PT XLSMART Telecom Sejahtera Tbk

Ladies and gentlemen, good afternoon and welcome to Excel Smart's first quarter 2026 Learning School. My name is Christopher, Head of Investor Relations, and I'll be coordinating today's call. Our presentation and financial results were released this morning and are available on our Investor Relations website. We'll begin today's call with feedback remarks from our management team, followed by a hybrid Q&A session. To ask a question, please type it in the Q&A box along with your full name and company. We will read your questions for management to address. If time permits, we may open your line for live follow-up questions. As a reminder, this session is being recorded. I would like to introduce our speakers for today's call. Mr. Rajiv Sethi, President Director and CEO. Mr. Anthony Susilo, Director and Chief Financial Officer. Mr. David Marcellus-Ossess, Director and Chief Commercial Officer for Consumer. And Mr. Verus Iqban, Director and Chief Strategy and Home Business Officer. And with that, I will hand over to Mr. Rajiv to begin the mentioned highlights. Mr. Rajiv, you may finally proceed.

Thank you, Christopher. Good afternoon, everyone. And thank you all for joining us today. Just to remind you, when we entered 2006, we spoke about our purpose, which was to connect every Indonesian for a better life. This purpose remains the foundation of our strategy. guiding us how we invest in our network, enhance our customer experience and drive sustainable growth. In the first quarter, we made solid progress in translating this purpose into execution. If I speak about integration, the execution continues to be ahead of the path with all key milestones for the quarter achieved and majority of the targeted initiatives completed as per schedule. This reduces network overlap improves operational efficiency and accelerates synergy capture. As a result, integration risk continues to decline as we move into the second half of the year. On the financial side, we are seeing improvement worth in the top-line revenue from a beta. Revenue growth in this quarter was supported by festive demand due to the trade wars in this quarter and gradual market spread. while we are also making steady progress of emerging loss cost structures. This reflects disciplined execution on both commercial and cost initiatives. On 5G network side, we accelerated the 5G rollout and the continued expansion has strengthened network quality delivering a much superior customer experience and faster speeds. This position makes us smart to handle rising data demand easily while expanding the coverage across key cities, reinforcing our 5G leadership in Indonesia. To summarize, we began the year with clear purpose and disciplined execution across integration, growth, cost and network expansion. This gives us confidence that we are on track to deliver strong performance while advancing our mission to connect every individual for a better life. If I move to the next slide, as I said, our inclusion in the first quarter is completely aligned with our purpose to connect every individual for a better life and our vision to become the most loved company, the best place to work and the most efficient service provider. For customers, we are strengthening experience to continue network integration and 5G expansion. Our focus on network leadership is delivering better quality, wider coverage and faster speeds. These improvements are increasingly validated by independent benchmarks, including the latest recommendation we had from Okla for being the fastest 5G network, reinforcing the experience we provide to our customers. For our employees, we continue to build a stronger, more unified organization. This progress has also been recognized externally, with Excel Smart being included in Times' 2026 Asia Pacific Best Companies list, and it's such an honor for us being such a young company, and it reflects our performance in employee satisfaction, financial strength, and sustainability. Finally, efficiency remains a core pillar of our execution. We are accelerating integration-led synergies, simplifying operations, and strengthening cost-specific. These efforts are building structurally a more efficient operating model with impact to be reflected in our margins over time. Overall, this quarter reflects tangible progress in delivering our purpose, enhancing customer experience through network leadership, strengthening our organization, and improving efficiency to support sustainable growth. As I mentioned earlier, integration continues to progress ahead of the plan, with strong momentum across network and synergy capture. Specifically on network integration, we've integrated more than 40,000 sites into AXS smart network, while simultaneously deploying additional 4,900 new sites, which helps improve our coverage. This reflects simultaneous execution consolidating overlapping infrastructure while expanding capacity to support future work. On synergy capture, site consolidation is advancing well, with 77% of targeted tower dismantling already completed. This is the biggest driver of cost efficiencies and operational simplification, and we remain on track if at any stage of the plan to realize integration synergies. The next step would be IT and platform transformation. IT integration programs are progressing well to enable a unified system and operations. This will be super critical to support product harmonization, further improve our customer experience and greatly enhance organizational agility. Overall, we expect the entire integration to be completed within this year, providing a strong foundation for both operational efficiency and sustainable growth. I have been speaking about our network leadership and we are very proud of where we have reached so far and we will continue to strengthen our network leadership powered by accelerated BTS deployments and rapid 5G rollouts enabling better speed, better experience for our customers. On network, our total BTS surpassed growing 12% quarter-on-quarter and more than 50% year-on-year. This expansion driven by both 5G and 4G reinforces depth and resilience of our network. On 5G, our footprint has expanded to 43 cities as of end March. We'll continue to roll out across key urban areas. We'll continue to expand 5G coverage, further strengthening our position and delivering the fastest 5G experience in the country. Importantly, this stronger network is not just about scale, it is translating into real performance. With improved quality and speed, we were able to handle a 21% surge in data traffic during Ramadan period. Overall, our investments are clearly reinforcing our network leadership, expanding coverage, enhancing experience, and supporting Indonesia's accelerating data demand. With that I will take a pause and hand over to Pa Anthony to walk us through the financial results.

