Telekomunikasi Indonesia, the country’s biggest phone operator, is seeking at least Rp 12 trillion to help finance its expansion this year.
The Bandung-based company has laid out its capital spending at Rp 20 trillion ($2 billion) this year, more than the Rp 15 trillion it set for last year.
Arif Yahya, president director of Telkom, said that the company is seeking these funds through a combination of bank loans and bond sales to raise at least Rp 12 trillion. The remaining Rp 8 trillion would be furnished with the company’s cash.
Arif however did not disclose the names of the lenders or details on its planned bond sale.
Arif said the company will spend more to finance various projects at its cellular phone unit Telkomsel. Telkomsel is 65 percent controlled by Telkom and 35 percent by Singapore Telecommunication company, or Singtel.
Telkom also plans to set up a telecommunications company in Myanmar this year.
“The penetration of the mobile market in Myanmar is only around 3 percent, so we are keen to set up a company there, but we haven’t set the investment value because it is still being discussed between our governments,” finance director Honesti Basyir said, according to Reuters.
Telkom plans to expand its mobile and fixed line businesses in Myanmar. It also expects its revenue to grow 8 percent this year, while increasing its customer base by 8 percent to 10 percent, Basyir said.
Telekomunikasi Indonesia posted a 19 percent increase in profits during the first nine months of 2012 on higher revenue.
Net income rose to Rp 10 trillion during that time, compared to Rp 8.38 trillion in the first nine months of 2011, according to a filing with the Indonesia Stock Exchange on Tuesday.
Revenue at the company rose 7.6 percent to Rp 56.9 trillion.
Arief said in October that the number of broadband users at Telkom rose 43 percent to 15.9 million subscribers, while BlackBerry Internet service users increased 69 percent to 5.1 million.
In the first nine months of last year, Telkom’s unit, Telkomsel, contributed almost 70 percent of Telkom’s revenue, equal to Rp 39.8 trillion.
In my opinion, TLK is not a growth company. It has a great franchise in Indonesia, but a large majority of their profits come from their mobile unit. I equate them with AT&T in the US. They have grown as Indonesian wealth has grown, but to this point are limited by being a one country service as well as having Indonesian government as a majority owner.
I didn't buy TLK for a lot of growth, but hope that initiatives like the Myanmar (other SE Asian growth) will provide them with more growth opportunities. I've treated this like a utility, but with some chance of also getting stock price appreciation.
Part of the stock price range issue in the US was and is the uncertainties in Congress as relates to dividend taxation. Their dividend is still attractive but for stock price appreciation, there needs to be more earnings growth and that may not come if TLK doesn't expand into other markets.
Finally, beware of inflation. It's the enemy of dividend driven stocks.