AriaWest welcomes formation of dispute-solving team

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)