Thank you Rajeev and good afternoon everyone. So let me start the first slide about the operational matrix. This quarter shows that we continue our progress in shifting forward to the quality-led growth, supported by the ARCO improvement as well as the stabilizing subscriber drives. Our mobile subscribers stood at 69.4 million. The sequential decline from the previous quarter was expected, reflecting our continuous focus on cleaning up inactive as well as the low-value SIMs. and also the impact of the pricing discipline following to the product simplification. The reduction was primarily coming from the newer subscribers with less than three months, while the long-standing subscriber base remained stable. Importantly, the pace of the decline has moderated, and we are seeing an early sign of stabilization as market preparation progresses. Our priority remains on improving subscribers' quality, in the continued ARPU improvements. Meanwhile, our blended ARPU continues to improve by 6% QonQ at 47,300 Rupiah, driven by both prepaid and postpaid track nights. This reflects the pricing discipline as a stronger data monetization following through the NAPO integration. Data traffic remains healthy at 3,867 data bytes 36% year-on-year, although slightly lower compared to the last quarter because of the less number of days in the Q1 compared to the last quarter Q4. Overall, the demand continues to grow, supported by expanding 4G and 5G coverage as well as improving the user experience. Finally, the fixed broadband subscribers were stable at 940,000, while positioning the business for more sustainable growth, and at the same time the fixed broadband output remains resilient despite the competitive market. Overall, this operational matrix reflects an early signs of stabilization, with stronger monetization and disciplined subscriber management supporting quality-led growth. Okay, move on to the next slide on the financial performance of the first quarter of 2016. We start with the revenue. We recorded 38% year-on-year positive growth in terms of revenue, so IDR 11.8 trillion rupiah. Primarily driven by the mobile business due to master preparations, which drives higher output. The performance was also contributed by Lebaran Momentum, where in this year, focus solely in Q1 2026, and on a quarter-on-quarter basis, the revenue, we will look at it, declined by 1%, which is reviewed as a broadly stable, considering the fourth quarter has more operating base. At the EBITDA level, normalized EBITDA increased by 26% year-on-year, to become 5.4 trillion rupiah. The performance was supported by solid revenue, improvement of cost efficiencies, so the EBITDA remained resilient with the normalized margin at 46%, broadly stable compared to the last quarter. The bottom line shows stronger improvement. Our normalized PAT grew by 254%, to be 1.4 trillion rupiah. or an increase around 90% quarterly basis. This was supported by lower interest expenses from the loan as well as the ROU assets. And also there is a proceed from the sale of these rental assets reflecting to the PAT group. Higher normalized PAT indicates the integration already has started to make a favorable result for the inbox of revenue growth as well as cost efficiencies. Overall, the first quarter reflects a stable financial performance with a solid revenue trajectory, resilient EBITDA, and disciplined cost management as we continue progressing through the integration phase. This slide provides a reconciliation to give a better understanding between the reported and the normalized EBITDA and VAT. Here we reflect the underlying performance At the middle level, the reported first quarter 2026 was 5.4 trillion rupiah. This includes relatively small integration related costs around 28 billion rupiah, which is primarily associated with the some costs from the rental of the central sites. The EBITDA has begun to show a sign of stabilization and increasing reflective of our underlying operational performance going forward basis. At the bottom line, we continue to recognize an accelerated depreciation around 2.1 trillion rupiah on equipment from old vendors as well as the 900 MHz spectrum as the network integration progresses. Adjusting of these market items, the normalized PAP clear review of the company's core profitability. We'll go to the next slide. Turning to our past performance, the operating expenses moderated in the first quarter following the integration drive spike in the previous quarter. Operating expenses declined by 18% due on due. to become 6.4 trillion rupiah, mainly reflecting normalization after the heavy integration-related activities happened in the Q4 2025, last year past quarter. The cost base is beginning to stabilize as integration execution progresses. Now, the interconnection and other direct expenses declined by 90% Q1Q, reflecting lower enterprise revenue due to a seasonal factor while the infrastructure costs also shows a decline by 11% quarter-on-quarter due to elevated integration-related costs, which is book in Q4 2025. Importantly, the labor costs declined sequentially as the end-state organization structure was established and already the workforce alignment already progressed. As a result, labor costs as a percentage of revenue improved from the previous quarter. In overall, the first quarter reflects a moderate cost base following the integration driven spike with improving cost discipline and early realization of operating efficiencies as we move closer to the completion of the integration. I think that's it from my side.

