AriaWest sets May deadline for Telkom to settle buyout rift
JAKARTA (JP): PT AriaWest International has set May as the deadline for state telecommunication firm PT Telekommunikasi Indonesia (Telkom) to find a solution to the lingering dispute over the buyout price of AriaWest's shares.
AriaWest said on Sunday that if both parties found no solution by the deadline, it would file arbitration proceedings against the state company.
"I very much regret that unless a final settlement is reached by next month, arbitration in Geneva appears to be the only way forward," AriaWest's president John Vondras said in a statement.
Vondras earlier called on the government, as the majority shareholder in Telkom, to pressurize the state company to postpone its shareholders' meeting from May 10 to sometime in June so that it and Telkom have enough time to find a final solution to their dispute and the solution could be presented during the shareholders' meeting for approval.
Unless the shareholders' meeting was postponed, Vondras said, the dispute could drag on.
"Our shareholders are not willing to allow this dispute to drag on beyond that," Vondras said.
Telkom's vice president for corporate communication D. Amarudien said Telkom would stick to its initial schedule for the shareholders' meeting and it was ready to face AriaWest in front of the arbitration panel.
He said Telkom was optimistic that the arbitration panel would rule in favor of Telkom.
Telkom's dispute with AriaWest centers around the amount of compensation Telkom must pay for their partnership.
AriaWest is one of five firms that are units of foreign telecommunication giants who signed joint-operating-schemes (KSO). Telkom engaged in such schemes during the mid-nineties to develop the country's telecommunication networks. AriaWest was awarded the contract in West Java.
Under the KSO scheme, partners are required to invest in new fixed lines and operate them under a profit-sharing-scheme with PLN.
But the KSO scheme became financially unattractive, following the government's plan to terminate Telkom's monopoly.
Telkom is thus seeking to buy out the shares of its KSO partners, but so far it has only reached buyout deals with two partners.
Amarudien said the solution to Telkom and AriaWest's dispute was elusive given the wide gap between the price set by AriaWest for its shares and the one set by Telkom.
According to Amarudien, AriaWest demanded US$1.3 billion in compensation for its shares, while Telkom valued the shares at a mere $260 million.
Vondras said that AriaWest had made "every effort" to settle the dispute, including cutting the valuation of its shares to $735 million from $1.3 billion.
He said the price of $260 million set by Telkom for its shares was much lower compared to the valuations made by state-owned securities house PT Danareksa and ABN-Amro Telecommunication Research, which set the value of AriaWest's shares at $522 million and $673 million, respectively.
Minister of Transportation and Telecommunication Agum Gumelar said the government has formed a special ministerial team to help solve the dispute between Telkom and AriaWest.
"The team is aimed to facilitate their (AriaWest and Telkom) separation. But it should be an amicable separation," Agum told reporters on Thursday at the presidential office. (jsk)