PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA TBK

6-K 1 c07468e6vk.htm FORM 6-K Form 6-K 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 November , 20 10

Perusahaan Perseroan (Persero) PT TELEKOMUNIKASI INDONESIA

(Translation of registrants name into English)

Jalan Japati No. 1 Bandung-40133 INDONESIA

(Address of principal executive office)

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

Form 20-F þ Form 40-F o

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934]

Yes o No þ

[If yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ]

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SIGNATURES

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

	Perusahaan Perseroan (Persero) PT TELEKOMUNIKASI INDONESIA
	(Registrant)
Date November 1, 2010	By	/s/ Agus Murdiyatno
		(Signature)
		Agus Murdiyatno VP Investor Relations/ Corporate Secretary

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

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2009 AND 2010 AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010

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

SEPTEMBER 30, 2009 AND 2010 AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010

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	9-133

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER 30, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Notes	Rp.	Rp.	US$ (Note 3)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	2c,2e,5,45	7,212,193	8,941,289	1,001,825
Temporary investments	2c,2f,45	286,648	373,325	41,829
Trade receivables	2c,2g,6,37,45
Related parties net of allowance
for doubtful accounts of
Rp.124,432 million in 2009 and
Rp.132,248 million in 2010		751,997	1,181,860	132,421
Third parties net of allowance for
doubtful accounts of
Rp.1,457,400 million in 2009 and
Rp.1,188,308 million in 2010		3,136,896	3,606,630	404,104
Other receivables net of allowance for
doubtful accounts of
Rp.10,732 million in 2009
and Rp.6,896 million in 2010	2c,2g,45	118,144	105,618	11,834
Inventories net of allowance for
obsolescence of Rp.73,541 million in
2009 and Rp.79,013 million in 2010	2h,7,37	437,877	569,860	63,850
Prepaid expenses	2c,2i,8,45	2,696,294	3,540,963	396,747
Claims for tax refund	2s,39	216,326	11,779	1,320
Prepaid taxes	2s,39	850,732	315,416	35,341
Other current assets	2c,9,45	34,877	5,921	663
Total Current Assets		15,741,984	18,652,661	2,089,934
NON-CURRENT ASSETS
Long-term investments net	2f,10	146,323	262,105	29,368
Property, plant and equipment net of
accumulated depreciation of
Rp.70,843,414 million in 2009 and Rp.80,992,514 million in 2010	2k,2l,4,11,19,20,23	73,922,446	75,569,531	8,467,174
Property, plant and equipment under
Revenue-Sharing Arrangements net
of accumulated depreciation of
Rp.194,729 million in 2009 and
Rp.197,443 million in 2010	2m,12,34,47	404,275	316,647	35,479
Prepaid pension benefit cost	2i,2r,42	782	8,911	998
Advances and other non-current assets	2c,2k,2o,13,29,45,49	2,347,208	3,079,320	345,022
Goodwill and other intangible assets net
of accumulated amortization of
Rp.7,303,266 million in 2009 and Rp.8,692,829 million in 2010	2d,2j,4,14	2,606,678	2,039,449	228,510
Escrow accounts	2c,15,45	46,236	41,240	4,621
Deferred tax assets net	2s,39,55	97,918	90,877	10,182
Total Non-current Assets		79,571,866	81,408,080	9,121,354
TOTAL ASSETS		95,313,850	100,060,741	11,211,288

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

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (continued) SEPTEMBER 30, 2009 AND 2010

(Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Notes	Rp.	Rp.	US$ (Note 3)
LIABILITIES AND STOCKHOLDERS
EQUITY
CURRENT LIABILITIES
Trade payables	2c,2q,16,45
Related parties		1,475,156	1,708,417	191,419
Third parties		7,777,365	6,883,652	771,278
Other payables		18,256	33,116	3,710
Taxes payables	2s,39	1,922,821	733,319	82,164
Dividend payables	2v	405,175	1,456,227	163,163
Accrued expenses	2c,17,35,42,45	2,896,662	3,501,338	392,307
Unearned income	2q,18	2,703,086	2,560,243	286,862
Advances from customers and suppliers		235,462	360,531	40,396
Short-term bank loans	2c,19,45	35,800	54,184	6,071
Current maturities of long-term liabilities	2c,2q,2l,20,45	8,357,001	6,447,834	722,446
Total Current Liabilities		25,826,784	23,738,861	2,659,816
NON-CURRENT LIABILITIES
Deferred tax liabilities net	2s,39,55	3,402,396	4,128,386	462,564
Accrued long service awards	2c,2r,43,45	165,431	204,013	22,859
Accrued post-retirement
health care benefits	2c,2r,44,45	2,019,054	1,260,522	141,235
Accrued pension and other post-retirement benefits costs	2c,2r,42,45	854,761	490,668	54,977
Long-term liabilities net of current
maturities
Obligations under finance leases	2l,2q,11,20	374,614	420,544	47,120
Two-step loans related party	2c,20,21,45	3,256,906	2,768,097	310,151
Bonds and notes	2c,20,22,45	27,000	3,166,418	354,781
Bank loans	2c,20,23,45	11,681,098	10,255,978	1,149,129
Deferred consideration for business
combinations	20,24	432,997
Total Non-current Liabilities		22,214,257	22,694,626	2,542,816
MINORITY INTEREST	25	9,766,000	10,885,873	1,219,706

as restated, refer to Note 2q

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

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (continued) SEPTEMBER 30, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Notes	Rp.		Rp.		US$ (Note 3)
STOCKHOLDERS EQUITY
Capital stock Rp.250 par value per
Series A Dwiwarna share and
Series B share
Authorized 1 Series A Dwiwarna
share and 79,999,999,999
Series B shares
Issued and fully paid 1 Series A
Dwiwarna share and
20,159,999,279 Series B shares	1c,26	5,040,000		5,040,000		564,706
Additional paid-in capital	2u,27	1,073,333		1,073,333		120,261
Treasury stock 490,574,500 shares in
2009 and 2010	2u,28	(4,264,073	)	(4,264,073	)	(477,767	)
Difference in value arising from
restructuring transactions and
other transactions between
entities under common control	2d,29	478,000		478,000		53,557
Difference due to change of equity in
associated companies	2f	385,595		385,595		43,204
Unrealized holding gain from
available-for-sale securities	2f	16,127		50,756		5,687
Translation adjustment	2f	244,468		229,001		25,658
Difference due to acquisition of
minority interest in subsidiary	1d,2d	(426,358	)	(509,911	)	(57,133	)
Retained earnings
Appropriated		15,336,746		15,336,746		1,718,403
Unappropriated		19,622,971		24,921,934		2,792,374
Total Stockholders Equity		37,506,809		42,741,381		4,788,950
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY		95,313,850		100,060,741		11,211,288

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

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

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars, except per share and per ADS data)

Notes	Rp.		Rp.		US$ (Note 3)
OPERATING REVENUES
Telephone	2q,30,55
Fixed lines		10,805,934		9,853,882		1,104,076
Cellular		21,504,166		22,056,590		2,471,327
Interconnection	2c,2q,31,45	2,401,431		2,295,404		257,188
Data, internet and information
technology services	2q,32,55	13,777,499		15,848,894		1,775,786
Network	2c,2q,33,45	895,061		903,485		101,231
Other telecommunications services	2m, 2q,12,34,47	778,708		1,164,097		130,431
Total Operating Revenues		50,162,799		52,122,352		5,840,039
OPERATING EXPENSES
Depreciation and amortization	2k,2l,2m,2q,11,12,13,14,55	10,195,696		11,042,997		1,237,311
Personnel	2c,2q,2r,17,35,42,43,44,45,55	5,545,706		5,427,255		608,096
Operations, maintenance and
telecommunication services	2c,2q,36,45,55	10,954,458		12,855,872		1,440,434
General and administrative	2g,2h,2q,6,7,14,37,55	1,843,673		1,726,590		193,455
Interconnection	2c,2q,38,45	2,174,318		2,277,133		255,141
Marketing	2q	1,494,657		1,598,371		179,089
Total Operating Expenses		32,208,508		34,928,218		3,913,526
OPERATING INCOME		17,954,291		`		1,926,513
OTHER (EXPENSES) INCOME
Interest income	2c,45	341,785		289,266		32,411
Equity in net loss of
associated companies	2f,10	(21,320	)	(6,195	)	(694	)
Interest expense	2c,45	(1,471,769	)	(1,429,873	)	(160,210	)
Gain on foreign exchange net	2p	774,784		131,024		14,681
Others net		206,701		300,480		33,667
Other expenses net		(169,819	)	(715,298	)	(80,145	)
INCOME BEFORE TAX		17,784,472		16,478,836		1,846,368
TAX EXPENSE	2s,39
Current		(4,597,272	)	(3,534,697	)	(396,044	)
Deferred		(399,605	)	(787,515	)	(88,237	)
		(4,996,877	)	(4,322,212	)	(484,281	)
INCOME BEFORE MINORITY INTEREST
IN NET INCOME OF CONSOLIDATED
SUBSIDIARIES		12,787,595		12,156,624		1,362,087
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARIES net	25	(3,487,133	)	(3,223,269	)	(361,151	)
NET INCOME		9,300,462		8,933,355		1,000,936
BASIC EARNINGS PER SHARE	2w,40
Net income per share		472.84		454.17		0.05
Net income per ADS
(40 Series B shares per ADS)		18,913.60		18,166.80		2.00

as restated, refer to Note 2q

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

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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah)


					in value
					arising from
					restructuring
					transactions
					and other		Unrealized				Difference
					transactions	Difference	holding				due to
					between	due to change	gain (loss)				acquisition
			Additional		entities under	of equity	on available-				of minority
		Capital	paid-in	Treasury	common	in associated	for-sale		Translation		interest		Retained earnings			Stockholders
		stock	capital	stock	control	companies	securities		adjustment		in subsidiary		Appropriated	Unappropriated		equity
Descriptions	Notes	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.		Rp.		Rp.		Rp.	Rp.		Rp.
Balance, January 1, 2009		5,040,000	1,073,333	(4,264,073	)	360,000	385,595	(19,066	)	238,319				10,557,985	20,941,978		34,314,071
Unrealized holding gain
on available-for-sale
securities	2f							35,193									35,193
Foreign currency
translation of
associated companies	2f,10									(1,610	)						(1,610	)
Foreign currency
translation of
subsidiaries and	1d,2b									7,759							7,759
49% acquisition of
Infomedia	1d,2d											(426,358	)				(426,358	)
Compensation for the
early termination of
exclusive rights	29					118,000											118,000
Cash dividends	2v,41														(5,840,708	)	(5,840,708	)
Appropriation for
general reserve	41													4,778,761	(4,778,761	)
Net income for the period															9,300,462		9,300,462
Balance, September 30, 2009		5,040,000	1,073,333	(4,264,073	)	478,000	385,595	16,127		244,468		(426,358	)	15,336,746	19,622,971		37,506,809

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

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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED) (continued) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah)


					in value
					arising from
					restructuring
					transactions
					and other		Unrealized			Difference
					transactions	Difference	holding			due to
					between	due to change	gain			acquisition
			Additional		entities under	of equity	on available-			of minority
		Capital	paid-in	Treasury	common	in associated	for-sale	Translation		interest		Retained earnings			Stockholders
		stock	capital	stock	control	companies	securities	adjustment		in subsidiary		Appropriated	Unappropriated		equity
Descriptions	Notes	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.	Rp.		Rp.		Rp.	Rp.		Rp.
Balance, January 1, 2010		5,040,000	1,073,333	(4,264,073	)	478,000	385,595	18,136	230,995		(439,444	)	15,336,746	21,130,459		38,989,747
Unrealized holding gain
on available-for-sale
securities	2f							32,620								32,620
Foreign currency translation of
associated companies	2f,10								1,389							1,389
Foreign currency translation of
subsidiaries	1d,2b								(3,383	)						(3,383	)
20% acquisition of
Sigma	1d,2d										(70,467	)				(70,467	)
Cash dividends	2v,41													(5,141,880	)	(5,141,880	)
Net income for the period														8,933,355		8,933,355
Balance, September 30, 2010		5,040,000	1,073,333	(4,264,073	)	478,000	385,595	50,756	229,001		(509,911	)	15,336,746	24,921,934		42,741,381

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010 (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	10,369,482		9,184,184		1,029,040
Cellular	21,195,286		21,843,066		2,447,402
Interconnection net	2,282,696		2,296,488		257,310
Data, internet and information technology services	13,765,897		15,151,929		1,697,695
Other services	1,598,562		1,980,602		221,916
Total cash receipts from operating revenues	49,211,923		50,456,269		5,653,363
Cash payments for operating expenses	(22,738,622	)	(25,623,824	)	(2,871,017	)
Cash paid from customers	94,280		248,487		27,842
Cash generated from operations	26,567,581		25,080,932		2,810,188
Interest received	358,088		291,765		32,691
Interest paid	(1,416,526	)	(1,349,692	)	(151,226	)
Income tax paid	(3,246,756	)	(3,533,834	)	(395,948	)
Net cash provided by operating activities	22,262,387		20,489,171		2,295,705
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of temporary investments
and maturity of time deposits	38,148		24,473		2,742
Purchases of temporary investments
and placements in time deposits	(22,559	)	(5,671	)	(635	)
Proceeds from sale of property, plant and equipment	6,088		8,768		982
Acquisition of property, plant and equipment	(15,056,495	)	(10,897,723	)	(1,221,033	)
Increase in advances for purchases of
property, plant and equipment	(1,054,568	)	(524,422	)	(58,759	)
Decrease in advances, other assets and escrow accounts	14,114		224,330		25,135
Business combinations, net of cash paid			(116,503	)	(13,054	)
Acquisition of intangible assets	(462,192	)	(612,051	)	(68,577	)
Acquisition of minority interest of subsidiary	(598,000	)	(95,422	)	(10,692	)
Cash dividends received	822		2,800		314
Acquisition of long-term investments			(115,358	)	(12,925	)
Net cash used in investing activities	(17,134,642	)	(12,106,779	)	(1,356,502	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid	(5,840,708	)	(5,141,880	)	(576,121	)
Cash dividends paid to minority stockholders
of subsidiaries	(2,829,472	)	(2,188,700	)	(245,232	)
Proceeds from short-term borrowings	83,023		254,152		28,476
Repayments of short-term borrowings	(91,929	)	(96,531	)	(10,816	)
Proceeds from medium-term Notes	30,000		35,000		3,922
Repayment from medium-term Notes			(3,400	)	(381	)
Proceeds from long-term borrowings	9,525,243		6,901,356		773,261
Repayment of long-term borrowings	(5,096,735	)	(6,430,082	)	(720,457	)
Repayment of promissory notes	(123,927	)
Repayment of obligations under finance leases	(209,954	)	(166,194	)	(18,621	)
Net cash used in financing activities	(4,554,459	)	(6,836,279	)	(765,969	)

as restated, refer to Note 2q

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued) NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Rp.		Rp.		US$ (Note 3)
NET INCREASE IN CASH AND
CASH EQUIVALENTS	573,286		1,546,113		173,234
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS	(251,038	)	(410,284	)	(45,970	)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD	6,889,945		7,805,460		874,561
CASH AND CASH EQUIVALENTS AT END OF PERIOD	7,212,193		8,941,289		1,001,825
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities:
Acquisition of property, plant and equipment
through incurrence of payables	7,153,267		5,802,018		650,086
Acquisition of property, plant and equipment
through finance leases	15,421		15,517		1,739

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2009 AND 2010 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010 (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 Government Regulation No. 25/1991. |
| The Company was established based on notarial deed No. 128 dated September 24, 1991 of Imas
Fatimah, S.H.. The deed of establishment was approved by the Minister of Justice of the
Republic of Indonesia in his Decision Letter No. C2-6870.HT.01.01.Th.1991 dated November 19,
1991, and was published in State Gazette No. 5 dated January 17, 1992, Supplement No. 210.
The Articles of Association have been amended several times, the latest amendments were to
comply with 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 BAPEPAM-LK Regulation No. IX.E.2 of
Material Transaction and Changes of the Core Business Activities, and to add the Companys
purposes and objectives, based on notarial deed No. 37 dated July 24, 2010 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-35876.AH.01.02/2010 dated July 19, 2010. |
| In accordance with Article 3 of the Companys Articles of Association, the scope of its
activities is to provide telecommunication network and services, informatics and
optimization of the Companys resources in accordance with prevailing regulations. To
achieve this objective, the Company is involved in the following activities: |

| i. | Planning, building, providing, developing, operating, marketing or selling,
leasing and maintaining telecommunications and information networks in accordance with
prevailing regulations. |
| --- | --- |
| ii. | Planning, developing, providing, marketing or selling and improving
telecommunications and information services in accordance with prevailing regulations. |
| iii. | Providing payment transactions and money transferring services through
telecommunications and information networks. |
| iv. | Performing activities and other undertakings in connection with optimization of
the Companys resources, among others the utilization of the Companys property, plant
and equipment and moving assets, information systems, education and training, and
repairs and maintenance facilities. |

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) SEPTEMBER 30, 2009 AND 2010 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010 (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 a cooperation which provides 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 domestic telecommunications services of the Company includes the provision of
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 the 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
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 was expected to pave the way for market liberalization. In connection with this law, Government Regulation No. 52/2000 was issued, which provided 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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GENERAL (continued)

a.	Establishment and general information (continued)
	On press release No. 05/HMS/JP/VIII/2000 dated August 1, 2000 of the Directorate General of
Post and Telecommunications (DGPT), as corrected by No. 1718/UM/VIII/2000 dated August 2,
2000, the period for exclusive rights granted to the Company to provide local and SLJJ
fixed-line telecommunications services were shortened from the expiration period of December
2010 to August 2002 and from December 2005 to August 2003. In return, the Government was
required to pay compensation to the Company (Notes 13 and 29). Further, on press release of
the Coordinating Minister of Economics of the Republic of Indonesia dated July 31, 2002, the
Government terminated the Companys exclusive right as a network provider for local and SLJJ
services effective August 1, 2002. On August 1, 2002, PT Indonesian Satellite Corporation
Tbk (Indosat) was granted a license to provide local and SLJJ telecommunications services.
	The Company has a commercial license to provide International Direct Dialing (IDD)
services based on the Minister of Communications of the Republic of Indonesia (MoC) Decree
No. KP. 162/2004 dated May 13, 2004.
b.	Companys Board of Commissioners, Directors and employees

| 1. |
| --- |
| Based on resolutions made at (i) the Annual General Meeting (AGM) of Stockholders of
the Company dated June 12, 2009 as covered by notarial deed No. 22 of Dr. A. Partomuan
Pohan, S.H., LLM.,; and (ii) the Extraordinary General Meeting (EGM) of Stockholders
of the Company dated June 11, 2010 as covered by notarial deed no. 18 of the same
notary, the composition of the Companys Board of Commissioners and Directors as of
September 30, 2009 and 2010, respectively, were as follows: |

	2009	2010
President Commissioner	Tanri Abeng	Tanri Abeng
Commissioner	Bobby A.A Nazief	Bobby A.A Nazief
Commissioner	Mahmuddin Yasin	Mahmuddin Yasin
Independent Commissioner	Arif Arryman	Arif Arryman*
Independent Commissioner	Petrus Sartono	Petrus Sartono
President Director	Rinaldi Firmansyah	Rinaldi Firmansyah
Vice President Director/Chief
Operating Officer (COO)	** (see Note below)	** (see Note below)
Director of Finance	Sudiro Asno	Sudiro Asno
Director of Network and Solution	Ermady Dahlan	Ermady Dahlan
Director of Enterprise and
Wholesale	Arief Yahya	Arief Yahya
Director of Consumer	I Nyoman Gede Wiryanata	I Nyoman Gede Wiryanata
Director of Compliance and
Risk Management	Prasetio	Prasetio
Chief Information Technology Officer	Indra Utoyo	Indra Utoyo
Director of Human Capital
and General Affairs (HCGA)	Faisal Syam	Faisal Syam

*	Passed away on September 7, 2010, the position is vacant on September 30, 2010
**	COO is held by Director of Network and Solution in 2009 and 2010

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GENERAL (continued)

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

1.	Board of Commissioners and Directors (continued)
	Based on the EGM of Stockholders of the Company dated June 11, 2010, the Companys
stockholders agreed to extend the terms of service of Tanri Abeng, Arif Arryman, Petrus
Sartono, Rinaldi Firmansyah, and Arief Yahya up to the next AGM of Stockholders of the
Company.
2.	Employees
	As of September 30, 2009 and 2010, the Company and its subsidiaries had 29,091 and
27,026 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 and
listed on the Indonesia Stock Exchange (IDX) (previously the Jakarta Stock Exchange and
the Surabaya Stock Exchange) and 700,000,000 Series B shares owned by the Government were
offered to the public and listed on the New York Stock Exchange (NYSE) and the London
Stock Exchange (LSE), in the form of American Depositary Shares (ADS). There are
35,000,000 ADS and each ADS represents 20 Series B shares at that time. |
| In December 1996, the Government had a block sale of its 388,000,000 Series B shares, and in
1997, had distributed 2,670,300 Series B shares as incentive to the Companys stockholders
who did not sell their shares within one year from the date of the IPO. In May 1999, the
Government further sold 898,000,000 Series B shares. |
| To comply with Law No. 1/1995 of the Limited Liability Companies, at the AGM of Stockholders
of the Company on April 16, 1999, the Companys stockholders resolved to increase the
Companys issued share capital by distribution of 746,666,640 bonus shares through the
capitalization of certain additional paid-in capital, which were distributed to the
Companys stockholders in August 1999. On August 16, 2007, the Law No. 1/1995 of the Limited
Liability Companies was amended by the issuing of Law No. 40/2007 of the Limited Liability
Companies which became effective at the same date. The Law No. 40/2007 has no effect on 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 sold a further
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, it was split 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 in
an increase of the Companys authorized capital stock from 1 Series A Dwiwarna share and
39,999,999,999 Series B shares to 1 Series A Dwiwarna share and 79,999,999,999 Series B
shares, and issued capital stock from 1 Series A Dwiwarna share and 10,079,999,639 Series B
shares to 1 Series A Dwiwarna share and 20,159,999,279 Series B shares. After the stock
split, each ADS represented 40 Series B shares. |

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GENERAL (continued)

c.	Public offering of shares of the Company (continued)
	During the EGM of Stockholders of the Company on December 21, 2005, AGM of Stockholders of
the Company on June 29, 2007 and the AGM of Stockholders of the Company on June 20, 2008,
the Companys stockholders approved the phase I, II and III plan, respectively, to
repurchase the Companys issued Series B shares (Note 28).
	As of September 30, 2010, all of the Companys Series B shares were listed on the IDX and
50,997,025 ADS shares were listed on the NYSE and LSE (Note 26).
d.	Subsidiaries
	As of September 30, 2009 and 2010, 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	2009	2010	2009	2010
PT Telekomunikasi Selular
( Telkomsel ), Jakarta, Indonesia	Telecomunication
provides
telecommunication
facilities and mobile
cellular services using
Global System for
Mobile Communication
(GSM) technology/May
26, 1995	1995	65	65	57,095,528	60,606,863
PT Multimedia Nusantara
( Metra ), Jakarta,
Indonesia	Multimedia
telecommunication
services/May 9, 2003	1998	100	100	1,526,850	1,836,691
PT Telekomunikasi
Indonesia International
( TII ) (formerly PT Aria
West International
( AWI )), Jakarta,
Indonesia	Telecommunication/July 31, 2003	1995	100	100	709,892	1,550,946
PT Pramindo Ikat
Nusantara
( Pramindo ), Jakarta, Indonesia	Telecommunication
construction and
services/August
15, 2002	1995	100	100	1,082,296	1,160,980
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	100 (including through 49% ownership by Metra)	100 (including through 49% ownership by Metra)	523,107	626,739
PT Dayamitra
Telekomunikasi
( Dayamitra ), Jakarta, Indonesia	Telecommunication/May 17, 2001	1995	100	100	393,363	398,660

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GENERAL (continued)

d. Subsidiaries (continued)

(i) Direct subsidiaries: (continued)

	Nature of business/ — date of incorporation	Date of	Percentage of — effective		Total assets
Subsidiary/place of	or acquisition by	commercial	ownership interest		before elimination
incorporation	the Company	operation	2009	2010	2009	2010
PT Indonusa Telemedia
( Indonusa ), Jakarta, Indonesia	Pay television and
content services/May
7, 1997	1997	100 (including through 1.25% ownership by Metra)	100 (including through 1.25% ownership by Metra)	181,231	226,848
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	176,534	218,863
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

(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	2009	2010	2009	2010
PT Sigma Cipta Caraka
( Sigma ), Tangerang,
Indonesia	Information technology
service sytem
implementation and
integration service,
outsourcing and
software license
maintenance/May 1, 1987	1988	80 (through 80% ownership by Metra)	100 (through 100% ownership by Metra)	415,417	469,092
Telekomunikasi
Indonesia
International Pte. Ltd., Singapore	Telecommunication/December 6, 2007	2008	100 (through 100% ownership by TII)	100 (through 100% ownership by TII)	209,538	207,342
PT Balebat Dedikasi Prima
( Balebat ) , Bogor,
Indonesia	Printing/October 1, 2003	2000	65 (through 65% ownership by Infomedia)	65 (through 65% ownership by Infomedia)	83,269	103,374
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)	81,798	70,952
PT Administrasi Medika
( Ad Medika ), Jakarta, Indonesia	Heatlh insurance administration service/February 25, 2010	2010		75 (through 75% ownership by Metra)		55,712

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GENERAL (continued)

d. Subsidiaries (continued)

(ii) Indirect subsidiaries: (continued)

	Nature of business/ — date of incorporation	Date of	Percentage of — effective		Total assets
Subsidiary/place of	or acquisition by	commercial	ownership interest		before elimination
incorporation	subsidiary	operation	2009	2010	2009	2010
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)	8,904	8,050
PT Metra-Net (Metra-Net) Jakarta, Indonesia	Multimedia portal
service/April 17, 2009	2009	99 (through 99% ownership by Metra)	100 (through 100% ownership by Metra)		54,563
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)	1,516	445
Telekomunikasi Selular
Finance Limited
( TSFL ), Mauritius	Finance establish
to raise funds
for the development of
Telkomsels 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)	24	22

| (a) |
| --- |
| On February 14, 2006, Telkomsel was granted the International Mobile
Telecommunications-2000 (IMT-2000) or 3 rd Generation technology (3G)
license in 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 49c.i). Telkomsel started its commercial
services for 3G in September 2006. |
| On October 11, 2006, Telkomsels operating licenses were updated by the 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 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)

(a)	Telkomsel (continued)
	This license stipulates the rights and obligations of Telkomsel, including any relevant
sanctions. The license has a perpetual term, which is subject to evaluation on an annual
basis.
	Based on Decision Letter No. 213/DIRJEN/2008 dated August 4, 2008, the Ministry of
Communication and Information Technology through the DGPT granted Telkomsel a principle
license to provide Internet Telephony Services (Voice over Internet Protocol or VoIP)
which provision is subject to an operation acceptance test within one year. Based on
Decision Letter No. 226/DIRJEN/2009 dated September 24, 2009, Telkomsel obtained the
operating license for providing VoIP services in certain areas. The license has a
perpetual term, which is subject to evaluation on an annual basis or every five years.
	Based on Bank Indonesias (BI) letter No. 10/632/DASP dated August 12, 2008, Telkomsel
registered as a Money Remitter with register No. 10/12/DASP/10 dated August 12, 2008 to
provide remittance service.
	Based on Decision Letter No. 268/KEP/M.KOMINFO/9/2009 of the Minister of Communication
and Information Technology dated September 1, 2009, the Government granted Telkomsel an
additional IMT-2000 license in the 2.1 GHz frequency bandwidth for a 10-year period from
the date of the decision letter (Notes 14iii and 49c.i).
(b)	Metra
	On January 25, 2010, Metra entered into a CSPA with Ad Medikas stockholders to purchase
75% of Ad Medikas outstanding shares (Note 4b). Subsequently, on February 25, 2010,
Metra entered into SPA with Ad Medikas stockholders for the share purchase transaction
amounting to Rp.128,250 million.
	On February 2, 2010, based on notarial deed No. 1 of Myra Yuwono, S.H., dated February
2, 2010, Metras stockholders agreed to increase its issued and fully paid capital from
Rp.1,084,179 million to Rp.1,101,179 million by issuing 1,700,000 additional new shares
with a nominal value of Rp.10,000 per share to be issued and fully paid by the Company
for additional paid in capital purpose on the Metra-Net.
	On March 4, 2010, based on notarial deed No. 5 of Myra Yuwono, S.H., dated March 4,
2010, Metras stockholders agreed to increase its issued and fully paid capital from
Rp.1,101,179 million to Rp.1,233,179 million by issuing 13,200,000 additional new shares
with a nominal value of Rp.10,000 per share to be issued and fully paid by the Company
for Ad Medikas acquisition purpose (Note 4b).
	On June 22, 2010, based on notarial deed No. 20 of Myra Yuwono, S.H., dated June 22,
2010, Metras stockholders agreed to increase its issued and fully paid capital from
Rp.1,233,179 million to Rp.1,284,179 million by issuing 5,100,000 additional new shares
with a nominal value of Rp.10,000 per share to be issued and fully paid by the Company
for purpose forming a joint venture with SK Telecom (Note 10a).

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GENERAL (continued)

d. Subsidiaries (continued)

(b)	Metra (continued)
	On August 30, 2010, based on notarial deed No. 59 of Myra Yuwono, S.H., dated August 30,
2010, Metras stockholders agreed to increase its issued and fully paid capital from
Rp.1,284,179 million to Rp.1,327,179 million by issuing 4,300,000 additional new shares
with a nominal value of Rp.10,000 per share to be issued and fully paid by the Company
for additional paid in capital purpose on the Metra-Net.
	On August 31, 2010, based on notarial deed No. 60 of Myra Yuwono, S.H., dated August 31,
2010, Metras stockholders agreed to increase its issued and fully paid capital from
Rp.1,327,179 million to Rp.1,422,901 million by issuing 9,572,206 additional new shares
with a nominal value of Rp.10,000 per share to be issued and fully paid by the Company
for the purpose of exercising 20% put option of Sigmas share owned by PT Sigma Citra
Harmoni (SCH) (Note 3a).
(c)	TII
	On January 11, 2010, TIIs stockholder agreed TIIs participation in South East
Asia-Japan Cable System (SJC) Sea Cable Consortium and Extended Capacity to United
States of America with total investment of US$45.2 million.
(d)	Pramindo
	On July 7, 2009, based on the MoJHRs Decision Letter No. AHU-32154.AH.01.02/2009 to
Pramindo concerning the amendment of Articles of Association regarding the changes of
Pramindos place of incorporation which originally located in Medan to Jakarta.

e.
The consolidated financial statements were authorized for issue by the Board of Directors on
October 28, 2010.