Thank you for answering and as Panditji mentioned I will talk about the outlook for the year 2026. We are maintaining our 2026 guidance as previously communicated during the 4th quarter earnings call. It is supported by the solid starts of the year and the continued progress which we are making in integration. For revenue, we are expecting our growth to be in line with the market, reflecting a disciplined approach focused on value and improving customer experience. At the bitter level, we continue to target a growth which will approximately be twice that of the revenue growth, supported by synergy realisation, improving cost structure and operating leverage as integration progresses. Capitalized skip rates is expected to be around IDR 15 trillion, primarily allocated to network expansion, 5G rollout in IDR cities, and integration-related initiatives to strengthen long-term competitiveness. Synergies, finally, we continue to target the cross-modal synergies of between US dollar with majority expected to be realized as network consolidation and operational integration advance per year. While the business fundamentals remain solid, we are aware about the external departments and we continue to closely monitor them including the evolving geopolitical situation in the Middle East which may impact macro conditions and energy prices. Having said that, at this stage, we remain confident with a fuller guidance. Overall, we believe we are well positioned to deliver our 2026 targets. Supported by disciplined execution, ongoing integration and continued focus on sustainable value creation. With this, I will conclude my remarks and hand it over to Chris.

Thank you, Mr. Rajiv, Mr. Anthony for the presentation. Ladies and gentlemen, we will now proceed to the Q&A sessions. As a reminder, the Q&A session will be hybrid mode. To ask a question, you may type it in the Q&A box. Please also ensure to type in your full name and company name. If you'd like further clarification after your question is answered, kindly use the raise hand button and we will proceed to unmute your mic. Please allow some time to tabulate the questions before we read out to everyone. Okay, let's start. So the first question coming from Andrew from UOPKJS. Let me read out the question. The first question is how much the integration cost accelerated depreciation and asset impairment in this year? And why is it so low this quarter? I think Andrew is referring to the integration cost. And number two, question number two is what percentage is currently of both optimization for network and human resource rationalization? And number three, for new 5G spectrum, how much do you think it will cost? What are the expected upfront fee? Do you think you will need to pay? I think for the first question, I would like to invite Mr. Anthony to provide the colors and number two as well.

