Telkom Indonesia (Persero) Tbk PT (TLK) 2021 Q1 法說會逐字稿

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Good day and thank you for standing by. Welcome to Telkom's first-quarter 2021 results conference call.(Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions).

And now I would like to have the conference over to Mr. Andi Setiawan, Vice President of Investor Relations. Thank you. Please go ahead.

Thank you, Amber. Ladies and gentlemen, welcome to Telkom Indonesia conference call for the first quarter of 2021 results. We released our results on June 28, 2021, and the reports are available on our website, www.telkom.co.id. Today's presentation is available on the webcast and an audio recording will be provided after the call for the next seven days. There will be an overview from our CEO, and after that, all participants are given the opportunity to participate in the Q&A session.

Before we start, let me remind you that today's call and responses to the questions may contain forward-looking statements within the meaning of the Safe Harbor. Actual results could differ materially from these statements, estimations, or expectations [for it] during today's call. This may [enforce] risks and uncertainties and may cause actual results to differ substantially from what we discussed. Telkom Indonesia does not guarantee to any actions which may have been taken in reliance of the discussion held today.

Ladies and gentlemen, it's my pleasure now to introduce Telkom's Board of Directors who are joining with us today: Mr. Ririek Adriansyah as President, Director, and Chief Executive Officer; Mr. Heri Supriadi as Finance and Risk Management Director; Mr. Herlan Wijanarko as Network and IT Solution Director; Mr. Bogi Witjaksono as Wholesale and International Service Director; Mr. Edi Witjara as Enterprise and Business Service Director; Ms. Venusiana as Consumer Service Director; Mr. Budi Setyawan Wijaya as Strategic Portfolio Director; Mr. Muhamad Fajrin Rasyid as Digital Business Director; and Mr. Afriwandi as Human Capital Management Director.

Also present are (technical difficulty); Mr. Hendri Mulya Syam as President Director; Mr. Mohamad Ramzyas as Finance and Risk Management Director; and Ms. Rachel Goh as Marketing Director.

I hand over the call to our CEO, Mr. Ririek Adriansyah, for his opening.

Thank you, Andi. Good afternoon, ladies and gentlemen. Welcome to our conference call for the first quarter of the year 2021 results. We really appreciate it your [participation] in this call.

In the first quarter of 2021, the Company recorded a consolidated revenue of [IDR33.95 trillion]. We successfully managed operating strategies that [certain] declined to IDR15.1 trillion. As a result, EBITDA margin expanded by half a percentage point to 55.4% and (inaudible) margin improved by 0.6 percentage points to 17.7%.

IndiHome continued to become engine growth as its revenue regressed by 25% year on year to IDR6.3 trillion as distribution to facilities revenue (inaudible) increased to 18.7% from 14.8% last year. Moreover, IndiHome's EBITDA margin reached 45.2%, a substantial increase from 38.9% in full year of 2020.

IndiHome revenue growth was driven by increasing subscriber, coupled with an improved ARPU. In this first quarter, we added 130,000 subscribers, while ARPU improved to IDR266,000 compared to IDR262,000 in the previous quarter. Increasing ARPU was largely helped by revenue from add-ons that grew by 32.2% year on year and contributed to around 15% to IndiHome revenue.

As the [pandemic being suppressed has not been is], we witnessed the rebase of IndiHome subscriber addition was relatively soft due to some restrictive measures that [SL Micro] have done. (inaudible), which it was done in the next couple of months and we'll decide on the new [type debt] of IndiHome subscriber.

Ladies and gentlemen, the impact of profit [managing pandemic] was also still seen in enterprise segment, which declined by 5.1% to IDR4.1 trillion in the first quarter this year. Nevertheless, we will continue to strengthen [retail] platform and services as part of the enterprise solution to our clients. We believe that the opportunity in B2B digital connectivity, digital platform, and digital services are still open wide to support turnaround (inaudible) in this segment.

Wholesale and international business segment revenue posted IDR3.3 trillion in revenue, slightly declined by 0.4% year on year that was mainly attributed to lower wholesale (inaudible). In the meantime, tower business that contributed around one-fifth to this segment increased by 17% year on year.

Ladies and gentlemen, in the first quarter of 2021, (inaudible) revenue declined by 5.4% year on year as legacy services continued to decline and competition remained intense. Telkomsel continued to pursue digital business with [serve] strong traction reflected from [data] that grew by 59.7% year on year. In terms of revenue, digital business increased its contribution to 76.9% of Telkom's revenue compared to 70.6% last year.

