PT Sarana Menara Nusantara Tbk

Recording in progress.

Good afternoon and welcome everyone. Thank you for joining today's group conference call of PT Nusarana Menara Nusantara Tbk jointly organized by Ferdinand Secrets Indonesia and Nomura. And this afternoon we are honored to have the management of Sarana Menara Nusantara with us to share the company update. So before we begin, please note that this call is by invitation only and strictly closed for the media. If you are a member of the media, please disconnect right now. Currently, we remind everyone we will be on mute during this call. If you wish to request a question during the Q&A session, you can either use the question function or submit a question via the Q&A box. Please be advised that this call is being recorded today, June 3rd, 2026. So, without further ado, I'm handing over the floor to our moderator, Erwin Jaya from Verdana. Erwin, you may go ahead. Thank you.

Thank you, Stani. Good afternoon, everyone. So, my name is Erwin Jaya from Verdana Spiritas, and I'll be the moderator for today's call. And first of all, I'd like to thank you all for joining me today at Tarana Menara Nusantara, first quarter, 2026 earnings. We appreciate your participation and interest in the company. Joining with us today, we have managements. We have Bahadono Tanuwijaya as a director and a chief of group IR, as well as Bahadan Divari, advisor and group of IR. So the agenda for today's call will be as follows. So we'll begin with the opening remarks from the management, and then the presentations of the first few results, and the management outlook, as well as followed by the Q&A sessions afterwards. Before we begin, I'd like to remind all of us who would like to ask questions, you can either submit your questions through the Q&A chat box, send them directly to me, or use the raise hand function button to ask your questions with our management during the Q&A session. And with that, I'd like to pass over the mic to Pak Adam for the beginning of the presentation. Pak Adam, go ahead.

