Stock market index uninterrupted by Telkom's woes

Stock market index uninterrupted by Telkom's woes

Rendi A. Witular, The Jakarta Post, Jakarta

Shares in state-owned telecommunications company PT Telkom ended
higher on Monday despite earlier news reports that there would be
several changes to its 2002 financial report following a reaudit.

Telkom shares ended 0.9 percent, or Rp 50 higher, at Rp 5,700
on Monday, after rebounding from an intraday low of Rp 5,500.

But the increase in Telkom shares failed to help lift the
Jakarta Composite Index higher, as it closed lower by 0.5
percent, or 2.70 points, at 597.140 on profit taking and losses
in many regional markets.

Telkom, which is also listed on the New York Stock Exchange,
was forced to reaudit its 2002 financial accounts by the U.S.
Securities and Exchange Commission after an earlier financial
report, audited by local auditor Eddy Pianto, was rejected
because the auditor had no affiliation with an accounting firm
certified by SEC.

But the earlier version of the report had been submitted to
the Jakarta Stock Exchange. Under this report, Telkom said it
made a net profit of Rp 8.34 trillion in 2002, double the result
of the previous year. Investors made transactions in Telkom
shares on the basis of this report.

Stock analyst Hendra Bujang from PT Mega Akses Securities said
that market players had yet to be affected by the news because
they were still awaiting further developments.

"The market is now cautiously following developments in the
case. Panic selling cannot be avoided if there are negative
changes that could impact the company's balance sheet," Hendra
said.

Hendra explained that during the next couple of weeks the
index would be overshadowed mostly by Telkom's woes.

Another possibility for Telkom was the announcement late last
week by the company that it would not be able to file the
reaudited 2002 financial report to the SEC by the end of
September as its auditor, PricewaterhouseCoopers, would need
another month to complete the audit.

The SEC had threatened to remove Telkom from the NYSE if it
failed to submit its report by a July 15 deadline. It is still
unclear whether the latest delay will increase the likelihood of
Telkom being delisted from the NYSE.

Elsewhere, head of the legal division of the Capital Market
Supervisory Agency (Bapepam) Robinson Simbolon said that the
agency would carry out an investigation if there were changes in
Telkom's 2002 report.

"We shall investigate whether the management of Telkom has
lied to the public. Before they reaudit the report, we have
warned them that if there are irregularities found in the
previous report the management must accept responsibility," said
Robinson.

He explained that Telkom's previous report could be withdrawn
by law if there were changes in the reaudited version because the
report submitted to the U.S. market should not be different to
the one that had earlier been submitted to the local market.

Eyebox

Net buyers of Telkom shares on Monday

Merrill Lynch Rp 18.6 billion

J.P. Morgan Rp 1.6 billion

Danpac Sekuritas Rp 1.5 billion

Sucorinvest Centra Rp 1.4 billion

FinanCorpindo Rp 924 million

Bahana Securities Rp 916 million

Equity Development Rp 565 million

Harumdana Sekuritas Rp 565 million

BNP Paribas Peregrine Rp 452 million

CLSA Indonesia Rp 383 million

Source: Bloomberg