Hello. Good afternoon, ladies and gentlemen. Welcome to XL Axiata's Earnings Call for the 2021 Financial Year Ended December 31. My name is Indar, and I'm the head of investor relations for XL Axiata, and I will be acting as your coordinator today. During the presentation, all participants are in a listen-only mode. Based on the feedback we have received from you after our previous webinar, it was found to be more efficient and quicker if the questions are read out by us instead of being asked by participants. Hence, on this quarter, we are only accepting typed questions. If you would like to ask a question, please type it in the Q&A box with your full name and company name, and we will read it out during the Q&A session. Please do not type it in the chat session, or this might not be read.
As a reminder, this session is being recorded for replay purposes. With me on the call today are Ibu Dian, our Chief Executive Officer, Pak Budi, our Chief Financial Officer, Pak David, our Chief Commercial Officer for Consumer, and Pak Abhijit, our Chief Commercial Officer for Enterprise and Home. Now, Ibu Dian will share the highlights for 2021, which will then be followed by the Q&A session. I will now hand the call over to Ibu Dian.
Thank you, Indar, and good afternoon to everyone. We are happy to report a good performance in 2021 despite the ongoing COVID-19 pandemic, as well as the price competition that impacted the market in the first half of 2021. This is the result of the consistent execution and implementation of our operational excellence strategy, which has put us on track to achieve our vision of becoming the number one converged operator in Indonesia. The key highlights of our results are as follows. Our revenue grew sequentially for the third consecutive quarter, rising 2% Q on Q due to continued strong product traction in the market. This means our full year 2021 revenue increased to IDR 26.8 trillion, rising 3% year-over-year.
Our EBITDA improved as well, rising 2% year-on-year in full year 2021 to IDR 13.3 trillion with margin at 50%. Most importantly, we continue to record profit with our full year 2021 total net profit at IDR 1.3 trillion, which is the highest level since 2013. We have spent a high level of CapEx in 2021 to improve our network performance along with increased digitalization to deliver the best customer experience. The improved customer experience was required to address and match the increasing customer expectation on internet quality that emerged during pandemic. Our focus going forward will not be to play the price game, but on delivering the best experience and creating value for our customers. Our convergence journey continues with our acquisition of Link Net, which I will touch on the later slide.
Importantly, our convergence penetration has reached 11% by end of December and currently at 16%, indicating a strong demand for this product. In this slide, let me share with you the update on what has happened in 2021. The consolidation in the industry that happened last year will be positive for competition as it has created a more balanced industry structure. This will mean a focus by market participants on strengthening new value propositions, such as customer experience rather than timing on price. Our network investment as well as high focus in digitalization will show how we also play our part in delivering this best customer experience to our subscribers as we continue to invest.
Convergence will remain a major focus for us to try and increase adoption to our convergence proposition as we scale up our integrated fixed and mobile business and gain higher share in home segment. A major positive development, the pandemic is predicted to subside in 2022, which will result in a better market environment during the year, along with a higher consumer confidence index. There is also a great opportunity for us as customers will adopt a more digital way of life, which will create higher and richer needs of our services as a key internet provider in this country. However, there are also risks to performance, which include rising inflation, especially with rising oil prices, which might affect consumer purchasing power.
Our announcement on the 27th of January 2022, where we would be acquiring along with our major shareholder, Axiata, a 66.03% stake in Link Net, which is one of the leading broadband providers in Indonesia, is the next huge step on our convergence journey. We expect to scale up our home presence further with this acquisition and will realize meaningful synergies from the transaction, which we expect to close in the third quarter of 2022. In this slide, we can see some key indicators, both financially and operationally. As we discussed before, all our metrics are moving positively in the right direction. On this slide, let me drill down a little bit into what we are seeing and why we are confident that our network investment and increased digitalization is leading to a better customer experience.
We have taken our BTS count above 162,000, with 4G BTS increasing to above 77,000, with an increase rate of fiberization where more than 50% of our end sites are now fiberized. Importantly, this is leading to higher usage as evident by the 34% increase in total traffic in full year 2021. This is because our customers have been getting higher access speeds as measured by Facebook, where access speeds have been increasing by 20% since the start of the year. Importantly, our digital sales and care apps, named myXL and AXISnet, have seen a 3.5 times increase in monthly active users since the start of pandemic, with more than a third of our base actively using these apps.
