Telkom may cut dividends by more than 40 percent

JAKARTA. State-run telecommunications giant PT Telekomunikasi Indonesia (Telkom) will likely lower dividend payments by more than 40 percent this year in line with the government’s commitment to further boost the capital structure of the country’s state-owned enterprises.

Telkom estimates the telecommunications giant would pay only about Rp 5.84 trillion (US$447.6 million) in dividends this year, about a 42 percent decline compared to Rp 9.9 trillion paid to shareholders last year.

While the publicly listed firm has declined to disclose its dividend pay-out ratio this year, State-Owned Enterprises Minister Rini Soemarno said previously that Telkom’s dividend payments would stand at around 40 percent of its net profit last year.

“We want to reduce dividend pay-out ratios of certain state companies so that they can have more money to support their business,” Rini said, adding that she wanted more state enterprises to be globally 
competitive.

Telkom president director Alex J. Sinaga said previously that Telkom would branch out even further internationally.

Telkom is present in 10 countries outside Indonesia, including Malaysia, Singapore, Timor Leste and Hong Kong.

“We will be thankful if our dividend pay-outs are slashed so that we [can] use the money for business-expansion and profit-boosting,” Alex said recently.

The government controls 53.14 percent of Telkom’s shares. The remaining 46.86 percent is held by the public, including Singapore Telecommunications Ltd.

The government has set a Rp 34.9 trillion dividend-payment target this year, almost Rp 10 trillion lower than the Rp 44 trillion listed in the initial draft of the state budget.

Of the Rp 34.9 trillion, Rp 17.6 trillion will come from 17 publicly listed state-controlled enterprises, with planned dividend pay-out ratios of between 10 and 50 percent.

Last year alone, Telkom made Rp 9.9 trillion in dividend payments, or 70 percent of its 2013 net profits.

The telecommunications company on Monday announced that its net profits increased 2.8 percent in 2014 to Rp 14.6 trillion from Rp 14.2 trillion in 2013, meaning that dividend payments would reach around 5.8 trillion this year.

The firm’s bottom-line growth was far lower than the 10.5 percent increase in net profits, from Rp 12.9 trillion 2012 to Rp 14.2 trillion in 2013.

Mandiri Sekuritas researcher Ariyanto Kurniawan said that the mere slight increase in the firm’s bottom-line was partly due to weakening performance in the fourth quarter last year.

“The weaker performance was caused by rising depreciation to Rp 5.1 trillion and rising general and administration expenses, which were as much as Rp 1.6 trillion,” he said.

With the net-profit increase, Telkom was the only telecommunications operators in the country to turn a profit last year, as other companies struggled to combat foreign exchange losses and surging operating expenses.

According to its annual financial report, Telkom also saw revenue growth of 8.1 percent to Rp 89.7 trillion from Rp 83 trillion.

Earnings from phone services, meanwhile, remained the largest revenue contributor, hitting Rp 43.2 trillion.

The highest growth was recorded by the firm’s data, Internet and information services divisions, which rose to Rp 37.7 trillion last year from Rp 32.6 trillion in the previous year.

Telkom has not yet revealed its year-end number of shareholders, but by September, the number of subscribers stood at 138 million.

Telkom’s shares, which are traded at the Indonesia Stock Exchange (IDX) under the code TLKM, slumped by 1.34 percent to Rp 2,945 apiece at Monday’s close, down from Rp 2,985 on the previous closing. (Khoirul Amin)