Telkom sees 20% sales growth in 2005

Tony Hotland, The Jakarta Post, Jakarta

State telecommunications firm PT Telkom expects a sales growth of 20 percent next year upon expectations of more subscribers.

Telkom president Kristiono said on Wednesday sales would continue to depend mainly on its cellular business, followed by its Code Division Multiple Access (CDMA) telephone service.

"We target growth to reach up to 20 percent on the basis of greater provision of infrastructure and because the penetration rate (of fixed-line services) in the country is still low," he said on the sidelines of a seminar on privatization of state- owned enterprises.

Telkom booked Rp 27.1 trillion (US$2.97 billion) in sales revenue last year.

Kristiono said the company expected about five million to six million new cellular subscribers, two million new subscribers to its CDMA service Flexi and 200,000 new fixed-line subscribers next year.

Indonesia, with its 220-million strong population, is deemed to have a very low telecom penetration rate. Data shows that only 8.5 million people have access to fixed-line phones, while about 25 million subscribe to cellular phone services.

Telkom's cellular subsidiary, PT Telkomsel, leads the domestic cellular market with 14 million subscribers targeted this year.

Kristiono added that the company's capital expenditure for 2005 would be about Rp 10 trillion, with more than half to be channeled to its cellular business.

"Much of the capital spending needs will be self-funded," he said.

Kristiono also said Telkom was going ahead with its plan to issue up to Rp 1 trillion in medium-term notes before year's end to convert its U.S.-dollar debt into rupiah and avoid accruing increased losses from fluctuations in the exchange rate.

The company incurred foreign exchange losses of Rp 869 billion in the first semester of 2004, which cut its net income of the period by almost 20 percent.

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 had a $852 million debt as of June, more than half its total debt.