Telkom's Role In The Capital Market Is "loved" By Erick Thohir

Indonesian SOE Minister Erick Thohir (center), President Director of the Indonesia Stock Exchange Inarno Djajadi (left), and Telkom President Director Ririek Adriansyah (right) in Jakarta, Thursday 19 November. (Photo: Telkom)

JAKARTA - State-Owned Enterprises (BUMN) Minister Erick Thohir advised to restore the glory of PT Telekomunikasi Indonesia (Persero) Tbk (TLKM) which had reached a market capitalization of IDR 450 trillion in the '90s. This message is a sign of Erick's affection for the telecommunications company.

Currently, Telkom's market capitalization has reached Rp. 317 trillion. The market cap value is the third largest behind PT Bank Central Asia Tbk (BBCA) worth IDR 805 trillion and PT Bank Rakyat Indonesia (Persero) Tbk (BBRI) IDR 491 trillion.

However, Erick admitted that he did not want to be satisfied with that number. Therefore, he gave a special task to Telkom's board of directors and commissioners to be able to repeat the achievement of IDR 450 trillion.

In terms of infrastructure, Telkom is the largest company owned by BUMN. Also, the business sector of the issuer coded as TLKM is one that is considered to be able to encourage change in this pandemic era.

Erick said that his strong statement encouraged Telkom's management to be more incessant in carrying out the transformation. It is proven, said Erick, that Telkom's market capitalization has reached Rp317 trillion.

"I'm sorry I spoke out loud, not because I didn't love it, but because I loved it. It was proven today by a joint discussion and a willingness with Telkom's ranks, only moving a little bit of the market capitalization of Rp. 317 trillion," he said, in Telkom's 25th IPO anniversary. Jakarta, Thursday, November 19.

Erick is not worried about the decline in Telkom's shares due to his statement. The reason is, this is only temporary. According to him, investors are not stupid and trust companies that have long-term strategies and adaptations to change.

"After my statement, it went down, but immediately went up again because investors are not stupid. Investors trust companies that have long-term strategies and adaptations to changes, especially in industries that exist in Telkom," he said.

Erick said the capitalization target of IDR 450 trillion is part of the Key Performance Indicator (KPI) of Telkom management. Erick believes Telkom's management is able to realize these targets.

"I am sure that our market capitalization in Telkom can raise its spirit again, as at that time Pak Setyanto (former President Director of Telkom) listed it. We can achieve the valuation price of IDR 450 trillion. This is part of KPI," he explained.

Compared to LQ45 which was 10.77 percent, Erick said the index of 20 BUMN companies had reached 19.37 percent. This means, said Erick, the transformation of the BUMN ranks has seen its impact on the market. Erick assessed that this will continue to grow positively considering the ongoing transformation program.

"The transformation that is in the Ministry of BUMN has not had major transformation, if I look at it in moderation," he said.

The story of Telkom's IPO

Telkom itself conducted an initial public offering (IPO) for the first time on November 14, 1995.

Telkom listed its shares on three exchanges at once, namely on the Indonesia Stock Exchange which was then called the Jakarta Stock Exchange, also on the New York Stock Exchange and the London Stock Exchange. However, Telkom then delisted on the London Exchange in 2014.

TLKM's market capitalization reportedly touched a level above IDR 450 trillion at the end of the third quarter of 2017, namely IDR 471.74 trillion.

President Director of Telkom, Ririek Adriansyah, said that after 25 years of being officially listed on the Indonesia Stock Exchange and the New York Stock Exchange, the market capitalization of the issuer coded as TLKM has doubled.

"This proves that Telkom is a company with good and sustainable performance, and is able to meet international standards with a market capitalization that continues to grow up to 12 times," he said.

On the same occasion, President Commissioner of Telkom Rhenald Khasali said that along with the current development of the company, Telkom is determined to continue to increase its market capitalization.

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"Telkom's market capitalization is more than 4 percent of the total capitalization in the Indonesia Stock Exchange. This is a market capitalization that has a big influence. Of course our dream is more than that," he explained.

Planned IPO for Telkom's subsidiary

As is well known, Telkom recently confirmed its plan to bring in one of the company's subsidiaries in the field of telecommunications tower operators, PT Dayamitra Telekomunikasi Indonesia alias Mitratel, to conduct an IPO.

Telkom Hub in Jakarta. (Photo: Telkom)

VP Investor Relations Telkom Andi Setiawan said Mitratel's IPO could realize the potential increase in valuation in Telkom's tower business, which he considered was still below market value (undervalued) compared to the industry.

In addition, bringing Mitratel to the market can strengthen the company's position in the market as well as prepare for 5G development opportunities and gain efficiency through economies of scale.

This plan received a positive response from the Financial Services Authority (OJK). Deputy Commissioner for OJK Capital Market Supervision, Djustini Septiana, said that the authority encourages Telkom to bring in its business children and grandchildren to collect funding through the capital market.

He said that up to now there have been 26 state-owned enterprises (BUMN) as well as 23 children and grandchildren of BUMN that have utilized the capital market in terms of funding.

OJK, he said, strongly encourages more companies to take advantage of the capital market, including companies in the Telkom business group as state-owned companies.

"It can also be encouraged to start taking advantage of the capital market, starting with encouraging subsidiaries that have good business prospects so that they can attract investors," he said.

Djustini assessed that for 25 years TLKM has been listed on the Stock Exchange, the holding company of PT Telekomunikasi Selular (Telkomsel) has played quite a role in the development of the Indonesian capital market, both from corporate activities and stock trading on the IDX.

Furthermore, he said that from the equity side, public ownership of TLKM shares has reached 44 percent. Likewise, TLKM's market capitalization reaches 4.4 percent of the total stock market cap. "So it is very clear that Telkom has a role in our capital market," he said.

He hopes that more BUMNs and their children and grandchildren will enter the capital market. This can be a role model for other companies, especially in implementing good corporate governance (GCG) and in compliance with laws and regulations.

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