On May 27, 2021, Telkomsel officially launched 5G service in several big cities across Java, Bali, Sumatra, and Sulawesi, becoming the first operator to serve 5G in Indonesia. Along with this new 5G services, Telkomsel also refreshed its brand identity as a symbol to strengthen its spirit and commitment to transform and remain relevant in every lifecycle.

Ladies and gentlemen, we continue to enhance our digital platform and digital [business]. In digital platform, in addition to the existing data center facilities, we are currently building a high-spec data center and have aspiration to collaborate with [Pak Guyan] to build the [Intel] ecosystem. Furthermore, we are also assessing the opportunity to unlock our data center business sometime in the future.

In digital services, recently Telkomsel increased its interest in Gojek and strengthened synergy between the two. Collaboration with the country's digital champion is part of our strategy to accelerate Telkom's digital transformation. We also have two [freezes] company through which we invest in various startup with focus area in healthcare, logistics, agriculture, education, and payment sectors. At the same time, we mature internal innovation that allows employees to explore ideas and develop the ideas into [affordable] solution in the effort of to build digital [pattern].

Ladies and gentlemen, to conclude my remarks, let me reaffirm our main guidance for the year of 2021. Number one: we expect consolidated revenue to grow by low- to mid-single digits. Two: EBITDA margin is expected to be relatively stable. Number three: capital expenditure for the Group is expected at around 25% of revenue. That is ending my remarks. Thank you.

Thank you, Ririek. We will now begin the Q&A session. (Operator Instructions) Operator, may we have the first question, please?

(Operator Instructions) Kresna, Mandiri.

Hi. Thanks for the time. I have two questions. My first question is on Telkomsel. Congratulations anyway on the recent corporate rebranding. But can you please give some update on what does this corporate and product rebranding exercise mean in terms of prepaid product positioning and pricing policies going forward? And would you mind sharing what are the immediate areas to improve and the low-hanging fruits from this exercise? That's my first question.

Second question is on IndiHome. Would you mind elaborating more on the key drivers to IndiHome ARPU improvement in the past two quarters? And also, how does management view the potential competition from the (inaudible) [city company PRN] in the (inaudible) market? Thank you.

Hi, questioner. I'm Rachel; can you hear me? I will take the first question regarding corporate rebranding and consolidation of brands and the impact from this. So Telkomsel rejuvenated our brand for the first time after 26 years of progress, trials, and successes. Beyond this, the start of the visual design and narrative change, the hard objective of this brand rejuvenation was clear: it was all about boosting business performance and results.

A centerpiece of this rebrand exercise was for us to selectively unify over 50 distinct sub-brands and identities that had already been built up over the last 26 years of our operation. We had been reviewing and consolidating our product portfolio progressively for the past 12 months already in line with the anticipation of this rebranding launch.

From Telkomsel, the reason why we do this is because it's important for us to ensure our product propositions are very simple for the customers from their perspective so that it is intuitive for them to choose which product package that they want. Which in this age, customers have become very aware. Especially the pandemic and the take-up rate of that (inaudible), customers have become very aware of the price denomination of packages that they are willing to buy and pay. Some prefer monthly, some prefer weekly, some prefer daily, and they've decided what they want.

Customers have also become very aware of the amount of data that they consume under their regular behavior. And hence, they are very intuitive in deciding how many gigs or how much in the price denomination that they want in the data package that they choose.

Another point is that increasingly, this is justified that over 65% of our customers are already using Telkomsel's self-service channel to choose and buy their own packages. And this leveraging on our advanced analytics and new campaign automation system, over 50% of our customers are already using BTL/CVM personalized packages and offers. So this is the right timing for us to simplify the basic digital connectivity packages so that it makes room for us to make it easy for customers to find and purchase relevant digital services.

So we are making room by simplifying the basic digital connectivity packages so that we can start recommending digital services packages to customers, such as Telkomsel video, games, and music platforms, which we [then] has own array of content for customers to choose from. And also by simplifying the basic digital connectivity packages, it also makes room for us to [cross] and recommend products such as Orbit or even device bundling for partners.

We believe that with this rebranding exercise, these are the low-hanging fruit. And it should improve our customers' experience, engagement rates, and lead to improvement in our financial performance.

