Ladies and gentlemen, good afternoon, and welcome to XLSMART's first quarter 2026 earnings call. My name is Christopher, Head of Investor Relations, and I'll be coordinating today's call. Our presentation and financial results were released this morning and are available on our investor relations website. We will begin today's call with prepared remarks from our management team, followed by a hybrid Q&A session. To ask a question, please type it in the Q&A box along with your full name and company. We will read your question for management to address. If time permits, we may open your line for live follow-up questions. As a reminder, this session is being recorded. I would like to introduce our speakers for today's call. Mr. Rajeev Sethi, President, Director, and CEO. Mr. Antony Susilo, Director and Chief Financial Officer. Mr. David Arcelus Oses, Director and Chief Commercial Officer for Consumer.
Mr. Feiruz Ikhwan, Director and Chief Strategy and Home Business Officer. With that, I will hand over to Mr. Rajeev to begin the management highlights. Mr. Rajeev, you may kindly proceed.
Thank you, Christopher. Good afternoon, everyone. Thank you all for joining us today. Just to remind you, when we entered 2026, we spoke about our purpose, which was to connect every Indonesian for a better life. This purpose remains the foundation of our strategy, guiding us how we invest in our network, enhance our customer experience, and drive sustainable growth. In the first quarter, we made solid progress in translating this purpose into execution. If I speak about integration, the execution continues to be ahead of the plan, with all key milestones for the quarter achieved and majority of the targeted initiatives completed as per schedule. This reduces network overlap, improves operational efficiency, accelerates synergy capture, as well as the integration risk continues to decline as we move into the second half of the year.
On the financial side, we are seeing improvement both in the top line revenue from [Indosat]. Revenue growth in this quarter was supported by festive demand. We know Idul Fitri was in this quarter and gradual market recovery. We are also making steady progress optimizing our cost structures. This reflects disciplined execution on both commercial and cost initiatives. On 5G and on network side, we accelerated the 5G rollout and the continuous expansion has strengthened network quality, delivering a much superior customer experience and faster speeds. This positions XLSMART to handle rising data demands easily while expanding the coverage across key cities, reinforcing our 5G leadership in Indonesia. To summarize, we began the year with clear purpose and disciplined execution across integration, growth, cost, and network expansion.
This gives us confidence that we are on track to deliver strong performance while advancing our mission to connect every Indonesian for a better life. If I move to the next slide. As I said, the execution in the first quarter is completely aligned with our purpose: to connect every Indonesian for a better life, and our vision to become the most loved company, the best place to work, and the most efficient service provider. For customers, we are strengthening experience through continued network integration and 5G expansion. Our focus on network leadership is delivering better quality, wider coverage, and faster speeds. These improvements are increasingly validated by independent benchmarks, including the latest recognition we had from Ookla of being the fastest 5G network, reinforcing the experience we provide to our customers. For our employees, we continue to build a stronger, more unified organization.
This progress has also been recognized externally, with XLSMART being included in TIME's 2026 Asia Pacific Best Companies list. It's such an honor for us being such a young company, and this reflects our performance in employee satisfaction, financial strength, and sustainability. Finally, efficiency remains a core pillar of our execution. We are accelerating integration-led synergies, simplifying operations, and strengthening cost discipline. These efforts are building structurally a more efficient operating model, with impact to be reflected in our margins over time. Overall, this quarter reflects tangible progress in delivering our purpose, enhancing customer experience through network leadership, strengthening our organization, and improving efficiency to support sustainable growth. As I mentioned earlier, integration continues to progress ahead of the plan, with strong momentum across network and synergy capture.
Specifically on network integration, we've integrated more than 40,000 sites into XLSMART network, while simultaneously deploying additional 4,900 new sites, which helps improve our coverage. This reflects simultaneous execution, consolidating overlapping infrastructure while expanding capacity to support future growth. On synergy capture, site consolidation is advancing well, with 77% of targeted tower dismantling already completed. This is the biggest driver of cost efficiencies and operational simplification, and we remain on track. In fact, I may say ahead of the plan to realize integration synergies. The next step would be IT and platform transformation. IT integration programs are progressing well to enable a unified system and operations. This will be super critical to support product harmonization, further improve our customer experience, and greatly enhance organizational agility.
