Good day, and thank you for standing by. Welcome to the Indosat Ooredoo Hutchison First Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. Following the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press Star 11 on the telephone. You will then hear an automated message advising your earnings raise. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Indar. Please go ahead.
Yep, thank you. Good afternoon, everyone. And thanks for joining us today. With us on the call today, we have Vikram Sinha, our Chief Executive Officer, Nicky Lee, our Chief Financial Officer, Ritesh Kumar, our Chief Commercial Officer, and we also have our Chief Marketing Officer, Vivek Mehendiratta, who joined us in October last year, joining us on the call today. I will now hand over the call to Pak Vikram for his opening remarks. Over to you, sir.
Thanks, Indar. Good afternoon, everyone. Let me start my presentation by sharing with you the highlight of our Q1 performance. Despite a challenging market environment in the first quarter of the year, we managed to deliver a progressive set of numbers for the quarter, with most financial and operational metrics improving quarter on quarter. We added 700,000 customers this quarter and more than 1.3 million data unique users, as we see positive momentum on our subscriber base. This is supplemented by our ARPU rising 0.8% quarter on quarter to IDR 39,200. Revenue was slightly weaker during the quarter due to challenging market environment seasonality, but we performed well on the equal-day basis. The biggest positive is that both our EBITDA and net profit grew by 1% and 6% quarter on quarter, respectively, reflecting our focus on profitable growth.
I have put something important in the slide, something which we have been consistently highlighting since our merger, is the need for Indonesia to realize its potential and grow its mobile ARPU, which still remains under-indexed relative to the region and very affordable as a % of GDP. As an average $2.4 ARPU, it is important for us to realize this potential, and IOH is ready to play its part by offering a world-class network and customer experience and pursue more sustainable pricing in the market. We have seen positive ARPU momentum continue in Q1 2025, where we have consistently grown our ARPU for the last five years from a level of below IDR 30,000 to now close to IDR 40,000, which is an increase of 32% over the past five years.
Our initiative we have implemented will continue to drive our ARPU growth through the rest of 2025 and beyond. This is through our implementation of AI across the business, which allows us hyper-personalization initiative, as well as smart CapEx and distribution, as our revamped postpaid product, IM3 Platinum, which is seeing good momentum. Finally, we have taken a bold step toward further sustainable pricing, where the SIM card price has been raised to IDR 35,000 across both brands. This will promote rational and real subscriber net addition. AI continued to be a core part of our DNA, guided by our AI North Star. As I spoke previously, part of our AI native TechCo is embedding AI across all parts of our business, from the customer experience to network experience to smart CapEx.
Our AI TechCo business is also doing well with revenue contribution to start in Q2, and we are confident of delivering $35 million net new revenue in 2025. The new batch of NVIDIA GPU GB200 has been ordered, and the service will be operational by Q3 2025. That ends my presentation, and I will now hand over to Nicky for more detailed financial presentation.
Thank you, Pak Vikram, and good afternoon, everyone. As mentioned by Pak Vikram, we achieved progressive results for the first quarter in 2025. Overall revenue, IDR 13.6 trillion for the first quarter, fell by 3.5%, mostly due to two days less in the quarter and low season effect. On the same-day basis, the normalized change is around 1.4%. Below revenue, we have maintained our strong operational efficiency and profitability, as we have reduced our total cost of services and OPEX by 2.2%. This helped to uplift EBITDA by 0.6% to IDR 6.4 trillion, and also EBITDA margin up by 1.9 percentage points. Going down the profit and loss, we got one-off gain of around IDR 250 billion, propelling net profit to IDR 1.3 trillion, up 27% from Q4. Excluding one-offs, the normalized net profit is IDR 1.2 trillion, up 6% quarter on quarter.
I will provide more details on these items later. In terms of net debt-to-EBITDA ratio, it dropped further from 0.4 times to just 0.36 times, reflecting primarily the team's effort on deleveraging our balance sheet. If we move on to the next slide, focusing on the first quarter performance against the same period in 2024, reported revenue fell by 1.9%. Again, if we normalize for one extra day in 2024, which is 29 February 2024, the two quarters actually came in with similar revenue. In terms of reported basis, this revenue movement also explained why EBITDA dropped 1.4% year on year. The lower OPEX this year helped to cushion the impact on the EBITDA level and also improved EBITDA margin by 0.2% to IDR 47.2%. Moving on to the top bottom line, we got an improvement of 1.3% as the one-off provided an uplift to the bottom line.
