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

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

Tantri Yuliandini
The Jakarta Post
Jakarta

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

Telkom's vice president for tariff 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 have been 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 will
comprise of an average of about 16.77 percent hike to local
calls, about 13.3 percent increase for domestic long distance
calls, and 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 a copy of the new tariff structure obtained by
the Post, a local call to a destination up to 20 kilometers away
will cost Rp 97.5 (about US$0.09) a minute compared to only Rp
83.5 a minute previously, and to a destination between 20 to 30
kilometers away it would cost Rp 130 a minute compared to Rp
111.3 a minute previously.

In the meantime, a telephone call to a local destination more
than 30 kilometers away would only cost Rp 195 a minute compared
to Rp 1,440 a minute previously.

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

The government's plan to increase domestic telephone rates
have 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 towards a 45.49 percent gradual increase
within three years.

However, it had to settle with an average of 15 percent
increase as the House deemed the initial 21.67 percent plan 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 telecoms sector and help expand telephone
network across the country.

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

Economist Raden Pardede of the Danareksa Research Institute
had warned earlier of a soaring inflation rate 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 the crippling of 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 courage of the
government when to implement the hike".

He said that the House had no qualms if Minister of
Communications Agum Gumelar signs 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 sufficiently
informed the public of the impending hike," Yoseph added.