Telkom rejects joint venture mechanism with KSO partners
Telkom rejects joint venture mechanism with KSO partners
JAKARTA (JP): State-owned telecommunications firm PT Telkom
rejected on Friday the proposal from its Joint Operation (KSO)
partners to form a joint venture firm as an alternative solution
to the existing flawed and full-of-conflict cooperation scheme.
Company president A.A. Nasution said Telkom would object to
changing the existing cooperation formula to a joint venture
scheme because it would only benefit the partners.
"No way. We will never form a joint venture. We will settle
all the differences by only amending some stipulations in the
contract."
He said the changes in the contract details would be made
according to the situation faced by Telkom and its partners in
their respective work areas.
According to the KSO partners, changing the cooperation
pattern into joint venture mechanism is the most feasible
solution to the dispute with Telkom.
The partners said the option was a win-win solution in which
both Telkom and the KSO partners would not have to lose their
investments but instead open the opportunity for new strategic
investors to participate in forming a stronger cooperation.
Nasution said the option was not a win-win solution for
Telkom.
"It will not benefit us. In fact, Telkom will have to be
responsible for all the partners' debts by entering into the
joint venture. The partners have been financing most of their
activities with the debts," he said.
He warned that KSO partners were bound by the main contract to
continue developing and marketing fixed line telephone services
in Indonesia for Telkom until 2010.
"If they refuse to continue with the existing cooperation
scheme, we will not be hesitant in declaring a default against
them ... They had better leave if they refuse to cooperate," he
added.
The KSO contract started in 1996 with the appointment of five
consortia of local and foreign firms -- PT Ariawest
International, PT Pramindo Ikat Nusantara, PT Mitral Global
Telekomunikasi Indonesia, PT Cable & Wireless Mitratel and PT
Bukaka Singtel -- to finance, build and operate domestic fixed
lined telephone service across Indonesia under a revenue-sharing
scheme until the year 2010.
Under the agreement, KSO partners are required to install,
during a three-year construction period from 1996 to 1999, a
total of two million new access line units (ALU), a figure that
was then revised in September 1998, by the government, to only
1.2 million, due to the economic crisis.
The agreement also requires the partners to pay Telkom a tri-
monthly fixed amount, known as Minimum Telkom Revenue (MTR) and
Distributable Telkom Revenue (DTR), based on their revenue.
The government revised the revenue-sharing scheme last year,
splitting the DTR from 30 percent into 10 percent for Telkom and
from 70 percent to 90 percent for partners.
However, the scheme often causes confusion, not only relating
to the amount of fixed line units each partner must install, but
also in the management of the network.
Nasution said that starting from January next year, the
revenue-sharing scheme would return to the initial agreement in
which Telkom received 30 percent of the DTR.
He said Telkom and the KSO partners were scheduled to meet to
discuss the matter within the next couple of days. (cst)