INDONESIA'S PT TELECOM(TLK) Message Board

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Technology Stocks : INDONESIA'S PT TELECOM(TLK)

TLK 21.12

+1.3%

Jan 30 9:30 AM EST

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To: needawin who wrote (760)	7/6/1998 10:46:00 AM
From: tom	Read Replies (1) of 947

In the 1980s when Latin America collapsed it took them a decade to get their economies on any sort of an even keel and the stock markets did not make any real progress for years. I don't doubt that foreign investors will be back but they will be buying existing assets, not building new ones, and so there will be no impact on growth. TLK have already conceded much to their foreign JV partners and will probably concede a lot more in terms of revenue share and MTR payments as the crisis worsens. Indonesia will recover in time - we both agree on that - but in what form will it exist? Will Habbibie play the nationalistic card and close Indonesia to the outside world? (and therefore avoid having to pay off its US$200bn of debt) or will the nation disintegrate as the starving population refuse to put up with the status quo? I disagree with TLK bulls for the following reasons... I think Indonesia will take 5 years plus to recover. Where else in the world has an economy that has gone through what Indonesia has experienced recovered over a period of 1-2 years? Their banking system is insolvent and illiquid, exports are not picking up hyperinflation remains a very real risk and interest rates are crippling. How can TLK grow US$ earnings in this environment. I am bullish of some Indonesian stocks (Indorama, Indah Kiat, Tambang Timah) as they have reasonable businesses, US$ revenue, are well managed and trade on 2-3x earnings with good growth prospects. TLK trades on 30x earnings, is badly managed, has Rupiah revenue and very poor growth prospects. Effective penetration of telephone lines in Indonesia is 50%. There just is not the affordable population to support a large telephone infrastrucure. Forget the fact that its the 4th largest country with 200m people. 100m of these are starving and, I assume, will not be needing a phone. Bankruptcies are soaring and unemployment is at 40% and rising. The effective market is only 10-20m people if that. Good luck Tom

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