Indonesia Finance Today reports that a planned spectrum auction in the country is set to be delayed, against the backdrop of a legal dispute involving operator market leader Telkomsel. This marks the fourth postponement since it was originally scheduled for June 2012.

ZDNet Asia said that under the country’s existing legislation, an operator that has been declared bankrupt cannot bid for new frequencies – ruling Telkomsel out of the process.

According to the Jakarta Post, the Jakarta Commercial Court has asked liquidators to supervise the country’s biggest mobile operator, after it was declared bankrupt late last week. This followed its failure to pay a US$0.5 million debt to PT Prima Jaya Informatika, a prepaid top-up voucher and SIM distributor.

It has been noted that corporate lawyers have criticised the Telkomsel decision, which does not reflect its “financial strength”. It was said the decision was based on “a substantial shortcoming in the nation’s bankruptcy law”, which may be open to abuse and could risk high-profile companies.

Reuters said that in Indonesia, a company can be declared bankrupt “if it can be shown to have at least two creditors and the debt owed to one of them is due and payable” – regardless of its financial position.

An appeal against the ruling is anticipated soon. According to the Jakarta Globe, analysts and shareholders have “brushed the decision aside as one of the quirks of the country's legal system, saying it is almost inevitable that it will be overturned when Telkomsel appeals to the country's Supreme Court”.

The Jakarta Post said that Prima Jaya and Telkomsel signed a distribution deal in June 2011, valid for two years, which was subsequently cancelled by the operator. Prima Jaya has argued that this has caused it losses.

According to Wireless Intelligence, Telkomsel has a 45 percent share of the country’s nearly 260 million subscribers.

For the first half of 2012, it reported a net income of IRP6.4 trillion, up 8.2 percent year-on-year, on revenue of IRP36.72 trillion, up 6.8 percent.