Indonesia Daily Focus October 21, 2026

Our visit to NeutraDC's KIIE campus and Telin's Nongsa CLS confirmed demand is not Batam's bottleneck. BTM-1 starts 4Q26 with a 6MW first phase fully taken by Gorilla Technology, the remaining 12MW due 1Q27. Modular construction merged BTM-2 and BTM-3 into one AI-ready campus scalable to 100MW, fully committed with c.260MW of interest, lifting planned Batam capacity to c.118MW from 54MW. TLKM targets c.60MW live by end-2026 (1H26: 49.9MW). Power sets the pace: new builds need dedicated generation at c.IDR25bn/MW.

Telin holds capacity on 33 subsea systems spanning 429,167km, with 65Tbps sold, 51% lease and 49% IRU. Owned-cable utilization exceeds 85% in most cases, led by IGG+SEA-US at 99% and SMW5 at 93%; newer systems have headroom (BIFROST 60%, TOPAZ and PEACE 73%). With core routes nearly full, growth comes from cable upgrades, bought capacity on new systems, then consortium builds. The new Nongsa CLS hosts six cable systems, while Manado on SEA-US could cut US latency 10-36% and reduce reliance on Batam, which carries 90% of international traffic.

Management expects bandwidth on the six major corridors to grow at a 24-30% CAGR through 2030, on enterprise IT spending, AI workloads and hyperscaler route diversity. Price erosion on 100G wavelengths has eased from 18% over 2017-20 to c.10% for 2025-26E as supply lags, and less still on tight routes like Singapore-Europe. With volume up 24-30% against a c.10% price decline, the revenue pool still grows +12-17% a year, so saleable capacity, not price, is Telin's constraint. 800G upgrades add capacity fastest; lease-to-IRU conversion is cash flow positive but revenue dilutive.

We maintain BUY on TLKM with a TP of IDR3,400, implying 4.2x FY27F EV/EBITDA. NeutraDC's fully committed Batam pipeline and Telin's highly utilized subsea routes are the key growth engines, with data center capacity scaling from FY27F. The stock also offers a c.8-9% dividend yield, above the INDOGB10Y. Risks: power delays, execution on the capacity buildout, faster price erosion as consortium peers upgrade, and slower AI demand.