PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA TBK

6-K 1 u00417e6vk.htm PT TELEKOMUNIKASI INDONESIA PT TELEKOMUNIKASI INDONESIA PAGEBREAK

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

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

For the month of October, 2009

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 October 30, 2009	By:	/s/ Heri Supriadi
		(Signature)
		Heri Supriadi VP Investor Relations/ Corporate Secretary

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

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2008 AND 2009 AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009

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

SEPTEMBER 30, 2008 AND 2009 AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2009

TABLE OF CONTENTS


Consolidated Financial Statements
Consolidated Balance Sheets	1-3
Consolidated Statements of Income	4
Consolidated
Statements of Changes in Stockholders Equity	5-6
Consolidated Statements of Cash Flows	7-8
Notes to Consolidated Financial Statements	9-127

/TOC

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER 30, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Notes	Rp.	Rp.	US$ (Note 3)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	2c,2e,5,44	7,545,364	7,212,193	746,218
Temporary investments	2c,2f,44,53	273,618	286,648	29,658
Trade receivables	2c,2g,6,37,44
Related parties net of allowance
for doubtful accounts of
Rp.181,774 million in 2008 and
Rp.124,432 million in 2009		393,465	751,997	77,806
Third parties net of allowance for
doubtful accounts of
Rp.1,056,359 million in 2008 and
Rp.1,457,400 million in 2009		2,780,263	3,136,896	324,563
Other receivables net of allowance for
doubtful accounts of
Rp.11,969 million in 2008
and Rp.10,732 million in 2009	2c,2g,44	173,037	118,144	12,224
Inventories net of allowance for
obsolescence of Rp.62,462 million in
2008 and Rp.73,541 million in 2009	2h,7,37	399,916	437,877	45,305
Prepaid expenses	2c,2i,8,44	1,860,933	2,696,294	278,975
Claims for tax refund	38, 53	408,011	216,326	22,382
Prepaid taxes	38, 53	160,549	850,732	88,022
Other current assets	2c,9,44	21,044	34,877	3,609
Total Current Assets		14,016,200	15,741,984	1,628,762
NON-CURRENT ASSETS
Long-term investments net	2f,10	141,559	146,323	15,139
Property, plant and equipment net of
accumulated depreciation of
Rp.59,993,339 million in 2008 and	2k,2l,4,11,
Rp.70,843,414 million in 2009	19,20,23,53	65,940,943	73,922,446	7,648,468
Property, plant and equipment under
Revenue-Sharing Arrangements net
of accumulated depreciation of
Rp.549,620 million in 2008 and
Rp.194,729 million in 2009	2m,12,34,46	570,878	404,275	41,829
Prepaid pension benefit cost	2i,2r,41	697	782	81
Advances and other non-current assets	2c,2k,2o,13,
	29,44,48	1,957,756	2,347,208	242,857
Goodwill and other intangible assets net
of accumulated amortization of
Rp.5,999,184 million in 2008 and	2d,2j,4,
Rp.7,303,266 million in 2009	14,37,53	3,356,763	2,606,678	269,703
Escrow accounts	2c,15,44	43,861	46,236	4,784
Total Non-current Assets		72,012,457	79,473,948	8,222,861
TOTAL ASSETS		86,028,657	95,215,932	9,851,623

*) As restated (Note 53)

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) SEPTEMBER 30, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Notes	Rp.	Rp.	US$ (Note 3)
LIABILITIES AND STOCKHOLDERS
EQUITY
CURRENT LIABILITIES
Trade payables	2c,16,44
Related parties		1,516,110	1,479,657	153,094
Third parties		7,445,795	7,809,197	807,987
Other payables	53	23,353	18,397	1,904
Taxes payable	2s,38	1,105,281	1,922,821	198,948
Dividend payable		2,855,632	405,175	41,922
Accrued expenses	2c,17,35,44	2,874,725	2,896,662	299,706
Unearned income	2q,18	3,135,568	2,703,086	279,678
Advances from customers and suppliers		197,090	235,462	24,362
Short-term bank loans	2c,19,44	53,449	35,800	3,704
Current maturities of long-term liabilities	2c,2l,20,44	6,450,582	8,268,247	855,483
Total Current Liabilities		25,657,585	25,774,504	2,666,788
NON-CURRENT LIABILITIES
Deferred tax liabilities net	2s,38,53	2,923,598	3,304,478	341,901
Unearned income on Revenue-Sharing
Arrangements	2m,12,46	336,534	205,727	21,286
Accrued long service awards	2c,2r,42,44	83,630	165,431	17,117
Accrued
postretirement
health care benefits	2c,2r,43,44	2,645,150	2,019,054	208,904
Accrued pension and other post-
retirement benefits costs	2c,2r,41,44	1,213,422	854,761	88,439
Long-term liabilities net of current
maturities
Obligations under finance leases	2l,11,20	228,380	221,308	22,898
Two-step loans related party	2c,20,21,44	3,468,125	3,256,906	336,979
Notes	2l,20,22		27,000	2,793
Bank loans	2c,20,23,44	6,439,296	11,681,098	1,208,598
Deferred consideration for business
combinations	20,24	1,609,746	432,997	44,801
Total Non-current Liabilities		18,947,881	22,168,760	2,293,716
MINORITY INTEREST	25,53	8,829,928	9,766,000	1,010,450

*) As restated (Note 53)

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) SEPTEMBER 30, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Notes	Rp.		Rp.		US$(Note 3)
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		521,469
Additional paid-in capital	2u,27	1,073,333		1,073,333		111,054
Treasury stock - 480,163,000 shares in
2008 and 490,574,500 shares in 2009	2u,28	(4,202,255	)	(4,264,214	)	(441,202	)
Difference in value arising from
restructuring transactions and
other transactions between
entities under common control	2d,29	270,000		478,000		49,457
Difference due to change of equity in
associated companies	2f	385,595		385,595		39,896
Unrealized holding gain from
available-for-sale securities	2f	(2,596	)	16,127		1,669
Translation adjustment	2f	228,805		244,468		25,294
Difference due to acquisition of
minority interest in subsidiary	1d,2d			(426,358	)	(44,114	)
Retained earnings
Appropriated		10,557,985		15,336,746		1,586,833
Unappropriated		19,242,396		19,622,971		2,030,313
Total Stockholders Equity		32,593,263		37,506,668		3,880,669
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY		86,028,657		95,215,932		9,851,623

*) As restated (Note 53)

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) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009

(Figures in tables are presented in millions of Rupiah and thousands of United States Dollars, except per share and per ADS data)

Notes	Rp.		Rp.		US$ (Note 3)
OPERATING REVENUES
Telephone	2q,30
Fixed lines		7,452,847		6,374,364		659,531
Cellular		18,280,741		21,041,240		2,177,055
Interconnection	2c,2q,31,44
Revenues		9,022,406		7,919,112		819,360
Expenses		(2,383,169	)	(2,179,021	)	(225,455	)
Net		6,639,237		5,740,091		593,905
Data, internet and information
technology services	2q,32,53	10,895,280		12,428,788		1,285,958
Network	2c,2q,33,44,53	741,042		761,716		78,812
Revenue-Sharing Arrangements	2m,12,34,46	267,518		117,849		12,193
Other telecommunications services	2q,53	372,860		650,342		67,288
Total Operating Revenues		44,649,525		47,114,390		4,874,742
OPERATING EXPENSES
Depreciation	2k,2l,2m,
	11,12,13,53	7,883,034		9,202,664		952,164
Personnel	2c,2r,17,35,
	41,42,43,44	6,490,783		5,742,177		594,121
Operations, maintenance and
telecommunication services	2c,2q,36,44	8,787,531		9,883,896		1,022,648
General and administrative	2g,2h,2q,6,
	7,14,37,53	2,732,194		2,836,705		293,503
Marketing	2q	1,577,315		1,494,657		154,646
Total Operating Expenses		27,470,857		29,160,099		3,017,082
OPERATING INCOME		17,178,668		17,954,291		1,857,660
OTHER (EXPENSES) INCOME
Interest income	2c,44	495,233		341,785		35,363
Equity in net (loss) income of
associated companies	2f,10	2,476		(21,320	)	(2,206	)
Interest expense	2c,44	(1,001,438	)	(1,471,769	)	(152,278	)
Gain (loss) on foreign exchange net	2p	(63,806	)	774,784		80,164
Others net		326,769		206,701		21,387
Other expenses net		(240,766	)	(169,819	)	(17,570	)
INCOME BEFORE TAX		16,937,902		17,784,472		1,840,090
TAX (EXPENSE) INCOME	2s,38
Current		(4,987,058	)	(4,597,272	)	(475,662	)
Deferred		165,138		(399,605	)	(41,346	)
		(4,821,920	)	(4,996,877	)	(517,008	)
INCOME BEFORE MINORITY INTEREST
IN NET INCOME OF CONSOLIDATED
SUBSIDIARIES		12,115,982		12,787,595		1,323,082
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARIES net	25	(3,196,094	)	(3,487,133	)	(360,800	)
NET INCOME		8,919,888		9,300,462		962,282
BASIC EARNINGS PER SHARE	2w,39
Net income per share		451.08		472.84		0.04
Net income per ADS
(40 Series B shares per ADS)		18,043.20		18,913.60		1.60

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) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah)


					in value
					arising from
					restructuring
					transactions
					and other		Unrealized
					transactions	Difference	holding
					between	due to change	(loss) gain
			Additional		entities under	of equity	on available-
		Capital	paid-in	Treasury	common	in associated	for-sale		Translation		Retained earnings			Stockholders
		stock	capital	stock	control	companies	securities		adjustment		Appropriated	Unappropriated		equity
Descriptions	Notes	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 loss on
available-for-sale securities	2f							(13,833	)						(13,833	)
Foreign currency translation of
associated company	2f,10									(1,212	)				(1,212	)
Treasury stock acquired at cost	2u,28			(2,025,644	)										(2,025,644	)
Resolved during the Annual General
Meeting of Stockholders on
June 20, 2008
Declaration of cash dividend	2v,40												(8,034,515	)	(8,034,515	)
Appropriation for general reserve	40											3,857,106	(3,857,106	)
Net income for the period													8,919,888		8,919,888
Balance, September 30, 2008		5,040,000	1,073,333	(4,202,255	)	270,000	385,595	(2,596	)	228,805		10,557,985	19,242,396		32,593,263

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) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah)


					in value
					arising from
					restructuring
					transactions
					and other		Unrealized				Difference
					transactions	Difference	holding				due to
					between	due to change	gain (loss)				acquisition
			Additional		entities under	of equity	on available-				of minority
		Capital	paid-in	Treasury	common	in associated	for-sale		Translation		interest		Retained earnings			Stockholders'
		stock	capital	stock	control	companies	securities		adjustment		in subsidiary		Appropriated	Unappropriated		equity
Descriptions	Notes	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.		Rp.		Rp.		Rp.	Rp.		Rp.
Balance, January 1, 2009		5,040,000	1,073,333	(4,264,073	)	360,000	385,595	(19,066	)	238,319				10,557,985	20,941,978		34,314,071
Unrealized holding gain on
available-for-sale securities	2f							35,193									35,193
Foreign currency translation
of associated companies	2f,10									(1,610	)						(1,610	)
Foreign currency translation
of subsidiaries	1d,2b									7,759							7,759
49% acquisition of Infomedia	1d,2d											(426,358	)				(426,358	)
Treasury stock
acquired at cost	2u,28			(141	)												(141	)
Compensation for the early
termination of exclusive
rights	29					118,000											118,000
Resolved during the Annual
General Meeting of
Stockholders on
June 12, 2009
Declaration of cash
dividend	2v,40														(5,840,708	)	(5,840,708	)
Appropriation for
general reserve	40													4,778,761	(4,778,761	)
Net income for the period															9,300,462		9,300,462
Balance, September 30, 2009		5,040,000	1,073,333	(4,264,214	)	478,000	385,595	16,127		244,468		(426,358	)	15,336,746	19,622,971		37,506,668

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) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009 (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	6,798,282		5,937,912		614,373
Cellular	19,156,910		20,732,360		2,145,097
Interconnection net	7,005,844		5,638,314		583,374
Data, internet and information technology services	10,964,969		12,417,186		1,284,758
Other services	1,054,964		1,454,700		150,512
Total cash receipts from operating revenues	44,980,969		46,180,472		4,778,114
Cash payments for operating expenses	(18,840,674	)	(19,707,171	)	(2,039,024	)
Cash receipt from customers	55,640		94,280		9,754
Cash generated from operations	26,195,935		26,567,581		2,748,844
Interest received	486,231		358,088		37,050
Interest paid	(887,720	)	(1,416,526	)	(146,562	)
Income tax paid	(6,769,770	)	(3,246,756	)	(335,929	)
Net cash provided by operating activities	19,024,676		22,262,387		2,303,403
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of temporary investments
and maturity of time deposits	18,256		38,148		3,947
Purchases of temporary investments
and placements in time deposits	(135,298	)	(22,559	)	(2,334	)
Proceeds from sale of property, plant and equipment	9,919		6,088		630
Proceeds from insurance claims	11,159
Acquisition of property, plant and equipment	(11,855,305	)	(15,056,495	)	(1,557,837	)
Increase in advances for purchases of
property, plant and equipment	(554,005	)	(1,054,568	)	(109,112	)
(Increase) decrease in advances and other assets	141,261		(39,031	)	(4,039	)
Business combinations, net of cash paid	(287,403	)
Acquisition of intangible assets	(21,630	)	(462,192	)	(47,821	)
Acquisition of long-term investments	(28,249	)
Acquisition of minority interest of subsidiary			(598,000	)	(61,873	)
Cash dividends received	1,020		822		85
Advance for acquisition of long term investments	(674	)
Decrease (increase) in escrow accounts	(42,458	)	53,145		5,499
Net cash used in investing activities	(12,743,407	)	(17,134,642	)	(1,772,855	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid	(6,105,963	)	(5,840,708	)	(604,315	)
Cash dividends paid to minority stockholders of
subsidiaries	(2,802,945	)	(2,829,472	)	(292,755	)
Proceeds from short-term borrowings	29,235		83,023		8,590
Proceeds from medium-term notes			30,000		3,104
Repayment of short-term borrowings	(549,746	)	(91,929	)	(9,512	)
Proceeds from long-term borrowings	6,038,695		9,525,243		985,540
Repayment of long-term borrowings	(3,252,317	)	(5,096,735	)	(527,339	)
Payment for purchases of treasury stock	(2,025,644	)
Repayment of promissory notes	(200,813	)	(123,927	)	(12,822	)
Repayment of obligations under finance leases	(32,188	)	(209,954	)	(21,723	)
Net cash used in financing activities	(8,901,686	)	(4,554,459	)	(471,232	)

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) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Rp.		Rp.		US$ (Note 3)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS	(2,620,417	)	573,286		59,316
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS	24,990		(251,038	)	(25,974	)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR	10,140,791		6,889,945		712,876
CASH AND CASH EQUIVALENTS AT END OF PERIOD	7,545,364		7,212,193		746,218
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities:
Acquisition of property, plant and equipment
through incurrence of payables	6,988,865		7,153,267		777,369
Acquisition of property, plant and equipment
through finance leases	82,001		15,421		1,596

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 (UNAUDITED) SEPTEMBER 30, 2008 AND 2009 AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009 (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 No. 5 dated January 17, 1992, Supplement No. 210. The Articles
of Association have been amended several times, the latest amendments were to comply with
Law No. 40/2007 of the Limited Liability Companies, Law No. 19/2003 of the National
State-owned Companies and Badan Pengawas Pasar Modal dan Lembaga Keuangan Indonesia
(BAPEPAM-LK) Regulation No. IX.J.1 of Main Provisions of the Articles of Association of
Company that Make an Equity Public Offering and Public Company and to add the Companys
purposes and objectives based on notarial deed No. 27 dated July 15, 2008 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.
AHU.46312.AH.01.02/2008 dated July 31, 2008 and was published in State Gazette of the
Republic of Indonesia No. 84 dated October 17, 2008, Supplement of the Republic of Indonesia
No. 20155. |
| In accordance with Article 3 of the Companys Articles of Association, the scope of its
activities is to provide telecommunication network and services, informatics and
optimization of the Companys resources 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. | Providing payment transactions and money transferring services through
telecommunications and information networks. |
| iv. | Performing activities and other undertakings in connection with optimization of
the Companys resources, among others the utilization of the Companys property, plant
and equipment and moving assets, information systems, education and training, and
repairs and maintenance facilities. |

The Companys head office is located at Jalan Japati No. 1, Bandung, West Java.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) SEPTEMBER 30, 2008 AND 2009, AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah, unless otherwise stated)

GENERAL (continued)

| a. |
| --- |
| 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 arrangement 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. |
| 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.

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GENERAL (continued)

| a. |
| --- |
| 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. |

b. Companys Board of Commissioners, Directors and employees

| 1. |
| --- |
| Based on resolutions made at (i) the Annual General Meeting (AGM) of Stockholders of
the Company dated July 15, 2008 as covered by notarial deed No. 27 of A. Partomuan
Pohan, S.H., LLM.,; (ii) the Extraordinary General Meeting (EGM) of Stockholders of
the Company dated September 19, 2008 as covered by notarial deed No. 16 of the same
notary; and (iii) AGM of Stockholders of the Company dated June 12, 2009 as covered by
the minutes of which have been summarized by deed No. 215 of the same notary, the
composition of the Companys Board of Commissioners and Directors as of September 30,
2008 and 2009, respectively, were as follows: |

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GENERAL (continued)

b. Companys Board of Commissioners, Directors and employees (continued)

Board of Commissioners and Directors (continued)

	2008	2009
President Commissioner	Tanri Abeng	Tanri Abeng
Commissioner	Bobby A.A Nazief	Bobby A.A Nazief
Commissioner	Mahmuddin Yasin	Mahmuddin Yasin
Independent Commissioner	Arif Arryman	Arif Arryman
Independent Commissioner	Petrus Sartono	Petrus Sartono
President Director	Rinaldi Firmansyah	Rinaldi Firmansyah
Vice President Director/ Chief
Operating Officer (COO)	** (see Note below)	* (see Note below)
Director of Finance	Sudiro Asno	Sudiro Asno
Director of Network and Solution	Ermady Dahlan	Ermady Dahlan
Director of Enterprise and
Wholesale	Arief Yahya	Arief Yahya
Director of Consumer	I Nyoman Gede Wiryanata	I Nyoman Gede Wiryanata
Director of Compliance and
Risk Management	Prasetio	Prasetio
Chief Information Technology
Officer	Indra Utoyo	Indra Utoyo
Director of Human Capital
and General Affairs	Faisal Syam	Faisal Syam

*	COO is held by Director of Network and Solution in 2009
**	Position is vacant in 2008

| Based on the EGM of Stockholders of the Company dated September 19, 2008, the Companys
stockholders agreed to appoint Bobby A.A. Nazief as a member of the Companys Board of
Commissioners for filling in the vacant position with a five year term and to extend the
term of service of the Companys Board of Commissioners whose members were elected in
the EGM of Stockholders of the Company dated March 10, 2004, which should expire on
March 10, 2009, to be extended on the date of the AGM of Stockholders of the Company in
2009. |
| --- |
| Based on AGM of Stockholders of the Company dated June 12, 2009, the Companys
stockholders agreed to extend the term of service of Tanri Abeng, Arif Arryman and
Petrus Sartono up to the next AGM of Stockholders of the Company. |

2.
As of September 30, 2008 and 2009, the Company and its subsidiaries had 34,426 and
29,091 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 the Companys 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
of the Company on April 16, 1999, the Companys stockholders resolved to increase the
Companys issued share capital by distribution of 746,666,640 bonus shares through the
capitalization of certain additional paid-in capital, which were distributed to the
Companys 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. |

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GENERAL (continued)

| c. |
| --- |
| At the AGM of Stockholders of the Company dated July 30, 2004, as covered by notarial deed
No. 26 of A. Partomuan Pohan, S.H., LLM., the Companys 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. |
| Based on EGM of Stockholders of the Company on December 21, 2005, AGM of Stockholders of the
Company on June 29, 2007 and AGM of Stockholders of the Company on June 20, 2008, the
Companys stockholders approved the phase I, II and III plan, respectively, to repurchase
the Companys issued Series B shares (Note 28). |
| As of September 30, 2009, all of the Companys Series B shares were listed on the IDX and
ADS shares were listed on the NYSE and LSE (Note 26). |

| d. |
| --- |
| As of September 30, 2008 and 2009, the Company has consolidated the following direct or
indirectly owned subsidiaries which it controls as a result of majority ownership (Notes 2b
and 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	2008	2009	2008	2009
PT Pramindo Ikat Nusantara
( Pramindo ), Jakarta, Indonesia	Telecommunication
construction and
services/August
15, 2002	1995	100	100	1,212,661	1,082,296
PT Telekomunikasi
Indonesia International
( TII ) (formerly PT Aria
West International
( AWI )), Jakarta,
Indonesia	Telecommunication/July 31, 2003	1995	100	100	1,367,521	709,892
PT Multimedia Nusantara
( Metra ), Jakarta,
Indonesia	Multimedia
telecommunication
services/May 9, 2003	1998	100	100	757,659	1,526,850
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	166,773	176,534

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GENERAL (continued)

d. Subsidiaries (continued)

(i) Direct subsidiaries: (continued)

	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	2008	2009	2008	2009
PT Dayamitra Telekomunikasi ( Dayamitra ), Jakarta, Indonesia	Telecommunication/ May 17, 2001	1995	100	100	430,436	393,363
PT Indonusa Telemedia ( Indonusa ), Jakarta, Indonesia	Pay television and content services/ May
7, 1997	1997	98.75	100 (including
through 1.25%
ownership by
Metra)	115,593	181,231
PT Telekomunikasi Selular ( Telkomsel ), Jakarta, Indonesia	Telecomunication provides
telecommunication facilities and mobile
cellular services using Global System
for Mobile Communication (GSM)
technology/ May 26, 1995	1995	65	65	51,020,592	57,095,528
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	4,910	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	100 (including
through 49%
ownership by
Metra)	516,645	523,107

(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	2008	2009	2008	2009
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)	1,849	1,516

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GENERAL (continued)

d. Subsidiaries (continued)

(ii) Indirect subsidiaries : (continued)

	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	2008	2009	2008	2009
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)	29	24
PT Balebat Dedikasi Prima ( Balebat ) , Bogor, Indonesia	Printing/October 1, 2003	2000	33.15 (through 65%
ownership by Infomedia)	65 (through 65% ownership by Infomedia)	77,142	83,269
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)	8,669	8,904
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)	23,494	81,798
PT Telekomunikasi
Indonesia
International Pte.
Ltd., Singapura	Telecommunication/December 6, 2007	2008	100 (through 100% ownership by TII)	100 (through 100% ownership by TII)		209,538
PT Sigma Cipta Caraka ( Sigma ), Tangerang, Indonesia	Information technology
service sytem
implementation and
integration service,
outsourcing and
software lisense
maintenance/May 1, 1987	1988	80 (through 80% ownership by Metra)	80 (through 80% ownership by Metra)	286,298	415,417

| (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 dated March 14, 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. |
| On December 31, 2008, pursuant to Third Amendment to Cooperation Agreement between the
Company and TII No. K.Tel.665/HK.820/UTA-00/2008 regarding Management and Development of
International Business, the Company has agreed to amend the transfer of international
telecommunications business from the Company to become management and development of
international business in the form of service operator partnership scheme. |

