JAKARTA -- The 4G broadband licenses of two internet service providers affiliated with Indonesian conglomerate Lippo Group have been terminated over unpaid fees totaling 708 billion rupiah ($48.6 million), the country's Ministry of Communication and Information Technology said Friday.
First Media and Internux "are officially no longer able to use the 2.3Ghz radio frequency band for telecommunications services" as of Friday, ministry spokesperson Ferdinandus Setu said in a statement, noting that this decision does not remove the debt obligations.
The termination represents a further setback for Lippo, run by the Riady family. The group's main property developer, Lippo Karawaci, has received multiple credit rating downgrades amid concerns over its finances, and its flagship Meikarta township project outside Jakarta has been embroiled in a bribery scandal.
The communication ministry has demanded that First Media and Internux pay their license fees for using 4G spectrum in 2016 and 2017. A commercial court in Jakarta approved a proposal from the two companies to pay in installments that could last 30 years. But the ministry objected, saying the period was too long, and has appealed the verdict to the Supreme Court of Indonesia.
Local media reports say the companies proposed paying the installments by 2020 instead. But a communication ministry official, after consulting with the Finance Ministry, reportedly said that the proposal does not comply with regulations.
First Media, in a filing to the Indonesia Stock Exchange, said the company and its subsidiary Internux support the ministry's decision and are "willing to end" the Bolt! internet services starting Friday. It also said that customers can refund their unused Bolt! credits.
"The company will focus on maximizing performances of company subsidiaries including in the businesses of telecommunications infrastructure and in-building solution providers... internet services, news content, and production houses for television commercials and content," Shinta Melani Paruntu, corporate secretary of First Media, said in the filing.
Internux President Director Dicky Moechtar said separately via text: "Bolt will fulfill and discharge all its obligations to the government including past due license fees which are owed according to the law. We have conveyed this accordingly to the Ministry."
Lippo was among the first in Indonesia to offer high-speed 4G service, holding the spectrum licenses since 2009 and starting service in 2013.
The licenses were due to expire next year, but the failure to pay the fees -- half of which were due in late 2016 -- prompted the communications ministry to set a Nov. 17 deadline to complete the payment. The deadline later was extended over concerns involving customer service and ongoing legal processes.