This is because of the increased focus and investment we have put in and will greatly help in making our business more efficient from the lower cost, as well as opportunities for selling more internet packets and giving better digital experience to these customers. Finally, our guidance for the year of 2022. We aim to grow our revenue in line with market and for EBITDA margin guidance is in the low 50s%. We will continue investing our network as our CapEx guidance of around IDR 9 trillion, as this investment will be made to strengthen network quality, enhance customer experience, as well as to increase digitalization. Thank you, and let us proceed to the Q&A session.
Thank you. Thank you, Ibu Dian. To ask a question, as mentioned, please type it into the Q&A box. Please do not use the chat box, as this is not the proper medium for questions. Please ensure to use your full name and company name, or we will not be able to read out your question. We also remind you to strictly keep your questions to a maximum of two to allow for other people to ask more questions. We shall end the conference call sharp at 3:00 P.M. Jakarta time. Our first question comes from Niko from BRI Danareksa. The first question, how much percent of your debt is floating? Do you undertake efforts to change it to fixed? The second question, what has driven the tax expense higher in 4Q 2021? How much is the effective tax rate going forward?
The third question, in the Q3 earnings call, you mentioned that price packs increased for XL. How much of the data revenue growth in 4Q 2021 is due to those price hikes?
Yeah, Niko, thanks for the question. On the first item, how much percentage of our debt have been floating rate, in our webinar pages, we show that it's around 70% plus. The exact number almost 78%. We have planned to convert into fixed. As you know, XL always very opportunistic. Whenever there's an opportunity, we do that. We working closely with the bank to monitor the trend of this interest going forward, what happened in other part of the world. Also another thing that we are monitoring, then we make the call. You're right, we are in the process looking at this to convert some floating portion that's coming, the loan that's coming in second half into fixed.
As you know, around IDR 1.7 trillion will be coming to this year. That's the number that we are looking at. On the second item, what drove the tax expense higher in 4Q. There's an announcement from the government to go back in terms of tax rate into 22% from 20%. There's an adjustment that we have to do in 4Q. Overall, we feel appropriate, we have to book that number to make the total of 2021 at the 22% in terms of our tax rate. I think going forward, that will be the number until there's further announcement from the government on the tax rate.
I think in the third question regarding the price hikes and what is the impact in the QoQ growth of the revenue. I mean, I could not quantify out of the revenue increase how much is due to this. What I can say is that the price hikes brought, it's one of the causes of the revenue increase, and the impact was positive.
Okay. Thank you, Niko. Hope that answered your questions. The next questions come from Arthur Pineda from Citi. The first question, can you remind us what is XL's dividend policy? Does the planned Link Net acquisition impact that? The second part of the question, why not move to consolidate Link Net on an XL level rather than at the parent company level? Excluding the leases, you are at 0.6x net debt to EBITDA. Also, won't the cost synergies be maximized if done on the local level? Why do it on the parent level?
Yeah. Let me answer the first part about the policy. Then, Abhijit, my colleague will answer about the relation with the recent acquisition that we have. The dividend policy that we have is still the same. Currently, it is 30% of our net profit. So 30% of NPAT, that's the current policy. What are we going to do for the last year? Right now we're still looking at it. When there will be more announcement about it. Then regarding to Link Net.
LinkNet acquisition, one of the key focus areas was also to protect the gearing ratios at both XL and Axiata levels, right? From a funding perspective, we had to ensure that both are well within their respective covenant requirements. Given this need and focus, the transaction structure we have arrived at is considered to be the most optimal ones for all the parties involved.
Sorry, Arthur, just to correct my earlier statement. I mentioned about 30% of NPAT. Actually, it's minimum 30% of NPAT. About the exact format, it's still under discussion, but that's the policy right now, minimum 30% of NPAT.
Okay, let me address the last part, right? There is one more. Cost synergies we maximize. Arthur, we have looked at all angles. Actually, at this stage, it would be a bit premature to start calculating synergies. We are confident that on the cost side at least, the bulk of the synergies we can realize through sharing of passive infrastructure, backbone and transmission. At the same time, we also see potential revenue opportunities, right? We have complementary footprints in ex-Java and mainly Java for Link Net. We also see a potential opportunity for cross-selling of products across both the companies. Nevertheless, as I mentioned, right now it's a bit premature. As we move towards the closing and the ownership has been transferred, we'll be developing and delving more into this.
Okay. I hope that answered your question, Arthur. The next questions come from Husein from UBS. He has three questions here. The first, what is the industry growth expectation for 2022? The second, any updates on the 700 MHz spectrum auction? And the third, how do you define convergence?
