PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA TBK

Foreign Filer Report • Dec 28, 2006

6-K 1 u92898e6vk.htm PT TELEKOMUNIKASI INDONESIA PT TELEKOMUNIKASI INDONESIA PAGEBREAK

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13 a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of December , 20 06

Perusahaan Perseroan (Persero) PT TELEKOMUNIKASI INDONESIA

(Translation of registrant’s name into English)

Jalan Japati No. 1 Bandung-40133 INDONESIA

(Address of principal executive office)

[Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F Form 20-F þ Form 40-F o

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 Yes o No þ

[If “yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3- 2(b) :

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SIGNATURES

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link1 "SIGNATURES"

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.

	Perusahaan Perseroan (Persero) PT TELEKOMUNIKASI INDONESIA
	(Registrant)
Date December 28, 2006	By	/s/ Harsya Denny Suryo
		(Signature)
		Harsya Denny Suryo Vice President Investor Relation & Corporate Secretary

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA, Tbk.

NOTICE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS 2007 No.920/PR110/COM-10/2006

Pursuant to Article 19 of the Article of Association of Perusahaan Perseroan (Persero) P.T. Telekomunikasi Indonesia, Tbk, further referred to as the “Company”, herewith announce to the Shareholders that the Company is to hold an Extraordinary General Meeting of Shareholders (EGMS) 2007 on:

Day/Date Time Place : : : Friday, January 26, 2007 14.00 Jakarta Time Aula Pangeran Kuningan Gedung Gma Citra Caraka Jl. Gatot Subroto No.52 Jakarta 12710

Those eligible to attend the EGMS shall be shareholders of the Company whose names are registered at the Company’s Share Register at 16.00 hours Jakarta Time on January 10, 2007.

According to paragraph 4, article 19 of the Company’s Article of Association, Shareholder with a minimal ownership of 10% of the total outstanding share with valid voting rights may propose an agenda for the meeting at the latest by January 4, 2007.

Invitation for the Shareholders Meeting shall be announced on January 11, 2007.

Bandung, December 28, 2006 PT TELKOM, Tbk Board of Directors

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AMENDMENT OF INFORMATION TO THE SHAREHOLDERS

in line with the plan for shares buy back Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk.

PERUSAHAAN PERSEROAN (PERSERO) PT TELEKOMUNKASI INDONESIA Tbk.

(the “Company”)

Referring to the advertisement on information to the Shareholders in line with the shares buy back plan published in the daily newspapers Bisnis Indonesia and The Jakarta Post on 22 November 2005, which plan obtained approval based on a resolution of the Extraordinary General Meeting of Shareholders of the Company on 21 December 2005, the Company is planning to change the plan of the Company on the shares bought back in the buyback of shares, from previously:

THE COMPANY’S PLAN ON THE SHARES BOUGHT BACK

“The company intends to keep the shares bought back in the Transaction (“Treasury Stock”). However, the Company may resell the Treasury Stock if the price of the shares increases and the Company will earn gains from the proceeds of the resale. The resale will be carried out on or outside the Stock Exchange with due consideration of Bapepam Rule No. XI.B.2”.

To become:

THE COMPANY’S PLAN ON THE SHARES BOUGHT BACK

The Company intends to use part of the shares bought back in the Transaction (“Treasury Stock”) or a maximum of 51,150,750 shares to be resold through the Employee and Management Stock Option Plan (EMSOP) program to employees who are a permanent employees of the Company with years of service of at least 1 (one) year whether seconded or work in other entities or government agencies, member of the Board of Directors of the

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Company as well as the members of the Board of Directors of Subsidiaries and member of the Board of Directors of Affiliated Companies, who are nominated by the Company and who are in office at the time this EMSOP program is implemented. The EMSOP will be carried out taking into consideration the terms and conditions of prevailing statutory regulations, in particular regulations in the Capital Markets, including Bapepam-LK Rule No. IX.E.1 on Conflicts of Interest in Certain Transactions. For the remaining shares, the Company can sell the Treasury Stock if the price of the shares increases. The resale will be carried out on or outside the Stock Exchange with due observance of Bapepam-LK Rule No. XI.B.2. In addition, the Company may, in the future use the remainder of the Treasury Stock for the EMSOP program, with prior approval from the General Meeting of Shareholders of the Company. Further information on the EMSOP program can be read in the disclosure of information announced together with this announcement.

EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS

The change of the plan to use the Treasury Stock will require approval from the General Meeting of Shareholders. In line with it, the Company will hold an Extraordinary General Meeting of Shareholders (“EGM”) on 26 January 2007. The approval of the EGM of the amendment ofthe use of the Treasury Stock is a pre requisite condition of the EMSOP program. The EGM may be convened if attended by shareholders representing more than 50% of the total shares with lawful voting rights issued by the Company and approved by more than 50% of the total votes lawfully cast at the meeting.

Important dates related to the EGM can be read in the disclosure of information distributed to the shareholders, announced together with this announcement.

