Telkom net profit drops 42 percent

Rendi A. Witular, The Jakarta Post, Jakarta

The net profit of publicly listed telecommunications company PT Telekomunikasi Indonesia (Telkom) plunged by 42 percent in the first nine months of this year, mostly due to the acquisition of its revenue-sharing partner, PT Aria West International.

Telkom, the country's largest telecoms firm, booked a net profit of Rp 4.37 trillion (US$520 million), down from Rp 7.56 trillion in the previous period.

"The buyout of Aria West has pulled Telkom's profit down. This is why our profit up until the third quarter of this year was lower," Telkom's head of investor relations Rochiman Soekarno told The Jakarta Post by telephone on Friday.

Telkom took over Aria West for $390 million last year, with the payment to be made by installment. Aria West was partly owned by AT&T Corp of the U.S.

Rochiman said the drop in profit was also because last year Telkom earned additional income from the sale of a stake worth $429 million in its cellular unit PT Telkomsel to Singapore's SingTel.

Currently, Telkom owns around 65 percent of Telkomsel, with the remaining 35 percent being owned by SingTel.

During the first nine months of this year, Telkom's operating revenue from surged by 27 percent to Rp 19.97 trillion from Rp 15.62 trillion in the same period last year, mostly on the back of increased revenue from its fixed-line and cellular businesses.

Telkom's revenue from the fixed-line business surged to Rp 7.12 trillion from Rp 6.23 trillion previously.

Meanwhile, cellular revenue surged to Rp 6.12 trillion from Rp 4.43 trillion previously.

The number of Telkom's cellular subscribers rose to nine million as of October from six million at the end of last year. The overall number of cellular subscribers as of October stood at 16.9 million, up from 8.45 million at the end of last year.

Analysts said that Telkomsel would become a key earner for Telkom in the future given Indonesia's low cellular market penetration. Only around 6 percent of the country's 220 million people have cell phones, allowing huge room for growth in the coming years.

Telkom's revenue from multimedia and Internet services jumped to Rp 2.15 trillion from Rp 1.07 trillion previously.

However, the company's operating's costs increased to Rp 10.40 trillion from Rp 7.95 trillion.

The government has a 51.19 percent stake in Telkom, while the rest is owned by the public, making it the largest counter on the Jakarta Stock Exchange.