PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA TBK

6-K 1 u00227e6vk.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 May , 20 09

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- ]

Enclosure: 2007 Annual Report of Perusahaan Perseroan (Persero) PT TELEKOMUNIKASI INDONESIA

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SIGNATURES

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

		Perusahaan Perseroan (Persero) PT TELEKOMUNIKASI INDONESIA
		(Registrant)
Date	May 11, 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)

MARCH 31, 2008 AND 2009 AND THREE MONTHS PERIOD ENDED MARCH 31, 2008 AND 2009

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

MARCH 31, 2008 AND 2009 AND THREE MONTHS ENDED MARCH 31, 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	9-121

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED) MARCH 31, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

	Notes	2008 — Rp.	2009 — Rp.	US$(Note 3)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	2c,2e,5,43	9,830,473	6,509,704	563,367
Temporary investments	2c,2f,43	186,708	287,558	24,886
Trade receivables	2c,2g,6,36,43
Related parties net of allowance
for doubtful accounts of
Rp.130,703 million in 2008 and
Rp.114,447 million in 2009		399,786	770,121	66,648
Third parties net of allowance for
doubtful accounts of
Rp.1,161,958 million in 2008 and
Rp.1,174,383 million in 2009		2,658,133	3,003,901	259,965
Other receivables net of allowance for
doubtful accounts of
Rp.10,719 million in 2008
and Rp.7,734 million in 2009	2c,2g,43	122,953	102,809	8,897
Inventories net of allowance for
obsolescence of Rp.56,868 million
in 2008 and Rp.68,111 million in 2009	2h,7,36	253,898	493,683	42,725
Prepaid expenses	2c,2i,8,43	1,226,795	2,087,031	180,617
Claims for tax refund	37, 52	408,011	222,954	19,295
Prepaid taxes	37, 52	71,366	803,700	69,554
Other current assets	2c,9,43	75,686	43,201	3,739
Total Current Assets		15,233,809	14,324,662	1,239,693
NON-CURRENT ASSETS
Long-term investments net	2f,10	140,261	170,184	14,728
Property, plant and equipment net of
accumulated depreciation of
Rp.56,472,320 million in 2008 and Rp.64,853,338 million in 2009	2k,2l,4,11, 19,20,22,52	60,392,109	71,165,921	6,158,885
Property, plant and equipment under
Revenue-Sharing Arrangements net
of accumulated depreciation of
Rp.524,688 million in 2008 and
Rp.272,514 million in 2009	2m,12,33,45	664,787	453,847	39,277
Prepaid pension benefit cost	2i,2r,40	557	176	15
Advances and other non-current assets	2c,2k,2o,13, 28,43,47	1,624,082	2,260,788	195,655
Goodwill and other intangible assets net
of accumulated amortization of
Rp.5,389,667 million in 2008 and Rp.6,641,019 million in 2009	2d,2j,4, 14,36,52	3,743,962	2,873,087	248,644
Escrow accounts	2c,15,43	1,285	44,105	3,817
Total Non-current Assets		66,567,043	76,968,108	6,661,021
TOTAL ASSETS		81,800,852	91,292,770	7,900,714

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

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (continued) MARCH 31, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

	Notes	2008 — Rp.	2009 — Rp.	US$ (Note 3)
LIABILITIES AND STOCKHOLDERS
EQUITY
CURRENT LIABILITIES
Trade payables	2c,16,43
Related parties		577,569	1,238,113	107,150
Third parties		4,845,103	8,954,257	774,925
Other payables		50,509	23,168	2,005
Taxes payable	2s,37	1,554,280	1,163,836	100,721
Accrued expenses	2c,17,34,43	3,069,501	3,383,731	292,837
Unearned income	2q,18	2,477,559	2,794,029	241,803
Advances from customers and suppliers		174,824	711,724	61,594
Short-term bank loans	2c,19,43	215,814	42,612	3,688
Current maturities of long-term liabilities	2c,2l,20,43	4,567,427	6,980,674	604,126
Total Current Liabilities		17,532,586	25,292,144	2,188,849
NON-CURRENT LIABILITIES
Deferred tax liabilities net	2s,37	3,023,781	2,898,126	250,811
Unearned income on Revenue-Sharing
Arrangements	2m,12,45	443,013	267,392	23,141
Accrued long service awards	2c,2r,41,43	76,806	108,722	9,409
Accrued post-retirement
health care benefits	2c,2r,42,43	2,894,582	2,553,531	220,989
Accrued pension and other
post-retirement benefits costs	2c,2r,40,43	1,324,308	1,057,509	91,520
Long-term liabilities net of current
maturities
Obligations under finance leases	2l,11,20	209,515	292,772	25,337
Two-step loans related party	2c,20,21,43	3,688,710	3,874,738	335,330
Bank loans	2c,20,22,43	3,830,987	6,393,675	553,325
Deferred consideration for business
combinations	20,23	2,117,166	1,179,701	102,095
Total Non-current Liabilities		17,608,868	18,626,166	1,611,957
MINORITY INTEREST	24	10,556,996	10,581,091	915,715

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

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (continued) MARCH 31, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

	Notes	2008 — 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,25	5,040,000		5,040,000		436,175
Additional paid-in capital	2u,26	1,073,333		1,073,333		92,889
Treasury stock 337,293,000 shares in
2008 and 490,574,500 shares in 2009	2u,27	(3,030,368	)	(4,264,114	)	(369,028	)
Difference in value arising from
restructuring transactions and
other transactions between
entities under common control	2d,28	270,000		360,000		31,155
Difference due to change of equity in
associated companies	2f	385,595		385,595		33,370
Unrealized holding gain from
available-for-sale securities	2f	12,586		1,653		143
Translation adjustment	2f	228,914		239,055		20,688
Retained earnings
Appropriated		6,700,879		10,557,985		913,716
Unappropriated		25,421,463		23,399,862		2,025,085
Total Stockholders Equity		36,102,402		36,793,369		3,184,193
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY		81,800,852		91,292,770		7,900,714

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) THREE MONTHS PERIOD ENDED MARCH 31, 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	2008 — Rp.	Rp.		US$ (Note 3)
OPERATING REVENUES
Telephone	2q,29
Fixed lines		2,540,438		2,116,593		183,176
Cellular		5,966,083		6,517,451		564,037
Interconnection	2c,2q,30,43
Revenues		3,041,324		2,659,347		230,147
Expenses		(781,585	)	(743,834	)	(64,373	)
Net		2,259,739		1,915,513		165,774
Data, internet and information
technology services	2q,31	3,944,676		3,715,768		321,572
Network	2c,2q,32,43	218,807		263,470		22,801
Revenue-Sharing Arrangements	2m,12,33,45	97,936		43,773		3,788
Other telecommunications services	2q	3,924		129,610		11,217
Total Operating Revenues		15,031,603		14,702,178		1,272,365
OPERATING EXPENSES
Depreciation	2k,2l,2m, 11,12,13,52	2,500,577		2,964,718		256,574
Personnel	2c,2r,17,34, 40,41,42,43	2,246,902		1,904,766		164,843
Operations, maintenance and
telecommunication services	2c,2q,35,43	2,506,173		3,288,635		284,607
General and administrative	2g,2h,2q,6, 7,14,36,52	858,482		841,257		72,805
Marketing	2q	376,981		414,604		35,881
Total Operating Expenses		8,489,115		9,413,980		814,710
OPERATING INCOME		6,542,488		5,288,198		457,655
OTHER (EXPENSES) INCOME
Interest income	2c,43	174,205		138,451		11,982
Equity in net income (loss) of
associated companies	2f,10	(874	)	931		81
Interest expense	2c,43	(263,146	)	(517,388	)	(44,776	)
Loss on foreign exchange net	2p	(45,655	)	(211,718	)	(18,323	)
Others net	52	102,916		56,371		4,878
Other expenses net		(32,554	)	(533,353	)	(46,158	)
INCOME BEFORE TAX		6,509,934		4,754,845		411,497
TAX (EXPENSE) BENEFIT	2s,37
Current		(2,058,376	)	(1,405,610	)	(121,645	)
Deferred		5,363		6,747		584
		(2,053,013	)	(1,398,863	)	(121,061	)
INCOME BEFORE MINORITY INTEREST
IN NET INCOME OF CONSOLIDATED
SUBSIDIARIES		4,456,921		3,355,982		290,436
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARIES net	24	(1,249,587	)	(898,098	)	(77,724	)
NET INCOME		3,207,334		2,457,884		212,712
BASIC EARNINGS PER SHARE	2w,38
Net income per share		161.50		124.46		0.01
Net income per ADS (40 Series B shares per ADS)		6,460.00		4,978.40		0.40

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) THREE MONTHS PERIOD ENDED MARCH 31, 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	gain
			Additional		entities under	of equity	on available-
		Capital	paid-in	Treasury	common	in associated	for-sale	Translation		Retained earnings		Stockholders
Descriptions	Notes	stock	capital	stock	control	companies	securities	adjustment		Appropriated	Unappropriated	equity
		Rp.	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.		Rp.	Rp.	Rp.
Balance, January 1, 2008		5,040,000	1,073,333	(2,176,611	)	270,000	385,595	11,237	230,017		6,700,879	22,214,129	33,748,579
Unrealized holding gain on
available-for-sale securities	2f							1,349					1,349
Foreign currency translation of
associated company	2f,10								(1,103	)			(1,103	)
Treasury stock acquired at cost	2u,27			(853,757	)								(853,757	)
Net income for the period												3,207,334	3,207,334
Balance, March 31, 2008		5,040,000	1,073,333	(3,030,368	)	270,000	385,595	12,586	228,914		6,700,879	25,421,463	36,102,402

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

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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED) (continued) THREE MONTHS PERIOD ENDED MARCH 31, 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	gain (loss)
			Additional		entities under	of equity	on available-
		Capital	paid-in	Treasury	common	in associated	for-sale		Translation	Retained earnings		Stockholders
Descriptions	Notes	stock	capital	stock	control	companies	securities		adjustment	Appropriated	Unappropriated	equity
		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							20,719					20,719
Foreign currency translation of
subsidiaries	1d,2b									736			736
Treasury stock acquired at cost	2u,27			(41	)								(41	)
Net income for the period												2,457,884	2,457,884
Balance, March 31, 2009		5,040,000	1,073,333	(4,264,114	)	360,000	385,595	1,653		239,055	10,557,985	23,399,862	36,793,369

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)

THREE MONTHS PERIOD ENDED MARCH 31, 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	2,503,591		2,117,409		183,246
Cellular	6,045,820		6,609,813		572,031
Interconnection net	2,376,289		1,676,398		145,080
Data, internet and information technology services	3,937,349		3,517,751		304,435
Other services	352,792		455,429		39,414
Total cash receipts from operating revenues	15,215,841		14,376,800		1,244,206
Cash payments for operating expenses	(5,820,282	)	(6,306,827	)	(545,809	)
Cash receipt from customers	33,328		569,313		49,270
Cash generated from operations	9,428,887		8,639,286		747,667
Interest received	174,829		151,759		13,134
Interest paid	(236,489	)	(571,434	)	(49,453	)
Income tax paid	(3,208,328	)	(966,307	)	(83,627	)
Net cash provided by operating activities	6,158,899		7,253,304		627,721
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of temporary investments
and maturity of time deposits	40,784		4,242		367
Purchases of temporary investments
and placements in time deposits	(21,548	)	(4,036	)	(349	)
Proceeds from sale of property, plant and equipment	5,298		844		73
Acquisition of property, plant and equipment	(3,600,112	)	(5,031,228	)	(435,416	)
Increase in advances for purchases of
property, plant and equipment	(169,857	)	(917,871	)	(79,435	)
Increase in advances and other assets	(33,885	)	(40,907	)	(3,540	)
Business combinations, net of cash paid	(323,541	)
Acquisition of intangible assets			(2,013	)	(174	)
Acquisition of long-term investments	(28,923	)
Cash dividends received	618		863		75
Increase in escrow accounts			6,745		584
Net cash used in investing activities	(4,131,166	)	(5,983,361	)	(517,815	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings	11,312		5,713		494
Repayments of short-term borrowings	(371,763	)	(13,500	)	(1,168	)
Proceeds from long-term borrowings			304,399		26,343
Repayment of long-term borrowings	(993,484	)	(1,889,197	)	(163,496	)
Payment for purchases of treasury stock	(853,757	)	(41	)	(4	)
Repayment of promissory notes	(101,355	)	(123,927	)	(10,725	)
Repayment of obligations under finance leases	(3,980	)	(59,747	)	(5,171	)
Net cash used in financing activities	(2,313,027	)	(1,776,300	)	(153,727	)

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) THREE MONTHS PERIOD ENDED MARCH 31, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Rp.		Rp.		US$ (Note 3)
NET DECREASE IN CASH AND
CASH EQUIVALENTS	(285,294	)	(506,357	)	(43,821	)
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS	(25,024	)	126,116		10,914
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR	10,140,791		6,889,945		596,274
CASH AND CASH EQUIVALENTS AT END OF PERIOD	9,830,473		6,509,704		563,367
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities:
Acquisition of property, plant and equipment
through incurrence of payables	4,263,679		6,988,865		604,835
Acquisition of property, plant and equipment
through finance leases	19,829		82,001		7,097

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) MARCH 31, 2008 AND 2009, AND THREE MONTHS PERIOD ENDED MARCH 31, 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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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) MARCH 31, 2008 AND 2009, AND THREE MONTHS PERIOD ENDED MARCH 31, 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.

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.

