Indonesian Telcos: Merger of XL Axiata and Smartfren
Communications
While this deal has been well flagged, finally getting it done is positive and bodes well for overall Indonesian ARPU. Valuation of the combined entity is better than it might have been from an XL Axiata perspective. Synergies targeted appear surprisingly large and while the market is likely to be sceptical this means that there is significant potential upside if management can deliver, especially given the relatively low pre-synergy multiple (4.6X EV/EBITDA). New Street has a Buy rating on Indosat (TP IDR 3,125), Telkom Indonesia (IDR 4,500) and XL Axiata (IDR 5,000).
Edition: 201
- 13 December, 2024
Axiata (AXIATA MK) Macedonia, The Former Yugoslav Republic of
Communication Services
New Street Research remains bullish on Axiata as they reported underlying revenue ahead of its mid-single digit FY23 guidance, driven across the board except for Ncell and ADA again. Year-to-date EBIT improved as well, tracking in line with FY23’s HSD guidance. However, reported PATAMI came in at a loss, driven by impairments in its Nepal business.
Edition: 168
- 01 September, 2023
XL Axiata (EXCL IJ) & Indosat (ISAT IJ) Indonesia
Communications
XL reported a strong set of results with revenue and EBITDA ahead of consensus. As expected, mobile ARPU rose 7.7% Y/Y on the price increase in Q1, driven by prepaid. More positively, XL has upgraded top line guidance to high-single digit growth. ISAT also performed well during the quarter and upgraded its EBITDA guidance (as New Street had predicted it would). XL and ISAT’s mobile performance are indicative of a rational mobile market as operators look towards better monetisation opportunities. New Street's TP of IDR 5,000 for XL offers 100%+ upside and implies a valuation multiple of 6.2x FY24 EV/EBITDA, while their TP of IDR 11,000 for ISAT implies a valuation multiple of 5.5x FY24 EV/EBITDA.
Edition: 166
- 04 August, 2023