Earnings Call: Q4 2022

Feb 20, 2023

Ladies and gentlemen, welcome to XL Axiata's earnings call for full year 2022 financial year ended in 31st December of 2022. My name is Christie. I'm the Investor Relations for XL Arcata and I will be your coordinator today. During the presentation, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer session. The Q and A session will be hybrid mode to ensure that we can accommodate everyone. To ask questions, please type it in the Q and A box with your full name and company name or we will not be able to address you properly. If we have time, we will circle back for follow-up questions. A reminder, this session is being recorded for replay purposes. With me on the call today are Ibudyan, our CEO, our Pabudi, our CFO, David, our CCO for consumer, And Bhabhijit, our CCO for Enterprise and Home. Now Iguodian will share the highlights for full year 2022, which will then be followed by the q and a session. I will hand it over to the I will hand over the call to Yigu Dian. Yigu Dian, the floor is yours. Thank you, Christie. Good afternoon, everyone. Thank you for attending today's earnings call. 2022 was a great year for XL with our pioneering and consistent Strategy execution of digital transformation and convergence. We have outperformed the industry despite the challenges that occur both globally and domestically. Let's see our full year 2022 key highlights. Our revenue grew by 9 Due to continued product innovation that are supported by our network excellence, top line growth positively impacts our EBITDA, which grew by 7% year on year with margin recorded at 49%. XL Asiata also booked stable and fast growth. Our network excellence initiatives have been very fruitful as we are closing 2022 with a win in 4 categories Based on December 2022, OpenSignal's mobile network experience report. For the 2nd time in a row, we are the winner of the download Speed Experience Award with overall download speed averaging at 20.8 megabmbps Or 11% increase compared to July 2022. On top of that, we also we also obtained 1st rank On video experience, games experience, and also voice app experience. AbsaSantara 2 as our convergence package Continuous its strong uptrend trajectory with 37% of our FTTH customers subscribed to it, A 5 percentage point increase compared to 32% in Q3 of 2022. This is a result of digital driven operations Through data analytics that enable us to do effective cross sell and up sell. Our digital transformation 2.0 on mobile also evolved the experience on our own apps, which are MyExcel and MyAccess Net. Both apps Have delivered a very strong result in 2022, which by end of December 2022, we recorded more than 25 1,000,000 monthly active subscribers. I would also like to thank our stakeholders for the support and trust on our fundraising initiatives. Last year, we have successfully raised around RUB 8,000,000,000 in funds, RUB 3,000,000,000,000 through balls and sucuk in September and with very competitive pricing and Rolf5 trillion through rate issue. The funds obtained strengthened our balance sheet, Allowing us to retain the AAA ratings and investment grade we are currently have and of course balancing our debt profile To give up for potential interest rate increases in the future. Now moving on to the next slide. So this is our 2022 overview and also 2023 outlook. Throughout 2022, Inucell telco industry remained rational with competition tracking slightly higher in the Q4. This is due to seasonal competition that happened in some areas, which we expect to subside in the coming quarters. Data consumption remains strong as we observe higher data package utilization from our subscribers, mainly driven by video streaming, A trend that will continue in 2023. We also observed all MNOs now shifting gears toward convergence following the steps Our confident proposition was adopting for lighter asset business model. As Alf mentioned earlier, Our investment in network infrastructure, digitalization and spectrum usage optimization have improved our customer experience immensely. In 2022, our 4 gs Pts grew by 19%, with 44% of our sites are now fiberized. Our spectral efficiency initiative continued to be enhanced using NFI's technology to remove the disadvantage of Relatively narrower spectrum benefits. On top of that, our end to end digital transformation enhanced original Organizational agility to adapt and cater to market needs and industry evolution. In 2023, opportunities Promising in telco industry, not only in mobile, but especially in fixed broadband market, both for consumers and enterprise segments Due to its relatively lower market penetration. Now not only smartphones that are connected to the Internet at home, but a wide range of new devices, Enabling the revolution of structural digital lifestyle. This is why our conversion offering is the right strategy to address the needs. Going into the new year, same risks continue to persist, such as weaker consumption due to macroeconomic pressures, Risk of aggressive competition to return as well as prolonged geopolitical issue impact on supply chain. Considering both opportunities and risks, we believe that Indonesia's telco industry will grow higher compared to 2022 growth. Now before we discuss numbers, allow me to provide you with more details on our key growth strategy that give us the win in 20 22. And hopefully going forward, as well as what many of our investors