Earnings Call: Q1 2018

May 14, 2018

Quarterly report

Good afternoon, ladies and gentlemen. Welcome to Exel Exertas Earnings Conference Call for the First Quarter of 2018. My name is Joanna, and I will be your coordinator today. During the presentation, all participants are in a listen only mode. Instructions will be given on how to register your questions when we get to the question and answer session. As a reminder, this conference is being recorded for replay purposes. Now, we would like to hand the conference over to our host, Mr. Inda. Please proceed. Thank you, Joanna. Good afternoon, everyone, and welcome to the call. On behalf of the Excel management team, I would like to thank all of you for taking the time to join us today. With us on the call today, we have Ibutian, our Chief Executive Officer Bar Ablan, our Chief Financial Officer, Bart Allen, our Chief Commercial Officer and Bart Ferris, Group Finance. Now, Ibudian will share the highlights of the first quarter of 2018, which will then be followed by a Q and A session. I will now hand the call over to Ibudian. Thank you, Indar, and good afternoon, everyone. 2018 started off with challenging market dynamics of and structural changes in term impacts to the industry. We firmly believe that the change is a positive one in the form of a healthier market environment for the mobile industry and thus long term value creation for XL Assietta. The change is very much in line with our transformation strategy in becoming a data leader focusing in value customers and experience rather than price. We have always remained steadfast in our transformation journey and this has enabled us to weather through this tax period. Despite the many challenges, I'm pleased to report that we had managed to outperform the industry on a year on year growth basis. Overall service revenue grew by 5% year on year mainly driven by continued growth in data revenue. Innovative data offerings and improvement in data service quality has successfully pushed data service growth in the first quarter to 29% year on year. Data revenue contribution now makes up the majority of our service revenue at 77% of service revenue in this current quarter. The data business continues to be our main growth driver of driving the decline from legacy service revenue. One of the key reasons for the proven so far in 2018 is the continued success of satellite product strategy coupled with a continued investment in our data network. Indonesia's data study customer has continued to respond well to our improved network as smartphone subscribers now stand at 74% of our subscriber base. Which continues to be materially higher than the industry operates. The total number of smartphone users now mourn to about 40,000,000 and has grown significantly at 28% year on year compared to the same period last year. Despite the challenging quarter, we're pleased to report that our customers numbers have continued to grow in a sustainable patient as we have added another 1,000,000 customers taking our offer base to BOP Fifty 4,000,000 customers for the first quarter of 2018. In establishing the XL brand as the choice for high value customers, both label high speed data and superior network quality are essential. As such, we continue to ensure a high quality data experience to our customers to continue roll out and upgrade of our networks. Our total data shown is now above 1 or 5000 BTS with 3 d totaling almost 48,000. Our core GLT service is now available in 373 Cities and areas across Indonesia and stands at more than 20,004 TBTES. Increased focus on XJFA for data has also led to both growing revenue and traffic outside JFA compared to a year ago as we aim to improve and its improving perception of better data network quality for the benefit of customer Xtraffic or HESTech B better campaign that's managed to receive positive response and appeal from both existing and potential data customers. Underlying this campaign are consistent efforts for further improved data networks. The network development include service coverage expansion to new areas which were not reached by the data network, especially outside Jaffa and strengthening that the quality and area of data presence. Furthermore, alongside network expansion, we have also been increasing the quality of the network by implementing Safari in a unified technology. This law for improvement in service quality and include network function for solution costs for respect to white van and 4.5 gig technology through spectral AT and T, current administration as well as high degree MIMO. All these initiatives improve the stability of the internet service on ASEA data networks and allow for internet speeds up to 100 Mbps. Investment in transmission back home network modification continues to support the rising data traffic across its network and to the profitability expanded to capacity and improve quality of its data service of our customers. The dual strategy has successfully seen art gain inroads in different segments through innovative offerings in each segment. We launched the extra water booster packet for XL which offer in our additional water for this customer and for access customer. Our corporate bank as a protest has gained good attraction through smartphone bundle package for well known antitrust providers. Of role, our performance in the 1st 3 months of 2018 was encouraging despite the heightened net data press competition in the industry. Furthermore, we serve a major structural change in the prepaid market as the government policy on mandatory prepaid number resulted in a short term uncertainty. Nevertheless, we believe the registration in necessary to work with healthier a sustainable industry moving forward, and this is very much in line with our strategy. The increase in property index in the during this quarter has impacted the overall industry growth as