PT XLSMART Telecom Sejahtera Tbk

Good afternoon, ladies and gentlemen. Welcome to XL Axiata's first quarter 2023 earnings conference call. I am Christopher, investor relations for XL Axiata, and I will be your coordinator today. During the presentation, all participants are in listen-only mode. After the speaker's remark, there will be question and answer session. The Q&A session will be in hybrid mode to ensure we can accommodate to everyone. To ask questions, please kindly type it in the Q&A box with your full name and company name. If we have time, we will circle back for follow-up questions. As a reminder, this session is being recorded for replay purposes. With me today... With me today are Ibu Diyan, our Chief Executive Officer, Pak Ferus, our Chief Financial Officer, Pa David, our Chief Commercial Officer, Consumer. Pa Gijit, our Chief Commercial Officer, Home and Convergence. Now, Ibu Dian will share the highlights for first quarter 2023, which will then be followed by Q&A session. I will now hand over the call to Ibu Dian.

Thank you, Chris. Good afternoon to everyone. Thank you for attending today's earnings call. I'm pleased with our business performance in this first quarter, which illustrates how we are meeting our commitment to deliver our vision as the leading converged operator in Indonesia. We started 2023 on a strong note, whereby Excel has successfully outperformed the industry, building on the strong momentum powered by both revenue and subscriber growth. Let's move to the next slide that is showing the first few 203 key highlights. Our revenue grew by double digit at 12% year-on-year due to continued product traction supported by our network excellence. Data and digital revenue grew 11% year-on-year, outperforming the industry. Top-line growth in addition to efforts on operational excellence gave positive impact to our EBITDA, which grew even faster at 13% year-on-year with margin recorded at 47%. Excel Asiato also recorded a jump in PAT as it grew 47% year-on-year, showing our ability to be more profitable. We continue to make progress on our conversion vision today, in line with our commitment to deliver complete converged proposition. Excel Satu continues its strong uptrend trajectory with 44% of our FTTS subscriber base are converted to converged subscribers. This represents 7% 7% points increase compared to 37% in Q4 2022. On the digital transformation front, we now recorded more than 26 million monthly active subscribers for our My Excel and AccessNet applications. This represents 45% of our mobile subscriber base. More and more users' transactions and spend are being captured via this channel. in line with efforts to drive this channel to be the major customer's touchpoint. Our focus in providing the best-in-class customer experience powered by personalization and dynamic offering is affirmed further as our subscriber base grew to 57.9 million loyal subscribers. This represents a 400,000 subscriber growth queue-on-queue compared to end of 2022. Now we move to the next slide for First Quarter 2023 Industry Updates In the first quarter 2023, Indonesia's telco industry remains rational, with more opportunities for further price reparation. XL is very supportive for this move, which will benefit the industry as a whole. Riding on the strong market momentum, we have made the decision to increase prices across our XL and XL offerings. Price increase was done across our traditional and digital channels towards the end of the quarter. We also observed that most telco operators have now launched their convergence proposition as their new growth driver. The industry is heading towards more efficiency as telco operators are now transforming themselves into techcos, focusing on execution and better asset utilization. Our investment in network infrastructure, digitalization, and optimization of spectrum have increased our customer experience immensely. Strong network infrastructure has created a foundation for our fixed mobile conference proposition. As I have mentioned previously, the opportunity for digital transformation is rising as most of the population have access to smartphones. We will leverage on this opportunity with our data-focused customers by further enhancing the digital experience via MyExcel and also AccessNet apps. This effort has enabled us to optimize sales and marketing costs. Furthermore, our internal business processes are also being digitalized and automated, which allow Excel to be more agile in responding to market needs. Huge opportunity arises from the low penetration of fixed broadband across households in Indonesia. The low penetration rate will provide growth potential for fixed broadband providers and fixed mobile convergence. On the risk side, potential global economic slowdown due to high interest rate environments remains while risk on competition may move beyond mobile. Now let's move on the performance in first quarter 2023. So this slide elaborates further our financial and operational performance. We delivered a strong set of finance sales in Q1 2023, outperforming the industry as shown in this slide. Double-digit growth in revenue and EBITDA, with subscribers growing to 57.9 million happy customers that supported us, thus enabling Excel to retain the ARPU of 40,000 rupiah. This follows that our strategy focuses on providing best-in-class customer experience for high-value subscribers amidst competition and inflation. Now we will see how those performance was achieved. Smart investment in pockets of growth and the investment on digitalization have increased the number of active users and their usage. Our digital-driven operations through granular data analytics have enabled us to invest our network in high-value areas buildings to meet demand from both residential and non-residential areas. This intelligent data analytics also allow us to evaluate KPIs across customer engagement, campaigns, and customer loyalty, so we can define the right strategies to address the challenges and opportunities at the right time. Our network investment was still focused on 4G deployment, especially in xJava, that increased our Fiji BTS count close to 95,000, with 20 with 12% growth year-on-year. We continue to deliver excellent network experience with higher usage as data traffic grew 19% year-on-year in the first quarter. As mentioned earlier during the presentation, our own apps now have more than 26 million subs on the platform. More and more revenues and transactions are being recorded on the apps. Our fiberized size as of March 2023 is at 55%. An increase of 13 percentage points year-on-year, pairing this with our spectrum reframing and new technology adoption has put Excel Asiata ahead of the curve. Now we move to the next slide. We show the structural transformation that we just announced. So earlier today, we have issued joint press release together with Linknet and Asiata on the structural transformation that is aimed to capture the under-penetrated fixed broadband and FMC market in Indonesia. XL will forge a stronger partnership with Linknet to accelerate rollout and supply of around 8 million new home passes over the next five years. In order to capture market opportunity, speed of execution is key with partnership with Linknet to accelerate rollout and deliver home passes. that will strongly fuel Excel's growth strategy in fixed broadband and also fixed mobile conferences. The exercise has commenced and is expected to ramp up immediately. Next slide. The structural transformation of the layering linknet into FiberCore and Excel as ServeCore for fixed broadband will allow for greater focus to capture market growth by leveraging on Excel's go-to-market capabilities. This will allow accelerated scalability as XL will now access to larger scale of fiber footprint with minimal investments. The creation of two strong assets will drive synergy and help fuel XL Vision to become the leading converged mobile, fixed and content service provider. This exercise will be subject to compliance from the prevailing laws and regulations and applicable shareholders approval with intention to complete by end of the year. I will conclude the speech with our full year guidance. In line with our strong first quarter performance, we continue to reiterate the full year guidance, whereby our revenue will grow in line with the industry at mid to high single digits or even faster. EBITDA margin guidance remains at approximately 49%. and our capex guidance this year will be at 8 trillion rupiah, with 70% of capex to be allocated to strengthen network quality and improve digitalization. With that, I conclude the presentation. Thank you and back to you, Chris.

Thank you, Ibu Dian, for the excellent walkthrough on the XR Axiata performance and strategy. Ladies and gentlemen, we will now proceed to the Q&A session. As a reminder, the Q&A session will be hybrid mode. To ask a question, you can type it in the Q&A box. Please ensure to use your full name and company name or we will not be able to read your question. After your question is answered, if you'd like further clarification, kindly use the raise hand button and we will call your name and you may proceed to unmute your mic. The first question comes from Sachin Mittal. The question is, can you please disclose normalized profit for the quarter excluding forex? And second question, LinkNet has started to make losses despite it being highly profitable in the past. Why so and what is required to change it? For this one, I would like to ask Pak Farus to answer the first question and later on we'll have Pak Abhijan to answer the second one.