International Journal of Research and Review Vol.8; Issue: 2; February 2021 Website: www.ijrrjournal.com Research Paper E-ISSN: 2349-9788; P-ISSN: 2454-2237

Analysis of Effect of Capital Efficiency, Efficiency and Exchange Rate Difference to Financial Performance in PT.Telkomsel

Faisal1, Khaira Amalia Fachrudin2, Yeni Absah3

1,2,3Master of Management Universitas Sumatera Utara, Indonesia

Corresponding Author: Faisal

ABSTRACT rate difference has a negative and significant effect to the financial performance of PT. PT.Telekomunikasi Seluler (PT. Telkomsel) is Telkomsel. one of the largest mobile telecommunications service providers and market leader in Keywords: Capital Expense Efficiency, Indonesia. Competition in the cellular business Operating Expense Efficiency, Exchange Rate is increasingly competitive, so companies must Difference, Financial Performance, implement a variety of strategies and policies Profitability, Net Margin (NPM) that are appropriate to keep the company growing and profitable. One of these things can INTRODUCTION be done by continuing to invest in developing Financial performance is an networks and managing operational costs important thing that must be achieved by efficiently as well as carrying out appropriate any company because financial performance policies in the purchase of equipment from is a reflection of the ability of a company to overseas partners so that the effects of fluctuations in the exchange rate of the Rupiah manage the financial resources of the against the Dollar can be minimized. The company. The assessment of a company's purpose of this study was to determine and financial performance can be interpreted as analyze the effect of capital expenditure an assessment of the achievements in this efficiency, operational cost efficiency and achievement can be judged from the income exchange rate differences to the financial or profits achieved by the company. performance of PT. Telkomsel. Financial Assessment of the performance of the performance is measured by profitability ratios companies important so that all the such as net profit margin (NPM). There are company's stakeholders (stakeholders) can three independent variables are capital assess and analyze the financial expenditure efficiency (X1), operating expense performance of the company. efficiency (X2) and foreign exchange rate difference (X3). While the independent A company's financial performance variable(Y) is net profit margin. Data collection during operation able to look through the in this study using the time series method by financial statements of the financial data. By analyzing the quarterly data analyzing the financial statements it will of PT. Telkomsel from 2012-2018. The results help all the interested parties in selecting or showed that 1) The efficiency of capital evaluating information where this expenditure had a positive and significant effect information is then used in taking the steps to the financial performance of PT. Telkomsel. and strategy of the company's business, is 2) The efficiency of operating expense has a no exception telecommunications company. positive and insignificant effect to the financial The telecommunications industry is performance of PT. Telkomsel. 3) The exchange

International Journal of Research and Review (ijrrjournal.com) 155 Vol.8; Issue: 2; February 2021 Faisal et.al. Analysis of effect of capital expense efficiency, operating expense efficiency and exchange rate difference to financial performance in PT.Telkomsel. currently one of the industry a very tight Maxis is a payment service provider competition both in Indonesia and in other in Malaysia with a range of 4G services countries, including in Southeast Asia. include 92% of the entire population in PT.Telekomunikasi Selular Malaysia and have the penetration of mobile (Telkomsel), Maxis Communication internet services reached 72% in the whole (Maxis) and Singapore Telecommunications of Malaysia. Maxis offers high-speed Limited (Singtel) is a leading internet service where 95% of the data telecommunication company in Southeast access with average data speeds of 3 Mbps Asia as well as a telecommunications or more. In 2017, Maxis posted a net company owned by the government which income of RM 8.5 Billion and EBITDA of has the advantages of the service and the RM 4.6 billion. Maxis also for the last 3 largest market share in each country as well years can maintain EBITDA Margin stable as has the growth of the business and at 53% so that Maxis could maintain its financial performance is very good. financial performance is still good. As for the things that underlie the Singapore Telecommunications chosen companies such as objects in the Limted (Singtel) is the first writing of this research are: 1) Because the telecommunication operator in Singapore company-the company is the market leader and is one of the largest telecommunications and has the market share is the highest in operator in Southeast Asia with the number the country, respectively. 2) Because all of customers reached 638 million customers three of these companies have a financial tersebardari Asia, Australia, Africa and even performance is very good and have high to the United States. Singtel profitability.3) Because the demographics of 70% is the contribution of from the population of the third country where outside of Singapore. Singtel owns shares in the company is located also vary consists of some company outside of Singapore, among various ethnic groups and tribes.4) Because others, Telkomsel Indonesia (35%), Airtel between each country very many of its India (36.5%), AIS Thailand (23.3%), residents moved domicile between the three Globe Philippines (47.1%) and Optus countries is well settled to do a long time Australia (100%). At the end of the year and while, making it a habit (behavior) it 2017 Singtel posted a net income of S$ will certainly be very large effect on the 3,853 Billion, Return On (ROE) of communication patterns of the population, 14.5% and Return On (ROA) of especially in the case of using the mobile 11.1%. Thus Singtel also managed to service, which will certainly affect the maintain the company's financial income roaming each mobile operator. performance remained stable. PT.Telkomsel is the largest provider Competitions in the of cellular services in Indonesia with the telecommunications industry in Indonesia, range of services includes more than 90% of especially in the mobile telecommunications the population in Indonesia with the number are increasingly strict. The operator mobile of Base Transceiver Station (BTS) is more service providers compete with each other than 160 thousand BTS. At the end of 2017, to get new customers. Various methods are Telkomsel has more than 196 million used among others by the development of a customers where the amount of customer network or to develop new products. data reached 105.8 million customers and a Investments are made primarily to market share of 55% of all mobile undertake the development of a network subscribers in Indonesia. The financial will certainly have an impact to financial performance of PT. Telkomsel from year companies such as increasing capital 2014-2017 very well, this can be seen from expenditure (Capex) and operating the south-west financial performance (operating expenditure / Opex). contained in the financial statements.

