Phone Charges to Soar in Kazakstan

Plans by the Kazak state phone company to substantially raise its monthly charges are not justified in spite of rising inflation, say NBCentralAsia experts.



On September 10, the chairman of the State Agency for Information and Communication, Kuanyshbek Yesekeev, announced that Kazakhtelecom, the state-owned monopoly for landline telecommunications, would be putting up its monthly service charges by an average of 32 per cent from January 1 next year.



Esekeev said the current rates charged by Kazakhtelecom do not reflect the true cost of telephone services.



Kazakhtelecom currently charges 248 tenge or two US dollars a month for services in rural areas and about twice that amount in towns and cities.



The company has previously come under fire for the way in which it manages resources. Last year, President Nursultan Nazarbaev sacked the company’s head Khairat Karibzhanov, who was earning 365,000 dollars a month, plus a million dollar annual bonus.



NBCentralAsia analysts say that the price rise is designed to keep pace with inflation and will only allow Kazakhtelecom to maintain the system as it is now, rather than paying for a substantial improvement in service.



According to National Bank statistics, the rate of inflation in the first eight months of 2007 was six per cent year on year, but independent observers believe the true figure is much higher.



NBCentralAsia analyst Sergei Duvanov says the price of basic services and food is growing rapidly and those on a low income are already feeling the pinch, so increasing phone charges will hit them hard.



“People will certainly carry on paying, but they may go short of food or forego certain things… pensions won’t rise in proportion to prices,” said Duvanov.



Gulnur Rahmatullina, head of economics at the Kazakstan Institute for Strategic Studies, says a 32 per cent increase is excessive.



“Consumers will immediately suffer. I don’t think this increase is justifiable, because telecoms prices are too high as things stand,” she said.



(NBCentralAsia draws comment and analysis from a broad range of political observers across the region.)