Thank you, Erwin. Thank you, everyone, for taking the time. and join our first quarter 2026 earnings call is this okay this is the first slide so we just released like two days ago or yesterday to be exact now today is the third we have our first quarter financials you know limited review without by our auditors because we are in the in the midst of issuing rupiah bonds So the first slide is basically telling you where we are today. Largest independent digital infrastructure in the country. We looked long and hard on this part and we think this part of the slide is still pretty much relevant that we have, you know, 180,000 plus of fiber optics physical cable in the country. We have 36,000 towers. People call us being the largest That's true because we have more revenues than any other power companies in Indonesia. But we are number two in terms of power count. compared to Mitratel our competitor and we have the fiber footprint that we have is probably number two compared to Telkom Groupia if they combine all the fiber they hold they have all together we that fiber count ranked as number two but but independently because we can serve anybody we can serve Telkom we can serve the fixed wireless access guide Wi-Fi and MyRepublic without having to worry about you know whether we have skin in the game in the fixed wireless market we still call ourselves independent we can lease to anybody our infrastructure and number two solid build to suit model for towers and fiber with long-term predictable cash flows and excess capacity for additional revenue stream this statement still holds true after you know more than 15 years in the business and we started with ours and starting in 2015 when we bought E4K more than 10 years ago we thought fiber can be built to suit can be with excess capacity and we have probably the most you know built-to-suit fiber optics in Asia at least yeah because we don't take risk when we build new for our telco companies customers you know we build fiber to the towers under Bluetooth contracts 10-year contracts when we build fiber to the home for provision of home passes for our broadband clients it's also under Bluetooth contracts where we have you know multi-year contract of you know typically 10 years under which you can recoup our investment and each of the towers and fiber optics we built for the built to suit has excess capacity by which we can basically lease out the excess capacity to somebody else the second tenant if you will or maybe use them for our own internal use which we are doing today and we can talk more about that later on specific slide and we can also have Pak Hartono with questions Pak Hartono is actually CFO of E4T and he has our you know M&A transactions for the group So if you look at you know companies like Farnion, Ramallah you know he's the man you know running the deal finding opportunities you know and then eventually creating values out of the each of the subsidies required all those years here including the more recent is Ramallah. The bottom line the bottom one is national and international investment grade ratings we are still in that one. even though Indonesia is put into a negative watch from S&P but you know the only thing that you know limit our rating is actually the sovereign but not anything else so we still have a very strong cash flow generation and even Standard & Poor's is allowing us to have a bigger leverage allowance because the business nature of our company is actually leasing out you know infrastructure under long-term contracts That is pretty much resilient and the customers are dependent on our infrastructure being there and ready to use. To the far right at the top is stable return on investment of 8%. We just did a checking. This number is pretty much stable return on investment. basically you put up all the EBITDA you can think of the whole company and then you add all the gross fixed assets and then the prepaid grant leases as a denominator then you come up with 8% so it's a very stable resilient business model the ROE of 13.7% because reflecting recent right issue but on a fundamental basis return on investment is still 8% And then you see the credentials of the stocks included in multiple indices like FT45, IDX80, Compass 100, and then MSCI Small Cap Index. And then we have a strong ESG footprint thanks to our corporate security team. IDX ESG recognizes us. MSCI ESG rating has given us an A. Sustanalytics 24.2 and we also follow S&P CSA score of 40, you know, which I think not many companies are being invited into participating. Next slide please. So, you know, this slide talks about where we come up with our source of sustainability. Number one is capital because, you know, in a world where we put up capital up front and we invest big investment outlay, we need to have the best access to low cost of funding. When we closed the book in March, we have 1.6 billion of financing available to us and this is in the form of offer from sheets or they already executed loan agreements but that's the kind of capital that the company has but we have always been maintaining the position that we want to get the best deal out of the market including the banks and capital markets here and we have investment ratings as i mentioned with only the ceiling is the sovereign and then number two lowest business because you know we under long-term contracts something that the big companies the big MNOs who have merged into three companies these days that they are relying on us and then we have proven a possibility of long-term contracts and those are irrevocable until today including from the impact of mergers so we need to basically get an agreement between us before people can change anything the causes And number three, we are very much ESG conscious management and company. Power and fiber are also important to reduce digital debt, which is a play of key role in sustainability of a certain society. Number four, attractive industry structure because we think the industry has been consolidated. I've been in business for 20 years and only now that I can say we've come to three players now in 2025. the most recent one is Excel Axiata and Smart Friend merging in last year and then we think is that we have a high barrier to entry because you know we have 36,000 towers is we cannot make it happen it's very it took that long for people to replace a company like ours with that kind of assets and we have a you know number five unique position as an asset class reasonable valuation the share price has come down because of market forces dynamic use flows and then but the fact of the matter is fundamentally we have been successfully consolidating showing up in our numbers we are responsible what we have bought because we want to continue to basically own and then extract values from those companies and then number six you know even though we are growing like this we have a very strong EBITDA and FFO growth with ROE of 13%, including the impact of red tissue just last year. Now, what we see in going to the future is that we have strong free cash flow and low cost of capital. The market is moving. Yield is getting higher because of the war and certain market forces. But we think we still have the ability to basically extract the best value from the company. When we think about where do we borrow from, we can borrow from banks because we know liquidity is there. Maybe the bond market is not so favorable, but at least we will have a bond program beyond June, July this year that we can go back and set additional capital from the market later on. And then, you know, box A, number two, you know, Indonesia is largely a 4G country. I'm sitting here in a hospital next to a window, but my 5G signal is only showing one bar at the moment. So, you know, Ferdana was highlighting that my connection is not so good. But that's the reality. Indonesia doesn't have a 5G yet. It's more of a gimmicky. They're trying to use whatever they have today in spectrum and equipment for, you know, offering 5G. If you feel like trying out 5G, you should try and go to Singapore, Japan or maybe Switzerland. A pure 5G will feel like you're accessing Wi-Fi, but you're sitting outdoor instead of indoor, but you're sitting outdoor. And that's a true 5G feels like, you know, the speed is like a Wi-Fi, but you're sitting outdoor. But today we don't have that yet. And then a number three, you know, we have been saying this and then we see the trend that MNOs increasingly need more services. increasingly need more types of assets to lease from us and we are doing that we are leasing batteries we are doing power as a service we are leasing green energy to our multiple types of customers and we like you know passive assets because with passive assets we can invest long term and then as we grow bigger we can extract a big better economics of scale from which we can get better margins etc And what's happening with Indonesia internet, we look to improve that together with our MNO clients. We see very strong demand for high speed internet. Traffic is still growing, strong double digit with the population average age is getting younger and younger. We are fortunate in Indonesia to be able to say that as opposed to many other countries in the world. consolidation of MN1 should create better business case for 5G which I strongly believe people need lower capacity