Shareholders requiring additional information related to the change of information to the shareholders may contact:

Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk. Investor Relations/Corporate Secretary Grha Citra Caraka Level 5 Jl. Gatot Subroto No. 52 Jakarta 12710 Telephone : (021) 521 5109, Facsimile: (021) 522 0500 e-mail: investor@telkom.co.id www.telkom.indonesia.com

This information is provided to be known by the public.

Bandung, 28 December 2006 Company’s Board of Directors

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INFORMATION TO THE SHAREHOLDERS Based on Bapepam-LK Rule No. IX.E.1 on Conflict of Interest Transaction

The Board of Directors and the Board of Commissioners of Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk. (the “Company”) jointly and severally are fully responsible for the correctness of all information stated in this information to the Shareholders and after careful examination confirm that to the best of their knowledge and belief there is no material information that has not been disclosed that could cause the information presented herein to the Shareholders to be incorrect or misleading.

PERUSAHAAN PERSEROAN (PERSERO) PT TELEKOMUNIKASI INDONESIA Tbk.

Domiciled in Bandung, Indonesia

Line of Business:

Telecommunication Business

Head Office Jl. Japati No. 1 Bandung 40133 Phone +62 (022) 452 1108, 452 7252 Fax +62 (022) 720 3247 Investor Relations Office Grha Citra Caraka 5th floor Jl. Gatot Subroto No. 52 Jakarta 12710 Phone +62 (021) 521 5109 Fax +62 (021) 522 0500

This information to the Shareholders contains information on the proposed plan to implement EMSOP ( Employee & Management Stock Option Plan ) Program that can be exercised against the shares that have been repurchased ( Buyback ) by the Company based on Extraordinary General Meeting of Shareholders resolution on 21 December 2005.

The transaction is a conflict of interest transaction based on Rule IX.E.1 on Conflict of Interest Transactions, Attachment to the Chairman of Bapepam-LK Decision No. Kep. 84/PM/1996 dated 24 January 1996 as lastly amended by Chairman of Bapepam-LK Decision No. Kep. 32/PM/2000 dated 22 August 2000 (Rule IX.E.1).

The Extraordinary General Meeting of Shareholders of the Company (“EGM”) will be held on 26 January 2007 at 14.00 WIB at Grha Citra Caraka Jl Gatot Subroto Jakarta. The Announcement of EGM is published in daily newspaper Bisnis Indonesia, Investor Daily and The Jakarta Post on 28 December 2006 together with this information to the shareholders as regulated in Rule IX.E.1 and the Notice of EGM will be published in the same daily newspapers on 11 January 2007.

If you are in doubt of any aspects of this information to the Shareholders or as to the actions you should take, you should consult your Investment Adviser or other Professional Advisers.

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Definition and Abbreviation

ADR American Depository Receipt

| Affiliation | Family relationship by marriage and descendant up to the
second level, horizontal as well as vertical; |
| --- | --- |
| (b) | relationship between the Party and employees, directors or
commissioners of the Party; |
| (c) | relationship between 2 (two) companies with one or more
common member of the board directors or board of commissioners; |
| (d) | Relationship between the company and the Party, directly
and/or indirectly controlling or controlled by the company; |
| (e) | Relationship between 2 (two
companies controlled, directly and/or indirectly by the same Party, or |
| (f) | Relationship between the company and the main shareholder. |

| Subsidiary | A company in which the Company owns more than 50% of the total
capital or shares. |
| --- | --- |
| Bapepam-LK | The Capital Market and Financial Institution Supervisory Agency. |
| Conflict of Interest | The difference between the economic interests of the Company
and the personal economic interest of a director, commissioner,
main shareholder of the Company or an affiliated party of the
director, commissioner or main shareholder. |
| BEJ | Jakarta Stock Exchange |
| BES | Surabaya Stock Exchange |
| EMSOP | Employee and Management Stock Option Plan |
| Option | The right granted to the Entitled Employee as a part of the
EMSOP program to purchase shares of the Company at a certain
time and at a certain price level. |
| Entitled Employee | An employee who is a permanent employee of the Company with
years of service of at least 1 (one) year whether seconded or
work in other entities or government agencies, member of the
Board of Directors of the Company as well as the members of the
Board of Directors of Subsidiaries and member of the Board of
Directors of Affiliated Companies, who are nominated by the
Company and who are in office at the time this EMSOP program is
implemented. |
| NYSE | New York Stock Exchange |
| Shareholder | The Company’s Shareholders |
| Independent Shareholders | The Company’s Shareholders who do not have Conflicts of
Interest in the intended Transaction, and/or are not affiliated
parties of the directors, commissioners or main shareholders of
the Company which has Conflicts of Interest in the EMSOP
transaction. |
| Rule IX.E.1 | Rule No. IX.E.1 on Conflicts of Interest in Certain
Transactions Attachment to Decision of the Chairman of
Bapepam-LK No. |

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| | Kep.84/PM/1996 dated 24 January 1996 as lastly
amended by Decision of the Chairman of Bepapam-LK No.
Kep.32/PM2000 dated 22 August 2000. |
| --- | --- |
| Rule XI.B.2 | Rule No. XI.B.2 on Shares Buy Back Issued by Issuer or Public
Company, Attachment to Decision of the Chairman of Bapepam-LK
No. Kep-45/PM/1998 dated 14 August 1998. |
| Company | Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk. |
| Affiliated Company | A company in which the Company owns 50% or less than 50% of the
total capital subscribed in the company. |
| GMS | General Meeting of Shareholders |
| EGM | Extraordinary General Meeting of Shareholders of the Company to
be convened on 26 January or other dates if it is adjourned. |