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

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d.	Acquisitions of subsidiaries (continued)
	In July 2004, the Indonesian Financial Accounting Standard Board (Dewan Standar Akuntansi
Keuangan di Indonesia or DSAK) issued PSAK 38 (Revised 2004), Accounting for
Restructuring Transactions between Entities under Common Control (PSAK 38R). Under PSAK
38R, the acquisition of entities under common control is accounted for using book value, in
a manner similar to that of pooling of interests accounting (carryover basis). Any
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 the consolidated statement
of income when the common control relationship has ceased.
	The difference between the consideration paid and the carrying amount of the minority
interest debited is recognized directly in equity and reported as Difference due to
acquisition of minority interest in subsidiary.
e.	Cash and cash equivalents
	Cash and cash equivalents consist of cash on hand and in banks and all unrestricted time
deposits with maturities of not more than three months from the date of placement.
f.	Investments

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f. Investments (continued)

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

| g. |
| --- |
| Trade and other accounts receivable are recorded net of allowance for doubtful accounts
which reviewed individually for collectability. Accounts are written-off against the
allowance during the period in which they are determined to be not collectible. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

g. Trade and other accounts receivable (continued)

| | The allowance for doubtful accounts is the Company and its subsidiaries best estimate of
the probable credit losses in the accounts receivable. The amount of the allowance is
recognized in the consolidated statement of income within operating expenses general and
administrative. The Company and its subsidiaries determine the allowance based on historical
write-off experience. The Company and its subsidiaries review the allowance for doubtful
accounts every month. Past due balances are reviewed individually for collectability.
Account balances are written-off against the allowance after all means of collection have
been exhausted and the potential for recovery is considered remote. |
| --- | --- |
| h. | Inventories |
| | Since January 1, 2009, the Company and its subsidiaries have adopted PSAK 14 (Revised 2008),
Inventories, which became effective for financial statement periods beginning on or after
January 1, 2009 and is applied prospectively. |
| | Inventories consist of components and modules, which are subsequently 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
cost and net realizable value. |
| | Cost is determined using the weighted average method for components, SIM cards, RUIM cards
and prepaid voucher blanks, and the specific-identification method for modules. |
| | The amount of any write-down of inventories below cost to net realizable value and all
losses of inventories is recognized as an expense in the period in which 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, is recognized as a reduction in the amount of inventories
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 |
| | Prepaid expenses are amortized over their future beneficial periods using the straight-line
method. |
| j. | Intangible assets |
| | Intangible assets comprised of intangible assets from subsidiaries 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
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.	Intangible assets (continued)
	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) fees for the next ten years (Notes 45a.ii and 49c.i). The up-front fee is recorded as
an 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 an expense when incurred. Management evaluates its plan to continue to use the
license on an annual basis.
k.	Property, plant and equipment direct acquisitions
	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	20-40
Leasehold improvements	3-7
Switching equipment	5-15
Telegraph, telex and data communication equipment	5-15
Transmission installation and equipment	5-25
Satellite, earth station and equipment	3-20
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

Pursuant to PSAK 16R, starting January 1, 2010, the Company has changed the estimated useful lives of buildings from 20 years to 40 years, Submarine Cable Communication System/Fiber Optic Communication System (included in transmission installation and equipment) from 20 years to 25 years and Antenna and Tower (included in transmission installation and equipment and satellite, earth station and equipment) from 15 years to 20 years. The Company charged the impact of the changes in the estimated useful lives to 2010 consolidated income statements as it is not considered material.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

k.	Property, plant and equipment direct acquisitions (continued)
	The Company and its subsidiaries periodically evaluate its property, plant and equipment for
impairment, whenever events and circumstances indicate that the carrying amount of the
assets may not be recoverable. When the carrying amount of an asset exceeds its estimated
recoverable amount, the asset is written-down to its estimated recoverable amount, which is
determined based upon the greater of its net selling price or value in use.
	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 for
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 cannot 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 is recorded
as part of intangible assets.
	The cost of maintenance and repairs is charged to the consolidated statement 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 until the property is ready for its intended use or
sale, 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 is reclassified into equipment not used in operation and
depreciated over their estimated useful life using straight-line method.
l.	Property, plant and equipment under finance leases
	Since January 1, 2008, the Company and its subsidiaries have 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 as a 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. The cumulative effect was charged to the 2008
consolidated income statements as the impact of the standard to the prior year was
insignificant.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

l.	Property, plant and equipment under finance leases (continued)
	Finance leases are 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 asset.
	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
lease period.
m.	Revenue-Sharing Arrangements (RSA)
	Previously, the Company records assets under RSA as Property, plant and equipment under
RSA and credited the Unearned income on RSA which was presented in the liabilities
section amounted to the cost spent by the investor as agreed in the agreements between the
Company and investor. With the abolition of PSAK 35 (Note 2q.viii), RSA transaction is
recorded in accordance with PSAK 30 (Revised 2007). RSA liabilities under capital lease is
recognized as the substitute of Unearned income on RSA amounted to the estimated present
value of the payment to investors.
	Property, plant and equipment under RSA are depreciated using the straight-line method based
on the estimated useful life of each asset. At the end of the revenue-sharing period, the
property, plant and equipment under RSA is reclassified to the Property, plant and
equipment account.
	All revenues received from RSA is recognized as part of revenues from operating, while part
of revenues provided to the investors is recorded as interest expense and presented as
deduction of RSA liabilities.
n.	Joint Operation Schemes (Kerja Sama Operasi or KSO)
	Revenues from KSO include amortization of unearned initial investor payments, Minimum Telkom
Revenues (MTR) and the Companys share of Distributable KSO Revenues (DKSOR).
	Unearned initial investor payments received are recorded net of all direct costs incurred in
connection with the KSO agreement and are amortized using the straight-line method over the
KSO period of 15 years starting from January 1, 1996.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

n.	KSO (continued)
	MTR are recognized on a monthly basis based on the contracted MTR amount for the current
year.
	The Companys share of DKSOR is recognized on the basis of the Companys percentage share of
the KSO revenues, net of MTR and operational expenses of the KSO Units, as provided in the
KSO agreements.
	Under PSAK 39, Accounting for Joint Operation Schemes, which supersedes paragraph 14 of
PSAK 35, Accounting for Telecommunications Services Revenue, the assets built by the KSO
partners under the KSO were recorded in the books of the KSO partners which operate the
assets and would be transferred to the Company at the end of the KSO period or upon
termination of the KSO agreement.
o.	Deferred charges for land rights
	Costs incurred to process and extend land rights are deferred and amortized using the
straight-line method over the term of the land rights.
p.	Foreign currency translation
	The functional currency of the Company and its subsidiaries is the Indonesian Rupiah and the
accounting records 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:

2009		2010
Buy	Sell	Buy	Sell
United States Dollars (US$) 1	9,660	9,670	8,920	8,930
Euro1	14,135	14,150	12,157	12,175
Yen1	107.98	108.11	107.11	107.27

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q. Revenue and expense recognition

i.	Fixed line telephone revenues
	Revenues from usage charges are recognized as customers incur the charges. Monthly
subscription charges are recognized as revenues when incurred by subscribers.
ii.	Cellular and fixed wireless telephone revenues
	Revenues from postpaid service, which consist of connection fee as well as usage and
monthly charges, are recognized as follows:

| | Airtime and charges for value added services are recognized based on usage by
subscribers. |
| --- | --- |
| | Monthly subscription charges are recognized as revenues when incurred by
subscribers. |

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

| | Sale of SIM and RUIM cards are 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) are 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. |
| | Unutilized promotional credits are netted against unearned income. |

| | Revenues under Universal Service Obligation (USO) arrangement are recognized when
telecommunication access is ready and the services are rendered. |
| --- | --- |
| iii. | Interconnection revenues |
| | With abolition of the rules of interconnection revenue recognition in PSAK 35 (notes
2q.viii) then revenues from network interconnection with other domestic and
international telecommunications carriers are recognized as earned in accordance with
contractual agreements. Interconnection revenues consist of revenues derives from other
operators subscriber call to the Company operators customer (incoming) and calls
between subscriber of other operators through the Companys network (transit). |
| iv. | Data, internet and information technology services revenues |
| | Revenues from data communication and internet are recognized based on usage. |
| | 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 the installation take place. |
| | Revenue from computer software development service is recognized using the percentage of
completion method. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q. Revenue and expense recognition (continued)

v.	Revenues from network
	Revenues from network consist of revenues from leased lines and satellite transponder
leases. Revenues are recognized based on subscription fees as specified in the
agreements.
vi.	Other telecommunications services revenues
	Revenues from other telecommunications services consist of sales of other
telecommunication services or goods. Revenues are recognized upon completion of services
or delivery of goods to customers.
vii.	Expenses
	Expenses are recognized on an accruals basis.
viii.	Implementation of Statement of Financial Accounting Standard Abolition
(Pernyataan Pencabutan Standar Akuntansi Keuangan or PPSAK) 1
	In June 2009, the Financial Accounting Standard Board (DSAK) issued Statement of
Withdrawal of Financial Accounting Standard No. 1. The statement, among other things,
revokes PSAK 35 Accounting for Revenue from Telecommunications Services. The
statement is effective for financial statement with period beginning on or after 1
January 2010 and earlier application is allowed. The Company adopted the statement and
change the presentation of the interconnection revenue from net to gross and change the
recording of Revenue Sharing Arrangement (RSA) transaction by referring to PSAK 30R
Leases (Note 2l).
	Previously, the Company adopted a net basis for presentation of revenue from
interconnection and recorded deferred RSA in accordance with telecommunications industry
practice in Indonesia. As a result of changes, the comparative figures in the
consolidated financial statements have been restated as follow:

restatement		Restatement		restatement
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2009:
Current Liabilities
Trade payables
Related parties	(1,479,657	)	4,501		(1,475,156	)
Third parties	(7,809,197	)	31,832		(7,777,365	)
Current maturities of
long-term liabilities	(8,268,247	)	(88,754	)	(8,357,001	)
Non-Current Liabilities
Unearned income on Revenue-Sharing	(205,727	)	205,727
Obligations under finance leases	(221,308	)	(153,306	)	(374,614	)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q. Revenue and expense recognition (continued)

viii. Implementation of Statement of Financial Accounting Standard Abolition (Pernyataan Pencabutan Standar Akuntansi Keuangan or PPSAK) 1 (continued)

restatement		Restatement		restatement
CONSOLIDATED INCOME
STATEMENT FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, 2009:
Operating Revenues
Telephone
Fixed lines	6,374,364		4,431,570		10,805,934
Cellular	21,041,240		1,362,739		22,403,979
Interconnection	5,740,091		(3,338,660	)	2,401,431
Data, internet and information
technology services	12,428,788		448,898		12,877,686
Network	761,716		133,345		895,061
Revenue-Sharing Arrangements	117,849		(117,849	)
Other telecommunications
services	650,342		128,366		778,708
Operating Expenses
Operations, maintenance and
telecommunication services	(9,883,896	)	(874,091	)	(10,757,987	)
Interconnection			(2,174,318	)	(2,174,318	)

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 the 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. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

r. Employee benefits (continued)

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

| Gains or losses on curtailment are recognized when there is a commitment to make a material
reduction in the number of employees covered by a plan or when there is an amendment of a
defined benefit plan terms such as that a material element of future services to be provided
by current employees will no longer qualify for benefits, or will qualify only for reduced
benefits. |
| --- |
| Gains or losses on settlement are recognized when there is a transaction that eliminates all
further legal or constructive obligation for part or all of the benefits provided under a
defined benefit plan. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

s.	Income tax
	The Company and its subsidiaries recognize deferred tax assets and liabilities for temporary
differences between the financial and tax bases of assets and liabilities at each reporting
date. The Company and its subsidiaries also recognize deferred tax assets resulting from the
recognition of future tax benefits, such as the benefit of tax losses carried 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.
	Deferred tax assets and liabilities are offset in the consolidated balance sheets, except if
these are for different legal entities, in the same manner the current tax assets and
liabilities are presented.
t.	Financial instruments
	In 2006, the DSAK issued PSAK 50 (Revised 2006) Financial Instruments: Presentation and
Disclosures and PSAK 55 (Revised 2006) Financial Instruments: Recognition and
Measurement. These standards amend both PSAK 50 Accounting for Investments in Certain
Securities and PSAK 55 Accounting for Derivative Instruments and Hedging Activities. Both
standards are applicable for financial statements covering periods beginning on or after
January 1, 2010.
	In implementing PSAK 50 (Revised 2006) and PSAK 55 (Revised 2006), the Company classifies
financial instruments into financial assets and financial liabilities.

| i. |
| --- |
| The Company classifies its financial assets in the following categories of (i) financial
assets at fair value through profit and loss, (ii) loans and receivables, (iii)
held-to-maturity financial assets, and (iv) available-for-sale financial assets. The
classification depends on the purpose for which the financials assets were acquired.
Management determines the classification of its financial assets at initial recognition. |

| a. |
| --- |
| Financial assets at fair value through profit or loss are financial assets
classified as held for trading. A financial asset is classified as held for trading
if it is acquired principally for the purpose of selling or repurchasing it in the
near term and for which there is evidence of a recent actual pattern of short term
profit taking. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

t. Financial instruments (continued)

i. Financial assets (continued)

a.	Financial assets at fair value through profit or loss (continued)
	There are no financial assets categorized as held for trading.
b.	Loans and receivables
	Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Loans and receivables are
initially recognized at fair value plus transaction costs and subsequently measured
at amortized cost using the effective interest rate method. Loans and receivables
consist of, among other things, trade receivables, other receivables, other current
financial assets and other non-current financial assets.
c.	Held-to-maturity financial assets
	Held-to-maturity investments are non-derivative financial assets with fixed or
determinable payments and fixed maturities that the Management has the positive
intention and ability to hold to maturity, other than:

| a) | those that the Company upon initial recognition designates as
at fair value through profit or loss; |
| --- | --- |
| b) | those that the Company designates as available for sale; and |
| c) | those that meet the definition of loans and receivables. |

| | These are initially recognized at fair value including transaction costs and
subsequently measured at amortized cost, using the effective interest method. |
| --- | --- |
| | There is no financial assets that classified as held-to-maturity financial assets. |
| d. | Available-for-sale financial assets |
| | Available-for-sale investments are non-derivative financial assets that are intended
to be held for indefinite period of time, which may be sold in response to needs for
liquidity or changes in interest rates, exchange rates or that are not classified as
loans and receivables, held-to maturity investments or financial assets at fair
value through profit or loss. |

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

t. Financial instruments (continued)

i. Financial assets (continued)

| d. |
| --- |
| Available-for-sale financial assets are initial recognized at fair value, plus
transaction costs, and measured subsequently at fair value with gains and losses
being recognized in the consolidated statement of changes in equity, except for
impairment losses and foreign exchange gains and losses, until the financial assets
is derecognized. If an available-for-sale financial asset is determined to be
impaired, the cumulative gain or loss previously recognized in the consolidated
statement of changes in equity is recognized in the consolidated income statement.
However, interest is calculated using the effective interest method, and foreign
currency gains or losses on monetary assets classified as available-for-sale are
recognized in the consolidated income statement. Available-for-sale financial assets
consist of, among other this, temporary investments. |

| ii. |
| --- |
| The Company classified its financial liabilities in the category of (i) financial
liabilities at fair value through profit or loss and (ii) financial liabilities measured
at amortized cost. |

a.	Financial liabilities at fair value through profit or loss
	Financial liabilities at fair value through profit or loss are financial liabilities
classified as held for trading. A financial liability is classified as held for
trading if it is acquired principally for the purpose of selling or repurchasing it
in the near term and for which there is evidence of a recent actual pattern of short
term profit taking.
	There are no financial liabilities categorized as held for trading.
b.	Financial liabilities measured at amortized cost
	Financial liabilities that are not classified as at fair value through profit and
loss fall into this category and are measured at amortized cost. Financial
liabilities measured at amortized cost are among other things, other payables,
accrued expenses, loans and bonds.

| iii. |
| --- |
| The fair value of financial instruments traded in active markets is determined based on
quoted market prices at the consolidated balance sheet date. The quoted market price
used for financial assets held by the Company is the current bid price, while for
financial liabilities it uses ask price. |
| The fair value of financial instruments that are not traded in active markets is
determined by using valuation technique. The Company uses discounted cash flow methods
and makes assumptions that are based on market conditions existing at each consolidated
balance sheet date which are used to determine fair value for the remaining financial
instruments. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

u.	Treasury Stock
	Reacquired Companys stock is accounted for at its reacquisition cost and classified as
Treasury Stock and presented as a deduction to stockholders equity. The cost of treasury
stock sold is accounted for using the weighted average method. The difference resulting from
the cost and the proceeds from the sale of treasury stock is credited to Paid-in Capital.
v.	Dividends
	Dividend distribution to the Companys stockholders is recognized as liability in the
Companys consolidated financial statements in the period in which the dividends are
approved by the Companys stockholders. For interim dividends, the Company recognized them
as liability based on the Board of Directors decision with the approval from the Board of
Commissioners.
w.	Earnings per share and earnings per ADS
	Basic earnings per share are computed by dividing net income by the weighted average number
of shares outstanding during the year. Net income per ADS is computed by multiplying basic
earnings per share by 40, the number of shares represented by each ADS.
x.	Segment information
	The Company and its subsidiaries segment information is presented based upon identified
business segments. A business segment is a distinguishable unit that provides different
products and services and is managed separately. Business segment information is consistent
with operating information routinely reported to the Companys chief operating decision
maker.
y.	Use of estimates
	The preparation of the consolidated financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.
Significant items subject to such estimates and assumptions include the carrying amount of
property, plant and equipment and intangible assets, the valuation allowance for receivables
and obligations related to employee benefits. Actual results could differ from those
estimates. In determining some estimates, management utilizes the work of 3 rd party specialists as required. In using specialists to assist with models and calculations,
management reviews the underlying assumptions and assesses the corresponding calculations
for reasonableness in the context of the circumstances of the Company.

| 3. |
| --- |
| 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.8,925 to US$1 as published by Reuters on September 30, 2010. 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. |

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ACQUISITIONS OF SIGMA AND AD MEDIKA

| a. |
| --- |
| 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 on February 22, 2008
(the closing date). |
| 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. |
| Pursuant to the agreement, SCH, which holds the remaining 20% ownership in Sigma, has a 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. On August 10, 2010, Metra has purchased the minority from SCH. |
| The acquisition of Sigma has been accounted for using the purchase method of accounting,
where the purchase price was allocated to fair value of the acquired assets and assumed
liabilities. The allocation of the acquisition cost was as follows: |


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

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ACQUISITIONS OF SIGMA AND AD MEDIKA (continued)

a.	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).
b.	Acquisition of Ad Medika
	On January 25, 2010, Metra entered into a CSPA with Ad Medikas stockholders to purchase 75%
of Ad Medikas outstanding shares. Subsequently, on February 25, 2010, Metra entered into
Sales Purchase Agreement (SPA) with Ad Medikas stockholders for the share purchase
transaction amounting to Rp.128,250 million (Note 1d.b).
	Ad Medika is an electronic health care network company. Ad Medika is the largest health
service administration management in Indonesia. Through the acquisition, the Company started
to actualize Insure Net as a National e-Heath initial program.
	The acquisition of Ad Medika has been accounted for using the purchase method of accounting,
where the purchase price was 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	26,403
Property, plant and equipments	17,110
Other non-current assets	884
Intangible assets	45,591
Current liabilities	(22,057	)
Long-term liabilities	(8,143	)
Deferred tax liabilities	(10,802	)
Minority interests	(4,145	)
Fair value of net assets acquired	44,841
Goodwill	85,236
Total purchase consideration	130,077
Less:
Cash and cash equivalents in subsidiary acquired	(13,574	)
Cash outflow from acquisition	116,503

Metra acquired control of Ad Medika on February 25, 2010 and the valuation was performed by an independent appraisal using the balance as of February 28, 2010, being the nearest convenient balance sheet date. The Companys consolidated results of operations have included the operating results of Ad Medika since March 1, 2010. The intangible assets customer contracts and backlog, non contractual customer relationship, trademarks and tradenames, and non compete agreement (Note 14).

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CASH AND CASH EQUIVALENTS

Cash on hand	29,548	28,050
Cash in banks
Related parties
Rupiah
PT Bank Mandiri (Persero) Tbk (Bank Mandiri)	248,023	343,598
PT Bank Negara Indonesia (Persero) Tbk (BNI)	211,441	216,964
PT Bank Rakyat Indonesia (Persero) Tbk (BRI)	15,335	9,337
PT Bank Syariah Mandiri (BSM)	189	1,336
PT Bank Tabungan Negara (Persero) Tbk (BTN)	35	581
PT Bank Pos Nusantara	96
	475,119	571,816
Foreign currencies
BNI	32,634	125,679
Bank Mandiri	257,430	98,171
BSM	35	865
BRI	1,032	99
	291,131	224,814
Sub-total	766,250	796,630
Third parties
Rupiah
ABN AMRO Bank (AAB)	90,974	159,183
Deutsche Bank AG (DB)	17,042	22,545
PT Bank Internasional Indonesia Tbk (BII)	95	20,789
PT Bank Permata Tbk (Bank Permata)	195	12,422
PT Bank Central Asia Tbk (BCA)	10,665	8,420
PT Bank CIMB Niaga Tbk (Bank CIMB Niaga)	2,916	8,532
PT Bank Ekonomi Raharja Tbk (Bank Ekonomi)		7,269
PT Bank Bukopin Tbk (Bank Bukopin)	3,440	2,356
PT Bank Perkreditan Rakyat Karyajatnika Sadaya	104	1,045
PT Bank ICB Bumiputera Tbk (Bank Bumiputera)	135	1,026
Others (each below Rp.1 billion)	1,857	3,581
	127,423	247,168

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CASH AND CASH EQUIVALENTS (continued)


Cash in banks (continued)
Third parties (continued)
Foreign currencies
The Hongkong and Shanghai Banking
Corporation Ltd. (HSBC)	12,969	17,310
Deutsche Bank AG (DB)	10,843	9,034
Bank Ekonomi	4,356	8,929
Citibank, N.A. (Citibank)	9,101	8,402
The Bank of Tokyo Mitsubishi UFJ, Ltd	85	2,810
Others (each below Rp.1 billion)	818	1,415
	38,172	47,900
Sub-total	165,595	295,068
Total cash in banks	931,845	1,091,698
Time deposits
Related parties
Rupiah
BRI	350,065	2,087,372
BNI	1,578,404	1,768,405
Bank Mandiri	574,701	1,022,974
BTN	140,000	100,000
BSM	1,000
	2,644,170	4,978,751
Foreign currencies
BNI	779,908	632,981
BRI	518,742	501,046
Bank Mandiri		4,506
	1,298,650	1,138,533
Sub-total	3,942,820	6,117,284
Third parties
Rupiah
PT Bank Indonesia Internasional (BII)	35,000	400,000
PT Bank Pembangunan Daerah Jawa Barat
dan Banten (Bank Jabar)	310,560	365,560
BCA	768,502	309,960
Bank Bukopin	190,455	186,135
PT Bank Mega Tbk (Bank Mega)	45,000	123,500
Bank CIMB Niaga	85,100	80,817
PT Bank Danamon Indonesia Tbk
(Bank Danamon)	35,000	45,000
PT Pan Indonesia Bank Tbk	30,000	40,000
Deutsche Bank AG (DB)	14,200	10,100
PT Bank Tabungan Pensiunan Nasional Tbk	3,000	10,000
PT Bank Yudha Bhakti		5,500
PT Bank Muamalat Indonesia (Bank Muamalat)	112,000
PT Bank Permata Tbk	55,000

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CASH AND CASH EQUIVALENTS (continued)


Time deposits (continued)
Third parties (continued)
Rupiah (continued)
PT Bank Mutiara Tbk	15,000
Others (each below Rp.1 billion)	300
	1,699,117	1,576,572
Foreign currencies
BCA	597,213	113,412
Bank Ekonomi		13,380
Bank Bukopin		893
Bank Muamalat	9,660
HSBC	1,990
	608,863	127,685
Sub-total	2,307,980	1,704,257
Total time deposits	6,250,800	7,821,541
Grand Total	7,212,193	8,941,289

Interest rates per annum on time deposits are as follows:

Rupiah	5.00% - 13,50 %	4.00% - 9.00 %
Foreign currencies	0.05% - 4,75 %	0.05% - 4.00 %

The related parties which the Company and its subsidiaries place their funds are state-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 state.

Refer to Note 45 for details of related party transactions.

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TRADE RECEIVABLES

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

a. By debtor

(i) Related parties

Government Agencies	717,142		1,136,517
CSM	59,438		70,975
Indosat	60,546		47,641
PT Patra Telekomunikasi Indonesia (Patrakom)	18,353		21,640
PT Aplikanusa Lintasarta (Lintasarta)	1,750		12,183
PT Graha Informatika Nusantara (Gratika)	2,462		6,102
PSN	9,525		5,368
Koperasi Pegawai Telkom (Kopegtel)	2,392		3,394
Others (each below Rp.1 billion)	4,821		10,288
Total	876,429		1,314,108
Allowance for doubtful accounts	(124,432	)	(132,248	)
Net	751,997		1,181,860

| | 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	4,108,632		4,312,780
Overseas international carriers	485,664		482,158
Total	4,594,296		4,794,938
Allowance for doubtful accounts	(1,457,400	)	(1,188,308	)
Net	3,136,896		3,606,630

b. By age

(i) Related parties

Up to 6 months	628,398		912,354
7 to 12 months	35,777		183,103
More than 12 months	212,254		218,651
Total	876,429		1,314,108
Allowance for doubtful accounts	(124,432	)	(132,248	)
Net	751,997		1,181,860

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TRADE RECEIVABLES (continued)

b. By age (continued)

(ii) Third parties

Up to 3 months	1,825,272		3,149,500
More than 3 months	2,769,024		1,645,438
Total	4,594,296		4,794,938
Allowance for doubtful accounts	(1,457,400	)	(1,188,308	)
Net	3,136,896		3,606,630

c. By currency

(i) Related parties

Rupiah	848,556		1,286,545
U.S. Dollars	27,873		26,247
Euro			1,316
Total	876,429		1,314,108
Allowance for doubtful accounts	(124,432	)	(132,248	)
Net	751,997		1,181,860

(ii) Third parties

Rupiah	4,000,553		4,112,765
U.S. Dollars	593,731		682,173
Singapore Dollars	12
Total	4,594,296		4,794,938
Allowance for doubtful accounts	(1,457,400	)	(1,188,308	)
Net	3,136,896		3,606,630

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TRADE RECEIVABLES (continued)

d. Movements in the allowance for doubtful accounts

Beginning balance	1,203,905		1,273,550
Additions (Note 37)	422,533		411,575
Bad debts write-off	(44,606	)	(364,569	)
Ending balance	1,581,832		1,320,556

Management believes that the allowance for doubtful accounts is adequate to cover losses on non-collection of the accounts receivable.

Except for the amounts receivable from the Government Agencies, management believes that there were no significant concentrations of credit risk on these receivables. The Company and its subsidiaries do not have any off-balance sheet credit exposures related to their customers.

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

Refer to Note 45 for details of related party transactions.

INVENTORIES

Modules	233,705		268,414
Components	150,513		221,612
SIM cards, RUIM cards and prepaid voucher blanks	127,200		158,847
Total	511,418		648,873
Allowance for obsolescence
Modules	(67,063	)	(72,046	)
Components	(6,468	)	(6,882	)
SIM cards, RUIM cards and prepaid voucher blanks	(10	)	(85	)
Total	(73,541	)	(79,013	)
Net	437,877		569,860

Movements in the allowance for obsolescence are as follows:

Beginning balance	64,849		72,174
Additions (Note 37)	8,851		11,072
Inventories write-off	(159	)	(4,233	)
Ending balance	73,541		79,013

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INVENTORIES (continued)

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

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

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

As of September 30, 2009 and 2010, certain inventories held by the Company have been insured against fire, theft and other specific risks with the total sum insured as of September 30, 2009 and 2010 is amounting to Rp.234,735 million and Rp.128,367 million, respectively (Note 45d.vii).

Certain inventories held by a certain subsidiary have been insured against all industrial risk and loss risk during delivery with the total sum insured as of September 30, 2009 and 2010 amounting to Rp.10,000 million, respectively.

Management believes that the insurance coverage is adequate to cover potential losses of the insured inventories.

PREPAID EXPENSES

Frequency license (Note 49c.iii)	1,817,245	2,514,708
Rental	385,664	468,528
Salaries	375,213	342,554
Insurance	81,337	97,234
Telephone directory issuance costs	10,950	30,624
Others	25,885	87,315
Total	2,696,294	3,540,963

Refer to Note 45 for details of related party transactions.

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OTHER CURRENT ASSETS

Other current assets as of September 30, 2009 and 2010 consists of restricted time deposits as follows:

		2009		2010
		Foreign		Foreign
		currencies	Rupiah	currencies	Rupiah
	Currency	(in millions)	equivalent	(in millions)	equivalent
BNI
The Company	Rp.		22,202
	US$	0.062	606
TII	US$			0.569	5,072
Bank Mandiri
The Company	Rp.		1,934
Metra	Rp.				235
TII	US$	0.569	5,493	0.030	267
Infomedia	Rp.		4,642
BRI
Metra	Rp.				347
Total			34,877		5,921

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 45 for details of related party transactions.

LONG-TERM INVESTMENTS

a. Long-term investments in associated companies

of	Beginning		net (loss)		Translation		Ending
ownership	balance	Addition	income		adjustment		balance
2009:
Patrakom	40.00	32,949		349				33,298
CSM	25.00	84,197		(21,669	)	(2,741	)	59,787
PSN	22.38
		117,146		(21,320	)	(2,741	)	93,085
2010:
Scicom (MSC)
Berhad
(Scicom)	29.71	49,721	64,358					114,079
Melon	51.00		51,000	8				51,008
Patrakom	40.00	36,409		2,079				38,488
CSM	25.00	44,277		(8,282	)	1,389		37,384
PSN	22.38
		130,407	115,358	(6,195	)	1,389		240,959

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LONG-TERM INVESTMENTS (continued)

a. Long-term investments in associated companies (continued)

i.	Scicom
	Scicom is engaged in providing call center services in Malaysia. On February 3, 2010,
TII has purchased additional 3,042,400 Scicom shares with a transaction value amounting
to US$0.42 million (equivalent to Rp.3,905 million), as a result, TIIs ownership in
Scicom increased to 17.01%.
	On May 6, 2010 and June 16, 2010, TII has purchased additional 4,870,000 and 30,000,000
Scicom shares, respectively, with a transaction value amounting to US$0.76 million
(equivalent to Rp.6,897 million) and US$5.79 million (equivalent to Rp.53,556 million),
respectively, as a result, TIIs ownership in Scicom increased to 29.85%.
	On August 11, 2010, based on Circular Meeting of Stockholder of Scicom, Scicoms
stockholder agreed to add its issued and fully paid capital for 1,260,000 shares which
amounted to MYR126,000 million (equivalent to Rp.356 million). As a result of the
addition of Scicom issued and fully paid capital, TIIs ownership in Scicom is diluted
to 29.71%.
ii.	Melon
	On August 16, 2010, Metra established a joint venture with SK Telecom called PT Melon
Indonesia with 51% ownership (Note 1d.b). Melon is engaged in providing Digital Content
Exchange Hub (DCEH). The DCEH is a new type of connection to distribute digital
content such as music file, games and video clip to be able to access by costumers,
online music store and telephone operator cable and cellular.
iii.	Patrakom
	Patrakom is engaged in providing satellite communication system services, related
services and facilities to companies in the petroleum industry.
	As of September 30, 2009 and 2010, the carrying amount of investment in
Patrakom was equal to the Companys share in the net assets of Patrakom.
iv.	CSM
	CSM is engaged in providing Very Small Aperture Terminal (VSAT), network
application services and consulting services on telecommunications technology and
related facilities.
	As of September 30, 2009 and 2010, the carrying amount of the investment
in CSM was equal to the Companys share in the net assets of CSM.
v.	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.

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LONG-TERM INVESTMENTS (continued)

b. Other long-term investments

The details of the investments in shares of stock as of September 30, 2009 and 2010 which are accounted for under the cost method are as follows:

of	Beginning	Translation	Ending
ownership	balance	adjustment	balance
2009:
Bridge Mobile Pte. Ltd. (BMPL)	10.00	20,360		20,360
PT Batam Bintan Telekomunikasi (BBT)	5.00	587		587
PT PembangunanTelekomunikasi Indonesia
(Bangtelindo)	2.11	199		199
Scicom	9.80	30,961	1,131	32,092
		52,107	1,131	53,238
2010:
BMPL	10.00	20,360		20,360
BBT	5.00	587		587
Bangtelindo	2.11	199		199
		21,146		21,146

i.	BMPL
	BMPL (Singapore), an associated entity of Telkomsel, is engaged in providing regional
mobile services in the Asia Pacific region.
	As of September 30, 2009 and 2010, Telkomsels contributions which represent 10%
ownership interest amounted to US$2,200,000 (equivalent to Rp.20,360 million).
ii.	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.
iii.	Bangtelindo
	Bangtelindo is primarily engaged in providing consultancy services on the installation
and maintenance of telecommunications facilities.

