Telkom called to solve dispute

JAKARTA (JP): The government has called on state telecommunications company PT Telkom and its five joint operation scheme (KSO) partners to quickly settle their dispute before mid- year to allow the partners to resume their telecommunications development activities.

Eman S. Sumantri, head of the telecommunications and information supervision department at the Ministry of Communications, said on Tuesday the failure to speed up the development of new projects would result in a shortage of telephone lines in most areas.

"If no new investment and development of new lines are conducted by mid-year, we are going to face shortages in telephone lines in December," he said.

He said no new telephone lines had been installed by the partners over the last couple of months due to the prolonged dispute.

He said there were only a few issues that had been settled between Telcom and its partners, including issues involving revenue sharing.

The KSO partners recently said they would not make major investments or install new lines until the problems were solved and a new, clear contract was made with Telkom.

The partners estimate that demand for new lines in their work areas will reach between two million and three million within the next five years.

They said fresh investment of between US$3 billion and $5 billion was needed to finance the development of the lines.

Telkom and its five KSO partners have been embroiled in a dispute over the management and operation of Telkom's work areas put under the management of the partners in 1996.

Telkom appointed the partners in 1996 to finance, build and operate domestic fixed line telephone services across the country on behalf of Telkom under a revenue-sharing scheme through 2010.

The five KSO partners are PT Pramindo Ikat Nusantara, which operates in Sumatra, PT AriaWest International in West Java, PT Mitra Global Telekomunikasi Indonesia in Central Java, PT Cable & Wireless Mitratel in Kalimantan and PT Bukaka Singtel International in eastern Indonesia.

Telkom controls the most profitable markets of Jakarta and East Java.

Under the 1996 agreement, the KSO partners were required to install a total of two million new access line units (ALU) from 1996 to 1999.

The government revised the figure to only 1.2 million in 1998 in the midst of the economic crisis.

The agreement also required the partners to pay Telkom a monthly fixed amount known as minimum Telkom revenue (MTR) and distributable Telkom revenue (DTR) amounting to 30 percent of their revenue.

Eman said it was hard to settle the dispute between Telkom and its partners as both parties had a strikingly different interpretation of the contents of the contract almost from the beginning.

He said this had affected the partners' performances, which analysts have criticized as unsatisfactory.

"Not all of the lines installed by the partners passed the initial performance test," he said.

He said only four partners, namely Pramindo Ikat, Mitra Global, Cable & Wireless Mitratel and Bukaka Singtel, had passed the tests and had been awarded certificates. (cst)