Telkom Indonesia (TLKM IJ/Maintain) - Investment Losses Mask a Steady Core

TLKM booked 3Q26 net profit of IDR3.8tr (-39.1% QoQ, -16.1% YoY), weighed by IDR1.3tr of unrealized investment losses on GOTO (IDR0.4tr) and MDI's startup book (IDR0.9tr). Core profit of IDR4.8tr takes 9M26 to IDR15.5tr, in line at 77.6%/76.6% of ours/cons (3Y avg: 76.3%), cushioned by D&A falling 6.7% YoY. EBITDA fell to IDR18.0tr (-1.4% YoY) at a 47.9% margin (-2.0ppt YoY) as cash opex rose 7.0% YoY on IDR742bn of receivable impairment.

Revenue came in at IDR37.6tr (-2.8% QoQ, +2.8% YoY), with all YoY growth from outside TSEL (+14.2% YoY to IDR10.4tr) as TSEL slipped 1.0% YoY to IDR27.3tr, pulling data, internet and IT revenue down 4.8% QoQ to IDR23.4tr. TSEL lost another 2.4mn subs QoQ to 151.1mn (-6.5mn YoY), ARPU eased to IDR44.9k (-2.4% QoQ) and yield fell to IDR3.43/MB (-4.0% QoQ), though payload held at 5,803PB (+0.8% YoY).

IndiHome B2C added 118k subs to 9.63mn (-6.1% YoY) with ARPU recovering to IDR218k (+3.3% QoQ), though the smaller base left segment revenue down 2.3% YoY at IDR6.3tr. Management expects a stronger 4Q26 on seasonality, market repair and network monetization, and kept its above-50% EBITDA margin guidance while admitting it may fall short. Capex ramps in 4Q to meet 17-19% C2R, and FY27F capex rises as data center and subsea spend adds on.

NeutraDC targets 400MW by 2030 (aspirational 1GW) with a strategic partner likely in 2027, while a 20-35% InfraNexia stake sale at 9-13x EBITDA could raise USD1-2bn+ for special dividends and reinvestment. We reiterate BUY with a TP of IDR3,400, implying 4.2x FY27F EV/EBITDA, as a stable mobile outlook supports ARPU recovery and streamlining stays on track. The stake sale and remaining IDR3.5tr buyback are near-term catalysts. Risks: weaker ARPU, higher ERP and depreciation.