Telkom lacks good faith: Pramindo

The Jakarta Post, Jakarta

PT Pramindo Ikat Nusantara, a joint operation scheme (KSO) partner of state-owned telecommunications firm PT Telkom, has accused the latter of not acting in good faith in completing a planned asset buyout transaction.

Pramindo managing director Jean Marie Gauthier said on Tuesday that the asset sale transaction could not yet be finalized due to a disagreement over price.

"The question is, is there any good will on the part of Telkom to conclude these negotiations because we started the discussions nine months ago and Telkom promised to finish them by the end of last year", Gauthier told The Jakarta Post and Koran Tempo.

Pramindo is one of the five KSO partners of Telkom that were granted contracts in 1995 to construct and operate fixed telephone lines in various provinces in Indonesia. Pramindo holds a 15-year contract to develop and manage telephone lines in Sumatra.

Under the contract, the KSO partner is required to install new telephone lines, pay Telkom an up-front license fee and a monthly minimum fee, and give Telkom a specified share of the KSO's profits.

The contracts were then amended in mid-1998 on account of several factors, especially the impact of the 1997 economic crisis, which meant that no significant profits accrued to the businesses. Telkom, the government and its KSO partners then signed a Memorandum of Understanding (MOU) in June 1998.

This MOU offered five alternatives to the KSO partners, one of which was for Telkom to buy out KSO assets. Pramindo then agreed to sell back its assets to Telkom.

Gauthier declined to disclose the price Pramindo was seeking for its assets.

"Our financial experts and banks have made an assessment of the value. They came up with different figures. I can't state the amount outside of negotiations," he said.

Separately, Telkom finance director Mursyid Amal dismissed Gauthier's allegation, saying it was normal for Telkom to negotiate for the best purchase price.

He also declined to disclose the price that would be agreeable to Telkom.

But Mursyid expected that his side could complete the negotiating process before a shareholders' meeting in March or April.

Pramindo currently runs one million fixed telephone lines across Sumatra island. Pramindo is 40 percent owned by Astratel Nusantara, a unit of Astra International, 35 percent by France Cables et Radio, 13 percent by PT Indonesian Satellite Corporation (ISAT), eight percent by Marubeni and two percent by Nichimen Corporation.