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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

MARCH 31, 2008 AND 2009, AND THREE MONTHS PERIOD ENDED MARCH 31, 2008 AND 2009 (Figures in tables are presented in millions of Rupiah, unless otherwise stated)

GENERAL (continued)

| a. |
| --- |
| 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 28). 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 Extraordinary General Meeting (EGM) of
Stockholders of the Company dated February 28, 2007 as covered by notarial deed No. 16
of A. Partomuan Pohan, S. H., LLM., as amended through the Annual General Meeting
(AGM) of Stockholders of the Company dated June 29, 2007 as covered by notarial deed
No. 58 of the same notary; and (ii) EGM of Stockholders of the Company dated September
19, 2008 as covered by notarial deed No. 16 of the same notary, the composition of the
Companys Board of Commissioners and Directors as of March 31, 2008 and 2009,
respectively, were as follows: |

	2008	2009
President Commissioner	Tanri Abeng	Tanri Abeng
Commissioner	Anggito Abimanyu	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

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GENERAL (continued)

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

| 1. |
| --- |
| Based on AGM of Stockholders of the Company dated June 29, 2007, the Companys
stockholders agreed to replace Gatot Trihargo as the Companys Commissioner to
Mahmuddin Yasin. |
| Based on Board of Commissioners Decision Letter dated February 15, 2008, the Board of
Commissioners agreed to appoint Ermady Dahlan as Director of Network and Solution and I
Nyoman Gede Wiryanata as Director of Consumer effective from March 1, 2008. |
| Based on Letter No. S-584/KF/2008 dated June 20, 2008, Anggito Abimanyu resigned from
his position as a member of Companys Board of Commissioners effective from August 20,
2008. |
| Based on Board of Commissioners Letter to the President Director No.
125/SRT/DK/2008/RHS dated July 25, 2008, the Board of Commissioners agreed to proceed
the appointment of COO, including the role of its position as Director of Network and
Solution. |
| 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. |

2.
As of March 31, 2008 and 2009, the Company and its subsidiaries had 33,438 and 30,288
employees, respectively.

| 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. |

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GENERAL (continued)

| c. |
| --- |
| 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. |
| 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 27). |
| As of March 31, 2009, all of the Companys Series B shares were listed on the IDX and
51,767,700 ADS shares were listed on the NYSE and LSE. |

| d. |
| --- |
| As of March 31, 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 ), Medan, Indonesia	Telecommunication construction and services/August 15, 2002	1995	100	100	1,222,583	1,146,543
PT Telekomunikasi Indonesia International ( TII ) (formerly PT Aria West International ( AWI )), Jakarta, Indonesia	Telecommunication/July 31, 2003	1995	100	100	626,059	659,251

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GENERAL (continued)

d.
(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 Multimedia Nusantara ( Metra ), Jakarta, Indonesia	Multimedia telecommunication services/May 9, 2003	1998	100	100	649,451	837,616
PT Graha Sarana Duta ( GSD ), Jakarta, Indonesia	Leasing of offices
and providing building
management and
maintenance services,
civil consultant and
developer/April
25, 2001	1982	99.99	99.99	153,866	170,329
PT Dayamitra Telekomunikasi ( Dayamitra ), Jakarta, Indonesia	Telecommunication/May 17, 2001	1995	100	100	437,253	411,503
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)	135,220	131,318
PT Telekomunikasi Selular ( Telkomsel ), Jakarta, Indonesia	Telecommunication
provides
telecommunication
facilities and mobile
cellular services using
Global System for
Mobile Communication
(GSM) technology/May 26, 1995	1995	65	65	43,133,467	52,945,199
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	51	500,645	578,689

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GENERAL (continued)

d.
(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)	1,848	1,642
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)	6	30
PT Balebat Dedikasi Prima ( Balebat ) , Bogor, Indonesia	Printing/October 1, 2003	2000	33.15
(through
65%
ownership by
Infomedia)	33.15
(through
65%
ownership by
Infomedia)	50,168	93,490
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)	8,489	10,638
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)	18,764	24,676
PT Telekomunikasi
Indonesia
International Pte. Ltd., Singapura	Finance/December 6, 2007	2008	100 (through 100% ownership by TII)	100 (through 100% ownership by TII)		98,225
PT Sigma Cipta Caraka ( Sigma ), Tangerang, Indonesia	Information technology
service system
implementation and
integration service,
outsourcing and
software license
maintenance/May 1, 1987	1988	80 (through 80% ownership by Metra)	80 (through 80% ownership by Metra)	266,613	353,593

| (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. |

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GENERAL (continued)

d. Subsidiaries (continued)

(a)	TII (continued)
	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.
(b)	Metra
	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 on acquisition of a maximum 80% ownership
interest in Sigma, a company engaged in providing information system services.
	On December 18, 2007, Metra entered into a Conditional Sales and Purchase Agreement
(CSPA) with Sigmas stockholders for the acquisition (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.

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GENERAL (continued)

d. Subsidiaries (continued)

| (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 47c.ii). Telkomsel started its
commercial services for 3G in September 2006. |
| On October 11, 2006, Telkomsels operating licenses were updated by MoCI based on
Decision Letter No. 101/KEP/M.KOMINFO/10/2006, granting Telkomsel the rights to
provide: (i) Mobile telecommunication services with radio frequency bandwidth in the
900 Megahertz (MHz) and 1800 MHz bands; (ii) Mobile telecommunication services
IMT-2000 with radio frequency bandwidth in the 2.1 GHz bands (3G); and (iii) Basic
telecommunication services. |

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GENERAL (continued)

d. Subsidiaries (continued)

| (d) |
| --- |
| 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 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. |

e.
The consolidated financial statements were authorized for issue by the Board of Directors
on May 8, 2009.

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. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

| 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. |
| 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. |
| 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. |

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 with maturities of more than three months but not more than one year, are
presented as temporary investments.

| ii. |
| --- |
| 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. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f. Investments (continued)

| iii. |
| --- |
| 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. |
| 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. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

| 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. |
| 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 (PSAK 14R), 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 card, RUIM card
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 asset. 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 47c.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. |
| --- |
| 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. |
| --- |
| 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. |
| --- |
| 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. |
| --- |
| 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. |
| --- |
| 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. |
| 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 |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

| n. |
| --- |
| 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.
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. |
| --- |
| 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	9,210	9,220	11,535	11,575
Euro1	14,549	14,567	15,307	15,364
Yen1	92.68	92.80	117.33	117.81

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 card is recognized as revenue upon delivery of the starter
packs to distributors, dealers or directly to customers. |
| --- | --- |
| | Sale of pulse reload vouchers (either bundled in starter packs or sold as
separate items) is recognized initially as unearned income and recognized
proportionately as usage revenue based on duration 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. |
| --- |
| 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. |
| --- |
| 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 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. |
| --- |
| 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 are recognized on accrual basis. Unutilized promotional credits are netted
against unearned income.

r. Employee benefits

| i. |
| --- |
| 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. |
| --- |
| Employees are entitled to receive certain cash awards or certain numbers 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 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. |
| --- |
| 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. |
| --- |
| 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. |
| --- |
| 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 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. |
| --- |
| 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. |
| --- |
| 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. |
| --- |
| 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. |
| --- |
| 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. |
| --- |
| 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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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.11,555 to US$1 as published by Reuters on March 31, 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.

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	120,369
Property, plant and equipments	65,511
Other non-current assets	30,935
Intangible assets	256,354
Current liabilities	(64,172	)
Long-term liabilities	(30,308	)
Deferred tax liabilities	(85,561	)
Fair value of net assets acquired	293,128
Goodwill	37,924
Total purchase consideration	331,052
Less:
Cash and cash equivalents in subsidiary acquired	(43,649	)
Cash outflow from acquisition	287,403

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

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).

CASH AND CASH EQUIVALENTS

Cash on hand	35,959	34,666
Cash in banks
Related parties
Rupiah
PT Bank Negara Indonesia (Persero) Tbk (BNI)	128,390	383,120
PT Bank Mandiri (Persero) Tbk (Bank Mandiri)	190,446	161,801
PT Bank Rakyat Indonesia (Persero) Tbk (BRI)	12,780	80,604
PT Bank Pos Nusantara	240	105
PT Bank Tabungan Negara (Persero) (BTN)	19	18
	331,875	625,648
Foreign currencies
Bank Mandiri	64,621	215,144
BNI	27,839	29,454
BRI	663	653
PT Bank Syariah Mega Indonesia
(Bank Syariah Mega)	165	81
	93,288	245,332
Sub-total	425,163	870,980
Third parties
Rupiah
ABN AMRO Bank (AAB)	92,499	85,544
PT Bank Central Asia Tbk (BCA)	17,718	11,459
Deutsche Bank AG (DB)	28,451	8,486
PT Bank Bukopin Tbk (Bank Bukopin)	5,593	4,834
Bank Syariah Mega	85	3,846
PT Bank Ekonomi Raharja Tbk (Bank Ekonomi)	1,815	2,296
PT Bank CIMB Niaga Tbk (Bank CIMB Niaga)
(formerly PT Bank Niaga Tbk and PT Bank
Lippo Tbk)	3,637	2,200
Others (each below Rp.1 billion)	3,269	2,553
	153,067	121,218

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CASH AND CASH EQUIVALENTS (continued)


Cash in banks (continued)
Third parties (continued)
Foreign currencies
DB	10,021	11,732
Citibank	8,673	8,807
Bank Ekonomi	3,603	5,935
The Hongkong and Shanghai Banking
Corporation Ltd. (HSBC)		1,717
Others (each below Rp.1 billion)	1,234	1,192
	23,531	29,383
Sub-total	176,598	150,601
Total cash in banks	601,761	1,021,581
Time deposits
Related parties
Rupiah
Bank Mandiri	245,818	555,831
BRI	1,425,300	520,915
BNI	792,449	483,448
BTN	250,725	375,725
	2,714,292	1,935,919
Foreign currencies
BNI	382,287	1,283,308
BRI		176,486
Bank Mandiri	69,870	2,311
	452,157	1,462,105
Sub-total	3,166,449	3,398,024
Third parties
Rupiah
PT Bank Pembangunan Daerah Jawa Barat
dan Banten (Bank Jabar)	354,400	345,560
Bank Bukopin	329,510	184,895
PT Bank Mega Tbk (Bank Mega)	127,945	105,000
PT Bank Muamalat Indonesia (Bank Muamalat)	28,000	78,550
PT Bank Danamon Indonesia Tbk
(Bank Danamon)	199,315	69,315
PT Bank Internasional Indonesia Tbk	191,500	60,000
PT Bank Century Tbk	45,000	40,000
DB	1,696,035	31,670
Bank CIMB Niaga	316,063	6,600
PT Pan Indonesia Bank Tbk	35,000	5,000
PT Bank Tabungan Pensiunan Nasional Tbk	32,053	5,000
PT Bank Yudha Bhakti	14,250	2,019

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CASH AND CASH EQUIVALENTS (continued)


Time deposits (continued)
Third parties (continued)
Rupiah (continued)
Standard Chartered Bank (SCB)	575,000
PT Bank Victoria International Tbk	70,000
PT Bank Bumiputera Indonesia Tbk	35,000
Bank Ekonomi	19,250
PT Bank Artha Graha Internasional Tbk	10,000
PT Bank Nusantara Parahyangan Tbk	1,000
	4,079,321	933,609
Foreign currencies
BCA		542,091
SCB	493,340	541,662
Bank Muamalat	147,360	34,605
Bank CIMB Niaga		3,466
DB	1,168,582
HSBC	112,831
Bank Jabar	18,420
Bank Bukopin	4,607
Bank Mega	1,843
	1,946,983	1,121,824
Sub-total	6,026,304	2,055,433
Total time deposits	9,192,753	5,453,457
Grand Total	9,830,473	6,509,704

Interest rates per annum on time deposits are as follows:

Rupiah	2.25% - 10.00 %	6.25% - 13.50 %
Foreign currencies	1.00% - 4.80 %	0.25% - 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 43 for details of related party transactions. |

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

a. By debtor

(i) Related parties

Government Agencies	451,114		752,242
Indosat			49,084
CSM	52,084		46,908
PT Aplikanusa Lintasarta (Lintasarta)	4,237		12,088
PSN			7,286
PT Graha Informatika Nusantara (Gratika)			4,254
Koperasi Pegawai Telkom (Kopegtel)	966		1,145
PT Patra Telekomunikasi Indonesia (Patrakom)	17,623
Others	4,465		11,561
Total	530,489		884,568
Allowance for doubtful accounts	(130,703	)	(114,447	)
Net	399,786		770,121

| | 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	3,559,353		3,738,103
Overseas international carriers	260,738		440,181
Total	3,820,091		4,178,284
Allowance for doubtful accounts	(1,161,958	)	(1,174,383	)
Net	2,658,133		3,003,901

b. By age

(i) Related parties

Up to 6 months	486,997		803,900
7 to 12 months	19,902		33,326
13 to 24 months	12,813		23,129
More than 24 months	10,777		24,213
Total	530,489		884,568
Allowance for doubtful accounts	(130,703	)	(114,447	)
Net	399,786		770,121

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TRADE RECEIVABLES (continued)

b. By age (continued)

(ii) Third parties

Up to 3 months	2,133,065		2,120,094
More than 3 months	1,687,026		2,058,190
Total	3,820,091		4,178,284
Allowance for doubtful accounts	(1,161,958	)	(1,174,383	)
Net	2,658,133		3,003,901

c. By currency

(i) Related parties

Rupiah	459,961		857,535
U.S. Dollars	70,528		27,033
Total	530,489		884,568
Allowance for doubtful accounts	(130,703	)	(114,447	)
Net	399,786		770,121

(ii) Third parties

Rupiah	3,512,594		3,411,931
U.S. Dollars	307,497		766,353
Total	3,820,091		4,178,284
Allowance for doubtful accounts	(1,161,958	)	(1,174,383	)
Net	2,658,133		3,003,901

d. Movements in the allowance for doubtful accounts

Beginning balance	1,100,456		1,203,905
Additions (Note 36)	192,651		123,029
Bad debts write-off	(446	)	(38,104	)
Ending balance	1,292,661		1,288,830

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TRADE RECEIVABLES (continued)

| d. |
| --- |
| Management believes that the allowance for doubtful accounts is adequate to cover probable
losses on non-collection of the accounts receivable. |
| Except for the amounts receivable from the Government Agencies, management believes that
there were no significant concentrations of credit risk on these receivables. The Company and
its subsidiaries do not have any off-balance sheet credit exposures related to their
customers. |
| Certain trade receivables of the Companys subsidiaries have been pledged as collateral for
lending agreements (Notes 19 and 22). |
| Refer to Note 43 for details of related party transactions. |

INVENTORIES

SIM cards, RUIM cards and prepaid voucher blanks	122,019		206,106
Modules	132,620		183,629
Components	56,127		172,059
Total	310,766		561,794
Allowance for obsolescence
SIM cards, RUIM cards and prepaid voucher blanks	(369	)
Modules	(50,557	)	(61,439	)
Components	(5,942	)	(6,672	)
Total	(56,868	)	(68,111	)
Net	253,898		493,683

Movements in the allowance for obsolescence are as follows:

Beginning balance	54,701		64,849
Additions (Note 36)	2,645		3,262
Inventories write-off	(478	)
Ending balance	56,868		68,111

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

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7.	INVENTORIES (continued)
	Management believes that the allowance is adequate to cover probable losses from decline in
inventory value due to obsolescence.
	As of March 31, 2009, certain inventories held by the Company have been insured against fire,
theft and other specific risks. Total sum insured as of March 31, 2009 amounted Rp.4,878 million
(Note 43d.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 March 31, 2009 amounting Rp.5,662
million.
	Management believes that the insurance coverage is adequate to cover potential losses of the
insured inventories.
8.	PREPAID EXPENSES

Frequency license		1,212,156
Salaries	342,694	425,027
Rental	746,379	331,466
Insurance	83,583	79,753
Telephone directory issuance costs	31,273	2,483
Others	22,866	36,146
Total	1,226,795	2,087,031

	Refer to Note 43 for details of related party transactions.
9.	OTHER CURRENT ASSETS
	Other current assets as of March 31, 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$			0.075	870
	Rp.				20,362
Bank Mandiri
The Company	US$	0.916	8,440
	Rp.		64,021		1,348
Infomedia	Rp.		3,225		13,262
TII	US$			0.569	6,559
Bank Syariah Mega
Dayamitra	Rp.				800
Total			75,686		43,201

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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 43 for details of related party transactions.
10.	LONG-TERM INVESTMENTS


