PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA TBK

6-K 1 u00569e6vk.htm 6-K 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

XBRL,dc

For the month of April, 2010 /XBRL,dc

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.

/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)

MARCH 31, 2009 AND 2010 AND THREE MONTHS PERIOD ENDED MARCH 31, 2009 AND 2010

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

MARCH 31, 2009 AND 2010 AND THREE MONTHS PERIOD ENDED MARCH 31, 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	9-123

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

xbrl,bs CONSOLIDATED BALANCE SHEETS (UNAUDITED) xbrl,body MARCH 31, 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	6,509,704	6,751,059	742,405
Temporary investments	2c,2f,45	287,558	359,182	39,499
Trade receivables	2c,2g,6,37,45
Related parties net of allowance
for doubtful accounts of
Rp.114,447 million in 2009 and
Rp.108,600 million in 2010		770,121	849,181	93,383
Third parties net of allowance for
doubtful accounts of
Rp.1,174,383 million in 2009 and
Rp.1,307,314 million in 2010		3,003,901	3,263,173	358,847
Other receivables net of allowance for
doubtful accounts of
Rp.7,734 million in 2009
and Rp.10,065 million in 2010	2c,2g,45	102,809	109,575	12,050
Inventories net of allowance for
obsolescence of Rp.68,111 million in
2009 and Rp.75,524 million in 2010	2h,7,37	493,683	504,283	55,455
Prepaid expenses	2c,2i,8,45	2,087,031	2,552,848	280,733
Claims for tax refund	2s,39	222,954	278,583	30,635
Prepaid taxes	2s,39	803,700	388,451	42,717
Other current assets	2c,9,45	43,201	52,499	5,773
Total Current Assets		14,324,662	15,108,834	1,661,497
NON-CURRENT ASSETS
Long-term investments net	2f,10	170,184	155,894	17,143
Property, plant and equipment net of
accumulated depreciation of
Rp.64,853,338 million in 2009 and
Rp.75,343,209 million in 2010	2k,2l,4,11, 19,20,23	71,165,921	75,405,335	8,292,224
Property, plant and equipment under
Revenue-Sharing Arrangements net
of accumulated depreciation of
Rp.272,514 million in 2009 and
Rp.188,471 million in 2010	2m,12,34,47	453,847	348,580	38,333
Prepaid pension benefit cost	2i,2r,42	176	614	68
Advances and other non-current assets	2c,2k,2o,13, 29,45,49	2,260,788	3,155,177	346,971
Goodwill and other intangible assets net
of accumulated amortization of
Rp.6,641,019 million in 2009 and
Rp.7,953,745 million in 2010	2d,2j,4, 14,37	2,873,087	2,219,474	244,073
Escrow accounts	2c,15,45	44,105	42,613	4,686
Deferred tax assets net	2s,39,54	76,716	97,676	10,741
Total Non-current Assets		77,044,824	81,425,363	8,954,239
TOTAL ASSETS		91,369,486	96,534,197	10,615,736

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

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (continued) MARCH 31, 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,16,45,54
Related parties		1,230,129	1,489,864	163,838
Third parties		8,911,854	6,371,012	700,612
Other payables		23,127	27,196	2,991
Taxes payables	2s,39	1,163,836	1,800,876	198,040
Accrued expenses	2c,17,35,42,45	3,383,731	3,497,576	384,624
Unearned income	2q,18	2,794,029	2,798,716	307,771
Advances from customers and suppliers		711,724	253,764	27,906
Short-term bank loans	2c,19,45	42,612	50,405	5,543
Current maturities of long-term liabilities	2c,2q,2l,20,45,54	7,142,260	7,767,893	854,225
Total Current Liabilities		25,403,302	24,057,302	2,645,550
NON-CURRENT LIABILITIES
Deferred tax liabilities net	2s,39,54	2,974,842	3,686,817	405,434
Accrued long service awards	2c,2r,43,45	108,722	209,959	23,089
Accrued post-retirement
health care benefits	2c,2r,44,45	2,553,531	1,681,512	184,914
Accrued pension and other post-
retirement benefits costs	2c,2r,42,45	1,057,509	684,805	75,307
Long-term liabilities net of current
maturities
Obligations under finance leases	2l,2q,11,20,54	448,965	460,883	50,683
Two-step loans related party	2c,20,21,45	3,874,738	2,878,012	316,491
Notes	2c,20,22,45		113,463	12,477
Bank loans	2c,20,23,45	6,393,675	9,046,132	994,791
Deferred consideration for business
combinations	20,24	1,179,701
Total Non-current Liabilities		18,591,683	18,761,583	2,063,186
MINORITY INTEREST	25	10,581,091	11,932,167	1,312,164

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

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (continued) MARCH 31, 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		554,242
Additional paid-in capital	2u,27	1,073,333		1,073,333		118,033
Treasury stock 490,574,500 shares in
2009 and 2010	2u,28	(4,264,073	)	(4,264,073	)	(468,914	)
Difference in value arising from
restructuring transactions and
other transactions between
entities under common control	2d,29	360,000		478,000		52,565
Difference due to change of equity in
associated companies	2f	385,595		385,595		42,403
Unrealized holding gain from
available-for-sale securities	2f	1,653		35,113		3,861
Translation adjustment	2f	239,055		230,826		25,384
Difference due to acquisition of
minority interest in subsidiary	1d,2d			(439,444	)	(48,325	)
Retained earnings
Appropriated		10,557,985		15,336,746		1,686,561
Unappropriated		23,399,862		23,907,049		2,629,026
Total Stockholders Equity		36,793,410		41,783,145		4,594,836
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY		91,369,486		96,534,197		10,615,736

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

xbrl,in CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) xbrl,body THREE MONTHS PERIOD ENDED MARCH 31, 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,30,54
Fixed lines		3,583,266		3,342,087		367,525
Cellular		6,499,363		6,691,220		735,824
Interconnection	2c,2q,31,45,54	1,091,924		1,016,657		111,800
Data, internet and information
technology services	2q,32,54	4,006,899		4,994,750		549,266
Network	2c,2q,33,45	263,470		277,470		30,513
Other telecommunications services	2m, 2q,12,34,47	173,383		265,138		29,157
Total Operating Revenues		15,618,305		16,587,322		1,824,085
OPERATING EXPENSES
Depreciation	2k,2l,2m,11,12,13	2,964,718		3,354,760		368,918
Personnel	2c,2r,17,35,
	42,43,44,45	1,904,766		1,874,100		206,092
Operations, maintenance and
telecommunication services	2c,2q,36,45,54	3,460,928		3,966,357		436,175
General and administrative	2g,2h,2q,6,7,14,37	841,257		983,669		108,173
Interconnection	2c,2q,38,45	743,834		670,220		73,703
Marketing	2q	414,604		416,459		45,797
Total Operating Expenses		10,330,107		11,265,565		1,238,858
OPERATING INCOME		5,288,198		5,321,757		585,227
OTHER (EXPENSES) INCOME
Interest income	2c,45	138,451		79,674		8,762
Equity in net income of
associated companies	2f,10	931		437		48
Interest expense	2c,45	(517,388	)	(504,235	)	(55,450	)
Gain (loss) on foreign exchange net	2p	(211,718	)	164,054		18,041
Others net		56,371		77,261		8,496
Other expenses net		(533,353	)	(182,809	)	(20,103	)
INCOME BEFORE TAX		4,754,845		5,138,948		565,124
TAX (EXPENSE) BENEFIT	2s,39
Current		(1,405,610	)	(1,036,459	)	(113,978	)
Deferred		6,747		(335,920	)	(36,941	)
		(1,398,863	)	(1,372,379	)	(150,919	)
INCOME BEFORE MINORITY INTEREST
IN NET INCOME OF CONSOLIDATED
SUBSIDIARIES		3,355,982		3,766,569		414,205
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARIES net	25	(898,098	)	(989,979	)	(108,867	)
NET INCOME		2,457,884		2,776,590		305,338
BASIC EARNINGS PER SHARE	2w,40
Net income per share		124.46		141.16		0.02
Net income per ADS
(40 Series B shares per ADS)		4,978.40		5,646.40		0.80

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

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

xbrl,se CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED) xbrl,body THREE MONTHS PERIOD ENDED MARCH 31, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah)


					in value
					arising from
					restructuring
					transactions
					and other		Unrealized
					transactions	Difference	holding
					between	due to change	gain (loss)
			Additional		entities under	of equity	on available-			Retained earnings
		Capital	paid-in	Treasury	common	in associated	for-sale		Translation			Stockholders
Descriptions	Notes	stock	capital	stock	control	companies	securities		adjustment	Appropriated	Unappropriated	equity
		Rp.	Rp.	Rp.	Rp.	Rp.	Rp.		Rp.	Rp.	Rp.	Rp.
Balance, January 1, 2009		5,040,000	1,073,333	(4,264,073	)	360,000	385,595	(19,066	)	238,319	10,557,985	20,941,978	34,314,071
Unrealized holding gain on
available-for-sale securities	2f							20,719					20,719
Foreign currency translation of
subsidiaries	1d,2b									736			736
Net income for the period												2,457,884	2,457,884
Balance, March 31, 2009		5,040,000	1,073,333	(4,264,073	)	360,000	385,595	1,653		239,055	10,557,985	23,399,862	36,793,410

