Telkom under pressure over tariff hike
JAKARTA (JP): The government's decision to raise telephone tariffs was unfair because the hike was prompted by state-owned telecommunications operator PT Telkom's failure to run its business efficiently, according to a consulting company.
The Econit Advisory Group said that Telkom's management should not burden its consumers because of its failure to properly manage the company.
It stated that the company's business failures had, among others things, resulted in a foreign exchange loss of Rp 1.6 trillion as of Sept. 30, 1998.
The managing director of Econit, Arif Arryman, said that the loss was the result of Telkom hedging only 11 percent of its foreign currency debts.
"Increasing tariffs should be the last option for Telkom. The management should find other ways to settle their financial problems, including restructuring its debts," he said.
Arif said Telkom should improve its efficiency by reviewing revenue generated from its joint operations, reviewing its shares in several unprofitable affiliates and focusing on expansion in potentially profitable regions.
He also said the inefficiency in Telkom's operations resulted from the fact that most of its joint operation partners received contracts with Telkom because of close relationships with powerful figures rather than capability.
Effective early last month, the government raised rates for local and domestic long-distance telephone calls by up to 46.67 percent on the request of Telkom.
However, Arif said that it was unfair to raise tariffs to cover higher operational costs because the company booked an 11.1 percent increase to Rp 2.1 trillion in its operating income in the third quarter of 1998.
"Also, in several categories the actual tariff hikes are over 2,000 percent and 3,000 percent," he said.
For example, he said, new rates for long-distance calls made in Jakarta and Bandung during the peak hours between 8 a.m. and 9 a.m. on weekdays were Rp 25.7 per second in a 30-kilometer to 200-kilometer radius, up 2,028 percent from the previous cost of Rp 1.2 per second.
In towns besides Jakarta and Bandung, the rates for calls outside a 30-km radius between 8 a.m. and 9 a.m. on weekdays rose by 3,092 percent to Rp 25.7 per second from Rp 0.8 per second.
Arif also expressed concern that the sharp increases would add to the people's burdens and had social and political implications.
"In a situation like we have now, this will surely create a chain reaction in the economy. The rise will contribute to this year's inflation," he said.
He also said the hikes would affect many non-export oriented businesses by increasing production costs.
Separately, Burhanuddin Napitupulu, the head of the House of Representatives Commission IV for public works, transportation, tourism, communications and public housing, said on Tuesday that the House would react to the increased tariffs only after Telkom released its February numbers.
He said that the House only approved tariff increases of up to 24 percent.
"If we see that increases are over 100 percent then we will summon the government for an explanation," he said on the sidelines of a commission hearing. (gis)