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Telkom hit by higher costs; profits decline
PT Telekomonikasi Indonesia, or Telkom, the country's largest telecommunications firm, posted a 5 percent decline in first semester net profits, compared to a year earlier, on higher operating costs
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PT Telekomonikasi Indonesia, or Telkom, the country's largest telecommunications firm, posted a 5 percent decline in first semester net profits, compared to a year earlier, on higher operating costs.
Net profits stood at Rp 6.3 trillion (US$684 million), as against Rp 6.6 trillion in the same period of last year.
As of the end of June, the company had total operating expenses of Rp 17.7 trillion, 15 percent up from Rp 15.5 trillion the previous year.
Finance director Sudiro Asno told a media conference Thursday that operation and maintenance and telecommunication services contributed the largest costs, with Rp 5.6 trillion, up from Rp 4.4 trillion in the first semester of last year.
On the revenue front, the company earned Rp 30.18 trillion in the first semester, a 5.86 percent increase from Rp 28.51 trillion in the same period in 2007, thanks to expanding networks and telecommunications services.
President director Rinaldi Firmansyah said cellular business contributed the biggest revenue with Rp 12.1 trillion, up from Rp 11.3 trillion during the same period last year.
Internet and data business revenue increased to Rp 7.3 trillion, up from Rp 6.2 trillion in the same period last year.
Rinaldi said that the fixed-line business was the third largest contributor, despite a 7 percent decline in revenue.
As of June, the fixed-line business earned Rp 5.2 trillion, down from Rp 5.6 trillion. Telkom's total fixed-line subscriber base was also down by 1 percent, from 8.71 million as of June last year to 8.65 million in the first semester this year.
"We understand this declining trend because the public prefer to use cellular phones instead of fixed-line services nowadays," Rinaldi said.
Indonesia's telecom sector has been one of the fastest growing industries in the country over the past five years, with 10 mobile phone companies now competing hard with each other to carve up the country's huge market.
Despite declining profits, Rinaldi was optimistic that the company could boost revenues by more than 10 percent.
"We will continue to gain more cellular subscribers as part of our efforts to add to revenues," he said, adding that the company already boasted a subscriber base of 52.4 million customers as of the end of June.
In the same period last year, the subscriber base stood at 42.8 million.
The company was also targeting 750,000 new broadband subscribers, he said.
Telkom's shares fell 2.5 percent to Rp 7,700 on Thursday. Its share value has declined by 24 percent so far this year, worse than the 16 percent drop suffered by the Jakarta stock market benchmark index, Bloomberg said. (ewd)