rather than if they are to compete with you know more number of players but with three players today I believe we believe that you know all the MN1 will try to create bigger market share from the 5G market given that the need for better and reliable internet on the wireless mobile is increasingly and more noticeable these days And one of the things that we also looked at, and this is the chart that Mr. Raymond Passaci of Verdana highlighted many years ago, that the ratio of population per tower in Indonesia is still very, very high, which is needing more towers if you compare it with that of USA and China. The number of towers when this was said, you know, a couple of years ago was still like 100,000. Today we are talking about maybe 120,000 towers, and we haven't seen tenancy ratio increasing you know during the past three or five years so we still believe that this metric is still relevant you know for the whole of Indonesian wireless mobile industry you know so thank you Pak Raymond Kostasi for highlighting this and we're still using in our discussion with investors and analysts and boxy to the far right at the bottom there you know We want to expand our product offering. We want to be successful for it. We want to be sure that we have economies of scale. We are opening up branches in various cities across Indonesia, not only in Jawa, but we want to be closer to where our customers are. And these are especially for connectivity customers. But we want to also be sure that Protelindo and other types of fiber people can also use those offices as well. So create a synergy that our next competitor cannot replicate in terms of synergies. And then of course, strategy will be driven by evolving the needs of customers. We will discuss more about this, especially with regards to first quarter, what happens to our power revenue. and our cyber revenue but at the last point at the bottom C3 here that we see fixed mobile conversion is happening and then you know mobile is increasing people we see the last result of Telkomsel for instance or Telkom Group you know but broadband revenue because of competition but we think over time there will be further consolidation in that home broadband market but we will be around that basically to provide you know a lot of fiber for people who wants to do this into the future and of course hygiene that we can discuss later on next slide please okay we are splitting our business model power in fiber under built-to-suit assets This slide talks about predictable revenue because we only build fiber to the towers, quantity towers to towers for backhaul and service towers that we have as our bread and butter. This slide basically represents about 80% of POWR consolidated revenue. So including towers, fiber for FTP, fiber for FTPH, you know, that we build for home prices. So that and then, you know, Nusantara Menara Nusantara Tbk use our other existing assets to be sure that we have a very strong denominator for us to reach a sustainable return investment of 8%. And then dependent tenants, because we have the most towers for customers like Indosat or customers like SLS, so we basically probably 40, 50, 60% of the towers they use in the country belong to us. So we need to be sure that, you know, they need us, we also need them. So it's a very strong linkage between the two companies. And whenever they move around, we want to be sure that we also serving them. And then upside from additional revenue, this is surely talking about using existing assets for co-locations or using existing fiber or additional core leasing. And not to mention other types of businesses that we can talk on the next slide. and you know high barrier to entry because we it took us you know almost 20 years to build up you know uh 180 000 kilometers of fiber 36 000 hours so we're not you know we're not small we're private sector we're not small uh we took all these years to for us to build um together with our customers and our team members management and then fast growing industry the usage is growing double digit 5G is, you know, the markets are looking for it. The customers are looking for it. You know, infrastructure providers such as us is looking for it. Investors are also looking for it. When 5G is going to happen? I think, you know, we were in that meeting for Hartono, right? I think like 10 days ago with investors from Singapore. we think it could be second second half of this year but we haven't seen anything but we we are seeing that it's almost two years that we are we have this new administration so we have we are hopeful that something could happen sooner than later next next slide please so this is our connectivity business you know basically the remainder 20 percent of what we have in our cost of revenue is coming from connectivity and this has been this segment has been growing double digit for the past you know five seven years it's a very strong growth contribution contributor for the whole TOWR of course we start with we try to grow the other segment as well but because we have the most in independent infrastructure in Indonesia we have the large capability to reinvest and then we have the capability to expand and then we have well you know we can offer to Nusantara Menara Tbk So, large addressable market, we have one to five years contracts with large target market including corporates SMEs and households through subsidiaries you know Romala Integral Farnion Media Antarnusa in Sumatra and you know because we have the most and then we wanna we have the best interest in the market to basically utilize our existing asset these guys the sub-CBDs will be doing it for us not to mention also our E40 our own E40 will be utilizing our existing fiber you know to market into this new market you know so this is connectivity and then you know when we talk about connectivity in future quarters this is the type of business This is the type of segment that we are talking about, ladies and gentlemen. Next slide. And this is where we have towers, 36,500 towers. Jawa is easily 52%, 53%. Jawa has never been diluted below 50% as far as I can remember. and that shows clearly even though the other markets outside of Jawa when people say is growing faster than Jawa but in our books the power count in Jawa has never been below 50% of our of our total towers here so that means Jawa is still an important market even in downtown Jakarta we're still building towers even though it's not easy but you know the need is there and then we are hearing from the working levels of operators that they see Black spots, you know, in dense areas in Jakarta. So I think, you know, I've been saying this, we've been saying this, and then I think still relevant today is for these MNOs, these operators to come up with a nice monetization path. And then once they see what they have invested before, see a good monetization path, then they can reinvest more. And then whenever they invest more to get more revenues, they need to see better pricing, better monetization path. So that's what we have been waiting for. And I think the market is seeing for a good three consecutive quarters, price have been increasing, including Capcom, Windows 7, Excel, SmartFriend. So we are very much cautiously optimistic that people will need more power and cyber eventually because once the market is consolidated into three players only, then people would want to be able to basically monetize better what they have already invested, including for the merger cost themselves. and then they will be competing likely to compete more on quality than on price that has happened for the past almost 20 years now in the business next slide this should show the fiber where we have fiber but on my on my screen is showing as blank page of white I don't know what happened maybe it's my connection but I think what we can show here is that the the fiber has been all over the place more than you know than just Jawa Sumatra but we are seeing market like Kalimantan Sulawesi and eastern part of Indonesia also needing some fiber the share screen is off is this is that correct yes but let me check on the presentation first okay Hello, sorry, ladies and gentlemen. While we wait, I think, you know, a bit of a move of a bit forward to compare to the flow of the presentation is that we are seeing that, you know, for 2026, the growth will still be mostly from connectivity business, right Pak Hartono, correct me if I'm wrong. Basically, we see certain reservations still out of MNOs before they invest big time into the mobile network equipment that they need to invest in. We understand fully where they are coming from. The recent war increased oil prices. high inflation and now we are seeing weaker rupiah also could hamper the ability of MNOs to charge more of customers because a lot of the increase in cost a lot of whatever they have in additional income will need to go elsewhere before they can spend more on mobile pop-ups okay this is fiber optics thank you Sami for coming back so Sumatra is already 46,000 and then Java is 107,000 Bali Nusra 7,000 Kalimantan 7,000 Sulawesi is 12,000 the most difficult part is the purple one when we try to build to the farther eastern part of Indonesia given the nature that is you know cables we need to be sure when we do that we have scalable you know market targeted market when we go to those part of

