Govt urged to cancel plan to raise telephone tariffs

Govt urged to cancel plan to raise telephone tariffs

JAKARTA (JP): Legislators have urged the government to cancel
a plan to raise telephone tariffs for local calls over more than
30 kilometers within Greater Jakarta.

Burhanuddin Napitupulu of the Golkar faction in the House of
Representatives said that the state-owned domestic
telecommunications provider, PT Telkom, should not pass over its
business failure to customers within Greater Jakarta by raising
local call tariffs.

He pointed out that Telkom suffered both a loss during the
first quarter of 1998 and the consequences of poor performances
by its joint operation telecommunications project (KSOs)
partners, five international telecom giants.

"We strongly disagree with the plan to restructure the local
call tariffs in Jakarta," Burhanuddin said during a hearing
between Telkom president Asman A. Nasution and House Commission
IV for public works, transportation and communications Thursday
night.

The Directorate General of Post and Telecommunications at the
Ministry of Communications said Wednesday that Telkom would apply
a long-distance call rate of Rp 950 (7 U.S. cents) per minute for
all local calls over distances of more than 30 km in the greater
Jakarta area.

In comparison, local call charges are set at Rp 110 per pulse,
which ranges from 1.5 minutes to three minutes depending on the
time (morning, afternoon or night) the call is made.

Nasution said that he would convey the House's reservations to
the government, stressing that the decision to restructure the
local call tariffs within Greater Jakarta was not his.

"It's up to the government (the director general of
telecommunications)," he said.

He explained that based on the 1998 telecommunications
ministerial decree, telephone calls over a distance of more than
30 km are classified as long-distance, thereby subject to long-
distance rates.

But, particularly in Greater Jakarta, such a classification
had not been applied. Telkom instead charged local call rates
because it wanted to provide the customers with special
treatment, Nasution said.

He said that Telkom had raised call tariff twice this year,
in January and in April.

The first rise did not incorporate the rupiah's depreciation,
he said, adding that following the implementation of the 1998
ministerial decree in April, the tariff formula had included the
changing exchange rate.

But he pointed out that the second tariff revision was still
only based on an exchange rate of Rp 5,000 to the U.S. dollar.

Nasution, however, said that despite the April tariff
increase, Telkom was still left with a first quarter net loss.
He didn't provide any figures.

He also said that the second semester results were not
available because the auditing process had yet to be completed.

The rupiah plunged to its lowest level of Rp 17,000 to the
dollar in January from Rp 2,450 in July, improved to more than Rp
8,000 in April and then fell again. Yesterday it was hovering at
about Rp 14,000.

Nasution also admitted that the year-long monetary crisis had
caused a disruption in its more than two-year joint operation
fixed-line telecom projects.

"The problem is very complicated. But the government will
work hard to keep the projects going," he said, pointing out that
the KSO projects were significant in maintaining Telkom's
credibility in the eyes of foreign investors.

He said that Telkom's initial public offering in 1995 was
successful because investors were looking forward with the KSO
projects.

Under the initial KSO contracts, five private
telecommunications firms were to install two million fixed lines
in Central Java, Sumatra, Sulawesi, Kalimantan and areas in
eastern Indonesia by March 1999.

The economic crisis, however, has resulted in the
international operators failing to meet the target.

Nasution also said that the government should not be too hasty
in its privatization plans, especially with regard to Telkom, in
order to get the best possible price.

The government plans to divest part of it stake in seven
listed state companies and seven unlisted companies in the
current fiscal year to raise Rp 15 trillion.

The first to go to the market is cement maker PT Semen Gresik,
for which a final deal is soon expected to be announced. (rei)