Let me take the first one regarding the growth expectations for the industry. We expect that in 2022 there will be a rebound. We believe that it will be a higher growth than in 2021. We are thinking on mid-single digit growth rate, so more or less. We believe that we can perform at least in line, if not better than the market.
Okay. I will take the second question on the 700 MHz spectrum auction. Currently, the government is planning to auction more spectrum, predominantly for 5G purposes. Currently, what is under discussion is to release spectrum on 2.3 GHz and 3.5 GHz and also for 700 MHz. The auction is expected to happen sometime late 2022 or early 2023.
Okay, I'll answer the next question from Husein. Actually, that's a good question. How would you define convergence, right? Convergence has many sub-definitions. We can talk about convergence at the consumer level, we can talk about device convergence, we can talk about network convergence, we can also talk about organization convergence. The way we see convergence in the telco sector generally and Axis specifically is the ability to offer all range of services and products into a household, right? We view our customer base from a customer lens perspective. Now, these services could be mobile, these services could be fixed, these services could be content or any other value-added service. From a customer perspective, this gives the consumer an ability to interact with the telco through a single interface.
In our case today, our customers can avail of all our services through the myXL app. It kind of negates the need to interact with different service providers for your fixed broadband needs or for your TV needs or for your mobile needs. This, according to us, is the definition of convergence.
I'll take the next question on the fiberization targets for 2022. Now our fiberization rate for our end site is around 50%. I think more than 50%. For 2022 at least, we targeted that this level can increase by an additional 10%-20%. Of course, synergy with Link Net in our infrastructure, especially on fiber infrastructure, will help our fiberization. Actually, this is very logical to do that we can get infrastructure collaboration to have like more economical and efficient CapEx and OpEx for our operation.
I think there's another question from Husein.
I think, Husein, you had one more question on the synergies from Link Net, which Abhijit has already commented on in the previous question. It's okay, I think. The next question will be from Sachin Mittal from DBS. His question is that data yields have declined 7% Q-on-Q in fourth quarter. Have we seen the impact of repricing of booster plans in October? And what's the outlook?
Yeah. Yes, we have seen the impact of the price increases that we did in October, November. I think that impact was positive. You are right, the yields keep decreasing. There are mainly three reasons because of that happening, right? Number one is that we keep growing faster in those geographical areas where our yield is lower. That makes the average, the total average keeps decreasing because we are growing more in areas where the yields are lower. That's number one. Number two is at the consumer level. Consumers also we see that they are upgrading and using more and more of the data package that they are buying.
There is a natural, more usage, lower yield coming from the same customers or customers that are upgraded to a higher package. That's the second one. The third topic is regarding the school program. The school program, as you may know, had a change in December. That change in December made the yield that we were receiving from those customers in the school program decrease massively. It was double digit decrease. I think those are the three main reasons why you can see that the yield has decreased, although we have done price increases and the price done, the impact of those increases has been positive.
Okay, Sachin, hope that answered your question. We'll go to the next question from Kresna Hutabarat from Mandiri Sekuritas. He has three questions. The first question, can we check if there is a one-off on the personal expenses or staff costs in FY 2021? If yes, what would be the normalized run rate for personal expenses in FY 2021? Second question, should we continue to expect sales and marketing expenses to form 10% of revenues going forward? And the final question, given the government's plan to retire 3G networks, should we expect accelerated depreciation for XL's 3G assets in the near future as well? How much of XL Axiata's assets currently are tied to the 3G network now?
Okay, Kresna, I will answer the first question. I think this question came up in last quarter call as well, and we already mentioned the rough figures. Whether we can expect or can we what about the personnel expense? Yeah, we book in the Q seventy billion adjustment at that time. It would be considered as normalized item for 2021. I will answer the third question, and Abhijit will address the second question on the sales and marketing. In terms of the retiring 3G network, if you see our record in December 2020, we booked a big adjustment at that time, CapEx 3G depreciation acceleration. It was around IDR 2.5 trillion.
That's the number that we recall of last year, I mean two years ago in 2022. The one that's still remaining is not really that material. I would say there is some a bit that's still left, but majority almost all already fully written off in 2020 different.
Okay. Let me take the second question regarding the marketing and sales expenses, right? As you know, we are in a very unique situation, and there are like three factors that are bringing our marketing and sales expenses to higher than they were before. The first one is convergence. We are, as you know, working hard on starting to launch our convergence offer, and that means we are doing a higher effort in both marketing and sales expenses there. The second topic is the 3G to 4G migration, which we are also aggressively pursuing now, and it's also meaning that our marketing and sales expenses are higher.
