Business Context and Reporting Period
This Form 6-K filing by Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (Telkom) covers the fiscal year ended December 31, 2013, with the report filed on March 18, 2014. Telkom is Indonesia's largest telecommunications provider and a state-owned enterprise (53.14% government ownership). The company is undergoing a strategic transformation from a traditional telecom operator to a TIMES (Telecommunications, Information, Media, Edutainment, and Services) provider. Key strategic initiatives include the Indonesia Digital Network (IDN) infrastructure project, international expansion into seven new countries, and strengthening its cellular subsidiary, Telkomsel.
Key Financial Metrics (Year Ended Dec 31, 2013)
| Metric | 2013 Value (Rp Billion) | 2012 Value (Rp Billion) | Change (%) |
|---|---|---|---|
| Total Revenues | 82,967 | 77,143 | +7.5% |
| Adjusted EBITDA | 43,626 | 40,154 | +8.6% |
| Operating Profit | 27,846 | 25,698 | +8.4% |
| Profit for the Year (Consolidated) | 20,290 | 18,362 | +10.5% |
| Net Income Attributable to Parent | 14,205 | 12,850 | +10.5% |
| Capital Expenditures | 24,898 | 17,272 | +44.2% |
| Total Assets | 127,951 | 111,369 | +14.9% |
| Total Liabilities | 50,527 | 44,391 | +13.8% |
| Net Working Capital | 4,638 | 3,866 | +20.0% |
Key Ratios: Return on Equity (ROE) was 23.5%; Operating Profit Margin was 33.6%; Current Ratio was 116.3%.
Material Changes vs. Prior Period
- Revenue Growth: Driven primarily by a 14.8% increase in Data, Internet, and IT services revenues and a 4.6% increase in Cellular revenues. This offset a 9.0% decline in Fixed Line telephone revenues due to substitution by mobile services.
- Subscriber Growth: Total cellular subscribers reached 131.5 million (+5.1%). Mobile broadband (Flash) subscribers surged 56.5% to 17.3 million. Fixed broadband (Speedy) subscribers grew 28.7% to 3.0 million.
- Expense Increases: Total expenses rose 6.8%, largely due to higher operations and maintenance costs (15.1% increase) and depreciation (9.2% increase) to support network expansion. Personnel expenses remained relatively flat (-0.5%) as the early retirement program was not executed in 2013.
- Foreign Exchange Impact: Significant depreciation of the Indonesian Rupiah against the US Dollar resulted in a foreign exchange loss of Rp249 billion in 2013, compared to Rp189 billion in 2012.
- Capital Expenditure: Capex increased significantly by 44.2% to Rp24.9 trillion, with the majority allocated to Telkomsel's radio access network expansion and broadband infrastructure.
Guidance, Outlook, and Risks
Outlook and Strategy: Management remains optimistic for 2014, prioritizing double-digit growth for Telkomsel, continued expansion of the IDN (including the Palapa Ring project), and further international expansion. The company aims to maintain a capital expenditure to revenue ratio of 25-30%.
Management Commentary: The President Director highlighted successful execution of the "first thing first" strategy, focusing on high-growth portfolios. The company received numerous awards for corporate governance, innovation, and service quality in 2013.
Key Risks:
- Macroeconomic: Continued volatility in the Rupiah exchange rate and potential interest rate hikes by Bank Indonesia.
- Regulatory: Changes in interconnection tariffs, SMS regulations, and potential new entrants in the IDD and DLD markets.
- Operational: Risks related to the Telkom-3 satellite launch failure (requiring leased capacity) and potential network disruptions from natural disasters.
- Competition: Intensifying competition in the cellular and broadband sectors, particularly from new technologies like LTE and WiMAX.
Important Facts for Investor Verification
- Accounting Standards: Financial results are reported under Indonesian Financial Accounting Standards (IFAS) for regulatory purposes, which differ from IFRS. Dividends are based on IFAS net income.
- Dividend Policy: The 2013 dividend payout ratio was not yet determined at the time of filing; it is subject to approval at the 2014 Annual General Meeting of Shareholders (AGMS).
- Government Ownership: The Indonesian Government holds a controlling 53.14% stake plus a special "Dwiwarna" share with veto rights over major corporate actions.
- Legal Proceedings: The company is involved in ongoing litigation regarding alleged monopolistic practices (KPPU case) and SMS cartel allegations, with provisions made for potential fines.
- Capital Commitments: As of December 31, 2013, the company had material contractual commitments for capital expenditures totaling Rp18.5 trillion, primarily for network infrastructure.