Indosat Tbk PT: Takeaways from the J.P. Morgan ASEAN TMT & Fintech Forum

Research evidence excerpt

Indosat Tbk PT: Takeaways from the J.P. Morgan ASEAN TMT & Fintech Forum

Ranjan Sharma, CFA AC Asia Pacific Equity Research

(65) 6882-1303 09 July 2026 J P M O R G A N

ranjan.x.sharma@jpmorgan.com

Investment Thesis, Valuation and Risks

Indosat Tbk PT (Overweight; Price Target: Rp3,300)

Investment Thesis

We anticipate a strong earnings growth outlook for ISAT, driven mainly by the mobile

segment. We believe the healthy growth in mobile revenues will translate into strong growth

in earnings due to ISAT’s high operating leverage. We believe ARPU reflation should drive

expansion in ROIC, which has generally been correlated with valuation multiples. New

growth initiatives offer option value. We rate ISAT OW.

Valuation

We derive our Dec-26 PT based on a 2027E P/E of 13x. This is at a premium to TLKM’s

in view of the higher growth profile of ISAT. Improving ROICs should drive valuation

multiple expansion, in our view.

Risks to Rating and Price Target

Key downside risks include:

• Increased mobile competition: While Indonesian telcos are currently looking to

improve tariffs, the key risks to ISAT come from an escalation in competition. In our

view, this could materialize in the form of broad-based price competition or operators

targeting ISAT customers in its profitable markets.

• Aggressive investments in new growth segments, which could result in value

destruction.

• 5G rollout and spectrum costs: While we expect capex for ISAT to remain elevated

in the near to mid-term (at ~20% of sales), there could be upside risks if telecom

operators pursue rapid and/or denser network rollouts. Moreover, as 5G lacks

commercial applications, the 5G network investments could come with poor ROICs.

Spectrum allocation has so far not been expensive in Indonesia. However, if there is