The third one is the specific go-to-market strategy that we have now, given the very unique context, consolidation context in the market, which also it's driving us to be more aggressive in certain areas. As long as these three factors keep aligning among themselves or the one of the few of them, we can expect that the marketing and sales expenses can be around that level.
Okay. Thank you, everyone for the answer. The next question comes from Raymond Kosasih from Verdhana Nomura. The first question is, post the MTO, what would XL stake in Link Net be? If it is below 50%, then there is no consolidation benefits, thus better off XL has no stake since Link Net would be controlled by Axiata, and thus XL can still enjoy the convergence benefit. The second question is the CapEx for 2022 split between cellular and Link Net.
Okay, this is Abhijit. Let me take your question, Raymond. Right. As I mentioned earlier, the reason we had this transaction structure was to protect the gearing ratios of both XL and Axiata. Hence we have gone in with the shareholding that has been released to the press. Post MTO, we do not envisage XL's shareholding to be above 50%. No, we will not be consolidating the revenue. Nevertheless, we will be able to record an associate contribution of the proportional profit. Now let's separate ownership from operations for a second. Despite the ownership structure, we are very confident that XL and Link Net can both cooperate and work together to enjoy the synergies, both on the cost side that I explained earlier, as well as on the revenue side.
Actually, we view the world a bit differently because both companies have got complementary footprints. As explained in the previous calls, we are stronger in East Java and Link Net brings a pretty robust network in Java to the table. Your next question is CapEx for 2022 split between cellular and Link. I think it's slightly premature to talk about CapEx at Link Net because we are still some time away from closing the deal as well. However, you know, I would imagine as a listed company and that is expanding, they would have their own CapEx figures. My colleague, Budi, will be giving the guidance for the 2022 CapEx, yeah. The next question. Sorry, I hope I have answered your question, Raymond. If not, then you can type again. Next question is from Sachin.
Will CapEx rise to expand the coverage of Link Net, and how much is its household coverage? In this call, I will give you the figure for the current household coverage, which is roughly around 2.7-2.8 million homes passed. That's what we call homes passed is their actual footprint. Within those homes passed, they have around 800,000 odd homes connected. Your first part of the question about CapEx on. Sorry, where is Sachin's question here? CapEx rise to expand the coverage of Link Net. Again, Sachin, sorry, but this is slightly premature because we are still a few months away from closing and transferring of ownership. I think this would be better addressed at that stage. No, I can read the next question. The next question is from, Angus, Smartkarma.
How quickly will XL Axiata be utilizing Link Net's fiber network? Will the company bundle First Media with XL Axiata services and merge its own broadband with First Media? We have just signed the SPA recently, and we announced, I think, on the 27th of January. As we mentioned, all parties are now focusing on obtaining the regulatory approvals and closing the transaction. Once the transaction closes, I think we'll be able to have more clarity on what are the synergies. I've already spoken about the synergies both on the cost and revenue side. Of course, we will be looking at utilizing the assets of both companies as well, right? Bundling First Media with XL Axiata services, et cetera.
Again, this forms a part of my previous response on revenue synergies, where we will be looking actively at cross-selling our products across the both respective footprints as well as our mobile products, which we want to bring in for the sake of convergence. Yes, we will be looking at all of this.
Okay. Thank you, Abhijit. Hope that answered your question, Angus. The next question is from Fung, from CIMB. He has two questions here. The first question is on CapEx. For the IDR 9 trillion CapEx guidance for 2022, that's quite a bit higher than our usual run rate. Where is the spending going to? Do you see that as the run rate into future years because XL now faces competition from a larger ISAT and Hutch entity? The second question, are there risks that the cost could come in higher given the inflationary environment, example, oil prices, and dent the margins? Or do you think that this is unlikely to be a major risk?
Yes. Thanks for the question. It's really a three-part here. One about the IDR 9 trillion, second about is it going to be new network and the third part about risks because of the COVID-19. On the first part, as you know, we're committing to continually improve our network, and we continue to focus on digitization to ensure that we have strong network that's able to deliver their promise, giving the best performance and also focus on the customer experience. This is commitment that XL's going to use that money in promo. As you know as well, partially our spend is also driven by the recent development in the industry consolidation.
We have to ensure we have good quality of network to be able to compete in the area that we believe we should fight to compete. This IDR 9 trillion is the guidance for this year. Whether we're going to do the same in the next two, three years, as you know, again, XL is very opportunistic. We see things very based on the fact of what's happening in the market. We're going to continuously evaluating our CapEx number based on how the market evolves. That's the one that we'll be at the next two, three years. We continue using our principle about operational excellence. We always look at the payback, which one is giving us the most optimum return with the lowest investment possible.
