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)