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

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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED) (continued) THREE MONTHS PERIOD ENDED MARCH 31, 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
Descriptions	Notes	stock	capital	stock	control	companies	securities	adjustment		in subsidiary		Appropriated	Unappropriated	equity
		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							16,977							16,977
Foreign currency translation of
associated company	2f,10								(169	)					(169	)
Net income for the period														2,776,590	2,776,590
Balance, March 31, 2010		5,040,000	1,073,333	(4,264,073	)	478,000	385,595	35,113	230,826		(439,444	)	15,336,746	23,907,049	41,783,145

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

xbrl,cf CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) xbrl,body THREE MONTHS PERIOD ENDED MARCH 31, 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	3,584,082		3,134,821		344,732
Cellular	6,591,725		6,619,502		727,938
Interconnection net	852,809		1,081,317		118,911
Data, internet and information technology services	3,808,882		4,795,259		527,328
Other services	455,429		535,301		58,866
Total cash receipts from operating revenues	15,292,927		16,166,200		1,777,775
Cash payments for operating expenses	(7,222,995	)	(8,310,521	)	(913,897	)
Cash refund to customers	569,313		143,852		15,819
Cash generated from operations	8,639,245		7,999,531		879,697
Interest received	151,759		87,614		9,635
Interest paid	(571,434	)	(439,121	)	(48,290	)
Income tax paid	(966,307	)	(662,922	)	(72,901	)
Net cash provided by operating activities	7,253,263		6,985,102		768,141
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of temporary investments
and maturity of time deposits	4,242		23,236		2,555
Purchases of temporary investments
and placements in time deposits	(4,036	)	(5,660	)	(622	)
Proceeds from sale of property, plant and equipment	844		1,451		160
Acquisition of property, plant and equipment	(5,031,228	)	(4,361,856	)	(479,667	)
Increase in advances for purchases of
property, plant and equipment	(917,871	)	(647,912	)	(71,250	)
Decrease (increase) in advances, other assets and escrow accounts	(34,162	)	144,812		15,925
Business combinations, net of cash paid			(111,676	)	(12,281	)
Acquisition of intangible assets	(2,013	)	(19,342	)	(2,127	)
Cash dividends received	863
Acquisition of long-term investments			(3,905	)	(429	)
Net cash used in investing activities	(5,983,361	)	(4,980,852	)	(547,736	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid to minority stockholders
of subsidiaries			(405,585	)	(44,602	)
Proceeds from short-term borrowings	5,713		21,483		2,363
Repayments of short-term borrowings	(13,500	)	(14,928	)	(1,642	)
Proceeds from medium-term Notes			35,000		3,849
Proceeds from long-term borrowings	304,399		422,565		46,469
Repayment of long-term borrowings	(1,889,197	)	(2,623,094	)	(288,458	)
Repayment of promissory notes	(123,927	)
Repayment of obligations under finance leases	(59,747	)	(77,110	)	(8,480	)
Net cash used in financing activities	(1,776,259	)	(2,641,669	)	(290,501	)

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued) THREE MONTHS PERIOD ENDED MARCH 31, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)

Rp.		Rp.		US$ (Note 3)
NET DECREASE IN CASH AND
CASH EQUIVALENTS	(506,357	)	(637,419	)	(70,096	)
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS	126,116		(416,982	)	(45,855	)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD	6,889,945		7,805,460		858,356
CASH AND CASH EQUIVALENTS AT END OF PERIOD	6,509,704		6,751,059		742,405
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities:
Acquisition of property, plant and equipment
through incurrence of payables	6,988,865		5,703,508		627,207
Acquisition of property, plant and equipment
through finance leases	82,001		5,967		656

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2009 AND 2010 THREE MONTHS PERIOD ENDED MARCH 31, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah, unless otherwise stated)

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GENERAL

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| 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 Law No. 40/2007 of the Limited Liability Companies, Law No. 19/2003 of the
National State-owned Companies and Badan Pengawas Pasar Modal dan Lembaga Keuangan Indonesia
(BAPEPAM-LK) Regulation No. IX.J.1 of Main Provisions of the Articles of Association of
Company that Make an Equity Public Offering and Public Company and to add the Companys
purposes and objectives based on notarial deed No. 27 dated July 15, 2008 of A. Partomuan
Pohan, S.H., LLM. and notification of this amendment was received by the Minister of Justice
and Human Rights of the Republic of Indonesia (MoJHR) as in his Letter No.
AHU.46312.AH.01.02/2008 dated July 31, 2008 and was published in State Gazette of the
Republic of Indonesia No. 84 dated October 17, 2008, Supplement of the Republic of Indonesia
No. 20155. |
| In accordance with Article 3 of the Companys Articles of Association, the scope of its
activities is to provide telecommunication network and services, informatics and
optimization of the Companys resources in accordance with prevailing
regulations. To achieve this objective, the Company is involved in the following activities: |

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) MARCH 31, 2009 AND 2010 THREE MONTHS PERIOD ENDED MARCH 31, 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 July 15, 2008 as covered by notarial deed No. 27 of Dr. A. Partomuan
Pohan, S.H., LLM.,; (ii) the Extraordinary General Meeting (EGM) of Stockholders of
the Company dated September 19, 2008 as covered by notarial deed No. 16 of the same
notary; and (iii) AGM of Stockholders of the Company dated June 12, 2009 as covered by
notarial deed No. 22 of the same notary, the composition of the Companys Board of
Commissioners and Directors as of March 31, 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

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 Board of Commissioners Letter to the President Director No.
125/SRT/DK/2008/RHS dated July 25, 2008, the Board of Commissioners agreed to proceed
with the appointment of the COO, including the role of the position as Director of
Network and Solution.
	At the EGM of Stockholders of the Company dated September 19, 2008, the Companys
stockholders agreed to appoint Bobby A.A. Nazief as a member of the Companys Board of
Commissioners to fill in the vacant position for a five year term and to extend the term
of service of the Companys Board of Commissioners whose members were elected in the EGM
of Stockholders of the Company dated March 10, 2004, which should expire on March 10,
2009, to be extended on the date of the AGM of Stockholders of the Company in 2009.
Based on the AGM of Stockholders of the Company dated June 12, 2009, the Companys
stockholders agreed to extend the terms of service of Tanri Abeng, Arif Arryman and
Petrus Sartono up to the next AGM of Stockholders of the Company.
2.	Employees
	As of March 31, 2009 and 2010, the Company and its subsidiaries had 30,288 and 27,366
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. |

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GENERAL (continued)

c.	Public offering of shares of the Company (continued)
	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.
	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 March 31, 2010, all of the Companys Series B shares were listed on the IDX and
43,468,176 ADS shares were listed on the NYSE and LSE (Note 26).
d.	Subsidiaries
	As of March 31, 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	52,945,199	58,616,876
PT Multimedia Nusantara
( Metra ), Jakarta,
Indonesia	Multimedia
telecommunication
services/May 9, 2003	1998	100	100	837,616	1,715,491
PT Telekomunikasi
Indonesia International
( TII ) (formerly PT Aria
West International
( AWI )), Jakarta,
Indonesia	Telecommunication/July 31, 2003	1995	100	100	659,251	1,435,377

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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 Pramindo Ikat
Nusantara
( Pramindo ), Jakarta, Indonesia	Telecommunication
construction and
services/
August 15, 2002	1995	100	100	1,146,543	1,167,074
PT Infomedia Nusantara
( Infomedia ), Jakarta, Indonesia	Data and information
service provides
telecommunication
information services
and other information
services in the form of
print and electronic
media and call
center services/September
22,1999	1984	51	100 (including through 49% ownership by Metra)	578,689	611,897
PT Dayamitra
Telekomunikasi
( Dayamitra ), Jakarta, Indonesia	Telecommunication/May 17, 2001	1995	100	100	411,503	376,397
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)	131,318	196,844
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	170,329	188,214
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)	80 (through 80% ownership by Metra)	353,593	467,606

