Telkom to raise phone rates by 15% on Jan. 15

Telkom to raise phone rates by 15% on Jan. 15

Tantri Yuliandini, The Jakarta Post, Jakarta

State-owned telecommunications company PT Telkom said that it
would increase domestic telephone rates by an average of 15
percent on Jan. 15 pending the signing of a ministerial decree
expected next week.

Telkom's vice president for rates and interconnection
Mundarwiyarso said that the company was ready to implement the
hike and that it was only waiting for the minister of
communications to sign the decree.

"All systems are ready, we were ready from the time the House
of Representatives gave us the go ahead," he told The Jakarta
Post, referring to the approval by the House in November to
increase telephone rates in 2002.

Mundarwiyarso said that the average 15 percent increase would
comprise of an average 16.77 percent hike for local calls and
about a 13.3 percent increase for domestic long distance calls.
Monthly fees will increase by Rp 7,000, Rp 3,200, and Rp 800 a
month for business, residential and social services respectively.

According to the new rate structure, a copy of which was
obtained by the Post, a local call to a destination of up to 20
kilometers away will cost Rp 97.5 (about US$0.09) a minute
compared to only Rp 83.5 a minute currently, and to a destination
of between 20 kilometers and 30 kilometers away it would cost Rp
130 a minute compared to Rp 111.3 a minute currently.

A telephone call to a local destination of more than 30
kilometers away would only cost Rp 195 a minute compared to Rp
1,440 a minute currently.

Separately, Dow Jones reported that Director General of Posts
and Telecommunications Djamhari Sirat said that he expected the
minister to sign the decree some time next week.

The government's plan to increase domestic telephone rates has
been delayed several times since early last year due to strong
opposition from the House, non-governmental organizations and the
general public.

The government had planned a 21.67 percent increase last year
as the initial step toward a 45.49 percent gradual increase over
three years.

However, it had to settle for a 15 percent increase as the
House deemed the initial 21.67 percent to be too high for the
public to cope with at the current time.

The telephone rate hike was expected to attract foreign
investment to the telecommunications sector and help expand the
telephone networks across the country.

The increased telephone rates would put more strain on the
general public. Furthermore, in addition to increased electricity
rates and fuel rates also expected within the month, the hike in
telephone rates would no doubt put strong pressure on inflation.

Economist Raden Pardede of the Danareksa Research Institute
had warned earlier of soaring inflation in the coming months,
which would pressure Bank Indonesia to retain its tight money
policy.

High interest rates on the central bank's promissory notes had
been blamed for crippling the country's business sector which saw
a plunge in exports by 14.7 percent in November 2001.

Joseph Umar Hadi, a legislator from the Indonesian Democratic
Party of Struggle (PDI Perjuangan), told the Post that as the
House had given its consent "it now depends on the government
when to implement the hike".

He said that the House had no qualms if Minister of
Communications Agum Gumelar signed the decree next week, but that
the government should give notice to the House before officially
implementing the hike.

"We think that the government and Telkom have given sufficient
notice to the public of the impending hike," Yoseph added.