(multiple speakers) Thanks, Rachel. You've shared it.

For the IndiHome, for the key driver of improvement for the (inaudible), for existing customer, we will [take] the [hike existing price]. So for the existing customer, we offer to upgrade with the same price or with the additional special price. So a customer can uplift or afford the speed. And the second, we improve for the (technical difficulty). And we offer a good bundling to the new customer or to the existing customer for the (technical difficulty).

Competition. Actually, we see that the [offer of the bank] is still not so [cute] us. So we know that in the same area, we need to monitoring so tightly. So we know that in this area that actually the competition was to attack our coverage or our customers.

Niko Margaronis, Danareksa. As we are not getting response, I will move to the next question. Choong Foong, CIMB.

Hi, this is Foong from CIMB. Thank you so much for the call. A couple of questions for me. Firstly, on the mobile business, appreciate if you can give us an update on competition. I have seen some tariff optimization that's been carried out by Telkomsel in recent months. Do you think that this is sustainable? Are peers following what you are doing? And is the price premium still at a reasonable level at this point? Do you see perhaps room for further optimization in the coming months? That's my first question.

Second question, with regards to IndiHome, as mentioned during the earlier part of the call, the net adds were a bit weak due to the challenges from the restrictive measures because of COVID-19. Can you just give us a bit more color as to what were the challenges that you faced? And given that there could be further tightening in the near future, is there a way to get around these restrictive measures or are we likely to miss our 1 million net target substantially for this year?

And also for IndiHome, the ARPU continues to rise, which is a very good sign. What are your thoughts on further potential for increases here? And where do you think this can ultimately go to, say, in the next 12 or even 24 months? And my last question enterprise: revenue still seems a little bit weak in the first quarter. What is the outlook for the full year? Those are my questions. Thank you.

Hi, Foong. Hope everything is well there. I will take on the question on the mobile competition landscape, pricing strategy, and what we are seeing in terms of ARPU and performance. When we had earnings call back in May, we informed that as a market leader we need to always drive sustainable healthy growth (inaudible) in the industry. So starting end of March this year, Telkomsel had initiated price adjustments. On the back of them at the time, expected macroeconomy recovery because we expected that businesses and individuals would be adapting better to COVID-19 with the vaccine rollout. This was back in February and March 2021.

So to believe at that point that this was getting better, we felt at that time in March, April, timing was right for us to do the changes. So a few things to this. In end of March, April, we pulled out from the unlimited packages. We placed a lot more focus on our CVM and BTL offers for existing customers. We increased prices across all our portfolios for existing and new customers. We shifted our focus towards renewal and data monetization more for more packages.

We also changed our drive towards going for more 4G SMB because we're still having some 3G-based, so we also drove towards a 4G SMB. We changed our starter pack promotion by offering lower denominations in view of making sure it's affordable for our customers for acquisition purposes. In the recent months, we also started pushing lower denomination packages and physical voucher products for existing customers who were economically affected by the new wave of COVID.

On this industry pricing correction that Telkomsel started in Q2 2021, Telkomsel expects our ARPU to be healthier, backed by the healthier data [stop] usage increase as well as the healthier pricing. What we have observed so far is that whilst competition is more rational, competition remains very intense. Telkomsel expects the others to demonstrate healthier pricing behaviors and we will keep monitoring them closely. And the behaviors of what [an enterprise want] and make sure that this optimum premium gap was protecting the relative market position of Telkomsel. So this I hope, Foong, addresses your first question. Thank you.

Thank you for the second question on the IndiHome, Mr. Foong. On the IndiHome, your question why the additional number of customer of IndiHome quite weak in the first quarter of this year. And the reason, you already mentioned one of the reasons, because the [interim] challenge because of this COVID situation.

The second is coming from our own policy in which we tried to basically having more quality subscriber base by apply (inaudible) -- I think [promptly]. And also, I think the requirement for becoming our subscriber for at least one year. That I think limit the number of additional as compared to previous quarter, but we believe this [hardy of] a policy on maintaining our I think churn and quality of subs (inaudible).

And what then drive the revenue of this quarter again. [Experion] I think ARPU per customer increased, as mentioned by my colleague [Venusiana]. Actually, most of the customers require higher speed of the Internet connection that make I think additional ARPU -- I think ARPU improvement for us so far. And we are happy with the results that have been, I think, so by the financial result of this IndiHome. That's about IndiHome.