International Journal of Research and Review (ijrrjournal.com) 156 Vol.8; Issue: 2; February 2021 Faisal et.al. Analysis of effect of capital expense efficiency, operating expense efficiency and exchange rate difference to financial performance in PT.Telkomsel.

There are several factors that affect Capital Expenditure the performance of the company, among Capital expenditure (Capex) is the others, strategies and policies of the cost-the cost that is used by a company to company in the development of network and acquire or add to the fixed assets or physical product, the right marketing strategy as well assets such as property, industrial buildings as the ability of the company to reduce the or equipment. The goddess (2006) and cost of production and the cost of Syaiful (2008) said that the capital operational. Besides, there are still some expenditure is an expenditure that is made other factors that can affect the company's in the framework of the formation of capital financial performance both from the internal that are adding to the fixed / inventory and external. External factors such as the provides benefits more than one presence of government regulation on the period including the expenses for the cost of tariff policy and the existence of local the maintenance of the nature preserve or regulations regarding the construction of a add to the benefits of the benefit, increase telecommunications tower that can be the kualias and capacity sachets. effected directly to the income and operating expenses. While factors other than Cost internal, which can affect the performance The cost is an expenditure that has of the company, among others, is the already happened (expired) used to process efficiency of capital expenditure, the resulting product. While Sofyan Syafri operational cost efficiency and the Harahap (2011: 204) explains the cost is all difference in the value of the rupiah charged to the products and services that exchange rate against the dollar. will be sold to earn income(revenue).

LITERATURE REVIEW Exchange Rate Financial Statements The exchange rate is the price of a Financial statements are the end currency of a country against the currencies result of a summary process of accounting in other countries. The exchange rate can be which include financial transactions that measured or expressed in any other occurred during the financial year currency. The exchange rate is also referred concerned and processed in such a way that to as the comparison value. That is, when it provides information on the state of the the exchange occurs between two different financial companies that can be useful and currencies, it will generate a comparison used by interested parties (stakeholders). value or price of the two currencies. The Disampaing that the financial statements are name of the other exchange rate is the sumbe rinformasi very important for the exchange value of currency (exchange rate). company and are useful for the management The exchange rate plays an important role in to take decisions on economic and business the transaction, especially in export and decisions of the company. The financial import. It is because the exchange rate help report is an index which connect the two translate the prices with different currencies accounting figures and is obtained by from different countries. In addition, the dividing one number by another number exchange rate also plays an important role (Kashmir,2010). in the foreign exchange market (foreign exchange market) or known by the name of Efficiency “Forex”. In the foreign exchange market Efficiency is defined as the ratio exchange currency at the exchange rate between output (output) to the input (the agreed upon by multiple parties. input), or the amount that is produced from one input used (Permono, 2000).

International Journal of Research and Review (ijrrjournal.com) 157 Vol.8; Issue: 2; February 2021 Faisal et.al. Analysis of effect of capital expense efficiency, operating expense efficiency and exchange rate difference to financial performance in PT.Telkomsel.

