Telkom, KSO partners in search of win-win solution
JAKARTA (JP): PT Telkom's five joint operation partners (KSO partners) said on Friday that they hoped to settle their differences with the state-owned telecommunications company this month.
At a media conference with representatives of the five partners, the president of PT Mitra Global Telekomunikasi Indonesia (MGTI) Sutrisman said the partners hoped the ongoing negotiations with Telkom will come up with a win-win solution.
The partners, Telkom and the government had appointed financial advisors to evaluate the respective interests of Telkom and the partners under the KSO contracts, he said.
"We have completed the valuation of our interests and are now waiting for Telkom to conclude theirs," Sutrisman said without disclosing the amount.
Managing director of PT Pramindo Ikat Nusantara Gilles Vaillant said the valuation was made based not only on the investment value, but also on the business and commercial value of the contracts.
Since 1996, when the KSO arrangement started, the total investment made by the five partners had amounted to a total of $1.7 billion and approximately 1.5 million fixed telephone lines had been installed.
Under the existing contracts, the five companies are required to install at least two million telephone lines .
The joint operation contracts will end in 2010 but due to ongoing conflicts between Telkom and its partners, the government has agreed to a proposal to revise the existing collaboration schemes.
Five options have been drawn up in recent negotiations with Telkom along with the government, to determine the future of the partnership arrangements.
The five options are; to continue the existing arrangements with modifications to safeguard ongoing operations; to establish a joint venture with Telkom; to establish a joint venture with state-owned PT Indosat; to allow Telkom to buy out the interests of the partners; or to allow the KSO partners to operate independently in their existing areas of operation.
Sutrisman said that the last option had been ruled out by the partners because it did not conform with their current situation. He declined to explain further.
MGTI director Robin Russell said that it was also very unlikely that the partners would agree to continue with the existing KSO arrangement without major changes being made to it.
"We are not ruling out the possibility but it would depend on the kind of modifications made," he said.
Russell claimed that the existing KSO scheme does not support the government's objective of creating a constructive overall investment climate.
He said the KSO scheme had been drawn up based on a monopolistic environment at a time when both Telkom and Indosat had exclusivity rights.
If the scheme were to be continued, it would be inconsistent with the government's objective of engendering more open competition, Russell said.
The five KSO partners are PT Pramindo Ikat Nusantara, which operates in Sumatra, PT Mitra Global Telekomindo Indonesia in Central Java, PT Airawest International in West Java, PT Cable & Wireless Mitratel in Kalimantan and PT Bukaka Singtel in eastern parts of Indonesia including Bali.
World telecom giants like France Cable et Radio, America's AT&T, Britain's Cable & Wireless Plc., Australia's Telstra, Japan's Marubeni Corp., Sumitomo Corp., and Itochu Corp, Singapore Telecom and Hong Kong's TM Communications are involved as shareholders in the five companies. (10)