Can Telkom adapt to changed consumer behaviour?

PT Telekomunikasi Indonesia, the country's biggest telephone company, will cut long-distance rates for calls made from fixed-line phones by as much as 46 percent, spokesman Eddy Kurnia said.

The company, known as Telkom, is trying to encourage use of fixed-line telephones, Kurnia said in a statement posted on Telkom's Web site.

Indonesia's mobile-phone operators, including Telkom's PT Telekomunikasi Selular unit, have slashed calling rates to attract more subscribers. Telekomunikasi Selular, the nation's biggest mobile-phone operator, said on Feb. 20 its subscribers topped 50 million following rate cuts in December.

“Telkom must adapt to the current conditions because people prefer to make long-distance calls using mobile phones,” said Edwin Sinaga, a director at Jakarta-based brokerage PT Financorpindo Nusa. He rates Telkom as “neutral.” “This is part of competition.”

Telkom's fixed-line service accounted for 19 percent of the company's revenue in the nine months ended September 30, compared with a 37 percent contribution from its mobile-phone operations, according to a statement on its Web site. The Bandung, West Java-based company has yet to release its full-year earnings.

Will slashing rates encourage people to change their habits?