Indosat cuts call tariffs but expects more income

Indosat cuts call tariffs but expects more income

JAKARTA (JP): The publicly listed PT Indosat, the state-owned
international telecommunications provider, expects its net profit
to increase by between 12 percent and 14 percent this year
despite cutting its call tariffs yesterday.

The firm announced yesterday it was cutting its tariffs on
international calls to 209 countries by between 1.1 percent and
38.5 percent. It also announced it was increasing tariffs to 21
countries by between 9.6 percent and 25.3 percent.

Countries to which call charges were lowered include
Australia, Britain, Germany, the Netherlands, the Philippines,
Thailand, Saudi Arabia and the United States.

China, Japan, Malaysia and Singapore are among the 21
countries to which tariffs have risen.

The increased telephone charges to Singapore, for example,
were introduced to compensate the government's policy of
continuous depreciation of the rupiah.

"The increase is also important for meeting the higher tariffs
from Singapore to Indonesia," the company said.

Singapore Telecom's (Singtel) new rates include a 5-Singapore
cent reduction on calls to Indonesia, down to S$1.75 a minute.
The new rate, it said, was equal to Rp 2,958.61 a minute, or 13.8
percent higher than Indosat's rate of Rp 2,600 a minute to
Singapore.

Singapore's new weekend rate is S$1.3, down 30 cents. The new
rate, equal to Rp 2,192, is 12.4 percent higher than Indosat's
rate of Rp 1,950 a minute to Singapore.

Indosat said it and Singtel had agreed to reduce their
accounting rate to Gold France Currency (GFC) 2.40 a minute next
February from the present rate of GFC2.60.

The accounting rate reduction would let Indosat save 7.6
percent on its payments to Singtel.

Indosat president Tjahono Soerjodibroto said the rate increase
would not significantly raise the firm's profit growth rate.

"The increase in telephone charges will not have any impact on
our profit target as we expect the traffic volume to increase
significantly ," he said.

In the first semester of 1996, the firm recorded a pretax
profit of Rp 235.1 billion (US$100.4 million), up 6.42 percent on
the corresponding period of 1995.

He said PT Indosat, which was listed both in New York and on
the Jakarta Stock Exchange in October 1994, would not be affected
by the downward trend in international accounting rates and
increasing competition.

Tjahjono said the firm would install and operate a submarine
fiber-optic network connecting Jakarta and Surabaya, and join the
Asia Pacific Cable Network which will connect Jakarta with other
Asia-Pacific countries. The Jakarta-Australia submarine fiber-
optic network will connect Jakarta with Surabaya and Jakarta with
Australia. The SEAMEWE III network will connect Indonesia with
the global information toll in the Asia-Pacific, Middle East and
western European countries.

For its expansion plans in 1997, Indosat will allocate about
Rp 490 billion (US$207.6 billion) for its national, regional and
international business. (09)