Telecom tariff rise postponed until next year

Telecom tariff rise postponed until next year

JAKARTA (JP): Plans to raise the country's domestic
telecommunications tariffs by October will be delayed until next
year due to the devastating impact of the economic crisis on the
people, a senior government official said.

Director General of Post and Telecommunications Sasmito Dirdjo
said on Thursday that the tariffs would be reviewed in January,
or might even have to be delayed again if the economic situation
deteriorated further.

"We also think that it's inappropriate to raise the tariff
again because Telkom has raised it twice this year. We plan to
review the tariff in January but this may be postponed again,
depending on the (economic) situation," he said on the sidelines
of a seminar on telecommunications.

PT Telkom is the state-owned domestic telecommunications
company.

The government raised local call rates by 8.7 percent to Rp
125 per pulse in January, but lowered interlocal call rates by 10
percent to Rp 97 per pulse.

One pulse equals 90 seconds, two minutes or three minutes,
depending on the distance over which a phone call is made.

In April, local phone rates were increased again, by 10
percent for household subscribers and a maximum 15 percent for
business subscribers.

Sasmito said that the government decided in April that the
tariff would be reviewed in October, to adjust to the rise in
inflation rates and the rupiah's exchange rate, which are two
major components in the telecom tariff formula.

The April tariff was based on a rupiah exchange rate of Rp
5,000 to the U.S. dollar, and 1997 inflation rate of 11.05
percent, he said.

The rupiah plunged to between Rp 16,000 and Rp 14,000 during
the past four months before stabilizing to around Rp 10,800
lately.

Inflation rates during the first eight months of this year
have jumped to 69.12 percent, and some analysts expect the full-
year rate to reach more than 100 percent.

Restructuring

Sasmito also said that the plan to restructure telephone call
rates within Greater Jakarta would also be delayed to January.

Under a 1994 telecommunications ministerial decree, local call
rates apply only for calls within a range of 30 kilometers.
Calls made to areas more than 30 kms away are classified as
interlocal, thereby subject to interlocal rates.

The ruling has been effective since early 1995, except for
areas within Greater Jakarta, in which Telkom president Asman
Nasution said the company wanted to provide special treatment for
customers within that area.

Minister of Communications Giri Suseno, however, said in early
August that Telkom had to proceed with the plan to restructure
the tariff because it had been promised to investors, as
contained in a prospectus issued by the company prior to its
initial public offering in November 1995.

"We will come up with a decision on this issue in January,"
Sasmito said.

Telkom has been badly hit by the current economic crisis, in
which the company suffered a net loss of Rp 1.17 trillion (US$100
million) in the first half of this year compared to a net profit
of Rp 821 billion in the corresponding period of 1997.

The company announced in August that it disconnected some
100,000 lines due to unpaid telecom bills, which costs the
company at least Rp 2 billion in loss revenue a month. (rei)