I think in the enterprise revenue, [Edi], you can start with the (inaudible).

[Thank you, everyone]. We still consistent to continue our strategy to improve (inaudible) in enterprise segment. So over the [intermediate] of the full-year revenue, I think we are optimistic. Full year 2021, we have still growth with the low- to mid-growth in the full year 2021. And we also [choose] the strategy to select the profitability project for the all segment of the enterprise (inaudible). Thank you.

Adding to explanation from our enterprise director, basically in the first quarter, we experienced also kind of a cycle in which most of our subscribers also, enterprise subscriber, preparing the order and so on. I think that cycle condition. The second is maintained by Edi. We also are becoming more conservative in implementing revenue recognition based on the I think accounting standards we apply.

So we push our colleagues to also having a good [omni strategy] in contract in collection and so on. Along the time, we believe this going to result a better (inaudible) until the end of the year. As mentioned by (inaudible), obviously we expect to see the positive revenue growth until the end of the year.

Thank you, [Bhagwa].

(Operator Instructions) Piyush Choudhary, HSBC.

Yes, hi. Thanks a lot for the call. A couple of questions. Firstly, on the mobile segment, with the recent branding and 5G launch, I think Rachel did mention but I missed probably the initial remarks. Are there any changes to your pricing strategy? And secondly on the 5G side, could you elaborate what your network coverage target for 2021 and 2022, how many subs are already there and in your base with 5G phones? And what is the incremental 5G shipment in the country? So that's the first one.

Secondly, on the Gojek investment, now it's standing at IDR450 million. So can you help us understand what would be your stake in the enlarged merged entity? And are there any other ADRs which you have identified of collaboration post Tokopedia merger? Thank you.

[I think on contributions] of 5G, I think the [second] (inaudible) operator is a good commercial party [during on me]. I think we still are going with our plan [according to] just our [budget] plan. And also, we will be excluding the states with on the business visibility and economic market condition. So we have to take a look in terms of [like our] system [relevant] discussed for the B2B and also the (inaudible) [affordability]. Because as we know, currently we (technical difficulty) using the 2.3 spectrum. [However by], this will only limit [operator] in what we see in the 2.3. Mostly the operator is in 700, 2.6 gigahertz, and also 3.5 gigahertz.

And also, we do also (inaudible) markets south of Korea. If we take a look in term of the 4G from the [base] in South Korea, they did in 2011, [where either Telkomsel just lost the 4G after] (inaudible) after them. And if we take a look just on the 4G representation in South Korea, maybe an Indonesian matter (inaudible) starting I think three years from now and (inaudible), which are starting to deploy after we got the spectrum, especially spectrum 700, 2.6 gigahertz, and 3.5 gigahertz. As we know, 700 I think [adds own] will start to do the meeting on the unlimited, but the 2.6 gigahertz I think is still quite far from now. And so Telkom (inaudible) already from the (inaudible).

And so in terms of pricing for the 5G, I think we still keep reminding the same (inaudible). We are not giving the differentiate the pricing in the 5G. That is all for --

This is for the [budget infraspend]. I think we do [that in addition] for spectrum service with the Google [profile, we start with the] benefit. And also, we do the [differentiation] 2.4 million of the Gojek lever. Currently we are 1.8 million using Telkomsel's numbers. And also, we [take on] the (inaudible) [papers]. And also, we do the synergy in terms of our division. We do the Telkomsel part of our business. And you see on waiting for the Gojek SME want us to become a Telkomsel partner. And also, we are giving affordable better [opportunities] for Gojek level partners and also continuing efforts for the Telkomsel outlet and standard (inaudible) and also the comarketing for gaming [system] at Telkomsel [video games]. And so we [can guess the rupiah] and we just launched a corporation (inaudible). I think that's all from the operation.

With Tokopedia (inaudible)?

With Tokopedia, we just start the discussion with them related to the same (inaudible) that we are going to do. Because not yet; we just started discussing with Tokopedia.

And I will take the question regarding how the rebranding affects our pricing and product positioning. So I think first up is I think the bigger change you see is that the unification of our multiple prepaid brands under one, which is [Inpatilukatuwa] now is known as Telkomsel Provider. So with this, Telkomsel customers, regardless of which sub-brand they were with, [we estimate] (inaudible), we will continue to give their usual numbers and the packages they have been purchasing without any disruption.

