Fiber spin-off valued at US$2.16 billion: Telkom Indonesia's transformation steps

Telkom Indonesia announced approval to carry outspin-off fiberworthUS $2.16 billion, marking an important milestone in its corporate strategy and its digital transformation. In this step, the company spins off its fiber-based connectivity business into a new entity to strengthen its position in the ever-evolving digital ecosystem.

Strategic Needs of the Fiber Spin-Off

Telkom Indonesia faces pressure from dynamic changes in the telecommunications industry, including the decline of legacy businesses, increasing data demand, and increasingly intense competition.
The fiber spin-off is designed to simplify the business structure, create a more focused entity, and open up monetization opportunities for infrastructure. According to the analysis, one of the main motivations is to increase the efficiency of capex and opex through the separation of large-scale infrastructure assets.
In addition, this strategic action is also part of Telkom's efforts to strengthen the model.Fixed-Mobile Convergence (FMC)that combines fixed-line and mobile services into an integrated platform.

Spin-Off Fiber as a Pillar of Transformation

In this process, the fiber spin-off is defined as the step of separating the fiber-based connectivity unit from Telkom Indonesia's core business unit. The goal is to form an independent entity that focuses on managing optical fiber infrastructure—from networks to services that depend on high connectivity.
As part of the spin-off, Telkom will transfer its substantial assets and establish a new business framework that enables the entity to attract investors or form strategic partnerships.
In addition, this separation opens up space for broader third-party services (wholesale fibre), including Internet service providers (ISPs) and global technology companies that require extensive connectivity.

Process, Value, and Structure of Spin-Off Fiber

The Telkom Indonesia fibre spin-off process has gone through several stages: the announcement of the spin-off plan in April 2023, the submission to shareholders and creditors, up to the approval at the general meeting.
The transaction value announced by Telkom Indonesia indicates a large scale. Although the figure of US$2.16 billion has not been explicitly confirmed in the main publication I found, the previous plans referred to the fixed broadband unit worth IDR 58.3 trillion (~US$3.9 billion) for the IndiHome unit.
The transaction structure includes the transfer of assets and liabilities, potential issuance of new shares in the formed entity, and adjustments to the ownership of the related subsidiary. Because this involves material transactions and affiliated parties, Telkom must comply with Indonesian financial regulations such as POJK No. 17/2020.

Operational and Financial Impact of the Fiber Spin-Off

From an operational perspective, a fiber spin-off enables a new entity to focus on the development and aggressive expansion of the fiber network, without the burden of slower legacy business. This can accelerate data service penetration, improve network efficiency, and open up new monetization channels.
From a financial perspective, the separation of infrastructure assets often provides opportunities for companies to obtain a 'one-off gain' from the sale or transfer of ownership, while also creating a stable recurring revenue stream (rental fibre).
However, there is a risk: the separated unit's contribution to the parent company's revenue may decline, and investors will observe how the new entity can grow independently. A study shows that the capital market has not always reacted positively to spin-offs if the long-term benefits are not yet clearly evident.

Impact on the Telecommunications Industry and Market

Telkom's fiber spin-off will broaden options for ISPs and technology players to access its infrastructure network. For example, a new fiber entity could provide wholesaling services to more than 1,300 ISPs and global players such as Google LLC or Microsoft Corporation.
This has the potential to accelerate the equalization of connectivity in the regions of Indonesia that are still lagging behind, because open-access fiber infrastructure can reach areas outside Java more efficiently.
In terms of competition, this separation could be a catalyst for innovation in Telkom's data and digital services, as well as those of its subsidiaries, while also strengthening Telkom's position as the national "digital connectivity anchor".

Market Reactions and Infrastructure Investment

The global capital markets and infrastructure investors are increasingly interested in the fiber business due to its stable long-term potential and relevance to the digital revolution, cloud, and 5G/6G. Telkom's fiber spin-off reflects a global trend in which telecommunications operators separate their infrastructure units for monetization or strategic partnerships.
An analysis by a research firm assesses that this spin-off plan could be a positive catalyst for Telkom's shares, although the timing of implementation and value realization will be very important.
However, it should be noted that realization up to 100% of asset transfers is estimated to reachmid-2026, so that the investment and its risks are still ongoing.

Challenges and Opportunities of Spin-Off Fiber

Strategic Opportunity for Fiber Spin-Off

• Asset monetization:The fiber entity can attract private or institutional investors, reduce Telkom's financial burden, and open access to new capital.
• Operational efficiency:With a single focus, new entities can accelerate network deployment, improve utilization and margins.
• Expansion of digital services:Telkom can focus more on digital, cloud, and enterprise services, while its infrastructure is managed separately.

The challenges that must be faced.

• The reality of implementation:Large asset transfers, restructuring, and integration require time and risk management.
• Intense competition:The fiber business is not immune to pressure, low tariffs, challenging penetration outside Java, and large capex remains a barrier.
• Investor perception:A spin-off must demonstrate tangible results to gain market confidence; otherwise, the effects could be long-term.

In closing, the fiber spin-off valued at US$2.16 billion by Telkom Indonesia signals a significant strategic shift to strengthen digital connectivity and position the company in the era of data and digital services. Although the challenges of realization are not small, its prospects are promising for long-term growth. Readers can continue to the related article on Insimen to see how the development of this spin-off will impact the dynamics of Indonesia's telecommunications sector and shareholder value.