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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
Telekomunikasi
Indonesia
International Pte. Ltd., Singapore	Telecommunication/December 6, 2007	2008	100 (through 100% ownership by TII)	100 (through 100% ownership by TII)	98,225	175,776
PT Balebat Dedikasi Prima
( Balebat ) , Bogor,
Indonesia	Printing/October 1, 2003	2000	33.15
(through
65%
ownership by
Infomedia)	65 (through 65% ownership by Infomedia)	93,490	81,695
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)	24,676	68,843
PT Administrasi Medika
( Ad Medika ), Jakarta, Indonesia	Heatlh insurance administration service/February 25, 2010	2010		75 (through 75% ownership by Metra)		45,503
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)	10,638	8,184
PT Metra-Net (Metra-Net) Jakarta, Indonesia	Multimedia portal
service/April 17, 2009	2009		100 (through 100% ownership by Metra)		18,422
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)	1,642	561
Telekomunikasi Selular
Finance Limited
( TSFL ), Mauritius	Finance establish
to raise funds
for the development of
Telkomsel s business
through the issuance
of debenture stock,
bonds, mortgages or
any other securities/April
22, 2002	2002	65 (through 100% ownership by Telkomsel)	65 (through 100% ownership by Telkomsel)	30	23

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GENERAL (continued)

d. Subsidiaries (continued)

(a)	Telkomsel
	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.
	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
	Based on the Circular Meeting of Stockholders of Metra on March 23, 2009, as covered by
notarial deed No. 64 of Sutjipto, S.H., M.Kn., dated April 16, 2009, Metras
stockholders agreed to increase its authorized capital from Rp.418,850 million to
Rp.485,679 million with a par value of Rp.10,000 per share. The authorized capital of
Rp.34,829 million was paid by conversion of the Companys receivables to Metra. In
addition, Metras stockholders also agreed to the establishment of a subsidiary which
specializes in multimedia portal services and content.
	Based on the Circular Meeting of Stockholders of Metra on June 24, 2009 as covered by
notarial deed No. 8 of Wahyu Nurani, S.H., dated July 24, 2009, Metras stockholders
agreed to the following: (1) to increase its authorized capital from Rp.1,000,000
million to Rp.2,000,000 million consisting of 200,000,000 shares, and (2) to increase
its issued and fully paid capital from Rp.485,679 million to Rp.1,084,179 million with
nominal value of Rp.10,000 per share that will be issued and fully paid by the Company.

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GENERAL (continued)

d. Subsidiaries (continued)

(b)	Metra (continued)
	On June 30, 2009, based on notarial deed No. 25 of Sjaaf De Carya Siregar, S.H. dated
June 30, 2009, Metra entered into a Sales Purchase Agreement (Akta Jual Beli or SPA)
of Shares to purchase 205,800,000 of Infomedias shares or the equivalent of 49% of
Infomedias total ownership, with a transaction value of Rp.598,000 million from Elnusa.
On July 1, 2009, Metra settled the transaction value to purchase 49% of Infomedias
shares from Elnusa, which amounted to Rp.598,000 million (Note 1d.e).
	On the transaction date, the Company was the majority shareholder of Infomedia,
therefore the transaction represents acquisition of the minority interest in the
subsidiary. The difference between acquisition cost and the minority historical cost of
Rp.439,444 million and is recorded as Difference due to acquisition of minority
interest in subsidiary in the equity account (Note 2d).
	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 SPA with Ad Medikas stockholders for the share purchase transaction amounting to
Rp.128,250 million.
(c)	TII
	On December 31, 2008, pursuant to the Third Amendment to Cooperation Agreement between
the Company and TII No. K.Tel.665/HK.820/UTA-00/2008 regarding Management and
Development of International Business, the Company has agreed to amend the transfer of
international telecommunications business from the Company to become management and
development of international business in the form of a service operator partnership
scheme.
	On June 1, 2009, pursuant to the Third Amendment and The Transfer of Procurement and
Installation Agreement of Batam Singapore Cable System (BSCS) Project, the Company has
transferred all its rights and obligations in the BSCS Project to TII.
	On October 22, 2009, pursuant to Notice of Assignment Acceptance to Management Committee
of Asia-America Gateway (AAG) and consortium member of AAG, the Company has
transferred all its rights and obligations in the AAG consortium to TII.
	Based on the Circular Meeting of Stockholders of TII on December 22, 2009, TIIs
stockholder agreed to the recognition of debt arising from the transfer of international
infrastructure development projects (on going projects) from the Company to TII which
consisted of the BSCS project and AAG project worth Rp.463,105 million.
	Based on the Circular Meeting of Stockholders of TII on December 22, 2009 as covered by
notarial deed No. 12 of Siti Safarijah dated January 21, 2010 which was reaffirmed by
the Recognition of Payables and Debt to Equity Swap Agreement between the Company and
TII on December 23, 2009, TIIs stockholders agreed as follows: (1) the increase of its
issued and fully paid capital amounted to Rp.593,191 million by issuing 5,203,427 new
shares, (2) the issuance of new shares to be issued and fully paid by the Company
through a debt to equity swap amounting to Rp.463,105 million and cash amounting to
Rp.130,086 million, and (3) the increase of its authorized capital from Rp.308,306
million which consists of 2,704,440 shares with par value of Rp.114,000 to Rp.2,052,000
million which consists of 18,000,000 shares with par value of Rp.114,000.

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GENERAL (continued)

d. Subsidiaries (continued)

(c)	TII (continued)
	On December 28, 2009, the Company paid for the increase in share capital to TII of
Rp.130,086 million .
	On December 23, 2009, the Company agreed the abolition of the Minimum Telkom Revenues
(MTR) and the Companys share of Distributable KSO Revenues (DKSOR). In addition,
the proportion of revenue sharing which was originally part of TII is 70% of DKSOR,
become proportional amounting to amortization expense of TIIs asset operated by Telkom
Divre III, based on the Fourth Amendment of KSO Agreement between Telkom Divre III and
TII No. K.Tel.222/HK.810/UTA-00/1995 dated October 20, 1995. This amendment applies
starting from January 1, 2009, until the date of termination of the KSO Agreement on
December 31, 2010.
	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)	Infomedia
	Based on the Circular Meeting of Stockholders of Infomedia on June 5, 2009 as covered by
notarial deed No. 10 of Sjaaf De Carya Siregar, S.H. dated June 5, 2009, Infomedias
stockholders agreed as follows: (1) the capitalization of retained earning balance in
the form of stock dividend; (2) increase its authorized capital from Rp.100,000 million
to Rp.500,000 million consisting of 1,000,000,000 shares and (3) the increase of its
issued and fully paid capital from Rp.40,000 million to Rp.210,000 million consisting of
420,000,000 shares.
	Based on a SPA of shares between Elnusa and Metra on June 30, 2009 as covered by
notarial deed No. 25 of Sjaaf De Carya Siregar, S.H. dated June 30, 2009, all parties
have agreed to transfer Elnusas ownership of 205,800,000 shares in Infomedia to Metra
(Note 1d.b).

e.
The consolidated financial statements were authorized for issue by the Board of Directors on
April 29, 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d.	Acquisitions of subsidiaries (continued)
	The Company continually assesses whether events or changes in circumstances have occurred
that would require revision of the remaining estimated useful life of intangible assets and
goodwill, or whether there is any indication of impairment. If any indication of impairment
exists, the recoverable amount of intangible assets and goodwill is estimated based on the
expected future cash flows which are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.
	In July 2004, the Indonesian Financial Accounting Standard Board (Dewan Standar Akuntansi
Keuangan di Indonesia or DSAK) issued PSAK 38 (Revised 2004), Accounting for
Restructuring Transactions between Entities under Common Control (PSAK 38R). Under PSAK
38R, the acquisition 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 (Note 1d.b).
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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f. Investments (continued)

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

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g.	Trade and other accounts receivable
	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.
	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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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 (Note 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
Leasehold improvements	3-7
Switching equipment	5-15
Telegraph, telex and data communication equipment	5-15
Transmission installation and equipment	5-20
Satellite, earth station and equipment	3-15
Cable network	5-25
Power supply	3-10
Data processing equipment	3-10
Other telecommunications peripherals	5
Office equipment	2-5
Vehicles	5-8
Other equipment	5

| Pursuant to PSAK 16R, starting January 1, 2008, the Company has changed the estimated useful
lives of fiber optic (included in cable network assets) from 15 years to 25 years. The
Company charged the impact of the changes in the estimated useful lives to 2008 consolidated
income statements as it is not considered material. |
| --- |
| 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. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

k.	Property, plant and equipment direct acquisitions (continued)
	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	11,535	11,575	9,088	9,099
Euro1	15,307	15,364	12,231	12,248
Yen1	117.33	117.81	97.41	97.58

| | 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). |
| --- | --- |
| q. | Revenue and expense recognition |

| i. |
| --- |
| Revenues from fixed line installations are recognized at the time the installations are
placed in service and ready for use. Revenues from usage charges are recognized as
customers incur the charges. Monthly subscription charges are recognized as revenues
when incurred by subscribers. |

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q. Revenue and expense recognition (continued)

ii.
Revenues from postpaid service, which consist of connection fee as well as usage and
monthly charges, are recognized as follows:

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

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

| | Sale of SIM and RUIM cards 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 installations (set-up) of internet, data communication and e-Business are
recognized upon the completion of installations. Revenues from data communication and
internet are recognized based on usage. |
| | 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 DSAK issued PPSAK 1, Abolition of PSAK 32: Accounting for Forestry
Industry, PSAK 35: Accounting for Telecommunications Services, and PSAK 37: Accounting
for Toll Road Industry that effective on January 1, 2010 and prospectively applied. To
improve the comparability of financial statement, the Company made accounts
reclassification of the financial statement of the periods ended before the reporting
period (Note 54). PPSAK 1 abolished the rules stated in PSAK 35 Accounting for
Telecommunication Services which have the impact on several important things in
financial statements, i.e. disclosure of interconnection revenue which is currently has
to be presented in a gross basis and abolition of unearned income recognition rules that
resulted from recognition of Revenue-Sharing Arrangements (RSA) asset that currently
recognized as long term liabilities.

