Moody’s projects 4%-4.5% growth in the telecommunication sector

30 November 2022 11:45

JAKARTA. Moody’s Investors Services, a renowned rating agency, predicts the growth rate in Indonesia’s telecommunication sector to reach 4% to 4.5% in 2023. However, its collective EBITDA is estimated to be depleted by approximately 2%-3% due to mergers of several telecommunication companies.

The mergers in question include the merger of PT Indosat Tbk. (ISAT) and PT Hutchison 3 Indonesia that resulted in Indosat Ooredoo Hutchison (IOH) in January 2022, as well as PT XL Axiata Tbk (EXCL) that took over PT Link Net Tbk (LINK). “We project an organic growth rate of 4%-4.5% for the telecommunication sector in Indonesia in 2023. It will be propelled by higher needs for data, broadband consumption, and the price rationalisation due to less competition,” Moody’s explained in its research, as quoted by Bisnis yesterday (29/11).

On the other hand, Moody’s also predicts a downturn in the average of EBITDA margin of 2% to 3% in 2022. However, it believes that the average profit margin of telecommunication companies in Indonesia will remain strong at 48%-49% for the next two years. This margin is dubbed one of the highest in the world by Moody.

Moody’s also estimates the debt of this sector will remain relatively stable. It is due to the fact that the telecommunication companies may fund its investments with its own cash from the operational activities and divesting its non-core assets, including towers, which will also help to curb their debts. “All telecommunication companies have solid liquidity, which is signified by their access to banks and the domestic bond market,” it further explained. (AM/ZH)

© 2024 - IDN Financials - All Rights Reserved.