Figure 1. Conceptual Framework

Hypothesis used is metodetime series for 7 years from Based on the background research the years 2012-2018. and the relationship between variables, then The type and Source of Data used in the research hypothesis: this research is secondary Data in the form 1. The efficiency of capital expenditure, of financial statements. Telkomsel from the operational cost efficiency and the years 2012-2018. Data exchange rate of the difference in the value of the exchange rupiah against the dollar c hmelalui website rate is partially significant effect on of the Ministry of Trade of the Republic of profitability at PT. Telkomsel. Indonesia and as a data comparison using 2. The efficiency of capital expenditure, the data of financial statements of PT. operational cost efficiency and the Telkomsel, Maxis Communications (Maxis) difference in the value of the exchange and Singapore Telecommunications Limited rate simultaneously have a significant (Singtel) year period 2014-2017. effect on profitability at PT. Telkomsel. Data Collection methods used are: 3. The efficiency of capital expenditure, data pembandingyaitu data the financial operational cost efficiency and the statements of each company's Annual difference in the value of the exchange Financial Statements () and the rate has no significant effect on financial statements quarterly (quarterly profitability at PT. Telkomsel. report) PT. Telkomsel obtained through http://www.telkom.com from the years MATERIAL AND METHODS 2014-2017. The Annual Financial This research is included statements (annual report) and the financial quantitative research because the data used statements quarterly (quarterly report) in the form of numbers. The Data used in Maxis obtained through this research is secondary. Secondary Data http://maxis.listedcompany.com from the in penetilian this is the data of the financial years 2014-2017. Financial statements statements of the company PT. Telkomsel (annual report) and the financial statements has been published. quarterly (quarterly report) Singtel acquired The population in this research is all through http://www.singtel.com from the of the financial statements. Telkomsel from years 2014-2017 and the Data sample in this 1995-2019.The criteria for the population research is secondary data, namely Data used is the quarterly statement PT. reports quarterly financial PT. Telkomsel Telkomsel from 1995-2019. As for the from the years 2012-2018 that includes data sample used in this study is to report capital expenditure (capex) and data quarterly financial PT. Telkomsel from the operating expenses (expense) and the data years 2012-2018. The sampling technique of financial performance ratios such as liquidity ratios, solvency ratios, activity

International Journal of Research and Review (ijrrjournal.com) 158 Vol.8; Issue: 2; February 2021 Faisal et.al. Analysis of effect of capital expense efficiency, operating expense efficiency and exchange rate difference to financial performance in PT.Telkomsel. ratios and profitability ratios. While the data year 2018 the number of BTS Telkomsel exchange rate of the rupiah against the achieve 189.091 BTS. dollar chmelalui website of the Ministry of Data sources financial Statements Trade of the Republic of Indonesia with the Telkomsel 2018, explained that the strategy address undertaken Telkomsel in developing the https://www.kemendag.go.id/id/economic- network is proven to have a significant profile/economic-indicators/exchange-rates. influence on the growth of the number of customers and revenue growth. Visible from RESULTS AND DISCUSSION the years 2014-2017 number of base stations The Influence of the Efficiency of Capital and the number of subscribers continues to Expenditure on Profitability increase and significantly affect the revenue From the results of the research growth of Telkomsel. At the end of 2018, indicate that the efficiency of capital the number of Telkomsel customers expenditure (X1) has a significant influence experience a drastic decline of around 34 on the company's financial performance as million customers where it is caused by the measured by profitability ratios (net profit policy of the government to register all margin) PT. Telkomsel. The results of customers so that the impact of a decline hypothesis testing showed variable also to the income of the company. efficiency of capital expenditure have a significance value smaller than 0.05, which The Influence of Operational Cost means that the efficiency of capital spending Efficiency on Profitability significantly influence profitability. The From the results of the research results of this study prove that the speed and indicate that the efficiency of the accuracy in the spending of capital will give operational cost (X2) does not have a a significant influence on the profitability of significant influence on the performance of the company. the profitability (net profit margin) PT. The goddess (2006) and Syaiful Telkomsel. From the results of the (2008) said that the capital expenditure is an hypothesis testing results obtained expenditure that is made in the framework significance value is more than 0.05, which of the formation of capital that are adding to means cost efficient operations have no the /inventory provides benefits significant influence on profitability. In more than one including other words, the reduction of operating costs the expenses for the cost of the maintenance not directly impact on profitability because of the nature preserve or add to the benefits there are other factors that influence is of the benefit, increase the kualias and greater. capacity assets. In other words, in the Since 2017, Telkomsel, program cellular business in an increasingly cost leadership with the efficiency of the competitive as it is now investing in operational costs to increase the net profit developing the network, increase the margin and keep the EBITDA margin capacity and improve the quality of the remained stable above 50%. Just program network is the thing that absolutely must be the operational cost efficiency that has been done so that companies continue to grow done by PT. Telkomsel has not been fully and profit. successful. Table 4.16 below displays the This is in line with the policy and revenue, expenses, EBITDA and profit strategy of Telkomsel to continue to allocate margin PT. Telkomsel from year 2014- capital expenditure to develop the range of 2018. services, increase capacity and improve Sofyan Syafri Harahap (2011:204) network quality. Table 4.15 shows that explains that the cost is all charged to the every year Telkomsel managed to build over products and services that will be sold to 20 thousand BTS and until the end of the earn income (revenue). Meaning the greater