well as our world. As competitive, hyperloyalty aggressively priced data packages, aim at creating market share. We believe such pricing is both unsustainability low and unhealthy and needs to improve. In addition, the deadline for prefection registration for existing customers came into effect as of 1st May 2018. Customers who have not registered will be blocked from services, which include SMS, call, and internet services. Those who have experienced blocking could then register the prepaid phone number via SMS or contact their provider service center while the number is still in the active period. We are pleased to report today that we have secured almost our entire revenue generating customer base with a minimal impact to our overall business. This was done through proactive efforts in communication For 5 days of registration via multiple channels, engaging our customers via our direct to get them to register and promotional incentives to register among others. We believe both prepaid, secondary line and market clean up, the new healthier and firewall is expanded and thus provide better opportunities for growth in the second half of the year. With a shift in focus from customer position from professional marketing channels, we also see signs of opportunities to monetize data further in the second half of the year. Our intent has always been on monetizing data while focusing on customer experience rather than drive. Having said that, the intent is very much dependent upon how our competitors position themselves in the market. But we heard that one of our competitors have different signals to the market that they will increase the price which we will come very much. Taking all this into account, we are reiterating our guidance for 2018 for our revenue to grow in line with market as it reflects the current competitive intensity and our hope for a better second half of the year. Our EBITDA margin guidance is high 30 and our CapEx spend guidance for 2018 is around BRL7 1,000,000,000,000, which will remain focused on data network investment in 4G and continuous network improvements and modernization in outside Jafar. Thank you and let us now proceed to the Q And A session. To cancel. You. Our first question comes from the line of Piyush Chandra from HSBC. Please ask a question. Yes, hi. Good afternoon and thanks for the call. A couple of questions. Firstly, can I clarify, on your opening remarks in terms of your driving strategy, would you look to raise data tariffs if your peer raises and improve data monetization, or do you think the current level of tariffs are sufficient and would help you to gain market share? So if you can just clarify on that, Secondly, on your cost side, we saw sales and marketing expense rising significantly. Can you kind of bispecific. How much is it one time due to the impact of similar registration and what would be more sustaining the number here? And also, if there is any one off or cost reversals in 1Q? Thanks. Let me start with the first one. I've understood that this is about the pricing and the price level in the market. As Iberdian mentioned that we have some indications and some not called rumors, but more indications in the market and you see some life price increase around both in data and invoices. We will definitely welcome that, as this is expected in the market. And we will follow that trend if that's going to happen. And we expect that it's will happen in the second half of this year that we will see a slightly price increase in the market. And again, we will come and follow that. Piyush, on your second question on costs. Yes, I think you probably have, right, that we have spend quite a fair bit in quarter 1 this year, revenue, compared to quarter 4 last year, around 8.5% of revenue. I think if you look at quarter 1, I think we did ramp up our initiative to register customer. I think as we reached the deadline, first of May, we at least spent either in terms of marketing dollars to get customer registered as well as putting a lot of resource on the call center, for example, to either call our customers, to help customers do the registration. In total, I think I would say that, around CHF 120,000,000,000 was meant for PPA registration, I would say that the bulk of this is probably one off, but there will be some bits of this amount that would probably be recurring, right? So moving forward, I think you should expect that, at least things stabilized on prepaid registration stabilized, as we go back to the norm, you would think that probably your sales marketing expense would probably go back at around 7.5% to about 8%. And is there any other one offs for your license? Okay. No. No one will accept for the expenses that we include for prepaid administration. Great. And if I can clarify on the pricing strategy, like, you know, not more from just second half, like, how would you continue to think about your data pricing strategy, would it be, some kind of a discount to the leader or how should we think about the long term data pricing strategies from the company? Thanks. If you look a little bit back, this whole thing and how it is in Indonesia right now started back in November, December last year. Where when people, our competitors saw our Q3 results, they immediately acted. So they made some unhealthy package products in the market. And I just see going forward, we will see a correction for these park packets. We will see these, competitors taking these packets out of the market. So we will follow our game plan, our strategy, this was that 2.5, 3 years ago that we're going to be a data center company, and we're going to focus on data. And no doubt about that leave for the data has to increase, but at the same time, we also need to give the right service and the right package to the customer. So we are in line with our strategy. We are in line with our game plan and