Let's move on to look at our cost. As mentioned earlier, we have managed to reduce our cost. If we look at the individual lines, essentially we have spent less across all lines when compared to the last quarter. Cost of sales experienced a 2.2% year-on-year increment, primarily due to higher partnership costs associated with wholesale business, which were in line with the corresponding revenue movement. However, on a quarter-on-quarter basis, we saw a 5% decrease, largely attributed to reduced installation costs and partnership costs associated with MIDI and wholesale business, which typically peaks in quarter four. Personnel costs reduced by 16% year-on-year and 50% quarter-on-quarter, mainly driven by lower bonus and incentives. This has also included an IDR 88 billion reversal of bonus provision following the actual payment in the first quarter.
We are also seeing a significant reduction in marketing expenses by 20% and 21% year-on-year and quarter-on-quarter, respectively. This is attributable to a lower level of activity, also with more focus on digital marketing. On G&A, it dropped by 5% year-on-year and 3% quarter-on-quarter, coming mostly from lower PR and also cost optimization impact. In terms of depreciation and amortization, it increased 5% year-on-year, primarily driven by the addition of fixed assets, our continual investment in network, and also right-of-use assets. On a quarter-on-quarter basis, these expenses were relatively flat. In the first quarter, we had significant one-off gains from reversal of tax provision following a win in the tax Supreme Court decision in the company's favor in the amount of IDR 157 billion. We also gained on disposal of dismantled assets around IDR 100 billion.
These gains and provision reversal contributed to a total other operating income of IDR 303 billion in the first quarter. This reflects a sharp turnaround from Q1 2024 and Q4 2024, which recorded other operating expenses of IDR 11 billion and IDR 61 billion, respectively. Let's take a look at our CapEx. CapEx booking has increased year-on-year following some project booking slip from Q4 to this quarter, but it only amounts to 20% of our full-year guidance for 2025. We do expect we'll catch up in the subsequent quarters in the year.
Net debt u p from IDR 6.7 trillion to IDR 9.3 trillion year-on-year, due mainly to mostly timing of payment leading to working capital movement, repayment of Tower colocation incentives, and also funding for network rollout. On a quarter-on-quarter comparison, it dropped by over 10% as payments are lower for Q1 generally. That's a quick summary for the finance section. Now I'll pass the time to Pak Vitesh.
Thanks, Nicky. Quarter one, we have seen a growth of around 0.7 million customers. ARPU also increased 0.8% to IDR 39,200 now. The good thing is that we have been able to gain our data unique user in quarter one over quarter four by 1.3 million. Data traffic, we have saw some regrowth because of two days lesser in quarter one over quarter four and also some seasonality. Next slide, please. Our commitment towards giving empowerment to Indonesia and keep on bringing good quality network experience for our consumers. We continue to invest our network, what Nicky also talked about, CapEx investment. We are also including AI to make sure the customer experiences are being well taken care of, and we are putting the right investment in the right place, focusing on customer satisfaction. That is all from my side. I'll give it back to Indar.
Thank you. Thank you, everyone. Desmond, can we go to the first question on the question-and-answer queue?
Certainly. As a reminder to ask questions, please press star 11 and wait for a name to be announced. Our first question comes from Piyush Chowdhury from HSBC. Please go ahead.
Yeah, hi. Thanks for the opportunity. Could you talk a little bit about the outlook on mobile revenue growth on the back of recent initiatives which have been discussed? When should we start seeing the impact of new starter pack, etc.? Secondly, EBITDA has significantly improved quarter on quarter due to significant cost discipline. A lot of these costs which have come down are discretionary in nature. Can we check the sustainability of this cost going forward and outlook for the margins? Thank you.
Hi, Piyush. This is Vikram. I think what I spoke about in terms of fundamental, when you talk about mobile revenue growth, which is our core business and which is very important for us, the most important thing I want to highlight is that there are two parameters which are in the right trajectory. One is the base movement, and second is the ARPU. We will see this improving month on month. This time, Lebanon was also end of March. Especially March, we saw things coming back from consumer sentiments also. We have taken action on starter pack, which will help bring more discipline not only for us and also for the industry. All these things on starter pack which we are doing will start reflecting from June. I think what we see is more progressive performance with the right trajectory here onwards on the core business.
