Telkom to allocate 40% of profit as dividend

Telkom to allocate 40% of profit as dividend

Rendi A. Witular, The Jakarta Post, Jakarta

State-controlled telecommunications company PT Telekomunikasi
Indonesia (Telkom) said on Thursday it planned to allocate 40
percent of its 2003 net profit for dividends next year.

"We hope shareholders approve our proposal to pay dividends
amounting to up to 40 percent of our net profit," company
president Kristiono told reporters prior to a hearing with House
of Representatives Commission IX for finance.

He said the publicly listed company might reconsider if the
government wanted a higher payout ratio.

The government, which is the largest shareholder of Telkom, is
in dire need of funds to help finance the state budget.

But Kristiono said allocating more of the profit for dividends
would affect the company's investment plans.

The company previously said its net profit is expected to
reach about Rp 6.2 trillion (US$733.73 million) this year, down
from Rp 8.34 trillion in 2002 because of the absence of extra
income from the sale of assets as it enjoyed last year.

During the hearing, House member Rizal Djalil urged Telkom to
push PricewaterhouseCoopers (PwC) to complete the reaudit of the
company's 2002 financial accounts to avoid any negative impact
from further delays.

"I urge Telkom's management to be stern with PwC," he said.

Problems with Telkom's 2002 financial report emerged after the
U.S. Securities and Exchange Commission rejected an earlier
filing because the report was audited by an Indonesian accounting
firm that was not properly registered in the U.S.

The SEC had demanded that Telkom, which has shares listed both
in Jakarta and New York, resubmit its 2002 accounts as soon as
possible or risk its shares being removed from the New York Stock
Exchange.

Telkom called in the PwC in June to reaudit the figures.

However, Telkom announced that it would need more time to
complete the reaudit as it was currently in talks with Deloitte
Touche Tohmatsu, the auditor of the 2000 and 2001 results, over
what adjustments needed to be made.

If Telkom fails to reach an agreement with Deloitte, the PwC
will have to reaudit those accounts as well, meaning that the
refiling of the 2002 results could be delayed by up to four
months.

Rizal also said in the hearing that Telkom's board of
commissioners should take responsibility for the accounting
problem because the commissioners appointed the auditor.

"Telkom's management should not take all of the
responsibility. This problem occurred in the first place because
the work of incompetent commissioners when choosing the auditor,"
he said.

Telkom's board of commissioner includes the secretary for the
Office of the State Minister for State Enterprises, Bacelius
Ruru, the secretary-general of the Ministry of Finance, Agus
Haryanto, Director General of Post and Telecommunications
Djamhari Sirat and analysts Arif Arrryman and P. Sartono, both
acting as independent commissioners.