Indosat's net income drops by 11 percent

The Jakarta Post, Jakarta

State-owned telecommunications company PT Indosat Tbk said its 2001 consolidated unaudited net income dropped by 10.8 percent to Rp 1.46 trillion (US$143.7 million) from Rp 1.64 trillion in 2000, citing higher growth in operating expenses.

The growth in operating expenses last year was "driven mostly by depreciation, maintenance and miscellaneous expenses, contributed by the amortization of goodwill and expenses related to the elimination of cross-ownership," the company said in a statement made available to The Jakarta Post.

The company said its operating revenue grew 71.7 percent last year, but its operating expenses jumped 113.2 percent.

The growth in operating revenue was mostly driven by its cellular business, which contributed 36.4 percent; its multimedia, datacom and Internet (MIDI) service, which contributed 19.9 percent; and its international direct dial (IDD) operations, which contributed 41.8 percent.

Indosat, which is one of the two companies licensed to operate an international phone service, has recently failed to acquire the fixed-line assets in Central Java and Yogyakarta owned by another state telecommunications company PT Telekomunikasi Indonesia.

The company said that this year, it would focus on the cellular business and develop wireless technology as an alternative method to enter the fixed-line business following its failure to acquire Telkom's Central Java and Yogyakarta fixed- line assets.

It expected to enter the "fixed wireless business" this year by utilizing its cellular network called IM3 or the network owned by Satelindo. Indosat owns a 75 percent stake in Satelindo.

Indosat has allocated around Rp 130.5 billion to develop the fixed wireless business.

In addition, Indosat would also spend Rp 322.1 billion this year to further develop its backbone, data communications and multimedia, IDD and Voice over Internet Protocol (VoIP) businesses.

The company planned a capital expenditure of Rp 780 billion this year but this figure could increase, once it receives payment from Telkom following the aborted sale of the Yogyakarta and Central Java assets.

Indosat earlier told the Jakarta Stock Exchange that it was entitled to receive $198 million from Telkom in payment for its assets sold to the latter.

Telkom has acquired a 35 percent stake owned by Indosat in cellular operator Telkomsel. It initially planned, but has so far failed, to transfer its assets in Yogyakarta and Central Java to cover part of the payment.