of Indonesia but we are still working on that and we will surely come back to you once we see something you know but it's multiple types of islands you know so it's not easy to be to be frank here next slide maybe pardon I want to add something for this slide yeah can you go back one previous slide yeah just to highlight that extension that we have close to 200,000 km fiber optic across all Indonesia with this 200,000 km fiber optic generate multiple revenue stream it can be used for fiber to the tower can be used for the fiber to the home and also can be used for our connectivity business so this is the beauty of the the beauty of our fiber optic which have the multiple revenue stream so it's a similar like tolo ratio in tolo so like that so and then on top of it I just want to highlight again that what Adam said that tower fiber to the home fiber FTPP This is a non-speculative business, which is a beauty suit model that we only invest, we spend capex whenever there is an order from our MNO. So there is always a day one return on it. So that is what Padang trying to say that this is a beauty suit model, which is generate a stable cash for long term contract, non-cancellable. with the blue chip customer so based on that on top of that we see that how to more utilize those assets that's why we come up with what Padang said we acquire a local ISP like Musanet in Medan which is strong strong connection in Sumatra Utara Farnium in the Bali and then we have also Ramallah which also to speed up our utilization of this fiber optic to go to the B2C while E40 also utilizing this fiber optic through our connectivity the B2B connectivity so E40 is focusing on the B2B and then while the B2C is through our subsidiary because we see that B2C is quite a unique one which is need a local knowledge which is the ISP that we acquire is now in their local present so will be easier for them to split up the utilization of our fiber optic but also don't forget that connectivity which is B2B or B2C is needs a POP right point of presence So we have also the advantage of that because we put the POPs in our tower. Which is we don't need to pay the ground list. So that is another good thing on us that we can actually very efficient in the HAPEX and UPEX. That's my additional opinion on it.

