BUSINESS STRATEGY BASED ON OPTIMAL CAPITAL STRUCTURE AND VALUATION ANALYSES OF PT TELEKOMUNIKASI INDONESIA, TBK. YEAR 2010

• Main Author: Marta Nuraida, Kinanti
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/64037
• Institution: Institut Teknologi Bandung

Every company strives to be the best company in their field that presented in the company’s financial, operational, business activities, etc. The management also tries to maintain the existence of the company by giving the finest performance and competing professionally with others. All it comes with one aim which’s to get more trust and attention from the investors, partners, and consumers (resulted as the market leader); and it affects indirectly on the company’s income and profit. Therefore the company’s management is structuring and designing various kinds of business strategies that derive all the management system run by the company. One of the crucial conditions that related to the financial performance is the financing decision to find the optimal capital structure to endeavor the highest value of firm by managing all the source of fund that used in the company. PT Telekomunikasi Indonesia is one of the market leaders in telecommunications services in Indonesia. By examining the value of firm (Discounted Cash Flow Method) and the optimal capital structure (WACC Approach), the suitable business strategy can be determined. Valuation of the company, useful to measure the real worth of the whole company’s value which already embodied the business value, financial condition, industry condition, country’s economy condition, etc; all measured in the valuation. The capital structure manages all the source of fund (debt and equity) that could used to finance all the company’s business and activities. The optimal capital structure will manage the right proportion of debt and equity that leads to the highest amount of firm value. As the result, the optimal capital structure is being concerned by most of the company to construct the best business strategy. In this research shows PT Telekomunikasi Indonesia, Tbk. is having better performance every year and having high value for their performances. It represented on the historical financial ratios (the Market to Book Ratio is 32 times, far above 1). Besides that, the historical value of PT Telekomunikasi Indonesia was increasing overtime and getting along with the decreasing of cost of capital (WACC) that suited with the optimal capital structure fundamental basis. For year 2005-2009, the optimal capital structure shows it is essential to maximize the debt ratio with range 55%-99%, in contrary shows in the optimal capital structure year 2010-2019, which is recommended minimize the debt ratio closed to 0% due to the company latest’s condition. By doing the valuation (from the historical and projected data) gives the outcome of the enterprise value of PT Telekomunikasi Indonesia is IDR 708,079,351 millions it covered all the supporting aspect (all future cash flow, asset, business industry, economic condition, equity, etc). As the conclusion, the well designed business strategy is important on controlling all the system run by the company and reaching the optimum firm value. It was proven from the factual condition in PT Telekomunikasi Indonesia, Tbk. that can deliver even better value of firm, compared to the WACC approach. Telkom’s management is having financial policies which control the capital structure; this is one of the business strategies that proven succeeded in bringing the company to its highest performance, value of firm.