亚太地区-电信行业-印尼电信业消费者调查：看好2020年前景

www.research.hsbc.comDisclosures & Disclaimer: This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it. MCI (P) 008/02/2019, MCI (P) 077/12/2019EquitiesDiversified TelecommunicationsJanuary 2020By: Piyush ChoudharyIndonesia Telecoms –Consumer surveyBullish 2020 outlook reinforcedWe asked more than 1,000 Indonesian consumers a variety of questions to understand their preferences and the factors influencing their choice of a telecom operatorTelkomsel has a stronger-than-expected position outside Java and is the only operator with a positive net promoter scoreThe results of our survey reinforce our bullish view on PT Telkom, XL Axiata, and Link Net, all rated Buy. Reduce on IndosatS P O T L I G H T 1 Equities ● Diversified Telecommunications January 2020 In the past few years, a key investor concern has been ‘Can Telkomsel maintain its moat outside Java?’ This concern is driven by two factors, in our view: (1) other operators incrementally expanding outside Java; and (2) the challenge to find global examples where an incumbent has been able to sustain such a dominant leadership position. Telkomsel has a c60% mobile revenue market share nationwide and more than a 70% market share outside Java. To address these investor concerns, HSBC partnered with Toluna Analytics to conduct a proprietary consumer survey of c1,040 consumers to understand consumer preferences for telecom brands by region (Java and outside Java). We were positively surprised to find that Telkomsel’s position is much stronger than expected outside Java – by a wide margin. The results of our survey support our Buy ratings on PT Telkom, XL Axiata, and Link Net. We have a Reduce on Indosat. Key conclusions from consumer survey  Telkomsel (unit of PT Telkom) is the most preferred mobile brand outside Java and has a net promoter score (NPS) of +30.8, making it the only mobile operator with a positive NPS  Telkomsel and XL are the most preferred mobile brands based on our nationwide sample  Telkomsel would gain data revenue market share in Java  Consumers prefer IndiHome and Link Net, for fixed broadband  Can ARPU increase? 33% of respondents likely to increase telecom spends  Can operators charge premium? 57% of respondents are willing to pay a premium  Customer stickiness: 64% of respondents are not likely to switch their mobile operator  ‘Quality of voice’ is still an important factor influencing the choice of a mobile operator PT Telkom is our preferred stock in the sector, with an unchanged target price of IDR4,800, as we expect (1) mobile revenue growth, driven by data market share gains, (2) a surge in fibre broadband revenue as subs expand, and (3) EBITDA margins to improve to c50%, fuelling a 13% profit CAGR over 2018-21e. We maintain our Buy rating on XL Axiata, with an unchanged target price of IDR4,000; we see it as better positioned than Indosat due to network investments and