Telkom partner endorses using independent auditor

Telkom partner endorses using independent auditor

JAKARTA (JP): The government should appoint an independent
auditor to assess the operation of state telecommunications
provider PT Telkom and its five partners under the joint-
operation scheme (KSO), one of the partners said on Friday.

Gatot S. Kahrmadji, vice president of PT Ariawest
International, said an independent auditor was needed to help
clarify differences between the two parties, especially the
partners's responsibilities.

"The result of an independent audit may then be acceptable to
both Telkom and the KSO partners, since each insists that their
reports are the most accountable one," he said.

Gatot was referring to a work performance disagreement
concerning the number of installed new access line units (ALU)
reported by the five KSO partners -- PT Ariawest International,
PT Pramindo Ikat Nusantara, PT Mitral Global Telekomunikasi
Indonesia (MGTI), PT Cable & Wireless Mitratel and PT Bukaka
Singtel (BSI).

As of March 31, KSO partners reported they had installed
approximately 1.37 million ALUs across the regions, exceeding the
target figure set by the government of 1.2 million ALU.

Pramindo contributed 297,290 ALU, Ariawest 299,458, MGTI
403,500, Cable & Wireless Mitratel 120,000 and Bukaka Singtel
251,300.

The telephone infrastructure of the five companies often
overlaps with that built by Telkom before they began their joint-
operation contracts in 1996.

Telkom also used its own auditor to assess its operation in
the overlapping areas.

Chairman of House Commission IV for communications,
Burhanuddin Napitupulu, said KSO's interpretation of ALU was
different from Telkom's.

"An installed ALU means that the telephone line is not only
installed but also kring (sold to a customer)."

He said another issue requiring clarification between Telkom
and its partners was the investment and revenue amounts made by
KSO partners.

According to the KSO partners' latest report, as of March 31,
total investment of US$1.56 billion had been made, of which $567
million was their own equity.

Telkom appointed in 1996 the five joint-operation partners --
a consortium of foreign and local firms -- to finance, build and
operate telephone services across Indonesia under a revenue-
sharing scheme up till 2010.

Ariawest is responsible for West Java, Pramindo for Sumatra,
MGTI for Central Java, Cable & Wireless for Kalimantan and BSI
for eastern Indonesia.

The agreement at first required KSO partners to install two
million new ALUs across their work areas during a three-year
construction period from 1996 to 1999.

Due to the economic crisis, in September 1998, the government
revised the target to 1.2 million ALU.

Under the 15-year agreement, the firms are required to pay
Telkom a three-monthly fixed amount known as Minimum Telkom
Revenue (MTR) and Distributable Telkom Revenue (DTR) based on
their revenue.

The government revised the revenue-sharing proportion last
year, dividing the DTR into 10 percent for Telkom and 90 percent
for the partners, from the previous 30 percent for Telkom and 70
percent for the partners.

KSO said they had paid Telkom approximately 45 percent, or Rp
5.03 trillion, of the total revenue collected since early 1996 to
March this year.

Burhanuddin said the disagreement between Telkom and the KSO
partners emerged partly because of changes in the contract
agreement following requests made by KSO partners to the
government.

"KSO partners had always tried to find excuses to revise the
agreement to their own interests," he said.

He said hiring an independent auditor would not solve the
disagreement.

"It'll only be a waste of time. I'd say we should cancel the
joint-operation scheme, it's not fruitful. A profit-sharing
contract may be a better and fairer scheme for everyone." (cst)