EM Investor : Phone Company Adapts To Change


Telkom, Indonesias largest phone company, has thrived despite the governments decision in 2002 to end its monopoly on fixed-line services. Telkom has expanded into the voice-over-Internet international arena and holds a 65% stake in Telkomsel, the largest mobile phone operator in Indonesia. Telkom also operates a limited-mobility CDMA-based enhanced cordless service in many cities.

Telkom, which is controlled by the government, reported a 62% rise in net income for the third quarter of 2006 compared with the same period in 2005. Its shares are listed on the Surabaya Stock Exchange, and its depositary receipts trade on the New York Stock Exchange and the London Stock Exchange. Telkom has a market capitalization of $18 billion.

Indonesias anti-monopoly agency announced in December that it would investigate a complaint that the countrys leading mobile operators are fixing prices. The complaint targets Temasek, Singapores state investment arm, which owns stakes in both Telkomsel and Indosat, Indonesias second-largest telecom. The complaint recommends that Temasek should be forced to divest its stakes in both companies.

Gordon Platt