In fact, on guidance on EBITDA, I will request Nicky to share more on detail. We stay committed on the guidance which we have given on 10%, mainly because of two reasons or three reasons. One, core, we want to make sure we grow ARPU. I have spoken about it in my presentation. There is a clear opportunity. As an industry, as an Indosat, we clearly see there is an opportunity. All our AI initiatives, our data modeling, our whole thing, it takes some time. We have been in this for three quarters. We have put use cases. Next quarter, there will be more use cases coming in. Once your models and your platform is ready, we have taken a platform and domain approach. The use case scale-up happens fast, and the approach is reusable.
We can do a lot of scale-up at a fraction of a cost. One is growing core. We stay committed on that. Second, EBITDA growing faster than revenue, we still have opportunity. We want to have cost leadership for growth. You will see that continue, that whatever revenue we are doing, we are very mindful that it has to flow into EBITDA. We want to make sure from the core side also, we are driving EBITDA growth faster than revenue. Our AI business, what I spoke about, will start flowing in mainly from third quarter, fourth quarter in RPL, and it will show up on MIDI revenue. What we have already booked, we just need to start delivering.
It will contribute to around $35 million. This also comes with anywhere between 55%-60% EBITDA margin. When I put all these three things together, in a challenging environment also, as management team, we stay committed to our guidance of 10% EBITDA growth. I'll give it to Nicky on specific on Q1 questions.
Hi, Piyush. Thank you for your question. I think in terms if I would split your question into two parts, one is on the cost of services and OPEX. The only item I highlighted in terms of accounting changes is in relation to the bonus reversal. Still, we get a pretty good cost management impact across all the other lines. We are seeing a lot of this good work would be sustainable. Yes, below EBITDA at the other operating expenses, we get some, again, some good input on managing tax issues as well as disposing some equipment that we do not need, right? It is not a one-off thing for that. We continuously look at what equipment we do not need, and we dispose it and booking profit on that. The amount would go up and down, but it is not a kind of a one-off exactly.
We still see a lot of opportunities going forward across all the core lines or network, how we can optimize power consumption, deploy technology to reduce our not even beyond not even in OPEX. I remember we discussed about CapEx saving in the last quarter. We are using AI for ways to optimize our network investment and make sure we only invest at the right time in the right place, right? All these things, we are seeing the benefits. More and more, we are getting the confidence that we will be able to drive cost down a bit more, definitely improving our efficiency going forward.
Thanks, Vikram and Nicky. If I may clarify one thing, in the mobile segment, you have reported subs have gone up quarter on quarter, and ARPU has also improved sequentially. If I look at cellular revenue, that is down quarter on quarter. Can you help us reconcile this?
Yeah, thanks, Piyush, for the question. See, the output reflects on the average number of quarters. While the subscriber at the end of quarter, how many subscribers what we have. During Q1, our subscribers started to increase from March. The majority of the growth came in the month of March, wherein we have added subscribers. That is how the number is stacking up.
Got it. Thanks, Ritesh, for clarification. Thanks a lot.
Thank you for the questions. Our next question comes from the line of Ranjan Sharma from JP Morgan. Please go ahead.
Hi, good afternoon, and thank you for the presentation. A couple of questions from my side. Firstly, the adjustment that you have talked about on the SIM card, is that broad-based across the country? Can you also share if other competitors have followed through as well? Similarly, are you only making changes to the starter packs? Have there been any adjustments to the renewal plans as well? Lastly, on the AI CapEx side, can you remind us how much capital you are deploying in 2025 and 2026 to unlock those revenues? Thank you.
Hi, Ranjan. This is Vikram. First, on the SIM card, on 15th March, we implemented, and then I think within two days, we saw everyone in the market. It is broad-based across. I think the good thing is it is bringing simplification in the industry. For us, it is both the brand, and it is across the country. The same, we have seen for others also. Next on that, are you making changes? Yes. This is starter pack. Now, when you look at our quarter four CapEx, sorry, capacity in terms of data traffic, and then you see our yield. We have been started using hyper-personalization. We have been very rational on managing our traffic yield, which is more sustainable and which moves in the right direction. We have not taken any headline price increase on the rebuys and all.
