AriaWest rejects demand to set up transitional management

JAKARTA (JP): One of state-owned PT Telkom's joint cooperation partner, PT AriaWest International, has rejected its workers' demand for establishment of a transitional management team to run its telecom services in West Java and Banten.

AriaWest vice president director Gatot S. Kahrmadji said here on Friday that the establishment of a transitional management team would breach the original contract with Telkom.

"The government can decide whatever it likes, but the original contract should be honored," Gatot told The Jakarta Post and Koran Tempo daily in an interview on Friday.

He was responding to threats from Telkom's workers in the joint cooperation (KSO) region of West Java and Banten that they would strike on Monday unless the government decided to set up a transitional management team to ensure the continuation of services in the region.

The drawn out dispute between AriaWest and Telkom has caused telecommunications services in West Java and Banten to cease, leaving some 90,000 new telephone applications and the billing of hundreds of thousands of customers unprocessed.

Gatot said that the company would need to study the reasons behind the transitional management proposition before it could be considered.

"It is highly probable that the situation is being politicized. There are problems, yes, but have they become so critical that they require transitional management?" he argued.

The proposal received wide support from legislators in the House of Representatives' Commission IV for infrastructure and transportation affairs who visited the KSO region last week.

"If the threat is being made to further undermine the company's position, then there is nothing we can do about it," Gatot said.

He emphasized that AriaWest had not and would not neglect its duty of providing telecommunications services to the public, but that the company was hampered by a lack of operating funds.

AriaWest claimed that it had no money to effectively operate the KSO region as the funds, revenue collected from customers, was withheld by Telkom in several bank accounts.

"These are not our accounts ... we have no right to withdraw money from them, besides which the bank would not allow us to," AriaWest director of human resources and corporate development Yap Tjay Hing maintained.

He said that, in the past, the KSO unit had operated with whatever money Telkom was willing to disburse, but that it had never been a problem until recently when disputes between the two companies came to a head.

Under the joint cooperation agreement signed at the beginning of the partnership in 1996, KSO partners are entitled to collect revenues generated from all telephone lines in service within the geographical KSO unit.

The partners are also responsible for all expenses directly incurred by the KSO unit in its region.

However, in the case of AriaWest, the generated revenues were kept in a collection account at several local banks under Telkom's name, Gatot said.

Telkom has denied allegations that it was withholding funds, saying that it was AriaWest who had refused to utilize the funds collected from customers for its operational expenses.

Telkom vice president for corporate communications Dodi Amarudien said earlier that, from the beginning, Telkom had advised all partners to close the collection account under Telkom's name and open new ones for their own units.

AriaWest filed an arbitration suit last month with the International Chamber of Commerce (ICC) in Paris, claiming US$1.3 billion in losses and damages arising from Telkom's breaches of the KSO contract.

Gatot said the arbitration case would only cover Telkom's breach of contract and not determine the fate of the KSO contract itself.

AriaWest maintained its stance to pull out of the partnership, but has yet to agree with Telkom on the value of the buyout.

"Telkom rejected our offer (made before the arbitration claim) of a settlement totaling $735 million. Now, with the arbitration case, we have to reassess the price," Gatot said.

Telkom, meanwhile, only agreed to pay $280 million based on its valuation of assets in West Java and Banten, Dodi said.(tnt)