have required, our convergence strategy and also goal for 2022. So personalization has been a foundation of our growth. One of the keys to our growth has been personalization, which have pushed to the next level. We have already profiled more than 10,000 persona segments to whom we offer tailored propositions. We have already introduced AI driven dynamic Pricing to all our digital channels. With dynamic pricing, we are able to offer each customer a different price to the portfolio with the objective of maximizing the ARPU. Another big step has been the implementation of cruise flow feedback Well, we have been able to capture more than 3,000,000 customer feedbacks that help us improve the customer journeys. As a result, we have been able to multiply by 4 the revenue from personalization in digital channels And multiply by 4.5, the satisfaction of those customers. Next slide, please. This year, we will double down on our convergence strategy by adding more features and boosting our family proposition To provide an even more comprehensive ecosystem that is relevant to our customers, such as smart devices, Ability to build your own Excel packages to better suit their needs, flexibility to add any Excel numbers to their convergence package And it seems that is soon to be launched by first half twenty twenty three. We will leverage on our comfort and Omnichannel touch points, unifying our distribution, taking advantage of over 130 ks touch points distribution synergies. On top of that, single family ID will make Acelsar 2 in the best position to capture the opportunity in comfort chains. Next slide, please. So to see this 2023 opportunity with convergence, Our early moves towards convergence have helped generate strong momentum for XLSTATO. This year, we will Fueled the growth even larger by scaling up our XL Home. We aim to close 2023 with 4 150 ks Home Kone and 150 ks Comfort subscribers. Next slide. So now we will go with our financial and operational KPI. This slide shows our key metrics for Full year 2022, which I will not go through 1 by 1. But the only thing that I want to highlight that we closed the year with 57,500,000 happy customers that support us, thus enabling XL to retain the ARPU of RUB40,000, Indicating that our additional subscribers are value accretive despite impact from fuel price hike and competitions. Next slide. So we've been focusing on customer experience and we will still Focusing in customer experience going forward. Our 4 gs BTS cohort is at 91,600, a 19% growth year on year. 3 gs spectrum refarming is completed with 98% over 51,000 3 gs BTS has been shut down. Our network investment and strategy has led to better network experience, hence higher usage as evidenced by the 20 2% year on year increase in total traffic for full year 2022. As mentioned earlier during the presentation, our own apps recorded a 62% year on year increase in monthly average users with more than 25,000,000 subs are on the platforms. More users on our own apps will sharpen our prediction on upcoming trends and customers' behaviors, Enabling us to provide direct offers to the right customers at the right time. In the end, it will improve the offering acceptance rate and increasing ARPU. Our fiberized site as of December 22, it is at 54%, an increase of 15 percentage point Year on year, pairing this with our spectrum reforming and new technology adoption has put excellent network ahead of the curve. Ultimately, the increased investment we have put in the past 2 years has helped making our network better and optimize our capital intensity. Finally, our guidance for the year. Next slide, please. We aim to grow our revenue by mid to high single digit or at least a line or better than industry. For EBITDA margin guidance at approximately 49%. And our CapEx guidance this year will be at RUB 8,000,000,000,000 With 70% of CapEx are allocated to strengthen network quality as well as to increase digitalization, And this year exclude potential spectrum auction from the government. With that, I conclude my opening remarks. Back to back to you, Kristi. Thank you, Bodian, for a very thorough walk through of XLRxietta performance and strategy. Ladies and gentlemen, will now proceed to the Q and A session. As a reminder, the Q and A session will be hybrid mode. To ask a question, you can type it in the Q and A box. Please ensure to use your full name and company name. And after your question is answered, if you'd like further clarification, kindly use the raise hand button and we will call your name for you to proceed to unmute your mind. The first question come from Arthur Pineda of Citi. Were there any one off bookings in Q4 2022? What accounted for the sudden rise in financing expenses? And are any of these factors are still relevant to January? And then the other question will be on the D and A. What accounted for the Q and Q jump in D and A expenses? And will it be possible for us to break out the growth momentum between mobile and fixed services for full year 2022 Q4 2023. Budi, would you like to take on this question? Yeah. Yeah. Atul, thanks for the questions. There are 2 parts of this question. I will take the I will answer the first one related to the P and L And the other one will be answered by that is related to the momentum of growth. Yeah. On the P and L impact, there was one Throughout the years, we've been working on rental negotiation with our towers provider