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GENERAL (continued)

d. Subsidiaries (continued)

| (b) |
| --- |
| Based on the Circular Meeting of Stockholders of Metra on December 13, 2007, Metras
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 the 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 of the 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 (Note 4). |
| On January 21, 2008, the Company paid Rp.350,000 million for additional capital to Metra
pursuant to Circular Meeting of Stockholders of Metra on December 13, 2007. The
acquisition of Sigmas transaction was completed through the signing of an Amendment to
the Sales and Purchase of Shares Agreement on February 21, 2008 which became effective
from February 22, 2008 (the closing date). |
| On July 3, 2008, based on notarial deed No. 6 of Wahyu Nurani, S.H. dated July 3, 2008,
Metra entered into a Commitment of Sales and Purchase of Shares Agreement (Perjanjian
Pengikatan Jual Beli Saham or PPJB) to purchase 6,000,000 Indonusas shares or
equivalent to 1.25% of Indonusas total ownership with a transaction value of Rp.6,600
million from PT Datakom Asia (Datakom). |
| On July 17, 2008, based on notarial deed No. 133 of Sutjipto, S.H., M.Kn. dated July 17,
2008, Metra obtained funding for the purchase through equity call from the addition of
Metras issued capital from Rp.412,250 million to Rp.418,850 million. On July 17, 2008,
based on notarial deed No. 134 of Sutjipto, S.H., M.Kn. dated July 17, 2008, Metra
exercised the sales and purchase of share transaction (Note 1d.c). |
| Based on Circular Meeting of Stockholders of Metra on March 23, 2009, as covered by
notarial deed No. 64 of Sutjipto, S.H., M.Kn., dated April 16, 2009, Metras
stockholders agreed increase its authorized capital from Rp.418,850 million to
Rp.485,679 million with a par value of Rp.10,000 per share. The authorized capital of
Rp.34,829 million was paid by conversion on the Companys receivable to Metra. |
| On May 29, 2009, Metra entered into a CSPA with PT Elnusa Tbk (Elnusa) for the
transaction of 49% shares of Infomedia from Elnusa (Note 1d.e) |
| Based on Circular Meeting of Stockholders of Metra on June 24, 2009 as covered by
notarial deed No. 8 of Wahyu Nurani, S.H., dated July 24, 2009, Metras stockholders
agreed as follows: (1) increase its authorized capital from Rp.1,000,000 million to
Rp.2,000,000 million consisting of into 200,000,000 shares, and (2) increase its issued
and fully paid capital from Rp.485,679 million to Rp.1,084,179 million with nominal
value of Rp.10,000 per share that will be issued and fully paid by Metra. |

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GENERAL (continued)

d. Subsidiaries (continued)

| (b) |
| --- |
| On June 30, 2009, based on notarial deed No. 25 of Sjaaf De Carya Siregar, S.H. dated
June 30, 2009, Metra entered Sales Purchase of Shares Agreement (Akta Jual Beli Saham
or AJB) to purchase 205,800,000 Infomedias shares or equivalent to 49% Infomedias
total ownership with a transaction value of Rp.598,000 million from Elnusa. On July 1,
2009, Metra has paid the transaction of purchasing 49% of Infomedias share amounted to
Rp.598,000 million to Elnusa (Note 1d.e). |
| On the transaction date, the Company was the majority shareholder of Infomedia,
therefore the transaction represent acquisition of minority interest in subsidiary. The
difference between acquisition cost and minority historical cost is recorded as
Difference due to acquisition of minority interest in subsidiary (Note 2d) on the
equity account. |

| (c) |
| --- |
| At the EGM of Stockholders of Indonusa on May 9, 2007, Indonusas stockholders resolved
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 consisting of 20,000,000 shares
to Rp.700,000 million consisting of 1,400,000,000 shares, as amended by the Decision of
Circular Meeting of Stockholders of Indonusa on December 28, 2007. The change increased
Companys paid-in capital from Rp.66,500 million to Rp.237,713 million through payment
and a 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. |
| --- | --- |
| | 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 of shares of stock of Indonusa. |

| Pursuant to the payment for the additional share capital and the debt swap to equity,
the Companys ownership in Indonusa has increased from 95.68% to 98.75%. |
| --- |
| Based on Circular Meeting of Stockholders of Indonusa on July 17, 2008 as covered by
notarial deed No. 64 of Dr. Wiratni Ahmadi, S.H. dated August 25, 2008, Indonusas
stockholders has agreed to transfer Datakoms ownership in Indonusa of 6,000,000 shares
to Metra (Note 1d.b). |
| Pursuant to the transfer of the ownership, the Companys ownership in Indonusa has
increased to 100% (including through 1.25% ownership by Metra). |

| (d) |
| --- |
| On February 14, 2006, Telkomsel was granted the International Mobile
Telecommunications-2000 (IMT-2000) or 3 rd Generation technology (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 48d.ii). Telkomsel started its commercial
services for 3G in September 2006. |

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GENERAL (continued)

d. Subsidiaries (continued)

| (d) |
| --- |
| 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. |
| Based on Decision Letter No. 213/DIRJEN/2008 dated August 4, 2008, the Ministry of
Communication and Information Technology through the DGPT granted Telkomsel a principle
license to provide Internet Telephony Services (Voice over Internet Protocol or VoIP)
which provision is subject to an operation acceptance test within one year. Based on
Decision Letter No. 226/DIRJEN/2009 dated September 24, 2009, Telkomsel has obtained the
operating license for providing VoIP services in certain areas. |
| Based on Bank Indonesias (BI) letter No. 10/632/DASP dated August 12, 2008, Telkomsel
has been registered as a Money Remitter with register No. 10/12/DASP/10 dated August 12,
2008 to provide remittance service. |
| Based on Decision Letter No. 268/KEP/M.KOMINFO/9/2009 of the Minister of Communication
and Information Technology dated September 1, 2009, the Government granted Telkomsel an
additional IMT-2000 license in the 2.1 GHz frequency bandwidth for a 10 year period
(Note 48d.ii). |

| (d) |
| --- |
| Based on Circular Meeting of Stockholders of Infomedia on June 5, 2009 as covered by
notarial deed No. 10 of Sjaaf De Carya Siregar, S.H. dated June 5, 2009, Infomedias
stockholders agreed as follows: (1) capitalize part of the retained earning in form of
the cash dividend; (2) increase its authorized capital from Rp.100,000 million to
Rp.500,000 million that divided into 1,000,000 shares and (3) increase its issued and
fully paid capital from Rp.40,000 million to Rp.210,000 million consist of 420,000,000
shares. |
| Based on AJB between Elnusa and Metra on June 30, 2009 as covered by notarial deed No.
25 of Sjaaf De Carya Siregar, S.H. dated June 30, 2009, all parties has agreed to
transfer the Elnusas ownership in Infomedia of 205,800,000 shares to Metra (Note 1d.b). |

| (e) |
| --- |
| On July 7, 2009, based on the MoJHRs Decision Letter No. AHU-32154.AH.01.02/2009 to PIN
concerning the amandmend of Articles of Association regarding the changes of PINs head
office from Medan to Jakarta. |

| (f) |
| --- |
| On August 18, 2009, Dayamitra signed a CSPA with PT Solusindo Kreasi Pratamas
(Solusindo) stockholders to acquire 66.7% of outstanding common stock of Solusindo at
the closing date and subsequently to subscribe shares issued by Solusindo at issuance
date to obtain 80% of ownership for a maximum total amount of Rp624,366 million. |

e.
The consolidated financial statements were authorized for issue by the Board of Directors on
October 28, 2009.

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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. |
| --- |
| 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. |
| --- |
| 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 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. |
| --- |
| 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 (Pernyataan Standar Akuntansi Keuangan or PSAK) 7, Related Party Disclosures. |

| d. |
| --- |
| 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, except longer
period but not more than twenty years can be justified. |
| 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. |
| --- |
| 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 consolidated statement of
income when the common control relationship has ceased. |
| The difference between the consideration paid and the carrying amount of the minority
interest debited is recognized directly in equity and reported as Difference due to
acquisition of minority interest in subsidiary (Note 1d.b). |

e.
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 period 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. |
| --- |
| 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. |
| --- |
| 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 period. |

| 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. |
| --- |
| 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. |
| --- |
| Since January 1, 2009, the Company and its subsidiaries has adopted PSAK 14 (Revised 2008),
Inventories, which became effective for financial statement periods beginning on or after
January 1, 2009 and is applied prospectively. |
| 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 cards, RUIM cards
and prepaid voucher blanks, and the specific-identification method for modules. |
| The amount of any write-down of inventories to net realizable value and all losses of
inventories shall be recognized as an expense in the period the write-down or loss occurs.
The amount of any reversal of any write-down of inventories, arising from an increase in net
realizable value, shall be recognized as a reduction in the amount of inventories recognized
as an expense in the period in which the reversal occurs. |
| Allowance for obsolescence is primarily based on the estimated forecast of future usage of
these items. |

i.
Prepaid expenses are amortized over their future beneficial periods using the straight-line
method.

| j. |
| --- |
| Intangible assets comprised of intangible assets from subsidiaries or business acquisition,
licenses and computer software. 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 assets. When the carrying amount of
an asset exceeds its estimated recoverable amount, the asset is written-down to its
estimated recoverable amount. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

| j. |
| --- |
| In 2006, Telkomsel was granted the right to operate the 3G license (Note 14.iii). 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 (Note 48d.ii). 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. |
| Based on 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. Management evaluates its plan to continue to use the
license on an annual basis. |

| k. |
| --- |
| Since January 1, 2008, the Company and its subsidiaries has adopted PSAK 16 (Revised 2007),
Property, Plant and Equipment (PSAK 16R), which became effective for financial statement
periods beginning on or after January 1, 2008 and is applied prospectively. |
| According to PSAK 16R, an entity should choose either the cost model or the revaluation
model in measuring the costs of the assets. The Company has decided to use the cost model.
Further, the cost of the assets include: (a) purchase price, (b) any costs directly
attributable to bringing the asset to its location and condition and (c) the initial
estimate of the costs of dismantling and removing the item and restoring the site on which
it is located. Each part of an item of property, plant and equipment with a cost that is
significant in relation to the total cost of the item shall be depreciated separately. The
residual value and the useful life of an asset should be reviewed at least at each financial
year-end. |
| 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: |

Buildings	20
Leasehold improvements	3-7
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	5-25
Power supply	3-10
Data processing equipment	3-10
Other telecommunications peripherals	5
Office equipment	2-5
Vehicles	5-8
Other equipment	5

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

k.	Property, plant and equipment direct acquisitions (continued)
	Pursuant to PSAK 16R, starting January 1, 2008, the Company has changed the estimated useful
lives of fiber optic (included in cable network assets) from 15 years to 25 years. The
Company charged the impact of the changes in the estimated useful lives to the current
period consolidated financial statements as it is not considered material.
	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.
	Spare parts and servicing equipment are carried as inventory and recognized in profit or
loss as consumed. Major spare parts and stand-by equipment that are expected to be used more
than 12 months are recorded as part of property, plant and equipment.
	When assets are retired or otherwise disposed of, their cost 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.
	Certain computer hardware can not be used without the availability of certain computer
software. In such circumstance, the computer software is recorded as part of the computer
hardware. If any computer software is independent from its computer hardware, it shall be
recorded as part of intangible assets.
	The cost of maintenance and repairs is charged to statements of income as incurred,
significant renewals and betterments are capitalized.
	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
period. 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 finance leases
	Since January 1, 2008, the Company and its subsidiaries has adopted PSAK 30 (Revised 2007),
Lease (PSAK 30R), which became effective for financial statement periods beginning on or
after January 1, 2008.
	Based on PSAK 30R, a lease is classified into finance lease or operating lease based on the
substance not the form of the contract. Property, plant and equipment under finance lease is
recognized if the lease transfers substantially all the risks and rewards incidental to
ownership. Statement of Financial Accounting Standards Interpretation (Interpretasi
Pernyataan Standar Akuntansi Keuangan or ISAK) 8, Determining Whether an Arrangement
Contains a Lease and Further Discussion on Transitional Provisions of PSAK 30 (Revised
2007), requires the Company and its subsidiaries to apply PSAK 30R retrospectively to all
lease transactions since the commencing dates of the related agreement or prospectively as
if the standard applied since the beginning of reporting periods. The Company has decided to
select the prospective application.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

l.	Property, plant and equipment under finance leases (continued)
	Considering that the impact of application of the standard to 2006 and 2007 is
insignificant, the Company charged the cumulative effect to the 2008 financial statements.
	Finance leases shall be recognized as assets and liabilities in the balance sheets as the
amounts equal to the fair value of the leased property or, if lower, the present value of
the minimum lease payments. Any initial direct costs of the Company and its subsidiaries are
added to the amount recognized as an assets.
	Minimum lease payments shall be apportioned between the finance charge and the reduction of
the outstanding liability. The finance charge shall be allocated to each period during the
lease term so as to produce a constant periodic rate of interest on the remaining balance of
the liability. Contingent rents shall be charged as expenses in the periods in which they
are incurred.
	Leased assets are depreciated using the same method over the shorter of the lease term and
their economic useful life.
	Leasing arrangements that do not meet the above criteria are accounted for as operating
leases for which payments are charged as an expense on the straight-line basis over the
period of expected benefit.
m.	Revenue-Sharing Arrangements (RSA)
	Revenues from RSA are recognized based on the 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.
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
period.
	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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

n.	KSO (continued)
	Under PSAK 39, Accounting for Joint Operation Schemes, which supersedes 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.
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:

2008		2009
Buy	Sell	Buy	Sell
United States Dollars (US$) 1	9,425	9,435	9,660	9,670
Euro1	13,546	13,561	14,135	14,150
Yen1	89.91	90.02	107.98	108.11

The resulting foreign exchange gains or losses, realized and unrealized, are credited or charged to consolidated statement of income of the current period, 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. |
| --- |
| 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. Monthly subscription charges are recognized as revenues
when incurred by subscribers. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q. Revenue and expense recognition (continued)

ii.
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 cards 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 and total of successful calls
made and the value added services used 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, internet and information technology services 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 the installation.
	Revenues from sales, installation and implementation of computer software and hardware,
computer data network installation service and installation are recognized when the
goods rendered to customers or installation takes place.
	Revenue from computer software development service is recognised using the percentage of
completion method.
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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q. Revenue and expense recognition (continued)

vi.	Other telecommunications services revenues
	Revenues from other telecommunications services consist of sales of other
telecommunication services or goods. Revenues are recognized upon completion of services
or delivery of goods to customers.
vii.	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 considering currently there is no deep
market for high quality corporate bonds 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) and Long Service Leave (LSL)
	Employees are entitled to receive certain cash awards or certain number of days leave
benefits based on length of service requirements. LSA are either paid at the time the
employees reach certain anniversary dates during employment, or at the time of
termination. LSL is either certain number of days leave benefit or cash, subject to
approval by management, provided to employee who has met the requisite number of years
of service and with a certain minimum age.
	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 and LSL is calculated by an independent actuary using
the projected unit credit method.

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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 forward, to the
extent their future realization is probable. Deferred tax assets and liabilities are
measured using enacted tax rates and tax laws 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 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. |
| | Current tax assets and liabilities are measured at the amount expected to be recovered or
paid using the tax rates and tax laws that have been enacted at each reporting date. |
| | 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 period. 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.9,665 to US$1 as published by Reuters on September 30, 2009. 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.	ACQUISITIONS OF SIGMA
	On February 21, 2008, Metra and Sigmas stockholders, PT Sigma Citra Harmoni (SCH) and
Trozenin Management Plc signed an Amendment to the Sales and Purchase of Shares Agreement which
authorized Metra to acquire 80% of the outstanding common stock of Sigma for US$35.2 million or
equivalent to Rp.331,052 million, which became effective from February 22, 2008 (the closing
date) (Note 1d.b).
	Sigma is an Information Technology (IT) Services company that provides software for banking,
multi finance and manufacturing companies. Through the acquisition, the Company started to
broaden its services to adjacent industries especially IT services by combining Sigmas
expertise and the Companys corporate customer base. Goodwill in respect of the acquisition
comprises principally the fair value of the skills and expertise of the acquired companys
workforce.
	Metra and SCH have agreed to support Sigma in achieving an IPO in 24 months from closing date.
Pursuant to the agreement, SCH, which holds the remaining 20% ownership in Sigma, has an put
option requiring Metra to purchase the minority. The option price is the higher of the
transacted price per share indexed to interest rates and fair value based on an independent
appraisal. The option is valid for 24 months or sooner if an IPO takes place.
	The acquisition of Sigma has been accounted for using the purchase method of accounting, which
purchase price were allocated to fair value of the acquired assets and assumed liabilities. The
allocation of the acquisition cost was as follows:


The assets and liabilities arising from the acquisition are as follows:
Current assets	150,461
Property, plant and equipments	86,886
Other non-current assets	29,686
Intangible assets	189,405
Current liabilities	(75,347	)
Long-term liabilities	(37,570	)
Deferred tax liabilities	(54,636	)
Minority interests	(57,777	)
Fair value of net assets acquired	231,108
Goodwill	99,944
Total purchase consideration	331,052
Less:
Cash and cash equivalents in subsidiary acquired	(43,649	)
Cash outflow from acquisition	287,403

*) As restated (Note 53)

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4.	ACQUISITIONS OF SIGMA (continued)
	Metra acquired control of Sigma on February 22, 2008 and the valuation was performed by an
independent appraisal using the balance as of February 28, 2008, being the nearest convenient
balance sheet date. The Companys consolidated results of operations have included the operating
results of Sigma since March 1, 2008. The intangible assets represent long-term customer
contracts and relationships, software and trademark (Note 14).
5.	CASH AND CASH EQUIVALENTS

Cash on hand	37,212	29,548
Cash in banks
Related parties
Rupiah
PT Bank Mandiri (Persero) Tbk (Bank Mandiri)	142,741	248,023
PT Bank Negara Indonesia (Persero) Tbk (BNI)	149,229	211,441
PT Bank Rakyat Indonesia (Persero) Tbk (BRI)	10,183	15,335
Bank Syariah Mandiri (BSM)	34	189
PT Bank Pos Nusantara	132	96
PT Bank Tabungan Negara (Persero) (BTN)	15	35
	302,334	475,119
Foreign currencies
Bank Mandiri	65,251	257,430
BNI	18,483	32,634
BRI	682	1,032
BSM	30	35
	84,446	291,131
Sub-total	386,780	766,250
Third parties
Rupiah
ABN AMRO Bank (AAB)	94,416	90,974
Deutsche Bank AG (DB)	40,876	17,042
PT Bank Central Asia Tbk (BCA)	22,993	10,665
PT Bank Bukopin Tbk (Bank Bukopin)	7,085	3,440
PT Bank CIMB
Niaga Tbk (Bank CIMB Niaga)
(formerly PT Bank Niaga Tbk and PT Bank
Lippo Tbk)	5,222	2,916
Citibank, N.A. (Citibank)	11,636	365
PT Bank DKI	2,077	12
PT Bank Ekonomi Raharja Tbk (Bank Ekonomi)	3,790
Others (each below Rp.1 billion)	1,721	2,009
	189,816	127,423

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CASH AND CASH EQUIVALENTS (continued)


Cash in banks (continued)
Third parties (continued)
Foreign currencies
The Hongkong and Shanghai Banking
Corporation Ltd. (HSBC)	9	12,969
DB	12,979	10,843
Citibank	8,878	9,101
Bank Ekonomi	3,137	4,356
AAB	42,368	202
Others (each below Rp.1 billion)	547	701
	67,918	38,172
Sub-total	257,734	165,595
Total cash in banks	644,514	931,845
Time deposits
Related parties
Rupiah
BNI	1,857,597	1,578,404
Bank Mandiri	339,886	574,701
BRI	1,383,025	350,065
BTN	195,725	140,000
BSM		1,000
	3,776,233	2,644,170
Foreign currencies
BNI	126,256	779,908
BRI	140,670	518,742
Bank Mandiri	65,845
	332,771	1,298,650
Sub-total	4,109,004	3,942,820
Third parties
Rupiah
BCA		768,502
PT Bank Pembangunan Daerah Jawa Barat
dan Banten (Bank Jabar)	183,060	310,560
Bank Bukopin	219,685	190,455
PT Bank Muamalat Indonesia (Bank Muamalat)	93,550	112,000
Bank CIMB Niaga	124,407	85,100
PT Bank Permata Tbk	10,000	55,000
PT Bank Mega Tbk (Bank Mega)	167,945	45,000
PT Bank Internasional Indonesia Tbk (BII)	90,000	35,000
PT Bank Danamon Indonesia Tbk
(Bank Danamon)	49,315	35,000
PT Pan Indonesia Bank Tbk	60,000	30,000

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5. CASH AND CASH EQUIVALENTS (continued)


Time deposits (continued)
Third parties (continued)
Rupiah (continued)
PT Bank Century Tbk	120,000	15,000
DB		14,200
PT Bank Tabungan Pensiunan Nasional Tbk	45,053	3,000
PT Bank Syariah Mega Indonesia
(Bank Syariah Mega)	5,000	300
PT Bank DBS Indonesia (DBS)	375,970
PT Bank Victoria International Tbk	85,000
PT Bank Bumiputera Indonesia Tbk	40,000
PT Bank Artha Graha Internasional Tbk	35,000
PT Bank OCBC NISP Tbk
(formerly PT Bank NISP Tbk)	20,000
Bank Ekonomi	8,251
	1,732,236	1,699,117
Foreign currencies
BCA		597,213
Bank Muamalat	197,925	9,660
HSBC		1,990
DBS	320,473
Standard Chartered Bank (SCB)	275,230
DB	193,896
Bank Jabar	18,850
Bank Niaga	14,138
Bank Bukopin	1,886
	1,022,398	608,863
Sub-total	2,754,634	2,307,980
Total time deposits	6,863,638	6,250,800
Grand Total	7,545,364	7,212,913

Interest rates per annum on time deposits are as follows:

Rupiah	2.25% - 12.80 %	5.00% - 13,50 %
Foreign currencies	1.00% - 5.25 %	0.05% - 4,75 %

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

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	501,175		717,142
Indosat			60,546
CSM	41,639		59,438
PT Patra Telekomunikasi Indonesia (Patrakom)	16,614		18,353
PSN	342		9,525
PT Graha Informatika Nusantara (Gratika)	3,497		2,462
Koperasi Pegawai Telkom (Kopegtel)	597		2,392
PT Aplikanusa Lintasarta (Lintasarta)	3,746		1,750
Others	7,629		4,821
Total	575,239		876,429
Allowance for doubtful accounts	(181,774	)	(124,432	)
Net	393,465		751,997

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	3,731,282		4,108,632
Overseas international carriers	105,340		485,664
Total	3,836,622		4,594,296
Allowance for doubtful accounts	(1,056,359	)	(1,457,400	)
Net	2,780,263		3,136,896

b. By age

(i) Related parties

Up to 6 months	499,112		628,398
7 to 12 months	33,278		35,777
13 to 24 months	29,131		17,049
More than 24 months	13,718		195,205
Total	575,239		876,429
Allowance for doubtful accounts	(181,774	)	(124,432	)
Net	393,465		751,997

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TRADE RECEIVABLES (continued)

b. By age (continued)

(ii) Third parties

Up to 3 months	2,808,979		1,825,272
More than 3 months	1,027,643		2,769,024
Total	3,836,622		4,594,296
Allowance for doubtful accounts	(1,056,359	)	(1,457,400	)
Net	2,780,263		3,136,896

c. By currency

(i) Related parties

Rupiah	566,203		848,556
U.S. Dollars	9,036		27,873
Total	575,239		876,429
Allowance for doubtful accounts	(181,774	)	(124,432	)
Net	393,465		751,997

(ii) Third parties

Rupiah	3,397,596		4,000,565
U.S. Dollars	439,026		593,731
Total	3,836,622		4,594,296
Allowance for doubtful accounts	(1,056,359	)	(1,457,400	)
Net	2,780,263		3,136,896

d. Movements in the allowance for doubtful accounts

Beginning balance	1,100,456		1,203,905
Additions (Note 37)	436,929		422,533
Bad debts write-off	(299,252	)	(44,606	)
Ending balance	1,238,133		1,581,832

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TRADE RECEIVABLES (continued)

d. Movements in the allowance for doubtful accounts (continued)

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.