Thank you Pak Hathor. So yeah that's the strong advantage that we have compared to our next competitor be it they're running a pure tower business or be it they are running a fiber leasing business but they don't usually in the same position with ours that we have both and in a citable manner that we basically can marry the locations of where we have fiber and towers in various in many times of occasions in in order for us to save cost so think of it this way if we can save cost in whenever we expand because we have towers in that same locations and we have a very efficient cost of capital and a very high economical scale then we should be better off than the next competitor it's just a matter of us maintaining the discipline and while waiting for the industry to rebound because at the end of the day it's all about bottom line efficiency you know from various types of inputs and outputs you know so that's where we are today basically as a sizable infrastructure provider in the country okay shall we move to the next slide yes yes okay So we have built, we have added, you know, for our build strategy, we added 1066 towers for the past 12 months. We added 19,000 kilometers of revenue generating fiber and this goes towards, you know, higher utilization ratio. And then we added 9093 activations. That's where we measure connectivity business and we added 107,000 compressors And we added almost 45,000 home comics. And then we protect investment grade and we maintain investment grade. And then we expect the same dividend payment for the shareholders as part of our return policy. We budgeted the same dividend as last year until we see maybe there's a higher, better, different business case than we had expected in 2026. but we expect to continue to operate the business as efficient as possible we noted the inflation push from the recent conflict in the Middle East for instance or weaker rupiah but we continue to manage as much as we can as part of the task of the management next slide please okay towers we have 36,500 towers We have 1.66 tenancy ratios. We expect this year a slight increase because the churn that we had expected from last year's big merger IOH to have subsided in 2025 and then 2026 which is a matter of executing the remainder couple of hundreds for IOH and then for XLS we expect much less impact on our tenancy ratios given XLS has a much less location that they need to move into we expect to have less number of new towers to be built under XLS merger compared to that of IOH merger so we try to accommodate the relocation into our existing towers as much as we can so that's a positive from this merger and then XLS merger will be the last merger that we expect compared to you know say you know we cannot say the same five years ago but you know we can say with high confidence that this merger of the MNOs into three players now is the last and we continue to see cautiously optimistic that the monetization of their investment is continuing to be improving from the increased prices number of towers located in Java is 53% as I mentioned I have not seen this 53% being lower than 50% for as long as I can remember and Fibre2D towers you know we have Revenue generating fiber by end of March of almost 240,000 kilometers. So, you know, if you divide 237,000 with 180,000, then you come up with 1.7, 1.8 utilization ratio. And then network focus to support surging data traffic. We have long-term contracts also under our FTTH and FDTT. and then connectivity we have 26,740 activations and then cyber to the home reaches 1.8 million home passes with almost 290,000 home connects you know 15.8 penetration rate which is markedly higher than last quarter of 12% so it's an improvement we are happy for our customers and that's you know as a provider we want to see them succeed okay let's move to the next slide And this is our capex spend. At the far right, you see in March, we spent 571 billion rupiah of capex for the tower segment in blue and then 552 billion for non-towers. And then don't forget the 571 inclusive of ground lease payment that we prepay up front to renew our right to use the ground under the towers with most of our landlords. At the bottom there, we have a tenancy ratio of 1.66. We are hopeful there's an inch of increase of this tenancy ratio given the fixed wireless access guys are expanding. Search is looking to leave our towers and they seem to be executing. and then you know utilization ratio of the fiber is 1.89 and this is including um you know our services you know so that's a good um you know given that also xls need allocation reallocation of what they pay us into fiber so that we see a higher utilization ratio on fiber but you know as you can discuss in later slides we see a slight negative on our um power revenue in the first quarter next slide please and this is our practical of consistent growth at the bottom there the box you see number of towers almost 35,000 and then the tenants is 60,700 private to the tower kilometer generating revenue almost 140,000 which is an increase from December 224 and then connectivity activations under connectivity you know we increase about 800 accounts we have been very busy and the team is very busy under connectivity to get more customers and we are hopeful that they continue to do so given that we have a sheer amount of fiber in the country next one um Okay, this is the chart that we were talking about the tower revenue inch down a bit and we expect this to be the last meaningful impact on our tower revenue from XLS because we have entered long-term contracts refresh long-term contracts with XLS so they can continue to use our towers with existing prices as reflected in the first quarter and then revenue from non-tower increased to 6 trillion from 4.6, 6 trillion is the annualized number and the 6 trillion increase actually because we consolidated a subsidy that we have been owning 30% of for the past years but we discussed with auditors and we were able to consolidate the subsidiary namely BASMUTI Global starting January 8 we consolidated that company so we booked revenues we booked their EBITDA and then EBITDA is still growing even though the margin is a bit lesser because the bus multi global is basically a contracting company so they have a lower margin but as you can see the absolute number of EBITDA is growing and then IFFO is also growing so the split of revenue may be impacted because of XLS but as you can see the EBITDA and IFFO is continues to grow next slide And this is our leverage. You know, gross debt is 45. I think last year this number used to be 55. So we raised capital through right issue of 5.5. So we actually paid more debt than we raised in equity from shareholders just last year. So this kudos to management who have been very strict in cash management, in collections, uh finding out what is missing in the contract that you still within our rights to to collect and then net debt is about uh I don't see the number here but it should be around 3.8 yeah only 3.9 at the bottom at the top there so slightly increase um interest coverage ratio 4.8 uh average interest rate is 5.5 percent um as of March next slide Okay, gross income, gross revenue 10.8% year-on-year increase, gross income 4.8%, operating income 3.3%, profit before tax increased by 24.5% because of less finance charges, including that of PSA 33, and then we have less amount of charge under others. Nusantara Menara Nusantara Tbk this reflects the fact that we are really working very hard and first quarter is typically a more difficult quarter than full year because a full year number of quarterly numbers usually we sum up whatever outstanding we have not been able to collect during the past three quarters of the year and we managed to do that in fourth quarter so first quarter is basically a fresh start for the management to break into in 2026 next slide I think we can skip this one next slide cash beginning 648 collection 4.388 billion sorry trillion affects 2.8 cash surplus 2.1 and then interest 645 loan proceeds only borrowing 735 and then we have a cash ending of 2.2 trillion rupiah next Revenue increased year-on-year 10.8%, quarter-over-quarter, a decrease of 2.2%. and then EBITDA minus 5.4% quarter over quarter year on year grew by 3.8% net income grew 17.8% year over year and then quarter over quarter is minus 16% because again whatever we tried to collect in a year usually happens in the last quarter of the year typically next slide Tower Revenue Analysis Minus 4.1% Quantitative High Growth Booking Quantitative for 44% Fiber to the Tower 3.7% and then Fiber to the Home is 2.8% and others is growing faster 100% and this includes you know Bah Muti Global BMG as well as Green Energy Power Generation Towers Summary Operational Data We grew 1000 towers or 3% during the past 12 months Tenancy we grew 4.6% as part of the restructuring of reseller into original tenants. So we grew that number of towers tenancy by 4.6%. Fiber to the tower grew 8.7%. Connectivity 51% and FTTH is 56%. Next. Oh, this is the part that makes me smile every time, given that Rupiah is now approaching, what, 18,000? Right, Paharta? No, we did these three boxes in red under which we borrowed in dollars and we hedged. At the time, we were still able to hedge at 15,000 by the time we paid down the debt, respectively, first half of 2027, first half of 2028, and the first half of 2029. And the rest is basically in rupiah, Japanese we also have, but most of them are basically implemented of hygiene. So we are still protected as well. I think this is the last slide. I apologize for talking too long. It's 45 minutes into the call. So I'm heading back over to Erwin. Thank you everyone.

