MTEL posted a solid performance in 2Q25, with revenue reaching Rp2.33 trillion (+3.2% QoQ; +4.0% YoY). Cumulatively, 1H25 revenue amounted to Rp4.60 trillion, reflecting 50.7% of our estimate and 47.2% of consensus. The tower leasing segment, which remains the core contributor, grew by +2.8% YoY to Rp3.81 trillion, supported by a +3.9% YoY increase in tenants to 60.91k and average ARPT growth of +0.8% YoY. In addition, the fiber and reseller segments continued to show strong traction, posting +16.1% YoY and +7.5% YoY growth, respectively.

Profitability remained healthy, with 2Q25 EBITDA recorded at Rp1.98 trillion (+5.5% QoQ; +6.8% YoY), pushing margins higher to 84.9% (vs. 83.05% in 1Q25 and 82.67% in 2Q24). Cumulatively, 1H25 EBITDA reached Rp3.86 trillion (+4.4% YoY), translating to a margin of 83.99%. This was in line with consensus and 4Y historical average, while also outperforming our internal estimates (Phintas: 53.6%; Cons: 48.1%; Avg-4Y: 47.7%). At the bottom line, net profit in 2Q25 rose +7.9% QoQ (+4.6% YoY) to Rp568 billion, resulting in 1H25 net profit of Rp1.09 trillion (+2.9% YoY), broadly in line with our expectations and historical averages, though slightly below consensus (Phintas: 51.6%; Cons: 45.5%; Avg-4Y: 50.0%).

Operational growth was also solid. The number of towers increased by 378 units YTD to 39.78k (+0.96% YTD; +3.11% YoY), while total tenants rose to 60.91k (+1.74% YTD; +3.90% YoY), pushing tenancy ratio to 1.53x (vs. 1.52x in 1H24). Fiber expansion remained on track, with a YTD addition of 3.41k km, bringing total fiber length to 54.45k km (+6.68% YTD; +44.8% YoY), aligning with the company’s strategy to grow coverage outside Java.

We reiterate our BUY recommendation for MTEL with a target price of Rp700 (see our previous report). Overall performance was in line with management’s guidance, which was also reaffirmed during the latest earnings call. While we acknowledge that near-term growth in the tower segment could be limited due to the impact of the ongoing consolidation of two major telecom operators (which may lead to overlapping site rationalization), we see continued upside potential—especially from the fiber segment where demand for FTTT and FTTH remains strong. We also expect new order flows to resume from IOH post-network consolidation. MTEL’s well-diversified tower portfolio and relatively low exposure to the current MNO merger provide better resilience compared to peers.

Downside Risks: 1) Aggressive site rationalization post-MNO merger, 2) Fiber pricing competition, particularly outside Java, which may limit margin expansion.

By PHINTRACO SEKURITAS | Research
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