Certain trade receivables of the Companys subsidiaries have been pledged as collateral for lending agreements (Notes 19 and 23).

Refer to Note 44 for details of related party transactions.

INVENTORIES

Modules	146,346		233,705
Components	141,454		150,513
SIM cards, RUIM cards and prepaid voucher blanks	174,578		127,200
Total	462,378		511,418
Allowance for obsolescence
Modules	(57,083	)	(67,063	)
Components	(5,379	)	(6,468	)
SIM cards, RUIM cards and prepaid voucher blanks			(10	)
Total	(62,462	)	(73,541	)
Net	399,916		437,877

Movements in the allowance for obsolescence are as follows:

Beginning balance	54,701		64,850
Additions (Note 37)	8,050		8,851
Inventories write-off	(289	)	(160	)
Ending balance	62,462		73,541

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

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| 7. |
| --- |
| Management believes that the allowance is adequate to cover probable losses from decline in
inventory value due to obsolescence. |
| As of September 30, 2009, certain inventories held by the Company have been insured against
fire, theft and other specific risks with the total sum insured as of September 30, 2009 is
combined with property, plant and equipments insurance (Notes 11d.viii and 44d.vii). |
| Certain inventories held by a certain subsidiary have been insured against all industrial risk
and loss risk during delivery with the total sum insured as of September 30, 2009 amounting
Rp.10,000 million. |
| Management believes that the insurance coverage is adequate to cover potential losses of the
insured inventories. |

PREPAID EXPENSES

Frequency license	1,054,544	1,817,245
Rental	342,694	385,664
Salaries	312,552	375,213
Insurance	106,217	81,337
Telephone directory issuance costs	2,578	2,090
Others	42,348	34,745
Total	1,860,933	2,696,294

Refer to Note 44 for details of related party transactions.

OTHER CURRENT ASSETS

Other current assets as of September 30, 2008 and 2009 consist of restricted time deposits as follows:

		2008		2009
		Foreign		Foreign
		currencies	Rupiah	currencies	Rupiah
	Currency	(in millions)	equivalent	(in millions)	equivalent
BNI
The Company	US$			0.062	606
	Rp.				22,202
Bank Mandiri
The Company	US$	0.36	3,372
	Rp.		10,502		1,934
Infomedia	Rp.		5,170		4,642
TII	US$			0.56	5,493
	Rp		2,000
Total			21,044		34,877

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9. OTHER CURRENT ASSETS (continued)

The restricted time deposits represent time deposits of the Companys and certain subsidiaries pledged as collateral for bank guarantees to the respective banks.

Refer to Note 44 for details of related party transactions.

10. LONG-TERM INVESTMENTS


Percentage
of	Beginning		Share of			Translation		Ending
ownership	balance	Addition	net income	Dividend		adjustment		balance
Equity method:
CSM	25.00	57,240		1,744			(1,212	)	57,772
Patrakom	40.00	32,892		732	(1,944	)			31,680
PSN	22.38
		90,132		2,476	(1,944	)	(1,212	)	89,452
Cost method:
Bridge Mobile Pte. Ltd.
(BMPL)	10.00	20,360							20,360
PT Batam Bintan
Telekomunikasi
(BBT)	5.00	587							587
PT Pembangunan
Telekomunikasi
Indonesia
(Bangtelindo)	2.11	199							199
Scicom (MSC)
Berhad (Scicom)	9.81	2,712	28,249						30,961
		23,858	28,249						52,107
		113,990	28,249	2,476	(1,944	)	(1,212	)	141,559


Percentage
of	Beginning	Share of net		Translation		Ending
ownership	balance	(loss) income		adjustment		balance
Equity method:
CSM	25.00	84,197	(21,669	)	(2,741	)	59,787
Patrakom	40.00	32,949	349				33,298
PSN	22.38
		117,146	(21,320	)	(2,741	)	93,085
Cost method:
BMPL	10.00	20,360					20,360
BBT	5.00	587					587
Bangtelindo	2.11	199					199
Scicom	9.80	30,961			1,131		32,092
		52,107			1,131		53,238
		169,253	(21,320	)	(1,160	)	146,323

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10. LONG-TERM INVESTMENTS (continued)

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 September 30, 2008 and 2009, 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 made in 2005.

| | Pursuant to the AGM of Stockholders of Patrakom as stated in notarial deed No. 235 of
Sutjipto, S.H., M.Kn. dated April 30, 2008, Patrakoms stockholders approved the
distribution of cash dividends for 2007 amounting to Rp.4,859 million and the
appropriation of Rp.607 million for general reserves. The Companys share of the
dividend amounting to Rp.1,944 million. |
| --- | --- |
| | As of September 30, 2008 and 2009, the carrying amount of investment in Patrakom
approximated 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%. |
| 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 (SK Telecom) as a stockholder of BMPL. However, the additional subscription of
300,000 shares shall be cancelled if SK Telecom becomes a stockholder of BMPL. |
| | Based on the Accession Agreement dated June 18, 2007, BMPLs stockholders agreed to admit
SK Telecom as a stockholder of BMPL. Consequently, the additional subscription of 300,000
shares was cancelled. On the same date, BMPLs stockholders also agreed to admit Advanced
Info Service Public Company Limited as a stockholder of BMPL. |
| | Telkomsel has paid additional subscriptions of US$600,000 (equivalent to Rp.5,455 million
and Rp.5,615 million) in April and November 2007, respectively. |

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10. LONG-TERM INVESTMENTS (continued)

d.	BMPL (continued)
	As of September 30, 2008 and 2009, Telkomsels contributions which represent 10% ownership
interest amounted to US$2,200,000 (equivalent to Rp.20,360 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.
	On July 19, 2007, based on decision of the EGM of Stockholders of Bangtelindo as covered by
notarial deed No. 38 of Dr. Wiratni Ahmadi, S.H. dated July 19, 2007, the Bangtelindos
stockholders agreed the addition of paid in capital amounting to Rp.2,000 million from PT
Fokus Investama Mondials (FIM) stockholders. As a result, the Companys ownership in
Bangtelindo was diluted to 2.41%.
	On February 5, 2008, based on decision of the EGM of Stockholders of Bangtelindo as covered
by notarial deed No. 85 of Dr. Wiratni Ahmadi, S.H. dated June 30, 2008, the Bangtelindos
stockholders agreed the addition of paid in capital amounting to Rp.1,200 million from
FIMs stockholders. As a result, the Companys ownership in Bangtelindo was diluted to
2.11%.
g.	Scicom
	Scicom is engaged in providing call center services in Malaysia. As of September 30, 2008,
TIIs contributions amounted to US$3.42 million (equivalent to Rp.30,961 million) which
represent or equivalent to 9.81% of TIIs total ownership in Scicom.
	On July 31, 2008, Scicom issued 35,000 new shares. As a result, TIIs ownership in Scicom
diluted to 9.80%.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) SEPTEMBER 30, 2008 AND 2009, AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah, unless otherwise stated)

11. PROPERTY, PLANT AND EQUIPMENT

2008	of Sigma	Additions	Deductions		Reclassifications		2008*)
At cost:
Direct acquisitions
Land	561,348	26,678	76,163			222		664,411
Buildings	2,557,804	17,091	39,228	(345	)	114,160		2,727,938
Leasehold improvements	403,498	2,227	45,749			374		451,848
Switching equipment	24,293,139		49,759			1,152,934		25,495,832
Telegraph, telex and data
communication equipment	156,036		959			(9,139	)	147,856
Transmission installation and
equipment	44,758,386		1,226,605	(30,425	)	6,553,929		52,508,495
Satellite, earth station
and equipment	5,979,626		350,514			(20,125	)	6,310,015
Cable network	20,669,529		801,735			(174,055	)	21,297,209
Power supply	4,416,077		60,205			760,767		5,237,049
Data processing equipment	5,710,782	14,523	212,951	(3	)	524,261		6,462,514
Other telecommunications
peripherals	637,020	2,186	14,983	(757	)	(35,987	)	617,445
Office equipment	706,484	1,345	34,220	(2,147	)	(14,485	)	725,417
Vehicles	156,192	1,160	6,608	(466	)	(26,383	)	137,111
Other equipment	109,784		3,312			(1,512	)	111,584
Property under
construction:
Buildings	86		176,005			(99,095	)	76,996
Switching equipment	83,740		1,073,659			(1,143,134	)	14,265
Transmission installation and
equipment	2,525,030		7,904,033			(7,997,149	)	2,431,914
Satellite, earth station
and equipment	3,557		12,211			(3,557	)	12,211
Cable network	381		38,291			(170	)	38,502
Power supply	37,979		749,457			(769,726	)	17,710
Data processing
equipment	31,351	21,676	653,825	(6	)	(630,722	)	76,124
Leased assets
Transmission installation
and equipment	283,813		37,020			6,022		326,855
Vehicles			44,981					44,981
Total	114,081,642	86,886	13,612,473	(34,149	)	(1,812,570	)	125,934,282
Accumulated depreciation and
impairment:
Direct acquisitions
Buildings	1,207,216		97,412			(23	)	1,304,605
Leasehold improvements	257,862		49,613					307,475
Switching equipment	13,562,557		1,803,593			1,309		15,367,459
Telegraph, telex and data
communication equipment	152,427		583			(9,139	)	143,871
Transmission installation
and equipment	16,178,965		3,438,437	(18,373	)	(1,423,934	)	18,175,095
Satellite, earth station
and equipment	2,373,355		328,532			(4,068	)	2,697,819
Cable network	12,917,430		1,078,182			(198,760	)	13,796,852
Power supply	1,864,747		342,597			(7,758	)	2,199,586
Data processing
equipment	3,895,304		588,947			(77,217	)	4,407,034
Other telecommunications
peripherals	575,458		9,236	(56	)	(36,057	)	548,581
Office equipment	584,927		33,263			(11,990	)	606,200
Vehicles	147,055		3,466	(466	)	(26,288	)	123,767
Other equipment	100,437		2,431			(1,512	)	101,356
Leased assets
Transmission installation
and equipment	188,094		3,163			310		191,567
Vehicles			22,072					22,072
Total	54,005,834		7,801,527	(18,895	)	(1,795,127	)	59,993,339
Net Book Value	60,075,808							65,940,943

*) As restated (Note 53)

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11. PROPERTY, PLANT AND EQUIPMENT (continued)

2009	Additions	Deductions		Reclassifications		2009
At cost:
Direct acquisitions
Land	684,768	40,928			57,085		782,781
Buildings	2,721,804	101,980	(3,349	)	103,420		2,923,855
Leasehold improvements	460,836	54,086					514,922
Switching equipment	26,356,172	9,662			1,944,807		28,310,641
Telegraph, telex and data
communication equipment	139,165				(5,504	)	133,661
Transmission installation and
equipment	56,572,954	1,513,036	(2,220	)	6,417,870		64,501,640
Satellite, earth station and
equipment	6,502,198	256,192	(146	)	(35,591	)	6,722,653
Cable network
Power supply	21,857,982	930,983	(407	)	132,737		22,921,295
Data processing equipment	5,838,258	167,657	(30	)	742,817		6,748,702
Other telecommunications	7,184,767	202,883	(1,757	)	569,609		7,955,502
peripherals	545,194	15,208	(536	)	(11,680	)	548,186
Office equipment	678,640	27,130	(7,425	)	(129	)	698,216
Vehicles	127,274	1,576	(105	)	(673	)	128,072
Other equipment	105,386	9,028			(20,339	)	94,075
Property under construction:
Buildings	60,099	116,579			(95,264	)	81,414
Leasehold improvements		425					425
Switching equipment	17,155	1,800,113			(1,799,787	)	17,481
Transmission installation and
equipment	1,173,830	5,925,144			(6,971,006	)	127,968
Satellite, earth station and
equipment		90,530					90,530
Cable network	384	115,449			(22	)	115,811
Power supply	13,131	702,639			(677,003	)	38,767
Data processing equipment	427,698	343,440			(334,135	)	437,003
Leased assets
Transmission installation and
equipment	284,978				(5,485	)	279,493
Data processing equipment	236,240	11,988					248,228
Office equipment	437,705	3,433	(179,876	)			261,262
Vehicles	56,998		(126	)	4,627		61,499
Customer premise equipment
(CPE) assets	23,307				(1,529	)	21,778
Total	132,506,923	12,440,089	(195,977	)	14,825		144,765,860
Accumulated depreciation and
impairment:
Direct acquisitions
Buildings	1,351,589	119,601	(3,350	)	653		1,468,493
Leasehold improvements	323,910	43,499			217		367,626
Switching equipment	15,926,334	1,949,266			29,906		17,905,506
Telegraph, telex and data
communication equipment	135,327	418			(5,504	)	130,241
Transmission installation
and equipment	19,220,612	4,562,107	(1,754	)	(424,777	)	23,356,188
Satellite, earth station and
equipment	2,732,847	354,370	(146	)	(1,635	)	3,085,436
Cable network	13,506,314	976,491	(390	)	117,528		14,599,943
Power supply	2,333,053	426,541	(29	)	7,217		2,766,782
Data processing equipment	4,588,877	475,508	(1,757	)	302,377		5,365,005
Other telecommunications
peripherals	462,208	11,540	(536	)	(4,954	)	468,258
Office equipment	561,073	37,890	(4,547	)	831		595,247
Vehicles	108,049	4,619	(59	)	(1,286	)	111,323
Other equipment	94,866	3,258			(20,339	)	77,785
Leased assets
Transmission installation and
equipment	207,323	14,442					221,765
Data processing equipment	60,162	39,057			(549	)	98,670
Office equipment	290,717	83,739	(179,875	)	1,574		196,155
Vehicles	11,640	13,422	(48	)			25,014
CPE assets	2,432	1,824			(279	)	3,977
Total	61,917,333	9,117,592	(192,491	)	980		70,843,414
Net Book Value	70,589,590						73,922,446

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11. PROPERTY, PLANT AND EQUIPMENT (continued)

a. Gain (loss) on disposal or exchange of assets

Proceeds from sale of property, plant and equipment	9,919		6,088
Net book value	(59,291	)	(3,486	)
Gain (loss) on disposal	(49,372	)	2,602

b. KSO assets ownership arrangements

(i) In accordance with the amended and restated KSO VII agreement with BSI, 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 September 30, 2008 and 2009, the net book value of these property, plant and equipment was Rp.954,626 million and Rp.845,093 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 September 30, 2008 and 2009, the net book value of this property, plant and equipment was Rp.587,019 million and Rp.304,703 million, respectively.

c. Assets impairment and related claims

(i) As of September 30, 2008 and 2009, 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 September 30, 2009, there were no events or changes in circumstances that would indicate that the carrying amount of the Companys satellites may not be recoverable.

(ii) On July 9, 2008, Balikpapan and its surrounding, area of Divre VI Kalimantan were covered by flood from which insurance claim for the replacement of the assets has been made. Buildings and other equipments affected by the flood have been re-operated gradually since July 2008.

(iii) On September 30, 2009, West Sumatera and its surrounding, area of Divre I Sumatera were experienced an earthquake from which insurance claim for the replacement of the assets has been made. Buildings and other equipments affected by the earthquake have been re-operated gradually since October 2009.

d. Others

(i) Interest capitalized to property under construction amounted to Rp.nil for the nine months period ended September 30, 2008 and 2009.

(ii) Foreign exchange loss capitalized as part of property under construction amounted to Rp.nil for the nine months period ended September 30, 2008 and 2009.

(iii) In 2008, the Company reclassified its software which was previously recorded as property, plant and equipment to intangible assets (Notes 14 and 53).

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11. PROPERTY, PLANT AND EQUIPMENT (continued)

d. Others (continued)

(iv) In 2008, certain Telkomsels equipment (part of infrastructure) with a total cost of Rp.797,208 million and their previous expected useful lives subsequent to 2010, are planned to be used up to 2010. Hence, the depreciation of the equipment are accelerated up to that year. The cumulative impact of acceleration of depreciation is Rp.71,867 million and Rp 100,273 million of which was charged to consolidated statement of income of the current period.

(v) From July 1, 2007 to December 31, 2008, Telkomsel recorded Rp.8,260,648 million of its property, plant and equipment which was subject to price adjustment (Note 48a.ii). In March 2009, Telkomsel and its vendors agreed to adjust price by US$107.05 million. The effect of the adjustment is a reduction to recorded property, plant and equipment by Rp.1,035,588 million and depreciation by Rp.47,868 million that was recorded in 2008 consolidated financial statement.

(vi) 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 15-45 years, which will expire between 2010 and 2052. Management believes that there will be no difficulty in obtaining the extension of the land rights when they expire.

(vii) 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.

(viii) As of September 30, 2009, the Companys and its subsidiaries property, plant and equipment, except for land, were insured with PT Asuransi Jasa Indonesia (Jasindo), PT Asuransi Ramayana Tbk, PT Asuransi Wahana Tata, PT Asuransi Ekspor Indonesia, PT Asuransi Sinar Mas, PT Asuransi Central Asia, PT Asuransi Allianz Utama Indonesia, PT Asuransi Bintang Tbk, PT Asuransi Tri Pakarta and PT Asuransi QBE POOL Indonesia against fire, theft, earthquake and other specified risks. Total cost of assets being insured amounted to Rp.71,771,790 million, which was covered by sum insured basis with a maximum loss claim of Rp.5,303,664 million, US$13.97 million, and Euro0.22 million and on first loss basis of Rp.5,391,473 million and US$4.00 million including business recovery of Rp.324,000 million with the Automatic Reinstatement of Loss Clause. In addition, Telkom-1 and Telkom-2 were insured separately for US$28.48 million and US$47.13 million, respectively. Management believes that the insurance coverage is adequate to cover potential losses of the insured assets.

(ix) As of September 30, 2009, the completion of assets under construction was around 52.89% of the total contract value, with estimated dates of completion between November 1, 2009 up to September 11, 2011. Management believes that there is no impediment to the completion of the construction in progress.

(x) 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)

(xi) The Company and its subsidiaries has lease commitments for transmission installation and equipment, vehicles, data processing equipment and office equipment, with the option to purchase the leased assets at the end of the lease terms. Future minimum lease payments for assets under finance leases as of September 30, 2008 and 2009 are as follows:

Year — 2008	105,815
2009	108,743		229,548
2010	100,921		149,492
2011	68,448		100,066
2012	30,143		35,889
2013	5,307		5,302
Later	138		138
Total minimum lease payments	419,515		520,435
Interest	(134,435	)	(126,271	)
Net present value of minimum lease payments	285,080		394,164
Current maturities (Note 20a)	(56,700	)	(172,856	)
Long-term portion (Note 20b)	228,380		221,308

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

2008	Additions	Reclassifications		2008
At cost:
Land	4,646		(222	)	4,424
Buildings	3,982		(225	)	3,757
Switching equipment	286,688		(6,734	)	279,954
Transmission installation
and equipment	179,785		(44,125	)	135,660
Cable network	583,353		(35,850	)	547,503
Other telecommunications
peripherals	149,200				149,200
Total	1,207,654		(87,156	)	1,120,498
Accumulated depreciation:
Land	2,935	126			3,061
Buildings	2,435	148	(48	)	2,535
Switching equipment	169,663	17,916	(1,880	)	185,699
Transmission installation
and equipment	90,141	9,291	(19,865	)	79,567
Cable network	144,603	35,915	(12,657	)	167,861
Other telecommunications
peripherals	92,786	18,111			110,897
Total	502,563	81,507	(34,450	)	549,620
Net Book Value	705,091				570,878

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PROPERTY, PLANT AND EQUIPMENT UNDER RSA (continued)

2009	Additions	Adjustments	Reclassifications		2009
At cost:
Land	1,313			(46	)	1,267
Buildings	338		3,418	(3,756	)
Switching equipment	152,776		53,643	(113,429	)	92,990
Transmission installation and
equipment	100,072		24,201	(63,630	)	60,643
Cable network	461,315		48,162	(69,010	)	440,467
Other telecommunications
peripherals	10,547		123,054	(129,964	)	3,637
Total	726,361		252,478	(379,835	)	599,004
Accumulated depreciation:
Land	926	48		(9	)	965
Buildings	61	20	2,521	(2,602	)
Switching equipment	69,899	9,038	52,748	(103,903	)	27,782
Transmission installation and
equipment	53,282	6,867	21,203	(47,320	)	34,032
Cable network	116,234	30,269	27,660	(44,847	)	129,316
Other telecommunications
peripherals	9,305	15,370	92,006	(114,047	)	2,634
Total	249,707	61,612	196,138	(312,728	)	194,729
Net Book Value	476,654					404,275

In accordance with the 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 September 30, 2008 and 2009, are as follows:

Gross amount	1,120,498		599,004
Accumulated amortization:
Beginning balance	(704,269	)	(427,037	)
Additions (Note 34)	(166,851	)	(93,597	)
Deductions	87,156		127,357
Ending balance	(783,964	)	(393,277	)
Net	336,534		205,727

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ADVANCES AND OTHER NON-CURRENT ASSETS

Advances and other non-current assets as of September 30, 2008 and 2009 consist of:

Prepaid rent net of current portion (Note 8)	863,451	921,668
Advances for purchase of property, plant and equipment	721,648	887,923
Restricted cash	1,514	214,187
Deferred Indefeasible Right of Use (IRU) Agreement charges
(Note 44c.ii)	156,934	159,886
Deferred land rights charges	105,122	63,580
Security deposits	50,136	42,516
Equipment not used in operations net	48,444	35,747
Others	10,507	21,701
Total	1,957,756	2,347,208

As of September 30, 2008 and 2009, restricted cash represent 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.

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 (Note 11d.vi).

As of September 30, 2009, 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 statements of income for nine months period ended September 30, 2008 and 2009 amounted to Rp.9,261 million and Rp23,460 million, respectively.

In 2008 and 2009, certain equipment of Telkomsel with a net carrying amount of Rp.1,131 million and Rp.nil, respectively, was reclassified to property, plant and equipment (Note 11).

Refer to Note 44 for details of related party transactions.