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.	Derivative instruments
	Derivative transactions are accounted for in accordance with PSAK 55 (revised 2006)
Financial Instrument: Recognition and Measurement which requires that all derivative
instruments be recognized in the financial statements at fair value. To qualify for hedge
accounting, PSAK 55 requires certain criteria to be met, including formal documentation at
the inception of the hedge. With the issue of PPSAK 5 Abolition of ISAK 06 interpretation
of paragraph 12 and 16, PSAK 55 (1999) Foreign Currency Embedded Derivative then embedded
derivative instrument is measured and recognized based on PSAK 55 (revised 2006). The
Company and its subsidiaries are currently assessing the impact of the abolition of ISAK 6
on the consolidated financial statements.
	Changes in the fair values of derivative instruments that do not qualify for hedge
accounting are recognized in the consolidated statements of income. If a derivative
instrument is designated and qualifies for hedge accounting the assets or liabilities shall
be adjusted. The changes in fair values of derivative instruments are recognized in the
consolidated statements of income or consolidated statement of changes in stockholders
equity depending on the type and effectiveness of hedge transaction.

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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.9,093.5 to US$1 as published by Reuters on March 31, 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) (Note 1d.b). |
| Sigma is an Information Technology (IT) Services company that provides software for
banking, multi finance and manufacturing companies. Through the acquisition, the Company
started to broaden its services to adjacent industries especially IT services by combining
Sigmas expertise and the Companys corporate customer base. Goodwill in respect of the
acquisition comprises principally the fair value of the skills and expertise of the acquired
companys workforce. |
| Metra and SCH have agreed to support Sigma in achieving an IPO in 24 months from closing
date. Pursuant to the agreement, SCH, which holds the remaining 20% ownership in Sigma, has
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. |
| 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
SPA with Ad Medikas stockholders for the share purchase transaction amounting to Rp.128,250
million.
	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 temporary allocation of the acquisition cost was as follows:


The assets and liabilities arising from the acquisition are as follows:
Current assets	25,871
Property, plant and equipments	17,080
Intangible assets	23,278
Other non-current assets	3,261
Current liabilities	(21,674	)
Long-term liabilities	(8,695	)
Deferred tax liabilities	(4,973	)
Minority interests	(9,250	)
Fair value of net assets acquired	24,898
Goodwill	103,352
Total purchase consideration	128,250
Less:
Cash and cash equivalents in subsidiary acquired	(13,574	)
Cash outflow from acquisition	114,676

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 represent long-term customer contracts and relationships, software and trademark (Note 14).

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CASH AND CASH EQUIVALENTS

Cash on hand	34,666	28,452
Cash in banks
Related parties
Rupiah
PT Bank Mandiri (Persero) Tbk (Bank Mandiri)	161,801	408,627
PT Bank Negara Indonesia (Persero) Tbk (BNI)	383,120	219,874
PT Bank Rakyat Indonesia (Persero) Tbk (BRI)	80,604	39,675
PT Bank Pos Nusantara	105
PT Bank Tabungan Negara (Persero) Tbk (BTN)	18	898
PT Bank Syariah Mandiri (BSM)		62
	625,648	669,136
Foreign currencies
Bank Mandiri	215,144	178,424
BNI	29,454	40,058
BRI	653	212
PT Bank Syariah Mega Indonesia
(Bank Syariah Mega)		108
	245,251	218,802
Sub-total	870,899	887,938
Third parties
Rupiah
Deutsche Bank AG (DB)	8,486	222,289
ABN AMRO Bank (AAB)	85,544	86,765
PT Bank Internasional Indonesia Tbk (BII)	85	12,550
PT Bank Central Asia Tbk (BCA)	11,459	12,018
PT Bank Bukopin Tbk (Bank Bukopin)	4,834	2,274
Citibank, N.A. (Citibank)	315	1,230
Bank Syariah Mega	3,846
PT Bank Ekonomi Raharja Tbk (Bank Ekonomi)	2,296	7,647
PT Bank CIMB Niaga Tbk (Bank CIMB Niaga)	2,200	7,136
Others (each below Rp.1 billion)	2,153	2,751
	121,218	354,660

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CASH AND CASH EQUIVALENTS (continued)


Cash in banks (continued)
Third parties (continued)
Foreign currencies
Deutsche Bank AG (DB)	11,732	32,484
The Hongkong and Shanghai Banking
Corporation Ltd.	1,717	29,945
Bank Ekonomi	5,935	12,325
Citibank	8,807	8,561
Others (each below Rp.1 billion)	1,273	1,348
	29,464	84,663
Sub-total	150,682	439,323
Total cash in banks	1,021,581	1,327,261
Time deposits
Related parties
Rupiah
BNI	483,448	1,665,749
BRI	520,915	808,150
Bank Mandiri	555,831	338,867
BTN	375,725	90,000
BSM		3,000
	1,935,919	2,905,766
Foreign currencies
BNI	1,283,308	699,719
BRI	176,486	491,931
Bank Mandiri	2,311
	1,462,105	1,191,650
Sub-total	3,398,024	4,097,416
Third parties
Rupiah
PT Bank Pembangunan Daerah Jawa Barat
dan Banten (Bank Jabar)	345,560	335,560
Bank Bukopin	184,895	159,590
PT Bank Muamalat Indonesia (Bank Muamalat)	78,550	102,000
Bank CIMB Niaga	6,600	100,117
PT Bank Mega Tbk (Bank Mega)	105,000	75,000
BCA		57,172
PT Bank Tabungan Pensiunan Nasional Tbk	5,000	24,000
PT Pan Indonesia Bank Tbk	5,000	20,000
Deutsche Bank AG (DB)	31,670	15,000
PT Bank Danamon Indonesia Tbk
(Bank Danamon)	69,315	10,000

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CASH AND CASH EQUIVALENTS (continued)


Time deposits (continued)
Third parties (continued)
Rupiah (continued)
PT Bank Syariah Mega Indonesia
(Bank Syariah Mega)		3,500
PT Bank Yudha Bhakti	2,019	2,000
PT Bank Capital Indonesia Tbk		1,000
BII	60,000
PT Bank Mutiara Tbk (formerly PT Bank Century Tbk)	40,000
	933,609	904,939
Foreign currencies
BCA	542,091	392,082
Bank Bukopin		909
Standard Chartered Bank (SCB)	541,662
Bank Muamalat	34,605
Bank CIMB Niaga	3,466
	1,121,824	392,991
Sub-total	2,055,433	1,297,930
Total time deposits	5,453,457	5,395,346
Grand Total	6,509,704	6,751,059

Interest rates per annum on time deposits are as follows:

	2009	2010
Rupiah	6.25%
- 13.50%	4.00% -
13.50%
Foreign currencies	0.25%
-
4.75%	0.05%
- 4.75%

| The related parties which the Company and its subsidiaries place their funds are stste-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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6.
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	752,242		798,635
Indosat	49,084		67,572
CSM	46,908		54,411
PT Patra Telekomunikasi Indonesia (Patrakom)			15,783
PT Graha Informatika Nusantara (Gratika)	4,254		4,597
PSN	7,286		4,212
Koperasi Pegawai Telkom (Kopegtel)	1,145		3,373
PT Aplikanusa Lintasarta (Lintasarta)	12,088		3,271
Others (each below Rp.1 billion)	11,561		5,927
Total	884,568		957,781
Allowance for doubtful accounts	(114,447	)	(108,600	)
Net	770,121		849,181

