Telkom under pressure over tariff hike<\/p>\n
JAKARTA (JP): The government's decision to raise telephone
\ntariffs was unfair because the hike was prompted by state-owned
\ntelecommunications operator PT Telkom's failure to run its
\nbusiness efficiently, according to a consulting company.<\/p>\n
The Econit Advisory Group said that Telkom's management should
\nnot burden its consumers because of its failure to properly
\nmanage the company.<\/p>\n
It stated that the company's business failures had, among
\nothers things, resulted in a foreign exchange loss of Rp 1.6
\ntrillion as of Sept. 30, 1998.<\/p>\n
The managing director of Econit, Arif Arryman, said that the
\nloss was the result of Telkom hedging only 11 percent of its
\nforeign currency debts.<\/p>\n
\"Increasing tariffs should be the last option for Telkom. The
\nmanagement should find other ways to settle their financial
\nproblems, including restructuring its debts,\" he said.<\/p>\n
Arif said Telkom should improve its efficiency by reviewing
\nrevenue generated from its joint operations, reviewing its shares
\nin several unprofitable affiliates and focusing on expansion in
\npotentially profitable regions.<\/p>\n
He also said the inefficiency in Telkom's operations resulted
\nfrom the fact that most of its joint operation partners received
\ncontracts with Telkom because of close relationships with
\npowerful figures rather than capability.<\/p>\n
Effective early last month, the government raised rates for
\nlocal and domestic long-distance telephone calls by up to 46.67
\npercent on the request of Telkom.<\/p>\n
However, Arif said that it was unfair to raise tariffs to
\ncover higher operational costs because the company booked an 11.1
\npercent increase to Rp 2.1 trillion in its operating income in
\nthe third quarter of 1998.<\/p>\n
\"Also, in several categories the actual tariff hikes are over
\n2,000 percent and 3,000 percent,\" he said.<\/p>\n
For example, he said, new rates for long-distance calls made
\nin Jakarta and Bandung during the peak hours between 8 a.m. and 9
\na.m. on weekdays were Rp 25.7 per second in a 30-kilometer to
\n200-kilometer radius, up 2,028 percent from the previous cost of
\nRp 1.2 per second.<\/p>\n
In towns besides Jakarta and Bandung, the rates for calls
\noutside a 30-km radius between 8 a.m. and 9 a.m. on weekdays rose
\nby 3,092 percent to Rp 25.7 per second from Rp 0.8 per second.<\/p>\n
Arif also expressed concern that the sharp increases would add
\nto the people's burdens and had social and political
\nimplications.<\/p>\n
\"In a situation like we have now, this will surely create a
\nchain reaction in the economy. The rise will contribute to this
\nyear's inflation,\" he said.<\/p>\n
He also said the hikes would affect many non-export oriented
\nbusinesses by increasing production costs.<\/p>\n
Separately, Burhanuddin Napitupulu, the head of the House of
\nRepresentatives Commission IV for public works, transportation,
\ntourism, communications and public housing, said on Tuesday that
\nthe House would react to the increased tariffs only after Telkom
\nreleased its February numbers.<\/p>\n
He said that the House only approved tariff increases of up to
\n24 percent.<\/p>\n
\"If we see that increases are over 100 percent then we will
\nsummon the government for an explanation,\" he said on the
\nsidelines of a commission hearing. (gis)<\/p>",
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