Zacks_Analysts' Blog : Outlook Bright for Telekomunikasi - Analyst Blog

P.T. Telekomunikasi Indonesia Tbk. (TLK), the largest telecom operator in Indonesia, recently provided a solid financial outlook for the ensuing fiscal 2011. The company estimated its total revenue in fiscal 2011 to grow by 7%-8% year over year. EBITDA margin will be around 58%. Total revenue in fiscal 2010 was $7,617 million, up 1.4% year over year.

Telekomunikasi looks very comfortable with its wireless businesses projecting a 10% year-over-year growth in 2011. This is the primary reason for this strong revenue forecast.

At the end of fiscal 2010, Telekomunikasi had around 95 million wireless subscribers. The Indonesian wireless services market is quickly maturing as several operators are offering more or less similar services. Telekomunikasi competes fiercely with P.T. Indosat Tbk (IIT) and P.T. Excelcomindo Pratama.

Despite this competitive pressure, the company now anticipates its wireless subscriber base to reach 115 million in 2011. This indicates a year-over-year growth of over 21%, much higher than the company’s earlier projection of 10%-12%.

To counter the growing internal threat, Telekomunikasi has made a strategic move to expand globally as it may generate growth at its top line. On December 2010, the company announced that it will acquire a majority stake of CamGSM, the largest wireless operator in Cambodia, for a consideration of over $500 million. However, industry sources disclosed that France Telecom S.A. (FTE) is also a contender for a majority stake in CamGSM.

Telekomunikasi also decided to spread out its radio access network infrastructure throughout Indonesia. The new transformation initiative will converge IP and optical networks to enable Telekomunikasi to effectively tackle growing data traffic, simplify network structure and reduce costs. Management has taken a decision to upgrade its existing HSPA network to HSPA+ that will enable the company to offer broadband access speeds up to 21 Mbps to its subscribers.