Overall, we expect the entire integration to be completed within this year, providing a strong foundation for both operational efficiency and sustainable growth. I've been speaking about our network leadership, and we are very proud of where we've reached so far. We'll continue to strengthen our network leadership, powered by accelerated BTS deployments and rapid 5G rollouts, enabling better speed, better experience for our customers. On network, our total BTS surpassed 253,000 in the first quarter, growing 12% quarter-on-quarter and more than 50% year-on-year. This expansion, driven by both 5G and 4G, reinforces depth and resilience of our network. On 5G, our footprint has expanded to 43 cities as of end March. We've continued rollout across key urban areas.
We'll continue to expand 5G coverage, further strengthening our position in delivering the fastest 5G experience in the country. Importantly, this stronger network is not just about scale. It is translating into real performance. With improved quality and speed, we were able to handle a 21% surge in data traffic during Ramadan. Overall, our investments are clearly reinforcing our network leadership, expanding coverage, enhancing experience, and supporting Indonesia's accelerating data demand. With that, I'll take a pause and hand over to Pak Antony to walk us through the financial results. Thank you.
Hey, thank you, Rajeev. Good afternoon, everyone. Let me start the first slide about the operational metrics. This quarter shows that we continue our progress in shifting over to the quality-led growth, supported by the ARPU improvement as well as the stabilizing subscriber trends. Our mobile subscribers stood at 69.4 million. The sequential decline from the previous quarter was expected, reflecting our continuous focus on cleaning up inactive as well as the low-value SIMs, and also the impact of the pricing discipline following to the product simplification. The reduction was primarily coming from the newer subscribers with less than three months, while the long-standing subscriber base remained stable. Importantly, the pace of the decline has moderated, and we are seeing early signs of stabilization as market separation progresses.
Our priority remains on improving subscribers' quality and monetization, which is reflected in the continued ARPU improvements. Meanwhile, our blended ARPU continued to improve by 6% QOQ, at IDR 47,300, driven by both prepaid and postpaid segments. This reflects our pricing discipline as a stronger data monetization following through the network integration. Data traffic remained healthy at 3,867 PB, growing 36% year-on-year. Although slightly lower compared to the last quarters because of the less number of days in the Q1 compared to the last quarter Q4. Overall, the demand continues to grow, supported by expanding 4G and 5G coverage as well as improving the user experience. Finally, the fixed broadband subscribers were stable at 940,000.
We remain focused on quality of subscribers and operational discipline while positioning the business for more sustainable growth. At the same time, the fixed broadband ARPU remaining resilient despite that is a competitive market environment. Overall, this operational metrics reflects an early signs of stabilization with stronger monetization and disciplined subscriber management supporting quality-led growth. Okay, move on to the next slide on the financial performance for the first quarter of 2036. We start with the revenues. We recorded 38% year-on-year positive growth in terms of revenue to IDR 11.8 trillion. Primarily driven by the mobile business due to market separations which drives higher ARPU. The performance was also contributed by Lebaran momentum, where in this year, focused solely in the Q1 2036.
On a quarter-on-quarter basis, the revenue, if you look at it, declined by 1%, which is reviewed as a broadly stable considering the fourth quarter have more operating days. At the EBITDA level, normalized EBITDA increased by 26% year-on-year to become IDR 5.4 trillion. The performance was supported by a solid revenue, improvement of cost efficiencies. The EBITDA remained resilient with the normalized margin at 46%, roughly stable but compared to the last quarter. The bottom line show a stronger improvement. Our normalized PAT grew by 254% to be IDR 1.4 trillion or an increase around 90% quarterly basis. This was supported by lower interest expenses from the loan as well as the ROU assets.
Also there is a profit from the sale of these rental assets, reflecting to the PAT group. Higher normalized PAT indicates the integration already has started to make a favorable result for in terms of revenue growth as well as cost efficiencies. Overall, the first quarter reflects a stable financial performance with a solid revenue trajectory, resilient EBITDA and disciplined cost management as we continue progressing through the integration phase. This slide provides a reconciliation to give a better understanding between the reported and the normalized EBITDA and PAT. This year we reflect the underlying performance of the business during the integration phase. At the EBITDA level, the reported first quarter 2026 was IDR 5.4 trillion.
