Telkom ends joint operation contract with AriaWest<\/p>\n
JAKARTA (JP): State-owned telecommunications company PT Telkom
\nterminated on Monday its joint operation (KSO) contract with PT
\nAriaWest International in a bid to end its protracted dispute
\nwith the subsidiary of American telecom giant AT&T.<\/p>\n
\"We sent the letter this morning to notify AriaWest about our
\ntermination decision.<\/p>\n
\"Telkom's decision to terminate the KSO agreement was made
\nafter exhaustive considerations and extensive efforts, which had
\nregrettably failed to remedy this dispute,\" Telkom's director of
\noperations and marketing Komarudin Sastrakoesoemah told a media
\nconference here.<\/p>\n
He explained that the declining telecommunication services in
\nits contractual areas-- West Java and Banten--, in addition to
\nthe company's failure to pay Telkom employees in both regions --
\nwere compelling, legitimate reasons for concluding that AriaWest
\nhad failed to honor its KSO contract.<\/p>\n
Under the contract, either Telkom or AriaWest had the right to
\nterminate the contract if they thought their partner had failed
\nto fulfill its contractual obligation, Komarudin said.<\/p>\n
\"Furthermore, the international arbitration proceedings filed
\nrecently by AriaWest against Telkom demanding US$ 1.3 billion in
\ncompensation clearly indicates AriaWest's attempt to pressure us
\nto accept a higher buyout price,\" Komarudin said.<\/p>\n
He was referring to the arbitration proceedings filed by
\nAriaWest in May at the International Chamber of Commerce (ICC) in
\nParis for losses incurred by Telkom's alleged breaches of the KSO
\nagreement.<\/p>\n
The next move to be taken by Telkom after terminating the
\ncontract was to take over AriaWest's assets, Komarudin said.<\/p>\n
In compensation for the assets and the 15-year KSO contract,
\nwhich was supposed to end in 2010, Telkom would pay AriaWest a
\nsum based on the net book value of the latter's assets, he said.<\/p>\n
\"The final sum would of course take into consideration
\nAriaWest's obligations such as employees' wages and so forth,\"
\nKomarudin said.<\/p>\n
This was in line with the KSO contract, he said, adding that
\nunder the contract if AriaWest terminated the contract, Telkom
\nhad to pay a compensation based on the assets' present value.<\/p>\n
Telkom and AriaWest signed the contract in 1995.<\/p>\n
When asked about the impact of the contract termination on the
\narbitration process of the companies' dispute, Komarudin said the
\ntermination of the contract would not automatically halt the
\narbitration process.<\/p>\n
\"If this (the termination) is acceptable to AriaWest, we will
\nask it to withdraw its arbitration proceedings. If it refuses to
\ndo so, we will prepare ourselves to fight at the arbitration
\ncourt,\" Komarudin said.<\/p>\n
Telkom had received a letter from ICC informing it of the
\nproceedings, Komarudin said, adding that the company had until
\nAug. 21 to reply to the letter.<\/p>\n
\"Furthermore, we have also prepared a counter suit against
\nAriaWest, which we will lodge at the same time as our reply,\" he
\nsaid.<\/p>\n
He, however, declined to give details about the counter-
\nproceeding, saying Telkom was still hopeful that AriaWest would
\naccept the termination settlement.<\/p>\n
Komarudin said Telkom invited AriaWest to a meeting on Monday
\nto discuss the termination procedures and asked it to present a
\nlist of all assets that would be transferred to Telkom for
\nvaluation.<\/p>\n
\"We could ask an independent appraisal team to assess the
\nvalue of AriaWest's assets so it would not lead to more
\ndisputes,\" he added.<\/p>\n
Separately, AriaWest's vice president Gatot S. Kahrmadji said
\nthe company would not accept Telkom's termination of the KSO
\ncontract, saying that the move was illegal.<\/p>\n
\"A termination cannot be unilateral like that. We will not
\naccept it. The notice is not valid. We will only send a reply by
\nletter and not go there (to the meeting) ourselves,\" he said.<\/p>\n
If AriaWest refused to accept the termination settlement then
\nTelkom would take legal steps against AriaWest, Komarudin warned,
\nwithout elaborating.<\/p>\n
AriaWest is 52.5 percent owned by Indonesia's PT Artimas
\nKencana Murni, 35 percent owned by U.S.'s MediaOne International
\nB.V. of which telcom giant AT&T is a part and 12.5 percent owned
\nby Hong Kong's Asian Infrastructure Fund. (tnt)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/telkom-ends-joint-operation-contract-with-ariawest-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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