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14. GOODWILL AND OTHER INTANGIBLE ASSETS

(i) The changes in the carrying amount of goodwill and other intangible assets for the nine months period ended September 30, 2008 and 2009 are as follows:


		intangible
Goodwill		assets		License		Total
Gross carrying amount:
Balance, December 31, 2007			8,419,906		436,000		8,855,906
Additions:
The Companys software			189,062				189,062
Indonusa	6,600						6,600
Acquisition of Sigma (Note 4)	99,944		189,405				289,349
Sigmas software license			15,030				15,030
Balance, September 30, 2008*)	106,544		8,813,403		436,000		9,355,947
Accumulated amortization:
Balance, December 31, 2007			(5,022,301	)	(58,393	)	(5,080,694	)
Amortization expense for nine months
period (Note 37)	(25,468	)	(857,986	)	(35,036	)	(918,490	)
Balance, September 30, 2008*)	(25,468	)	(5,880,287	)	(93,429	)	(5,999,184	)
Net Book Value	81,076		2,933,116		342,571		3,356,763
Weighted-average amortization period	20 years		7.10 years		9.33 years


		intangible
Goodwill		assets		License		Total
Gross carrying amount:
Balance, December 31, 2008	106,544		8,969,599		436,000		9,512,143
Additions:
The Companys software			132,734				132,734
3G Telkomsel					320,000		320,000
GSDs software			50				50
Sigmas software			9,408				9,408
Reclassification			(64,391	)			(64,391	)
Balance, September 30, 2009	106,544		9,047,400		756,000		9,909,944
Accumulated amortization:
Balance, December 31, 2008	(17,048	)	(6,202,180	)	(105,107	)	(6,324,335	)
Amortization expense for nine months
period (Note 37)	(8,678	)	(932,551	)	(37,702	)	(978,931	)
Balance, September 30, 2009	(25,726	)	(7,134,731	)	(142,809	)	(7,303,266	)
Net Book Value	80,818		1,912,669		613,191		2,606,678
Weighted-average amortization period	19.17 years		6.57 years		9.60 years

*) As restated (Note 53)

| (ii) | Goodwill resulted from the acquisition of Sigma in 2008 (Note 4) and Indonusa in 2008
(Notes 1d.b and 1d.c). Goodwill is amortized using the straight-line method over a period
of not more than five years, except longer period but not more than twenty years can be
justified. (Note 2d). Other intangible assets resulted from the acquisitions of Dayamitra,
Pramindo, TII, KSO IV and KSO VII, and represented the rights to operate the business in
the KSO areas. |
| --- | --- |
| (iii) | The up-front fee paid by Telkomsel in February 2006 for the 3G license amounting to
Rp.436,000 million was recognized as an intangible asset and is amortized over the term of
the 3G license (Notes 2j and 44a.ii). |

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GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

(iv) The estimated annual amortization expense relating to other intangible assets for each year beginning from October 1, 2009 is approximately Rp.1,292,671 million per year.

ESCROW ACCOUNTS

Escrow accounts as of September 30, 2008 and 2009 consist of the following:

Bank Mandiri	42,572	44,937
Bank Danamon	1,181	1,191
Others	108	108
	43,861	46,236

| The escrow account with Bank Mandiri were established in relation with the Palapa Ring
Consortium Construction and Maintenance Agreement (C&MA) as an initial deposit 5% of the
commitment value (Note 48d.iv). |
| --- |
| The escrow account with Bank Danamon were established in relation with the RSA in
telecommunications equipment in Divre VII East Indonesia. |
| Refer to Note 44 for details of related party transactions. |

TRADE PAYABLES


Related parties
Concession fees	1,207,726	1,217,561
Purchases of equipment, materials and services	229,842	153,365
Payables to other telecommunications providers	78,542	108,731
Sub-total	1,516,110	1,479,657
Third parties
Purchases of equipment, materials and services	7,260,856	7,650,149
Payables to other telecommunications providers	87,627	98,107
Payables related to RSA	97,312	60,941
Sub-total	7,445,795	7,809,197
Total	8,961,905	9,288,854

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16.
Trade payables by currency are as follows:

Rupiah	3,322,331	4,231,509
U.S. Dollars	3,435,105	4,560,807
Euro	2,195,718	463,452
Singapore Dollars	8,660	32,741
Great Britain Pound sterling		86
Japanese Yen	46	55
Others	45	204
Total	8,961,905	9,288,854

Refer to Note 44 for details of related party transactions.

ACCRUED EXPENSES

Operations, maintenance and telecommunications services	1,300,760	1,231,883
Salaries and benefits	769,754	739,265
General, administrative and marketing	552,780	580,132
Interest and bank charges	251,431	345,382
Total	2,874,725	2,896,662

Refer to Note 44 for details of related party transactions.

UNEARNED INCOME

Prepaid pulse reload vouchers	3,036,452	2,605,106
Other telecommunications services	28,614	3,203
Others	70,502	94,777
Total	3,135,568	2,703,086

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SHORT-TERM BANK LOANS

Bank CIMB Niaga	35,000	16,800
Bank Ekonomi		11,000
BSM		8,000
Bank Syariah Mega	18,449
Total	53,449	35,800

Refer to Note 44 for details of related party transactions.

| a. |
| --- |
| 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 CIMB
Niaga. These credit facilities are secured by Balebats property, plant and equipment
located in West Java up to a maximum of Rp.3,350 million (Note 11). The credit facility has
been amended several times. The changes covered the combination of the facility, interest
rate, and maturity date. On July 28, 2009, based on the latest amendment (8 th amendment agreement), credit facility, interest rate and maturity date is changed to
Rp.15,000 million, 14% per annum and May 29, 2010, respectively. The principal outstanding
as of September 30, 2008 and 2009 amounted to Rp.15,000 million and Rp.11,800 million,
respectively. |
| On April 29, 2008, Balebat received an additional Specific Transaction Facility and Bank
Overdraft Facility of Rp.5,000 million and Rp.500 million, respectively (Note 23f). The
loan bears an interest rate of 11.5% per annum and will mature on May 29, 2009. On July 28,
2009, based on the latest amendment (8 th amendment agreement), the interest rate
is changed from 11.5% per annum to 14% and 14.5%, respectively, and the maturity date is
extended to May 29, 2010. As of September 30, 2008 and 2009, the principal outstanding
amounted to Rp.5,000 million and Rp.5,000 million. |
| On October 18, 2005, GSD entered into two short-term loan agreements with Bank CIMB Niaga
for an original facility of Rp.12,000 million and Rp.3,000 million. The loans bore interest
rate of 14.50% per annum and matured on October 18, 2006 for each loan. The loan agreements
were amended twice, the latest on November 3, 2006 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, GSD entered into a short-term loan agreement with Bank CIMB Niaga as an amendment of
the both loans for an original facility of Rp.15,000 million. The loan bore interest rate of
11% per annum and matured on 18 October 2008. The loan agreement was amended twice, the
latest on December 23, 2008 to change the total facility to Rp.19,000 million with interest
rate of 15.5% per annum and the maturity period to October 18, 2009. This credit facility
was secured by GSDs property, plant and equipment located in Jakarta (Note 11). The
principal outstanding as of September 30, 2008 amounted to Rp.15,000 million and on July 10,
2009, the loan was fully repaid. |

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

SHORT-TERM BANK LOANS (continued)

b.	Bank Ekonomi
	On October 14, 2008, Sigma entered into a Rp.7,500 million short-term loan agreement with
Bank Ekonomi for working capital purpose. The loan bore floating interest rate from 12.50%
per annum to 15.50% per annum and was repayable within 9 months from the signing date to
July 15, 2009. This facility was secured by Sigmas trade receivables (Note 6). On July 15,
2009 the loan was fully repaid.
	On November 14, 2008, Sigma entered into a Rp.5,500 million short-term loan agreement with
Bank Ekonomi for working capital purpose. On December 2, 2008, Rp.3,500 million were
drawdown from the Facility. The loan bears interest rate of 15.50% per annum and is
repayable within 12 months from the signing date to December 2, 2009. This facility is
secured by Sigmas trade receivables (Note 6). As of September 30, 2009, the principal
outstanding amounted to Rp.4,000 million.
	On February 11, 2009, Sigma entered into a US$550,000 short-term loan agreement with Bank
Ekonomi for working capital purpose. On March 23, 2009, US$380,000 were drawdown from the
Facility. The loan bears interest rate of 6% per annum and is repayable within 3 months from
the signing date to June 23, 2009. Based on the latest amendment, the maturity date is
extended to September 23, 2009. This facility is secured by Sigmas trade receivables (Note
6). On September 23, 2009 the loan was fully repaid.
	On May 22, 2009, PT Sigma Solusi Integrasi, one of Sigmas subsidiaries entered into a US$2
million short-term loan agreement with Bank Ekonomi for working capital purpose. On June 1,
2009, US$1,1 million were drawdown from the Facility. The loan bears interest rate of 9% per
annum and is repayable within 3 months from the date of withdrawal. This facility is secured
by Purchase Orders (PO) or Letter of Intent from certain companies. On July 1, 2009 the
loan was fully repaid.
	On August 7, 2009, Sigma entered into a Rp.35,000 million short-term loan agreement with
Bank Ekonomi for working capital purpose. On September 16, 2009, Rp.7,000 million was
drawdown from the Facility. The loan bears floating interest rate from 13.00% per annum to
15.50% per annum and is repayable within 12 months from the signing date to July 1, 2010.
The principal outstanding as of September 30, 2009 amounted to Rp.7,000 million.
c.	BSM
	On August 20, 2009, Balebat entered into a Rp.8,000 million loan agreement with BSM 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 certain fixed asset (Note
11), receivables (Note 6), inventories (Note 7), insurance, and letter of comfort. The loan
is payable within 6 months from the signing date. The principal outstanding as of September
30, 2009 amounted to Rp.8,000 million.

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SHORT-TERM BANK LOANS (continued)

| d. |
| --- |
| On March 31, 2008, Infomedia entered into a Rp.8,812 million loan agreement with Bank
Syariah Mega for working capital purpose. The facility was obtained through sharia
principles with the estimated rates on borrowing at 14% per annum and was secured by the
receivables from contact center (Note 6). The loan was payable within 3 months from the
signing date. Based on amendment on September 25, 2008 (2 nd amendment agreement),
the maturity period of loan agreement was extended to December 28, 2008. As of September 30,
2008, the principal outstanding amounted to Rp.8,812 million and on November 27, 2008, the
loan was fully repaid. |
| On June 5, 2008, Infomedia entered into Rp.9,637 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 was secured by the receivables from
contact center. The loan was payable within 3 months from the signing date which become due
on September 2008. Based on amendment on September 28, 2008, the maturity period of loan
agreement was extended to December 28, 2008. The principal outstanding as of September 30,
2008 amounted to Rp.9,637 million and on November 27, 2008, the loan was fully repaid. |

MATURITIES OF LONG-TERM LIABILITIES

a. Current maturities

Bank loans	23	4,814,589	6,432,094
Deferred consideration for business combinations	24	1,141,940	1,200,948
Two-step loans	21	437,353	459,349
Obligations under finance leases	11	56,700	172,856
Notes	22		3,000
Total		6,450,582	8,268,247

b. Long-term portion

Notes	Total	2010	2011	2012	2013	Later
Bank loans	23	11,681.1	619.1	4,175.6	2,742.7	2,730.4	1,413.3
Two-step loans	21	3,256.9	70.3	405.6	407.7	332.9	2,040.4
Deferred consideration for
business combinations	24	433.0	323.3	109.7
Obligations under finance leases	11	221.3	113.8	70.6	31.9	4.9	0.1
Notes	22	27.0	6.0	21.0
Total		15,619.3	1,132.5	4,782.5	3,203.3	3,068.2	3,453.8

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

TWO-STEP LOANS

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

Creditors	Interest rate — 2008	2009	Outstanding — 2008	2009
Overseas banks	3.10% - 12.27 %	3.10% - 9.65 %	3,905,478		3,716,255
Current maturities (Note 20a)			(437,353	)	(459,349	)
Long-term portion (Note 20b)			3,468,125		3,256,906

b. The details of two-step loans obtained from overseas banks as of September 30, 2008 and 2009 are as follows:

Currencies	Interest rate — 2008	2009	Outstanding — 2008	2009
U.S. Dollars	4.00% - 6.67 %	4.00% - 6.67 %	1,495,692	1,350,341
Rupiah	8.97% - 12.27 %	9.65% - 11.39 %	1,269,205	1,079,144
Japanese Yen	3.10 %	3.10 %	1,140,581	1,286,770
Total			3,905,478	3,716,255

| | The loans are intended for the development of telecommunications infrastructure and
supporting equipment. The loans are payable 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
interest rates based upon the average interest rate on three-month Certificate of Bank
Indonesia (Sertifikat Bank Indonesia or 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. |
| As of September 30, 2009, 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 September 30, 2009, the Company complied with the above mentioned ratios. | |
| Refer to Note 44 for details of related party transactions. | |

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NOTES

Medium-term Notes	30,000
Current maturities (Note 20a)	(3,000	)
Long-term portion (Note 20b)	27,000

| On June 9, 2009, Metra entered into an agreement with PT Bahana Securities (acting as
Arranger) and Bank Mega (acting as Trustee) to issue Medium Term Notes (MTN) for a total
principal amount of Rp.50,000 million. PT Kustodian Sentral Efek Indonesia acting as Colecting
Agent and Custodian. Proceeds from issuance of MTN were used to expand Metras business and as
working capital. | |
| --- | --- |
| MTN is scheduled to be issued maximum in 4 (four) phases in a maximum amount of Rp.50,000
million with repayment at the latest in 3 (three) years after the Issuance Date for each
phases. The first phase was issued for Rp.30,000 million, that will be mature on June 19,
2012. | |
| Interest on MTN was payable quarterly beginning from the Issuance Date, through the Due Date.
The MTN bear floating interest rates, for the first year of 15,05%, for the second and third
years of highest average rate (yield) of 3 (three) Surat Utang Negara (SUN) that has a same
remaining period of time, the same with the second and third years of MTN plus 4,02% premium.
Repayment of the principal for each 10%, 20%, and 70% on the first, second and third
anniversary of the Issuance Date, respectively. | |
| Metra secures minimal 40% of the value of the payable principle MTN amount. Maximum 60% of the
payable principle MTN amount is unsecured and at all times ranked (pari passu) with other
unsecured debts of the Metra. Metra may buy back all or part of the MTN at any time before the
maturity date of the MTN. | |
| Based on the agreements, Metra is required to comply with all covenants or restrictions
including maintaining financial ratios as follows: | |
| a. | Debt to equity ration maximum 1,5:1 (one comma five proportionate one) |
| b. | EBITDA to Interest Ratio minimum 2.5. |
| As of September 30, 2009, Metra complied with the above mentioned ratios. | |

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23.
The details of long-term bank loans as of September 30, 2008 and 2009 are as follows:

			2008
		2009	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	71	665,560	47	454,759
Bank Mandiri	Rp.	4,750,000		1,210,000		3,480,000
BCA	Rp.	3,500,000		1,450,000		2,700,000
Citibank	US$		4	37,970
	Rp.	500,000		600,000		300,000
BNI	Rp.	4,000,000		2,960,000		1,800,000
Bank CIMB Niaga	Rp.	35,096		33,584		26,198
Bank Bukopin	Rp.	5,300		2,409		1,191
BRI	Rp.	4,200,000		3,240,000		2,680,000
Bank Ekonomi	Rp.	95,000		54,362		71,044
Syndication of banks	Rp.	5,100,000		1,000,000		5,100,000
PT ANZ Panin Bank (ANZ Panin)	Rp.	1,000,000				1,000,000
BII	Rp.	500,000				500,000
Total				11,253,885		18,113,192
Current maturities of bank loans
(Note 20a)				(4,814,589	)	(6,432,094	)
Long-term portion (Note 20b)				6,439,296		11,681,098

Refer to Note 44 for details of related party transactions.
a.	The Export-Import Bank of Korea
	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 Code Division Multiple Access
(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.
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 bore a floating interest
rate of three-month SBI plus 1.75% per annum which becomes due quarterly in arrears and
was unsecured. The principal outstanding as of September 30, 2008 amounted to
Rp.120,000 million and on March 29, 2009, the loan was fully repaid. |
| --- | --- |
| (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 bore a floating
interest rate of three-month SBI plus 1.5% per annum which becomes due quarterly in
arrears and was unsecured. The principal outstanding as of September 30, 2008 and 2009
amounted to Rp.70,000 million and on March 28, 2009, the loan was fully repaid. |

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BANK LOANS (continued)

b. Bank Mandiri (continued)

| (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 which becomes
due quarterly in arrears and is unsecured. On July 24, 2007, the loan agreement was
amended with addition of total facilities provided amounted to Rp.200,000 million. The
principal outstanding as of September 30, 2008 and 2009 amounted to Rp.420,000 million
and Rp.140,000 million, respectively. |
| --- | --- |
| (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 which
becomes due quarterly in arrears and is unsecured. The principal outstanding as of
September 30, 2008 and 2009 amounted to Rp.600,000 million and Rp.300,000 million,
respectively. |
| (v) | On December 23, 2008, Telkomsel signed a medium-term facility loan agreement
with Bank Mandiri of Rp.1,300,000 million. On December 30, 2008, Rp.1,000,000 million
has been drawn-down from the Facility and the remaining Rp.300,000 million was
drawn-down by Telkomsel on January 30, 2009. 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 one-month JIBOR plus 2.25% per annum which
becomes due monthly in arrears and is unsecured. The principal outstanding as of
September 30, 2009 amounted to Rp.1,040,000 million. |
| (vi) | On July 3, 2009, Telkomsel signed a medium-term facility loan agreements with
Bank Mandiri of Rp.2,000,000 million. This facility is payable in 9 equal
semi-annual installments commencing 6 months after the end of the availability period.
The loan bears average interest rate of three-month JIBOR plus 3.25% per annum which
becomes due quarterly in arrears and is unsecured. The principal outstanding as of
September 30, 2009 amounted to Rp.2,000,000 million. |

c. BCA

| (i) | 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 bore a floating interest rate of
three-month SBI plus 1.75% per annum which becomes due quarterly in arrears and was
unsecured. The principal outstanding as of September 30, 2008 amounted to Rp.80,000
million and on March 28, 2009, the loan was fully repaid. |
| --- | --- |
| (ii) | On August 15, 2006, Telkomsel signed a medium-term facility loan agreement with
BCA for Rp.350,000 million, payable in 5 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bore a floating interest rate
of three-month SBI plus 1.5% per annum which becomes due quarterly in arrears and was
unsecured. The principal outstanding as of September 30, 2008 amounted to Rp.70,000
million and on March 28, 2009, the loan was fully repaid. |

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BANK LOANS (continued)

c. BCA (continued)

| (iii) | 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 which becomes due quarterly in arrears
and is unsecured. The principal outstanding as of September 30, 2008 and 2009 amounted
to Rp.300,000 million and Rp.100,000 million, respectively. |
| --- | --- |
| (iii) | On July 14, 2008, Telkomsel signed a medium-term facility loan agreements with
BCA of Rp.1,000,000 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 one-month JIBOR plus 1.5% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2008 and 2009 amounted to Rp.1,000,000 million and Rp.600,000 million, respectively. |
| (iv) | On July 3, 2009, Telkomsel signed a medium-term facility loan agreements with
BCA of Rp.2,000,000 million. This facility is payable in 9 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears average interest rate of three-month JIBOR plus 3.25% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2009 amounted to Rp.2,000,000 million. |

d. Citibank

High Performance Backbone (HP Backbone) Loans

| 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 September 30, 2008, the outstanding loan was US$2.1 million (equivalent to
Rp.19,773 million) and on October 6, 2008, the loan was fully repaid. The loan was
payable in 10 equal 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. |
| 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 September 30, 2008 and up to the repayment date on June 5, 2008 and
October 6, 2008, as follows: |

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BANK LOANS (continued)

d. Citibank (continued)

HP Backbone Loans (continued)

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.
3.	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 pertaining to the waiver of the above providing loans facility covenant, which
waiver letter is intended to be valid until the loans facility have been fully repaid.
In 2008, the Company has complied with the above covenant.

EKN-Backed Facility

| On December 2, 2002, pursuant to the partnership agreement with PT Ericsson Indonesia
(Ericsson Indonesia) (Note 48a.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 was determined based on Commercial Interest
Reference Rate (CIRR) of 3.52% plus 0.5% per annum and was unsecured. Interest was
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 2008. The principal outstanding as of
September 30, 2008 amounted to US$1.9 million (equivalent to Rp.18,197 million) and on
December 30, 2008, the loan was fully repaid. |

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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, payable in 5 equal
semi-annual installments commencing 6 months after the end of the availability
period. The loan bore a floating interest rate of three-month SBI plus 1.75% per
annum which becomes due quarterly in arrears and was unsecured. The principal
outstanding as of September 30, 2008 amounted to Rp.100,000 million and on March
28, 2009, the loan was fully repaid. |
| --- | --- |
| (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. The
principal outstanding as of September 30, 2008 and 2009 amounted to Rp.500,000
million and Rp.300,000 million. |

The following table summarizes the principal outstanding on the various long-term loans from Citibank as of September 30, 2008 and 2009:

	2008
	Foreign			Foreign
	currencies	Rupiah		currencies	Rupiah
	(in millions)	equivalent		(in millions)	equivalent
HP Backbone loans	US$	2.1	19,773
EKN-Backed Facility	US$	1.9	18,197
Medium term loan	Rp.		600,000		300,000
Total			637,970		300,000
Current maturities			(337,970	)	(200,000	)
Long-term portion			300,000		100,000

e. BNI

| (i) | On August 15, 2006, Telkomsel signed a medium-term facility loan agreement with
BNI for Rp.300,000 million, payable in 5 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bore a floating interest rate
of three-month SBI plus 1.5% per annum which becomes due quarterly in arrears and was
unsecured. The principal outstanding as of September 30, 2008 amounted to Rp.60,000
million and on March 28, 2009, the loan was fully repaid. |
| --- | --- |
| (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 which becomes due quarterly in arrears
and is unsecured. The principal outstanding as of September 30, 2008 and 2009 amounted
to Rp.300,000 million and Rp.100,000 million, respectively. |

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

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 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 which becomes
due quarterly in arrears and is unsecured. The principal outstanding as of September
30, 2008 and 2009 amounted to Rp.600,000 million and Rp. 300,000 million, respectively. |
| --- | --- |
| (iv) | On July 14, 2008, Telkomsel signed a medium-term facility loan agreements with
BNI of Rp.2,000,000 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 one-month JIBOR plus 1.5% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2008 and 2009 amounted to Rp.2,000,000 million and Rp. 1,200,000 million, respectively. |
| (v) | On July 3, 2009, Telkomsel signed a medium-term facility loan agreements with
BNI of Rp.750,000 million. On July 9, 2009, Rp.200,000 million were drawdown from the
Facility. This facility is payable in 9 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bears average interest rate
of three-month JIBOR plus 3.00% per annum which becomes due quarterly in arrears and is
unsecured. The principal outstanding as of September 30, 2009 amounted to Rp.200,000
million. |

f. Bank CIMB Niaga

| (i) |
| --- |
| 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 19b). |
| On June 13, 2006, Balebat also received an additional facility of Rp.2,500 million which
consisted of 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 were secured by Balebats property,
plant and equipment located in West Java (Note 11). As of September 30, 2008, the
outstanding loans of the facilities were Rp.1,006 million and Rp.nil, and on June 23,
2009, the loan was fully repaid. |

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

BANK LOANS (continued)

f. Bank CIMB Niaga (continued)

| (ii) | As discussed in Note 19b, on April 25, 2005, Balebat entered into a loan
agreement with Bank CIMB 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. As of September 30, 2008 and
2009, the principal outstanding amounted to Rp.468 million and Rp.37 million,
respectively. |
| --- | --- |
| (iii) | On May 29, 2006, Infomedia entered into a loan agreement with Bank CIMB Niaga
for a facility of Rp.18,500 million, to finance its call center project with Telkomsel.
The facility bore interest at 15.5% per annum and was 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 (Note 6). As
of September 30, 2008, the principal outstanding amounted to Rp.5,520 million and on
June 19, 2009, the loan was fully repaid. |
| (iv) | In March 2007, GSD entered into a loan agreement (2 nd special
transaction loan agreement) with Bank CIMB 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 and buildings of GSD (Note 11). 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
September 30, 2008 and 2009, the principal outstanding amounted to Rp.19,150 million
and Rp.18,050 million, respectively. |
| (v) | On November 23, 2007, GSD entered into a loan agreement (3 rd special
transaction loan agreement) with Bank CIMB 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 and buildings of GSD (Note 11). 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 September 30, 2008 and 2009, the principal outstanding amounted to Rp.6,670
million and Rp.5,075 million, respectively. |
| (vi) | On July 28, 2009, Balebat entered into a loan agreement with Bank CIMB Niaga
for a total facility of Rp.3,296 million for investment credit facility with maturity
date of November 28, 2014. On August 28, 2009, Rp.2,743 million was drawdown from the
Facility. The investment credit facility loan is payable in 60 unequal monthly
installments beginning in December 28, 2009 through November 28, 2014. The investment
credit facility bears interest rate of 14% per annum. The facilities are secured by
certain Balebats property, plant and equipment (Note 11), inventories (Note 7), trade
receivables (Note 6). As of September 30, 2009, the principal outstanding amounted to
Rp.2,743 million. |

g. 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 and 15.00% per annum as of September 30, 2008 and 2009. 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, plant and equipment (Note 11).