Percentage			Share of
of	Beginning		net (loss)		Translation		Ending
ownership	balance	Addition	income		adjustment		balance
Equity method:
CSM	25.00	57,240		(2,021	)	(1,103	)	54,116
Patrakom	40.00	32,892		1,146				34,038
PSN	22.38
		90,132		(875	)	(1,103	)	88,154
Cost method:
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	(875	)	(1,103	)	140,261


Percentage
of	Beginning	Share of	Translation	Ending
ownership	balance	net income	adjustment	balance
Equity method:
CSM	25.00	84,197			84,197
Patrakom	40.00	32,949	931		33,880
PSN	22.38
		117,146	931		118,077
Cost method:
BMPL	10.00	20,360			20,360
BBT	5.00	587			587
Bangtelindo	2.11	199			199
Scicom	9.80	30,961			30,961
		52,107			52,107
		169,253	931		170,184

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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 March 31, 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 the Company 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 March 31, 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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LONG-TERM INVESTMENTS (continued)

d.	BMPL (continued)
	As of March 31, 2008 and 2009, Telkomsels contributions which represent 10% ownership
interest amounted to US$2,200,000 (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 March 31, 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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PERUSAHAAN PERSEROAN (PERSERO) P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

PROPERTY, PLANT AND EQUIPMENT

2008	of Sigma	Additions	Deductions		Reclassifications		2008
At cost:
Direct acquisitions
Land	561,348		11,274					572,622
Buildings	2,557,804		2,107			38,650		2,598,561
Leasehold improvements	403,498	2,227	16,760			1,027		423,512
Switching equipment	24,293,139		13,350			136,161		24,442,650
Telegraph, telex and data
communication equipment	156,036					(2,403	)	153,633
Transmission installation and
equipment	44,758,386		210,443			1,965,505		46,934,334
Satellite, earth station
and equipment	5,979,626		33,557			2,799		6,015,982
Cable network	20,669,529		129,041			(1,133	)	20,797,437
Power supply	4,416,077		5,910			257,782		4,679,769
Data processing equipment	5,710,782	14,523	12,025			137,919		5,875,249
Other telecommunications
peripherals	637,020	2,186	4,307					643,513
Office equipment	706,484	1,345	6,720			(40	)	714,509
Vehicles	156,192	1,161		(466	)	(5,980	)	150,907
Other equipment	109,784		224					110,008
Property under
construction:
Buildings	86		48,725			(39,822	)	8,989
Switching equipment	83,740		121,520			(137,579	)	67,681
Transmission installation and
equipment	2,525,030		1,687,204			(1,977,647	)	2,234,587
Satellite, earth station
and equipment	3,557					(525	)	3,032
Cable network	381		34,364					34,745
Power supply	37,979		245,630			(259,016	)	24,593
Data processing
equipment	31,351	27,544	152,471			(137,937	)	73,429
Leased assets
Vehicles			20,874					20,874
Transmission installation
and equipment	283,813							283,813
Total	114,081,642	48,986	2,756,506	(466	)	(22,239	)	116,864,429
Accumulated depreciation and
impairment:
Direct acquisitions
Buildings	1,207,216		31,586			(50	)	1,238,752
Leasehold improvements	257,862		15,873					273,735
Switching equipment	13,562,557		584,204			(504	)	14,146,257
Telegraph, telex and data
communication equipment	152,427		99			(2,403	)	150,123
Transmission installation
and equipment	16,178,965		1,061,269			(2,856	)	17,237,378
Satellite, earth station
and equipment	2,373,355		130,045			8,642		2,512,042
Cable network	12,917,430		331,685			598		13,249,713
Power supply	1,864,747		108,636			(276	)	1,973,107
Data processing
equipment	3,895,304		183,984			15		4,079,303
Other telecommunications
peripherals	575,458		3,014			38		578,510
Office equipment	584,927		11,398			570		596,895
Vehicles	147,055		965	(466	)	(5,933	)	141,621
Other equipment	100,437		749					101,186
Leased assets
Vehicles			863					863
Transmission installation
and equipment	188,094		4,932			(191	)	192,835
Total	54,005,834		2,469,302	(466	)	(2,350	)	56,472,320
Net Book Value	60,075,808							60,392,109

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PROPERTY, PLANT AND EQUIPMENT (continued)

2009	Additions	Deductions		Reclassifications		2009
At cost:
Direct acquisitions
Land	684,768	15,422			12,027		712,217
Buildings	2,721,804	91,040			43,384		2,856,228
Leasehold improvements	460,836	9,198					470,034
Switching equipment	26,356,172	7,496			441,396		26,805,064
Telegraph, telex and data
communication equipment	139,165						139,165
Transmission installation and
equipment	56,572,954	696,103	(4	)	1,305,157		58,574,210
Satellite, earth station and
equipment	6,502,198	155,180			211		6,657,589
Cable network	21,857,982	270,570	(294	)	(93	)	22,128,165
Power supply	5,838,258	44,040			230,349		6,112,647
Data processing equipment	7,184,767	37,009			189,712		7,411,488
Other telecommunications
peripherals	545,194	647					545,841
Office equipment	678,640	4,685	(2,290	)	(167	)	680,868
Vehicles	127,274	45	(100	)	5		127,224
Other equipment	105,386	1,905					107,291
Property under construction:
Buildings	60,099	24,899			(43,487	)	41,511
Switching equipment	17,155	367,789			(331,215	)	53,729
Transmission installation and
equipment	1,173,830	1,225,253			(1,356,491	)	1,042,592
Satellite, earth station and
equipment
Cable network	384	11,453			(22	)	11,815
Power supply	13,131	190,725			(173,661	)	30,195
Data processing equipment	427,698	349,662			(305,202	)	472,158
Leased assets
Vehicles	56,998						56,998
Transmission installation and
equipment	284,978						284,978
Data processing equipment	236,240						236,240
Office equipment	437,705						437,705
Customer premise equipment
(CPE) assets	23,307						23,307
Total	132,506,923	3,503,121	(2,688	)	11,903		136,019,259
Accumulated depreciation and
impairment:
Direct acquisitions
Buildings	1,351,589	34,015			787		1,386,391
Leasehold improvements	323,910	15,087			380		339,377
Switching equipment	15,926,334	636,333			298		16,562,965
Telegraph, telex and data
communication equipment	135,327	146					135,473
Transmission installation
and equipment	19,220,612	1,333,530			24		20,554,166
Satellite, earth station and
equipment	2,732,847	123,494			283		2,856,624
Cable network	13,506,314	330,233	(294	)	(226	)	13,836,027
Power supply	2,333,053	131,166					2,464,219
Data processing equipment	4,588,877	261,494			(5,775	)	4,844,596
Other telecommunications
peripherals	462,208	3,632			20		465,860
Office equipment	561,073	10,991	(592	)	471		571,943
Vehicles	108,049	1,584	(54	)	20		109,599
Other equipment	94,866	939					95,805
Leased assets
Vehicles	11,640	3,977					15,617
Transmission installation and
equipment	207,323	4,814					212,137
Data processing equipment	60,162	14,824			1,440		76,426
Office equipment	290,717	33,283			(927	)	323,073
CPE assets	2,432	608					3,040
Total	61,917,333	2,940,150	(940	)	(3,205	)	64,853,338
Net Book Value	70,589,590						71,165,921

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

PROPERTY, PLANT AND EQUIPMENT (continued)

a. (Loss) gain on disposal or exchange of assets

Proceeds from sale of property, plant and equipment	5,298	844
Net book value		(1,748	)
(Loss) gain on disposal	5,298	(904	)

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
March 31, 2008 and 2009, the net book value of these property, plant and equipment was
Rp.1,010,385 million and Rp.899,970 million, respectively. |
| --- | --- |
| (ii) | In accordance with the amended and restated KSO IV agreement with PT Mitra
Global Telekomunikasi Indonesia (MGTI), the ownership rights to the acquired
property, plant and equipment in KSO IV are legally retained by MGTI until the end of
the KSO period which is on December 31, 2010. As of March 31, 2008 and 2009, the net
book value of this property, plant and equipment was Rp.741,409 million and Rp.434,589
million, respectively. |

c. Assets impairment and related claims

| (i) | In the first quarter of 2005, the Government issued a series of regulations
in its efforts to rearrange the frequency spectra utilized by the telecommunications
industry. This action has resulted in the Company not being able to utilize certain
frequency spectra it had used to support its fixed wireline cable network by the end
of 2006. As a result of these regulations, certain of the Companys cable network
facilities within the fixed wireline segment, which comprised primarily of Wireless
Local Loop (WLL) and Approach Link equipment operating in the affected frequency
spectra, could no longer be used by the end of 2006. Hence, the Company had shortened
the remaining useful lives for WLL and Approach Link equipment in the first quarter of
2005 and depreciated the remaining net book value of these assets through December 31,
2006, and charged additional depreciation expense of Rp.240,398 million (Rp.168,279
million net after tax) in 2006. |
| --- | --- |
| (ii) | Further, on August 31, 2005, MoCI issued a press release which announced that
in order to conform with international standards and as recommended by the
International Telecommunications Union Radio communication Sector (ITU-R), the
1900 MHz frequency spectrum would only be used for IMT-2000 or 3G network. In its
press release, the MoCI also announced that the Code Division Multiple Access
(CDMA)-based technology network which the Company used for its fixed wireless
services could only operate in the 800 MHz frequency spectrum. The Company utilizes
the 1900 MHz frequency spectrum for its fixed wireless network in Jakarta and West
Java areas while for other areas, the Company utilizes the 800 MHz frequency spectrum. |

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

PROPERTY, PLANT AND EQUIPMENT (continued)

c. Assets impairment and related claims (continued)

(ii)	(continued)
	On January 13, 2006, the MoCI issued MoCI Regulation No. 01/PER/M.KOMINFO/1/2006 which
reaffirmed the Governments decision that the Companys fixed wireless network could
only operate in the 800 MHz frequency spectrum and that the 1900 MHz will be allocated
for 3G network. Following the preceding Governments decisions, the Company reviewed
the recoverable amount of cash-generating unit to which the affected fixed wireless
asset belongs and in 2005, the Company had written-down Rp.616,768 million for
transmission installation and equipment of fixed wireless assets. The recoverable
amount was estimated using value in use which represented the present value of
estimated future cash flows from cash-generating unit using a pretax discount rate of
16.89%, representing the Companys weighted average cost of capital as of December 31,
2005. In determining cash-generating unit to which an asset belongs, assets were
grouped at the lowest level that included the assets and generated cash inflows that
were largely independent of the cash inflows from other assets or group of assets. In
addition, the Company recognized a loss relating to non-cancelable contracts for
procurement of the 1900 MHz transmission installation and equipment in Jakarta and
West Java areas amounting to Rp.79,359 million.
	As a result of this Governments decision, the Companys Base Station System (BSS)
equipment in Jakarta and West Java areas which are part of the transmission
installation and equipment for the fixed wireless network could no longer be used by
the end of 2007 with total acquisition cost amounted to Rp.1,330,818 million. The BSS
equipment has been completely replaced with BSS equipment operating in 800 MHz by the
end of December 2007. Further, the Company changed the estimated remaining useful
lives for the Jakarta and West Java BSS equipment and depreciated the remaining net
book value of these assets through June 30, 2007 and recognized an additional
depreciation expense of Rp.173,826 million (Rp.121,678 million net after tax) in
2006. In June 2007, the Company has been fully depreciated the assets.
(iii)	As of March 31, 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 March 31, 2009, there were no events or changes in circumstances that
would indicate that the carrying amount of the Companys satellites may not be
recoverable.
(iv)	On 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.

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

PROPERTY, PLANT AND EQUIPMENT (continued)

d. Others

| (i) | Interest capitalized to property under construction amounted to Rp.nil for
the three months period ended March 31, 2008 and 2009. |
| --- | --- |
| (ii) | Foreign exchange loss capitalized as part of property under construction
amounted to Rp.nil for the three months period ended March 31, 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 52). |
| (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 change in the useful life has an insignificant impact
to the depreciation charged. |
| (v) | In 2008, Telkomsel recorded Rp.8,260,648 million of its property, plant and
equipment which was subject to price adjustment (Note 47a.ii). In March 2009,
Telkomsel and its vendors agreed to adjust price by US$107.05 million (Note 47a.ii).
The effect of the adjustment is a reduction to recorded property, plant and equipment
by Rp.1,035,588 million and to 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 20-30 years, which will expire between 2009 and 2038. 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. |

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

PROPERTY, PLANT AND EQUIPMENT (continued)

d. Others (continued)

| (viii) | As of March 31, 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.67,529,060 million, which was covered by sum insured basis with
a maximum loss claim of Rp.758,979 million and US$12.82 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$47.14
million, respectively. Management believes that the insurance coverage is adequate to
cover potential losses of the insured assets. |
| --- | --- |
| (ix) | As of March 31, 2009, the completion of assets under construction was around
57.71% of the total contract value, with estimated dates of completion between April
2009 up to Mei 2010. 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 22). |
| (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 March 31, 2008 and
2009 are as follows: |

Year — 2008	84,142
2009	84,756		296,863
2010	84,756		176,266
2011	77,489		112,953
2012	51,307		62,375
2013	14,809		17,607
Later	415		415
Total minimum lease payments	397,674		666,479
Interest	(152,581	)	(136,803	)
Net present value of minimum lease payments	245,093		529,676
Current maturities (Note 20a)	(35,578	)	(236,904	)
Long-term portion (Note 20b)	209,515		292,772

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

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

2008	Additions	Reclassifications		2008
At cost:
Land	4,646				4,646
Buildings	3,982				3,982
Switching equipment	286,688				286,688
Transmission installation
and equipment	179,785		(18,179	)	161,606
Cable network	583,353				583,353
Other telecommunications
peripherals	149,200				149,200
Total	1,207,654		(18,179	)	1,189,475
Accumulated depreciation:
Land	2,935	58			2,993
Buildings	2,435	50			2,485
Switching equipment	169,663	6,137			175,800
Transmission installation
and equipment	90,141	3,808	(6,059	)	87,890
Cable network	144,603	12,059			156,662
Other telecommunications
peripherals	92,786	6,072			98,858
Total	502,563	28,184	(6,059	)	524,688
Net Book Value	705,091				664,787
January 1,				March 31,
2009	Additions	Adjustments		2009
At cost:
Land	1,313				1,313
Buildings	338				338
Switching equipment	152,776				152,776
Transmission installation and
equipment	100,072				100,072
Cable network	461,315				461,315
Other telecommunications
peripherals	10,547				10,547
Total	726,361				726,361
Accumulated depreciation:
Land	926	17			943
Buildings	61	18	(14	)	65
Switching equipment	69,899	4,169	(298	)	73,770
Transmission installation and
equipment	53,282	2,387	446		56,115
Cable network	116,234	10,494	(272	)	126,456
Other telecommunications
peripherals	9,305	79	5,781		15,165
Total	249,707	17,164	5,643		272,514
Net Book Value	476,654				453,847

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.

