INDONESIA'S PT TELECOM(TLK) Message Board

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Technology Stocks : INDONESIA'S PT TELECOM(TLK)

TLK 21.55

-3.6%

Nov 28 9:30 AM EST

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To: Duke who wrote (105)	1/23/1998 6:06:00 AM
From: tom	Read Replies (2) of 947

Reasons why TLK is a screaming sell (apart from the fact that I can assure you that Indonesia is bankrupt (Debt to GDP 400% and rising) and you should forget about investing there for a few years anyway). - Why should the share price in Rupiah terms be at all time highs when the prospects for revenue growth have disappeared - GDP will contract by 10%+ this year? - The valuations are crazy - TLK will make US$0.20 per ADR (or less if the Rupiah continues to fall) this year which puts it on almost 35x earnings - Although Telkom is a monopoly it has no pricing power. Its tariffs are set by the government. At the current tariff levels it cannot make enough money to carry on re-investing in the business. Revenue per line would need to rise by 200% to justify re-investment. - The average income per capita is US$200. Can they really afford to spend much money on a phone given that many people cannot afford to eat? - The share price has been driven up by arbitraging of the local shares/ADRs. This will not continue forever.

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