UPDATE 1-Indonesia to cut mobile interconnection tariffs

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JAKARTA, Feb 4 (Reuters) - Indonesia will cut cellular interconnection tariffs by 20-40 percent starting April 1, a move that could boost the number of mobile phone users in the Southeast Asian country, the communications' minister said on Monday.

Mohammad Nuh told reporters that the government expected the number of mobile phone users in Indonesia to rise by 30-40 percent this year from around 80 million at the end of 2007.

The minister said that the new tariffs would start from April in order to give operators enough time to set up their systems.

"We still see a trend of declining tariffs from this year lasting until 2009. The trend needs to be maintained," Nuh said.

Indonesia's mobile phone sector have been growing rapidly in the past few years and some analysts and industry experts expect the number of mobile phone users to pass 100 million sometime this year.

PT Telekomunikasi Selular (Telkomsel), 65 percent owned by PT Telekomunikasi Indonesia Tbk TLKM.JK, is the largest cellular operator with more than half market share, followed by PT Indosat Tbk ISAT.JK and PT Excelcomindo Pratama Tbk EXCL.JK.

But the strong growth and high margins among operators have attracted more operators into the business as well as scrutiny by the anti-trust regulator.

In November, Indonesia's anti-trust agency, KPPU, ruled that Telkomsel must cut its tariff by 15 percent after KPPU ruled that it had breached competition law. (Reporting by Nury Sybli, writing by Harry Suhartono, editing by Ed Davies)