Telkom reports slight increase in net profit

JAKARTA (JP): State-owned telecommunications provider PT Telkom, reported on Wednesday a 1.4 percent increase in net profit in 1998 to Rp 1.16 trillion (about US$137.5 million) from Rp 1.15 trillion in 1997.

The company said net earnings per share (EPS) in the year ended Dec. 31 rose slightly to Rp 125.21 from Rp 123.44 in the previous year.

"Slow growth in net income was caused mainly by the substantial interest expenses and net loss on foreign exchange, which amounted to Rp 981 billion and Rp 965 billion respectively, resulting from the depreciation of the rupiah since the beginning of 1998," Telkom's corporate secretary Bambang Suselo said.

He said that the slow growth rate was also caused by higher interest rates during the year.

Bambang said that total operating revenue increased by 12 percent to Rp 6.6 trillion in 1998 from Rp 5.90 trillion in the previous year.

Total operating expenses rose by 18 percent to Rp 4 trillion from Rp 3.38 trillion in the same period. This resulted in a 2.9 percent increase in operating income to Rp 2.60 trillion from Rp 2.52 trillion.

As of Dec. 31, 1998, 51 percent of the total loan portfolio was denominated in rupiah and 49 percent in foreign exchange currencies whereas in 1997, 72 percent of the total loan portfolio was denominated in rupiah and 28 percent in foreign currencies, Bambang said.

The debt breakdown is Rp 4.89 trillion in rupiah, US$367.1 million, 14.115 billion yen, 154.9 million French francs and 25.7 million Dutch guilders.

Telkom's total foreign exchange loss reached a total of Rp 1.64 trillion, which was partly offset by a Rp 342 billion foreign exchange gain.

Of the resulting net foreign exchange loss of Rp 1.30 trillion, Rp 965 billion was charged to other expenses in the income statement and Rp 337 billion was capitalized to construction in progress.

For its income statement, the company used a rupiah exchange rate of Rp 9,100 to the dollar, compared to Rp 8,550 last year. Over the course of 1998, the rupiah sank to all-time lows of Rp 17,000 to the dollar.

Due to renegotiation of the revenue-sharing agreement with Telkom's joint-operating partners in June, revenue under the joint operation scheme fell 3.3 percent to Rp 1.59 trillion from Rp 1.64 trillion last year.

Each of Telkom's partner companies includes at least one foreign operator. Among the main investors are France's Cables & Radio (in Sumatra); U.S. West International (in West Java); Telstra Corp. of Australia's (TLS) Telstra Global Ltd. (in Central Java); UK's Cable & Wireless PLC (CWP) (in Kalimantan) and Singapore Telecommunications Ltd.'s (P.SGT) Singapore Telecom International (in East Indonesia).

In addition, Telkom said it had requested a $50 million loan from the World Bank to finance its Year 2000 program. Telkom said the bank had already agreed to allocate the funding. (hen)