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

PROPERTY, PLANT AND EQUIPMENT UNDER RSA (continued)

The balances of unearned income on RSA as of March 31, 2008 and 2009, are as follows:

Gross amount	1,189,474		726,361
Accumulated amortization:
Beginning balance	(704,269	)	(427,037	)
Additions (Note 33)	(60,372	)	(31,932	)
Deductions	18,180
Ending balance	(746,461	)	(458,969	)
Net	443,013		267,392

ADVANCES AND OTHER NON-CURRENT ASSETS

Advances and other non-current assets as of March 31, 2008 and 2009 consist of:

Prepaid rent net of current portion (Note 8)	828,937	897,669
Advances for purchase of property, plant and equipment	305,053	789,427
Restricted cash	91,618	194,234
Deferred Indefeasible Right of Use (IRU) Agreement charges
(Note 43c.ii)	163,936	151,257
Deferred land rights charges	94,619	112,200
Security deposits	48,719	55,897
Equipment not used in operations net	65,258	51,255
Others	25,942	8,849
Total	1,624,082	2,260,788

| As of March 31, 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 28) 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 March 31, 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 three months period ended March 31, 2008 and 2009 amounted to Rp.3,091 million
and Rp.7,404 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 43 for details of related party transactions. |

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

GOODWILL AND OTHER INTANGIBLE ASSETS

(i) The changes in the carrying amount of goodwill and other intangible assets for the three months period ended March 31, 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 Sigmas software license		21,044				21,044
Additions acquisition of Sigma (Note 4)	232,335					232,335
Additions the Companys software		24,344				24,344
Balance, March 31, 2008	232,335	8,465,294		436,000		9,133,629
Accumulated amortization:
Balance, December 31, 2007		(5,022,301	)	(58,393	)	(5,080,694	)
Accumulated Sigmas software license		(12,605	)			(12,605	)
Amortization expense for three months
period (Note 36)		(284,689	)	(11,679	)	(296,368	)
Balance, March 31, 2008		(5,319,595	)	(70,072	)	(5,389,667	)
Net Book Value	232,335	3,145,699		365,928		3,743,962
Weighted-average amortization period	5 years	7.22 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 Sigmas software			2,013				2,013
Reclassification GSDs software			(50	)			(50	)
Balance, March 31, 2009	106,544		8,971,562		436,000		9,514,106
Accumulated amortization:
Balance, December 31, 2008	(17,048	)	(6,202,180	)	(105,107	)	(6,324,335	)
Amortization expense for three months
period (Note 36)	(1,279	)	(303,730	)	(11,679	)	(316,688	)
Reclassification GSDs software			4				4
Balance, March 31, 2009	(18,327	)	(6,505,906	)	(116,786	)	(6,641,019	)
Net Book Value	88,217		2,465,656		319,214		2,873,087
Weighted-average amortization period	5 years		7.05 years		9.33 years

| (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 (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 43a.ii). |

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

GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

(iv) The estimated annual amortization expense relating to other intangible assets for each year beginning from April 1, 2009 is approximately Rp.1,275,569 million per year.

ESCROW ACCOUNTS

Escrow accounts as of March 31, 2008 and 2009 consist of the following:

Bank Mandiri		42,811
Bank Danamon	1,177	1,186
Others (each below Rp.1 billion)	108	108
	1,285	44,105

| 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 47c.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 43 for details of related party transactions. |

TRADE PAYABLES


Related parties
Concession fees	280,931	838,639
Purchases of equipment, materials and services	229,537	160,622
Payables to other telecommunications providers	67,101	238,852
Sub-total	577,569	1,238,113
Third parties
Purchases of equipment, materials and services	4,647,468	8,870,211
Payables related to RSA	92,033	74,542
Payables to other telecommunications providers	105,602	9,504
Sub-total	4,845,103	8,954,257
Total	5,422,672	10,192,370

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

TRADE PAYABLES (continued)

Trade payables by currency are as follows:

Rupiah	5,194,977	4,066,279
U.S. Dollars	187,698	5,298,858
Euro	34,592	798,914
Singapore Dollars	4,916	27,093
Others	489	1,226
Total	5,422,672	10,192,370

Refer to Note 43 for details of related party transactions.

ACCRUED EXPENSES

Operations, maintenance and telecommunications services	1,024,133	1,513,581
Salaries and benefits	1,347,508	1,128,243
General, administrative and marketing	533,490	505,237
Interest and bank charges	164,370	236,670
Total	3,069,501	3,383,731

Refer to Note 43 for details of related party transactions.

UNEARNED INCOME

Prepaid pulse reload vouchers	2,298,523	2,634,337
Other telecommunications services	51,518	29,756
Others	127,518	129,936
Total	2,477,559	2,794,029

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

SHORT-TERM BANK LOANS

Bank CIMB Niaga	29,800	25,213
Bank Ekonomi		17,399
BNI	166,667
Bank Syariah Mega	19,347
Total	215,814	42,612

Refer to Note 43 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
applicable fixed interest rate and maturity date of the revolving credit facility was
amended on July 26, 2005 from 12% per annum to 12.5% per annum and May 30, 2006,
respectively and subsequently on June 13, 2006 to 16.5% per annum and May 30, 2007,
respectively. Based on the latest amendment, the revolving credit facility amounting to
Rp.800 million was combined with the short-term fixed credit facility of Rp.4,000 million
(Note 22f). Additionally, Balebat obtained a credit facility of Rp.500 million with a fixed
interest rate of 16.75% per annum, maturing on May 30, 2007. On May 23, 2007, the loan
agreement was amended (4 th amendment agreement) to increase the maximum facility
amount and interest rate to Rp.15,000 million and 13% per annum respectively, for the
period up to May 29, 2008. On April 29, 2008, the loan agreement was amended to change the
maturity period to May 29, 2009 and change rate from 13% per annum to 11% per annum. The
principal outstanding as of March 31, 2008 and 2009 amounted to Rp.14,800 million and
Rp.15,000 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 22f). The
loan bears an interest rate of 11.5% per annum and will mature on May 29, 2009. As of
March 31, 2009, the principal outstanding amounted to Rp.5,000 million and Rp.213 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
is secured by GSDs property, plant and equipment located in Jakarta (Note 11). The
principal outstanding as of March 31, 2008 and 2009 amounted to Rp.15,000 million and
Rp.5,000 million, respectively. |

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

SHORT-TERM BANK LOANS (continued)

| b. |
| --- |
| 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 bears floating interest rate from 12.50%
per annum to 15.50% per annum and repayable within 9 months from the signing date to July
15, 2009. This facility is secured by Sigmas trade receivables (Note 6). As of March 31,
2009, the principal outstanding amounted to Rp.7,500 million. |
| 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 March 31, 2009, the principal
outstanding amounted to Rp.5,500 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. This facility is secured by Sigmas trade
receivables (Note 6). As of March 31, 2009, the principal outstanding amounted to
US$380,000 (equivalent to Rp.4,399 million). |

| c. |
| --- |
| On June 15, 2007, Telkomsel signed a Rp.300,000 million short-term facility agreement with
BNI, payable in 3 equal quarterly installments commencing after 3 months from the end of
the availability period. The loan bore a floating interest rate of three-month Jakarta
Interbank Offered Rate (JIBOR) plus 1.25% per annum which becomes due quarterly in
arrears and was unsecured. On July 24, 2007, the loan agreement was amended for additional
facilities of Rp.200,000 million. On April 28, 2008, the loan was fully repaid. |

| d. |
| --- |
| On December 11, 2007, Infomedia entered into a Rp.10,535 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 June 10, 2008 (2 nd amendment agreement), the
maturity period of loan agreement was extended to September 11, 2008. As of March 31, 2008,
the principal outstanding amounted to Rp.10,535 million and on September 29, 2008, the loan
was fully repaid. |
| 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
March 31, 2008, the principal outstanding amounted to Rp.8,812 million and on November 27,
2008, the loan was fully repaid. |

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

MATURITIES OF LONG-TERM LIABILITIES

a. Current maturities

Bank loans	22	2,924,835	5,008,936
Deferred consideration for business combinations	23	1,154,537	1,262,104
Two-step loans	21	452,477	472,730
Obligations under finance leases	11	35,578	236,904
Total		4,567,427	6,980,674

b. Long-term portion

Notes	Total	2010	2011	2012	2013	Later
Bank loans	22	6,393.7	3,883.4	1,270.9	616.2	609.2	14.0
Two-step loans	21	3,874.7	353.8	449.1	451.1	376.3	2,244.4
Deferred consideration for
business combinations	23	1,179.7	1,057.0	122.7
Obligations under finance leases	11	292.8	132.7	89.5	53.8	16.4	0.4
Total		11,740.9	5,426.9	1,932.2	1,121.1	1,001.9	2,258.8

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% - 11.64 %	3.10% - 12.27 %	4,123,786		4,347,468
Consortium of contractors	3.20 %		17,401
Total			4,141,187		4,347,468
Current maturities (Note 20a)			(452,477	)	(472,730	)
Long-term portion (Note 20b)			3,688,710		3,874,738

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TWO-STEP LOANS (continued)

b. The details of two-step loans obtained from overseas banks as of March 31, 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 %	1,548,663	1,725,649
Rupiah	8.97% - 12.14 %	11.47% - 12.27 %	1,363,688	1,174,363
Japanese Yen	3.10% - 3.20 %	3.10 %	1,211,435	1,447,456
Total			4,123,786	4,347,468

| | 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. |
| c. | The two-step loans obtained from a consortium of contractors as of March 31, 2008
consisted of loans in Japanese Yen with an interest rate of 3.10% per annum. |
| | The consortium of contractors consists of Sumitomo Corporation, PT NEC Nusantara
Communications and PT Humpuss Elektronika (SNH Consortium). The loans were obtained to
finance the second digital telephone exchange project. The loans were payable in semi-annual
installments and were due on various dates through June 15, 2008. On June 15, 2008, the
loans were fully repaid. |

As of March 31, 2009, the Company has used all facilities under the two-step loans program and the drawdown period for the two-step loans has expired.

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TWO-STEP LOANS (continued)

The Company is required to maintain financial ratios as follows:

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

As of March 31, 2009, the Company complied with the above mentioned ratios.
Refer to Note 43 for details of related party transactions.

BANK LOANS

The details of long-term bank loans as of March 31, 2008 and 2009 are as follows:

			2008
			Outstanding		Outstanding
		2009	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	82	758,793	59	680,433
Bank Mandiri	Rp.	3,700,000		1,690,000		2,030,000
BCA	Rp.	2,250,000		700,000		1,000,000
Citibank	US$	113	16	144,994
	Euro	73	7	106,811
	Rp.	1,000,000		200,000		400,000
BNI	Rp.	3,550,000		1,270,000		2,250,000
Bank CIMB Niaga	Rp.	52,300		39,060		27,909
Bank Bukopin	Rp.	5,300		2,964		1,824
BRI	Rp.	3,400,000		1,820,000		2,560,000
Bank Ekonomi	Rp.	60,000		23,200		52,445
Syndication of banks	Rp.	2,400,000				2,400,000
Total				6,755,822		11,402,611
Current maturities of bank loans
(Note 20a)				(2,924,835	)	(5,008,936	)
Long-term portion (Note 20b)				3,830,987		6,393,675

Refer to Note 43 for details of related party transactions.

| a. |
| --- |
| On August 27, 2003, the Company entered into a loan agreement with The Export-Import Bank of
Korea for a loan facility of US$124 million, to finance the CDMA procurement from the
Samsung Consortium. The facility bears interest, commitment and other fees totaling 5.68%
per annum. The loan is unsecured and payable in 10 semi-annual installments on June 30 and
December 30 of each year beginning in December 2006. |

b. Bank Mandiri

(i) On March 20, 2006, Telkomsel signed a loan agreement with Bank Mandiri for a facility of Rp.600,000 million, payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month SBI plus 1.75% per annum which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2008 and 2009 amounted to Rp.240,000 million and Rp.nil, respectively.

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BANK LOANS (continued)

b. Bank Mandiri (continued)

| (ii) | On August 15, 2006, Telkomsel signed a medium-term facility loan agreement with
Bank Mandiri for Rp.350,000 million, payable in 5 equal semi-annual installments
commencing 6 months after the end of the availability period. The loan bears a floating
interest rate of three-month SBI plus 1.5% per annum which becomes due quarterly in
arrears and is unsecured. The principal outstanding as of March 31, 2008 and 2009
amounted to Rp.140,000 million and Rp.nil, respectively. |
| --- | --- |
| (iii) | On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with
Bank Mandiri of Rp.500,000 million. This facility is payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears a floating interest rate of three-month JIBOR plus 1,25% per annum 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 March 31, 2008 and 2009 amounted to Rp.560,000 million and
Rp.280,000 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
March 31, 2008 and 2009 amounted to 750,000 million and Rp.450,000 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 will be
drawn-down on January 30, 2009. On January 30, 2009, Rp.300 billion of the remaining
loan facility from Mandiri was drawn-down by Telkomsel. 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
March 31, 2009 amounted to Rp.1,300,000 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 bears a floating interest rate of
three-month SBI plus 1.75% per annum which becomes due quarterly in arrears and is
unsecured. The principal outstanding as of March 31, 2008 and 2009 amounted to
Rp.160,000 million and Rp.nil, respectively. |
| --- | --- |
| (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 bears a floating interest
rate of three-month SBI plus 1.5% per annum which becomes due quarterly in arrears and
is unsecured. The principal outstanding as of March 31, 2008 and 2009 amounted to
Rp.140,000 million and Rp.nil, respectively. |

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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 March 31, 2008 and 2009 amounted to
Rp.400,000 million and Rp.200,000 million, respectively. |
| --- | --- |
| (iv) | 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 March 31, 2009
amounted to Rp.800,000 million. |

d. Citibank

| 1. |
| --- |
| On December 2, 2002, pursuant to the partnership agreement with Siemens
Aktiengesellschaft (AG) (Note 47a.ii), Telkomsel entered into the Hermes Export
Facility Agreement (Facility) with Citibank International plc (as Original Lender
and Agent) and Citibank, Jakarta branch (Arranger) covering a total facility of
Euro76.2 million divided into several tranches. The agreement was subsequently amended
on October 15, 2003, amending the Facility amount to Euro73.4 million and the payment
dates. |
| The Facility bore interest rate based on the Euro Interbank Offered Rate (EURIBOR) plus
0.75% per annum and was unsecured. Interest was payable semi-annually, starting on the
utilization date of the Facility (May 29, 2003) and was due on October 7, 2008. The
principal outstanding as of March 31, 2008 amounted to Euro7.3 million (equivalent to
Rp.106,811 million) and on May 28, 2008, the loan was fully repaid. |
| In addition to interest, Telkomsel was also charged an insurance premium for the
guarantee given by Hermes in favor of Telkomsel for each loan utilization, 15% of which
was paid in cash. The remaining balance was settled through utilization of the facility. |

High Performance Backbone (HP Backbone) Loans

| a. |
| --- |
| As of March 31, 2008, the outstanding loan was US$4.2 million (equivalent to
Rp.38,644 million) and on September 15, 2008, the loan was fully repaid. The loan is
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. |

