Telco: OpenSignal 2H24 results: narrowing gaps but overall better network capacities (OVERWEIGHT)

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Telco

OpenSignal 2H24 results: narrowing gaps but overall better network capacities

TSEL remains the download speed leader at 26.3 Mbps, narrowing the gap with peers while intensively utilizing its network for FMC synergies.
Hutch3 leads in upload speed at 11 Mbps and leads in gaming, video and voice experiences due to its stronger focus on latency experience.
Maintain Overweight as price hikes, justified by improved networks, shall allow for better monetization on the seasonal 4Q24, 1Q25 demand

Download (DL) speed improved; TSEL remains leader, but with smaller gap

TSEL continues to lead the sector in DL speed in 2H24 with 26.3mbps on nationwide basis, although the gap with XL and IOH narrowed further, with IOH posting a double-digit % improvement. Assuming rate of capex rollouts remained constant among players, Opensignal findings suggest that TSEL has utilized its network more intensively relative to contender peers in 2H24. Contenders have improved relatively more on their DL capacity, which is important for streaming/ big files/ content downloads in the coming months.

Potentially more emphasis on Upload speed (UL) by contenders

Hutch3 overtakes TSEL as the sector leader for UL speed with 11mbps. While TSEL also improved its UL speed, Hutch3, Indosat, and XL recorded significantly greater improvements, each achieving double-digit % growth in UL capacity. Contender peers might be focusing more on enhancing end-user content generation through offering more bandwidth for uplink, while TSEL might have sold relatively more UL capacity in 2H24.

Video, and Voice Experience: Hutch is leader incl. gaming KPI now too

Hutch3 of IOH retains a marginal sector lead in 2 Opensignal categories of Video and Voice experience while gaining the lead in gaming experience (latency being key variable). Meanwhile, its sister network Indosat delivering the strongest improvement for video on a semester basis.

Telkomsel utilizing its network more intensively to gain advantage for FMC On average, TSEL appears to have utilized its network capacity more intensively than its competitors, which aligns with affirmations for TSEL's aggressive marketing in 2Q/3Q24, and this was also reflected in its lower overall ranking compared to previous semester. TSEL possibly put more emphasis on DL speed which relates more easily with end user (fast consumption, easy downloads etc) and thus effective for user acquisitions. This should also be useful later to cross-sell to Indihome.

IOH merger synergies reflected until today, setting example for EXCL-FREN

IOH continues to benefit from its merger, achieving notable profitability while improving network capacity across sequential semesters. Both XL and Smartfren are focused on their operational integration following the merger announcement, with the potential to achieve progress similar to IOH.

Maintain Sector OW: Telcos positioned to supply network and monetize

Maintain sector Overweight as Telcos are positioned to improve monetization with recent price hikes, as justified by better network performances. We anticipate the sector to achieve growth of over 2%+qoq in 4Q24, positioning to capitalize on the seasonal demand in 4Q24, 1Q25, setting the tone in FY25.

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