partners. As you know, we think that our rental that we pay roughly Around RMB10 1,000,000 per month consists of 2. One portion is related to the maintenance, operational maintenance, the other one related to the rental. For the O and M, operational maintenance, the fee is actually subject to escalation. So every year, the fee will be adjusted up. So we've been negotiating with our tower company to reduce overall TCO, overall top up cost of the agreement By reducing this volume portion. Finally, towards the end in Q4, we got the deal closed with our provider. Hence, they agreed to reduce the total and portion that's subject to escalation. Hence, as a result of that, there's a one time adjustment Q2 IFRS 16. We booked impacting our rental reduction on rental. But then on the flip side, we got slightly higher on interest financing costs and also depreciation. That's what the one time that happening in Q4. The total year will be will it happen again? The answer is no because only one time, but the new structure will be applied 2030 onwards. So that's the answer for the first questions. David, you want to start? Regarding the growth momentum, so as you will see in the numbers, right, 2022 has been a very good year for us. So the growth momentum is there. Quarter 4, usually because of seasonality and because of some more competitive pressure, It's usually for us not the best of the quarters, but still we see internally very good growth drivers like The gigabytes per subscriber, the market share that we are gaining, so we see very positive Growth momentum will be very quarter for, so we are positive also for 2023. Thank you, Babuji and Panavit. Next, there are question from Nicola Santoso of Verdana. Is there a reason for the lower postpaid ARPU? Is it because of low end postpaid users from Telkom migrating to XL? And second, why is the EBITDA margin guidance kept at 49% Will there be any room for this to improve to low 50s? I believe the first question will be addressed by David. Yes, correct. So regarding the lower postpaid ARPU, It's pushed by the regionalization of the offer. So we are extending the postpaid offer of prioritas To ex Yavan to 3rd time Tier 2 cities. While we do that, we usually go with regional pricing and the ARPU that we are obtaining from there, it's a little bit lower. So overall, the lower ARPU is because we are expanding to Tier 2 cities or an ex Java cities. But we still see a strong ARPU in Yavan in the Tier 1 cities. Yeah. Let me take the second part of the questions. Thanks for the questions, Nicolas. On the EBITDA, we currently, based on the data, based on the Estimate that we have we are looking at 49%. But as you know, however, we continue exploring any other opportunities. As You know, we're implementing our operational excellence and we very basically Always look for opportunities, whatever is possible. So right now, we still kept our 49% as our guidance, whether there's a room to be better than that, Hi. Can you hear me? Yes, Arthur, loud and clear. Hi. Yes, just to clarify, can we get a quantification in the DNA and financing impact linked to this contract renegotiation? And just the second question is with regard to the pricing strategy. We've seen both IndusAT and Telkom sell raise pricing in January February. Has ExCEL done the same so far? Thank you. Okay. Turan, the quantification of Amount that hitting the P and L is somewhere around RMB80,000,000,000 to RMB100 1,000,000,000 related to this IFRS adjustment for that we booked in 4Q. So that's the one. A one time. Yeah. Understood. And there's no accelerated depreciation. Is that correct? Yes. There's no as well as depreciation, it's more on the yes, like a one time through up on the depreciation. That one somewhere around RMB 200 To RMB 250,000,000,000 the amount for depreciation related to the ROU for this IFRS 16. Understood. Okay. Thank you. Yes. So regarding the pricing strategy, it's true. So we have seen that both IOH And telecom sales have increased their prices for the SIM cards. So the SP prices or the SP related product prices, We have seen that they have increased those prices probably in order to stop the use and throw behavior. So we have done the same. Our presence of the SPEs Have been also increased. And our strategy is simple. Any product that goes with an SP or with a SIM card needs to be always, Let's call it worse than the equivalent digital or voucher one. So that the use and flow behavior is not incentivized. So we have increased the prices Of the SIM cards, I would have made the portfolio in such a way that it will always be better for a customer to Buy a digital voucher or a packet rather than use and throw the same SIM card. Having said this, we are also going to increase because this is Yes. And it's more parts of the revenue, right? The SP or the acquisition product is a very small part of the revenue. So we are committed to keep Growing increasing prices and we are going to do so in the coming weeks, not for the SP which we have already done, but for the whole portfolio. Got it. Thank you very much. Thanks, Arthur. Thanks, Parde. Thanks, Baburi. Next question is from Akhil Triadhi of Panim Securities. What do you think about the 700 megahertz frequency auction that will happen in first half of twenty twenty three? I think this question is addressed to Boudienne. Thank you, Abdul Thiryani for the question. So last year, the government actually