Telkom asks government to stop meddling in its business
BANDUNG (JP): The president of state-owned telecommunications company PT Telkom Indonesia, A.A. Nasution, called on the government on Thursday to stop interfering in the firm's business relationships with its five joint operation (KSO) partners.
"Too much intervention will only give a negative impression to our investors," he said.
Nasution said the government's decision last year to revise the target of new phone lines to be installed by KSO partners and the change in the revenue sharing scheme damaged Telkom's credibility as a public company and caused a setback in its performance.
KSO contracts began in 1996 when Telkom, under the government's strong recommendation, appointed the five consortium of foreign and local firms -- PT Ariawest International, PT Pramindo Ikat Nusantara, PT Mitral Global Telekomunikasi Indonesia, PT Cable & Wireless Mitratel and PT Bukaka Singtel -- to finance, build and operate domestic fixed lined telephone service across the country under a revenue-sharing scheme in effect through 2010.
Under the initial contracts, KSO partners were required to install a total of two million new access line units from 1996 to 1999. The government revised the figure to 1.2 million in September 1998 following partners' complaints over the severe impact of the economic crisis on their operations.
The initial contracts also required the partners to pay Telkom a fixed fee, known as Minimum Telkom Revenue (MTR) and Distributable Telkom Revenue (DTR), every three months.
The government also revised the revenue-sharing scheme last year, providing 10 percent of the DTR to Telkom and 90 percent for the partners. Under the original scheme, Telkom received 30 percent and the partners the remainder.
Nasution said Telkom would evaluate the partners' work performance as of Dec. 31 to determine if they were suitably qualified to continue the performance.
He said Telkom would not hesitate to end their contracts if the partners failed to meet the revised target.
Separately, Telkom's operational director John Welly told journalists on the sidelines of a telecommunications seminar in Jakarta that the state telecoms monopoly did not plan to change the existing partnership scheme.
"We will continue with the KSO scheme until it ends in 2010. it is still a feasible and profitable business plan for both sides. So there's no need to terminate it or change it into something else." KSO partners proposed recently the termination of the existing scheme to create a new entity involving the government and investors of Telkom, KSO partners, Indosat and new strategic partners.
KSO partners said the option to create the new entity by involving more strategic investors was in line with the spirit of liberalization upheld by the new telecommunications law.
They contended the option was the best solution since both Telkom and the partners would still keep the assets and investments they injected in the current scheme in the form of stake in the new entity.
John said the option was totally unacceptable.
"It's only their excuse... We are not going to create another entity. We're only going to adjust several terms in the scheme, especially the currency rate because it is no longer suitable given the fluctuations, and move on with it until 2010," he added. (43/cst)