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

Residential and business subscribers	3,738,103		4,175,609
Overseas international carriers	440,181		394,878
Total	4,178,284		4,570,487
Allowance for doubtful accounts	(1,174,383	)	(1,307,314	)
Net	3,003,901		3,263,173

b. By age

(i) Related parties

Up to 6 months	803,900		684,110
7 to 12 months	33,326		100,078
More than 12 months	47,342		173,593
Total	884,568		957,781
Allowance for doubtful accounts	(114,447	)	(108,600	)
Net	770,121		849,181

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TRADE RECEIVABLES (continued)

b. By age (continued)

(ii) Third parties

Up to 3 months	2,120,094		3,149,289
More than 3 months	2,058,190		1,421,198
Total	4,178,284		4,570,487
Allowance for doubtful accounts	(1,174,383	)	(1,307,314	)
Net	3,003,901		3,263,173

c. By currency

(i) Related parties

Rupiah	857,535		935,843
U.S. Dollars	27,033		21,006
Euro			932
Total	884,568		957,781
Allowance for doubtful accounts	(114,447	)	(108,600	)
Net	770,121		849,181

(ii) Third parties

Rupiah	3,411,931		3,936,684
U.S. Dollars	766,353		633,803
Total	4,178,284		4,570,487
Allowance for doubtful accounts	(1,174,383	)	(1,307,314	)
Net	3,003,901		3,263,173

d. Movements in the allowance for doubtful accounts

Beginning balance	1,203,905		1,273,551
Additions (Note 37)	123,029		146,869
Bad debts write-off	(38,104	)	(4,507	)
Ending balance	1,288,830		1,415,913

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TRADE RECEIVABLES (continued)

| d. |
| --- |
| 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. |

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INVENTORIES

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Modules	183,629		250,783
Components	172,059		211,651
SIM cards, RUIM cards and prepaid voucher blanks	206,106		117,373
Total	561,794		579,807
Allowance for obsolescence
Modules	(61,439	)	(68,744	)
Components	(6,672	)	(6,770	)
SIM cards, RUIM cards and prepaid voucher blanks			(10	)
Total	(68,111	)	(75,524	)
Net	493,683		504,283

Movements in the allowance for obsolescence are as follows:

Beginning balance	64,849	72,175
Additions (Note 37)	3,262	3,349
Ending balance	68,111	75,524

| 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). |

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7.	INVENTORIES (continued)
	As of March 31, 2010, certain inventories held by the Company have been insured against fire,
theft and other specific risks with the total sum insured as of March 31, 2010 is amounting to
Rp.128,367 million (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 March 31, 2010 amounting to
Rp.10,000 million.
	Management believes that the insurance coverage is adequate to cover potential losses of the
insured inventories.
8.	PREPAID EXPENSES

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Frequency license (Note 49c.iii)	1,212,156	1,844,747
Rental	331,466	448,396
Salaries	425,027	189,893
Insurance	79,753	20,702
Telephone directory issuance costs	2,483	2,566
Others	36,146	46,544
Total	2,087,031	2,552,848

	Refer to Note 45 for details of related party transactions.
9.	OTHER CURRENT ASSETS
	Other current assets as of March 31, 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.		20,362		41,937
	US$	0.075	870	0.276	2,507
TII	US$			0.569	5,167
Bank Mandiri
The Company	Rp.		1,348		2,306
	US$
Infomedia	Rp.		13,262
TII	US$	0.569	6,559
Metra	Rp.				235
BRI
Metra	Rp.				347
Bank Syariah Mega
Dayamitra	Rp.		800
Total			43,201		52,499

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9.
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.

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LONG-TERM INVESTMENTS

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Percentage
of	Beginning	Share of	Ending
ownership	balance	net income	balance
Equity method:
CSM	25.00	84,197		84,197
Patrakom	40.00	32,949	931	33,880
PSN	22.38
		117,146	931	118,077
Cost method:
Scicom (MSC) Berhad (Scicom)	9.80	30,961		30,961
Bridge Mobile Pte. Ltd. (BMPL)	10.00	20,360		20,360
PT Batam Bintan Telekomunikasi (BBT)	5.00	587		587
PT Pembangunan Telekomunikasi Indonesia
(Bangtelindo)	2.11	199		199
		52,107		52,107
		169,253	931	170,184


Percentage			Share of
of	Beginning		net	Ending
ownership	balance	Addition	income	balance
Equity method:
CSM	25.00	44,277			44,277
Patrakom	40.00	36,409		437	36,846
PSN	22.38
		80,686		437	81,123
Cost method:
Scicom	17.01	49,721	3,905		53,626
BMPL	10.00	20,360			20,360
BBT	5.00	587			587
Bangtelindo	2.11	199			199
		70,867	3,905		74,772
		151,553	3,905	437	155,894

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LONG-TERM INVESTMENTS (continued)

a.	CSM
	CSM is engaged in providing Very Small Aperture Terminal (VSAT), network application
services and consulting services on telecommunications technology and related facilities.
	As of March 31, 2009 and 2010, the carrying amount of the investment in CSM was equal to the
Companys share in the net assets of CSM.
b.	Patrakom
	Patrakom is engaged in providing satellite communication system services, related services
and facilities to companies in the petroleum industry.
	As of March 31, 2009 and 2010, the carrying amount of investment in Patrakom was equal
to the Companys share in the net assets of Patrakom.
c.	PSN
	PSN is engaged in providing satellite transponder leasing and satellite-based communication
services in the Asia Pacific region. The Companys share in losses in PSN has exceeded the
carrying amount of its investment since 2001, accordingly, the investment value has been
reduced to Rp.nil.
d.	Scicom
	Scicom is engaged in providing call center services in Malaysia. As of March 31, 2009, TIIs
contributions amounted to US$3.42 million (equivalent to Rp.30,961 million), which
represents or equivalent to 9.80% of TIIs total ownership in Scicom.
	In 2009, TII has purchased an additional 16,081,800 Scicom shares with transaction value
amounting to US$1.973 million (equivalent to Rp.18,760 million). As a result, TIIs
ownership in Scicom increased to 15.86%.
	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%.
e.	BMPL
	BMPL (Singapore), an associated entity of Telkomsel, is engaged in providing regional mobile
services in the Asia Pacific region.
	As of March 31, 2009 and 2010, Telkomsels contributions which represent 10% ownership
interest amounted to US$2,200,000 (equivalent to Rp.20,360 million).
f.	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.
g.	Bangtelindo
	Bangtelindo is primarily engaged in providing consultancy services on the installation and
maintenance of telecommunications facilities.

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11. PROPERTY, PLANT AND EQUIPMENT

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

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PROPERTY, PLANT AND EQUIPMENT (continued)

2010	of Ad Medika	Additions	Deductions		Reclassifications		2010
At cost:
Direct acquisitions
Land	781,275	7,584	5,071					793,930
Buildings	2,978,417	5,147	22,537			86,338		3,092,439
Leasehold improvements	526,770	348	20,415					547,533
Switching equipment	28,948,306		48,145			276,471		29,272,922
Telegraph, telex and data
communication equipment	20,716							20,716
Transmission installation and
equipment	67,228,748		198,495	(1,015	)	1,626,406		69,052,634
Satellite,
earth station and equipment	6,795,379		8,830			22,570		6,826,779
Cable network	23,621,586		206,198	(392,321	)	783		23,436,246
Power supply	7,368,721		30,526	(748	)	49,376		7,447,875
Data processing equipment	7,602,865		18,215			110,827		7,731,907
Other
telecommunications peripherals	476,705		2,350					479,055
Office equipment	576,098	3,167	7,465	(7,825	)	422		579,327
Vehicles	110,216	834	2,290	(226	)			113,114
Other equipment	103,310							103,310
Property under construction:
Buildings	89,926		37,663			(78,278	)	49,311
Leasehold improvements	466		1,034					1,500
Switching equipment	48,588		251,438			(276,471	)	23,555
Transmission installation and
equipment	358,562		1,604,867			(1,631,172	)	332,257
Satellite, earth station and
equipment			11,747			(11,506	)	241
Cable network	2,856		2,306	(40	)	(33	)	5,089
Power supply	52,167		35,359			(47,244	)	40,282
Data processing equipment	16,008		123,974			(103,004	)	36,978
Leased assets
Transmission installation and
equipment	288,766							288,766
Data processing equipment	260,782		5,967					266,749
Office equipment	247,897			(124,866	)			123,031
Vehicles	61,220							61,220
CPE assets	21,778							21,778
Total	148,588,128	17,080	2,644,892	(527,041	)	25,485		150,748,544
Accumulated depreciation and
impairment:
Direct acquisitions
Buildings	1,485,234		29,449			6,740		1,521,423
Leasehold improvements	381,536		14,511			91		396,138
Switching equipment	18,425,673		717,419			(7,876	)	19,135,216
Telegraph, telex and data
communication equipment	17,391		127					17,518
Transmission installation
and equipment	24,794,959		1,569,332	(376	)	(5,704	)	26,358,211
Satellite, earth station and
equipment	3,136,685		127,015			(4,320	)	3,259,380
Cable network	14,688,600		322,571	(392,321	)	(16,366	)	14,602,484
Power supply	2,932,127		237,565	(225	)	547		3,170,014
Data processing equipment	5,094,420		264,502			17,693		5,376,615
Other telecommunications
peripherals	351,875		3,434			(15	)	355,294
Office equipment	465,291		12,808	(7,591	)	905		471,413
Vehicles	94,693		2,026	(226	)	8		96,501
Other equipment	87,228		1,293			(5	)	88,516
Leased assets
Transmission installation and
equipment	227,193		5,046			103		232,342
Data processing equipment	116,540		14,127			1,099		131,766
Office equipment	201,039		15,682	(124,866	)			91,855
Vehicles	29,133		4,277					33,410
CPE assets	4,545		568					5,113
Total	72,534,162		3,341,752	(525,605	)	(7,100	)	75,343,209
Net Book Value	76,053,966							75,405,335

