TOWR booked revenue of IDR 3.29 trillion in 4Q24 (–0.25% QoQ; +8.80% YoY), pushing FY24 revenue to IDR 12.74 trillion (+8.48% YoY), broadly in line with consensus (Cons: 102%) and slightly above our estimate (Phintas: 106.26%). Tower leasing segment—its largest contributor—posted modest growth of IDR 8.52 trillion (+1.44% YoY), reflecting lingering impacts from the Indosat-Hutchison merger. In contrast, revenue growth was primarily driven by the non-tower segments. FTTH & Connectivity surged to IDR 2.14 trillion (+35.21% YoY), supported by a +45.80% YoY jump in Home Connect and +33.30% YoY in service activation. Fiber revenue also posted solid growth, reaching IDR 2.07 trillion (+18.09% YoY), in line with the fiber rollout expansion to 217 thousand km (+19.34% YoY). Revenue mix is shifting, with tower leasing now contributing 66.92% (vs 71.57% in FY23), while fiber and non-tower segments grew to 18.09% and 16.78%, respectively. EBITDA margin slightly declined to 84.02% (vs 85.00% in FY23).

Interest expense rose +9.78% YoY to IDR 3.14 trillion due to increased debt post-acquisition of IBST.IJ, pushing Net Debt/EBITDA to 4.80x (vs 4.46x in FY23) and DER to 2.74x. Despite financial pressure, net profit reached IDR 888 billion in 4Q24 (+5.38% QoQ; +7.25% YoY), with FY24 net profit totaling IDR 3.73 trillion (+29.28% YoY), in line with estimates (Phintas: 99.44%; Cons: 98.87%).

Operator consolidation resurfaces as a key overhang, as seen with EXCL–FREN merger. Notably, EXCL was TOWR’s largest tenant in FY24 (31.68% of revenue), which makes this merger a material risk. Historical precedent from the Indosat-Hutchison merger in 2022 showed a -2.37% YoY tower revenue decline in FY23 before a +1.44% YoY recovery in FY24. We expect tower leasing revenue to slightly contract over FY25–27F (–1.02%/+2.29%/+2.70%) with declining contribution to 64.59%/64.25%/64.08%.

We forecast total revenue growth to remain in the low-single-digit range over FY25–27F (+2.55%/+2.83%/+2.97%), led by continued strength in fiber segment (+9.54%/+6.72%/+6.03%) and FTTH/activation services (+10.00% YoY). EBITDA is expected to grow modestly at +1.95%/+3.08%/+3.21%, with margin slightly trending down to 83.52%/83.73%/83.92% (Mgmt guide: 83% FY25E). Net profit is projected to remain flat in FY25E (+0.46% YoY) at IDR 3.35 trillion, as topline softness and elevated interest costs persist. Net margin may compress to 25.65% in FY25E.

We maintain our BUY rating on TOWR with a lower TP of IDR 650 (Prev: IDR 860), implying 7.5x EV/EBITDA FY25F. While tower segment momentum is expected to moderate due to telco consolidation headwinds, long-term growth visibility is underpinned by diversification into fiber and digital services. Backed by robust infrastructure, we believe these segments will increasingly act as growth engines. Downside risks: (1) Elevated interest rates that could pressure profitability; (2) Intensifying competition in fiber broadband.

By PHINTRACO SEKURITAS | Research
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