This includes relatively small integration related costs around IDR 28 billion, which is primarily associated with the sunk costs from the rental of these rental sites. The EBITDA has begun to show a sign of stabilization and is increasing reflective of our underlying operational performance going forward basis. At the bottom line, we continue to recognize an accelerated depreciations around IDR 2.1 trillion on equipment from both vendors as well as the 900 MHz spectrum as the network integration progresses. Adjusting of these non-cash items, the normalized PAT for first quarter of 2026 was IDR 1.4 trillion +, providing a clearer view of the company core profitability. Move on to the next slide. Next slide, please. Okay. Turning to our cost performance.
The operating expenses moderated in the first quarter following the integration drive spike in the previous quarter. Operating expenses declined by 18% QOQ, to become IDR 6.4 trillion, mainly reflecting normalization after the heavy integration related activities happened in the Q4 2025, last year, last quarter. The cost base is beginning to stabilize as integration execution progresses. Now, the interconnection and other direct expenses declined by 19% QOQ, reflecting lower enterprise revenue due to a seasonal factor, while the infrastructure costs also shows a decline by 11% quarter-on-quarter, due to elevated integration related costs, which is booked into Q4 2025. Importantly, the labor costs declined significantly as the AirFiber organization structure was established and already the workforce alignment already progressed.
As a result, labor costs as a percentage of revenue improved from the previous quarter. Overall, the first quarter reflects a moderating cost base following the integration driven spike with improving cost discipline and early realization of operating efficiencies as we move closer to the completion of the integration. I think that's it from my side. I shall now hand over back to Pak Rajeev to provide the full year 2025 guidance as well as the foreseeable plans. Thank you.
Thank you, Pak Antony. As Pak Antony mentioned, I will talk about the outlook for the year 2026. We are maintaining our 2026 guidance as previously communicated during the third quarter earnings call. It's supported by the solid start to the year and the continued progress which we are making in integration. For revenue, we are expecting a growth to be in line with the market, reflecting a disciplined approach, focus on value and improving customer experience. At EBITDA level, we continue to target a growth which will approximately be twice that of the revenue growth, supported by synergy realization, improving cost structure and operating leverage as integration progresses. Capitalized CapEx is expected to be around IDR 13 trillion, primarily allocated to network expansion, 5G rollout in 88 cities and integration related initiatives to strengthen long-term competitiveness.
On synergies, finally, we continue to target the gross merger synergies of between $250 million and $300 million, with majority expected to be realized as network consolidation and operational integration advance throughout the year. While the business fundamentals remain solid. We are aware about the external developments, and we continue to closely monitor them, including the evolving geopolitical situation in the Middle East, which may impact macro conditions and energy prices. Having said that, at this stage, we remain confident with our full year guidance. Overall, we believe we are well-positioned to deliver our 2026 targets, supported by disciplined execution, ongoing integrations, and continued focus on sustainable value creation. With this, I will conclude my remarks and hand it over to Chris.
Thank you, Mr. Rajeev, Mr. Antony, for the presentations. Ladies and gentlemen, we will now proceed to the Q&A sessions. As a reminder, the Q&A session will be hybrid mode. To ask a question, you may type it in the Q&A box. Please also ensure to type in your full name and company name. If you'd like further clarification after your question is answered, kindly use the Raise Hand button, and we will proceed to unmute your mic. Please allow some time to tabulate the questions before we read out to everyone. Let's start. The first question coming from Andrew from UOB Kay Hian. As he read out the question, the first question is how much the integration cost accelerated depreciation and asset impairment in this year, and why is it so low this quarter? I think Andrew is referring to the integration cost.
Number two, question number two is what percent is currently of both optimization for network and human resource rationalizations? Number three, for new 5G spectrum, how much do you think it will cost? What are the expected upfront fee do you think you will need to pay? I think, for the first question, I would like to invite Mr. Antony to provide the colors and number two as well.
Okay. Thank you, Andrew. To answer number one and number two, I'll try to cover and answer number one. On the number one regarding the integration cost, the numbers in 2025, if we look at the presentation slide there, the total integration cost is around IDR 1.8 trillion. However, in 2026 first quarter, it shows a very low numbers. It's only like IDR 22 billion. To answer that, the integration cost, most of it comes already finished, already completed, like almost 70% already finished by in 2025, already completed all the progress of the network optimizations.
