Telkom called to solve dispute

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)