Higher profit of $751.5m expected at PT Telkom

JAKARTA (JP): ING Baring Securities Ltd. expects state-owned telecommunications firm PT Telkom to post a net profit of Rp 1.8 trillion (US$751.5 million), up from Rp 1.49 trillion last year.

Next year, it predicts that Telkom will gain Rp 2.22 trillion in net profit, ING Baring said in its latest report Asian Telecommunications Reviews.

Telkom, listed on the New York, London, Jakarta and Surabaya stock exchanges, posted a net profit of Rp 907 billion in 1995, increasing 14 percent from Rp 795 billion in 1994.

ING Baring predicted that Telkom's earnings per share would increase significantly to Rp 273.9 next year, from Rp 193 this year and 160.7 last year.

The higher profits are expected to come from increasing domestic demand for telecommunications services, especially after the introduction of joint operation projects for the installation of at least 2.25 million telephone lines by private firms in five regions by 1999.

The government adjusted phone-call tariffs on Dec. 30 last year. The new tariffs structures went into effect Jan. 1 and include the 4.5 percent increase in domestic call rates from Rp 110 to Rp 115 per pulse.

One telephone pulse lasts for three minutes (for calls made within a 20-kilometer radius) and for two minutes within a 20 km to 30 km radius.

Domestic and long-distance calls account for about 61 percent of Telkom's total revenue. An estimated one-third of the pulses are generated from long-distance calls and the remaining two- thirds come from local calls.

The government cut long-distance call tariffs by 2 percent to Rp 108 from Rp 110 per pulse (between four seconds and seven seconds, depending on distances). The new installation fees were reduced by 15 percent on average, while leased line circuit costs were cut by an average of 52 percent.

Cellular air time charges were lowered 2 percent to Rp 270 from Rp 275 per minute.

The government last year also revised tariffs for international calls, including charge reductions to 209 countries (ranging from 1.1 percent to 38.5 percent) and charge increases to 21 countries (ranging from 9.6 percent to 25.3 percent).

ING Baring's predictions for Indosat's financial performance in 1996 were almost in line with the actual results.

Indosat

Indosat, the state-owned international telecommunications operator, reported last week a 14 percent increase in its net profit last year to Rp 523.5 billion from Rp 459.4 billion in 1995.

Indosat announced that its sales grew by 17.1 percent to Rp 1.22 trillion in 1996, from Rp 1.04 trillion in 1995. The company's profit represented a net income of Rp 505.6 per share, or $2.12 per American Depository Share. The company's 14 percent profit growth in 1996 was much lower than 59 percent increase recorded in 1995.

ING Baring had predicted that Indosat would gain Rp 565 billion in operating profit and Rp 495 billion in profit, while its earning per share was predicted to stay at Rp 478.

ING Baring projected that Indosat's operating profit would reach Rp 648 billion this year and Rp 754 billion in 1998, its net profit would reach Rp 563 billion this year and Rp 688 billion next year, and its earnings per share would increase from an estimated figure of Rp 544 this year to an estimated Rp 664 next year. (icn)