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BANK LOANS (continued)

h. 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 which becomes
due quarterly in arrears and is unsecured. The principal outstanding as of September
30, 2008 and 2009 amounted to Rp.240,000 million and Rp.80,000 million, respectively. |
| --- | --- |
| (ii) | On October 24, 2007, Telkomsel signed a medium-term 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 which becomes due quarterly in
arrears and is unsecured. In 2008, the loan has been fully drawn-down. The principal
outstanding as of September 30, 2008 and 2009 amounted to Rp.2,000,000 million and
Rp.1,200,000 million, respectively. |
| (iii) | On July 28, 2008, Telkomsel entered a medium-term facility loan agreement with
BRI of Rp.1,000,000 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 one-month JIBOR plus 1.5% per annum which becomes due quarterly in
arrears and is unsecured. The principal outstanding as of September 30, 2008 and 2009
amounted to Rp.1,000,000 million and Rp.600,000 million, respectively. |
| (iv) | On September 2, 2009, Telkomsel entered a medium-term facility loan agreement
with BRI of Rp.800,000 million. This facility is in 9 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 3.25% per annum which becomes due quarterly in
arrears and is unsecured. The principal outstanding as of September 30, 2009 amounted
to Rp.800,000 million. |

i. Bank Ekonomi

| (i) | On December 7, 2006, Sigma entered into a facility loan agreement with Bank
Ekonomi of Rp.14,000 million. The facility bears a floating interest rate from 9.50%
per annum to 15.50% per annum and is payable in 63 monthly installments starting from
September 12, 2007 and ending on December 12, 2012. As of September 30, 2008 and 2009,
the principal outstanding amounted to Rp.11,878 million and Rp.9,673 million,
respectively. |
| --- | --- |
| (ii) | On March 9, 2007, Sigma entered into a facility loan agreement with Bank
Ekonomi of Rp.13,000 million. The facility bears a floating interest rate from 9.50%
per annum to 15.50% per annum and is payable in 60 monthly installments starting from
December 12, 2007 and ending on December 12, 2012. As of September 30, 2008 and 2009,
the principal outstanding amounted to Rp.9,484 million and Rp.7,724 million,
respectively. |
| (iii) | On September 10, 2008, Sigma entered into a facility loan agreement with Bank
Ekonomi of Rp.33,000 million. The facility bears a floating interest rate from 12.50%
per annum to 15.50% and is payable in 78 monthly installments starting from March 11,
2009 and ending on March 11, 2015. As of September 30, 2008 and 2009, the principal
outstanding amounted to Rp.33,000 million and Rp.31,147 million, respectively. |

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

BANK LOANS (continued)

i. Bank Ekonomi (continued)

(iv) On August 7, 2009, Sigma entered into a facility loan agreement with Bank Ekonomi of Rp.35,000 million. The facility bears a floating interest rate from 13.00% per annum to 14.00% and is payable in 48 monthly installments with maturity date on August 18, 2013. On September 4, 2009 and September 9, 2009, Rp.17,800 million and Rp.4,700 million were drawdown from the Facility, respectively. As of September 30, 2009, the principal outstanding amounted to Rp.22,500 million.

These credit facilities are secured by a parcel of land and buildings of Sigma located in Surabaya (Note 11) and Sigmas trade receivables (Note 6) and also includes certain restrictive covenants which require Sigma to obtain written consent from Bank Ekonomi prior to acting as guarantor for third party loan, mortgaging the land to other bank or third party, leasing the land to third party, withdrawing the facility exceeding the maximum facility limit, changing Sigmas legal status, distributing or declaring dividend and paying shareholders receivables.

As of September 30, 2009, Sigma has complied with the above covenant.

j. Syndication of banks

| (i) | On July 29, 2008, the Company entered into a long-term loan agreements with
syndication of BNI, BRI and Bank Jabar (syndication of banks) of Rp.2,400,000 million.
This facility is payable in 8 equal semi-annual installments commencing 6 months after
the end of the availability period. Bank BNI, acting as the facility agent, charged a
floating interest rate of three-month JIBOR plus 1.2% per annum which becomes due
quarterly in arrears and is unsecured. The loan will mature on July 28, 2013. As of
September 30, 2008 and 2009, the principal outstanding amounted to Rp.1,000,000 million
and Rp.2,400,000 million, respectively. |
| --- | --- |
| | 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 September 30, 2009 as follows: |
| | 1. Debt to equity ratio should not exceed
2:1. 2. Debt service coverage ratio should exceed 125%. |
| (ii) | On June 16, 2009, the Company entered into a long-term loan agreements with
syndication of BNI and BRI (syndication of banks) of Rp.2,700,000 million. This
facility is payable in 8 equal semi-annual installments commencing 6 months after the
end of the availability period. Bank BNI, acting as the facility agent, charged a
floating interest rate of three-month JIBOR plus 2.45% per annum which becomes due
quarterly in arrears and is unsecured. The loan will mature on June 15, 2014. As of
September 30, 2009, the principal outstanding amounted to Rp.2,700,000 million. |
| | 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 September 30, 2009 as follows: |
| | 1. Debt to equity ratio should not exceed 2:1. |
| | 2. Debt service coverage ratio should exceed 125%. |

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BANK LOANS (continued)

k. ANZ Panin

On September 4, 2009, Telkomsel entered a medium-term facility loan agreement with ANZ Panin of Rp.1,000,000 million. This facility is in 9 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 2.5% per annum which becomes due quarterly in arrears and is unsecured. The principal outstanding as of September 30, 2009 amounted to Rp.1,000,000 million.

l. BII

On September 15, 2009, Telkomsel entered a medium-term facility loan agreement with BII of Rp.500,000 million. This facility is in 9 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 3.5% per annum which becomes due quarterly in arrears and is unsecured. The principal outstanding as of September 30, 2009 amounted to Rp.500,000 million.

| 24. |
| --- |
| Deferred consideration represents 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	54,037
The Asian Infrastructure Fund	12,866
MediaOne International I B.V.	36,024
Less discount on promissory notes	(29	)
	102,898
KSO IV transaction
MGTI	1,765,799		1,048,754
Less discount	(157,166	)	(52,999	)
	1,608,633		995,755
KSO VII transaction
BSI	1,226,176		700,132
Less discount	(186,021	)	(61,942	)
	1,040,155		638,190
Total	2,751,686		1,633,945
Current maturity net of discount (Note 20a)	(1,141,940	)	(1,200,948	)
Long-term portion net of discount (Note 20b)	1,609,746		432,997

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DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS (continued)

a.	TII transaction
	The outstanding balance relating to the 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). The promissory notes are payable in 10 equal
semi-annual installments beginning July 31, 2004 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).
	As of September 30, 2008, the outstanding promissory notes, before unamortized discount,
amounted to US$10.9 million (equivalent to Rp.102,927 million) and on January 30, 2009, the
promissory notes was fully repaid
b.	KSO IV transaction
	The outstanding balance relating to the KSO IV transaction 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 December 2010 at a discount rate of 8.3%, plus the direct cost of the business
combination.
	As of September 30, 2008 and 2009, the remaining monthly payments to be made to MGTI, before
unamortized discount, amounted to US$187.2 million (equivalent to Rp.1,765,799 million) and
US$108.45 million (equivalent to Rp.1,048,754 million), respectively.
c.	KSO VII transaction
	The outstanding balance relating to the KSO VII transaction arose from acquisition of KSO
VII by the Company, based on amendment and restatement of KSO agreement entered into by the
Company and BSI on October 19, 2006. Based on the agreement, in consideration for the
Companys obtaining legal right to control the financial and operating decision of KSO VII,
the Company has agreed to pay BSI the total purchase price of approximately Rp.1,770,925
million which represents the present value of fixed monthly payments (totaling Rp.2,359,230
million), payable to BSI beginning October 2006 through December 2010 at a discount rate of
15%, plus the direct cost of the business combination.
	As of September 30, 2008 and 2009, the remaining monthly payments to be made to BSI, before
unamortized discount, amounted to Rp.1,226,176 million and Rp.700,132 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	8,622,035	9,697,713
Metra	62,036	61,101
Infomedia	145,857	7,186
Total	8,829,928	9,766,000

*) As restated (Note 53)


Minority interest in net income of subsidiaries:
Telkomsel	3,158,664	3,434,915
Infomedia	35,273	36,715
Metra	2,157	15,503
Total	3,196,094	3,487,133

CAPITAL STOCK

	2008 — Number of	Percentage	Total
Description	shares	of ownership	paid-up capital
Series A Dwiwarna share
Government	1
Series B shares
Government	10,320,470,711	52.44	2,580,118
JPMCB US Resident (Norbax Inc.)	1,383,633,901	7.03	345,909
The Bank of New York Mellon Corporation
(formerly The Bank of New York Company, Inc.)	1,851,712,416	9.41	462,928
Directors (Note 1b):
Ermady Dahlan	17,604		4
Indra Utoyo	5,508		1
Public (individually less than 5%)	6,123,996,139	31.12	1,530,999
Total	19,679,836,280	100.00	4,919,959
Treasury stock (Note 28)	480,163,000		120,041
Total	20,159,999,280	100.00	5,040,000

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CAPITAL STOCK (continued)

	2009 — Number of	Percentage	Total
Description	shares	of ownership	paid-up capital
Series A Dwiwarna share
Government	1
Series B shares
Government	10,320,470,711	52.47	2,580,118
JPMCB US Resident (Norbax Inc.)	1,019,059,586	5.18	254,765
Directors (Note 1b):
Ermady Dahlan	17,604		4
Indra Utoyo	5,508		1
Public (individually less than 5%)	8,329,871,370	42.35	2,082,468
Total	19,669,424,780	100.00	4,917,356
Treasury stock (Note 28)	490,574,500		122,644
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 Stockholders of the Company 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.

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 | |

TREASURY STOCK

Based on the resolution at the EGM of Stockholders of the Company on December 21, 2005, the stockholders authorized the phase I plan to repurchase the Companys issued and outstanding Series B shares. The proposal 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 the 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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TREASURY STOCK (continued)

Based on the resolution at the AGM of Stockholders of the Company on June 29, 2007, the stockholders authorized the discontinuance of 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 proposal was to undertake a stock repurchase program with 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).

Based on the resolution at the AGM of Stockholders or the Company on June 20, 2008, the stockholders authorized the discontinuance of the phase II plan to repurchase the Series B shares and authorized the phase III plan to repurchase the Companys issued and outstanding Series B shares. The proposal was to undertake a stock repurchase program with the following terms and conditions: (i) maximum stock repurchase would be 339,443,313 of the Companys issued Series B shares with total cost not to exceed Rp.3,000,000 million; and (ii) the period determined for the acquisition would not be longer than 18 months (June 20, 2008 to December 20, 2009).

On October 13, 2008, based on BAPEPAM-LK Regulation No. XI.B.3 Attachment to the Decision of the Chairman of BAPEPAM-LK No. Kep-401/BL/2008 dated October 9, 2008 concerning the Stock Repurchase of Stock Issued by the Public Company on Potential Crisis Market Condition, the Company has released a full disclosure statement to the public in relation to the Companys plan to conduct a stock repurchase program of the Companys stock which has been issued and listed in IDX up to 20% of its paid up capital with total cost not to exceed Rp.3,000,000 million which will be conduct gradually within the acquisition period that would not be longer than 3 months (October 13, 2008 to January 12, 2009).

As of September 30, 2008 and 2009, the Company has repurchased 480,163,000 and 490,574,500 shares of the Companys issued and outstanding Series B shares, respectively, representing 2.38% and 2.43% of the Companys issued and outstanding Series B shares, for a total repurchase amount of Rp. 4,202,255 million and Rp.4,264,214 million up to September 30, 2008 and 2009, respectively, (including brokers commissions and custodian fees).

The Company has planned to retain, sell or use the treasury stock for other purposes in accordance with BAPEPAM-LK 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	244,740,500	2,176,611	490,574,500	4,264,073
Number of shares acquired/addition	235,422,500	2,025,644		141
Balance ending	480,163,000	4,202,255	490,574,500	4,264,214

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TREASURY STOCK (continued)

For the period from January 1 to September 30, 2009, the Company did not repurchase any treasury shares, hence the historical unit cost of repurchase of treasury shares for the nine months period ended September 30, 2008 and 2009 is as follows:

2008	2009
Weighted average	8,604
Minimum	6,771
Maximum	10,155

The acquisition cost per share has included the brokers commissions. Up to the consolidated balance sheet date, none of the shares acquired were sold.

As of October 28, 2009, the Company had repurchased 490,574,500 shares equivalent to 2.43% of the issued and outstanding Series B shares, for a repurchase price of Rp.4,264,232 million, including broker and custodian fees (Note 1c).

DIFFERENCE IN VALUE ARISING FROM RESTRUCTURING TRANSACTIONS AND OTHER TRANSACTIONS BETWEEN ENTITIES UNDER COMMON CONTROL

The balance of this account amounting to Rp.478,000 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. 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 September 30, 2008 and 2009, the development of the related infrastructures amounted to Rp.296,872 million and Rp.416,773 million, respectively.

As of September 30, 2008 and 2009, the Company has received an aggregate of Rp.270,000 million and Rp.478,000 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, December 13, 2007, November 12, 2008, and Rp.118,000 million on August 25, 2009, 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.

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

TELEPHONE REVENUES


Fixed lines
Local and SLJJ	4,482,415	3,284,150
Monthly subscription charges	2,756,481	2,829,363
Installation charges	91,308	73,016
Phone cards	7,715	24,389
Others	114,928	163,446
Total	7,452,847	6,374,364
Cellular
Usage charges	17,267,588	18,193,872
Monthly subscription charges	290,544	1,371,840
Features	524,838	1,299,709
Connection fee charges	197,771	175,819
Total	18,280,741	21,041,240
Total Telephone Revenues	25,733,588	27,415,604

INTERCONNECTION REVENUES

Revenues	9,022,406		7,919,112
Expenses	(2,383,169	)	(2,179,021	)
Total Net	6,639,237		5,740,091

| | 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 47). |
| --- | --- |
| | Refer to Note 44 for details of related party transactions. |
| 32. | DATA, INTERNET AND INFORMATION TECHNOLOGY REVENUES |

Short Messaging Services (SMS)	7,309,377	8,662,615
Internet	1,567,268	2,328,936
Data communication and information technology services	1,887,928	1,273,912
VoIP	108,409	135,559
e-Business	22,298	27,766
Total	10,895,280	12,428,788

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NETWORK REVENUES

Leased lines	484,710	564,417
Satellite transponder lease	256,332	197,299
Total	741,042	761,716

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

RSA revenues	100,667	24,252
Amortization of unearned income (Note 12)	166,851	93,597
Total	267,518	117,849

PERSONNEL EXPENSES

Salaries and related benefits	2,200,267	2,259,819
Vacation pay, incentives and other benefits	1,871,994	1,950,357
Employees income tax	905,981	529,755
Net periodic pension costs (Notes 41a)	529,736	395,813
Net periodic post-retirement health care
benefits costs (Note 43)	676,227	248,334
Housing	175,573	155,264
LSA and LSA termination costs (Note 42)	14,933	66,898
Other post-retirement cost (Note 41b)	62,677	61,101
Medical	6,150	6,610
Other employees benefits (Note 41c)	10,882	11,398
Others	36,363	56,828
Total	6,490,783	5,742,177

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OPERATIONS, MAINTENANCE AND TELECOMMUNICATION SERVICES EXPENSES

Operations and maintenance	4,467,268	4,928,378
Radio frequency usage charges (Note 48d.v)	1,718,590	1,729,718
Concession fees and Universal Service
Cost of handset, phone, SIM and RUIM cards	578,705	843,917
Obligation (USO) charges	780,453	829,780
Electricity, gas and water	380,249	488,307
Leased lines and CPE	267,077	341,321
Insurance	273,540	234,158
Vehicles rental and supporting facilities	163,858	193,400
Cost of IT services	63,221	155,824
Travelling	38,911	44,376
Others	55,659	94,717
Total	8,787,531	9,883,896

	Refer to Note 44 for details of related party transactions.
37.	GENERAL AND ADMINISTRATIVE EXPENSES

| Amortization of goodwill and other intangible assets
(Note 14) | 918,490 | 978,931 |
| --- | --- | --- |
| Collection expenses | 446,653 | 519,750 |
| Provision for doubtful accounts and inventory
obsolescence (Notes 6d and 7) | 444,979 | 431,384 |
| Security and screening | 196,097 | 177,928 |
| Travelling | 180,748 | 163,646 |
| Training, education and recruitment | 176,863 | 145,367 |
| General and social contribution | 73,485 | 135,136 |
| Professional fees | 77,285 | 94,631 |
| Meetings | 67,308 | 52,767 |
| Stationery and printing | 48,306 | 44,270 |
| Vehicles rental | 60,470 | 42,129 |
| Research and development | 7,188 | 4,354 |
| Others | 34,322 | 46,412 |
| Total | 2,732,194 | 2,836,705 |

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TAXATION

a. Claim for tax refund


Subsidiaries
Corporate income tax		448
Income tax including interest
Article 4 (2) Final tax		2
Article 23 - Withholding tax on services delivery	72,751	314
Article 26 - Withholding tax on non-resident income tax	7,934	687
Value Added Tax (VAT) including interest	327,326	214,875
	408,011	216,326

b. Prepaid taxes


The Company
Corporate income tax		255,168
		255,168
Subsidiaries
Corporate income tax	85,702	570,555
VAT	48,334	14,115
Income tax Article 22- Withholding tax on goods delivery
and imported		597
Income tax Article 23 - Services delivery	26,513	10,297
	160,549	595,564
	160,549	850,732

c. Taxes payable


The Company
Income taxes
Article 4 (2) Final tax		5,740
Article 21- Individual income tax	169,344	92,998
Article 22- Withholding tax on goods delivery and
imported	6,458	1,462
Article 23- Withholding tax on services delivery	19,395	6,928
Article 25- Installment of corporate income tax	5,790	5,561
Article 26- Withholding tax on non-resident income tax	6,383	1,604
Article 29- Underpayment of corporate income tax	363,741	61,597
VAT	253,360	248,668
	824,471	424,558

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TAXATION (continued)

c. Taxes payable (continued)


Subsidiaries
Income taxes
Article 4 (2) Final tax			20,484
Article 21- Individual income tax	36,294		24,781
Article 22- Withholding tax on goods delivery and
imported	2
Article 23- Withholding tax on services delivery	65,496		30,712
Article 25- Installment of corporate income tax	419,190		319,430
Article 26- Withholding tax on non-resident income tax	6,862		135,718
Article 29- Underpayment of corporate
income tax	(327,709	)	837,047
VAT	80,675		130,091
	280,810		1,498,263
	1,105,281		1,922,821

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


Current
The Company	1,470,362		862,832
Subsidiaries	3,516,696		3,734,440
	4,987,058		4,597,272
Deferred
The Company	52,968		338,584
Subsidiaries	370,352		61,021
	423,320		399,605
Benefits of deferred tax from reduction in tax rate
The Company	(167,079	)
Subsidiaries	(421,379	)
	(588,458	)
	4,821,920		4,996,877

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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	16,937,902		17,784,472
Add back consolidation eliminations	6,019,451		6,275,835
Consolidated income before tax and eliminations	22,957,353		24,060,307
Less: income before tax of the subsidiaries	(12,681,216	)	(13,552,243	)
Income before tax attributable to the Company	10,276,137		10,508,064
Less: income subject to final tax	(520,951	)	(536,130	)
	9,755,186		9,971,934
Tax calculated at progressive rates	2,926,538		2,293,545
Non-taxable income	(1,806,578	)	(1,439,283	)
Non-deductible expenses	330,884		234,326
Deferred tax liabilities (assets) that cannot be utilized net	10,029		59,851
Effect on the Companys deferred tax liabilities
of reduction in tax rate net	(167,079	)
Corporate income tax expense	1,293,794		1,148,439
Final income tax expense	62,457		52,977
Total income tax expense of the Company	1,356,251		1,201,416
Income tax expense of the subsidiaries	3,887,048		3,795,461
Effect on subsidiaries deferred tax liabilities
of reduction in tax rate net	(421,379	)
Total consolidated income tax expense	4,821,920		4,996,877

The reconciliation between income before tax attributable to the Company and the estimated taxable income for the nine months period ended September 30, 2008 and 2009, are as follows:

Income before tax attributable to the Company	10,276,137		10,508,064
Less: income subject to final tax	(520,951	)	(536,130	)
	9,755,186		9,971,934

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TAXATION (continued)

e. (continued)


Temporary differences:
Amortization of intangible assets	724,555		752,380
Depreciation of property, plant and equipment	343,288		(133,953	)
Allowance for doubtful accounts	361,521		299,528
Accrued employees benefits	(288,081	)	(800,615	)
Depreciation of property, plant and equipment
under RSA	81,507		61,612
Finance leases	(1,477	)	(15,358	)
Allowance for inventory obsolescence	7,668		8,834
Amortization of land rights	(2,827	)	(3,034	)
Gain on sale of property, plant and equipment	(7,282	)	(10,491	)
Amortization of unearned income on RSA	(143,306	)	(83,637	)
Trade receivable written-off	(247,796	)
Net periodic pension and other post-retirement
benefits costs	(260,345	)	(318,244	)
Payments of deferred consideration for business
combinations	(661,956	)	(880,162	)
Foreign exchange (gain) loss on deferred consideration
for business combinations	(32,089	)	(132,328	)
Other provisions	(16,508	)	43,583
Total temporary differences	(143,128	)	(1,211,885	)
Permanent differences:
Net periodic post-retirement health care
benefits costs	668,432		248,334
Amortization of goodwill	180
Amortization of discounts on promissory notes	8,753		520
Equity in net income of associates
and subsidiaries	(6,021,928	)	(6,257,754	)
Others	425,580		769,956
Total permanent differences	(4,918,983	)	(5,238,944	)
Taxable income	4,693,075		3,521,105
Current corporate income tax expense	1,407,905		809,855
Final income tax expense	62,457		52,977
Total current income tax expense of the Company	1,470,362		862,832
Current income tax expense of the subsidiaries	3,516,696		3,734,440
Total current income tax expense	4,987,058		4,597,272

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TAXATION (continued)

f. Tax assessment

(i)	Company
	In 2006, the Company received an underpayment tax assessment letter (Surat Ketetapan
Pajak Kurang Bayar or SKPKB) from the Tax Office confirming an underpayment of its
corporate income tax for fiscal year 2004 amounting to Rp.4,363 million. The
underpayment was paid in August 2006.
(ii)	Telkomsel
	In 2007, Telkomsel was assessed by the Tax Authorities 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. The difference between the assessed and
objected amounts of Rp.70 billion was charged to the 2007 consolidated statements of
income.
	Subsequently, on December 31, 2008, the Tax Authorities accepted Rp.141 billion of the
objection. Telkomsel recognized such amount and interest of Rp.39 billion as claims for
tax refund as of December 31, 2008. On February 23, 2009, Telkomsel filed an appeal to
the Tax Court for the rejected objection on VAT of Rp.215 billion. Telkomsel believes
that such amount will be refundable, hence, it was recognized as a claim for tax refund
as of December 31, 2008. The remainder of the rejected amount of Rp.52 billion was
charged to the 2008 consolidated statements of income. The Tax Authorities might raise
similar issues for transactions that occurred in subsequent fiscal years.
	On October 2, 2007, Telkomsel filed an appeal to the Tax Court for the Tax Authorities
rejection over the Telkomsels objection on SKPKB of withholding taxes article 23 and 26
for the fiscal year 2002 of Rp.21 billion. The amount of Rp.21 billion which was
previously recorded as claims for tax refund was charged to the 2007 consolidated
statement of income.
	Based on the Tax Courts decision in December 2008, Telkomsels appeal has been
accepted and an amount of Rp.115 billion with an interest of Rp.52 billion, net of
underpayments of various taxes, was received in February 2009.
	On February 25, 2009, Tax Authorities filed a judicial review in Indonesian SC, on the
Tax Courts decision to accept Telkomsels appeal for a refund of Rp.115 billion.
Telkomsel believes that the decision has properly been made. Accordingly, on April 3, 2009,
Telkomsel filed a contra appeal to the SC. As of the issuance date of the consolidated
financial statements, no decision has been reached on the judicial review.

