TLKM MOODYS BAA1 RATING

#TLKM
MOODYS AFFIRMS TELKOM INDONESIAS BAA1 RATING

IQPlus, (25/11) -    Moody's Investors Service has affirmed the Baa1 issuer rating of Telekomunikasi Indonesia (P.T.) (Telkom). The rating outlook remains stable.

"Telkom's Baa1 issuer rating continues to reflect the company's established position as Indonesia's largest integrated telecommunications  operator and an operating and financial profile reflective of a strong investment-grade company," says Annalisa DiChiara, a Moody's Vice  President and Senior Credit Officer.

However, its rating is also constrained by its exposure to Indonesia's competitive, although stabilizing operating environment, and the risk of  intervention from the Government of Indonesia (Baa3 stable) given Telkom  is a majority state-owned company.

For the nine months ended September 2016, Telkom maintained solid revenue  growth of 13.8% year-on-year (YoY) - to IDR86.2 trillion  reflecting  37.2% YoY growth in its Data, Internet and IT Services segment. The  growth in this segment has more than offset the decline in its traditional  Fixed-Line Voice segment, and the moderating growth in the Cellular  Voice and SMS segment.

"With continued growth in demand for data, and Telkom's increasing focus  on digital services, we expect the revenue contribution from Data,  Internet and IT Services to increase to around 40% of consolidated  revenue by end-2017 from 32% in 2015," adds DiChiara, who is also Moody's  lead analyst for Telkom.

To preserve its strong network quality and coverage in support of the growing demand for data, Moody's expects Telkom to maintain capex  spending at 23%-25% of total revenue over the next few years, which can  largely be funded from its cash balance and cash from operations. (end)