I. INTRODUCTION

| This disclosure of information is made in line with the plan of the Company’s Board of
Directors to carry out the EMSOP program for the Entitled Employees (“EMSOP Program”).
Shares to be used for this EMSOP program are shares re-purchased by the Company/treasury
stock. The Board of Directors provides this disclosure of information to give information to
the shareholders in respect of the EGM to be held on 26 January 2007. The EMSOP Program
requires approval from the Shareholders and the Independent Shareholders through the
Company’s EGM. |
| --- |
| The EMSOP Program is a transaction with an element of conflict of interest as defined in
Rule IX.E.1. |
| GENERAL INFORMATION ABOUT THE COMPANY |
| The Company was established as a limited liability company based on Deed No. 128, dated 24
September 1991, drawn before Imas Fatimah SH, Notary in Jakarta, and published in the State
Gazette of the Republic of Indonesia No. 5 dated 17 January 1992, Supplement No. 210. At
the time the Company carried out its Initial Public Offering, the Company’s Articles of
Association were entirely amended, which amendment was stated in State Gazette of the
Republic of Indonesia No. 7 dated 23 January 1990, Supplement No. 556. |

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| Further, the Company’s Articles of Association were amended several times and the last
amendment was published in the State Gazette of the Republic of Indonesia No. 51 dated 27
June 2006, Supplement No. 666. |
| --- |
| The Shares of the Company were listed on BEJ, BES and in the form of ADR on NYSE and the
London Stock Exchange on 14 November 1995. |
| Capital Structure |
| According to the Company’s Register of Shareholders issued by the Securities Administration
Bureau PT Datindo Entrycom on 20 December 2006 the composition of the Company’s shareholders
is as follows: |

Information — Shares	(Rp)	%
Authorized capital	80,000,000,000	20,000,000,000,000
Subscribed and fully paid up
capital:
The Government of the Republic
of Indonesia
— Series A Dwiwarna Shares	1	250	0.00
— Series B Shares	10,320,470,711	2,580,117,677,750	51.19
JPMCB US Resident (Norbax Inc.)	1,760,752,981	440,188,245,250	8.73
The Bank of New York	1,478,225,256	369,556,314,000	7.33
Commissioner
Petrus Sartono	19,116	4,779,000	0.00
Directors
Guntur Siregar	19,980	4,995,000	0.00
Garuda Sugardo	16,524	4,131,000	0.00
John Welly	4	1,000	0.00
Abdul Haris	1,000	250,000	0.00
The public with less than 5%
ownership	6,483,617,207	1,620,904,301,750	32.16
Sub Total	20,043,122,780	5,010,780,695,000	99.42
Treasury stock	116.876.500	29,219,125,000	0.58
Total Subscribed and Fully
Paid-up Capital	20,159,999,280	5,039,999,820,000	100.00
Shares in Portfolio	59,840,000,720	14,960,000,180,000

Supervision and Management
The composition of the Commissioners of the Company is as follows:

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Commissioners

President Commissioner	: Tanri Abeng
Independent Commissioner	: Arief Arryman
Independent Commissioner	: P. Sartono
Commissioner	: Anggito Abimanyu
Commissioner	: Gatot Trihargo

The composition of the Board of Directors of the Company is as follows: Board of Directors

President Director	: Arwin Rasyid
Director (called Chief Operating Officer Or Vice President Director	: Garuda Sugardo
Finance Director	: Rinaldi Firmansyah
Network & Solution Director	: Abdul Harris
Enterprise & Wholesale Director	: Arief Yahya
Human Resources Director	: John Welly
Consumer Director	: Guntur Siregar

Summary of the Company’s Important Financial Data

(in billion of Rp.)

CONSOLIDATED BALANCE SHEETS

(Audited)			(Unaudited)
2003	2004	2005	2006
ASSETS
CURRENT ASSETS
Cash and cash equivalent	5,094	4,856	5,375	8,309
short-term investment	4	20	22	46
Trade account receivable — net	2,833	3,319	3,578	3,732
Other receivables — net	170	56	153	149
Inventories	154	203	220	188
Other current assets	687	750	957	1,823
TOTAL CURRENT ASSETS	8,942	9,204	10,305	14,247
NONCURRENT ASSETS
Long term investments	65	83	101	101
Fixed assets — net	35,080	40,071	46,193	49,020
Other fixed assets	6,196	6,821	5,572	4,983
TOTAL NON-CURRENT ASSETS	41,341	46,975	51,866	54,104