We feel there's an opportunity. Overall, consumer sentiments were also very soft. We have been managing our data traffic, our yield for growing more sustainably through all these hyper-personalization for now. Third question is on GPU. Two things I want to call out here. Last year, we had invested because our data center partner is BDX, where we have 25% equity. We do not have to put any CapEx on that. It is all done by our data center for data center requirement. Where we put CapEx is on the GPU. This year, we have ordered GB200. It is around $120 million. The good thing is we have locked the customer. It is a multi-year contract.
We have taken a very conservative approach on the application and all. These are very value-aggregating contracts customers which we have closed. You will see the impact of it coming Q3 onwards. This year, it will be only four-five months. Next year onwards, you will see a full year impact of these contracts and business on AI cloud.
Thank you so much. If I can have a quick follow-up. With the changes that you have made in terms of pricing, how can we think of mobile industry revenue growth in 2025? Thank you.
These are early days, Ranjan. We have to be cautiously optimistic. At least on the SIM card implementation which we have done, we will see benefit coming from June onwards. I think let's wait for one more quarter. Personally, we see the right projection. We should wait and watch more in terms of the industry revenue guide.
Thank you.
Thank you for the questions. Our next question comes from Sachin Mittal from DBS. Please go ahead.
Yeah. Thank you. Park, Vikram, and Park, Nicky. Just to follow up, you said IDR 120 million as CapEx has been incurred already on the GPUs, right? I mean, is it a full year or is the CapEx incurred so far? That's question number one. Two other questions, mainly on the cost side. 16% reduction in personnel cost, which we saw. Do you think this is sustainable because of the base of the level which we are seeing this quarter? Are these sustainable levels of personnel cost? Also on the marketing side.
The third question is on the EBITDA. When I look at the EBITDA, by adding the depreciation and amortization to the operating income, I get much higher, not IDR 6.4 trillion, but IDR 6.7 trillion EBITDA. What am I missing here in terms of why the math doesn't work in terms of adding? Is there some kind of one-off or some changes here that EBITDA seems to be understated if we add the operating income and DNA? Thank you.
Start with you, Vikram. If I can start and you can supplement. On the first question, depending on what we get, what new business we will get on the GPU side, we may need to incur we need to buy.
Basically, what we are trying to do is not to buy GPU in advance, but then we will secure customer order first. Depending on what customer would order, we will buy the GPU type accordingly from NVIDIA. Just so you're clear, the customer order and contract we're talking about are long-term contracts. We will make sure we get all of our investment plus a reasonable return on these contracts. Potentially, we may need to incur more, but that's what we think for 2025.
Got it.
Just to add on this, Sachin, I think this is something that is a new business for us. We are seeing, because we got our factory up last year, and we got with H100. We got support from NVIDIA on the allocation of GB200. This $120 million, we locked the customer. It is a 3 plus 2, 5-year contract. We are getting it here, and it will be ready for service by July. As Nicky said, our approach has been, especially for regional global customers, to lock the customer first and then lock the data center readiness. We have strategic partnership on data center, and then make sure that we order. That is the approach which we are taking.
Got it. Thank you.
Yeah. Coming to Sachin, coming to your second question, as I highlighted earlier, we have a bonus cost reversal in first quarter. Except for that, I think whether it's personnel or other marketing expenses, you also mentioned, across different quarters, there would be some volatility. Overall, we see the cost base to be sustainable.
Got it.
Thank you for the questions. One moment for the next question. Our next question comes from.
I think there is also.
Hi, Vikram.
There is also a question on EBITDA. I think Indar can help you. We're working offline to basically, there are certain items in other expenses that we need to be taken out. We can work with you offline, Sachin.
Thank you for the questions. Next question comes from Sukhriti Bansal from Bank of America. Please go ahead.
Hi. Thank you, Manoj Mantham. Thanks for taking my question. A couple of questions. Firstly, on the GPU as a service, you mentioned that once you get orders from customers, that's when you start ordering the GPUs from NVIDIA. Just to be clear, if the customer is asking incrementally for GB200s, what kind of use cases, if you can elaborate just a little bit, are those customers using these advanced GPUs for? You mentioned these are long-term contracts.
As new chips start coming in, given they are demanding for newer NVIDIA chips, do they expect you to keep progressing to newer NVIDIA GPUs over time? Is there also any condition from NVIDIA, given that you have a partnership with them, that you have to buy certain GPUs from them? Or could it be anywhere from zero to any number that you wish to buy? Secondly, on the dividend, can you give any kind of a timeline on how you'll be progressing to the 70% payout by 2027? What kind of growth will we be seeing over time?