In 2026, we are expecting, of course, there is still some integration costs, but the amount will not be as material as 2025. If 2025 is around IDR 1.8 trillion, 2026 will be approximately maybe 25% of the numbers or maybe remaining around below IDR 500 billion. That's on the integration costs. Well, for the accelerated depreciations, this is regarding the spectrum of 900 MHz as well as the old assets we don't use it anymore. This thing is still continue. We are expecting the project will complete by, hopefully by Q3. By end of Q3, 2026. In terms of the amount itself, if you recall that in 2025 you already booked IDR 4.5 trillion of accelerated depreciations.
In the, for the 2026 we are estimating approximately maybe around IDR 5 point almost IDR 5 trillion-IDR 6 trillion that we've made in profit in this year. Majorly will be booked in the Q1 until Q3 2026. Hopefully by Q4 2026 will be already, the numbers already become smaller. I think that's to answer the item number one. I think relates to item number two on the percentage currently on the network optimization and the whole human resource rationalization. I think I would like to say on the network optimization, like I mentioned earlier, we have done it already. Most of it, most of the sites already modernized, I think by around 70%-80% already done.
In terms of human resource rationalization, I would like to say that maybe most of the things already completed in Q4 2025 last quarter. There are still some integration required for the human resources, but the amount will be relatively small in this year. I think number one and number two is related to the integration cost as well that I mentioned earlier, that we are expecting the integration cost from the network, from the personnel and so on. Everything is very low relative to small, maybe below IDR 500 billion. I think that's to answer number one and two. Regarding number three, Rajeev, maybe you may want to cover this.
Sure. In terms of how much do we think we need to pay, I think that will be speculating. I will not be able to do that. What we know are the initial auction details which have been published. That's what we know. We know the base prices which have been set for 4G spectrum. We know the rules which have been set in place.
We continue to evaluate different options we have, and the end result will be determined by finding how the auction is conducted and which all operators are interested in different spectrum. For me, it will be very difficult to speculate on this. The only thing which I can say is one thing which is different this time, the annual fee is one time as compared to twice the annual fee in the previous auctions. That's the difference. Obviously, there are other different changes which are there. I'm sure all of you have access to that document. My information is also limited to whatever is publicly available.
Okay, Mr. Rajeev, Mr. Antony. Andrew, do you have any follow-up questions? We have unmute your mic. If no questions, I think we can move on to the next question. The next question comes from Sabrina, from Trimegah. There are two questions. The first question is data yield continue to improve through Q1 2026, increased by roughly around 3.9% QOQ and 1.5% year-over-year. How do you view the sustainability of the trend going forward, particularly given the expectation of a more subdued consumer spending post-Lebaran? What strategies do you plan to implement to sustain that value? The second question is about the depreciation. We observed an increase in depreciation expenses compared to the previous quarter, with the depreciation to revenue ratio also trending higher.
Should we treat the first quarter results figure as the run rate for the remaining quarters in 2036? Or should we expect further acceleration or deceleration in the subsequent quarters? Could you provide more colors on the expected packages? I would like to invite David to provide some color, please, for the data yield.
Okay. Thank you. Regarding the yield, yes, as you mentioned, it has been increasing quarter-on-quarter and year-on-year. As we have been socializing before, I think this is a consequence of many decisions that we have taken in order to move towards good quality subscribers. The first of them was killing many of the freebies that we were already giving in our product and services. Many freebies and bonuses that we give in order to avoid that usage. Second one, as you also know, it's increasing significantly the acquisition quality. We moved to one SP that is 3 GB, IDR 35,000, when previously there were, like, many more SPs with many more gigabytes and lower yield. The third decision was to improve the portfolio in general.
There were some products that were low yield that have been eliminated. With killing the freebies, improving the quality of acquisition or the SP yield, and doing certain portfolio movement, we have been able to have this yield consequence or outcome, right? That, as you mentioned, it's positive. Positive this quarter, positive year-on-year and in the past few quarters. We believe that we have a competitive portfolio. Our acquisition machine is also working properly. I guess that the yield will come as an outcome of the mix of products that our consumers select. There are lower yield products at higher prices and of course, higher yield products at lower prices. Depending on that mix of products, we will see how the yield evolves in the following quarters.
Is this sustainable? We will see. I think it shouldn't move too much in one direction or another. Again, if the customer behavior moves towards higher prices, we will see some kind of yield decreases. If it's the opposite, we will see yields that can even improve further or maintain. Hope that this answers your question.
Thank you, David. Let's move on to the next question. Maybe, Antony, Mr. Antony, you want to provide some colors on the depreciation.
