PT TELEKOMUNIKASI IN (TLK)edit

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TLK is an NYSE-traded, sponsored American Depostary Receipt (ADR) representing the class-B (ordinary) shares of PT Telekomunikasi Indonesia (TELKOM). TELKOM is a provider of fixed-line telecommunications services in Indonesia. The Company also provides a range of other telecommunications services, including interconnection, network, data and Internet services, among others.[1]


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Funds w/ TLK: 5
Rank: 347 / 351



Company Analysis

PT Telkom's consolidated revenue composition from recent corporate presentation.[2]

The company is also traded in other exchanges under the following tickers: NYSE: TLK, LSE: TKID, JSX: TLKM, Surabaya Stock Exchange: TLKM [3]

P.T. Telekomunikasi Indonesia (TELKOM), formerly Perumtel, is a provider of fixed-line telecommunications services in Indonesia. The Company also provides a range of other telecommunications services, including interconnection, network, data and Internet services, and other telecommunications services. [1]

Currently TELKOM has monopoly to operate fixed land line, local and long distance services in Indonesia. However the government has started to deregulate the telecommunications industry. Recently the government granted permission to PT Indosat, which is also partly owned by the government to operate long distance service. [3] and the company has been facing competition from "indirect competition" such as VoIP, and cellular phone providers. As part of this deregulation, PT Telkom has been entering other business like satellite communications segment (formerly monopolized by Indosat), VoIP, cellular services (through its 65% stake in Telkomsel, its joint venture with Singapore's Singtel).[2]

Ownership and Share Classes

Ordinary Shares

The company has 2 classes of shares. The ordinary shares (series B) is the publicly floated class of shares. As of December 31, 2005, there are currently 20 billion ordinary shares outstanding.

Ownership Structure as of 12/31/2005[4]

  • Government of Republic of Indonesia: 51.193%
  • Other Domestic (Indonesian) Shareholders: 2.609%
  • Foreign Shareholders: 46.198%

Series-A shares "Dwiwarna"

The Indonesian government owns the only special class-A share. The Class-A share, called "Dwiwarna" or Two-colors, referring to the Indonesian flag, comes with special rights to veto changes in company's bylaws and appointments and dismissals of members of the boards of Directors and management. According to the company's bylaws, the Indonesian government cannot sell or transfer the ownership of the "Dwiwarna" share. The only way to terminate Indonesian government's rights that comes with the "dwiwarna" shares is by changing the bylaws, which requires government approval. [4]

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Risks

  • Direct and indirect foreign exchange risk. Besides a direct foreign exchange risk for US$ based investors, PT telkom has indirect foreign exchange risk. Most of its revenue stream is in Indonesian Rupiah (Rp). PT telkom has an amount of US$ denominated debt and a significant amount of its expenses are in US$. While PT Telkom possesses some financial hedging, it is susceptible to adverse fluctuation in the currency exchange rate.
  • Regulatory risk. Indonesia is currently deregulating its telecommunication sector, which poses some operational uncertainty. PT Telkom historically has monopoly over Indonesian fixed landline and long distance services, which could be lost in deregulation.[citation needed]
  • Indonesian government owned companies like PT Telkom have historically been riddled with corruption[5] and customer service[citation needed] problems.
  • PT Telkom has, in the past, failed to comply with SEC's reporting requirements, threatening its NYSE listing.[6]

Research Links

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Notes

  1. ↑ 1.0 1.1 Company Profile from Reuters. Accessed on February 22, 2007.
  2. ↑ 2.0 2.1 PT Telkom Corporate Presentation
  3. ↑ 3.0 3.1 Wikipedia article on PT Telkom Indonesia
  4. ↑ 4.0 4.1 share ownership section of corporate website. Accessed on 2/22/2007. Translated by khartand
  5. ↑ Witular, R., INDONESIA: Corruption team intensifies investigation into Telkom, Jakarta Post, June 21, 2006.
  6. ↑ PT Telkom Investor Relations Press Release (SEC filling), December 2003
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