JAKARTA, Mar 19: Indonesian telecommunications giant PT Telekomunikasi Indonesia (Telkom) is expected to post another gloomy performance this year after poor 1997 results, analysts said on Thursday. They said Indonesia's ravaging economic crisis would hamper growth, while volatility in the rupiah currency added uncertainties."In the short term, Telkom will see these problems hamperingits performance," said Agung Prabowo, an analyst with PT Danareksa Securities.Telkom reported on Tuesday that net profit in 1997 fell 23 per cent to 1.152 trillion rupiah ($115 million) compared with 1.503 trillion rupiah in 1996 and below the market consensus of 1.5 trillion rupiah.
It said earnings per share in 1997 stood at 123.44 rupiah against 161.07 rupiah in 1996. The company's shares, which are also listed in New York and in London, fell 75 rupiah to 3,925 in early Jakarta trading on Thursday. The counter, the heaviest weighted stock on Jakarta's composite index, has fallen from 4,250 on Monday.
Telkom said thefall in net profit was driven by a foreign exchange loss of 424.44 billion rupiah in 1997 compared with 3.45 billion rupiah in 1996. The country's rupiah currency has fallen more than 70 percent since July and trades around 10,000 to the U.S. Dollar.
Telkom has said it is deeply concerned over the current monetary crisis and its effect on performance this year. "The company is not able to determine whether the current condition will continue in 1998 and thereafter," Telkom said.
The company said its 1998 financial performance could be adversely affected in several areas, including reduction in net income, an increase in liabilities and increase in capital expenditure. Telkom said it had been reducing its planned capital expenditure programme, had set more stringent criteria for investment proposals and initiated cost-cutting.
"The company will continue these measures in 1998 to address the economic difficulties," it said. Analysts also said Telkom's foreign joint operating partners (KSOs) would also beconcerned by low returns on investments.
Under the KSO scheme, partner companies are entitled to manage and operate five regional operating divisions in Indonesia. They in turn provide fees to Telkom.
Telkom said KSO investors' Financial viability and level of returns had been hit by the rupiah's depreciation against foreign currencies. "KSO investors have indicated that they may not be able to continue with their obligation under the KSO agreements to meet, among other things, their minimum new lines target," Telkom said. "In the region where KSO partners operate, Telkom's partners met just 53 percent of their target of 643,000 customers (in 1997)," Danareksa's Prabowo said.
He said the likely cause of KSO companies failing to meet targets was problems faced by local partners lacking liquidity due to the monetary crisis. Another analyst said Telkom was expected to use its old inventories like telephone cables for upgrading its telephone lines this year.
"In 1998, Telkom will use their telephonecables procured last year, cleaning up their cable warehouse," Adrian Lesmana of BNI Securities said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
