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