Telkom profit surges on cellular boom

The Jakarta Post, Jakarta

State-owned PT Telekomunikasi Indonesia (Telkom) recorded a 19 percent increase in net profit during the first nine months of this year on higher revenue from its cellular, interconnection, international calls and multimedia businesses.

In a statement to the Jakarta Stock Exchange on Monday, the country's largest telecommunications company said profits had soared to Rp 5.78 trillion (US$578 million) between January and September from Rp 4.85 trillion in the same period of last year.

The profit was derived from strong growth in operating revenues, which rose by 20 percent to Rp 30.1 trillion from Rp 25 trillion previously.

Revenues from the company's cellular business, which rose by 29 percent to Rp 9.93 trillion from Rp 7.68 trillion, contributed to some 32 percent of the revenues, while those from the fixed line business accounted for 27.5 percent.

Telkom's cellular business is run by its subsidiary, PT Telkomsel, which has about a 55 percent market share.

With a relatively lower expansion in the fixed line business due to higher investment spending than other telecommunications infrastructure, revenue from this sector declined slightly to Rp 8.31 trillion from Rp 8.35 trillion.

Currently, only about 4 percent of the country's 220-million population have access to fixed line telephones. Telkom controls some 97 percent of the domestic fixed line business, with about 9.5 million users.

Another contributor to Telkom's higher revenue was the interconnection business, which recorded a 26.7 percent increase to Rp 5.46 trillion during the first nine months of this year as against Rp 4.31 trillion in the corresponding period last year.

Telkom also booked strong revenue growth in its data and internet business, which increased by 44.6 percent to Rp 4.85 trillion from Rp 3.35 trillion.

In the international call business, Telkom managed to increase its revenue by more than five fold following aggressive promotion after the government decided to allow the company to fully engage in the business.

Before 2002, Telkom's smaller rival PT Indosat held a monopoly in the international call sector.

Revenue from this business rose to Rp 280.2 billion from Rp 53.8 billion previously.

The company also reported that operating expenses soared by 20 percent to Rp 17.35 trillion from Rp 14.40 trillion previously.

Telkom has major prospects of recording higher profits as it operates in a market where less than 20 percent of the nation's 220 million people have mobile or fixed-line phones.