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

PROPERTY, PLANT AND EQUIPMENT

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

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

PROPERTY, PLANT AND EQUIPMENT (continued)

2010	of Ad Medika	Additions	Deductions		Reclassifications		2010
At cost:
Direct acquisitions
Land	781,275	8,103	28,740			(13,439	)	804,679
Buildings	2,978,417	6,307	35,081	(701	)	146,275		3,165,379
Leasehold improvements	526,770	32	61,691					588,493
Switching equipment	28,948,306		90,950			1,199,888		30,239,144
Telegraph, telex and data
communication equipment	20,716							20,716
Transmission installation and
equipment	67,228,748		1,579,099	(778,654	)	4,422,156		72,451,349
Satellite, earth station and
equipment	6,795,379		22,777			51,442		6,869,598
Cable network	23,621,586		749,793	(392,321	)	1,476		23,980,534
Power supply	7,368,721		115,903	(4,194	)	496,830		7,977,260
Data processing equipment	7,602,865	1,185	62,264	(71	)	329,709		7,995,952
Other telecommunications
peripherals	476,705		6,250			1,221		484,176
Office equipment	576,098	1,045	41,559	(7,826	)	4,186		615,062
Vehicles	110,216	438	2,442	(751	)			112,345
Other equipment	103,310		3,269			1,391		107,970
Property under construction:
Buildings	89,926		109,842			(157,559	)	42,209
Leasehold improvements	466		73,620					74,086
Switching equipment	48,588		1,151,760			(1,198,867	)	1,481
Transmission installation and
equipment	358,562		4,305,034			(4,428,154	)	235,442
Satellite, earth station and
equipment			60,309			(37,650	)	22,659
Cable network	2,856		5,914			(76	)	8,694
Power supply	52,167		484,374			(498,142	)	38,399
Data processing equipment	16,008		312,134			(315,379	)	12,763
Leased assets
Transmission installation and
equipment	288,766		363			10,801		299,930
Data processing equipment	260,782		10,020			1,246		272,048
Office equipment	247,897		5,134	(175,453	)	(11,931	)	65,647
Vehicles	61,220			(6,968	)			54,252
CPE assets	21,778							21,778
Total	148,588,128	17,110	9,318,322	(1,366,939	)	5,424		156,562,045
Accumulated depreciation and
impairment:
Direct acquisitions
Buildings	1,485,234		66,318	(151	)	(1,695	)	1,549,706
Leasehold improvements	381,536		44,769			381		426,686
Switching equipment	18,425,673		2,141,968			(8,558	)	20,559,083
Telegraph, telex and data
communication equipment	17,391		329					17,720
Transmission installation
and equipment	24,794,959		4,674,966	(775,746	)	(4,409	)	28,689,770
Satellite, earth station and
equipment	3,136,685		359,758			(5,693	)	3,490,750
Cable network	14,688,600		905,349	(392,321	)	(20,022	)	15,181,606
Power supply	2,932,127		715,197	(1,316	)	(1,585	)	3,644,423
Data processing equipment	5,094,420		768,934	(71	)	23,219		5,886,502
Other telecommunications
peripherals	351,875		10,853			(387	)	362,341
Office equipment	465,291		31,524	(7,591	)	6,139		495,363
Vehicles	94,693		4,136	(527	)	28		98,330
Other equipment	87,228		3,978			723		91,929
Leased assets
Transmission installation and
equipment	227,193		15,477			2,439		245,109
Data processing equipment	116,540		40,984			4,722		162,246
Office equipment	201,039		25,938	(175,453	)	(3,991	)	47,533
Vehicles	29,133		12,417	(4,382	)			37,168
CPE assets	4,545		1,704					6,249
Total	72,534,162		9,824,599	(1,357,558	)	(8,689	)	80,992,514
Net Book Value	76,053,966							75,569,531

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

PROPERTY, PLANT AND EQUIPMENT (continued)

a. (Losses) gains on disposal or sale of property, plant and equipment

Proceeds from sale of property, plant and equipment	6,088		8,768
Net book value	(3,486	)	(9,381	)
(Losses) gains on disposal or sale of property,
plant and equipment	2,602		(613	)

b. KSO assets ownership arrangements

| (i) | In accordance with the amended and restated KSO VII agreement with PT Bukaka
Singtel International (BSI), the ownership rights to the acquired property, plant and
equipment in KSO VII are legally retained by BSI until the end of the KSO period which
is on December 31, 2010. As of September 30, 2009 and 2010, the net book value of these
property, plant and equipment was Rp.845,093 million and Rp.735,882 million,
respectively. |
| --- | --- |
| (ii) | In accordance with the amended and restated KSO IV agreement with PT Mitra
Global Telekomunikasi Indonesia (MGTI), the ownership rights to the acquired
property, plant and equipment in KSO IV are legally retained by MGTI until the end of
the KSO period which is on December 31, 2010. As of September 30, 2009 and 2010, the
net book value of this property, plant and equipment was Rp.304,703 million and
Rp.182,122 million, respectively. |

c. Assets impairment and related claims

| (i) | As of September 30, 2009 and 2010, the Company operated two satellites,
Telkom-1 and Telkom-2 primarily providing backbone transmission links for its network
and earth station satellite up-linking and down-linking services to domestic and
international users. As of September 30, 2010, there were no events or changes in
circumstances that would indicate that the carrying amount of the Companys satellites
may not be recoverable. |
| --- | --- |
| (ii) | On April 7, 2010, Nangroe Aceh Darussalam and its surrounding, area of West
Customer Service Division (CSD) Sumatera Regional experienced an earthquake from
which insurance claim for the replacement of the assets has been made. Buildings and
other equipments affected by the earthquake have been re-operated gradually since
April 2010. |
| (iii) | On June 16, 2010, Irian Jaya Islands and its surrounding, area of East CSD
East Indonesian Regional experienced an earthquake from which insurance claim for the
replacement of the assets has been made. Buildings and other equipments affected by the
earthquake have been re-operated gradually since June 2010. |

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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
nine months period ended September 30, 2009 and 2010, respectively. |
| --- | --- |
| (ii) | Foreign exchange loss capitalized as part of property under construction
amounted to Rp.nil for the nine months period ended September 30, 2009 and 2010,
respectively. |
| (iii) | In 2009, certain Telkomsels software and equipment (part of infrastructure
and supporting facilities) with a net carrying amount of Rp.1,163,657 million were
planned to be used until 2011, hence the depreciation of the assets is accelerated
until 2011. The accumulative effect of accelerated depreciation is Rp.276,526 million,
Rp.248,874 million of which charged to the current period consolidated statement of
income. |
| (iv) | In 2009, the useful life of certain Telkomsels equipment (part of supporting
facilities) was changed from 10 years to 5 years to reflect its current economic life.
The cumulative effect of accelerated depreciation is Rp.252,242 million, Rp.169,953
million of which charged was charged to the current period consolidated statement of
income. |
| (v) | In 2008, certain Telkomsels equipment (part of infrastructure) with a net
carrying amount of Rp.352,862 million and for which the useful life was previously
expected to be beyond 2010, would only be used until 2010. Moreover, due to recent
technological development, those equipment were only used until December 31,
2009.Hence the equipments were depreciated up to this date. Subsequently, those
equipment with a cost of Rp.774,046 million were written off. The accelerated
depreciation expense of Rp.16,985 million was charged to 2009 consolidated of income. |
| (vi) | The Company and its subsidiaries own several pieces of land located
throughout Indonesia with Building Use Rights (Hak Guna Bangunan or HGB) for a
period of 15-45 years, which will expire between 2010 and 2052. Management believes
that there will be no difficulty in obtaining the extension of the land rights when
they expire. |
| (vii) | The Company was granted the right to use certain parcels of land by the
Ministry of Communications and Information Technology of the Republic of Indonesia
(formerly Ministry of Tourism, Post and Telecommunications) where they were 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 September 30, 2010, the Company and its subsidiaries property, plant and
equipment except for land, were insured with PT Asuransi Jasa Indonesia (Jasindo), PT
Asuransi Ramayana Tbk, PT Sarana Janesia Utama, PT Asuransi Wahana Tata, PT Asuransi
Ekspor Indonesia, PT Asuransi Central Asia, PT Asuransi Sinar Mas, PT Asuransi Allianz
Utama Indonesia, HSBC Insurance (Singapore) Pte, Ltd, PT Asuransi Astra Buana and PT
Asuransi Mitra Maparya, against fire, theft, earthquake and other specified risks.
Total cost of assets being insured amounted to Rp.73,217,436 million and US$6.80
million, which was covered by sum insured basis with a maximum loss claim of Rp.773,408
million, US$14.43 million, Euro0.22 million and SGD6.42 million and on first loss basis
of Rp.6,219,144 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$22.91 million and US$43 million, respectively. Management believes
that the insurance coverage is adequate to cover potential losses of the insured
assets. |
| --- | --- |
| (ix) | As of September 30, 2010, the completion of assets under construction was
around 76.02% of the total contract value, with estimated dates of completion between
December 2010 and December 2011. Management believes that there is no impediment to the
completion of the construction in progress. |
| (x) | Certain property, plant and equipment of the Companys subsidiaries have been
pledged as collateral for lending agreements (Notes 19 and 23). |
| (xi) | The Company and its subsidiaries have lease commitments for property, plant and
equipments under RSA (Note 12), transmission installation and equipment, data
processing equipment, office equipment, vehicles and CPE assets, with the option to
purchase certain leased assets at the end of the lease terms. Future minimum lease
payments for assets under finance leases as of September 30, 2009 and
2010 are as follows: |

Year — 2009	318,302
2010	229,822		292,892
2011	166,118		203,364
2012	42,812		145,884
2013	5,303		112,539
2014	138		25,938
Later			61,056
Total minimum lease payments	762,495		841,673
Interest	(126,271	)	(221,382	)
Net present value of minimum lease payments	636,224		620,291
Current maturities (Note 20a)	(261,610	)	(199,747	)
Long-term portion (Note 20b)	374,614		420,544

as restated, refer to Note 2q

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

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

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

2010	Additions	Reclassifications		2010
At cost:
Land	1,267				1,267
Switching equipment	92,990		(8,976	)	84,014
Transmission installation and
equipment	43,383		(15,682	)	27,701
Cable network	406,570		(9,050	)	397,520
Other telecommunications
peripherals	3,638		(50	)	3,588
Total	547,848		(33,758	)	514,090
Accumulated depreciation:
Land	981	48			1,029
Switching equipment	29,759	5,398	(7,061	)	28,096
Transmission installation and
equipment	26,396	4,310	(10,135	)	20,571
Cable network	122,085	27,916	(5,088	)	144,913
Other telecommunications
peripherals	2,696	188	(50	)	2,834
Total	181,917	37,860	(22,334	)	197,443
Net Book Value	365,931				316,647

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

ADVANCES AND OTHER NON-CURRENT ASSETS

Advances and other non-current assets as of September 30, 2009 and 2010 consist of:

Advances for purchase of property, plant and equipment	887,923	1,412,345
Prepaid rent net of current portion (Note 8)	921,668	1,074,289
Deferred RSA charges		218,209
Deferred Indefeasible Right of Use (IRU) Agreement charges	159,886	134,225
Restricted cash	214,187	98,656
Deferred land rights charges	63,580	57,519
Security deposits	42,516	35,511
Equipment not used in operations net	35,747	29,805
Others	21,701	18,761
Total	2,347,208	3,079,320

Deferred RSA charges is an additional liabilities to RSA inventors in relation with extension of concession period, and is amortized over RSA period.

As of September 30, 2009 and 2010, restricted cash represent cash received from the Government relating to compensation for early termination of exclusive rights to be used for the construction of certain infrastructures (Notes 1a and 29) and time deposits with original maturities of more than one year pledged as collateral for bank guarantees.

Deferred land rights charges represent costs to extend the contractual life of the land rights which have been deferred and amortized over the contractual life (Note 11d.vi). As of September 30, 2009 and 2010, IRU and deferred land right amortization expense amounted to Rp.14,101 million and Rp.49,926 million, respectively.

As of September 30, 2009 and 2010, 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 expense charged to the consolidated statements of income for nine months period ended September 30, 2009 and 2010 amounted to Rp.23,460 million and Rp.227 million, respectively.

Refer to Note 45 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 nine months period ended September 30, 2009 and 2010 are as follows:


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


		intangible
	Goodwill	assets		License		Total
Gross carrying amount:
Balance, December 31, 2009	106,544		9,085,534		806,861		9,998,939
Additions			596,078		15,973		612,051
Acquisitions of Ad Medika	85,236		45,591				130,827
Reclassification	2,343		(11,882	)			(9,539	)
Balance, September 30, 2010	194,123		9,715,321		822,834		10,732,278
Accumulated amortization:
Balance, December 31, 2009	(21,373	)	(7,385,950	)	(163,336	)	(7,570,659	)
Amortization expense for nine months
period	(6,322	)	(1,059,821	)	(64,242	)	(1,130,385	)
Reclassifications	11,997		(3,782	)			8,215
Balance, September 30, 2010	(15,698	)	(8,449,553	)	(227,578	)	(8,692,829	)
Net Book Value	178,425		1,265,768		595,256		2,039,449
Weighted-average amortization period	20.00 years	6.23 years		9.80 years

| (ii) | Goodwill resulted from the acquisition of Sigma in 2008 (Note 4a), Indonusa in 2008 and
the acquisition of Ad Medika in 2010 (Note 4b). Starting January 1, 2009, the Company has
changed the estimated useful lives of goodwill from 5 years to 20 years (Note 2d). The
Company charged the impact of the changes in the estimated useful lives to 2009
consolidated statement of income. 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. In 2009, Telkomsel obtained an additional 3G license of Rp.320,000 million
which is recorded as an intangible assets and amortized over 10 years (Notes 1d.a, 2j,
45a.ii and 49c.i). |

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GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

| (iv) | In 2009, the Company was granted a switched based local network provider license using
2.3 GHz radio frequency bandwidth for wireless broadband services. The up-front fee is
recorded as an intangible assets and amortized over the licenses useful life of 10 years. |
| --- | --- |
| (v) | Starting January 1, 2009, the Company has changed the estimated useful lives of
software from 5-10 years to 3-5 years. The Company charged the impact of the changes in the
estimated useful lives to 2009 consolidated statement of income. Telkomsels software is
amortized over 3 and 5 years. |
| (vi) | The estimated annual amortization expense relating to other intangible assets for each
year beginning from October 1, 2010 is approximately Rp.940,733 million per year. |

15.
Escrow accounts as of September 30, 2009 and 2010 consist of the following:

Bank Mandiri	44,937	41,129
Bank Danamon	1,191	2
BII	108	109
	46,236	41,240

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 49c.ii).

The escrow account with Bank Danamon and BII were established in relation with the RSA in telecommunications equipment in Divre VII East Indonesia.

Refer to Note 45 for details of related party transactions.

TRADE PAYABLES


Related parties
Concession fees	1,217,561	1,121,277
Purchases of equipment, materials and services	153,365	407,300
Payables to other telecommunications providers	104,230	179,840
Sub-total	1,475,156	1,708,417
Third parties
Purchases of equipment, materials and services	7,650,149	6,805,700
Payables to other telecommunications providers	66,275	70,515
Payables related to RSA	60,941	7,437
Sub-total	7,777,365	6,883,652
Total	9,252,521	8,592,069

as restated, refer to Note 2q

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16.
Trade payables by currency are as follows:

Rupiah	4,195,176	4,639,674
U.S. Dollars	4,560,807	3,894,480
Euro	463,452	39,975
Singapore Dollars	32,741	15,705
Others	345	2,235
Total	9,252,521	8,592,069

as restated, refer to Note 2q

Refer to Note 45 for details of related party transactions.

ACCRUED EXPENSES

Operations, maintenance and telecommunications services	1,231,883	1,870,653
Salaries and benefits	739,265	737,571
General, administrative and marketing	580,132	616,086
Interest and bank charges	345,382	277,028
Total	2,896,662	3,501,338

Refer to Note 45 for details of related party transactions.

UNEARNED INCOME

Prepaid pulse reload vouchers	2,605,106	2,360,400
Other telecommunications services	3,203	96,846
Others	94,777	102,997
Total	2,703,086	2,560,243

SHORT-TERM BANK LOANS

Bank Ekonomi	11,000	6,105
Bank CIMB Niaga	16,800	40,079
PT Bank Syariah Mandiri (BSM)	8,000	8,000
Total	35,800	54,184

Refer to Note 45 for details of related party transactions.

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SHORT-TERM BANK LOANS

| a. |
| --- |
| On December 2, 2008, Sigma entered into a Rp.5,500 million short-term loan agreement with
Bank Ekonomi for working capital purpose. The loan bore a floating interest rate from 12.50%
per annum to 15.50% per annum and repayable within 12 months from the signing date to
December 2, 2009. This facility was secured by Sigmas trade receivables (Note 6). As of
September 30, 2009 the principal outstanding amounted to Rp.4,000 million and on October 9,
2009 the loan was fully repaid. |
| On February 11, 2009, Sigma entered into a US$550,000 short-term loan agreement with Bank
Ekonomi for working capital purpose. The loan bears interest rate of 6% per annum and is
repayable within 3 months from the signing date to June 23, 2010. The agreement is extended
up to June 13, 2011. This facility is secured by Sigmas trade receivables (Note 6). As of
September 30, 2010, the facilities did not utilized. |
| On August 7, 2009, Sigma entered into a Rp.35,000 million short-term loan agreement with
Bank Ekonomi for working capital purpose. The loan bears a floating interest rate from
12.50% per annum to 13.50% per annum and is repayable within 12 months from the signing date
to July 1, 2010. The agreement is extended up to October 1, 2010. The principal outstanding
as of September 30, 2009 and 2010 amounted to Rp.7,000 million and Rp.6,105 million,
respectively. |

b. Bank CIMB Niaga

| (i) |
| --- |
| 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. On May 24,
2010, based on the latest amendment, the credit facility, interest rate and maturity
date is changed to Rp.5,000 million, 14% per annum and May 29, 2011 for Specific
Transaction Facility, respectively, and Rp.500 million, 12.75% per annum and May 29,
2011 for Bank Overdraft Facility. The principal outstanding as of September 30, 2009
amounted to Rp.5,000 million and Rp.nil, respectively, and the principal outstanding as
of September 30, 2010 amounted to Rp.5,000 million and Rp.nil, respectively |
| The facilities are secured by Balebats property, plant and equipment (Note 11),
inventories (Note 7) and receivables (Note 6). |

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SHORT-TERM BANK LOANS (continued)

b. Bank CIMB Niaga (continued)

| (ii) | On October 18, 2005, GSD entered into a Rp.12,000 million short-term loan
agreements with Bank CIMB Niaga. The credit facility has been amended several times.
Based on the latest amendment on July 28, 2010, the total facility, interest rate, and
maturity date is changed to Rp.19,000 million, 10.25% per annum, and October 18, 2010,
respectively. The principal outstanding as of September 30, 2009 and 2010 amounted to
Rp.nil and Rp.10,000 million, respectively. |
| --- | --- |
| | This credit facility is secured by GSDs property, plant and equipment (Note 11). |
| (iii) | On May 14, 2010, Infomedia entered into a Rp.28,000 million short-term loan
agreement with Bank CIMB Niaga for investment funding. The loan bears a floating
interest rate of 12.50% per annum and will be repaid on its maturities. The facility is
secured by Infomedias property, plant and equipment (Note 11). The principal
outstanding as of September 30, 2010 amounted to Rp.15,807 million. |

c. BSM

| (i) | On August 20, 2009, Balebat entered into a Rp.15,000 million revolving credit
facility with BSM for working capital purpose. The facility is obtained through sharia
principles with the estimated rates on borrowing at 15.30% per annum and is secured by
certain property, plant and equipment (Note 11), receivables (Note 6), inventories
(Note 7), insurance and letter of comfort. The loan will mature on August 20, 2010. On
August 2, 2010, the agreement is extended up to October 2, 2010. The principal
outstanding as of September 30, 2009 and 2010 amounted to Rp.8,000 million and Rp.1,000
million, respectively . |
| --- | --- |
| (ii) | On September 1, 2010, Balebat entered into a Rp.15,000 million revolving credit
facility with BSM for working capital purpose. The facility is obtained through sharia
principles with the estimated rates on borrowing at 14% per annum and will be repaid at
its maturities. The facility is secured by Balebats property, plant and equipment
(Note 11), receivables (Note 6), inventories (Note 7). The principal outstanding as of
September 30, 2010 amounted to Rp.7,000 million. |

MATURITIES OF LONG-TERM LIABILITIES

a. Current maturities

Bank loans	23	6,432,094	5,383,057
Deferred consideration for business combinations	24	1,200,948	412,994
Two-step loans	21	459,349	390,095
Obligations under finance leases	11	261,610	199,747
Notes	22	3,000	61,941
Total		8,357,001	6,447,834

as restated, refer to Note 2q

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MATURITIES OF LONG-TERM LIABILITIES (continued)

b. Long-term portion

Notes	Total	2011	2012	2013	2014	Later
Bank loans	23	10,256.0	362.6	3,583.7	3,569.3	2,263.0	477.4
Bonds	22	2,991.0					2,991.0
Two-step loans	21	2,768.1	70.9	393.0	318.3	320.8	1,665.1
Obligations under finance leases	11	420.5	147.6	112.4	95.0	17.7	47.8
Notes	22	175.4	15.8	102.1	27.5	30.0
Total		16,611.0	596.9	4,191.2	4,010.1	2,631.5	5,181.3

TWO-STEP LOANS

Two-step loans are unsecured loans obtained by the Government from overseas banks, which are then re-loaned to the Company. The loans entered into up to July 1994 were recorded and payable in Rupiah based on the exchange rate at the date of drawdown. Loans entered into after July 1994 are payable in their original currencies and any resulting foreign exchange gain or loss is borne by the Company.

The details of two-step loans obtained from overseas banks as of September 30, 2009 and 2010 are as follows:

Currencies	Interest rate — 2009	2010	Outstanding — 2009	2010
U.S. Dollars	4.00% - 6.67 %	4.00% - 6.67 %	1,350,341		1,078,375
Rupiah	9.65% - 11.39 %	7.57% - 7.65 %	1,079,144		885,418
Japanese Yen	3.10 %	3.10 %	1,286,770		1,194,399
Total			3,716,255		3,158,192
Current maturities (Note 20a)			(459,349	)	(390,095	)
Long-term portion (Note 20b)			3,256,906		2,768,097

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 or 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 or the floating interest rate offered by the lenders, plus 0.5% per annum.

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

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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 September 30, 2010, the Company complied with the above mentioned ratios.

Refer to Note 45 for details of related party transactions.

BONDS AND NOTES

Bonds			2,990,959
Medium-term Notes (MTN)
Metra	30,000		47,000
Sigma			30,000
Finnet			24,600
Supplier financing
PT. ZTE Indonesia (ZTE)			33,678
PT Huawei Tech Investment (Huawei Tech)			102,122
Total	30,000		3,228,359
Current maturities (Note 20a)	(3,000	)	(61,941	)
Long-term portion (Note 20b)	27,000		3,166,418

a. Bonds

On June 7, 2010, the Company held a public expose for public offering of Telkoms Bond II Year 2010, with total principle maximum of Rp.3,000,000 million. The Bonds consist of 2 series:

Series A Bond : was issued at par value and have a term of five years. The bond bears interest at a fixed rate of 9.60% per annum, payable quarterly beginning on October 6, 2010. Series A bond will mature at July 6, 2015.

Series B Bond : was issued at par value and have a term of ten years. The bond bears interest at a fixed rate of 10.20% per annum, payable quarterly beginning on October 6, 2010. Series B bond will mature at July 6, 2020.

The bonds are secured by all assets owned by the Company. The bonds are traded in IDX. The trustees of the bonds are PT Bahana Securities, PT Danareksa Sekuritas and PT Mandiri Sekuritas. And the custodian is PT CIMB Niaga Tbk.

The Company received the proceeds of the issuance of bonds on July 6, 2010.

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BONDS AND NOTES

a. Bonds (continued)

The Fund received from bonds public offering net of issuance costs, will be used to increase capital expenditure which consists of: Wave broadband (bandwidth, offswitching, datacom, information technology and others), Infrastructure (backbone, metro, regional metro junction, internet protocol, and satellite system), and Optimizing Legacy and Supporting Facilities (fixed wireline and wireless).

As of September 30, 2010, the rating for the bonds issued by PT Pemeringkat Efek Indonesia (Pefindo) is idAAA ( stable outlook ).

As of September 30, 2010, the outstanding principle amount of the bond and the unamortized bond issuance costs are as follows:

Principal	3,000,000
Bond issuance costs	(9,041	)
Net	2,990,959

Based on indenture trusts agreement, the Company is required to comply with all covenants or restrictions including maintaining financial ratios as follows:

1.	Debt to equity ratio should not exceed 2:1.
2.	EBITDA to interest expenses ratio should not less than 5:1.
3.	Debt service coverage is 125%

As of September 30, 2010, the Company complied with the above mentioned ratios.

b. MTN Metra

On June 9, 2009, Metra entered into an agreement with PT Bahana Securities (Bahana Securities) (acting as Arranger) and Bank Mega (acting as Trustee) to issue Medium Term Notes (MTN) for a total principal amount of Rp.50,000 million. PT Kustodian Sentral Efek Indonesia (KSEI) acting as Collecting Agent and Custodian. Proceeds from issuance of MTN were used to expand the business and as working capital.

MTN are scheduled to be issued in a maximum of 4 (four) phases to a maximum of Rp.50,000 million. Each phase will be at longest 3 (three) years from the issuance date. The first phase which was issued for Rp.30,000 million, will mature on June 19, 2012.

On February 1, 2010, Metra issued the second phase of MTN amounted to Rp.20,000 million, which will mature on February 2, 2013.

Interest on MTN is payable quarterly beginning from the Issuance Date, through the Due Date. The MTN bear floating interest rates, for the first year of 15,05%, for the second and third years of average return (yield) of 3 (three) Government Bonds (Surat Utang Negara or SUN) with a remaining period of time equal to the second and third years of MTN plus 4.02% premium. Repayment of the principal for each 10%, 20% and 70% on the first, second and third anniversary of the Issuance Date, respectively.

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BONDS AND NOTES (continued)

b. MTN Metra (continued)

The first interest for second phase MTN is set together by the Issuer and Arranger at 12.01% which will be paid on May 2, 2010, while for the second and forward will be set by the Trustee with considering the requirement stated in the main agreement.

Metra secures with a minimum value of 40% of the outstanding MTN principal. The maximum value of 60% of the outstanding MTN principal is unsecured and at all times ranked (pari passu) with other unsecured debts of Metra. Metra may buy back all or part of the MTN at any time before the maturity date of the MTN.

Based on the agreements, Metra is required to comply with all covenants or restrictions including maintaining financial ratios as follows:

1.	Debt to Equity maximum 1.5:1
2.	EBITDA to Interest Ratio minimum 2.5.

As of September 30, 2010, Metra complied with the above mentioned ratios.

c. MTN Sigma

On October 16, 2009, Sigma entered into an agreement with Bahana Securities (acting as Arranger) and Bank Mega (acting as Trustee) to issue MTN for a total principal amount of Rp.30,000 million. KSEI acting as Collecting Agent and Custodian. Proceeds from issuance of MTN were used to expand the business.

MTN are scheduled to be issued in 1 (one) phase with limited placement for a maximum amount of Rp.30,000 million with repayment at the latest in 5 (five) years after the Issuance Date, which will mature on November 17, 2014.

Interest on MTN is payable semi-annually beginning from the Issuance Date, through the Due Date. The MTN bear interest rates, for the first year of 14.5% from the Issuance Date, for the second up to the fifth years from the Issuance Date based upon the average interest rate on one-month SBI plus 800 basis points premium, calculated on the basis of the average interest rates of one-month SBI in the last 6 months at the time of the determination of the interest of MTN.

MTN are not secured by a specific collateral, but secured by all Sigmas assets which are movable property or fixed property, either existing or in the future will become collateral for MTN holders and at all times ranked (pari passu) without any preference with other creditor previleges in accordance with prevailing regulations.

Based on the agreements, Sigma is required to comply with all covenants or restrictions including maintaining financial ratios as follows:

1.	Debt to Equity maximum 2.5:1
2	Funded debt and maximum of five times EBITDA in 2009, three and a half times in
2010 and two and a half times in 2011.

As of September 30, 2010, Sigma complied with the above mentioned ratios.

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BONDS AND NOTES (continued)

d. MTN Finnet

On October 16, 2009, Finnet entered into an agreement with Bahana Securities (acting as Arranger) and Bank Mega (acting as Trustee) to issue MTN for a total principal amount of Rp.25,000 million. KSEI acting as Collecting Agent and Custodian. Proceeds from issuance of MTN were used for the investment of hardware and software, project development and bridging loan payments for projects.

MTN are scheduled to be issued in a maximum of 2 (two) phases with limited placement for a maximum amount of Rp.25,000 million with issuance at the latest in 17 (seventeen) months from the MTN Issuance Date of the first phase. The first phase, which was issued for Rp.10,000 million, will mature on November 17, 2012. Repayment of the principal are 1% each month on the 7 th until 12 th month, 2% each month on the 13 th until 35 th month, and the remaining 48% will be paid on November 17, 2012.

On March 18, 2010, Finnet issued the second phase of MTN amounted to Rp.15,000 million which will mature on March 24, 2013.

Interest on MTN were payable monthly beginning from the Issuance Date, through the Due Date. The MTN bear interest rates of 16.25% per annum.

MTN are not secured by a specific collateral, but secured by all Finnets assets which are movable property or fixed property, either existing or in the future will become collateral for MTN holders and at all times ranked (pari passu) without any preference with other Finnets creditor previleges in accordance with prevailing regulations. Finnet may buy back all or part of the MTN at any time before the maturity date of the MTN.

Based on the agreements, Finnet is required to comply with all covenants or restrictions including maintaining financial ratio as follows:

1.	Debt to Equity maximum 2.5:1
2.	EBITDA to Interest Ratio minimum 2.5.

As of September 30, 2010, Finnet complied with the above mentioned ratios.

e. Supplier Financing ZTE

On December 10, 2009, the Company entered into a supplier financing agreement with ZTE. The unsecured facility covered 85% of Hand Over Report (Berita Acara Serah Terima or BAST) I Procurement and Installation MSAN ALU and Secondary Access Batch 2.

The facility bear a fixed interest rate six-month London Interbank Offered Rate (LIBOR) plus 2.5% per annum (US$) which is payable in 5 semi-annual installment commencing in December 2009. The principal outstanding as of September 30, 2010 amounted to US$3.77 million (equivalent to Rp.33,678 million).

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BONDS AND NOTES (continued)

f. Supplier Financing Huawei Tech

On March 19, 2010, the Company entered into a supplier financing agreement with Huawei Tech. The unsecured facility covered 85% of Hand Over Report (Berita Acara Serah Terima or BAST) I Procurement and Installation Softswitch and Modernization MSAN Divre I and Divre IV.

The facility bear a fixed interest rate six-month London Interbank Offered Rate (LIBOR) plus 2.5% per annum (US$) which is payable in 5 semi-annual installment commencing in September 2010. The principal outstanding as of September 30, 2010 amounted to US$11.43 million (equivalent to Rp.102,122 million).

BANK LOANS

The details of long-term bank loans as of September 30, 2009 and 2010 are as follows:

			2009
			Outstanding		Outstanding
		2010	Original		Original
		Total facility	currency	Rupiah	currency	Rupiah
Lenders	Currency	(in millions)	(in millions)	equivalent	(in millions)	equivalent
The Export-Import Bank of Korea
(Korea Eximbank)	US$	124	47	454,759	24	209,979
Bank Mandiri	Rp.	7,550,000		3,480,000		3,075,556
BCA	Rp.	5,500,000		2,700,000		2,755,556
Citibank	Rp.	500,000		300,000		100,000
BNI	Rp.	4,000,000		1,800,000		1,150,000
Bank CIMB Niaga	Rp.	38,096		26,198		22,501
Bank Bukopin	Rp.	5,300		1,191		76
BRI	Rp.	4,200,000		2,680,000		1,222,000
Bank Ekonomi	Rp.	115,000		71,044		85,668
Syndication of banks	Rp.	5,100,000		5,100,000		4,500,000
PT ANZ Panin Bank (ANZ Panin)	Rp.	1,000,000		1,000,000		777,778
BII	Rp.	500,000		500,000		388,889
PT Bank OCBC Indonesia
(OCBC Indonesia)	Rp.	200,000				200,000
PT Bank OCBC NISP Tbk (formerly
PT Bank NISP Tbk) (OCBC NISP)	Rp.	500,000				500,000
ABN Amro Bank N.V., Hong Kong
(AAB Hong Kong)	US$	318
Industrial and Commercial Bank of
China Limited (ICBC)	US$	250
Bank of China (BoC)	US$	100			16	146,043
Finnish Export Credit Ltd	US$	250
Japan Bank for International
Cooperation (JBIC)	US$	60			60	534,807
BTN	Rp.	9,500				7,567
PT Bank Index Selindo (Bank Index)	Rp.	590				590
Total				18,113,192		15,677,010
Unamortized debt issue cost						(37,975	)
				18,113,192		15,639,035
Current maturities of bank loans
(Note 20a)				(6,432,094	)	(5,383,057	)
Long-term portion (Note 20b)				11,681,098		10,255,978

Refer to Note 45 for details of related party transactions.

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BANK LOANS (continued)

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

b. Bank Mandiri

| (i) | On 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 Jakarta Interbank Offered Rate (JIBOR)
plus 1.25% per annum which becomes due quarterly in arrears and is unsecured. On July
24, 2007, the loan agreement was amended with addition of total facilities provided
amounted to Rp.200,000 million. The principal outstanding as of September 30, 2009
amounted to Rp.140,000 million and on January 30, 2010, the loan was fully repaid. |
| --- | --- |
| (ii) | On October 24, 2007, Telkomsel signed a medium-term facility loan agreement
with Bank Mandiri of Rp.750,000 million. This facility is payable in 5 equal
semi-annual installments commencing 6 months after the end of the availability period.
The loan bears a floating interest rate of three-month JIBOR plus 1.17% per annum which
becomes due quarterly in arrears and is unsecured. The principal outstanding as of
September 30, 2009 amounted to Rp.300,000 million and on April 30, 2010, the loan was
fully repaid. |
| (iii) | 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 drawdown from the facility and the remaining Rp.300,000 million was drawdown
by Telkomsel on January 30, 2009. This facility is payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears a floating interest rate of one-month JIBOR plus 2.25% per annum which becomes
due monthly in arrears and is unsecured. The principal outstanding as of September 30,
2009 and 2010 amounted to Rp.1,040,000 million and Rp.520,000 million, respectively. |
| (iv) | On July 3, 2009, Telkomsel signed a medium-term facility loan agreements with
Bank Mandiri of Rp.2,000,000 million. This facility is payable in 9 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears average interest rate of three-month JIBOR plus 3.25% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2009 and 2010 amounted to Rp.2,000,000 million and Rp.1,555,556 million, respectively. |
| (v) | On July 5, 2010, Telkomsel signed a medium-term facility loan agreements with
Bank Mandiri of Rp.3,000,000 million. This facility is payable in 9 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears average interest rate of three-month JIBOR plus 1.2% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2010 amounted to Rp.1,000,000 million. |

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BANK LOANS (continued)

c. BCA

| (i) | On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with
BCA for Rp.500,000 million, payable in 5 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bore a floating interest rate
of three-month JIBOR plus 1.25% per annum which becomes due quarterly in arrears and
was unsecured. The principal outstanding as of September 30, 2009 amounted to
Rp.100,000 million and on December 28, 2009, the loan was fully repaid. |
| --- | --- |
| (ii) | On July 14, 2008, Telkomsel signed a medium-term facility loan agreements with
BCA for Rp.1,000,000 million. This facility is payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears a floating interest rate of one-month JIBOR plus 1.5% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2009 and 2010 amounted to Rp.600,000 million and Rp.200,000 million, respectively. |
| (iii) | On July 3, 2009, Telkomsel signed a medium-term facility loan agreements with
BCA for Rp.2,000,000 million. This facility is payable in 9 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears average interest rate of three-month JIBOR plus 3.25% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2009 and 2010 amounted to Rp.2,000,000 million and Rp.1,555,556 million, respectively. |
| (iv) | On July 5, 2010, Telkomsel signed a medium-term facility loan agreements with
BCA of Rp.2,000,000 million. This facility is payable in 9 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears average interest rate of three-month JIBOR plus 1.2% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2010 amounted to Rp.1,000,000 million . |

d.	Citibank
	On October 24, 2007, Telkomsel signed a medium-term facility loan agreement
with Citibank, Jakarta Branch for 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.
e.	BNI

(i) On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with BNI for Rp.500,000 million, payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bore a floating interest rate of three-month JIBOR plus 1.25% per annum which becomes due quarterly in arrears and was unsecured. The principal outstanding as of September 30, 2009 amounted to Rp.100,000 million and on December 28, 2009, the loan was fully repaid.