we will see the data prices going up in the future. Our next question comes from the line of Arthur Pinara from Citigroup. Please ask your question. Two questions then. Given that the government seems to have lifted a cap on the number of SIM cards per user, do you see this is changing the terms of in terms of churn levels and the cost savings that you may have seen with SIM registration? Second question I had is with regard to your competitor, the smaller competitor, which is in those your revenue momentum appears to be far stronger. I'm just wondering, what's driving this differential? Is it because of geography? You're doing better for or non Java or it's mainly because of network quality, which is driving the differential? Thank you. Thank you. Okay. Awesome. I will take the question number 1. So, yes, the with the paper registration regulation, the new one, government will actually limit the number of SIM card 3 as incorrect for ID. Of course, this actually will remove the rotational churn, which currently probably around 20 to 30% in the market and that will give us processing in terms of uh-uh SIM card costs that is currently quite sizable. So the answer is yes. Would that understand that the government changed the ruling from threesome card limit to unlimited. Is that correct? No, actually, it has not been a firm yet. For that. So currently, the one that is still under discussion is for the number of SIM card that can be activated by a retail outlet. But per customer, the one that is registered by per customer, it's a maximum 3. Understood. Let me comment on the revenue part. As you all know, we are not able to comment on our competitors' revenue achievement at all, but we will add surprises many of you when we saw this result. So we have not fixed the deep dive into this. What is the outcome of that revenue? We can just say that we are following our game plan again as I said before. And this is exactly what we expected in terms of revenue. So no comments on the outcome for the revenue actually. But internally, in terms of your own revenues, is it mainly coming out of Java or outside of Java, what's driving the growth for your revenue base? If you look at, obviously, I think we put a fair bit of investment, going outside each other. And you probably have seen from Q4 numbers as well that the growth are probably coming a lot from Java, right? But having said that, I think in Q1, there were probably stiff competition. So I think that number that you the growth rate that we were seeing before this has definitely slowed down quite tremendously, right? Given the fact that competition in Java or even more after this quarter 1, and hence, I think it has impacted everyone. And I think it reflective in all the numbers that you are probably seeing, right? Nevertheless, I think with the investment we did outside Java and the better network quality that we have, think that's probably helped us in terms of getting in better quality subs and customers into our network. Great. Thank you very much. Our next question comes from the line of Colleen McAllen from Credit Suisse. Please ask your question. Thanks, everyone. Good afternoon. A couple of questions from me. The first is, I think Eberdian did mention in her opening remarks But just want to confirm that you're basically saying you don't think that XL will face a big drop in revenue in second quarter. As large numbers of SIM cards on 1st May are basically cut off or removed because you've basically kind of registered the vast majority of your revenue base anyway. I just want to confirm that that is what was said. And then secondly, on the related point, I know that there were some pretty aggressive kind of registration bonuses were given to customers. I think it started off, 10 gig then turned into 20 and then 30. So one would presume if you've registered people that, those registration bonuses would disappear, going into 2nd quarter. And so presumably, there would be average revenue per megabit that we would be able to see fairly quickly as those things are removed. I just want to confirm that as well. Thank you. So Pauline, just on the second question, on the first question, right? So obviously, we cannot comment much on our Q2 numbers, but I think what is actually said that, yeah, we have registered, but it's substantial in terms of our subscriber with events, right? Nevertheless, there's still some that we didn't manage to register on time. So there will be probably some impact in terms of revenue as far as revenue. So nevertheless, as you know that, I mean, it's probably a timing effect, right? Because this customer that failed to register on time or when it comes to the borrowing date, typically, they will come back at some later dates, right? And typically, that's what we have probably seen as well, right? So you probably may not have registered 100 percent of your customers at the point of time when you are. So there is probably some impact on revenue. Nevertheless, I think what we've probably seen as well. These customers do come back and subsequently either do re registration or come in with a different SIM card, right? So So I would say that, yes, there will still be some impact to our 42 numbers, with regards to the registration. But at this point in time, we cannot comment in terms of, and quantify what that impact is going to be. So in terms of the cost part, when you talk about the bonuses to the customer, so 1st of all, we are welcoming this immigration process We believe it's giving a market of the industry going forward. We could see less for channels or traditional churner in the market as well, meaning there are 2 car sizes available to save first is, of course, the production of SIM. Hopefully, we will have to produce the vaccine as we don't have any rotational churners. At the same time, we'll also be less bonuses for the people because