Ricky, you can start with dividend, and then I'll come to GPU.
Okay. I was hoping you would do this first. It's okay. On dividend, I think you're referring to the dividend policy we have published. Basically, what we try to do is to give the guidance that we will be paying dividend on a progressive basis in terms of both the amount and also the dividend payout rate, with the expectation that we will continue to improve our business performance and deliver more profits going forward. Last year, the payout ratio is a little bit below 50%, right?
What we are seeing in the space of three years' time from year 2024 to 2026, we will be improving. We'll be closing this 20% gap. Exactly how much in which year we'll need to figure out depending on different factors, which we also mentioned in the dividend policy note. We'll need to see. Seventy percent will be what we expect to pay out for the year 2026.
Hi, Sukhriti. This is Vikram. Coming on to your first question on GPU, I think what is important to understand is that last year, we got our sovereign AI factory. With NVIDIA, we worked very closely on making sure that the factory was up in October. What we saw, there are two kinds of demands. One is domestic use cases. For that sovereign domestic use cases, first, you need to have the factory. When we got the factory, we have seen some early wins, small number in order from banks, from mining companies, even some of the other startup companies. The quantum of demand and the quality of power which is needed is not as advanced as GB. All the Indonesia domestic demand, it is on L40S. We are putting most of the use cases which is domestic on L40S.
There are a few of them who are on H100. For GB200 and all, these are regional customers. These demands are training demands. The power of GB200 is cost per token is less than H100. These are customers who, one of the examples of this customer is they do weather forecasting at scale for Asia. Some of these customers, when they train their data, they want the most latest one. Once we get the request, we log the customer and long-term contract. We have taken a very conservative approach on depreciation. I think Nicky can give more detail. We have been taking a very conservative approach. In future, the first contract is locked. In future, if they want something upgraded, they have to buy and order new one. That is how it progressed.
Specifically, NVIDIA and Accenture, they are working very closely with us on helping us scale our sovereign AI factory. The help and support they are giving is how to create more domestic demand, more domestic use cases, especially with inferencing coming in. That is where we are investing a lot of time with them, and they are giving us a lot of support.
In terms of depreciation for these GPU chips, we are using five years. The actual use life is significantly longer than that. We have taken a relatively conservative treatment on that. On question number three, there is no commitment for us to buy whatever type or whatever number of GPUs from NVIDIA.
Understood. Thank you, very clear.
Thank you for the question. Our next question comes from Arthur Pineda from Citi. Please go ahead.
Hi. Thanks for the opportunity. Two questions, please. Firstly, on the GPU business, you've mentioned $35 billion in revenues booked over four to five months of operations this year, and these are multi-year contracts. Am I to understand that the revenue contributions from these contracts should basically more than double into the next year when you get full years' worth of booking? Or do the bookings tend to be lumpy? Second question I had is with regard to mobile. When we look at this, it's down Q and Q, even though you have a seasonal peak of Lebanon in the first quarter of this year. What's driving down the revenues? Is this due to competition or weak consumption? Or are you seeing market share loss given activities from competitors? Thank you.
Yeah. Mobile revenue, as I said, in the month of March, we saw towards the end of the month some growth coming as part of seasonality of Lebaran. We got some benefit in about quarter two, we will see some improvement coming against what was happening on SIM card price from IDR 35,000, as Vikram also talked about in the month of June. We do not see any competition activity going up during the month of Lebaran, to be very honest. I think things are stable, much better than what used to be before. Yeah.
Coming back to GPU business, you are right. What we see is when I say 30-35, it is just part of this year. Full year 2026-2027, these customers and the contract will deliver around $65 million revenue, close to $40 million EBITDA, both in 2026 and 2027. Thank you.
Thank you for the questions. One moment for the next question. Our next question comes from Aurelia Satyabhoodi from BNI Security Taskforce. Please go ahead.
Hi. Thank you for the opportunity. Congratulations, management, on the strong results in the first quarter. I would like to touch on the mobile business. Understand that the ARPU is being calculated as an average of the quarter, which was amazing at IDR 39,200, while the January-February number was supposedly to be on the weaker side. I would like to ask on the color, moving into the second quarter, especially after the peak season of Lebaran, how would you see the ARPU trending towards the month of April onwards, especially with the increase in the startup pricing? Thank you.