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(Audited)			(Unaudited)
2003	2004	2005	2006
TOTAL ASSETS	50,283	56,179	62,171	68,351
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable	3,767	4,254	5,295	4,657
Tax payable	1,513	1,593	2,470	2,496
Accrued Expenses	1,185	1,051	1,521	2,061
Unearned income	763	1,030	1,593	1,982
Current maturities of long-term liabilities	3,481	3,403	2,401	5,531
Other current liabilities	461	346	233	266
TOTAL LIABILITIES	11,170	11,677	13,513	16,993
NON-CURRENT LIABILITIES
Deferred tax liabilities	3,547	2,928	2,392	2,163
Provision for employment and
post-retirement benefit	2,568	4,914	4,904	4,682
Two-step loan — related party	6,859	5,363	4,760	4,177
notes and bonds payable	2,102	2,332	1,457	—
Bank loans	2,116	1,776	1,752	2,670
Business acquisition liabilities	747	3,743	3,128	2,389
Other non current liabilities	153	380	667	573
TOTAL NON CURRENT LIABILITIES	18,092	21,436	19,060	16,654
Minority rights to the
subsidiary’s net assets	3,708	4,938	6,305	7,195
Equity	17,313	18,128	23,293	27,509
TOTAL LIABILITIES AND EQUITY	50,283	56,179	62,171	68,351

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CONSOLIDATED STATEMENTS OF INCOME

(in billion of Rp)

2003		2004		2005		2006 (9 mo)
(Audited)		(Audited)		(Audited)		(Unaudited)
OPERATING REVENUES
Fixed Lines	8,897		10,645		10,781		8,073
Cellular	8,459		10,421		14,571		14,899
Interconnection	4,162		6,188		7,742		6,367
Joint Operation Scheme	1,486		657		589		485
Data and Internet	3,109		4,809		6,934		6,369
Network	518		654		587		462
Revenue Sharing Arrangement	258		281		302		306
Other Telecommunications services	227		293		301		239
Total Operating Revenues	27,116		33,948		41,807		37,200
OPERATING EXPENSES
Personnel	4,440		4,910		6,563		4,961
Depreciation	4,780		6,438		8,188		6,633
Operations, maintenance and
telecommunication services	3,339		4,530		5,916		5,351
General and Administrative	2,079		2,600		2,844		2,217
Marketing	503		882		1,126		855
Total Operating expenses	15,141		19,360		24,637		20,017
OPERATING INCOME	11,975		14,588		17,170		17,183
OTHER INCOME (CHARGES)
Interest income	366		318		345		448
Interest expenses	(1,383	)	(1,270	)	(1,177	)	(862	)
Gain (loss) on foreign
exchange — net	126		(1,221	)	(517	)	677
Equity in net income of
associated companies	3		3		11		—
Others
— net	364		331		409		118
Other
Income (charges) — net	(524	)	(1,839	)	(929	)	381
INCOME BEFORE TAX	11,451		12,749		16,241		17,564
TAX EXPENSE	(3,861	)	(4,178	)	(5,184	)	(5,387	)
INCOME BEFORE MINORITY
INTEREST IN NET INCOME OF
SUBSIDIARIES	7,590		8,571		11,057		12,177
MINORITY INTEREST IN NET
INCOME OF SUBSIDIARIES, net	(1,503	)	(1,956	)	(3,064	)	(2,955	)
NET INCOME	6,087		6,615		7,993		9,222
Net income per share	301.95		328.10		396.51		458.12
Net income per ADS (40 Series
B Shares per ADS)	12,077.83		13,124.14		15,860.25		18,324.80

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II. DESCRIPTION OF TRANSACTION

The Company has obtained approval to buy back some of the shares of the Company that were issued and listed on BEJ, BES or listed in the form of ADR in NYSE. The buy back of shares has been and shall be carried out in stages during an 18 (eighteen) months period or during the period of 22 December 2005 until 21 June 2007. The buyback of shares is carried out, based on the decision of the Company’s management, both through BEJ, BES, in the form of ADR on NYSE.

The buyback of shares is carried out under the following terms:

| — | The maximum number of Series B shares which can be repurchased, including in the form
of ADR is 5% of the shares issued by the Company or 1,007,999,964 Series B shares. However
based on the Company’s consideration and growth plan, the Company may and is intending to
buyback a smaller number of shares. |
| --- | --- |
| — | The period of the buyback is from 22 December 2005 to 21 June 2007. |
| — | The allocated fund for the buyback of shares is Rp.5,250 billion, originating from
allocated profit as at 30 September 2005. |
| — | The Company appointed PT Danareksa Sekuritas, as a member of BEJ and BES Securities
Brokers, which shall execute the buyback of shares through BEJ and BES in line with Bapepam
Rule No. XI.B.2, including: |

| a. | The purchase transactions may not be made at the opening or at the closing of
trading or within 30 (thirty) minutes after opening of trading or 30 (thirty) minutes
before closing of trading at BEJ and BES. |
| --- | --- |
| b. | The repurchase must be done at a lower price from or the same as the previous
closing price. |
| c. | The maximum shares bought back on any day in BEJ and BES is 25% of that daily’s
trading volume, except if that limitation would result in the purchase of less than 1
(one) lot/trading unit, in that case the company shall be allowed to purchase be 1
(one) lot/trading unit; and |
| d. | Insiders of the Company as defined in Law No. 8 of 1995 on Capital Markets are
prohibited from engaging in transactions of the shares of the Company on the same day
as the buyback transaction is made by the Company. |

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Insiders means members of the Board of Commissioners, the Board of Directors and employees of the Company, main shareholder of the Company, and any individual whose position or profession or business relation with the Company makes it possible for that person to obtain the Company’s insider information, and parties who ceased being one of the parties mentioned above within the last 6 (six) months.