Okay, thank you, Andrew. So to answer number one and number two, I'll try to cover answer number one and number two. On the number one, I think regarding the integration cost, I think yes, the numbers in the 2025, if you look at the presentation slide, the total integration cost is around 1.8 billion rupiah. However, in the 2026 first quarter, it shows some very low numbers. It's only like 22 billion rupiah. Well, I think to answer that The integration cost, most of it comes already finished, already completed, like almost 70% of it finished by in 2025, already completed. All the progress of the network optimization. Again, in 2026, we are expecting, of course, there is too much integration cost, but the amount will not be as material as of the numbers or maybe remaining around below 500 gigabit per year. So that's all the interpretation costs. Now for the accelerated depreciation, this is regarding the spectrum of 900 megahertz as well as the old asset that means we don't use it anymore. So this thing is still continuing. We are expecting the project will complete hopefully by 2023, by around 2023, 2026. So in terms of the amount itself, if you recall that in 2025, we already booked 4.5 trillion rupiah of accelerated reprications. Then for the 2026, we are estimating approximately maybe 5-6 trillion rupiah that we may incur in this year. Majorly will be booked in the So I think that's to answer the item number one. I think related to item number two on the percentage on the network optimization and the whole human resource rationalization, I think I would like to say on the network optimization, like I mentioned earlier, we have done it already most of the starts already modernized, I think by about 70-80%. But in terms of human resource personalization, I would like to say that maybe most of the things already completed in Q4 2025 last quarter. There are still some integration required for the human resources, but the amount will be relatively small in this year. So I think number one and number two is related to the integration cost as well, that I mentioned earlier, that we are expecting the integration cost from the network, from the personnel and so on, everything is very low, relatively low, small, maybe below 500 billion per year. I think that's why I said number one and two, and regarding number three, Parajit, maybe you may want to talk about this. Sure.

In terms of how much do we think we need to pay, I think that will be speculating. I will not get into that. What we know are the initial option details which have been published. That's what we know. We know the base prices which have been set for both these sections. We know the rules which have been second-tested. We continue to evaluate different options we have. and the end result will be determined by finding how the auction is conducted and which all operators are interested in different spectrums. So for me it will be very difficult to speculate on this. The only thing which I can say is one thing which is different is just that the annual fee is one time as compared to twice. in the YCAA annual fee in the previous options. So that's different. Obviously, there are other different changes which are there. I'm sure all of you have access to that document. And my information is also limited to whatever is publicly available.

Okay, Mr. Rajiv, Mr. Anthony. Andrew, do you have any follow-up questions? We have unheard your mind. Okay, if no questions, then I think we can move on to the next question. The next question comes from Sabrina from Trimaga. There are two questions. The first question is, data yield continue to improve through Q1 2026, increased by roughly around 3.9% Q1 yield, and 1.5% yield on year. How do you view the sustainability of the trend going forward, and particularly given the expectation of a more consumer spending post-Baron What strategies do you plan to implement to sustain that value? And the second question is about the depreciation. We observe an increase in depreciation expenses compared to the previous quarter with the depreciation to revenue. Is it also trending higher? Should we treat the first quarter results figure as the run rate for the remaining quarters in 2036? Or should we expect further acceleration or deceleration in the subsequent quarters Could you provide more colors on the expected packages? But nice to invite David to provide some colors, please, for the data yield.

Okay, so thank you. Regarding the yield, yes, as you mentioned, it has been increasing quarter on quarter and year on year. As we have been socializing before, I think this is a consequence of many decisions that we have taken in order to move towards good quality subscribers. The first of them was killing many of the freebies that we were already giving in our Prata services. So, many freebies and bonuses that we give in order to avoid abuse. Second one, as you also know, is... increasing significantly the acquisition quality. So we moved to one SP that is 3 GB, 35,000 Rupiah, when previously there were many more SPs with many more GB and lower yield. The third decision was to improve the portfolio in general. So there were some products that were low yield that had been eliminated. So it's killing the freebies. improving the quality of acquisition or the SP yield. And doing third time portfolio movement, we have been able to have this yield consequence or outcome, right? As you mentioned, it's positive, positive this quarter, positive year on year and in the past few quarters. Now we will need to have a competitive portfolio. Our acquisition machine is also working properly, so I guess that the yield will come as an outcome of the mix of products that our consumers select. There are lower yield products at higher prices, and of course, a higher yield product at lower prices. Depending on that mix of products, we will see how the yield evolves in the following quarters. Is it sustainable? We will see. I think it shouldn't move too much. in one direction or another, but again, if the customer behavior moves towards higher prices, we will see some kind of yield decreases. If the opposite, we will see yield that can even improve further or maintain. Hope that this answers the question.

