TLKM Able to Invest Heavily, ISAT and EXCL Burdened by Debt
Jakarta, CNBC Indonesia - The telecommunications sector is a capital-intensive industry that requires continuous investment. Infrastructure such as the expansion of fiber optic networks, transmission towers, and the development of data centers require significant funding each year.
Moreover, transforming from a telecommunications company into a technology company requires even greater investment to build technology infrastructure, from data centers to software development.
Therefore, a company’s capital structure is a crucial indicator. The ability of issuers to manage debt, as reflected in the debt-to-equity ratio (DER), is a benchmark for stakeholders in assessing a company’s future expansion capacity.
Based on the publication of the Q3 2025 financial reports, the three major telecommunications issuers in Indonesia, namely PT Telkom Indonesia (Persero) Tbk (TLKM), PT Indosat Tbk (ISAT), and PT XLSMART Telecom Sejahtera Tbk (EXCL), show different funding strategies and financial risk profiles.
Debt Ratio Showdown: Who is Most Prudent?
Referring to the company’s fundamental data as of the end of September 2025, there is a significant disparity in the financial leverage of the three issuers.
Here is a summary of the debt ratios of the three issuers based on the Q3 2025 financial reports:
From the table above, TLKM recorded the lowest debt metrics. With a DER ratio of 0.88x, the proportion of the company’s liabilities (debt) is still smaller than its total equity. TLKM’s total short-term and long-term debt is in the range of IDR 136.88 trillion, compared to total equity of IDR 155.01 trillion.
For an industry that is very capital-intensive, such as telecommunications, having a DER below 1x is a very conservative and solid fundamental position.
TLKM’s Expansion Room is Wide Open
This capital structure position places TLKM in a strategically advantageous financial position. With relatively low debt compared to equity, TLKM has ample room if it needs external funding at any time.
This means that the company still has a large capacity to absorb new credit facilities from banks or issue bonds to finance future strategic projects, without having to worry about the stability of its financial statements.
This flexibility is also supported by TLKM’s debt-to-EBITDA ratio, which is at a moderate level of 2.52x, which has historically been considered very reasonable by creditors.
Competitor’s Leverage Challenges
On the other hand, the capital structure of ISAT and EXCL appears to be more aggressive in utilizing third-party loans. ISAT recorded a DER of 2.03x, while EXCL is at 2.43x. These figures, which are above the 2x level, indicate that the company’s capital composition is more dominated by debt than equity.
The use of large amounts of debt is common in scenarios to accelerate market share growth or business consolidation. However, from the perspective of future funding capacity, this high ratio limits the company’s maneuverability.
If ISAT and EXCL want to make massive investments in the near future, their room for adding credit is likely to be more limited. Adding new debt at the current leverage level can trigger a significant increase in interest expense, which can ultimately put pressure on profit margins.
The higher debt burden on these two competitors is also confirmed by ISAT’s Debt/EBITDA ratio, which is at 4.58x and EXCL at 6.12x.
Overall, in the midst of intense competition in the national telecommunications industry, TLKM holds a fundamental advantage in terms of balance sheet resilience. The still-ample debt space gives TLKM the highest financial flexibility to execute future business and investment plans more stably.
Debt Structure of Each Issuer
Delving deeper into the financial statements, the debt structure of these three issuers shows the funding instruments used to accommodate high capital expenditure needs, especially in recent years after the pandemic.
- PT Telkom Indonesia (Persero) Tbk (TLKM)
The main liabilities of TLKM consist of bank loan facilities, the issuance of corporate bonds, and lease liabilities. This funding is consistently directed to support the expansion of fixed broadband infrastructure, strengthening the tower business, investing in the data center ecosystem, and the Fixed Mobile Convergence (FMC) initiative.
Unlike the common practice of using massive external funding for acquisitions to facilitate the FMC agenda, Telkom’s move to consolidate IndiHome into Telkomsel in mid-2023 can be implemented in a measurable manner within the group’s ecosystem.
Due to its low leverage position and strong credit rating, TLKM tends to have high flexibility. As a historical note, in early 2023, TLKM management stated their readiness to seek external funding through bank credit or bond issuance by utilizing the company’s solid rating (AAA) to drive business, without worrying about burdening the balance sheet excessively.
- PT Indosat Tbk (ISAT)
ISAT’s liability posture is supported by a combination of large-scale bank loans, bond issuance, sukuk, and lease financing liabilities. This debt base increased after the merger, which became effective in early 2022, into Indosat Ooredoo Hutchison, where the company needed large funds to finance network integration costs.
In its development until 2025, ISAT continues to maintain a high leverage level along with the rapid transformation.