Telkom reacts `childishly' to govt delay

Telkom reacts `childishly' to govt delay

A'an Suryana, The Jakarta Post, Jakarta

President of state-owned telecommunications giant PT Telkom
Kristiono said the delay of phone charge increases would limit
the company's ability in developing fixed lines and providing
telephone services to more people in the country.

"Of course it will automatically affect (the fixed-line
development) because the intention of the higher rate is for
penetration," he was quoted by detik.com as saying on Thursday.

As of Sept. 30, Telkom had around 7.6 million telephone lines
across the country and planned to invest around Rp 3 trillion
(US$337.1 million) to build some 750,000 more lines this year.

The government raised phone charges by an average of 15
percent earlier this month as part of the government's three-year
plan, demanded by the International Monetary Fund (IMF), to crank
up phone charges by 45.49 percent in a bid to boost investment in
the country's fixed line telecommunications sector. However, as a
response to public outrage, the government agreed on Wednesday to
delay the increase.

Telkom raised phone charges by an average of 15 percent in
January last year.

But independent telecommunications expert Roy Suryo criticized
Kristiono's statement as "childish," saying that as a virtual
telecommunications monopoly, which reaped huge profit last year,
Telkom has an obligation to develop fixed lines in the country.

"Telkom has always been asking for its rights before it
carries out its obligations ... This is childish," he said.

Telkom's net profit in the first nine months of last year more
than doubled to Rp 7.57 trillion, although it was greatly helped
by capital gains from the sale of a stake in cellular phone unit
PT Telkomsel.

Roy said that the delay in the rate increase would only cause
the company to lose some Rp 75 billion in potential revenue,
which was "peanuts" compared to its overall profit.

He said that with such huge revenues, Telkom should have a
sufficient cash flow to continue its investment program.

He added that Telkom should pursue a strategy of efficiency so
that the cost of installing fixed lines could be lowered, and
thus would not have to put so much burden on its customers.

"Telkom has not always been transparent," he said.

Suryo said that there must be an independent regulatory body
which could provide sanctions to utility companies like Telkom if
it failed to deliver.

Elsewhere, Kristiono said in an effort to bring in more
customers, the company would reduce the installment cost of each
telephone line to US$160 to $200 from around $300 (currently
around Rp 2.7 million) last year.

He claimed the company would strive to boost its revenue this
year by increasing efficiency and cutting operating costs.