stated that they would conduct the Auction for 700, Q1 2023. But towards the end of 2022, actually, they revised the statement saying that the 700 would be auction In 2023. So they do not they didn't specify whether it will be in quarter 1, 2, or or actually later of this year. But with that revision of statement, we think that it will be in the second half of twenty twenty 3. And the reason is because we think that there are challenges in actually moving the analog TV to digital TV Because the government needs to provide the STB for those who doesn't have digital television. Thank you, Biren. Next question is coming from Chung Chen Feng of CIMB. You mentioned big ticket Items are already spent. Which are these items? And can you quantify how much was charged in 2022? And will this be recurring in full year 2023 or these are nonrecurring? Tianfeng, thanks for the questions. Related to the big ticket items, as you know, one of the big one last year was the 3 gs spectrum refinery. It's a huge project that we took, a brave decision. Once the government decided, we accelerated quickly in Q1, Q2 last year And then finalized in Q4. And as we spend a lot of over there to ensure we get the optimum Refounding of the spectrum result. As you know, we are now number 1 in terms of network quality as we start of leveraging that If I mean that, that aspect. So that's one of the ticket items. The other things that we did was the digitalization. There's another heavy lifting that We did last year. And that, you know, Buddy won't stop. So we will continue on this digitalization journey. Hope that answer, Junfeng. Thank you, Babudi. A follow-up question from Chongqing Fu is Why XL guided for flat EBITDA margin? While we have mid to high single digit revenue growth and big ticket items are already spent. Yeah, I think we answered that already that we still keep our guidance at 49%, Junfeng, but as you know, XL is we are very opportunistic, right? Whenever possible, our operational excellence is there To become our main guideline whenever we make decision, whenever opportunity is there, we always try to strike and then get A better margin position. But for now, unfortunately, we still keep what we've been we call 49% as our guidance for the years. In terms of revenue, I think the revenue wide growth big ticket, Thank you, Babu Ri. So there are questions from Richard of Trimagga Securities. I think the first question is on EBITDA margin guidance. It was conservative. We have addressed it. And the next question is, do we anticipate any cost increases for 2023? Yes. So the one that Currently, we're looking at for 2023 is the cost for energy and electricity. As you know, government already increased the energy and electricity Last year, the fuel especially 17%, but only for the consumer, not yet for the enterprises. So that's the one that we continue watching out. Having said that, we've been actively also investing to ensure we got electricity productivity. So So a lot of initiatives been there to ensure that we can at least manage the impact to ensure it doesn't really hit badly on our P and L. That's one thing that we are anticipating for 2023. Thanks, Babudi. Chongqing Fang also have the same question. Do we Do we see any specific cost pressure? Phuong, I believe that has been answered. Next question is from Henry Tejha of Mandari Securities. Can we provide more colors on the O and M negotiation that we have mentioned earlier, Bakburi? And what is the cost reduction that we will get from Tauercos? And will it be applicable to all network sites. Yeah. So your questions, Henry, related to And negotiation, right? How much the cost relation? So the one that we already booked in Q4 is pretty much the 1 year top up. For our cost, it doesn't really impact for the beginning of the year, but total cost is the one that we're looking at Because you can imagine, Henry, the portion of the on used to be 20% or 30% And it's always being escalated every year based on certain parameter that we agreed with the vendor With our company and that portion being reduced, then it will reduce total cost 10 years of the contract throughout the years. So that's the one that we're looking at. In terms of numbers, roughly some contract 20%, 30% now become 5% to 10% only. So I cannot give you the figures exactly, but You can calculate. Thanks, Fauci. Follow-up question from Akhil Triad of Finance Securities. How prepared are we for the auction of 700 megahertz frequency? Yeah. Gil, thank you very much for this follow-up questions. Of course, yeah, Spectrum is the, probably the most important asset for any of OCOs or any MNOs. So for 700, what we know currently is that The available 700 spectrum, it will be actually divided by several packages. So currently we know that probably all of operators will actually are keen to Get the spectrum of 700. For us, this also will be very important In getting this spectrum because it will actually strengthening our capability for Not only increasing capacity, but also coverage, knowing that this is a lower band spectrum. So at the moment, we are ready with funding for the spectrum if we win the spectrum. And we also already talked with the government on The importance of actually doing the spectrum auction as soon as possible. Thank you, Goody Ann. Next question is from Li. Sorry, Yes. Okay, Christy. Thank you. Next question is from Lydia of Ispring. What is the proportion of