Indosat Fourth-Quarter Profit Rises 24% on New Users

PT Indosat, Indonesia's second- biggest phone company, said profit increased 24 percent in the fourth quarter on increased subscribers.

Net income rose to 597 billion rupiah ($64.9 million) from 483 billion rupiah a year earlier. Indosat spokeswoman Adita Irawati confirmed the quarterly figures. Sales jumped 37 percent to 4.61 trillion rupiah.

Indonesian phone companies are expanding their networks to add subscribers and provide better call quality as newcomers such as Li Ka-shing's Hutchison Telecommunications International threaten to take market share. Indosat expects its 2008 market share to remain unchanged from the previous year at 28 percent, President Director Johnny Swandi Sjam told reporters.

Indonesia has “a lot of potential in subscriber growth,”
Ong Boon Leong, an analyst at Hwang-DBS Vickers Research Sdn. in Kuala Lumpur, said by telephone on March 28. Ong has a “buy” rating on Indosat.

The level of mobile-phone ownership in Indonesia may double in about five years, Ong said. Malaysia's penetration rate is currently about 85 percent, double what it was in 2003. “I see Indonesia growing in a similar pattern,” he said.

Jakarta-based Indosat, about 40 percent owned by Singapore Technologies Telemedia, had 25.1 million users in a country with a population of 235 million at the end of 2007, up from 16.7 million a year earlier. The nation has 10 mobile-phone operators, compared with 8 in 2006.

The penetration rate for mobile phones in Southeast Asia's largest economy was 41.4 percent by the end of 2007, the company said. That's lower than in neighboring Malaysia, the Philippines and Singapore.

The Indonesian mobile market will ``exhibit strong growth in the coming 12 to 18 months, given low penetration, improving coverage and falling prices,'' Morgan Stanley's Hong-Kong based analysts Navin Killa and Gary Yu wrote in a note. The analysts have an ``overweight'' rating on Indosat.

Net income last year rose 45 percent to 2.04 trillion rupiah, the Jakarta-based company said in a statement in Bisnis Indonesia newspaper. That's more than the average 2.01 trillion rupiah of 19 analyst estimates compiled by Bloomberg.

The number of subscribers may increase by 6 million and sales by at least 18 percent this year, Sjam said. Indosat plans to spend $1.2 billion on capital expenditure to build 3,000 mobile-phone towers, among other things, he added.

The quarterly figures were derived by subtracting nine- month earnings from the 2007 profit announced.