Possible profit revision drags Telkom shares down

Rendi A. Witular, The Jakarta Post, Jakarta

Shares in state-owned telecommunications company PT Telekomunikasi Indonesia (Telkom) plunged on Monday over fears that the reaudit of the company's 2002 financial report would result in a reduction in its net profit.

Telkom shares, the largest counters on the Jakarta Stock Exchange, dropped by 2.6 percent, or Rp 150 to Rp 5,700.

Analysts said that the drop was mainly attributable to a Telkom statement last week that it might have to reduce its previously stated Rp 8.34 trillion (US$987 million) net profit for 2002 by between 4 percent and 20 percent.

They said that Telkom's problems would overshadow the Jakarta Composite Index in the coming weeks unless Telkom's management immediately held a public expose to clear the air and give investors the opportunity they needed to seek explanations from Telkom management about the matter, which has dragging on since May.

The affair has riled State Minister for State Enterprises Laksamana Sukardi, who said that Telkom should immediately hold a public expose to ease investors' concern as the information coming out was still confusing.

"I have officially requested Telkom management to immediately conduct a public expose as currently investors and the public are getting worried over the negative impact of the reaudit, and the fact that the information circulating is confusing," said Laksamana.

He made the statement on the sidelines of a ceremony to list the shares of state-owned Bank Rakyat Indonesia (BRI) on the Jakarta Stock Exchange on Monday.

Meanwhile, Telkom's head of investor relations Rochiman Soekarno told The Jakarta Post that the company would hold a public expose to brief investors and the public on the issue on Nov. 14.

He said management would provide details on the latest developments and their likely impact on Telkom's business in 2004.

The problems with Telkom's 2002 financial report emerged after the U.S. Securities and Exchange Commission (SEC) rejected an earlier filing because the report was audited by an Indonesian accounting firm which was not properly registered in the U.S.

The SEC had demanded that Telkom, which has shares listed both in Jakarta and New York, resubmit its 2002 accounts as soon as possible or risk its shares being removed from the New York Stock Exchange.

Telkom then called in PricewaterhouseCoopers (PWC) in June to reaudit the figures.

Preliminary findings from PWC show that Telkom needs to make adjustments to the 2002 results as regards the calculation of deferred taxes. PWC believes the adjustments will also affect Telkom's 2000 and 2001 financial results.

Telkom announced last week that it would need more time to complete the reauditing process as it was currently in talks with Deloitte Touche Tohmatsu, the auditor of the 2000 and 2001 results, over what adjustments needed to be made.

If Telkom fails to reach an agreement with Deloitte, PWC will have to reaudit those accounts as well, meaning that the refiling of the 2002 results could be delayed by up to four months, said Telkom in a statement.

Elsewhere, chairman of the Capital Market Supervisory Agency (Bapepam) Herwidayatmo said the agency would let Telkom decide which financial report was more "appropriate" to be used.