they have to do the registration as well. But this is an insignificant amount that is the given way for the bonuses. So we will not see that as a big impact on our spec at all. But you're right, it will disappear in the future. Thank you. Our next question comes from the line of Fu Chung Chen from CIMB. Please ask your question. Hi, thanks for the call. 2 questions from me. Firstly, on the rental costs, Q on Q and year on year, there was a fairly big drop. And I noted the comments in the info memo on savings from renewal of older leases But I just wanna check whether there are any one off there. And, how should we expect this trend going forward? Is there more room for this to decline in the subsequent quarters? That's the first question. And second question, regarding your debt, what percentage of your total debt is floating rate And in light of the rising interest rate in the market, I'm just wondering whether, is that something of concern and whether you are doing anything at all to address it? Thank you. Yeah, John, on rental, yeah, you'll probably see that this is actually one of our bigger cost item, right, under infrastructure expenses. And typically, I think you probably have known as well, that we have managed to renegotiate in terms of our rental cost area. So at point of renewal, we are probably getting up to approximately 50% discount from the price that we used to pay. Right? So, and I think as we said in earlier calls as well, starting this year and moving to the next 3 years as well, there will be quite a big chunk of ours, ours that's probably coming for renewal, right? So you, therefore, it has contributed quite significantly in terms of that reduction of the rental of the tower leases. While doing that as well, we are also talking to tower providers at all to probably see whether we can early renew some of these towers as well. So we are able to accrue this savings upfront in process progress now. Yeah. So So there are still opportunity in terms of, let's say, a reduction in tower rentals. And I think this would also help in terms of trying to push the impact of the new towers, that we are probably building, especially, in our site, Gawa. On your second question, on the debt, on the debt, I think if you look at today, 56% of our portfolio is actually floating, and 44% is actually fixed. So I think we have a policy of a fine portfolio, ideally at fifty-fifty But in this case, I think approximately 50% are actually floating rate. Okay. But do we need to do anything to shift more towards the fixed side because interest rates could be rising, right? I think, we look at it case to case. Obviously, I think, as you speak today, right? I mean, you look at the rate today are probably a rising as well, right? I mean, especially if you look at a longer term, right? So I think, we are looking at this. Right? And we probably do our analysis to see that, what makes sense before we take any decision on this line, but definitely something that is in our radar. Thanks. Thank you. Our next question comes from the line of Gopa Kumar from Nomura. Please ask your question. So you had a sequential drop in revenue in first quarter. So is it fair to say that bulk of the impact of SIM card registrations already in the 1Q 'eighteen numbers and directionally you expect improvement going forward? That's the first question. Secondly, in terms of the outlook for this year, you mentioned to grow in line market, a bit confused here because the growth numbers are quite diverse across the TrendCo. So if you can quantify how much you expect market to grow this year? That would be great. So let me take the first question. Yes, you're right about the drop in the revenue for Q1. That the seasonality impact with the Zebra usually is 4.5 percent seasonality. And we also see an impact for the CymbriX rate as well as it kick started 3, 4 months ago, but the real start is actually May 1st, where you cannot buy a stimulus niche without doing the registration. If you're looking at the neighboring countries where we have done this in Greece reasons for some time ago, right? We see at the end for the 1st 12 months, 8 to 12 months, we see the revenue going down. Then we offer normal after 12 months. We are not absolutely sure what's going to happen here. As I said before, it just started, but I think we will stabilize right now in Q2. And then we will see some price increase at the end of Q2 going into the second half of the year. So I think we have not seen the full hit yet. We will see some impact in Q2 as well. But going forward after Q2, there will definitely be an off time upside. Yes, Gopa, on the guidance, I think, in line with market is something that, that we came to the market, I think, early this year, right? Obviously, I think having seen Q1 numbers I think one would expect that, okay, our results in the industry that we could potentially grow the market, right, outgrow the market never tell us, I think as to what allergy, I think, we also need to understand and see what the impact will be on Q2 given the the barring impact only came in, on 1st May, right? So, what I think, at this point in time, we are outgrowing the industry. Nevertheless, I think we are not changing our guidance at this point in time until we have better clarity of the impact on the, barring of the prepaid registration, at the end of, at first of May. And only then, I think if any if in any case, if there is a material difference for our expectation before the our guidance. But for now, in line with market, it's still the guidance that we're giving. Thank you. Our next question comes from the line of Sebastian Praveen from Ganga. Please ask your question. Thank you, and congratulations for impressive EBITDA growth. And margins. So I just want to get a better sense of competition. I think we are quietly familiar of what, what Telkom sell and in result