Government forms team to handle Telkom-Ariawest dispute
JAKARTA (JP): The government said on Monday it would form an inter-ministerial team to facilitate talks to end the dispute between state telecommunication company PT Telkom Indonesia, and PT Ariawest International.
"I have reported to Coordinating Minister for the Economy on the establishment of a team that will facilitate a solution to Telkom and AWI's (Ariawest) problem," Minister of Transportation and Telecommunication Agum Gumelar was quoted as saying by Antara.
He said the team would comprise officials from his ministry, the Ministry of Finance, and from the office of Coordinating Minister for the Economy, Rizal Ramli,
"In a short time, the coordinating minister will make a decision," he said without elaborating further.
Telkom's dispute with Ariawest centers around the compensation amount Telkom must pay to end a partnership agreement between them.
Ariawest, a unit of the United States' telecommunication giant AT&T, operates fixed telephone lines in West Java under a joint operation scheme called KSO with Telkom.
The scheme, initiated in the mid-nineties, requires Telkom's KSO partners to invest in new fixed lines, and operate them under a profit-sharing scheme.
But as the government has since required Telkom to lose its monopoly right in the fixed line industry, the KSO scheme has become financially unattractive.
Telkom agreed to bail out the investment its five KSO partners made in order to end the KSO scheme.
So far, Telkom has secured bail-out deals for two KSO partners.
But despite lengthy negotiations, the state company was unable to come to an agreement with Ariawest.
Agum said Ariawest demanded Telkom pay it US$700 million in compensation, while the latter insisted on paying only $300 million.
He said that the team would work out how to settle the difference in valuation of Ariawest's investment.
But with no immediate solution in sight, Ariawest has said it was planning to commence arbitration proceedings against Telkom to recoup its investment.
Ariawest also charged Telkom of failing to build extra phone lines in West Java, as required under the KSO contract.
Telkom's inaction, prompted Ariawest to retain the disbursement of Rp340 billion (about $31.4 million) in revenue shares to Telkom.
Ariawest further complained of staff harassment at its Bandung office by Telkom employees, and even of death threats issued against some of its staff members.
Ariawest said last week that grave security concerns had forced it to evacuate its staff from Bandung.
"We cannot take risks with the safety of our personnel," the company's president John Vondras said in a statement last week.
Telkom has denied all charges against it.
The state company said it was prepared to face Ariawest in front of an arbitration panel, for which it had already appointed a team of lawyers.
Commenting on the accusations of death threats, Telkom's investor relation's officer Dina Arifani described them as "exaggerated and groundless".
Telkom's protracted dispute with Ariawest sheds more negative publicity on Indonesia's already tarnished image among foreign investors.
Its four other KSO partners are PT Mitra Global Telekomunikasi Indonesia, PT Pramindo Ikat, PT Cable & Wireless Mitratel, PT Bukaka Singtel.(bkm)