Convergence Vanguard
    Category: Rightsizing the SOEs By : Yessar Rosendar Read : 734 Date : Tuesday, August 06, 2013 - 06:45:16

    Ahmad Zamroni / Forbes Indonesia

    One sign of the changes underway at PT Telekomunikasi Indonesia (better known as Telkom) is also among the most obvious: the blue and yellow that has been the company colors for the last four years will be replaced by red and white, a nod to the national colors (the logo design will remain unchanged). “Telkom Indonesia exists to give the best to Indonesia and the rest of the world,” says Arief Yahya, president director of Telkom.

    Other important but less visible parts of the huge company are also being transformed by Arief, who came into the post last year with a mandate for reform. His actions are already bearing fruit, as the company posted Rp 77 trillion of revenue last year, an 8% increase from Rp 71 trillion the year before, and net profit rose 19% to Rp 13 trillion from Rp 11 trillion. “We want to double our market cap to $30 billion by 2015,” Arief says. This year Arief aims to grow revenues by 10% with the addition of new services, primarily in the cellular and broadband areas.

    It helps to compare these figures with older ones, to see the scope of change. From 2008 to 2011, revenue only increased by 11% from Rp 64 trillion in 2008 to Rp 71 trillion in 2011, while net income rose only 10% from Rp 10 trillion to Rp 11 trillion over the same period.

    What happens at Telkom is vital to the country. Telkom is the fourth largest company in terms of market capitalization on the Indonesia Stock Exchange. It is also one of the oldest, started 157 years ago, in the colonial era with the first electromagnetic telegraph that connected Jakarta and Bogor. It went on to launch and operate the country's first telecommunications satellite in 1976 and now, in the digital era, it is in the midst of building a 75,000 km fiber optic network that will connect the whole archipelago. “We want to think in a mega way so that we will benefit the nation, the customer and the company all at once,” Arief says.

    Despite the country's large population and strong economic growth, it is a difficult market for any telecom company due to the country's vast geographic size and being spread out over 17,000 islands. Thus telecom infrastructure is hard to build. Yet Telkom needs to build this network, in order to sell more data services, to offset the slowing legacy of its POTS (Plain Old Telephone Services).

    The company is a bellwether in other ways. Aside from its listing on the Indonesia Stock Exchange, it is one of the few Indonesian companies with a listing as well on the New York Stock Exchange and the London Stock Exchange. Its shares have risen 37% in the past year from Rp 8,250 to Rp 11,650 as of July, while its market capitalization reached Rp 238 trillion as of July. This year it ranked 685 in the Forbes Global 2000 list of the world's biggest companies, up from 726 last year. It also ranked fourth among nine Indonesian companies on that list.