are doing. Can you give us some color as to what do you think of Hutchison, or any other the smaller players, whether they could be a threat to the, what seems to be improving pricing environment or not? Secondly, could you just give us some color on consumer behavior on data. I mean, are we looking at what sort of percentage of the usage is maybe related to videos online videos or any kind of behavior that would be appreciated. Thank you. Yes, so let me start with the first one regarding the competition. As I said before, it all started back in Q4 2017. And the starting point will see that the Intelsat introduced the yellow packets, which was extremely significant cheaper than anybody else. Does that also follow-up by Telkomcel saying the prices down. And later on, especially in the beginning of Q1, 3 became extremely aggressive as a whole in terms of prices in terms of the kickback and the commission to the dealer and to the retailer. That's actually only 1 month. We saw that in the month of January. And since then, we haven't seen a lot coming from 3 as well. So they have kept the same level that they did in January, taking a little bit out for the commission for the marketer. But we haven't seen them. So we don't see a big threat coming from the smaller player in this market. Hopefully, it will be comes down to set the stage in the future. And we'll be able to take the small steps upwards when it comes to data pricing. I'm not able here to go out down to details and give exact figures on how many people use YouTube, how many to reach your setup. But what we can say after we introduce this, one good package where we have YouTube is many of our package and we now have a handset in the market where you get free YouTube for 1 year as well. That has created a significant impact in the market and a height in the market. And we now see in our network, users of YouTube is increasing significance. So there's no doubt about this segmentation we have done for XL for the white color blue color and Axis brand for the used actually worked in this market. So we see more and more huge people using the offerings where we have free YouTube going forward. So it's significant amount that I do general, but specific figures, I do not have. Thank you. 2 questions for me. Firstly, we had about reduction in the number of covers by Hutch and some lot of relocation by Martin. So are you able to claw back some market share from these players given that they might be facing some issues or just the thesis and it's not really working so far? That's question number 1. And among the 3 major operators, Could you share with us what kind of signs of pricing improvement you're seeing on the ground? Is it just a talk or we are already seeing something which is happening by this after this May timeframe now. That's it. Yeah. On the, okay, second, on the towers, in terms of reduction, the number of towers from Hutch's Smart Friend, as far as the portfolio that we have with them, we don't see much reduction. I really cannot comment whether that reduction coming from other Tahoe providers or not, right? But, technically, the Tahoe's had a heart or even smart friend, leaching from us there is no material changes. For the 3 among the 3 major operators, have you seen some signs of pricing improvement? And if you could share with us, is it more again, is it something which is happening on the data side of things? And in what form of improvement are we? Is it it can't be outright, right? Is it something are we seeing lower data quotas what is the form of pricing improvement that we are seeing on the ground now? First of all, this is more of indications in the market right now. All the three big operators at the moment have only one thing they concentrate about is the civil regulations. We are basically not looking into the market approach. You're not looking into prices instead of because all our efforts and all the energy have been put into the Cymbic situation that happened 2 weeks ago to be able to be 100 compliance in the market. Now hopefully within the next 2, 3 weeks, there'll be a little bit of the lead sense of people can actually think and work with something else. So the indication is that, that will be both. The prices will be taken up a little bit. And at the same time, some of the quota, some of the big quotas giving from all the three operators will also be taken down. So they're not able to get 20 GB more, it will more be that it will go down to 10, etcetera. So that's the indication right now, but we haven't seen it in reality in the market yet. Our next question comes from the line of Pang Viet from Goldman Sachs. Please ask a question. Hi. Thank you very much for the opportunity. Most of my questions have already been answered, but just one question. Any update you can tell us on your, Sahiki that you were mentioning last time about going into, like, pay TV and free broadband? Sorry, couldn't really catch that. Could you repeat the question again? Hi, yes. So just one thing on the Sanjay, I remember, like, earlier in the year, There was, like, a lot of new and rumor about you going into, like, pay TV. Is there, like, any, update from your side you can give to us? Okay. So for, our fixed broadband, actually, we just soft launches on the 2nd May. So now it's in the actually introduction stage to the market. So we do a lot of communication and so on and so forth. So that's the progress so far. But so far, we have already more than 5000 compass that is available in the market. And this is only in Java? Yes. So far, we only focus in major city in Japan. Our next question comes from Bharat Joshi from Aberdeen. Please ask your question. Thanks for the results. I just have two questions. The first question, I noticed that the data traffic growth has been very healthy. So basically going forward, what would be a sustaining rate for