Alright, thank you for the comprehensive presentations. Ladies and gentlemen, we will not begin our Q&A session. And as a reminder, please submit your questions through the chat box. Or you can use the raise hand function to solve that with the management. So we have received quite a number of questions, but the first line of questions come from Sabrina Trimadas Kuritas. So there are three questions. The first one is the power list rate. So we know that the FH list rate has declined to approximately 11 million rupiahs per tenant per month, the lowest historically ever, and more in line with the prevailing industry rates. Could you elaborate on the key drivers behind this trend? Is there a decline primarily attributable to new contracts being signed at a lower list rate? If so, given the new contracts should still represent a relatively small portion of the overall portfolio compared to legacy contracts. Maybe we can start with that.

Okay, let me try address one by one if possible. So the deal with Excel Smart is the last and the first that we think can do because we agree to that because of this merger and we want to see them successful as well, number one. Number two, they are a very big customer of ours and then they also treat us as a very big vendor so we kind of need each other to be sure that the numbers work. but as long as for us we see other types of revenue stream coming from sls today currently to replace that shortfall or into the future we think that's fine and then the decrease is probably from 11 to 10.5 right but you know that that decrease is manageable and we expect we don't see, we don't expect to see another merger like this happening ever again in Nusantara Coast. So that's where we are coming from. Pak Toda, do you think we should add anything more?