Our existing customers across the sub-brands can still find the package offers, the [various schemes] and (inaudible) the packages that they have been using. What we have done is introduce new variants for them to choose from and recommend to them in the sales of this channel. This is part of the usual product lifecycle management process that was introduced.

Another thing maybe just to highlight in here is that the division for the unification of prepaid brands to more the monolistic Telkomsel Provider brand was based on a few studies [about] point of sales and customers. And this unification actually already began in phases in the market about 12 months ago, where you see that outside the [peck out there] were already packaged as a Telkomsel brand and based on dual-based tack-on offers such as Internet (inaudible) or (inaudible). And for our existing customers, again because more than 50% are already on CVM, our personalized offers, so they continue to be buying what we see as the [combo] (inaudible) products.

So in terms of pricing or product offers, it's really based on the current CVM and the analytics that we have, not so much because we are doing a brand unification. Thank you.

Peter Milliken, Deutsche Bank.

Good afternoon. My question follows on from that, this product simplification. So if I understand it correctly, it's mainly the brands unification and so as that happens, you get fewer packages. Should we expect that to lead to any change in spend of the users? Like, would the lower-end brands be going away, for example, as part of this?

Okay, I will just answer that question. It's not about a low-end brand or high-end brand now. So what we see from customers from our view here is that their customers' behaviors are turning toward something that they want to see as simple for them. So from the customer's perspective, they already know whether they want to spend IDR10,000 or IDR20,000 or IDR75,000 or IDR150,000. So it's more about how affordable the packages are for them. Some prefer to buy once a month; some prefer to buy four times a month.

So with this simplification, it means that based on their past behavior, we are able to then recommend to them in the self-service channel the packages that they have been used to buying. At the same time, recommend an option for them to upgrade or to buy something else different. So in our self-service channel, they can see the recommended offers. So someone who had been on kartuAs in the past may not be considered a low-end customer. Someone who had been on kartuAs may have grown up now and could be a professional who buys kartuHALO. So we do not segment customers by (inaudible) behavior.

Okay got it. Thank you very much.

Ranjan Sharma, JPMorgan.

Hi, good afternoon and thank you for the presentation. Two questions from my side. Firstly, if you can share our revised guidance for 2021 for revenues, EBITDA margin, and CapEx. And the second question is on your plans to monetize assets or companies that you invested in, two listings on various exchanges, if you can share an update to some of the things that have been disclosed previously. Thank you.

Thank you, Mr. Ranjan. On the guidance for the 2021, on the revenue, we believe the revenue going to be still continued growth by around low- to mid-single-digit. And then on the margin, we do expect that we can maintain the EBITDA margin as we have in the previous year. We believe we are on track on that one. Of course, we are going to be happy if we can improve some margin on this one, but put in worst conservative view that we can be able to maintain the EBITDA margin.

And the third I think in the CapEx, basically the CapEx that we prepare for this year is around 25% of revenue as we see that we still need some investment in the (inaudible) in IndiHome. And then we have also still continue to grow our network, operate and improve the quality in the mobile. And the total CapEx spend is going to be around 40% in the mobile and then around 30% to 35% in the -- for the IndiHome. And the balance goes to supporting infrastructure. That are basically the guideline that we can provide to you.

On the (inaudible) part.

Okay. Ranjan, can I clarify which asset that you mentioned in Telkomsel or [in Telkomsel]?

For Telkom Group, you had talked about, let's say, the IP of mature debt into the (inaudible)?

Okay, yes. The professional are on track. We cannot tell you the EBITDA at this point of time due to the regulations. But what I can say is that the professional [serve] is on track and [metatails] are performing in line with what we expect. And the discussion on the (inaudible) will be [continued with Telkomsel].

And the second [play], it's a bit of whether it is the monetization on the data center. That one is -- even though it's probably two years away from (inaudible), but we start to consolidate the data center and then we will proceed for the IPO probably early of 2023.

(Operator Instructions) Niko Margaronis, Danareksa.

Yes, hi, good afternoon, everyone. I just want to ask about the IndiHome and the recent media talking about this [new unit's folks] channels will stop broadcasting via satellite and will be showing content only via OTP, via streaming online. What do you think -- how you think this will affect your -- the performance of IndiHome and the add-on strategy, the upselling strategy? And how you will address this development? That's question number one.

Number two, I understand about the unification of the brands and the Telkomsel and being able to communicate better, more simplified proposition. Do you think this may affect the value of Telkomsel as a premium brand in the country? That's part of the second question.

And secondly, do you have -- do you see the opportunity to tap further into the core services of Gojek and Tokopedia? For instance, like ride hailing, perhaps fintech, and penetrating deeper into the (inaudible) of Tokopedia. These are my questions. Thank you.

Okay, Niko. For the question number one, we're not really impacted at IndiHome because normally already have the collaboration of Indi [OTP] with some of the team with us. And still ongoing discussion with [other] OTP to all interested parties. You know our [subs base] is already a broad [8 million malls] and then [it already] impacting all the assets of the [same] players. So they really want to have (inaudible).

Because you know in Indonesia, there are a small number of customers that had the [fintech]. So they were work together with us rather than [not]. So we can collaborate for the [feeling] and payment and also, customers get all promotions and assets that we already had done experience to have collaborated with [other] (inaudible).

Rachel, can you answer the number two?

Sure. So Niko, so the answer to the question is that this decision for the unification of the prepaid brands to what the monolistic Telkomsel brand was really based on lots of new studies with our points of sales and also the customers in the market. And it was a very eye-opening finding because customers, regardless of whether they were using simPATI or kartuAs or LOOP, when you ask them what brand they were using, they would tell you first thing Telkomsel. Because they associate it -- the (inaudible) brand as part of the Telkomsel network, which represents good quality, superior network quality.

And that was the reason why we decided that it was the right move towards this unification. Hence, we do not see anything creating any negative impact. We expect to create positive impact with this unification under the Telkomsel Provider brand. I hope that addresses your question.

Perhaps (technical difficulty)?

Thank you for the question and answer. Because as I mentioned before, (technical difficulty), especially with the right timing. I mentioned before that currently we only cover around 2.4 million. Well, we cover 1.8 million of 2.4 million, meaning around 75% of the [right] the Gojek driver is only use our services. And related to the fintech, yes, we do the collaboration with the Gojek fintech. We [use about] quarter -- previous quarter we have them, Gojek, for the [previous quarter]. And for the top bet, I think we are still extending the scope of -- with Tokopedia. We have to [end] that discussion.

Can I have a follow-up question on this? Does this [partner] (inaudible) allow the Gojek or Tokopedia to tap into your subscriber base and your data analytics? That's the follow-up question number one. Number two is Bayu, after the Bayu brand, is it -- under the rebranding, is it going to be merged under Telkomsel prepaid? Thank you.

I'll take the question on Bayu first. Yes, some brands such as Bayu or Orbit shall retain their own unique sub-branding because their customer base is quite different. So for example, for our postpaid brand Halo retains Halo because based on our key studies and market studies, customers associate Halo with postpaid and premium. And customers on Bayu associate themselves with Bayu and Orbit with good Wi-Fi access, mobile Wi-Fi access. So they are brands that we allow to retain their own brand. Thank you.

On the question on (inaudible) address our subscriber base that are of our subscriber base, especially we then exchange the subscriber base data based on I think -- what is a [contrarian] (inaudible) of our customer base on this one. I think privacy. What we are doing during the product construction, basically we try to, let's say, see the profile in the general, what kind of profile of customer of certain product that we are going to pro-sell or upsell.

Based on that one, we have the I think cooperation basically, co-program on that one. [That] I think, let's say, collaboration on this one. Not necessarily directly; one each other going to basically address subscriber base or individual privacy of the customer base.

Sure, sure. Thank you so much.

Samuel Chen, AllianceBernstein.

Hi, thank you for your time. Three questions. The first one is you mentioned about IndiHome. The ARPU uplift seems to be coming from the speed upgrade. Would you be able to tell us roughly what's the most frequent package that the subscriber is subscribing on right now? That's my first question. Thank you.

Okay, excluding the biggest customer, now it is the same Mbps. And then since half semester in 2020, we did upgrade for the customers and now the customers already increase -- close to [50%] go to the 20 and 30 Mbps. So there are incremental speed [multi in the] customer. So this -- compared to the ARPU uplift. And we not open anymore for the small -- for the low speed to the customers. So now we only offer minimum 20 Mbps. This was to [give digital]. But for the regular channel, we only offer 450 Mbps.