data growth? And We also noticed that the investments in BTS in the quarter was quite significant. So how are you aligning data growth with BTS expansion. And then the second question which was actually asked earlier about the debt, given in a rapid increase in interest rates forward, would it be more conservative to use part of the cash flow to repay down the debt and what will be a comfortable leverage going forward? Yeah. Okay. Maybe let me take the second question first, right? So yes, I think, you probably expect that, there is pressure on the interest rate to go up. I mean, in the near future. So I think, our approach has always been to adopt a balanced portfolio in terms of fixed and probably floating rate, right? So but anyhow, as I mentioned earlier, right? At this point in time, we are evaluating, to see the business case of probably moving into, let's say, converting some of the floating into fixed at this point in time. But, you may well appreciate as well that, at this point in time, given the expectation that, the interest may increase, I mean, you would expect that fixed rate have also gone up as well. So nevertheless, that's something that we are probably evaluating. And I think should we use our cash probably to pay down debt? I think Well, we are also we are also evaluating that, but we are also in the midst of also pending and building our network outside of Java as well. Hence, I think if you look at the returns that if you look at the revenue growth that we are probably seeing, from last year and even moving on to this year. I think, there's no question that I think, most of this cash that we are generating today, we need to be used for our expansion purpose, right? So So I think we have no intent to probably early repay some of this debt at this point in time. Regarding the data growth rates, it's very difficult to predict about the future data growth, but we don't see any reason Why should ease down at the moment? So to be honest, we actually see the same growth rate going forward. We have the CapEx as Eberdian has mentioned in our introduction speed and that we have to build BTS within that CapEx and we do the optimization to accommodate this stage of growth. So right now, our reclaim that we have an extremely healthy network at the moment. We are not utilizing our network completely, so we still have space in our network. But so far it looks good and you can either accommodate that future data growth. Thanks. Thank you. Our next question comes from the line of Norman Chung from CLSA. Please ask your question. Hi, good afternoon. Thanks for the call. I actually have three questions. Firstly, it's actually, regarding data traffic as well. Actually, okay, your new trend, yes, indeed, the growth is, right, strong, but looking on Q on Q, did that traffic only grew 2% compared to competitors that have double digit Do you mind to give some color on this one? 2nd is your ex Java marketing strategy. I just want to understand that your extra expansion this year, do you plan to do it as aggressive as last year, meaning doing a lot of, free promo to advice people to use your sims, or you are trying to do it the other way mainly from more healthy competitions, using price per service level, just kind of angle to enterprise people to use your Network. 3rd is actually regarding to guidance. I just want to clarify that what is your definition of, market growth? Because, Telecom said, right? They expect market growth rate at low single digit. But they expect themselves to outperform the market. So do you do you define yourself, do you define market as telkom self growth rate or or or how Yes, you found my 3 questions. Let me try to answer on the data traffic. You're right that just look at the traffic growth from our competitor, it has been higher or stronger or whatever and we have not been grossed about. And the reason for that what we believe in, we started this program almost as I said before 3 years ago where we had our transformation here. So we started being a data centric dentist centric company before the oligarchs. And we see that they are coming now. So they, I will claim that they are 1, 1.5 year after that when you look at the figures when it comes to 77 percent of our revenue today coming from data, we have a highest smartphone penetration in the market as well. So we have taken the first step into this data centric world and the other guys have followed That's why we will not see the same growth rate for data coming from us as from our competitor as we have taken the first step. The second one will be done. Yes. The second one is our with regards to AgJAVA, right? I think, we will continue to I will network outside Java, right? Because I think we see opportunity there. I think whether we're going to be at a safe, going into this market. I think we'll probably be selective, right? In areas that we see a big opportunity where we come in, where in areas where Arkansas are probably the only competitor there. I think there is no need to be very aggressive in terms of your data pricing, right? Because, even at, let's say, a 20% to 30% discount to telecom sales prices in two areas, you are probably selling at a 30, 40% premium from the Java prices, right? So, but in areas that we will probably see more than 2 competitors, for example, right? Will probably be a bit more aggressive in those markets. So I think the answer to your question, yes, we'll still continue our endeavor expansion. And I think we will probably be selective in terms of how we go out in terms of aggression into the market. Depending on the competition in those area or those clusters, right? So on guidance, I think if we look at a market, at an industry, right? Typically between ourselves, you know, touch and hardship. And Telkomsel in Rotart and earth, we are probably, positing more than 90% of the market already, right? So