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.