—	Purchase of shares in the form of ADR on NYSE must be based on US capital market law.
—	Any purchase of share carried out other than on BEJ, BES and NYSE must be carried out
based on the law of the jurisdiction concerned.
—	Buyback of shares may only be carried out if it is beneficial to the Company and the
shareholders at any time, based on the market condition.
—	The company shall not carry out buyback of shares which may cause a negative material
impact to the Company’s liquidity and the capital and/or to the status of the Company as a
public company.

As of 20 December 2006, the Company has bought back a total of 116,876,500 (one hundred sixteen million eight hundred seventy six thousand and five hundred) shares or 11.59% from the total shares planned to be bought back by the Company.

Considering the change of plan of the Company relating to the Shares which have been bought as announced at the same time as the announcement of this information to the Shareholders, and which will be subject to the approval by the EGM, if the Company’s EGM approves this change, the Company is planning to use maximum 51,150,750 shares, which form a part of the shares bought by the Company as of 20 December 2006 (“EMSOP Shares”)

Purpose of the EMSOP Program

The purposes of the EMSOP program are as follows:

1.	To motivate the employees to achieve the company’s target.
2.	To attract and retain the employees/management who performed well in the Company.

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EMSOP Terms:

| a. | The Company will grant the Options to the Entitled Employees. The total number of Options to
be granted shall be a maximum of 51,150,750. |
| --- | --- |
| | The persons entitled to participate in the EMSOP Program are all the Entitled Employees. |
| b. | The EMSOP Program will be implemented with the following terms: |

| 1. | The EMSOP program will be implemented by issuing the Options which will be
distributed to all the Entitled Employees; |
| --- | --- |
| 2. | Each Option shall give rights to the holder to purchase one EMSOP share after
vesting period has lapsed; |
| 3. | The Option can be exercised during the Exercise Period; and |
| 4. | The management of the EMSOP Program is supervised by the Commissioners of the
Company, and shall be reported to the Annual General Meeting of Shareholders. |

The implementation of the EMSOP Program is deemed as having a conflict of interest as meant in Rule IX.E.1.

Further information on the EMSOP program can be read at Section IV on the EMSOP Program.

III. REASONS AND BACKGROUND FOR THE TRANSACTION PLAN

The company is aware that the employees are one of the key factors in the realization of the vision and mission of the Company, i.e. “To Become a Leading Infocom Company in the Region” with a mission to manage the business in the best possible way, with the best human resources, competitive technology and synergic business partner, and that each party, the

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management as well as all levels of employees have an important role in enhancing the performance of the company.

Therefore, the Company proposes to implement the EMSOP Program which will give the opportunity to the management and employees of the Company to own the Company’s shares. This program is also a part of the employees development program and is an incentive given by the Company to all levels of employees. With this Program, it is expected to achieve harmony between the aims the Company would like to achieve and the aims the employees wish to achieve. As such this step will increase shareholder value.

The reason for EMSOP Program is:

The EMSOP Program is a program with long-term incentive (LTI) for the employees and management by enhancing the performance to be achieved by the Company in the future.

IV. INFORMATION ON EMSOP PROGRAM

The EMSOP Program is the granting of the Option to the Entitled Employees to purchase the maximum 51,150,750 shares that have been repurchased by the Company and held as treasury stock, within a specific period of time.

| a. |
| --- |
| The Company will issue the Options in a maximum amount of 45,661,500 all at once. Each
Option will grant its holder the right to purchase 1 share of the Company by paying the
Exercise Price. The Board of Directors of the Company has the authority to determine the
grant date of the Options at any time after the EGM approves the EMSOP Program. |
| The remaining Options amounting to 5,489,250 shall be reserved and issued later for new
employees, new hire and top performer of the Company who are entitled for the Options. The
Company’s Board of Directors has the authority to determine which new entitled employees
will receive the Options, the allocation of the Options and the grant date of the Options. |

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| | The total Options issued by the Company will be adjusted if the Company undertakes a
corporate action including but not limited to an action that can change the nominal value of
the shares, a merger or another form of reorganization or restructurisation of the Company
that would affect the capital of the Company. |
| --- | --- |
| b. | EMSOP Program Participants |
| | The Options will be granted to the Entitled Employees and the Options may not be transferred
or sold. |
| | The Option granted can be exercised by its holder and will be vested immediately in the
following events: |

—	Entitled Employee retires in line with the Company’s policy;
—	Entitled Employee, with the approval from the Board of Directors, retires
early;
—	Entitled Employee is subject to involuntary termination, including redundancy
and retrenchment but excluding dismissal due to misconduct or disciplinary action
subject to heavy disciplinary punishment;
—	Entitled Employee dies;
—	Entitled Employee suffers total and permanent disability or ill-health
retirement; or
—	There is a change of control in the Company whereby the Government of the
Republic of Indonesia no longer controls the Company;

| Should events above stated occurred, the Options continue to be exercisable in 5 (five)
years as of the date Options are granted. |
| --- |
| The Options granted whether vested or unvested will be forfeited, and therefore can not be
exercised in the event: |

—	Entitled Employee resigns;
—	Entitled Employee is dismissed due to misconduct or disciplinary action subject
to heavy disciplinary punishment; or
—	Entitled Employee is declared bankrupt.