Yes, Pak Adam, that's correct. Yes, we see Excel Smart is our anchor tenant for Tower and also for the Fiber. So we try to support them during the merger. But this decreasement also compensated with the reset of the contract. so everything actually is reset so for another 10 years time so yes we are experiencing a little bit down on the revenue but we have a longer contracted revenue with them which we believe that will be favorable to us across the year that's my comment for this cover list rate

Yes, yeah, I think that's a very good point. I think we see we want to have them sustainable, have a sustainable operations after the merger. So we want to see them successful. And once they are successful, which we think they will, and then the rollout of 5G and better services for the whole country will require them to leave more infrastructure. So and then even before that, we already have the commitment for other types of businesses coming our way.

we don't intend on you know just to be a new practice in the market but because of this merger only yeah one more question that yes it's compensated with the longer contracted revenue and also that we receive another order also for the fiber optic so overall is this is we see that this is quite preferable for us for this business.

Alright, thank you. And moving on to the next part of the questions, we've got the connectivity business. Could you provide more colors on the connectivity business model and its revenue recognition mechanisms? We know that the average revenue per activations has been relatively volatile from quarter to quarter. What are the key factors driving this fluctuation?

Okay, I try to take this pattern. Yes, the connectivity business model is we have more than 6,000 customers, B2B customers. The business model is not like tower or fiber which is kilometer, rupiah per kilometer per month. This is based on bandwidth. This is dedicated internet for the corporate enterprise. It's measured by bandwidth. Let's say 100 megabytes is how much per month, like 5 million, 10 million. So, yes, this is very from one customer to another customer. It can be as low as 5 to 7 million, but also some customers can generate more than 100 million per month. So, it really depends on the deal-by-deal basis.

Got it. Thank you. And moving on to the last part of the question, which is about FPTH penetrations. So, the penetration rate for FPTH is at an all-time high right now. But we observe that while penetration continues to increase, both quarterly and yearly FPTH revenue have declined. Could you help us understand the reasons behind the disconnect? And in addition, how is the FTT service typically priced and monetized from the customer's perspective?

Okay, I also take this, Radhan. So yes, FTTH currently we have more than 1.8 million home passes. I can separate this between two boxes. One is B2B business, which is we build the home pass at around 1.8 million home pass for XL and Indosat. So they are the one actually who sell into the market to the B2C so it's a wholesale for us. So this is a long term contract with the minimum payment. So there's a minimum guarantee because it's a built-in model. They pay us based on the home connect but with the minimum penetration rate. so yes the penetration rate is increasing little bit from quarter to quarter but the revenue is flattest because of like I said this is still below the minimum commitment from them minimum penetration guarantee rate from the from the XLN Indonesia so 1.8 million which is

accounts more than 95% is based on that the whole wholesale business and the rest is B2C which is run by our subsidiaries right thank you for this answer yeah and moving on the next questions I'll try to compile questions sent by anonymous attendees the first question is can you share how the current exchange rate impacts your business does the revenue we receive always use the latest foreign exchange?

I think from my recollection our only exposure to foreign exchange is only on interest expense but that's very small because the bulk of our borrowing is on rupiah when we pay interest only but the principal is typically hedged under our loan that we showed on the previous pages and then the other types of dollar exposure that we have but this is also relatively small because maybe you know but we pay capex mostly in local currency actually when we buy you know for fiber for steel you know stuff like that so as far as I can remember actually our exposure is very small correct me if I'm wrong Pak Harto no?

yes Pak Adam I agree that the implication is quite minor at the time this mainly because of two things first yes our some of our components actually we purchase in IDR but but actually the raw material is the US dollar also but we luckily that we lock the price actually before the war so like DWDM fiber optic we have early this year we see that we have provided with our enough stock so there is lucky that we have the stock with the old price so the impact is pretty small what we can say thank you and moving on to the next question how has the trend on the list of the list rate been can you share what is your current payback period or IRR for towers and fibers

and any target of towers or tenants growth in the next several years?