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11. 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	844		1,451
Net book value	(1,748	)	(1,436	)
(Losses) gains on disposal or sale of property,
plant and equipment	(904	)	15

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 March 31, 2009 and 2010, the net book value of these
property, plant and equipment was Rp.899,970 million and Rp.789,585 million,
respectively. |
| --- | --- |
| (ii) | In accordance with the amended and restated KSO IV agreement with PT Mitra
Global Telekomunikasi Indonesia (MGTI), the ownership rights to the acquired
property, plant and equipment in KSO IV are legally retained by MGTI until the end of
the KSO period which is on December 31, 2010. As of March 31, 2009 and 2010, the net
book value of this property, plant and equipment was Rp.434,589 million and Rp.231,268
million, respectively. |

c. Assets impairment and related claims

| (i) | As of March 31, 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 March 31, 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 August 16, 2009, Padang and its surrounding, area of Divre I Sumatera
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 August 2009. |
| (iii) | On September 2, 2009, Tasikmalaya and its surrounding, area of Divre III West
Java 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 September 2009. |
| (iv) | On September 30, 2009, Padang and its surrounding, area of Divre I Sumatera
experienced an earthquake from which insurance claim for the replacement of the assets
has been made. Buildings and other equipments affected by the earthquake have been
re-operated gradually since October 2009. |

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11. PROPERTY, PLANT AND EQUIPMENT (continued)

d. Others

| (i) | Interest capitalized to property under construction amounted to Rp.nil for the
three months period ended March 31, 2009 and 2010, respectively. |
| --- | --- |
| (ii) | Foreign exchange loss capitalized as part of property under construction
amounted to Rp.nil for the three months period ended March 31, 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.110,611 million,
Rp.82,958 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.150,764 million, Rp.68,475
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.
Telkomsels accelerated depreciation expense charged to the current period
consolidated statements of income amounted to Rp.nil. |
| (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 2011and 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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11. PROPERTY, PLANT AND EQUIPMENT (continued)

d. Others (continued)

| (viii) | As of March 31, 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 Sinar Mas, PT Asuransi Central Asia, PT Asuransi Allianz Utama
Indonesia, HSBC Insurance (Singapore) Pte, Ltd, PT Asuransi Mitra, PT Advis Terapan
Proteksindo and PT Asuransi QBE POOL Indonesia against fire, theft, earthquake and
other specified risks. Total cost of assets being insured amounted to Rp.72,798,686
million and US$6.8 million, which was covered by sum insured basis with a maximum loss
claim of Rp.795,352 million, US$15.89 million, Euro0.22 million and SGD6.42 million and
on first loss basis of Rp.6,132,488 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 March 31, 2010, the completion of assets under construction was around
74.42% of the total contract value, with estimated dates of completion between July
2010 and April 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 March 31, 2009 and 2010 are as follows: |

Year — 2009	458,450
2010	326,931		332,393
2011	118,481		229,645
2012	62,375		171,734
2013	17,607		126,263
2014	415		106,007
Later			30,552
Total minimum lease payments	984,259		996,594
Interest	(136,804	)	(274,407	)
Net present value of minimum lease payments	847,455		722,187
Current maturities (Note 20a)	(398,490	)	(261,304	)
Long-term portion (Note 20b)	448,965		460,883

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

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2009	Additions	Adjustments		2009
At cost:
Land	1,313				1,313
Buildings	338				338
Switching equipment	152,776				152,776
Transmission
installation and equipment	100,072				100,072
Cable network	461,315				461,315
Other
telecommunications peripherals	10,547				10,547
Total	726,361				726,361
Accumulated depreciation:
Land	926	17			943
Buildings	61	18	(14	)	65
Switching equipment	69,899	4,169	(298	)	73,770
Transmission
installation and equipment	53,282	2,387	446		56,115
Cable network	116,234	10,494	(272	)	126,456
Other
telecommunications peripherals	9,305	79	5,781		15,165
Total	249,707	17,164	5,643		272,514
Net Book Value	476,654				453,847

2010	Additions	Reclassifications		2010
At cost:
Land	1,267				1,267
Switching equipment	92,990				92,990
Transmission
installation and equipment	43,383		(10,014	)	33,369
Cable network	406,570		(783	)	405,787
Other
telecommunications peripherals	3,638				3,638
Total	547,848		(10,797	)	537,051
Accumulated depreciation:
Land	981	16			997
Switching equipment	29,759	1,976			31,735
Transmission
installation and equipment	26,396	1,569	(6,004	)	21,961
Cable network	122,085	9,309	(375	)	131,019
Other
telecommunications peripherals	2,696	63			2,759
Total	181,917	12,933	(6,379	)	188,471
Net Book Value	365,931				348,580

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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13. ADVANCES AND OTHER NON-CURRENT ASSETS

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Advances and other non-current assets as of March 31, 2009 and 2010 consist of:

Advances for purchase of property, plant and equipment	789,427	1,421,146
Prepaid rent net of current portion (Note 8)	897,669	975,736
Deferred RSA charges		242,439
Restricted cash	194,234	221,035
Deferred Indefeasible Right of Use (IRU) Agreement charges	151,257	139,902
Deferred land rights charges	112,200	60,291
Security deposits	55,897	37,045
Equipment not used in operations net	51,255	24,203
Others	8,849	33,380
Total	2,260,788	3,155,177

As of March 31, 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 December 31, 2008 and 2009, equipment not used in operations represents Base Transceiver Station (BTS) and other equipment of the Company and Telkomsel temporarily taken out from operations but planned to be reinstalled. Telkomsels depreciation expense charged to the consolidated statements of income for three months period ended March 31, 2009 and 2010 amounted to Rp.7,404 million and Rp.75 million, respectively.

Refer to Note 45 for details of related party transactions.

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14. GOODWILL AND OTHER INTANGIBLE ASSETS

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(i) The changes in the carrying amount of goodwill and other intangible assets for the three months period ended March 31, 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
Additions:
Sigmas software			2,013				2,013
Reclassification:
GSDs software			(50	)			(50	)
Balance, March 31, 2009	106,544		8,971,562		436,000		9,514,106
Accumulated amortization:
Balance, December 31, 2008	(17,048	)	(6,202,180	)	(105,107	)	(6,324,335	)
Amortization expense during
the period (Note 37)	(1,279	)	(303,730	)	(11,679	)	(316,688	)
Reclassification:
GSDs software			4				4
Balance, March 31, 2009	(18,327	)	(6,505,906	)	(116,786	)	(6,641,019	)
Net Book Value	88,217		2,465,656		319,214		2,873,087
Weighted-average amortization period	5 years	7.05 years		9.33 years

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14. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

(i) (continued)


		intangible
	Goodwill	assets		License		Total
Gross carrying amount:
Balance, December 31, 2009	106,544		9,085,534		806,861		9,998,939
Additions:
The Companys software			18,746				18,746
Sigmas software			596				596
Ad Medikas software			2,409				2,409
Acquisitions of Ad Medika	103,352		23,278				126,630
Reclassification			25,899				25,899
Balance, March 31, 2010	209,896		9,156,462		806,861		10,173,219
Accumulated amortization:
Balance, December 31, 2009	(21,373	)	(7,385,950	)	(163,336	)	(7,570,659	)
Amortization expense during
the period (Note 37)	(1,512	)	(345,216	)	(20,950	)	(367,678	)
Reclassifications			(15,408	)			(15,408	)
Balance, March 31, 2010	(22,885	)	(7,746,574	)	(184,286	)	(7,953,745	)
Net Book Value	187,011		1,409,888		622,575		2,219,474
Weighted-average amortization period	20 years	6.59 years		9.63 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 and
45a.ii). |
| (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. |
| (vi) | The estimated annual amortization expense relating to other intangible assets for each
year beginning from April 1, 2010 is approximately Rp.1,121,196 million per year. |

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15. ESCROW ACCOUNTS

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Escrow accounts as of March 31, 2009 and 2010 consist of the following:

Bank Mandiri	42,811	42,503
Bank Danamon	1,186	2
Others	108	108
	44,105	42,613

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 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.