Okay. On the depreciation expenses, I think, if you look at the depreciation expense actually includes the accelerated depreciation that we did in 2025 and continue also in 2026. If you look at the slide that in Q1 2026, there is a one-time cost of accelerated depreciation is from IDR 2 trillion. If we You want to treat the first quarter figures as the run rate, I think you should take out this one-off item first. Then for the remaining quarters in 2026, Q2 and Q3, as I explained earlier, that we are expecting the accelerated depreciation still continuing. The amount maybe like I mentioned earlier, maybe will be Official will be around IDR 5 trillion-IDR 6 trillion. Already booked IDR 2 trillion this quarter.
The remaining IDR 3 trillion, IDR 2 trillion-IDR 3 trillion will be covered hopefully in the Q2 or Q3, Q4. Q4 will be much smaller. I think that to give you the understanding about how do you want to analyze the depreciation expenses. Thank you.
Thank you. Antony. I would like to open the line for Sabrina. Sabrina, do you have any follow-up questions? You have unmuted your line.
Hi, Pak Antony and Pak David. Thank you for the colors. Maybe I have one follow-up question. On the data yield front, I think we have been seeing that the likes of Axis and Smartfren, they have also been increasing the prices as well as the yield. Do you think that the improvement in the data yield for first quarter is much more driven by from Axis and Smartfren? Do you see that this positive contribution mostly still coming from XL? Thank you.
It's from all the three brands, to be honest. Each of the brands has like, as you know, different behavior. Some were maybe relying more on previous imbalances. Some were relying more on the acquisition of the SKUs. The three brands have seen positive movement in yield. Not only in the quarter on quarter, as I am saying, it's like if you take the longer trend, right? The last four quarters, you can see a positive trend. It's been all the brands.
Okay. Thank you, David. Sabrina, any follow-up on that? Okay. If not, I think we can move on to the next question. The next question comes from Erwin Wijaya from I think Sabrina will read that. The next question comes from Erwin from Perdana. Two questions. The first one is about biometrics. Any updates on the biometrics registration and implementation by the Komdigi? Second one is, how does the management assess strategic importance of the 700 MHz and 2600 MHz bands in context of XLSMART medium-term positioning, network positioning and capacity requirement? I think for the first one on the biometric, David, would you like to give some comments?
The biometric registration, it's already been approved and implemented, so it's already available in the market. That will be a strong implementation or mandatory starting in July. I think we are ready for it, and we truly believe that it's a very good movement for the, for the industry, to move towards this type of security to the industry and to the, to our customers.
Okay. Maybe Pak Rajeev. Thank you, David. How do you think for the management assessment part for the spectrum auction? What do you think is the importance here?
Yeah. As I mentioned earlier, the initial guidelines have been published by the regulator a few weeks back. We are evaluating that. Your question specifically speaks about medium-term, and as we know that spectrum is required over the length of its assignment to us, which is 10 years. In a market which is relying heavily on data consumption growth, spectrum will be needed for future. We are evaluating the pricing which has been shared with us, the reserve price and the auction mechanism, and we are putting all the scenarios together. Based on that, we'll take a decision in terms of participating in either one or both of these spectrums. Obviously we'll share the updates once we are ready with that.
Okay. Now let's open the line for Erwin to ask any question. Okay. Seems like no question from Erwin. I think we are still waiting for more questions from the participants. We'll wait. Let's say you have any follow-up questions with regards to Rajeev 's presentation.
Absolutely.
Okay. We have one question coming from Raymond Kosasih. The question is about the churn decline with the biometrics. Maybe, David, you would like to give some colors on this?
Yeah. That's a very good question, right? Difficult to answer. Since we have implemented our new acquisition, quality acquisition strategy, we have seen the acquisition numbers go down. I'm sure that you have seen also our subscribers numbers, how they have been cleaning up in the last few quarters, right? Mainly because of number of subscribers of low tenure or less than three months reducing. We have gone already through that, I don't know whether to call it pain or cleaning process. Now it's true that the industry probably maybe not all. Again, difficult to say how much this will stop, but for sure it's a healthy measure for the security of our subscribers and for the industry itself.
In the sense that it will reduce the use and throw behavior in the market, which we know that it's very negative in all senses.