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

BANK LOANS (continued)

e. BNI (continued)

| (ii) | On October 24, 2007, Telkomsel signed a medium-term facility loan agreement
with BNI for Rp.750,000 million. This facility is payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears a floating interest rate of three-month JIBOR plus 1.17% per annum which becomes
due quarterly in arrears and is unsecured. The principal outstanding as of September
30, 2009 amounted to Rp.300,000 million and on April 30, 2010, the loan was fully
repaid, respectively. |
| --- | --- |
| (iii) | On July 14, 2008, Telkomsel signed a medium-term facility loan agreements with
BNI for Rp.2,000,000 million. This facility is payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bears a floating interest rate of one-month JIBOR plus 1.5% per annum which becomes due
quarterly in arrears and is unsecured. The principal outstanding as of September 30,
2009 and 2010 amounted to Rp.1,200,000 million and Rp.400,000 million, respectively. |
| (iv) | On July 3, 2009, Telkomsel signed a medium-term facility loan agreements with
BNI for Rp.750,000 million. On July 9, 2009, Rp.200,000 million were drawdown from the
facility. This facility is payable in 9 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bears average interest rate
of three-month JIBOR plus 3.00% per annum which becomes due quarterly in arrears and is
unsecured. The principal outstanding as of September 30, 2009 and 2010 amounted to
Rp.200,000 million and Rp.750,000 million, respectively. |

f. Bank CIMB Niaga

| (i) | On December 28, 2004, Balebat entered into a loan agreement with Bank CIMB
Niaga for a total facility of Rp.2,200 million to finance certain purchases of
machinery (Specific Transaction Facility). The Specific Transaction Facility is
payable in 60 monthly installments commencing from June 29, 2005. The facility will
mature on June 28, 2010. The credit facility has been amended several times. On July
28, 2009, based on the latest amendment, the interest rate is changed at 14% per annum.
As of September 30, 2009, principal outstanding under these facilities amounted to
Rp.293 million and on June 28, 2010, the loan was fully repaid. |
| --- | --- |
| | The facilities are secured by Balebats property, plant and equipment (Note 11),
inventories (Note 7) and receivables (Note 6). |
| (ii) | As discussed in Note 19b, on April 25, 2005, Balebat entered into a loan
agreement with Bank CIMB Niaga for a total facility of Rp.2,400 million which includes
an investment credit facility of Rp.1,600 million with maturity date of October 25,
2009. The investment credit facility loan was payable in 48 unequal monthly
installments beginning in November 2005 through October 2009. The investment credit
facility bore interest rate 14% per annum. The principal outstanding as of September
30, 2009 amounted to Rp.37 million and on October 25, 2009, the loan was fully repaid. |
| (iii) | In March 21, 2007, GSD entered into a loan agreement (2nd 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 June 21, 2015. As of September
30, 2009 and 2010, the principal outstanding amounted to Rp.18,050 million and
Rp.16,600 million, respectively. |

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

BANK LOANS (continued)

f. Bank CIMB Niaga (continued)

| (iv) | On November 23, 2007, GSD entered into a loan agreement (3rd special
transaction loan agreement) with Bank CIMB Niaga for a total facility of Rp.8,000
million with an interest rate of 11% per annum. The facility is secured by a parcel of
land and buildings of GSD (Note 11). The facility is payable in 5 years and the
principal is payable in 60 monthly installments and will be due on November 23, 2012.
As of September 30, 2009 and 2010, the principal outstanding amounted to Rp.5,075
million and Rp.3,478 million, respectively. |
| --- | --- |
| (v) | On July 28, 2009, Balebat entered into a loan agreement with Bank CIMB Niaga
for a total facility of Rp.3,296 million with maturity date on November 28, 2014. On
August 28, 2009, Rp.2,743 million was drawdown from the facility. The investment credit
facility loan is payable in 60 unequal monthly installments beginning in December 28,
2009 through November 28, 2014. The credit facility has been amended several times. On
May 24, 2010, based on the latest amendment, the credit facility and interest rate is
changed to Rp.2,743 million and 14% per annum, respectively. The facilities are secured
by certain Balebats property, plant and equipment (Note 11), inventories (Note 7) and
trade receivables (Note 6). As of September 30, 2009 and 2010, the principal
outstanding amounted to Rp.2,743 million and Rp.2,423 million, respectively. |
| (vi) | On May 24, 2010, Balebat entered into a loan agreement with Bank CIMB Niaga for
a total facility of Rp.3,000 million with maturity date on May 27, 2015 and interest
rate at 14% per annum. The investment credit facility loan is payable in 60 monthly
installments. The facilities are secured by certain Balebats property, plant and
equipment (Note 11), inventories (Note 7) and trade receivables (Note 6). As of
September 30, 2010, the facilities have not been utilized. |

g.	Bank Bukopin
	On May 11, 2005, Infomedia entered into loan agreements with Bank Bukopin for various
facilities in a maximum of Rp.5,300 million to finance the acquisition of a property. The
loan is payable in 60 monthly installments and bears an interest rate of 15% per annum as of
September 30, 2009 and 2010, respectively. A portion of the facilities of Rp.4,200 million
was fully repaid 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).
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 was payable in 5 equal semi-annual
installments commencing 6 months after the end of the availability period. The loan
bore a floating interest rate of three-month JIBOR plus 1.25% per annum which becomes
due quarterly in arrears and was unsecured. The principal outstanding as of September
30, 2009 amounted to Rp.80,000 million and on December 28, 2009, the loan was fully
repaid. |
| --- | --- |
| (ii) | On October 24, 2007, Telkomsel signed a medium-term loan agreement with BRI for
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 drawdown. The principal
outstanding as of September 30, 2009 and 2010 amounted to Rp.1,200,000 million and
Rp.400,000 million, respectively. |

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

BANK LOANS (continued)

h. BRI (continued)

| (iii) | On July 28, 2008, Telkomsel entered a medium-term facility loan agreement with
BRI for 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 September 30, 2009 and 2010, the principal outstanding
amounted to Rp.600,000 million and Rp.200,000 million, respectively. |
| --- | --- |
| (iv) | On September 2, 2009, Telkomsel entered a medium-term facility loan agreement
with BRI for Rp.800,000 million. This facility is in 9 equal semi-annual installments
commencing 6 months after the end of the availability period. The loan bears a floating
interest rate of three-month JIBOR plus 3.25% per annum which becomes due quarterly in
arrears and is unsecured. The principal outstanding as of September 30, 2009 and 2010
amounted to Rp.800,000 million and Rp.622,000 million, respectively . |

i. Bank Ekonomi

| (i) | On December 7, 2006, Sigma entered into a facility loan agreement with Bank
Ekonomi for Rp.14,000 million. The facility bears a floating interest rate from 12.50%
per annum to 15.50% per annum and is payable in 63 monthly installments starting from
September 12, 2007 and ending on December 12, 2012. As of September 30, 2009 and 2010,
the principal outstanding amounted to Rp.9,673 million and Rp.7,094 million,
respectively. |
| --- | --- |
| (ii) | On March 9, 2007, Sigma entered into a facility loan agreement with Bank
Ekonomi for Rp.13,000 million. The facility bears a floating interest rate from 12.50%
per annum to 15.50% per annum and is payable in 60 monthly installments starting from
December 12, 2007 and ending on December 12, 2012. As of September 30, 2009 and 2010,
the principal outstanding amounted to Rp.7,724 million and Rp.5,664 million,
respectively. |
| (iii) | On September 10, 2008, Sigma entered into a facility loan agreement with Bank
Ekonomi for Rp.33,000 million. The facility bears a floating interest rate from 12.50%
per annum to 15.50% and is payable in 78 monthly installments starting from March 11,
2009 and ending on March 11, 2015. As of September 30, 2009 and 2010, the principal
outstanding amounted to Rp.31,147 million and Rp.26,941 million, respectively. |
| (iv) | On August 7, 2009, Sigma entered into a facility loan agreement with Bank
Ekonomi for Rp.65,000 million. On September 17, 2009, the agreement is amended to
change the facility to Rp.35,000 million. The facility bears a floating interest rate
from 12.50% per annum to 13.50% per annum and is payable in 36 monthly installments
with maturity date on September 9, 2012. As of September 30, 2009 and 2010, the
principal outstanding amounted to Rp.22,500 million and Rp.27,665 million,
respectively. |
| (v) | On August 7, 2009, Sigma entered into a facility loan agreement with Bank
Ekonomi for Rp.20,000 million. The facility bears a floating interest rate from 12.50%
per annum to 15.50% per annum and is payable in 48 monthly installments. A portion of
the facilities of Rp.7,000 million will mature in November 19, 2013 and the remainder
of Rp.4,750 million will mature in April 7, 2014. As of September 30, 2009 and 2010,
the principal outstanding amounted to Rp.nil and Rp.18,304 million, respectively. |

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

BANK LOANS (continued)

i.	Bank Ekonomi (continued)
	These credit facilities are secured by a parcel of land and buildings of Sigma located in
Surabaya (Note 11) and Sigmas trade receivables (Note 6) and also includes certain
restrictive covenants which require Sigma to obtain written consent from Bank Ekonomi prior
to acting as guarantor for third party loan, mortgaging the land to other bank or third
party, leasing the land to third party, withdrawing the facility exceeding the maximum
facility limit, changing Sigmas legal status, distributing or declaring dividend and paying
shareholders receivables.
	As of September 30, 2010, Sigma has complied with the above covenant.
j.	Syndication of banks

| (i) |
| --- |
| As stated in the agreements, the Company is required to comply with all covenants or
restrictions including maintaining financial ratios as follows, in which the Company has
complied with as of September 30, 2010 as follows: |

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

| (ii) |
| --- |
| As stated in the agreements, the Company is required to comply with all covenants or
restrictions including maintaining financial ratios as follows, in which the Company has
complied with as of September 30, 2010 as follows: |

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

| k. |
| --- |
| On September 4, 2009, Telkomsel entered a medium-term facility loan agreement with ANZ Panin
for Rp.1,000,000 million. This facility is in 9 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bears a floating interest rate of
three-month JIBOR plus 2.5% per annum which becomes due quarterly in arrears and is
unsecured. |

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BANK LOANS (continued)

l.	BII
	On September 15, 2009, Telkomsel entered a medium-term facility loan agreement with BII for
Rp.500,000 million. This facility is in 9 equal semi-annual installments commencing 6 months
after the end of the availability period. The loan bears a floating interest rate of
three-month JIBOR plus 3.25% per annum which becomes due quarterly in arrears and is
unsecured.
m.	OCBC Indonesia
	On November 2, 2009, Telkomsel entered a medium-term facility loan agreement with OCBC
Indonesia for Rp.200,000 million. This facility is in 9 equal semi-annual installments
commencing 6 months after the end of the availability period. The loan bears a floating
interest rate of three-month JIBOR plus 3.00% per annum which becomes due quarterly in
arrears and is unsecured.
n.	OCBC NISP
	On November 2, 2009, Telkomsel entered a medium-term facility loan agreement with OCBC NISP
for Rp.500,000 million. This facility is in 9 equal semi-annual installments commencing 6
months after the end of the availability period. The loan bears a floating interest rate of
three-month JIBOR plus 3.00% per annum which becomes due quarterly in arrears and is
unsecured.
o.	AAB Hong Kong
	On December 30, 2009, pursuant to agreement with PT Ericsson Indonesia (Ericsson
Indonesia) and Ericsson AB (Note 49a.ii), Telkomsel entered into an EKN-Backed Facility
Agreement (facility) with AAB Hong Kong and SCB (as Arrangers) for a total facilities of
US$318 million for the purchase of Ericsson telecommunication equipment and services.
	The facilities consist of facility 1, 2 and 3 amounting to US$117 million, US$106 million
and US$95 million, respectively.
	Borrowings under the facilities bear interest at an average six-month LIBOR plus 0.2% per
annum and SEK Funding cost 0.62% per annum which become due semi-annually in arrears and is
unsecured.
	As of September 30, 2010, the facilities have not been utilized.
p.	ICBC
	On December 30, 2009, pursuant to agreement with Huawei International Pte.Ltd. (Huawei
International) and Huawei Tech (Note 49a.ii), Telkomsel entered into a Sinosure-Backed
Facility Agreement (facility) with the ICBC (as Arranger) for a total facilities of
US$266 million, including premium of US$16 million for the purchase of Huawei Tech
telecommunication equipment and services.
	The facilities consist of facility 1 and 2 amounting to US$166 million and US$100 million,
respectively.
	Borrowings under the facilities bear interest at an average six-month LIBOR plus 1.2% per
annum, which become due semi-annually in arrears and is unsecured.
	As of September 30, 2010, the facilities have not been utilized.

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BANK LOANS (continued)

q.	BoC
	On December 30, 2009, Telkomsel entered into a long-term loan agreement with BoC for a loan
facility of US$100 million for the purchase of telecommunication equipment and services from
Chinese suppliers.
	Borrowing under the facility bears interest at an average six-month LIBOR plus 2.55% per
annum, which becomes due semi-annually in arrears and is unsecured.
	As of September 30, 2010, US$16.37 million (equivalent to Rp.146,043 million) has been
drawdown from the facility.
r.	Finnish Export Credit Ltd (FEC)
	On March 2, 2010, Telkomsel entered into a facility loan agreement with FEC (as the
original lender), Citibank and Credit Suisse AG, Zurich (as arrangers) The Hongkong and
Shanghai Banking Corporation limited (as the arranger and FEC counterparty) and HSBC Bank
Plc (as the agent) for total facility of US$264 million including premium of US$14 million
for the purchase of Nokia Siemens Networks telecommunication equipment and services.
	The facilities consist of facility 1 and 2 amounting to US$127 million and US$137 million,
respectively.
	Borrowings under the facilities bear interest at an Commercial Interest Reference rate
(CIRR) plus 1.2% per annum, which become due semi-annually in arrears.
	As of September 30, 2010, the facilities have not been utilized.

Telkomsel has no collateral for its bank loans, or other credit facilities except time deposits (Notes 9 and 48h). 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 among other things, certain restrictions on the amount of dividends and other profit distributions which could adversely affect Telkomsels capacity to comply with its obligation under the facility. 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.

| s. |
| --- |
| On March 26, 2010, in connection with the agreement with NSW-Fujitsu Consortium, the Company
entered into a loan agreement with JBIC, the international arm of Japan Finance Corporation
for a loan facility of US$59.89 million for the purchase of NSW-Fujitsu Consortium
telecommunication equipment and services. The facilities consist of facility A and B
amounting to US$35.93 million and US$23.96 million. The facilities are repayable in 10
equal semi-annual installments commencing 6 months after utilization. Borrowings under the
facilities bear interest 4.56% and in arrears at an average six-month LIBOR plus 0.70% per
annum and are unsecured. As of the issuance date of the consolidated financial statements,
the facilities have not been utilized. |

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BANK LOANS (continued)

t.	BTN
	On September 10, 2009, Ad Medika entered into a facility loan agreement with BTN for
Rp.9,500 million. The loan bears a fixed interest rate of 14.75% per annum and is payable in
60 monthly installments and will mature on August 10, 2014.
	The facility is secured by Ad Medikas property, plant and equipment in form of land which
is located in Jakarta (Note 11) and Ad Medikas receivables (Note 6).
u.	Bank Index
	On May 12, 2010, Balebat entered into a facility loan agreement with Bank Index for Rp.590
million. The loan bears a floating interest rate of 14% per annum and is payable in 23
monthly installments and will mature on August 26, 2012.
	The facility is secured by Balebats property, plant and equipment.

| 24. |
| --- |
| Deferred consideration represents the Companys obligations to the Selling Stockholders of TII
in respect of the Companys acquisition of 100% of TII, MGTI in respect of the Companys
acquisition of KSO IV and BSI in respect of the Companys acquisition of KSO VII, with details
as follows: |


KSO IV transaction
MGTI	1,048,754		243,906
Less discount	(52,999	)	(2,519	)
	995,755		241,387
KSO VII transaction
BSI	700,132		174,884
Less discount	(61,942	)	(3,277	)
	638,190		171,607
Total	1,633,945		412,994
Current maturity net of discount (Note 20a)	(1,200,948	)	(412,994	)
Long-term portion net of discount (Note 20b)	432,997

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

DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS (continued)

a.	KSO IV transaction
	The outstanding balance relating to the KSO IV transaction arose from acquisition of KSO IV
by the Company, based on amendment and restatement of KSO agreement entered into by the
Company and MGTI on January 20, 2004. Based on the agreement, in consideration for the
Company 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
January 2011 at a discount rate of 8.3%, plus the direct cost of the business combination.
	As of September 30, 2009 and 2010, the remaining monthly payments to be made to MGTI, before
unamortized discount, amounted to US$108.45 million (equivalent to Rp.1,048,754 million) and
US$27.31 million (equivalent to Rp.243,906 million), respectively.
b.	KSO VII transaction
	The outstanding balance relating to the KSO VII transaction arose from acquisition of KSO
VII by the Company, based on amendment and restatement of the KSO agreement entered into by
the Company and BSI on October 19, 2006. Based on the agreement, in consideration for the
Company 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 January 2011 at a discount rate of
15%, plus the direct cost of the business combination.
	As of September 30, 2009 and 2010, the remaining monthly payments to be made to BSI, before
unamortized discount, amounted to Rp.700,132 million and Rp.174,884 million, respectively.

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

MINORITY INTEREST


Minority interest in net assets of subsidiaries:
Telkomsel	9,697,713	10,863,505
Metra	61,101	15,297
Infomedia	7,186	7,071
Total	9,766,000	10,885,873


Minority interest in net income of subsidiaries:
Telkomsel	3,434,915	3,219,025
Metra	15,503	4,045
Infomedia	36,715	199
Total	3,487,133	3,223,269

CAPITAL STOCK

	2009 — Number of	Percentage	Total
Description	shares	of ownership	paid-up capital
Series A Dwiwarna share
Government	1
Series B shares	10,320,470,711	52.47	2,580,118
Government	10,320,470,711	52.47	2,580,118
JPMCB US Resident (Norbax Inc.)	1,019,059,586	5.18	254,765
The Bank of New York Mellon Corporation	1,812,518,856	9.22	453,130
Directors (Note 1b):
Ermady Dahlan	17,604		4
Indra Utoyo	5,508		1
Public (individually less than 5%)	6,517,352,514	33.13	1,629,338
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

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CAPITAL STOCK (continued)

	2010 — 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
The Bank of New York Mellon Corporation	2,039,881,016	10.37	509,970
Directors (Note 1b):
Ermady Dahlan	17,604		4
Indra Utoyo	5,508		1
Public (individually less than 5%)	7,309,049,940	37.16	1,827,263
Total	19,669,424,780	100.00	4,917,356
Treasury stock (Note 28)	490,574,500		122,644
Total	20,159,999,280	100.00	5,040,000

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

ADDITIONAL PAID-IN CAPITAL

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

| 28. |
| --- |
| The Company had repurchased the Series B shares phase I, II and III based on the AGM of
Stockholders of the Company (Note 1c) and on the potential crisis market condition 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. |

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

28.	TREASURY STOCK (continued)
	As of September 30, 2009 and 2010, the Company has repurchased 490,574,500 of the Companys
issued and outstanding Series B shares, respectively, representing 2.43% of the Companys issued
and outstanding Series B shares, for a total repurchase amount of Rp.4,264,073 million up to
September 30, 2009 and 2010, 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.
	Pursuant to the AGM of Stockholders of the Company dated June 11, 2010, the stockholders
approved the changes to the Companys plan for the treasury stock as result of the Share Buy
Back I, II and III, as follows: (i) market placement; (ii) cancellation; (iii) equity
conversion; and (iv) funding.
29.	DIFFERENCE IN VALUE ARISING FROM RESTRUCTURING TRANSACTIONS AND OTHER TRANSACTIONS BETWEEN
ENTITIES UNDER COMMON CONTROL
	The balance of this account amounting to Rp.478,000 million arose from the early termination of
the Companys exclusive rights to provide local and domestic fixed line telecommunication
services. As discussed in Note 1a, on December 15, 2005, the Company signed an Agreement on
Implementation of Compensation for Termination of Exclusive Rights with the State MoCI DGPT,
which was amended on October 18, 2006. Pursuant to this agreement, the Government agreed to pay
Rp.478,000 million, net of tax, to the Company over a five-year period. In addition, the Company
is required by the Government to use the funds received from this compensation for the
development of telecommunications infrastructure. As of September 30, 2009 and 2010, the
development of the related infrastructures amounted to Rp.416,773 million and Rp.537,304
million, respectively.
	As of September 30, 2009 and 2010, the Company has received an aggregate of Rp.478,000 million,
respectively, in relation to the compensation for the early termination of exclusivity rights,
made up of annual payments of Rp.90,000 million from 2005 to 2008 and Rp.118,000 million on
August 25, 2009, respectively. The Company recorded these amounts in Difference in value
arising from restructuring transactions and other transactions between entities under common
control in the Stockholders Equity section. These amounts are recorded as a component of
Stockholders Equity because the Government is the majority and controlling stockholder of the
Company.

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

TELEPHONE REVENUES


Fixed lines
Usage charges	7,795,919	7,165,003
Monthly subscription charges	2,735,281	2,457,293
Installation charges	74,520	74,834
Others	200,214	156,752
Total	10,805,934	9,853,882
Cellular
Usage charges	20,627,379	20,988,828
Features	399,896	666,580
Monthly subscription charges	301,073	362,191
Connection fee charges	175,818	38,991
Total	21,504,166	22,056,590
Total Telephone Revenues	32,310,100	31,910,472

as restated, refer to Note 2q
INTERCONNECTION REVENUES

International interconnection	1,041,536	1,047,309
Cellular interconnection	1,157,624	1,037,295
Others	202,271	210,800
Total Net	2,401,431	2,295,404

as restated, refer to Note 2q

Based on the MoCI Regulation No. 08/Per/M.KOMINFO/02/2006, the implementation of cost-based interconnection tariff is applicable beginning January 1, 2007 (Note 48).

Refer to Note 45 for details of related party transactions.

DATA, INTERNET AND INFORMATION TECHNOLOGY REVENUES

Short Messaging Services (SMS)	8,662,615	8,774,261
Internet, data communication and information technology services	5,011,856	6,895,661
VoIP	75,262	131,942
e-Business	27,766	47,030
Total	13,777,499	15,848,894

as restated, refer to Note 2q

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NETWORK REVENUES

Leased lines	564,416	520,816
Satellite transponder lease	330,645	382,669
Total	895,061	903,485

as restated, refer to Note 2q

Refer to Note 45 for details of related party transactions.

OTHER TELECOMMUNICATIONS SERVICES

Customer Premise Equipment (CPE) and terminal	411,760	472,260
Directory assistance	259,808	234,807
Universal Service Compensation		231,964
Pay TV	75,877	112,375
Others	31,263	112,691
Total	778,708	1,164,097

as restated, refer to Note 2q
PERSONNEL EXPENSES

Salaries and related benefits	2,063,348	2,065,842
Vacation pay, incentives and other benefits	1,950,357	1,973,181
Employees income tax	529,755	615,716
Net periodic pension costs (Notes 42a)	395,813	264,198
Net periodic post-retirement health care
benefits costs (Note 44)	248,334	178,746
Housing	155,264	164,165
Other post-retirement cost (Note 42b)	61,101	49,407
LSA and LSA termination costs (Notes 43a,b)	66,898	33,564
Other employees benefits (Note 42c)	11,398	14,472
Medical	6,610	3,786
Others	56,828	64,178
Total	5,545,706	5,427,255

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OPERATIONS, MAINTENANCE AND TELECOMMUNICATION SERVICES EXPENSES

Operations and maintenance	6,110,287	7,137,580
Radio frequency usage charges (Notes 44a.ii and 49c.iii)	1,729,718	2,631,906
Concession fees and Universal Service Obligation charges
(Note 44a.ii)	829,780	879,935
Cost of handset, phone, SIM and RUIM cards	843,917	701,449
Electricity, gas and water	488,307	610,803
Insurance	234,158	286,503
Vehicles rental and supporting facilities	193,400	200,985
Leased lines and CPE	310,926	195,458
Cost of IT services	155,824	136,584
Travelling	44,376	43,056
Others	13,765	31,613
Total	10,954,458	12,855,872

as restated, refer to Note 2q

	Refer to Note 45 for details of related party transactions.
37.	GENERAL AND ADMINISTRATIVE EXPENSES

| Provision for doubtful accounts and inventory
obsolescence (Notes 6d and 7) | 431,384 | 422,647 |
| --- | --- | --- |
| Collection expenses | 519,750 | 284,764 |
| Travelling | 163,646 | 185,879 |
| General and social contribution | 135,136 | 184,411 |
| Security and screening | 177,928 | 171,132 |
| Training, education and recruitment | 145,367 | 154,373 |
| Professional fees | 94,631 | 110,812 |
| Meetings | 52,767 | 57,974 |
| Stationery and printing | 44,270 | 43,838 |
| Vehicle rental | 42,129 | 37,162 |
| Research and development | 4,354 | 7,805 |
| Others | 32,311 | 65,793 |
| Total | 1,843,673 | 1,726,590 |

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INTERCONNECTION EXPENSES

Cellular interconnection	1,277,608	1,370,615
International interconnection	758,188	798,060
Others	138,522	108,458
Total	2,174,318	2,277,133

as restated, refer to Note 2q

Refer to Note 45 for details of related party transactions.

TAXATION

a. Claim for tax refund


Subsidiaries
Corporate income tax	448	9,727
Income tax including interest
Article 4 (2) Final tax	2
Article 23 Withholding tax on services delivery	314	640
Article 26 Withholding tax on non-resident income tax	687
Value Added Tax (VAT) including interest	214,875	1,412
	216,326	11,779

b. Prepaid taxes


The Company
Corporate income tax	255,168
	255,168
Subsidiaries
Corporate income tax	570,555	262,563
VAT	14,115	43,703
Article 22 Withholding tax on goods delivery and
imports	597	90
Article 23 Withholding tax on services delivery	10,297	9,060
	595,564	315,416
	850,732	315,416

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TAXATION (continued)

c. Taxes payable


The Company
Income taxes
Article 4 (2) Final tax	5,740	2,311
Article 21 Individual income tax	92,998	54,045
Article 22 Withholding tax on goods delivery and
imports	1,462	1,473
Article 23 Withholding tax on services delivery	6,928	5,567
Article 25 Installment of corporate income tax	5,561	5,326
Article 26 Withholding tax on non-resident income tax	1,604	2,994
Article 29 Underpayment of corporate income tax	61,597	63,326
VAT	248,668	119,649
	424,558	254,691
Subsidiaries
Income taxes
Article 4 (2) Final tax	20,484	15,331
Article 21 Individual income tax	24,781	15,084
Article 22 Withholding tax on goods delivery and
imports		2
Article 23 Withholding tax on services delivery	30,712	32,187
Article 25 Installment of corporate income tax	319,430	361,811
Article 26 Withholding tax on non-resident income tax	135,718	19,504
Article 29 Underpayment of corporate
income tax	837,047	16,328
VAT	130,091	18,381
	1,498,263	478,628
	1,922,821	733,319

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


Current
The Company	862,832	502,320
Subsidiaries	3,734,440	3,032,377
	4,597,272	3,534,697
Deferred
The Company	338,584	626,420
Subsidiaries	61,021	161,095
	399,605	787,515
	4,996,877	4,322,212

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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	17,784,472		16,478,836
Add back consolidation eliminations	6,275,835		5,983,865
Consolidated income before tax and eliminations	24,060,307		22,462,701
Less: income before tax of the subsidiaries	(13,552,243	)	(12,469,793	)
Income before tax attributable to the Company	10,508,064		9,992,908
Less: income subject to final tax	(536,130	)	(439,907	)
	9,971,934		9,553,001
Tax calculated at applicable rates	2,293,545		1,910,600
Non-taxable income	(1,439,283	)	(1,195,532	)
Non-deductible expenses	234,326		212,367
Deferred tax liabilities that cannot be utilized net	59,851		166,739
Corporate income tax expense	1,148,439		1,094,174
Final income tax expense	52,977		34,566
Total income tax expense of the Company	1,201,416		1,128,740
Income tax expense of the subsidiaries	3,795,461		3,193,472
Total consolidated income tax expense	4,996,877		4,322,212

The reconciliation between income before tax attributable to the Company and the estimated taxable income for the nine months period ended September 30, 2009 and 2010, are as follows:

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TAXATION (continued)

e. (continued)

Income before tax attributable to the Company	10,508,064		9,992,908
Less: income subject to final tax	(536,130	)	(439,907	)
	9,971,934		9,553,001
Temporary differences:
Amortization of intangible assets	752,380		779,946
Depreciation of property, plant and equipment	(133,953	)	(308,586	)
Allowance for doubtful accounts	299,528		284,406
Accrued employees benefits	(800,615	)	(73,050	)
Depreciation of property, plant and equipment
under RSA	61,612		37,860
Finance leases	(15,358	)	(11,365	)
Allowance for inventory obsolescence	8,834		11,060
Amortization of land rights	(3,034	)	(3,223	)
Inventories written-off			(6,785	)
Gain on sale of property, plant and equipment	(10,491	)	(300,461	)
Amortization of unearned income on RSA	(83,637	)	(46,247	)
Trade receivables written-off			(337,233	)
Net periodic pension and other post-retirement
benefits costs	(318,244	)	(379,978	)
Payments of deferred consideration for business
combinations	(880,162	)	(892,503	)
Accrued early retirement benefits			(1,028,639	)
Foreign exchange loss on deferred consideration
for business combinations	(132,328	)	(32,354	)
Other provisions	43,583		8,744
Total temporary differences	(1,211,885	)	(2,298,408	)
Permanent differences:
Net periodic post-retirement health care
benefit costs	248,334		171,934
Amortization of discounts on promissory notes	520
Equity in net income of associates
and subsidiaries	(6,257,754	)	(5,977,662	)
Others	769,956		889,901
Total permanent differences	(5,238,944	)	(4,915,827	)
Taxable income	3,521,105		2,338,766

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TAXATION (continued)

e. (continued)

Current corporate income tax expense	809,855	467,754
Final income tax expense	52,977	34,566
Total current income tax expense of the Company	862,832	502,320
Current income tax expense of the subsidiaries	3,734,440	3,032,377
Total current income tax expense	4,597,272	3,534,697

f. Tax assessment

(i)	The Company
	On 16 June 2010, Directorate General of Tax (DGT) has audited the Companys income tax
overpayment amounting Rp.255 billion on 2008 fiscal year. Subsequently DGT issued SKPLB
on corporate income tax amounting Rp.228 billion in June 2010. The difference between
SKPLB and the Companys claim for tax refund has been charged to current years income
statement amounting Rp.27 billion.
	The Company received SKPKB on VAT amounting Rp.1.69 billion including tax of Rp470
million which has been net off with SKPLB of income taxes. Therefore, the Company
received restitution from DGT amounting Rp.226 billion. On July 9, 2010, the Company has
accepted refund from claim of SKPLB corporate income tax fiscal year 2008 amounted to
Rp.226,539 million.
	Currently, the Company is being audited by the DGT for fiscal year 2008. As of the
issuance date of the consolidated financial statements, the tax audit has not been
completed yet.
(ii)	Telkomsel
	Due to recalculation of depreciation for fiscal year 2006, Telkomsel claimed for
overpayment from the previously reported tax of Rp.12.5 billion. Telkomsel is currently
being tax audited for fiscal year 2006. As of the issuance date of the consolidated
financial statements, the tax audit has not been completed yet.
	In 2007, Telkomsel was also assessed by the DGT for underpayments of withholding taxes,
VAT and corporate income tax, including penalties, 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 to the underpayment assessments of withholding taxes and
VAT including penalties totaling Rp.408 billion.

