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20250915_EXCL_Laporan Hasil Pemeringkatan_31950012_lamp2.pdf
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9/8/25, 7:51 AM Fitch Affirms XLSMART at 'BBB-/'AA-(idn)'/Stable: Withdraws IDRS FitchRatings RATING ACTION COMMENTARY Fitch Affirms XLSMART at 'BBB-/'AA-idn)'/Stable, Withdraws IDRs Fri 22 Aug, 2025 - 5:40 AMET Fitch Ratings - Jakarta - 22 Aug 2025: Fitch Ratings has affirmed Indonesian telecom operator PT XLSMART Telecom Sejahtera Tbk's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB- with a Stable Outlook and simultaneously withdrawn the IDRSs. Fitch Ratings Indonesia has also affirmed the National Long-Term Rating and all outstanding rupiah-denominated senior unsecured bonds and sukuk at 'AA-(idn)' The Outlook on the National Long-Term Rating is Stable. The rating reflects XLSMART's improved business profile following its merger with PT Smartfren Telecom Tbk, resulting in astronger market position, larger scale and larger spectrum holding. This is partially offset by the increase in leverage. The Stable Outlook reflects our view that EBITDA net leverage will return to below 2.1x after 2025, the level above which we may consider negative rating action. 'AA' National Ratings denote expectations of a very low level of default risk relative to other issuers or obligations in the same country or monetary union. The default risk inherent differs only slightly from that of the country's highest rated issuers or obligations. Fitch has chosen to withdraw the Long-Term Foreign- and Local-Currency IDRs for commercial reasons. KEY RATING DRIVERS Stronger Market Position and Scale: XLSMART's market share and business scale will improve significantly after the merger, boosting free cash flow generation in the long term, despite the likelihood of some initial customer losses due to subscriber consolidation and churn. We expect the company to close its mobile market share gap with its closest peer, PT https://www fitchratings.com/research/corporate-financef/fitch-affirms-xlsmart-at-bbb-aa-idn-stable-withdraws-idrs-22-08-2025 118
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9/8/25, 7:51 AM Fitch Affirms XLSMART at 'BBB-/'AA-(idn)'/Stable: Withdraws IDRS Indosat Tbk (BBB/AAAfidn)/Stable). We estimate XLSMART's pro forma mobile revenue market share to beat 27X in 2025, similar to that of Indosat. Larger Spectrum Holding: XLSMART's expanded spectrum portfolio will benefit its network guality, cost efficiency and overall competitiveness. The company will have 137MHz of spectrum in total, excluding the 15MHz in the 900MHz band that will be returned by December 2026. In comparison, mobile market leader PT Telekomunikasi Indonesia Tbk (Telkom, BBB/Stable, Standalone Credit Profile (SCP): a-) and Indosat have 165MHz and 135MHz of spectrum holdings, respectively. Increased Network Coverage: The combined entity will have around 67,000 mobile sites in total, with 2096-304 of sites overlapping. These will be gradually decommissioned and we expect some to be relocated, subject to negotiation with tower operators. Based on the number of mobile sites, we expect XLSMART's network coverage and guality to be comparable to that of Indosat, which we expect to have around 53,000 sites by end-2025 based on the 2022 merger conditions set by the government. Consolidation Supports Pricing Discipline: We believe the sector's consolidation into three operators will foster price discipline and profitable long-term growth. Smartfren customers' lower average revenue per user (ARPU) will dilute XLSMART's reported ARPU. However, beyond the very short term, we expect a trend of rising ARPU as operators prioritise profitable growth over market share gains. Mobile ARPU in Indonesia is still among the lowest in the Asia-Pacific region. Higher Leverage: We expect EBITDA net leverage to deteriorate from XLSMART's standalone level of 1.1x at end-2024, due to the consolidation of the higher-levered Smartfren, share repurchases from dissenting shareholders, and expected capex on the 5G spectrum auction in 2025. We forecast leverage to peak at 2.3x in 2025 and gradually improve to 1.7x by 2027, driven by EBITDA margin recovery and improved capex efficiency. 5G Spectrum Auction: We assume XLSMART will spend IDR4.9 trillion on 5G spectrum upfront payments in 2025-2026, assuming telcos will still pay two times the winning bid amount as an upfront payment. This is in line with the payment structures in past auctions and does not factor in any potential incentive offered by the government, which might lower the upfront cost and annual usage charge. Rated on Standalone Basis: Fitch rates XLSMART based on its SCP as we believe none of its shareholders - Axiata Group Berhad and Smartfren's previous owner, Sinar Mas - have sufficient control over XLSMART. Axiata and Sinar Mas jointly control XLSMART, with egual https://www fitchratings.com/research/corporate-financef/fitch-affirms-xlsmart-at-bbb-aa-idn-stable-withdraws-idrs-22-08-2025 2/8
