Telkom completes acquisition of Ariawest
Yuli Tri Suwarni, The Jakarta Post, Bandung
State-owned telecommunications company PT Telkom has purchased telecommunications firm PT AriaWest International (AWI) through a combination of cash and promissory notes, Telkom president Kristiono said on Friday.
He said that with the acquisition, signed on Thursday, the two companies could finally end years of legal dispute.
"We have sent a letter to the International Chamber of Commerce (ICC) stating that Telkom and AWI have agreed to stop the arbitration process," he told reporters following a ceremony.
AWI was previously owned by MediaOne (a unit of U.S. telecom giant AT&T), Asian Infrastructure Fund, and PT Aria Infotek (owned by local businessman Edwin Soeryadjaya).
The telecom firm is among five joint ventures established before the 1997 financial crisis to develop telecom fixed-lines in various places in the country. AWI is to develop telecom lines in West Java and Banten. Under the plan, Telkom would obtain part of the revenue in return for exclusive rights given to the ventures to build and operate the lines. But the agreement turned sour following the regional economic crisis (which boosted investment costs) and after the government terminated Telkom's monopoly rights in the fixed-line business as part of the telecommunications sector liberalization drive.
Since then, Telkom and AWI have been locked in a lengthy dispute on how to end the agreement. Reports said that AWI later agreed to withdraw its lawsuit at the arbitration panel after Telkom expressed interest to buyout its assets.
The buyout process was supposed to be completed earlier in the year, but was delayed due to the slow process in reaching a restructuring agreement with AWI's creditors.
Telkom said in a press statement that it would pay US$58.67 million in cash and another $109.1 million in promissory notes for AWI's assets.
Payment of the promissory notes, which do not carry an interest rate, would be made every six months for five-and-a-half years.
Telkom said it would also assume AWI's current debt of $196.97 million and would repay the debt in installments every six months for four years.