Telkom turns $215 million profit in the first semester

Telkom turns $215 million profit in the first semester

JAKARTA (JP): State-owned telecommunications company PT Telkom
announced on Friday unaudited net income of Rp 1.47 trillion
(US$215.01 million) in the first semester, compared to its net
loss of Rp 1.17 trillion in the same period last year.

It attributed the development to the increase in total
operating revenues and the conversion of some expenses into
income.

During the first semester of the year, Telkom's operating
revenues rose 15.3 percent, reaching Rp 3.73 trillion from Rp
3.23 trillion in the first semester of 1998.

Telkom's operating revenue is derived from its telephone
services, joint operation scheme (KSO) partners, interconnection
fee and other services.

Telkom said all of its operating revenues sources showed a
considerable increase this year except for the revenue from KSO
partners.

The company said telephone services, which is Telkom's core
business, contributed the most with Rp 2.13 trillion, a figure
reflecting a 16.8 percent increase from Rp 1.77 trillion gained
in the first semester last year.

Despite a considerable amount of subscription cancellations --
with about 90,322 residential subscribers (70.8 percent of the
total canceled), 36,949 business subscribers (28.9 percent) and
373 social subscribers (0.3 percent) -- there was little effect
on Telkom's revenues from the telephone service.

Telkom said yields from interconnection revenues -- an
obligatory fee paid by other telecommunications operators for
connecting their networks to Telkom's network during domestic or
international calls -- rose 42 percent to Rp 411.54 billion in
the first semester this year, from Rp 246.20 billion in the same
period last year.

Revenues from KSO partners fell 8.6 percent to Rp 831.47
billion from Rp 909.20 billion paid in the same period last year,
the company said. The KSOs are consortiums of local and foreign
firms that hold 15-year concessions to build and operate local
fixed line telecommunications nationwide except for Jakarta and
East Java

As of June 30 this year, Telkom and its KSO partners have 5.75
million lines in service, consisting of 3.07 million lines in
Telkom's Jakarta and East Java regions and 2.68 million lines in
KSO regions.

Telkom said the other factor driving the positive growth for
the first semester was the fact that several other expenses were
turned around to profits.

For the first half of 1999, Telkom enjoyed a foreign exchange
gain of Rp 689.2 billion, compared to the Rp 2.93 trillion loss
in the first semester last year.

Telkom said it used the conversion rate of Rp 6,855 to the
U.S. dollar, based on the Dow Jones Telerate on July 30, for the
calculation of revenues.

It added that of the foreign exchange gain, about Rp 514.5
billion was recognized as other income while the remaining Rp
174.7 billion was recognized as an offset to the capitalization
of construction in progress.

Telkom, which has the exclusive right to provide local fixed
line and wireless fixed line telephone services nationwide until
2010, has at least 13 subsidiaries, including all cellular
operators.

Telecommunications providers and operators wanting to enter
the country's telecommunications business are obliged by law to
cooperate with Telkom.

The new telecommunications law, set to be passed by the House
of Representatives on Aug. 25, will scrap the obligation and
allow local or foreign firms to freely set up telecommunications
enterprises as long as they do not interfere with Telkom's local
telephone services.

Telkom's shares are listed on the Jakarta, Surabaya, New York
and London stock exchanges. (cst)