At the same time, local telcos are working on fixed-mobile convergence (FMC) offerings, which combine fixed and mobile network services into a single package, to increase their average revenue per user (ARPU).

However, an analyst has expressed doubt over the firms’ readiness to offer FMC services, adding that any resulting contributions might not be reflected in their financial reports until next year.

Telkom Group posted revenue of Rp 36.1 trillion in the first quarter (Q1), 2.5 percent more than the corresponding period last year.

Telkom's mobile services arm, Telkomsel, contributed Rp 21.5 trillion to that topline figure, most of which came from a 7.1 percent revenue increase in the data and digital segment to Rp 18.15 trillion.

Steven Gunawan, an equity analyst at Henan Putihrai Sekuritas, said the state-owned firm’s performance was still in line with his initial full-year revenue estimate of around Rp 153.4 trillion for 2023.

Telcom rivals Indosat Ooredoo Hutchison (IOH) and XL Axiata also posted year-on-year (yoy) Q1 revenue growth of respectively 9.9 percent and 12 percent.

IOH reaped Rp 11.95 trillion in revenue, while its mobile data revenue grew 13 percent to Rp 9.59 trillion. XL booked Rp 7.55 trillion in revenue as its mobile data revenue increased 11 percent to Rp 6.91 trillion.

IOH and XL recorded respective growth of 21.7 percent and 13 percent in earnings before interest, taxes, depreciation and amortization (EBITDA), while market leader Telkomsel saw its EBITDA decline 2.4 percent in the first three months of the year.

Read also: Local telcos rush to eSIM despite risks

Mohammad Fakhrul Arifin, an equity research analyst at BCA Sekuritas, said Indonesian telcos would see continued revenue growth until the end of the year, noting that increasing internet data prices and smartphone usage were major revenue drivers.

In its financial report, IOH said data traffic on its network had increased 17.3 percent to 3.38 exabytes (EB; equivalent to 1 billion gigabytes). Meanwhile, XL recorded a 19 percent jump to 2.2 EB as Telkomsel posted an 11 percent rise in data usage to 4.22 EB.

Telkomsel, Xl and IOH all saw increases in ARPU, respectively booking per user growth of Rp 45,000, Rp 40,000 and Rp 32,927.

"Continuous demand for internet data, especially [in view of the 2024] national election, is the catalyst for telcos," Fakhrul told The Jakarta Post on Tuesday.

No FMC effect, yet

On April 6, Telkom signed an agreement to merge its IndiHome residential network service with Telkomsel as part of its plan to rely on FMC for future growth. It expected the merger to be completed in the second half of this year.

Henan Putihrai's Steven said the integrated service could result in a rise in Telkom’s EBITDA margin, or the ratio of EBITDA to revenue, from 52.6 percent in Q1 2023 to 55 percent by the end of 2024.

A separate report from Mirae Asset Sekuritas estimates that the integrated service could increase Telkom's revenue by Rp 5.6 trillion and its EBITDA by Rp 5.3 trillion in 2027.

Mirae Asset senior research analyst Robertus Hardy said consumer spending was significantly higher for fixed broadband subscriptions than mobile services, so merging the two services could increase a provider’s blended ARPU.

Read also: Telkom to merge IndiHome with Telkomsel

Other local telecommunications service providers have also started integrating their mobile and fixed network offerings.

Last September, IOH launched Indosat HiFi, a fiber-to-home internet connection.

Meanwhile, XL Axiata last year acquired Link Net, the operator of fixed broadband provider First Media, from diversified conglomerate Lippo Group. Since then, it has been promoting XL Satu, its FMC package.

CEO Dian Siswarini said in a statement that XL would increase its household internet penetration to 8 million "home passes" over the next five years, meaning the network could reach 8 million homes in the country that may or may not be connected to its network.

On the other hand, IOH aims to increase its coverage from currently 400,000 home passes to 1.5 million home passes by the end of this year, including an estimated 20 percent of HiFi customers.

However, those figures are still far below IndiHome’s, with more than 9.4 million customers.

According to Fakhrul of BCA Sekuritas, it would take time for FMC services to grow significantly to be reflected in the telcos’ financial reports. Investors would also wait to see whether the integration was seamless or not.

"IndiHome and Telkomsel may need one or two years until the integration is really complete. XL Satu has been offered by the firm, but it still needs time to scale. IOH also has a plan to go there. The impacts may start appearing [in financial reports] next year," Fakhrul said.

He added that market reception could hinge on the providers’ ability to promote FMC to its customers at an appropriate price range.