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)