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TAXATION (continued)

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


		credited to the
		consolidated				Effect of
December 31,		to statements		Acquisitions		reduction in		September 30,
2007		of income		of Sigma		tax rate		2008*)
The Company
Deferred tax assets:
Deferred consideration for
business combinations	1,010,035		(208,213	)			(94,293	)	707,529
Allowance for doubtful accounts	306,329		33,999				(45,327	)	295,001
Net periodic pension and other
post-retirement benefits costs	375,994		(69,720	)			(43,996	)	262,278
Accrued expenses	76,686		(27,737	)			(9,306	)	39,643
Accrued for employees benefits	172,071		(86,424	)			(13,320	)	72,327
Finance leases	40,057		(4,590	)			(2,528	)	32,939
Allowance for inventory obsolescence	15,891		2,283				(2,740	)	15,434
Total deferred tax assets	1,997,063		(360,402	)			(211,510	)	1,425,151
Deferred tax liabilities:
Difference between book and tax property, plant and
equipments net book value	(1,848,201	)	132,767				291,986		(1,423,448	)
Land rights	(4,592	)	(849	)			786		(4,655	)
RSA	(59,859	)	(10,391	)			10,419		(59,831	)
Intangible assets	(909,005	)	185,907				75,398		(647,700	)
Total deferred tax liabilities	(2,821,657	)	307,434				378,589		(2,135,634	)
Deferred tax liabilities of the Company net	(824,594	)	(52,968	)			167,079		(710,483	)
Deferred tax liabilities of the
subsidiaries net	(2,209,506	)	(370,352	)	(54,636	)	421,379		(2,213,115	)
Total deferred tax liabilities net	(3,034,100	)	(423,320	)	(54,636	)	588,458		(2,923,598	)


	credited to the
	consolidated
December 31,	statements		September 30,
2008	of income		2009
The Company
Deferred tax assets:
Deferred consideration for business combinations	698,048	(283,497	)	414,551
Allowance for doubtful accounts	259,195	95,784		354,979
Net periodic pension and other post-retirement benefits costs	275,741	(89,110	)	186,631
Accrued expenses	31,877	7,755		39,632
Early termination expenses	220,698	(220,698	)
Accrued for employees benefits	93,035	(3,475	)	89,560
Finance leases	22,034	(4,300	)	17,734
Allowance for inventory obsolescence	16,201	2,436		18,637
Total deferred tax assets	1,616,829	(495,105	)	1,121,724

*) As restated (Note 53)

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TAXATION (continued)

g. Deferred tax assets and liabilities (continued)


		credited to the
		consolidated
December 31,		statements		September 30,
2008		of income		2009
Deferred tax liabilities:
Difference between book and tax property, plant and
equipments net book value	(1,570,559	)	(87,451	)	(1,658,010	)
Land rights	(4,922	)	(848	)	(5,770	)
RSA	(57,869	)	(6,168	)	(64,037	)
Intangible assets	(573,918	)	250,988		(322,930	)
Total deferred tax liabilities	(2,207,268	)	156,521		(2,050,747	)
Deferred tax liabilities of the Company net	(590,439	)	(338,584	)	(929,023	)
Deferred tax liabilities of the
subsidiaries net	(2,314,434	)	(61,021	)	(2,375,455	)
Total deferred tax liabilities net	(2,904,873	)	(399,605	)	(3,304,478	)

| | Realization of the deferred tax assets is dependent upon future 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 that 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 prepaid taxes. |
| h. | Administration |
| | Under the taxation laws of Indonesia, the Company and each subsidiary submit tax return on
the basis of self assessment. The Directorate General of Tax (DGT) may assess or amend
taxes within ten years of the time the tax becomes due, or until 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. |
| | On September 23, 2008, the President of the Republic Indonesia and MoJHR has signed and
enacted the Tax Law No. 36/2008 concerning the Fourth Amendment of the Tax Law No. 7/1983 of
Income Taxes. This regulation stipulates that corporate tax rate will be a flat rate of 28%
in 2009 (previously calculated using progressive tax rates range from 10% to 30%), and 25%
in 2010. As of December 31, 2008, the Company and its subsidiaries measured the effect of
the enacted tax rate of 28% and 25% in calculating its deferred tax assets and liabilities
depending on the timing of realization of its estimates. |

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TAXATION (continued)

| h. |
| --- |
| Other than tariff changes, the Tax Law No. 36/2008 also stipulates a reduction of 5% from
the top rate applies for qualifying companies listed and traded its stock in the IDX which
meet the prescribed criteria that the stocks owned by the public are 40% or more of the
total fully paid and traded stocks in IDX, and such stocks are owned by at least 300
parties, each party owning less than 5% of the total paid-up stocks. These requirements
should be fulfilled by the publicly-listed companies for a period of 6 months in 1 tax year.
Therefore, the calculation of income tax expenses and liabilities for the financial
reporting period of September 30, 2009 purposes, the Company uses tax rate after
considering the decrease in tax rates. For fiscal year 2008, the Company has met all of the
required criteria, thereby the Company is entitled the tax rate reduction incentive and it
has been implemented for the calculation of corporate income tax. |
| 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 2007, and Infomedia up to fiscal year 2003. Currently, Telkomsel is
being audited by the Tax Office for the fiscal year 2006 and 2008 and DMT for fiscal year
2008. |
| In 2008, Tax Authorities issued a sunset policy program in form of an opportunity to the tax
payer to make revision in the prior years underpaid Annual Tax Returns Form (Surat
Pemberitahuan Tahunan or SPT Tahunan), which will be granted for free tax administration
sanction and will be no assessment in the related fiscal year, unless the Tax Authorities
find new evidence to perform the assessment and investigation. The Company and Telkomsel
have utilized sunset policy program through SPT revision. The Company settled the tax
underpayments for fiscal years 2003, 2005 and 2006 amounting to Rp.1.9 billion, Rp.2.8
billion and Rp.2.4 billion, respectively, and Telkomsel for fiscal year 2003 amounting to
Rp.1.9 billion. In addition, the Company received a certificate of tax investigation
exemption from DGT for fiscal year 2007 and 2008, unless if the Company files overpaid SPT
Tahunan then tax assessment will be performed. |

39.
Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the year, totaling 19,774,345,563 and 19,669,424,780 for the nine months period ended September 30, 2008 and 2009, respectively.
Basic earnings per share amounting to Rp.451.08 and Rp.472.84 for the nine months period ended
September 30, 2008 and 2009, respectively.
The Company does not have potentially dilutive ordinary shares.

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| 40. |
| --- |
| Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 41 dated June
20, 2008 of A. Partomuan Pohan, S.H., LLM., the stockholders approved the distribution of cash
dividends for 2007 amounting to Rp.7,071,360 million or Rp.357.87 per share (of which
Rp.965,398 million or Rp.48.45 per share was distributed as interim cash dividend in November
2007), the distribution of special cash dividends amounting to Rp.1,928,553 million and the
appropriation of Rp.3,857,106 million for general reserves. |
| Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 215 dated
June 12, 2009 of A. Partomuan Pohan, S.H., LLM., the stockholders approved the distribution of
cash dividends for 2008 amounting to Rp.5,840,708 million or Rp.296.94 per share and the
appropriation of Rp.4,778,761 million for general reserves. |

PENSION AND OTHER POST-RETIREMENT BENEFITS


Accrued pension and other post-retirement
benefits costs
Pension
The Company	842,662	441,605
Telkomsel	69,951	99,951
Accrued pension costs	912,613	541,556
Other post-retirement benefits	235,044	246,198
Obligation under Labor Law	65,765	67,007
Accrued pension and other post-retirement
benefits costs	1,213,422	854,761
Prepaid pension benefits costs	697	782
Net periodic pension costs
The Company	483,213	354,787
Telkomsel	46,514	41,021
Infomedia	9	5
Net periodic pension costs (Note 35)	529,736	395,813
Other post-retirement cost (Note 35)	62,677	61,101
Other employees benefits (Note 35)	10,882	11,398

a. Pension

1.
The Company sponsors a defined benefit pension plan and a defined contribution pension
plan.

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 1. |
| --- |
| 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 and subsidiaries contributions to the pension fund for the
nine months period ended September 30, 2008 and 2009 amounted to Rp.666,201 million and
Rp.666,796 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 (Dana Pensiun Lembaga Keuangan or DPLK). The Companys contribution to DPLK is
determined based on certain percentage of the participants salaries and amounted to
Rp.2,144 million and Rp.2,847 million for the nine months period ended September 30,
2008 and 2009, 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 as of September 30, 2008 and 2009, for its defined benefit
pension plan: |


Change in projected benefits obligation
Projected benefits obligation at beginning of year	10,727,812		9,516,975
Service costs	211,601		168,554
Interest costs	807,727		836,680
Plan participants contributions	33,378		33,503
Actuarial (gains) losses	585,519		(1,626,201	)
Expected benefits paid	(331,198	)	(330,799	)
Projected benefits obligation at end of period	12,034,839		8,598,712
Change in plan assets
Fair value of plan assets at beginning of year	9,034,392		8,713,418
Expected return on plan assets	698,126		773,122
Employers contributions	666,201		666,796
Plan participants contributions	33,378		33,503
Actuarial loss (gains)	(1,444,003	)	1,437,693
Expected benefits paid	(308,856	)	(303,923	)
Fair value of plan assets at end of period	8,679,238		11,320,609
Funded status	(3,355,601	)	2,721,897
Unrecognized prior service costs	1,490,096		1,331,729
Unrecognized net actuarial (gain) loss	1,022,843		(4,495,231	)
Accrued pension benefit cost	(842,662	)	(441,605	)

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 1. |
| --- |
| In 2007, the Company provides pension benefit based on uniformulation for both
participants prior to and from April 20, 1992 effective for employees retiring beginning
February 1, 2009. The change in benefit had increased the Companys liabilities by
Rp.698,583 million, which is amortized over 9.9 years until 2016. |
| The actual return on plan assets was Rp.681,493 and Rp.2,296,785 million for the nine
months period ended September 30, 2008 and 2009. |
| The movement of the accrued pension benefits costs during the nine months period ended
September 30, 2008 and 2009, is as follows: |

| Accrued pension benefits costs at beginning
of year | 1,054,097 | | 775,657 | |
| --- | --- | --- | --- | --- |
| Net periodic pension cost less amounts
charged to KSO Units and subsidiaries | 483,213 | | 354,787 | |
| Amount charged to KSO Units and subsidiaries under
contractual agreements | | | 773 | |
| Employers contributions | (666,201 | ) | (666,796 | ) |
| Benefits paid by the Company | (28,447 | ) | (22,816 | ) |
| Accrued pension benefits costs at end of period | 842,662 | | 441,605 | |

| As of September 30, 2009, plan assets consisted mainly of Indonesian Government bonds
and corporate bonds. As of September 30, 2008 and 2009, plan assets included Series B
shares issued by the Company with fair value totaling Rp.257,892 million and Rp.316.334
million, respectively, represents 3.10% and 2.79% of total assets of Dapen as of
September 30, 2008 and 2009, respectively. |
| --- |
| The actuarial valuation for the defined benefit pension plan and the other
post-retirement benefits (Note 41b) was performed based on the measurement date as of
December 31, 2007 and 2008, with reports dated March 31, 2008 and March 31, 2009,
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, 2007 and 2008, are as follows: |

Discount rate	10.25 %	12 %
Expected long-term return on plan assets	10 %	11.5 %
Rate of compensation increases	8 %	8 %

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

1.
The components of net periodic pension costs are as follows:

Service costs	211,601		168,554
Interest costs	807,727		836,680
Expected return on plan assets	(698,126	)	(773,122	)
Amortization of prior service costs	165,991		165,991
Recognized actuarial gain	(3,980	)	(42,543	)
Net periodic pension costs	483,213		355,560
Amount charged to KSO Units and subsidiaries under
contractual agreements			(773	)
Total net periodic pension costs less
amounts charged to KSO Units and subsidiaries (Note 35)	483,213		354,787

| 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. |
| Telkomsels contributions to Jiwasraya amounted to Rp.40,634 million and Rp.33,498
million for the nine months period ended September 30, 2008 and 2009, respectively. |
| The following table reconciles the unfunded status of the plans with the amounts
included in the consolidated balance sheets as of September 30, 2008 and 2009: |

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

Telkomsel (continued)

Projected benefits obligation	(342,250	)	(335,348	)
Fair value of plan assets	148,114		162,588
Unfunded status	(194,136	)	(172,760	)
Unrecognized items in the consolidated balance sheet:
Unrecognized prior service costs	(798	)	(735	)
Unrecognized net actuarial losses	123,288		72,027
Unrecognized net obligation at the date of
initial application of PSAK 24	1,695		1,517
Accrued pension benefits costs	(69,951	)	(99,951	)

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

Service costs	27,971		25,461
Interest costs	22,930		25,563
Expected return on plan assets	(8,450	)	(11,592	)
Amortization of past service costs	(47	)	(47	)
Recognized actuarial losses	3,977		1,503
Amortization of net obligation at the date of
initial application of PSAK 24	133		133
Net periodic pension costs (Note 35)	46,514		41,021

The net periodic pension cost for the pension plan was calculated based on the measurement date as of December 31, 2007 and 2008, with reports dated March 25, 2008 and February 12, 2009, respectively, by WWP, an independent actuary in association with WWW. The principal actuarial assumptions used by the independent actuary based on the measurement date as of December 31, 2007 and 2008 for each of the year, are as follows:

Discount rate	10.5 %	12 %
Expected long-term return on plan assets	10.5 %	12 %
Rate of compensation increases	8 %	9 %

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 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 September 30, 2008 and 2009, are as follows: |

Projected benefits obligation	(6,307	(5,922
Fair value of plan assets	7,004	6,704
Funded status	697	782
Prepaid pension benefits costs	697	782

The net periodic pension costs of Infomedia amounted to Rp.9 million and Rp.5 million for the nine months period ended September 30, 2008 and 2009, 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 2006, these benefits presented as part of LSA. |
| The movement of the other post-retirement benefits for the nine months period ended
September 30, 2008 and 2009, are as follows: |

| Accrued other post-retirement benefits costs
at beginning of year | 195,061 | | 210,345 | |
| --- | --- | --- | --- | --- |
| Other post-retirement benefits costs | 62,677 | | 61,101 | |
| Other post-retirement benefits paid | (22,694 | ) | (25,248 | ) |
| Total accrued other post-retirement benefits
costs at end of period after early
retirement benefits | 235,044 | | 246,198 | |

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

b.
The components of the net periodic other post-retirement benefits costs for the nine months
period ended September 30, 2008 and 2009, are as follows:

Service costs	16,969	16,297
Interest costs	31,450	34,619
Amortization of past service costs	5,120	5,120
Recognized actuarial losses	9,138	5,065
Total net periodic other post-retirement
benefits costs (Note 35)	62,677	61,101

| 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 age. The total related obligation recognized as of
September 30, 2008 and 2009 amounted to Rp.65,765 million and Rp.67,007 million,
respectively. The related employees benefits cost charged to expense amounted to Rp.10,882
million and Rp.11,398 million for the nine months period ended September 30, 2008 and 2009,
respectively (Note 35). |

LONG SERVICE AWARDS (LSA)

| Telkomsel |
| --- |
| Telkomsel provides certain cash awards or certain number of days leave benefits to its employees
based on the employees length of service requirements, including LSA and LSL (Note 48d.i). LSA
are either paid at the time the employees reach the anniversary dates during employment, or at
the time of termination. LSL are either certain number of days leave benefit or cash, subject to
approval by management, provided to employees who met the requisite number of years of service
and with a certain minimum age. |
| The obligation with respect to these awards was determined based on an actuarial valuation using
the Projected Unit Credit method, and amounted to Rp.83,630 million and Rp.165,431 million as
of September 30, 2008 and 2009, respectively (Note 44). The related benefits cost charged to
expense amounted to Rp.14,933 million and Rp.66,898 million for the nine months period ended
September 30, 2008 and 2009, 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 to work for 20 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. |
| 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 September 30, 2008 and 2009: |


Change in projected benefits obligation
Projected benefits obligation at beginning of year	8,925,612		5,855,224
Service costs	107,986		54,005
Interest costs	677,624		515,075
Actuarial (gains) loss	1,052,567		(2,921,904	)
Expected post-retirement health care paid	(166,496	)	(198,252	)
Projected benefits obligation at end of period	10,597,293		3,304,148
Change in plan assets
Fair value of plan assets at beginning of year	3,376,172		4,018,693
Expected return on plan assets	257,525		307,784
Employers contributions	800,000		800,350
Actuarial losses (gains)	(393,073	)	614,061
Expected post-retirement health care paid	(166,496	)	(198,252	)
Fair value of plan assets at end of period	3,874,128		5,542,636
Funded status	(6,723,165	)	2,238,488
Unrecognized net actuarial (gains) losses	4,078,015		(4,257,542	)
Accrued post-retirement health care benefits costs	(2,645,150	)	(2,019,054	)

The actual return on plan assets was Rp.169,143 million and Rp.263,890 million for the nine months period ended September 30, 2008 and 2009, respectively.

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

Service costs	107,986		54,005
Interest costs	677,624		515,075
Expected return on plan assets	(257,525	)	(307,784	)
Recognized actuarial (gain) losses	148,142		(12,612	)
Net periodic post-retirement benefits costs	676,227		248,684
Amounts charged to KSO Units and subsidiaries
under contractual agreements			(350	)
Total net periodic post-retirement health care
benefits costs less amounts charged to
KSO Units and subsidiaries (Note 35)	676,227		248,334

| As of September 30, 2008 and 2009, plan assets included the Companys Series B shares with total
fair value of Rp.59,606 million and Rp.76,860 million, respectively. |
| --- |
| The movements of the accrued post-retirement health care benefits costs for the nine months
period ended September 30, 2008 and 2009, are as follows: |

| Accrued post-retirement health care benefits costs at
beginning of year | 2,768,923 | | 2,570,720 | |
| --- | --- | --- | --- | --- |
| Net periodic post-retirement health care benefits costs
less amounts charged to KSO Units and
subsidiaries (Note 35) | 676,227 | | 248,334 | |
| Amounts charged to KSO Units and subsidiaries
under contractual agreements | | | 350 | |
| Employers contributions | (800,000 | ) | (800,350 | ) |
| Accrued post-retirement health care benefits
costs at end of period | 2,645,150 | | 2,019,054 | |

The actuarial valuation for the post-retirement health care benefits was performed based on the measurement date as of December 31, 2007 and 2008, with reports dated March 31, 2008 and March 31, 2009, respectively, by WWP, an independent actuary in association with WWW. The principal actuarial assumptions used by the independent actuary as of December 31, 2007 and 2008, are as follows:

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POST-RETIREMENT HEALTH CARE BENEFITS (continued)

Discount rate	10.25 %	12 %
Expected long-term return on plan assets	9 %	9.25 %
Health care costs trend rate assumed
for next year	14 %	12 %
Ultimate health care costs trend rate	8 %	8 %
Year that the rate reaches the ultimate trend rate	2011	2011

| 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.97,853 million and Rp.194,181 million
for the nine months period ended September 30, 2008 and 2009, respectively. Interest
expense for two-step loans represent 9.77% and 13.20% 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. 446,983 million and Rp.239,410 million for the nine
months period ended September 30, 2008 and 2009, respectively (Note 36), representing
1.6%, and 0.8%, respectively, of the total operating expenses for each period. Radio
frequency usage charges amounted to Rp.1,718,590 million and Rp.1,729,718 million for
the nine months period ended September 30, 2008 and 2009, respectively (Note 36),
representing 6.3% and 5.9% 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 14iii). |

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RELATED PARTY TRANSACTIONS

a. Government

| iii. |
| --- |
| USO charges amounted to Rp.333,470 million and Rp.590,370 million for the nine months
period ended September 30, 2008 and 2009, respectively (Note 36), representing 1.2% and
2.0% 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.40,249 million and Rp.39,850 million for the nine months period ended
September 30, 2008 and 2009, respectively, representing 0.2% and 0.1% of the total
operating expenses for each period. |
| --- | --- |
| 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.99,779 million and Rp.106,370 million for the nine months period ended September 30,
2008 and 2009, respectively, representing 0.4% of the 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. |

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RELATED PARTY TRANSACTIONS (continued)

| c. |
| --- |
| 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 the Companys
fixed line network and allowing Indosats mobile customers to access the Companys 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. On August 28, 2008, the Company and Indosat agreed to implement
IDD service charge tariff, the tariff already taken into account the compensation of its
billing and collection. The agreement is valid and effective starting on April to December
2008. The Company and Indosat performed evaluation for determining the IDD service charge
tariff which will be effective in 2009. |
| On December 28, 2006, the Company and Indosat signed amendments to the interconnection
agreements for the fixed line networks (local, SLJJ and international) and mobile network
for the implementation of the cost-based tariff obligations under the MoCI Regulations No.
8/2006 (Note 47). 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 earned net interconnection income from Indosat of Rp.13,489 million and Rp.118,375 million for the nine months period ended September 30, 2008 and 2009, respectively, representing 0.03% and 0.25% of the total operating revenues for each period.

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RELATED PARTY TRANSACTIONS (continued)

| c. |
| --- |
| 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.18,951 million and Rp.9,325 million for the nine
months period ended September 30, 2008 and 2009, respectively, representing 0.07% and 0.03%
of the total operating expenses for each period. |
| Other agreements between Telkomsel and Indosat are as follows: |

| i. | Agreement on Construction and Maintenance for Jakarta-Surabaya Cable System
(J-S Cable System) |
| --- | --- |
| | On October 10, 1996, Telkomsel, Lintasarta, PT Satelit Palapa Indonesia (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.353 million and
Rp.1,118 million for the nine months period ended September 30, 2008 and 2009,
respectively. |
| ii. | IRU Agreement |
| | 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 (Note 13).
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 September 30, 2008 and 2009, the prepaid portion is shown in the consolidated balance sheets as Advances from customers and suppliers.