Thank you, David. Now let's move on to the next question. Maybe, Mr. Anthony, you want to provide some colors on the depreciation.

I think if you look at the depreciation expense actually includes the accelerated depreciation that we did in 2025 and continue also in 2026. If you look at the slide that in quarter of 2026, there is a one-time cost of accelerated depreciation is around 2 trillion rupiah. And then for the remaining quarters in 2046, Q2 and Q3, as I explained earlier, that we are expecting the accelerated depreciation still continuing. The amount maybe like I mentioned earlier, maybe the initial will be around 5 to 6 trillion rupiah. So, already booked 2 trillion rupiah this quarter. So, the remaining 3 trillions or 2 to 3 trillion rupiah will be happening hopefully in the Q2 or Q3, Q4. But Q4 will be much much smaller. So, I think that to give you the understanding about how do you want to analyze the depreciation tax process.

Thank you. Thank you. I would like to open the line for Sabrina. Sabrina, do you have any follow-up questions? We have un-used your line.

Hi, Pak Anthony and Pak David. Thank you for the callers. Maybe I have one follow-up question. So on the data yield front, I think we have been seeing that the likes of Axis and SmartFriend, they have also been increasing the prices as well as the yields. So do you think that the improvement in the data yield for first quarter is much more driven from access and smart frame, or do you see that this positive contribution mostly still coming from Excel? Thank you.

So, it's from all the three brands, to be honest. So, each of the brands has, like, as you know, different behavior. So, some were maybe relying more on previous bonuses, some were relying more on the acquisition of the SPs, but the three brands have seen positive movement in yield, not only in the quarter-on-quarter, as I am saying, it's like if you take the longer trend, right? the last four quarters, you can see a positive trend, and it will win all the brands.

Okay, thank you, David. Sabrine, any follow-up on that? Okay. If not, I think we can move on to the next question. The next question comes from Irwin Wijaya from... I think Sabrine... The next question comes from Erwin from Perdana. Two questions. The first one is about biometrics. Any updates on the biometrics registration and implementation by the COMDG? And second one is how does the management assess strategic importance of the 700 and 2600 MHz bands in context of Excel smart medium term positioning, network positioning and capacity requirement for the first one on the biometric with David would you like to give some cards?

Yeah, so the biometric registration it's already been approved and implemented so it's already available in the market that will be a strong implementation or mandatory starting in July so I think we are ready for it and we truly believe that it's a very good movement for the industry to move towards this type of security to the industry and to our customers

Thank you, David. And how do you think for the management assessment for the spectrum option? What do you think is the importance?

As I mentioned earlier, the initial guidelines have been published by the regulator a few weeks back. We are evaluating that. Your question specifically speaks about medium-term and you know that spectrum is required over the length of its assignment to us which is 10 years and in a market which is relying heavily on data consumption growth, spectrum would be needed for future. We are evaluating the pricing which has been shared with us, the reserve price and the auction mechanism and we are putting all these scenarios together and based on that we are we'll take a decision in terms of participating in either one or both of these spectrums. And obviously we'll share the updates once we're ready with that.

Now let's open the line for Parveen to ask any questions. Okay, seems like no question from Arvind. I think we are still waiting for more questions from the participants. We'll wait. Let's see if you have any follow-up questions with regards to the presentation. That's good. Okay, we have one question coming from Raymond Konstanty. The question is about the Chowney coin with the biometrics. David, would you like to give some colors on this?

Yeah, that's a very good question, right? And difficult to answer. Since we have implemented our new acquisition quality, acquisition strategy, we have seen the acquisition numbers go down and I'm sure that you have seen also our subscribers numbers, how they have been cleaning up in the last few quarters, right? Mainly because of number of subscribers of low tenure or less than three months reducing. So we have gone already through that. through that, I don't know whether to call it pain or cleaning process. No, it's true that the industry probably maybe not not all so so again difficult to say how much this will stop but for sure it's a healthy measure for the security of our subscribers and for the industry itself in the in the sense that it will reduce the use and throw behavior in the in the market which we know that it's a it's a negative in in all senses thank you David maybe um do you have any follow-up questions

No question, but Raymond has typed in the question. I think I would like to read the questions. The question is about our home business. How do you position the wireless broadband services relative to the upcoming FWA from MyRepublic and SIRS from the competitors? I would like to maybe invite partners to give some comments. Sure.

