Telkom moves to help KSO Divre III unit

Telkom moves to help KSO Divre III unit

The Jakarta Post, Bandung

State-owned telecommunications company PT Telkom announced on
Monday it had decided to implement an independent management plan
in the West Java and Banten telecom region (KSO Divre III), to
ensure the smooth functioning of its operations.

"Since AriaWest has refused to operate the KSO unit, and has
also refused to transfer control to Telkom, there is no other
alternative for Telkom than to implement independent management,"
Komarudin Sastrakusumah, Telkom's director for operations and
marketing, said in a press release.

Under the plan, Telkom will grant a mandate to the management
of the KSO Unit to use the unit's funds to pay daily operational
expenses.

The decision was taken due to the worsening dispute between
Telkom and its partner in West Java and Banten, PT AriaWest
International.

The dispute between the two companies started in 1996, after
Telkom had awarded AriaWest a 15-year contract under a joint
operation scheme (locally called KSO) to provide
telecommunications facilities in the two provinces.

However, the two sides have been swapping allegations of a
breach of contract since then.

The tug-of-war between the two reached a higher level in May
when AriaWest filed for arbitration with the Paris-based
International Chamber of Commerce (ICC), demanding US$1.3 billion
for losses incurred as a result of Telkom's alleged breach of
contract.

Less than three months later, Telkom lodged a counterclaim
against AriaWest with the ICC, also alleging breach of contract.

"By taking these actions, we hope to protect Divre III's
customers, suppliers and employees, and also to restore quality
services in West Java and Banten," Komarudin said.