International Journal of Research and Review (ijrrjournal.com) 159 Vol.8; Issue: 2; February 2021 Faisal et.al. Analysis of effect of capital expense efficiency, operating expense efficiency and exchange rate difference to financial performance in PT.Telkomsel. the cost incurred by the company to produce CONCLUSIONS AND the goods and services it will be the smaller RECOMMENDATIONS the income (revenue) earned by the CONCLUSIONS company and vice versa. Based on the results of the research From the Source dataLaporan can be summed up as follows: financial Telkomsel 2018 looks that costs 1. The efficiency of capital expenditure has (expense) incurred by PT. Telkomsel from positive and significant effect on year 2014-2018 in value every year tends to profitability of PT. Telkomsel. increase. In 2018 the cost-the cost of PT. 2. Operational cost efficiency and no Telkomsel 54.707 trillion (up 3%) when significant positive effect on compared with the year 2017 amounting to profitability of PT. Telkomsel 53.146 trillion, while the income of PT. 3. The difference in value between the Telkomselt year 2018 amounted to 89,246 exchange rate and a significant negative trillion, down 4% compared to the year effect on profitability of PT. Telkomsel. 2017 amounted to 93,217 trillion. It can be 4. The efficiency of capital expenditure, concluded that the program cost efficiency operational cost efficiency and the of operations conducted by PT. Telkomsel difference in the value of the exchange has no significant effect on the growth of rate for the simultaneous influential and revenue and net profit margin. significant impact on the profitability of PT.Telkomsel. The Effect of Foreign Exchange Rates on the Profitability RECOMMENDATIONS From the results of the research Suggestions of researchers from the indicate that the difference in the value of research that has been done is as follows: the exchange rate (X3) has a regression 1. The efficiency of capital spending to coefficient -0,006 and smaller than 0.05, so give the most dominant influence in it is concluded that the difference in the increasing the profitability and financial value of the exchange rate have a significant performance of the company. Therefore, effect on the performance of profitability as competition of the industry mobile (net profit margin) PT. Telkomsel. The telecommunications tighter, speed and value of regression coefficient -0,006 accuracy in invest to develop and add to (negative) show influence in the opposite the network is very crucial and must be direction means if the value of the rupiah carried out by the company. against the dollar rises (exchange rate 2. The efficiency of the operational costs weakened) then the income will go down, provide no significant influence on and vice versa if the value of the rupiah financial performance. In other words, if exchange rate against the dollar fell companies want to succeed in (exchange rate strengthened) to eat the operational costs then have to be really income will rise. selective and right on target again in As is known, Telkomsel, purchase choosing a cost-the cost of which give devices, especially for devices that are effect to the financial performance if the capex and increase the assets of all the program is run. transactions done using currency USD 3. The differences in the value of the (United states Dollar). So recording the exchange rate have a significant receipt of flow and obligations influence on financial performance. Just (liabilities) of maturity of the company will this factor is a factor from the outside affect the fluctuations in the exchange rate that will certainly be difficult to be of the rupiah against the dollar. controlled by the company. But internally the company could do such a policy negotiations on the price which is

International Journal of Research and Review (ijrrjournal.com) 160 Vol.8; Issue: 2; February 2021 Faisal et.al. Analysis of effect of capital expense efficiency, operating expense efficiency and exchange rate difference to financial performance in PT.Telkomsel.

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