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RELATED PARTY TRANSACTIONS (continued)

c.	Indosat (continued)
	The Company provides leased lines to Indosat and its subsidiaries, namely Indosat Mega
Media, Lintasarta and PT Sistelindo Mitralintas. 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.127,271 million and
Rp.111,823 million for the nine months period ended September 30, 2008 and 2009,
respectively, representing 0.3% and 0.2% 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.15,541 million and Rp.20,158 million for the
nine months period ended September 30, 2008 and 2009, respectively, representing less than
0.1% and 0.04% 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.25,046 million and Rp.26,576 million for the nine
months period ended September 30, 2008 and 2009, respectively, representing 0.1% of the
total operating expenses for each period.
d.	Others
	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 PSN for the utilization of the Companys satellite
transponders or frequency channels. Revenues earned from these transactions amounted to
Rp.78,974 million and Rp.108,422 million for the nine months period ended September 30,
2008 and 2009, respectively, representing 0.2% of the total operating revenues for each
period. |
| (iii) | The Company provides leased lines to associated companies, namely CSM,
Patrakom, PSN and Gratika. 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.48,940 million and Rp.34,492
million for the nine months period ended September 30, 2008 and 2009, respectively,
representing 0.1% of the total operating revenues for each period. |
| (iv) | The Company purchases property, plant 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.499,079 million and Rp.145,992 million
for the nine months period ended September 30, 2008 and 2009, respectively,
representing 4.2% and 1.0% of the total fixed assets purchased in each period. |

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RELATED PARTY TRANSACTIONS (continued)

d. Others (continued)

| (v) | INTI is also a major contractor and supplier of equipment, including
construction and installation services of Telkomsel. Purchases from INTI for the nine
months period ended September 30, 2008 and 2009 amounted to Rp.21,422 million and
Rp.54,923 million, respectively, representing 0.2% and 0.4% 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.99,466 million and Rp.159,780 million for the nine months period
ended September 30, 2008 and 2009, respectively, representing 0.4% and 0.5% 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.250,391 million and Rp.234,735 million for the nine months
period ended September 30, 2008 and 2009, respectively, representing 0.9% and 0.8% of
the total operating expenses for each period. |
| (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.4,832,652 million and Rp.5,282,271
million as of September 30, 2008 and 2009, respectively, representing 5.6%and 5.5% of
the total assets. Interest income recognized for the nine months period ended September
30, 2008 and 2009 amounted to Rp.193,485 million and Rp.145,266 million, representing
39.0% and 42.5% of the total interest income for each period. |
| (ix) | The Company and its subsidiaries obtained loans from state-owned banks.
Interest expense on these loans for the nine months period ended September 30, 2008 and
2009 amounted to Rp.424,022 million and Rp.779,671 million, respectively, representing
42.3% and 53.0% of the total interest expense for each period. |
| (x) | The Company leases buildings, leases vehicles, 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.299,588 million and Rp.268,027 million for the nine months period ended
September 30, 2008 and 2009, respectively, representing 1.1% and 0.9% of the total
operating expenses for each period. |

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RELATED PARTY TRANSACTIONS (continued)

d. Others (continued)

| (xi) | The Company and its subsidiaries incurred interconnection expenses from PSN,
with a total of Rp.1,717 million and Rp.112 million for the nine months period ended
September 30, 2008 and 2009, respectively, representing 0.004% and 0.0002% of the total
operating expenses for each period. |
| --- | --- |
| (xii) | The Company has RSA with Kopegtel. Kopegtels share in revenues from these
arrangements amounted to Rp.8,410 million and Rp.3,950 million for the nine months
period ended September 30, 2008 and 2009, respectively, representing 0.02% and 0.01% 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.108,953 million and Rp.176,775 million for the nine months period ended September
30, 2008 and 2009, respectively, representing 0.4% and 0.6% of the total operating
expenses for each period. |
| (xiv) | Koperasi Pegawai Telkomsel (Kisel) is a cooperation 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.416,148 million and Rp.441,907 million
for the nine months period ended September 30, 2008 and 2009, respectively,
representing 1.5% of the total operating expenses for each period. 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.1,575,207 million and Rp.1,633,680 million for the nine months period ended
September 30, 2008 and 2009, respectively, representing 5.7% and 3.5% of the total
operating revenues for each period. |
| (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 Gratika, a subsidiary of Dapen, for
installation and maintenance of equipment. Total procurement for installations of
equipment amounted to Rp.33,481 million and Rp.38,248 million for the period nine
months period ended September 30, 2008 and 2009, respectively; representing 0.28% and
0.38% of the total acquisition of fixed assets for each period; and for maintenance of
equipment amounted to Rp.27,329 million and Rp.26,266 million for the nine months
period ended September 30, 2008 and 2009, respectively, representing 0.1% of the total operating expenses for
each period. |

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44.
Presented below are balances of accounts with related parties:

	% to		% to
Amount	total assets	Amount	total assets
a. Cash and cash equivalents (Note 5)	4,495,784	5.23	4,709,070	4.95
b. Temporary investments	270,650	0.31	286,648	0.30
c. Trade receivables net (Note 6)	393,465	0.46	751,997	0.79
d. Other receivables
State-owned banks (interest)	28,863	0.03	7,743	0.01
Patrakom	4,713	0.01	4,734	0.01
Kopegtel	3,841	0.00	3,846	0.00
Government Agencies	2,333	0.00	666	0.00
Other	354	0.00	6,902	0.01
Total	40,104	0.04	23,891	0.03
e. Prepaid expenses (Note 8)	116,378	0.14	1,938,939	2.04
f. Other current assets (Note 9)
Bank Mandiri	21,044	0.02	22,808	0.02
BNI			1,934	0.00
Total	21,044	0.02	24,742	0.02
g. Advances and other non-current
assets (Note 13)
Bank Mandiri	793	0.00	119,794	0.13
BNI	721	0.00	94,833	0.10
Kisel	1,088	0.00	1,088	0.00
Perusahaan Umum Percetakan Uang Republik
Indonesia (Peruri)	813	0.00	813	0.00
BRI			347	0.00
Total	3,415	0.00	216,875	0.23
h. Escrow accounts (Note 15)	42,572	0.05	44,937	0.05

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RELATED PARTY TRANSACTIONS (continued)

	% to total		% to total
Amount	liabilities	Amount	liabilities
i. Trade payables (Note 16)
Government Agencies	1,221,004	2.74	1,224,346	2.55
Kopegtel	72,148	0.16	67,854	0.14
Indosat	27,030	0.06	44,410	0.09
SPM	7,902	0.02	7,993	0.02
Gratika	5,538	0.01	6,315	0.01
Yakes	43,110	0.10	4,927	0.01
INTI	29,214	0.07	4,387	0.01
CSM			1,012	0.00
Patrakom			741	0.00
PSN	4,634	0.01	53	0.00
Others	105,530	0.24	117,621	0.25
Total	1,516,110	3.41	1,479,659	3.08
j. Accrued expenses (Note 17)
Employees	769,754	1.72	739,265	1.54
Government Agencies and
state-owned banks	66,880	0.15	134,055	0.28
PT Jaminan Sosial Tenaga Kerja (Persero)
(Jamsostek)	20,310	0.05	25,274	0.05
Jasindo	93	0.00
Total	857,037	1.92	898,594	1.87
k. Short-term bank loans (Note 19)
BSM			8,000	0.02
l. Two-step loans (Note 21)	3,905,478	8.76	3,716,255	7.75
m. Accrued pension and other post-retirement
benefits (Note 41)	1,213,422	2.72	854,761	1.78
n. Accrued LSA (Note 42)	83,630	0.19	165,431	0.35
o. Accrued post-retirement health care
benefits (Note 43)	2,645,150	5.93	2,019,054	4.21
p. Long-term bank loans (Note 23)
BNI	3,460,000	7.75	4,700,000	9.80
BRI	3,448,300	7.73	4,180,000	8.72
Bank Mandiri	1,210,000	2.71	3,480,000	7.26
Total	8,118,300	18.19	12,360,000	25.78

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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. Goodwill is allocated to fixed wireline segment. |
| 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	14,738,217		2,499,110		27,104,103		308,095		44,649,525				44,649,525
Inter-segment operating revenues	1,268,727		(43,305	)	249,870		226,338		1,701,630		(1,701,630	)
Total segment revenues	16,006,944		2,455,805		27,353,973		534,433		46,351,155		(1,701,630	)	44,649,525
External operating expenses	(12,453,853	)	(1,417,757	)	(13,135,480	)	(463,767	)	(27,470,857	)			(27,470,857	)
Inter-segment operating expenses	(289,035	)			(1,532,158	)	(18,112	)	(1,839,305	)	1,839,305
Segment expenses	(12,742,888	)	(1,417,757	)	(14,667,638	)	(481,879	)	(29,310,162	)	1,839,305		(27,470,857	)
Segment results	3,264,056		1,038,048		12,686,335		52,554		17,040,993		137,675		17,178,668
Interest expense													(1,001,438	)
Interest income													495,233
Loss on foreign exchange net													(63,806	)
Other income net													326,769
Income tax expense													(4,821,920	)
Equity in net income
of associated companies													2,476
Income before minority interest													12,115,982
Unallocated minority interest													(3,196,094	)
Net income													8,919,888
Other information
Segment assets	31,051,259		7,604,161		51,348,672		682,193		90,686,285		(4,799,187	)	85,887,098
Investments in associates	121,200				20,359				141,559				141,559
Total consolidated assets													86,028,657
Total consolidated liabilities	(20,724,447	)	(1,644,512	)	(26,732,140	)	(303,553	)	(49,404,652	)	4,799,186		(44,605,466	)
Capital expenditures	(2,196,525	)	(767,838	)	(10,603,409	)	(44,701	)	(13,612,473	)			(13,612,473	)
Depreciation and amortization	(2,608,950	)	(289,827	)	(4,974,782	)	(40,614	)	(7,914,173	)	15,995		(7,898,178	)
Amortization of goodwill and
other intangible assets	(883,454	)			(35,036	)			(918,490	)			(918,490	)
Other non-cash expenses	(404,828	)			(40,150	)	(899	)	(445,877	)			(445,877	)

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SEGMENT INFORMATION (continued)


Fixed		Fixed						Total before				Total
wireline		wireless		Cellular		Others		elimination		Elimination		consolidated
Segment results
External operating revenues	14,243,868		2,346,120		30,216,355		308,047		47,114,390				47,114,390
Inter-segment operating revenues	1,855,064		58,067		92,351		235,582		2,241,064		(2,241,064	)
Total segment revenues	16,098,932		2,404,187		30,308,706		543,629		49,355,454		(2,241,064	)	47,114,390
External operating expenses	(13,494,184	)	(1,726,247	)	(13,405,831	)	(533,837	)	(29,160,099	)			(29,160,099	)
Inter-segment operating expenses	518,391				(2,917,880	)	(25,837	)	(2,425,326	)	2,425,326
Segment expenses	(12,975,793	)	(1,726,247	)	(16,323,711	)	(559,674	)	(31,585,425	)	2,425,326		(29,160,099	)
Segment results	3,123,139		677,940		13,984,995		(16,045	)	17,770,029		184,262		17,954,291
Interest expense													(1,471,769	)
Interest income													341,785
Gain on foreign exchange net													774,784
Other income net													206,701
Income tax expense													(4,996,877	)
Equity in net income of
associated companies													(21,320	)
Income before minority interest													12,787,595
Unallocated minority interest													(3,487,133	)
Net income													9,300,462
Other information
Segment assets	34,794,875		5,195,289		57,525,303		693,460		98,208,927		(3,139,318	)	95,069,609
Investments in associates	125,964				20,359				146,323				146,323
Total consolidated assets													95,215,932
Total consolidated liabilities	(19,320,743	)	(1,668,367	)	(29,835,091	)	(257,382	)	(51,081,583	)	3,138,319		(47,943,264	)
Capital expenditures	(2,687,201	)	(831,174	)	(8,895,783	)	(25,931	)	(12,440,089	)			(12,440,089	)
Depreciation and amortization	(2,605,839	)	(453,126	)	(6,116,006	)	(41,795	)	(9,216,766	)			(9,216,766	)
Amortization of goodwill and
other intangible assets	(934,505	)	(1,885	)	(42,495	)	(46	)	(978,931	)			(978,931	)
Other non-cash expenses	(353,410	)			(75,091	)	(2,883	)	(431,384	)			(431,384	)

REVENUE-SHARING ARRANGEMENTS (RSA)

| 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 September 30, 2009, the Company has 32 RSA with 27 investors. The RSA are located mainly
in Pekanbaru, East Java, Kalimantan, Makassar, Pare-pare, Manado, Denpasar, Mataram and Kupang,
with concession periods ranging from 50 to 172 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. |

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| 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.52,706 million and Rp.67,107 million
as of September 30, 2008 and 2009, respectively (Note 12). |
| The investors share of revenues amounted to Rp.249,210 million and Rp.113,574 million for the
nine months period ended September 30, 2008 and 2009, respectively. |

TELECOMMUNICATIONS SERVICES TARIFFS

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

| The Government has issued new adjustment tariff formula which
is stipulated in the MoCI Decree No. 15/Per/M.KOMINFO/4/2008 dated April 30, 2008 concerning Procedure for Tariff
Calculation for Basic Telephone Service which connected through fixed line network. |
| --- |
| Under the Decree, tariff structure for basic telephone service which is connected through
fixed line network consists of the following: |

	Connection fee
	Monthly charges
	Usage charges
	Additional facilities fee

Based on the Decree, the Company adjusted the tariffs effective August 1, 2008 as follows:

| | Local charges decreased by range from 2.5% to increase by 8.9%, depending on service
usage and customers segment |
| --- | --- |
| | SLJJ charges decreased by an average range from 36.9% to increased by an average of
13.7%, depending on service usage and customers segment |
| | SMS charges decreased by an average range from 42.8% to 49.7%, depending on service
usage and customers segment |

b. Mobile cellular telephone tariffs

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

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

b. Mobile cellular telephone tariffs (continued)

| 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. |
| 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. |
| Under Decree No. 09/PER/M.KOMINFO/04/2008 dated April 7, 2008 of the MoCI the cellular
tariffs consist of the following: |

	Basic services tariff
	Roaming tariff
	Multimedia tariff,

with the following structure:

	Connection fee
	Monthly charges
	Usage charges
	Additional facilities fee.

The tariffs are determined based on certain formula consisting of:

	Network element cost;
	Retail service activity cost plus margin.

The network element cost is determined using Long Run Incremental Cost (LRIC) Bottom up Method. The operators are allowed to apply de-average basic telephone service usage cost and bundling tariffs, maximum equal to tariff determined using the above formula.

c. Interconnection tariffs

| 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. |
| --- |
| Based on Director General of Post and Telecommunications Decree No. 205/2008 dated April 11,
2008, valid for one year period, 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, shall be as follows: |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

c. Interconnection tariffs (continued)

(a) Fixed line

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

(b) Cellular

1.	Local termination from fixed line service tariff is Rp.261/minute.
2.	Long distance termination from fixed line service tariff is Rp.380/minute.
3.	Local termination from cellular mobile network service tariff is Rp.261/minute.
4.	Long distance termination from cellular mobile network service tariff is
Rp.493/minute.
5.	Local termination from satellite network service tariff is Rp.261/minute.
6.	Long distance termination from satellite network service tariff is Rp.501/minute.
7.	Local termination from SLJJ service provider tariff is Rp.261/minute.
8.	Long distance termination from SLJJ service provider tariff is Rp.380/minute.
9.	International termination from IDD service provider tariff is Rp.498/minute.
10.	Local origination to SLJJ service provider tariff is Rp.261/minute.
11.	Long distance origination to SLJJ service provider tariff is Rp.380/minute.
12.	International origination to IDD service provider tariff is Rp.498/minute.

| As of the issuance date of the consolidated financial statements, the RIO is still in
renewal process. |
| --- |
| Based on Decree No. 14/PER/M.KOMINFO/02/2009 dated February 25, 2009 of the Ministry of
Communication and Information Technology, interconnection among operators is settled through
telecommunication traffic clearing process. The clearing function is undertaken collectively
by operators under supervision of Indonesian Telecommunication Regulatory Body. |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

c. Interconnection tariffs (continued)

On March 2, 2009, 12 operators and PT Pratama Jaringan Nusantara (PJN) entered into an agreement for operating Telecommunicating Traffic Clearing System (Sistem Kliring Trafik Telekomunikasi or SKTT) that appointed PJN to conduct voice interconnect clearing process. PJN is appointed to conduct voice interconnect clearing process with the following conditions:

	Tariff is Rp.0.4 each of call data record,
	To support the process, PJN should provide SKTT within 6 months.

The agreement is valid for ten years, extendable based on agreement by both parties or may be terminated prior to such period, subject to amongst other, PJNs ability to:

	Provide the system within the above-mentioned period,
	Change its Articles of Association in compliance with Corporate Law No. 40/2007,
within one month.

As of the date of this report, the operation of voice interconnect clearing by PJN is still under preparation

d. VoIP interconnection tariff

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.

| e. |
| --- |
| 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 Director General of Post and
Telecommunication 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 Provision Procedure
of Network Lease Service in 2008 Owned by Dominant Network Lease Service Provider 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. |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

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 services
	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. On April 1, 2009, the Company reduced its
internet tariff by an average of 20% depending on subscription packages.
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 Governments Decree
No. 7/2009 dated January 16, 2009, the contribution is changed to 1.25% gross revenues, net
of bad debts and/or interconnection charges and/or connection charges. On January 16, 2009
and January 23, 2009, Telkomsel was selected in a tender by the Government through BTIP to
provide telecommunication access and services in rural areas (USO Program) for a total
amount of Rp.1.66 trilion, covering all Indonesian territory except Sulawesi, Maluku and
Papua. Telkomsel will obtain local fixed-line licenses and the right to use radio frequency
in 2,390 MHz-2,400 MHz.
	On February 18, 2009 and March 16, 2009, based on Decrees No. 62/KEP/M.KOMINFO/02/09 dated
February 18, 2009 and No. 88/KEP/M.KOMINFO/03/2009 dated March 16, 2009 of the Ministry of
Communication and Information Technology, the Ministry granted Telkomsel principle licenses
to operate fixed-line network under USO program which provision is subject to an operation
acceptance test within six months. The license is extendable for three months based upon
evaluation of the DGPT. Telkomsel has obtained the acceptance certificates for package 1,
3 and 6. The operation acceptance tests for package 2 and 7 have not been completed,
accordingly, the principle licenses are extended for the next three months.
	Based on MoCI Decree No. 32/PER/M.KOMINFO/10/2008 dated October 10, 2008 which replaced MoCI
Decree No. 11/PER/M.KOMINFO/04/2007 dated April 13, 2007 which was amended by MoCI
Decree No. 38/Per/M.KOMINFO/9/2007 dated September 20, 2007, it is stipulated 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 (BTIP) 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 September 30, 2009, 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		3,908,738
U.S. Dollars	639	6,184,118
Euro	11	159,285
Total		10,252,141

The above balance includes the following significant agreements:

(i) Company

				Outstanding
				purchase
				commitment as of
Contracting		Significant provisions of		September 30,
parties	Date of agreement	the agreement	Total contract value	2009
Company and ZTE
Consortium	September 16, 2005	Procurement and
installation
agreement for
Speedy Access Batch
1 in Divre II	US$5.05 million and
Rp.314,149 million	US$0.08 million and
Rp.115,077 million
Company and Huawei		Procurement and
installation
agreements for NSS,
BSS and PDN FWA
CDMA System
Expansion Project
in:
	January 6,
2006	a. Divre I
(Sumatra) and IV
(Central Java and
Daerah Istimewa
Yogyakarta)	US$58.9 million
and Rp.249,840
million	US$21.7 million and
Rp.81,069 million
	December 8,
2006	b. Divre II
(Jakarta)	US$42.7 million and
Rp.210,049 million	US$9.4 million and
Rp.54,615 million
	December 8,
2006	c. Divre III (West
Java and Banten)	US$20.4 million and
Rp.113,262 million	US$3.4 million and
Rp.25,234 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase commitment
Contracting	Date of	Significant provisions of		as of September 30,
parties	agreement	the agreement	Total contract value	2009
Company and Samsung
Consortium		Procurement and
installation
agreements for NSS,
BSS and PDN FWA CDMA
System Expansion
Project in:
	October 13,
2006	a. Divre V (East Java)	US$90.5 million and
Rp.159,237 million	US$20.6 million and
Rp.34,916 million
	July 10, 2007	b. Divre VII
(Bali-Nusa Tenggara	US$6.5 million and
Rp.18,578 million	US$2.4 million and
Rp.3,920 million
Company and ZTE
Consortium		Procurement and
installation agreement
for Expansion of NSS, BSS and PDN System in:
	November 28,
2006	a. Divre VI
(Kalimantan)	US$21.7 million and
Rp.57,168 million	US$10.2 million and
Rp.40,844 million
	July 10, 2007	b. Divre VII
(Sulawesi, Maluku and
Papua)	US$16.7 million and
Rp.26,018 million	US$3.5 million and
Rp.12,126 million
Company and Huawei	September 28, 2007	a. Procurement and
installation agreement
for Speedy Access
Batch 2	US$24.4 million and
Rp.123,463 million	US$0.7 million and
Rp.38,349 million
	September 28, 2007	b. Procurement and
installation agreement
for Speedy Access
Batch 3	US$19.2 million and
Rp.131,028 million	US$0,45 million and
Rp.46,891 million
Company and PT
Datacomm Diangraha	November 28, 2007	a. Procurement and
installation agreement
Metro Ethernet Batch 2	Rp.238.454 million
Rp.185,872 million	Rp.54,222 million
Rp.48,016 million
	March 31, 2007	b. Procurement and
installation agreement
Metro Ethernet Batch 4
Company and PT ZTE
Indonesia (ZTE)	December 18, 2007	Procurement and
installation agreement
for Speedy Divre VII
(Sulawesi, Maluku and
Papua)	Rp.103,741 million	Rp.31,532 million
Company and Huawei	March 31, 2008	Procurement and
installation agreement
for Metro Ethernet
Batch 3 in Divre V	Rp.80,320 million	Rp.23,197 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase commitment
Contracting	Date of	Significant provisions of		as of September 30,
parties	agreement	the agreement	Total contract value	2009
Company and Era Bangun
Jaya	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 3
Divre II	Rp.103,774 million	Rp39,672 million
Company and Telekomindo
Primakarya	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 4
Divre III	Rp.73,527 million	Rp.16,404 million
Company and PT Horison
Komunikasi	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 6
Divre V	Rp.61,666 million	Rp.46,122 million
Company and G-Pas
Consortium	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 8
Divre VII	Rp.112,568 million	Rp.34,058 million
Company and PT
Konsorsium
Jembo-Karteksi-Tridayasa	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 9
Netre Sumbagut Area	Rp.156,844 million	Rp.78,921 million
Company and PT
Telekomindo Primakarya	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 11
Netre Sumbagsel	Rp.119,326 million	Rp.30,611 million
Company and PT Brimbun
Raya Indah (Brimbun)	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic Batch 12
Netre Jakarta and
West Java	Rp.134,314 million	Rp.40,854 million
Company and INTI	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 13
Netre Central Java
and East Java	Rp.70,010 million	Rp.4,136 million
Company and PT Nokia
Siemens Networks	June 30, 2008	Procurement and
installation
agreement for
Expansion of
Capacity and
Implementation of
Full Redundancy IP
CORE 2008	Rp.116,545 million	Rp.28,989 million
Company and PT Sansaine
Exindo	October 15, 2008	Procurement
agreement for
TENOSS Batch 4 FWN
Domain	Rp.97,248 million	Rp.25,170 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase
				commitment as of
Contracting	Date of	Significant provisions of		September 30,
parties	agreement	the agreement	Total contract value	2009
Company and PT
Datacraft Indonesia	December 4, 2008	Procurement and
installation
agreement for Tera
Router 2008 in
Divre I, Divre II
and Divre V	Rp.94,815 million	Rp.5,448 million
Company and PT
Nokia Siemens
Networks	December 5, 2008	Procurement and
installation
agreement for
Softswitch and
modernization of
MSAN Divre V and
trial location of
Bali and Timika	Rp.71,926 million	Rp.70,241 million
Company and NSW -
Fujitsu Consortium	December 30, 2008	Procurement and
installation
agreement for
Capacity Ring
JaKa2LaDeMa Project	US$115.4 million	US$105.4 million
Company and ISS
Reshetnev	March 2, 2009	Procurement
agreement for
Telkom-3 Satellite	US$179.4 million	US$169.9 million
Company and APT
Satellite Company
Limited	March 23, 2009	142E Degree Orbital
Position
Cooperation
Agreement	US$18.5 million	US$13.3 million
Company and
Sansaine Huawei
Consortium	May 27, 2009	a. Cooperation
agreement for
procurement and
installation of
MSAN ALU and
Secondary Access
2008 Batch 3	US$2.98 million and
Rp.57,507 million	US$2.98 million and
Rp.57,507 million
	June 15, 2009	b. Cooperation
agreement for
procurement and
installation of
MSAN ALU and
Secondary Access
2008 Batch 1	US$3.0 million and
Rp.40,497 million	US$3.0 million and
Rp.40,497 million
Company and ZTE	June 2, 2009	Cooperation
agreement for
procurement and
installation of
MSAN ALU and
Secondary Access
2008 Batch 2	US$4.7 million and
Rp.33,953 million	US$4.2 million and
Rp.29,096 million
Company and PT
Aldomaru	June 11, 2009	Procurement
agreement Roll Out
Infusion PL 2009	Rp.53,750 million	Rp.28,891 million
Company and
Sansaine Huawei
Consortium	August 3, 2009	Procurement and
installation
agreement for
Softswitch and
modernization of
MSAN Divre I, Divre
II, Divre III, and
Divre IV	US$6.5 million and
Rp.8,413 million	US$6.5 million and
Rp.8,413 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase
		Significant		commitment as of
Contracting	Date of	provisions of the		September 30,
parties	agreement	agreement	Total contract value	2009
Company and PT
Uangel Indonesia	August 14, 2009	Procurement and
installation
agreement for
Wireless
Intelligent Network
(WIN) Expantion
Jakarta and
Surabaya 2009	Rp.85,516 million	Rp.85,516 million

| (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 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. |

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COMMITMENTS (continued)

a. Capital expenditures (continued)

| (ii) |
| --- |
| 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, 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.v). |

Subsequently, 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. 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 years period. |

For the purpose of providing telecommunication services with 3G, 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. Based on letters from Telkomsel, the Managed Operation Agreements with those companies were terminated as of March 31, 2008.