Thank you, David. Maybe Raymond, do you have any follow-up questions? Since I have no question, Raymond has typed in the question. I think I would like to read the questions. The question is about our home business. How do we position the wireless broadband services relative to the upcoming FWA from MyRepublic and service at least from the public trust? I think I would like to maybe invite Feiruz to give some colors.
Sure. Hi. Hi, Raymond. With regards to your question, I think as we've always highlighted how we position our home broadband business, right? It would be certainly from a point of view of delivering the best home broadband that we can to the customers. So focusing on reliability and stability and consistency of the experience. That's the angle that we will go for, right? Irrespective of the technology, right? Whether it's FWA or FTTH. I think I would leave it at that. At the same time, we know that we're looking for better, how should I say, better quality customers, right? More sustainable, right? Growth in this home broadband space rather than being overly price aggressive.
Thank you, Feiruz, for giving the colors. Raymond, do you have any follow-up questions? Yeah. Unmute. We have unmute your mic, if you have any questions. If not, move on. Do you have any other questions from the audience?
Thank you.
Okay, we have the next question coming from Etta Putra from Maybank. There are two questions. The first one is: What do you think about the competition in Java and East Java? Second is: What is your primary market for expansion in 2026? I think I would like to invite both, David and maybe Pak Rajeev to add some colors.
Yeah. I mean, competition has always, right, it's tough. Honestly, I think, it's been a while since we don't split like Java and East Java. We focus more on city per city granularity, and we look more into the cities. There are some cities in Java that are very competitive, some other areas that are little less competitive and same happens in East Java. Yes, it's true that East Java is usually Telkomsel stronghold, traditionally, right? Especially some areas. That might be a little bit different when in Java, most of the players are everywhere. I wouldn't make such a big difference now between Java and East Java.
I think every city is like a, it's a different, it's a different world with different competitive dynamics, different network stance, and that's how we focus. Primary market for expansion in 2026. I think as you have already mentioned before, we are expanding, I mean, we are expanding in different ways. One is in coverage with new sites. One is in quality with 5G. Another one is in quality, but with the capacity as well, right? Again, we have different type of expansions in different areas with different types of technologies. Again, we select each of those cities or each of those expansions where we need new sites, where we need 5G, where we need new capacity based on each of the cities.
Thank you, David. I would like to unmute Etta's line if you have any questions. Go ahead. All right. Since Etta doesn't have any questions, let's move on. I see that Sukriti has raised a hand. Let's open up the line for Sukriti from Bank of America. Over to ask the question.
Hi. Thank you, Chris, and thank you management for taking my question. Sorry, my chatbot function does not work. Just have one quick question on how we should generally think about the direction of ARPU growth and quantum of ARPU growth going forward. Are you positive on 5G driving some of that growth on ARPU? Do you think ARPU growth moderates if it's organic growth and not headline price increases that you're able to take in the current macro environment? Is ARPU growth likely to moderate from here to low single-digit levels?
Sure. There are several ways to look at this. The first one is the consumption rate growth, which will impact ARPU. If you look at our data consumption currently, it's around, 20, 22, 23 GBs per subscriber, depending on how you measure the subscribers. In neighboring markets, it has increased much more than that, especially with launch of 5G, which is less than three months old for us in most of the cities that we've launched. We are seeing early signs of increased consumption movements, people adopt 5G. One avenue of growth in the near future would be consumption-led growth, where people consume more data and therefore they generate more ARPU. That's one part of it. In the recent past, there has been more rationalized pricing offerings.
I must color. Give it, give it a bit more color. It's not just on the recurring pack, it's on the starter packs where most of the action has happened. If you know the industry was adding close to 20 million new subscribers a month, with a population of 280 million total people in Indonesia, roughly the same number of SIM cards were being sold in a year. At a very low price, low yield, low ARPU. That has been taken away. The ARPU increase, which you see, some bit of it is coming from that side. The other is more of a price rationalization and very low value recurring packs. Is there a headroom for a further price increase? I would just refer to the ARPU as a percentage of per capita income that is still 0.6, 0.7 here.
As compared to around 1.1% in similar prepaid markets. What I believe is customers have the ability to pay a bit more than what they are doing now. It will come through a combination of both consumption increase and a bit more of pricing, price rationalization as we move forward. As you would see, 0.6% of somebody's per capita income is a very small number. Despite those macroeconomic challenges, it may not be a significant factor for us to have an optimistic view about further ARPU growth. Yes, lower, lowest end, lowest spectrum of the customers, there may be some challenge there. Apart from that, broadly, we are pretty optimistic that ARPU growth will continue.
