Possible profit revision drags Telkom shares down

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.