That's the formula that we promise we continue going to use whatever we make decision on the CapEx. The last bit on the risk, you're right. Those are always around about the risk on what's happening in the commodity market, et cetera. But as you know, XL always do negotiation on the like a bulk negotiation once a year, we already know what we're going to do, and we negotiate work together with the vendor to secure, to protect our investment. We make the one, sometimes it can be even up to three years. Those risks are reflected in the price. We mitigate the risk by having that price locked up front. Every year, we continue to revisit to get a better deal with the partner. I think that should answer your question.
If not, then feel free to correct.
Okay. The next question comes from Mohammad Fakhrul from BCA Sekuritas. He has two questions. The first question: Could you please share some color on the long-term plan from the acquisition of Link Net? Do you plan to become a major shareholder in Link Net and consolidate Link Net's books? I think this is also related to a question that Raymond also has, which is also once debt ratios are not a concern, would Link Net be consolidated at XL level?
Yeah. Hi, Mohammad and Raymond. This is Abhijit again. The long-term plan, as Ibu Dian mentioned in her presentation, is for XL to become the number one converged operator in Indonesia. In order to achieve that, we will use different strategies at our disposal. Link Net acquisition is one of them. We also have partnerships with other fiber providers where we do a wholesale retail, and in addition, we also have our own footprint, right? Nevertheless, all these approaches are geared towards one goal, which is to become the number one converged operator in Indonesia. Now, Link Net consolidation, as I answered before, the reason we have had this current transaction structure is to protect the gearing ratios of both purchasing entities, Axiata and XL.
For the foreseeable future, at least for now, I can say that we will maintain this current structure. Nevertheless, allow me to repeat what I had mentioned before. Let's separate ownership from what we achieve in the market, right? Owner shareholding is one thing, but operationally we believe there are a number of synergies that we can achieve both on the cost and on the revenue side with this acquisition. I hope I have answered both questions, Raymond and Mohammad.
Yeah. I think the second part of Mohammad's question was.
No issue.
What kinds of innovation? Yeah.
Yeah. Mohammad's question is, what kinds of innovation do you guys plan to unleash in the near future once you consolidate Link Net operationally? Mohammad, allow me to share with you. Let's separate consolidation and shareholding and ownership from the actual innovation. What we see is having the ability to interface with a household with an entire breadth and depth of telco-related products and services. We no longer view the world through a mobile or a fixed lens only.
We want to be able to offer the customer a converged experience across content, be it through OTT platforms or a pay TV, ability to manage mobile subscriptions and fixed broadband subscriptions through one single interface, one single bill, and any other value-added services that we introduce in the future, be it smart homes or digital lifestyle products or, health insurance or any other type of financial products. We see a household as one unit, and as a telco, we see that we should be in a position to drive all kinds of products and services into this household. I hope that gave you a bit of color of how we view convergence and the innovation that we are thinking.
Hope that answers your questions, Fakhrul. The next question is from Norman Choong from CLSA. Can you share what's your strategy on convergence after acquiring Link Net? How do you retain existing subscribers of Link Net, and will there be changes on products offerings and ARPU of Link Net?
Okay. I think, Norman, I have already answered the convergence and the strategy, post this acquisition, in my responses about offering all kinds of products and services into the household. I hope you have got that bit now. How do you retain existing subscribers of Link Net, and will there be changes on products offering and ARPU of Link Net? I think, retaining subscribers of Link Net, you know, Link Net is a listed entity, and after this transaction, they still will be two separate companies. I'm sure their focus will be on retaining their customers. The second part, changes on products offering and ARPU of Link Net. Now, ARPU is an outcome of what strategies we deploy, so I cannot comment on that. But product offering, definitely.
As I mentioned, we will be working very closely with Axiata and Link Net to drive synergies across the network. At the same time, looking at driving revenue opportunities in Link Net's current footprint, in their intended expanding footprint, and also on the XL side as well. Right? Revenue opportunities initially will come through from cross-selling of products across these two companies. I hope this has answered your question as well.
Okay. We'll go to the next question from Sean Yap from Saba Capital. He has three questions. The first: Your FY 2022 guidance guides for revenue to be in line with industry growth. Is Axiata no longer anticipating market share gains from the Indosat Hutch consolidation? The second question: XL lost 70,000 subscribers in Q4. What drove this sub loss? Did XL lose market share in Q4? And then the final question: What is Ferrymount's role in XL Axiata?