Hi there, Raymond. With regards to the question, I think as we've already highlighted, how we position our home broadband business, right? It would be certainly from a point of view of delivering the best home broadband that we can to the customers. So focusing on reliability and stability and consistency of the experience. That's the angle that we will go for, irrespective of the technology, whether it's FWE or FTTH. I think I would leave it at that. At the same time, we know that we're looking for better quality customers, more sustainable growth in this home development space rather than being overly price-aggressive.

Thank you, Mr. Harris, for keeping the colours. Are there any follow-up questions? We have unmute your mic if you have any questions. We have any other questions from the audience? Okay, we have the next question coming from Etta Putra from Maybank. So there are two questions. The first one is, what do you think about the competition in Java and XJava? And second is, what is your primary market for expansion in 2026? And I think I would like to invite both David and maybe Parajit to add some comments.

Yeah, so I'm in competition, as always, right? It's tough. So honestly, I think... It's been a while since we don't split like Java and Xjava, we focus more on city per city granularity and we look more into the cities. There are some cities in Java that are very competitive, some other areas that aren't. little less competitive, and same as in Java. Yes, it's true that Java is usually a stronghold, traditionally, right? Especially some areas, and that might be a little bit different, when in Java, most of the players are everywhere. But I wouldn't make such a big difference now between Java and Intel, I think. Every city is like a different world with different competitive dynamics, different network stands and that's how we focus. primary market for expansion in 2026 so I think as we have already mentioned before we have we are expanding I mean we are expanding in different ways one is in coverage with new site one is in quality with 5G and another one is in quality with capacity as well right so again we have different type of expansions in different areas with different types of technologies so Again, we select each of those IPs or each of those expansions where we need new site, where we need ID, where we need new capacity based on each of the IPs.

Thank you, David. I would like to unmute at a slide if you have any questions at all. All right, since Vaitha doesn't have any questions, so let's move on. I see that Sukriti has raised her hand. Let's open up the line for Sukriti from Bank of America. Offer to ask a question.

Hi, thank you, Chris, and thank you, management, for taking my question. Sorry, my chatbot function does not work. Just have one quick question on how we should generally think about the direction of ARPU growth and quantum of ARPU growth going forward. Are you positive on 5G driving some of that growth on ARPU? And do you think ARPU growth moderates if it's organic growth and not headlight price increases that we are able to take in the current macro environment? Is ARPU growth likely to moderate from third to low single digit levels?

There are several ways to look at this. The first one is the consumption rate growth, which will impact ARPU. If you look at our data consumption currently, it's around 22-23 GBs per subscriber, depending on how you measure the subscribers. In every market, it has increased much more than that. Especially with the launch of 5G, which is less than 3 months old for us in most of the cities where we march, we are seeing early signs of increased consumption movements. People adopt 5G. So one avenue of growth in the near future would be consumption-less growth where people consume more data and therefore they generate more ARPU. That's one part of it. more rationalized pricing offerings and as much color, give it a bit more color. It's not just on the recurring pack, it's on the starter packs where most of the action has happened, where if you know the industry was adding close to 20 million new subscribers a month with a population of 280 million total people in Indonesia, roughly the same number of SIM cards were being sold in a year at a very low price. low yield, low ARPU that has been taken away. So, if the ARPU increase which you see some bit of it is coming from that side, the other is more of a price rationalization and very low value recurring tax. Is there a headroom for a further price increase? I would just refer to the ARPU as a percentage of per capita income that is still 0.6, 0.7 as compared to around 1-1.1% in similar prepaid markets. So what I believe is customers have the ability to pay a bit more than what they are doing now and it will come through a combination of both consumption increase and a bit more of price rationalization as we move forward. And as you would see 0.6% of somebody's per capita income is a very small number. But despite those macroeconomic challenges, it may not be a significant factor for us to have an optimistic view about further R2 growth. Yes, lowest end, lowest spectrum of the customers, there may be some challenge there. But apart from that, broadly, we are pretty optimistic that R2 growth will continue. It may not be at the same level. intensity, the same growth which has happened over the last few months. But definitely, there is further room for improvement there. David, would you want to add something there? No, I think all is said and done.

