Telkom profit rises 14% on cellular, fixed businesses

The Jakarta Post, Jakarta

State-owned PT Telkom, the country's largest telecommunications company, reported a 14 percent surge in net profit during the first nine months of this year, on higher revenue from its cellular and fixed-line telephone businesses.

Publicly listed Telkom said net profit from January to September this year rose to Rp 5.02 trillion (US$556 million) from Rp 4.41 trillion in the same period last year. Operating revenue also climbed to Rp 25 trillion from Rp 19.6 trillion.

The Bandung-based Telkom did not provide an explanation for the increase, but analysts believe it was mainly the result of higher revenue booked by the company from its cellular and fixed- line businesses.

The company's revenue from its cellular services jumped to Rp 7.68 trillion in the first nine months of this year from Rp 6.12 trillion in the same period last year. Revenue from its fixed- line business increased to Rp 7.65 trillion from Rp 6.47 trillion.

Revenue from the company's cellular and fixed-line businesses account for about 61 percent of the company's total operating revenue, with 17.2 percent coming from the interconnection business and 21.8 percent from Internet, data, network and other services.

PT Telkomsel, Telkom's joint cellular subsidiary with Singapore Telecommunications, leads the domestic cellular market with 14 million subscribers, or about 53 percent of market share.

The company expects revenue to grow by 20 percent next year as the number of subscribers for its cellular business and Code Division Multiple Access (CDMA) telephone service are projected to increase.

There is still huge room for growth in the telecommunications sector in Indonesia, which has a population of over 220 million and a low telecom penetration rate. Only about 8.5 million people have access to fixed-line phones, while about 25 million subscribe to cellular phone services.

According to its financial statement, Telkom's interest expenses remain high, with an allocation of Rp 937 billion in the first nine months of this year, down slightly from Rp 948 billion in the same period last year.

The company also incurred a foreign exchange loss of Rp 577 billion from a gain of Rp 165 billion in the corresponding period last year.

The weakening rupiah during the period made it more expensive for the company to repay its foreign-currency debt, because most of its earnings are in the local currency.

Telkom shares rose by Rp 50 to Rp 4,350 on the Jakarta Stock Exchange on Friday. The Indonesian government has a 51 percent stake in Telkom, with the remaining stake publicly held.