Okay, I will take the first two. You are right. What I said in the expectations of our growth for 2022 was in line or better than the market, right? Yes, reading the question, maybe it was not expected enough. Yes, we expect to grow market share in 2022, given that we are an attacker, and we have two companies that are consolidating and another big company, right? Definitely, yes, we are anticipating to win market share in 2022. Regarding the second question, I think it's the 70,000 subs loss. You can see that in the order of magnitude of the total number of subs, it's a small amount.
Now, it's true that in quarter four we have seen a little bit of consolidation due to some of the dual SIMers of the school program starting to consolidate that, right? That we have seen. Nevertheless, the tracking that we do from our market share, we see that we have grown market share in the fourth quarter as well. It's not a decrease in subs and market share. It's a decrease in subs given to a specific situation, and subs seeing consolidation that is happening. What we can see is that our total market share, subs market share, has increased a little bit.
Now for number three.
Okay. I will take now the third question on the, what is Ferrymount role in XL Axiata. Currently, Ferrymount owns 5% of XL shares, and it can be extended further in the future. We have shared in our previous call that the objective of Axiata to actually release that 5% or more to Ferrymount is just to help Axiata in forming a strategy in navigating through a regulatory environment, political situations and so on and so forth, and helping XL in those arenas.
Okay. I hope that answers your question, Sean. The next question is from Selvi from UOB Sekuritas. Her question: Since Link is targeting to enlarge the enterprise segment growth, does XL have plans or synergies convergence that are also targeting corporate customers? Also, are there any synergy plans on data centers?
I will take that question. This is Abhijit. Selvi, thank you for an excellent question, by the way. Earlier when I was talking about convergence, I illustrated that using an example of a household, but you are absolutely spot on. Convergence also applies to enterprise customers, and we are actually very excited about using the LinkNet acquisition to drive convergence into their enterprise footprint in conjunction with us. This means not only selling our mobile solutions and fixed connectivity solutions, but also going into the ICT space and selling digital products and solutions from productivity tools to cloud solutions into the entire large, medium, and small enterprise space. The short answer, but that was a long answer, but the short answer is yes to your first question. Your second question is synergy plan on data center. Absolutely.
When I mentioned about cost synergies, I illustrated using backbone and transmission networks. Nevertheless, we will be looking at the entire network components, including data centers and seeking to drive synergies.
Okay, Selvi, I hope that answered your question. The next question comes from Richard from Trimegah. The first question: What do you think the data usage trend will be like in 2022? Will it be lower than 2021, requiring the company to concentrate more on data yield? The second question: Is the company willing to consider a right issue to reduce debt?
I will take the first one. Regarding the data usage trend, we expect it to keep increasing. We believe that it will be higher, the data usage in 2022 will be higher than 2021. Now, that doesn't mean that we are not going to focus on data yield. I think we have a strong focus on data yield and on market repositioning, I will say. As we were telling in our last quarter call, we already did price increases in October, November. We are doing the same as we speak. This February seventeenth, we already modified our biggest portfolio, ex-Java Xtra Combo Lite, in the traditional channel and have increased prices, right? We have converted it to something that is now called ex-Java Xtra Combo Flex with some price increases.
We have complete commitment on trying to bring higher revenue per gigabyte.
On the second question related to whether we are considering rights issue to raise. Currently at this stage, we are evaluating all funding options we have, right? Especially with this recent acquisition of assets we're having of Link Net. Could be debt, could be equity, whether debt is bank loan or bonds, whether the bonds is short-term, long-term. Those are being reviewed currently. We do this together with the group as well because we have this recent acquisition. To get most optimum option to keep our gearing at healthy levels. I think that's the ultimate goal. Currently, we are in a strong, balanced position, but we continue reviewing options there is to get the optimum funding expense.
Okay. Hope that answers your question, Richard. The next question comes from Niko from BRI Danareksa. The first question: what is the target of convergence in 2022 to 2024? The second-
I think Niko has many questions. Perhaps you go one by one.
Okay. Yeah. I'll read out all of them, then we can answer them. The second question is: what is the current sales outlook for e-commerce marketplace channels? How much sales is attributed to that channel? Do you see any potential for deeper partnerships with e-commerce players, and what is the contribution of sales via your own app? The third question: do you actively pursue network collaboration with Smartfren or even deeper integration with any of your other peers?
