Indosat books profit despite lower income

JAKARTA (JP): International telephone operator PT Indosat suffered a 12.2 percent decline in operating profit in 2000, but the company still booked a significant increase in net earnings thanks to a surge in other income.

In its 2000 consolidated financial report, the company said its operating profit dropped to Rp 1.33 trillion in 2000 from Rp 1.52 trillion the previous year, although there was a 4 percent increase in operating profit.

Its operating revenue rose by 4 percent from Rp 2.73 trillion to Rp 2.85 trillion, falling within the range of market expectations of between Rp 2.7 trillion and Rp 2.8 trillion.

Operating expenses grew 24.4 percent to Rp 1.51 trillion from Rp 1.21 trillion in 1999, due to a sharp increase in compensation costs to cellular operators and a surge in the company's personnel expenses.

However, the 228 percent increase in other income to Rp 1.11 trillion from Rp 339.9 billion prevented the company from falling into the red, with net income rising 27 percent to Rp 1.75 trillion from Rp 1.37 trillion in 1999.

"This very strong increase in other income was mainly due to the significant increase in gains from foreign exchange," Indosat president Hari Kartana said.

In its financial statement, Indosat said foreign exchange profits rose 874 percent to Rp 466.9 billion from a loss of Rp 60 billion the previous year, a result of the impact of the rupiah's depreciation against the US dollar.

The Indonesian currency fell sharply against the dollar, plummeting from Rp 7,100 at the end of 1999 to Rp 9,595 at the end of last year.

The company said investment income grew slightly to Rp 398.7 billion from Rp 369.9 billion in 1999. PT Telkomunikasi Selular (Telkomsel) contributed earnings of Rp 417 billion, Intelsat Rp 21.9 billion and TPI Rp 7.9 billion, offsetting losses of Rp 128 billion from Mitra Global Telkomunikasi Indonesia (MGTI).

Insosat said that unlike the earnings from foreign exchange, its interest income dropped to Rp 152 billion from Rp 212 billion as a result of a sharp drop in domestic interest rates to an average of 12 percent in 2000 against 35 percent in 1999.

The company's financial report received a cool response from the market despite the significant increase in net earnings.

Securities analysts said the company's share prices lost Rp 100 in the afternoon session, falling to Rp 9,650 as investors worried about lackluster operating revenue for the company this year.

Although the company booked a significant gain in net income, its financial performance was relatively flat as reflected by the less than 5 percent increase in operating revenue.(hen)