ISAT recorded a net profit decline of IDR1.03 trillion in 4Q24 (-39.93% YoY; -9.69% QoQ), with net profit margin weakening to 7.34% (vs. 8.26% in 3Q24; 12.49% in 4Q23) due to rising operating expenses, primarily driven by higher marketing costs and cost of service. ISAT’s revenue grew modestly to IDR14.7 trillion (+1.73% QoQ; +2.24% YoY), supported by the MIDI segment (+4.45% QoQ; +7.49% YoY), while the cellular segment remained relatively flat at IDR11 trillion (+1.44% QoQ; +1.94% YoY). EBITDA contracted to IDR6.37 trillion (-3.24% QoQ; +1.49% YoY) with a margin of 45.29%.Data segment revenue contracted to IDR10.88 trillion (-2.92% QoQ ; -0.86% YoY), in line with a decline in subscribers to 94.70 million (vs. 98.70 million in 3Q24). However, blended ARPU increased to IDR38.90k (vs. IDR37.20k in 3Q24), reflecting ISAT’s optimization strategy to retain high-value customers. Management targets above-industry revenue growth, EBITDA growth of >10%, capital expenditure of Rp13 trillion, and expansion into AI-powered services using GPUs. The company also plans a dividend payout ratio of 70% in 2026. We maintain a BUY rating with a lower target price of Rp2,200, based on DCF valuation with an 11% WACC and 2% terminal growth, with downside risks including intense industry competition and weak consumer purchasing power.

By PHINTRACO SEKURITAS | Research

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