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.