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9/8/25, 7:51 AM Fitch Affirms XLSMART at 'BBB-/'AA-(idn)'/Stable: Withdraws IDRS ownership of 34.74 each, and have egual board nomination rights. The cross-default clause in Axiata's long-term multi-currency sukuk and euro medium-term note programme documents will no longer apply to XLSMART, as it will be an associate rather than a subsidiary of Axiata. PEER ANALYSIS Indosat's higher rating than XLSMART is mainly underpinned by Indosat's larger EBITDA size and stronger financial profile, with lower forecast EBITDA net leverage of around 1.1x. This is partly offset by XLSMART's better business diversification on account of its larger fixed broadband business, which has over one million subscribers. In comparison, Indosat's fixed broadband subscriber base reached around 350,000 as of June 2025. Incumbent Telkom has a stronger market position than XLSMART, with a 509 revenue market share in Indonesia's mobile market and a dominant position in fixed broadband service through its 70X-owned subsidiary, PT Telekomunikasi Selular. Moreover, Telkom has awider EBITDA margin and significantly lower net leverage below 1.0Ox. Telkom's IDRS remain capped by Indonesia's sovereign rating (BBB/Stable) on close linkages with the state and the absence of restrictions that limit cash and asset flow from Telkom to the government. XLSMART's National Long-Term Rating is the same as that of Indonesian tower operator PT Tower Bersama Infrastructure Tbk (TBI, BBB-/AA--(idn)/Stable). TBI is the third-largest wireless tower operator in Indonesia with about 2096 market share. It has stronger cash flow visibility from long-term lease agreements and generally faces less competition. TBI alsofaces lower capex risk as the deployment of new towers is typically on a precontracted basis. However, TBI's higher EBITDA net leverage of around 5.Ox offsets its lower business risk. XLSMART's National Long-Term Rating is one notch above the 'aalidn)' SCP of astate- owned energy company, PT Perusahaan Gas Negara Tbk (PGN, BBB-/AA-(idn)/Stable). PGN's SCP is constrained by the regulatory risks for its gas distribution and transmission business in Indonesia, which balance its dominant domestic market position. Any regulatory changes could significantly affect PGN's profitability. However, PGN's capex plans can be adjusted according to the price cap and it maintains a net cash position. KEY ASSUMPTIONS Fitch's Key Assumptions Within Our Rating Case for the Issuer: https://www fitchratings.com/research/corporate-financef/fitch-affirms-xlsmart-at-bbb-aa-idn-stable-withdraws-idrs-22-08-2025 3/8
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9/8/25, 7:51 AM Fitch Affirms XLSMART at 'BBB-/'AA-(idn)'/Stable: Withdraws IDRS - Revenue to reach IDR43 trillion in 2025 and IDR48 trillion in 2026 (2024 pro forma: IDR46 trillion). - EBITDA margin of 25X in 2025, gradually improving to 27X in 2026 (2024 pro forma: 26K). - Annual capex of IDR12 trillion-13 trillion over 2025-2026 (2024 pro forma: IDR10.3 trillion), including total spectrum capex of IDR4.9 trillion over 2025-2026. - 2025 dividend distribution of around IDR1.1 trillion (2024: IDR646 billion). - IDR2.4 trillion spending in 2025 on repurchasing shares from dissenting shareholders of the pre-merger entities. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: - EBITDA net leverage above 2.1x for a sustained period, - Deterioration of business profile, such as market share loss, increasing competition or significantly higher than expected spectrum cost, that leads to weakening profitability for the merged business. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: - EBITDA net leverage below 1.1x for a sustained period, while maintaining its post-merger market position and delivering sustained EBITDA growth. LIOGUIDITY AND DEBT STRUCTURE XLSMART is likely to depend on refinancing to meet debt maturities. We believe the company has reasonable refinancing ability with access to capital markets and bank facilities, supported by strong relationships with local and foreign lenders. All outstanding debt from the pre-merger entity, PT XL Axiata Tbk, is unsecured, reflecting its solid banking access, while most of Smartfren's legacy loans are secured. Smarfren refinanced its rupiah syndication loan in November 2024 with lower interest. XLSMART's entire debt is denominated in Indonesian rupiah, in line with revenue and costs. https://www fitchratings.com/research/corporate-financef/fitch-affirms-xlsmart-at-bbb-aa-idn-stable-withdraws-idrs-22-08-2025 4/8
