TOWR delivered a moderate performance in 2Q25, booking revenue of IDR3.19 trillion (-0.7% QoQ; +2.5% YoY), bringing 1H25 revenue to IDR6.39 trillion (+3.9% YoY). This figure was broadly in line with our estimate (50% Phintas), consensus (48%), and 5Y historical average (48%). The tower leasing business remained the core contributor, posting +2.9% YoY growth to IDR4.26 trillion. Meanwhile, the fiber and FTTH segments continued to show solid momentum, growing +9.96% YoY and +29.22% YoY respectively, supported by steady asset additions. Productive fiber reached 219.96k km (+14.36% YoY), and Homeconnect subscribers grew significantly to 207.72k (+52.85% YoY).

Profitability remained resilient, with 2Q25 EBITDA recorded at IDR2.65 trillion (-1.2% QoQ; +2.2% YoY), maintaining strong margins at 83.04% (vs. 83.48% in 1Q25). On a cumulative basis, 1H25 EBITDA stood at IDR5.32 trillion (+3.7% YoY), with a margin of 83.26%, slightly lower than 1H24’s 83.41%. Net profit in 2Q25 rose +5.8% QoQ (+5.2% YoY) to IDR849 billion, resulting in 1H25 earnings of IDR1.65 trillion (+2.9% YoY), achieving 54.4% of our full-year forecast, although still below consensus (45.2%).

Operationally, growth was visible on the asset side, with the number of towers rising +13.7% YoY to 35.83k units. However, tenant growth lagged at +7.1% YoY to 58.16k, leading to a decline in tenancy ratio to 1.62x (vs. 1.67x in 1H24). ARPT also softened by -3.9% YoY to IDR12.14 million, while fiber revenue/km fell -7.1% YoY to IDR683k—indicating margin pressure from tenant demand deceleration. On the positive side, non-tower expansion stayed strong: total FTTT pole length increased +20.72% YoY to 122.2k km, and Homeconnect subscribers jumped +52.9% YoY. However, a +47.2% YoY rise in home passes led to only a modest take-up rate improvement to 11.6% (vs. 11.2% in 1H24).

We downgrade our recommendation from BUY to HOLD, with target price of IDR650. While results were broadly in line, we remain cautious on near-term growth, particularly with risks from operator consolidation (e.g., XL-FREN) that could drive prolonged site rationalization. On the flip side, TOWR completed a rights issue of IDR5.5 trillion to strengthen its subsidiary Protelindo’s balance sheet via debt repayment—a strategic move we view positively. Furthermore, management highlighted that the ISAT-Hutch rationalization is entering its final phase, potentially supporting new tower demand ahead.

Downside Risks: 1) Prolonged decline in tenancy ratio due to further rationalization, 2) Margin pressure from aggressive pricing in FTTH and fiber services.

By PHINTRACO SEKURITAS | Research
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