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c.
The Options will be distributed and allocated to the Entitled Employees as follows:

Company	Level	Class	Option — Per person
Telkom	President Director	Exe	850,000
Telkom	Director	Exe	550,000
Subsidiary	President Director	Exe	115,000*)
Subsidiary	Director	Exe	115,000*)
Telkom	Band I	Exe	60,000
Telkom	Band I	Non Exe	18,500
Telkom	Band II	Exe	18,500
Telkom	Band II	Non Exe	12,000
Telkom	Band III	Exe	12,000
Telkom	Band III	Non Exe	7,500
Telkom	Band IV	Exe	2,500
Telkom	Band IV	Non Exe	1,000
Telkom	Band V	Non Exe	500
Telkom	Band VI	Non Exe	500
Telkom	Band VII	Non Exe	500

*) The amount of Option per person of 115,000 merely reflects average estimation of Options to be granted to President Director and Director of Subsidiaries who meets the criteria of Entitled Employees. The amount of Options to be granted to President Director and Director of Subsidiaries or Affiliated Companies shall be determined further by the Board of Directors with the approval of the Board of Commissioners of the Company.

| | The Option Allocation above cannot be amended without prior approval from the GMS of the
Company. |
| --- | --- |
| d. | Exercise Period |
| | The Options granted can be exercised after the vesting period. |
| | Vesting period and it’s implementation: |

— For the Management, Band I, II and III:

—	At the end of year 1: 30% (subject to minimum of 2500 Options);
—	At the end of year 2: 30%;

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— At the end of year 3: 40%

— For the Entitled Employee in the Band IV, V, VI, and VII: 100% of the Option granted can be exercised at the end of year 1 (one).

e.	Validity of Options Granted
	The Option will expire after 5 years as from the date the Options are granted.
f.	Exercise Price
	The exercised price in the EMSOP Program differs for each level group of Entitled Employees.

| — | For Management Level: The average closing price of share of the Company during the 25 (twenty five)
consecutive trading days in the Regular Market prior to the date report to BEJ is
made on the exercised plan of EMSOP Program. |
| --- | --- |
| — | For level of Band I up to Band III: Exercised price is equal to the exercise price for the Management level less 5%
discount. |
| — | For level of Band IV up to Band VII: Exercise price is equal to the exercise price for the Management level less 10%
discount. |

| The Company is obliged to report to the BEJ with copy Bapepam-LK and BES on its plan to
exercise EMSOP program at the latest 5 (five) trading days prior to the date the Options can
be exercised, and Exercise Period in EMSOP Program can be done at the most twice a year, in
line with BEJ Regulation. |
| --- |
| The Entitled Employees shall have no rights as a shareholder of the Company until the
Options are exercised and the Entitled Employees are registered as the Company’s
shareholders in the register of shares. |

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| To exercise an Option, the Entitled Employee must give a notification to the Company of the
number of shares to be purchased in line with the procedures to be stipulated by the Board
of Directors of the Company. Payment of the purchase price of such shares must be made in
full and in cash in the exercise Period. |
| --- |
| The Board of Directors of the Company shall issue rules related to the implementation of
EMSOP Program from time to time, as it deems appropriate for the proper administration and
procedures of EMSOP Program. The management and implementation of the EMSOP program will be
supervised by the Board of Commissioners and reported to the Annual GMS of the Company. |

V. PARTIES WITH CONFLICTS OF INTEREST

The implementation of the EMSOP Program is deemed to be a transaction with Conflicts of Interest as meant in Rule IX.E.1, because:

| a. | The shares to be used for the EMSOP program are shares bought back by the Company (treasury
stock), whereby the Board of Directors of the Company is the party who implements the buying
back of the Company’s shares, because it fixes the price, number
and time of purchase of the shares. |
| --- | --- |
| b. | The members of the Company’s Board of Directors are among the parties who will receive the
Options. |
| c. | Employees are affiliated parties of the Company, who will receive the Options. |
| d. | The members of the Company’s Board of Directors and Employees that own shares of the Company
are parties who will also receive the Options. |

VI. OPINION OF THE INDEPENDENT PARTY

In relation to the EMSOP Program and its implementation, the Company appoints the following independent adviser:

Hadiputranto, Hadinoto & Partners, as independent legal consultant providing a legal opinion on the plan of the implementation of the EMSOP Program based on prevailing statutory regulations within the Republic of Indonesia.

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The above-mentioned Independent party states that it has no affiliate relationship, as defined in the Capital Market Law, either directly and/or indirectly with the Company or the Company’s Board of Directors.

