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.