Indosat market share to decline this year

JAKARTA (JP): The state-owned PT Indosat, the international communications provider, will see its market share of 91.2 percent last year decline to 86 percent this year.

Indosat marketing vice president, Bambang Sulistyo, yesterday blamed the projected decline on stiffer competition in the international call market.

"But we are optimistic about maintaining an average market share of not less than 86 percent throughout the year," he said.

Indosat last year had an average 91.2 percent market share, based on a 89.4 percent market share of outgoing calls and a 92.6 percent share of incoming call traffic.

The company said its international telephone traffic increased by 18.88 percent to 330.5 million minutes in the first half of this year from 278 million minutes in the same period of 1996. The growth rate in international telephone traffic in the January to June period of 1995 was 17.54 percent.

Out of the 330.5 million minutes of international telephone traffic in the first half of this year, 190.4 million were incoming calls (up 19.44 percent from 159.4 million in 1996) and the remainder was outgoing calls (up 18.1 percent from 118.5 million).

"Although the growth of incoming traffic is still higher than outgoing traffic, the gap is narrowing, as shown by the increase in our share of the outgoing calls from 89.97 percent in March to 90.05 percent in June," Sulistyo said.

Under a minister of tourism, post and telecommunications decree, the government has awarded the exclusive rights to international telecommunications services in the country to Indosat and PT Satelindo until 2005.

In the meantime, dozens of foreign callback service providers have entered Indonesia's market though such a business is banned by the government. Callback operators usually offer up to 60 percent cheaper rates for international calls compared to the tariffs set by the government.

Indosat investor relations manager Budi Prasetyo said Indosat's market share would reach 80 percent by 2000.

To secure its business, Indosat has allocated Rp 120 billion for a 25 percent stake in Global Link, a telecommunications provider in the United States which also offers callback services.

"During the first half of 1997, Indosat had an average 89.4 percent market share, based on a 90 percent share of outgoing traffic and 89 percent of incoming traffic," Sulistyo said.

Profit

Indosat reported yesterday a 15.78 percent increase in after- tax profit to Rp 272.2 billion (US$111.1 million) in the first half of this year.

The profit represented a net earning of Rp 262.9 per share, or $1.07 per American Depository Share.

The profit growth rate was higher than last year's. The company had Rp 235.1 billion in profit in the January-July period in 1996, up 6.42 percent from 1995.

"Our 1997 first half result showed our strong commitment to maintaining the operating revenue's high growth. The 15.8-percent growth of our operating income enabled us to keep an operating efficiency of about 48 percent," Indosat's president, Tjahjono Soerjodibroto, said yesterday.

He said that Indosat had a strong growth of telephone traffic and high speed lease line services compared to the same period last year. "The good performance during the first half has allowed us, with approval from commissioners, to distribute an interim dividend of Rp 80 per share or about 30 percent payout ratio."

The company floated its shares on the New York and Jakarta Stock Exchanges in October 1994. Indosat's share price was unchanged at $31.375 per American Depository Share on the New York Stock Exchange Tuesday. Its share price on the Jakarta Stock Exchange stood at Rp 7,525 at yesterday's close. (icn)