Opinion of Legal Consultant

Hadiputranto, Hadinoto & Partners by its letter No. 31650 dated 28 December 2006 states that the EMSOP Program is a transaction with conflicts of interest as meant in Rule IX.E.1

VII. FINANCIAL IMPACT OF THE TRANSACTION

CONSOLIDATED BALANCE SHEETS

(in billion of Rp)

Before EMSOP	After EMSOP
Program	Program
(unaudited)	(Un-audited
	Proforma)
ASSETS
CURRENT ASSETS
Cash and equivalent	8,309	8,270
Short term investment	46	46
Receivables — net	3,732	3,732
Other receivables — net	149	149
Inventory	188	188
Other current assets	1,823	1,823
TOTAL NON CURRENT ASSETS	14,247	14,208
NON CURRENT ASSETS
Long term investment	101	101
Fixed Assets — net	49,020	49,020
Other non current assets	4,983	5,030
TOTAL NON CURRENT ASSETS	54,104	54,151
TOTAL ASSETS	68,351	68,359
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable	4,657	4,657
Tax payable	2,496	2,496
Accrued expenses	2,061	2,061
Unearned income	1,982	1,982
Current Maturities of Long term-liabilities	5,531	5,531
Other current liabilities	266	266
TOTAL LIABILITIES	16,993	16,993
NON CURRENT LIABILITIES
Deferred tax liabilities	2,163	2,163
Provision for employment and post-retirement benefit	4,682	4,682
Two step loan — related party	4,177	4,177
Notes and bonds	—	—
Bank loan	2,670	2,670
Liabilities of business acquisition	2,389	2,389

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Before EMSOP	After EMSOP
Program	Program
(unaudited)	(Un-audited
	Proforma)
Other non current liabilities	573	573
TOTAL NON CURRENT LIABILITIES	16,654	16,654
Minority rights to net assets of subsidiaries	7,195	7,195
Equity	27,509	27,517
TOTAL LIABILITIES AND EQUITY	68,351	68,359

CONSOLIDATED STATEMENTS OF INCOME

(in billion of Rp)

Without EMSOP		With EMSOP
Program		Program
(unaudited)		(Proforma)
OPERATING REVENUES
Fixed Lines	8,073		8,073
Cellular	14,899		14,899
Interconnection	6,367		6,367
Joint Operation scheme	485		485
Data and Intenet	6,369		6,369
Network	462		462
Revenue Sharing Arrangement	306		306
Other telecommunications services	239		239
Total operating revenues	37,200		37,200
OPERATING EXPENSES
Personnel	4,961		5,000
Depreciation	6,633		6,633
Operations, maintenance and telecommunication services	5,351		5,351
General and administrative	2,217		2,217
Marketing	855		855
TOTAL OPERATING EXPENSES	20,017		20,056
OPERATING INCOME	17,183		17,144
OTHER INCOME (EXPENSES)
Interest Income	448		448
Interest expenses	(862	)	(862	)
Gain
(loss) on foreign exchange — net	677		677
Equity in net income of associated companies	—		—
Others
— net	118		118
Total
Income (expenses) — net	381		381
INCOME BEFORE TAX	17,564		17,525
TAX EXPENSE	(5,387	)	(5,387	)
INCOME BEFORE MINORITY INTEREST IN NET INCOME OF
SUBSIDIARIES	12,177		12,138
MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES	(2,955	)	(2,955	)
NET INCOME	9,222		9,183
Net income per share — Rp.	458.12		457.10
Net Profit per ADS (40 Series B shares per ADS)	18,324.80		18,284.00

Note of impact on Financial Statements:

— The Company will issue 51,150,750 share options

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| — | The granting of the share options as if taken place on 30
September 2005 with a vesting period from 1 to 3 years, and
accordingly the execution dates are assumed starting from
30 September 2006. |
| --- | --- |
| — | The fair value of the share option is estimated using Black
Scholes Method with the following assumptions: |

•	Risk-free interest rate: 9.75%
•	Vesting period for Directors and Employees with band level I to III are from 1 to 3
years, while other employees with band level IV to VII are 1 year.
•	Expected volatility of the share price: 6.2%
•	Expected dividend yield per share Rp276.08

| — | Based on the Black Scholes Method, the estimated fair value of the
share option is Rp86 billion. |
| --- | --- |
| — | The estimated fair value is recognized as Deferred Compensation Cost
which will be amortized for 3 years. |
| — | Adjustment resulted from the program to the consolidated balance
sheets and income statements as of 30 September 2006 are as follows: |

| • | Additional personnel expenses and reduction of net income amounted to Rp39 billion
which represents amortization of deferred compensation expenses for the 1 st year. |
| --- | --- |
| • | Reduction of net income per share and ADS to Rp457.10 and Rp18,284 respectively. |
| • | Cash and Cash equivalent is deducted by Rp 39 billion resulted by additional cash
receipt of Rp289 billion from sale of 29,355,200 shares of Treasury Stock with price
per share ranging from Rp8,895.60 to Rp9,884, and reduction of cash and cash equivalent
due to acquisition of additional treasury stock of Rp328 billion for the period from
October 1 to 20 December 2006. |
| • | Addition of Other Non-current assets by Rp47 billion which represents balance of
Deferred Compensation Cost. |
| • | Addition of Equity of Rp 8 billion resulted from reduction of Treasury Stock
recognition of share options. The changes of equity balance are as follows: |

Equity without EMSOP Program	27,509
Stock Options	47
Reduction of net income	(39	)
Balance of equity with EMSOP Program	27,517

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VIII. STATEMENT OF THE COMPANY’S BOARD OF DIRECTORS AND BOARD OF COMMISSIONERS

The Board of Directors and the Board of Commissioners hereby states that all important and material information which relate to the EMSOP Program has been disclosed and after careful examination confirm that to the best of their knowledge and belief there is no material information that has not been disclosed that could cause the information presented herein to the Shareholders to be incorrect or misleading.

