Telecom operators may raise tariffs due to currency woes

Telecom operators may raise tariffs due to currency woes

JAKARTA (JP): The ongoing currency turmoil may force
telecommunications operators to increase tariffs, executives said
here yesterday.

President of cellular operator PT Telkomsel, Koesmarihati
Soegondo, said that she would accept any measures to increase
cellular phone tariffs.

"The current Rp 270 per minute of air-time in Indonesia is the
cheapest cellular rate in the world. The new rate will be
discussed among the cellular operators to be proposed to the
government," she said.

There are now seven cellular service providers operating three
different systems in Indonesia.

The companies held a meeting Tuesday which also discussed new
tariff arrangements.

State-owned domestic telecommunications provider PT Telkom
earlier proposed a 2.64-percent rate increase.

But Telkom's president Asman A. Nasution denied this
yesterday.

"What do you think is the best thing for a situation like now?
It's the government's decision to adjust the tariffs," he said.

Sources at Telkom said yesterday that the company had met with
the country's Association of Indonesian Electric Cables Producers
to discuss how to overcome the rupiah upheaval which would
increase prices and the rate of telephone investment per line.

Secretary-general of the Ministry of Tourism, Post and
Telecommunications, Jonathan L. Parapak, has said that the
government is committed to adjusting telecommunications tariffs
annually.

"Just wait and see, there will be adjustments. But it's too
early to talk about it now," he said over the weekend.

Nasution admitted Telkom would be very cautious with its
budget in ongoing operations and future telecommunications
developments.

The government has set a new target of telecommunications
network development to have more telephones per capita.

Last year the government announced that it would install more
telephone lines than originally planned for the ongoing Sixth
Five-Year Development Plan period to end in March 1999.

Its previous target for new telephone lines has risen 60
percent from five million to eight million.

The new target is 6.7 million fixed-telephone lines and a
network capacity for 1.3 million mobile telephones.

"We will use our own capital in the development program
instead of using the remaining loans extended by overseas banks,"
Nasution said, adding that Telkom's long-term foreign debts had
reached Rp 1.6 trillion.

A top executive of telecommunications company PT Telekomindo,
Rudiantara, said that the utilization of foreign exchange in
telecommunications business was still high because 80 percent of
the industry's equipment was imported.

"Both cellular and fixed-line telephone companies have loans
in foreign currencies, the difference is just in the interest
rates," he said.

He said he believed that the companies would be able to manage
all possible problems so as to avoid disadvantaging the public.

Five private firms which develop telecommunications networks
in cooperation with Telkom, and a number of cellular operators
have won loans of hundreds of millions of dollars to develop
telecommunications infrastructure.

Currency turmoil may affect their ability to pay back the
overseas loans.

There's no estimate of possible increases in per line costs
for fixed line (between $800 and $1,000) and cellular (about $900
to $1,300) services.

Rudiantara said that the price of some cellular phones had
gone up, and some brands had even disappeared from the market.

"This does not relate to cellular operators but to the handset
sales agents or cellular providers' dealers," he said. (icn)