TLKM Operating Profit Fell 9% - Almost None of It Was the Actual Business

A Headline Profit Decline That's Mostly a Stock-Market Mark, Not a Business Problem

Operating profit fell 9.3% YoY to Rp10,611 billion in Q1 2022 - the first reported decline this dataset has tracked in either operating profit or Adjusted EBITDA since Q1 2021. Read in isolation, that would be a genuine reversal of the pattern this entire backfill has documented since FY2020: profit consistently growing faster than revenue, not falling while revenue keeps growing.

But the cause is disclosed directly in the P&L, not buried in a footnote: a new line, "Unrealized gain (losses) on changes in fair value of investments," swung from +Rp14 billion in Q1 2021 to -Rp893 billion this quarter - booked above the operating-profit line, inside cost and expenses. This is Telkomsel's stake in GoTo (the merged Gojek-Tokopedia entity Telkomsel invested a combined US$450 million into across 2020-2021 - see Q1 2021's post and FY2021's post), marked to GoTo's own IPO offering price of Rp338/share ahead of its April 11, 2022 listing (see Beyond the Usual). Strip that one line out and operating profit was Rp11,504 billion versus Rp11,685 billion a year earlier - down just 1.5%, not 9.3%.

The Prescription

Telkom should break out unrealized investment mark-to-market swings as a clearly labeled non-operating item in its own earnings commentary, not just in the raw P&L line item. A reader skimming this quarter's headline operating-profit number would reasonably conclude the core telecom business weakened materially - it didn't, once the GoTo mark is excluded - and a company sitting on a large, volatile, FVTPL-classified startup investment owes shareholders a clean "as-reported vs. underlying" reconciliation every quarter this volatility persists, not just this one.

Telkom should also keep pushing the Enterprise segment toward the breakeven it's now clearly approaching (-Rp34 billion this quarter, its smallest loss in this dataset's two-year tracking history) rather than declaring victory early. The segment's own history - a real profit in Q3 2021 reversed by a real loss in Q4 - is a direct warning against reading one good quarter as the whole story (see Segment Comparison).

Key Financial Metrics

Q1 2022 (three months ended Mar 31, 2022) vs Q1 2021, consolidated

FX: approximately Rp14,351 = US$1 (Mar 31, 2022) and Rp14,606 = US$1 (Mar 31, 2021) - quoted market rates for each date, used only to convert the USD columns below.

Metric	Q1 2022 (Rp)	Q1 2022 (US$)	Q1 2021 (Rp)	YoY (Rp)	YoY (US$)
Revenue	Rp35,208B	~$2,453.9M	Rp33,945B	✅ +3.7%	✅ +5.6%
Adjusted EBITDA»	Rp18,587B	~$1,295.2M	Rp18,985B	⚠️ -2.1%	⚠️ -0.3%
Operating Income»	Rp10,611B	~$739.5M	Rp11,699B	🔴 -9.3%	⚠️ -7.7%
Net Income (attributable to owners)	Rp6,118B	~$426.4M	Rp6,014B	✅ +1.7%	✅ +3.6%
Free Cash Flow» (OCF - capex)	Rp10,148B	~$707.2M	Rp10,853B	⚠️ -6.5%	⚠️ -4.8%
Total Cash	Rp41,629B	~$2,901.0M	Rp31,729B	✅ +31.2%	✅ +33.6%

Both Adjusted EBITDA and Operating Income show a YoY decline for the first time in this dataset's tracking, but both are computed from the reported P&L, which includes the -Rp893 billion GoTo mark discussed above - excluding that single line, both metrics would show modest growth, not a decline (see the opening section above). Net income still grew despite the headline operating-profit drop, because the mark-to-market loss is largely offset below the operating-profit line by other items; free cash flow fell modestly on continued elevated capex (Rp8,469 billion, in line with the reacceleration flagged across 2021's posts).

The headline operating-profit decline looks like this quarter's story - it isn't. A single mark-to-market line on Telkomsel's GoTo stake explains nearly all of it, and the underlying telecom business kept growing. See Target Valuation Range for what the market is pricing in.

Key Operational Metrics

• IndiHome subscribers: 8.7 million, up 136,000 net additions this quarter, with revenue up 7.9% YoY on relatively stable ARPU rather than subscriber-driven growth alone - a genuine deceleration from the double-digit revenue growth rates seen throughout 2021
• Capital expenditure: Rp8,469 billion, up 28.7% from Rp6,580 billion a year earlier - capex continuing to run well above pre-2021 levels
• Mobile subscriber count: not separately disclosed in this quarter's presentation

Segment Comparison

Q1 2022 vs Q1 2021 (restated), consolidated segment note

Segment	External Revenue Q1'22	External Revenue Q1'21	YoY	Segment Result Q1'22	Margin Q1'22	Margin Q1'21
Mobile	Rp20,390B	Rp20,382B	➖ +0.0%	Rp6,301B	⚠️ 30.9%	36.4%
Consumer (IndiHome)	Rp6,508B	Rp5,973B	✅ +9.0%	Rp1,986B	⚠️ 30.5%	31.4%
Enterprise	Rp4,179B	Rp4,102B	➖ +1.9%	🔴 -Rp34B	✅ -0.8%	-10.7%
WIB	Rp3,883B	Rp3,347B	✅ +16.0%	Rp2,514B	➖ 64.7%	66.4%
Others	Rp55B	Rp47B	➖ +17.0%	-Rp196B	n/m	n/m
Total segment	Rp35,015B	Rp33,851B	✅ +3.4%	Rp10,571B	30.2%	32.9%

Mobile's margin compressed sharply (36.4% to 30.9%) even on flat revenue - the segment's largest single-quarter margin drop in this dataset, and worth watching closely in Q2's post for whether it's a cost-structure shift or a one-quarter effect. Enterprise, by contrast, is now within a rounding error of breakeven.