Again, thanks. I think this is a very good question. I think Ritesh explained. We are cautiously optimistic. We see a progressive trend because Lebanon also, we did not see the full Lebanon impact. It was split, in fact, more on quarter two, less on quarter one. We are cautiously optimistic. Our clear focus is to have progressive. If you look at my presentation, I have explained that the ARPU in Indonesia is underindexed. It is important that we deliver good network and customer experience. We will be partnering with a lot of digital services to grow ARPU.
Thank you, Pasikram. If I may have one more follow-up question. Regarding the strong ARPU that we see in the first quarter and also moving into the second quarter, would you be expecting this to be the growth of ARPU will be coming from the ex-Java regions? Or it's still quite a balance between the growth of stabilizing ARPU in Java and also the growing business and presence in ex-Java?
No, I think coming from outside Java also, reason being we are improving our network. And as Nicky and Vikram also talked about, we are improving our customer experience. We have seen outside Java, the usage per customer is growing up. That is where we are more confident that nationwide, we keep on increasing our ARPU.
If you can comment on your spending or market share in Java.
We cannot go to that detail. If you mean marketing expenditure, then we are using more tools internally on marketing tools. Also, with the circle we are working, we are more mindful and have more control on the on-ground activities. That is where the efficiency is coming in, wherein Nicky also talked about that those are sustainable ones. That is how we see the efficiency in marketing cost. Yeah.
Okay. Thank you so much, Ritesh.
Thank you for the question. We have a follow-up question from Ranjan Sharma from JP Morgan. Please go ahead.
Hi. Thank you. Just quick two follow-ups. Firstly, can you remind us what percentage of your revenues comes from startup packs? Second is if you can give us an update on where we are with respect to the fiber restructuring that was announced last year. Thank you. Around 4%-5% revenues come from our startup pack, Ranjan. What about fiber?
Fiber carve-out, we are still in the process. I think quarter two end, we will have more updates. The process is progressing well. We have seen significant interest on our fiber carve-out project.
Thank you for the question.
Thank you.
We also have follow-up questions from Piyush Chowdhury from HSBC. Please go ahead.
Yeah. Hi. Just two questions. Firstly, any kind of update on the spectrum auction timeline pricing if you can update on that? Secondly, in the first quarter, MIDI revenue is down year on year. Though small, it's down 0.5%. If you can tell us what's happening in the enterprise segment and the outlook for it without excluding the GPU as a service, just the core enterprise segment outlook. Thank you.
Thank you, Piyush. I think this is also a very good question. Two parts to it. I think especially when we talk about MIDI, our subsidiary Lintasata and Indosat B2B, we have seen some softness or slowness on especially government projects. Still, we are confident that core revenue for MIDI will be close to double-digit growth. On top of it, when you have AI services, I've already spoken about it. What you see now is a little bit of seasonality. June onwards, it will pick up. We see a very strong line on B2B. At least we have to plan for six months. We see a very strong pipeline coming up. The second question was spectrum auction timeline. What I'm getting is that this year, 1.4, 700, and 2.6. We will wait for more clarity.
We have got very positive signs that government is very mindful of how spectrum has to help the industry. We have not got any specific detail. I will not be able to comment on pricing. Broad timeline, what we are hearing is that these three spectrum will be coming this year. The first one will be 1.4 megahertz and 700 and 2.6.
Great. Thanks a lot, Vikram.
Thank you for the questions. One moment for the next questions. Our next question comes from Sukhriti Bansal from Bank of America. Please go ahead.
Hi. Thanks again for taking my questions. A couple of follow-ups. Firstly, on the ex-Java expansion, you are still expanding. In terms of competition, are you seeing lesser expansion from competition given they've undergone merger and are probably going to proceed towards some network integration? Is that impacting competition in ex-Java for you?
Has it come off slightly? On EBITDA growth, I think you did provide some clarity on the 10% growth outlook. If you could just broadly talk about what percent of this 10% growth could come from ARPU growth, what should be cost optimization and operating leverage broadly, that would be very helpful. If I could just squeeze in one more question on the GPU as a service. You mentioned regional operators or regional use cases. Are there also some MNC or US-based use cases which could see some risk from the AI diffusion framework?