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BANK LOANS (continued)

d. Citibank (continued)

HP Backbone Loans (continued)

| b. |
| --- |
| The loan bore a fixed interest rate of 4.14% per annum payable in 10 semi-annual
installments beginning in December 2003. Total principal outstanding as of March 31,
2008 was US$1.9 million (equivalent to Rp.17,110 million) and on June 5, 2008, the
loan was fully repaid. |

As stated in the agreements, the Company is required to comply with all covenants or restrictions including maintaining financial ratios as follows, in which the Company has complied with as of March 31, 2008 and up to the repayment date on June 5, 2008 and September 15, 2008, as follows:

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

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

Debt to EBITDA ratio should not exceed:

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

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

| 3. |
| --- |
| On December 2, 2002, pursuant to the partnership agreement with PT Ericsson Indonesia
(Ericsson Indonesia) (Note 47a.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. |

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BANK LOANS (continued)

d. Citibank (continued)

| 3. |
| --- |
| The interest rate per annum on the Facility is determined based on Commercial Interest
Reference Rate (CIRR) of 3.52% plus 0.5% per annum and is unsecured. Interest is payable
semi-annually, starting on the utilization date of the Facility (July 31, 2003). |
| In addition to interest, Telkomsel was also charged an insurance premium for the
guarantee given by EKN in favor of Telkomsel for each loan utilization, 15% of which was
paid in cash. The remaining balance was settled through utilization of the facility. |
| No amounts were drawdown from the Facility in 2008. The principal outstanding as of
March 31, 2008 amounted to US$9.7 million (equivalent to Rp.89,240 million) and on
December 30, 2008, the loan was fully repaid. |

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 bears a floating interest rate of three-month SBI plus 1.75% per
annum which becomes due quarterly in arrears and is unsecured. The principal
outstanding as of March 31, 2008 and 2009 amounted to Rp.200,000 million and
Rp.nil, respectively. |
| --- | --- |
| (b) | On October 24, 2007, Telkomsel signed a medium-term facility loan
agreement with Citibank, Jakarta Branch of Rp.500,000 million. This facility is in
5 equal semi-annual installments commencing 6 months after the end of the
availability period. The loan bears a floating interest rate of three-month JIBOR
plus 1.09% per annum which becomes due quarterly in arrears and is unsecured. The
principal outstanding as of March 31, 2008 and 2009 amounted to Rp.nil and
Rp.400,000 million. |

The following table summarizes the principal outstanding on the various long-term loans from Citibank as of March 31, 2008 and 2009:


	Foreign			Foreign
	currencies	Rupiah		currencies	Rupiah
	(in millions)	equivalent		(in millions)	equivalent
Hermes Export Facility	Euro	7.3	106,811
HP Backbone loans	US$	6.1	55,754
EKN-Backed Facility	US$	9.7	89,240
Medium term loan	Rp.		200,000		400,000
Total			451,805		400,000
Current maturities			(451,805	)	(200,000	)
Long-term portion					200,000

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BANK LOANS (continued)

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 bears a floating interest
rate of three-month SBI plus 1.5% per annum which becomes due quarterly in arrears and
is unsecured. The principal outstanding as of March 31, 2008 and 2009 amounted to
Rp.120,000 million and Rp.nil, respectively. |
| --- | --- |
| (ii) | On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with
BNI of Rp.500,000 million, payable in 5 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bears a floating interest
rate of three-month JIBOR plus 1.25% per annum which becomes due quarterly in arrears
and is unsecured. The principal outstanding as of March 31, 2008 and 2009 amounted to
Rp.400,000 million and Rp.200,000 million, respectively. |
| (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 March 31,
2008 and 2009 amounted to Rp.750,000 million and Rp.450,000 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 as of March 31,
2009 amounted to Rp.1,600,000 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 19a). |

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BANK LOANS (continued)

f. Bank CIMB Niaga (continued)

(i)	(continued)
	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 are secured by Balebats property,
plant and equipment located in West Java (Note 11). As of March 31, 2008, the
outstanding loans of the facilities were Rp.1,184 million and Rp.nil, and as of March
31, 2009 was Rp.799 million and Rp.nil.
(ii)	As discussed in Note 19a, 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 March 31, 2008 and
2009, the principal outstanding amounted to Rp.667 million and Rp.235 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 bears interest at 15.5% per annum and is secured by Infomedias
receivables on the call center contract with Telkomsel amounted to Rp.23,125 million
until the due date of the loan within 36 months from the withdrawal date (Note 6). As
of March 31, 2008 and 2009, the principal outstanding amounted to Rp.9,201 million and
Rp.1,840 million, respectively.
(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
March 31, 2008 and 2009, the principal outstanding amounted to Rp.19,550 million and
Rp.18,650 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 March 31, 2008 and 2009, the principal outstanding amounted to Rp.7,468 million
and Rp.5,872 million, respectively.

| g. |
| --- |
| 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 March 31, 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 March 31,
2008 and 2009 amounted to Rp.320,000 million and Rp.160,000 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 March 31, 2008 and 2009 amounted to Rp.1,500,000 million and
Rp.1,600,000 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. As of March 31, 2009, the principal outstanding 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 March 31, 2008 and 2009, the
principal outstanding amounted to Rp.12,849 million and Rp.10,812 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 March 31, 2008 and 2009, the
principal outstanding amounted to Rp.10,351 million and Rp.8,633 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 March 31, 2009, the principal outstanding
amounted to Rp.33,000 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 March 31, 2009, Sigma has complied with the above covenant. |

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BANK LOANS (continued)

| j. |
| --- |
| 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 stated in the agreements, the Company is required to comply with all covenants or
restrictions including maintaining financial ratios as follows, in which the Company has
complied with as of March 31, 2009 as follows: |

1.	Debt to equity ratio should not exceed 2:1.
2.	Debt service coverage ratio should exceed 125%.

DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS

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	105,611
The Asian Infrastructure Fund	25,145
MediaOne International I B.V.	70,407
Less discount on promissory notes	(5,085	)
	196,078
KSO IV transaction
MGTI	2,080,863		1,715,567
Less discount	(223,791	)	(119,942	)
	1,857,072		1,595,625
KSO VII transaction
BSI	1,488,475		962,720
Less discount	(269,922	)	(116,540	)
	1,218,553		846,180
Total	3,271,703		2,441,805
Current maturity net of discount (Note 20a)	(1,154,537	)	(1,262,104	)
Long-term portion net of discount (Note 20b)	2,117,166		1,179,701

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DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS (continued)

| a. |
| --- |
| 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 March 31, 2008 and 2009, the outstanding promissory notes, before unamortized
discount, amounted to US$21.8 million (equivalent to Rp.201,163 million) and US$nil
(equivalent to Rp.nil), respectively. |

| b. |
| --- |
| 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 March 31, 2008 and 2009, the remaining monthly payments to be made to MGTI, before
unamortized discount, amounted to US$225.7 million (equivalent to Rp.2,080,863 million) and
US$148.2 million (equivalent to Rp.1,715,567 million), respectively. |

| c. |
| --- |
| 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 March 31, 2008 and 2009, the remaining monthly payments to be made to BSI, before
unamortized discount, amounted to Rp.1,488,475 million and Rp.962,720 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	10,423,163	10,361,606
Infomedia	102,816	158,682
Metra	31,017	60,803
Total	10,556,996	10,581,091


Minority interest in net income (loss) of subsidiaries:
Telkomsel	1,257,064		901,101
Infomedia	(9,039	)	(5,092	)
Metra	1,562		2,089
Total	1,249,587		898,098

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	52.06	2,580,118
JPMCB US Resident (Norbax Inc.)	1,673,923,863	8.44	418,481
The Bank of New York Mellon Corporation
(formerly The Bank of New York Company, Inc.)	1,782,115,056	9.00	445,529
Directors (Note 1b):
Ermady Dahlan	17,604		4
Indra Utoyo	5,508		1
Public (individually less than 5%)	6,046,173,537	30.50	1,511,544
Total	19,822,706,280	100.00	4,955,677
Treasury stock (Note 27)	337,293,000		84,323
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.)	1,216,193,600	6.18	304,049
Directors (Note 1b):
Ermady Dahlan	17,604		4
Indra Utoyo	5,508		1
Public (individually less than 5%)	8,132,737,356	41.35	2,033,184
Total	19,669,424,780	100.00	4,917,356
Treasury stock (Note 27)	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. |
| 26. | 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 | |

| 27. |
| --- |
| 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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| 27. |
| --- |
| 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 March 31, 2008 and 2009, the Company has repurchased 337,293,000 and 490,574,500 shares of
the Companys issued and outstanding Series B shares, respectively, representing 1.67% and 2.43%
of the Companys issued and outstanding Series B shares, for a total repurchase amount of
Rp.3,030,368 million and Rp.4,264,114 million up to March 31, 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	92,552,500	853,757		41
Balance ending	337,293,000	3,030,368	490,574,500	4,264,114

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27.
Historical unit cost of repurchase of treasury shares for the three months period ended March
31, 2008 and 2009 is as follows:

2008	2009
Weighted average	9,224
Minimum	8,407
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 May 8, 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.4,264,130 million,
including broker and custodian fees (Note 1c). |
| 28. | DIFFERENCE IN VALUE ARISING FROM RESTRUCTURING TRANSACTIONS AND OTHER TRANSACTIONS BETWEEN
ENTITIES UNDER COMMON CONTROL |
| | The balance of this account amounting to Rp.360,000 million arose from the early termination of
the Companys exclusive rights to provide local and domestic fixed line telecommunication
services. As discussed in Note 1a, on December 15, 2005, the Company signed an Agreement on
Implementation of Compensation for Termination of Exclusive Rights with the State MoCI DGPT,
which was amended on October 18, 2006. Pursuant to this agreement, the Government agreed to pay
Rp.478,000 million, net of tax, to the Company over a five-year period where Rp.90,000 million
shall be paid from the 2005 State budget, Rp.90,000 million from the 2006 State budget and the
remaining Rp.298,000 million shall be paid gradually or in one lump-sum payment based on the
States financial ability. In addition, the Company is required by the Government to use the
funds received from this compensation for the development of telecommunications infrastructure.
As of March 31, 2008 and 2009, the development of the related infrastructures amounted to
Rp.190,997 million and Rp.296,871 million, respectively. |
| | As of March 31, 2008 and 2009, the Company has received an aggregate of Rp.270,000 million and
Rp.360,000 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 and November 12, 2008, respectively. The Company recorded these amounts in
Difference in value arising from restructuring transactions and other transactions between
entities under common control in the Stockholders Equity section. These amounts are recorded
as a component of Stockholders Equity because the Government is the majority and controlling
stockholder of the Company. The Company will record the remaining amount of Rp.118,000 million
when received. |

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TELEPHONE REVENUES


Fixed lines
Local and SLJJ	1,563,486	1,111,016
Monthly subscription charges	918,914	914,227
Installation charges	30,639	31,071
Phone cards	299	2,103
Others	27,100	58,176
Total	2,540,438	2,116,593
Cellular
Usage charges	5,683,839	5,733,675
Monthly subscription charges	84,555	443,961
Features	139,433	282,424
Connection fee charges	58,256	57,391
Total	5,966,083	6,517,451
Total Telephone Revenues	8,506,521	8,634,044

INTERCONNECTION REVENUES

Revenues	3,041,324		2,659,347
Expenses	(781,585	)	(743,834	)
Total Net	2,259,739		1,915,513

| | 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 46). |
| --- | --- |
| | Refer to Note 43 for details of related party transactions. |
| 31. | DATA, INTERNET AND INFORMATION TECHNOLOGY REVENUES |

Short Messaging Services (SMS)	2,930,176	2,498,118
Internet	452,125	742,552
Data communication and information technology services	518,707	425,642
VoIP	37,462	41,590
e-Business	6,206	7,866
Total	3,944,676	3,715,768

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NETWORK REVENUES

Leased lines	85,928	180,052
Satellite transponder lease	132,879	83,418
Total	218,807	263,470

	Refer to Note 43 for details of related party transactions.
33.	REVENUE-SHARING ARRANGEMENTS (RSA) REVENUES

RSA revenues	37,564	11,841
Amortization of unearned income (Note 12)	60,372	31,932
Total	97,936	43,773

PERSONNEL EXPENSES

Salaries and related benefits	705,758	762,429
Vacation pay, incentives and other benefits	764,454	657,481
Employees income tax	233,307	152,454
Net periodic pension costs (Notes 40a)	179,662	132,030
Net periodic post-retirement health care
benefits costs (Note 42)	225,659	82,811
Housing	98,200	52,049
Other post-retirement cost (Note 40b)	20,894	20,367
LSA and LSA termination costs (Note 41)	4,978	6,855
Other employees benefits (Note 40c)	3,002	3,711
Medical	2,008	1,581
Others	8,980	32,998
Total	2,246,902	1,904,766

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OPERATIONS, MAINTENANCE AND TELECOMMUNICATION SERVICES EXPENSES

Operations and maintenance	1,377,968	1,733,710
Radio frequency usage charges (Note 47c.v)	341,263	557,790
Concession fees and Universal Service
Obligation (USO) charges	261,740	261,396
Cost of handset, phone, SIM and RUIM cards	166,794	277,913
Electricity, gas and water	113,201	149,014
Leased lines and CPE	76,178	110,833
Insurance	87,643	75,808
Vehicles rental and supporting facilities	54,454	63,396
Cost of IT services	6,301	44,030
Travelling	12,219	13,297
Call center	7,319	5
Others	1,093	1,443
Total	2,506,173	3,288,635

	Refer to Note 43 for details of related party transactions.
36.	GENERAL AND ADMINISTRATIVE EXPENSES

| Amortization of goodwill and other intangible assets
(Note 14) | 296,368 | 316,688 |
| --- | --- | --- |
| Collection expenses | 116,020 | 148,695 |
| Provision for doubtful accounts and inventory
obsolescence (Notes 6d and 7) | 195,296 | 126,291 |
| Security and screening | 64,745 | 64,359 |
| Travelling | 51,656 | 51,616 |
| Training, education and recruitment | 41,004 | 33,647 |
| General and social contribution | 14,782 | 17,433 |
| Vehicles rental | 22,151 | 17,208 |
| Professional fees | 15,697 | 16,126 |
| Meetings | 19,300 | 15,834 |
| Stationery and printing | 14,054 | 13,421 |
| Research and development | 923 | 951 |
| Others | 6,486 | 18,988 |
| Total | 858,482 | 841,257 |