Mobile

Revenue essentially flat and margin down nearly 6 points - a genuinely weaker quarter than the "modest, steady erosion" pattern flagged across 2021's posts, still without a disclosed cause in the segment footnote.

Consumer (IndiHome)

Revenue growth decelerated to 9.0% from the double-digit rates seen throughout 2021, with margin essentially flat - the clearest sign yet that IndiHome's growth phase may be maturing rather than accelerating further.

Enterprise

Nearly at breakeven (-0.8% margin) for the first time since Q1 2020 - continuing the volatile-but-improving trajectory this dataset has tracked since Q1 2021, though FY2021's post is a direct warning against reading any single good quarter as resolution.

WIB (Wholesale and International Business)

Revenue grew fastest of any segment (+16.0%) though margin compressed slightly to 64.7% - still comfortably Telkom's highest-margin segment.

Beyond the Usual

Telkomsel's GoTo Stake Was Marked Down Rp893 Billion Right Before GoTo's Own IPO

The investments footnote discloses the full history of Telkomsel's GoTo position: a US$150 million convertible bond from November 2020, converted into GoTo shares at the May 2021 Gojek-Tokopedia merger, plus the US$300 million call option exercised the same month (the piece flagged as a subsequent event in Q1 2021's post) - a combined US$450 million investment, later split-adjusted to 23,722,133,875 shares. As of this quarter-end, Telkomsel marked the position to GoTo's own IPO offering price of Rp338/share, producing the Rp893 billion unrealized loss discussed above. The position is classified as fair-value-through-profit-or-loss ("FVTPL"), meaning every future quarter's mark-to-market swing - in either direction - will keep flowing directly through operating profit, not through a separate investment-gains line below it, as long as Telkom holds the stake this way.

MDI's Startup Portfolio Also Booked a Small Unrealized Loss

The same footnote discloses that MDI (Telkom's corporate venture arm) added Rp698 billion of new startup investments this quarter and booked a modest Rp5 billion unrealized loss on its existing FVTPL-classified portfolio - immaterial in size relative to the GoTo mark, but confirming the same fair-value-through-P&L treatment applies to Telkom's broader startup investment book, not just the GoTo position specifically.

Target Valuation Range

Bottom line: roughly Rp3,530-Rp6,050 fair-value range (bear-to-bull, TTM EV/EBITDA-based) against a Rp4,580 actual close - the stock sits closer to the bull case than any prior quarter in this dataset, suggesting the market may already be looking through the GoTo mark to the underlying business.

Telkom's shares closed Q1 2022 at Rp4,580, up 13.4% from FY2021's Rp4,040 close (see that post) - a real re-rating that, notably, happened despite this quarter's headline operating-profit decline, consistent with the market correctly discounting the GoTo mark as non-operational. Over the trailing 2 years (April 2020 through March 2022), the stock moved from a Rp3,500 close to Rp4,580, a 30.9% net gain - the strongest 2-year trailing return this dataset has shown so far.

Market cap → enterprise value	Q1 2022 (period-end)
Share price (period-end)	Rp4,580
Shares outstanding	99,062,216,600
Market capitalization	~Rp453,705 billion (~$31.6 billion)
Plus: total debt	Rp48,466 billion
Less: cash	Rp41,629 billion
Enterprise value	~Rp460,542 billion

Peer-multiple sanity check	FY2021	Q1 2022 (TTM)	Change
TTM EPS	Rp249.94	Rp250.98	➖ roughly flat
P/E	~16.2x	~18.3x	⚠️ up
Book value per share (owners)	~Rp1,227.9	~Rp1,289.9	✅ up
P/B	~3.29x	~3.55x	⚠️ up
TTM Adjusted EBITDA	Rp79,379B	Rp78,981B	➖ roughly flat
EV/EBITDA (TTM)	~5.2x	~5.8x	⚠️ up

Every multiple expanded even though TTM earnings and EBITDA were essentially flat - the entire move is price-driven, consistent with the market re-rating Telkom's shares upward independent of (and arguably despite) this quarter's reported operating-profit dip. Applying the same mature-telecom EV/EBITDA range used throughout this dataset:

Scenario	Key assumption	Multiple	Implied EV	Implied price
Current (Q1 2022 close)	actual market price, for reference	~5.8x TTM Adjusted EBITDA	~Rp460,542 billion	Rp4,580
Bear	GoTo's stock (now publicly traded and volatile) produces further mark-to-market losses that keep pressuring headline operating profit, and the multiple compresses	~4.5x	~Rp355,415 billion	~Rp3,532
Base	Multiple holds near current levels as the market continues looking through non-operating marks to the underlying telecom business's steady growth	~5.8x	~Rp458,090 billion	~Rp4,555
Bull	Mobile's margin compression (see Segment Comparison) proves temporary and Enterprise crosses into sustained profitability, re-rating the multiple toward the top of the historical range	~7.5x	~Rp592,358 billion	~Rp6,049

The current close sits almost exactly on the base case - a market that has already re-rated meaningfully over the trailing two years and is now pricing Telkom roughly in line with its own recent multiple, neither penalizing it for the GoTo mark nor yet crediting it for Mobile's margin risk or Enterprise's near-breakeven.

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