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Summary of Indosat- IM2 case
The relevant parties in this case are PT. Indosat, Tbk (Indosat) and PT. Indosat Mega Media
(IM2). Indosat is a licenced Mobile Network Operator in Indonesia. It was awarded spectrum
in the 2.1 GHz-band following a tender. Furthermore, Indosat also has a licence as an ISP.
IM2 has a licence as an ISP to provide multimedia services.
In February 2006, Indosat and IM2 entered into a cooperation agreement regarding internet
service access through the 3G/HSDPA network of Indosat, as amended several times. In
accordance with the agreement, IM2 would sell internet service access under the brand
name of IndosatM2 to IM2 customers using the 3G/HSDPA network of Indosat. The parties
agreed on a revenue sharing scheme where Indosat would receive 66% and IM2 would
receive 34% of the revenues. Indosat was obliged to provide network connectivity and was
also responsible for providing, operating and maintaining the 3G/HSDPA network.
In October 2011, an NGO filed a report with the High Prosecutor Office in West Java stating
that it suspected that IM2 had illegally used frequencies, allocated to Indosat, in the 2.1
GHz-band for 3G services and that this had caused a revenue loss to the State in the
amount of IDR 3.8 Trillion. Following this report, the High Prosecutor Office initiated an
investigation. In January 2012, the authority for the investigation was taken over by the
District Attorney. During the investigation, the Finance and Development Supervisor Board
(BPKP - State Audit Investigation Agency) was asked to calculate the State’s revenue loss.
According to the BPKP, the state’s loss amounted to approximately IDR 1.3 Trillion,
consisting of non-payment of an Up Front Fee and Frequency BHP. (The loss was
calculated using the Up Front Fee and Frequency BHP paid by Indosat following the tender).
In a press release in January 2012, the Department of Communications and Informatics -
Kementrian Kominfo (the regulator for telecommunication sector which includes radio
spectrum) announced that the cooperation between Indosat and IM2 had been made in
accordance with the prevailing laws and regulations and that no obligation could be imposed
by the state on IM2. This was followed by a letter by the Minister of Communications and
Informatics in February 2012 to the Board of Directors of Indosat with a similar message. In
November 2012, the Minister also sent a letter to the Attorney General, confirming that there
was no violation in the Indosat-IM2 cooperation. It was moreover pointed out that hundreds
of similar cooperation agreements have been entered into by telecommunications operators
Court cases and findings
Criminal proceedings were brought by the Public Prosecutor from the Attorney General
Office against the former President Director of IM2, Indar Atmanto. These proceedings were
examined by Corruption Court of Central Jakarta District Court and subsequently appealed
to the DKI Jakarta High Court as the Appeal Court of the Corruption Court. In the view of the
Public Prosecutor, Indar Atmanto as the President Director of IM2, between 24 November
2006 and up to 15 January 2012, had conducted an unlawful act by enriching himself or
others or a corporation that may harm the State’s financial or economic conditions.
The Public Prosecutor Indictment states that unlawful act by Indar Atmanto was conducted
by signing “cooperation agreement regarding internet service access through the
3G/HSDPA network of Indosat” which cause frequency sharing and/or illegal use of 2,1
Ghz frequency by IM2 in which the frequency was allocated to Indosat. The Corruption Court
accepts entirely the indictment from the Public Prosecutor and rejects all defence statement
from Indar Atmantothe corruption court also accept Public Prosecutor argument stating that
Indosat and IM2 would have to pay compensation in the amount of approximately IDR 1.3
Trillion. These demands presumably will be put forward in separate proceedings, as the
case is being investigated by the Attorney General Office..
In July 2013, the Appeal Court upheld the decision by the District Court, finding that Indar
Atmanto, was guilty of conducting a corruption and sentenced him to eight years
imprisonment. The decision has been appealed to the Supreme Court and has been through
the Supreme Court procedure (cassation). It is now seemed like the Supreme Court has
rendered its judgment which is not in favour of Indar Atmanto but there has not been any
formal notification of the decision. A Judicial Review attempt will be available to Indar
Atmanto upon receipt of the Supreme Court (cassation) decision. For this review to take
place, new evidence must be submitted to the court. Indosat has collected new evidences
from five cities that there was no spectrum sharing as part of the cooperation agreement. In
showing that similar cooperation agreements among MNO and ISP, essentially resale
agreements, are common throughout the World, an expert opinion, from the ITU would be
instrumental. The new evidence will be reviewed by the lower courts and minutes of this will
be sent to the Supreme Court which may then decide to change its decision. Note that panel
of judges to try the Judicial Review will be different than that who ruled the cassation case.
In addition to the criminal case against Indar Atmanto, Indosat, IM2 and Indar Atmanto filed
a lawsuit in the Administrative Court (PTUN), challenging the State loss calculation from
BPKP. The Administrative Court ruled in favour of Indosat, IM2 and Indar Atmanto and found
that there was no State loss, since there had been no frequency sharing between Indosat
and IM2. This decision has subsequently been upheld by the High Court and Supreme Court
(cassation) and is now deemed to be a final and binding decision. Be that as it may, a
Judicial Review attempt is available, if BKPP decides to defend their calculation although
basis for submitting a Judicial Review remains to be seen.
Contradiction in outcomes
The main allegations and the substance of the cases in the Administrative Court and
Corruption Court are similar:
a) Due to a cooperation agreement between Indosat and IM2 signed by Indar Atmanto
on behalf of IM2, IM2 has illegally used spectrum in the 2.1 GHz-band, allocated to
b) Due to the cooperation agreement and the illegal usage of spectrum, IM2 has caused
the State a loss of approximately 1.3 Trillion IDR.
Although the substance and merit in the different cases in the Appeal Court and in the
Administrative Court are the same, the respective decisions contradict one another. The
Corruption Court decided that there is a State loss due to frequency sharing between
Indosat and IM2, while the Administrative Court decided that there is no State loss since
there has not been any frequency sharing.
Law no. 36 of 1999
Article 9 paragraph 1; Telecommunication network operator as referred in Article 8
paragraph 1 can provide telecommunication service.
Article 9 paragraph 2: Telecommunication service as referred in Article 8 paragraph 1 in
providing telecommunication service, uses and/or rent telecommunication network owns by
telecommunication network operator.
Government Regulation number 52 of 2000
In providing telecommunication services as referred in article 3 letter b, telecommunication
service operator may use telecommunication network owned by a telecommunication
Relevant facts and information:
a) During the court hearing in the Corruption Court, witnesses and experts from the
Ministry of Information and Communication stated that :
In conducting its operations, IM2, as a telecommunications service provider, was
allowed by law to use the network owned by a telecommunications network
provider (Indosat) based on a collaboration agreement. This is sufficiently
stipulated in Article 9(2) of Law No. 36/1999 regarding Telecommunications, and
Article 13 of Government Regulation No. 52/2000 regarding Provision of
The Agreement between Indosat and IM2 only regulates collaboration for the
utilization of Indosat’s telecommunications network. There is no provision that
provides for the joint utilization of a radio frequency spectrum, contrary to what
has been alleged.