I'll take the first question, what is the target of convergence in 2022 to from 2022 to 2024. Put it simply, we want to become the number one converged operator. As simple as that. If your question is more about what revenues, what subscribers, then as I mentioned previously, it's a bit premature because we haven't closed the transaction yet. Let us do that, and I think by the time we close the transaction with LinkNet and transfer the ownership, then we will be in a better position to offer more details to the market.
Okay. On the second question, we don't disclose the information to that level, right? I don't think we share that level of information, but I can tell you that number one, our most important channel, of course, is always our own digital application. One information that, yes, we have shared is that our monthly active users have grown 3.5 times since January to December. You know that we have already more than almost 16 million monthly active users in our digital applications. You can more or less estimate that the revenue growth has gone also has been big, right? Has been in line. It's no longer a negligible revenue.
It's already a significant amount of revenue that we are receiving directly from our digital channels. To the second point around e-commerce platforms, yes, they are very important for us as well. Anything that is digital, again, the best digital channel for us is our own channel. But the second, best digital channel is e-commerces or other digital channels. Digital is always positive for us, so we are in constant partnerships and constantly looking for more strategic, collaboration with all these, e-commerce players.
I will take the last question. Do you actively pursue network collaboration with Smartfren or even deeper integration with your other peers? I think we have shown in the past few years that XL is the number one supporter of network sharing. We really think that any infra collaboration will bring benefits for the participant. The answer is yes, that we actively pursue a collaboration, not only Smartfren, but with any other operator as well. The second part of the question, I think deeper integration, probably you're alluding to a consolidation. At this stage, what we can say is that we are supportive of efforts to improve in the industry via deeper consolidation.
However, currently, we are still busy with the focus on our core spectrum acquisition activities. The potential of merger is always there.
Okay.
I hope that answered the question.
Okay. We'll go to the next question from Piyush from HSBC. He says, "Thanks for the call, and congrats on the great set of results." His first question: On revenue, can you give us the split of revenue in Java and ex-Java? What was revenue growth in Java and ex-Java in 2021? The second question: Can you update us on EBITDA or EBIT margin of ex-Java regions? What proportion of CapEx would be spent in Java region in 2022? Would it be fair to think that Indosat Hutch formation would divert larger CapEx in Java region to maintain your revenue market share?
Okay. Let me take the first one regarding the revenue. Once again, we don't disclose the revenue to that level, but I can give you the data that both regions, Java and ex-Java, were growing quarter-on-quarter. Of course, ex-Java is still outperforming Java in terms of revenue and trajectory, as you know. Currently, ex-Java revenues are more or less 30% of the total revenues in this fourth quarter.
Yeah. On the second question related to EBITDA, EBIT for ex-Java as well as the effect of the investment for ex-Java due to the recent consolidation. Same like what David mentioned, we couldn't really disclose in detail on what's the EBITDA effect between the two states, regions, Java, ex-Java. I could share a few things, something that we also shared before, that we've been investing in ex-Java up until 2017. As you know, our operational excellence is very disciplined in terms of CapEx. Depending on the area in ex-Java, some areas we're looking between 2-4 years payback. Hence with that, 2017 we've been doing this. Most areas already look on already profitable or reaching profitability.
However, since ex-Java continue to become our investment focus also, as of now still not yet profitable as we continue building scale right now. W ith this recent happening of the COVID, surely impacting certain pockets of the area. Whether the merger will drive the way we invest in ex-Java, the merger is just one of the things that we're considering. In terms of investment, our decision always look at which one giving the fastest pay back and with the lowest investment threshold. Hence, we're looking at many things. Looking at the potency of that area, what's happening in that area. Many things that we're considering. This recent merger surely one of it, but it's not effectively.
Okay, hope that answers your question. Raymond has a follow-up. "We understand your profitability has been on an uptrend. However, your debt costs are still large. How would you finance the Link Net acquisition? Is there any plan for a rights issue in the next 12 months?"
Yes. That question already asked before, but I can elaborate more detail on this. At this stage, again, we are really evaluating all the funding options. All this could be funded via debt or via equity. Right issue is something that we do seriously look at as one of the options. At the end of the day, our obligation is to ensure that we're giving the optimum option in terms of funding the transaction and giving the most benefit return for the company. We have to ensure we are at the right level in terms of gearing at the healthy level. That's just what we are doing right now. To the answer whether right issue or not, yes, it's one of the options we are looking at.