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COMMITMENTS (continued)

a. Capital expenditures (continued)

| (ii) |
| --- |
| On April 17, 2008, Telkomsel, Ericsson Indonesia, PT Nokia Siemens Networks also
entered into Technical Service Agreements for technical support of Combined 2G and 3G
CS Core Network. The agreements commence: |

| | in respect of the August 2007 Project only, on the date that transition-out
services have been completed in accordance with the 3G Managed Operations
Agreement; |
| --- | --- |
| | in all other respects, on the Effective Date; |

and continues until the later of:

	the date which is three years after the Effective Date; and
	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 3 years period.

In July and August 2008, Telkomsel entered into 2G BSS and 3G UTRAN Network Trial Agreements (NTA) with PT Alcatel-Lucent Indonesia, ZTE and PT Huawei Tech Investment (Huawei Tech) (Trial Participants). Subsequently, in September 2008, the agreements with ZTE and Huawei Tech were amended. Such agreements contain, among others:

| | The provision by Trial Participants of the design, supply, delivery,
installation, integration and commissioning of 2G GSM BSS and 3G UMTS radio access
network and technical support for such subsystem and networks on a trial basis; |
| --- | --- |
| | At Telkomsels election, the Trial Participants must transfer ownership to
Telkomsel of those 2G GSM BSS and 3G UMTS radio access networks . |

| On March and June 2009, Telkomsel, Ericsson Indonesia, Ericsson AB, PT Nokia Siemens
Indonesia, Nokia Siemens Network Oy, Huawei Internstional Pte.Ltd., PT Huawei Tech
Investment and ZTE entered into 2G BSS and 3G UTRAN Rollout Agreements for the
provision of 2G GSM BSS and 3G UMTS Radio Access Network. |
| --- |
| During the terms, the vendors (excluding Huawei International Pte. Ltd. and PT Huawei
Tech Investment) agreed to provide vouchers, free of charge equipment and other
commercial incentives to Telkomsel. Part of the vouchers totaling US$107.05 million,
provided by the vendors as an adjustment to prices stated in PO issued since July 1,
2007 (Note 11d.v). |

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COMMITMENTS (continued)

b. Borrowings and other credit facilities

| (i) | Telkomsel 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
31, 2010. Under these facilities, as of September 30, 2009, Telkomsel has issued a bank
guarantee of Rp.20,000 million (equivalent to US$2.07 million) for a 3G performance
bond (Note 48d.ii). Borrowings under the facilities bear interest at Singapore
Interbank Offered Rate (SIBOR) plus 1.25% per annum (US$). As of September 30, 2009,
2008 and 2009, there were no outstanding loans under these facilities. |
| --- | --- |
| (ii) | Telkomsel has not provided any collateral for its bank borrowings, or other
credit facilities, except time deposits (Notes 9 and 47h). 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. |

| c. |
| --- |
| Telkomsel is exposed to market risks, primarily changes in foreign currency exchange rates,
and uses derivative instruments in connection with its risk management activities. Telkomsel
entered into derivative transactions for the purpose of hedging and not for trading
purposes. None of the derivative transactions entered into by Telkomsel during 2008 met the
PSAK No. 55 criteria for hedge accounting. Therefore, changes in the fair values of the
derivative financial instruments were recognized in the consolidated result of operations. |
| Telkomsel purchases equipment from several countries and, as a result, is exposed to
fluctuation in foreign currency exchange rates. In September 2008, Telkomsel entered into
forward foreign exchange contracts with DB to protect against foreign exchange risk relating
to its foreign currency denominated purchases. The primary purpose of Telkomsels foreign
currency hedging activities is to protect against the volatility associated with foreign
currency purchases of equipment and other assets in the normal course of business. |
| The notional amounts of Telkomsels foreign exchange forwards entered into in September 2008
are US$24 million and Euro15 million. |
| The contract will be realized on October 24, 2008 and November 24, 2008 with equal
proportions, respectively. |
| The payable arising from the difference between the contract rates and the rates prevailing
as of September 30, 2008, amounted to Rp.2,968 million has been presented as part of accrued
liabilities. |

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COMMITMENTS (continued)

d. Others

(i)	Employee benefits
	On May 26, 2008, Telkomsel and its Labour Union (Serikat Pekerja Telkomsel) signed a
collective labour agreement (Perjanjian Kerja Bersama or PKB) which is valid until
May 25, 2010. The agreement replaced the old agreement which expired on March 23, 2008.
Based on the agreement, Telkomsel shall provide LSL to its employees (Note 42).
(ii)	3G license
	With reference to the Decision Letter No. 07/Per/M.KOMINFO/2/2006 and No.
268/KEP/M.KOMINFO/9/2009 of the MoCI, as one of the successful bidders (Notes 1d and
2j), 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 third and fourth year were paid in March 2008 and 2009, respectively. The commitments as of September 30, 2009 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 — Former Lisence	Additional Lisence
1			20% x HL	100% x HL
2	R1	I1 = (1 + R1)	40% x I1 x HL	100% x I1 x HL
3	R2	I2 = I1(1 + R2)	60% x I2 x HL	100% x I2 x HL
4	R3	I3 = I2(1 + R3)	100% x I3 x HL	100% x I3 x HL
5	R4	I4 = I3(1 + R4)	130% x I4 x HL	130% x I4 x HL
6	R5	I5 = I4(1 + R5)	130% x I5 x HL	130% x I5 x HL
7	R6	I6 = I5(1 + R6)	130% x I6 x HL	130% x I6 x HL
8	R7	I7 = I6(1 + R7)	130% x I7 x HL	130% x I7 x HL
9	R8	I8 = I7(1 + R8)	130% x I8 x HL	130% x I8 x HL
10	R9	I9 = I8(1 + R9)	130% x I9 x HL	130% x I9 x HL

| Notes
: | |
| --- | --- |
| Ri | = average BI rate from previous year |
| Auction Price (Harga Lelang or HL) | = Rp.160,000 million |
| Index | = adjustment to the bidding price for respective period |

| | The BHP is payable upon receipt of notification letter (Surat Pemberitahuan
Pembayaran) from the DGPT. |
| --- | --- |
| 2. | Provide roaming access for the existing 3G operators. |
| 3. | Contribute to USO development. |

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COMMITMENTS (continued)

d. Others (continued)

(ii) 3G license (continued)

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.

Based on MOCIs letter No. 320/M.KOMINFO/12/2008 dated December 30, 2008, considering that Telkomsel has fulfilled its commitments, 1 block of radio frequency (2 x 5 MHz FDD) in 2.1 GHz bandwith is offered to Telkomsel with a price of Rp.160,000 million. Pursuant to that, Telkomsel has submitted its response that Telkomsel accepted the offering with a condition that such price is equally applied to the other operators. On July 16, 2009, based on the letter from the MoCI, the Government shall grant the additional spectrum in 2.1 Ghz bandwith to Telkomsel. On September 1, 2009, Telkomsel has received the additional spectrum (Note 1d.d).

(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 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 bandwidth at the end of 2008 in the AAG configuration that will be laid from Malaysia to the United States. As of September 30, 2009, the Company has paid US$34.39 million (equivalent to Rp.326,164 million) and recorded as advances for the purchase of property, plant and equipment (Note 13).

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COMMITMENTS (continued)

d. Others (continued)

(iv)	Palapa Ring Consortium
	On November 10, 2007, the Company entered into a C&MA with 5 other companies for Palapa
Ring Consortium. This consortium was formed to build optical fiber network in 32 cities
in Eastern Indonesia with total initial investment of Rp.2,070,336 million. The Company
will obtain 4 lambdas bandwidth of total capacity of 8.44 lambdas from this consortium
(Note 15). As of September 30, 2009, the Company has paid US$0.005 million (equivalent
to Rp.48 million) and recorded as advances for the purchase of property, plant and
equipment (Note 13).
(v)	Radio Frequency Usage Fees
	In accordance with the prevailing laws and telecommunications regulations, the operators
are obliged to register their radio stations to the DGPT to obtain frequency usage
license, except those stations that use 2.1 GHz frequency bandwidth (Note 48d.ii). The
frequency usage fees are payable upon receipt of notification letter (Surat
Pemberitahuan Pembayaran) from DGPT. The fee is determined based on the number of
registered transceivers (TRXs) of the radio stations. The fees for 2009 will be
determined based on 304,810 TRXs in operation as of September 30, 2009, with a fee
ranging from Rp.0.035 million to Rp.17.55 million for each TRXs.
(vi)	Apple, Inc
	On January 9, 2009, Telkomsel entered into an agreement with Apple, Inc for the purchase
of iPhone products, marketing it to the customers using third party (PT Trikomsel OKE)
and provide cellular network services. Cumulative minimum iPhone units that shall be
purchased as of December 31, 2009, 2010 and 2011 are 125,000, 300,000 and 500,000 units
for each year.
(vi)	Operating leases

	Less than	1-5	More than
Total	1 year	years	5 years
Operating leases	310,089	60,341	224,484	25,264

Operating leases represent non-cancelable office lease agreements of certain subsidiaries.

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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, monopolistic practice
and unfair business competition and SMS cartel practices. Based on managements estimate of
the probable outcomes of these matters, the Company and its subsidiaries have accrued
Rp.91,945 million as of September 30, 2009. |
| --- | --- |
| b. | A former Director of Human Resources and an employee of the Company were indicted under
the Eradication of Criminal Act of 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 Courts (SC) objecting to the High
Courts ruling. As of the issuance date of the consolidated financial statements, no
decision has been reached on the appeal. |
| c. | 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 SC objecting the
District Court ruling. On March 3, 2008, Denpasar District Court found 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. On November 5, 2008, the Bali High Court
found the defendant guilty. On January 16, 2009, one of the defendant in Bali High Court
has filed an appeal to Indonesian SC. As of the issuance date of the consolidated financial
statements, no decision has been reached on both appeals. |
| d. | 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
cross-ownership by Temasek Holdings and monopoly practices by Telkomsel, it had decided
that, among other things: |

	Telkomsel had not been proven to violate article 25.1.b of the Law,
	Telkomsel had violated article 17.1 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 Rp.25,000 million and instructed Telkomsel to discontinue the imposition of high tariffs and reduce its tariffs by least 15%.

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CONTINGENCIES (continued)

d.
On May 9, 2008 the Court pronounced its verdict and concluded among other things:

	Telkomsel had not been proven to violate article 25.1.b of the Law,
	Telkomsel had violated article 17.1 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 becoming 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, Telkomsel filed an appeal to SC. In its verdict on September 9, 2008, the SC revoked the Courts verdict on the instruction to Temasek Holdings and certain affiliated companies to release their ownership in either Indosat or Telkomsel. On May 22, 2009, Telkomsel filed a judicial review to the Supreme Court on the verdict. As of the issuance date of the consolidated financial statements, no decision has been reached on the appeal.

| e. |
| --- |
| On July 8, 2008, the class-action lawsuits filed in Bekasi District Courts against Telkomsel
by certain subscribers has been revoked and the case is closed. |
| On August 14, 2008, based on the Courts verdict, the classaction lawsuits in Tangerang
shall be consolidated with other various locations. The subscribers in other various
locations objected to the decision and filed an appeal to SC. On January 21, 2009, in its
verdict No. 01K/Pdt.Sus/2009, the SC approved the subscribers appeal, accordingly, the
class action lawsuit are processed separately in respective Court. |
| Management believes that Telkomsel has applied tariffs in accordance with prevailing
regulations, accordingly, such allegation has no strong basis. |

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CONTINGENCIES (continued)

| f. |
| --- |
| Pursuant to the decision of KPPU dated June 17, 2008, the Company and Telkomsel have filed
an objection with the Bandung District Court and South Jakarta District Court, respectively,
on July 14, 2008 and July 11, 2008, respectively. |
| Management believes that there are no such cartel practices that led to breach of prevailing
regulations. As of the issuance date of the consolidated financial statements, no decision
has been reach on the appeal. |

| | 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. |
| --- | --- |
| 50. | ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES |
| | 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	98.87	929,660	180.67	1,746,554
Euro	41.78	574,088	33.31	471,533
Singapore Dollars	0.53	3,502	2.73	18,634
Malaysian Ringgit			0.03	96
Japanese Yen	3.15	283	0.20	22
Temporary investments
U.S. Dollars	7.13	67,192	7.53	72,702
Singapore Dollars			0.29	1,990
Japanese Yen	220.04	19,784
Trade receivables
Related parties
U.S. Dollars	0.65	6,091	2.78	26,829
Third parties
U.S. Dollars	43.42	409,211	60.74	587,047
Singapore Dollars			0.00	12
Other receivables
U.S. Dollars	0.01	84	0.37	3,589
Great Britain Pound sterling	0.01	210	0.04	597
Euro	0.01	87	0.02	220
Singapore Dollars			0.01	91
Other current assets
U.S. Dollars	4.01	37,828	0.63	6,099
Euro	0.06	874

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ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)


Foreign			Foreign
currencies	Rupiah		currencies	Rupiah
(in millions)	equivalent		(in millions)	equivalent
Assets (continued)
Advances and other non-current assets
U.S. Dollars	21.72	204,638	2.58	24,986
Singapore Dollars			0.05	344
Escrow accounts
U.S. Dollars	4.52	42,572	4.65	44,937
Total assets		2,296,104		3,006,282
Liabilities
Trade payables
Related parties
U.S. Dollars	19.51	183,975	6.96	67,379
Great Britain Pound sterling			0.00	1
Euro	0.01	86
Third parties
U.S. Dollars	346.37	3,251,130	464.24	4,493,428
Euro	159.67	2,195,632	32.73	463,452
Singapore Dollars	1.31	8,660	4.78	32,741
Australian Dollars			0.02	145
Great Britain Pound sterling			0.01	86
Swiss Franc	0.00	14	0.01	59
Japanese Yen	0.51	46	0.51	55
Myanmar Kyat	0.01	21
Hongkong Dollars	0.01	11
Other payables
U.S. Dollars	0.07	668	0.22	2,143
Malaysian Ringgit			0.54	1,517
Singapore Dollars			0.02	150
Euro			0.01	109
Accrued expenses
U.S. Dollars	11.40	107,554	10.95	105,853
Singapore Dollars	0.61	4,008	3.96	27,104
Japanese Yen	144.20	12,981	135.46	14,644
Advances from customers and suppliers
U.S. Dollars	11.44	107,964	1.27	12,252
Current maturities of long-term liabilities
U.S. Dollars	124.86	1,177,965	125.60	1,214,652
Japanese Yen	767.90	69,126	767.90	83,017
Long-term liabilities
U.S. Dollars	289.64	2,732,788	172.95	1,672,459
Japanese Yen	11,902.41	1,071,455	11,134.52	1,203,753
Total liabilities		10,924,084		9,394,999
Net liabilities		(8,627,980	)	(6,388,717	)

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| 50. |
| --- |
| 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. |
| If the Company and its subsidiaries reports monetary assets and liabilities in foreign
currencies as of September 30, 2009 using the rates on October 28, 2009, unrealized foreign
exchange loss will decrease by the amount of Rp.75,347 million. |

SUBSEQUENT EVENTS

| (a) | On October 1, 2009, TII has purchased additional 5,500,000 Scicom shares with
transaction value amounted to US$0.54 million (equivalent to Rp5,226 million), as a result,
TIIs ownership in Scicom increased to 11.9%. |
| --- | --- |
| (b) | On October 14, 2009, Human Capital and General Affairs Director of the Company issued
KR.11/PS900/COP-B0011000/2009 concerning the Decision of Human Capital and General Affairs
Directors Amendment No. KR.06/PS900/COP-B0011000/2009 on July 1, 2009 and 2009 Early
Retirement Establishment. Early retirement was communicated to the employees on October
23, 2009. |
| (c) | On October 16, 2009, The Company officialy announce a new corporate identity, new
tagline the world in Your Hand, and establish business portfolio to TIME
(Telecommunication, Information, Media and Edutainment). |
| (d) | On October 16, 2009, Sigma and Finnet entered into an agreement to issue MTN (Note 22)
for a total principal amount of Rp.30 billion and Rp.10 billion, respectively, for a period
of 5 years and 3 years, respectively, and interest rate of 14.50% per annum and 16.50% per
annum, respectively. On October 23, 2009, the facilities were fully drawn-down. |

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52.
The recent accounting pronouncement in Indonesia that relevant to the Company and its
subsidiaries are as follow:

(i)	PSAK 50 (Revised 2006), Financial Instruments: Presentation and Disclosures
	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). DSAK has
postponed the application of PSAK 50 (Revised 2006) until January 1, 2010 based on its
letter No. 1705/DSAK/IAI/XII/2008 regarding, The Announcement of the Change of Effective
Date of PSAK No. 50 (Revised 2006) and PSAK No. 55 (Revised 2006) dated December 30, 2008.
The Company and its subsidiaries are currently assessing the impact of the application of
PSAK 50 (Revised 2006) on the consolidated financial statements.
(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 financial liability including
derivative instruments. It also provides guidance on the recognition and measurement of
sales and purchase contracts of non-financial items. DSAK has postponed the application of
PSAK 55 (Revised 2006) until January 1, 2010 based on its letter No. 1705/DSAK/IAI/XII/2008
regarding, The Announcement of the Change of Effective Date of PSAK No. 50 (Revised 2006)
and PSAK No. 55 (Revised 2006) dated December 30, 2008. 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 26 (Revised 2008), Borrowing Costs
	In September 2008, the DSAK issued PSAK 26 (Revised 2008), Borrowing Costs which amends
PSAK 26, Borrowing Costs. PSAK 26 (Revised 2008) provides guidance on
commencement, suspension and cessation of borrowing cost capitalization as part of the cost
of an asset. PSAK 26 (Revised 2008) requires borrowing costs that are directly attributable
to the acquisition, construction or production of a qualifying asset to be capitalized as
part of the cost of that asset. There are no significant differences between PSAK 26
(Revised 2008) and PSAK 26. PSAK 26 (Revised 2008) shall be effective on January 1, 2010.
The Company and its subsidiaries are currently assessing the impact of the requirement of
PSAK 26 (Revised 2008) on the consolidated financial statements. The Company and its
subsidiaries are currently assessing the impact of the application of PSAK 26 (Revised 2008)
on the consolidated financial statements.

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RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA (continued)

| (iv) |
| --- |
| In June 2009, the DSAK issued PPSAK 1, Abolition of PSAK 32: Accounting for Forestry
Industry, PSAK 35: Accounting for Telecommunication Services, and PSAK 37: Accounting for
Toll Road Industry . PPSAK 1 abolished the rules stated in PSAK 33, PSAK 35 and PSAK 37.
PPSAK 1 shall be effective on January 1, 2010 and prospectively applied. To improve the
comparability of financial statements, the DSAK encourages restatement of financial
statements of the periods ended before the reporting period. Earlier application of PPSAK 1
is encouraged. The Company and its subsidiaries are currently assessing the impact of the
requirement of PPSAK 1 on the consolidated financial statements. |

| 53. |
| --- |
| In 2008, The Company has reasessed the fair value of its assets and liabilities arose from
acquisition of Sigmas transaction (Note 3) and determined the need to restate the consolidated
financial statements as of September 30, 2008 in accordance with the correction of its
transaction. |
| Certain accounts in the consolidated financial statement for the nine months period ended
September 30, 2008 has been reclassified to conform with the presentation of accounts of the
consolidated financial statements for the nine months period ended September 30, 2009. |
| A summary of previously reported and after restatement and reclassification balance as of and
for the nine months period ended September 30, 2008 is as follows: |


Restatements					Restatements
and					and
Reclassifications		Restatements	Reclassifications		Reclassifications
Consolidated balance sheet
September 30, 2008:
Temporary investments	270,650		2,968			273,618
Claims for tax refund	420,550			(12,539	)	408,011
Prepaid taxes	148,010			12,539		160,549
Property, plant and equipment cost	126,933,192		7,212	(1,006,122	)	125,934,282
Accumulated depreciation	(60,527,740	)		534,401		(59,993,339	)
Property, plant and equipment net
of accumulated depreciation	66,405,452		7,212	(471,721	)	65,940,943

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53. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS AND ACCOUNTS RECLASSIFICATION (continued)


Restatements						Restatements
and						and
Reclassifications		Restatements		Reclassifications		Reclassifications
Consolidated balance sheet
September 30, 2008: (continued)
Goodwill and other intangible
assets gross carrying amount	8,354,754		(4,929	)	1,006,122		9,355,947
Accumulated amortization	(5,464,783	)			(534,401	)	(5,999,184	)
Goodwill and other intangible
assets net of accumulated
amortization	2,889,971		(4,929	)	471,721		3,356,763
Other payables	(20,385	)	(2,968	)			(23,353	)
Deffered tax liabilities net	(2,950,461	)	26,863				(2,923,598	)
Minority interest	(8,800,782	)	(29,146	)			(8,829,928	)
Consolidated income statement
for the nine months
ended September 30, 2008:
Operating revenues data, internet
and information technology
services	10,761,163				134,117		10,895,280
Operating revenues network	796,160				(55,118	)	741,042
Operating revenues other
telecommunications services	402,548				(29,688	)	372,860
Operating expenses depreciation	(7,988,460	)			105,426		(7,883,034	)
Operating expenses operations,
maintenance and
telecommunication services	(8,738,220	)			(49,311	)	(8,787,531	)
Operating expenses general and
administrative	(2,626,768	)			(105,426	)	(2,732,194	)

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