AriaWest welcomes formation of dispute-solving team

JAKARTA (JP): Telecommunications contractor PT AriaWest International has warmly greeted the government's plan to establish a special team to solve its lingering dispute concerning its joint operating contract (KSO) with state-owned telecommunications firm PT Telkom.

The company has, however, called on the government team to move swiftly and take concrete action to find a solution to the dispute.

"We've been trying to get Telkom to follow the KSO contract for many years, to no avail. So we're happy that the government is taking an interest in our plight," AriaWest president John Vondras said in a statement on Wednesday.

Earlier, Minister of Transportation and Telecommunications Agum Gumelar said had he proposed the formation of a special team to facilitate a solution to the dispute between AriaWest and Telkom.

The team will comprise officials from the ministry, the Ministry of Finance and the Office of the Coordinating Minister for the Economy.

Vondras said he had sent a letter to minister Agum in which he urged the government to delay Telkom's annual shareholders' meeting, scheduled for May 10, until the end of June to show that Telkom had good intentions to solve the dispute.

The postponement was necessary to give AriaWest and Telkom ample time to find a solution to their dispute and the solution could be presented to Telkom's shareholders for approval during the general meeting, Vondras said.

Under the ruling of the Capital Market Supervisory Agency (Bapepam), at least 28 days' notice must be given for any material motions to be considered at the shareholders' meeting, according to Vondras.

If the meeting was not postponed, AriaWest might go ahead with its plan of filing for arbitration against Telkom, he said.

But, Telkom's corporate communication vice president D. Amarudien said on Wednesday Telkom would stick to its initial schedule for the shareholders' meeting.

"The only purpose of stopping the shareholders meeting is to prevent Telkom from concluding transactions with other KSO investors at valuations, which demonstrate conclusively that AriaWest's monetary demands on Telkom are entirely without basis," Amarudien said in a statement.

AriaWest, a unit of the United States' telecommunications giant AT&T, operates a fixed telephone line network in West Java under a KSO scheme with Telkom.

The KSO scheme, initiated in the mid-1990s, requires Telkom's KSO partners to invest in new fixed lines and operate them under a profit-sharing scheme.

The prolonged dispute came to the fore again recently following AriaWest's move to withhold Telkom's profit share totaling Rp 340 billion (US$31.4 million), charging the state company of failing to meet its obligation of installing more than 100,000 new lines in West Java.

AriaWest then announced that it had evacuated its workers from Telkom's headquarters in West Java following alleged death threats by Telkom workers.

In the latest attack against Telkom, AriaWest recently threatened to start arbitration proceedings against Telkom in Geneva, demanding $1.3 billion in compensation.

But Telkom dismissed AriaWest's claim about its failure to meet its obligation of installing fixed lines, insisting instead that it was AriaWest which had failed to meet the fixed line target.

The state company also dismissed the alleged death threats against AriaWest's workers, saying West Java was one of the safest places in the country.

Telkom further said it was ready to face AriaWest in front of an arbitration panel in Geneva.

"AriaWest's plan of starting arbitration proceedings against Telkom at the international arbitration panel in Geneva is being responded to by Telkom with coolness and optimism," Amarudien said.

He added that Telkom was preparing a team of lawyers to represent Telkom at the arbitration proceedings. (jsk)