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16. TRADE PAYABLES

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Related parties
Concession fees	830,655	987,391
Purchases of equipment, materials and services	160,622	283,186
Payables to other telecommunications providers	238,852	219,287
Sub-total	1,230,129	1,489,864
Third parties
Purchases of equipment, materials and services	8,870,211	6,285,387
Payables related to RSA	32,139	12,635
Payables to other telecommunications providers	9,504	72,990
Sub-total	8,911,854	6,371,012
Total	10,141,983	7,860,876

Trade payables by currency are as follows:

Rupiah	4,015,892	6,676,171
U.S. Dollars	5,298,858	1,035,843
Euro	798,914	144,968
Singapore Dollars	27,093	3,004
Others	1,226	890
Total	10,141,983	7,860,876

Refer to Note 45 for details of related party transactions.

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17. ACCRUED EXPENSES

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Operations, maintenance and telecommunications services	1,513,581	1,756,264
Salaries and benefits	1,128,243	904,082
General, administrative and marketing	505,237	571,827
Interest and bank charges	236,670	265,403
Total	3,383,731	3,497,576

Refer to Note 45 for details of related party transactions.

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18. UNEARNED INCOME

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Prepaid pulse reload vouchers	2,634,337	2,627,674
Other telecommunications services	29,756	8,881
Others	129,936	162,161
Total	2,794,029	2,798,716

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19. SHORT-TERM BANK LOANS

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Bank Ekonomi	17,399	27,983
Bank CIMB Niaga	25,213	11,922
PT Bank Syariah Mandiri (BSM)		10,500
Total	42,612	50,405

Refer to Note 45 for details of related party transactions.

| a. |
| --- |
| On October 14, 2008, Sigma entered into a Rp.7,500 million short-term loan agreement with
Bank Ekonomi for working capital purpose. The loan bore floating interest rate from 13.50%
per annum to 15.50% per annum and repayable within 9 months from the signing date to July
15, 2009. This facility was secured by Sigmas trade receivables (Note 6). As of March 31,
2009, the principal outstanding amounted to Rp.7,500 million and on July 2, 2009 the loan
was fully repaid. |
| 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
March 31, 2009 the principal outstanding amounted to Rp.5,500 million and on October 9, 2009
the loan was fully repaid. |

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SHORT-TERM BANK LOANS (continued)

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a.	Bank Ekonomi (continued)
	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. This facility is secured
by Sigmas trade receivables (Note 6). As of March 31, 2009 and 2010, the principal
outstanding amounted to US$380,000 (equivalent to Rp.4,399 million) and US$187,052.71
(equivalent to Rp.1,702 million), respectivelly.
	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 principal outstanding as of March 31, 2010 amounted to Rp.26,281
million.
b.	Bank CIMB Niaga

| (i) | On April 25, 2005, Balebat entered into a Rp.800 million revolving credit
facility and Rp.1,600 million (Note 23f.ii) investment credit facility agreement with
Bank CIMB Niaga. The credit facility has been amended several times. On July 28, 2009,
based on the latest amendment, credit facility, interest rate and maturity date is
changed to Rp.15,000 million, 14% per annum and May 29, 2010, respectively. The
principal outstanding as of March 31, 2009 and 2010 amounted to Rp.15,000 million and
Rp.6,922 million, respectively. |
| --- | --- |
| | On April 29, 2008, Balebat received an additional Specific Transaction Facility and Bank
Overdraft Facility of Rp.5,000 million and Rp.500 million, respectively. On July 28,
2009, based on the latest amendment, the interest rate is changed to 14% and 14.25%,
respectively, and the maturity date is extended to May 29, 2010. The principal
outstanding as of March 31, 2009 amounted to Rp.5,000 million and Rp.213 million,
respectively, and the principal outstanding as of March 31, 2010 amounted to Rp.5,000
million and Rp.nil, respectively |
| | The facilities are secured by Balebats fixed asset (Note 11), inventories (Note 7) and
receivables (Note 6). |
| (ii) | On October 18, 2005, GSD entered into two short-term loan agreements with Bank
CIMB Niaga for an original facility of Rp.12,000 million and Rp.3,000 million. The
credit facility has been amended several times. The latest on December 23, 2008, change
the total facility to Rp.19,000 million with interest rate of 15.5% per annum and the
maturity period to October 18, 2009. This credit facility was secured by GSDs
property, plant and equipment located in Jakarta (Note 11). The principal outstanding
as of March 31, 2009 amounted to Rp.5,000 million and on July 10, 2009, the loan was
fully repaid. |

| c. |
| --- |
| 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 fixed asset (Note
11), receivables (Note 6), inventories (Note 7), insurance and letter of comfort. The loan
will mature on August 20, 2010. The principal outstanding as of March 31, 2010 amounted to
Rp.10,500 million. |

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MATURITIES OF LONG-TERM LIABILITIES

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a. Current maturities

Bank loans	23	5,008,936	6,058,319
Deferred consideration for business
combinations	24	1,262,104	1,015,776
Two-step loans	21	472,730	414,185
Obligations under finance leases	11	398,490	261,304
Notes	22		18,309
Total		7,142,260	7,767,893

b. Long-term portion

Notes	Total	2011	2012	2013	2014	Later
Bank loans	23	9,046.1	1,858.0	2,835.8	2,822.3	1,479.7	50.3
Two-step loans	21	2,878.0	260.3	388.8	314.1	316.5	1,598.3
Obligations under
finance leases	11	460.9	160.2	128.4	101.7	45.5	25.1
Notes	22	113.5	16.7	45.3	21.5	30.0
Total		12,498.5	2,295.2	3,398.3	3,259.6	1,871.7	1,673.7

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TWO-STEP LOANS

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| 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 March 31, 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 %	1,725,649		1,184,694
Rupiah	11.47% - 12.27 %	6.65% - 10.30 %	1,174,363		983,531
Japanese Yen	3.10 %	3.10 %	1,447,456		1,123,972
Total			4,347,468		3,292,197
Current maturities (Note 20a)			(472,730	)	(414,185	)
Long-term portion (Note 20b)			3,874,738		2,878,012

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TWO-STEP LOANS (continued)

| 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. |
| The Company is required to maintain financial ratios as follows: |

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

As of March 31, 2010, the Company complied with the above mentioned ratios.
Refer to Note 45 for details of related party transactions.

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NOTES

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Medium-term Notes
Metra	50,000
Sigma	30,000
Finnet	25,000
Supplier financing
PT. ZTE Indonesia (ZTE)	4,144
PT Huawei Tech Investment (Huawei Tech)	22,628
Total	131,772
Current maturities (Note 20a)	(18,309	)
Long-term portion (Note 20b)	113,463

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NOTES (continued)

| a. |
| --- |
| 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. |
| 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 March 31, 2010, Metra complied with the above mentioned ratios.
b.	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.

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NOTES (continued)

| b. |
| --- |
| 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 March 31, 2010, Sigma complied with the above mentioned ratios.
c.	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 March 31, 2010, Finnet complied with the above mentioned ratios.

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NOTES (continued)

| d. |
| --- |
| 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 March 31, 2010 amounted to US$0.46 million
(equivalent to Rp.4,144 million). |

| e. |
| --- |
| 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 dan 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 March 31, 2010 amounted to US$2.5 million
(equivalent to Rp.22,628 million). |

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23.
The details of long-term bank loans as of March 31, 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	59	680,433	35	320,930
Bank Mandiri	Rp.	4,750,000		2,030,000		2,707,778
BCA	Rp.	3,000,000		1,000,000		2,177,778
Citibank	Rp.	500,000		400,000		200,000
BNI	Rp.	3,500,000		2,250,000		1,150,000
Bank CIMB Niaga	Rp.	33,496		27,909		24,442
Bank Bukopin	Rp.	5,300		1,824		510
BRI	Rp.	3,800,000		2,560,000		1,911,111
Bank Ekonomi	Rp.	115,000		52,445		74,349
Syndication of banks	Rp.	5,100,000		2,400,000		4,800,000
PT ANZ Panin Bank (ANZ Panin)	Rp.	1,000,000				888,889
BII	Rp.	500,000				444,444
PT Bank OCBC Indonesia
(OCBC Indonesia)	Rp.	200,000				100,000
PT Bank OCBC NISP Tbk (formerly
PT Bank NISP Tbk) (OCBC NISP)	Rp.	500,000				250,000
ABN Amro Bank N.V., Hong Kong
(AAB Hong Kong)	US$	318
Industrial and Commercial Bank of
China Limited (ICBC)	US$	266
Bank of China (BoC)	US$	100				45,686
Finnish Export Credit Ltd	US$	250
Japan Bank for International
Cooperation (JBIC)	US$	60
BTN	Rp.	9,500				8,534
Total				11,402,611		15,104,451
Current maturities of bank loans
(Note 20a)				(5,008,936	)	(6,058,319	)
Long-term portion (Note 20b)				6,393,675		9,046,132

