Govt yet to decide on new phone charges

Govt yet to decide on new phone charges

The Jakarta Post, Jakarta

The government will decide by the end of this month whether to
approve an average 33 percent rise in local phone charges under a
new tariff structure proposed by state-owned local call operator
PT Telkom, which will see call rates rise by an average of 15
percent next year.

"Telkom has submitted the proposal which we're now
studying ... to see whether we can approve it or not," Minister
of Transportation Agum Gumelar told reporters on Tuesday on the
sidelines of a hearing with the House of Representatives'
Commission IV on transportation and infrastructure affairs.

Agum said the government would announce its decision on Nov.
29, or a month before the proposed hikes would take effect on
Jan.1, 2003.

If approved, Telkom would charge Rp 259.9 (about 2 U.S. cents)
per two minutes for a local call compared to Rp 195 currently.

For long distance calls, Telkom's biggest revenue contributor,
charges would drop by around 3.97 percent.

The measure is part of a three-year Telkom plan to raise the
charges by a total of 45.49 percent, or some 15 percent every
year, starting in 2001.

Telkom president Kristiono said the plan would allow it to
subsidize fixed line investment in otherwise low yielding
regions. These were either remote or poorly populated areas, or
regions mostly populated by low income groups.

The government has required Telkom to install between 2.5
million and 3 million new telephone lines by 2006. This year, the
target has been set at 285,464 lines, of which Telkom has already
installed 237,329 lines.

Telkom's three-year plan is also aimed at preparing for new
competition once the company loses its monopoly over local call
services. Telkom argues that competitors will benefit from the
fixed lines it has installed and on which it has yet to earn a
profit.

Kristiono said Telkom was operating its local call service at
a loss since this was part of the company's public service. For
now, long distance call service made up for the revenue
shortfall, he said.

Starting this month, state-owned international call operator
PT Indosat will enter the local call market using Telkom
infrastructure.

Telecommunications experts and a number of legislators have,
however, questioned Telkom's financing needs, arguing that the
company continues to boast a sound financial performance.

Telkom's third quarter net profit more than doubled to Rp 7.57
trillion from Rp 3.64 trillion in the same period last year. It
attributed the hefty rise to the sale of a 12.7 percent stake in
its mobile phone unit, PT Telekomunikasi Selular Indonesia
(Telkomsel).

Its core business, fixed line services, contributed 39 percent
of Telkom's third quarter revenue of Rp 15.62 trillion.

Kristiono said Telkom had calculated the proposed average 33
percent hike in local call charges in such way that the overall
average charge increase would amount to just 15 percent.

Based on the company's weighting formula, however, the new
tariff structure would see local call charges increase by 33
percent and subscriber fees by 31.1 percent.

Only the charges for long distance calls, which have the
biggest weighting, would decline.