Thank you, Farhaji. Supriti, any follow-up questions from your side?

Yes, just one quick follow-up, Max, and thank you for that, Kala. Just wanted to understand, you mentioned there are different cities that you now look at it versus Java, XJava, in terms of how you're growing, but any particular cities that you'd like to point to where we're seeing better growth on our customer base, or is it generally very broad-based? And also, probably on the same lines, any specific areas where we think that growth we would not focus as much on for certain reasons.

Yeah, so I think, again, I'm not going to give names of specific cities, right? I think the 5G, wherever we deploy in 5G, I think it's like Paris, so those are like the main cities and I think it's there. I would add that in many cities, after our 5G deployment or our new site deployment, our network is is number one. So we have like the best network in download speed, not only in 5G but also in 4G and our coverage in those cities is also number one or apart with the rest. So for sure those cities will be where we expect our results and our experience to be better. Are there areas where we are not going to focus? Well, if we are present, we have to focus, right? If we have the network, we'll be focusing in there as well.

All right. Thank you. Thank you. Thank you. Thank you, Sukriti, for the questions. Now let's move on. We have another question. This comes from Arthur Pineda from CP. We will unmute your line, Arthur. Please ask the question.

Hi. Thanks. Sorry, I couldn't use the chat bot as well. Just two questions, please. Firstly, on the CapEx, can you just clarify your 15 trillion CapEx for the year? Does this include your assumptions for 5G deployment? And second question I had is with regard to the spectrum that you have at the moment. Are you at liberty to redeploy some of them for 5G usage, or are there any specific requirements for you to attach them to older technologies? Because I do see that you have a fair bit of spectrum on the 2300 band that could also be used for 5G.

I think the first question was on the CapEx, it includes the entire CapEx and as we mentioned in our earlier calls also, we can classify this as an integration CapEx, but what we are doing is given the timing of our merger, we are taking this opportunity to ready our network for 5G also in cities where we want to go for 5G. So it's a sum total of the direct effects 5G and integration was put together. The second question was about... Sorry, Drew. Can you just read the second question for us?

Oh, sorry. The second question is with regard to the ability to redeploy some of your existing spectrum bands for 5G. Are there any limitations for that, or can you actually just reform them for 5G?

All the spectrum is technology-improved, so we can do that as we need it.

Understood. Okay, thank you.

Thank you, Arthur. All right, let's move on now. We have the next question comes from Angus McIntosh. This is about the broadband. What is the direction of ARPU for the broadband business, and do you have any longer-term targets for the broadband subscribers? I would like to ask Papyrus to provide some colors on this, please.

Hi, Angus. Thank you for the question. Directionally, if you take a closer look at the industry, what we see is the broadband market is becoming more competitive, right? So that may suggest some pressure over the overall industry output. Having said that, our focus remains on looking at customer lifetime value. We look at better retention as well as very much more disciplined acquisition rather than just competing on price as I mentioned earlier. I think on the subscriber targets, unfortunately, we do not provide the long-term subscriber targets, but we still remain focused on how to grow this business in a sustainable and profitable manner.

Okay. Thank you, my friends. Let's open the line. We have one question.

Okay.

Okay, it seems like there is no question from Angus, so we'll just move on to the next question. It comes from Sabrina from Trimaga. So the question is about the BTS. It was mentioned that in the fiscal year 2025, Orings called that Excel smart plans to add 7,000 to 8,000 XI, but BTS has increased by 28,000 more. I didn't see any type dismantling here. Can you please shed some light on this?

