Telkom considers ADR delisting

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Telkom, Indonesia's largest listed company, is considering a plan to delist its American Depository Receipts amid repeated problems in meeting US reporting deadlines and SEC-mandated accounting standards.

The state-controlled company earlier this week announced that it was seeking a 15-day extension from the US Securities and Exchange Commission to file its 2004 results, although it added that it was unlikely to meet even an extended deadline. It also revealed earlier this year that it was still dealing with SEC questions about the auditing of its 2003 results.

But Rohiman Sukarno, Telkom's head of investor relations, said yesterday that the company's board of directors had begun a study to determine whether they ought to abandon their 10-year-old US listing, partly because of what have become annual auditing headaches for the company.

“With a dual listing we have more benefits [such as] prestige for foreign investor confidence,” he said.

“But on the other hand the consequence is bigger in terms of cost and a more accurate auditing process,” he added.

The study was ordered by the government at a shareholder meeting last month that yielded a new chief executive, former banker Arwin Rasyid.

Mr Sukarno sought to play down the study's significance yesterday. The board had not set a deadline for its completion, he said. He added that it also undertook a similar study last year without any resulting change.

Telkom's problems in meeting SEC deadlines have not stopped the company from being a favourite among foreign portfolio investors in Indonesia.

It retains a virtual monopoly over domestic landline service and has in recent years begun competing with rival Indosat for international calls.

The company's mobile unit, Telkomsel, also leads the archipelago's rapidly growing cellular market with more than 20m subscribers and industry analysts are predicting continuing growth thanks to what remain relatively low penetration rates.

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