Data Centre Business Supports TLKM Prospects, Check Analyst Recommendations

The prospects for PT Telkom Indonesia (Persero) Tbk (TLKM) are expected to remain positive until the end of 2026. The state-owned telecommunications issuer’s performance is supported by the stabilisation of its mobile business and growth in its digital business, particularly through the development of its data centre business. TLKM is expanding its data centre business through NeutraDC and has plans to divest a 70% stake in the unit. The company has a JKT-1 facility in Cikarang with a design capacity of 21.5 megawatts (MW). Currently, only 3.5 MW of capacity is operational, while another 18 MW has been completed and fully contracted by customers but is awaiting tenant customisation. Senior Equity Research at Kiwoom Sekuritas, Sukarno Alatas, stated that data centre business expansion remains a key catalyst for TLKM. Assuming a hyperscale rental rate of around US$200,000 per MW per month, the data centre business could potentially generate revenue of approximately Rp 1.3 trillion in the initial phase, increasing to Rp 2.1 - Rp 2.2 trillion once the Batam facility is fully operational. Although its contribution to total group revenue is still relatively small, Sukarno assesses that the data centre business has the potential to become a source of long-term valuation rerating for TLKM. Beyond NeutraDC’s expansion, Sukarno noted that increasing demand for artificial intelligence (AI) technology, cloud services, and data centres will serve as positive catalysts for the company. Increased data centre utilisation, additional 700 MHz spectrum to improve network quality and efficiency, and potential monetisation of digital assets through strategic partnerships or an initial public offering (IPO) of NeutraDC are also seen as factors that could strengthen TLKM’s fundamentals and valuation. On the risk side, TLKM still faces potential tighter tariff competition from ISAT and XLSmart, which could pressure ARPU. High capital expenditure needs for data centre expansion, an economic slowdown affecting demand for digital services, and rising energy costs are also factors to watch going forward. During the first half of 2026, TLKM realised capital expenditure of Rp 10.8 trillion, with more than 96% allocated to developing priority business areas in the B2C, B2B Infrastructure, and International Business segments. The company has also completed several strategic preparation stages for the transfer of InfraNexia Phase 2 assets, targeted for completion in the second half of 2026. In terms of financial performance, TLKM recorded positive results in the first half of 2026, with consolidated revenue of Rp 75.9 trillion, growing 3.9% year-on-year. Net profit attributable to owners of the parent entity reached Rp 10.6 trillion, up 1.4% year-on-year. However, Head of Research at Korea Investment & Sekuritas Indonesia (KISI), Muhammad Wafi, cautioned that the Constitutional Court ruling regarding internet quotas that cannot expire could add regulatory uncertainty to the prepaid service business model. The Constitutional Court recently ruled that mobile operators must provide service options ensuring that customers’ remaining internet quota does not expire unilaterally, as the purchased quota holds economic value as an intangible asset belonging to the consumer. Considering these various factors, Sukarno recommends buying TLKM shares with a target price of Rp 3,630 per share.