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.