Indonesia’s incumbent telco PT Telkom has reported a rise of around 50% in its net profit for 2002, reaching IDR8.35 trillion at the end of the period, which the operator has attributed mainly to the sale of a 12.72% stake in its cellular subsidiary Telkomsel earlier that year. The stake, which was sold to Singaporean PTO SingTel for a cash payment of USD429 million, helped Telkom to boost its profit by IDR3.2 trillion in 2002. Its operating revenue grew to IDR21.4 trillion, up from IDR16.1 trillion the previous year. Telkom said it does not expect to see such strong gains in 2003, although it hopes that robust growth in the wireless business will still mean that it posts a reasonably healthy profit.
Telkom’s main rival Indosat, on the other hand, has not witnessed such promising results for 2002, with its net profit falling to IDR336.25 billion from IDR1.45 trillion a year earlier. The 75% fall came as a surprise to analysts which had forecast a bottom line of around IDR570 billion, but the operator has blamed heavy non-operating expenses incurred during the year. The weak results have exposed Indosat’s vulnerability to competition from Telkom, and Singapore’s ST Telemedia, which owns a 42% stake in Indosat, has announced that it may have to seek increased protection from the government for its shareholding. It fears that the number two operator is likely to continue losing market share to its rival in both the fixed and mobile arenas, and this could have disastrous effects on its shareholders.