Telkom enjoys profit after first-half loss

JAKARTA (JP): State-owned telecommunications firm PT Telkom reported on Monday a 71 percent decrease in net profit to Rp 326.1 billion (US$38.6 million) during the first nine months of this year from a Rp 1.13 trillion surplus in the same period of last year.

The company said in a statement that the negative growth in profit was caused mainly by foreign exchange losses, amounting to Rp 1.56 trillion.

During the first nine months of 1998, it said, total operating revenue grew 10.4 percent to Rp 4.8 trillion from Rp 4.38 trillion in the comparable period of 1997.

Results, however, were battered by the company's expanding foreign debts, which had become more expensive to repay following the rupiah's collapse.

The rupiah has lost some 70 percent of its value against the U.S. dollar since the crisis started to engulf the country in July last year.

As of the end of September, the company had US$330 million in U.S. dollar debts, of which less than 15 percent was hedged. It also had 11.93 billion in Japanese yen-denominated debt, of which less than 3 percent was hedged. The company also has some foreign debt denominated in French francs and Dutch guilders.

On account of the relatively large unhedged foreign debt, the company booked a foreign exchange loss of Rp 1.56 trillion during the first nine months of this year, compared to Rp 146 billion in the corresponding period of last year.

The company's domestic debt had also become more burdensome in terms of its servicing due to soaring interest rates. The company had Rp 4.97 trillion worth of rupiah debt as of the end of September.

Interest expenses rose to Rp 359 billion in the first nine months, almost four times the Rp 94 billion in the same period of 1997.

The profit report for the first nine months of this year surprised the market, considering that the company booked a net loss of Rp 1.18 trillion in the first six months of 1998.

During the third quarter of 1998 alone, Telkom booked Rp 1.5 trillion net profit compared to Rp 306 billion a year ago as the rupiah rebounded strongly against the U.S. dollar during the quarter.

Sales in the quarter rose to Rp 1.6 trillion from Rp 1.51 trillion.

The company's total assets were Rp 23.76 trillion as of Sept. 30, compared to Rp 19.1 trillion at the end of 1997.

Following the release of the profit report, Telkom's shares on the Jakarta Stock Exchange surged Rp 75 to close at Rp 2,625 on Monday, leading a 3 percent rise in the benchmark index. Telkom accounts for 17 percent of market capitalization. (29)