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TAXATION (continued)

f. Tax assessment (continued)

| (ii) |
| --- |
| Subsequently, in December 2008, the DGT approved Rp.141 billion of the objection. In
February 2009, Telkomsel received this amount and interest of Rp.39 billion. On February
23, 2009, Telkomsel filed an appeal to the Tax Court for the rejected VAT of Rp.215
billion and recognize it as claim for tax refund (Note 39a). The remaining rejected
amount of Rp.52 billion was charged to the 2008 consolidated statements of income. Based
on Tax Courts verdict in March 3, 2010, Telkomsels appeal on VAT was accepted with a
refund of Rp.215 billion. The refund was received in June 2010 with an interest of
Rp.103 billion. On August 10, 2010, the DGT filed a judicial review to the Indonesian
Supreme Court (SC) on the Tax Courts verdict. Telkomsel believes that the Tax Courts
verdict has been properly made. On September 24, 2010, Telkomsel filed a contra-appeal
to the SC. As of the issuance date of the consolidated financial statements, it is
still in process. |
| On October 2, 2007, Telkomsel filed an appeal with the Tax Court for the DGT rejection
of Telkomsels objection to underpayment assessments of withholding taxes articles 23
and 26 for the fiscal year 2002 of Rp.115 billion. |
| Based on the Tax Courts decision in December 2008, Telkomsels appeal was accepted
with a refund of Rp.115 billion. In February 2009, Telkomsel received this amount and
interest of Rp.52 billion, net of underpayments of various taxes. |
| On February 25, 2009, the DGT filed a judicial review to Indonesian Supreme Court
(SC), on the Tax Courts decision accepting Telkomsels appeal for a refund of Rp.115
billion. Telkomsel believes that the decision has properly been made. On April 3, 2009,
Telkomsel filed a contra-appeal to the SC. As of the issuance date of the consolidated
financial statements, it is still in process. |
| On February 12, 2009, Telkomsel received a Tax Collection Letter (Surat Tagihan Pajak
or STP) for an underpayment of income tax article 25 for the period of December 2008
of Rp.429 billion (including a penalty of Rp.8 billion). From its letter dated March 3,
2009, Telkomsel filed an objection and requested the DGT to cancel the STP. On April 28,
2009, the DGT rejected the objection. Subsequently, on May 28, 2009, Telkomsel filed an
appeal to the Tax Court for the rejection. In August 2009, Telkomsel paid part of the
penalty of Rp.4.2 billion. |
| On December 21, 2009, the Tax Court issued its decision which approved Telkomsels
appeal and requested the DGT to cancel the STP. |
| On December 29, 2009, as a result of a tax audit, Telkomsel was assessed for an
overpayment of the 2008 corporate income tax of Rp.439 billion. The rejected portion of
Rp.3
billion was accepted by Telkomsel and charged to the 2009 consolidated statement of
income. On January 28 and February 12, 2010, Telkomsel received claim for tax refund for
fiscal year 2008 of Rp.439 billion and Rp.4.2 billion, respectively. |

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TAXATION (continued)

f. Tax assessment (continued)

| (ii) |
| --- |
| On April 21, 2010, Tax Court notified Telkomsel that DGT filed an appeal to the SC on
Tax Courts decision of cancellation of STP for underpayment of income tax article 25.
As of the issuance date of the consolidated financial statements, the appeal is still in
process. |

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


		credited to the
		consolidated
December 31,		statements		September 30
2008		of income*)		2009
The Company
Deferred tax assets:
Deferred consideration for business combinations	698,048		(283,497	)	414,551
Allowance for doubtful accounts	259,195		95,784		354,979
Net periodic pension and other post-retirement benefits costs	275,741		(89,110	)	186,631
Accrued expenses	31,877		7,755		39,632
Early termination expenses	220,698		(220,698	)
Accrued for employee benefits	93,035		(3,475	)	89,560
Finance leases	22,034		(4,300	)	17,734
Allowance for inventory obsolescence	16,201		2,436		18,637
Total deferred tax assets	1,616,829		(495,105	)	1,121,724
The Company
Deferred tax liabilities:
Difference between accounting and tax property, plant and
equipments net book value	(1,570,559	)	(87,451	)	(1,658,010	)
Land rights	(4,922	)	(848	)	(5,770	)
RSA	(57,869	)	(6,168	)	(64,037	)
Intangible assets	(573,918	)	250,988		(322,930	)
Total deferred tax liabilities	(2,207,268	)	156,521		(2,050,747	)
Deferred tax liabilities of the Company net	(590,439	)	(338,584	)	(929,023	)
Deferred tax liabilities of the
subsidiaries net	(2,314,434	)	(158,939	)	(2,473,373	)
Total deferred tax liabilities net	(2,904,873	)	(497,523	)	(3,402,396	)
Total deferred tax assets net			97,918		97,918

*) Including adjustment due to changes in tax rate (Note 39h)

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TAXATION (continued)

g. Deferred tax assets and liabilities (continued)


		credited to the
		consolidated
December 31,		statements		Acquisition			September 30,
2009		of income		of Ad Medika		Reclassification	2010
The Company
Deferred tax assets:
Deferred consideration for
business combinations	335,409		(231,214	)				104,195
Allowance for doubtful accounts	268,427		(15,470	)				252,957
Net periodic pension and other
post-retirement benefits costs	160,310		(94,993	)				65,317
Accrued expenses	36,239		(20,405	)				15,834
Early termination expenses	257,160		(257,160	)
Accrued for employee benefits	84,719		(18,251	)				66,468
Finance leases	18,432		(4,220	)				14,212
Allowance for inventory
obsolescence	17,672		1,706					19,378
Total deferred tax assets	1,178,368		(640,007	)				538,361
Deferred tax liabilities:
Difference between accounting
and tax property, plant and
equipments net book value	(1,650,200	)	(183,525	)				(1,833,725	)
Land rights	(5,808	)	(807	)				(6,615	)
RSA	(44,596	)	2,933					(41,663	)
Intangible assets	(271,202	)	194,986					(76,216	)
Total deferred tax liabilities	(1,971,806	)	13,587					(1,958,219	)
Deferred tax liabilities of the
Company net	(793,438	)	(626,420	)				(1,419,858	)
Deferred tax liabilities of the
subsidiaries net	(2,549,763	)	(156,135	)	(10,802	)	8,172	(2,708,528	)
Total deferred tax liabilities net	(3,343,201	)	(782,555	)	(10,802	)	8,172	(4,128,386	)
Total deferred tax assets net	94,953		(4,960	)	884			90,877

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 the 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 DGT, hence, it was reversed with a corresponding deduction to the deferred tax liability. The rejection of the recalculation resulted in a recognition of overpayment of corporate income tax for 2006 of Rp.12.5 billion presented as part of prepaid taxes.

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TAXATION (continued)

| h. |
| --- |
| Under the taxation laws of Indonesia, the Company and each subsidiary submit tax return on
the basis of self assessment. DGT may assess or amend taxes within ten years of the time the
tax becomes due, or until the end of 2013, whichever is earlier. There are new rules
applicable to fiscal year 2008 and subsequent years stipulating that the DGT may assess or
amend taxes within five years of the time the tax becomes due. |
| On September 23, 2008, the President of the Republic Indonesia and MoJHR has signed and
enacted the Tax Law No. 36/2008 concerning the Fourth Amendment of the Tax Law No. 7/1983 of
Income Taxes. This regulation stipulates that the corporate tax rate will be a flat rate of
28% in 2009 (previously calculated using progressive tax rates ranging from 10% to 30%) and
25% in 2010. |
| Other than tariff changes, the Tax Law No. 36/2008 also stipulates a reduction of 5% from
the top rate applicable for qualifying companies listed and for whose stock is traded on 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 on the IDX, and such stocks are owned by at least
300 parties, each party owning less than 5% of the total paid-up stocks. These requirements
should be fulfilled by the publicly-listed companies for a period of 6 months in one tax
year. The Company has met the required criteria. Therefore, for the purposes of calculating
income tax expenses and liabilities for the financial reporting periods of September 30,
2009 and 2010, the Company has incorporate 5% decrease in tax rates. |
| The Companys tax audit has been performed up to 2008 fiscal year, except for fiscal year
2003 the tax audit has not been conducted. |
| Telkomsel is currently undergoing a tax audit for the 2008 and 2006 fiscal year. No tax
audit has been conducted for fiscal year 2003 and 2009. A tax audit has been completed for
all other fiscal years. |
| In 2008, DGT issued a sunset policy program in the form of an opportunity for the tax payer
to make a revision in the prior years for underpaid (Surat Pemberitahuan Tahunan or
Annual SPT), which will be granted free tax administration sanction and no assessment in
the related fiscal year, unless the DGT find new evidence to perform the assessment and
investigation. The Company and Telkomsel have utilized the 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, 2008 and 2009,
unless the Company files for overpaid Annual SPT then a tax assessment will be performed. |

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40.	BASIC EARNINGS PER SHARE
	Basic earnings per share is computed by dividing net income by the weighted average number of
shares outstanding during the period, totaling 19,669,424,780 for nine months period ended
September 30, 2009 and 2010, respectively.
	Basic earning per share amounting to Rp.472.84 and Rp.454.17 (full amount) for nine months
period ended September 30, 2009 and 2010, respectively.
	The Company does not have potentially dilutive ordinary shares.
41.	CASH DIVIDENDS AND GENERAL RESERVE
	Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 22 dated June
12, 2009 of A. Partomuan Pohan, S.H., LLM., the stockholders approved the distribution of cash
dividends for 2008 amounting to Rp.5,840,708 million or Rp.296.94 per share and the
appropriation of Rp.4,778,761 million for general reserves.
	Pursuant to the AGM of Stockholders of the Company as stated by the minutes of which have been
summarized by deed No. 17 dated June 11, 2010 of A. Partomuan Pohan, S.H., LLM., the
stockholders approved the distribution of cash dividends for 2009 amounting to Rp.5,666,070
million or Rp.288.06 per share (of which Rp.524,190 million or Rp.26.65 per share was
distributed as an interim cash dividend in November 2009), the appropriation of Rp.5,666,070
million for retained earnings.
42.	PENSION AND OTHER POST-RETIREMENT BENEFITS


Accrued pension and other post-retirement
benefit costs
Pension
The Company	441,605
Telkomsel	99,951	169,215
Accrued pension costs	541,556	169,215
Other post-retirement benefits	246,198	232,624
Obligation under Labor Law	67,007	88,829
Accrued pension and other post-retirement
benefit costs	854,761	490,668
Prepaid pension benefit costs
The Company		8,064
Infomedia	782	847
Prepaid pension benefit costs	782	8,911

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)


Net periodic pension costs
The Company	354,787	208,047
Telkomsel	41,021	56,224
Infomedia	5	(73	)
Net periodic pension costs (Note 35)	395,813	264,198
Other post-retirement cost (Note 35)	61,101	49,407
Other employee benefits (Note 35)	11,398	14,472

a. Pension

| 1. |
| --- |
| The Company sponsors a defined benefit pension plan and a defined contribution pension
plan. |
| The defined benefit pension plan is provided to employees hired with permanent status
prior to July 1, 2002. The pension benefits are paid based on the participating
employees latest basic salary at retirement and the number of years of their service.
The plan is managed by Telkom Pension Fund (Dana Pensiun Telkom or Dapen). The
participating employees contribute 18% (before March 2003: 8.4%) of their basic salaries
to the plan. The Companys contributions to the pension fund for nine months period
ended September 30, 2009 and 2010 amounted to Rp.666,796 million and Rp.383,818 million,
respectively. |
| The defined contribution pension plan is provided to employees hired with permanent
status on or after July 1, 2002. The plan is managed by Financial Institutions Pension
Fund (Dana Pensiun Lembaga Keuangan or DPLK). The Companys contribution to DPLK is
determined based on certain percentage of the participants salaries and amounted to
Rp.2,847 million and Rp.3,236 million for the nine months period ended September 30,
2009 and 2010, respectively. |
| The following table presents the change in projected benefits obligation, change in plan
assets, funded status of the plan and net amount recognized in the Companys
consolidated balance sheets as of September 30, 2009 and 2010, for its defined benefit
pension plan: |


Change in projected benefits obligation
Projected benefits obligation at beginning of year	9,516,975		11,753,439
Service costs	168,554		233,561
Interest costs	836,680		868,067
Plan participants contributions	33,503		31,815
Actuarial (gains) losses	1,441,752		(158,836	)
Expected benefits paid	(330,799	)	(542,018	)
Projected benefits obligation at end of period	11,666,665		12,186,028

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

The Company (continued)


Change in plan assets
Fair value of plan assets at beginning of year	8,713,418		12,300,181
Expected return on plan assets	773,122		965,039
Employers contributions	666,796		383,818
Plan participants contributions	33,503		31,815
Actuarial gains	1,437,693		8,313
Expected benefits paid	(303,923	)	(465,437	)
Fair value of plan assets at end of period	11,320,609		13,223,729
Funded status	(346,056	)	1,037,701
Unrecognized prior service costs	1,331,728		1,110,407
Unrecognized net actuarial gains	(1,427,277	)	(2,140,044	)
Prepaid (accrued) pension benefit costs	(441,605	)	8,064

| 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.2,296,785 million and Rp.1,890,173 million for
nine months period ended September 30, 2009 and 2010, respectively. |
| The movement of the accrued pension benefits costs during the nine months period ended
September 30, 2009 and 2010, is as follows: |

Accrued pension benefits costs at beginning of year	775,657		410,209
Net periodic pension cost less amounts
charged to subsidiaries	354,787		208,047
Amounts charged to subsidiaries
under contractual agreements	773		1,228
Employers contributions	(666,796	)	(383,818	)
Benefits paid by the Company	(22,816	)	(243,730	)
(Prepaid) accrued pension benefits costs
at end of period	441,605		(8,064	)

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 1. |
| --- |
| As of September 30, 2009 and 2010, plan assets consisted mainly of Indonesian Government
bonds and corporate bonds. As of September 30, 2009, plan assets included Series B
shares issued by the Company with fair value totaling Rp.316.334 million representing
2.79% of total assets of Dapen as of September 30, 2009. As of September 30, 2010, plan
assets included Series B shares and bonds issued by the Company with fair value totaling
Rp.325,232 million and Rp.154,650 million, respectively, representing 2.46% and 1.17% of
total assets of Dapen as of September 30, 2010, respectively. |
| The actuarial valuation for the defined benefit pension plan and the other
post-retirement benefits (Note 42b) was performed based on the measurement date as of
December 31, 2008 and 2009, with reports dated March 31, 2009 and March 30, 2010,
respectively, by PT Watson Wyatt Purbajaga (WWP), an independent actuary in
association with Towers Watson (TW) (formerly Watson Wyatt Worldwide). The principal
actuarial assumptions used by the independent actuary as of December 31, 2008 and 2009,
are as follows: |

Discount rate	12 %	10.75 %
Expected long-term return on plan assets	11.5 %	10.5 %
Rate of compensation increases	8 %	8 %

The components of net periodic pension costs are as follows:

Service costs	168,554		233,561
Interest costs	836,680		868,067
Expected return on plan assets	(773,122	)	(965,039	)
Amortization of prior service costs	165,991		165,991
Recognized actuarial gain	(42,543	)	(93,305	)
Net periodic pension costs	355,560		209,275
Amount charged to subsidiaries
under contractual agreements	(773	)	(1,228	)
Total net periodic pension costs less
amounts charged to subsidiaries (Note 35)	354,787		208,047

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 2. |
| --- |
| Telkomsel provides a defined benefit pension plan to its employees. Under this plan,
employees are entitled to pension benefits based on their latest basic salary or
take-home pay and the number of years of their service. PT Asuransi Jiwasraya
(Jiwasraya), a state-owned life insurance company, manages the plan under an
annuity insurance contract. Until 2004, the employees contributed 5% of their monthly
salaries to the plan and Telkomsel contributed any remaining amount required to fund the
plan. Starting 2005, the entire contributions are fully made by Telkomsel. |
| The following table reconciles the unfunded status of the plans with the amounts
included in the consolidated balance sheets as of September 30, 2009 and 2010: |

Projected benefits obligation	(335,348	)	(463,466	)
Fair value of plan assets	162,588		154,091
Unfunded status	(172,760	)	(309,375	)
Unrecognized items in the consolidated balance sheet:
Unrecognized prior service costs	(735	)	(672	)
Unrecognized net actuarial losses	72,027		139,492
Unrecognized net obligation at the date of
initial application of PSAK 24	1,517		1,340
Accrued pension benefits costs	(99,951	)	(169,215	)

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

Service costs	25,461		32,630
Interest costs	25,563		31,435
Expected return on plan assets	(11,592	)	(12,117	)
Amortization of past service costs	(47	)	(47	)
Recognized actuarial losses	1,503		4,190
Amortization of net obligation at the date of
initial application of PSAK 24	133		133
Net periodic pension costs (Note 35)	41,021		56,224

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 2. |
| --- |
| The net periodic pension cost for the pension plan was calculated based on the
measurement date as of December 31, 2008 and 2009, with reports dated February 12, 2009
and February 8, 2010, respectively, by WWP, an independent actuary in association with
TW. The principal actuarial assumptions used by the independent actuary based on the
measurement date as of December 31, 2008 and 2009 for each of the year, are as follows: |

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

| 3. |
| --- |
| Infomedia provides a defined benefit pension plan to its employees. The reconciliation
of the funded status of the plan with the net amount recognized in the consolidated
balance sheets as of September 30, 2009 and 2010, are as follows: |

Projected benefits obligation	(5,922	(7,987
Fair value of plan assets	6,704	8,834
Funded status	782	847
Prepaid pension benefits costs	782	847

The net periodic pension (income) costs of Infomedia amounted to Rp.5 million and (Rp.73) million for nine months period ended September 30, 2009 and 2010, respectively (Note 35).

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

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

b.
The movement of the other post-retirement benefits for nine months period ended September
30, 2009 and 2010, are as follows:

| Accrued other post-retirement benefits costs
at beginning of year | 210,345 | | 209,183 | |
| --- | --- | --- | --- | --- |
| Other post-retirement benefits costs | 61,101 | | 49,407 | |
| Other post-retirement benefits paid | (25,248 | ) | (25,966 | ) |
| Total accrued other post-retirement benefits costs
at end of year after early retirement benefits | 246,198 | | 232,624 | |

The components of the net periodic other post-retirement benefits costs for nine months period ended September 30, 2009 and 2010, are as follows:

Service costs	16,297	14,017
Interest costs	34,619	26,925
Amortization of past service costs	5,120	5,120
Recognized actuarial losses	5,065	3,345
Total net periodic other post-retirement
benefits costs (Note 35)	61,101	49,407

| c. |
| --- |
| Under Law No. 13/2003 concerning labor regulation, the Company and its subsidiaries are
required to provide a minimum pension benefit, if not covered yet by the sponsored pension
plans, to their employees upon retirement age. The total related obligation recognized as of
September 30, 2009 and 2010 amounted to Rp.67,007 million and Rp.88,829 million,
respectively. The related employees benefits cost charged to expense amounted to Rp.11,398
million and Rp.14,472million for nine months period ended September 30, 2009 and 2010,
respectively (Note 35). |

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43.	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. 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.165,431 million and Rp.204,013
million as of September 30, 2009 and 2010, respectively (Note 45). The related benefits cost
charged to expense amounted to Rp.66,898 million and Rp.33,564 million for nine months period
ended September 30, 2009 and 2010, respectively (Note 35).
44.	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 are entitled to this plan. The plan is managed by Yayasan Kesehatan Pegawai Telkom
(Yakes).
	The following table presents the change in the projected benefits obligation, change in plan
assets, funded status of the plan and net amount recognized in the Companys consolidated
balance sheets as of September 30, 2009 and 2010:


Change in projected benefits obligation
Projected benefits obligation at beginning of year	5,855,224		7,165,974
Service costs	54,005		62,941
Interest costs	515,075		558,413
Actuarial losses	613,224		287,441
Expected post-retirement health care paid	(198,252	)	(215,943	)
Projected benefits obligation at end of year	6,839,276		7,858,826
Change in plan assets
Fair value of plan assets at beginning of year	4,018,693		6,022,263
Expected return on plan assets	307,784		442,148
Employers contributions	800,350		720,460
Actuarial gains	614,061		287,441
Expected post-retirement health care paid	(198,252	)	(215,943	)
Fair value of plan assets at end of year	5,542,636		7,256,369
Funded status	(1,296,640	)	(602,457	)
Unrecognized net actuarial gains	(722,414	)	(658,065	)
Accrued post-retirement health care benefits costs	(2,019,054	)	(1,260,522	)

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44.
The actual return on plan assets was Rp.263,890 million and Rp.413,095 million for nine
months period ended September 30, 2009 and 2010, respectively.
The components of net periodic post-retirement health care benefits cost are as follows:

Service costs	54,005		62,941
Interest costs	515,075		558,413
Expected return on plan assets	(307,784	)	(442,148	)
Recognized actuarial gains	(12,612	)
Net periodic post-retirement benefits costs	248,684		179,206
Amounts charged to subsidiaries under contractual agreements	(350	)	(460	)
Total net periodic post-retirement health care benefits
costs less amounts charged to subsidiaries (Note 35)	248,334		178,746

| As of September 30, 2009 and 2010, plan assets included the Companys Series B shares with total
fair value of Rp.76,860 million and Rp.67,928 million, respectively. |
| --- |
| The movements of the accrued post-retirement health care benefits costs for nine months period
ended September 30, 2009 and 2010, are as follows: |

| Accrued post-retirement health care benefits costs at
beginning of year | 2,570,720 | | 1,801,776 | |
| --- | --- | --- | --- | --- |
| Net periodic post-retirement health care benefits costs
less amounts charged to subsidiaries (Note 35) | 248,334 | | 178,746 | |
| Amounts charged to subsidiaries under
contractual agreements | 350 | | 460 | |
| Employers contributions | (800,350 | ) | (720,460 | ) |
| Accrued post-retirement health care benefits
costs at end of year | 2,019,054 | | 1,260,522 | |

The actuarial valuation for the post-retirement health care benefits was performed based on the measurement date as of December 31, 2008 and 2009, with reports dated March 31, 2009 and March 30, 2010, respectively, by WWP, an independent actuary in association with TW. The principal actuarial assumptions used by the independent actuary as of December 31, 2008 and 2009, are as follows:

Discount rate	12 %	10.75 %
Expected long-term return on plan assets	9.25 %	9.25 %
Health care costs trend rate assumed for next year	12 %	10 %
Ultimate health care costs trend rate	8 %	8 %
Year that the rate reaches the ultimate trend rate	2011	2012

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| 45. |
| --- |
| 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.194,181 million and Rp.121,332
million for nine months period ended nine months period ended, 2009 and 2010,
respectively. Interest expense for two-step loans represent 13.20% and 8.49% 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.239,410 million and Rp.255,915 million for nine months
period ended September 30, 2009 and 2010, respectively (Note 36), representing 0.7%,
respectively, of the total operating expenses for each period. Radio frequency usage
charges amounted to Rp.1,729,718 million and Rp.2,631,906 million for nine months period
ended September 30, 2009 and 2010, respectively (Note 36), representing 5.9% and 7.5% of
the total operating expenses for each period. |
| | Telkomsel paid an up-front fee for the 3G license amounting to Rp.756,000 million and
recognized as an intangible asset (Note 14.iii). |
| iii. | Starting 2005, the Company and its subsidiaries pay USO charges to the Ministry
of Communications and Information of the Republic of Indonesia pursuant to MoCI
Regulation No.15/Per/M.KOMINFO/9/2005 of September 30, 2005. |
| | USO charges amounted to Rp.590,370 million and Rp.624,020 million for nine months period
ended September 30, 2009 and 2010, respectively (Note 36), representing 1.8% of the
total operating expenses for each period. |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) SEPTEMBER 30, 2009 AND 2010 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010

(Figures in tables are presented in millions of Rupiah, unless otherwise stated)

RELATED PARTY TRANSACTIONS (continued)

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.39,850 million and Rp.42,208 million for nine months period ended
September 30, 2009 and 2010, 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.106,370 million and Rp.118,564million for nine months period ended September 30,
2009 and 2010, respectively, representing 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. |

The Company has also entered into an interconnection agreement between the Companys fixed line network (Public Switched Telephone Network or PSTN) and Indosats GSM mobile cellular telecommunications network in connection with implementation of Indosat Multimedia Mobile services and the settlement of the related interconnection rights and obligations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) SEPTEMBER 30, 2009 AND 2010 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010

(Figures in tables are presented in millions of Rupiah, unless otherwise stated)

RELATED PARTY TRANSACTIONS (continued)

| c. |
| --- |
| 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 December 11, 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 January to December
2009, and can be applied until a new Minutes of Agreement available. |
| 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 48). These amendments took effect on January 1, 2007. |
| Telkomsel also entered into an agreement with Indosat for the provision of international
telecommunications services to its GSM mobile cellular customers. The principal matters
covered by the agreement are as follows: |

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

The Company and its subsidiaries were earned net interconnection income from Indosat of Rp.677,568 million and Rp.700,125 million for nine months period ended September 30, 2009 and 2010, respectively, representing 1.4% and 1.3% of the total operating revenues for each period.

The Company and its subsidiaries were charged net interconnection charges from Indosat of Rp559,193 million and Rp.685,044 million for nine months period ended September 30, 2009 and 2010, respectively, representing 1.1% and 2.0% of the total operating expenses for each period.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) SEPTEMBER 30, 2009 AND 2010 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010

(Figures in tables are presented in millions of Rupiah, unless otherwise stated)

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.9,325 million and Rp.3,238 million for nine months
period ended September 30, 2009 and 2010, respectively, representing 0.03% and 0.01% 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 an agreed
formula. |
| | Telkomsels share in operating and maintenance costs amounted to Rp.1,118 million and
Rp.426 million for nine months period ended September 30, 2009 and 2010, 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 right to use of 30 years. Satelindo paid Rp.17,210 million in 1994 while the remaining balance Rp.25,813 million was not paid because the Utilization Right (Hak Pengelolaan Lahan or HPL) on the land could not be delivered as provided in the transfer agreement. In 2000, the Company and Satelindo agreed on an alternative solution resulting in the payment being treated as a lease expense up to 2006. In 2001, Satelindo paid an additional amount of Rp.59,860 million as lease expense up to 2024. As of September 30, 2009 and 2010, the prepaid portion is shown in the consolidated balance sheets as Advances from customers and suppliers.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) SEPTEMBER 30, 2009 AND 2010 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010

(Figures in tables are presented in millions of Rupiah, unless otherwise stated)

RELATED PARTY TRANSACTIONS (continued)

| c. |
| --- |
| 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.111,823 million and
Rp.101,486 million for nine months period ended September 30, 2009 and 2010, respectively,
representing 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.20,158 million and Rp.21,453 million for nine
months period ended September 30, 2009 and 2010, respectively, representing 0.04% of total
operating revenues for each period. |
| Telkomsel has an agreement with Lintasarta (valid until October 31, 2010) and PT Artajasa
Pembayaran Elektronis (Artajasa) (valid until May 2008) (a 39.8% owned subsidiary of
Indosat) for the usage of data communication network system. The charges from Lintasarta and
Artajasa for the services amounted to Rp.26,576 million and Rp.19,506 million for nine
months period ended September 30, 2009 and 2010, respectively, representing 0.1% of the
total operating expenses for each period. |

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

| (i) | The Company provides telecommunication services to substantially all Government
Agencies in Indonesia for 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.108,422 million and Rp.93,461 million for nine months period ended September 30,
2009 and 2010, respectively, representing 0.2% of the total operating revenues for each
period. |
| (iii) | The Company provides leased lines to associated companies, namely CSM,
Patrakom, PSN and Gratika. The leased lines can be used by the associated companies for
telephone, telegraph, data, telex, facsimile or other telecommunications services.
Revenues earned from these transactions amounted to Rp.34,492 million and Rp.32,995
million for nine months period ended September 30, 2009 and 2010, 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.145,992 million and Rp.75,043 million
for nine months period ended September 30, 2009 and 2010, respectively, representing
1.0% and 0.7% of the total fixed assets purchased in each period. |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) SEPTEMBER 30, 2009 AND 2010 NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2010

(Figures in tables are presented in millions of Rupiah, unless otherwise stated)

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 nine
months period ended September 30, 2009 and 2010 amounted to Rp.54,923 million and
Rp.84,510 million, respectively, representing 0.4% and 0.8% 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.159,780 million and Rp.132,582 million for nine months period
ended September 30, 2009 and 2010, respectively, representing 0.5% and 0.4% of the
total operating expenses for each period. |
| (vii) | The Company and its subsidiaries insured their property, plant and equipment
against property losses, inventories and employees social security from Jasindo, PT
Asuransi Tenaga Kerja and Jiwasraya, state-owned insurance companies. Insurance
premiums amounted to Rp.234,735 million and Rp.291,989 million for nine months period
ended September 30, 2009 and 2010, respectively, representing 0.7% 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.5,282,271 million and Rp.7,362,270
million as of September 30, 2009 and 2010, respectively, representing 5.5% and 7.4% of
the total assets. Interest income recognized for nine months period ended September 30,
2009 and 2010 amounted to Rp.145,266 million and Rp.91,843 million, representing 42.5%
and 31.8% of the total interest income for each period. |
| (ix) | The Company and its subsidiaries obtained loans from state-owned banks.
Interest expense on these loans for nine months period ended September 30, 2009 and
2010 amounted to Rp.779,671 million and Rp.664,439 million, respectively, representing
53.0% and 46.5% 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.268,027 million and Rp.439,571 million for nine months period ended
September 30, 2009 and 2010, respectively, representing 0.8% and 1.3% 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 revenues from PSN,
with a total of Rp.3,757 million and Rp.3,711 million for nine months period ended
September 30, 2009 and 2010, respectively, representing less than 0.01% and 0.01%of the
total operating revenues for each period. And earned interconnection expenses from PSN,
with a total of Rp.3,868 million and Rp.3,782 million for nine months period ended
September 30, 2009 and 2010, respectively, representing less than 0.01% and 0.01% 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.3,950 million and Rp.657 million for nine months period
ended September 30, 2009 and 2010, respectively, representing 0.01% and less than 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.176,775 million and Rp.148,595 million for nine months period ended September 30,
2009 and 2010, respectively, representing 0.5% and 0.4% 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.441,907 million and Rp.410,730 million
for nine months period ended September 30, 2009 and 2010, respectively, representing
1.4% and 1.2% of the total operating expenses for each period. Telkomsel also has
dealership agreements with Kisel for distribution of SIM cards and pulse reload
vouchers. Total SIM cards and pulse reload vouchers which were sold to Kisel amounted
to Rp.1,633,680 million and Rp.1,644,348 million for nine months period ended September
30, 2009 and 2010, respectively, representing 3.3% and 3.2% of the total operating
revenues for each period. |
| (xv) | 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.38,248 million and Rp.18,770 million for nine months period
ended September 30, 2009 and 2010, respectively; representing 0.3% and 0.2% of the
total acquisition of fixed assets for each period; and for maintenance of equipment
amounted to Rp.26,266 million and Rp.10,870 million for nine months period ended
September 30, 2009 and 2010, respectively, representing 0.1% and less than 0.01% of the
total operating expenses for each period. |

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

45.
Presented below are balances of accounts with related parties:


		% of		% of
	Amount	total assets	Amount	total assets
a.	Cash and cash equivalents (Note 5)	4,709,070	4.94	6,913,914	6.91
b.	Temporary investments	286,648	0.30	303,363	0.30
c.	Trade receivables net (Note 6)	751,997	0.79	1,181,860	1.18
d.	Other receivables
	State-owned banks (interest)	7,743	0.01	5,724	0.01
	Patrakom	4,734	0.01	1,888	0.00
	Government Agencies	666	0.00	47	0.00
	Kopegtel	3,846	0.00	32	0.00
	Other	6,902	0.01	1,765	0.00
	Total	23,891	0.03	9,456	0.01
e.	Prepaid expenses (Note 8)	1,938,939	2.03	2,615,245	2.61
f.	Other current assets (Note 9)
	BNI	22,808	0.02	5,072	0.01
	Bank Mandiri	12,069	0.01	502	0.00
	BRI			347	0.00
	Total	34,877	0.03	5,921	0.01
g.	Prepaid pension benefit cost (Note 42)			8,064	0.01
h.	Advances and other non-current assets (Note 13)
	BNI	94,833	0.10	92,653	0.09
	Bank Mandiri	119,794	0.13	4,477	0.00
	Kisel	1,088	0.00	1,088	0.00
	Perusahaan Umum Percetakan Uang Republik Indonesia (Peruri)	813	0.00	813	0.00
	BRI	347	0.00
	Total	216,875	0.23	99,031	0.09
i.	Escrow accounts (Note 15)	44,937	0.05	41,129	0.04

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RELATED PARTY TRANSACTIONS (continued)


