ISAT posted a moderate performance in 2Q25, reflected by revenue of Rp13.53 trillion (–0.34% QoQ; –4.31% YoY). Cumulatively, ISAT’s revenue reached Rp27.11 trillion (–3.1% YoY), falling below our estimates, market consensus, and the 5-year average (Phintas: 46.7%; Cons: 46.2%; 5Y Avg: 48%). The decline in the cellular segment, ISAT’s main revenue contributor, was primarily due to a drop in prepaid subscribers (–5.7% YoY) and total subscribers overall (–4.02% YoY), leading to a 3.6% YoY decrease in cellular revenue to Rp22.75 trillion. Meanwhile, MIDI and fixed connectivity segments posted mixed results, with revenues growing 1.15% and declining 13.2% YoY, respectively.

Pressure on ISAT’s performance was also visible from the increase in cost of service, which rose 1.86% QoQ (+5.14% YoY) to Rp5.82 trillion in 2Q25. Additionally, depreciation and amortization expenses increased 2.99% QoQ (+0.88% YoY) to Rp4.04 trillion, in line with aggressive network expansion, marked by the addition of around 18.9 thousand BTS during 1H25 (+7.86% YoY). As a result of these combined factors, operating profit weakened to Rp2.40 trillion in 2Q25 (–3.66% QoQ; –17.2% YoY).

EBITDA remained relatively flat at Rp6.44 trillion in 2Q25 (+0.39% QoQ; –6.7% YoY), with a stable EBITDA margin of 47.59%. Cumulatively, EBITDA reached Rp12.86 trillion (–4.15% YoY), broadly in line with our estimates, consensus, and the 5-year average (Phintas: 47.2%; Cons: 45.6%; 5Y Avg: 48%). From the bottom line, net income experienced significant pressure, falling to Rp1.02 trillion in 2Q25 (–21.88% QoQ; –28.85% YoY), bringing 1H25 net income to Rp2.34 trillion (–14.6% YoY), with a net profit margin declining to 8.61% (vs. 9.77% in 1H24).

We downgrade our recommendation from BUY to HOLD for ISAT (TP: Rp2,200). Although there have been industry-wide initiatives among telco players to standardize starter pack pricing as part of a broader pricing strategy consolidation, this has yet to be reflected meaningfully in this quarter’s financial performance. The pricing adjustment implemented in mid-March 2025 is likely still in the early stages of rollout, while its impact on new subscriber acquisition and data traffic monetization may require more time to be reflected in the financials. This condition is further exacerbated by weak consumer purchasing power, which continues to weigh on demand recovery and spending on data services.

Upside Risks: 1) The standardized starter pack pricing strategy could help drive traffic and subscriber growth 2) Stable interest rates may ease financial burdens and open up room for further expansion.

By PHINTRACO SEKURITAS | Research
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