postpaid subscriber between 1st and second tier cities? If we can share that. And what is the mid Single digit growth guidance, how much is driven by ASP? David, I think the question is yours, Pavel. Yes. So I don't think I can share the proportion. Actually, let me maybe refresh a little bit. It's 1st and second tier cities, but it's also ex Java. So I cannot share the subscriber base that we have in ex Java or second and first tier cities, but I can tell that the growth that we are seeing In general, for the whole company, but also in priorities in those cities, it's big. Now to the second question regarding the mid single digit growth guidance. Sorry, but what do you mean by the ASP? The if how much of that is actually driven by our If we take a look also to 2022, I think there have been like growth from 2 different areas. One is because we grow market share and additional subscribers are giving us additional revenue. And the other part is because our subscribers Consume more or spend more. And that is our subscribers spending more also comes from 2 things. 1 is from the price increases or the ASP, but also the other is And then gigabytes per subscriber keeps increasing. So let's say that there are like 3 drivers. 1 is the pricing or the yes, The price of the data, the other is more consumption of data per subscriber and the third one is increasing market share of Subscribers. So all the growth that we expect in 2023 also will be divided in those 3 drivers. It won't be only the ASP, We'll be part of the ASP. As I was mentioning, we are going to increase prices starting in quarter 1. So we are going to do it soon After the speed that we have already done, but we also expect to grow the market share of subscribers and we expect also a natural organic growth of Data per subscriber that is already happening. Thank you, Pardeep. Next question is from Chongqing Phung of CIMB. Can we quantify the cost spend for the 3 gs shutdown And also digitalization in 2022. Was this all charged under OpEx in the P and L? Yeah. So, Qianfeng, there are 2 components, right? Some, but mainly on CapEx On this 3 gs shutdown refinement and also digitalization. For CapEx, as you know, it's Not so much on OpEx because of rental, because we basically replacing the active equipment and also core equipments With 4 gs, that's the big deal. So taking down the 3 gs equipment and replace it With the 4 gs, so mainly CapEx. There are some OpEx like our 3 gs handset program Yes. Impact OpEx or costs to be precise. So that's the one that hitting us. About the amount, I cannot really share the figures, But you can see the up and down year on year figures and kind of like the estimate, how much of the amount related to it. Thanks, Babudi. Next housekeeping question. Yes. A housekeeping question also from Phung Ba related to the reserve For the new income tax law implementation that was impacting our labor expenses, will this be in 4Q22 only? Is this a one off? It won't be one off. So it's going to be here to stay for this article 2021. You know what's the law, Tim Fong, it's more on I used to be in Indonesia, if you have some allowance, tax allowance, for example, benefit It's not subject to Article 21, but you can treat it like non deductible expense in our P and L corporate now. Since 2020 And 2021 actually, the government treat this as part of benefit that's subject to Article 21. So we adjust it for 2022, then it becomes the new norm for 2023 onwards because that's required by the tax law. Next question is from Richardson Raymond of Trimaga. How does management see higher possibilities this year? Stronger revenue growth or better OpEx control that will drive our EBITDA margin above our guidance? Okay. So regarding the revenue growth, as we were mentioning, we are expecting to high Single medium to high single digit growth, right? So we are optimistic towards the year. We see that Competition is becoming more rational and the expected macroeconomic impact with all the inflation etcetera That started last year, we have not seen hurting the environment or the buying power of our subscribers. So we are optimistic. We see that still the share of wallet of Indonesia's in telco is low. So we know that we have room to grow. And again, being the competition more rational and with our plans to keep increasing prices, we are Optimistic in the revenue side of the story. I'll let yes, Udi. Yes, I guess the same on 49%, we cannot we will not But OpEx control is there. Whether it's going to be above guideline or no, we continue exploring. There's always room for us to look around on our cost accounts that we're working on. So the answer is not straight to the numbers or figures here. Thanks, Padevi. Thanks, Baburi. Next question is from Etta Putra of Maybank. It's actually the same question also from Richard Serns. This is regarding the FMC business model. How do we see this going forward? What will be the potential? Hi, Etta. This is Abhijit. Thank you for the question. We are very aggressive and ambitious about the FMC business model Going forward, in the initial slides presented by Gudian, you must have seen the figures about our aspiration to achieve 450,000 Homes Connect And 150,000 homes with our convergence product, which is Exel Santo. So FMC remains the key driver Of our growth going forward. Now what is the business model, right? So in the presentation, we also mentioned asset light. So this is