Telkom says benefits of NYSE listing outweigh costs
Rendi A. Witular, Jakarta
State-owned telecommunications company PT Telekomunikasi Indonesia (Telkom) said that it wanted to retain its listing on the New York Stock Exchange (NYSE) as this was in the company's best interests, despite requests by several government officials for it to withdraw from the U.S. exchange.
Telkom president director Kristiono said that a recent internal study by management had concluded that the company would gain more benefits if it continued to be listed on both the NYSE and the Jakarta Stock Exchange (JSX).
"We will recommend to the government that the company's listing on the NYSE be retained as this is a matter of maintaining our reputation. That is the most fundamental benefit," said Kristiono after attending a ceremony held by the JSX on Tuesday.
Kristiono explained that aside from the matter of reputation, the company also benefited from improved corporate governance, better supervision and control, and greater efficiencies.
The listing on the NYSE also raised investor confidence at home in Telkom's operations and performance, he said.
The government holds a 51 percent stake in Telkom, with the remaining 49 percent being held by the investing public.
Telkom is the largest telecommunications company in Indonesia and the largest counter on the JSX, accounting for 17 percent of market capitalization.
Kristiono said that the company would present the results of the study during its annual general shareholders meeting on July 30. However, the meeting would not be asked to approve the study.
State Minister for State Enterprises Laksamana Sukardi had previously requested Telkom management to study the possibility of delisting from the NYSE after the company encountered problems in meeting U.S. audit requirements.
Laksamana had said that the listing on the NYSE was unnecessary due to the high costs that the company had to bear, especially after the financial audit problems emerged.
Problems with the Telkom audit first came to light last year when the U.S. Securities and Exchange Commission (SEC) rejected the company's initial 2002 financial accounts as audited by the Indonesian accounting firm, Eddy Pianto.
The SEC demanded that Telkom resubmit the audited 2002 accounts as soon as possible or risk being delisted from the exchange.
After more than seven months of uncertainty, Telkom managed to avoid delisting by finally resubmitting its accounts in February.
Elsewhere, Kristiono said that Telkom planned to allocate 40 percent of the company's 2003 net profit for the paying of a dividend this year.
Telkom recorded a net profit of Rp 6.08 trillion (US$681 million) last year, down 24.28 percent from the Rp 8.03 trillion recorded in 2002 due to the absence of extraordinary gains.
Telkom shares ended Rp 100 lower at Rp 7,450 on the JSX at the close of Tuesday's trading on the back of profit-taking.