IX. EXTRAORDINARY MEETING OF SHAREHOLDERS

The EGM agenda which is linked with EMSOP Program is “Approval on the implementation of the EMSOP program”. Below are matters which relate to the EGM to approve EMSOP Program:

| 1. |
| --- |
| With due observance of the provisions stipulated in Rule IX.E.1 and the Articles of
Association of the Company, the EGM which will be held on Friday, 26 January 2007 in which
one of the agendas is above stated, must comply with the following requirements: |

| a. | According to Rule IX.E.1 and the Articles of Association of the Company, the
EMSOP Program can only be implemented after approval is obtained from an EGM which is
attended by Independent Shareholders representing more than 50% of the total shares
owned by the Independent Shareholders, and the EMSOP Program is approved by more than
50% of Independent Shareholders representing more than 50% of the total shares in the
Company owned by the Independent Shareholders. |
| --- | --- |
| b. | If the quorum of the Independent Shareholders at the first EGM is not reached,
a second EGM may be held, which must be attended by Independent Shareholders
representing more than 50% of the share owned by the |

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| | Independent Shareholders and the resolution must be approved by Independent
Shareholders representing more than 50% of the shares owned by the Independent
Shareholders or their proxies who are present at the meeting. |
| --- | --- |
| c. | If the quorum of the Independent Shareholders at the second EGM is not reached,
a third EGM may be held, with the approval from Bapepam-LK relating to quorum, and the
resolution on the EMSOP Program must be approved by more than 50% of the total votes of
Independent Shareholders representing more than 50% of the total shares in the Company
owned by the Independent Shareholders or their proxies who are present at the meeting. |
| d. | If the Independent Shareholders do not approve the EMSOP Program proposed by
the Board of Directors of the Company, the EMSOP Program cannot be resubmitted within
12 months after the date of the EGM rejecting the matter. |

| 2. |
| --- |
| Based on Rule IX.E.1, before the EGM, the Company will provide statement forms to be duly
stamped and signed by the Independent Shareholders or their proxies containing the statement
that: |

a.	the person concerned is really an Independent Shareholder; and
b.	if in the future it is proven that the statement is not correct, the person
concerned can be liable to sanction stipulated in the provisions of the prevailing
statutory regulations.

3.
The significant dates which need to be observed in relation to the holding of the EGM are as
stated in the following schedule:

Events	Dates
Announcement of EGM through newspapers	28 December 2006

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Events	Dates
Announcement of brief information on EMSOP Program in
newspapers	28 December 2006
Date of Register of Shareholders	10 January 2007
Notice of EGM in newspapers	11 January 2007
Dispatch of Information to the Shareholders EGM	11 January 2007
EGM	26 January 2007
Report to Bapepam-LK on the result of the EGM	30 January 2007
Announcement of the result of the EGM in newspapers	30 January 2007

| 4. |
| --- |
| The EGM will be held at 14.00 Western Indonesia Time at Grha Citra Caraka, Jl Gatot Subroto
Jakarta. The Shareholders who are unable to attend the EGM may grant power of attorney to
other parties with due observance of the following provisions: |

| a. | The Shareholders must complete the Power of Attorney form which can be obtained
from the Securities Administration Bureau appointed by the Company, i.e. PT Datindo
Entrycom, Puri Datindo — Wisma Sudirman Jl. Jenderal Sudirman Kav. 34 Jakarta 10220
phone 021-5709009 fax 021-5709026. |
| --- | --- |
| b. | Members of the Board of Directors and Commissioners and employees of the
Company are allowed to act as proxies of a Shareholder at the EGM, but their votes as
proxy shall not be counted in the voting. |
| c. | The original Power of Attorney form fully completed must be delivered by the
Shareholder to the Securities Administration Bureau appointed by the Company before the
date of the EGM. In the event of failure to submit it to the Company’s Securities
Administration Bureau, the original Power of Attorney must be shown to the official of
PT Datindo Entrycom before the EGM starts. |

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X. ADDITIONAL INFORMATION

Should the Shareholders require further information with respect to the EMSOP Program, please contact the Company at the following address

Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk. Investor Relations/ Corporate Secretary, Ghra Citra Caraka Lt, 5, Jl. Gatot Subroto No. 52 Jakarta 12710 Phone: (021) 521 5109, Fax: (021) 522 0500 E-mail: investor@telkom.co.id www.telkom-indonesia.com