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TAXATION

a. Claim for tax refund


Subsidiaries
Corporate income tax		5,484
Income tax including interest
Article 21 Individual income tax		388
Article 23 Withholding tax on services delivery	72,751	211,321
Article 26 Withholding tax on non-resident income tax	7,934	3,950
Value Added Tax (VAT) including interest	327,326	1,811
	408,011	222,954

b. Prepaid taxes


The Company
Corporate income tax		255,168
		255,168
Subsidiaries
Corporate income tax	63,402	535,708
VAT	3,247	11,299
Income tax Article 23 Services delivery	4,717	1,525
	71,366	548,532
	71,366	803,700

c. Taxes payable


The Company
Income taxes
Article 21 Individual income tax	52,533	34,588
Article 22 Withholding tax on goods delivery and imported	2,289	3,510
Article 23 Withholding tax on services delivery	10,519	12,241
Article 24	115
Article 25 Installment of corporate income tax	5,948	6,714
Article 26 Withholding tax on non-resident income tax	2,112	1,298
Article 29 Underpayment of corporate income tax	283,527	220,976
VAT	273,539	258,545
	630,582	537,872

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TAXATION (continued)

c. Taxes payable (continued)


Subsidiaries
Income taxes
Article 21 Individual income tax	9,042	22,445
Article 22 Withholding tax on goods delivery and imported		2
Article 23 Withholding tax on services delivery	25,567	56,184
Article 25 Installment of corporate income tax	420,948	321,936
Article 26 Withholding tax on non-resident income tax	5,283	16,919
Article 29 Underpayment of corporate income tax	339,255	72,209
VAT	123,603	136,269
	923,698	625,964
	1,554,280	1,163,836

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


Current
The Company	568,140		434,005
Subsidiaries	1,490,236		971,605
	2,058,376		1,405,610
Deferred
The Company	(87,532	)	(36,758	)
Subsidiaries	82,169		30,011
	(5,363	)	(6,747	)
	2,053,103		1,398,863

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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	6,509,934		4,754,846
Add back consolidation eliminations	2,295,998		1,621,543
Consolidated income before tax and eliminations	8,805,932		6,376,389
Less: income before tax of the subsidiaries	(5,117,987	)	(3,521,257	)
Income before tax attributable to the Company	3,687,945		2,855,132
Less: income subject to final tax	(178,104	)	(200,327	)
	3,509,841		2,654,805
Tax calculated at progressive rates	1,052,934		743,345
Non-taxable income	(688,537	)	(454,293	)
Non-deductible expenses	95,864		86,046
Deferred tax liabilities (assets) that cannot be utilized net	(762	)	(1,669	)
Corporate income tax expense	459,499		373,429
Final income tax expense	21,109		23,818
Total income tax expense of the Company	480,608		397,247
Income tax expense of the subsidiaries	1,572,405		1,001,616
Total consolidated income tax expense	2,053,013		1,398,863

The reconciliation between income before tax attributable to the Company and the estimated taxable income for the three months period ended March 31, 2008 and 2009, are as follows:

Income before tax attributable to the Company	3,687,945		2,855,132
Less: income subject to final tax	(178,104	)	(200,327	)
	3,509,841		2,654,805

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TAXATION (continued)

e. (continued)


Temporary differences:
Amortization of intangible assets	250,793		245,871
Depreciation of property, plant and equipment	144,945		9,061
Allowance for doubtful accounts	163,918		84,401
Accrued employees benefits	115,622		84,153
Depreciation of property, plant and equipment under RSA	28,184		17,164
Finance leases	579		(7,150	)
Foreign exchange loss (gain) on deferred consideration for business combinations	(45,838	)	97,414
Allowance for inventory obsolescence	2,201		3,037
Amortization of land rights	(988	)	(1,021	)
Gain on sale of property, plant and equipment	1,545
Amortization of unearned income on RSA	(51,239	)	(31,651	)
Net periodic pension and other post-retirement benefits costs	(62,235	)	(101,119	)
Payments of deferred consideration for business combinations	(216,450	)	(294,983	)
Other provisions	(41,810	)	20,144
Total temporary differences	289,227		125,321
Permanent differences:
Net periodic post-retirement health care benefits costs	223,061		82,811
Amortization of discounts on promissory notes	3,689		520
Equity in net income of associates and subsidiaries	(2,295,124	)	(1,622,474	)
Others	92,800		223,972
Total permanent differences	(1,975,574	)	(1,315,171	)
Taxable income	1,823,494		1,464,955
Current corporate income tax expense	547,031		410,187
Final income tax expense	21,109		23,818
Total current income tax expense of the Company	568,140		434,005
Current income tax expense of the subsidiaries	1,490,236		971,605
Total current income tax expense	2,058,376		1,405,610

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TAXATION (continued)

f. Tax assessment

| (i) |
| --- |
| 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) |
| --- |
| In 2007, Telkomsel was assessed for underpayments of withholding taxes, VAT and
corporate income tax including penalty covering the fiscal years 2004 and 2005 totaling
Rp.478 billion. The underpayments were settled through netting off withholding tax paid
in 2006 of Rp.25 billion and cash payments of Rp.453 billion. On January 3, 2008,
Telkomsel filed an objection for underpayment of withholding taxes and VAT including a
penalty totaling Rp.408 billion. 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. 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
December 31,		to statements		Acquisitions	March 31,
2007		of income		of Sigma	2008
The Company
Deferred tax assets:
Deferred consideration for business combinations	1,010,035		(78,686	)		931,349
Allowance for doubtful accounts	306,329		48,971			355,300
Net periodic pension and other post-retirement benefits costs	375,994		(18,670	)		357,324
Accrued expenses	76,686		(12,866	)		63,820
Accrued for employees benefits	172,071		34,687			206,758
Finance leases	40,057		174			40,231
Allowance for inventory obsolescence	15,891		626			16,517
Total deferred tax assets	1,997,063		(25,764	)		1,971,299
Deferred tax liabilities:
Difference between book and tax property, plant and equipments net book value	(1,848,201	)	149,855			(1,698,346	)
Land rights	(4,592	)	(296	)		(4,888	)
RSA	(59,859	)	(6,368	)		(66,227	)
Intangible assets	(909,005	)	(29,895	)		(938,900	)
Total deferred tax liabilities	(2,821,657	)	113,296			(2,708,361	)
Deferred tax liabilities of the Company net	(824,594	)	87,532			(737,062	)
Deferred tax liabilities of the subsidiaries net	(2,209,506	)	(82,169	)	4,956	(2,286,719	)
Total deferred tax liabilities net	(3,034,100	)	5,363		4,956	(3,023,781	)


	credited to the
	consolidated
December 31,	statements		March 31,
2008	of income		2009
The Company
Deferred tax assets:
Deferred consideration for business combinations	698,048	(55,319	)	642,729
Allowance for doubtful accounts	259,195	28,101		287,296
Net periodic pension and other post-retirement benefits costs	275,741	(28,315	)	247,426
Accrued expenses	31,877	5,641		37,518
Early termination expenses	220,698			220,698
Accrued for employees benefits	93,035	23,562		116,597
Finance leases	22,034	(1,933	)	20,101
Allowance for inventory obsolescence	16,201	850		17,051
Total deferred tax assets	1,616,829	(27,413	)	1,589,416

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TAXATION (continued)

g. Deferred tax assets and liabilities (continued)


		credited to the
		consolidated
December 31,		statements		March 31,
2008		of income		2009
Deferred tax liabilities:
Difference between book and tax property, plant and equipments net book value	(1,570,559	)	(42,031	)	(1,612,590	)
Land rights	(4,922	)	(285	)	(5,207	)
RSA	(57,869	)	(4,057	)	(61,926	)
Intangible assets	(573,918	)	110,544		(463,374	)
Total deferred tax liabilities	(2,207,268	)	64,171		(2,143,097	)
Deferred tax liabilities of the Company net	(590,439	)	36,758		(553,681	)
Deferred tax liabilities of the subsidiaries net	(2,314,434	)	(30,011	)	(2,344,445	)
Total deferred tax liabilities net	(2,904,873	)	6,747		(2,898,126	)

| | 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 Forth 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 six months in one tax
year. 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, Infomedia up to fiscal year 2003, and PIN for fiscal year 2007.
Currently, Telkomsel is being audited by the Tax Office for the fiscal year 2006 and 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. |

BASIC EARNINGS PER SHARE

| Basic earnings per share is computed by dividing net income by the weighted average number of
shares outstanding during the year, totaling 19,860,250,480 and 19,748,574,254 for three months
period ended March 31, 2008 and 2009, respectively. |
| --- |
| Basic earning per share amounting to Rp.161.50 and Rp.124.46 for the three months period ended
March 31, 2008 and 2009, respectively. |
| The Company does not have potentially dilutive ordinary shares. |

CASH DIVIDENDS AND GENERAL RESERVE

Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 58 dated June 29, 2007 of A. Partomuan Pohan, S.H., LLM., the stockholders approved the distribution of cash dividends for 2006 amounting to Rp.6,053,067 million or Rp.303.21 per share (of which Rp.971,017 million or Rp.48.41 per share was distributed as interim cash dividend in December 2006) and the appropriation of Rp.4,897,482 million for general reserves.

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CASH DIVIDENDS AND GENERAL RESERVE (continued)

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.

PENSION AND OTHER POST-RETIREMENT BENEFITS


Accrued pension and other post-retirement
benefits costs
Pension
The Company	978,362	662,197
Telkomsel	79,575	105,952
Accrued pension costs	1,057,937	768,149
Other post-retirement benefits	209,399	222,379
Obligation under Labor Law	56,972	66,981
Accrued pension and other post-retirement
benefits costs	1,324,308	1,057,509
Prepaid pension benefits costs	557	176
Net periodic pension costs
The Company	161,269	118,354
Telkomsel	15,505	13,674
Infomedia	2,288	2
Net periodic pension costs (Note 34)	179,062	132,030
Other post-retirement cost (Note 34)	20,894	20,367
Other employees benefits (Note 34)	3,002	3,711

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 three months period ended March 31, 2008 and 2009 amounted to Rp.221,628
million and Rp.222,265 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.578 million and Rp.867 million for the three months period ended March 31, 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 March 31, 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	70,534		56,184
Interest costs	269,242		278,893
Plan participants contributions	21,317		11,081
Actuarial (gains) losses	195,173		(542,067	)
Expected benefits paid	(111,321	)	(110,267	)
Projected benefits obligation at end of period	11,172,757		9,210,799
Change in plan assets
Fair value of plan assets at beginning of year	9,034,391		8,713,418
Expected return on plan assets	228,827		257,707
Employers contributions	221,628		222,265
Plan participants contributions	21,317		11,081
Actuarial gains	159,880		66,421
Expected benefits paid	(102,952	)	(101,308	)
Fair value of plan assets at end of period	9,563,091		9,169,584
Funded status	(1,609,666	)	(41,215	)
Unrecognized prior service costs	1,624,066		1,442,389
Unrecognized net actuarial gain	(992,762	)	(2,063,371	)
Accrued pension benefit cost	(978,362	)	(662,197	)

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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.228,936 million and Rp.319,432 million for the
three months period ended March 31, 2008 and 2009, respectively. |
| The movement of the accrued pension benefits costs during the three months period ended
March 31, 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 | 161,269 | | 118,354 | |
| Amount charged to KSO Units and subsidiaries under
contractual agreements | | | 166 | |
| Employers contributions | (221,628 | ) | (222,265 | ) |
| Benefits paid by the Company | (15,376 | ) | (9,715 | ) |
| Accrued pension benefits costs at end of period | 978,362 | | 662,197 | |

| As of March 31, 2009, plan assets consisted mainly of Indonesian Government bonds and
corporate bonds. As of March 31, 2009, plan assets included Series B shares issued by
the Company with fair value totaling Rp.299,564 million represents 3.16% of total
assets of Dapen as of March 31, 2009. |
| --- |
| The actuarial valuation for the defined benefit pension plan and the other
post-retirement benefits (Note 40b) 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	70,534		56,184
Interest costs	269,242		278,893
Expected return on plan assets	(232,709	)	(257,707	)
Amortization of prior service costs	55,330		55,330
Recognized actuarial gain	(1,128	)	(14,180	)
Net periodic pension costs	161,269		118,520
Amount charged to KSO Units and subsidiaries under
contractual agreements			(166	)
Total net periodic pension costs less
amounts charged to KSO Units and subsidiaries (Note 34)	161,269		118,354

| 2. |
| --- |
| Telkomsel provides a defined benefit pension plan to its employees. Under this plan,
employees are entitled to pension benefits based on their latest basic salary or
take-home pay and the number of years of their service. PT Asuransi Jiwasraya
(Jiwasraya), a state-owned life insurance company, manages the plan under an
annuity insurance contract. Until 2004, the employees contributed 5% of their monthly
salaries to the plan and Telkomsel contributed any remaining amount required to fund
the plan. Starting 2005, the entire contributions are fully made by Telkomsel. |
| The following table reconciles the unfunded status of the plans with the amounts
included in the consolidated balance sheets as of March 31, 2008 and 2009: |

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

Telkomsel (continued)

Projected benefits obligation	(308,316	)	(301,332	)
Fair value of plan assets	107,480		129,239
Unfunded status	(200,836	)	(172,093	)
Unrecognized items in the consolidated
balance sheet:
Unrecognized prior service costs	(829	)	(766	)
Unrecognized net actuarial losses	120,306		65,301
Unrecognized net obligation at the date of
initial application of PSAK 24	1,784		1,606
Accrued pension benefits costs	(79,575	)	(105,952	)

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

Service costs	9,324		8,487
Interest costs	7,643		8,521
Expected return on plan assets	(2,817	)	(3,864	)
Amortization of past service costs	(16	)	(16	)
Recognized actuarial losses	1,326		501
Amortization of net obligation at the date of
initial application of PSAK 24	45		45
Net periodic pension costs (Note 34)	15,505		13,674

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 March 31, 2008 and 2009, are as follows: |

Projected benefits obligation	(5,960	(5,387
Fair value of plan assets	6,517	5,563
Funded status	557	176
Prepaid pension benefits costs	557	176

The net periodic pension costs of Infomedia amounted to Rp.2,888 million and Rp.2 million for the three months period ended March 31, 2008 and 2009, respectively (Note 34).

| 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 three months period ended March
31, 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 | 20,894 | | 20,367 | |
| Other post-retirement benefits paid | (6,556 | ) | (8,333 | ) |
| Total accrued other post-retirement benefits
costs at end of period after early
retirement benefits | 209,399 | | 222,379 | |

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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 three
months period ended March 31, 2008 and 2009, are as follows:

Service costs	5,657	5,432
Interest costs	10,484	11,540
Amortization of past service costs	760	1,706
Recognized actuarial losses	3,993	1,689
Total net periodic other post-retirement
benefits costs less amounts
charged to KSO Units (Note 34)	20,894	20,367

| 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 March 31, 2008 and 2009 amounted to Rp.56,972 million and Rp.66,981 million,
respectively. The related employees benefits cost charged to expense amounted to Rp.3,002
million and Rp.3,711 million for the three months period ended March 31, 2008 and 2009,
respectively (Note 34). |

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
47c.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.76,806 million and Rp.108,722
million as of March 31, 2008 and 2009, respectively (Note 43). The related benefits cost
charged to expense amounted to Rp.4,978 million and Rp.6,855 million for the three months
period ended March 31, 2008 and 2009, respectively (Note 34). |

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POST-RETIREMENT HEALTH CARE BENEFITS

| 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 March 31, 2008 and 2009: |


Change in projected benefits obligation
Projected benefits obligation at beginning of year	8,925,612		5,855,224
Service costs	35,995		18,002
Interest costs	225,875		171,692
Actuarial gains	(32,603	)	(973,968	)
Expected post-retirement health care paid	55,499		(66,084	)
Effect of change in assumption	350,856
Projected benefits obligation at end of period	9,561,234		5,004,866
Change in plan assets
Fair value of plan assets at beginning of year	3,376,172		4,018,693
Expected return on plan assets	76,965		102,595
Employers contributions	100,000		100,084
Actuarial (losses) gains	42,134		77,297
Expected post-retirement health care paid	55,499		(66,084	)
Fair value of plan assets at end of period	3,650,770		4,232,585
Funded status	(5,910,464	)	(772,281	)
Unrecognized net actuarial (gains) losses	3,015,882		(1,781,250	)
Accrued post-retirement health care benefits costs	(2,894,582	)	(2,553,531	)

The actual return on plan assets was Rp.55,143 million for the three months period ended March 31, 2009.

