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Technology Stocks : INDONESIA'S PT TELECOM(TLK) -- Ignore unavailable to you. Want to Upgrade?

To: tom who wrote (481)	4/3/1998 1:55:00 PM
From: Solon	1 Recommendation Respond to of 947

As usual, Tom, you've hit the nail on the head. At the risk of labouring your point, I'll raise a few more negative issues. The entire KSO model is falling apart and Telkom will have to pay dearly to meet the government's Universal Service Obligations from among the fragments. Investors should expect a significant financial contribution towards USO commitments in the next 18 months, irrespective of the IDR/USD exchange rate. Also, be aware that the company is moving rapidly on its costly T-2001 project, which is a substantial upgrade of billing and customer services functions. While this upgrade is sensible, it will occasion a significant USD capital spend and almost certainly result in an increased level of bad and doubtful debts. Oh, and then there's Telkom's USD-denominated satellite launch commitments ... With these factors and the artificially buoyant share price at present (which Tom details), you have a formula for share price contraction over 1999. Don't let's get emotional here - the fundamentals don't support much more than an arbitrage opportunity at present.