		% of total		% of total
	Amount	liabilities	Amount	liabilities
j.	Trade payables (Note 16)
	Government Agencies	1,224,346	2.55	1,329,822	2.86
	Kopegtel	67,854	0.14	85,197	0.18
	Yakes	4,927	0.01	79,496	0.17
	Indosat	44,410	0.09	37,031	0.08
	Gratika	6,315	0.01	7,803	0.02
	SPM	7,993	0.02	7,342	0.02
	Patrakom	741	0.00	6,812	0.01
	INTI	4,387	0.01	4,940	0.01
	CSM	1,012	0.00
	Others	113,171	0.24	149,974	0.32
	Total	1,475,156	3.07	1,708,417	3.67
k.	Accrued expenses (Note 17)
	Employees	739,265	1.54	737,571	1.59
	Government Agencies and state-owned banks	134,055	0.28	69,264	0.15
	PT Jaminan Sosial Tenaga Kerja (Persero)	25,274	0.05	25,465	0.05
	Total	898,594	1.87	832,300	1.79
l.	Short-term bank loans (Note 19)
	BSM	8,000	0.02	8,000	0.02
m.	Accrued LSA (Note 43)	165,431	0.34	204,013	0.44
n.	Accrued post-retirement health care benefits (Note 44)	2,019,054	4.20	1,260,522	2.71
o.	Accrued pension and other post-retirement benefits costs (Note 42)	854,761	1.78	490,668	1.06
p.	Two-step loans (Note 21)	3,716,255	7.74	3,158,192	6.80
q.	Notes (Note 22)			101,600	0.22
r.	Long-term bank loans (Note 23)
	BNI	4,700,000	9.78	3,750,000	8.08
	Bank Mandiri	3,480,000	7.24	3,075,556	6.62
	BRI	4,180,000	8.70	2,597,000	5.59
	BTN			7,567	0.02
	Total	12,360,000	25.72	9,430,123	20.31

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| 46. |
| --- |
| 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 the 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	15,844,551		2,346,120		31,664,080		308,048		50,162,799				50,162,799
Inter-segment operating revenues	3,228,544		58,067		1,300,160		235,582		4,822,353		(4,822,353	)
Total segment revenues	19,073,095		2,404,187		32,964,240		543,630		54,985,152		(4,822,353	)	50,162,799
External operating expenses	(15,094,867	)	(1,726,247	)	(14,853,556	)	(533,838	)	(32,208,508	)			(32,208,508	)
Inter-segment operating expenses	(855,090	)			(4,125,689	)	(25,837	)	(5,006,616	)	5,006,616
Segment expenses	(15,949,957	)	(1,726,247	)	(18,979,245	)	(559,675	)	(37,215,124	)	5,006,616		(32,208,508	)
Segment results	3,123,138		677,940		13,984,995		(16,045	)	17,770,028		184,263		17,954,291
Interest expense													(1,471,769	)
Interest income													341,785
Gain on foreign exchange net													774,784
Other income net													206,701
Income tax expense													(4,996,877	)
Equity in net income of
associated companies													(21,320	)
Income before minority interest													12,787,595
Unallocated minority interest													(3,487,133	)
Net income													9,300,462
Other information
Segment assets	34,880,880		5,195,289		57,525,303		705,373		98,306,845		(3,139,318	)	95,167,527
Investments in associates	125,963				20,360				146,323				146,323
Total consolidated assets												95,313,850
Total consolidated liabilities	(19,406,607	)	(1,668,367	)	(29,835,091	)	(269,295	)	(51,179,360	)	3,138,319		(48,041,041	)
Capital expenditures	(2,687,201	)	(831,174	)	(8,895,783	)	(25,931	)	(12,440,089	)			(12,440,089	)
Depreciation and amortization	(2,605,839	)	(453,126	)	(6,116,006	)	(41,794	)	(9,216,765	)			(9,216,765	)
Amortization of goodwill and
other intangible assets	(934,505	)	(1,885	)	(42,495	)	(46	)	(978,931	)			(978,931	)
Other non-cash expenses	(353,410	)			(75,091	)	(2,883	)	(431,384	)			(431,384	)

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SEGMENT INFORMATION (continued)


Fixed		Fixed						Total before				Total
wireline		wireless		Cellular		Others		elimination		Elimination		consolidated
Segment results
External operating revenues	16,076,425		2,266,972		33,460,615		318,340		52,122,352				52,122,352
Inter-segment operating revenues	3,827,862		130,845		1,427,751		531,690		5,918,148		(5,918,148	)
Total segment revenues	19,904,287		2,397,817		34,888,366		850,030		58,040,500		(5,918,148	)	52,122,352
External operating expenses	(13,175,440	)	(2,075,546	)	(19,005,866	)	(671,366	)	(34,928,218	)			(34,928,218	)
Inter-segment operating expenses	(2,701,429	)	(92,434	)	(3,107,762	)	(30,580	)	(5,932,205	)	5,932,205
Segment expenses	(15,876,869	)	(2,167,980	)	(22,113,628	)	(701,946	)	(40,860,423	)	5,932,205		(34,928,218	)
Segment results	4,027,418		229,837		12,774,738		148,084		17,180,077		14,057		17,194,134
Interest expense													(1,429,873	)
Interest income													289,266
Gain on foreign exchange net													131,024
Other income net													300,480
Income tax expense													(4,322,212	)
Equity in net income of
associated companies													(6,195	)
Income before minority interest													12,156,624
Unallocated minority interest													(3,223,269	)
Net income													8,933,355
Other information
Segment assets	43,211,770		247,682		60,906,846		845,032		105,211,330		(5,412,694	)	99,798,636
Investments in associates	(4,698,271	)	4,940,016		20,360				262,105				262,105
Total consolidated assets													100,060,741
Total consolidated liabilities	(20,747,388	)	(880,560	)	(29,885,462	)	(330,587	)	(51,843,997	)	5,410,510		(46,433,487	)
Capital expenditures	(2,832,057	)	(25,758	)	(6,416,167	)	(44,340	)	(9,318,322	)			(9,318,322	)
Depreciation and amortization	(2,306,807	)	(543,976	)	(7,036,676	)	(25,153	)	(9,912,612	)			(9,912,612	)
Amortization of goodwill and
other intangible assets	(964,556	)	(5,565	)	(159,888	)	(376	)	(1,130,385	)			(1,130,385	)
Other non-cash expenses	(293,207	)	(26,247	)	(97,750	)	(5,444	)	(422,648	)			(422,648	)

| 47. |
| --- |
| The Company has entered into agreements with several investors under RSA to develop fixed lines,
public card-phone booths (including their maintenance), data and internet network and related
supporting telecommunications facilities. |
| As of September 30, 2010, the Company has 18 RSAs with 16 investors. The RSA are located mainly
in Pekanbaru, East Java, Kalimantan, Makassar, Pare-pare, Manado, Denpasar, Mataram and Kupang,
with concession periods ranging from 71 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 RSA period, the investors transfer the ownership of the
facilities to the Company at a nominal price. |

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47.	RSA (continued)
	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.
	In 2009, the Company made amendments to some PBH agreements for extending the PBH period and the
PBH ratio between the Company and investors.
	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.67,107 million and Rp.11,424 million
as of September 30, 2009 and 2010, respectively (Note 12).
	The investors share of revenues amounted to Rp.113,574 million and Rp.82,700 million for the
nine months period ended September 30, 2009 and 2010, respectively.
48.	TELECOMMUNICATIONS SERVICES TARIFFS
	Under Law No. 36/1999 and Government Regulation No. 52/2000, tariffs for the use of
telecommunications network and telecommunication services are determined by providers based on
the tariffs category, structure and with respect to fixed line telecommunications services, at
price cap formula set by the Government.

| a. |
| --- |
| The Government has issued a 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

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

| b. |
| --- |
| 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 the Long Run Incremental Cost (LRIC) Bottom up
Method. The operators are allowed to apply de-average basic telephone service usage cost and
bundling tariffs, maximum equal to tariff determined using the above formula. |
| --- | --- |
| c. | Interconnection tariffs |
| | 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 Reference Interconnection Offer (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: |

(1) Fixed line

a.	Local termination from local fixed line service tariff is Rp.73/minute.
b.	Local termination from domestic fixed line (local call) service tariff is
Rp.73/minute.
c.	Local termination from domestic fixed line (long distance call) service
tariff is Rp.203/minute.
d.	Long distance termination from domestic fixed line service tariff is Rp.560/minute.
e.	Local termination from cellular mobile network service tariff is Rp.203/minute.
f.	Local termination from satellite mobile network service tariff is Rp.204/minute.
g.	Long distance termination from cellular mobile network service tariff is
Rp.626/minute.
h.	Long distance termination from satellite mobile network service tariff is
Rp.613/minute.
i.	Domestic termination from international network service tariff is Rp.612/minute.
j.	International origination from domestic fixed line to fixed
international network service provider tariff is Rp.612/minute.
k.	Local origination service for long distance call from domestic fixed
line to SLJJ service provider tariff is Rp.203/minute
l.	Local transit service tariff is Rp.69/minute.
m.	Long distance transit service tariff is Rp.295/minute.
n.	International transit service tariff is Rp.316/minute.

(2) Cellular

a.	Local termination and origination service tariff is Rp.261/minute.
b.	Long distance termination and origination service tariff is
Rp.380/minute.
c.	Long distance termination from cellular mobile network service tariff
is Rp.493/minute.
d.	Long distance termination from satellite network service tariff is
Rp.501/minute.
e.	International termination and origination service tariff is
Rp.498/minute.

| As of the issuance date of the consolidated financial statements, the RIO is still in
renewal process. |
| --- |
| Based on Decree No. 14/PER/M.KOMINFO/02/2009 dated February 25, 2009 of the Ministry of
Communication and Information Technology, interconnection among operators is settled through
a telecommunication traffic clearing process. The clearing function is undertaken
collectively by operators under supervision of the Indonesian Telecommunication Regulatory
Body. |
| On March 2, 2009, 12 operators and PT Pratama Jaringan Nusantara (PJN) entered into an
agreement for operating Telecommunicating Traffic Clearing System (Sistem Kliring Trafik
Telekomunikasi or SKTT) that appointed PJN to conduct voice interconnect clearing
process. PJN was appointed to conduct voice interconnection clearing processes with the
following conditions: |

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

c. Interconnection tariffs (continued)

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

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

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

| | As of the date of this report, the operation of voice interconnect clearing is still under
preparation. |
| --- | --- |
| d. | VoIP interconnection tariff |
| | Previously, the MoC Decree No. KM.23/2002 provided that access charges and network lease
charges for the provision of VoIP services were to be agreed between network operators and
VoIP operators. On March 11, 2004, the MoC issued Decree No. 31/2004, which stated that
interconnection charges for VoIP are to be fixed by the MoC. Currently, the MoCI has not yet
determined what the new VoIP interconnection charges will be. Until such time as the new
charges are fixed, the Company will continue to receive connection fees for calls that
originate or terminate on the Companys fixed line network at an agreed fixed amount per
minute. |
| e. | Network lease tariff |
| | The Government regulated the form, type and tariff structure and tariff formula for services
of network lease through MoCI Decree No. 03/Per/M.KOMINFO/1/2007 dated January 26, 2007.
Pursuant to the MoCI Decree, the Government released 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 Company issued network leased tariff which was valid starting from January 21, 2010, in
form of: |

1.	Network leased activation fee starting from Rp.2,400,000.
2.	Monthly usage tariff for local end to end (under 25 km) varies starting from
Rp.3,800,000 up to Rp.74,400,000 depending on the capacity, for monthly usage tariff
for long distance end to end (over 25 km) varies starting from Rp.7,100,000 up to
Rp.519,700,000 depending on the capacity.
3.	Monthly usage tariff for local point to point (under 25 km) varies starting
from Rp.1,500,000 up to Rp.37,200,000 depending on the capacity, for monthly usage
tariff for long distance point to point (over 25 km) varies starting from Rp.4,800,000
up to Rp.482,500,000 depending on the capacity.

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

f.	Public phone kiosk (warung telekomunikasi or wartel) tariff
	The MoC issued Decree No. KM. 46/2002 dated August 7, 2002 regarding the operation of phone
kiosks as replaced by the MoCI Regulation No. PM.05/Per/M.KOMINFO/I/2006 dated January 30,
2006, which provided the Company the entitlement to retain a maximum of 70% of the phone
kiosk basic tariffs for domestic calls and up to 92% of phone kiosk basic tariffs for
international calls. It also provides that the airtime from the cellular operators shall
generate at a minimum 10% of the kiosk phones revenues.
g.	Tariff for other services
	The tariffs for satellite rental and other telephony and multimedia services are determined
by the service provider by taking into account the expenditures and market price. The
Government only determines the tariff formula for basic telephony services. There is no
stipulation for the tariff of other services.
	On September 27, 2010, the Company reduced the tariff for internet services by an average of
22% depending on the packages subscribe.
h.	Universal Service Obligation (USO)
	The MoCI issued Regulation No. 15/Per/M.KOMINFO/9/2005 dated September 30, 2005, which sets
forth the basic policies underlying the USO program and requires telecommunications
operators in Indonesia to contribute 0.75% of their gross revenues (with due consideration
for bad debts and interconnection charges) for USO development. Based on the Governments
Decree No. 7/2009 dated January 16, 2009, the contribution is changed to 1.25% of gross
revenues, net of bad debts and/or interconnection charges and/or connection charges.
	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 and 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.
	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 territories except
Sulawesi, Maluku and Papua. Telkomsel will obtain local fixed-line licenses and the right to
use radio frequency in 2390 MHz-2400 MHz.

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TELECOMMUNICATIONS SERVICES TARIFFS (continued)

h.
Subsequently, the agreements have been amended. The latest amendments dated December 29,
2009 cover, among other things:

	Relocations and additions of certain sites,
	Changes in the price to Rp.1.76 trillion,
	Extending pre-operating periods to January 31, 2010 and February 28, 2010 and
operating periods to March and April 2014.

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 Minister granted Telkomsel principle licenses to operate a fixed-line network under USO program, the provision of which is subject to an operation acceptance test within six months. The license is extendable for three months based upon evaluation of the DGPT. Telkomsel has obtained the acceptance certificates for package 1, 3 and 6. The operation acceptance tests for package 2 and 7 have been completed, and subsequently, Telkomsel has received the acceptance certificates for those packages. On January 22, 2010, Telkomsel obtained acceptance certificates for package 2 and 7. Subsequently, on January 25, 2010 and January 28, 2010, respectively, based on Decrees No. 39/KEP/M.KOMINFO/01/2010 and No. 41//KEP/M.KOMINFO/01/2010, Telkomsel was granted operating licenses to provide local fixed-line under the USO program in areas covered by agreements between Telkomsel and BTIP. The licenses are valid until the expiration of the agreements, extendable subject to evaluation

COMMITMENTS

| a. |
| --- |
| As of September 30, 2010, capital expenditures committed under the contractual arrangements,
principally relating to procurement and installation of switching equipment, transmission
equipment and cable network, are as follows: |

	Amounts in — foreign currencies	Equivalent
Currencies	(in millions)	in Rupiah
Rupiah		3,857,071
U.S. Dollars	477	4,253,685
Euro	1	8,765
Total		8,119,521

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COMMITMENTS (continued)

a.
The above balance includes the following significant agreements:

(i) Company

				Outstanding
				purchase
				commitment as of
Contracting	Date of	Significant provisions of		September 30,
parties	agreement	the agreement	Total contract value	2010
Company and PT Abhimara
Citra Abadi consortium	November 9, 2007	Procurement and installation agreement
for Metro Ethernet Batch 1	Rp.171,295 million	Rp.13,077 million
Company and PT Datacomm
Diangraha	November 28, 2007	Procurement and installation agreement
Metro Ethernet Batch 2	Rp.292,814 million	Rp.44,472 million
Company and Huawei Tech	March 31, 2008	Procurement and installation agreement
for Metro Ethernet Batch 3 in Divre V	Rp.113,553 million	Rp.11,447 million
Company and G-Pas
Consortium	April 18, 2008	Procurement and installation agreement
for Outside Plant Fiber Optic 2008
Batch 8 Divre VII	Rp.146,368 million	Rp.33,584 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.222,968 million	Rp.24,914 million
Company and G-Pas
Consortium	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 10
in Netre Sumbagsel
Area	Rp.116,314 million	Rp.36,624 million
Company and PT
Telekomindo Primakarya	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 11
Netre Sumbagsel	Rp.126,873 million	Rp.473 million
Company and PT Brimbun
Raya Indah	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic Batch 12
Netre, Jakarta and
West Java	Rp.168,914 million	Rp.17,757 million
Company and Lintas
Tehnologi Indonesia
Consortium	September 26, 2008	Procurement and
installation
agreement for
Inside Plant
Backbone Kalimantan
Sulawesi	Rp.100,451 million	Rp.12,327 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.213,635 million	Rp.104,610 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase
				commitment as of
Contracting	Date of	Significant provisions of		September 30,
parties	agreement	the agreement	Total contract value	2010
Company and PT NSW
- Fujitsu
Consortium	December 30, 2008	Procurement and
installation agreement
for Ring Project
JaKa2LaDeMa	US$117.5 million	US$0.4 million
Company and ISS
Reshetnev	March 2, 2009	Procurement agreement for Telkom-3 Satellite	Rp.178.9 million	Rp.116.5 million
Company and APT
Satellite Company
Limited	March 23, 2009	142E Degree Orbital Position Cooperation Agreement	Rp.18.5 million	Rp.13.3 million
Company and
Sansaine Huawei
Consortium
(Sansaine Huawai)	May 27, 2009 June 15, 2009	a. Cooperation agreement
for procurement and
installation of MSAN ALU
and Secondary Access
2008 Batch 3 b. Cooperation agreement
for procurement and
installation of MSAN ALU
and Secondary Access
2008 Batch 1	US$6.4 million and
Rp.76,725 million US$6.4 million and
Rp.63,822 million	US$2.5 million and
Rp.25,500 million US$2.2 million and
Rp.21,727 million
Company and ZTE
Consortium	June 2, 2009	Cooperation agreement
for procurement and
installation of MSAN ALU
and Secondary Access
2008 Batch 2	US$24.3 million and
Rp.104,143 million	US$16.4 million and
Rp.56,340 million
Company and PT
Aldomaru	June 11, 2009	Procurement agreement Roll Out Infusion PL 2009	Rp.85,868 million	Rp.37,784 million
Company and PT
Dharma Kumala Utama	July 29, 2009	Procurement and
installation agreement
for Fiber Optic Cable
Access and RMJ 2009 in
Central Java and East
Java Batch 1	Rp.64,550 million	Rp.5,316 million
Company and
Sansaine Huawei	August 3, 2009	Procurement and
installation agreement
for Softswitch and
modernization of MSAN
Divre I, Divre II, Divre
III and Divre IV	US$14.7 million and
Rp.29,740 million	US$1.9 million and
Rp.11.481 million
Company and
Sansaine Huawei	November 24, 2009	Procurement and
installation agreement
for Palapa Ring
Mataram-Kupang Cable
System Project (MKCS)	US$52.3 million and
Rp.114,949 million	US$52.3 million and
Rp.114,949 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase
				commitment as of
Contracting	Date of	Significant provisions of		September 30,
parties	agreement	the agreement	Total contract value	2010
Company and Tekken
DMT Consortium	November 25, 2009	Procurement and
installation agreement
for Fiber Optic Cable
Access Divre VI
Kalimantan	Rp.57,381 million	Rp.21,556 million
Company and NEC
NSN Consortium	December 16, 2009	Procurement and
installation agreement
for Capacity Expansion
Ring Jasuka Backbone
2009	US$14.8 million and
Rp.203,077 million	US$9.1 million and
Rp.107,738 million
Company and ZTE	December 21, 2009	Procurement and
installation agreement
for Improvement and
Upgrade Java Backbone
2009	Rp.85,187 million	Rp.36,904 million
Company and ZTE	April 29, 2010	Item price procurement
and installation
agreement for Insert
Card IP-DSLAM	Rp.58,026 million	Rp.8,593 million

| (ii) |
| --- |
| In August 2007, due to the expiration of the above agreements, based on letters from
Ericsson AB and Ericsson Indonesia and Nokia Siemens Networks (which currently
represents Nokia Corporation, Nokia Network and Siemens AG), those companies agreed to: |

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

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 year period. |

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COMMITMENTS (continued)

a. Capital expenditures (continued)

| (ii) |
| --- |
| 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, provided
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 June 30, 2008. |
| On April 17, 2008, Telkomsel, Ericsson Indonesia and 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 year period. |

| In March and June 2009, Telkomsel, Ericsson Indonesia, Ericsson AB, PT Nokia Siemens
Indonesia, Nokia Siemens Network Oy, Huawei International, Huawei Tech and ZTE entered
into 2G BSS and 3G UTRAN Rollout Agreements for the provision of 2G GSM BSS and 3G UMTS
Radio Access Network. |
| --- |
| In accordance with the agreements, the Vendors should provide equipment and related
services, including amongst other things: |

	Participate in Joint Planning process
	Provide SITAC and CME works
	Provide software license

Provision of the equipment and services should be aligned with other agreements such as Combined 2G BSS and 3G Core Network Rollout and Technical Support Agreements dated April 17, 2008.

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COMMITMENTS (continued)

a. Capital expenditures (continued)

| (ii) |
| --- |
| During the terms, the vendors (excluding Huawei International, Huawei Tech and ZTE)
agreed to provide vouchers, free of charge equipment and other commercial incentives to
Telkomsel. Part of the vouchers totaling US$107.05 million (equivalent to Rp.1,172
billion), provided by the vendors as an adjustment to prices stated in PO issued since
July 1, 2007. |
| The agreements are valid until the later of: |

	Three years after the effective date; and
	The date on which the last PO under these agreements terminates or expires in
respect of any purchase order issued prior to the expiry of three year period.

| Telkomsel may extend terms of the agreements for a period up to 12 months. |
| --- |
| Pursuant to expiry of the trial period under 2G BSS and 3G UTRAN Network Trial
Agreements with ALU, based on a Settlement Agreement on February 5, 2010, Telkomsel
agreed to give a compensation to ALU of US$7.2 million (equivalent to Rp.67.68 billion)
and Rp.18.4 billion which was charged to 2009 consolidated statements of income. |
| On February 3, 2010, Telkomsel entered into the following agreements for maintenance
and procurement of equipment and related services: |

| | Next Generation Convergence IP RAN Rollout and Technical Support with PT Packet
Systems Indonesia and Huawei Tech; and |
| --- | --- |
| | Next Generation Convergence Core Transport Rollout and Technical Support with
PT Datacraft Indonesia and Huawei Tech. |

The agreements commence on the effective date and continue until the later of:

	The date which is three years after the effective date; and
	The date on which the last PO under the agreements terminate or expire in
respect of any PO issued prior to the expiry of the three year period.

| Telkomsel may extend the term of the agreements by a period of not more than two years. |
| --- |
| On February 8, 2010, Telkomsel entered into an Online Charging System and Service
Control Points System Solution Development Agreement with Amdocs Software Solutions
Limited Liability Company and PT Application Solutions. |
| The agreement commences on the effective date and continues until the later of: |

	The date which is five 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 five year period.

Telkomsel may extend the term of the agreement by a period of not more than three years.

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COMMITMENTS (continued)

b.	Borrowings and other credit facilities
	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 on July 31, 2010. Under
these facilities, as of September 30, 2010, Telkomsel has issued a bank guarantee of
Rp.20,000 million (equivalent to US$2.2 million) for a 3G performance bond (Note 49c.i).
Borrowings under the facilities bear interest at Singapore Interbank Offered Rate (SIBOR)
plus 1.25% per annum (US$). As of September 30, 2009 and 2010, there were no outstanding
loans under these facilities.
c.	Others

| (i) |
| --- |
| With reference to the Decision Letter No. 07/Per/M.KOMINFO/2/2006 and No.
268/KEP/M.KOMINFO/9/2009 of the MoCI (Notes 1d.a and 2j), Telkomsel amongst other
commitments, is required to: |

Pay annual BHP fee which is determined based on a certain formula over the license term (10 years). The BHP for the fifth year of the former license was paid in February 2010 and the BHP for the second year of the additional license was paid in September 2010 (Note 14iii). The commitments arising from the BHP as of September 30, 2010 and up to the expiry period of the license using the formula set forth in the Decision Letter are as follows:

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

Notes:

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

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

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COMMITMENTS (continued)

c. Others (continued)

(i) 3G license (continued)

2.	Provide roaming access for the existing 3G operators.
3.	Contribute to USO development.
4.	Construct a 3G network which covers a minimum number of provinces, as
follows:

	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.

| (ii) |
| --- |
| 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). In 2008, 2 companies draw back from the consortium, hence the total number of
Palapa Ring Consortiums member become 4 companies including the Company. |

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COMMITMENTS (continued)

c. Others (continued)

(iii)	Radio Frequency Usage
	In accordance with the prevailing laws and telecommunications regulations, the operators
are obliged to register their radio stations with the DGPT to obtain frequency usage
license, except those stations that use 2.1 GHz frequency bandwidth (Note 49c.i). 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 carrier (TX) for the Company and transceivers (TRX) for Telkomsel of the
radio stations. The fees for 2010 will be determined based on 17,664 TX in operation as
of September 30, 2010, with a fee ranging from Rp.0.07 million to Rp.17.55 million for
each TX and based on 327,008 TRXs in operation as of September 30, 2010, with a fee
ranging from Rp.3.4 million to Rp.15.9 million for each TRX (Note 8).
(iv)	Apple, Inc
	On January 9, 2009, Telkomsel entered into an agreement with Apple, Inc for the purchase
of iPhone products, marketing it to customers using a third party (PT Trikomsel OKE) and
providing 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.
(v)	Operating leases

	Less than	1-5	More than
Total	1 year	years	5 years
Operating leases	263,963	64,521	171,148	28,294

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.92,793 million as of September 30, 2010.

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CONTINGENCIES (continued)

| b. | On January 2, 2006, the Office of the Attorney General launched an investigation into
allegations of misuse of telecommunication facilities in connection with the provision of
VoIP services, whereby one of the 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 May 4,
2010, the Company received SCs decision that found the defendant guilty and sentenced the
defendant to a six-year prison term, Rp.500 million penalty, and indemnity amounting
Rp.30,115 million by jointly liability. The defendants filed a judicial review to SC for the
decision. As of the issuance date of the consolidated financial statements, no decision has
been reached on the judicial review. |
| | 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 a 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 defendants guilty.
On January 16, 2009, one of the defendants in Bali High Court has filed an appeal to the
Indonesian SC. On March 22, 2010, SC found the defendants not guilty. As of the issuance
date of the consolidated financial statements, the Office of the Attorney General is still
reviewing the result to determine an action to be taken including the option for a judicial
review by the SC. |
| c. | 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 was proven not to have violated article 25.1.b of the Law,
	Telkomsel had violated article 17.1 of the Law,
	Temasek Holdings and certain affiliated companies were instructed to release their
ownership either in Indosat or Telkomsel with the following conditions:

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

Telkomsel was to be charged a penalty of Rp.25,000 million and instructed Telkomsel to discontinue the imposition of high tariffs and reduce its tariffs by least 15%.

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CONTINGENCIES (continued)

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

	Telkomsel was proven not to have violated 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 their ownership by 50% in each
of those companies within twelve months from the date of the decision becoming final
and legally binding at the following conditions:

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

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

| | On May 22, 2008, Telkomsel filed an appeal to the SC. In its verdict on September 9, 2008,
the SC revoked the Courts verdict on the instruction to Temasek Holdings and certain
affiliated companies to release their ownership in either Indosat or Telkomsel. On May 14,
2009, Telkomsel filed a judicial review to the SC on the verdict. On May 5, 2010, SC
pronounced that it rejected Telkomsels appeal for the judicial review. As of the issuance
date of the consolidated financial statements, Telkomsel has not received any formal verdict
form the SC. |
| --- | --- |
| d. | Certain subscribers of Telkomsel, Indosat and PT XL Axiata Tbk (formerly PT
Excelcomindo Pratama Tbk) 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 classaction lawsuits in Tangerang
shall be consolidated with other various locations. The subscribers in other various
locations objected to the decision and filed an appeal to the SC. On January 21, 2009, in
its verdict No. 01K/Pdt.Sus/2009, the SC approved the subscribers appeal, accordingly, the
class action lawsuit is processed separately in the respective Court. |
| | On January 27, 2010, the Central Jakarta District Court decided to revoke a class action
lawsuit which was filed by certain subscribers of other various locations |
| | On May 24, 2010, the class-action lawsuits filed in Tangerang District Courts against the
Parties by certain subscribers has been revoked and the case is closed. |
| | Management believes that Telkomsel has applied tariffs in accordance with prevailing
regulations, accordingly, such allegation has no strong basis. |

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CONTINGENCIES (continued)

| e. | 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 reached on the appeal. |
| f. | On March 30, 2010, the Company was notified of MoCI Letter No. 152/M.KOMINFO/03/2010
dated March 26, 2010 regarding the explanation on the Rights of Usage (Biaya Hak
Pengunaan or BHP) fee of Telkom Flexi Calculation and a Letter of Technical Team of
State Revenue Optimization of Telecommunication Sector Task Force Fields of Non-Tax State
Revenues (Penerimaan Negara Bukan Pajak or PNBP) through a letter of the Director of
Government Institute Supervision for Other Economic Affairs of The Financial and
Development Supervisory Agency (Badan Pengawasan Keuangan dan Pembangunan or BPKP)
No.S-71/OPN.TEKNIS.1.2.2/03/2010. The letter required the Company to make additional
payments in relation to its historical BHP license fee obligations and applied an
additional administrative penalty. The Company has recognized the additional BHP
obligations in its financial results. Pursuant to the reconciliation result between the
Company and DGPT, the amount should be paid by the Company has been agreed so that the
Company made an adjustment to the recorded liabilities. As of the issuance date of the
consolidated financial statements, the Company believes the penalty should not apply. As of
the issuance date of the consolidated financial statements, the Company has not received
Payment Letter or Surat Perintah Pembayaran (SPP) from DGPT. |

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

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

Foreign		Foreign
currencies	Rupiah	currencies	Rupiah
(in millions)	equivalent	(in millions)	equivalent
Assets
Cash and cash equivalents
U.S. Dollars	180.67	1,746,554	146.68	1,308,686
Euro	33.31	471,533	18.75	227,624
Singapore Dollars	2.73	18,634	0.37	2,508
Malaysian Ringgit	0.03	96	0.03	100
Japanese Yen	0.20	22	0.38	40
Temporary investments
U.S. Dollars	7.53	72,702	9.12	81,381
Singapore Dollars	0.29	1,990
Trade receivables
Related parties
U.S. Dollars	2.89	27,873	2.94	26,247
Euro			0.11	1,316
Third parties
U.S. Dollars	61.43	593,731	76.47	682,173
Singapore Dollars	0.00	12
Other receivables
U.S. Dollars	0.37	3,589	0.60	5,396
Great Britain Pound sterling	0.04	597	0.00	66
Euro	0.02	220	0.00	34
Singapore Dollars	0.01	91
Other current assets
U.S. Dollars	0.63	6,099	0.60	5,339
Advances and other non-current assets
U.S. Dollars	2.58	24,986	2.51	22,418
Singapore Dollars	0.05	344
Escrow accounts
U.S. Dollars	4.65	44,937	4.61	41,129
Total assets		3,014,010		2,404,457

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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	6.96	67,379	10.33	92,146
Great Britain Pound sterling	0.00	1
Third parties
U.S. Dollars	464.24	4,493,428	426.04	3,802,334
Euro	32.73	463,452	3.29	39,975
Singapore Dollars	4.78	32,741	2.32	15,705
Malaysian Ringgit			0.55	1,600
Great Britain Pound sterling	0.01	86	0.04	516
Japanese Yen	0.51	55	0.51	55
Norway Krone			0.03	39
Swiss Franc	0.01	59	0.00	15
Hong Kong Dollars			0.01	10
Australian Dollars	0.02	145
Other payables
U.S. Dollars	0.22	2,143	0.12	1,082
Singapore Dollars	0.02	150	0.01	34
Malaysian Ringgit	0.54	1,517
Euro	0.01	109
Accrued expenses
U.S. Dollars	10.95	105,853	7.58	67,690
Japanese Yen	135.46	14,644	126.72	13,593
Singapore Dollars	3.96	27,104
Advances from customers and suppliers
U.S. Dollars	1.27	12,252	0.95	8,490
Euro			0.08	1,013
Current maturities of long-term liabilities
U.S. Dollars	125.60	1,214,652	83.16	742,621
Japanese Yen	767.90	83,017	767.90	82,372
Notes
U.S. Dollars			15.21	135,800
Long-term liabilities
U.S. Dollars	172.95	1,672,459	166.75	1,488,989
Japanese Yen	11,134.52	1,203,753	10,336.62	1,112,027
Total liabilities		9,394,999		7,606,106
Net liabilities		(6,380,989	)	(5,201,649	)

| As of September 30, 2009, the net monetary (liabilities) assets position denominated in
foreign currencies of the Company and its subsidiaries is (US$521.45) million and Euro0.59
million. As of September 30, 2010, the net monetary liabilities assets position denominated in
foreign currencies of the Company and its subsidiaries is (US$466.61) million and Euro15.49
million. |
| --- |
| 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. |

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| 51. |
| --- |
| The Company and its subsidiaries overall risk management programs focus on the unpredictability
of financial markets and seek to minimize potential adverse effects on the financial performance
of the Company and its subsidiaries. Management provides written policy for foreign currency
risk management mainly through time deposits placements and hedging to cover foreign currency
risk exposures for the time range of 3 up to 12 months. |
| If the Company and its subsidiaries reports monetary assets and liabilities in foreign
currencies as of September 30, 2010 using the rates on October 28, 2010 the unrealized foreign
exchange loss will increase by the amount of Rp.26,833 million. |

FINANCIAL ASSETS AND LIABILITIES

a.	Financial risk management
	The Company and its subsidiaries are exposed to market risks that arise from changes in
exchange rates, interest rates and equity price risk, each of which will have an impact on
us. The Company and its subsidiaries do not generally hedge its long-term liabilities in
foreign currencies but hedge its obligations for the current year.
	The Company and its subsidiaries activities expose it to variety of financial risks: market
risk (including foreign exchange risk and interest rate risk), credit risk and liquidity
risk. The Company and subsidiaries overall financial risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the
financial performance of the Company and subsidiaries. The Company and its subsidiaries use
derivative financial instruments such as forward foreign currency contracts, cross currency
swap and interest rate swap to hedge certain risk exposures. Derivatives are exclusively
used for hedging purposes, i.e. not as trading or other speculative instruments. Financial
risk management is carried out by Treasury Management unit under policies approved by
Directors. Treasury Management unit identifies, evaluates and hedges financial risks.
b.	Foreign exchange risk
	The Company and subsidiaries exposure to exchange rate fluctuations results primarily from
long-term debt obligations and account receivables and payables paid for through draw downs
under the Government on-lending program. The obligations as well as both account receivables
and payables are denominated, among other things, in U.S. Dollars, Euro, Singapore Dollars,
Great Britain Pound sterling and Japanese Yen (Note 51). Part of these obligations might be
compensated by the increases in the value of time deposits denominated in foreign currencies
and increases in the value of account receivables in foreign currencies. The information on
instruments and transactions that are sensitive to foreign exchange rates, among other
things, including U.S. Dollars, Euro, Singapore Dollars, Great Britain Pound sterling and
Japanese Yen debt obligations and term deposits and the Company and its subsidiaries
account payables and receivables.