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POST-RETIREMENT HEALTH CARE BENEFITS (continued)

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

Service costs	35,995		18,002
Interest costs	225,875		171,692
Expected return on plan assets	(85,842	)	(102,595	)
Recognized actuarial losses	49,631		(4,204	)
Net periodic post-retirement benefits costs	225,659		82,895
Amounts charged to KSO Units and subsidiaries
under contractual agreements			(84	)
Total net periodic post-retirement health care
benefits costs less amounts charged to
KSO Units and subsidiaries (Note 34)	225,659		82,811

| As of March 31, 2009, plan assets included the Companys Series B shares with total fair value
of Rp.67,474 million. |
| --- |
| The movements of the accrued post-retirement health care benefits costs for the three months
period ended March 31, 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 34) | 225,659 | | 82,811 | |
| Amounts charged to KSO Units and subsidiaries
under contractual agreements | | | 84 | |
| Employers contributions | (100,000 | ) | (100,084 | ) |
| Accrued post-retirement health care benefits
costs at end of period | 2,894,582 | | 2,553,531 | |

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

RELATED PARTY TRANSACTIONS

| 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.58,463 million and Rp.66,522 million
for the three months period ended March 31, 2008 and 2009, respectively. Interest
expense for two-step loans represent 22.2% and 12.9% 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.149,836 million and Rp.75,248 million for the three
months period ended March 31, 2008 and 2009, respectively (Note 35), representing 1.8%
and 0.8%, respectively, of the total operating expenses for each period. Radio
frequency usage charges amounted to Rp.341,263 million and Rp.557,790 million for the
three months period ended March 31, 2008 and 2009, respectively (Note 35), representing
4.0% 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.111,904 million and Rp.186,147 million for the three months
period ended March 31, 2008 and 2009, respectively (Note 35), representing 1.3% 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.7,379 million and Rp.10,035 million for the three months period ended
March 31, 2008 and 2009, respectively, representing 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.18,495 million and Rp.28,908 million for the three months period ended
March 31, 2008 and 2009, respectively, representing 0.2% and 0.3% 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 46). 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 (charged) net interconnection income (charges) from Indosat of (Rp.36,757) million and Rp.19,725 million for the three months period ended March 31, 2008 and 2009, respectively, representing (0.2)% and 0.1% 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.6,821 million and Rp.8,218 million for the three
months period ended March 31, 2008 and 2009, respectively, representing 0.1% 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.92 million and
Rp.915 million for the three months period ended March 31, 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 March 31, 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.44,121 million and Rp.35,049 million for the
three months period ended March 31, 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.4,842 million and Rp.6,550 million for the
three months period ended March 31, 2008 and 2009, respectively, representing less than 0.1%
of total operating revenues for each period.
	Telkomsel has an agreement with Lintasarta (valid until October 31, 2010) and PT Artajasa
Pembayaran Elektronis (Artajasa) (valid until May 2008) (a 39.8% owned subsidiary of
Indosat) for the usage of data communication network system. The charges from Lintasarta and
Artajasa for the services amounted to Rp.8,408 million and Rp.8,561 million for the three
months period ended March 31, 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.25,448 million and Rp.40,731 million for the three months period ended March 31, 2008
and 2009, respectively, representing 0.2% and 0.3% 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.15,125 million and Rp.12,271 million for the
three months period ended March 31, 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.76,434 million and Rp.32,260 million for the
three months period ended March 31, 2008 and 2009, respectively, representing 2.1% and
0.6% 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 three months period
ended March 31, 2008 and 2009 amounted to Rp.10,143 million and Rp.24,910 million,
respectively, representing 0.3% and 0.5% 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.33,359 million and Rp.60,934 million for the three months period
ended March 31, 2008 and 2009, respectively, representing 0.4% and 0.6% 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.79,614 million and Rp.75,910 million for the three months period ended
March 31, 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.3,938,915 million and Rp.4,829,230
million as of March 31, 2008 and 2009, respectively, representing 4.8% and 5.3% of the
total assets. Interest income recognized for the three months period ended March 31,
2008 and 2009 amounted to Rp.60,945 million and Rp.55,676 million, representing 35.0%
and 40.0% of the total interest income for each period. |
| (ix) | The Companys subsidiaries obtained loans from state-owned banks. Interest
expense on these loans for the three months period ended March 31, 2008 and 2009
amounted to Rp.127,937 million and Rp. 177,608 million, respectively, representing
48.6% and 34.3% 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.89,015 million and Rp.86,878 million for the three months period ended
March 31, 2008 and 2009, respectively, representing 1.0% 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.809 million and Rp.85 million for the three months period ended March 31,
2008 and 2009, respectively, representing 0.005% and 0.001% 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.3,194 million and Rp. 1,628 million for the three months
period ended March 31, 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.36,953
million and Rp.64,253 million for the three months period ended March 31, 2008 and 2009,
respectively, representing 0.4% and 0.7% 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.106,359 million and Rp.121,124 million
for the three months period ended March 31, 2008 and 2009, respectively, representing
1.3% 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.510,710 million
and Rp.525,361 million for the three months period ended March 31, 2008 and 2009,
respectively, representing 3.4%, and 3.6% 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. |
| (xvii) | 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.7,974 million and Rp.38,248 million for the period three months
period ended March 31, 2008 and 2009, respectively; representing 0.2% and 0.8% of the
total acquisition of fixed assets for each period; and for maintenance of equipment
amounted to Rp.11,568 and Rp.9,376 million for the three months period ended March 31,
2008 and 2009, respectively, representing 0.1% of the total operating expenses for each
period. |

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43.
Presented below are balances of accounts with related parties:


		% to		% to
	Amount	total assets	Amount	total assets
a.	Cash and cash equivalents (Note 5)	3,591,612	4.39	4,269,004	4.68
b.	Temporary investments	186,708	0.23	287,531	0.31
c.	Trade receivables net (Note 6)	399,786	0.49	770,121	0.84
d.	Other receivables
	State-owned banks (interest)	21,619	0.03
	Patrakom	2,773	0.00	4,725	0.01
	Kopegtel	3,829	0.00	3,827	0.00
	Government Agencies	2,065	0.00	2,442	0.00
	Other	558	0.00	425	0.00
	Total	30,844	0.03	11,419	0.01
e.	Prepaid expenses (Note 8)	22,443	0.03	1,284,159	1.41
f.	Other current assets (Note 9)
	BNI			21,232	0.02
	Bank Mandiri	75,686	0.09	21,169	0.02
	Total	75,686	0.09	42,401	0.04
g.	Advances and other non-current assets (Note 13)
	BNI			94,039	0.10
	Bank Mandiri	91,618	0.11	91,198	0.10
	Kisel			1,088	0.00
	Perusahaan Umum Percetakan Uang
Republik Indonesia (Peruri)	813	0.00	813	0.00
	BRI			347	0.00
	Total	92,431	0.11	187,485	0.20
h.	Escrow accounts (Note 15)			42,811	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	300,154	0.85	847,774	1.93
	Kopegtel	107,506	0.31	62,898	0.14
	Indosat	47,867	0.14	24,492	0.06
	Yakes	52,782	0.15	9,588	0.02
	SPM	15,199	0.04	7,377	0.02
	INTI	23,921	0.07	6,916	0.02
	Gratika	69	0.00	3,955	0.01
	CSM			1,012	0.00
	PSN	4,407	0.01
	Others	25,664	0.07	274,101	0.62
	Total	577,569	1.64	1,238,113	2.82
j.	Accrued expenses (Note 17)
	Employees	1,347,508	3.83	1,128,243	2.57
	Government Agencies and state-owned banks	43,271	0.12	85,694	0.20
	PT Jaminan Sosial Tenaga Kerja
(Persero) (Jamsostek)	20,978	0.06	21,032	0.05
	Jasindo	93	0.00	93	0.00
	Total	1,390,872	3.95	1,235,062	2.82
k.	Short-term bank loans (Note 19)
	BNI	166,667	0.47
	Total	166,667	0.47
l.	Two-step loans (Note 21)	4,141,187	11.78	4,347,468	9.90
m.	Pension and other
post-retirement benefits (Note 40)	1,324,308	3.77	1,057,509	2.41
n.	Accrued LSA (Note 41)	76,806	0.22	108,722	0.25
o.	Accrued post-retirement health
care benefits (Note 42)	2,894,582	8.24	2,553,531	5.81
p.	Long-term bank loans (Note 22)
	BNI	1,270,000	3.61	3,450,000	7.86
	BRI	1,820,000	5.18	3,060,000	6.97
	Bank Mandiri	1,690,000	4.81	2,030,000	4.62
	Total	4,780,000	13.60	8,540,000	19.45

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| 44. |
| --- |
| 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	4,832,852		799,072		9,392,850		6,829		15,031,603				15,031,603
Inter-segment operating revenues	316,169		(30,860	)	194,443		86,255		566,007		(566,007	)
Total segment revenues	5,149,021		768,212		9,587,293		93,084		15,597,610		(566,007	)	15,031,603
External operating expenses	(4,100,683	)	(404,270	)	(3,869,833	)	(114,329	)	(8,489,115	)			(8,489,115	)
Inter-segment operating expenses	(80,010	)			(510,189	)	(7,788	)	(597,987	)	597,987
Segment expenses	(4,180,693	)	(404,270	)	(4,380,022	)	(122,117	)	(9,087,102	)	597,987		(8,489,115	)
Segment results	968,328		363,942		5,207,271		(29,033	)	6,510,508		31,980		6,542,488
Interest expense													(263,146	)
Interest income													174,205
Loss on foreign exchange net													(45,655	)
Other income net													102,916
Income tax expense													(2,053,013	)
Equity in net income
of associated companies													(874	)
Income before minority interest													4,456,921
Unallocated minority interest													(1,249,587	)
Net income													3,207,334
Other information
Segment assets	29,481,326		7,115,618		46,776,830		657,686		84,031,460		(2,370,869	)	81,660,591
Investments in associates	119,902				20,359				140,261				140,261
Total consolidated assets													81,800,852
Total consolidated liabilities	(18,477,244	)	(1,637,145	)	(17,025,929	)	(372,005	)	(37,512,323	)	2,370,869		(35,141,454	)
Capital expenditures	(514,584	)	(20,630	)	(2,280,052	)	(2,331	)	(2,817,597	)			(2,817,597	)
Depreciation and amortization	(878,909	)	(94,204	)	(1,535,157	)	(13,062	)	(2,521,332	)	15,995		(2,505,337	)
Amortization of goodwill and
other intangible assets	(272,236	)			(24,132	)			(296,368	)			(296,368	)
Other non-cash expenses	(183,061	)			(12,475	)	240		(195,296	)			(195,296	)

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SEGMENT INFORMATION (continued)


Fixed		Fixed						Total before				Total
wireline		wireless		Cellular		Others		elimination		Elimination		consolidated
Segment results
External operating revenues	4,651,361		744,413		9,258,218		48,186		14,702,178				14,702,178
Inter-segment operating revenues	649,822		17,819		(21,313	)	81,365		727,693		(727,693	)
Total segment revenues	5,301,183		762,232		9,236,905		129,551		15,429,871		(727,693	)	14,702,178
External operating expenses	(3,928,107	)	(586,380	)	(4,743,859	)	(155,634	)	(9,413,980	)			(9,413,980	)
Inter-segment operating expenses	(197,787	)			(575,831	)	(9,006	)	(782,624	)	782,624
Segment expenses	(4,125,894	)	(586,380	)	(5,319,690	)	(164,640	)	(10,196,604	)	782,624		(9,413,980	)
Segment results	1,175,289		175,852		3,917,215		(35,089	)	5,233,267		54,931		5,288,198
Interest expense													(517,388	)
Interest income													138,451
Loss on foreign exchange net													(211,718	)
Other income net													56,371
Income tax expense													(1,398,863	)
Equity in net income of
associated companies													931
Income before minority interest													3,355,982
Unallocated minority interest													(898,098	)
Net income													2,457,884
Other information
Segment assets	30,836,414		8,152,772		53,222,294		743,830		92,955,310		(1,832,724	)	91,122,586
Investments in associates	149,825				20,359				170,184				170,184
Total consolidated assets													91,292,770
Total consolidated liabilities	(19,224,027	)	(2,565,550	)	(23,635,051	)	(326,406	)	(45,751,034	)	1,832,724		(43,918,310	)
Capital expenditures	(893,119	)	(448,634	)	(2,156,983	)	(4,385	)	(3,503,121	)			(3,503,121	)
Depreciation and amortization	(874,021	)	(140,878	)	(1,940,513	)	(13,841	)	(2,969,253	)			(2,969,253	)
Amortization of goodwill and
other intangible assets	(289,623	)			(27,065	)			(316,688	)			(316,688	)
Other non-cash expenses	(99,865	)			(24,840	)	(1,586	)	(126,291	)			(126,291	)

| 45. |
| --- |
| The Company has entered into agreements with several investors under RSA to develop fixed
lines, public card-phone booths (including their maintenance), data and internet network and
related supporting telecommunications facilities. |
| As of March 31, 2009, the Company has 40 RSA with 33 investors. The RSA are located mainly in
Pekanbaru, Jakarta, East Java, Kalimantan, Makassar, Pare-pare, Manado, Denpasar, Mataram and
Kupang, with concession periods ranging from 48 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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| 45. |
| --- |
| 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.12,120 million and Rp.nil as of
March 31, 2008 and 2009, respectively (Note 12). |
| The investors share of revenues amounted to Rp.71,865 million and Rp.41,905 million for the
three months period ended March 31, 2008 and 2009, respectively. |

| 46. |
| --- |
| 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. |
| --- |
| 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.
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. |
| --- |
| 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. |
| --- |
| The MoC issued Decree No. 32/2004, dated March 11, 2004 stated that cost-based
interconnection fees shall be applicable beginning January 1, 2005, of which subsequently
postponed until January 1, 2007 based on the MoCI Regulation No. 08/Per/M.KOMINFO/02/2006
dated February 8, 2006. On December 28, 2006, the Company and all network operators signed
amendments to their interconnection agreements for fixed line networks (local, SLJJ and
international) and mobile network for the implementation of the cost-based tariff
obligations under the MoCI Regulations No. 08/Per/M.KOMINFO/02/2006. These amendments took
effect on January 1, 2007. |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

| c. |
| --- |
| 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: |

(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.