Let me start with the last question. The good thing is whatever customer and contract which we have closed, it has no risk, anything in terms of compliance. Because Indosat, for us, compliance and governance, our shareholder, both Ooredoo Group and CK Hutchison, they are very supportive on making sure that we are 100% compliant on these things. There is no risk at all. We just need to deliver. What happens in future on AI diffusion law will define how much more we can close and grow in these contracts. We will have to wait for June if some changes are happening on AI diffusion. As of now, all these are secured. It is compliant with AI diffusion law, on all regulation. On EBITDA, I think I'll repeat the same thing. I think first, we want to grow core revenue.
When I say core, it is ARPU and sequential positive growth on base. Cost leadership, what you heard from Nicky, we have started using a lot of initiative, not to cut costs, but to be more efficient on how we do the same thing with less. Whether it is on CapEx, we have seen some win. There are a lot of other things on digital marketing, even on distribution. We want to make sure that EBITDA is growing faster than revenue. That whole piece is supported by GPU as a service, which will flow. Still, this year, it will be small. Mainly, it will be driven by core business on ARPU and sequential-based growth and a very well-managed cost. We have some more opportunity on cost optimization on IT side and all, which is progressing quite well.
We are too focused on making sure we drive our agenda. I will not be able to comment more on competition and what they are doing. For us, we have a clear plan. We see clear opportunities across. Yes, ex-Java, we have to serve across Indonesia. People have expectations from Indosat that it should work everywhere.
Understood. Thank you. Thanks, Vikram.
Thank you for the questions. We will now take the next follow-up questions from Arthur Pineda from Citi. Please go ahead.
Hi. Thanks for the follow-up questions. Two questions for me. Can I ask about the mobile pricing trends for top-ups? Were there any increases on top-ups for 1Q or 2Q by yourself or your competition? I know you mentioned that starter packs have been increased. I'm just wondering, for the 96% of the business, is that actually improving? Secondly, on broadband, can you get some color on this business? If I look at fixed revenues, that's down year on year, flat to Q. Are you not seeing any pickup in fixed broadband? As I recall, you had aggressive market share targets on this. I'm just wondering why it's not growing faster, considering the low broadband penetration in Indonesia. Thank you.
What we can see, Arthur, is that on data packages, industry is more rational. That is what we can see. We are actually looking at, from our side, our product strategy point of view, we are looking at ARPU accreative pricing. That is where we can see, like Vikram also talked about, the moment we increased the SIM card prices, it was being followed by the industry. We keep on focusing on delivering good service and keep on focusing on making sure ARPU is going in the right direction by giving them the right pricing, what they want, and also more digital services. On fixed broadband, it was in stress this year, but we are committed to achieve our number of around 100,000 net adds for 2025.
Sorry. If I just can clarify, you mentioned that. Sorry. Sorry. Go ahead, please.
No, no. Please go ahead.
I'm just trying to understand. When you say data creative packages, are you actually seeing direct price increases in the market, or is this basically an upsell that you're seeing in the market? Has anyone been actually raising rates? Normally, we see that going up towards Lebaran, but it seems like we didn't see that this year.
Two ways of looking at things, Arthur. One is increasing the prices. Second one is, are we being rational? That's what I mentioned here, right? For example, some product is giving some benefit, which is not good for industry. We can see that some rationalization happening on the benefits which are going. Price hike, as we said, we are actually looking at our product strategy, which is more ARPU creative products, more hyper-personalization. What comment we can make here is we can see lots of rationalization happening in the market.
Understood. Apologies for interrupting, Vikram. I do not know if you were responding to the question.
Yeah. I wanted to help you understand. I think the SIM thing which we are doing, it is not only 4%. It was pulling the core revenue also down. When you have a lot of SIM in the market and when SIMs are getting sold like.
Recharge.
Recharge, it really brings the table down for the core business also. I think SIM, June onwards, at least, that will benefit more rebuys. Overall, that will help move industry in the right direction. Second, just building on what Ritesh said, your observation is right. There was no headline price increase. There are a lot of rationalization on how to optimize if you are giving something which you can manage it better. It is getting more scientific, at least in our case. That is what we see now. As I said, we have to be cautiously optimistic. We see that industry, at least March onwards, is moving in the right direction.
Understood. Thank you very much.
Thank you for the questions. We have come to the end of the question and answer session. I'd like to hand the call back to management for closing.
Okay. Thank you, Desmond. Thank you, everyone, for joining us on the call today. As always, if you need any further information, please reach out to myself. Otherwise, we'll speak to you very soon. Thank you very much, and have a good day. Bye.
That does conclude today's conference call. Thank you for your participation. You may now disconnect your line.