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9/8/25, 7:51 AM Fitch Affirms XLSMART at 'BBB-/'AA-(idn)'/Stable: Withdraws IDRS ISSUER PROFILE XLSMART is the surviving entity from the merger of PT XL Axiata Tbk and Smartfren. The combined telco had over 94 million mobile subscribers and over one million fixed broadband subscribers at end-June 2025. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Click here to access Fitch's latest guarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG CONSIDERATIONS The highest level of ESG credit relevance is ascore of '3' unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process, they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores. RATING ACTIONS ENTITY /DEBT $ RATING PRIOR $ PT XLSMART Telecom BBB- LTIDR ' BBB- Affirmed Sejahtera Tbk LTIDR ' WD Withdrawn https://www fitchratings.com/research/corporate-financef/fitch-affirms-xlsmart-at-bbb-aa-idn-stable-withdraws-idrs-22-08-2025 5/8
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9/8/25, 7:51 AM Fitch Affirms XLSMART at 'BBB-/'AA-(idn)'/Stable: Withdraws IDRS BBB- LCLTIDR BBB- Affirmed LCLTIDR ' WD Withdrawn AA-lidn) NatILT — AA-lidn) Affirmed senior unsecured AA-lidn) NatILT — AA-lidn) Affirmed of1 VIEW ADDITIONAL RATING DETAILS Additional information is available on www.fitchratings.com PARTICIPATION STATUS The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure. APPLICABLE CRITERIA National Scale Rating Criteria (pub. 23 Dec 2020) Sukuk Rating Criteria (pub. 13 Jun 2022) Country-Specific Treatment of Recovery Ratings Criteria (pub. 04 Mar 2023) Corporates Recovery Ratings and Instrument Ratings Criteria (pub. 03 Aug 2024) (including rating assumption sensitivity) Corporate Rating Criteria (pub. 28 Jun 2025) (including rating assumption sensitivity) Sector Navigators - Addendum to the Corporate Rating Criteria (pub. 28 Jun 2025) APPLICABLE MODELS Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s). https://www fitchratings.com/research/corporate-financef/fitch-affirms-xlsmart-at-bbb-aa-idn-stable-withdraws-idrs-22-08-2025
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9/8/25, 7:51 AM Fitch Affirms XLSMART at 'BBB-/'AA-(idn)'/Stable: Withdraws IDRS Corporate Monitoring & Forecasting Model (COMFORT Model), v8.2.0 (1) ADDITIONAL DISCLOSURES Dodd-Frank Rating Information Disclosure Form Solicitation Status Endorsement Policy ENDORSEMENT STATUS PT XLSMART Telecom Sejahtera Tbk EU Endorsed, UK Endorsed PT XLSMART Telecom Sejahtera Tbk EU Endorsed, UK Endorsed DISCLAIMER & DISCLOSURES All Fitch Ratings (Fitch) credit ratings are subject to certain limitations and disclaimers. Please read these limitations and disclaimers by following this link: https://www.fitchratings.com/understandingcreditratings. In addition, the following https://www.fitchratings.com/rating-definitions-document details Fitch's rating definitions for each rating s READ MORE SOLICITATION STATUS The ratings above were solicited and assigned or maintained by Fitch at the reguest of the rated entity/issuer or a related third party. Any exceptions follow below. UNSOLICITED ISSUERS ENTITY/SECURITY ISIN/CUSIP — RATING TYPE SOLICITATION STATUS PT XLSMART - Local Currency Long Term Issuer Unsolicited Telecom Sejahtera Default Rating Tbk PT XLSMART - Long Term Issuer Default Rating Unsolicited Telecom Sejahtera Tbk https://www fitchratings.com/research/corporate-financef/fitch-affirms-xlsmart-at-bbb-aa-idn-stable-withdraws-idrs-22-08-2025 7/8
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9/8/25, 7:51 AM Fitch Affirms XLSMART at 'BBB-/'AA-(idn)'/Stable: Withdraws IDRS Fitch's solicitation status policy can be found at www.fitchratings.com/ethics. ENDORSEMENT POLICY Fitch's international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU CRA Regulation or the UK Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, as the case may be. Fitch's approach to endorsement in the EU and the UK can be found on Fitch's Regulatory Affairs page on Fitch's website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis. https://www fitchratings.com/research/corporate-financef/fitch-affirms-xlsmart-at-bbb-aa-idn-stable-withdraws-idrs-22-08-2025 8/8
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