And I think that's how is our, the guidance is actually based on the share of these 3 operators, right? As we said, what is our expectation on market growth today? I mean, it has been the same. Since early this year. What we say that if prepaid administration is strictly enforced, we expect that market growth to be at low single digit. I think that guidance is probably similar to, our, what our competitors have probably quoted as well, right? So at this point in time, as I said, right? Given the uncertainty that we are still seeing in terms of on this registration, especially in Q2, we are still keeping our guidance in line of the market. And market we are looking at around low single digit. Okay. Just the final one coming back to my questions. Number 1, just want to clarify, are you saying that your data traffic, I mean, data usage per users has already heading to a maturity stage, or or this is just a temporarily, run rate, how should we look at the growth on a quarter to quarter basis going forward? No, no, it's definitely not coming to mature states. That's for sure. We will still see significant growth in this market. What I'm saying is that In some of the quarter, you will see that the oil guys have a higher growth than us because they are just starting the transformation into the data centric model. And we have just been ahead of these guys. So it will continue, but will still be growth in the market and we will take our share of that growth in the market as well. Okay. Thank you so much. Thank you. Our next question comes from the line of Asa Pinara from Citigroup. Please ask your question. Hi, thanks. Just one follow-up question, please. Back on your 3rd party power leases, how different are the new leases versus the expiring leases on the pricing side? And what percentage of your power portfolio should be expiring over the next 2, 3 years? Yes. If you look at the towers, it's probably coming to end period, right, power that we have leased for approximately 10 years that's coming for renewal now, we are paying at approximately between the $25,000,000 to $26,000,000 all in, right? So and I think today, if you look the market, for all this renewal, even for new build today, we are paying at a range of between $10,000,000 to $13,000,000, right? So I think if you look just slowly from those, we are getting approximately 50% savings in terms of our renewal of towers. And as I said, if you look at our built pattern over the last 10 years, you would expect that in the next 2 to 3 years, a big chunk of our towers would probably come for renewal, right? And I think that would actually help in terms of reducing our rentals. And at the same time easing the pressure when we continue to build new towers, especially outside each other. In terms of percentage, we are not able to disclose that number, but safe to say that I think over the next 2 to 3 years, a big chunk of our towers will come for anyone. Thank you. Our next question comes from the line of Alex Gold And Banks. Please ask the question. I've got two questions. The first thing is, I'm trying to understand how is it that your revenue has declined by 8% quarter on quarter from fourth quarter, but, your subscribers have actually increased by almost 1,000,000 That would mean that your existing customers, which are paying higher outputs, moving out of, AXA Asserta, and your new customers are not paying as much as those existing customers that you have lost. Am I right in that, in that, that estimate? And my second one is, since the new SIM registration, it's actually completed by in February, has, the new take up of our subscribers, has it normalized in March April? And should we expect, going forward, your new intakes are going to improve from here on. Okay. So if you look at the revenue subs, right? I think you probably are well aware, right? In quarter 1, there's probably competition in the market, right? No question that we are gaining subscriber, but at the same time, you are probably seeing that there's a lot of pressure on prices as well on yields, right? And overall, generally, in the market, you've probably seen that a yield has probably dropped by 30%, 40%, right? And as a result, it's also going to impact your existing customers as well, right? As people trade down into a lower package and a more simple package, right? So, and hence, that's why you see that, even though that we are acquiring customers, nevertheless, there is pressure on revenue, given the fact that I think youth has probably come down, right? So I think that's what was probably happening in quarter 1. When it comes to take for our new customers. We have 3 segments of new customer. The first one is the customer who wants to buy and we think we've never had a bid before. The second segment we have is the guide where you want to shift the telco, who want to shift MNO going from one to another one. And then we have the 3rd part is rotational churn of time. The 2 first, we see that we will not see a change in that these two segments. For the first segment, the translational churners, we will see a significant change. Because now there should be no reason to go out and buy a new SIM every month or every quarter. So they will just stick to the same. So we will have products business data and current people to keep the current SIM with new packages, etcetera, right? So there will be an impact for that particular segment when it comes to repurchase on churn. So yes, you're right. Going forward, we will see less appreciation coming in But the acquisition we will get is much more healthier than what begins. So we will not see a big impact on the revenue in that sense. Yes. My second question was regarding your subscription in subscribers in March April. You know, the SCIM registration was supposed to be completed in February. So March April, was there a normalization of your, pickups? So