Indosat (ISAT) Reports 38.1% Profit Growth in 2024 but Misses Expectations

PT Indosat Tbk (ISAT) recorded a net profit of IDR 4.9 trillion in 2024, marking a 38.1% year-on-year (yoy) increase. However, this figure only met 92.6% of BRI Danareksa Sekuritas’ estimate and 94.6% of market consensus, meaning Indosat’s earnings fell short of expectations.

In Q4 2024, Indosat's net profit stood at IDR 1.1 trillion, reflecting a 3.4% quarter-on-quarter (qoq) decline and a 19.2% yoy drop. According to BRI Danareksa Sekuritas analysts Niko Margaronis and Kafi Ananta, the decline was due to a 230 basis point (bps) reduction in EBITDA margin to 45.3%, well below the company’s guidance.

Revenue Aligns with Estimates Amid Intense Competition

Indosat’s 2024 revenue reached IDR 55.9 trillion, aligning with prior forecasts. EBITDA stood at IDR 26.4 trillion, coming in at 97.3% and 98.2% of estimates, respectively.

However, in Q4 2024, revenue grew only 1.7% qoq and 2.2% yoy to IDR 14.1 trillion. Indosat’s management attributed this to intense competition in the prepaid card market, with prices dropping from IDR 25,000 to IDR 10,000 nationwide, alongside weakened consumer demand.

ISAT’s Strategy: Focus on Productive Customers and B2B Growth

To counter these challenges, Indosat retained its 94.7 million productive customers, while eliminating 4 million inactive users. This move led to an increase in average revenue per user (ARPU) to IDR 38,800, up 4.6% qoq.

Additionally, Indosat continues to expand its B2B (business-to-business) and wholesale segments, resulting in higher operating expenses (opex) related to installation, partnerships, and network maintenance.

2025 Outlook: Mobile Expansion and AI Revenue Growth

Indosat remains optimistic about outperforming the telecom industry’s average revenue growth in 2025, driven by mobile expansion in rural areas, rising ARPU and monthly active users (MAU), and cross-selling of fixed broadband (BB) and fixed wireless access (FWA) services.

Moreover, Indosat is set to recognize revenue from a US$ 30 million annual AI contract, beginning in Q2 2025.

“With a stronger focus on non-mobile business, Indosat expects EBITDA growth of over 10% yoy in 2025,” said Niko.

Stock Recommendation and Valuation

Following Indosat’s 2024 performance, BRI Danareksa Sekuritas adjusted ISAT’s earnings projections for 2025, 2026, and 2027 by -5.8%, -6.6%, and -1.2%, respectively. Additionally, Indosat introduced a new dividend policy targeting a 70% payout ratio for 2026 earnings.

Using a DCF (discounted cash flow) model combined with an EV/EBITDA multiple of 4.5x over three years, BRI Danareksa Sekuritas revised ISAT’s target price to IDR 3,200 from IDR 3,800.

“We maintain a buy recommendation for ISAT, given its strong growth potential,” concluded Niko.

However, as of this report, ISAT shares have plunged to IDR 1,650, creating a potential upside of over 90%.

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