It may not be at the same intensity, the same growth, which has happened over the last few months, but definitely there is further room for improvement there. David, would you want to add something there?
No, I think all said, right.
Okay. Thank you, Pak Rajeev. Sukriti, any follow-up question from your side?
Yes, just one quick follow-up, [Maxim]. Thank you for that color. Just wanted to understand, you mentioned, David, that there are different cities that you now look at it versus Java, ex-Java in terms of your, you know, how you're growing. Any particular cities that you'd like to point to where we are seeing better growth for, on our customer base? Or is it generally very broad-based? Also probably on the same lines, any specific areas where we think that growth would, we would not focus as much on for certain reasons.
Yeah. I think again, I'm not gonna give names of specific cities, right? I think the 5G, where are we deploying 5G, I think it's quite fairly. Those are like the main cities, and I think it's there. I would add that in many cities, after our 5G deployment or our new site deployment, our network is number one. We have like the best network in download speed. Not only in 5G, but also in 4G. Our coverage in those cities is also number one or at par with the best, right? For sure, those cities will be where we expect our result and our experience to be better. Are there areas where we are not going to focus? Well, if we are present, we have to focus, right?
If we have network, we'll be focusing in that as well.
Right. Thank you, David.
Thank you. Thank you.
Thank you, Sukriti, for the questions. Now let's move on. We have another question. This comes from Arthur Pineda from Citi. We will unmute your line, Arthur. Please ask the question.
Hi. Thanks. Sorry, I couldn't use the chatbox as well. Just two questions, please. Firstly, on the CapEx, can you just clarify your IDR 15 trillion CapEx for the year? Does this include your assumptions for 5G deployment? Second question I had is with regard to the spectrum that you have at the moment. Are you at liberty to redeploy some of them for 5G usage or are there any specific requirements for you to attach them to older technologies? I do see that you have a fair bit of spectrum on the 2300 MHz band, which would also be used for 5G. Thank you.
Yeah. I think the first question was on the CapEx. It includes the entire CapEx. As we mentioned in our earlier calls also, we can classify this as an integration CapEx, but what we are doing is given the timing of our merger, we are taking this opportunity to ready our network for 5G also, in cities where we want to go for 5G. It's a sum total of the entire CapEx, 5G, and integration both put together. The second question was, sir? Sorry, Arthur, can you just read the second question for us?
Oh, sorry. The second question is with regard to the ability to redeploy some of your existing spectrum bands for 5G. Are there any limitations for that or can you actually just reform them for 5G?
All the spectrum is technology-neutral, so we can use it as we deem fit.
Understood. Okay. Thank you.
Thank you, Arthur. All right, let's move on now. We have the next question comes from Angus Mackintosh. This is about the broadband. What is the direction of ARPU for the broadband business, and do you have any longer-term targets for the broadband subscribers? I would like Pak Feiruz to provide some colors on this, please.
Yeah. Hi, Angus. Thank you for the question. I think directionally, if you take a closer look at the industry, what we see is the broadband market is becoming more competitive, right?
Some pressure over the overall industry ARPU. Having said that, our focus remains on, you know, looking at customer lifetime value. We look at better retention, as well as very much more disciplined acquisition, rather than just competing on price, as I mentioned earlier. I think on the subscriber targets, unfortunately, we do not provide the long-term subscriber targets. We still remain focused, right, to grow this business, in a sustainable and profitable manner.
Okay. Thank you, Feiruz. Let's open the line for Angus. Yeah, if you have some question. Okay. Okay. Okay, it seems like there is no question from Angus, so we'll just move on to the next question. Comes from Sabrina from Trimegah. Question is about the BTS, yeah. It was mentioned that in the fiscal year 2025, I recall that XLSMART plans to add 7,000 - 8,000 sites, but BTS has increased by 28,000 while at the Q on Q. It's like we don't see any site dismantling here. Can you please shed some light on this? Yeah, maybe go ahead.
Okay. Sabrina, this is Antony. I think, yes, you are right that if you in 2025, we mentioned that there is a plan to add 7,000, 8,000 sites, the number of sites that we want to do for this integration. Currently, we already deploy approximately around 4,900, almost 5,000 sites, new sites that we are adding at this moment, from the L one. In terms of that, you, if you look at the BTS count, yeah, I think you are exactly correct that the delta is 28,000. I think we should understand that there is a different of definition between number of sites and the BTS definition as well. I think, we cannot really correlate the numbers exactly like that.