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.

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

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

| 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. |

| f. |
| --- |
| 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. |
| --- |
| 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 |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

| h. |
| --- |
| 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 trillion, 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. |
| Based 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. |

COMMITMENTS

| a. |
| --- |
| As of March 31, 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		4,503,772
U.S. Dollars	750	8,671,403
Euro	27	421,286
Total		13,596,461

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COMMITMENTS (continued)

a.
The above balance includes the following significant agreements:

(i) Company

				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 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.240,955 million	US$0.48 million and
Rp.71,515 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$33.8 million and
Rp.148,026 million
	December 8,
2006	b. Divre II (Jakarta)	US$42.7 million and
Rp.210,049 million	US$18.6 million and
Rp.96,952 million
	December 8,
2006	c. Divre III (West
Java and Banten)	US$20.4 million and
Rp.113,262 million	US$12.05 million
and Rp.53,716
million
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$90.4 million and
Rp.157,166 million	US$42.2 million and
Rp.67,131 million
	July 10, 2007	b. Divre VII
(Bali-Nusa Tenggara	US$6.5 million and
Rp.18,578 million	US$4.8 million and
Rp.13,206 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$12.4 million and
Rp.48,481 million
	July 10, 2007	b. Divre VII
(Sulawesi, Maluku and
Papua)	US$16.7 million and
Rp.26,018 million	US$6.3 million and
Rp.15,319 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 2009
Company and Huawei	September 28, 2007	a. Procurement and
installation
agreement for
Speedy Access Batch
2	US$23.6 million and
Rp.119,725 million	Rp.79,475 million
	September 28, 2007	b. Procurement and
installation
agreement for
Speedy Access Batch
3	US$18.8 million and
Rp.129,618 million	Rp.61,435 million
Company and PT ZTE
Indonesia (ZTE)	December 18, 2007	Procurement and
installation
agreement for
Speedy Divre VII
(Sulawesi, Maluku
and Papua)	Rp.95,385 million	Rp.21,019 million
Company and NEC
Corporation	March 3, 2008	Procurement and
installation
agreement for Batam
Singapore Cable
System (BSCS)
Project	US$12.5 million	US$12.5 million
Company and Huawei	March 31, 2008	Procurement and
installation
agreement for Metro
Ethernet Batch 3 in
Divre V	Rp.86,053 million	Rp.7,164 million
Company and PT SCS
Astragraphia
Technologies	April 3, 2008	Procurement and
installation
agreement for ALPRO
IP TRANSPORT for
Speedy service and
corporate service
Batch 2	Rp.58,133 million	Rp.4,571 million
Company and PT Horison
Komunikasi	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 6
Divre V	Rp.65,173 million	Rp.65,173 million
Company and PT Brimbun
Raya Indah (Brimbun)	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 7
Divre VI	Rp.60,220 million	Rp.22,478 million
Company and G-Pas
Consortium	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 8
Divre VII	Rp.72,450 million	Rp.72,450 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.78,201 million	Rp.30,364 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 2009
Company and PT
Telekomindo
Primakarya	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 11
Netre Sumbagsel	Rp.109,734 million	Rp.62,829 million
Company and Brimbun	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic Batch 12
Netre, Jakarta and
West Java	Rp.84,217 million	Rp.19,335 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.71,266 million	Rp.40,047 million
Company and PT
Lintas Teknologi
Indonesia	September 26, 2008	Procurement and
installation
agreement for Inside Plan
Backbone
Kalimantan-Sulawesi	Rp.87,111 million	Rp.85,334 million
Company and PT
Sansaine Exindo	October 15, 2008	Procurement agreement for TENOSS Batch 4 FWN Domain	Rp.97,248 million	Rp.80,086 million
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.89,477 million	Rp.4,702 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.78,100 million	Rp.78,100 million
Company and NSW
Fujitsu Consortium	December 30, 2008	Procurement and
installation
agreement for
Capacity Ring
JaKa2LaDeMa Project	US$115.4 million	US$115.4 million
Company and ISS
Reshetnev (Russia)	March 3, 2009	Procurement agreement for Telkom-3 Satellite	US$179.4 million	US$179.4 million
Company APT Satellite Company Limited	March 23, 2009	142E Degree Orbital Position Cooperation Agreement	US$18.5 million	US$18.5 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

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

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

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

| | extend the above agreements until new agreements were made between Telkomsel
and these other companies, 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). |

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COMMITMENTS (continued)

a. Capital expenditures (continued)

| (ii) |
| --- |
| 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. |
| --- |
| 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. |

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COMMITMENTS (continued)

a. Capital expenditures (continued)

| (ii) |
| --- |
| 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 for a period up to nine months. |
| --- | --- |
| | At Telkomsels election, the Trial Participants must transfer ownership to
Telkomsel of those 2G GSM BSS and 3G UMTS radio access networks elements
(excluding software). |

| On March 3, 2009 and March 13, 2009, Telkomsel, Ericsson Indonesia, Ericsson AB, PT
Nokia Siemens Indonesia, Nokia Siemens Network Oy, Huawei
International Pte.Ltd. and
PT Huawei Tech Investment 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. |

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, 2009. Under these facilities, as of March 31, 2009, Telkomsel has issued a
bank guarantee of Rp.20,000 million (equivalent to US$1.73 million) for a 3G
performance bond (Note 47c.ii). Borrowings under the facilities bear interest at
Singapore Interbank Offered Rate (SIBOR) plus 1.25% per annum (US$). As of March 31,
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 46h). The terms of the various
agreements with Telkomsels lenders and financiers require compliance with a number of
pledges and negative pledges as well as financial and other covenants, which include
inter alia, certain restrictions on the amount of dividends and other profit
distributions which could adversely affect Telkomsels capacity to comply with its
obligation under the facilities. The terms of the relevant agreements also contain
default and cross default clauses. Telkomsels management is not aware of any
breaches of the terms of these agreements and does not foresee any such breaches
occurring in the future. |

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COMMITMENTS (continued)

c. Others

| (i) |
| --- |
| 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 41). |

| (ii) |
| --- |
| With reference to the Decision Letter No. 07/Per/M.KOMINFO/2/2006 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 March 31, 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
1			20% x HL
2	R1	I1 = (1 + R1)	40% x I1 x HL
3	R2	I2 = I1(1 + R2)	60% x I2 x HL
4	R3	I3 = I2(1 + R3)	100% x I3 x HL
5	R4	I4 = I3(1 + R4)	130% x I4 x HL
6	R5	I5 = I4(1 + R5)	130% x I5 x HL
7	R6	I6 = I5(1 + R6)	130% x I6 x HL
8	R7	I7 = I6(1 + R7)	130% x I7 x HL
9	R8	I8 = I7(1 + R8)	130% x I8 x HL
10	R9	I9 = I8(1 + R9)	130% x I9 x HL

Notes :
Ri	= average 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. |
| 4. | Construct a 3G network which covers at least the following provinces: |

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COMMITMENTS (continued)

c. Others (continued)

(ii) 3G license (continued)

(continued)

	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. As of the issuance
date of the consolidated financial statements, there is no decision from MoCI. |
| --- | --- |
| (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 March 31, 2009, the Company has paid US$31
million (equivalent to Rp.288,075 million) and recorded as advances for the purchase of
property, plant and equipment (Note 13). |
| (iv) | Palapa Ring Consortium |
| | On November 10, 2007, the Company entered into a C&MA with 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 March 31, 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). |

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COMMITMENTS (continued)

c. Others (continued)

(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 47c.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 281,033 TRXs in operation as of March 31, 2009, with a fee ranging
from Rp.0.035 million to Rp.17.5 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	392,807	51,317	314,303	27,187

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

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.79,202 million as of March 31, 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. |

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CONTINGENCIES (continued)

| 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:

n	Maximum 5% of total shares for each buyer,
n	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%.

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:

n	Maximum 10% of total shares for each buyer,
n	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.

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CONTINGENCIES (continued)

d.	(continued)
	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. As of the issuance date
of the consolidated financial statements, Telkomsel is still reviewing the result to
determine a favorable action to be taken including the option for a judicial review by the
SC.
e.	Certain subscribers of Telkomsel, Indosat and PT Excelcomindo Pratama (Excelcomindo)
which are domiciled in Bekasi, Tangerang and other various locations, represented by the
Law Firms, have filed class-action lawsuits with the Courts against Telkomsel, the Company,
Indosat, the Government, Temasek Holdings and certain of its affiliated companies
(Parties). The Parties are alleged to have had excessive price practices that potentially
could have adversely affected those subscribers.
	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 class-action 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.
f.	The Company, Telkomsel and seven other local operators are being investigated by the
KPPU for allegation of SMS cartel practices. As a result of the investigations on June 17,
2008, KPPU found that the Company, Telkomsel and certain other local operators had proven
to violate Law No. 5/1999 article 5 and gave the Company and Telkomsel Rp.18,000 million
penalty and Rp.25,000 million penalty, respectively.
	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.

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

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	157.50	1,450,556	183.20	2,123,412
Euro	73.20	1,064,958	47.87	733,626
Singapore Dollars	0.01	33	0.21	1,570
Malaysian Ringgit			0.03	109
Japanese Yen	4.45	412	0.18	22
Temporary investments
U.S. Dollars	7.95	73,189	8.00	92,280
Trade receivables
Related parties
U.S. Dollars	7.83	70,528	2.34	27,033
Third parties
U.S. Dollars	33.38	307,497	66.37	766,353
Other receivables
U.S. Dollars	3.84	35,392	0.79	9,080
Euro	0.06	833	0.02	268
Great Britain Pound sterling	0.01	225	0.01	203
Singapore Dollars			0.00	2
Other current assets
U.S. Dollars	0.92	8,440	0.64	7,429
Advances and other non-current assets
U.S. Dollars	20.77	191,256	3.28	37,901
Euro			0.07	494
Escrow accounts
U.S. Dollars			3.71	42,811
Total assets		3,203,319		3,842,593

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ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)


Foreign			Foreign
currencies	Rupiah		currencies	Rupiah
(in millions)	equivalent		(in millions)	equivalent
Liabilities
Trade payables
Related parties
U.S. Dollars	0.54	4,968	6.13	71,005
Singapore Dollars	0.00	22	2.29	17,477
Third parties
U.S. Dollars	19.82	182,730	451.66	5,227,853
Euro	2.51	34,592	52.12	798,914
Singapore Dollars	0.73	4,894	1.26	9,616
Japanese Yen	0.51	47	5.61	661
Australian Dollars			0.05	427
Hongkong Dollars			0.07	104
Swiss Franc	0.05	442	0.00	16
Great Britain Pound sterling			0.00	14
Malaysian Ringgit			0.00	4
Other payables
U.S. Dollars	0.80	7,418	0.05	573
Singapore Dollars	0.00	11	0.00	12
Great Britain Pound sterling	0.00	2
Accrued expenses
U.S. Dollars	160.03	1,475,487	10.30	119,243
Japanese Yen	149.23	13,849	137.74	16,227
Malaysian Ringgit			0.54	1,722
Great Britain Pound sterling	0.05	832	0.05	751
Singapore Dollars	0.53	3,531	0.03	263
Euro	88.61	1,290,719
Short-term bank loans
U.S. Dollars			0.38	4,399
Advances from customers and suppliers
U.S. Dollars	1.00	9,241	1.23	14,247
Current maturities of long-term liabilities
U.S. Dollars	143.51	1,318,446	125.15	1,448,610
Japanese Yen	955.40	88,662	767.90	90,466
Euro	7.34	106,811
Long-term liabilities
U.S. Dollars	345.68	3,187,154	234.66	2,716,179
Japanese Yen	12,286.36	1,140,174	11,518.46	1,356,990
Total liabilities		8,870,032		11,895,773
Net liabilities		(5,666,713	)	(8,053,180	)

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ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)

| The Company and its subsidiaries activities expose them to a variety of financial risks,
including the effects of changes in debt and equity market prices, foreign currency exchange
rates and interest rates. |
| --- |
| The Company and its subsidiaries overall risk management programs focus on the unpredictability
of financial markets and seek to minimize potential adverse effects on the financial performance
of the Company and its subsidiaries. Management provides written policy for foreign currency
risk management mainly through time deposits placements and hedging to cover foreign currency
risk exposures for the time range of 3 up to 12 months. |
| If the Company and its subsidiaries reports monetary assets and liabilities in foreign
currencies as of December 31, 2008 using the rates on May 8, 2009, unrealized foreign exchange
loss will decrease by the amount of Rp.794.171 million. |

SUBSEQUENT EVENTS

On April 1, 2009, the Company reduced its internet tariff by an average of 20% for various subscription packages (Note 46g).

RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA

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

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

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RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA (continued)

(ii)	PSAK 55 (Revised 2006), Financial Instruments: Recognition and Measurement
	In December 2006, the DSAK issued PSAK 55 (Revised 2006), Financial Instruments:
Recognition and Measurement which amends PSAK 55 (Revised 1999), Accounting for Derivative
Instruments and Hedging Activities. PSAK 55 (Revised 2006) provides guidance on how to
recognize, measure and derecognize financial asset and 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.
(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.

ACCOUNTS RECLASSIFICATION

Certain accounts in the consolidated financial statement for the three months period ended March 31, 2008 has been reclassified to conform with the presentation of accounts of the consolidated financial statements for the three months period ended March 31, 2009, as follows:

reclassification		Reclassification		reclassification
Consolidated balance sheet
March 31, 2008:
Property, plant and equipment cost	117,705,831		(841,402	)	116,864,429
Accumulated depreciation	(56,935,191	)	462,871		(56,472,320	)
Property, plant and equipment net of
accumulated depreciation	60,770,640		(378,531	)	60,392,109
Goodwill and other intangible assets
gross carrying amount	8,292,227		841,402		9,133,629
Accumulated amortization	(4,926,796	)	(462,871	)	(5,389,667	)
Goodwill and other intangible assets
net of accumulated amortization	3,365,431		378,531		3,743,962

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ACCOUNTS RECLASSIFICATION (continued)

reclassification		Reclassification		reclassification
Consolidated balance sheet
March 31, 2008:
Claims for tax refund	420,550		(12,539	)	408,011
Prepaid taxes	58,827		12,539		71,366
Consolidated income statement
for the three months
ended March 31, 2008:
Operating revenues data, internet and
information technology services	(3,917,418	)	(27,258	)	(3,944,676	)
Operating revenues network	(223,816	)	5,009		(218,807	)
Operating revenues Other
telecommunications services	(26,173	)	22,249		(3,924	)
Operating expenses depreciation	2,534,473		(33,896	)	2,500,577
Operating expenses general and
administrative	824,586		33,896		858,482

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