PT Telekomunikasi Indonesia, the country’s biggest telecoms firm, said on Thursday it expects profit growth to recover this year after a drop in 2008 thanks to a steady rupiah and less intense price war.
Telkom also expects to acquire two small telecoms-related companies by the end of the year, Chief Executive Rinaldi Firmansyah told Reuters in an interview.
Firmansyah said he sees profit growth of “around 5 to 10 percent” this year, adding “net profit is hopefully good, because the rupiah is strengthening so we are optimistic. We expect revenue to grow in single digit, in the middle of the range.”
Telkom, which has a stock market value of $16.92 billion, reported net profit of 10.6 trillion rupiah in 2008, down 17 percent from the previous year, while revenue was up 2.1 percent in the year.
It reported a 22 percent fall in its first-quarter net profit due to foreign currency losses.
Indonesia’s rupiah currency has gained 8.27 percent against the dollar so far this year, making it the best performing currency in Asia.
Telkom shares ended down 5.26 percent at 8,100 rupiah on Thursday while the broader market ended largely flat. Telkom shares have risen 17.4 percent so far this year, underperforming a 53.75 percent gain in the market.
Indonesia’s mobile telephone market is growing increasingly competitive, with new entrants forcing mobile operators to spend more on promotions and reduce their charges.
Telkom, which controls 65 percent of PT Telekomunikasi Selular — the largest mobile phone operator in the country with more than 50 percent market share — has been forced to slash prices in recent years due to competitive pressure.
“The tariff was quite high and when suddenly new players entered, the tariff came down. So you see in the last 1-2 years the telecommunication industry was hit quite badly. But I think it was just a short-term impact,” said Firmansyah.
Telkomsel, 35-percent owned by Singapore Telecommunications Ltd, had around 72.1 million customers at the end of the first quarter.
Telkom is seeking to increase revenue from non-traditional sources of income including the launch of internet protocol television services, in a bid to defend its dominant position in the fixed-line and fast-growing cellular markets.
It sees opportunities to expand in areas such as internet, broadband and wireless services and plans two acquisitions in areas such as infrastructure and content by the end of the year, Firmansyah said.
He declined to name the acquisition targets but indicated that the value of each deal was close to a previous acquisition, that of call centre company PT Infomedia Nusantara, which Telkom bought for 598 billion rupiah ($59 million).
Telkom also wants to expand overseas, but Firmansyah said there was a very limited possibility for Telkom to pursue its plans to acquire an Iranian telecoms firm in the near term because of political instability in the wake of Iran’s elections.
Telkom had said in February that it was considering buying a stake in state-owned Telecommunication Company of Iran. The sale of TCI is part of a wider drive by the Iranian government to speed up the sale of state-owned companies.