Performance Indonesia's Telecommunication Providers Improves in 2015
The financial performance of Indonesia's listed telecommunication and network providers improved in 2015. Indonesia's three largest listed telecommunication companies Telekomunikasi Indonesia, XL Axiata and Indosat Ooredoo all recorded a better financial performance last year. However, this does not mean all three companies posted net profit. In fact, only Telekomunikasi Indonesia recorded net profit. The other two companies still posted a net loss, albeit their losses were much lower compared to one year earlier. Given that Indonesia's economic growth is expected to accelerate in 2016, these companies should be able to continue growing this year.
Telekomunikasi Indonesia (abbreviated Telkom), a state-controlled company, saw its revenue rise by 14.2 percent year-on-year (y/y) to IDR 102.5 trillion (approx. USD $7.8 billion) in 2015 from one year earlier. It is interesting to note that revenue generated from data and Internet & information technology (IT) services exceeded revenue generated from telephone calls. This is the first time ever for Telkom that the telephone calls business segment was not the top earner .
Meanwhile, the company's net profit rose 6.7 percent to IDR 15.5 trillion (approx. USD $1.1 billion) over the same period. Net profit grew much slower than the company's revenue due to a 26 percent increase (y/y) of operating, maintenance, and telecommunications services costs, while interconnection charges rose 21.6 percent (y/y). The company also incurred heavier foreign exchange losses due to the depreciating rupiah (against the US dollar) in 2015. Reportedly, foreign exchange losses grew by a staggering 228 percent (y/y) to IDR 46 billion. Indonesia's rupiah depreciated around 11 percent against the US dollar in 2015.
Telkom is - by far - the largest telecommunication and network provider in Indonesia and is also one of the largest companies in Indonesia in terms of market capitalization. In order to stay on top Telkom launched its 4G mobile broadband network in 2015 and also engaged in a successful campaign offering its IndiHome fiber optics Internet service to Indonesian households across the archipelago.
Stock Quote Telekomunikasi Indonesia - TLKM:
The graph below shows a steep decline as Telkom conducted a stock split with a ratio of 1:5 in August 2013. This measure was taken to increase the company’s share liquidity.
Earlier, the Qatar-based Ooredoo Group announced that Indosat Ooredoo posted a net loss of 320 Qatari riyal (approx. USD $88 million) in 2015, improving from a net loss of 564 Qatari riyal in the preceding year. The group added that excluding foreign exchange losses Indosat Ooredoo would have posted a net profit last year. Meanwhile, the company's revenue fell 2 percent (y/y) to 7.27 billion Qatari riyal (approx. USD $2 billion).
Stock Quote Indosat - ISAT:
The same scenario applies to XL Axiata. The company posted a net loss of IDR 25.3 billion in 2015, improving from a loss of IDR 803.7 billion in the preceding year, supported by an increase in operating income. Operating income rose 97.9 percent to IDR 3.14 trillion supported by the company's decision to sell 3,500 telecom towers for a combined price of USD $459 million to Solusi Tunas Pratama. The firm may decide to sell more telecom towers in 2016 in a move to bulk up its balance sheet. However, XL Axiata's revenue declined 2.5 percent (y/y) to IDR 22.9 trillion.
Stock Quote XL Axiata - EXCL: