PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA TBK

6-K 1 u93270e6vk.htm PT TELEKOMUNKASI 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 May , 20 08

Perusahaan Perseroan (Persero) PT TELEKOMUNIKASI INDONESIA

(Translation of registrants 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) : 82- ]

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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	May 23, 2008	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 AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2007 AND 2008, AND THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

MARCH 31, 2007 AND 2008, AND THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008

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TABLE OF CONTENTS

Consolidated Balance Sheets	1-2
Consolidated
Statements of Income	3
Consolidated Statements of
Changes in Stockholders Equity	4-5
Consolidated
Statements of Cash Flows	6-7
Notes to Consolidated Financial Statements	8-63

/TOC

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PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED) MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

	Notes	2007 — Rp.	2008 — Rp.	US$ (Note 3)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	2c,2e,5,44	7,363,462	9,830,473	1,066,790
Temporary investments	2c,2f,44	85,846	186,708	20,261
Trade receivables	2c,2g,6,37,44
Related parties net of allowance for doubtful
accounts of Rp.91,803 million in 2007
and Rp.130,703 million in 2008		535,544	399,786	43,384
Third parties net of allowance for doubtful
accounts of Rp.691,513 million in 2007
and Rp.1,161,958 million in 2008		2,961,961	2,658,133	288,457
Other receivables net of allowance for
doubtful accounts of Rp.1,591 million in 2007
and Rp.10,719 million in 2008	2c,2g,44	149,412	122,953	13,343
Inventories net of allowance for obsolescence of
Rp.49,629 million in 2007 and Rp.56,868
million in 2008	2h,7,37	207,166	253,898	27,553
Prepaid expenses	2c,2i,8,44	1,728,970	1,226,795	133,130
Claim for tax refund	38	359,582	420,550	45,638
Prepaid taxes	38	26,896	58,827	6,384
Restricted time deposits	2c,9,44	4,623	75,686	8,213
Total Current Assets		13,423,462	15,233,809	1,653,153
NON-CURRENT ASSETS
Long-term investments net	2f,10	92,174	140,261	15,221
Property, plant and equipment net of accumulated
depreciation of Rp.47,390,018 million in 2007 and Rp.56,935,191 million in 2008	2k,2l,4,11, 19,20,23	56,368,870	60,770,640	6,594,752
Property, plant and equipment under Revenue-
Sharing Arrangements net of accumulated
depreciation of Rp.534,746 million in 2007
and Rp.524,688 million in 2008	2m,12,34,47	924,267	664,787	72,142
Prepaid pension benefit cost	2i,2r,41	103	557	60
Advances and other non-current assets	2c,2o,13,29,44,49	721,029	1,624,082	176,243
Goodwill and other intangible assets net of
accumulated amortization of Rp.3,971,474
million in 2007 and Rp.5,033,144 million in 2008	2d,2j,4,14,37	4,173,722	3,365,431	365,212
Escrow accounts	2c,15,44	1,387	1,285	140
Total Non-current Assets		62,281,552	66,567,043	7,223,770
TOTAL ASSETS		75,705,014	81,800,852	8,876,923

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements.

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PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS UNAUDITED (Continued) MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

	Notes	2007 — Rp.	Rp.		US$ (Note 3)
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Trade payables	2c,16,44
Related parties		874,351		577,569		62,677
Third parties		6,335,820		4,845,103		525,784
Other payables		33,932		50,509		5,482
Taxes payable	2s,38	1,507,519		1,554,280		168,668
Accrued expenses	2c,17,35,41,44	2,578,363		3,069,501		333,098
Unearned income	18	2,154,127		2,477,559		268,862
Advances from customers and suppliers		236,942		174,824		18,972
Short-term bank loans	2c,19,44	357,133		215,814		23,420
Current maturities of long-term liabilities	2c,20,44	4,714,280		4,567,427		495,651
Total Current Liabilities		18,792,467		17,532,586		1,902,614
NON-CURRENT LIABILITIES
Deferred tax liabilities net	2s,38	2,708,336		3,023,781		328,137
Unearned income on Revenue-Sharing Arrangements	2m,12,47	749,254		443,013		48,075
Accrued long service award	2c,2r,42,44	453,535		76,806		8,335
Accrued post-retirement health care benefits	2c,2r,43,44	2,826,770		2,894,582		314,116
Accrued pension and other post-retirement benefits costs	2r,41	1,159,778		1,324,308		143,712
Long-term liabilities net of current maturities
Obligations under capital leases	2l,11,20	208,000		209,515		22,736
Two-step loans related party	2c,20,21,44	3,879,111		3,688,710		400,294
Bank loans	2c,20,23,44	2,018,614		3,830,987		415,734
Deferred consideration for business combinations	20,24	3,256,028		2,117,166		229,752
Total Non-current Liabilities		17,259,426		17,608,868		1,910,891
MINORITY INTEREST	25	9,230,848		10,556,996		1,145,632
STOCKHOLDERS EQUITY
Capital stock Rp.250 par value per Series A
Dwiwarna share and Series B share
Authorized 1 Series A Dwiwarna share and
79,999,999,999 Series B shares
Issued and fully paid 1 Series A Dwiwarna share
and 20,159,999,279 Series B shares	1c,26	5,040,000		5,040,000		546,934
Additional paid-in capital	27	1,073,333		1,073,333		116,477
Treasury stock 191,915,500 shares in 2007 and
337,293,000 shares in 2008	2u,28	(1,641,680	)	(3,030,368	)	(328,852	)
Difference in value arising from restructuring transactions and other
transactions between entities under common control	2d,29	180,000		270,000		29,300
Difference due to change of equity in associated
companies	2f	385,595		385,595		41,844
Unrealized holding gain from available-for-sale securities	2f	9,708		12,586		1,366
Translation adjustment	2f	227,669		228,914		24,841
Retained earnings
Appropriated		1,803,397		6,700,879		727,171
Unappropriated		23,344,251		25,421,463		2,758,705
Total Stockholders Equity		30,422,273		36,102,402		3,917,786
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY		75,705,014		81,800,852		8,876,923

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements.

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PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars, except per share and per ADS data)

	Notes	2007 — Rp.	Rp.		US$ (Note 3)
OPERATING REVENUES
Telephone	2q,30
Fixed lines		2,867,576		2,540,438		275,685
Cellular		5,579,802		5,966,083		647,432
Interconnection	2q,31,44
Revenues		2,790,382		3,041,324		330,041
Expenses		(661,467	)	(781,585	)	(84,817	)
Net		2,128,915		2,259,739		245,224
Data and Internet	2q,32	2,921,030		3,917,418		425,113
Network	2q,33,44	208,754		223,816		24,288
Revenue-Sharing Arrangements	2m,12,34,47	132,672		97,936		10,628
Other telecommunications services		8,984		26,173		2,840
Total Operating Revenues		13,847,733		15,031,603		1,631,210
OPERATING EXPENSES
Depreciation	2k,2l,2m,11,12,13	2,364,489		2,534,473		275,038
Personnel	2r,17,35,41,42,43	2,054,655		2,246,902		243,831
Operations, maintenance and telecommunication
services	2q,36,44	2,149,251		2,506,173		271,967
General and administrative	2g,2q,6,7,14,37	827,934		824,586		89,483
Marketing	2q	280,644		376,981		40,909
Total Operating Expenses		7,676,973		8,489,115		921,228
OPERATING INCOME		6,170,760		6,542,488		709,982
OTHER INCOME (EXPENSES)
Interest income	44	144,899		174,205		18,905
Equity in net income (loss) of associated
companies	2f,10	2,977		(874	)	(95	)
Interest expense	44	(384,259	)	(263,146	)	(28,556	)
Loss (gain) on foreign exchange net	2p	(86,422	)	(45,655	)	(4,954	)
Others net		86,991		102,916		11,168
Other (expenses) income net		(235,814	)	(32,554	)	(3,532	)
INCOME BEFORE TAX		5,934,946		6,509,934		706,450
TAX (EXPENSE) BENEFIT	2s,38
Current tax		(1,810,967	)	(2,058,376	)	(223,372	)
Deferred tax		(42,939	)	5,363		582
		(1,853,906	)	(2,053,013	)	(222,790	)
INCOME BEFORE MINORITY INTEREST IN NET
INCOME OF SUBSIDIARIES		4,081,040		4,456,921		483,660
MINORITY INTEREST IN NET INCOME OF
SUBSIDIARIES net	25	(1,038,830	)	(1,249,587	)	(135,604	)
NET INCOME		3,042,210		3,207,334		348,056
BASIC EARNINGS PER SHARE	2w,39
Net income per share		152.03		161.50		0.02
Net income per ADS
(40 Series B shares per ADS)		6,081.20		6,460.00		0.80

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements.

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PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED)

THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah )


					value of
					restructuring	Difference
					transactions	due to change	Unrealized
			Additional		between entities	of equity	holding gain (loss)
		Capital	paid-in		under common	in associated	on available-for-sale	Translation	Retained earnings		stockholders
Description	Notes	stock	capital	Treasury stock	control	companies	securities	adjustment	Appropriated	Unappropriated	equity
		Rp.	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.
Balance, January 1, 2007		5,040,000	1,073,333	(952,211	)	180,000	385,595	8,865	227,669	1,803,397	20,302,041	28,068,689
Unrealized holding gain on
available-for-sale securities	2f							843				843
Treasury stock acquired at cost	2u,28			(689,469	)							(689,469	)
Net income for the year											3,042,210	3,042,210
Balance, March 31, 2007		5,040,000	1,073,333	(1,641,680	)	180,000	385,595	9,708	227,669	1,803,397	23,344,251	30,422,273

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements

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PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED) (Continued) THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah )


					value of
					restructuring	Difference
					transactions	due to change	Unrealized
			Additional		between entities	of equity	holding gain (loss)
		Capital	paid-in		under common	in associated	on available-for-sale	Translation		Retained earnings		stockholders
Description	Notes	stock	capital	Treasury stock	control	companies	securities	adjustment		Appropriated	Unappropriated	equity
		Rp.	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.		Rp.	Rp.	Rp.
Balance, January 1, 2008		5,040,000	1,073,333	(2,176,611	)	270,000	385,595	11,237	230,017		6,700,879	22,214,129	33,748,579
Unrealized holding gain (loss) on
available-for-sale securities	2f							1,349					1,349
Foreign currency translation of
associated companies	2f,10								(1,103	)			(1,103	)
Treasury stock acquired at cost	2u,28			(853,757	)								(853,757	)
Net income for the year												3,207,334	3,207,334
Balance, March 31, 2008		5,040,000	1,073,333	(3,030,368	)	270,000	385,595	12,586	228,914		6,700,879	25,421,463	36,102,402

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Rp.		Rp.		US$ (Note 3)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from operating revenues
Telephone
Fixed lines	2,787,553		2,503,591		271,686
Cellular	5,643,370		6,045,820		656,085
Interconnection net	2,304,773		2,376,289		257,872
Joint operation schemes	(15,092	)
Data and internet	2,863,295		3,937,349		427,276
Other services	323,254		352,792		38,285
Total cash receipts from operating revenues	13,907,153		15,215,841		1,651,204
Cash payments for operating expenses	(6,911,684	)	(5,820,282	)	(631,610	)
Cash receipt from customers	81,251		33,328		3,617
Cash generated from operations	7,076,720		9,428,887		1,023,211
Interest received	155,172		174,829		18,972
Interest paid	(354,297	)	(236,489	)	(25,663	)
Income tax paid	(2,757,061	)	(3,208,328	)	(348,164	)
Net Cash Provided by Operating Activities	4,120,534		6,158,899		668,356
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of temporary investments and
maturity of time deposits	11,468		40,784		4,426
Purchase of temporary investments
and placements in time deposits	(11,979	)	(21,548	)	(2,338	)
Proceeds from sale of property, plant and equipment	2,481		5,298		575
Acquisition of property, plant and equipment	(3,923,616	)	(3,600,112	)	(390,680	)
(Increase) decrease in advances for the purchase of
property, plant and equipment	683,882		(169,857	)	(18,433	)
(Increase) decrease in advances and others	197,853		(33,885	)	(3,677	)
Business combinations, net of cash paid			(323,541	)	(35,110	)
Purchases of long-term investments			(28,249	)	(3,066	)
Cash dividends received	766		618		67
Acquisition of long-term investments			(674	)	(73	)
Net Cash Used in Investing Activities	(3,039,145	)	(4,131,166	)	(448,309	)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in escrow accounts	686
Proceeds from short-term borrowings	23,000		11,312		1,228
Repayments of short-term borrowings	(833,333	)	(371,763	)	(40,343	)
Repayments of long-term borrowings	(379,033	)	(993,484	)	(107,812	)
Payment for purchase of treasury stock	(689,468	)	(853,757	)	(92,649	)
Repayments of promissory notes	(99,165	)	(101,355	)	(10,999	)
Repayments of obligations under capital leases			(3,980	)	(432	)
Net Cash Used in Financing Activities	(1,977,313	)	(2,313,027	)	(251,007	)
NET DECREASE IN CASH AND
CASH EQUIVALENTS	(895,924	)	(285,294	)	(30,960	)
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS	(56,450	)	(25,024	)	(2,716	)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR	8,315,836		10,140,791		1,100,466
CASH AND CASH EQUIVALENTS AT END OF PERIOD	7,363,462		9,830,473		1,066,790

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements.

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PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued) THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Rp.	Rp.	US$ (Note 3)
SUPPLEMENTAL CASH FLOW INFORMATION
Noncash investing and financing activities:
Acquisition of property, plant and equipment
through incurence of payables	5,208,815	4,263,679	462,689
Acquisition of property, plant and equipment
through capital leases		19,829	2,152

See accompanying notes to consolidated financial statements which form an integral part of the consolidated financial statements.

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2007 AND 2008, AND THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah, unless otherwise stated)

GENERAL

| a. |
| --- |
| Perusahaan Perseroan (Persero) P.T. Telekomunikasi Indonesia Tbk (the Company) was
originally part of Post en Telegraafdienst , which was established in 1884 under the
framework of Decree No. 7 dated March 27, 1884 of the Governor General of the Dutch Indies
and was published in State Gazette No. 52 dated April 3, 1884. |
| In 1991, the status of the Company was changed into a state-owned limited liability
corporation (Persero) based on the Government Regulation No. 25/1991. |
| The Company was established based on notarial deed No. 128 dated September 24, 1991 of Imas
Fatimah, S.H.. The deed of establishment was approved by the Minister of Justice of the
Republic of Indonesia in his Decision Letter No. C2-6870.HT.01.01.Th.1991 dated November 19,
1991, and was published in State Gazette No. 5 dated January 17, 1992, Supplement No. 210.
The Articles of Association have been amended several times, the latest amendments were
concerning among others, the change in terms of service of Board of Commissioners and Board
of Directors based on notarial deed No. 8 and No. 9 dated September 7, 2007 of A. Partomuan
Pohan, S.H., LLM. and notification of this amendment was received by the Minister of Justice
and Human Rights of the Republic of Indonesia (MoJHR) as in his Letter No.
W7-HT.01.10-12858 dated September 14, 2007. |
| In accordance with Article 3 of the Companys Articles of Association, the scope of its
activities is to provide telecommunication and information facilities and services in
accordance with prevailing regulations. To achieve this objective, the Company is involved
in the following activities: |

| i. | Planning, building, providing, developing, operating, marketing or selling,
leasing and maintaining telecommunications and information networks in accordance with
prevailing regulations. |
| --- | --- |
| ii. | Planning, developing, providing, marketing or selling and improving
telecommunications and information services in accordance with prevailing regulations. |
| iii. | Performing activities and other undertakings in connection with the utilization
and development of the Companys resources and optimizing the utilization of the
Companys property, plant and equipment, information systems, education and training,
and repairs and maintenance facilities. |

| The Companys head office is located at Jalan Japati No. 1, Bandung, West Java. |
| --- |
| Pursuant to Law No. 3/1989 on Telecommunications (effective on April 1, 1989), Indonesian
legal entities are allowed to provide basic telecommunications services in cooperation with
the Company as the domestic telecommunications organizing body (or badan penyelenggara).
The Government Regulation No. 8/1993 relating to the provision of the telecommunications
services regulates that cooperation to provide basic telecommunications services can be in
the form of a joint venture, joint operation or contractual management and that the entities
cooperating with the domestic telecommunications organizing body must use the organizing
bodys telecommunications networks. If the telecommunications networks are not available,
the
Government Regulation requires that the cooperation be in the form of a joint venture that
is capable of constructing the necessary networks. The Minister of Tourism, Post and
Telecommunication of the Republic of Indonesia (MTPT) reaffirmed the status of the Company
as the organizing body for the provision of domestic telecommunication services through two
Decision Letters both dated August 14, 1995. |

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) MARCH 31, 2007 AND 2008, AND THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008 (Figures in tables are presented in millions of Rupiah, unless otherwise stated)

1. GENERAL (continued)

| a. |
| --- |
| The provision of domestic telecommunications services of the Company, includes telephone,
telex, telegram, satellite, leased lines, electronic mail, mobile communication and cellular
services. Pursuant to this, in 1995, the Company entered into agreements with investors to
develop, manage and operate telecommunications facilities in five of the Companys seven
regional divisions (Divre) under Joint Operation Schemes (known as Kerja Sama Operasi or
KSO), in order to: |

(1)	accelerate the construction of telecommunication facilities,
(2)	make the Company a world-class operator, and
(3)	increase the technology as well as knowledge and skills of its employees.

| Historically, the Company had exclusive right to provide local wireline and fixed wireless
services for a minimum period of 15 years and the exclusive right to provide domestic
long-distance (Sambungan Langsung Jarak Jauh or SLJJ) telecommunications services for a
minimum period of 10 years, effective January 1, 1996. Such exclusive rights also applied to
telecommunications services provided for and on behalf of the Company through a KSO. This
grant of rights did not affect the Companys right to provide other domestic
telecommunications services. |
| --- |
| In 1999, the Government of the Republic of Indonesia (the Government) passed
Telecommunications Law No. 36, which took effect in September 2000. This Law states that the
telecommunication activities cover: |

(1)	Telecommunications networks,
(2)	Telecommunications services, and
(3)	Special telecommunications.

| National state-owned companies (Badan Usaha Milik Negara or BUMN), regional state-owned
companies, privately-owned companies and cooperatives are allowed to provide
telecommunications networks and services. Special telecommunications can be provided by
individuals, Government Agencies and legal entities other than telecommunications networks
and service providers. The Telecommunications Law prohibits activities that result in
monopolistic practices and unfair competition, and expects to pave the way for market
liberalization. In connection with this law, Government Regulation No. 52/2000 was issued,
which provides that interconnection fees shall be charged to originating telecommunications
network operators where telecommunications service is provided by two or more
telecommunications network operators. |
| --- |
| On press release No. 05/HMS/JP/VIII/2000 dated August 1, 2000 of the Directorate General of
Post and Telecommunications (DGPT), as corrected by No. 1718/UM/VIII/2000 dated August 2,
2000, the period for exclusive rights granted to the Company to provide local and SLJJ
fixed-line telecommunications services, were shortened from the expiration period of
December 2010 to August 2002 and from December 2005 to August 2003. In return, the
Government was required
to pay compensation to the Company (Notes 13 and 29). Further, on press release of the
Coordinating Minister of Economics of the Republic of Indonesia dated July 31, 2002, the
Government terminated the Companys exclusive right as a network provider for local and SLJJ
services effective August 1, 2002. On August 1, 2002, PT Indonesian Satellite Corporation
Tbk (Indosat) was granted a license to provide local and SLJJ telecommunications services. |
| The Company has a commercial license to provide International Direct Dialing (IDD)
services based on the Minister of Communications of the Republic of Indonesia (MoC) Decree
No. KP. 162/2004 dated May 13, 2004. |

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GENERAL (continued)

b. Companys officers and employees

| 1. |
| --- |
| Based on resolutions made at (i) the Annual General Meeting (AGM) of Stockholders
dated June 24, 2005 as covered by notarial deed No. 36 of A. Partomuan Pohan, S. H.,
LLM. and (ii) the Extraordinary General Meetings (EGM) of Stockholders dated February
28, 2007 as covered by notarial deed No. 16 of the same notary, as amended through the
AGM of Stockholders dated June 29, 2007 as covered by notarial deed No. 58 of the same
notary, the composition of the Companys Board of Commissioners and Directors as of
March 31, 2007 and 2008, respectively, were as follows: |

	2007	2008
President Commissioner	Tanri Abeng	Tanri Abeng
Commissioner	Anggito Abimanyu	Anggito Abimanyu
Commissioner	Gatot Trihargo	Mahmuddin Yasin
Independent Commissioner	Arif Arryman	Arif Arryman
Independent Commissioner	Petrus Sartono	Petrus Sartono
President Director	Rinaldi Firmansyah	Rinaldi Firmansyah
Director of Finance	Sudiro Asno	Sudiro Asno
Director of Network and Solution	I Nyoman Gede Wiryanata	Ermady Dahlan
Director of Enterprise and
Wholesale	Arief Yahya	Arief Yahya
Director of Consumer	Ermady Dahlan	I Nyoman Gede Wiryanata
Director of Compliance and
Risk Management	Prasetio	Prasetio
Chief Information Technology
Officer	Indra Utoyo	Indra Utoyo
Human Resources Director/
Human Capital and General
Affairs	Faisal Syam	Faisal Syam

| | Based on AGM of Stockholders dated June 29, 2007, the Companys stockholders agreed to
replace Gatot Trihargo as the Companys Commissioner to Mahmuddin Yasin. |
| --- | --- |
| | Based on Board of Commissioners Decision Letter dated February 15, 2008, the Board of
Commissioners agreed to appoint Ermady Dahlan as Director of Network and Solution and
I Nyoman Gede Wiryanata as Director of Consumer effective from March 1, 2008. |
| 2. | Employees |
| | As of March 31, 2007 and 2008, the Company and its subsidiaries had 34,389 and 33,438
employees, respectively. |

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GENERAL (continued)

| c. |
| --- |
| The Companys shares prior to its Initial Public Offering (IPO) totaled 8,400,000,000,
consisting of 8,399,999,999 Series B shares and 1 Series A Dwiwarna share, and were
100%-owned by the Government. On November 14, 1995, 933,333,000 new Series B shares and
233,334,000 Series B shares owned by the Government were offered to public through IPO at
the Indonesia Stock Exchange (IDX) (previously the Jakarta Stock Exchange and the Surabaya
Stock Exchange) and 700,000,000 Series B shares owned by the Government were offered to the
public and listed on the New York Stock Exchange (NYSE) and the London Stock Exchange
(LSE), in the form of American Depositary Shares (ADS). There are 35,000,000 ADS and
each ADS represents 20 Series B shares at that time. |
| In December 1996, the Government had a block sale of its 388,000,000 Series B shares, and in
1997, had distributed 2,670,300 Series B shares as incentive to stockholders who did not
sell their shares within one year from the date of the IPO. In May 1999, the Government
further sold 898,000,000 Series B shares. |
| To comply with Law No. 1/1995 of the Limited Liability Companies, at the AGM of Stockholders
on April 16, 1999, the stockholders resolved to increase the Companys issued share capital
through distribution of 746,666,640 bonus shares, to be taken from its additional paid-in
capital, which were distributed to stockholders in August 1999. |
| On August 16, 2007, the Law No. 1/1995 of the Limited Liability Companies has been amended
by the issuing of Law No. 40/2007 of the Limited Liability Companies which become effective
at the same date. The Law No. 40/2007 has no effect to the public offering of shares of the
Company. The Company has complied with Law No. 40/2007. |
| In December 2001, the Government had another block sale of 1,200,000,000 shares or 11.9% of
the total outstanding Series B shares. In July 2002, the Government had sold 312,000,000
shares or 3.1% of the total outstanding Series B shares. |
| At the AGM of stockholders on July 30, 2004, as notarized by deed No. 26 of A. Partomuan
Pohan, S.H., LLM., the stockholders approved the Companys 2-for-1 stock split for Series A
Dwiwarna and Series B. For series A Dwiwarna share with par value of Rp.500, the split was
into 1 Series A Dwiwarna share with par value of Rp.250 per share and 1 Series B share with
par value of Rp.250 per share. The stock split resulted to an increase of the Companys
authorized capital stock from 1 Series A Dwiwarna share and 39,999,999,999 Series B shares
into 1 Series A Dwiwarna Share and 79,999,999,999 Series B shares, and the issued capital
stock from 1 Series A Dwiwarna share and 10,079,999,639 Series B shares into 1 Series A
Dwiwarna share and 20,159,999,279 Series B shares. After the stock split, each ADS
represented 40 Series B shares. |
| At the EGM on December 21, 2005, the stockholders approved the phase I plan to repurchase up
to a maximum of 5% of the Companys issued Series B shares for a maximum repurchase
amount of Rp.5,250,000 million which had expired on June 20, 2007. At the AGM on June 29,
2007, the stockholders approved the phase II plan to repurchase up to 215,000,000 Series B
shares for Rp.2,000,000 million which will be expired on December 28, 2008. As of May 19,
2008, the Company had repurchased 399,671,000 shares equivalent to 1.98% of the issued and
outstanding Series B shares, for a repurchase price of Rp.3,585,971 million, including
broker and custodian fees (Note 28). |
| As of March 31, 2008, all of the Companys Series B shares were listed on the IDX and
44,552,876 ADS shares were listed on the NYSE and LSE. |

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GENERAL (continued)

d.	Subsidiaries
	As of March 31, 2007 and 2008, the Company has consolidated the following direct or
indirectly owned subsidiaries which it controls as a result of majority ownership (Note 2d):
(i)	Direct subsidiaries:

	Nature of business/ — date of incorporation	Date of	Percentage of — effective		Total assets
Subsidiary/place of	or acquisition by	commercial	ownership interest		before elimination
incorporation	the Company	operation	2007	2008	2007	2008
PT Pramindo Ikat Nusantara ( Pramindo ), Medan, Indonesia	Telecommunication
construction and
services/ August
15, 2002	1995	100	100	1,370,377	1,222,583
PT Telekomunikasi Indonesia International ( TII ) (formerly PT Aria West International ( AWI )), Jakarta, Indonesia	Telecommunication/ July
31, 2003	1995	100	100	775,386	626,059
PT Multimedia Nusantara ( Metra ), Jakarta, Indonesia	Multimedia
telecommunication
services/ May 9, 2003	1998	100	100	90,290	649,451
PT Graha Sarana Duta ( GSD ), Jakarta, Indonesia	Leasing of offices
and providing building
management and
maintenance services,
civil consultant and
developer/April 25, 2001	1982	99.99	99.99	153,714	153,866
PT Dayamitra Telekomunikasi ( Dayamitra ), Jakarta, Indonesia	Telecommunication/May 17, 2001	1995	100	100	471,708	437,253
PT Indonusa Telemedia ( Indonusa ), Jakarta, Indonesia	Pay television and
content services/May
7, 1997	1997	96	98.75	57,205	135,220
PT Telekomunikasi Selular ( Telkomsel ), Jakarta, Indonesia	Telecomunication
provides
telecommunication
facilities and mobile
cellular services using
Mobile Global System
for Communication
(GSM) technology/ May
26, 1995	1995	65	65	40,204,901	43,133,467
PT Napsindo Primatel Internasional ( Napsindo ), Jakarta, Indonesia	Telecommunication -
provides Network
Access Point (NAP),
Voice Over Data
(VOD) and other
related services/ December
29, 1998	1999; ceased
operation on
January 13,
2006	60	60	4,536	4,910
PT Infomedia Nusantara ( Infomedia ), Jakarta, Indonesia	Data and information
service provides
telecommunication
information services
and other information
services in the form of
print and electronic
media, and call
center services/September
22,1999	1984	51	51	448,606	500,645

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GENERAL (continued)

d. Subsidiaries (continued)

(ii) Indirect subsidiaries:

	Nature of business/ — date of incorporation	Date of	Percentage of — effective		Total assets
Subsidiary/place of	or acquisition by	commercial	ownership interest		before elimination
incorporation	subsidiary	operation	2007	2008	2007	2008
Aria West International
Finance B.V.
( AWI BV ) The Netherlands	Established to engaged
in rendering services
in the field of trade
and finance services/ June
3, 1996	1996; ceased
operation on
July 31, 2003	100 (through 100% ownership by TII)	100 (through
100%
ownership by
TII)	1,745	1,848
Telekomunikasi Selular Finance Limited ( TSFL ), Mauritius	Finance establish
to raise funds
for the development of
Telkomsel s business
through the issuance
of debenture stock,
bonds, mortgages or
any other securities/ April
22, 2002	2002	65 (through 100% ownership by Telkomsel)	65 (through
100%
ownership by
Telkomsel)	7	6
PT Balebat Dedikasi Prima ( Balebat ) , Bogor, Indonesia	Printing/October 1, 2003	2000	33.15
(through 65%
ownership by
Infomedia)	33.15
(through
65%
ownership by
Infomedia)	47,026	50,168
Telkomsel Finance B.V.,
( TFBV ), Amsterdam
The Netherlands	Finance establish
in 2005 for the
purpose of borrowing,
lending and
raising funds
including issuance
of bonds, promissory
notes or debts/February
7, 2005	2005	65 (through 100% ownership by Telkomsel)	65 (through
100%
ownership by
Telkomsel)	8,240	8,489
PT Finnet Indonesia ( Finnet ), Jakarta, Indonesia	Banking data and
communication/ October
31, 2005	2006	60 (through 60% ownership by Metra)	60
(through
60%
ownership
by Metra)	13,366	18,764
PT Telkom Indonesia
International Pte. Ltd. Singapura	Finance/	2007		100 (through
100%
ownership by
TII)
PT Sigma Cipta Caraka ( Sigma ), Jakarta, Indonesia	Banking data and
communication/	1988		80 (through 80% ownership by Metra)		266,613

| (a) |
| --- |
| On March 6, 2007, based on notarial deed No. 3 of Titien Suwartini, S.H., and as
approved by the MoJHR in its Decision Letter No. W8-00573.HT.01.04-TH.2007 and the
Capital Investment Coordinating Board in its Decision Letter No. 20/III/PMDN/2007 dated
March 1, 2007, PT Aria West International has changed its name to PT Telekomunikasi
Indonesia International and its business operation has been expanded to include
international businesses. |

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GENERAL (continued)

d. Subsidiaries (continued)

(b)	Metra
	Based on Circular Meeting of Metras stockholders on December 13, 2007, the stockholders
agreed as follows: (1) increase its authorized capital from Rp.200,000 million to
Rp.1,000,000 million with a par value of Rp.10,000 per share; (2) increase its issued
and fully paid capital from Rp.62,250 million to Rp.412,250 million by issuing
35,000,000 new shares; (3) to limit the maximum additions to issued capital for funding
acquisition of Sigma amounting to Rp.335,000 million, and for the acquisition cost as
well as Metras business development amounting to a maximum of Rp.15,000 million; (4)
approve a total of 35,000,000 new shares to be issued and fully paid by the Company; and
(5) approval on acquisition of a maximum 80% ownership interest in Sigma, a company
engaged in providing information system services.
	On December 18, 2007, Metra entered into a Conditional Sales and Purchase Agreement
(CSPA) with Sigmas stockholders for the acquisition.
	On January 21, 2008, the Company paid Rp.350,000 million for additional capital to Metra
pursuant to circular meeting of the Metras stockholders on December 13, 2007. The
acquisition of Sigma transaction was completed through the signing of an Amendment to
the CSPA of Shares on February 21, 2008 which became effective from February 22, 2008.
(c)	Indonusa
	At Indonusas EGM on May 9, 2007, the stockholders revolved to: (1) stock split of
Indonusas shares par value from Rp.10,000 to Rp.500 per share; (2) increase its issued
capital from Rp.200,000 million consists of 20,000,000 shares to Rp.700,000 million
consists of 1,400,000,000 shares, as amended by the Decision of Circular Meeting of
Indonusas stockholders on December 28, 2007. The change increased Companys paid-in
capital from Rp.66,500 million to Rp.237,713 million through payment and debt to equity
swap, as follows:

| | The Company had paid for the increase in share capital phase I to
Indonusa on June 5, 2007 and August 13, 2007 amounting to Rp.21,624 million and
Rp.976.3 million, respectively. Also, a payment for the increase in share capital
for phase II was made on November 26, 2007 amounting to Rp.65,986 million. |
| --- | --- |
| | On December 19, 2007, Indonusas debt to the Company amounting to
Rp.82,627 million was converted into ownership on shares of stock of Indonusa. |

Pursuant to the payment for the additional share capital and debt swap to equity, the Companys ownership in Indonusa has increased from 95.68% to 98.75%.

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GENERAL (continued)

d. Subsidiaries (continued)

(d)	Telkomsel
	On February 14, 2006, Telkomsel was granted the International Mobile
Telecommunications-2000 (IMT-2000 or 3G) license in the 2.1 Gigahertz (GHz)
frequency bandwidth for a 10 year period by the Minister of Communication and
Information Technology of the Republic of Indonesia (MoCI), based on its Decision
Letter No. 19/KEP/M.KOMINFO/2/2006. The license is extendable subject to evaluation
(Notes 14 and 49d.ii). Telkomsel started its commercial services for 3G in September
2006.
	On October 11, 2006, Telkomsels operating licenses were updated by MoCI based on
Decision Letter No. 101/KEP/M.KOMINFO/10/2006, granting Telkomsel the rights to provide:
(i) Mobile telecommunication services with radio frequency bandwidth in the 900
Megahertz (MHz) and 1800 MHz bands; (ii) Mobile telecommunication services IMT-2000
with radio frequency bandwidth in the 2.1 GHz bands (3G); and (iii) Basic
telecommunication services.
(e)	Balebat
	On July 1, 2006, Infomedia purchased 14% of Balebats shares from other stockholders,
thereby increasing Infomedias ownership interest from 51% to 65%.

e.
The consolidated financial statements were authorized for issue by the Board of Directors on
May 22, 2008.

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2.
The consolidated financial statements of the Company and its subsidiaries have been prepared in
accordance with generally accepted accounting principles in Indonesia (Indonesian GAAP).

a.	Basis of preparation of financial statements
	The consolidated financial statements, except for the consolidated statements of cash flows,
are prepared on the accrual basis of accounting. The measurement basis used is historical
cost, except for certain accounts recorded on the basis described in the related accounting
policies.
	The consolidated statements of cash flows are prepared using the direct method and present
the changes in cash and cash equivalents from operating, investing and financing activities.
	Figures in the consolidated financial statements are rounded to and presented in millions of
Indonesian Rupiah (Rp.), unless otherwise stated.
b.	Principles of consolidation
	The consolidated financial statements include the financial statements of the Company and
its subsidiaries in which the Company directly or indirectly has ownership of more than 50%,
or the Company has the ability to control the entity, even though the ownership is less than
or equal to 50%. Subsidiaries are consolidated from the date on which every effective
control is obtained and are no longer consolidated from the date of disposal.
	All significant inter-company balances and transactions have been eliminated on the
consolidated financial statements.
c.	Transactions with related parties
	The Company and its subsidiaries have transactions with related parties. The definition of
related parties used is in accordance with Indonesian Statement of Financial Accounting
Standards (PSAK) 7, Related Party Disclosures.
d.	Acquisitions of subsidiaries
	The acquisition of a subsidiary from a third party is accounted for using the purchase
method of accounting. The cost of an acquisition is allocated to the identifiable assets and
liabilities recognized using as reference, their fair values at the date of the transaction.
The excess of the acquisition cost over the Companys interest in the fair value of
identifiable assets acquired and liabilities assumed is recorded as goodwill and amortized
using the straight-line method over a period of not more than five years.
	The Company continually assesses whether events or changes in circumstances have occurred
that would require revision of the remaining estimated useful life of intangible assets and
goodwill, or whether there is any indication of impairment. If any indication of impairment
exists, the recoverable amount of intangible assets and goodwill is estimated based on the
expected future cash flows which are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d.	Acquisitions of subsidiaries (continued)
	In July 2004, the Indonesian Financial Accounting Standard Board (Dewan Standar Akuntansi
Keuangan di Indonesia or DSAK) issued PSAK 38 (Revised 2004), Accounting for
Restructuring Transactions between Entities under Common Control, (PSAK 38R). Under PSAK
38R, the acquisition transaction with entities under common control is accounted for using
book value, in a manner similar to that in pooling of interests accounting (carryover
basis). The difference between the consideration paid or received and the related historical
carrying amount, after considering income tax effects, is recognized directly in equity and
reported as Difference in value arising from restructuring transactions and other
transactions between entities under common control in the stockholders equity section.
	The balance of Difference in value arising from restructuring transactions and other
transactions between entities under common control is charged to retained earnings when the
common control relationship has ceased.
e.	Cash and cash equivalents
	Cash and cash equivalents consist of cash on hand and in banks and all unrestricted time
deposits with maturities of not more than three months from the date of placement.
f.	Investments

i.	Time deposits
	Time deposits with maturities of more than three months but not more than one year, are
presented as temporary investments.
ii.	Investments in securities
	Investments in available-for-sale securities are stated at fair value. Unrealized
holding gains or losses on available-for-sale securities are excluded from income of the
current year and are reported as a separate component in the stockholders equity
section until realized. Realized gains or losses from the sale of available-for-sale
securities are recognized in the consolidated statements of income, and are determined
on a specific-identification basis. A decline in the fair value of any
available-for-sale securities below cost that is deemed to be other-than-temporary is
charged to the consolidated statements of income.
iii.	Investments in associated companies
	Investments in companies where the Company has 20% to 50% of the voting rights, and
through which the Company exerts significant influence, but not control, over the
financial and operating policies are accounted for using the equity method. Under this
method, the Company recognizes the Companys proportionate share in the income or loss
of the associated company from the date that significant influence commences until the
date that significant influence ceases. When the Companys share of loss exceeds the
carrying amount of the associated company, the carrying amount is reduced to nil and
recognition of further losses is discontinued except to the extent that the Company has
guaranteed obligations of the associated company or committed to provide further
financial support to the associated company.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f. Investments (continued)

iii.	Investments in associated companies (continued)
	On a continuous basis, but no less frequently than at the end of each year, the Company
and its subsidiaries evaluate the carrying amount of their ownership interests in
associated companies for possible impairment. Factors considered in assessing whether an
indication of other-than-temporary impairment exists include the achievement of business
plan objectives and milestones including cash flow projections and the results of
planned financing activities, the financial condition and prospects of each associated
company, the fair value of the ownership interest relative to the carrying amount of the
investment, the period of time the fair value of the ownership interest has been below
the carrying amount of the investment and other relevant factors. Impairment to be
recognized is measured based on the amount by which the carrying amount of the
investment exceeds the fair value of the investment. Fair value is determined based on
quoted market prices (if any) and projected discounted cash flows, whichever is lower or
other valuation techniques as appropriate.
	Changes in the value of investments due to changes in the equity of associated companies
arising from capital transactions of such associated companies with other parties are
recognized directly in equity and are reported as Difference due to change of equity in
associated companies in the stockholders equity section. Differences previously
credited directly to equity as a result of equity transactions in associated companies
are released to the consolidated statements of income upon the sale of an interest in
the associate in proportion to percentage of the interests sold.
	The functional currency of PT Pasifik Satelit Nusantara (PSN) and PT Citra Sari Makmur
(CSM) is the United States Dollars (U.S. Dollars). For the purpose of reporting
these investments using the equity method, the assets and liabilities of these companies
as of the balance sheet date are translated into Indonesian Rupiah using the rates of
exchange prevailing at that date, while revenues and expenses are translated into
Indonesian Rupiah at the average rates of exchange for the year. The resulting
translation adjustments are reported as part of Translation adjustment in the
stockholders equity section.
iv.	Other investments
	Investments in companies where ownership interests of less than 20% that do not have
readily determinable fair values and are held for long-term are carried at cost and are
adjusted only for other-than-temporary decline in the value of individual investments.
Any write-down is charged directly to income of the current year.

| g. |
| --- |
| Trade and other accounts receivable are recorded net of allowance for doubtful accounts,
based upon a review of the collectibility of the outstanding amounts. Accounts are
written-off against the allowance during the period in which they are determined to be not
collectible. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

g.	Trade and other accounts receivable (continued)
	The allowance for doubtful accounts is the Company and its subsidiaries best estimate of
the probable credit losses in the accounts receivable. The amount of the allowance is
recognized in the consolidated statement of income within operating expenses general and
administrative. The Company and its subsidiaries determine the allowance based on historical
write-off experience. The Company and its subsidiaries review the allowance for doubtful
accounts every month. Past due balances over 90 days for retail customers are fully
provided, and past due balance for non-retail customers over a specified amount are reviewed
individually for collectibility. Account balances are written off against the allowance
after all means of collection have been exhausted and the potential for recovery is
considered remote.
h.	Inventories
	Inventories consist of components and modules which are expensed or transferred to property,
plant and equipment upon use. Inventories also include Subscriber Identification Module
(SIM) cards, Removable User Identity Module (RUIM) cards and prepaid voucher blanks,
which are expensed upon sale. Inventories are stated at the lower of costs or net realizable
value.
	Cost is determined using the weighted average method for components, SIM card, RUIM card and
prepaid voucher blanks, and the specific-identification method for modules.
	Allowance for obsolescence is primarily based on the estimated forecast of future usage of
these items.
i.	Prepaid expenses
	Prepaid expenses are amortized over their future beneficial periods using the straight-line
method.
j.	Intangible assets
	Intangible assets comprised of intangible assets from subsidiaries and business acquisition
and licenses. Intangible assets shall be recognized if it is probable that the expected
future economic benefits that are attributable to each asset will flow to the Company and
its subsidiaries and the cost of the asset can be reliably measured.
	Intangible assets are stated at cost less accumulated amortization and impairment, if any.
Intangible assets are amortized over their useful lives. The Company and its subsidiaries
shall estimate the recoverable value of their intangible asset. When the carrying amount of
an asset exceeds its estimated recoverable amount, the asset is written down to its
estimated recoverable amount.
	In 2006, Telkomsel was granted the right to operate the 3G license. Telkomsel is required to
pay an up-front fee and annual rights of usage (Biaya Hak Penggunaan or BHP) fee for the
next ten years. The up-front fee is recorded as intangible asset and amortized using the
straight-line method over the term of the right to operate the 3G license (10 years).
Amortization commenced in 2006 when the assets attributable to the provision of the related
services became available for use.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

j.	Intangible assets (continued)
	Based on Telkomsels management interpretation of the license conditions and the written
confirmation from the DGPT, the license may be returned at any time without any financial
obligation to pay the remaining outstanding annual BHP fees. Accordingly, Telkomsel
recognizes the annual BHP fees as expense when incurred.
	Telkomsels management evaluates its plan to continue to use the license on an annual basis.
k.	Property, plant and equipment direct acquisitions
	Property, plant and equipment directly acquired are stated at cost, less accumulated
depreciation and impairment losses.
	Property, plant and equipment, except land, are depreciated using the straight-line method,
based on the estimated useful lives of the assets as follows:

	Years
Buildings	20
Switching equipment	5-15
Telegraph, telex and data communication equipment	5-15
Transmission installation and equipment	5-20
Satellite, earth station and equipment	3-15
Cable network	5-15
Power supply	3-10
Data processing equipment	3-10
Other telecommunications peripherals	5
Office equipment	2-5
Vehicles	5-8
Other equipment	5

| The Company and its subsidiaries evaluate their property, plant and equipment whenever
events and circumstances indicate that the carrying amount of the assets may not be
recoverable. |
| --- |
| When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is
written down to its estimated recoverable amount, which is determined based upon the greater
of its net selling price or value in use. |
| The cost of maintenance and repairs is expensed as incurred. Expenditures, which extend the
useful life of the asset or result in increased future economic benefits such as increase in
capacity or improvement in the quality of output or standard of performance are capitalized. |
| When assets are retired or otherwise disposed of, their carrying values and the related
accumulated depreciation are eliminated from the consolidated financial statements, and the
resulting gains or losses on the disposal or sale of property, plant and equipment are
recognized in the consolidated statement of income. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

k.	Property, plant and equipment direct acquisitions (continued)
	Computer software used for data processing is included in the value of the associated
hardware.
	Property under construction is stated at cost until construction is completed, at which time
it is reclassified to the specific property, plant and equipment account to which it
relates. During the construction period, borrowing costs, which include interest expense and
foreign currency exchange differences incurred to finance the construction of the asset, are
capitalized in proportion to the average amount of accumulated expenditures during the year.
Capitalization of borrowing cost ceases when the construction has been completed and the
asset is ready for its intended use.
	Equipment temporarily unused are reclassified into equipment not used in operation and
depreciated over their estimated useful life using straight-line method.
l.	Property, plant and equipment under capital leases
	Property, plant and equipment acquired under capital leases are stated at the present value
of minimum lease payments and the residual values (option price) paid by the Company and its
subsidiaries at the end of lease period. At inception of the lease, a corresponding
liability, which equals to the present value of minimum lease payments, is also recorded and
subsequently reduced by the principal component of each minimum lease payment. The interest
component of each minimum lease payment is recognized in the consolidated statement of
income of the current year.
	Since January 1, 2008, the Company and its subsidiaries has applied PSAK 30 (Revised 2007),
Lease prospectively. Based on PSAK 30 (Revised 2007), property, plant and equipment under
capital lease is recognized if the lease transfers substantially all the risks and rewards
incidental to ownership. A lease is classified into capital lease or operating lease based
on the substance not the form of the contract.
	Leased assets are depreciated using the same method over the shorter of the lease term and
its economic useful life.
	Leased assets are depreciated using the same method and over the same estimated useful lives
used for directly acquired property, plant and equipment.
m.	Revenue-Sharing Arrangements (RSA)
	Revenues from RSA are recognized based on Companys share as agreed upon in the contracts.
	The Company records assets under RSA as Property, plant and equipment under RSA (with a
corresponding initial credit to Unearned income on RSA presented in the liabilities
section of the consolidated balance sheet) based on the costs incurred by the investors as
agreed upon in the contracts entered into between the Company and the investors. Property,
plant and equipment are depreciated over their estimated useful lives using the
straight-line method (Note 2k).
	Unearned income related to the acquisition of the property, plant and equipment under RSA is
amortized over the revenue-sharing period using the straight-line method.
	At the end of the revenue-sharing period, the property, plant and equipment under RSA is
reclassified to the Property, plant and equipment account.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

n.	KSO
	Revenues from KSO include amortization of unearned initial investor payments, Minimum Telkom
Revenues (MTR) and the Companys share of Distributable KSO Revenues (DKSOR).
	Unearned initial investor payments received are recorded net of all direct costs incurred in
connection with the KSO agreement and amortized using the straight-line method over the KSO
period of 15 years starting from January 1, 1996.
	MTR are recognized on a monthly basis, based on the contracted MTR amount for the current
year.
	The Companys share of DKSOR is recognized on the basis of the Companys percentage share of
the KSO revenues, net of MTR and operational expenses of the KSO Units, as provided in the
KSO agreements.
	Under PSAK 39, Accounting for Joint Operation Schemes, which supercedes paragraph 14 of
PSAK 35, Accounting for Telecommunications Services Revenue, the assets built by the KSO
partners under the KSO were recorded in the books of the KSO partners which operate the
assets and would be transferred to the Company at the end of the KSO period or upon
termination of the KSO agreement.
	As of December 31, 2006, the Company has obtained full control over all of the KSO
operations through acquisition of interest of KSO investors and the Company has accelerated
the amortization the amortization of KSO deferred compensation income per March 31, 2008.
o.	Deferred charges for land rights
	Costs incurred to process and extend land rights are deferred and amortized using the
straight-line method over the term of the land rights.
p.	Foreign currency translation
	The functional currency of the Company and its subsidiaries is the Indonesian Rupiah and the
books of accounts of the Company and its subsidiaries are maintained in Indonesian Rupiah.
Transactions in foreign currencies are translated into Indonesian Rupiah at the rates of
exchange prevailing at transaction date. At the consolidated balance sheet date, monetary
assets and monetary liabilities balances denominated in foreign currencies are translated
into Indonesian Rupiah based on the buy and sell rates quoted by Reuters prevailing at the
consolidated balance sheet date as follows:

2007		2008
Buy	Sell	Buy	Sell
United States Dollars (US$) 1	9,123	9,127	9,210	9,220
Euro1	12,146	12,154	14,549	14,567
Yen1	77.25	77.31	92.68	92.80

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

p.	Foreign currency translation (continued)
	The resulting foreign exchange gains or losses, realized and unrealized, are credited or
charged to income of the current year, except for foreign exchange differences incurred on
borrowings during the construction of qualifying assets which are capitalized to the extent
that the borrowings can be attributed to the construction of those qualifying assets (Note
2k).
q.	Revenue and expense recognition

i.	Fixed line telephone revenues
	Revenues from fixed line installations are recognized at the time the installations are
placed in service and ready for use. Revenues from usage charges are recognized as
customers incur the charges.
ii.	Cellular and fixed wireless telephone revenues
	Revenues from postpaid service, which consist of connection fee as well as usage and
monthly charges, are recognized as follows:

| | Connection fees for service connection are recognized as revenues at the time
the connection occurs. |
| --- | --- |
| | Airtime and charges for value added services are recognized based on usage by
subscribers. |
| | Monthly subscription charges are recognized as revenues when incurred by
subscribers. |

Revenues from prepaid card subscribers, which consist of the sale of starter packs (also known as SIM cards in the case of cellular and RUIM in the case of fixed wireless telephone and start-up load vouchers) and pulse reload vouchers, are recognized as follows:

| | Sale of SIM and RUIM card is recognized as revenue upon delivery of the starter
packs to distributors, dealers or directly to customers. |
| --- | --- |
| | Sale of pulse reload vouchers (either bundled in starter packs or sold as
separate items) is recognized initially as unearned income and recognized
proportionately as usage revenue based on duration of successful calls made and the
value added services by the subscribers or the expiration of the unused stored
value of the voucher. |

iii.	Interconnection revenues
	Revenues from network interconnection with other domestic and international
telecommunications carriers are recognized as earned in accordance with agreement and
are presented net of interconnection expenses.
iv.	Data and internet revenues
	Revenues from installations (set-up) of internet, data communication and e-Business are
recognized upon the completion of installations. Revenues from data communication and
internet are recognized based on usage.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q. Revenue and expense recognition (continued)

v.	Revenues from network
	Revenues from network consist of revenues from leased lines and satellite transponder
leases. Revenues are recognized based on subscription fees as specified in the
agreements.
vi.	Expenses
	Expenses are recognized on accrual basis. Unutilized promotional credits are netted
against unearned income.

r. Employee benefits

i.	Pension and post-retirement health care benefit plans
	The net obligations in respect of the defined pension benefit and post-retirement health
care benefit plans are calculated at the present value of estimated future benefits that
the employees have earned in return for their service in the current and prior periods,
less fair value of plan assets and as adjusted for unrecognized actuarial gains or
losses and unrecognized past service cost. The calculation is performed by an
independent actuary using the projected unit credit method. The present value of the
defined benefit obligation is determined by discounting the estimated future cash
outflows using government bond interest rates that have terms to maturity approximating
the terms of the related liability.
	Actuarial gains or losses arising from experience adjustments and changes in actuarial
assumptions, when exceeding the greater of 10% of present value defined benefit
obligation or 10% of fair value of plan assets, are charged or credited to the
consolidated statements of income over the average remaining service lives of the
relevant employees. Prior service cost is recognized immediately if vested or amortized
over the vesting period.
	For defined contribution plans, the regular contributions constitute net periodic costs
for the year in which they are due and as such are included in staff costs.
ii.	Long Service Awards (LSA)
	Employees are entitled to receive certain cash awards based on length of service
requirements. The benefits are either paid at the time the employees reach certain
anniversary dates during employment, or at the time of termination.
	Actuarial gains or losses arising from experience and changes in actuarial assumptions
are charged immediately to the consolidated statements of income.
	The obligation with respect to LSA is calculated by an independent actuary using the
projected unit credit method.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

r. Employee benefits (continued)

iii.	Early retirement benefits
	Early retirement benefits are accrued at the time the Company makes a commitment to
provide early retirement benefits as a result of an offer made in order to encourage
voluntary redundancy. A commitment to a termination arises when, and only when a
detailed formal plan for the early retirement cannot be withdrawn.
iv.	Pre-retirement benefits
	Employees of the Company are entitled to a benefit during a pre-retirement period in
which they are inactive for 6 months prior to their normal retirement age of 56 years.
During the pre-retirement period, the employees still receive benefits provided to
active employees, which include, but are not limited to regular salary, health care,
annual leave, bonus and other benefits. Benefits provided to employees which enter
pre-retirement period are calculated by an independent actuary using the projected unit
credit method.
v.	Other post-retirement benefits
	Employees are entitled to home leave passage benefits and final housing facility
benefits to their retirement age of 56 years. Those benefits are calculated by an
independent actuary using the projected unit credit method.

| | Gains or losses on curtailment are recognized when there is a commitment to make a material
reduction in the number of employees covered by a plan or when there is an amendment of a
defined benefit plan terms such as that a material element of future services to be provided
by current employees will no longer qualify for benefits, or will qualify only for reduced
benefits. |
| --- | --- |
| | Gains or losses on settlement are recognized when there is a transaction that eliminates all
further legal or constructive obligation for part or all of the benefits provided under a
defined benefit plan. |
| s. | Income tax |
| | The Company and its subsidiaries recognize deferred tax assets and liabilities for temporary
differences between the financial and tax bases of assets and liabilities at each reporting
date. The Company and its subsidiaries also recognize deferred tax assets resulting from the
recognition of future tax benefits, such as the benefit of tax loss carry forwards, to the
extent their future realization is probable. Deferred tax assets and liabilities are
measured using enacted tax rates at each reporting date which are expected to apply to
taxable income in the years in which those temporary differences are expected to be
recovered or settled. |
| | Income tax is charged or credited to the consolidated statement of income, except to the
extent that it relates to items recognized directly in equity, such as the difference in
value arising from restructuring transactions and other transactions between entities under
common control (Note 29) and the effect of foreign currency translation adjustment for
certain investments in associated companies, in which case income tax is also charged or
credited directly to equity. |
| | Amendment to taxation obligations are recorded when an assessment is received or if appealed
against, when the results of the appeal are determined. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

t.	Derivative instruments
	Derivative transactions are accounted for in accordance with PSAK 55, Accounting for
Derivative Instruments and Hedging Activities which requires that all derivative
instruments be recognized in the financial statements at fair value. To qualify for hedge
accounting, PSAK 55 requires certain criteria to be met, including formal documentations at
the inception of the hedge.
	Changes in the fair values of derivative instruments that do not qualify for hedge
accounting are recognized in the consolidated statements of income. If a derivative
instrument is designated and qualifies for hedge accounting the assets or liabilities shall
be adjusted. The changes in fair values of derivative instruments are recognized in the
consolidated statements of income or consolidated statement of changes in stockholders
equity depending on the type and effectiveness of hedge transaction.
u.	Treasury Stock
	Reacquired Companys stock is accounted for at its reacquisition cost and classified as
Treasury Stock and presented as deduction in stockholders equity. The cost of treasury
stock sold is accounted for using the weighted average method. The difference resulting from
the cost and the proceeds from the sale of treasury stock is credited to Paid-in Capital.
v.	Dividends
	Dividend distribution to the Companys stockholders is recognized as liability in the
Companys consolidated financial statements in the period in which the dividends are
approved by the Companys stockholders. For interim dividends, the Company recognized it as
liability based on the Board of Directors decision with the approval from the Board of
Commissioners.
w.	Earnings per share and earnings per ADS
	Basic earnings per share are computed by dividing net income by the weighted average number
of shares outstanding during the year. Net income per ADS is computed by multiplying basic
earnings per share by 40, the number of shares represented by each ADS.
x.	Segment information
	The Company and its subsidiaries segment information is presented based upon identified
business segments. A business segment is a distinguishable unit that provides different
products and services and is managed separately. Business segment information is consistent
with operating information routinely reported to the Companys chief operating decision
maker.
y.	Use of estimates
	The preparation of the consolidated financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.
Significant items subject to such estimates and assumptions include the carrying amount of
property, plant and equipment and intangible assets, the valuation allowance for receivables
and obligations related to employee benefits. Actual results could differ from those
estimates.

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3.	TRANSLATION OF RUPIAH INTO UNITED STATES DOLLARS
	The consolidated financial statements are stated in Indonesian Rupiah (Rupiah). The
translations of Indonesian Rupiah amounts into U.S. Dollars are included solely for the
convenience of the readers and have been made using the average of the market buy and sell rates
of Rp.9,215 to US$1 as published by Reuters on March 31, 2008. The convenience translations
should not be construed as representations that the Indonesian Rupiah amounts have been, could
have been, or could in the future be, converted into United States Dollars at this or any other
rate of exchange.
4.	AMENDMENT AND RESTATEMENT OF THE JOINT OPERATION SCHEME IN REGIONAL DIVISION VII (KSO VII)
AND ACQUISITIONS OF SIGMA

| a. |
| --- |
| On October 19, 2006, the Company and PT Bukaka Singtel International (BSI), the investor
in KSO VII, entered into an agreement to amend and restate their joint operation agreement
(KSO agreement), to cover an amendment and restatement of the following principal
provisions in the original KSO agreement: |

| | The rights to operate fixed-line telecommunications services have been transferred
to the Company, where KSO VII is operated under the management, supervision, control
and responsibility of the Company. |
| --- | --- |
| | The responsibilities for funding construction of new telecommunications facilities
and payments of operating expenses incurred in KSO VII have been assigned to the
Company. |
| | The risk of loss from damages or destructions of assets operated by KSO VII will be
transferred to the Company. |
| | At the end of the KSO period (December 31, 2010), all rights, titles and interests
of BSI in existing property, plant and equipment (including new additional
installations) and inventories will be transferred to the Company at no cost. |
| | The Companys rights to receive MTR and a share in DKSOR under the original KSO
agreement were amended so that BSI receives fixed monthly payments (Fixed Investor
Revenues) amounting to Rp.55,637 million beginning in October 2006 through June 2007
and amounting to Rp.44,250 million in July 2007 through December 2010. The Company is
entitled to the balance of KSO revenues net of operating expenses and payments to BSI
for Fixed Investor Revenues. In addition, payments for Fixed Investor Revenues must be
made to BSI before any payments could be made to the Company. |
| | In the event that funds in KSO VII are insufficient to pay Fixed Investor Revenues
to BSI, the Company is required to pay the shortfall to BSI. |

As a result of the amendment and restatement of the KSO agreement, the Company obtained the legal right to control the financial and operating decisions of KSO VII. Accordingly, the Company has accounted for this transaction as a business combination using the purchase method of accounting. As a condition precedent to the coming into effect of the amended KSO agreement, the Company has entered into assignment agreement with BSI and its business partners whereby BSI assigned its RSA with its business partners to the Company. The Company has accounted for these transactions in accordance with the accounting treatment for RSA.

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AMENDMENT AND RESTATEMENT OF THE JOINT OPERATION SCHEME IN REGIONAL DIVISION VII (KSO VII) AND ACQUISITIONS OF SIGMA (continued)

| a. |
| --- |
| The purchase price for this transaction was approximately Rp.1,770,925 million which
represents the present value of fixed monthly payments (totaling Rp.2,359,230 million) to be
paid to BSI beginning in October 2006 through December 2010 using a discount rate of 15%
plus the direct cost of the business combination. The allocation of the acquisition cost was
as follows: |

Purchase consideration at present value	1,770,925
Fair value of net assets acquired:
- Cash and cash equivalents	143,648
- Receivables	266,337
- Other current assets	69,960
- Property, plant and equipment	1,288,888
- Deferred tax assets	6,993
- Property, plant and equipment under RSA	452,205
- Intangible assets	451,736
- Current liabilities	(456,637	)
- Unearned income on RSA	(452,205	)
Fair value of net assets as at October 19, 2006	1,770,925

| | The fair values of the property, plant and equipment and property, plant and equipment under
RSA were determined by an independent appraisal, while the fair values of other assets and
liabilities were determined by management. The intangible assets represent right to operate
the business in the KSO VII area and are amortized over the remaining term of the KSO
agreement of 4.3 years (Note 14). There was no goodwill arising from this acquisition. |
| --- | --- |
| | The Companys consolidated results of operations have included the operating results of KSO
VII since October 1, 2006 being the nearest convenient consolidated balance sheet date. |
| | As of March 31, 2007 and 2008, the remaining monthly payments to be made to BSI, before
unamortized discount, amounted to Rp.2,060,867 million and Rp.1,488,475 million,
respectively, and is presented as Deferred consideration for business combinations (Note
24). |
| b. | Sigma |
| | Effective on February 21, 2008, Metra acquired 80% of the outstanding common stock of Sigma
for Rp.330,264. The acquisition of Metra has been accounted for using purchase method of
accounting. The following table summarizes the purchase price allocation of the acquired
assets and assumed liabilities at the closing date: |

Current assets	111,467
Fixed assets	50,806
Intangible assets	232,335
Other assets	20,056
Current liabilities	(56,444	)
Long-term liabilities	(27,956	)
Acquisition cost	330,264

The Companys consolidated result of operations had included the operating of Sigma since the date of acquisition.

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CASH AND CASH EQUIVALENTS

Cash on hand	32,354	35,959
Cash in banks
Related parties
Rupiah
PT Bank Mandiri (Persero) Tbk (Bank Mandiri)	109,565	190,446
PT Bank Negara Indonesia (Persero) Tbk (BNI)	114,039	128,390
PT Bank Rakyat Indonesia (Persero) Tbk (BRI)	115,139	12,780
PT Bank Pos Nusantara	514	240
PT Bank Tabungan Negara (Persero) Tbk (BTN)		19
	339,257	331,875
Foreign currencies
Bank Mandiri	35,170	64,621
BNI	11,980	27,839
BRI	618	663
Bank Syariah Mandiri		165
	47,768	93,288
Sub-total	387,025	425,163
Third parties
Rupiah
ABN AMRO Bank (AAB)	118,847	92,499
Deutsche Bank AG (DB)	3,251	28,451
PT Bank Central Asia Tbk (BCA)	11,950	17,718
PT Bank Bukopin Tbk (Bank Bukopin)	7,209	5,593
PT Bank Lippo Tbk (Bank Lippo)	1,611	2,124
PT Bank Ekonomi Raharja Tbk (Bank Ekonomi)		1,815
PT Bank Niaga Tbk (Bank Niaga)	1,652	1,513
Citibank, N.A. (Citibank)	8,082	851
Bank Sorong	2,719
Others (each below Rp.1 billion)	1,765	2,503
	157,086	153,067
Foreign currencies
DB	1,929	10,021
Citibank	8,653	8,673
Bank Ekonomi		3,603
AAB	163	185
Others (each below Rp.1 billion)	177	1,049
	10,922	23,531
Sub-total	168,008	176,598
Total cash in banks	555,033	601,761

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CASH AND CASH EQUIVALENTS (continued)


Time deposits
Related parties
Rupiah
BRI	196,675	1,425,300
BNI	2,034,905	792,449
BTN	239,890	250,725
Bank Mandiri	352,542	245,818
	2,824,012	2,714,292
Foreign currencies
BNI	97	382,287
Bank Mandiri	842,490	69,870
	842,587	452,157
Sub-total	3,666,599	3,166,449
Third parties
Rupiah
DB	6,000	1,696,035
Standard Chartered Bank (SCB)	554,400	575,000
PT Bank Pembangunan Daerah Jawa Barat
dan Banten (Bank Jabar)	237,030	354,400
Bank Bukopin	67,415	329,510
Bank Niaga	114,170	313,063
PT Bank Danamon Indonesia Tbk
(Bank Danamon)	55,965	199,315
PT Bank Internasional Indonesia Tbk	27,190	191,500
PT Bank Mega Tbk (Bank Mega)	95,690	127,945
PT Bank Victoria International Tbk		70,000
PT Bank Century Tbk		45,000
PT Bank Bumiputera Indonesia Tbk
(Bank Bumiputera)		35,000
PT Pan Indonesia Bank Tbk		35,000
PT Bank Tabungan Pensiunan Nasional Tbk	57,125	32,053
PT Bank Muamalat Indonesia (Bank Muamalat)	56,740	28,000
Bank Ekonomi		19,250
PT Bank Yudha Bhakti	3,945	14,250
Bank Artha Graha Internasional Tbk		10,000
Bank Lippo		3,000
PT Bank Nusantara Parahyangan Tbk	1,000	1,000
PT Bank Syariah Mega Indonesia
(Bank Syariah Mega)	8,000
PT Bank NISP Tbk	47,065
PT Bank Permata Tbk	102
Citibank	137,300
	1,469,137	4,079,321

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CASH AND CASH EQUIVALENTS (continued)


Time deposits (continued)
Third parties (continued)
Foreign currencies
DB	1,322,937	1,168,582
SCB	136,770	493,340
Bank Muamalat		147,360
The Hongkong and Shanghai Banking
Corporation Ltd.		112,831
Bank Jabar		18,420
Bank Bukopin	3,650	4,607
Bank Mega	1,825	1,843
Citibank	175,157
	1,640,339	1,946,983
Sub-total	3,109,476	6,026,304
Total time deposits	6,776,075	9,192,753
Grand Total	7,363,462	9,830,473
Interest rates per annum on time deposits are as follows:

Rupiah	3.25%9.75 %	2.25%10.00 %
Foreign currencies	3.25%3.75 %	1.00%4.80 %

| The related parties which the Company and its subsidiaries place their funds are
Government-owned banks. The Company and its subsidiaries placed a majority of their cash and
cash equivalents in these banks because they have the most extensive branch network in Indonesia
and are considered to be financially sound banks as they are owned by the Government. |
| --- |
| Refer to Note 44 for details of related party transactions. |

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6.
Trade receivables arose from services provided to both retail and non-retail customers, with
details as follows:

a. By debtor

(i) Related parties

Government Agencies	528,471		451,114
CSM	41,235		52,084
PT Patra Telekomunikasi Indonesia (Patrakom)	12,129		17,623
PT Aplikanusa Lintasarta (Lintasarta)	3,454		4,237
Koperasi Pegawai Telkom (Kopegtel)	4,094		966
PSN	718
Others	37,246		4,465
Total	627,347		530,489
Allowance for doubtful accounts	(91,803	)	(130,703	)
Net	535,544		399,786

| | Trade receivables from certain related parties are presented net of the Company and its
subsidiaries liabilities to such parties due to legal right of offset in accordance
with agreements with those parties. |
| --- | --- |
| (ii) | Third parties |

Residential and business subscribers	3,406,380		3,559,353
Overseas international carriers	247,094		260,738
Total	3,653,474		3,820,091
Allowance for doubtful accounts	(691,513	)	(1,161,958	)
Net	2,961,961		2,658,133

b. By age

(i) Related parties

Up to 6 months	421,949		486,997
7 to 12 months	47,223		19,902
13 to 24 months	36,203		12,813
More than 24 months	121,972		10,777
Total	627,347		530,489
Allowance for doubtful accounts	(91,803	)	(130,703	)
Net	535,544		399,786

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

TRADE RECEIVABLES (continued)

b. By age (continued)

(ii) Third parties

Up to 3 months	2,929,738		2,133,065
More than 3 months	723,736		1,687,026
Total	3,653,474		3,820,091
Allowance for doubtful accounts	(691,513	)	(1,161,958	)
Net	2,961,961		2,658,133

c. By currency

(i) Related parties

Rupiah	615,472		459,961
U.S. Dollars	11,875		70,528
Total	627,347		530,489
Allowance for doubtful accounts	(91,803	)	(130,703	)
Net	535,544		399,786

(ii) Third parties

Rupiah	3,343,819		3,512,594
U.S. Dollars	309,655		307,497
Total	3,653,474		3,820,091
Allowance for doubtful accounts	(691,513	)	(1,161,958	)
Net	2,961,961		2,658,133

d. Movements in the allowance for doubtful accounts

Beginning balance	784,789		1,100,456
Additions (Note 37)	122,179		192,651
Bad debts write-off	(123,652	)	(446	)
Ending balance	783,316		1,292,661

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TRADE RECEIVABLES (continued)

| d. |
| --- |
| Management believes that the allowance for doubtful accounts is adequate to cover probable
losses on non-collection of the accounts receivable. |
| Except for the amounts receivable from the Government Agencies, management believes that
there were no significant concentrations of credit risk on these receivables. The Company
and its subsidiaries do not have any off-balance sheet credit exposures related to their
customers. |
| Refer to Note 44 for details of related party transactions. |

INVENTORIES

Modules	113,086		132,620
SIM cards, RUIM cards and prepaid voucher blanks	84,050		122,019
Components	59,659		56,127
Total	256,795		310,766
Allowance for obsolescence
Modules	(45,003	)	(50,557	)
Components	(4,436	)	(5,942	)
SIM cards, RUIM cards and prepaid voucher blanks	(190	)	(369	)
Total	(49,629	)	(56,868	)
Net	207,166		253,898

Movements in the allowance for obsolescence are as follows:

Beginning balance	48,098		54,701
Additions (Note 37)	1,807		2,645
Inventories write-off	(276	)	(478	)
Ending balance	49,629		56,868

Components and modules represent telephone terminals, cables, transmission installation spare parts and other spare parts.

Management believes that the allowance is adequate to cover probable losses from decline in inventory value due to obsolescence.

As of March 31, 2008, certain inventories held by the Company has been insured against fire, theft and other specific risks. Total sum insured as of March 31, 2008 amounted Rp.88,968 million (Note 44d.vii). Management believes that the insurance coverage is adequate.

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

PREPAID EXPENSES

Rental	1,255,803	746,379
Salaries	352,473	342,694
Insurance	42,450	83,583
Telephone directory issuance costs	47,330	31,273
Others	30,914	22,866
Total	1,728,970	1,226,795

	Refer to Note 44 for details of related party transactions.
9.	RESTRICTED TIME DEPOSITS
	This account consists of the Companys time deposits of US$0.02 million (equivalent to Rp.155
million) and Rp.2,737 million as of March 31, 2007 and US$0.916 million (equivalent to Rp.8,440
million) and Rp.64,021 million as of March 31, 2008, and Infomedias time deposit of Rp.1,731
million as of March 31, 2007 and Rp.3,225 million as of March 31, 2008 which were pledged as
collateral for bank guarantees to Bank Mandiri (Note 44).
10.	LONG-TERM INVESTMENTS


Percentage
of	Beginning	Share of	Translation	Ending
ownership	balance	net income	adjustment	balance
Equity method:
CSM	25.00	53,114			53,114
Patrakom	40.00	26,007	2,977		28,984
PSN	22.38
		79,121	2,977		82,098
Cost method:
Bridge Mobile Pte. Ltd. (BMPL)	12.50	9,290			9,290
PT Batam Bintan Telekomunikasi (BBT)	5.00	587			587
PT Pembangunan Telekomunikasi
Indonesia (Bangtelindo)	3.18	199			199
		10,076			10,076
		89,197	2,977		92,174

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10. LONG-TERM INVESTMENTS (continued)


Percentage			Share of
of	Beginning		net income		Translation		Ending
ownership	balance	Addition	(loss)		adjustment		balance
Equity method:
CSM	25.00	57,240		(2,021	)	(1,103	)	54,116
Patrakom	40.00	32,892		1,146				34,038
PSN	22.38
		90,132		(875	)	(1,103	)	88,154
Cost method:
BMPL	10.00	20,360						20,360
BBT	5.00	587						587
Bangtelindo	3.18	199						199
Scicom (MSC) Berhad (Scicom)	9.85	2,712	28,249					30,961
		23,858	28,249					52,107
		113,990	28,249	(875	)	(1,103	)	140,261

a.	CSM
	CSM is engaged in providing Very Small Aperture Terminal (VSAT), network application
services and consulting services on telecommunications technology and related facilities.
	As of March 31, 2007 and 2008, the carrying amount of the investment in CSM was equal to the
Companys share in the net assets of CSM.
b.	Patrakom
	Patrakom is engaged in providing satellite communication system services, related services
and facilities to companies in the petroleum industry.
	The increase of ownership in Patrakom in 2007 represents an adjustment arising from
the difference between the book value and the initial investment was made in 2005.
	As of March 31, 2007 and 2008, the carrying amount of investment in Patrakom was
approximate to the Companys share in the net assets of Patrakom.
c.	PSN
	PSN is engaged in providing satellite transponder leasing and satellite-based communication
services in the Asia Pacific region. The Companys share in losses in PSN has exceeded the
carrying amount of its investment since 2001, accordingly, the investment value has been
reduced to Rp.nil.
	On January 20, 2006, PSNs stockholders agreed to issue new shares to a new stockholder. The
issuance of new shares resulted in dilution of the Companys interest in PSN to 22.38%.

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LONG-TERM INVESTMENTS (continued)

d.	BMPL
	BMPL (Singapore), an associated entity of Telkomsel, is engaged in providing regional mobile
services in the Asia Pacific region.
	Subsequently, on March 7, 2007, it was resolved that each of the stockholders shall
subscribe for 1,500,000 additional shares of BMPL, subject to the accession of SK Telecom
Co., Ltd as a stockholder of BMPL. However, the additional subscription of 300,000 shares
shall be cancelled if SK Telecom Co., Ltd becomes a stockholder of BMPL.
	Based on the Accession Agreement dated June 18, 2007, the stockholders of BMPL agreed to
admit SK Telecom Co, Ltd as a stockholder of BMPL. Consequently, the additional subscription
of 300,000 shares was cancelled. On the same date, the stockholders of BMPL also agreed to
admit Advanced Info Service Public Company Limited as a stockholder of BMPL.
	In 2007, Telkomsel has paid additional subscriptions of US$1,200,000 (equivalent to
Rp.11,069 million).
e.	BBT
	BBT is engaged in providing fixed line telecommunication services at Batamindo Industrial
Park in Muka Kuning, Batam Island and at Bintan Beach International Resort and Bintan
Industrial Estate in Bintan Island.
f.	Bangtelindo
	Bangtelindo is primarily engaged in providing consultancy services on the installation and
maintenance of telecommunications facilities.
g.	Scicom
	Scicom is engaged in providing call center services in Malaysia. As of March 31, 2008, TII
has purchased 2,600,000 shares which represent 9.85% of Scicom outstanding shares.

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

PROPERTY, PLANT AND EQUIPMENT

2007	Additions	Deductions		Reclassifications		2007
At cost:
Direct acquisitions
Land	399,338	2,175	(50	)	13,854		415,317
Buildings	2,758,673	22,877			53,511		2,835,061
Switching equipment	21,335,512	2,692			471,168		21,809,372
Telegraph, telex and data
communication equipment	189,701						189,701
Transmission installation and
equipment	34,621,302	111			2,997,378		37,618,791
Satellite, earth station and
equipment	5,568,809	62,456					5,631,265
Cable network	19,515,317	11,560			9,406		19,536,283
Power supply	3,269,686	2,641			245,664		3,517,991
Data processing equipment	5,332,847	45,259			413,202		5,791,308
Other telecommunications
peripherals	626,631				(3,226	)	623,405
Office equipment	759,959	11,004			4,758		775,721
Vehicles	171,778	61			(219	)	171,620
Other equipment	113,093	351					113,444
Property under construction:
Buildings	35,105	59,151			(70,604	)	23,652
Switching equipment	1,334,956	453,157			(471,158	)	1,316,955
Transmission installation and
equipment	2,987,094	2,797,965			(2,927,699	)	2,857,360
Cable network	7,159	1,785			(2,829	)	6,115
Power supply	17,644	485,334			(258,863	)	244,115
Data processing equipment	16	415,483			(410,372	)	5,127
Other telecommunications
peripherals		10,465					10,465
Leased assets
Transmission installation and
equipment	265,820						265,820
Total	99,310,440	4,384,527	(50	)	63,971		103,758,888
Accumulated depreciation and
impairment:
Direct acquisitions
Buildings	1,290,020	44,253			(99	)	1,334,174
Switching equipment	11,195,005	537,025					11,732,030
Telegraph, telex and data
communication equipment	185,736	106					185,842
Transmission installation
and equipment	12,163,943	995,171			27,661		13,186,775
Satellite, earth station and
equipment	1,947,875	108,194					2,056,069
Cable network	11,495,878	350,723			(1,611	)	11,844,990
Power supply	1,500,435	81,737			(5	)	1,582,167
Data processing equipment	3,688,200	179,408			(9,656	)	3,857,952
Other telecommunications
peripherals	587,545	3,705			6,490		597,740
Office equipment	593,038	12,335			901		606,274
Vehicles	161,018	1,053			(167	)	161,904
Other equipment	101,211	1,118					102,329
Leased assets
Transmission installation and
equipment	133,476	8,296					141,772
Total	45,043,380	2,323,124			23,514		47,390,018
Net Book Value	54,267,060						56,368,870

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PROPERTY, PLANT AND EQUIPMENT (continued)

2008	of Sigma	Additions	Deductions		Reclassifications		2008
At cost:
Direct acquisitions
Land	561,348		11,274					572,622
Buildings	2,961,302		18,868			39,677		3,019,847
Switching equipment	24,293,139		13,350			136,161		24,442,650
Telegraph, telex and data
communication equipment	156,036					(2,403	)	153,633
Transmission installation and
equipment	44,758,386		210,443			1,965,505		46,934,334
Satellite, earth station and
equipment	5,979,626		33,557			2,799		6,015,982
Cable network	20,669,529		129,041			(1,133	)	20,797,437
Power supply	4,416,077		5,910			257,781		4,679,768
Data processing equipment	6,527,841	14,523	36,322			137,919		6,716,605
Other telecommunications
peripherals	637,020	2,186	4,307					643,513
Office equipment	706,484	1,345	6,767			(40	)	714,556
Vehicles	156,192	1,161		(466	)	(5,980	)	150,907
Other equipment	109,784		224					110,008
Property under construction:
Buildings	86		48,725			(39,823	)	8,988
Switching equipment	83,740		121,520			(137,579	)	67,681
Transmission installation and
equipment	2,525,030		1,687,204			(1,977,647	)	2,234,587
Satellite, earth station and
equipment	3,557					(525	)	3,032
Cable network	381		34,364					34,745
Power supply	37,979		245,630			(259,016	)	24,593
Data processing equipment	31,351	27,544	152,471			(137,937	)	73,429
Leased assets
Vehicles		2,227	20,874					23,101
Transmission installation and
equipment	283,813							283,813
Total	114,898,701	48,986	2,780,851	(466	)	(22,241	)	117,705,831
Accumulated depreciation and
impairment:
Direct acquisitions
Buildings	1,465,078		47,459			(50	)	1,512,487
Switching equipment	13,562,557		584,204			(504	)	14,146,257
Telegraph, telex and data
communication equipment	152,427		99			(2,403	)	150,123
Transmission installation
and equipment	16,178,965		1,064,359			(5,947	)	17,237,377
Satellite, earth station and
equipment	2,373,355		130,045			8,642		2,512,042
Cable network	12,917,430		331,685			598		13,249,713
Power supply	1,864,747		108,636			(276	)	1,973,107
Data processing equipment	4,324,279		217,880			15		4,542,174
Other telecommunications
peripherals	575,458		3,014			38		578,510
Office equipment	584,927		11,399			570		596,896
Vehicles	147,055		965	(466	)	(5,933	)	141,621
Other equipment	100,437		749					101,186
Leased assets
Vehicles			863					863
Transmission installation and
equipment	188,094		4,932			(191	)	192,835
Total	54,434,809		2,506,289	(466	)	(5,441	)	56,935,191
Net Book Value	60,463,892							60,770,640

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

PROPERTY, PLANT AND EQUIPMENT (continued)

a. Gain on disposal or exchange of assets

Proceeds from sale of property, plant and equipment	2,481	5,298
Net book value
Gain on disposal	2,481	5,298

(ii) In 2006, Telkomsel exchanged certain equipment with a net book value of Rp.440,355 million for new equipment with a value of Rp.440,357 million. The resulting gain of Rp.2 million was charged to the 2006 consolidated statement of income. The net carrying value of certain equipment, Rp.309,860 million was reclassified under equipment not used in operations (Note 13).

b. KSO assets ownership arrangements

| (i) | In accordance with the amended and restated KSO VII agreement with BSI (Note
4), the ownership rights to the acquired property, plant and equipment in KSO VII are
legally retained by BSI until the end of the KSO period which is on December 31, 2010.
As of March 31, 2007 and 2008, the net book value of these property, plant and
equipment was Rp.1,130,845 million and Rp.1,010,385 million, respectively. |
| --- | --- |
| (ii) | In accordance with the amended and restated KSO IV agreement with PT Mitra
Global Telekomunikasi Indonesia (MGTI), the ownership rights to the acquired
property, plant and equipment in KSO IV are legally retained by MGTI until the end of
the KSO period which is on December 31, 2010. As of March 31, 2007 and 2008, the net
book value of these property, plant and equipment was Rp.1,047,795 million and
Rp.741,409 million, respectively. |

c. Assets impairment and related claims

| (i) | In the first quarter of 2005, the Government issued a series of regulations in
its efforts to rearrange the frequency spectra utilized by the telecommunications
industry. This action has resulted in the Company not being able to utilize certain
frequency spectra it had used to support its fixed wireline cable network by the end of
2006. As a result of these regulations, certain of the Companys cable network
facilities within the fixed wireline segment, which comprised primarily of Wireless
Local Loop (WLL) and Approach Link equipment operating in the affected frequency
spectra, could no longer be used by the end of 2006. Hence, the Company had shortened
the remaining useful lives for WLL and Approach Link equipment in the first quarter in
2005 and depreciated the remaining net book value of these assets through December 31,
2006. |
| --- | --- |
| (ii) | Further, on August 31, 2005, MoCI issued a press release which announced that
in order to conform with the international standards and as recommended by the
International Telecommunications Union Radiocommunication Sector (ITU-R), the 1900 MHz frequency
spectrum would only be used for IMT-2000 or 3G network. In its press release, the MoCI
also announced that the Code Division Multiple Access (CDMA)-based technology network
which the Company used for its fixed wireless services could only operate in the 800
MHz frequency spectrum. The Company utilizes the 1900 MHz frequency spectrum for its
fixed wireless network in Jakarta and West Java areas while for other areas, the
Company utilizes the 800 MHz frequency spectrum. |

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PROPERTY, PLANT AND EQUIPMENT (continued)

c. Assets impairment and related claims (continued)

(ii)	(continued)
	On January 13, 2006, the MoCI issued MoCI Regulation No. 01/Per/M.KOMINFO/1/2006 which
reaffirmed the Governments decision that the Companys fixed wireless network could
only operate in the 800 MHz frequency spectrum and that the 1900 MHz will be allocated
for 3G network. Following the preceding Governments decisions, the Company reviewed
the recoverable amount of cash-generating unit to which the affected fixed wireless
asset belongs and in 2005, the Company had written-down Rp.616,768 million for
transmission installation and equipment of fixed wireless assets. The recoverable
amount was estimated using value in use which represented the present value of
estimated future cash flows from cash-generating unit using a pretax discount rate of
16.89%, representing the Companys weighted average cost of capital as of December 31,
2005. In determining cash-generating unit to which an asset belongs, assets were
grouped at the lowest level that included the assets and generated cash inflows that
were largely independent of the cash inflows from other assets or group of assets. In
addition, the Company recognized a loss relating to non-cancelable contracts for
procurement of the 1900 MHz transmission installation and equipment in Jakarta and West
Java areas amounting to Rp.79,359 million.
	As a result of this Governments decision, the Companys Base Station System (BSS)
equipment in Jakarta and West Java areas which are part of transmission installation
and equipment for fixed wireless network could no longer be used by the end of 2007
with total acquisition cost amounted to Rp.1,330,818 million. The BSS equipment has
been completely replaced with BSS equipment operating in 800 MHz by the end of December
2007. In June 2007, the Company has been fully depreciated the assets.
(iii)	As of March 31, 2007 and 2008, the Company operated two satellites, Telkom-1
and Telkom-2 primarily providing backbone transmission links for its network and earth
station satellite up-linking and down-linking services to domestic and international
users. As of March 31, 2008, there were no events or changes in circumstances that
would indicate that the carrying amount of the Companys satellites may not be
recoverable.
(iv)	On February 2, 2007, Jakarta and its surrounding, area of Divre II Jakarta
were covered by flood where an insurance claim for the replacement of the assets has
been agreed. Buildings and other equipments affected by the flood have been
re-operated gradually and with full completion expected to be on July 30, 2008.
(v)	On March 6, 2007, Padang within Divre I Sumatera experienced an earthquake
where an insurance claim for the replacement of the assets has been made. The
facilities have been re-operated gradually since September 2007.
(vi)	On September 12, 2007, South and West Sumatera within Divre I Sumatera
experienced an
earthquake where an insurance claim for the replacement of the assets has been made.
The facilities have been re-operated gradually since September 2007.

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PROPERTY, PLANT AND EQUIPMENT (continued)

d. Others

| (i) | Interest capitalized to property under construction amounted to Rp.nil
for the three months period ended March
31, 2007 and 2008, respectively. |
| --- | --- |
| (ii) | Foreign exchange loss capitalized as part of property under construction
amounted to Rp.nil for the three months period ended March 31, 2007 and 2008,
respectively. |
| (iii) | In 2007, Telkomsel capitalized Rp.938,296 million of its property, plant and
equipment which was subject to price adjustment (Note 49a.ii). Part of the capitalized
amount of Rp.307,603 million has been depreciated with total depreciation charged to
the consolidated statement of income amounting to Rp.10,210 million. As of the date of
the consolidated financial statements, the new agreements are still under negotiation;
it is therefore not possible to determine adjustment, if any, to the property, plant
and equipment as of March 31, 2008 and its related depreciation. |
| (iv) | The Company and its subsidiaries own several pieces of land located throughout
Indonesia with Building Use Rights (Hak Guna Bangunan or HGB) for a period of 20-30
years, which will expire between 2008 and 2038. Management believes that there will be
no difficulty in obtaining the extension of the land rights when they expire. |
| (v) | The Company was granted the right to use certain parcels of land by the
Ministry of Communications and Information Technology of the Republic of Indonesia
(formerly Ministry of Tourism, Post and Telecommunications) where they are still under
the name of the Ministry of Tourism, Post and Telecommunications and the Ministry of
Transportation of the Republic of Indonesia. The transfer to the Company of the legal
title of ownership on those parcels of land is still in progress. |
| (vi) | As of March 31, 2008, the Companys and its subsidiaries property, plant and
equipment, except for land, were insured with PT Asuransi Jasa Indonesia (Jasindo),
PT Asuransi Ramayana, PT Asuransi Wahana Tata and PT Asuransi Export Indonesia against
fire, theft and other specified risks. Total cost of assets being insured amounted to
Rp.33,169,394 million and US$490.21 million, which was covered by sum insured basis
with a maximum loss claim of Rp.1,181,046 million and on first loss basis of US$378.86
million and Rp.824,000 million including business recovery of Rp.324,000 million with
Automatic Reinstatement of Loss Clause. In addition, the Telkom-1 and Telkom-2 were
insured separately for US$34.04 million and US$51.26 million respectively. Management
believes that the insurance coverage is adequate. |
| (vii) | As of March 31, 2008, the completion of assets under construction was around
65% of the total contract value with estimated dates of completion to be between April
2008 up to March 2009. Management believes that there is no impediment to the
completion of the construction in progress. |
| (viii) | Certain property, plant and equipment of the Companys subsidiaries have been pledged
as collateral for lending agreements (Notes 19 and 23). |

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PROPERTY, PLANT AND EQUIPMENT (continued)

d. Others (continued)

(ix) The Company has lease commitments for entitled vehicle, certain transmission installation and equipment, with the option to purchase the leased assets at the end of the lease terms. Future minimum lease payments for the assets under capital leases as of March 31, 2007 and 2008 are as follows:

Year — 2007	53,903
2008	78,161		84,142
2009	78,161		84,756
2010	78,161		84,756
2011	78,161		77,489
2012	24,470		51,307
Later			15,224
Total minimum lease payments	391,017		397,674
Interest	(161,351	)	(152,581	)
Net present value of minimum lease payments	229,666		245,093
Current maturities (Note 20a)	(21,666	)	(35,578	)
Long-term portion (Note 20b)	208,000		209,515

PROPERTY, PLANT AND EQUIPMENT UNDER REVENUE-SHARING ARRANGEMENTS (RSA)

2007	Additions	Deduction
At cost:
Land	4,646		4,646
Buildings	5,110		5,110
Switching equipment	365,293		365,293
Transmission installation
and equipment	296,365		296,365
Cable network	618,845		618,845
Other telecommunications
peripherals	168,754		168,754
Total	1,459,013		1,459,013
Accumulated depreciation:
Land	2,703	58	2,761
Buildings	2,926	64	2,990
Switching equipment	172,341	8,678	181,019
Transmission installation
and equipment	103,253	9,380	112,633
Cable network	124,740	16,972	141,712
Other telecommunications
peripherals	87,418	6,213	93,631
Total	493,381	41,365	534,746
Net Book Value	965,632		924,267

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PROPERTY, PLANT AND EQUIPMENT UNDER RSA (continued)

2008	Additions	Deduction		2008
At cost:
Land	4,646				4,646
Buildings	3,982				3,982
Switching equipment	286,688				286,688
Transmission installation
and equipment	179,785		(18,179	)	161,606
Cable network	583,353				583,353
Other telecommunications
peripherals	149,200				149,200
Total	1,207,654		(18,179	)	1,189,475
Accumulated depreciation:
Land	2,935	58			2,993
Buildings	2,435	50			2,485
Switching equipment	169,663	6,137			175,800
Transmission installation
and equipment	90,141	3,808	(6,059	)	87,890
Cable network	144,603	12,059			156,662
Other telecommunications
peripherals	92,786	6,072			98,858
Total	502,563	28,184	(6,059	)	524,688
Net Book Value	705,091				664,787

| In accordance with RSA, the ownership rights to the property, plant and equipment under RSA are
legally retained by the investors until the end of the revenue-sharing periods. |
| --- |
| The balances of unearned income on RSA as of March 31, 2007 and 2008, are as follows: |

Gross amount	1,459,013		1,189,474
Accumulated amortization:
Beginning balance	(641,839	)	(704,269	)
Additions (Note 34)	(67,920	)	(60,372	)
Deductions			18,180
Ending balance	(709,759	)	(746,461	)
Net	749,254		443,013

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13.
Advances and other non-current assets as of March 31, 2007 and 2008 consist of:

Advances for purchase of property, plant and equipment	292,542	1,133,990
Deferred land rights charges	85,729	94,619
Restricted cash	91,738	91,618
Equipment not used in operations net		65,258
Security deposits	32,691	48,719
Others	218,329	189,878
Total	721,029	1,624,082

| | Deferred land rights charges represent costs to extend the contractual life of the land rights
which have been deferred and amortized over the contractual life. |
| --- | --- |
| | As of March 31, 2007 and 2008, restricted cash represented cash received from the Government
relating to compensation for early termination of exclusive rights to be used for the
construction of certain infrastructures (Notes 1a and 29) and time deposits with original
maturities of more than one year pledged as collateral for bank guarantees. |
| | As of March 31, 2008, equipment not used in operations represents Base Transceiver Station (BTS)
and other equipment of the Company and Telkomsel temporarily taken out from operations but
planned to be reinstalled. Telkomsels depreciation charged to the consolidated statement of
income for three months period ended March 31, 2007 and 2008 amounted to Rp.8,363 million and
Rp.3,091 million, respectively. |
| | In 2007 certain Telkomsels equipment with a net carrying amount of Rp.119,773 million was
re-installed and subsequently reclassified to property, plant and equipment (Note 11). |
| | Refer to Note 44 for details of related party transactions. |
| 14. | GOODWILL AND OTHER INTANGIBLE ASSETS |

(i) The changes in the carrying amount of goodwill and other intangible assets for the three months period ended March 31, 2007 and 2008 are as follows:


		intangible
	Goodwill	assets		License		Total
Gross carrying amount:
Balance, December 31, 2006	106,348		7,602,848		436,000		8,145,196
Balance, March 31, 2007	106,348		7,602,848		436,000		8,145,196
Accumulated amortization:
Balance, December 31, 2006	(106,348	)	(3,590,563	)	(11,679	)	(3,708,590	)
Amortization expense for three months
period (Note 37)			(251,205	)	(11,679	)	(262,884	)
Balance, March 31, 2007	(106,348	)	(3,841,768	)	(23,358	)	(3,971,474	)
Net Book Value			3,761,080		412,642		4,173,722
Weighted-average amortization period	5 years	7.58 years		9.5 years

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GOODWILL AND OTHER INTANGIBLE ASSETS (continued)


		intangible
	Goodwill	assets		License		Total
Gross carrying amount:
Balance, December 31, 2007	106,348		7,602,848		436,000		8,145,196
Additions Sigmas Software License					21,044		21,044
Additions Metras Goodwill	232,335						232,335
Balance, March 31, 2008	338,683		7,602,848		457,044		8,398,575
Accumulated amortization:
Balance, December 31, 2007	(106,348	)	(4,593,326	)	(58,393	)	(4,758,067	)
Accumulated Sigmas Software License					(12,605	)	(12,605	)
Amortization expense for three months
period (Note 37)			(250,793	)	(11,679	)	(262,472	)
Balance, March 31, 2008	(106,348	)	(4,844,119	)	(82,677	)	(5,033,144	)
Net Book Value	232,335		2,758,729		374,367		3,365,431
Weighted-average amortization period	5 years	7.58 years		9.5 years

| (ii) | Other intangible assets resulted from the acquisitions of Dayamitra, Pramindo, AWI, KSO
IV and KSO VII (Note 4), and represented the rights to operate the business in the KSO
areas. Goodwill resulted from the acquisition of GSD in 2001. |
| --- | --- |
| (iii) | The estimated annual amortization expense relating to other intangible assets for each
of the next three years beginning from January 1, 2008 would be approximately Rp.1,049,477
million per year. |
| (iv) | In 2006, Telkomsel was granted the right to operate the 3G license. Telkomsel is
required to pay an up-front fee and annual BHP fee for the next ten years. The up-front fee
is recorded as intangible asset and amortized using the straight-line method over the term
of the right to operate the 3G license (10 years) which is extendable subject to
evaluation. Amortization commenced in 2006 when the assets attributable to the provision of
the related services became available for use. |
| | The up-front fee paid by Telkomsel in February 2006 for the 3G license amounting to
Rp.436,000 million was recognized as intangible asset and is amortized over the term of the
3G license. |
| | Based on Telkomsels management interpretation of the license conditions and written
confirmation from the DGPT, the 3G license may be returned at any time without any financial
obligation to pay the remaining outstanding annual BHP fees. Accordingly, the annual BHP
fees relating to 3G license are expensed when incurred. Telkomsels management assesses its
plan to continue to use the license on an annual basis. |
| (v) | As of March 31, 2008, management believes that there was no indication of impairment. |

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15.
Escrow accounts as of March 31, 2007 and 2008 consist of the following:

Bank Danamon	1,162	1,177
Others (each below Rp.1 billion)	225	108
	1,387	1,285

| | The escrow accounts with Bank Danamon were established in relation with the RSA in
telecommunications equipment in Divre VII East Indonesia. |
| --- | --- |
| 16. | TRADE PAYABLES |


Related parties
Concession fees	662,818	280,931
Purchases of equipment, materials and services	113,891	229,537
Payables to other telecommunications providers	97,642	67,101
Sub-total	874,351	577,569
Third parties
Purchases of equipment, materials and services	6,083,457	4,647,468
Payables related to RSA	203,236	92,033
Payables to other telecommunications providers	49,127	105,602
Sub-total	6,335,820	4,845,103
Total	7,210,171	5,422,672

Trade payables by currency are as follows:

Rupiah	6,690,521	5,194,977
U.S. Dollars	427,093	187,698
Euro	46,937	34,592
Singapore Dollars	45,596	4,916
Japanese Yen	24	47
Others		442
Total	7,210,171	5,422,672

Refer to Note 44 for details of related party transactions.

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ACCRUED EXPENSES

General, administrative and marketing	419,523	1,557,623
Salaries and benefits	1,309,258	1,347,508
Interest and bank charges	199,394	164,370
Operations, maintenance and telecommunications services	650,188
Total	2,578,363	3,069,501

UNEARNED INCOME

Prepaid pulse reload vouchers	2,052,562	2,298,523
Other telecommunications services	4,338	51,518
Others	97,227	127,518
Total	2,154,127	2,477,559

SHORT-TERM BANK LOANS

BNI	100,000	166,667
Bank Niaga	15,800	29,800
Bank Syariah Mega		19,347
BCA	116,667
Bank Mandiri	116,666
Bank Bumiputera	8,000
Total	357,133	215,814

| a. |
| --- |
| On August 15, 2006, Telkomsel signed a Rp.300,000 million short-term facility agreement with
BNI, payable in 3 equal quarterly installments commencing after
3 months from the end of the availability period. The loan bore a floating interest rate of
three-month Certificate of Bank Indonesia (Sertifikat Bank Indonesia or SBI) plus 1.5%
per annum (12.86% per annum as of March 31, 2007) which becomes due quarterly in arrears and
was unsecured. The principal outstanding as of March 31, 2007, amounted to Rp.100,000
million and on June 28, 2007 the loan was fully repaid. |

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19. SHORT-TERM BANK LOANS (continued)

a.	BNI (continued)
	On June 15, 2007, Telkomsel signed a Rp.300,000 million short-term facility agreement with
BNI, payable in 3 equal quarterly installments commencing after 3 months from the end of the
availability period. The loan bears a floating interest rate of three-month Jakarta
Interbank Offered Rate (JIBOR) plus 1.25% per annum (9.40% per annum as of March 31, 2008)
which becomes due quarterly in arrears and is unsecured. On July 24, 2007, the loan
agreement was amended for additional facilities of Rp.200,000 million. The principal
outstanding as of March 31, 2008, amounted to Rp.166,667 million.
b.	Bank Niaga
	On April 25, 2005, Balebat entered into a Rp.800 million, 12% per annum fixed rate revolving
credit facility and Rp.1,600 million investment credit facility agreement with Bank Niaga.
These credit facilities are secured by Balebats property located in West Java up to a
maximum of Rp.3,350 million (Note 11). The applicable fixed interest rate and maturity date
of the revolving credit facility was amended on July 26, 2005 from 12% per annum to 12.5%
per annum and May 30, 2006, respectively and subsequently on June 13, 2006 to 16.5% per
annum and May 30, 2007, respectively. Based on the latest amendment, the revolving credit
facility amounting to Rp.800 million was combined with the short-term fixed credit facility
of Rp.4,000 million (Note 23h). Additionally, Balebat obtained a credit facility of Rp.500
million with a fixed interest rate of 16.75% per annum, maturing on May 30, 2007. On May 23,
2007, the loan agreement was amended (4 th amendment agreement) to increase the
maximum facility amount and interest rate to Rp.15,000 million and 13% per annum
respectively, for the period up to May 29, 2008. As of March 31, 2007 and 2008, the
principal outstanding amounted to Rp.800 million and Rp.14,800 million, respectively.
	On October 18, 2005, GSD entered into a short-term loan agreement with Bank Niaga for an
original facility of Rp.3,000 million for a one-year term. On November 3, 2006, the
agreement was amended to change the interest rate from 16.25% per annum to 15.5% per annum
and the maturity period to October 18, 2007. On November 23, 2007, the loan agreement was
amended to change the total facility to Rp.15,000 million with an interest rate of 11% per
annum and the maturity period to October 18, 2008. This credit facility is secured by GSDs
property, plant and equipment located in Jakarta (Note 11). As of March 31, 2007 and 2008,
the principal outstanding amounted to Rp.8,000 million and Rp.15,000 million, respectively.
	In October 2005, GSD entered into a short-term facility agreement with Bank Niaga for an
original facility of Rp.12,000 million, as amended on June 7, 2006 to Rp.7,000 million, and
maturing on October 18, 2006. The loan agreement was amended twice, the latest on November
3, 2006, to change the interest rate from 16.25% per annum to 15.5% per annum for the period
October 18, 2006 to October 18, 2007. The principal outstanding as of March 31, 2007 and
2008 was Rp.7,000 million and Rp.nil respectively.
c.	Bank Syariah Mega
	On December 11, 2007, Infomedia entered into a Rp.10,535 million loan agreement with
Bank Syariah Mega for working capital purpose. The facility is obtained through sharia
principles with the estimated rates on borrowing at 14% per annum, and is secured by the
receivables from contact center. The loan is payable within 3 months from the signing date.
On March 27, 2008, the loan agreement was amended to extend the maturity period to June 14,
2008. The principal outstanding as of March 31, 2008 amounted to Rp.10,535 million.

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19. SHORT-TERM BANK LOANS (continued)

c.	Bank Syariah Mega (continued)
	On March 31, 2008, Infomedia entered into Rp.8,812 million loan agreement with Bank Syariah
Mega for working capital purpose. The facility is obtained through sharia principles with
the estimated rates on borrowing at 14% per annum, and is secured by the receivables from
contact center. The loan is payable within 3 months from the signing date which become due
on June 2008. The principal outstanding as of March 31, 2008 amounted to Rp.8,812 million.
d.	BCA
	On August 15, 2006, Telkomsel signed a Rp.350,000 million short-term facility agreement with
BCA, payable in 3 equal quarterly installments commencing after 3 months from the end of the
availability period. The loan bore a floating interest rate of three-month SBI plus 1.5% per
annum (12.86% per annum as of March 31, 2007) which becomes due quarterly in arrears and was
unsecured. The principal outstanding as of March 31, 2007, amounted to Rp.116,667 million
and on June 28, 2007, the loan was fully repaid.
	On June 15, 2007, Telkomsel signed a Rp.300,000 million short-term facility agreement with
BCA, payable in 3 equal quarterly installments commencing after 3 months from the end of the
availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.25%
per annum (9.38% per annum as of March 31, 2008) which becomes due quarterly in arrears and
was unsecured. On March 28, 2008, the loan was fully repaid.
e.	Bank Mandiri
	On August 15, 2006, Telkomsel signed a Rp.350,000 million short-term facility agreement with
Bank Mandiri, payable in 3 equal quarterly installments commencing after 3 months from the
end of the availability period. The loan bore a floating interest rate of three-month SBI
plus 1.5% per annum (12.86% per annum as of March 31, 2007) which becomes due quarterly in
arrears and was unsecured. The principal outstanding as of March 31, 2007, amounted to
Rp.116,666 million and on June 28, 2007, the loan was fully repaid.
	On June 15, 2007, Telkomsel signed a Rp.300,000 million short-term facility agreement with
Bank Mandiri, payable in 3 equal quarterly installments commencing 3 months from the end of
the availability period. The loan bears a floating interest rate of three-month JIBOR plus
1.25% per annum (9.38% per annum as of March 31, 2008) which becomes due quarterly in
arrears and was unsecured. On March 28, 2008, the loan was fully repaid.
f.	Bank Bumiputera
	On February 15, 2006, GSD entered into a Rp.8,000 million loan agreement with
Bank Bumiputera with an interest rate of 17% per annum, unsecured and repayable by monthly
installment within 12 months from the signing date to February 15, 2007. On February 27,
2007, the loan agreement was amended to extend the maturity period to February 27, 2008. As
of December 31, 2006, the loan was fully drawn-down. The loan was fully paid on
November 23, 2007.

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20. MATURITIES OF LONG-TERM LIABILITIES

a. Current maturities

Bank loans	23	1,655,205	2,924,835
Deferred consideration for business combinations	24	1,055,668	1,154,537
Two-step loans	21	518,365	452,477
Obligations under capital leases	11	21,666	35,578
Notes and bonds	22	1,463,376
Total		4,714,280	4,567,427

b. Long-term portion

Notes	Total	2009	2010	2011	2012	Later
Bank loans	23	3,830.9	2,126.1	1,266.1	417.6	10.2	10.9
Two-step loans	21	3,688.7	308.8	413.2	385.7	387.8	2,193.2
Deferred consideration for
business combinations	24	2,117.2	805.6	1,204.9	106.7
Obligations under capital leases	11	209.5	41.8	52.2	57.7	43.7	14.1
Total		9,846.3	3,282.3	2,936.4	967.7	441.7	2,218.2

21. TWO-STEP LOANS

a.
The details of the two-step loans are as follows:

Creditors	Interest rate — 2007	2008	Outstanding — 2007	2008
Overseas banks	3.10% 11.64 %	3.10% 11.64 %	4,353,987		4,123,786
Consortium of contractors	3.20 %	3.20 %	43,489		17,401
Total			4,397,476		4,141,187
Current maturities (Note 20a)			(518,365	)	(452,477	)
Long-term portion (Note 20b)			3,879,111		3,688,710

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21. TWO-STEP LOANS (continued)

b. The details of two-step loans obtained from overseas banks as of March 31, 2007 and 2008 are as follows:

Currencies	Interest rate — 2007	2008	Outstanding — 2007	2008
US Dollars	4.00% - 7.39 %	4.00% - 6.67 %	1,733,746	1,548,663
Rupiah	8.54% - 11.43 %	8.97% - 12.14 %	1,551,650	1,363,688
Japanese Yen	3.10 %	3.10% - 3.20 %	1,068,591	1,211,435
Total			4,353,987	4,123,786

| | The loans are intended for the development of telecommunications infrastructure and
supporting equipment. The loans are repayable in semi-annual installments and are due on
various dates through 2024. |
| --- | --- |
| | The two-step loans which are payable in Rupiah bear either fixed interest rates and floating
rates based upon the average interest rate on three-month SBI during the six-months
preceding the installment due date plus 1% per annum, and floating interest rate offered by
the lenders plus 5.25% per annum. Two-step loans which are payable in foreign currencies
bear either fixed rate interests and the floating interest rate offered by the lenders, plus
0.5% per annum. |
| c. | The two-step loans obtained from a consortium of contractors as of March 31, 2007 and
2008 consisted of loans in Japanese Yen with an interest rate of 3.20% and 3.10% per annum,
respectively. |
| | The consortium of contractors consists of Sumitomo Corporation, PT NEC Nusantara
Communications and PT Humpuss Elektronika (SNH Consortium). The loans were obtained to
finance the second digital telephone exchange project. The loans are repayable in
semi-annual installments and are due on various dates through June 15, 2008. |

As of March 31, 2008, the Company has used all facilities under the two-step loans program and the drawdown period for the two-step loans has expired.

The Company is required to maintain financial ratios as follows:

| a. | Projected net revenue to projected debt service ratio should exceed 1.5:1 and 1.2:1
for the two-step loans originating from the World Bank and Asian Development Bank
(ADB), respectively. |
| --- | --- |
| b. | Internal financing (earnings before depreciation and interest expense) should exceed
50% and 20% compared to annual average capital expenditures for loans originating from
World Bank and ADB, respectively. |

As of March 31, 2008, the Company complied with the above mentioned ratios.

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22. NOTES AND BONDS


Bonds
Principal	1,000,000
Bond issuance costs	(1,542	)
Net	998,458
Medium-term Notes
Principal	465,000
Debt issuance costs	(82	)
Net	464,918
Total	1,463,376
Current maturities (Note 20a)	(1,463,376	)
Long-term portion

a.	Bonds
	On July 16, 2002, the Company issued a five-year bonds amounting to Rp.1,000,000 million, at
par value. The bonds bore interest at a fixed rate of 17% per annum, payable quarterly
beginning October 16, 2002 and secured with all assets owned by the Company. The bonds are
traded on the Surabaya Stock Exchange and matured on July 16, 2007. The trustee of the bonds
is BRI (effective from January 17, 2006 replacing BNI) and the custodian is PT Kustodian
Sentral Efek Indonesia.
	Under the provisions of the bond, the Company is required to comply with all covenants or
restrictions including maintaining certain consolidated financial ratios. The Company was
also restricted from making any loans to or for the benefit of any person which in aggregate
exceed Rp.500,000 million, in which the Company was not able to comply with in 2006.
However, the Company has obtained a written waiver from BRI, the trustee of the bonds. The
bonds were fully repaid on July 16, 2007.
b.	Medium-term Notes (the Notes)
	On December 13, 2004, the Company entered into an agreement with PT ABN AMRO Asia Securities
Indonesia, PT Bahana Securities, PT BNI Securities and PT Mandiri Sekuritas (collectively
referred as Initial Purchasers) to issue Notes for a total principal amount of
Rp.1,125,000 million. Proceeds from issuance of the Notes were used to finance the payment
of the remaining balance of the borrowings assumed in connection with the TII acquisition
amounting to US$123.0 million.

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NOTES AND BONDS (continued)

b.
The Notes consist of four Series with the following maturities and interest rates:

Series — A	290,000	Maturity — June 15, 2005	7.70 %
B	225,000	December 15, 2005	7.95 %
C	145,000	June 15, 2006	8.20 %
D	465,000	June 15, 2007	9.40 %
Total	1,125,000

| Interest on the Notes is payable semi-annually beginning June 15, 2005 through June 15,
2007. The Notes were unsecured and at all times ranked pari passu with other unsecured debts
of the Company. The Company may, at any time, before the maturity dates of the Notes,
repurchase the Notes in whole or in part. |
| --- |
| On June 15, 2005, December 15, 2005, June 15, 2006 and June 15, 2007, the Company repaid the
Series A, Series B, Series C, and series D Notes, respectively. |

23.
The details of long-term bank loans as of March 31, 2007 and 2008 are as follows:

			2007
		2008	Outstanding		Outstanding
			Original		Original
		Total facility	currency	Rupiah	currency	Rupiah
Lenders	Currency	(in millions)	(in millions)	equivalent	(in millions)	equivalent
The Export-Import Bank of Korea	US$	124	105.8	965,751	82	758,793
Bank Mandiri	Rp.	2,400,000		760,000		1,690,000
BCA	Rp.	1,423,000		614,349		700,000
Citibank	US$	113	39.2	356,780	16	144,994
	Euro	73	22.0	268,173	7	106,811
	Rp.	1,000,000		400,000		200,000
BNI	Rp.	1,550,000		240,000		1,270,000
Consortium of banks	Rp.	150,000		22,035
Bank Lippo	Rp.	18,500		16,561		9,201
Bank Niaga	Rp.	39,300		26,190		29,859
Bank Bukopin	Rp.	5,300		3,980		2,964
BRI	Rp.	2,400,000				1,820,000
Bank Ekonomi	Rp.	27,000				23,200
Total				3,673,819		6,755,822
Current maturities of bank loans
(Note 20a)				(1,655,205	)	(2,924,835	)
Long-term portion (Note 20b)				2,018,614		3,830,987

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BANK LOANS (continued)

| a. |
| --- |
| On August 27, 2003, the Company entered into a loan agreement with The Export-Import Bank of
Korea for a loan facility of US$124 million, to finance the CDMA procurement from the
Samsung Consortium. The facility bears interest, commitment and other fees totaling 5.68%
per annum. The loan is unsecured and payable in 10 semi-annual installments on June 30 and
December 30 of each year beginning in December 2006. The principal outstanding as of
March 31, 2007 and 2008 amounted to US$105.8 million (equivalent to Rp.965,751 million) and
US$82 million (equivalent to Rp.758,793 million), respectively. |

b. Bank Mandiri

| (i) | On March 20, 2006, Telkomsel signed a loan agreement with Bank Mandiri for a
facility of Rp.600,000 million, payable in 5 equal semi-annual installments commencing
6 months after the end of the availability period. The loan bears a floating interest
rate of three-month SBI plus 1.75% per annum (11.25% per annum and 9.85% per annum as
of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is
unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to
Rp.480,000 million and Rp.240,000 million, respectively. |
| --- | --- |
| (ii) | On August 15, 2006, Telkomsel signed a medium-term facility loan agreement with
Bank Mandiri for Rp.350,000 million, payable in 5 equal semi-annual installments
commencing 6 months after the end of the availability period. The loan bears a floating
interest rate of three-month SBI plus 1.5% per annum (11% per annum and 9.60% per annum
as of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and
is unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to
Rp.280,000 million and Rp.140,000 million, respectively. |
| (iii) | On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with
Bank Mandiri of Rp.500,000 million. This facility is payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears a floating interest rate of three-month JIBOR plus 1,25% per annum (9.38% per
annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. On
July 24, 2007, the loan agreement has been amended with addition of total facilities
provided amounted to Rp.200,000 million. The principal outstanding as of March 31, 2008
amounted to Rp.560,000 million. |
| (iv) | On October 24, 2007, Telkomsel signed a medium-term facility loan agreement
with Bank Mandiri of Rp.750,000 million. This facility is payable in 5 equal
semi-annual installments commencing 6 months after the end of the availability period.
The loan bears a floating interest rate of three-month JIBOR plus 1.17% per annum
(9.26% as of March 31, 2008) which becomes due quarterly in arrears and is unsecured.
The principal outstanding as of March 31, 2008 amounted to Rp.750,000 million. |

c. BCA

(i) On April 10, 2002, the Company entered into a Term Loan Agreement HP Backbone Sumatra Project with BCA for a total facility of Rp.173,000 million, to finance the Rupiah portion of the high performance backbone network in Sumatra pursuant to the Partnership Agreement dated November 30, 2001 with PT Pirelli Cables Indonesia (Pirelli Cables) and PT Siemens Indonesia (Siemens Indonesia).

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

BANK LOANS (continued)

c. BCA (continued)

(i)	(continued)
	The amounts drawn from the facility bear interest rate of 4.35% per annum plus the
three-month time deposit rate (12.27% per annum as of March 31, 2007) and were
unsecured. The loans were payable in twelve unequal quarterly installments beginning in
July 2004 and mature in April 2007.
	Total principal outstanding as of March 31, 2007 was Rp.14,349 million.
	Based on the loan agreement, the Company is required to comply with all covenants or
restrictions including maintaining financial ratios. In 2006, the Company breached a
covenant in the loan agreement which stipulates that the Company will not make any loans
to or for the benefit of any person which in aggregate exceed Rp.500,000 million. The
Company obtained a written waiver from BCA with regard to providing loans to certain
subsidiaries which in aggregate exceed Rp.500,000 million. The loan was fully repaid on
April 10, 2007.
(ii)	On March 16, 2006, Telkomsel signed a loan agreement with BCA for a facility of
Rp.400,000 million, payable in 5 equal semi-annual installments commencing 6 months
after the end of the availability period. The loan bears a floating interest rate of
three-month SBI plus 1.75% per annum (11.25% per annum and 9.85% per annum as of March
31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is
unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to
Rp.320,000 million and Rp.160,000 million, respectively.
(iii)	On August 15, 2006, Telkomsel signed a medium-term facility loan agreement
with BCA for Rp.350,000 million, payable for 5 equal semi-annual installments
commencing 6 months after the end of the availability period. The loan bears a floating
interest rate of three-month SBI plus 1.5% per annum (11% per annum and 9.60% per annum
as of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and
is unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to
Rp.280,000 million and Rp.140,000 million, respectively.
(iv)	On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with
BCA of Rp.500,000 million, payable in 5 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bears a floating interest
rate of three-month JIBOR plus 1.25% per annum (9.38% per annum as of March 31, 2008)
which becomes due quarterly in arrears and is unsecured. The principal outstanding as
of March 31, 2008 amounted to Rp.400,000 million.

d. Citibank

| 1. |
| --- |
| On December 2, 2002, pursuant to the partnership agreement with Siemens
Aktiengesellschaft (AG) (Note 49a.ii), Telkomsel entered into the Hermes Export
Facility Agreement (Facility) with Citibank International plc (as Original Lender
and Agent) and Citibank, Jakarta branch (Arranger) covering a total facility of
Euro76.2 million divided into several tranches. The agreement was subsequently amended
on October 15, 2003, amending the Facility amount to Euro73.4 million and the payment
dates. |

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BANK LOANS (continued)

d. Citibank (continued)

| 1. |
| --- |
| The Facility bears interest rate based on the Euro Interbank Offered Rate (EURIBOR) plus
0.75% per annum (4.48% per annum and 4.99% per annum as of March 31, 2007 and 2008,
respectively) and is unsecured. Interest is payable semi-annually, starting on the
utilization date of the Facility (May 29, 2003). As of March 31, 2007 and 2008, the
outstanding balance was Euro22.0 million (equivalent to Rp.268,173 million) and Euro7.3
million (equivalent to Rp.106,811 million), respectively. This loan will due on October
7, 2008. |
| In addition to interest, Telkomsel was also charged an insurance premium for the
guarantee given by Hermes in favor of Telkomsel for each loan utilization, 15% of which
was paid in cash. The remaining balance was settled through utilization of the facility. |

High Performance Backbone (HP Backbone) Loans

| a. | On April 10, 2002, the Company entered into a loan agreement with
Citibank (Arranger) and Citibank International plc (Agent), which was supported
by an export credit guarantee of Hermes Kreditversicherungs AG (Lender and
Guarantor), providing a total facility of US$23.4 million. The facility which was
unsecured, was obtained to finance up to 85% of the cost of supplies and services
sourced in Germany relating to the design, manufacture, construction, installation
and testing of high performance backbone networks in Sumatra pursuant to the
Partnership Agreement dated November 30, 2001, with Pirelli Cables and Siemens
Indonesia for the construction and provision of a high performance backbone in
Sumatra. The lender required a fee of 8.4% of the total facility, 15% of which was
paid in cash and 85% was included in the loan balance. |
| --- | --- |
| | As of March 31, 2007 and 2008, the outstanding loan was US$8.4 million (equivalent
to Rp.76,509 million) and US$4.2 million (equivalent to Rp.38,644 million),
respectively. The loan is payable in 10 semi-annual installments beginning in April
2004 with interest at a rate equal to the six-month London Interbank Offered Rate
(LIBOR) plus 0.75% per annum (6.11% per annum and 5.93% per annum as of March 31,
2007 and 2008, respectively). |
| b. | On April 10, 2002, the Company entered into a loan agreement with
Citibank (Arranger) and Citibank International plc (Agent), which was supported
by an export credit guarantee obtained from Servizi Assicurativi del Commercio
Estero ( SACE Italy ) providing a total maximum facility to US$21.0 million. The
facility which was unsecured, was used to finance up to 85% of material and
services procured in Italy in connection with the design, manufacture, development,
installation and testing of Sub-System VI , as part of HP Backbone network. |
| | The loan bears a fixed interest rate of 4.14% per annum payable in 10 semi-annual
installments beginning in December 2003. Total principal outstanding as of
March 31, 2007 and 2008 was US$5.6 million (equivalent to Rp.50,812 million) and
US$1.9 million (equivalent to Rp.17,110 million), respectively. |

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BANK LOANS (continued)

d. Citibank (continued)

| 2. |
| --- |
| As stated in the agreements, the Company is required to comply with all covenants or
restrictions including maintaining financial ratios as follows, in which the Company has
complied with as of March 31, 2007 and 2008 as follows: |

1.	Debt service coverage ratio should exceed 1.5:1.
2.	Debt to equity ratio should not exceed:

a.	3:1 for the period April 10, 2002 to January 1, 2003,
b.	2.75:1 for the period January 2, 2003 to January 1, 2004,
c.	2.5:1 for the period January 2, 2004 to January 1, 2005, and
d.	2:1 for the period January 2, 2005 to the full repayment date
of the loans.

Debt to EBITDA ratio should not exceed:

a.	3.5:1 for the period April 10, 2002 to January 1, 2004, and
b.	3:1 for the period January 2, 2004 to the full repayment date
of the loans.

| In 2005, the Company has breached a covenant in the loan agreements which stipulate that
the Company will not make any loans or grant any credit to or for the benefit of any
person which in aggregate exceed 3% of stockholders equity. On May 12, 2006, the
Company obtained a written waiver from Citibank International plc with regard to
providing loans to certain subsidiaries which in aggregate exceed 3% of stockholders
equity. In 2006, the Company has complied with the above covenant. |
| --- |
| As of June 21, 2007, the Company obtained a waiver letter from Citibank International
plc with regard to providing loans facility. The waiver letter is intended to be valid
until the loans facility have been fully repaid. In 2007, the Company has complied with
the above covenant. |

| 3. |
| --- |
| On December 2, 2002, pursuant to the partnership agreement with PT Ericsson Indonesia
(Ericsson Indonesia) (Note 49a.ii), Telkomsel entered into the EKN-Backed Facility
agreement (Facility) with Citibank International plc (Original Lender and Agent)
and Citibank, Jakarta branch (Arranger) covering a total Facility of US$70.5 million,
divided into several tranches. The agreement was subsequently amended on December 17,
2004, to reduce the total Facility to US$68.9 million. |
| The interest rate per annum on the Facility is determined based on Commercial Interest
Reference Rate (CIRR) of 3.52% plus 0.5% per annum (4.02% as of March 31, 2007 and 2008,
respectively) and is unsecured. Interest is payable semi-annually, starting on the
utilization date of the Facility (July 31, 2003). |
| In addition to interest, Telkomsel was also charged an insurance premium for the
guarantee given by EKN in favor of Telkomsel for each loan utilization, 15% of which was
paid in cash. The remaining balance was settled through utilization of the facility. |
| No amounts were drawdown from the Facility in 2007 and 2008. As of March 31, 2007 and
2008, the outstanding balance was US$25.2 million (equivalent to Rp.229,459 million) and
US$9.7 million (equivalent to Rp.89,240 million), respectively. This loan will due on
December 30, 2008. |

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BANK LOANS (continued)

d. Citibank (continued)

Medium term loan

| a. | On March 21, 2006, Telkomsel signed a medium term loan agreement with
Citibank, Jakarta Branch for a facility of Rp.500,000 million, repayable in 5 equal
semi-annual installments commencing 6 months after the end of the availability
period. The loan bears a floating interest rate of three-month SBI plus 1.75% per
annum (11.25% per annum and 9.85% per annum as of March 31, 2007 and 2008,
respectively) which becomes due quarterly in arrears and is unsecured. The
principal outstanding as of March 31, 2007 and 2008 amounted to Rp.400,000 million
and Rp.200,000 million, respectively. |
| --- | --- |
| b. | On October 24, 2007, Telkomsel signed a medium-term facility loan
agreement with Citibank, Jakarta Branch of Rp.500,000 million. This facility is in
5 equal semi-annual installments commencing 6 months after the end of the
availability period. The loan bears a floating interest rate of three-month JIBOR
plus 1.09% per annum which becomes due quarterly in arrears and is unsecured. As of
March 31, 2008, the facility has not been drawn-down. |

The following table summarizes the principal outstanding on the various long-term loans from Citibank as of March 31, 2007 and 2008:


	Foreign			Foreign
	currencies	Rupiah		currencies	Rupiah
	(in millions)	equivalent		(in millions)	equivalent
Hermes Export Facility	Euro	22.0	268,173	7.3	106,811
HP Backbone loans	US$	14.0	127,321	6.0	55,754
EKN-Backed Facility	US$	25.2	229,459	9.7	89,240
Medium term loan	Rp.		400,000		200,000
Total			1,024,953		451,805
Current maturities			(592,089	)	(451,805	)
Long-term portion			432,864

e. BNI

| (i) | On August 15, 2006, Telkomsel signed a medium-term facility loan agreement with
BNI for Rp.300,000 million, payable for 5 equal semi-annual installment commencing 6
months after the end of the availability period. The loan bears a floating interest
rate of three-month SBI plus 1.5% per annum (11% per annum and 9.60% per annum as of
March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is
unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to
Rp.240,000 million and Rp.120,000 million, respectively. |
| --- | --- |
| (ii) | On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with
BNI of Rp.500,000 million, payable in 5 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bears a floating interest
rate of three-month JIBOR plus 1.25% per annum (9.38% per annum as of March 31, 2008)
which becomes due quarterly in arrears and is unsecured. The principal outstanding as
of March 31, 2008 amounted to Rp.400,000 million. |

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BANK LOANS (continued)

e. BNI (continued)

(iii) On October 24, 2007, Telkomsel signed a medium-term facility loan agreement with BNI of Rp.750,000 million. This facility is in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.17% per annum (9.26% per annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2008 amounted to Rp.750,000 million.

f. Consortium of banks

On June 21, 2002, the Company entered into a loan agreement with a consortium of banks for a facility of Rp.400,000 million, to finance the Divre V Junction Project. Bank Bukopin, acting as the facility agent, charged interest at the rate of 19% per annum for the first year from the signing date and at the rate of the highest average three-month deposit rate of each creditor plus 4% per annum for the remaining years. The drawdown period expires 19 months from the signing of the loan agreement and the principal is payable in 14 quarterly installments starting from April 2004. The loan facility is secured by project equipment, with a value of not less than Rp.500,000 million.

Based on an addendum to the loan agreement dated April 4, 2003, the loan facility was reduced to Rp.150,000 million, the drawdown period was amended to expire 18 months from the signing of the addendum, the repayment schedule was amended to 14 quarterly installments starting from May 21, 2004 and ending on June 21, 2007, and the value of the project equipment secured was reduced to Rp.187,500 million.

As of March 31, 2007, interest rate charged on the loan was 12.69% per annum and principal outstanding was Rp.22,035 million. As of June 22, 2007 the loan was fully repaid.

g. Bank Lippo

On May 29, 2006, Infomedia entered into a loan agreement with Bank Lippo for a facility of Rp.18,500 million, to finance its call center project with Telkomsel. The facility bears interest at 15.5% per annum and is secured by Infomedias receivables on the call center contract with Telkomsel amounted to Rp.23,125 million until the due date of the loan within 36 months from the withdrawal date. As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.16,561 million and Rp.9,201 million, respectively.

h. Bank Niaga

(i) On December 28, 2004, Balebat entered into a loan agreement with Bank Niaga for a total facility of Rp.7,200 million comprising of Rp.5,000 million to finance the construction of plant (Investment Facility) with an interest rate of 13.5% per annum and Rp.2,200 million to finance certain purchases of machinery (Specific Transaction Facility) with an interest rate of 12% per annum. Through an amendment on December 1, 2005, the interest rate was subsequently increased to 17% per annum. The Investment Facility is repayable in 36 monthly installments commencing from March 31, 2005. The Specific Transaction Facility is repayable in 60 monthly installments commencing from June 29, 2005. These facilities are secured by Balebats property, plant and equipment with a total value of Rp.8,450 million (Note 11). As of March 31, 2007 and 2008, principal outstanding under these facilities amounted to Rp.2,968 million and Rp.990 million, respectively.

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

BANK LOANS (continued)

h. Bank Niaga (continued)

(i) (continued)

On December 22, 2005, the loan agreement was amended to include a short-term credit facility of Rp.4,000 million with maturity date and interest rate of December 22, 2006 and 12.5% per annum, respectively. On June 13, 2006, the facility was combined with the revolving credit facility of Rp.800 million (Note 19d).

On June 13, 2006, Balebat also received an additional facility of Rp.2,500 million which consisted a facility of Rp.2,000 million to finance the purchase of a printing machine and Rp.500 million to finance the purchase of operational vehicles with an interest rate of 16.5% per annum. These facilities will be due on October 30, 2011 and November 28, 2009, respectively. Both facilities are secured by Balebats property located in West Java. As of March 31, 2007, the outstanding loans of the facilities were Rp.1,678 million and Rp.476 million, respectively, and as of March 31, 2008 was Rp.1,184 million and Rp.nil .

| (ii) | As discussed in Note 19d, on April 25, 2005, Balebat entered into a loan
agreement with Bank Niaga for a total facility of Rp.2,400 million which includes an
investment credit facility of Rp.1,600 million with maturity date of October 25, 2009.
The investment credit facility loan is payable in 48 unequal monthly installments
beginning in November 2005 through October 2009. The investment credit facility bears
interest at a rate equal to market rate plus 2% per annum (17% per annum and 16.5% per
annum as of March 31, 2007 and 2008, respectively). As of March 31, 2007 and 2008, the
principal outstanding amounted to Rp.1,067 million and Rp.667 million respectively. |
| --- | --- |
| (iii) | In March 2007, GSD entered into a loan agreement (2 nd special
transaction loan agreement) with Bank Niaga for a total facility of Rp.20,000 million
with an interest rate of 13% per annum. The facility is secured by a parcel of land of
GSD. The facility is payable in 8 years and the principal is payable in 33 quarterly
installments and will be due in May 2015. As of March 31, 2008, the principal
outstanding amounted to Rp.19,550 million. |
| (iv) | On November 23, 2007, GSD entered into a loan agreement (3 rd special
transaction loan agreement) with Bank Niaga for a total facility of Rp.8,000 million
with an interest rate of 11% per annum. The facility is secured by a parcel of land of
GSD. The facility is payable in 5 years and the principal is payable in 60 monthly
installments and will be due on November 23, 2012. As of March 31, 2008, the principal
outstanding amounted to Rp.7,468 million. |

i. Bank Bukopin

On May 11, 2005, Infomedia entered into loan agreements with Bank Bukopin for various facilities in a maximum of Rp.5,300 million to finance the acquisition of a property. The loan is payable in 60 monthly installments and bears an interest rate of 15.75% per annum as of March 31, 2007 and 2008. A portion of the facilities of Rp.4,200 million will mature in June 2010 and the remainder of Rp.1,100 million will mature in December 2010. The facilities are secured by certain Infomedias property. As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.3,980 million and Rp.2,964 million, respectively.

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BANK LOANS (continued)

j. BRI

| (i) | On June 15, 2007, Telkomsel entered into a medium-term loan agreement with BRI
for a facility of Rp.400,000 million. The loan is payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears a floating interest rate of three-month JIBOR plus 1.25% per annum (9.38% per
annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured.
The principal outstanding as of March 31, 2008 amounted to Rp.320,000 million. |
| --- | --- |
| (ii) | On October 24, 2007, Telkomsel signed a medium-term facility loan agreement
with BRI of Rp.2,000,000 million. The loan is payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears a floating interest rate of three-month JIBOR plus 1.17% per annum (9.26% per
annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured.
The principal outstanding as of March 31, 2008 amounted to Rp.1,500,000 million. |

k. Bank Ekonomi

On December 2006, Sigma signed into a facility loan agreement with Bank ekonomi of Rp.14,000 million. The loan is payable in 72 monthly installments starting from December 12, 2006 and ending on December 12, 2012. This credit facility is secured by a parcel of land os Sigma located in Surabaya (Note 11). As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.13,188 million and Rp.12,849 million, respectively.

On March 9, 2007, Sigma received an additional facility of Rp.13,000 million. The facility bears interest at 12% per annum and is payable in 69 mothly installments starting from March 12, 2007 and ending on December 12, 2012. This credit facility is secured by a parcel of land of Sigma located in Surabaya (Note 11). As of March 31, 2008, the principal outstanding amounted to Rp 10,351 million.

DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS

Deffered consideration represent the Companys obligations to the Selling Stockholders of TII in respect of the Companys acquisition of 100% of TII, MGTI in respect of the Companys acquisition of KSO IV, and BSI in respect of the Companys acquisition of KSO VII, with details as follows:


TII transaction
PT Aria Infotek	209,091		105,611
The Asian Infrastructure Fund	49,784		25,145
MediaOne International I B.V.	139,394		70,407
Less discount on promissory notes	(21,206	)	(5,085	)
	377,063		196,078
KSO IV transaction
MGTI	2,744,659		2,080,863
Less discount	(394,025	)	(223,791	)
	2,350,634		1,857,072

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DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS (continued)


KSO VII transaction (Note 4)
BSI	2,060,867		1,488,475
Less discount	(476,867	)	(269,922	)
	1,584,000		1,218,553
Total	4,311,697		3,271,703
Current maturity net of discount (Note 20a)	(1,055,668	)	(1,154,537	)
Long-term portion net of discount (Note 20b)	3,256,029		2,117,166

a. TII transaction

The outstanding balance relating to TII transaction represents non-interest bearing promissory notes which were included in the purchase consideration, and arose from the acquisition of the 100% outstanding common shares of TII (previously the Companys KSO III partner) on July 31, 2003. These promissory notes have initial face value of US$109.1 million (equivalent to Rp.927,272 million) and a present value at a discount rate of 5.16% at the closing date of US$92.7 million (equivalent to Rp.788,322 million). The promissory notes are payable in 10 equal semi-annual installment beginning July 31, 2004.

As of March 31, 2007 and 2008, the outstanding promissory notes, before unamortized discount, amounted to US$54.5 million (equivalent to Rp.491,182 million) and US$21.8 million (equivalent to Rp.201,164 million), respectively.

b. KSO IV transaction

The outstanding balance relating to KSO IV arose from acquisition of KSO IV by the Company, based on amendment and restatement of KSO agreement entered into by the Company and MGTI on January 20, 2004. Based on the agreement, in consideration for the Companys obtaining legal right to control the financial and operating decision of KSO IV, the Company has agreed to pay MGTI the total purchase price of approximately US$390.7 million (equivalent to Rp.3,285,362 million) which represents the present value of fixed monthly payments (totaling US$517.1 million), payable to MGTI beginning February 2004 through 2010 at a discount rate of 8.3%, plus the direct cost of the business combination.

As of March 31, 2007 and 2008, the remaining monthly payments to be made to MGTI, before unamortized discount, amounted to US$300.7 million (equivalent to Rp.2,744,659 million) and US$201 million (equivalent to Rp.1,857,073 million), respectively.

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

MINORITY INTEREST


Minority interest in net assets of subsidiaries:
Telkomsel	9,123,375	10,423,163
Infomedia	104,851	102,816
Metra	2,622	31,017
GSD
Total	9,230,848	10,556,996


Minority interest in net income (loss) of subsidiaries:
Telkomsel	1,048,779		1,257,064
Metra	122		1,562
GSD	(7	)
Infomedia	(10,064	)	(9,039	)
Total	1,038,830		1,249,587

CAPITAL STOCK

	2007 — Number of	Percentage	Total
Description	shares	of ownership	paid-up capital
Series A Dwiwarna share
Government	1	0.00	0
Series B shares
Government	10,320,470,711	51.68	2,580,118
JPMCB US Resident (Norbax Inc.)	1,656,405,338	8.30	414,101
The Bank of New York	1,519,651,896	7.61	379,913
Directors (Note 1b):
Ermady Dahlan	17,604	0.00	4
Indra Utoyo	5,508	0.00	1
Public (individually less than 5%)	6,471,532,722	32.41	1,617,884
Total	19,968,083,780	100.00	4,992,021
Treasury stock (Note 28)	191,915,500	0.00	47,979
Total	20,159,999,280	100.00	5,040,000

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CAPITAL STOCK (continued)

	2008 — Number of	Percentage	Total
Description	Shares	of Ownership	Paid-up Capital
Series A Dwiwarna share
Government	1	0.00	0
Series B shares
Government	10,320,470,711	52.06	2,580,118
JPMCB US Resident (Norbax Inc.)	1,673,923,863	8.44	418,481
The Bank of New York	1,782,115,056	9.00	445,529
Directors (Note 1b):
Ermady Dahlan	17,604	0.00	4
Indra Utoyo	5,508	0.00	1
Public (individually less than 5%)	6,046,173,537	30.50	1,511,544
Total	19,822,706,280	100.00	4,955,677
Treasury stock (Note 28)	337,293,000	0.00	84,323
Total	20,159,999,280	100.00	5,040,000

| | The Company only issued 1 Series A Dwiwarna Share which is held by the Government and
cannot be transferred to any party, and has a veto in the General Meeting of the Stockholders
with respect to election and removal of the Board of Commissioners and Directors and to amend
the Companys Articles of Association. |
| --- | --- |
| | Series B shares give the same and equal rights to all the Series B stockholders. |
| 27. | ADDITIONAL PAID-IN CAPITAL |

| Proceeds from sale of 933,333,000 shares in excess of par value
through IPO in 1995 | 1,446,666 | | 1,446,666 | |
| --- | --- | --- | --- | --- |
| Capitalization into 746,666,640 Series B shares in 1999 | (373,333 | ) | (373,333 | ) |
| Total | 1,073,333 | | 1,073,333 | |

| 28. |
| --- |
| Based on the resolution on the EGM of Stockholders on December 21, 2005, the stockholders
authorized the phase I plan to repurchase the Companys issued and outstanding Series B shares.
The proposals for a stock repurchase program are under the following terms and conditions: (i)
maximum stock repurchase would be 5% of the Companys issued Series B shares with total cost
not to exceed Rp.5,250,000 million; and (ii) the period determined for the acquisition would not be longer than 18 months (December 21, 2005
to June 20, 2007). |

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| 28. |
| --- |
| Based on the resolution on the AGM on Stockholders on June 29, 2007, the stockholders authorized
to discontinue the phase I plan to repurchase the Series B shares and authorized the phase II
plan to repurchase the Companys issued and outstanding Series B shares. The proposals to
undertake a stock repurchase programs, under the following terms and conditions: (i) maximum
stock repurchase would be 215,000,000 of the Companys issued Series B shares with total cost
not to exceed Rp.2,000,000 million; and (ii) the period determined for the acquisition would not
be longer than 18 months (June 29, 2007 to December 28, 2008). |
| As of March 31, 2007 and 2008, the Company has repurchased 191,915,500 and 337,293,000 shares,
respectively, of the Companys issued and outstanding Series B shares, representing 0.95% and
1.67%, respectively, for a total repurchased amount of Rp.1,641,680 million in 2007 and
Rp.3,030,368 million in 2008 (including brokers commissions and custodian fees). |
| The Company has planned to retain, sell or use the treasury stock for other purposes in
accordance with Badan Pengawas Pasar Modal dan Lembaga Keuangan Indonesia (BAPEPAM) Regulation
No. XI.B.2 and under Law No. 40/2007 on Limited Liability Companies. |
| The movement of shares held in treasury arising from the programs for repurchase of shares is as
follows: |

Number		Number
of shares	Rp.	of shares	Rp.
Balance beginning	118,376,500	952,211	244,740,500	2,176,611
Number of shares acquired	73,539,000	689,469	92,552,500	853,757
Balance ending	191,915,500	1,641,680	337,293,000	3,030,368

Historical unit cost of repurchase of treasury shares:


2008
Weighted average	8,984
Minimum	6,633
Maximum	11,200

The acquisition cost per share has included all the cost for the shares repurchase programs (i.e. brokers commissions and custodian fees). Up to the consolidated balance sheet date, none of the shares acquired were sold.

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| 29. |
| --- |
| The balance of this account amounting to Rp.270,000 million arose from the early termination of
the Companys exclusive rights to provide local and domestic fixed line telecommunication
services. As discussed in Note 1a, on December 15, 2005, the Company signed an Agreement on
Implementation of Compensation for Termination of Exclusive Rights with the State MoCI DGPT,
which was amended on October 18, 2006. Pursuant to this agreement, the Government agreed to pay
Rp.478,000 million, net of tax, to the Company over a five-year period where Rp.90,000 million
shall be paid from the 2005 State budget, Rp.90,000 million from the 2006 State budget and the
remaining Rp.298,000 million shall be paid gradually or in one lump-sum payment based on the
States financial ability. In addition, the Company is required by the Government to use the
funds received from this compensation for the development of telecommunications infrastructure. |
| As of March 31, 2007 and 2008, the Company has received an aggregate of Rp.180,000 million and
Rp.270,000 million, respectively, in relation to the compensation for the early termination of
exclusivity rights, being Rp.90,000 million each paid on December 30, 2005, December 28, 2006
and December 13, 2007, respectively. The Company recorded these amounts in Difference in value
arising from restructuring transactions and other transactions between entities under common
control in the Stockholders Equity section. These amounts are recorded as a component of
Stockholders Equity because the Government is the majority and controlling stockholder of the
Company. The Company will record the remaining amount of Rp.208,000 million when received. |
| As of March 31, 2007 and 2008, the development of the related infrastructures amounted to
Rp.90,702 million and Rp.190,997 million, respectively. |

TELEPHONE REVENUES


Fixed lines
Local and SLJJ	1,856,465	1,563,486
Monthly subscription charges	923,529	918,914
Installation charges	31,888	30,639
Phone cards	639	299
Others	55,055	27,100
Total	2,867,576	2,540,438
Cellular
Air time charges	5,430,504	5,683,839
Features	50,659	139,433
Monthly subscription charges	64,643	84,555
Connection fee charges	33,996	58,256
Total	5,579,802	5,966,083
Total Telephone Revenues	8,447,378	8,506,521

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INTERCONNECTION REVENUES

Revenues	2,790,382		3,041,324
Expenses	(661,467	)	(781,585	)
Total Net	2,128,915		2,259,739

| | Based on the MoCI Regulation No. 08/Per/M.KOMINFO/02/2006, the implementation of cost-based
interconnection tariff is applicable beginning January 1, 2007 (Note 48). |
| --- | --- |
| | Refer to Note 44 for details of related party transactions. |
| 32. | DATA AND INTERNET REVENUES |

Short Messaging Services (SMS)	2,017,799	3,319,041
Internet	297,726	452,125
Data communication	549,851	102,584
Voice over Internet Protocol (VoIP)	46,866	37,462
e-Business	8,788	6,206
Total	2,921,030	3,917,418

NETWORK REVENUES

Satellite transponder lease	15,566	137,888
Leased lines	193,188	85,928
Total	208,754	223,816

	Refer to Note 44 for details of related party transactions.
34.	REVENUE-SHARING ARRANGEMENTS (RSA) REVENUES

Amortization of unearned income (Note 12)	67,920	60,372
RSA revenues	64,752	37,564
Total	132,672	97,936

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PERSONNEL EXPENSES

Vacation pay, incentives and other benefits	646,793	764,454
Salaries and related benefits	724,486	690,487
Employees income tax	217,080	233,307
Net periodic post-retirement health care
benefits costs (Note 43)	181,042	225,659
Net periodic pension costs (Note 41a)	114,946	179,662
Housing	101,944	98,200
Other post-retirement cost (Note 41b)	21,871	20,894
Additional old saving allowance		15,271
LSA costs (Notes 42a,b)	20,002	4,978
Other employees benefits (Note 41c)	2,438	3,002
Medical	2,447	2,008
Others	21,606	8,980
Total	2,054,655	2,246,902

OPERATIONS, MAINTENANCE AND TELECOMMUNICATION SERVICES EXPENSES

Operations and maintenance	1,238,322	1,377,968
Radio frequency usage charges	224,893	341,263
Concession fees and Universal Service
Obligation (USO) charges	240,829	261,740
Cost of phone, SIM and RUIM cards	159,288	166,794
Electricity, gas and water	112,105	113,201
Insurance	72,862	87,643
Leased lines	40,498	76,178
Vehicles rental and supporting facilities	48,559	54,454
Travelling	11,221	12,219
Others	674	14,713
Total	2,149,251	2,506,173

Refer to Note 44 for details of related party transactions.

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GENERAL AND ADMINISTRATIVE EXPENSES

| Amortization of goodwill and other intangible assets
(Note 14) | 262,884 | 262,472 |
| --- | --- | --- |
| Provision for doubtful accounts and inventory
obsolescence (Notes 6d and 7) | 123,986 | 195,296 |
| Collection expenses | 156,412 | 116,020 |
| Security and screening | 53,895 | 64,745 |
| Travelling | 59,024 | 51,656 |
| Training, education and recruitment | 33,663 | 41,004 |
| Vehicles rental | 21,760 | 22,151 |
| Meetings | 17,244 | 19,300 |
| Professional fees | 22,961 | 15,697 |
| General and social contribution | 55,145 | 14,782 |
| Stationery and printing | 12,874 | 14,054 |
| Research and development | 1,099 | 923 |
| Others | 6,987 | 6,486 |
| Total | 827,934 | 824,586 |

TAXATION

| a. | In 2007, Telkomsel recognized a claim for tax refund amounting to Rp.12.5 billion (Note
38g) as a result of its revision to the 2004 and 2005 tax returns and Rp.408 billion as a
result of its objection to the 2007 tax assessment (Note 38f). |
| --- | --- |
| b. | Prepaid taxes |


Subsidiaries
Corporate income tax		50,863
Value Added Tax (VAT)		3,247
Income tax
Article 23 Services Delivery	26,896	4,717
	26,896	58,827

c. Taxes payable


The Company
Income taxes
Article 21
Individual income tax	56,170	52,533
Article 22 Withholding tax on goods delivery and import	1,696	2,289
Article 23 Withholding tax on services delivery	26,815	10,519
Article 24		115
Article 25 Installment of corporate income tax	6,629	5,948
Article 26 Withholding tax on non-resident income tax	3,812	2,112
Article 29 Underpayment of corporate income tax	355,145	283,527
VAT	317,780	273,539
	768,047	630,582

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TAXATION (continued)

c. Taxes payable (continued)


Subsidiaries
Income taxes
Article 21 Individual income tax	25,211	9,042
Article 22 Withholding tax on goods delivery and import	845
Article 23 Withholding tax on services delivery	67,231	25,567
Article 25 Installment of corporate income tax	329,359	420,948
Article 26 Withholding tax on non-resident income tax	27,107	5,283
Article 29 Underpayment of corporate income tax	200,839	339,255
VAT	88,880	123,603
	739,472	923,698
	1,507,519	1,554,280

d. The components of income tax expense (benefit) are as follows:


Current
The Company	616,734		568,140
Subsidiaries	1,194,233		1,490,236
	1,810,967		2,058,376
Deferred
The Company	(60,677	)	(87,532	)
Subsidiaries	103,616		82,169
	42,939		(5,363	)
	1,853,906		2,053,103

e. Corporate income tax is computed for each individual company as a separate legal entity (consolidated financial statements are not applicable for computing corporate income tax in Indonesia).

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TAXATION (continued)

e.
The reconciliation between the consolidated income before tax and taxable income
attributable to the Company and the consolidated income tax expense are as follows:

Consolidated income before tax	5,934,946		6,509,934
Add back consolidation eliminations	1,985,914		2,295,998
Consolidated income before tax and eliminations	7,920,860		8,805,932
Less: income before tax of the subsidiaries	(4,322,593	)	(5,117,987	)
Income before tax attributable to the Company	3,598,267		3,687,945
Less: income subject to final tax	(162,833	)	(178,104	)
	3,435,434		3,509,841
Tax calculated at progressive rates	1,030,613		1,052,935
Non-taxable income	(596,667	)	(688,537	)
Non-deductible expenses	106,445		95,865
Deferred tax assets that cannot be utilized net	(7,218	)	(762	)
Corporate income tax expense	533,173		459,501
Final income tax expense	22,884		21,109
Total income tax expense of the Company	556,057		480,610
Income tax expense of the subsidiaries	1,297,849		1,572,403
Total consolidated income tax expense	1,853,906		2,053,013

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TAXATION (continued)

e.
The reconciliation between income before tax attributable to the Company and the estimated
taxable income for the years ended March 31, 2007 and 2008, are as follows:

Income before tax attributable to the Company	3,598,267		3,687,945
Less: income subject to final tax	(162,833	)	(178,104	)
	3,435,434		3,509,841
Temporary differences:
Amortization of intangible assets	251,205		250,793
Depreciation of property, plant and equipment	167,231		144,945
Allowance for doubtful accounts	94,101		163,918
Accrued employees benefits	81,209		115,622
Depreciation of property, plant and equipment
under RSA	41,365		28,184
Capital leases	319		579
Foreign exchange (gain) loss on deferred
consideration for business combinations	34,015		(45,838	)
Allowance for inventory obsolescence	1,829		2,201
Amortization of land rights	(1,173	)	(988	)
Gain on sale of property, plant and equipment	8		1,545
Amortization of unearned income RSA	(82,623	)	(51,239	)
Trade receivables written-off	(123,650	)
Net periodic pension costs and other-post retirement
benefits costs	(70,895	)	(62,235	)
LSA	10,224
Payments of deferred consideration for business
combinations	(223,886	)	(216,450	)
Accrued early retirement benefits	(1,082	)
Other provisions			(41,810	)
Total temporary differences	178,197		289,227

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TAXATION (continued)

e. (continued)

| Permanent differences: — Net periodic post-retirement health care
benefits costs | 178,598 | | 223,061 | |
| --- | --- | --- | --- | --- |
| Amortization of discounts on promissory notes | 7,623 | | 3,689 | |
| Equity in net income of associates and subsidiaries | (1,988,890 | ) | (2,295,124 | ) |
| Others | 168,595 | | 92,800 | |
| Total permanent differences | (1,634,074 | ) | (1,975,574 | ) |
| Taxable income | 1,979,557 | | 1,823,494 | |
| Corporate income tax expense | 593,850 | | 547,031 | |
| Final income tax expense | 22,884 | | 21,109 | |
| Total current income tax expense of the Company | 616,734 | | 568,140 | |
| Current income tax expense of the subsidiaries | 1,194,233 | | 1,490,236 | |
| Total current income tax expense | 1,810,967 | | 2,058,376 | |

f. Telkomsels tax assessment

| a. | In 2006, Telkomsel was assessed for underpayments of withholding taxes and VAT
(self assessed) including penalty, covering the fiscal year 2002 totaling Rp.129
billion and overpayment of corporate income tax of Rp.5 billion. The net underpayment
of Rp.124 billion was settled through the use of the payment of income tax in 2003 of
Rp.24 billion and a cash payment of Rp.100 billion. Of the Rp.100 billion cash
payment, Telkomsel has filed an objection for Rp.99 billion. Of the net underpayment
of Rp.105 billion, Rp.83 billion was charged to expense in 2006 with the remaining
amount of Rp.22 billion recorded as part of its claims for tax refund. In 2007, part
the Telkomsels objection covering fiscal year 2002 of Rp.185 million was accepted by
the Tax Authorities through a cash refund of Rp.176 million and through netting off
against the Telkomsels tax underpayments during the previous periods amounting to
Rp.9 million. The remaining balance was rejected by the Tax Authorities. On October 2,
2007 Telkomsel filed an appeal with the Tax Court for rejection of withholding taxes
Article 23 and 26 of Rp.21 billion. Conservatively, the amount was charged to the
consolidated statements of income. |
| --- | --- |
| b. | In 2007, Telkomsel was assessed for underpayments of withholding taxes, VAT and
corporate income tax including penalty covering the fiscal years 2004 and 2005 totaling
Rp.478 billion. The underpayments were settled through netting off withholding tax paid
in 2006 of Rp.25 billion and cash payments of Rp.453 billion. On January 3, 2008,
Telkomsel filed an objection for underpayment of withholding taxes and VAT including a
penalty totaling Rp.408 billion (Note 38a). Up to the issuance date of the consolidated
financial statements, Telkomsel has not received the Tax Authorities decision on the
objection. Telkomsel believes that such amount will be refundable, hence, recognized it
as part of claim for tax refund. The Tax Authorities might raise similar issues for
transactions occurred in subsequent fiscal years. |

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TAXATION (continued)

f. Tax assessment (continued)

c. Considering the uncertain result of Telkomsels filing for judicial review in the Indonesian Supreme Court for claim of Rp.27 billion covering fiscal year 2001, Telkomsel has conservatively charged the amount to the consolidated statements of income.

g.
The details of the Company and subsidiaries deferred tax assets and liabilities are as
follows:


		credited to the
		consolidated
December 31,		to statements		Prior year	March 31,
2006		of income		overpayment	2007
The Company
Deferred tax assets:
Deferred consideration for
business combinations	1,249,332		(58,010	)		1,191,322
Allowance for doubtful accounts	263,321		(2,523	)		260,798
Net periodic pension and other
post-retirement benefits costs	361,839		(21,268	)		340,571
Accrued expenses	57,185					57,185
Accrued for employees benefits	529,662		24,039			553,701
Accrued LSA	117,440		3,067			120,507
Capital leases	12,408		95			12,503
Allowance for inventory obsolescence	14,099		470			14,569
Total deferred tax assets	2,605,286		(54,130	)		2,551,156
Deferred tax liabilities:
Difference between book and
tax property, plant and
equipments net book value	(1,947,349	)	47,828			(1,899,521	)
Land rights	(3,800	)	767			(3,033	)
RSA	(47,661	)	(9,150	)		(56,811	)
Intangible assets	(1,205,783	)	75,362			(1,130,421	)
Total deferred tax liabilities	(3,204,593	)	114,807			(3,089,786	)
Deferred tax liabilities of the Company net	(599,307	)	60,677			(538,630	)
Deferred tax liabilities of the subsidiaries net	(2,066,090	)	(103,616	)		(2,169,706	)
Total deferred tax liabilities net	(2,665,397	)	(42,939	)		(2,708,336	)

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TAXATION (continued)

g. Deferred tax assets and liabilities (continued)

2007		of income		of Sigma	2008
The Company
Deferred tax assets:
Deferred consideration for
business combinations	1,010,035		(78,686	)		931,349
Allowance for doubtful accounts	306,329		48,971			355,300
Net periodic pension and other
post-retirement benefits costs	375,994		(18,670	)		357,324
Accrued expenses	76,686		(12,866	)		63,820
Accrued for employees benefits	172,071		34,687			206,758
Accrued LSA
Capital leases	40,057		174			40,231
Allowance for inventory obsolescence	15,891		626			16,517
Total deferred tax assets	1,997,063		(25,764	)		1,971,299
Deferred tax liabilities:
Difference between book and
tax property, plant and
equipments net book value	(1,854,350	)	44,722			(1,809,628	)
Land rights	(4,592	)	(296	)		(4,888	)
RSA	(59,859	)	(6,368	)		(66,227	)
Intangible assets	(902,856	)	75,238			(827,618	)
Total deferred tax liabilities	(2,821,657	)	113,296			(2,708,361	)
Deferred tax liabilities of the Company net	(824,594	)	87,532			(737,062	)
Deferred tax liabilities of the subsidiaries net	(2,209,506	)	(82,169	)	4,956	(2,286,719	)
Total deferred tax liabilities net	(3,034,100	)	5,363		4,956	(3,023,781	)

| | Realization of the deferred tax assets is dependent upon profitable operations.
Although realization is not assured, the Company and its subsidiaries believe that it is
probable that these deferred tax assets will be realized through reduction of future
taxable income. The amount of deferred tax assets is considered realizable, however, could
be reduced if actual future taxable income is lower than their estimates. |
| --- | --- |
| | Telkomsels claims for overpayment of corporate income tax for fiscal years 2004 and 2005
due to recalculation of depreciation of property, plant and equipment in 2006 for tax
purposes amounting to Rp.338 billion were rejected by the Tax Authorities, hence, it was
reversed with a corresponding deduction to the deferred tax liability. The rejection of
recalculation resulted to a recognition of overpayment of corporate income tax for 2006 of
Rp.12.5 billion presented as part of claims for tax refund (Note 38a). |
| h. | Administration |
| | Under the taxation laws of Indonesia, the Company and each subsidiary submit tax returns on
the basis of self-assessment. The Tax Authorities may assess or amend taxes within the
Statute of Limitations, under the prevailing regulations up to 2007. |

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TAXATION (continued)

| h. |
| --- |
| Based on a new tax Law No. 28/2007 concerning the General Provision and Procedure of
Taxation effective as of January 1, 2008, the Director General of Tax (DGT) may assess or
amend taxes within ten years of the time the tax becomes due, or until the end of 2013,
whichever is earlier. There are new rules applicable to fiscal year 2008 and subsequent
years stipulating that the DGT may assess or amend taxes within five years of the time the
tax becomes due. |
| The Company has been audited by the Tax Office up to the fiscal year of 2004, excluding
fiscal year 2003, Telkomsel up to fiscal year 2005 excluding fiscal year 2003, GSD up to
fiscal year 2002, and Infomedia up to fiscal year 2003. Currently, Telkomsel is being
audited by the Tax Office for the fiscal year 2006. |

39.	BASIC EARNINGS PER SHARE
	Basic earnings per share is computed by dividing net income
by the weighted average number of shares outstanding during the year, totaling 20,010,678,488 and 19,860,250,480 for three months
period ended March 31, 2007 and 2008, respectively.
	The Company does not have potentially dilutive ordinary shares.
40.	CASH DIVIDENDS AND GENERAL RESERVE
	Pursuant to the AGM of Stockholders as stated in notarial deed No. 68 dated June 30, 2006 of A.
Partomuan Pohan, S.H., LLM., the stockholders approved the distribution of cash dividends for
2005 amounting to Rp.4,400,090 million or minimum of Rp.218.86 per share.
	Pursuant to the AGM of Stockholders as stated in notarial deed No. 58 dated June 29, 2007 of A.
Partomuan Pohan, S.H., LLM., the stockholders approved the distribution of cash dividends for
2006 amounting to Rp.6,053,067 million or Rp.303.21 per share (of which Rp.971,017 million or
Rp.48.41 per share was distributed as interim cash dividend in December 2006) and the
appropriation of Rp.4,897,482 million for general reserves.
	On November 6, 2007 the Company decided to distribute the 2007 interim cash dividends of
Rp.965,398 million or Rp.48.45 per share to the Companys stockholders.

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PENSION AND OTHER POST-RETIREMENT BENEFITS

a. Pension

| 1. |
| --- |
| The Company sponsors a defined benefit pension plan and a defined contribution pension
plan. |
| The defined benefit pension plan is provided to employees hired with permanent status
prior to July 1, 2002. The pension benefits are paid based on the participating
employees latest basic salary at retirement and the number of years of their service.
The plan is managed by Telkom Pension Fund (Dana Pensiun Telkom or Dapen). The
participating employees contribute 18% (before March 2003: 8.4%) of their basic salaries
to the plan. The Companys contributions to the pension fund for the three months period
ended March 31, 2007 and 2008 amounted to Rp.173,374 million and Rp.221,628 million,
respectively. |
| The defined contribution pension plan is provided to employees hired with permanent
status on or after July 1, 2002. The plan is managed by financial institutions pension
fund (DPLK). The Companys contribution to DPLK is determined based on certain
percentage of the participants salaries and amounted to Rp.463 million and Rp.578
million for the three months period ended March 31, 2007 and 2008, respectively. |
| The following table presents the change in projected benefits obligation, change in plan
assets, funded status of the plan and net amount recognized in the Companys
consolidated balance sheets for the three months period ended March 31, 2007 and 2008,
for its defined benefit pension plan: |


Change in projected benefits obligation
Projected benefits obligation at beginning of year	8,121,381		10,727,812
Service costs	50,902		70,534
Interest costs	215,543		269,242
Plan participants contributions	11,002		21,317
Actuarial gains	71,683		195,173
Expected benefits paid	(86,545	)	(111,321	)
Projected benefits obligation at end of year	8,383,966		11,172,757
Change in plan assets
Fair value of plan assets at beginning of year	7,210,748		9,034,391
Expected return on plan assets	169,401		228,827
Employers contributions	173,375		221,628
Plan participants contributions	11,002		21,317
Actuarial gains	167,924		159,880
Expected benefits paid	(86,545	)	(102,952	)
Fair value of plan assets at end of year	7,645,905		9,563,091
Funded status	(738,061	)	(1,609,666	)
Unrecognized prior service costs	1,016,246		1,624,066
Unrecognized net actuarial gain	(1,206,299	)	(992,762	)
Accrued pension benefit cost	(928,114	)	(978,362	)

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

1.
The actual return on plan assets was Rp.247,513 million and Rp.228,936 million for the
three months period ended March 31, 2007 and 2008, respectively.
The movement of the accrued pension benefits costs during the three months period ended
March 31, 2007 and 2008, is as follows:

Accrued pension benefits costs at beginning of year	1,002,999		1,054,097
Net periodic pension cost less amounts charged to KSO Units	98,489		161,269
Employers contributions	(173,374	)	(221,628	)
Benefits to be paid by the Company			(15,376	)
Accrued pension benefits costs at end of year	928,114		978,362

The actuarial valuation for the defined benefit pension plan and the other prost-retirement benefits (Note 41b) was performed based on the measurement date as of December 31, 2006 and 2007, with reports dated April 24, 2007 and March 31, 2008, respectively, by PT Watson Wyatt Purbajaga (WWP), an independent actuary in association with Watson Wyatt Worldwide (WWW). The principal actuarial assumptions used by the independent actuary as of December 31, 2006 and 2007, are as follows:

Discount rate	10.5 %	10.25 %
Expected long-term return on plan assets	10.5 %	10 %
Rate of compensation increases	8 %	8 %

The components of net periodic pension costs are as follows:

Service costs	50,902		70,534
Interest costs	215,543		269,242
Expected return on plan assets	(194,569	)	(232,709	)
Amortization of prior service costs	34,755		55,330
Recognized actuarial gain	(8,142	)	(1,128	)
Total net periodic pension costs less amounts
charged to KSO Units (Note 35)	98,489		161,269

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 2. |
| --- |
| Telkomsel provides a defined benefit pension plan to its employees. Under this plan,
employees are entitled to pension benefits based on their latest basic salary or
take-home pay and the number of years of their service. PT Asuransi Jiwasraya
(Jiwasraya), a state-owned life insurance company, manages the plan
under an annuity insurance contract. Until 2004, the employees contributed 5% of their
monthly salaries to the plan and Telkomsel contributed any remaining amount required to
fund the plan. Starting 2005, the entire contributions are fully made by Telkomsel. |
| The following table reconciles the unfunded status of the plans with the amounts
included in the consolidated balance sheets as of March 31, 2007 and 2008: |

Projected benefits obligation	(243,917	)	(308,316	)
Fair value of plan assets	29,969		107,480
Unfunded status	(213,948	)	(200,836	)
Unrecognized items in the consolidated balance sheet:
Unrecognized prior service costs	(892	)	(829	)
Unrecognized net actuarial losses	165,136		120,306
Unrecognized net obligation at the date of
initial application of PSAK 24	1,962		1,784
Accrued pension benefits costs	(47,742	)	(79,575	)

The components of the net periodic pension costs are as follows:

Service costs	8,138		9,324
Interest costs	6,038		7,643
Expected return on plan assets	(558	)	(2,817	)
Amortization of past service costs	(16	)	(16	)
Recognized actuarial losses	2,098		1,326
Amortization of net obligation at the date of
initial application of PSAK 24	45		45
Net periodic pension costs (Note 35)	15,745		15,505

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 2. |
| --- |
| The net periodic pension cost for the pension plan was calculated based on measurement
date as of December 31, 2006 and 2007, with reports dated February 16, 2007 and March
25, 2008, respectively, by WWP, an independent actuary in association with WWW. The
principal actuarial assumptions used by the independent actuary based on measurement
date of December 31, 2006 and 2007 for each of the year, are as follows: |

Discount rate	10.5 %	10.5 %
Expected long-term return on plan assets	7.5 %	10.5 %
Rate of compensation increases	8 %	8 %

| 3. |
| --- |
| Infomedia provides a defined benefit pension plan to its employees. The reconciliation
of the funded status of the plan with the net amount recognized in the consolidated
balance sheets as of March 31, 2007 and 2008, are as follows: |

Projected benefits obligation	(6,188	(5,960
Fair value of plan assets	6,291	6,517
Funded status	103	557
Prepaid pension benefits costs	103	557

The net periodic pension costs of Infomedia amounted to Rp.712 million and Rp.2,288 million for the three months period ended March 31, 2007 and 2008, respectively (Note 35).

| b. |
| --- |
| The Company provides other post-retirement benefits in the form of cash paid to employees on
their retirement or termination. These benefits consist of last housing allowance (Biaya
Fasilitas Perumahan Terakhir or BFPT) and home passage leave (Biaya Perjalanan Pensiun
dan Purnabhakti or BPP). In 2005 and 2006, these benefits presented as part of LSA. |

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

b.
The movement of the other post-retirement benefits for the three months period ended March
31, 2007 and 2008, are as follows:

| Accrued other post-retirement benefits costs
at beginning of year | 198,596 | | 195,061 | |
| --- | --- | --- | --- | --- |
| Other post-retirement benefits costs | 21,871 | | 20,894 | |
| Other post-retirement benefits paid | (4,714 | ) | (6,556 | ) |
| Accrued other post-retirement benefits costs at end of year | 215,753 | | 209,399 | |
| Benefits to be paid for early retirement program | (67,279 | ) | | |
| Accrued other post-retirement benefits costs at end of
year after early retirement benefits | 148,474 | | 209,399 | |

The components of the net periodic other post-retirement benefits costs for the three months period ended March 31, 2007 and 2008, are as follows:

Service costs	5,731	5,657
Interest costs	11,278	10,484
Amortization of past service costs	1,706	760
Recognized actuarial losses	3,156	3,993
Net periodic other post-retirement benefits costs	21,871	20,894
Amounts charged to KSO Units under contractual agreements
Total net periodic other post-retirement benefits costs less
amounts charged to KSO Units (Note 35)	21,871	20,894

| c. |
| --- |
| Under Law No. 13/2003 concerning labor regulation, the Company and its subsidiaries are
required to provide a minimum pension benefits, if not covered yet by the sponsored pension
plans, to their employees upon retirement. The total related obligation recognized as of
March 31, 2007 and 2008 amounted to Rp.35,448 million and Rp.56,972 million, respectively.
The related employees benefits cost charged to expense amounted to Rp.2,438 million and
Rp.3,002 million for the three months period ended March 31, 2007 and 2008, respectively
(Note 35). |

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LONG SERVICE AWARDS (LSA)

| a. |
| --- |
| The Company provides certain cash awards to its employees based on length of service
requirements. The benefits are either paid at the time the employees reach the anniversary
dates during employment, or at the time of termination. |
| The movements of the accrued LSA for the three months period ended March 31, 2007 and 2008,
are as follows: |

Accrued LSA at beginning of year	391,467
LSA costs (see Note below and Note 35)	16,107
Amounts to be charged to KSO Units under contractual
agreements
LSA paid	(22,937	)
Accrued LSA at end of year	384,637
Benefits to be paid for early retirement
program
Accrued LSA non current	384,637

| In 2007, in relation to the termination of LSA, the Company recorded an actuarial gain of
Rp.391,467 million, resulting from LSA obligation as of December 31, 2006. |
| --- |
| The actuarial valuation for the LSA was performed based on the measurement date as of
December 31, 2006, with reports dated April 24, 2007 respectively, by WWP, an independent
actuary in association with WWW. The principal actuarial assumptions used by the independent
actuary as of December 31, 2006 is as follows: |

Discount rate	10.5 %
Rate of compensation increase	8 %

| b. |
| --- |
| Telkomsel provides certain cash awards to its employees based on the employees length of
service requirements. The benefits are either paid at the time the employees reach the
anniversary dates during employment, or at the time of termination. |
| The obligation with respect to these awards was determined based on the actuarial valuation
using the Projected Unit Credit method, and amounted to Rp.68,898 million and Rp.76,806
million as of March 31, 2007 and 2008, respectively. The related benefits cost charged to
expense amounted to Rp.3,895 million and Rp.4,978 million for the three months period ended
March 31, 2007 and 2008, respectively (Note 35). |

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| 43. |
| --- |
| The Company provides a post-retirement health care plan to all of its employees hired before
November 1, 1995 who have worked for the Company for 20 years or more when they retire, and to
their eligible dependents. The requirement of working for over 20 or more years does not apply
to employees who retired prior to June 3, 1995. The employees hired by the Company starting from
November 1, 1995 no longer be entitled to this plan. The plan is managed by Yayasan Kesehatan
Pegawai Telkom (Yakes). |
| The following table presents the change in the projected benefits obligation, change in plan
assets, funded status of the plan and net amount recognized in the Companys consolidated
balance sheets as of March 31, 2007 and 2008: |


Change in projected benefits obligation
Projected benefits obligation at beginning of year	6,985,342		8,925,612
Service costs	28,293		35,995
Interest costs	181,009		225,875
Actuarial (losses) gains	149,031		(32,603	)
Expected post-retirement health care paid	(44,878	)	55,499
Effect of change in assumption	60,052		350,856
Projected benefits obligation at end of period	7,358,849		9,561,234
Change in plan assets
Fair value of plan assets at beginning of year	2,253,260		3,376,172
Expected return on plan assets	36,316		76,965
Employers contributions	300,080		100,000
Actuarial gains (losses)	(44,878	)	42,134
Expected post-retirement health care paid	9,453		55,499
Fair value of plan assets at end of period	2,554,231		3,650,770
Funded status	(4,804,618	)	(5,910,464	)
Unrecognized net actuarial losses	1,977,848		3,015,882
Accrued post-retirement health care benefits costs	(2,826,770	)	(2,894,582	)

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43.
The components of net periodic post-retirement health care benefits cost are as follows:

Service costs	28,293		35,995
Interest costs	181,009		225,875
Expected return on plan assets	(55,537	)	(85,842	)
Recognized actuarial losses	27,277		49,631
Net periodic post-retirement benefits costs	181,042		225,659
Amounts charged to KSO Units under contractual
agreements
Total net periodic post-retirement health care
benefits costs less amounts charged to
KSO Units (Note 35)	181,042		225,659

The movements of the accrued post-retirement health care benefits costs for the three months period ended March 31, 2007 and 2008, are as follows:

| Accrued post-retirement health care benefits costs at
beginning of year | 2,945,728 | | 2,768,923 | |
| --- | --- | --- | --- | --- |
| Net periodic post-retirement health care benefits costs
less amounts charged to KSO Units (Note 35) | 181,042 | | 225,659 | |
| Amounts charged to KSO Units under contractual
agreements | | | | |
| Employers contributions | (300,000 | ) | (100,000 | ) |
| Accrued post-retirement health care benefits
costs at end of year | 2,826,770 | | 2,894,582 | |

The actuarial valuation for the post-retirement health care benefits was performed based on the measurement date as of December 31, 2006 and 2007, with reports dated April 24, 2007 and March 31, 2008, respectively, by WWP, an independent actuary in association with WWW. The principal actuarial assumptions used by the independent actuary as of December 31, 2006 and 2007, are as follows:

Discount rate	10.5 %	10.25 %
Expected long-term return on plan assets	8.5 %	9 %
Health care costs trend rate assumed
for next year	12 %	14 %
Ultimate health care costs trend rate	8 %	8 %
Year that the rate reaches the ultimate trend rate	2011	2011

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| 44. |
| --- |
| In the normal course of business, the Company and its subsidiaries entered into transactions
with related parties. It is the Companys policy that the pricing of these transactions be the
same as those of arms-length transactions. |
| The following are significant agreements/transactions with related parties: |

a. Government

| i. | The Company obtained two-step loans from the Government, the Companys majority
stockholder (Note 21). |
| --- | --- |
| | Interest expense for two-step loans amounted to Rp.83,050 million and Rp.58,463 million
for the three months period ended March 31, 2007 and 2008, respectively. Interest
expense for two-step loans represent 21.6% and 22.2% of the total interest expense for
each period. |
| ii. | The Company and its subsidiaries pay concession fees for telecommunications
services provided and radio frequency usage charges to the Ministry of Communications
and Information (formerly, Ministry of Tourism, Post and Telecommunications) of the
Republic of Indonesia. |
| | Concession fees amounted to Rp.135,347 million and Rp.149,836 million for the three
months period ended March 31, 2007 and 2008, respectively (Note 36), representing 1.6%
and 1.8%, respectively, of the total operating expenses for each period. Radio frequency
usage charges amounted to Rp.224,893 million and Rp.341,263 million for the three months
period ended March 31, 2007 and 2008, respectively (Note 36), representing 2.7% and
4.0%, respectively, of the total operating expenses for each period. |
| | Telkomsel paid an up-front fee for the 3G license amounting to Rp.436,000 million and
recognized as intangible asset (Note 14). |
| iii. | Starting 2005, the Company and its subsidiaries pay USO charges to the Ministry
of Communication and Information of the Republic of Indonesia pursuant to MoCI
Regulation No.15/Per/M.KOMINFO/9/2005 of September 30, 2005. |
| | USO charges amounted to Rp.105,482 million and Rp.111,904 million for the three months
period ended March 31, 2007 and 2008, respectively (Note 36), representing 1.3% of the
total operating expenses for each period. |

b. Commissioners and Directors remuneration

i. The Company and its subsidiaries provide honorarium and facilities to support the operational duties of their Board of Commissioners. The total of such benefits amounted to Rp.4,930 million and Rp.7,379 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.1% of total operating expenses for each period.

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RELATED PARTY TRANSACTIONS (continued)

b. Commissioners and Directors remuneration (continued)

ii. The Company and its subsidiaries provide salaries and facilities to support the operational duties of their Board of Directors. The total of such benefits amounted to Rp.13,967 million and Rp.18,495 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.2% of total operating expenses for each period.

| c. |
| --- |
| The Company considers Indosat as a related party because the Government can exert
significant influence over the financial and operating policies of Indosat by virtue of its
right to appoint one Director and one Commissioner of Indosat. |
| The Company has an agreement with Indosat for the provision of international
telecommunications services to the public. |
| The principal matters covered by the agreement are as follows: |

| i. | The Company provides a local network for customers to make or receive
international calls. Indosat provides the international network for the customers,
except for certain border towns, as determined by the Director General of Post and
Telecommunications of the Republic of Indonesia. The international telecommunications
services include telephone, telex, telegram, Package Switched Data Network (PSDN),
television, teleprinter, Alternate Voice/Data Telecommunications (AVD), hotline and
teleconferencing. |
| --- | --- |
| ii. | The Company and Indosat are responsible for their respective telecommunications
facilities. |
| iii. | Customer billing and collection, except for leased lines and public phones
located at the international gateways, are handled by the Company. |
| iv. | The Company receives compensation for the services provided in the first item
above, based on the interconnection tariff determined by the MoC. |

| The Company has also entered into an interconnection agreement between the Companys fixed
line network (Public Switched Telephone Network or PSTN) and Indosats cellular network in
connection with implementation of Indosat Multimedia Mobile services and the settlement of
the related interconnection rights and obligations. |
| --- |
| The Company also has an agreement with Indosat for the interconnection of Indosats GSM
mobile cellular telecommunications network with the Companys PSTN, enabling each partys
customers to make domestic calls between Indosats GSM mobile network and Telkoms fixed
line network and allowing Indosats mobile customers to access Telkoms IDD service by
dialing 007. |
| The Company has been handling customer billings and collections for Indosat. Indosat is
gradually taking over the activities and performing its own direct billing and collection.
The Company receives compensation from Indosat computed at 1% of the collections made by the
Company beginning January 1, 1995, plus the billing process expenses which are fixed at a
certain amount per record. |

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RELATED PARTY TRANSACTIONS (continued)

| c. |
| --- |
| On December 28, 2006, the Company and Indosat signed amendments to the interconnection
agreements for the fixed line networks (local, domestic long-distance and international) and
mobile network for the implementation of the cost-based tariff obligations under the MoCI
Regulations No. 8/2006 (Note 48). These amendments took effect on January 1, 2007. |
| Telkomsel also entered into an agreement with Indosat for the provision of international
telecommunications services to its GSM mobile cellular customers. The principal matters
covered by the agreement are as follows: |

| i. | Telkomsels GSM mobile cellular telecommunications network is interconnected
with PT Indosats international gateway exchanges to facilitate outgoing and incoming
international calls. |
| --- | --- |
| ii. | Telkomsels and Indosats GSM mobile cellular telecommunications networks are
interconnected to allow cross-network communications among their subscribers. |
| iii. | In exchange for these interconnections, Indosat is entitled to a certain amount
as compensation. |
| iv. | Interconnection equipment installed by one of the parties in another partys
premises remain the property of the party installing such equipment. Expenses incurred
in connection with the provision of equipment, installation and maintenance are borne
by Telkomsel. |

| The Company and its subsidiaries were charged net interconnection charges from Indosat of
Rp.105,971 million and Rp.36,757 million for the three months period ended March 31, 2007
and 2008, respectively, representing 0.7% and 0.2% of the total operating revenues in each
period. |
| --- |
| Telkomsel also has an agreement with Indosat on the usage of Indosats telecommunications
facilities. The agreement, which was made in 1997 and is valid for eleven years, is subject
to change based on annual review and mutual agreement by both parties. The charges for the
usage of the facilities amounted to Rp.4,401 million and Rp.6,821 million for the three
months period ended March 31, 2007 and 2008, respectively, representing 0.1% of the total
operating expenses in each period. |
| Other agreements between Telkomsel and Indosat are as follows: |

| i. |
| --- |
| On October 10, 1996, Telkomsel, Lintasarta, Satelindo and Indosat (the
Parties) entered into an agreement on the construction and maintenance of the J-S
Cable System. The Parties have formed a management committee which consists of a
chairman and one representative from each of the Parties to direct the construction
and operation of the cable system. The construction of the cable system was completed
in 1998. In accordance with the agreement, Telkomsel shared 19.325% of the total
construction costs. Operating and maintenance costs are shared based on agreed
formula. |
| Telkomsels share in operating and maintenance costs amounted to Rp.273
million and Rp.92 million for the three months period ended March 31, 2007 and 2008,
respectively. |

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RELATED PARTY TRANSACTIONS (continued)

c. Indosat (continued)

| ii. |
| --- |
| On September 21, 2000, Telkomsel entered into agreement with Indosat on the use of SEA-ME-WE 3 and tail link in Jakarta and Medan. In accordance with the agreement,
Telkomsel was granted an IRU for certain capacity of the link starting from September
21, 2000 until September 20, 2015 for an up-front payment of US$2.7 million. In addition
to the up-front payment, Telkomsel is also charged annual operating and maintenance
costs amounting to US$0.1 million. |

| In 1994, the Company transferred to Satelindo the right to use a parcel of Company-owned
land located in Jakarta which had been previously leased to Telekomindo. Based on the
transfer agreement, Satelindo is given the right to use the land for 30 years and can apply
for the right to build properties thereon. The ownership of the land is retained by the
Company. Satelindo agreed to pay Rp.43,023 million to the Company for the 30 years right.
Satelindo paid Rp.17,210 million in 1994 while the remaining balance Rp.25,813 million was
not paid because the Utilization Right (Hak Pengelolaan Lahan or HPL) on the land could
not be delivered as provided in the transfer agreement. In 2000, the Company and Satelindo
agreed on an alternative solution resulting in the payment being treated as a lease expense
up to 2006. In 2001, Satelindo paid an additional amount of Rp.59,860 million as lease
expense up to 2024. As of March 31, 2007 and 2008, the prepaid portion is shown in the
consolidated balance sheets as Advances from customers and suppliers. |
| --- |
| The Company provides leased lines to Indosat and its subsidiaries, namely Indosat Mega Media
and Lintasarta. The leased lines can be used by these companies for telephone, telegraph,
data, telex, facsimile or other telecommunication services. Revenues earned from these
transactions amounted to Rp.41,419 million and Rp.44,121 million for the three months period
ended March 31, 2007 and 2008, respectively, representing 0.3% of the total operating
revenues for each period. |
| Lintasarta utilizes the Companys satellite transponders or frequency channels. Revenues
earned from these transactions amounted to Rp.3,979 million and Rp.4,842 million for the
three months period ended March 31, 2007 and 2008, respectively, representing less than 0.1%
of total operating revenues for each period. |
| Telkomsel has an agreement with Lintasarta (valid until October 31, 2010) and PT Artajasa
Pembayaran Elektronis (Artajasa) (valid until May 2008) (a 39.8% owned subsidiary of
Indosat) for the usage of data communication network system. The charges from Lintasarta and
Artajasa for the services amounted to Rp.6,815 million and Rp.8,408 million for the three
months period ended March 31, 2007 and 2008, respectively, representing 0.1% of the total
operating expenses for each period. |

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RELATED PARTY TRANSACTIONS (continued)

d.
Transactions with all BUMN are considered as related parties transactions:

| (i) | The Company provides telecommunication services to substantially all Government
agencies in Indonesia which transactions are treated as that of third parties
customers. |
| --- | --- |
| (ii) | The Company has entered into agreements with Government Agencies and associated
companies, namely CSM, Patrakom and KSO VII (for the period from
January - September
2006), for the utilization of the Companys satellite transponders or frequency
channels. Revenues earned from these transactions amounted to Rp.29,150 million and
Rp.25,448 million for the three months period ended March 31, 2007 and 2008,
respectively, representing 0.2% of the total operating revenues for each period. |
| (iii) | The Company provides leased lines to associated companies, namely CSM,
Patrakom and PSN. The leased lines can be used by the associated companies for
telephone, telegraph, data, telex, facsimile or other telecommunications services.
Revenues earned from these transactions amounted to Rp.37,654 million and Rp.15,125
million for the three months period ended March 31, 2007 and 2008, respectively,
representing 0.3% and 0.1% of the total operating revenues for each period. |
| (iv) | The Company purchases property and equipment including construction and
installation services from a number of related parties. These related parties include,
among others, PT Industri Telekomunikasi Indonesia (INTI) and Kopegtel. Purchases
made from these related parties amounted to Rp.9,000 million and Rp.76,434 million for
the three months period ended March 31, 2007 and 2008, respectively, representing 0.3%,
and 2.1% of the total fixed assets purchased in each period. |
| (v) | INTI is also a major contractor and supplier of equipment, including
construction and installation services of Telkomsel. Purchases from INTI for the three
months period ended March 31, 2007 and 2008 amounted to Rp.11,182 million and Rp.10,143
million, respectively, representing 0.3% of the total fixed assets purchased in each
period. |
| (vi) | Telkomsel has an agreement with PSN for the lease of PSNs transmission link.
Based on the agreement, which was made on March 14, 2001, the minimum lease period is 2
years since the operation of the transmission link and is extendable subject to
agreement by both parties. The agreement was extended until March 13, 2011. The lease
charges amounted to Rp.38,643 million and Rp.33,359 million for the three months period
ended March 31, 2007 and 2008, respectively, representing 0.5% and 0.4% of the total
operating expenses for each period. |
| (vii) | The Company and its subsidiaries insured their property, plant and equipment
against property losses, inventories and employees social security from Jasindo, PT
Asuransi Tenaga Kerja and Jiwasraya, state-owned insurance companies. Insurance
premiums amounted to Rp.69,022 million and Rp.79,614 million for the three months
period ended
March 31, 2007 and 2008, respectively, representing 0.8% and 0.9% the total operating
expenses for each period. |

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

RELATED PARTY TRANSACTIONS (continued)

d. Others (continued)

| (viii) | The Company and its subsidiaries maintain current accounts and time deposits in
several state-owned banks. In addition, some of these banks are appointed as collecting
agents for the Company. Total placements in the form of current accounts, time deposits
and mutual funds in state-owned banks amounted to Rp.4,058,400 million and Rp.3,938,915
million as of March 31, 2007 and 2008, respectively, representing 5.4% and 4.8% of the
total assets as of March 31, 2007 and 2008, respectively. Interest income recognized
for the three months period ended March 31, 2007 and 2008 amounted to Rp.88,812 million
and Rp.60,945 million, representing 61% and 35%, respectively, of total interest income
for each period. |
| --- | --- |
| (ix) | The Companys subsidiaries obtained loans from state-owned banks. Interest
expense on these loans for the three months period ended March 31, 2007 and 2008
amounted to Rp.43,463 million and Rp.127,937 million, respectively, representing 11.3%
and 48.6%, respectively, of the total interest expense for each period. |
| (x) | The Company leases buildings, purchases materials and construction services,
and utilizes maintenance and cleaning services of Kopegtel and PT Sandhy Putra Makmur
(SPM), a subsidiary of Yayasan Sandikara Putra Telkom a foundation managed by
Dharma Wanita Telkom. Total charges from these transactions amounted to Rp.20,402
million and Rp.89,015 million for the three months period ended March 31, 2007 and
2008, respectively, representing 0.2% and 1.0%, respectively, of the total operating
expenses for each period. |
| (xi) | The Company and its subsidiaries earned interconnection revenues (expense) from
PSN, with a total of Rp.492 million and Rp.(809) million for the three months period
ended March 31, 2007 and 2008, respectively, representing 0.003% and 0.005%,
respectively, of the total operating revenues for each period. |
| (xii) | The Company has RSA with Kopegtel. Kopegtels share in revenues from these
arrangements amounted to Rp.4,580 million and Rp.3,194 million for three months period
ended March 31 2007 and 2008, respectively, representing 0.03% and 0.02% of the total
operating revenues for each period. |
| (xiii) | Telkomsel has operating lease agreements with Patrakom and CSM for the use of their
transmission link for 3 years, subject to extension. Lease charges amounted to
Rp.55,157 million and Rp.36,953 million for the three months period ended March 31,
2007 and 2008, respectively, representing 0.7% and 0.4%, respectively, of the total
operating expenses for each period. |
| (xiv) | Koperasi Pegawai Telkomsel (Kisel) is a cooperative that was established by
Telkomsels employees to engage in car rental services, printing and distribution of
customer bills, collection and other services principally for the benefit of Telkomsel.
For these services, Kisel charged Telkomsel Rp.80,636 million and Rp.106,359 million
for the three months period ended March 31, 2007 and 2008, respectively. Telkomsel also
has dealership agreements with Kisel for distribution of SIM cards and pulse reload
vouchers. Total SIM cards and pulse reload vouchers which were sold to Kisel amounted
to Rp.396,516 million and Rp.510,710 million for the three months period ended March
31, 2007 and 2008, respectively. |

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RELATED PARTY TRANSACTIONS (continued)

d. Others (continued)

| (xv) | The Company has seconded a number of its employees to related parties to assist
them in operating their businesses. In addition, the Company provides to certain of its
related parties, the right to use its buildings free of charge. |
| --- | --- |
| (xvi) | Telkomsel has procurement agreements with PT Graha Informatika Nusantara
(Gratika), a subsidiary of Dapen, for installation and maintenance of equipment.
Total procurement for installations of equipment amounted to Rp.17,330 million and
Rp.7,974million for the three months period ended March 31, 2007 and 2008,
respectively; and for maintenance of equipment amounted to Rp.13,075 million and
Rp.11,568 million for the three months period ended March 31, 2007 and 2008,
respectively, representing 0.2% and 0.1%, respectively, of total operating expenses in
each period. |

Presented below are balances of accounts with related parties:


		% to		% to
	Amount	total assets	Amount	total assets
a.	Cash and cash equivalents (Note 5)	4,053,624	5.35	3,591,612	4.39
b.	Temporary investments	85,846	0.11	186,708	0.23
c.	Trade receivables net (Note 6)	535,544	0.17	399,786	0.49
d.	Other receivables
	State-owned banks (interest)	8,961	0.01	21,619	0.03
	Kopegtel			3,829	0.00
	Patrakom			2,773	0.00
	Government Agencies	1,122	0.00	2,065	0.00
	Other	5,049	0.01	558	0.00
	Total	15,132	0.02	30,844	0.03
e.	Prepaid expenses (Note 8)	27,914	0.04	22,443	0.03
f.	Restricted time deposits (Note 9)	2,892	0.00	75,686	0.09
g.	Advances and other non-current assets (Note 13)
	Bank Mandiri	1,738	0.00	91,618	0.11
	Peruri	813	0.00	813	0.00
	Total	2.551	0.00	92,431	0.11
h.	Escrow accounts (Note 15)	145	0.00

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RELATED PARTY TRANSACTIONS (continued)


		% to total		% to total
	Amount	liabilities	Amount	liabilities
i.	Trade payables (Note 16)
	Government Agencies	684,241	1.90	300,154	0.85
	Kopegtel	51,031	0.14	107,506	0.31
	Yakes			52,782	0.15
	Indosat	90,466	0.25	47,867	0.14
	INTI	6,441	0.02	23,921	0.07
	SPM	6,406	0.02	15,199	0.04
	PSN	24	0.00	4,407	0.01
	Gratika	13,331	0.04	69	0.00
	Others	22,411	0.06	25,664	0.07
	Total	874,351	2.43	577,569	1.64
j.	Accrued expenses (Note 17)
	Employees	1,312,123	3.64	1,347,508	3.83
	Government Agencies and state-owned banks	88,898	0.25	43,271	0.12
	Jasindo			93	0.00
	Others	4,678	0.01
	Total	1,405,699	3.90	1,390,872	3.95
k.	Short-term bank loans (Note 19)
	Bank Mandiri	116,666	0.32
	BNI	100,000	0.28	166,667	0.47
	Total	216,666	0.60	166,667	0.47
l.	Two-step loans (Note 21)	4,397,476	12.20	4,141,187	11.78
m.	Accrued LSA (Note 42)	453,535	1.26	76,806	0.22
n.	Accrued post-retirement health care benefits (Note 43)	2,826,770	7.84	2,894,582	8.24
o.	Long-term bank loans (Note 23)
	BRI			1,820,000	5.18
	Bank Mandiri	760,000	2.11	1,690,000	4.81
	BNI	240,000	0.67	1,270,000	3.61
	Total	1,000,000	2.78	4,780,000	13.60

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| 45. |
| --- |
| The Company and its subsidiaries have three main business segments operating in Indonesia
namely: fixed wireline, fixed wireless and cellular. The fixed wireline segment provides local,
SLJJ and international telephone services, and other telecommunications services (including
among others, leased lines, telex, transponder, satellite and VSAT) as well as ancillary
services. The fixed wireless segment provides CDMA-based telecommunication services which offers
customers the ability to use a wireless handset with limited mobility (within a local code
area). The cellular segment provides basic telecommunication services, particularly mobile
cellular telecommunication services. Operating segments that do not individually represent more
than 10% of the Companys revenues are presented as Others, comprising of telephone
directories and building management businesses. |
| Segment revenues and expenses include transactions between business segments and are accounted
for at prices that management believes represent market prices. |


Fixed		Fixed						Total before				Total
wireline		wireless		Cellular		Others		elimination		Elimination		consolidated
Segment results
External operating revenues	4,065,455		782,731		8,944,219		55,328		13,847,733				13,847,733
Inter-segment operating revenues	1,263,578		(41,163	)	(755,347	)	26,837		493,905		(493,905	)
Total segment revenues	5,329,033		741,568		8,188,872		82,165		14,341,638		(493,905	)	13,847,733
External operating expenses	(3,825,397	)	(353,387	)	(3,399,663	)	(98,526	)	(7,676,973	)			(7,676,973	)
Inter-segment operating expenses	(63,770	)			(467,330	)	(232	)	(531,332	)	531,332
Segment expenses	(3,889,167	)	(353,387	)	(3,866,993	)	(98,758	)	(8,208,305	)	531,332		(7,676,973	)
Segment results	1,439,866		388,181		4,321,879		(16,593	)	6,133,333		37,427		6,170,760
Interest expense													(384,259	)
Interest income													144,899
Loss on foreign exchange net													(86,422	)
Other income net													86,991
Income tax expense													(1,853,906	)
Equity in net income
of associated companies													2,977
Income before minority interest													4,081,040
Unallocated minority interest													(1,038,830	)
Net income													3,042,210
Other information
Segment assets	33,077,927		3,967,810		40,084,749		602,320		77,732,806		(2,119,965	)	75,612,841
Investments in associates	82,883				9,290				92,173				92,173
Total consolidated assets													75,705,014
Total consolidated liabilities	(22,130,508	)	(1,700,658	)	(14,024,602	)	(321,646	)	(38,177,414	)	2,125,521		(36,051,893	)
Minority Interest	(2,622	)					(7,530	)	(10,152	)	(9,220,696	)	(9,230,848	)
Capital expenditures	(343,867	)	(47,789	)	(3,969,628	)	(23,245	)	(4,384,529	)			(4,384,529	)
Depreciation and amortization	(920,871	)	(116,249	)	(1,323,235	)	(10,747	)	(2,371,102	)	2,479		(2,368,623	)
Amortization of goodwill and
other intangible assets	(251,205	)			(11,679	)			(262,884	)			(262,884	)
Other non-cash expenses	(107,167	)			(16,680	)	(140	)	(123,987	)			(123,987	)

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SEGMENT INFORMATION (continued)


Fixed		Fixed						Total before				Total
wireline		wireless		Cellular		Others		elimination		Elimination		consolidated
Segment results
External operating revenues	4,832,852		799,072		9,392,850		6,829		15,031,603				15,031,603
Inter-segment operating revenues	316,169		(30,860	)	194,443		86,255		566,007		(566,007	)
Total segment revenues	5,149,021		768,212		9,587,293		93,084		15,597,610		(566,007	)	15,031,603
External operating expenses	(4,100,683	)	(404,270	)	(3,869,833	)	(114,329	)	(8,489,115	)			(8,489,115	)
Inter-segment operating expenses	(80,010	)			(510,189	)	(7,788	)	(597,987	)	597,987
Segment expenses	( 4,180,693	)	(404,270	)	(4,380,022	)	(122,117	)	(9,087,102	)	597,987		(8,489,115	)
Segment results	968,328		363,942		5,207,271		(29,033	)	6,510,508		31,980		6,542,488
Interest expense													(263,146	)
Interest income													174,205
Loss on foreign exchange net													(45,655	)
Other income net													102,916
Income tax expense													(2,053,013	)
Equity in net income
of associated companies													(874	)
Income before minority interest													4,456,921
Unallocated minority interest													(1,249,587	)
Net income													3,207,334
Other information
Segment assets	29,481,326		7,115,618		46,776,830		657,686		84,031,460		(2,370,869	)	81,660,591
Investments in associates	119,902				20,359				140,261				140,261
Total consolidated assets													81,800,852
Total consolidated liabilities	(18,477,244	)	(1,637,145	)	(17,025,929	)	(372,005	)	(37,512,323	)	2,370,869		(35,141,454	)
Minority Interest	3,214						(8,242	)	(5,028	)	(10,551,968	)	(10,556,996	)
Capital expenditures	(514,584	)	(20,630	)	(2,280,052	)	(2,331	)	(2,817,597	)			(2,817,597	)
Depreciation and amortization	(900,352	)	(94,204	)	(1,547,610	)	(13,062	)	(2,555,228	)	15,995		(2,539,233	)
Amortization of goodwill and
other intangible assets	(250,793	)			(11,679	)			(262,472	)			(262, 472	)
Other non-cash expenses	(183,061	)			(12,475	)	240		(195,296	)			(195,296	)

| 46. |
| --- |
| In 1995, the Company and five investors (Pramindo, TII, MGTI, Dayamitra and BSI) entered into
agreements for KSO and KSO construction agreements for the provision of telecommunication
facilities and services for the Sixth Five-Year Development Plan ( Repelita VI ) of the Republic
of Indonesia. The five investors undertook the development and operation of the basic fixed
telecommunications facilities and services in five of the Companys seven Divre. |
| Following the Indonesian economics crisis that began in mid-1997, certain KSO partners
experienced difficulties in fulfilling their commitment under the KSO agreements. As remedial
measures instituted by both the Company and the KSO partners did not fully remedy this
situation, the Company acquired and currently controls the related KSO through acquisition of
its KSO partners or the businesses. Accordingly, the revenue-sharing percentage in those KSO is
no longer relevant as the financial statements of the acquired KSO partners and the related KSO
are consolidated into the Companys consolidated financial statements since the date of
acquisition (Notes 4 and 24). |

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| 47. |
| --- |
| The Company has entered into agreements with several investors under RSA to develop fixed lines,
public card-phone booths (including their maintenance), data and internet network and related
supporting telecommunications facilities. |
| As of March 31, 2008, the Company has 52 RSA with 44 investors. The RSA are located mainly in
Pekanbaru, Jakarta, East Java, Kalimantan, Makassar, Pare-pare, Manado, Denpasar, Mataram and
Kupang, with concession periods ranging from 24 to 176 months. |
| Under the RSA, the investors finance the costs incurred in developing the telecommunications
facilities. Upon completion of the construction, the Company manages and operates the facilities
and bears the cost of repairs and maintenance during the revenue-sharing periods. The investors
legally retain the rights to the property, plant and equipment constructed by them during the
RSA periods. At the end of each the RSA period, the investors transfer the ownership of the
facilities to the Company at a nominal price. |
| Generally, the revenues earned from the customers in the form of line installation charges are
allocated in full to the investors. The revenues from outgoing telephone pulses and monthly
subscription charges are shared between the investors and the Company based on certain agreed
ratio. |
| The net book value of the property, plant and equipment under RSA which have been transferred to
property, plant and equipment of the Company amounted to Rp.nil and Rp.12,120 million as of
March 31, 2007 and 2008, respectively (Note 12). |
| The investors share of revenues amounted to Rp.71,865 million for the three months period ended
March 31, 2008. |

| 48. |
| --- |
| Under Law No. 36/1999 and Government Regulation No. 52/2000, tariffs for the use of
telecommunications network and telecommunication services are determined by providers based on
the tariffs category, structure and with respect to fixed line telecommunications services, at
price cap formula set by the Government. |

| a. |
| --- |
| Fixed line telephone tariffs are imposed for network access and usage. Access charges
consist of a one-time installation charge and a monthly subscription charge. Usage charges
are measured in pulses or minutes and classified as either local or SLJJ. The tariffs depend
on call distance, call duration, time of call, day of the week and holidays. |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

| a. |
| --- |
| Tariffs for fixed line telephone are regulated under the MoC Decree No. KM.12/2002 dated
January 29, 2002 concerning the addendum of the decree of MTPT No. 79 /1995, concerning the
Method for Basic Tariff Adjustment on Domestic Fixed Line Telecommunication Services. Furthermore, the MoC issued Letter No. PK 304/1/3 PHB-2002 dated January 29, 2002 concerning
increase in tariffs for fixed line telecommunications services. According to the Letter,
tariffs for fixed line domestic calls would increase by 45.49% over three years. The average
increase in 2002 was 15%. This increase was effective on February 1, 2002. The
implementation of the planned increase in the tariff in 2003, however, was postponed by the
MoC through Letter No. PR.304/1/1/PHB-2003 dated January 16, 2003. |
| Based on the Announcement No. PM.2/2004 of the MoC dated March 30, 2004, the Company
adjusted the tariffs effective April 1, 2004 as follows: |

	Local charges increased by an average of 28%
	SLJJ charges decreased by an average of 10%
	Monthly subscription charges increased by an average of 12% to 25%, depending on
customers segment.

| | The Government has issued initial tariff formula and adjustment tariff which are stipulated
in the MoCI Decree No. 09/Per/M.KOMINFO/02/2006 concerning Procedure for Initial Tariff
Establishment and Tariff Change for Basic Telephone Service Through Fixed Line Network dated
February 8, 2006, replacing the MoC Decree No. KM. 12 dated January 29, 2002 of the MTPT as
stated above. |
| --- | --- |
| b. | Mobile cellular telephone tariffs |
| | Tariffs for cellular providers are set on the basis of the MTPT Decree
No. KM.27/PR.301/MPPT-98 dated February 23, 1998. Under the regulation,
the cellular tariffs consist of activation fees, monthly charges and usage charges. |
| | The maximum tariff for the activation fee is Rp.200,000 per new subscriber number and
Rp.65,000 for monthly charge. Usage charges consist of the following: |

(i).
The maximum basic airtime tariff charged to the originating cellular subscriber is
Rp.325/minute. Charges to the originating cellular subscriber are calculated as follows:

1.	Cellular to cellular	:	2 times airtime rate
2.	Cellular to PSTN	:	1 time airtime rate
3.	PSTN to cellular	:	1 time airtime rate
4.	Card phone to cellular	:	1 time airtime rate plus 41% surcharge

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

b. Mobile cellular telephone tariffs (continued)

(ii). Usage tariffs

| 1. | The local usage tariffs are charged to cellular subscriber who makes a
call to the PSTN. For the use of network, the tariffs per minute are computed at
50% of the prevailing local PSTN tariffs. |
| --- | --- |
| 2. | The long-distance usage tariffs between two different service areas
charged to cellular subscriber are the same as the prevailing tariffs for domestic
SLJJ applied to PSTN subscribers. |

| Based on Decree No. KM. 79/1998 of the MoC, the maximum tariff for prepaid customers
may not exceed 140% of the peak time tariffs for post-paid subscribers. |
| --- |
| Based on Announcement No. PM.2/2004 of the MoC dated March 30, 2004, Telkomsel adjusted
its tariffs by eliminating the tariff subsidy from long-distance calls, resulting to a
9% tariff increase. |
| Under Decree No. 12/Per/M.KOMINFO/02/2006 dated February 28, 2006 of the MoCI the
cellular tariffs consist of the following: |

	Connection fee
	Monthly charges
	Usage charges
	Additional facilities fee

| The tariffs are determined based on certain formula with a floor price. For usage
charges, the floor price should be the originating fee plus termination fee (total
interconnection fee) while for connection fee and monthly charges, the floor price
depends on the cost structure of each cellular provider. |
| --- |
| The implementation of the new tariff for a dominant operator has to be approved by the
Government. A dominant operator is an operator that has operating revenues equal to or
more than 25% of total Industry revenue for a certain segment. |

| c. |
| --- |
| The Government establishes the percentage of tariffs to be received by each operator in
respect of calls that transit to multiple networks. The Telecommunications Law and
Government Regulation No. 52/2000 provides for the implementation of a new policy to replace
the current revenue-sharing policy. Under the new policy, the operator of the network on
which calls terminate would determine the interconnection charge to be received by it based
on a formula to be mandated by the Government, which would be intended to have the effect of
requiring that operators charge for calls based on the costs of carrying such calls. The MoC
issued Decree No. 32/2004, dated March 11, 2004 stated that cost-based interconnection fees
shall be applicable beginning January 1, 2005, of which subsequently postponed until January
1, 2007 based on the MoCI Regulation No. 08/Per/M.KOMINFO/02/2006 dated February 8, 2006. On
December 28, 2006, the Company and all network operators signed amendments to their
interconnection agreements for fixed line networks (local, SLJJ and international) and
mobile network for the implementation of the cost-based tariff obligations under the MoCI
Regulations No. 08/Per/M.KOMINFO/02/2006. These amendments took effect on January 1, 2007. |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

c. Interconnection tariffs (continued)

| (i). |
| --- |
| The Governments National Fundamental Technical Plan set forth in Decree No. KM.4/2001,
as amended by Decree No. KM.28/2004, sets out the technical requirements, routing plans
and numbering plans for interconnection of the networks of various telecommunications
operators among themselves and with the Companys fixed line network. Under the National
Fundamental Technical Plan, all operators are permitted to interconnect with the
Companys fixed line network for access thereto and to other networks, such as
international gateways and the networks of other cellular operators. In addition,
cellular operators may interconnect directly with other networks without connecting to
the Companys fixed line network. Currently, the fees for interconnection are set forth
in Decree No. KU.506/1997, Decree No. KM.46/1998, Decree No. KM.37/1999 and Decree No.
KM.30/2000. |
| Fixed line Interconnection with Indosat. Currently, the fixed line interconnection
between the Company and Indosat is generally based on their agreement signed in 2005.
Pursuant to the agreement between the Company and Indosat, for interconnection of local
and SLJJ calls, the operator of the network on which the calls terminate receives an
agreed amount per minute. |
| Other Fixed Wireline Interconnection. Since September 1, 1998, the Company has been
receiving a share of the tariffs from Batam Bintan Telekomunikasi (BBT), which is a
local operator with a special coverage area on Batam Island, for each successful call
that transits or terminates on the Companys fixed line network. Under the
interconnection agreement, for local interconnection calls, revenues are shared on a
sender keeps all basis. For local calls originating on BBTs network terminating on a
cellular network and vice versa which transit through the Companys fixed line network,
the Company receives an agreed percentage of the prevailing tariff for local calls. For
interconnection of SLJJ calls, the operator of the network on which the calls terminate
or transit receives an agreed percentage of the prevailing long-distance tariff. In
addition, BBT is to receive a certain fixed amount for each minute of incoming and
outgoing international calls, from and to BBT that transit through the Companys fixed
line network and use the Companys IDD service and 50% of the prevailing interconnection
tariff for incoming and outgoing international calls that transit through the Companys
fixed line network and use Indosats IDD service. |
| Other Fixed Wireless Interconnection. Fixed wireless networks may interconnect with the
Companys fixed line network at the Companys gateway. At present, other than the
Company and Indosat, PT Bakrie Telecom (BT) also operates a fixed wireless network in
Indonesia. The fixed wireless interconnection between the Company and BT is currently
based on the most recent interconnection agreement signed in 2005. Pursuant to the
agreement, for interconnection of local calls, the operator of the network on which the
calls terminate receives an agreed amount per minute. For local calls originating on
BTs network terminating on a cellular network and vice versa which transit through
the Companys fixed line network, the Company receives
an agreed percentage of the prevailing tariff for local calls. For SLJJ calls that
originate on the Companys fixed line network and terminate on BTs network, BT receives
an agreed amount per minute. |

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

TELECOMMUNICATIONS SERVICES TARIFFS (continued)

c. Interconnection tariffs (continued)

(i).	Interconnection with fixed line network (continued)
	In the reverse situation and for transit long-distance calls through the Companys fixed line
network, the Company receives an agreed percentage of the prevailing long-distance
tariff. In addition, BT is to receive a certain fixed amount for each minute of incoming
and outgoing international calls to and from BT that transit through the Companys fixed
line network and use the Companys IDD service and 25% of prevailing interconnection
tariff of incoming and outgoing international calls that transit through the Companys
fixed line network and use Indosats IDD service.
(ii).	Cellular interconnection
	In respect of local interconnection calls, including transit calls, between a cellular
network and the Companys fixed line network, the Company receives 50% of the prevailing
fixed-line usage tariff for local pulse. For local calls from the Companys fixed line
network to a cellular network, the Company charges its subscribers the applicable local
call tariff plus an airtime charge, and pays the cellular operator the airtime charge.
For local calls between cellular telecommunications networks, the originating cellular
operator pays the terminating cellular operator the airtime charges.
	The current Interconnection Decree, effective April 1, 1998, assumes that it is possible
for long-distance calls to be carried by more than one network. Pursuant to the
Interconnection Decree, for long-distance calls which originate on the Companys fixed
line network, the Company is entitled to retain a portion of the prevailing
long-distance tariff, which ranges from 40% of the tariff in cases where the entire
long-distance portion is carried by a cellular operator up to 85% of the tariff in cases
where the entire long-distance portion is carried by the Companys fixed line network.
For long-distance calls that originate from a cellular subscriber, the Company and its
subsidiaries are entitled to retain a portion of the prevailing long-distance tariff,
which ranges from 25% of the tariff in cases where the call originates from a cellular
subscriber, transits the Companys fixed line network and terminates on another cellular
subscriber with the entire long-distance portion carried by a cellular operator, up to
85% of the tariff in cases where the entire long-distance portion is carried by the
Companys fixed line network and terminates on the Companys fixed line network.
(iii).	International interconnection
	Interconnection on the Companys domestic fixed line network for international calls
consists of access charges and usage charges. The following table sets forth the current
international interconnection tariff, effective as of December 1, 1998, for IDD calls
which are routed through Indosats international gateways and which originate, transit
or terminate on the Companys domestic fixed line network and Telkomsels cellular
network, pursuant to Ministerial Decree No. KM.37/1999:

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

c. Interconnection tariffs (continued)

(iii). International interconnection

Description	Tariff
Access charge	Rp850 / successful call
Usage charge	Rp550 / successful paid minute

In addition, since June 2004, the Company has provided IDD services. Currently, the Companys IDD service can be accessed by subscribers of all telecommunication operators in Indonesia. Interconnection and access charges for originating calls using the Companys IDD service or terminating incoming international calls routed through the Companys international voice telecommunications gateway are negotiated with each respective domestic operator.

| (iv). |
| --- |
| Since the fourth quarter of 2001, the Company has been receiving a share of revenues
arising from interconnection transactions with PSN, a national satellite operator. Under
the agreement, in respect of the interconnection calls between the Company and PSN, the
Company receives Rp.800 per minute for network charges and an additional Rp.300 per
minute origination fee if the call originates from the Companys fixed line network. |

| Based on Indonesian Telecommunications Regulatory Body (Badan Regulasi Telekomunikasi
Indonesia or BRTI) Letters No. 273/BRTI/XII/2006 dated December 6, 2006 about Reference
Interconnection Offer (RIO) of the Company and No. 297/BRTI/XII/2006 dated December 21,
2006 about Implementation of Cost Based Interconnection, the Director General of Posts and
Telecommunications, as Head of BRTI, affirmed the implementation of RIO of the Company as
approved in Director General of Posts and Telecommunications Decree No. 279/DIRJEN/2006
dated August 4, 2006. |
| --- |
| The implementation of the Companys interconnection tariff starting January 1, 2007 based on
Director General of Post and Telecommunications Decree No. 279/DIRJEN/2006 dated August 4,
2006. The new interconnection tariff is implemented based on 2008 Companys RIO, shall be
as follows: |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

c. Interconnection tariffs (continued)

(a) Fixed line

1.	Local termination from fixed line (local call) service tariff is Rp.73/minute.
2.	Local termination from fixed line (long distance call) service tariff is
Rp.203/minute.
3.	Long distance termination from fixed line service tariff is Rp.560/minute.
4.	Local termination from cellular mobile network service tariff is Rp.203/minute.
5.	Local termination from satellite mobile network service tariff is Rp.204/minute.
6.	Long distance termination from cellular mobile network service tariff is
Rp.626/minute.
7.	Long distance termination from satellite mobile network service tariff is
Rp.613/minute.
8.	Domestic termination from international network service tariff is Rp.612/minute.
9.	International origination from international network service tariff is Rp.612/minute.
10.	Domestic origination from domestic network service tariff is Rp.203/minute
11.	Local transit service tariff is Rp.69/minute.
12.	Long distance transit service tariff is Rp.295/minute.
13.	International transit service tariff is Rp.316/minute.

(b) Cellular

1.	Local termination from fixed line service tariff is Rp.361/minute.
2.	Long distance termination from fixed line service tariff is Rp.471/minute.
3.	Local termination from cellular mobile network service tariff is Rp.449/minute.
4.	Long distance termination from cellular mobile network service tariff is
Rp.622/minute.
5.	Local termination from satellite mobile network service tariff is Rp.574/minute.
6.	Long distance termination from satellite mobile network service tariff is
Rp.851/minute.
7.	Local termination from SLJJ service provider tariff is Rp.361/minute.
8.	Long distance termination from SLJJ service provider tariff is Rp.471/minute.
9.	International termination from IDD service provider tariff is Rp.510/minute.
10.	Local origination to SLJJ service provider tariff is Rp.361/minute.
11.	Long distance origination to SLJJ service provider tariff is Rp.471/minute.
12.	International origination to IDD service provider tariff is Rp.510/minute.

| d. |
| --- |
| Previously, the MoC Decree No. KM.23/2002 provided that access charges and network lease
charges for the provision of VoIP services were to be agreed between network operators and
VoIP operators. On March 11, 2004, the MoC issued Decree No. 31/2004, which stated that
interconnection charges for VoIP are to be fixed by the MoC. Currently, the MoCI has not yet
determined what the new VoIP interconnection charges will be. Until such time as the new
charges are fixed, the Company will continue to receive connection fees for calls that
originate or terminate on the Companys fixed line network at agreed fixed amount per
minute. |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

e.	Network lease tariff
	The Government regulated the form, type, and tariff structure and tariff formula for
services of network lease through MoCI Decree No. 03/Per/M.KOMINFO/1/2007 dated January 26,
2007. Pursuant to the MoCI Decree, the Government released DGPT Decision Letter No.
115/Dirjen/2008 dated March 24, 2008 which stated the agreement on Network Lease Service
Type Document, Network Lease Service Tariff, Available Capacity of Network Lease Service,
Quality of Network Lease Service, and Procurement Procedure of Network Lease Service in
2008 is in conformity with the Companys proposal. The minimum tariff for activation fee is
Rp.2,400,000. The tariff for monthly usage for local (under 25 km) vary starting from
Rp.1,750,000 up to Rp.88,650,000, depending on the speed and the tariff for monthly usage
for long distance (over 25 km) starting from Rp.5,600,000 up to Rp.3,893,100,000 depending
on the speed.
f.	Public Phone Kiosk (warung telekomunikasi or wartel) Tariff
	The MoC issued Decree No. KM. 46/2002 dated August 7, 2002 regarding the operation of phone
kiosks as replaced by the MoCI Regulation No. PM.05/Per/M.KOMINFO/I/2006 dated January 30,
2006, which provided the Company the entitlement to retain a maximum of 70% of the phone
kiosk basic tariffs for domestic calls and up to 92% of phone kiosk basic tariffs for
international calls. It also provides that the airtime from the cellular operators shall
generate at a minimum 10% of the kiosk phones revenues.
g.	Tariff for other dervices
	The tariffs for satellite rental and other telephony and multimedia services are determined
by the service provider by taking into account the expenditures and market price. The
Government only determines the tariff formula for basic telephony services. There is no
stipulation for the tariff of other services.
h.	USO
	The MoCI issued Regulation No. 15/Per/M.KOMINFO/9/2005 dated September 30, 2005, which sets
forth the basic policies underlying the USO program and requires telecommunications
operators in Indonesia to contribute 0.75% of their gross revenues (with due consideration
for bad debts and interconnection charges) for USO development.
	Based on MoCI Decree No. 11/Per/M.KOMINFO/04/2007 dated April 13, 2007 which has amended by
MoCI Decree No. 38/Per/M.KOMINFO/9/2007 dated September 20, 2007, it stipulate that, among
others, in providing telecommunication access and services in rural areas (USO Program),
the provider is determined through a selection process by Balai Telekomunikasi dan
Informatika Pedesaan which was established based on MoCI Decree No.
35/Per/M.KOMINFO/11/2006 dated November 30, 2006.

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COMMITMENTS

| a. |
| --- |
| As of March 31, 2008, capital expenditures committed under the contractual arrangements,
principally relating to procurement and installation of switching equipment, transmission
equipment and cable network, are as follows: |

	Amounts in — foreign currencies	Equivalent
Currencies	(in millions)	in Rupiah
Rupiah		5,857,252
U.S. Dollars	492	4,530,271
Euro	129	1,873,192
Total		12,260,715

The above balance includes the following significant agreements:

(i) Company

					Outstanding
					purchase
Contracting		Date of	Significant provisions of		commitment as of
parties		agreement	the agreement	Total contract value	March 31, 2008
Company and:			Procurement and
installation
agreement for
Optical Access
Network (OAN) for
the following
projects:
a.	Huawei Consortium
(Huawei)	a. November 30,
2006	a. Project Batch III in Divre IV
(Central Java and
Daerah Istimewa
Yogyakarta)	US$3.2 million and
Rp.59,431 million	US$0.03 million and
Rp.698 million
b.	Alcatel-Inti Consortium	b. December 18,
2006	b. Project Batch IV
in Divre VI
(Kalimantan)	US$3.9 million and
Rp.62,633 million	US$0.9 million and
Rp.5,962 million
Company and
Opnet-Olexindo
Consortium		December 29,
2006	Procurement and
installation
agreements
Opnet-Olexindo for
OAN Project Batch I
in Divre I and III	US$3 million and
Rp.59,310 million	US$1.50 million and
Rp.14,237 million
Company and
PT Lintas Teknologi
Indonesia		November 16,
2006	Procurement and
installation
agreements for OAN
Project Batch II in
Divre II	Rp.77,977 million	Rp.49,484 miilion

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COMMITMENTS (continued)

a.	Capital expenditures (continued)
(i)	Company (continued)

				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 2008
Company and Huawei		Procurement and
installation
agreements for NSS,
BSS and PDN FWA
CDMA System
Expansion Project
in:
	January 6,
2006	a. Divre I and IV,
for a period of 3
years (2006-2008)
with option to
extend for another
2 years (2009-2010)	US$27.6 million and
Rp.109,511 million
(for the 3 years
coverage) and
US$12.3 million and
Rp.39,972 million
(for the 2 years
extension)	US$30.3 million and
Rp.103,851 million
		Service Level
Agreement (SLA),
whereby Huawei will
provide service and
maintenance support
for 3 years
(2006-2008) in
relation to the
construction above	Rp.10,450 million
	December 8,
2006	b. Divre II
(Jakarta)	US$25.3 million and
Rp.131,045 million	US$19.9 million and
Rp.109,597 million
		SLA whereby Huawei
will provide
service and
maintenance support
for 3 years
(2006-2008) in
relation to the
above agreement	Rp.11,509 million
	December 8,
2006	c. Divre III (West
Java and Banten)	US$9.9 million and
Rp.55,262 million	US$7.2 million and
Rp.42,000 million
		SLA whereby Huawei
will
provide service and
maintenance support
for 3 years
(2007-2009) in
relation to the
above agreement	Rp.4,217 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 2008
Company and Samsung
Consortium	October 13,
2006	Procurement and
installation agreements
for NSS, BSS and PDN
FWA CDMA System
Expansion Project in:
		a. Divre V (East Java)	US$59.9 million and
Rp.94,759 million	US$54.4 million and
Rp.115,604 million
		Samsung Consortium will
provide service and
maintenance support,
pursuant to a SLA for
period 3 years
(2006-2008) in
accordance with above
agreement	Rp.29,998 million
	July 10, 2007	b. Divre VII
(Bali-Nusa Tenggara)	US$11.9 million and
Rp.34,352 million	US$11.9 million and
Rp.42,124 million
		Samsung Consortium will
provide service and
maintenance support,
pursuant to a SLA for
period 3 years
(2006-2008) in
accordance with above
agreement	Rp.7,772 million
Company and ZTE
Consortium	November 28, 2006	Procurement and
Installation agreement
for Expansion of NSS,
BSS and PDN System in
Divre VI (Kalimantan)	US$22.5 million and Rp.57,168 million	US$22.5 million and
Rp.66,093 million
		a. Divre VI (Kalimantan)	Rp.8,925 million
		SLA whereby ZTE will
provide service and
maintenance support for
3 years (2006-2008) in
relation to the above
agreement
	July 10, 2007	b. Divre VII (Sulawesi,
Maluku and Papua)	US$19.6 million and Rp.28,030 million	US$19.6 million and
Rp.40,526 million
		SLA whereby ZTE will
provide service and
maintenance support for
3 years (2009-2011) in
relation to above
agreement	Rp.12,495 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 2008
Company and PT Infonet
Telekomindo	July 13, 2007	Procurement and
installation
agreement for Fiber
Optic Communication
System Metro
Junction Regional
Expansion Batch 2	Rp.67,312 million	Rp.54,840 million
Company and Industri
Telekomunikasi
Indonesia	July 17, 2007	Procurement and
installation
agreement for Fiber
Optic Communication
System Metro
Junction Regional
Expansion Batch 1	Rp.60,240 million	Rp.39,739 million
Company and ZTE
Consortium	July 10, 2007	Procurement and
installation
agreement for
Expansion of NSS,
BSS and PDN System
in Divre VII
(Sulawesi, Maluku
and Papua)	US$14 million and
Rp.22,967 million
(for 3 years
coverage) and
US$5.6 million and
Rp.5,063 million
(for the 2 years
extension)	US$19.6 million and
Rp.40,526 million
		SLA whereby ZTE
will provide
service and
maintenance support
for 3 years in
relation to above
agreement	Rp.12,495 million
Company and ZTE
Consortium	September 16, 2005	Procurement and
installation
agreement for
Speedy Access Batch
1	US$1.8 million and
Rp. 237,255 million	US$0.9 million and
Rp.235,965 million
Company and NEC
Corporation	March 3, 2008	Procurement and
installation
agreement for Batam
Singapore Cable
System (BSCS)
Project	US$13.1 million	US$13.1 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

| (ii) |
| --- |
| The Telkomsels agreements with Motorola, Inc. and PT Motorola Indonesia, Ericsson AB
and Ericsson Indonesia, Nokia Corporation and PT Nokia Network (Nokia Network), and
Siemens AG since August 2004, relate to the maintenance and procurement of equipment
and related services, involving: |

	Joint Planning and Process Agreement
	Equipment Supply Agreement (ESA)
	Technical Service Agreement (TSA)
	Site Acquisition and Civil, Mechanical and Engineering Agreement (SITAC and CME)

| The agreements contain list of charges to be used in determining the fees payable by
Telkomsel for all equipment and related services to be procured during the rollout
period upon the issue of Purchase Orders (PO). |
| --- |
| The agreements are valid and effective as of the execution date by the respective
parties for a period of three years, provided that the suppliers are able to meet the
requirements set out in each PO. In the event that the suppliers fail to meet those
requirements, Telkomsel may terminate the agreements at its sole discretion with prior
written notice. |
| In accordance with the agreements, the parties also agreed that the charges specified
in the price list would apply to equipment and services (ESA and TSA) and services
(SITAC and CME) acquired from the suppliers between May 26, 2004 and the effective
date, except for those acquired from Siemens under TSA relating to equipment and
maintenance of Telkomsels Switching Sub System (SSS) and BSS that were acquired
between July 1, 2004 and the effective date. Prices are subject to quarterly reviews. |
| In August 2007, due to the expiration of the above agreements, based on letters from
Ericsson AB and Ericsson Indonesia and Nokia Siemens Networks (which currently
represents Nokia Corporation, Nokia Network and Siemens AG), those companies agreed to: |

| | extend the above agreements until new agreements were made between Telkomsel
and these other companies (Note 52f), and |
| --- | --- |
| | prior to the effective date of new agreements, retroactively apply prices under
the new agreements (retroactive price adjustment) to PO for the procurement of BSS
equipment and services issued by Telkomsel after July 1, 2007 using the previous
price list (Note 11d.iv). |

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COMMITMENTS (continued)

a. Capital expenditures (continued)

For the purpose of providing telecommunication services with 3rd Generation technology, in September and October 2006, Telkomsel entered into agreements with Nokia Corporation and Nokia Networks, Ericsson AB and Ericsson Indonesia, and Siemens Networks GmbH & Co.KG for network construction (Rollout Agreement) and Nokia Networks, Ericsson Indonesia and Siemens Networks GmbH & Co.KG for network operations and maintenance (Managed Operations Agreement and Technical Support Agreement). The agreements are valid and effective as of the execution date by the respective parties (the effective date) until the later of December 31, 2008 or the date on which the last PO terminates under the agreements or expires in respect of any PO issued prior to December 31, 2008, providing that the suppliers are able to meet the requirements set out in each PO.

b. Borrowings and other credit facilities

| (i) | The Company has a US$3 million bond and bank guarantee, standby letter of
credit facility and foreign exchange facility with SCB, Jakarta. The facilities expire
in July 2008. Under these facilities, as of March 31, 2008, the Company has issued bank
guarantee of Rp.20,000 million (equivalent to US$2.17 million for a 3G performance bond
(Note 49c.ii). Borrowings under the facilities bear interest at Singapore Interbank
Offered Rate (SIBOR) plus 1% per annum (US$) except a borrowing under the import
facility which bears interest at SIBOR plus 1.25% per annum (US$), and at a rate equal
to the three-month SBI plus 1.25% per annum (Rupiah); for other currencies the interest
rate is based on the Banks cost of funds plus 2%. As of March 2007 and 2008, there
were no outstanding loans under these facilities. |
| --- | --- |
| (ii) | Telkomsel has not provided any collateral for its bank borrowings, or other
credit facilities. The terms of the various agreements with Telkomsels lenders and
financiers require compliance with a number of pledges and negative pledges as well as
financial and other covenants, which include inter alia, certain restrictions on the
amount of dividends and other profit distributions which could adversely affect
Telkomsels capacity to comply with its obligation under the facilities. The terms of
the relevant agreements also contain default and cross default clauses. Telkomsels
management is not aware of any breaches of the terms of these agreements and does not
foresee any such breaches occurring in the future. |

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COMMITMENTS (continued)

c. Others

(i)	Employee benefits
	On March 24, 2006, Telkomsel and its Labour Union (Serikat Pekerja Telkomsel) signed a
collective labour agreement (Perjanjian Kerja Bersama or PKB) which is valid until
March 23, 2008. Based on the agreement, Telkomsel shall provide long service leave and
post retirement insurance to its employees. These benefits are subject to further
agreement between Telkomsel and Labour Union which has not been made until the date the
consolidated financial statements. Therefore, it is not possible to determine the amount
of the benefits as of March 31, 2008. As the date of the consolidated financial
statements, Telkomsel is still in extension process of new PKB, accordingly the current
PKB is valid up to the originally stated date.
(ii)	3G license
	With reference to the Decision Letter No. 07/Per/M.KOMINFO/2/2006 of the MoCI, as one of
the successful bidders, Telkomsel amongst other commitments, is required to:

Pay annual BHP fee which is determined based on a certain formula over license term (10 years). The BHP for the first and second year were paid in March 2006 and 2007, respectively. The commitments as of March 31, 2008 arising from the BHP up to the expiry period of the license using the formula set forth in the Decision Letter are as follows:

Year	BI Rates (%)	Index (multiplier)	Radio Frequency — Usage Tariff
1			20% x HL
2	R1	I1 = (1 + R1)	40% x I1 x HL
3	R2	I2 = I1(1 + R2)	60% x I2 x HL
4	R3	I3 = I2(1 + R3)	100% x I3 x HL
5	R4	I4 = I3(1 + R4)	130% x I4 x HL
6	R5	I5 = I4(1 + R5)	130% x I5 x HL
7	R6	I6 = I5(1 + R6)	130% x I6 x HL
8	R7	I7 = I6(1 + R7)	130% x I7 x HL
9	R8	I8 = I7(1 + R8)	130% x I8 x HL
10	R9	I9 = I8(1 + R9)	130% x I9 x HL

Notes :
Ri	= average Bank Indonesia rate from previous year
HL (auction price)	= Rp.160,000 million
Index	= adjustment to the bidding price for respective year

The BHP is payable upon receipt of Surat Pemberitahuan Pembayaran (notification letter) from the DGPT.

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COMMITMENTS (continued)

c. Others (continued)

(ii) 3G license (continued)

2.	Provide roaming access for the existing 3G operators.
3.	Contribute to USO development.
4.	Construct a 3G network which covers at least the following provinces:

	Minimum number
Year	of provinces
1	2
2	5
3	8
4	10
5	12
6	14

Issue a performance bond each year amounting to Rp.20,000 million or 5% of the annual fee to be paid for the subsequent year, whichever is higher. This performance bond shall be redeemed by the Government if Telkomsel is not able to meet the requirements set out in the above mentioned Decision Letter or upon cancellation/termination of the license, or if Telkomsel decides to return the license voluntarily.

(iii)	Asia-America Gateway Consortium (AAG)
	On April 27, 2007, the Company became a member of AAG consortium, an undersea cable
consortium with 19 companies, by signing a Construction and Maintenance Agreement
(C&MA) and an AAG Cable Network Supply Contract and paid US$40 million. Through the
AAG Consortium, the Company will acquire 40 Gbps international bandwith at the end of
2008 in the AAG configuration that will be laid from Malaysia to the United States. As
of March 31, 2008, the Company has paid US$11.36 million (equivalent to Rp.104,350
million) and recorded as advances for the purchase of property, plant and equipment
(Note 13).
(iv)	Palapa Ring Consortium
	On November 10, 2007, the Company entered into a C&MA with five other companies for
Palapa Ring Consortium. This consortium was formed to build optical fiber network in 32
cities in Eastern Indonesia with total investment of Rp.2,070,336 million. The Company
will obtain 4 lambda bandwidth of total capacity of 8.44 lambdas from this consortium.

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CONTINGENCIES

| a. | In the ordinary course of business, the Company and its subsidiaries have been named as
defendant in various legal actions in relation with land disputes, other disputes involving
premium call billings and telecommunication billings. Based on managements estimate of the
probable outcomes of these matters, the Company has accrued Rp.30,479 million as of March
31, 2008. |
| --- | --- |
| b. | In December 2005, the West Java Police Department initiated investigations related to
an alleged violation of Anti-Corruption Law, in particular the provision of interconnection
services to Napsindo, the Companys subsidiary, and Globalcom, a Malaysian company, at an
incorrect tariff for the Companys network for the provision of illegal VoIP services, and
misuse of authority in procuring telecommunication equipment. It is also understood that
one of the investigations related to the Companys guarantee of a bank loan obtained by
Napsindo. During the investigation, former Directors and employees of the Company were held
in custody by the West Java Police Department for further investigation. On May 10, 2006,
such individuals were released from police custody after the expiration of the maximum
period of 120 days allowed for police custody of suspect for investigation purposes. As of
March 31, 2007 and 2008, the police have not found sufficient evidence to properly transfer
the case to the High Attorney Office for indictment. |
| c. | A former Director of Human Resources and an employee of the Company were indicted under
the Anti-Corruption Law in Bandung District Court relating to allegations of misuse of
authority in procuring consultancy services resulting to a loss of Rp.789 million. On May
2, 2007, the Bandung District Court found the defendants guilty and sentenced each
defendant to a one-year prison term and gave Rp.50 million penalty. The defendants have
filed and appeal to the West Java High Court, objecting to the District Court ruling. On
October 3, 2007, West Java High Court found the defendants not guilty. The Attorney has
filed an appeal to Indonesian Supreme Court objecting to the High Courts ruling. As of the
issuance date of the consolidated financial statements, no decision has been reach on the
appeal. |
| d. | On January 2, 2006, the Office of the Attorney General launched an investigation into
allegations of misuse of telecommunications facilities in connection with the provision of
VoIP services, whereby one of Companys former employees and four of the Companys
employees in KSO VII were named suspects. As a result of the investigations, one of
Companys former employees and two of the Companys employees were indicted in the Makassar
District Court, and two other employees were indicted in the Denpasar District Court for
their alleged corruption in KSO VII. On January 29, 2008, the Makassar District Court found
the defendant not guilty. The Attorney has filed an appeal to Indonesian Supreme Court
objecting the District Court ruling. On March 3, 2008, Denpasar District Court fount the
defendants guilty and sentenced each defendant to a one-year six-month prison term and a
one year prison term and gave Rp.50 million penalty. The defendants have filed an appeal to
the Bali High Court objecting to the District Court ruling. As of the issuance date of the
consolidated financial statements, no decision has been reach on the appeal. |

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CONTINGENCIES (continued)

e. The Commission for the Supervision of Business Competition (Komisi Pengawasan Persaingan Usaha or KPPU) on its letter dated December 5, 2007, notified Telkomsel that based on its investigation of case No. 07/KPPU-L/2007 dated November 19, 2007, according to the applied provisions regarding allegation of violating Law No. 5/1999, Prohibition of Monopolistic Practice and Unfair Business Competition (the Law), related to a cross-ownership by Temasek Holdings and monopoly practices by Telkomsel, it had decided that, among others things :

	Telkomsel had violated article 17.1 of the Law
	Telkomsel had not been proven to violate article No. 25.1 of the Law
	Temasek Holdings and certain affiliated companies were instructed to release their
ownership either in Indosat or Telkomsel with the following conditions:

§	Maximum 5% of total shares for each buyer,
§	The buyer is not associated with Temasek Holdings

Telkomsel was to be charged a penalty of Rp25,000 million and instructed Telkomsel to discontinue the imposition of high tariffs and reduce its tariffs by at least 15%.

| | The Company and Telkomsels management believe that Telkomsel has complied with prevailing
regulations or laws, accordingly, on December 19, 2007, Telkomsels management filed an
objection with the District Court (Note 52g). |
| --- | --- |
| f. | Certain subscribers of Telkomsel and Indosat which are domiciled in Bekasi and
Tangerang and subscribers of PT Excelcomindo Pratama (Excelcomindo) which are domiciled
in Tangerang, represented by the law firms, have filed class-action lawsuits with the
courts against Telkomsel, the Company, Indosat, the Government, Temasek Holdings and
certain of its affiliated companies (Parties). The Parties are alleged to have had
excessive price practices that potentially could have adversely affected those subscribers
(Note 52h). |
| | As of the issuance date of the consolidated financial statements, the lawsuits are still
being processed by the courts. The Telkomsels management believes that Telkomsel has
applied tariffs in accordance with prevailing regulations, accordingly, such allegation has
no strong basis. |
| g. | The Company, Telkomsel and seven other local operators are being investigated by the
KPPU for allegation of SMS cartel practices. Management is in the process of defending this
case. |

For the matters and cases stated above, the Company and its subsidiaries do not believe that any subsequent investigation or court decision will have significant financial impact to the Company and its subsidiaries.

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51.
The balances of monetary assets and liabilities denominated in foreign currencies are as
follows:

Foreign		Foreign
currencies	Rupiah	currencies	Rupiah
(in millions)	equivalent	(in millions)	equivalent
Assets
Cash and cash equivalents
U.S. Dollars	176.64	1,618,114	157.50	1,450,556
Euro	75.79	923,351	73.20	1,064,958
Japanese Yen	1.95	151	4.45	412
Singapore Dollars			0.01	33
Temporary investments
U.S. Dollars			7.95	73,189
Trade receivables
Related parties
U.S. Dollars	1.30	11,875	7.83	70,528
Third parties
U.S. Dollars	33.94	309,655	33.38	307,497
Other receivables
U.S. Dollars	0.03	306	0.15	1,367
Euro	0.02	264	0.01	93
Great Britain Pound sterling			0.01	225
Other current assets
U.S. Dollars	0.02	155	4.61	42,465
Euro			0.05	740
Advances and other non-current assets
U.S. Dollars	2.47	22,535	20.77	191,256
Total assets		2,886,406		3,203,319

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ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)


Foreign			Foreign
currencies	Rupiah		currencies	Rupiah
(in millions)	equivalent		(in millions)	equivalent
Liabilities
Trade payables
Related parties
U.S. Dollars	0.27	2,452	0.54	4,968
Singapore Dollars		21	0.00	22
Third parties
U.S. Dollars	46.53	424,641	19.82	182,730
Euro	3.86	46,937	2.51	34,592
Japanese Yen	0.32	24	0.51	47
Singapore Dollars	7.57	45,575	0.73	4,894
Swiss Franc			0.05	442
Other payables
U.S. Dollars	0.07	683	0.80	7,418
Great Britain Pound sterling			0.00	2
Singapore Dollars		10	0.00	11
Accrued expenses
U.S. Dollars	227.80	2,079,104	160.03	1,475,487
Euro	136.94	1,664,434	88.61	1,290,719
Japanese Yen	160.24	12,388	149.23	13,849
Singapore Dollars	0.33	1,975	0.53	3,531
Great Britain Pound sterling			0.05	832
Advances from customers and suppliers
U.S. Dollars			1.00	9,241
Current maturities of long-term liabilities
U.S. Dollars	144.19	1,315,997	143.51	1,318,446
Euro	14.71	178,782	7.34	106,811
Japanese Yen	1,714.37	132,538	955.40	88,662
Long-term liabilities
U.S. Dollars	489.53	4,467,969	345.68	3,187,155
Euro	7.35	89,391
Japanese Yen	12,670.31	979,542	12,286.36	1,140,174
Total liabilities		11,442,463		8,870,033
Net liabilities		(8,556,057	)	(5,666,714	)

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51.	ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)
	The Company and its subsidiaries activities expose them to a variety of financial risks,
including the effects of changes in debt and equity market prices, foreign currency exchange
rates and interest rates.
	The Company and its subsidiaries overall risk management programs focus on the
unpredictability of financial markets and seek to minimize potential adverse effects on the
financial performance of the Company and its subsidiaries. Management provides written policy
for foreign currency risk management mainly through time deposits placements and hedging to
cover foreign currency risk exposures for the time range of 3 up to 12 months.
52.	SUBSEQUENT EVENTS

| a. | On April 1, 2008, Telkomsel reduced its tariffs through implementing new
interconnection and cellular (retail) tariffs effective on April 1, 2008. The reductions
range from 2% to 55% for interconnection and from 5% to 72% for cellular (retail). |
| --- | --- |
| b. | On April 3, 2008, the Company entered into a SLJJ access code (Kode Akses SLJJ or
KAS) agreement with Indosat for Balikpapan City which cover 140,000 customers. |
| c. | On April 7, 2008, the Company implemented new tariffs for SLJJ charges which
decreased by an average range from 0.4% to 46.2% from the prevailing tariffs for SLJJ
charges, effective on April 8, 2008. |
| d. | On April 7, 2008, the MoCI issued Decree No. 09/PER/M.KOMINFO/04/2008 Mechanism to
Determine Tariff of Telecommunication Services which Connected through Mobile Cellular
Network which provides guidelines to determine cellular tariffs with a formula consisting
of network element cost and retail services activity cost. This Decree replaced the
previous Decree of No. 12/PER/M.KOMINFO/02/2006. |
| e. | On April 11, 2008, the new interconnection tariff has been implemented based on
Director General of Post and Telecommunications Decree No. 205/2008 dated April 11, 2008
about Agreement to RIO of the telecommunication network operator with operating revenue of
25% or more from the total revenue of all telecommunication operators in the service
segmentation. |
| f. | On April 17, 2008, Telkomsel, Ericsson Indonesia, Ericsson AB, PT Nokia Siemens
Networks, Nokia Siemens Network Oy and Nokia Siemens Network Gmbh & Co. KG signed Combined
2G and 3G CS Core Network Rollout Agreements (Note 49a.ii). The Agreements are valid until
the later of: |

| | three years after the effective date (April 17, 2008, except for certain POs issued
in August 2007 which commenced on August 15, 2007), or |
| --- | --- |
| | the date on which the last PO under this agreement terminates or expires in respect
of any PO issued prior to the expiry of the three year period. |

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SUBSEQUENT EVENTS (continued)

g. Pursuant to the Telkomsels filing of its objection (Note 50e) on decision of KPPU, on May 9, 2008 the court has pronounced its verdict and concluded among other things:

	Telkomsel had violated article 17.1 of the Law
	Telkomsel had not been proven to violate article 25.1.b of the Law
	Temasek Holdings and certain affiliated companies were instructed to release their
ownership in either Indosat or Telkomsel or to decrease its ownership by 50% in each
of those companies within twelve months from the date of the decision become final and
legally binding at the following conditions:

	Maximum 10% of total shares for each buyer
	The buyer is not associated with Temasek Holdings

	Telkomsel was charged a penalty of Rp 15 billion
	The court revoked the decision of KPPU on the instruction to reduce the tariffs
because KPPU did not have the authority to determine the tariffs.

	On May 22, 2008, management is in the process of legal remedy to Indonesian Supreme Court.
h.	On May 12, 2008, Telkomsel was ordered by the court to stand before a trial under
another similar class action lawsuit filed by other subscribers of Telkomsel, Indosat and
Excelcomindo domiciled in various locations against the Parties (Note 50f).
i.	As of May 19, 2008, TII has purchased additional 26,000,000 Scicom shares or
equivalent to 9.81% of TIIs total ownership with transaction value amounted to US$3.42
million (equivalent to Rp.31,891 million).

53.
The recent accounting pronouncement in Indonesia that relevant to the Company and its
subsidiaries are as follow:

| (i) |
| --- |
| In December 2006, the DSAK issued PSAK 50 (Revised 2006), Financial Instruments:
Presentation and Disclosures which amends PSAK 50, Accounting for Investments in Certain
Securities. PSAK 50 (Revised 2006) provides guidance on how to disclose and present
financial instruments in the financial statements and whether a financial instrument is a
financial liability or an equity instrument. This standard applies to the classification of
financial instruments, from the perspective of the issuer, into financial assets, financial
liabilities and equity instruments; the classification of related interest, dividends,
losses and gains; and the circumstances in which financial assets and financial liabilities
should be offset. PSAK 50 (Revised 2006) complements the principles for recognizing and
measuring financial assets and financial liabilities in PSAK 55 (Revised 2006). PSAK 50
(Revised 2006) shall be effective after January 1, 2009. The Company and its subsidiaries
are currently assessing the impact of the application of PSAK 50 (Revised 2006) on the
consolidated financial statements. |

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RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA (continued)

(ii)	PSAK 55 (Revised 2006), Financial Instruments: Recognition and Measurement
	In December 2006, the DSAK issued PSAK 55 (Revised 2006), Financial Instruments:
Recognition and Measurement which amends PSAK 55 (Revised 1999), Accounting for
Derivative Instruments and Hedging Activities. PSAK 55 (Revised 2006) provides guidance on
how to recognize, measure and derecognize financial asset and liability including
derivative instruments. It also provides guidance on the recognition and measurement of
sales and purchase contracts of non-financial items. PSAK 55 (Revised 2006) shall be
effective after January 1, 2009. The Company and its subsidiaries are currently assessing
the impact of the application of PSAK 55 (Revised 2006) on the consolidated financial
statements.
(iii)	PSAK 13 (Revised 2007), Investment Property
	In May 2007, the DSAK issued PSAK 13 (Revised 2007), Investment Property which replaces
PSAK 13, Accounting for Investment. PSAK 13 (Revised 2007) provides guidance on
recognition, measurement at recognition, measurement after recognition, transfer, disposal
and financial statement disclosures regarding investment property. PSAK 13 (Revised 2007)
provides two measurement alternatives, the cost model and fair value model which shall be
consistently applied. PSAK 13 (Revised 2007) shall be effective after January 1, 2008. The
Company and its subsidiaries have decided to use cost model to measure investment property.
(iv)	PSAK 16 (Revised 2007), Property, Plant and Equipment
	In May 2007, the DSAK issued PSAK 16 (Revised 2007), Property, Plant and Equipment which
replaces PSAK 16, Fixed Assets and Other Assets. PSAK 16 (Revised 2007) provides guidance
on recognition, measurement at recognition, measurement after recognition, derecognition
and financial statement disclosures requirements. PSAK 16 (Revised 2007) provides two
measurement alternatives, the cost model and revaluation model which shall be consistently
applied. PSAK 16 (Revised 2007) shall be effective after January 1, 2008. The Company and
its subsidiaries have decided to use cost model to measure property, plant and equipment
(Note 2k).
(v)	PSAK 30 (Revised 2007), Leases
	In June 2007, the DSAK issued PSAK 30 (Revised 2007), Leases which replaces PSAK 30,
Accounting for Leases. PSAK 30 (Revised 2007) provides guidance on how to classify leases
into operating lease and capital lease. PSAK 30 (Revised 2007) also provides guidance on
how to record and disclose operating and capital lease transactions in the financial
statements of lessors and lessees. PSAK 30 (Revised 2007) shall be effective after January
1, 2008. The Company and its subsidiaries have decided to apply PSAK 30 (Revised 2007)
prospectively. The application of PSAK 30 (Revised 2007) change the guidance used to
classify lease into operating lease and capital lease. Due to prospective application of
PSAK 30 (Revised 2007), the balance of any pre-existing capital lease is deemed to have
been properly determined by the Company and its subsidiaries. In relation with the
prospective implementation of PSAK 30 (Revised 2007), since January 1, 2008, lease
transaction that meets the requirement stated in PSAK 30 (Revised 2007) paragraph 10 and
44, will be treated as capital lease by recognizing assets and corresponding
liabilities. The Company and its subsidiaries are currently assessing the impact
of the application of PSAK 30 (Revised 2007) on the consolidated financial statements. The
Company and its subsidiaries are currently assessing the impact of the application of PSAK
30 (Revised 2007) on the consolidated financial statements.

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| 54. |
| --- |
| Certain accounts in the consolidated financial statement for the three months period ended March
31, 2007 has been reclassified to conform with the presentation of accounts of the consolidated
financial statement for the three months period ended March 31, 2008, as follows: |

reclassification		Reclassification		reclassification
Consolidated balance sheet:
Accrued long service awards	602,009		(148,474	)	453,535
Accrued pension and other
post-retirement benefits costs	1,011,304		148,474		1,159,778
Consolidated income statement:
Interconnection revenues	2,790,382		(661,467	)	2,128,915
Interconnection expenses	(661,467	)	661,467

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