Telkom fails to complete plan to buy Ariawest<\/p>\n
Dow Jones, Jakarta<\/p>\n
State-owned telecommunications company PT Telkom said Monday
\nit has failed to close a US$370 million deal to buy out its
\nforeign partners - including AT&T Corp. - in a fixed-line project
\nin West Java.<\/p>\n
In May, state-owned domestic call operator Telkom said it will
\npay $184.5 million to buy 100 percent of PT Ariawest
\nInternational, and will assume its debt.<\/p>\n
Telkom expected the final deal to cost between $360 million
\nand $370 million, including Ariawest's debt.<\/p>\n
But Ariawest - which is 35 percent owned by AT&T - wasn't able
\nto get shareholders and creditors to restructure its debt before
\nan Aug. 30 deadline.<\/p>\n
\"The buyout can't be completed as Ariawest International
\nfailed to reach a debt restructuring deal,\" said Setiawan
\nSulistyono, Telkom's investor relations manager.<\/p>\n
Indonesia is trying to reach agreements with a number of
\nforeign telecommunication companies that set up fixed-line
\nprojects in the 1990s. Under the agreements, Telkom received 70
\npercent of any revenue from the projects in return for granting
\noperating licenses.<\/p>\n
Telkom formed a joint operating partnership with Ariawest in
\n1995. Under that deal, Ariawest paid the state-owned company
\nrevenue in return for a 15-year monopoly in West Java.<\/p>\n
But after the Asian financial crash of 1997, which pushed the
\nrupiah sharply lower, many of the companies, including Ariawest,
\ncomplained their revenues were barely enough to cover investment
\ncosts.<\/p>\n
Indonesia's decision to open its telecommunication business to
\nfree competition also meant Telkom had to find a way out of its
\npartnerships with foreign companies.<\/p>\n
Of the five projects with foreigners, Telkom has already
\nreached agreement to buy out three.<\/p>\n
Both Telkom and Ariawest had filed international arbitration
\nsuits before the agreement in May. Failure to implement the
\nagreement means more wrangling is likely.<\/p>\n
\"Telkom intends to vigorously pursue its claim and defenses in
\nthe arbitration,\" said Kristiono, the company's president, said
\nin a statement.<\/p>\n
Telkom had filed a Rp 1.5 trillion arbitration clause, while
\nAriawest is claiming $1.3 billion against the Indonesian state-
\nowned company.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/telkom-fails-to-complete-plan-to-buy-ariawest-1447893297",
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