KSO firms hire advisor to assess ties with Telkom
KSO firms hire advisor to assess ties with Telkom
JAKARTA (JP): Joint operation partners of PT Telkom Indonesia
has appointed Credit Suisse First Boston as an advisor to assess
a possible change in its cooperation scheme with state
telecommunications company.
Stephen R. Dowling, director and chief financial officer of
Ariawest International, one of the five joint operation (KSO)
partner firms, said the decision to hire an independent advisor
was made following a recommendation from the government.
"The government recommended we hire an independent advisor to
help finalize the proposal, which we recently presented to the
government, Telkom, Indosat and some independent financial
services," he said.
He said KSO partners offered five alternative for the future
relationship with Telkom: continue the existing cooperation with
some modifications to the existing KSO agreement; Telkom buy out
all KSO partners and terminate the existing agreement; Telkom and
KSO partners create a joint venture company to continue the
cooperation agreement; Telkom's strategic investors buy out all
KSO investors and terminate the existing agreement; or terminate
the current agreement, with Telkom divesting KSO assets and
liabilities into a separate entity which later would invest in a
new company created by the KSO partners, the government and new
investors.
Dowling said the last option would be the most feasible
solution to the dispute with Telkom according to Credit Suisse
First Boston.
"The option is a win-win solution in which both Telkom and KSO
partners will not have to lose their investments but instead open
the opportunity for new strategic investors to participate to
form a stronger cooperation," he said.
The option to invite new strategic partners without having to
dramatically reduce the government's stake in the new company
would also be in line with the newly ratified telecommunications
law which encourages the opening up of the telecommunications
business sector to new local or foreign players, he added.
The KSOs partners have been criticized by many people,
including Telkom officials, for their failure to meet obligations
mentioned in the KSO contract. Many also feel the KSO scheme only
benefits the partners.
The KSO contract was signed in 1996 with the appointment of
five consortia of local and foreign firms -- PT Ariawest
International, PT Pramindo Ikat Nusantara, PT Mitral Global
Telekomunikasi Indonesia (MGTI), PT Cable & Wireless Mitratel and
PT Bukaka Singtel (BSI) -- to finance, build and operate domestic
fixed-line telephones across Indonesia under a revenue-sharing
scheme through 2010. (cst)