Okay. Hope that answers your question, Raymond Kosasih. Fung has a couple of follow-ups. The first question, XL subscriber base has not grown in the past 12 months. What are we seeing in terms of subscriber trend traction in Xtra and Xtra? The second question, do XL lenders look at net debt to EBITDA with or without finance leases? Given the investment in Link Net and the still higher CapEx in 2022, are we comfortable with where the gearing level will be by the end of 2022? The last question on the higher device costs in 4Q 2021, is that due to handset campaigns or is it fixed broadband related?
Let me take the first one regarding the XL subs. I think Q4 2020 was an extraordinary or different abnormal quarter due to some of the school programs, dual SIM that were there. We already saw much of consolidation in Q1, right? You saw that our subs were decreasing from Q4 to Q1, and since then have been growing healthily. When we compare other attributes, again, not the total number of subs that you can see that sometimes the dual SIM play again there. But when we see daily active users in our network, we have seen a very healthy growth in the last 12 months. I wouldn't say that it has not grown in the last 12 months. Yes, it does.
Comparing with Q 4 of 2020, it's little bit misleading. That's...
Related to the fourth question, do lenders look at XL net CapEx detail or without finance lease. I think, we couldn't answer on behalf of lenders, but I could share something like, we've been working with the lenders and giving what they're asking, data that they're asking. So depending on the lenders, some lenders will be looking at the net with finance leases, some looking at without finance leases. So they have their own priorities the way they look at the borrower structure, right? In terms of whether we're comfortable at the gearing level by the end of 2022, surely that's what we're aiming. That's why we keep all options open.
We continue reviewing which one giving us the most optimum return by the end of 2022 and also going forward 2023 onwards. It's not only one time short-term impact. On the fifth question, on the higher device cost in 4Q due to handset campaign or fixed broadband related. In terms of cost, basically we can elaborate more on the device, what we did implement in 4Q. But mostly from the device, basically it's related on what we did. On the 3G refinement here.
Yeah. I mean, no, not much to add, right? As I was explaining before, we are migrating 3G to 4G, so that requires some handset investment in some of these areas.
Okay. I hope that answers your question. Husein from UBS has a couple of follow-ups. The first is, have you seen your competitors responding to XL's move to increase pricing? And the second, I heard that Indosat has increased data quota for one of the plans. Is there a risk that XL increases pricing and competitors don't follow?
That's a good question. Once we increase the prices, I think there have been different reactions in the market. The incumbent, Telkomsel, we believe that it will play it a little bit more rational in airtime portfolio, although it is still quite aggressive in airtime and other portfolios, right? Now to your question with Indosat, yes, it's true that both Indosat and Hutch actually they increased their promotions in quarter four, right? They had this double quota in many of their plans. We really hope that our competitors will also push for the market rationalization. In any case, I mean, we have a very clear strategy, a very clear go-to-market strategy with very granular pricing.
We keep our commitment on repairing the prices.
Okay.
I think there's a question from Niko. There was 11% of convergence in 2021, so I'll interpret that as a question. The short answer is yes. Niko, what that means is, of the installed base of our XL HOME customers, 11% of that were already convergence customers. That means they availed of more than one service from XL. Actually, the news gets better, right? This was end of December 2021. Currently, 15% of our installed base are convergence customers. They avail of both mobile and OTT content and fixed broadband from us.
Okay. Guys, just looking at time, we'll wrap up with one final question from Raymond. His question is, most operators have high-value customers, which is probably around 20% of their customer base, contributing 70%-80% of total revenue. Would it make more sense to raise package prices for these segment of users while leaving price-sensitive segments to be competitive?
Yes. Correct, Raymond. I think you are right. There are, like, different segments that we are tackling with, right? We have a very strong below-the-line strategy, where we can adjust the product portfolio prices depending on the segment that we are tackling with. Yes, exactly, the idea is to try to monetize those segments that are less price sensitive while still being competitive in those that are price sensitive. Now, another topic that we are bringing, as you know, our network has improved significantly in the last few months, right? We are seeing that the customer experience that we are providing is also much better now than it was a few months ago, which also plays into the game, right?
Yes, price increases and optimization is not going to be general, but more selective in those segments that are less price sensitive via below the line. We will try to be competitive, but still reprice the market in those segments that are more price sensitive. Overall, we have a pleasing customer experience, given also the improvement in our network that we intend to keep improving.
Okay, Raymond, I hope that answers your question. That was the last question for the call. I think if you have any other questions that you need answered, please, reach out to us. Otherwise, we'll speak to you next quarter. Thank you very much.
Thank you. Bye.