Telkomsel bankruptcy ruling overturned by Supreme Court

Indonesia's largest telco Telkomsel has won its appeal with the Supreme Court, to reject a ruling declaring it bankrupt.

This overturns the controversial decision by the Jakarta Commercial Court in September, which had found Telkomsel guilty of failing to repay its debt to a distributor, according to a report Thursday by Jakarta Globe.

Under Indonesian law, a company regardless of its balance sheet can be declared bankrupt if it has at least two creditors and it has not settled its due debt for at least one of them.

The bankruptcy ruling stemmed from a dispute with its top-up voucher payment distributor Prima Jaya Informatika over an invoice of 5.3 billion rupiah (US$557,000). Telkomsel had said it did not settle the debt as the distributor did not fulfil its agreement to hit a sales target.

The case may drag on if Prima Jaya asks for further review, but it has not officially received any information from the Supreme Court in order to make a decision, noted the report.

The bankruptcy ruling had led the Indonesia's 3G auction to be delayed in September, as Telkomsel despite being the largest operator with over 100 million subscribers would be disqualified on technicalities.

Telkomsel is majority controlled by state-owned Telkom, with the rest of the 35 percent stake owned by Singapore's SingTel.