typically how we look at growth options. We don't necessarily have to inject huge amounts of CapEx. There are a lot of players in the industry who are willing to inject capital in infrastructure. So what we do is We tie up with them through partnerships. So it becomes a CapEx slide or a 0 CapEx model for us. And mostly these partnerships are termed as build to suit Our co location models where somebody injures the CapEx builds infrastructure and we ride on that as a service company. Now the third element of your question was the business model and the integration with LinkNet. So there are 2 fundamental areas we are looking at. 1st is the synergies and the work has progressed significantly around these. So where we are looking at backbone sharing, Some poll sharing, transmission and we will also be tying up on CPE, the consumer premises equipment. So trying to eke out synergies in all these areas. And the second element also ties into the asset line, as I just mentioned, right? So we will be looking at LinkNet's deployment engine to see if we can leverage that to build out new areas for us to drive our FMC strategy. Kristi, do you want to read out the next question? Thanks, Babaji. Yes. Go ahead, Yes. So Raymond, your question is expectations for how the FMC initiative will affect Exel's total revenue in the short or long term. Well, in the short term, our focus is on getting Homes Connect on board. Once we have subscribers on board, then that will drive revenue. So in the short term, I think there will be an incremental Kind of impact. But longer term, as stated in our strategy, we see ourselves as a very strong convergence player in this market. And by that definition, obviously, significant portion of our revenues will come from FMC. And by the way, we are looking at FMC not only in the consumer side or Just homes. We are looking at that in enterprise side as well. Thanks, Bai Bijit. Next question is from Chongqing Hung regarding our increased fiberization rate That came up by close to 15 percentage point from 39 in full year 'twenty 1 to 54% in full year 2022. He asked how much of that was self built and how much is leased and do we have any target of hybridization for this year? So, Phuong, the one that we did throughout 2022 is mostly on Lease model. So no longer because as you know, we want we apply operational excellence, right? So we always look at the cheapest, the fastest and the highest return possible. And based on our calculation, the price at least in the market Still very compelling for us compared if we invest ourselves. If you put the same fund as the same Fine. For the building of our own, the return is very long. So because the return is very Then we go with the lease model most of the time. Thank you, Valerie. As addition to that, I think not only from the cost perspective, but from the Practically, it is also easier to do it in the lease model because those fiberization is through to Tower, which is also owned by Tower Company in leasing model with us. Yes. So most of this fiber is provided by those tower provider. Yeah. Correct. As you know, the practicing industry, right, if you roll out your own fiber to the tower company, there's some fee requested by tower company. Apart from the deals, we work with the tower company to provide the fiberization with 0 fee for the access. And that's already very good on paper and in practice as well and is faster as Bud Yan mentioned. The lines, the permit, everything already are there for us To execute. So that's why we go ahead with this lease module north compared to if we do it Sorry, go ahead, Christy. Nopa, please, Nopa. Yeah. In terms of target, we, as you know, every year we're adding more towers as well, right? So 50% to 60% is the one that we continue looking at because as our number of towers continue increasing, then the ratio we have hybridizing compared to additional Towers also align together. Yeah. But now we also have Additional reason why we need to do this fiberization. So initially, this fiberization is not only supporting our 4 gs, but also for the 5 gs, but now for FMC as well, because for FMC, if we have already fiberous tower, Then the last mile for FMC, which will be much more economical and faster. Yes. And this depends on the It's not always the best case to do fiberizations, as Budian mentioned, depend on the opportunities that we're looking at and depends on technicality and also Situation on the specific fibers that we only do so specific towers, then we do the fiberization. So you're not always going to be 100% fibres. Thanks, Babudi. Possible to address part the debt repayment that we have done in January 2023 and how it impact our debt profile? Yes. So after we use up the 100% of the 5,000,000,000,000 cash coming from the dry tissue, our position In January, roughly, I can give the figures, it's somewhere between 53% to 55% compared for the fixed and remaining with floating. So that's the position post the repayment. So still now 5050, But we're going towards that mix that we aspire. Okay. Next question is from Vanikou of Danarexa. What is the asset light model that we currently being what we are currently pursuing? And any specific telco areas that is referring to? And second question is on our guidance regarding the financial expenses for towers. So, Christy, Nico, I'll take the first question, right. Asset light is not a new concept in the industry. All telcos have been looking on ways and means how to lighten the balance sheet, right? By asset light, what we mean is, It is not necessary for us to own a particular asset in our functional value chain in order to serve our customers better. Few years ago, telco started selling off their towers. That is one example of asset light. 