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Weak rupiah puts pressure on telecom operators' Q1 earnings
Telecommunications operators in the country have seen their finances pressured by the weak rupiah during the January-March period this year, but most are confident that the situation could be reversed next year
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Telecommunications operators in the country have seen their finances pressured by the weak rupiah during the January-March period this year, but most are confident that the situation could be reversed next year.
PT XL Axiata, PT Indosat and PT Smartfren Telecom pocketed either lower revenues or losses in the first quarter this year compared to the same period last year, but state-owned PT Telekomunikasi
Indonesia (Telkom) emerged triumphant with double-digit revenue growth thanks to Internet and data growth.
XL's net losses more than doubled to Rp 766.94 billion (US$58.69 million) during the period, from Rp 378.98 billion recorded in first quarter last year, as its revenues decreased slightly to Rp 5.48 trillion from Rp 5.51 trillion.
'The losses in the first quarter were mainly due to rupiah depreciation against the US dollar,' XL CEO Dian Siswarini said.
The rupiah had weakened to Rp 13,084 as of March 31, from Rp 12,474 on Jan. 2, data from the Jakarta Interbank Spot Dollar Rate (JISDOR) showed.
Around half of telecommunications operators' capital expenditures were used to import materials for backbone infrastructure, according to Communications and Information Minister Rudiantara.
The acquisition of PT Axis Telekom Indonesia last year worth $865 million by XL ' which was funded by loans from its parent Axiata Group Berhad and a number of banks ' also affected the company's financial performance.
XL's Dian said she was upbeat that her firm would be in the black next year when impact from the acquisition would be significantly subdued.
XL's subscribers declined to 52.1 million in the first quarter this year, lower than Indosat's 66.5 million in the same period.
However, Indosat's earnings before interest, tax, depreciation and amortization (EBITDA) declined by 7.6 percent to 786 million Qatari riyal during the first quarter of this year from 851 million Qatari riyal in the same period last year, according to the financial report of its Qatar-based parent company Ooredoo Group.
The group stated in its report that there was an adverse impact of rupiah depreciation on Indosat's earnings ' as Indosat's US dollar debt accounted for around 46 percent of its total debts last year.
Bahana Securities analyst Leonardo Henry Gavaza has estimated that Indosat would reverse its losses into profit next year, when its network modernization and better infrastructure start taking effect.
Experiencing the same pressure from the weak rupiah, the country's sole Code Division Multiple Access (CDMA) operator, Smartfren, registered Rp 551.48 billion in net losses during the January-March period this year, a contrast to Rp 235.56 billion of net profit in the same period last year.
The firm booked Rp 307.2 billion in foreign exchange (forex) losses in the three-month period this year, compared to Rp 407.5 billion in forex gains in the same period last year.
Meanwhile, Telkom became the only operator pocketing net profit in the first quarter of this year with a total of 141.46 million subscribers.
The telecommunications giant saw its net profit rise 6.1 percent year-on-year (yoy) to Rp 3.81 trillion as revenues climbed by 11 percent to Rp 23.61 trillion thanks to a 27 percent revenue growth from the company's data, Internet and IT services business lines that topped Rp 7.06 trillion during the first quarter.
'The growth in data, Internet and IT services cannot be separated from mobile digital businesses that grew 37.4 percent,' Telkom president director Alex J. Sinaga said as quoted on the company's website.
Indonesia's telecom players are expanding into data, Internet and IT services as revenues from cellular voice and SMS services have been growing flat at single-digit pace. It is said that the country's telecommunications industry has reached saturation point, with the number of SIM card sales totaling more than the country's 250 million population.
An analyst with MNC Securities, Victoria Veny, said that most operators would likely still book flat growth in their revenues in the second quarter of this year, with around a 5 percent increase in the number of subscribers.
The top operators, namely Telkom's Telkomsel, XL Axiata and Indosat, together hold around a 70 percent market share.
