Mitratel (MTEL.IJ Rp 510; BUY TP Rp 800) In-Line FY24 Earnings with Growth and Continued Margin Expansion, but Outlook Weakens

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Mitratel (MTEL IJ)

In-Line FY24 Earnings with Growth and Continued Margin Expansion, but Outlook Weakens

4Q24 revenue growth was solid, driven by Telkom projects and FTTT growth, including the UMT acquisition.
FY24 net profit was in line amid strong 82.7% EBITDA margin (+230bps yoy), despite higher interest from M&A and higher tax.
Maintain Buy rating with lower TP of Rp800 to reflect -6.6% est. cut in FY25-27; MTEL remains best positioned for MNOs' ex-Java growth.

4Q24 earnings: +5.1% qoq revenue with solid EBITDA margin expansion

MTEL posted a net profit of Rp609bn (+18.8% qoq, +3.0% yoy), supported by solid revenue growth and a sequential improvement in EBITDA margin. Revenue reached Rp2.49tr (+5.1% qoq, +3.3% yoy), driven by Telkom-related projects and strong FTTT contributions from organic rollout and the UMT acquisition (8,100 km), completed on Dec 2^nd. EBITDA came in at Rp2.11tr (+7.1% qoq, +9.4% yoy), with margins improving by +160bps qoq / +470bps yoy, supported by efficiencies in cash COGS.

FY24 in-line Earnings –organic growth with solid margin gains

MTEL net profit was Rp2.10tr (+4.1% yoy), forming 98.2%/98.9% of our and cons FY24 ests.. Revenue reached Rp9.31tr (+7.2% yoy), also in line, supported by new organic tenancies (+2,459 new tenancies, of which 1,390 came from BTS towers and 1,069 from collocations) and rising FTTT contribution (8.5% in 4Q). EBITDA margin was commendable, improving to 82.7% (+230bps yoy) due to efficiencies. Interest costs rose from the UMT acquisition loan, while the effective tax rate increased by 217bps yoy in FY24.

Conservative guidance by MTEL management in 2025

MTEL guides for +1.8% revenue growth in FY25, in line with the industry. It expects 2,500 new net tenancies in FY25, likely to materialize in 3Q/4Q25 amid demand and macro headwinds, with XLSmart site relocations expected in early FY25. This implies conservative tower revenue growth, despite 607 outstanding tenancy orders from FY24 and growing FTTT revenue from +10,000 new fiber kms. Capex guidance of Rp5.3tr includes Rp2tr for M&A, indicating upside potential from inorganic growth.

Maintain Buy rating but with lower TP amid demand and macro headwinds

We revise our 2025–27 NP forecasts by -6.2/-7.4%/-6.4% to reflect the updated demand outlook. We employ a new blended valuation using DCF and EV/EBITDA (9.6x), arriving at a revised TP of Rp800. We remain positive on MTEL as the largest beneficiary of MNOs' expansion outside Java and its financial capacity for potential M&A. We reaffirm our Buy rating. Key risk stems from weaker than expected demand.

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