2, 3 years ago, XL also Divested our data centers where we formed a JV with PDG where we have an equity stake. We are also looking to divest any other asset in the company, which is not core to the business And which helps to lighten our balance sheet and also so our customers better. Now the most recent example of this was illustrated in my previous answer. In order to build a home passed and build fiber in the access side of our network, we don't necessarily have to inject CapEx ourselves. There is a lot there are a lot of players in the industry who are willing to inject capital in infrastructure in Indonesia. And, what we do is, strike partnerships with them, which can take many forms where they deploy the CapEx, build the asset, And we ride on the asset to serve the customers. So this is the most recent example. 2nd question, I think, to Kapoori here. Okay. Niko, on the questions related to financial expense for towers and the interest moving forward, will it come down? As I mentioned, the Q4, The one that we booked related to financial expense and interest related to the tower, that one is one time. One time that also consists of some portion of our previous quarters. So you have to normalize count that Situation, if you want to forecast your Q1 onwards. Whereas for interest expense specific, after we repay our RMB5 trillion more using the TRITC result. Obviously, our financial interest expense will be lower After that, the repayment on the call. Thanks, Babudi. Housekeeping question coming from Henry Tejio of Money Re Securities related to the bundling cost of the 3 gs shutdown program back And will it be normalizing in Q1 2023? And have we finished doing the 3 gs The funding almost done, right? We can say done, if not. But then having said that, there's another situation that we are trying to tackle as well. The 40, as you know, voice service still needed. So there's another program that we probably have To take care as a follow-up after the 3 gs after the 3 gs shutdown with that handset to faster The adoption of our 3 gs refurbishment to 4 gs. Thank you, Pa. Next question is from Henry Sugiato of Jarvis. Do you see collaboration in terms of rolling out XL Home with infrastructure payers like KOWR? And can we provide Kristi, I will take that question. Yes. Andy, hi. The short answer is yes. As we discussed previously, right, so a couple of things. We are seeking to become an asset light Telco, that means we will leverage other people's infrastructure to serve our customers. And as discussed answered by Boudyan and Boudi, many of these top players are doing They have a lot of experience in laying fiber, in maintaining towers, maintaining equipment. So we see them as a natural partner in our drive, to roll out fiber in the access network as well. On the FMC product post with Accel Home and LinkNet, it's early days yet. LinkNet has taken our product and deployed it in their areas. I think currently we are seeing figures in the low single thousands. But as we move forward, we will be ramping up. I think one point to note is, again, in the Boudyan's presentation, we were mentioning that we are now ramping up our Sales effort nationally to drive conversions better in the footprint. And we are working closely with LinkedMed on this topic as well. So we can start driving conversions deeper into their footprint than our footprint. Thanks, Baji. Next question is from Richardson of Trimuga. He noticed that the CapEx is lower this year compared to last year. Is this going to be the run rate onwards? Hello, Jason. Thank you. Yeah. Thank you for the question. So as you might aware Of that, prior to 2021, our annual CapEx was around 7 to 8,000,000,000,000. But in 20212022, the CapEx was increased quite significantly around 9 to 10,000,000,000,000. The reason is because we had to shut down our 3 gs, so we had to expand our 4 gs to replace the capacity and coverage that left by 3 gs technology. So in 2023, because we already completed our 3 gs That requirement is not there anymore. So from this year moving forward, that will be our Run rate for annual CapEx, which will be around 7 to 8,000,000,000,000. This CapEx requirement will Stay the same until there is a new technology coming in, which is 5 gs. And we think that the Another CapEx high CapEx cycle for 5 gs will not come beyond 2020 so will not come before 2026. Thank you, Ibu Dien. We have one last question from Ranjan Sharma of JPMorgan. Ranjan, go ahead and unmute your mic. Thank you, Christy. Thank you management for the presentation and this opportunity. I have a bunch of questions. Maybe I can take them 1 by 1. If I look at your presentation and your on Slide 10, The infrastructure costs are down from Q3 to Q4. The first question is what's behind this? Typically, these costs should be going up. Is this just the capitalization of cost was recorded as P and A and interest expense? Yeah. Anjan, yeah. As I explained earlier, that's related to the one time true up on that Because our result negotiation with our company is more on the IFRS 16 treatment reduction on the rental network. And then we got higher RoU depreciation and financing costs. So I think that's censored before. Okay. So that drop from 993 to 662 in 4th quarter is primarily driven by capitalization of leases? Correct. Okay. So from that perspective, like if I look at your interest expense, it goes from $700,000,000,000 to like Close to $890,000,000,000 in the Q4. Should we take that as a new run rate? I mean, do you still have interest expenses going up, interest rates going up? This is not going to be around, right? It's combination of few things, right? 