There should be like a formula, ratio of the number of sites at the BTS count as well. In terms of dismantling site, I think just to reiterate the words that Rajeev already mentioned, that we already completed like almost 77% of the towers dismantled from in the Q1 30/30 scales. Again, I think that's the answer.
Yeah. I think to clarify this a bit more. A physical tower is one thing, and on that physical tower we put multiple BTSs to cater to different spectrum which we have and different technologies we have. The number of BTSs would continue to increase as we deploy more 5G, but the number of physical towers on which we pay these will decline from the pre-merger phase. Just to remind you of the numbers. Prior to the merger, XL had 45,000 towers and 22,000 towers were the Smartfren towers. Total of 67,000. Out of which roughly 17,000 towers were supposed to be dismantled. As Antony just mentioned, roughly 77% of the 17,000 have already been dismantled, and that's what is flowing into our synergy. In addition, we're deploying close to 7,000 sites this year.
Out of which more than close to 5,000 sites have been already deployed. That's the way you should look at it. 67, 17,000 to be dismantled, out of which around 13,000-14,000 already done. Going down to 52-53, we added 3,000-4,000 more sites. That's the physical number of towers on which we are paying lease and also the CapEx. I hope that clarifies, Sabrina.
Thank you for Pak Rajeev, Antony, to give the clarification. All right, let's move on. The next question comes from Belva, Monica Belva from Indo Premier. This question is about mobile. What is the exit ARPU for March and also the April. I'd like to get some color here for the Q on Q.
I don't think we disclose, right?
Yeah.
The exit ARPUs or let's say the ARPU ongoing in this second quarter. As you can imagine, of course, March was Lebaran. The ARPUs in March will be higher than the average of the quarter. In April, there is a post-Lebaran effect. Again, we don't disclose. I can say that in March of course, the ARPU were higher than the average, and then in April they come back to normalization.
Get it. Belva, do you have anything? Follow-up question to ask?
This is all I have. Actually, no, I'm good, thank you.
Thank you, Belva. All right. Let's move on to the next question from Angus Mackintosh. Again, this is about the company use of AI. Can you outline how the company use AI in the overall business and both operationally to improve efficiencies and for optimizing the subscriber experience? Yeah, I'd like to invite Pak Rajeev please to give some colors on this.
Sure. I was wondering how can a call be complete without the word AI? Thank you for bringing this topic up. I think this is a buzzword. What we believe in XLSMART is AI should be a technology which is put to real use in every single day. As you rightly mentioned, there are multiple ways we are using it. One is to become more efficient in the way we operate. There are tasks which are repeatedly done by people. We're using AI to do it better and faster and cheaper. Things like the software we develop, the new products we develop. The testing of that was really manual. Most of it has moved to an AI-based tools where it's done faster and with much lesser errors. Things like route planning of our sales people. Earlier it was manual.
People decided which place to go. Now with the help of AI, based on the needs of the ROs and potentially the potential customers in the home business. Those route plans are also being designed by using AI tools. This is one area. The other area is making our customer experiences better. Significant portion of our network optimization decisions are now being made using AI. As you know, networks generate a large amount of data. Customers generate billions of records every single day. It's very difficult to process that manually. Most of that is being done now using AI. Have we reached a situation of completely autonomous network operations? No. The ambition is to reach there very quickly, and we are well on our way in that journey as we move forward.
The other thing also like AI-based CLM offers. We make the best offer for the customer from a product pricing point of view. There are multiple ways in which it is being used. As always, we're never satisfied with the extent to which we are using. We believe there are many more use cases, and there are much more things which we can do on AI to become even better. We are very excited about this technology and, unlike many other players, we would want to put it to real use rather than just using it for branding purpose.
Thank you, Pak Rajeen, for sharing the vision on AI. Angus, do you have any follow-up question to ask?
No, thank you very much. That's very clear. Thank you.
Thank you so much. Okay. All right. Any other questions from the audience? All right. Since we have no more questions from the audience, I think we can wrap up the call. Thank you once again for joining us today. If you have follow-up questions, please reach out to investor relations. Stay safe, stay healthy. We look forward to speaking to you next quarter. Thank you.