Indosat's earnings rose to $22 million in 1996

JAKARTA (JP): State-owned PT Indosat reported a 14 percent increase yesterday in its net profit last year -- lower than the 59 percent increase in 1995 -- to Rp 523.5 billion (US$22 million) from Rp 459.4 billion in 1995.

President of the state-owned international telecommunications carrier Tjahjono Soerjodibroto told a press conference that Indosat's sales grew by 17.1 percent to Rp 1.22 trillion in 1996, from Rp 1.04 trillion in 1995.

He said the January-December 1996 profit represented a net income of Rp 505.6 per share, or $2.12 per American Depository Share.

He admitted that the 14 percent profit growth in 1996 was much lower than 59 percent increase in 1995 as "Indosat restructured its operational expenses with the introduction of the new interconnection regulation in January 1995."

He said the result in 1996, however, further testified to the company's strong commitment to achieving double digit growth, "despite the gloomy outlook given by most telecommunication analysts."

"Our earnings growth was almost double the analysts' estimate of 7.9 percent," he said.

According to Indosat's executive vice president for marketing, Bambang Sulistyo, the company's outgoing and incoming telephone traffic volumes were 248.2 million and 328.4 million respectively last year, an increase of 20.2 percent and 14.9 percent, respectively, compared to the figures in 1995.

"The erosion of our market share appears to be receding, as shown by the higher outgoing traffic growth of 20 percent in 1996. This reflects the continued confidence of the customers in our service.

"During 1996, Indosat had an average 91.2 percent market share, based on a 89.4 percent outgoing market share and a 92.6 percent incoming traffic market share," he said.

Analysts estimated that Indosat would gain between 88 percent and 90 percent market share in 1996.

The government, under decree No. 6/102/1995, handed over the exclusive rights to international telecommunication services to Indosat and PT Satelindo until 2005.

Indosat, which is listed on the New York and Jakarta stock exchanges, reported yesterday that out of its Rp 1.22 trillion sales in 1996, Rp 1.17 trillion were generated by international calls.

The volume of last year's international calls increased by 17.1 percent to 576.6 million minutes from 492.5 million minutes in 1995.

Last year's growth in international calls was a bit higher than the 15.3 percent recorded in 1995. International calls totaled 427.2 million minutes in 1994.

Tjahjono said his company added 884 new international lines last year, bringing their total number to 6,658 circuits.

He said Indosat's investment in its subsidiary businesses had started to pay off earlier than expected, bringing in Rp 18.5 billion into the company's bottomline.

Company executive vice president of corporate development Safwan Natanegara said the decrease in the gains on foreign exchange -- net as a result of the depreciation of the U.S. dollar-special drawing right -- was offset by an increase in investment income, which consequently resulted in a higher consolidated other income net of 8.2 percent to Rp 117.5 billion.

"This investment income includes dividends received from Intelsat, Inmarsat and PT Lintasartha totaling Rp 11.0 billion and Rp 1.4 billion in equity accounted profit from PT Mitra Global and Rp 19.4 billion from PT Telkomsel. It also has been adjusted for Rp 1.8 billion in losses from PT Yasawirya Tama Cipta and another Rp 2.7 billion from Camintel."

"In 1996, Indosat began amortizing the goodwill resulting from the acquisition of Yasawirya, a Jakarta-based video recording firm, and USA Global Link, a telecommunications provider in the United States," he said.

He said Indosat had diversified its business by setting up several subsidiaries, including cellular operator PT Primasel and multimedia firm PT Indosat Mega Media.

"Contributions expected from this diversification will be around 8 percent to 10 percent of our revenues in 2000," he said. (icn)