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. Last Updated: 07/27/2016

City Phone Firm Wants Higher Tariffs

Moscow local telephone company MGTS must convince the city to let it raise household tariffs to 50 rubles ($2) per month from 30 rubles to fulfill its 2000 business plan, the company's chief executive said.

The company has been applying for the rate hike since May, and the politically sensitive decision of raising household rates is now being discussed at the federal level, Vladimir Lagutin said at a news conference Thursday.

"We are ready to show the government of Moscow that if tariffs are not raised soon, the business plan for MGTS growth will be ruined," he said. "Realistically, we believe if everything works out, we can put the new tariff in place no earlier than Dec. 1."

MGTS had a pretax loss of 141 million rubles ($5.4 million) in the first six months of this year, against a 369 million ruble pretax profit in the same period of 1998, according to domestic accounting standards.

Lagutin said the new business plan would ensure revenues covered expenditures.

Household tariffs do not cover costs of 49 rubles each, with widespread breaks for pensioners and other customers bringing down the average household tariff to 24.7 rubles.

Overall, 82 percent of installed telephones, including those of government organizations, get discounts, leaving MGTS to raise two-thirds of its revenue from the remaining 18 percent, which belong mostly to businesses.