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.