So Sabrina, this Anthony, I think yes you are right that in 2021 you mentioned that there is a plan to add 7,000-8,000 sites, a number of sites that we want to do for this integration. Currently we already deploy approximately around 4,900, almost 5,000 new sites that we are adding at this moment from the LD1. But then in terms of that, if you look at the BTS count, I think you are exactly correct that the delta is 28,000. But I think we should understand that there is a difference of definition between number of sites and the BTS definition. So I think we cannot really correlate the numbers exactly like that. there should be like a formula ratio for the number of steps at the DTS tower as well. So, in terms of dismantling type, I think just to reiterate the work that I think Rajiv already mentioned, that we already completed like almost 77% of the tower dismantled, probably the Q1 2036. So, I think that's what I want to say.

Yeah, I think to clarify this a bit more, A physical tower is one thing and on that physical tower we put multiple BTSs to cater to different spectrum which we have and different technologies we have. So the number of BTSs would continue to increase as we deploy more PyChip but the number of physical towers on which we pay lease will decline from the pre-merger phase. Just to remind you of the numbers. Prior to the merger, we had, Excel had 45,000 towers and 22,000 towers were the smartphone towers, a total of 67,000. Out of which roughly 17,000 towers were supposed to be dismantled. As Pantani just mentioned, roughly 77% of the 17,000 have already been dismantled. And that's what is flowing into us energy. In addition, we deploy close to 7,000 sites this year, out of which more than close to 5,000 sites have been already deployed. So that's the way you should look at it. 67, 17,000 to be dismantled, out of which around 13-14,000 are already there, going down to 52-53, and then we added 3-4,000 more sites. That's the physical number of towers on which we have been using the Sushita, of course. I hope that clarifies it very much.

Thank you, Parajit, for entering to give the clarification. All right, let's move on. Yeah, the next question comes from Monica from Indopremier. This question is about mobile. What is the exit arc for Mars and also the April? So I'd like to get some colors here.

I don't think we disclose, right, the exit arc or less even the arc going in this second quarter. As you can imagine, of course, Mars was the balance of So the output in March will be higher than the average of the quarter. And in April, there is, of course, a barren pay. But again, we don't disclose. I can say that. In March, of course, the output will be higher than the average. And then in April, they come back to normalization.

You do. Well, do you have any follow-up questions to ask? This is already a question.

Actually, no. I'm good. Thank you.

Thank you, Wada. All right. Let's move on to the next question from Angus McIntosh. Again, this is about your company use of AI. Can you outline how the company use AI in the offline business and both operationally to improve efficiencies and for optimizing the subscriber experience? We would like to invite Paradee, please, to give some thoughts on it.

Sure, I was wondering how can the call be complete without the word AI. Thank you for bringing this topic up. I think this is the buzzword. What we believe in XLSmart is AI should be a technology which is put to real use in every single day. And as you rightly mentioned, there are multiple ways we are using it. One is to become more efficient in the way we operate. So there are tasks which are repeatedly done Why people were using AI to do it better and faster and cheaper? Things like the software we developed, the new products we developed, the testing of that was really a manual. Most of it has moved to an AI-based tools where it's done faster and with much lesser errors. Things like route planning of our salespeople. Earlier it was manual, people decided which place to go. Now with the help of AI, based on the needs of the ROs and potentially the potential customers in the home business, those root plans are also being designed by using AI tools. So this is one area. The other area is Making a customer experience is better. Significant portion of a network optimization decisions are now being made using AI. As you know, network generates large amounts of data. Customers generate billions of records every single day. It's very difficult to process that manually. Most of that is being done now using AI. Have we reached a situation of completely autonomous network operations? No. But the ambition is to reach there very quickly. And we are well on our way in that journey as we move forward. The other thing also like AI based CLM offers. The best offer for the customer from a product pricing point of view. So there are multiple ways in which it is being used and as always we are never satisfied with the extent to which we are using. We believe there are many more use cases and there are much more things which we can do on AI to become even better. We are very excited about this technology and unlike many other players we would want to put it to real use rather than just using it for branding purpose.

Thank you Parvati for sharing the vision on AI. Angus, do you have any follow-up questions to ask?

No, thank you very much. That's very clear. Thank you.

Thank you so much. Okay. All right. Any other questions from the audience? All right. Since we have no more questions from the audience, I think we can wrap up the call. Thank you once again for joining us today. If you have follow-up questions, please reach out to Investor Relations. Stay safe, stay healthy. We look forward to speaking to you next quarter. Thank you.