Telkom forecasts sales to increase 20% in 2006 from network expansion

Telkom forecasts sales to increase 20% in 2006 from network expansion

Soraya Permatasari and Naila Firdausi, Bloomberg/Jakarta

PT Telekomunikasi Indonesia (Telkom), the nation's biggest telephone company, expects sales to rise 20 percent next year, as the company plans to expand its network to attract more users.

Telkom and its units have budgeted a combined Rp 14.5 trillion (US$1.44 billion) to Rp 19 trillion for capital expenditure next year, higher than the Rp 13 trillion for this year, said President Arwin Rasyid.

Telkom is counting on rising demand for mobile-phone services in the country. Indonesia's cell-phone users may increase to about 79 million by 2007, according to Morgan Stanley, making the country Asia's fourth-largest mobile-phone market.

"We still expect good growth in cellular-service demand and also more demand for Flexi," Rasyid told reporters and analysts on Thursday. "The capex is for expanding cellular and Flexi networks and to expand broadband for our multimedia services."

Telkom said in October it added 140,000 users to its Flexi wireless service that charges its customers a cheaper, fixed-line rate. Telkom had 3.8 million Flexi users in September and aims to raise its Flexi user base to five million, Bisnis Indonesia reported on Sept. 30. Telkom said on Nov. 14 it is seeking to partner with a Hong Kong-based company to expand its multimedia business.

The company also expects this year's revenue to increase 20 percent, Rasyid said. That's higher than the 18 percent sales increase estimated in August.

Telkom said on Oct. 31 net income in the nine months to Sept. 30 rose 19 percent to Rp 5.78 trillion as revenue at its mobile- phone unit PT Telekomunikasi Selular (Telkomsel) gained 29 percent. In 2004, Telkom earned Rp 6.13 trillion in net income on sales of Rp 33.9 trillion.

Separately, Telkom Chief Commissioner Tanri Abeng said the company has proposed to add two directors to its board. In a June shareholders' meeting the company increased the size of the board to seven from five.

"The first one will be to handle risk management, and the other will be for logistics and services," he told reporters on Thursday in Jakarta. "We feel we need more directors to support our efforts to triple our market value in five years."

Telkom's shares gained Rp 150, or 2.9 percent, to Rp 5,300 at the 12 p.m. local time break on the Jakarta Stock Exchange.