Telkom tipped to post 14% profit gain

Telkom tipped to post 14% profit gain

Soraya Permatasari, Bloomberg/Jakarta

PT Telekomunikasi Indonesia, the nation's biggest phone company,
may say 2004 profit rose 14 percent after adding sales with low
call rates and an expanded network, even as competition from
overseas companies intensified.

Net income probably rose to Rp 6.94 trillion (US$737 million)
in the year ended Dec. 31, from Rp 6.09 trillion a year earlier,
according to the median estimate of seven analysts surveyed by
Bloomberg. Bandung-based Telekomunikasi, or Telkom, is scheduled
to publish full-year earnings by March 31. Sales rose an
estimated 26 percent, the company, which does not report
quarterly figures, said earlier.

Telekom Malaysia Bhd., Southeast Asia's second-largest phone
company, is among cell-phone companies that are entering
Indonesia drawn by high subscriber growth rates. Telkom, which
boosted its mobile user base 67 percent last year, helped by
lower rates, is well-placed to defend its 54 percent market
share, analysts said.

"Telkom has been able to react positively to competition,"
Verdi Budiman, an analyst at Merrill Lynch & Co., said. The
company is expected to "continue posting positive income growth
in years to come." Budiman has a "buy" recommendation on the
stock.

Sales rose to an estimated Rp 34.2 trillion, from Rp 27.1
trillion in 2003, Telkom said on Feb. 17.

"Telkom will remain a market leader because it's got an
extensive network already," said Ferry Yosia Hartoyo, an analyst
at DBS Vickers Securities, who has a "buy" recommendation on the
stock.

Hartoyo, whose forecast was the highest in the survey, said he
expects Telkom to report profit of Rp 7.99 trillion for last
year, which implies fourth-quarter net income of Rp 2.97
trillion.

Telkom's mobile-phone revenue, which made up about a third of
the company's total revenue, increased 26 percent last year,
Budiman said.

One-third of Telkom's revenue is from fixed-line services,
which gained about 16 percent in 2004, he said. Internet and data
connection services accounted for 13 percent of sales in the
first nine months, the company said.

Telkom's main mobile unit, PT Telekomunikasi Selular, or
Telkomsel, had 16 million subscribers at the end of 2004, up from
9.6 million. Telkom has two smaller cellular units with a total
of about 43,000 subscribers as of September 2004.

Telkom increased its mobile-phone market share from 51 percent
in 2003. Closest rival PT Indosat held 32 percent at the end of
2004, unchanged from a year earlier.

Faster economic growth has encouraged demand for
telecommunications in Indonesia, where about one in six people
has phone access. The $222 billion economy expanded 5.1 percent
last year, the fastest growth since 1996.

Even so, the company's shares have fallen 5.2 percent this
year after surging 43 percent in 2004, when the Jakarta Composite
Index gained 45 percent. The benchmark index added 10 percent
this year. The stock gained 25 rupiah, or 0.6 percent, to 4,575
rupiah at the close of trading in Jakarta on Monday.