What a Share Buyback on the IDX Actually Does to the Stock Price
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4 min read
A company you hold announces a share buyback worth trillions of rupiah, and the headline makes it sound like a straightforward reason to expect the stock price to rise. It usually is not that simple. A buyback changes two separate things at once, one mechanical and guaranteed, one a market signal that investors are free to ignore. Telkom Indonesia's (TLKM) own Rp4 trillion buyback, approved in June 2026, shows both sides clearly.
A buyback is the company using its own cash to purchase its own shares back from the market, then holding them as treasury shares (shares that still exist but no longer count as outstanding). Two things happen automatically:
Neither of these forces the share price up. They mechanically raise earnings per share (EPS), the company's profit divided by its share count, because the same profit is now split among fewer shares.
Telkom's shareholders approved a buyback of up to Rp4 trillion at the AGM on 8 June 2026, to run through 8 June 2027, funded entirely from internal cash (Kontan, 8 June 2026). At the time of the announcement, that Rp4 trillion equaled about 1.4% of TLKM's outstanding shares, against a market cap of Rp273.41 trillion on 5 June 2026 (Kontan, "Simak Rekomendasi Saham Telkom (TLKM) yang Siapkan Rp 4 Triliun untuk Buyback").
Telkom reported Rp17.81 trillion in net income and Rp179.83 in basic earnings per share for full year 2025 (Stockbit Snips, TLKM 2025 results).
Run Telkom's own numbers through that formula: Rp179.83 divided by (1 − 1.4%) comes out to roughly Rp182.4, an EPS lift of about 1.4% with profit held flat (self-derived from the two sourced figures above). That is a small, mechanical, close-to-guaranteed effect. It is not the same thing as the stock price rising by 1.4%, or at all.
The other half of a buyback is a signal, not a mechanism: management spending company cash to buy its own shares is often read as management saying the stock looks cheap relative to what they believe it is worth. Investors can take that signal seriously, discount it, or ignore it entirely.
Telkom's own case makes the limit of that signal clear. Despite the buyback and a separate Rp21.9 trillion dividend announced the same month, TLKM's stock actually came under pressure around the news (Kontan, "TLKM Sempat Tertekan di Tengah Kabar Dividen Rp 222 per Saham & Buyback Rp 4 Triliun"). Analysts covering the stock noted that a buyback equal to only 1.4% of shares outstanding is enough to help stabilize the price in the short term but not enough on its own to drive a re-rating, since bigger forces like the rupiah's exchange rate, MSCI index weighting decisions and general risk appetite still dominate short-term price moves for a stock this size (same source).
IDX-listed buybacks are not unlimited. Under current rules, a company cannot repurchase more than 10% of its issued and paid-up capital, and it cannot let the buyback push its free float (the portion of shares actually available to the public) below the 15% regulatory minimum. That free-float floor connects directly to how the IHSG weights every stock by free float, not raw size: a large buyback that cut free float too far would shrink the company's own index weight, working against the price-support goal the buyback was meant to serve in the first place.
Before treating a buyback announcement as a reason to hold or buy more of a stock, look past the headline number. Open the Asset Detail page for Telkom (TLKM) in NetWort to see its actual earnings, share count and price history side by side, rather than judging the buyback on the rupiah figure alone.