Company Coverage
XLSMART Telecom Sejahtera (EXCL IJ): Sinarmas Consolidation Supports Post-Merger Integration
BUY (Maintained)
Current price:
Target price:
Upside:
Rp2,530
Rp3,600
+42.3%
Analyst
Analyst
Highlights
- Sinarmas consolidation supports funding flexibility. EXCL's Rp2.6t spectrum payment appears manageable as DSSA continues consolidating Sinarmas Group's digital infrastructure assets and recently injected Rp8.53t into Bali Media Telekomunikasi.
- Merger headwinds nearing an end. Most integration costs should be recognised by 3Q26, supporting a stronger earnings recovery despite Rp5t-6t of accelerated depreciation keeping reported earnings under pressure in 2026.
- Maintain BUY with an unchanged target price of Rp3,600, based on 5.8x EV/EBITDA.
Analysis
- Sinarmas consolidation could support EXCL's future growth. XLSmart Telecom Sejahtera (EXCL) secured one 700MHz and one 2.6GHz spectrum block in the 2026 Komdigi auction, requiring an estimated Rp2.6t cash outflow in 3Q26 (1x upfront fee + 1x annual spectrum fee). While EXCL ended 1Q26 with Rp2.7t cash, we believe funding risk remains manageable as Dian Swastika Sentosa (DSSA) continues consolidating Sinarmas Group's digital infrastructure assets, including the transfer of Sinarmas Group's EXCL stake in Bali Media Telekomunikasi, as well as the acquisition of Mora Telematika Indonesia and Ketrosden Triasmitra. More recently, DSSA injected Rp8.53t into Bali Media Telekomunikasi following the acquisition, reinforcing the group's financial capacity to support future investment. These developments also strengthen our view that Sinarmas could eventually increase its 32.0% stake in EXCL should Axiata decide to divest its 34.7% holding.
- Accelerated depreciation expected to keep EXCL loss-making in 2026. In 2025, the company booked Rp7.4t in post-tax one-off charges related to site consolidation, asset retirement, workforce alignment, and network integration. Accelerated depreciation charges are expected to reach Rp5t-6t this year, while integration costs should decline sharply to only around Rp500b as up to 70-80% of the post-merger integration spending has already been recognised. Management expects elevated depreciation costs to continue through 3Q26, while targeting 4Q26 results to be largely free from accelerated depreciation charges. Despite accounting losses, core earnings should continue improving on stronger average revenue per user (ARPU) and rising synergy realisation.
Highlights
- Sinarmas consolidation supports funding flexibility. EXCL's Rp2.6t spectrum payment appears manageable as DSSA continues consolidating Sinarmas Group's digital infrastructure assets and recently injected Rp8.53t into Bali Media Telekomunikasi.
- Merger headwinds nearing an end. Most integration costs should be recognised by 3Q26, supporting a stronger earnings recovery despite Rp5t-6t of accelerated depreciation keeping reported earnings under pressure in 2026.
- Maintain BUY with an unchanged target price of Rp3,600, based on 5.8x EV/EBITDA.
Analysis
- Sinarmas consolidation could support EXCL's future growth. XLSmart Telecom Sejahtera (EXCL) secured one 700MHz and one 2.6GHz spectrum block in the 2026 Komdigi auction, requiring an estimated Rp2.6t cash outflow in 3Q26 (1x upfront fee + 1x annual spectrum fee). While EXCL ended 1Q26 with Rp2.7t cash, we believe funding risk remains manageable as Dian Swastika Sentosa (DSSA) continues consolidating Sinarmas Group's digital infrastructure assets, including the transfer of Sinarmas Group's EXCL stake in Bali Media Telekomunikasi, as well as the acquisition of Mora Telematika Indonesia and Ketrosden Triasmitra. More recently, DSSA injected Rp8.53t into Bali Media Telekomunikasi following the acquisition, reinforcing the group's financial capacity to support future investment. These developments also strengthen our view that Sinarmas could eventually increase its 32.0% stake in EXCL should Axiata decide to divest its 34.7% holding.
- Accelerated depreciation expected to keep EXCL loss-making in 2026. In 2025, the company booked Rp7.4t in post-tax one-off charges related to site consolidation, asset retirement, workforce alignment, and network integration. Accelerated depreciation charges are expected to reach Rp5t-6t this year, while integration costs should decline sharply to only around Rp500b as up to 70-80% of the post-merger integration spending has already been recognised. Management expects elevated depreciation costs to continue through 3Q26, while targeting 4Q26 results to be largely free from accelerated depreciation charges. Despite accounting losses, core earnings should continue improving on stronger average revenue per user (ARPU) and rising synergy realisation.
BUY (Maintained)
Current price:
Target price:
Upside:
Rp2,530
Rp3,600
+42.3%
Analyst
Analyst
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