We built a bottoms-up model for each of years, you know, expected results. And we base the numbers on big factor we hear from markets. Because we don't see the next year of 2027 from today, we basically try to forecast as much as we can from the theme of a year from customers. So this year, I think for top line, from usually 13, we are seeing we achieving 14 trillion of revenues. and then EBITDA to be mid 70s or 78% and then the bottom line we have to wait until where we see interest rate and exchange rate for instance because you know translation processes from accounting Got it, thank you I have more lines for Adam in terms of the top line for tower

FTTT and FTTH when I say FTTH here is a wholesale business which is more than 95% of our portfolio is a wholesale business or FTTH this is a customer driven business so we rely on the Excel, Indosat or Telkomsel to list from us so it's but we see that in terms of R2 is getting better from them So hopefully It makes them More capable or more Capable even In the future to grow the business That's for Tower, RTTT and RTTH But don't forget also We still believe that tower Is still important For In the future So regardless about what kind of technology You have, you still need tower To transmit that Tbk Tbk need more towers but even for Java actually they need more dense tower later on so we hope that in the mid term the tower business will again pick up again thank you thank you and the next question is that how does management think about capital allocation priorities by back at current valuations versus increasing demand that or acquiring or building more towers and fibers we are this year instead of concentrating on the growth so we are disciplined on the CAPEX and OPEX we see more like interest cost also we keep trying to lower it by various Tbk I think we have done it in the first quarter ya Pak Adam ya yeah yeah yeah we have some yeah so we see uh the mix of it which is which gives the best result for our stakeholders so uh the tagline is we are very disciplined on CapEx and OpEx uh to support our uh our revenue growth thank you so that brings us to the next questions uh one participant asked

that your capex is actually bigger than your depreciation but your BTC doesn't seem to keep up with the additional capex beyond depreciation and at what point do you think your ROIC and ROE will bottom?

I think as a function of higher asset utilization I think what is missing from tower segment is you know higher you know by the customers that would require them to list more towers i.e. a higher collocation tenancy ratio on our towers. That is what is missing. I think we have seen for the past five years consolidations that led to basically stagnant number of tenants or even lower tenancy ratios because we are allowing for new towers to be built for one of the mergers here. But I think once we see a rebound in tenancy ratio because people need to compete on quality under you know obviously 5G in the future and more fiber utilization we see a better ROIC because we have all the we have a lot of assets already to be utilized no thank you

I think it's also relates with the merger of IOH two years ago, which is we spend capex to build to suit for them to relocate. So we have spent more capex to maintain our revenue with them. So it also relate to that.

But that one repeat under XLS merger because we expect to build less hours, much less number of hours for XLS merger than IOH merger.

maybe this is going to be the last question this is the line of questions comes from and another participant asking about the plan that Wi-Fi or search plan to roll out about 1800 FWA types could you share the current run rate of FWA tenant additions and the outlook for FWA tenant for TOWR in 2026

from last summer we heard we saw 400 but today we are seeing more than 1000 number of leases that they look to lease from us and we have we could see some more also from coming from people with access guys yeah also adding to Adam's comment therefore and my rep for sure they need to roll out quickly to return their investment because

I heard that the OPEX also to maintain the spectrum is very high so they need to roll out massively as soon as possible to get to the economic scale of the business that's one thing second thing is also that I heard that I heard that like Padang said that recently they they just finish the VRM and then ready to launch another batch of raw out we don't know yet what is the impact to us the order that's number two and the number three also I want to emphasize that for this my rep and search is we try to discipline ourself that we provide the color only meaning we don't build the power for them

so that could maximize the existing tower 37,000 tower that we have at the moment yes so that's where we're coming from with the higher tenancy ratio by Erwin alright got it I think that wraps up the whole Q&A session and thank you ladies and gentlemen for the participation I will hand over the mic to management for the closing remarks thank you but

Pak Hartono, I would like to say something. Yes, please. Pak Erwin and everyone, I would like to say that this will be my last earnings call with you guys representing the company. In future quarters, we will be in the good hands of Pak Hartono, already with me for several quarters already now. I want to spend more time with my family and that's the only reason why. Don't be afraid when you guys meet me in Jakarta or in Singapore for that matter.

also not only in Singapore in Jakarta but there could be more time in London London also my number is in case thank you Fadam thank you for assisting thank you everyone back of love Fadam and thank you Fardana as well thank you Fardana

Thank you very much ladies and gentlemen. This is end of our session. You may now disconnect. Thank you.