Got it. Just maybe a very quick follow-up. If I am a customer and I want to upgrade to a faster package, there is no hardware upgrade involved or any additional investment either from your side or their side? It is basically just changing the speed, right?

Yes, yes.

Okay. All right, thank you. That's very helpful. My next question is on the EBITDA margin. I noticed the IndiHome EBITDA margin has been on the upward trend; very substantial ever since I started tracking it. Would you -- but then you guys have never mentioned your EBITDA margin on either the enterprise side or the wholesale side. Would you be able to give us just a rough range for those two business? And I understand especially for the enterprise side what we have been doing over the year is focus on revenues that are more high-quality revenues. So I just want an idea there.

Okay, on the other segment, basically for example on the enterprise side, actually we have low- to mid-tens of EBITDA margin on this one. It is in the -- actually you mentioned purposely in the process of improvement on this one, we hope are getting (inaudible) from time to time. And in the wholesale, wholesale I think our EBITDA margin --- it is a mix of I think some products here, some kind of -- in the wholesale, we have tower as well here and then data center as well.

But what we can tell you, this is quite healthy and comparable to our global benchmark here. I think I need to come back to you maybe directly from my IR to provide you some further detail on this one.

Okay, thank you very much. And the last question is -- congratulations on the dividend increase. That was very helpful for the investors. But going forward, I know there's going to be more auctions coming and there's going to be more CapEx coming for 5G as well. Of course, the competition might become hopefully better on the mobile side with the merger. Is there any guidance on dividend policy for the next two to three years? Any color there would be helpful. Is it going to be free cash flow based; is it going to be earnings based? Something like that? Thank you.

Thank you. First of all, of course, we want to return the investment on that to our shareholders that's coming from dividend yield. And also, I think capital gain coming from the further improvement of the stock price. We manage both things, but of course, we are going to put our dividend yield supposed to be always competitive from time to time.

The good thing that we have today actually our -- basically, our (inaudible) is quite healthy, being comparable to [SK.com] or Singtel, in which we have room for, let's say, investing more by using our debt capacity on this one. Of course, we do understand and by [do remain] it may need some more investment on this one. As my mobile CEO previously mentioned, I think the peak of the 5G is going to be around two, three years from now. I think during this period, we try to our best to provide the I think competitive dividend to the shareholders.

Okay, thank you very much.

Arthur Pineda, Citigroup.

Hi, thanks. Two questions, please. Firstly, on the mobile side, I know that you mentioned that you raised rates from March, April, May. How have your competitors reacted to this price increase? Are they following suit on the price [repair]? Or if not, does this (technical difficulty) subscriber share momentum into the second quarter?

Second question I had was with regard to the expenses. I'm just wondering, are there any one-offs in 1Q? So if you look at OpEx, it seems to have declined across the board on a Q-on-Q basis. Even D&A had declined significantly, which is quite unusual. Any driver behind this? Thank you.

Hi, I'll take the first question. So in the Q2, [losses] moved up. I think our competitors have become more rational. I think [they were still] reduced the aggressiveness in terms of unlimited. However, I think there's more room for improving the overall health of the market from a pricing standpoint. So that is my sense. Thank you.

Sorry, I'm just a little confused with that. So does that mean they have not really followed with regard to price increases? And does that market share, because basically you are becoming an outlier if you raise rates and they don't.

It's more rational, but they could do more. That is one thing.

Okay. After on the any one-off in the first quarter of this year, we can answer that there is no one-off for the first quarter of the year. And then in the depreciation and amortization decline in Q-on-Q, basically because the I think additional asset that we put in our balance sheet is actually a decline about IDR1 trillion over the same full year. So we don't have any change in the [vesting] in terms of the amortization of the (inaudible), specifically more to the additional assets that are coming to our book.

Okay. Because if you look at D&A, it's down like 7% Q-on-Q. So if you were to model this, we should view 1Q as the baseline. Is that the right way to look at this?

Yes, basically yes. Because of the I think asset, there's no change in the I think amortization or anyone of (inaudible).

Understood. Okay, thank you very much.

Thank you. So we have reached the end of the question-and-answer session. I will hand the conference back to Pak Andi for his closing remarks.

Thank you, Amber. Thank you, everyone, for participating in this call. We apologize for those whose questions could not be addressed here. So should you have any further questions, please don't hesitate to contact us directly. Thank you, everyone.

Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.