JAKARTA — PT Indosat Tbk. (ISAT) continues to demonstrate robust performance in Indonesia’s highly competitive telecommunications sector. Market analysts remain optimistic about the company’s growth trajectory, noting that its valuation remains attractive, bolstered by rising Average Revenue Per User (ARPU), an emerging artificial intelligence (AI) business, and a cooling price war in the data market.
Indosat kicked off 2026 with strong operational results. The telecommunications giant reported a net profit of Rp1.5 trillion for the first quarter of 2026, representing a 13.7% year-on-year (yoy) increase, despite a 22.4% decline compared to the previous quarter.
CGS International analyst Bob Setiadi noted that these results align with market expectations. The profit growth was primarily driven by higher revenue and improved customer quality, reflected in a notable increase in ARPU.
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“While the net profit figure was slightly below our specific projections, it sits comfortably within the consensus estimated by Bloomberg,” Setiadi stated in a recent research note.
During the first quarter of 2026, ISAT’s revenue reached Rp15.2 trillion, a 12.1% growth compared to the same period last year. This performance was underpinned by a rise in blended ARPU to Rp45,200, marking a 15.3% yoy increase and a 2.7% gain over the previous quarter.
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While the subscriber base remained relatively stable at 94 million, data consumption surged, with traffic reaching 4,906 petabytes (PB)—a 25.1% yoy increase. Operationally, the company remains resilient, with EBITDA recorded at Rp7.2 trillion, up 13% yoy, proving that revenue growth has successfully offset rising labor costs.
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Despite these gains, the company faces pressure from increased interest expenses, which climbed 20.3% quarter-on-quarter to Rp1.2 trillion, alongside other expenses totaling Rp109 billion. However, the company’s strategic shift into AI is beginning to pay off, with its AI Neocloud business contributing US$16 million in revenue this quarter. This serves as a significant milestone toward the annual target of US$50 million to US$60 million.
Management is optimistic that the upward trend in ARPU will persist, fueled by high data consumption and a healthier competitive landscape. Furthermore, the integration of Gemini AI technology from Google is expected to deepen customer loyalty and reduce churn rates.
Looking ahead, Indosat maintains its 2026 guidance for mid-to-high single-digit growth in revenue and EBITDA. Management noted that business trends observed in April 2026 have been increasingly positive, and they plan to review their formal guidance following the first half of the year.
To support this expansion, capital expenditure (capex) was front-loaded in the first quarter, rising 60% yoy to Rp4.2 trillion to enhance network quality. Despite this heavy initial investment, the total capex target for 2026 remains fixed at Rp13 trillion, excluding potential 5G spectrum costs.
Indosat also welcomed the government’s latest spectrum policy, which sets base prices 60%-70% lower than previous auctions. This move is expected to ease the financial burden on operators and reduce aggressive price competition during the tender process.
“We maintain an ‘Add’ recommendation for ISAT shares with a target price of Rp2,540. The current valuation is compelling, as it trades at 3.9 times EV/EBITDA, well below its five-year historical average,” Setiadi concluded. Investors, however, should remain mindful of potential risks, including rising marketing expenses, additional capex requirements for 5G, and the ongoing costs of scaling AI initiatives.
Ultimately, the combination of a stabilizing data market and improving consumer purchasing power acts as a strong catalyst for a potential re-rating of ISAT stock in the coming quarters.
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Summary
PT Indosat Tbk (ISAT) delivered a strong performance in the first quarter of 2026, reporting a net profit of Rp1.5 trillion, which represents a 13.7% year-on-year increase. Revenue reached Rp15.2 trillion, largely driven by a 15.3% rise in Average Revenue Per User (ARPU) and significant growth in data consumption. This positive momentum is further supported by the company’s strategic expansion into AI services, which contributed $16 million in revenue this quarter.
Market analysts maintain an optimistic outlook for ISAT, citing attractive valuations and a more stable competitive environment in the telecommunications sector. While the company faces challenges such as rising interest expenses and ongoing capital expenditure for network infrastructure, it remains committed to its 2026 growth guidance. Consequently, experts have issued an “Add” recommendation, viewing the stock as a compelling opportunity due to its trading position below historical averages.