I just want to clarify that actually the deadline of the prefacing card registration is not 1st February. That's when it is introduced, but then the service blocking only happened in 1st May. So what we see is that I think this is the habit of Indonesian they will wait until the last day to register. So from April to May, that has not been a movement, a significant movement in terms of the preparation. So most of the customers register when we applied the service blocking which has happened in April closing to 1st May deadline. So the deadline was not 1st February but 1st May. So in the for since 1st May, whoever has not registered, all the service will be blocked, but there's still subscriber so they can really register and then become their SIM card will become active again. I see. But for the past 1 to 2 weeks since the end of that, they find, was there any, significant change in terms of, subscription, anything? Yes, obviously, after the same registration, enforcement, right? Mean, you would expect the acquisition. There would be some impact on your acquisition, right, because there is a nuance people have got to register before they activate the same, right? So you would expect there would be an impact on the acquisition. The next question comes from the line of Gopa Kumar Nomura. On your comment on Synchrony's early impact since May, are you seeing more subscribers moving to reloads versus starter packs now? Or is it too early to say that? 2nd is, your comments on the fixed broadband business Can I understand what is your strategy here, whether you can share any medium term long term KPIs in terms of subscribers or homes passed or any CapEx implications from this? Thank you. Yes, let me thank you for the question, a very valid question. The first one regarding what in the market. Yes, we have done products. We have done services where we motivate where we encourage users to actually go from buying starter pack to buying relo or to buy something similar, right? So we encourage the consumer of Indonesia to keep the SIM and top off as you're doing in the neighboring countries in Asia. So hopefully, that will work. We haven't seen the results so far. It's only 14 days old. But at least we can see a first indication that it actually works. So we will see a shift in the behavior from consumer from buying a SIM to do reload similar services going forward. On the second question on the fixed broadband, I think this is still too early to share with you our strategy on fixed broadband. We just did the soft launch So currently we are in the stage of testing the market opportunity to see how we will ship our strategy on building this uh-uh business. So very sorry. We cannot service you at this point. Are no more questions. I'll hand the call over to Dave. Shafka. Last question is Karamutin of Kasichapala. Just two questions from my right. How do you see your CapEx momentum beyond FY 2018? Is the 7,000,000,000,000 CapEx something that you believe you can sustained given your own forecast of, operating cash flow and EBITDA. And my second question is, if you look at, let's say, who your challenges are, I know PT Telcom is always going to be the incumbent outside, Java, but when you're looking to build your network, outside non Java, Who do you think is your most credible, let's say challenger? Is it Intocet or are there operators who are strong in certain pockets that you need to contend with? Thank you. Okay. First question on CapEx. I think if you look at this year, right, what's complete the $7,000,000,000 investment, we'll probably, we'll hit a 4 g penetration coverage of around population coverage of close to about 80%, right? So and you would expect that we'll still probably need to spend some more CapEx to probably cover the remaining balance, especially on 4G, especially in the non Java area, right? So So, the $7,000,000,000,000, the investment, CapEx investment, let's say, between 1 or 2 years, you would still side to be around this region. But of course, I think we probably need to see how that's going to take forward, right, given that new technology on 5G and all that. That's going to come up. But I think the strategy on 4G would probably be an approach on 5G would probably be a completely different to what we have seen on 2 d. So at least for the next 1 to 2 years, yes. I think we should continue this investment, especially outside Java. And I think if you look at our internal cash flow, if we are able to ramp up our growth outside Java, definitely something that we could definitely fund this investment internally. Right? Number 2, regarding how do we actually build a network and how do we see our competitor? To be honest, this is a pretty complex spreadsheet that we have and we have spent a lot of work and a lot of many hours to find out where to build our network. And there's not one attribute or not one parameter that stands out in terms of competitors. We have multiple parameters and multiple attributes for how to develop a business network. And one of the parameters, of course, where do we see Telkom sell and where do we see industries like where are the strongholds, where are the non stronghold is what I said, all right? But there's no doubt about looking at the map, telecom services is very strong outside Java as well. And of course, we see potential business in the areas where only telecom services So there's no doubt about we are building networks where we also see Telkom Jel as well. But there's multiple parameters in our spreadsheet. Got it. Thank you. Thank you and all the best. Thank you. Thank you. There are no further questions. I'll hand the call back to today's call Okay. Thank you everybody for your participation in today's call. And as always, do get back to us if you need further information. We'll see you next. Thank you. This concludes our call. You may now disconnect.