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FINANCIAL ASSETS AND LIABILITIES (continued)

b.	Foreign exchange risk (continued)
	Changes in exchange rates have effected and may continue to affect the Company and its
subsidiaries results of operations and cash flows. Some of the Company and its
subsidiaries debt obligations and capital expenditures are and expected will continue to
be, denominated in U.S. Dollars. Most of the Company and its subsidiaries revenues are
denominated in Rupiah. Currently, the Company and its subsidiaries hedge a portion of its
foreign currency exposure principally because the annual USD-denominated operating revenue
is less than the sum of USD-denominated capital expenditures, annual payments of
USD-denominated principal and interest payments. In an effort to manage foreign currency
exposure, the Company and its subsidiaries enter into forward foreign currency contracts and
cross currency swap contracts with international financial institutions. For the forward
foreign currency contracts, the Company and its subsidiaries typically pays a fixed rate
premium. As a result these contractual arrangements, the Company and its subsidiaries
believe that it has reduced some of its foreign exchange risk exposure, although not all of
our foreign exchange exposure is hedged and replacement hedging agreements may not be
available when the current hedging agreements expire.
c.	Interest rate risks
	The Company and its subsidiaries exposure to interest rate fluctuations results primarily
from changes to the floating rate applied for long-term debt. This risk relates to long-term
loans either under the Government on-lending program or syndication of bank that has been
used to finance the Company and its subsidiaries capital expenditures and corporate
actions. The interest charged refers to the rate applicable for the Rupiah portion based on,
among other things, the average for the preceding six months for three month certificates
issued by Bank Indonesia plus 1.00% or refers to average interest rate of three-month JIBOR
plus 1.20% or 2.45%. For the non-Rupiah portion, among other things, refers to three-month
LIBOR plus 2.50%.

Interest rate fluctuation is monitored to minimise any negative impact to the Company and subsidiaries financial position. Borrowings issued at variable rates expose the Company and its subsidiaries to interest rate risk. To measure market risk fluctuations in interest rates, the Company and its subsidiaries primarily uses interest margin and maturity profile of the assets and liabilities based on changing schedule of the interest rate..

d.	Equity price risks
	Our long-term investments consist primarily of minority interests in the equity of private
Indonesian companies. The financial performance of these companies may be affected by the
macro economic and social conditions, such as the level of economic activity, the
fluctuation of Rupiah exchange rates against other currencies, inflation and interest rates.
e.	Credit risks
	Credit risk arises as the lender and investors trust is declining which cause the Company
and its subsidiaries financial condition decline and unable to comply with the covenant set
by the lender, as the consequence of financial facility accepted by the Company and its
subsidiaries. Credit risk will increase cost of equity, especially loan, which will decrease
the Company and its subsidiaries value.

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FINANCIAL ASSETS AND LIABILITIES (continued)

e.	Credit risks (continued)
	The Company and its subsidiaries monitor the agreed covenants periodically and always trying
to comply with the requirement.
f.	Liquidity risks
	Liquidity risk arises in situations where the Company and its subsidiaries has difficulties
in fulfilling financial liability in accordance with the time and amount which was already
set before. Prudent liquidity risk management implies maintaining sufficient cash and cash
equivalents in order to fullfil the Company and its subsidiaries financial liabilities. The
Company and its subsidiaries manage liquidity risk by continously monitoring forecast and
actual cashflows and matching the maturity profiles of financial assets and liabilities.

Fair value of financial assets and liabilities
Fair value is the amount for which an asset could be exchanged, or liability settled, in an
arms-length transaction basis.
The table below sets out the carrying amount and fair value of those financial assets and
liabilities not presented on the Companys consolidated balance sheets at their fair values:

Carrying value	Fair value
Long-term loans	19,210,221	18,552,198
Long-term bonds and notes	3,228,359	3,370,960

| | The fair value of long-term loans are estimated by using discounted cash flow applying the
effective interest rate charged by the lenders for the last utilisation in each currency
borrowings. The fair value of bonds is estimated by using the last quoted market price. |
| --- | --- |
| 53. | SUBSEQUENT EVENTS |

| a. | On October 13, 2010, the Company entered into a loan agreement with BRI and BNI for
loan facilities of Rp.3,000,000 million and Rp.1,000,000 million, respectively. |
| --- | --- |
| b. | On October 20, 2010, Telkomsel received a Tax Collection Letter (Surat Tagihan Pajak
or STP) for an underpayment of income tax article 25 for 2010 fiscal year of Rp.184
billion (including a penalty of Rp.10 billion). |

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54.
The recent accounting pronouncements in Indonesia that are relevant to the Company and its
subsidiaries are as follow:

(i)	PSAK 1 (Revised 2009), Presentation of Financial Statements
	In December 2009, the DSAK issued PSAK 1 (Revised 2009), Presentation of Financial
Statements which amends PSAK 1 (1998), Presentation of Financial Statements. PSAK 1
(Revised 2009) prescribes the basis for presentation of general purpose financial
statements, to ensure comparability both with the financial statements of previous periods
and with the financial statements of other entities. PSAK 1 (Revised 2009) sets out
overall requirements for the presentation of financial statements, guidelines for their
structure and minimum requirements for their content and requires the Company and its
subsidiaries to issue a complete set of financial statements which comprises of a
statement of financial position, a statement of comprehensive income, a statement of
changes in equity, a statement of cash flows, notes comprising a summary of significant
accounting policies and other explanatory information and a statement of financial
position as at the beginning of the earliest comparative period when the Company and its
subsidiaries apply an accounting policy retrospectively or make a retrospective
restatement of items in their financial statements, or when they reclassify items in their
financial statements. PSAK 1 (Revised 2009) shall be effective for the reporting period
beginning on or after January 1, 2011. PSAK 1 (Revised 2009), Presentation of Financial
Statements is expected to have significant impact on presentation in the consolidated
financial statements and its related disclosure.
(ii)	PSAK 5 (Revised 2009), Operating Segments
	In December 2009, the DSAK issued PSAK 5 (Revised 2009), Operating Segments which amends
PSAK 5 (Revised 2000), Segment Reporting. PSAK 5 (Revised 2009) requires the Company and
its subsidiaries to disclose information that enables users of the consolidated financial
statements to evaluate the nature and financial effects of the business activities. PSAK 5
(Revised 2009) enhances the definition of operating segment and the procedures used to
identify and report operating segment. PSAK 5 (Revised 2009) shall be effective for the
reporting period beginning on or after January 1, 2011. The Company and its subsidiaries
are currently assessing the impact of the requirement of PSAK 5 (Revised 2009), Operating
Segments on the consolidated financial statements.
(iii)	PSAK 48 (Revised 2009), Impairment of Assets
	In December 2009, the DSAK issued PSAK 48 (Revised 2009), Impairment of Assets which
amends PSAK 48, Impairment of Assets. PSAK 48 (Revised 2009) provides guidance on how to
identify cash generating unit and measure impairment of assets. An impairment loss shall
be recorded for a cash-generating unit when the recoverable amount of the unit is less
than its carrying amount. The impairment loss shall be allocated to reduce the carrying
amount of any goodwill allocated to the cash-generating unit and to other assets of the
unit pro rata on the basis of the carrying amount of each asset in the unit. PSAK 48
(Revised 2009) requires the Company and its subsidiaries to assess at the end of each
reporting period whether there is any indication that an asset may be impaired and
impairment loss recognized in prior periods for assets other than goodwill may no longer
exist. PSAK 48 (Revised 2009) shall be effective for the reporting period beginning on or
after January 1, 2011 and prospectively applied. The Company and its subsidiaries are
currently assessing the impact of the requirement of PSAK 48 (Revised 2009), Impairment
of Assets on the consolidated financial statements.

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RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA (continued)

(iv)	PSAK 58 (Revised 2009), Non-current Assets Held for Sale and Discontinued Operations
	In December 2009, the DSAK issued PSAK 58 (Revised 2009), Non-current Assets Held for
Sale and Discontinued Operations which amends PSAK 58 (Revised 2003), Discontinued
Operations. PSAK 58 (Revised 2009) enhances the guidance to classify and measure assets
held for sale. Asset held for sale shall be classified as current assets separately from
other accounts. PSAK 58 (Revised 2009) shall be effective for the reporting period
beginning on or after January 1, 2011 and prospectively applied. The Company and its
subsidiaries are currently assessing the impact of the requirement of PSAK 58 (Revised
2009), Non-current Assets Held for Sale and Discontinued Operations on the consolidated
financial statements.
(v)	ISAK 10 (Revised 2009), Customer Loyalty Programmes
	In December 2009, the DSAK issued ISAK 10 (Revised 2009), Customer Loyalty Programmes.
ISAK 10 (Revised 2009) provides guidance on how to record and measure grants award credits
to customers. ISAK 10 (Revised 2009) requires the award credits to be separately
identified and measured by reference to their fair values. ISAK 10 (Revised 2009) shall be
effective for reporting periods beginning on or after January 1, 2011. The Company and its
subsidiaries are currently assessing the impact of the requirement of ISAK 10 (Revised
2009), Customer Loyalty Programmes on the consolidated financial statements.

| 55. |
| --- |
| Certain accounts in the consolidated financial statement for the nine months period ended
September 30, 2009 has been reclassified to conform with the presentation of accounts of the
consolidated financial statements for the nine months period ended September 30, 2010, with
details of significant accounts reclassification are as follows: |

reclassification		Reclassification		reclassification
Consolidated balance sheet
September 30, 2009:
NON-CURRENT ASSETS
Deferred tax assets net			97,918		97,918
NON-CURRENT LIABILITIES
Deferred tax liabilities net	(3,304,478	)	(97,918	)	(3,402,396	)

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ACCOUNTS RECLASSIFICATION (continued)

reclassification		Reclassification		reclassification
Consolidated income statement
for the nine months
ended September 30, 2009:
OPERATING REVENUES
Telephone
Cellular*	22,403,979		(899,813	)	21,504,166
Data, internet and information
technology services*	12,877,686		899,813		13,777,499
OPERATING EXPENSES
Depreciation and amortisation	(9,202,664	)	(993,032	)	(10,195,696	)
Personnel	(5,742,177	)	196,471		(5,545,706	)
Operations, maintenance and
telecommunication services*	(10,757,987	)	(196,471	)	(10,954,458	)
General and administrative	(2,836,705	)	993,032		(1,843,673	)

Balance after restatement, refer to Note 2q

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PRESS RELEASE TEL. 271 /PR000/COP-A0070000/2010

TELKOM GROUP CUSTOMERS REACHED 118.2 MILLION AND OPERATING REVENUE INCREASED Rp52.1 TRILLION IN 9M/2010

Jakarta, October 29, 2010 Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk. (TELKOM or the Company) has filed its un-audited Financial Statements for the nine month period ended September 30, 2009 with BAPEPAM-LK (the Indonesian Capital Market Supervisory Agency). TELKOMs results were highlighted by growth in consolidated revenues, solid gains in cellular customers and strong sales in Data, Internet and IT Services.

The key highlights of the 3Q/2010 Results are:

| | Consolidated operating revenue for 9M10 rose to Rp52.1 trillion, up 3.9% compared with the
year-earlier period. |
| --- | --- |
| | Our cellular customer base grew strongly by 16.7% year on year (YoY) to 93.1 million customers in
September 2010 with a total net add of 11.5 million customers. |
| | Broadband subscribers increased by 155% to 6,381K with Data, Internet and ITS services
consolidated revenue up 15%. |
| | The decline in wireline revenue slowed to 8.8% in 9M10. |

As of September 30, 2010, TELKOM recorded an increase in total operating revenue of Rp1,960 billion or 3.9%. The gain was mostly contributed by growth in Data, Internet and IT Services revenue of Rp2,071 billion or 15.0%. Cellular revenue increased by Rp552 billion or 2.6%, while Fixed Line revenue declined by Rp952 billion or 8.8%.

As of September 30, 2010, total number of TELKOM Group Customers reached 118.2 million, with breakdown as follows:

	Fixed wirelines in service has remained essentially flat at approximately 8.3 million subscribers.
	Flexi obtained 1,617K net additional subscribers, bringing total subscribers to 16.8 million subscribers.
	Telkomsel saw strong net-add in 3Q10 of 4.8 million customers, for a net-add during 2010 of 11.5 million
customers. At the end of 3Q10, Telkomsels customer base reached 93.1 million customers, consisting of 2.1 million
postpaid and 91.0 million prepaid customers. This represented 16.7% growth from a year ago on the back of
continuous product and service innovation, strong brand positioning and an improved network.

TELKOMs operating expenses increased by Rp2,720 billion or 8.4%. Operating expenses were impacted by a Rp1,901 billion or 17.4%, rise in operating and maintenance expenses, and an increase in depreciation and amortization expenses of Rp847 billion or 8.3%, in line with our addition in productive assets. Meanwhile, personnel expenses and general and administration expenses fell by Rp118 billion and Rp117 billion or 2.1% and 6.4%, respectively.

TELKOM experienced a decrease in gain on foreign exchange of Rp644 billion compared to the previous period, which led a sharp rise in other expenses-net of Rp545 billion or 321%. This reduced our net profit by 3.9% or Rp367 billion to Rp8,933 billion. However, TELKOM posted an increase in EBITDA of Rp87 billion from Rp28,150 billion to Rp28,237 billion.

A summary of the balance sheet, income statements and operational highlights follows:

(In Billion Rp)		(decrease)
Total Assets	95,313.8	100,060.7	5.0
Total Liabilities	48,041.0	46,433.5	(3.3	)
Minority Interest	9,766.0	10,885.8	11.5
Total Equity	37,506.8	42,741.4	14.0
Operating Revenue	50,162.8	52,122.4	3.9
Operating Expense	32,208.5	34,928.2	8.4
Operating Income	17,954.3	17,194.1	(4.2	)
Net Income	9,300.5	8,933.4	(3.9	)
EBITDA	28,150.0	28,237.1	0.3
EBITDA Margin (%)	56.1	54.2	(1.9	)

The Financial Statements are prepared in accordance with Generally Accepted Accounting Standards in Indonesia

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	Unit	3Q/2009	3Q/2010	% Increase — (decrease)
Line in Service:
- Wireline	Subs (000)	8,703	8,334	(4.2	)
- Wireless	Subs (000)	14,886	16,756	12.6
Total Fixed Lines	Subs (000)	23,589	25,089	6.4
Customer Base Cellular:
- kartuHALO	Subs (000)	2,051	2,101	2.4
- simPATI	Subs (000)	56,863	62,090	9.2
- Kartu As	Subs (000)	20,860	28,944	38.8
Total Customer Base Cellular	Subs (000)	79,774	93,136	16.7
ADSL (Speedy)	Subs (000)	979	1,530	56.3
MOU Cellular	Billion minutes	100.8	92.8	(7.9	)
ARPU Cellular/month	Rp 000	48	43	(10.4	)

The Consolidated Statements reflect certain changes imposed by the Financial Accounting Standards Board of the Indonesian Institute of Accountants, effective January 1, 2010. Whereas interconnection revenue in the Statement of Income was previously presented on a net basis, it is now shown on a gross basis. Interconnection expenses are included as operating expenses. Outgoing interconnection revenue, which was previously classified as Interconnection revenue, is now presented as fixed line and cellular revenue. The 2009 presentation has been reclassified to conform to the current presentation. A full copy of the 3Q/2010 Financial Statement for PT Telekomunikasi Indonesia, Tbk. can be found on our website at http://www.telkom.co.id

Rinaldi Firmansyah, President Director of PT Telekomunikasi Indonesia, Tbk, commented This was a record quarter for Data, Internet and IT Services, an important growth driver for us. We are particularly pleased by the surge in broadband customers, and feel that our investment in high-speed internet infrastructure, along with our aggressive marketing of these offerings, is paying off. TELKOMs confidence and momentum is also boosted by the rise in cellular subscribers in spite of difficult market conditions.

AGUS MURDIYATNO Vice President Investor Relations

For further information, please contact:

Investor Relations Unit PT TELEKOMUNIKASI INDONESIA, Tbk
Tel:	62-21-5215109
Fax:	62-21-5220500
Email:	[email protected]

About Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk.

Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (TELKOM or the Company) is the biggest full service and network provider in Indonesia. TELKOMs majority-owned subsidiary Telkomsel is also the largest Indonesian mobile cellular operator, as measured by subscribers and revenues. The Company also provides a wide range of other telecommunication services including interconnection, network, data and internet services, and other telecommunications services. TELKOMs shares are listed in the Indonesian Stock Exchange (IDX: TLKM) and its American Depository Shares are listed in the New York Stock Exchange (NYSE:TLK) and London Stock Exchange (LSE:TKIA). For more information please visit www.telkom.co.id

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Highlights

| | TELKOM consolidated operating revenue
for 9M10 up Rp.52.1 trillion or 3.9%. |
| --- | --- |
| | Cellular subscriber base grew strongly
by 16.7% year on year (YoY) to 93.1 million subscribers during
9M10 with a total net add of 11.5 million subscribers. |
| | Broadband subscriber rose by
155% to 6.381K with Data, Internet and IT services consolidated
revenue increasing by 15%. |
| | The decline in fixed line revenue slowed to 8.8% in 9M10. |

OPERATIONAL HIGHLIGHTS:

	YoY — 9M09	9M10	Growth	QoQ — 1Q10	2Q10	3Q10	Growth
Descriptions	(000)	(000)	(%)	(000)	(000)	(000)	(%)
Fixed Line:
LIS Wireline	8,703	8,334	-4.2	8,382	8,397	8,334	-0.8
LIS Wireless (Flexi):	14,886	16,756	12.6	15,948	15,896	16,756	5.4
- Post paid	664	554	-16.6	594	565	554	-2.0
- Prepaid	14,222	16,202	13.9	15,354	15,330	16,202	5.7
Total	23,589	25,089	6.4	24,331	24,293	25,089	3.3
Cellular:
- Post paid	2,051	2,101	2.4	2,047	2,098	2,101	0.1
- Prepaid	77,723	91,034	17.1	79,903	86,218	91,034	5.6
Total	79,774	93,136	16.7	81,950	88,316	93,136	5.5
Broadband:
- Fixed broadband / Speedy	979	1,530	56.3	1,283	1,416	1,530	8.1
- Mobile broadband / Flash	1,375	4,278	211.1	2,139	2,976	4,278	43.8
- Blackberry	148	573	287.2	280	456	573	25.7

FINANCIAL HIGHLIGHT

TELKOM CONSOLIDATED

Key Indicators	YoY — 9M09 *)	9M10	Growth (%)	1Q10	2Q10	3Q10	Growth (%)
Op. Revenues (Rp Bn)	50,163	52,122	3.9		16,593	17,650	17,880	1.3
Op. Expenses (Rp Bn)	32,209	34,928	8.4		11,266	11,618	12,045	3.7
Op. Income (Rp Bn)	17,954	17,194	(4.2	)	5,327	6,032	5,835	(3.3	)
EBITDA (Rp Bn)	28,150	28,237	0.3		9,044	9,738	9,455	(2.9	)
EBITDA Margin (%)	56.1 %	54.2 %	(1.9	)	54.5 %	55.2 %	52.9 %	(2.3	)
Net Inc. (Rp Bn)	9,300	8,933	(3.9	)	2,777	3,227	2,930	(9.2	)
Net Inc./Share(Rp)	473	454	(3.9	)	141	164	149	(9.2	)
Net Inc./ADS(Rp)	18,914	18,167	(3.9	)	5,646	6,562	5,958	(9.2	)

*) The 2009 figures are reclassified to conform to the current presentation

TELKOMSEL

Key Indicators	YoY — 9M09	9M10	Growth (%)	1Q10	2Q10	3Q10	Growth (%)
Op. Revenues (Rp Bn)	32,117	33,738	5.0		10,670	11,278	11,790	4.5
Op. Expenses (Rp Bn)	18,082	20,937	15.8		6,606	6,994	7,337	4.9
Op. Income (Rp Bn)	14,035	12,801	(8.8	)	4,064	4,284	4,453	3.9
EBITDA (Rp Bn)	20,151	19,838	(1.6	)	6,400	6,597	6,841	3.7
EBITDA Margin (%)	63 %	59 %	(4	)	60 %	58 %	58 %	0.0
Net Inc. (Rp Bn)	9,821	9,189	(6.4	)	2,838	3,088	3,263	5.7

TICKERS:

NYSE	: TLK
LSE	: TKIA
IDX	: TLKM

ISSUED SHARES: 20,159,999,280 shares

SHAREHOLDER COMPOSITION:

Govt. of Indonesia	: 52.47
Public	: 47.53 %

(exclude treasury stock 490,574,500 shares) (As of Sep 30, 2010)

CONVERSION RATES (US$1.00): 2009 = Rp9,665.0 (Sep 30,2009) 2010 = Rp8,925.0 (Sep 30,2010)

DISCLAIMER

This document contains financial conditions and result of operation, and may also contain certain projections, plans, strategies, and objectives of the Company, which would be treated as forward looking statements within the meaning of applicable law. Forward looking statements, by their nature, involve risk and uncertainty that could cause actual results and development to differ materially from those expressed or implied in these statements. TELKOM does not guarantee that any action, which may have been taken in reliance on this document will bring specific results as expected.

Investor Relations

PT. TELEKOMUNIKASI INDONESIA Tbk Grha Citra Caraka, 5 th floor Jl. Gatot Subroto No.52, Jakarta

Phone	: 62 21 5215109
Fax	: 62 21 5220500
Email	: [email protected]
Website	: www.telkom.co.id

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

The following analysis and discussion is based on our financial statements for nine months of 2009 and 2010 ended on September 30, 2009 and September 30, 2010 respectively. These have been submitted to the BAPEPAM-LK, the Capital Market and Financial Institutions Supervisory Agency.

OPERATIONAL RESULTS

Cellular Service

Market conditions in 3Q10 were relatively stable with competition ticking up during the Ramadan festive of August and September. Most of operators attempted to attract new customers through their marketing programs to gain the momentum from the holiday. Promotion included handset bundling program, BlackBerry programs, data packages and voice and SMS packages. Telkomsel still successfully led the market by offering attractive promotional programs and head-to-head competition with the rest of the pack. As a result, Telkomsel recorded another strong expansion of its customer base in 3Q10.

Customer Base

Telkomsel saw strong net-add in 3Q10 with 4.8 million customers, for a net-add during 2010 to 11.5 million customers. At the end of 3Q10, Telkomsels customer base reached 93.1 million customers, consisting of 2.1 million postpaid and 91 million prepaid customers. This represented 16.7% growth from a year ago on the back of continuous product and service innovation, strong brand positioning and an improved network. Kartu As was the main contributors of the customer base growth, which increased by 38.8% on YoY comparison. The launch of the Kartu As Jagoan Serbu promotional programs has received a strong response from the market and expanded our penetration to lower market segments. Estimated market share as of September 2010 was approximately 47% of full mobility market.

Minutes of Use MoU & Revenue per Minute (RPM)

The MoU (chargeable) again surged in 3Q10 that booked 34.3 billion minutes booked, an increase of 11.4% from 2Q10. The growth was due to a 5.5% rise in our customer base combined with improved MoU per subscriber. Total MoU for 9M10 was 92.8 billion minutes, which marked a decline 7.9% from the same period last year.

Average RPM in 3Q10 was lower compared to 2Q10, which has brought down the RPM for 9M10 to the level of Rp230. However, on a year-on-year basis, RPM in 9M10 was still 10% higher compared to the RPM recorded in the same period last year.

SMS & Revenue per SMS (RPS)

We recorded 26.4 billion records chargeable SMS in 3Q10, an increase of 27% from the second quarter. The significant increase was due to our aggressive Kartu As SMS promotion program called Jagoan Serbu. The promotional allows customer to send 1,000 SMSes to customer of all the cellular operators for 24 hour for only Rp1,000/day. For 9M10, chargeable SMS traffic reached 68.2 billion records, 7% lower from the previous year figure of 73.5 billion records an impact of an aggressive SMS promotion in 2010

The revenue per SMS (chargeable) increased from the previous year by 9% to Rp113 in 9M10. This is due to the right pricing strategy in our SMS promotional packages.

ARPU

Blended ARPU was Rp43K, which was 10% lower than the ARPU during the same period last year. The decline in ARPU was attributable to the decline of simPATI s ARPU, while other products showed a relatively stable ARPU.

Network Capacity

During 9M10, Telkomsel rolled out 4,324 new BTS units (including 2,416 units 3G-BTSes), bringing the total to 35,316 BTSes on air. This figure is up 19% from the same period last year. The overall network capacity available at end of September 2010 was 97.3 million subscribers.

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

New Products and Programs

In July 2010, we introduced the simPATI Freedom starter pack for Rp5,000 which includes free 100 free SMSes (off-network), 1 free Mb of internet access, and a free wallpaper and Ring Back Tone. Various packages are also available through *999# access such as unlimited internet access, unlimited evening calls and unlimited anytime calls. The existing tariff scheme applies to this new starter pack.

We introduced Rp20/minute call promotion for Kartu As users in August 2010 permitting customers to call all day at the special promotional rate. Through *100# access customer can purchase the Rp1,000 package which gives 50 minutes on-network calls in different time band (00.0017.00 and 17.00 24.00).

In September 2010, a new package of free 100 free minutes calling time for simPATI Freedom was introduced. By registering through 999# access, customer can make 100 minutes of calls from 18.0023.59. We also offer a package of free 300 free minutes in simPATI Freedom. By registering through 999# access, customer can make 300 minutes of calls from 18.0023.59.

In the following table, we present a YoY and QoQ comparison for our cellular performance:

	Unit	YoY — 9M09	9M10	Growth (%)	1Q10		2Q10	3Q10	Growth (%)
CUSTOMER BASE
Customer Base
kartuHALO	Subs (000)	2,051	2,101	2.4		2,047		2,098	2,101	0.1
simPATI	Subs (000)	56,863	62,090	9.2		57,692		60,201	62,090	3.1
Kartu As	Subs (000)	20,860	28,944	38.8		22,211		26,017	28,944	11.3
Total	Subs (000)	79,774	93,136	16.7		81,950		88,316	93,136	5.5
Net Add
kartuHALO	Subs (000)	111	66	(40.5	)	12		52	3	(94.2	)
simPATI	Subs (000)	13,830	4,098	(70.4	)	(300	)	2,509	1,889	(24.7	)
Kartu As	Subs (000)	533	7,328	1,274.9		594		3,806	2,927	(23.1	)
Total	Subs (000)	14,474	11,492	(20.6	)	306		6,367	4,819	(24.3	)
MOU (excluding free & incoming
mins)	Bn minutes	100.8	92.8	(7.9	)	27.8		30.8	34.3	11.4
SMS (in billion units)	Bn units	73.5	68.2	(7.2	)	21.0		20.7	26.4	27.5
ARPU
Voice (9 months average)
kartuHALO	Rp.000 per mo.	211	212	0.5		208		211	212	0.5
simPATI	Rp.000 per mo.	48	42	(12.5	)	42		43	43
Kartu As	Rp.000 per mo.	30	30			30		29	29
Blended	Rp.000 per mo.	48	43	(10.4	)	43		43	43
Non-voice/Data (9 months average)
kartuHALO	Rp.000 per mo.	47	56	19.1		53		57	58	(1.8	)
simPATI	Rp.000 per mo.	14	13	(7.1	)	12		12	14	16.7
Kartu As	Rp.000 per mo.	15	15			16		13	13
Blended	Rp.000 per mo.	15	14	(6.7	)	14		14	15	7.1
NETWORK DATA
Network Capacity
Base stations installed
(GSM/DCS/3G)	Unit	29,781	35,316	18.6		32,243		34,005	35,316	3.9
Overall capacity all network
elements	subscriber Mn	82.9	97.2	17.2		85.1		90.9	97.2	6.93
Quality of Service
Call success rate	%	95.41	94.83	-0.58		96.64		95.67	94.83	-0.84
Call completion rate	%	98.81	98.77	-0.04		98.93		98.74	98.77	-0.03
EMPLOYEE DATA
Total employees *)	person	4,158	4,354	4.7		4,234		4,313	4,354	1.0
Efficiency ratio	Subs/employee	19,186	21,391	11.5		19,355		20,477	21,391	4.5

*) Excluding Board of Directors

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

Broadband Services

Fixed Broadband (Speedy)

Customer Base

As of September 30, 2010, there were 1,530K subscribers for fixed broadband services (Speedy), representing growth of 56.3% from 979K subscribers recorded in the same period last year. Speedy remained the market leader in this business with total marker share of approximately 80%.

ARPU

ARPU is derived from monthly recurring customers usage. ARPU for 9M10 was Rp222K, a decrease of 15.6% in the same period a year ago.

New Products and Programs

In line with our new business portfolio (Telecommunication, Information, Media and Edutainment - TIME) and adjusted for current market conditions, Speedy, with its tagline Lead Your Life, is bundling its services with other TELKOM Group offerings.

Special Offers included:

The Speedy Netbook Package: The promotion provides one Netbook computer for every child. This bundled program leverages synergies with our mobile broadband/Flash & FlexiNet, merchandise, computer vendors, the Indonesian Education Department and Microsoft, and was offered to the student at a special price of Rp 3,199,000.

A special tariff promo for the Speedy package: Socialia 384Kbps, Load 512Kbps, Familia 1Mbps, Executive 2Mbps and Biz 3Mbps. This offer was valid from July 1 to September 30, 2010 for Jakarta and Surabaya areas.

Mobile Broadband (Flash)

Customer Base

In the third quarter 2010, our mobile broadband/Flash user base grew by 43.8% from 2,976K in the prior quarter to 4,278K. We have maintained our leadership position in the mobile broadband sector with an approximately 64% market share. To support our mobile broadband service, some of our backbone infrastructures were utilized by Telkomsel as a part of our strategy to synergize operational resources.

ARPU

ARPU for this service was Rp30K, representing a decrease of 57.1% compare to the same period last year.

New Products and Programs

Our popular promotions from previous quarter continued to this quarter, including:

Unlimited Flash BroadbandPrepaid (A new starter pack). The objective of this promo is to provide affordable unlimited internet access and to drive data and internet usage with our prepaid users and potential users. The starter pack was sold at Rp60K, which included credit for Rp55K of use, 1MB free internet and 100 SMSes off-network. We also provide other packages with at price-points of Rp50K, Rp100K and Rp200K for 384kbps internet connections (active period 14 days), 384kbps and 512kbps with active period 30 days, and also fair use quota set at 100MB, 500MB and 1.5GB, respectively.

Our Modem Flash program at Rp499K which includes 300Mb free/month. All cellular users will get 300Mb free on a volume based package.

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

Fixed Wireline Services

Customer Base

As of September 30, 2010, our total number of fixed wirelines in service has remained essentially flat at approximately 8.3 million, representing a decrease of 4.2% from 8.7 million in 9M09. Our 8.3 million subscribers represented a market share of some 99%. We remain dominant player in the fixed wireline market.

ARPU

ARPU for this period amounted to Rp105K, or declined 5.6% from Rp112K on the same period previous year. As part of our strategy to manage fixed wireline churn, we launched a fixed business improvement program (FBIP). As of September 30, 2010, there were around 2.2 million subscribers registered with one of our FBIP programs, amounting to approximately 26.5% of total wireline subscribers. The total incremental revenue during the third quarter of 2010 from this program was Rp98.3 billion.

Promo and Reward Program

Our point based reward program that we called TPRT ( Telkom Point Rejeki Tumpah ) was still going on during 3Q10. With this program, we are able to lock-in customers until 2011.