1, because of debt capitalization. 2nd, because We don't forget to repay $5,000,000,000,000 our debt that will reduce the interest that hitting our P and L going forward. And, you have to come back a mix the impact if you want to forecast. Got it. And the depreciation and amortization like of $2,900,000,000,000 because you have higher capitalization of leases? Yeah. So depreciation, roughly, full year, that will be our base. But then it will depend on how we're going to roll out our CapEx going forward. So So just going back to that, right, apart from CapEx, you have significant jump in Leases, your capital your capitalized leases have gone from 25,000,000,000,000 at the end of 2021 to more than 31,000,000,000,000 in 2022 That's been increasing through the year. So shouldn't that increase the D and A run rate? No, that balance, the increase Happened in Q4 because of the one that I explained earlier related to the Ottawa O and M brand negotiation. And hence, we capitalized and ROU increased the balance, liabilities ROU. Got it. And my last question is on the free cash flow. So even if I look at your 2022 numbers, if I just do a simple calculation of Cash flow from operating activities minus CapEx, minus interest expenses paid and minus lease liabilities. You have a negative free cash flow of RUB 1,400,000,000,000. When should we start thinking about XL becoming free cash flow positive? Yes. So as Boudienne mentioned, what as you can see, right, our CapEx on the high side in the last 2 years, especially last year also 9,000,000,000,000 in 2022. That's one of the driver for that cash flow OpEx I mean cash flow operational. So with this year, we're back to the normal running rate of CapEx, then it will significantly push up the operational cash flow. We are in our indicated CapEx, we mentioned the one that we're going to spend around JPY 1,000,000,000,000. So that will be the new guideline until the next technology coming. Okay. Got it. Thank you so much. Thank you, Ranjan. Thanks, Baburi. We have 2 more questions. We are in the last 5 minutes lag of the call. The first one will be from Nico Margaronis. How much percentage of our XL Home connection are based on fixed wireless access? And what is the incremental connection? Yeah. So thanks, Nipo. So currently, actually, none Around fixed wireless access. It's essential to distinguish between fixed wireless access and LTE. So currently, our customers on the fixed broadband are served through 2 technologies. 1 is fiber And a small minority is sold through a wireless router using our LTE network. I think in the future when 5 gs comes, we will start looking at fixed wireless access. Currently, we are using the mobility spectrum LTE. Incremental connections predominantly will be based on fiber till the time 5 gs comes. And once that comes, we will evaluate the business case and see whether we can It was more 5 gs in the last mile using FWA, but till such time it is 5. Thank you, Babaji. Last question for today is coming from Henley Subierta of Jarvis. He wants to know the economics and also the commercial surrounding the infrastructure rollout partner for fiberization. Vijit, would you like to take this? Yeah. I think this is a very this is a key area, right? So we've discussed in detail the asset light model, right? Economics depends on economics and the commercial model is a function of 2 things. 1 is who is the partner And second thing is what is the business model that underpins the commercial model? There are a variety of infrastructure funds willing to Capital, there are a number of infrastructure players. We also spoke about tower providers. So it really depends on who is entering this game. The economics is driven by their cost of capital, how much capital is required to deploy this And then what kind of commercial arrangement, they enter into us? And there are a number of commercial models available in the market. I mentioned colocation where, for example, A wholesale or an infrastructure builder will just come in and build a network and then go and talk to Any operator interested or any ISP who will come and do ride on that. And that will, the other type of model is what we call as build to suit, Where we identify the areas where we are going to go in and then we get somebody to come and build for us and we do a long term partnership. So really, the commercial model follows the business model and the economics of the infrastructure. I hope this answers your question. Thank you. All right. Thank you, Bhavijit. So that question concludes today's conference call. Thank you, Ibu Dyan, Babudi, Pajavit and Pajid for your thorough explanation. Thank you everyone for your participation in today's call. As always, do get back to us if you need further information. Please stay safe and healthy and we will see you next quarter. Thank you. Thank you. Thank you, everyone. Thank you. Have a good day.