Dividend, Blade With Two Sides

Having watch Mr. Arwin Rasyid (TELKOM CEO) in the Market Review of MetroTV explaining the TELKOM policy in entering dual listing both in JSX and Dow Jones seems a little bit worrying.

My first concern is that Mr. Rasyid assuring shareholders that with the so called “Risk Management” or “Portfolio Management” in splitting it stocks both ways foreign and domestically, shall neutralize the common trend of money flows. He also explained that by such action TELKOM will be positioned similar to the other 9 telco companies that mastering each region, so everyone must be aggreed that TELKOM ’should have’ been mastering Asia-Pacific in this matter.

Funny thing is that the TEMASEK group of Singapore and Telekom Malaysia which paradoxically not listed in Dow Jones, actually dominating Indosat and XL shares respectively. The question is, why would flag telco company such as TELKOM failed to
create strongholds in it own territory? The point is Mr. Rasyid is bullshitting us all.

Secondly, about dividend; It is true that by splitting the shares into several numbers would actually benefit shareholders if the value of the share is rising constantly. On the other hand, it will destroy the overall trust if the stocks fell down (this he believe that BUMN will not going down whatsoever). So that dividend received by shareholders shall be multiplied according to the numberfold created. And Mr. Rasyid confidently say that TELKOM has giving it shareholders huge amount of dividend in the past 11 years.
But… large dividend has it risks, first, it will reducing the company’s capability in re-investing it capital, since the earnings made shall be distributed into dividend, slow growth, and finally strategically lost. Secondly, dividend it will deteriorate the P/E (Price/Earnings) ratio, that makes the stocks look like lifted, but actually it was caused by the decreasing number of retained earnings…

Any comment?

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