Fixed Wireless Service (Flexi)

Customer Base

As of September 30, 2010, Flexi obtained 1,617K net additional subscribers, bringing total subscribers to 16.8 million. This represents an approximately 57.2% market share. We have maintained our top position in the fixed wireless market.

ARPU

ARPU (blended) for this period amounted to Rp17K, a decrease of 26.3% from Rp23K from the same period last year. Revenue per Minute (RPM) amounted to Rp182, an increase of 0.8% from Rp180. Total wireless production (MoU) was 9.2 billion minutes decreased by 26.0% from 12.4 billion minutes from the same period last year.

Network Capacity

During third quarter 2010, the total number of BTSes on-air increased by 5.4% to 5,580 units. As of September 30, 2010, 370 cities are covered by these BTSes the same as last quarter. The allocation of BTSes located in Java and outside Java is about 35% and 65%, respectively.

New Products and Programs

FLEXINET UNLIMITED: Flexi program for unlimited internet access with a fixed period (Rp2,500/day, Rp15,000/week and Rp50,000/month). This program is valid until December 31, 2010.

FLEXI IRITPrepaid (A new starter pack). The starter pack offers a special price of Rp 49/minute from the first call to our customers who called to our cellular and our PSTN.

We also launched Flexi ngROOMpi. This product permits our customers to make a conference with multi participants in a simple manner (just push 550) and at a very affordable rate (Rp 49/minute, one tariff).

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

In the following table we present comparison YoY and QoQ Flexi performance, as follows:

	UNIT	YoY — 9M09	9M10		Growth (%)	1Q10	2Q10	3Q10	Growth (%)
Customer Base
Classy/Postpaid	SSF(000)	664		554		-16.6	594	565	554	-1.9
Trendy/Prepaid	SSF(000)	14,222		16,202		13.9	15,354	15,330	16,202	5.7
Total Blended	SSF(000)	14,886		16,756		12.6	15,948	15,896	16,756	5.4
Net additional
Classy/Postpaid	SSF(000)	(67	)	(95	)	-41.8	-55	-29	-12	-58.6
Trendy/Prepaid	SSF(000)	2,228		1,712		-23.2	864	-24	872	3,733.3
Total Blended	SSF(000)	2,161		1,617		-25.2	809	-53	860	1,722.6
ARPU
Classy/Postpaid	Rp(000)	85		85		0.0	83	88	84	-4.5
Trendy/Prepaid	Rp(000)	19		14		-26.3	15	14	14	0.0
Total Blended	Rp(000)	23		17		-26.1	17	17	16	-5.9
MoU (Minute of use)	mn minutes	12,435		9,198		-26.0	3,073	3,080	3,045	-1.1
SMS	mn messages	3,854		3,047		-20.8	1,073	1,030	943	-8.4
NETWORK
BTS	BTS	5,296		5,580		5.4	5,543	5,552	5,580	0.5
Coverage	Cities	321		370		15.3	370	370	370	0.0

FINANCIAL RESULTS

TELKOM CONSOLIDATED

Profit and Loss Statement

In the following table, we present a YoY and QoQ comparison for our Statement of Income:

Key Indicators	YoY — 9M09	9M10	Growth (%)	1Q10	2Q10	3Q10	Growth (%)
Op. Revenues (Rp Bn)	50,163	52,122	3.9		16,593	17,650	17,880	1.3
Op. Expenses (Rp Bn)	32,209	34,928	8.4		11,266	11,618	12,045	3.7
Op. Income (Rp Bn)	17,954	17,194	(4.2	)	5,327	6,032	5,835	(3.3	)
EBITDA (Rp Bn)	28,150	28,237	0.3		9,044	9,738	9,455	(2.9	)
EBITDA Margin (%)	56.1 %	54.2 %	(1.9	)	54.5 %	55.2 %	52.9 %	(2.3	)
Net Inc. (Rp Bn)	9,300	8,933	(3.9	)	2,777	3,227	2,930	(9.2	)
Net Inc./Share(Rp)	473	454	(3.9	)	141	164	149	(9.2	)
Net Inc./ADS(Rp)	18,914	18,167	(3.9	)	5,646	6,562	5,958	(9.2	)

Operating Revenues

We recorded operating revenues of Rp52.1 trillion in 9M10, an increase of Rp2.0 trillion or 3.9% from Rp50.2 trillion in 9M09. A summary follows:

| | Fixed line revenue decreased by Rp952.1 billion or 8.8% from Rp10.8 trillion in
9M09 to Rp9.9 trillion in 9M10, mainly due to a decrease usage charge revenue, which was in
line with Flexi Trendi ARPU decrease. |
| --- | --- |
| | Cellular revenue increased by Rp552.4 billion or 2.6% from Rp21.5 trillion in
9M09 to Rp22.1 trillion in 9M10 due to an increase on usage charge and features
revenues. |
| | Interconnection revenue decreased by Rp106.0 billion or 4.4% from Rp2.4 trillion
in 9M09 to Rp2.3 trillion in 9M10. This was mainly due to a decline in Flexi
interconnection revenue. |

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

| | Data, internet and information technology services revenues increased by Rp2.1
trillion or 15% from Rp13.8 trillion in 9M09 to Rp15.8 trillion in 9M10. This was largely
driven by significant growth in internet connectivity, data communications and information
technology services revenues as a result of substantial growth in Speedy subscribers and
mobile broadband users of 56.3% and 211.1%, respectively. |
| --- | --- |
| | Network revenues increased by Rp8.4 billion or 0.9% from Rp895.1 billion in 9M09
to Rp903.5 billion in 9M10, mainly due to the increase in satellite transponder lease. |
| | Other revenues increased by Rp385.4 billion or 49.5% from Rp778.7 billion in
9M09 to Rp1,164.1 billion in 9M10, mainly due to Universal Service Obligation compensation. |

In the following table, we present a YoY and QoQ comparison for our operating revenues:

9M09	9M10	Growth	1Q10	2Q10	3Q10	Growth
Fixed line (Rp Bn)	10,806	9,854	-8.8 %	3,342	3,343	3,169	-5.2 %
Cellular (Rp Bn)	21,504	22,057	2.6 %	6,950	7,449	7,657	2.8 %
Interconnection (Rp Bn)	2,401	2,295	-4.4 %	758	765	772	1.0 %
Data, Internet & IT (Rp Bn)	13,777	15,849	15.0 %	4,995	5,228	5,627	7.6 %
Network (Rp Bn)	895	903	0.9 %	277	278	348	25.6 %
Other (Rp Bn)	779	1,164	49.5 %	271	588	306	-48.0 %

Operating Expenses

Total Operating Expenses were Rp34.9 trillion in 9M10, increasing by Rp2.7 trillion or 8.4% from Rp32.2 trillion in 9M09. A summary follows:

| | Depreciation and amortization expenses increased by Rp847.3 billion or 8.3%,
from Rp10.2 trillion to Rp11.0 trillion, mainly due to an increase on depreciation of
supporting facilities, BTSes and switching. The period also saw an increase of amortization
of goodwill, software and KSO Plus. |
| --- | --- |
| | Personnel expenses decreased by Rp118.5 billion or 2.1%, from Rp5.5 trillion to
Rp5.4 trillion, mainly due to a decrease in net periodic pension costs and net periodic
post-retirement health care benefit costs. |
| | Operation & maintenance expenses increased by Rp1.9 billion or 17.4% from Rp10.9
trillion in 9M09 to Rp12.9 trillion in 9M10. The rise was mainly due to network
infrastructure growth, which affected operation and maintenance cost, frequency fees and
power supply costs. The increase in these expenses was also affected by an increase in
partnership fees for third parties who sold our products. |
| | General and administrative expenses decreased by Rp117.1 billion or 6.4% from
Rp1.8 trillion in 9M09 to Rp1.7 trillion, due to a decrease in collection expense and
provision for doubtful accounts. |
| | Interconnection expense increased by Rp102.8 billion or 4.7% from Rp2.2 trillion
in 9M09 to Rp2.3 trillion, due to decrease in cellular interconnection expense. |
| | Marketing expenses slightly increased by Rp103.7 billion or 6.9% to Rp1.6
trillion, mainly due to an increase in exhibition and sales commission. |

In the following table, we present a YoY and QoQ comparison for our operating expenses:

9M09	9M10	Change	1Q10	2Q10	3Q10	Change
Depreciation (Rp Bn)	10,196	11,043	8.3 %	3,716	3,706	3,620	-2.3 %
Personnel (Rp Bn)	5,546	5,427	-2.1 %	1,874	1,593	1,960	23.0 %
O & M (Rp Bn)	10,954	12,856	17.4 %	3,966	4,443	4,446	0.1 %
G & A (Rp Bn)	1,844	1,727	-6.4 %	622	496	608	22.6 %
Interconnection (Rp Bn)	2,174	2,277	4.7 %	670	829	778	-6.2 %
Marketing (Rp Bn)	1,495	1,598	6.9 %	416	550	632	15.0 %

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

EBITDA and Other (Expenses) Income

During 9M10, EBITDA reached Rp28.2 trillion, growing by 0.3% from the same period last year, while EBITDA margin decline from 56.1% to 54.2%.

The increase in other expenses-net by Rp715.3 billion or 321.2% compared to the previous period was mainly due to a decrease in foreign exchange gains following the smaller appreciation of the rupiah against foreign currencies (particularly USD and EUR) this period in the previous period.

Net Income

Net income decreased by 3.9% to Rp8.9 trillion and net income margin reached 17.1%, declining by 1.4%, compared to the same period last year. The foreign exchange gain decreased amounted Rp643.8 billion to Rp131.0 billion from Rp774.8 billion last year, resulted Net Income decreased by 3.9%. Normalized Net Income to foreign exchange gains resulted positive growth by 1.3%.

Normalized Net Income (Rp. Bn) — Forex Gain	774.8	131	(643.8	)	-83.1 %
Net Income	9,300.5	8,933.4	(367.1	)	3.9 %
Less : Forex Gain, Net of Tax	581.1	98.3	(482.8	)	-83.1 %
Normalized Net Income	8,719.4	8,835.1	115.7		1.3 %

Balance Sheet

In the following table we present a comparison YoY for the Balance Sheet as follows:

Balance Sheet	YoY — 9M09	9M10	Change	QoQ — 1Q10	2Q10	3Q10	Change
Total Assets (Rp Tn)	95.3	100.1	5.0 %	96.5	99.1	100.1	1 %
Total Liabilities (Rp Tn)	48.0	46.4	-3.3 %	42.8	49.4	46.4	-6.1 %
Minority interest (Rp Tn)	9.8	10.9	11.5 %	11.9	9.7	10.9	12 %
Total Equity (Rp Tn)	37.5	42.7	14.0 %	41.8	39.9	42.7	7 %

As of September 30, 2010, our total assets increased by Rp4.7 trillion or 5.0% from Rp95.3 trillion on Q309 to Rp100.1 trillion on Q310. This was mainly due to an increase in current assets, which consisted of cash and cash equivalent and trade receivables from related party.

Total liabilities has decreased by Rp1.6 trillion or 3.3% from Rp48 trillion to Rp46.4 trillion, mainly due to a decrease in taxes payables that was partially offset by an increase in bond prices.

| | Current Liabilities decreased by 8.1% to Rp23.7 trillion, mainly due to a
decrease in taxes payable. |
| --- | --- |
| | Non-current Liabilities increased by 2.2% to Rp22.7 trillion due to an increase
in Bonds and Notes. |

Total equity increased by Rp5.2 trillion or 14.0% from Rp37.5 trillion on September 30, 2009 to Rp42.7 trillion on September 30, 2010. This was mainly due to net income during Q310.

Cash Flow

Cash and cash equivalents at the end of this period totaled Rp1.5 trillion, an increase of 169.7% compared to the same period last year, as a result of:

| | Net cash flows from operating activities decreasing by Rp1.8 trillion or 7.9%,
primarily due to a decrease in cash receipts from fixed line and also caused by increases in
cash payments for operating expenses. |
| --- | --- |
| | Net cash flows used in investment activities decreasing by Rp5 trillion or
29.3%, primarily due to decrease in cash payment for acquisition of property, plant and
equipment; and |
| | Net cash flows from financing activities decreasing by Rp2.3 trillion, or 50.1%,
primarily due to decreasing proceeds from long term borrowings. |

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

FINANCIAL RATIOS

9M09	9M10	Growth		1Q10	2Q10	3Q10	Growth
Operating Margin (%)	35.8	33.0	(2.8	)	32.1	34.2	32.6	(1.6	)
Profit Margin (%)	18.5	17.1	(1.4	)	16.7	18.3	16.4	(1.9	)
Current Ratio (%)	61.0	78.6	17.6		62.8	57.6	78.6	21.0
Return on Asset (%)	9.8	8.9	(0.8	)	2.9	3.3	2.9	(0.3	)
Return on Equity (%)	24.8	20.9	(3.9	)	6.6	8.1	6.9	(1.2	)
Total Liabilities to Equity (%)	128.1	108.6	(19.4	)	102.5	124.0	108.6	(15.3	)
Gearing (Net Debt to Equity) (%)	42.6	30.7	(11.9	)	28.7	23.4	31.7	8.3
Debt Equity (%)	62.7	52.6	(10.1	)	45.8	45.2	53.6	8.5
Debt to EBITDA (%)	83.6	79.7	(4.0	)	220.5	178.2	242.3	64.2
Debt Service Ratio (Times)	2.9	3.7	0.7		1.1	1.4	1.4	0.0
EBITDA to Interest Expense (Times)	19.1	19.7	0.6		17.2	22.3	20.0	(2.2	)
EBITDA to Net Debt (%)	176.0	214.9	38.9		72.4	108.4	69.7	(38.6	)

TELKOMSEL

Profit and Loss Statement

In the following table, we present a YoY and QoQ comparison for our Statement of Income:

Key Indicators	YoY — 9M09	9M10	Growth (%)	1Q10	2Q10	3Q10	Growth (%)
Op. Revenues (Rp Bn)	32,117	33,738	5.0		10,670	11,278	11,790	4.5
Op. Expenses (Rp Bn)	18,082	20,937	15.8		6,606	6,994	7,337	4.9
Op. Income (Rp Bn)	14,035	12,801	(8.8	)	4,064	4,284	4,453	3.9
EBITDA (Rp Bn)	20,151	19,838	(1.6	)	6,400	6,597	6,841	3.7
EBITDA Margin (%)	63 %	59 %	(4.0	)	60 %	58 %	58 %	0.0
Net Inc. (Rp Bn)	9,821	9,189	(6.4	)	2,838	3,088	3,263	5.7

Operating Revenues

Operating revenues (gross) of Rp33.74 trillion were recorded in 9M10, an increase of Rp1.62 trillion or 5% YoY. All products showed a positive growth, with the main driver of the growth being on Kartu As.

	Postpaid revenues increased 3% to Rp3.32 trillion, mainly due to increase in data revenue.
	Prepaid revenues grew 4% to Rp27.53 trillion.
Prepaid revenues were mainly
contributed (67%) by simPATI product. However, the YoY growth was mainly from the Kartu As product
line that recorded strong growth in both voice and non-voice revenues.
	International roaming revenues remained stable at Rp541 billion as a result of a decline in
revenue from inbound roamers combined with an increase in revenue from outbound roamers.
	Interconnection revenues increased 6% to Rp1.97 trillion, which was due to a rise in
incoming interconnection traffic from international calls.
	Other operating revenues increased 186% to Rp369 billion which was mainly from USO
compensation fees.

Despite the decline in voice and SMS traffic, Telkomsels operating revenues still showed a positive YoY growth. This is a result of our tariff optimization effort to improve revenue per minute and revenue per SMS. The growth of data (non-SMS) revenues has also contributed to the operating revenues growth.

Non-voice data revenues grew approximately 11% to Rp9.69 trillion, which represented 29% of gross operating revenues or 30% of net operating revenues.

Operating Expenses

Operating expenses (including depreciation) increased 16% to Rp20.94 trillion. Much of the increase was a result of an increased operation & maintenance and depreciation expenses tied to the growth of Telkomsels network infrastructures.

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

| | Personnel expenses increased by 18% YoY to Rp1.17 trillion, as a result of organization
restructuring and increase in number of employees. |
| --- | --- |
| | Operation & maintenance expenses grew 25% YoY % to Rp7.77 trillion primarily driven by
network infrastructure growth (the number of BTS increased by 19% and overall network capacity
increased by 17%), which mainly impacted frequency fee and repair & maintenance costs. (which
was also impacted by cost saving in 2009). |
| | General & administration expenses increased to Rp624 billion or 10% YoY. Most of these
expenses came from rental expenses and professional fees related to business process
improvement. |
| | Marketing expenses grew 10% to Rp912 billion, mainly as a result of sales support costs
(such as sales outlets). |
| | Interconnection expenses declined 3% to Rp1.71 trillion, in conjunction with the decline in
outgoing interconnection traffic as a result of increase in on-network promotions. |
| | Other operating expenses increased 6% to Rp624 billion. |
| | Depreciation expenses increased to Rp7.04 trillion or 15% YoY, following the acquisition of
new assets and impact of changes on estimated assets useful life. |

Other (non-operating) expenses increased 12% from net expenses of Rp417 billion in 9M09 to net expenses of Rp468 billion in 9M10, mainly due to higher foreign exchange gains recorded in 9M09 compared to 9M10 as a result of the appreciation of the rupiah against foreign currencies (USD and EUR).

Net income decreased 6% YoY to Rp9.19 trillion in 9M10.

Balance Sheet

Total assets increased 6% to Rp60.61 trillion. Total liabilities increased slightly (1%) to Rp29.58 trillion, while total equity increased 12% to Rp31.03 trillion.

| | Current assets increased 34% to Rp8.37 trillion, mainly in cash & cash equivalents and
prepaid expenses. |
| --- | --- |
| | Fixed assets increased 1% to Rp49.72 trillion as a result of network infrastructure
expansion. |
| | Current liabilities increased 1% to Rp19.98 trillion, primarily because of an increase of
dividend payable combined with decline in current maturities of medium-term loans. |
| | Non-current liabilities increased 1% to Rp9.60 trillion. |

As of September 30, 2010 Telkomsel had Rp10.31 trillion loans outstanding, of which Rp3.76 trillion was presented as current liabilities and Rp6.55 trillion as non-current liabilities.

Cash Flow

Net cash generated from operations in 9M10 was Rp15.19 trillion, a slightly declined compared to 9M09. Cash flow for investment activities, which was mostly spent in the acquisition of network infrastructures, decreased 23% to Rp7.44 trillion. It was mainly due to the changes of term of payments. Net cash used in financing activities increased 49% mainly due to lower loan proceeds and impact of dividend installments.

For subsequent events in October 2010, the company paid the remaining dividend payable of Rp4.14 trillion.

(in Rp billion)	YoY — 9M09	9M10		Growth (%)
Cash Flow from Operating Activities	15,963		15,195		-4.8 %
Cash Flow for Investing Activities	(9,671	)	(7,435	)	-23.1 %
Cash Flow from Financing Activities	(4,737	)	(7,080	)	49.5 %
Net Increase in Cash & Cash Equivalents	1,555		680		-56.3 %
Effect of Foreign Exchange Rate Changes	(104	)	(53	)	-49.0 %
Cash and Cash Equivalents at Beginning of Periods	1,155		3,641		215.2 %
Cash and Cash Equivalents at End of Periods	2,606		4,268		63.8 %

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

ADDITIONAL INFORMATION

Capital Expenditure

During third quarter 2010, total consolidated CAPEX amounted to Rp9.6 trillion with allocation for TELKOM and Telkomsel amounting to Rp2.7 trillion and Rp6.4 trillion, respectively. Taking into account these figures, around 71% and 76% of TELKOMs and Telkomsels CAPEX have been absorbed as of month end September, 2010.

Loan/Debt

For 9M10, Telkomsel drew down Rp3.25 trillion and USD 16 million from our existing facilities. The remaining amount of facilities as of the end of September 2010, including facilities in foreign exchange, was equivalent to Rp10.31 trillion. Telkomsel has to observe certain agreed financial covenants related to its loans/debts. As of September 30, 2010 these covenants were as follows:

Covenants to be maintained	Required
EBITDA To Debt Service	> 1.25	4.13
Debt to Tangible Net Worth	< 2.00	0.34

Human Resources

As of September 30, 2010, the total number of TELKOM employees as a parent company was 21,336 persons. This is a decrease of 8.6% compared to the same period last year, and comes mainly as a result of ordinary attrition. Meanwhile, in the same period, the number of Telkomsels employees grew by 4.7% to 4,354 employees excluding the Board of Directors.

Recent Development

Our Ownership in SCICOM become 29.71%

On June 16, 2010, TII purchased 10.28% share of SCICOM raising its ownership stake 29.71%.

Our Ownership in SIGMA become 100%

On August 1, 2010, Sigma Citra Harmoni (SCH) executed its option right to sell the remaining 20% of Sigma shares amounting Rp96 billion to TELKOM. As a result, TELKOM acquires 100% control of SIGMA.

Melon Joint Venture

In August 16, 2010, Metra formed a Joint Venture Company with South Korean Telkom (SKT). Metra has 51% ownership.

AWARDS

We continue to receive recognition for our innovative products, reliable network and excellent customer service. The following are the awards that we received during third quarter of 2010:

| | Asia Magazine awards as the Best Managed Company, the
Best Corporate Governance, the Best Investor Relations, the
Best Corporate Social Responsibility and the Most Committed to
a Strong Dividend Policy. |
| --- | --- |
| | Best of the Best BUMN (State-Owned Enterprises) award
during a 2010 ceremony hosted by Minister of BUMN. This award
was recognized Indonesian state-owned enterprise which shown
have positive performance through sound strategic execution. |
| | Indonesia Cellular Awards in 2010 as The Best Customer
Growth and The Best Operator GSM from Sinyal Magazine. |
| | IBBA Award 2010 for simPATI as The Most Valuable Brand
for Prepaid GSM Cellular Provider Product Category from SWA &
MARS. |
| | IBBA Award 2010 for kartuHALO as The Most Valuable Brand
for Postpaid GSM Cellular Provider Product Category from SWA &
MARS. |
| | The Best Financial Institutions Awards and The Best
Corporate of the Year in Southeast Asia (Indonesia) from Alpha
Southeast Asia for Telkomsel. |

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)


ASSETS
CURRENT ASSETS
Cash and cash equivalents	7,212,193	8,941,289
Temporary investments	286,648	373,325
Related parties net of allowance for doubtful
accounts of Rp.124,432 million in 2009
and Rp.132,248 million in 2010	751,997	1,181,860
Third parties net of allowance for doubtful
accounts of Rp.1,457,400 million in 2009
and Rp.1,188,308 million in 2010	3,136,896	3,606,630
Other receivables net of allowance for
doubtful accounts of Rp.10,732 million in 2009
and Rp.6,896 million in 2010	118,144	105,618
Inventories net of allowance for obsolescence of
Rp.73,541 million in 2009 and Rp.79,013
million in 2010	437,877	569,860
Prepaid expenses	2,696,294	3,540,963
Claims for tax refund	216,326	11,779
Prepaid taxes	850,732	315,416
Other current assets	34,877	5,921
Total Current Assets	15,741,984	18,652,661
NON-CURRENT ASSETS
Long-term investments net	146,323	262,105
Property, plant and equipment net of accumulated
depreciation of Rp.70,843,414 million in 2009
and Rp.80,992,514 million in 2010	73,922,446	75,569,531
Property, plant and equipment under Revenue-Sharing
Arrangements net of accumulated
depreciation of Rp.194,729 million in 2009
and Rp.197,443 million in 2010	404,275	316,647
Prepaid pension benefit cost	782	8,911
Advances and other non-current assets	2,347,208	3,079,320
Goodwill and other intangible assets net of
accumulated amortization of Rp.7,303,266 million
in 2009 and Rp.8,692,829 million in 2010	2,606,678	2,039,449
Escrow accounts	46,236	41,240
Defferred tax assets net	97,918	90,877
Total Non-current Assets	79,571,866	81,408,080
TOTAL ASSETS	95,313,850	100,060,741

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (continued) SEPTEMBER, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)


LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Trade payables
Related parties	1,475,156		1,708,417
Third parties	7,777,365		6,883,652
Other payables	18,256		33,116
Taxes payables	1,922,821		733,319
Dividend payables	405,175		1,456,227
Accrued expenses	2,896,662		3,501,338
Unearned income	2,703,086		2,560,243
Advances from customers and suppliers	235,462		360,531
Short-term bank loans	35,800		54,184
Current maturities of long-term liabilities	8,357,001		6,447,834
Total Current Liabilities	25,826,784		23,738,861
Deferred tax liabilities net	3,402,396		4,128,386
Accrued long service awards	165,431		204,013
Accrued post-retirement health care benefits	2,019,054		1,260,522
Accrued pension and other post-retirement benefits costs	854,761		490,668
Obligations under finance leases	374,614		420,544
Two-step loans related party	3,256,906		2,768,097
Bonds and Notes	27,000		3,166,418
Bank loans	11,681,098		10,255,978
Deferred consideration for business combinations	432,997
Total Non-current Liabilities	22,214,257		22,694,626
MINORITY INTEREST	9,766,000		10,885,873
and 20,159,999,279 Series B shares	5,040,000		5,040,000
Additional paid-in capital	1,073,333		1,073,333
Treasury stock 490,574,500 shares in 2009 and 2010	(4,264,073	)	(4,264,073	)
transactions between entities under common control	478,000		478,000
companies	385,595		385,595
Unrealized holding gain from available-for-sale securities	16,127		50,756
Translation adjustment	244,468		229,001
Difference due to acquisition of minority interest in subsidiary	(426,358	)	(509,911	)
Appropriated	15,336,746		15,336,746
Un-appropriated	19,622,971		24,921,934
Total Stockholders Equity	37,506,809		42,741,381
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY	95,313,850		100,060,741

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

PERUSAHAAN PERSEROAN (PERSERO) P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) NINE MONTHS PERIOD ENDED SEPTEMBER, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars, except per share and per ADS data)


OPERATING REVENUES
Telephone
Fixed lines	10,805,934		9,853,882
Cellular	21,504,166		22,056,590
Interconnection	2,401,431		2,295,404
Data, internet and information technology services	13,777,499		15,848,894
Network	895,061		903,485
Other telecommunications services	778,708		1,164,097
Total Operating Revenues	50,162,799		52,122,352
OPERATING EXPENSES
Depreciation & Amortization	10,195,696		11,042,997
Personnel	5,545,706		5,427,255
Operations, maintenance and telecommunication
services	10,954,458		12,855,872
General and administrative	1,843,673		1,726,590
Interconnection	2,174,318		2,277,133
Marketing	1,494,657		1,598,371
Total Operating Expenses	32,208,508		34,928,218
OPERATING INCOME	17,954,291		17,194,134
OTHER (EXPENSES) INCOME
Interest income	341,785		289,266
Equity in net loss of associated companies	(21,320	)	(6,196	)
Interest expense	(1,471,769	)	(1,429,873	)
Gain on foreign exchange net	774,784		131,024
Others net	206,701		300,480
Other expenses net	(169,819	)	(715,298	)
INCOME BEFORE TAX	17,784,472		16,478,836
TAX EXPENSE
Current	(4,597,272	)	(3,534,697	)
Deferred	(399,605	)	(787,515	)
	(4,996,877	)	(4,322,212	)
INCOME BEFORE MINORITY INTEREST IN NET
INCOME OF CONSOLIDATED SUBSIDIARIES	12,787,595		12,156,624
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARIES net	(3,487,133	)	(3,223,269	)
NET INCOME	9,300,462		8,933,355
BASIC EARNINGS PER SHARE
Net income per share	472.84		454.17
(40 Series B shares per ADS)	18,913.60		18,166.80

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

PT TELEKOMUNIKASI INDONESIA Tbk and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) PERIOD ENDED SEPTEMBER, 2009 AND 2010 (in millions of Rupiah)


CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from operating revenues
Telephone
Fixed lines	10,369,482		9,184,184
Cellular	21,195,286		21,843,066
Interconnection	2,282,695		2,296,488
Data, internet and information technology services	13,765,897		15,151,929
Other services	1,598,563		1,980,602
Total cash receipts from operating revenues	49,211,923		50,456,269
Cash payments for operating expenses	(22,738,622	)	(25,623,824	)
Cash paid from customers	94,280		248,487
Cash generated from operations	26,567,581		25,080,932
Interest received	358,088		291,765
Interest paid	(1,416,526	)	(1,349,692	)
Income tax paid	(3,246,756	)	(3,533,834	)
Net cash provided by operating activities	22,262,387		20,489,171
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of temporary investments and
maturity of time deposits	38,148		24,473
Purchases of
temporary investments and placements in time deposits	(22,559	)	(5,671	)
Proceeds from sale of property, plant and equipment	6,088		8,768
Acquisition of property, plant and equipment	(15,056,495	)	(10,897,723	)
Decrease in
advances for purchases of property, plant and equipment	(1,054,568	)	(524,422	)
Decrease in advances, other assets, escrow accounts	14,114		224,330
Business combinations, net of cash paid			(116,503	)
Acquisition of intangible assets	(462,192	)	(612,051	)
Acquisition of minority interest in subsidiary	(598,000	)	(95,422	)
Cash dividends received	822		2,800
Acquisition of long-term investments			(115,358	)
Net cash used in investing activities	(17,134,642	)	(12,106,779	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid	(5,840,708	)	(5,141,880	)
Cash dividends paid to minority stockholders of subsidiaries	(2,829,472	)	(2,188,700	)
Proceeds from short-term borrowings	83,023		254,152
Repayments of short-term borrowings	(91,929	)	(96,531	)
Proceeds from Medium-term Notes	30,000		35,000
Repayment of Medium-term Notes			(3,400	)
Proceeds from long-term borrowings	9,525,243		6,901,356
Repayment of long-term borrowings	(5,096,735	)	(6,430,082	)
Repayment of promissory notes	(123,927	)
Repayment of obligations under finance leases	(209,954	)	(166,194	)
Net cash used in financing activities	(4,554,459	)	(6,836,279	)
NET INCREASE IN CASH AND CASH EQUIVALENTS	573,286		1,546,113
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(251,038	)	(410,284	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	6,889,945		7,805,460
CASH AND CASH EQUIVALENTS AT END OF PERIOD	7,212,193		8,941,289

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THIRD QUARTER 2010 RESULTS (UNAUDITED)

PT TELEKOMUNIKASI SELULAR (TELKOMSEL) INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 (In billions of Rupiah)

Rp		Rp
OPERATING REVENUES
Post-paid	3,215		3,324
Prepaid	26,378		27,535
International roaming	540		541
Interconnection revenues	1,855		1,969
Other (USO compensation & network lease)	129		369
Total Operating Revenues	32,117		33,738
OPERATING EXPENSES
Personnel	993		1,170
Operation & maintenance	6,223		7,774
General & administrative	566		624
Marketing	803		912
Interconnection charges	1,772		1,714
Other operating expenses	1,609		1,706
Depreciation	6,116		7,037
Total Operating Expenses	18,082		20,937
EBIT (EARNINGS BEFORE INTEREST & TAXES)	14,035		12,801
OTHER INCOME/(EXPENSES)
Interest income & financing charges	(696	)	(597	)
Foreign exchange gain	272		96
Others net	7		33
Other income/(expenses) net	(417	)	(468	)
INCOME BEFORE TAX	13,618		12,333
INCOME TAX EXPENSE	3,797		3,144
NET INCOME	9,821		9,189
EBITDA	20,151		19,838
EBITDA Margin over gross oper. revenues	63	%	59	%
ROA	23	%	21	%
ROE	47	%	43	%

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PT TELEKOMUNIKASI SELULAR (TELKOMSEL) BALANCE SHEET AS OF SEPTEMBER 30, 2010 AND 2009 (In billions of Rupiah)


ASSETS
CURRENT ASSETS
Cash and cash equivalents	2,607	4,268
Acct. /Unbilled receivables	735	911
Prepayments	2,092	2,811
Others	807	376
Total Current Assets	6,241	8,366
NON-CURRENT ASSETS
Long-term Investment	20	20
Fixed assets net	49,041	49,720
Advances for fixed assets	2	330
Equipment no used in operations net	15	1
Intangible assets net	728	1,042
Others	1,049	1,128
Total Non-Current Assets	50,855	52,241
TOTAL ASSETS	57,096	60,607
CURRENT LIABILITIES
Accounts payable & Accr. Liabilities	9,199	9,163
Taxes payable	1,478	446
Unearned revenue	2,389	2,459
Dividend payable	1,142	4,145
Curr. maturities of med-term loans	5,584	3,763
Curr. maturities of obligation under finance leases	52	3
Total Current Liabilities	19,844	19,979
NON-CURRENT LIABILITIES
Med-term & long term loans net of current maturities	6,876	6,547
Deferred tax liabilities	2,371	2,651
Others	289	397
Total Non-current Liabilities	9,536	9,595
EQUITY
Capital
stock Rp1,000,000 par value Authorized
650,000 shares Issued and fully paid 182,570 shares	183	183
Additional paid-in capital	1,505	1,505
Retained earnings	26,028	29,345
Total Equity	27,716	31,033
TOTAL LIABILITIES & STOCKHOLDERS EQUITY	57,096	60,607

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