Telkom says it is not daunted by AriaWest arbitration threat

JAKARTA (JP): State-owned telecommunications company PT Telekomunikasi Indonesia (Telkom) said on Friday it is ready to face arbitration proceedings by PT AriaWest International, one of its five partners in a joint operation scheme.

Dina Arifani, the company's investor relations officer, said that AriaWest's threat to commence arbitration proceedings was not the first and that Telkom had formed a team of lawyers to fight against the arbitration threat.

"We're ready to face it (the arbitration). But, it's a last ditch effort to resolve the conflict. We still prefer to settle the dispute through negotiations," Dina told The Jakarta Post.

AriaWest threatened on Thursday to commence arbitration proceedings in Geneva to recover US$1.3 billion from Telkom as long-standing efforts to amicably resolve their differences had proved futile.

"It has become clear that Telkom doesn't want to settle the dispute. So, unfortunately, there seems to be no alternative but to put the case before an independent arbitrator in Geneva," the company's chief financial officer Stephen Dowling said on Thursday.

AriaWest also said that its staff had received death threats and that its Bandung office had been terrorized by menacing banners and posters under the auspices of Sekar, an organization of Telkom employees.

Later on Friday AriaWest said it was evacuating all of its staff from its Bandung office due to grave security concerns.

"We cannot take risks with the safety of our personnel," the company's president John Vondras said in a statement.

AriaWest, which is partly owned by a unit of the United States-based telecommunication giant AT&T, operates fixed telephone lines in West Java under a joint operation scheme or KSO with Telkom.

Dina denied that Telkom had terrorized or threatened AriaWest executives and staff.

"It doesn't make sense that Telkom would use such uncivilized and unethical methods," Dina said, adding that AriaWest's allegations were exaggerated and groundless.

Ariawest and Telkom have been at odds over several issues related to their contract, including the amount of money paid by Ariawest to Telkom under the KSO contract. AriaWest accused Telkom of not meeting their obligation to build extra phone lines as pledged in the contract.

The two companies have been engaged in negotiations to settle their dispute. AriaWest wants Telkom to bailout its operation but the two companies are divided over how much Telkom should pay in compensation to end the contract.

According to AriaWest it should be paid at least $1.3 billion while Telkom says that the payment is worth only $160 million.

AriaWest said early this week that it had decided not to disburse Rp 340 billion in revenue shares to Telkom because the later failed to meet its obligation to build extra phone lines.

Dina also said that AriaWest's decision to withhold the funds reflected AriaWest's lack of good faith to settle the dispute. (03)