Govt to proceed with plan to raise phone call rates
JAKARTA (JP): Publicly listed domestic telecommunications provider PT Telkom has to proceed with a plan to restructure telephone call rates within Greater Jakarta since this was promised to investors when the government floated shares of the company on the stock exchange in 1995, according to Minister of Communications Giri Suseno.
He said Telkom's rate restructuring plan was contained in a prospectus issued by the company prior to its initial public offering in November 1995.
The rate restructuring plan was in line with tourism, post and telecommunications ministerial decree No. KM.104/PR.301/MPP-94, which came into force on Jan. 1, 1995.
"Don't forget that the decree was issued because Telkom had to fulfill certain conditions before going public. This can't be canceled unilaterally. We have to honor this (the prospectus)," Giri told reporters Friday after installing the new board of directors at three state-owned transportation companies.
The decree stipulates that local rates apply only for calls within a range of 30 kilometers. Calls made to areas more than 30 km away are classified as long distance, thereby subject to long distance rates.
Giri said Telkom already applied such a rating system in areas outside Greater Jakarta.
"It's Telkom's duty to socialize the tariff restructuring so that the public can understand," he said.
The House of Representatives last month urged the government to cancel the plan to restructure local telephone rates within Greater Jakarta.
Telkom president Asman A. Nasution told House Commission IV for transportation and communications that Greater Jakarta had been exempt from the tariff restructuring measure because the government wanted to give the area preferential treatment. He also appealed for understanding that the company had been hurt by the sharp depreciation of the rupiah against the U.S. dollar.
He pointed out that the company, which is listed on the Jakarta Stock Exchange and New York Stock Exchange, suffered a first quarter loss this year. He declined to provide a figure.
Telkom has raised its rates twice this year, in January and in April, he said, adding that only the second revision incorporated a new exchange rate which was based on Rp 5,000 to the dollar, compared to Rp 2,400 in July during the precrisis period.
The rupiah hovered around Rp 13,000 last week.
Giri also said Telkom and five contractors had reached an initial agreement to revise joint operation scheme (KSO) contracts in installing two million fixed lines by the end of 1999 and managing them through 2010.
"They will meet again to finalize details of the revision," he said, adding that among the changes would be the lowering of the number of lines to be installed and the shared revenue fee for Telkom.
Under the initial KSO contracts, five joint venture telecommunications firms were to install new telephone lines starting 1996 and manage them until 2010 in a revenue sharing deal with Telkom.
The foreign KSO investors are France Cables & Radio (to install lines in Sumatra), U.S. West International (West Java), Telstra Global of Australia (Central Java), Cable & Wireless of the UK (Kalimantan) and SingTel of Singapore (eastern part of Indonesia).
The KSO operations contributed 28 percent to Telkom's operating revenue in 1997.
The monetary crisis made it difficult for contractors to meet the contract terms.
They claimed in April that 50.1 percent of the targeted lines had been installed by the end of 1997, but Telkom's Asman said only 25 percent had been installed.
Telkom is one of 12 state companies to be put on the government's privatization list to help raise US$1.5 billion to finance the 1998/1999 State Budget. The government, which at present holds a 65 percent stake in the telecommunications company, plans to make further divestments in its privatization program.
The restructuring of the KSO contracts, however, has to be completed first before selling more of the government's stake in the company, officials said. (rei)