PT Telekomunikasi Indonesia Tbk
), the leading integrated telecommunications service provider of
Indonesia, recently suffered a setback due to the adverse
movement of foreign exchange rate. Yesterday, the stock price of
Telekomunikasi dropped 5.57% mainly attributed to a 0.8% fall in
the value of Indonesian Rupiah with respect to the U.S.
An adverse movement of the foreign exchange rate will
significantly hurt the company's revenues in terms of the U.S.
Dollar. Telekomunikasi reports in Indonesian Rupiah. Thus, a weak
Rupiah will reduce its revenues and net income after conversion
into U.S. Dollar. Furthermore, Telekomunikasi has U.S. Dollar
denominated loans, which may worsen its balance sheet and
increase interest payment.
Telekomunikasi, along with other carriers, provides wireless,
wireline, fixed-mobile broadband Internet and interconnection
services. Telecom service providers of the Asian region are
highly dependent on the U.S. and European firms for critical
equipments to deploy network. These firms generally offer prices
in the U.S. Dollar and a strong Dollar will certainly inflate
these telecom carriers' operating expenditure.
We expect the future sales of Telekomunikasi to remain
unstable as both wireless and the wireline telephone operations
have become highly competitive in Indonesia. Operating expenses
are also likely to increase due to network upgrades and
promotional activities. On the other side, despite facing
competition, Telekomunikasi is exhibiting solid growth in
cellular services and data and Internet revenues that may reduce
its top-line volatility.
Other Stocks to Consider
Apart from Telekomunikasi, other stocks in the Asian Telecom
segment that warrant a look include
Shenandoah Telecommunications Co.
Nippon Telegraph and Telephone Corp.
Tata Communications Ltd.
). Both Shenandoah and Nippon currently carry a Zacks Rank #1
(Strong Buy) whereas Tata has a Zacks Rank #2 (Buy).
NIPPON TELE-ADR (NTT): Free Stock Analysis
SHENANDOAH TELE (SHEN): Free Stock Analysis
TELEKOMUNIK-ADR (TLK): Get Free Report
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