Telkom hopes to settle disputes with all KSO partners this year
JAKARTA (JP): State-owned telecommunications company PT Telekomunikasi Indonesia (Telkom) says it hopes the prolonged conflict with its five joint cooperation scheme (KSO) partners can be settled this year.
Telkom's investor relations manager Setiawan Sulistyono told The Jakarta Post on Friday the company was still negotiating with three of its KSO partners after finalizing deals with its KSOs in Central Java and Kalimantan recently.
Telkom signed a memorandum of understanding on Thursday to acquire 90.32 percent of PT Dayamitra Telekomunikasi, Telkom's KSO partner operating in Kalimantan, worth $121.93 million.
The publicly listed company in February also sold its interest in PT Mitra Global Telekomunikasi Indonesia (MGTI), the KSO partner operating in Central Java, to state-owned company PT Indosat. The assets of MGTI were taken over by Indosat for $375 million.
The negotiations with Telkom's partner in Kalimantan in eastern Indonesia, PT Bukaka SingTel International, will also be concluded soon, Setiawan said, adding that the company had opted for a renewal with revision of the KSO contract.
"SingTel wanted (among other things) the right to add new installed lines which was not specified in the old contract ... the additional number will be up to them," he said over the phone.
Setiawan said that the two other KSO partners, PT AriaWest International and PT Pramindo Ikat Nusantara, favored the buy-out option by Telkom rather than one of the other four options offered by the government.
The existing options are to continue the existing agreement with modifications to ensure ongoing commercial viability, to establish a joint venture company with Telkom, to establish a joint venture company with state-owned PT Indosat, for Telkom to buy out the interests of the partners, or for the government to give them licenses to operate.
Negotiations with AriaWest, Telkom's partner in West Java, have so far been the toughest.
AriaWest corporate communications manager Denni Koswara said that AriaWest's latest stance was to revert to the valuation of its assets by the Canadian Imperial Bank of Commerce (CIBC) valued at $1.3 billion.
"Telkom had previously offered its shares in PT Satelindo as one of the alternative payment tools, but with it being sold to Indosat, we are facing a new setback in negotiations," he told the Post.
In accordance with the government's telecommunications blueprint to terminate joint ownership between Telkom and Indosat, in February Telkom agreed to sell its 22.5 percent share in cellular operator PT Satelindo for $186 million to Indosat, its 37.66 percent interest in Lintasarta for $38 million, as well as the assets of the Central Java KSO region run by MGTI.
However, Setiawan said that according to Telkom's valuation, AriaWest's assets in West Java were only worth about $160 million.
Denni said that AriaWest hoped that negotiations would resume more intensively by the end of March, and that Telkom's shareholders meeting in April would help improve the negotiations.
The discord between Telkom and AriaWest does not stop at the difference in asset valuation.
In September 2000, both companies signed a Good Faith Interim Solutions Agreement and agreed to appoint auditor PricewaterhouseCoopers (PwC) to investigate financial improprieties, which allegedly took place when AriaWest's management was led by a senior Telkom official up until last year, Denni said.
It was agreed that, based on the results of the PricewaterhouseCoopers audit, Telkom would pay AriaWest any amount determined by the auditors to have been misappropriated, unaccounted for, lost, stolen or unreasonably disbursed by the KSO unit, he said.
The audit was started on Sept. 18, and a progress report was delivered to Telkom on March 2, 2001.
On March 8, Telkom president M. Nazif issued a formal letter to stop the audit on the grounds that the two companies had not issued an engagement letter for PwC to begin auditing.
Setiawan Sulistyono said that the agreement had been to appoint an auditor, which was PwC.
"But the work plan had not been agreed upon," he said, explaining that working conditions and the scope of the audit was still to be determined. (tnt)