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BANK LOANS (continued)

Refer to Note 45 for details of related party transactions.

| 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 March 31, 2009 and 2010
amounted to Rp.280,000 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
March 31, 2009 and 2010 amounted to Rp.450,000 million and Rp.150,000 million,
respectively. |
| (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 March 31, 2009 and 2010 amounted to Rp.1,300,000 million and
Rp.780,000 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 March 31, 2010
amounted to Rp.1,777,778 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 March 31, 2009 amounted to Rp.200,000
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 March 31, 2009
and 2010 amounted to Rp.800,000 million and Rp.400,000 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 March 31, 2010
amounted to Rp.1,777,778 million. |

| d. |
| --- |
| 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 March 31, 2009 amounted to Rp.200,000
million and on December 28, 2009, the loan was fully repaid. |
| --- | --- |
| (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 March 31,
2009 and 2010 amounted to Rp.450,000 million and Rp.150,000 million, respectively. |

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23. BANK LOANS (continued)

e. BNI (continued)

| (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 March 31,
2009 and 2010 amounted to Rp.1,600,000 million and Rp.800,000 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 March 31, 2010 amounted to Rp.200,000
million. |

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 March 31, 2009 and 2010, principal outstanding under these facilities
amounted to Rp.513 million and Rp.73 million, respectively. |
| --- | --- |
| | On June 13, 2006, also received an additional facility of Rp.2,000 million to finance
purchases of printing machine. The facility will mature on October 30, 2011. As of
March 31, 2009, the outstanding loans of the facilities were Rp.799 million and on June
23, 2009, the loan was fully repaid. |
| | The facilities are secured by Balebats fixed asset (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 March 31,
2009 amounted to Rp.235 million and on October 25, 2009, the loan was fully repaid. |
| (iii) | On May 29, 2006, Infomedia entered into a loan agreement with Bank CIMB
Niaga for a facility of Rp.18,500 million, to finance its call center project with
Telkomsel. The facility bore interest at 15% per annum and was secured by Infomedias
receivables on the call center contract with Telkomsel amounted to Rp.23,125 million
until the due date of the loan within 36 months from the withdrawal date (Note 6). As
of March 31, 2009, the principal outstanding amounted to Rp.1,840 million and on June
19, 2009, the loan was fully repaid. |

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23. BANK LOANS (continued)

f. Bank CIMB Niaga (continued)

| (iv) | In March 2007, GSD entered into a loan agreement (2 nd special
transaction loan agreement) with Bank CIMB Niaga for a total facility of Rp.20,000
million with an interest rate of 13% per annum. The facility is secured by a parcel of
land and buildings of GSD (Note 11). The facility is payable in 8 years and the
principal is payable in 33 quarterly installments and will be due in May 2015. As of
March 31, 2009 and 2010, the principal outstanding amounted to Rp.18,650 million and
Rp.17,350 million, respectively. |
| --- | --- |
| (v) | On November 23, 2007, GSD entered into a loan agreement (3 rd special transaction loan agreement) with Bank CIMB Niaga for a total facility of
Rp.8,000 million with an interest rate of 11% per annum. The facility is secured by a
parcel of land and buildings of GSD (Note 11). The facility is payable in 5 years and
the principal is payable in 60 monthly installments and will be due on November 23,
2012. As of March 31, 2009 and 2010, the principal outstanding amounted to Rp.5,872
million and Rp.4,276 million, respectively. |
| (vi) | On July 28, 2009, Balebat entered into a loan agreement with Bank CIMB Niaga
for a total facility of Rp.3,296 million for investment credit facility with maturity
date of November 28, 2014. On August 28, 2009, Rp.2,743 million was drawdown from the
facility. The investment credit facility loan is payable in 60 unequal monthly
installments beginning in December 28, 2009 through November 28, 2014. The investment
credit facility bears interest rate of 14% per annum. The facilities are secured by
certain Balebats property, plant and equipment (Note 11), inventories (Note 7) and
trade receivables (Note 6). As of March 31, 2010, the principal outstanding amounted
to Rp.2,743 million. |

g.	Bank Bukopin
	On May 11, 2005, Infomedia entered into loan agreements with Bank Bukopin for various
facilities in a maximum of Rp.5,300 million to finance the acquisition of a property. The
loan is payable in 60 monthly installments and bears an interest rate of 15.00% per annum
as of March 31, 2009 and 2010, respectively. A portion of the facilities of Rp.4,200
million will mature in June 2010 and the remainder of Rp.1,100 million will mature in
December 2010. The facilities are secured by certain Infomedias property, plant and
equipment (Note 11).
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 March 31,
2009 amounted to Rp.160,000 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 March 31, 2009 and 2010 amounted to Rp.1,600,000 million
and Rp.800,000 million, respectively. |

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23. 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 March 31, 2009 and 2010, the
principal outstanding amounted to Rp.800,000 million and Rp.400,000 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 March 31, 2010
amounted to Rp.711,111 million. |

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 March 31, 2009 and 2010, the
principal outstanding amounted to Rp.10,812 million and Rp.8,424 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 March 31, 2009 and 2010, the
principal outstanding amounted to Rp.8,633 million and Rp.6,727 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 March 31, 2009 and 2010, the
principal outstanding amounted to Rp.33,000 million and Rp.29,110 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 March 31, 2010, the principal
outstanding amounted to Rp.23,551 million. |
| (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 with maturity
date on November 19, 2013. On November 19, 2009, Rp.7,000 million were drawdown from
the facility. As of March 31, 2010, the principal outstanding amounted to Rp.6,537
million. |

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23. 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 March 31, 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 March 31, 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 March 31, 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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23. 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. On February 2, 2010, the loan facility from OCBC Indonesia
amounted to Rp.100,000 million was drawdown by Telkomsel.
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. On February 2, 2010, the loan facility from OCBC NISP amounted to Rp.250,000
million was drawdown by Telkomsel.
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 March 31, 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 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 March 31, 2010, the facilities have not been utilized.

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23. 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.
r.	Finnish Export Credit Ltd
	On March 2, 2010, Telkomsel entered into a facility loan agreement with Finnish Export
Credit Ltd. for US$250 million. The purpose of the facility is for the purchase of Nokia
Siemens Network equipment and services. As of the issuance date of the consolidated
financial statements, 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.	JBIC
	On March 26, 2010, in connection with the agreement with NSW-Fujitsu Consortium (Note
49a.i), 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.
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. Up to March 31, 2010, the
facility is fully drawdown.
	The facilitiy is secured by Ad Medikas fixed asset in form of land which is located in
Jakarta (Note 11) and Ad Medikas receivables (Note 6).

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DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS

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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	1,715,567		621,390
Less discount	(119,942	)	(18,987	)
	1,595,625		602,403
KSO VII transaction
BSI	962,720		437,234
Less discount	(116,540	)	(23,861	)
	846,180		413,373
Total	2,441,805		1,015,776
Current maturity net of discount (Note 20a)	(1,262,104	)	(1,015,776	)
Long-term portion net of discount (Note
20b)	1,179,701

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 March 31, 2009 and 2010, the remaining monthly payments to be made to MGTI, before
unamortized discount, amounted to US$148.2 million (equivalent to Rp.1,715,567 million) and
US$68.29 million (equivalent to Rp.621,390 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 March 31, 2009 and 2010, the remaining monthly payments to be made to BSI, before
unamortized discount, amounted to Rp.962,720 million and Rp.437,234 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) MARCH 31, 2009 AND 2010, AND THREE MONTHS PERIOD ENDED MARCH 31, 2009 AND 2010 (Figures in tables are presented in millions of Rupiah, unless otherwise stated)

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25. MINORITY INTEREST

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Minority interest in net assets of subsidiaries:
Telkomsel	10,361,606	11,857,827
Metra	60,803	68,022
Infomedia	158,682	6,318
Total	10,581,091	11,932,167


Minority interest in net income (loss) of subsidiaries:
Telkomsel	901,101		989,419
Metra	2,089		1,115
Infomedia	(5,092	)	(554	)
Total	898,098		989,980

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26. CAPITAL STOCK

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	2009 — Number of	Percentage	Total
Description	shares	of ownership	paid-up capital
Series A Dwiwarna share
Government	1
Series B shares
Government	10,320,470,711	52.47	2,580,118
JPMCB US Resident (Norbax Inc.)	1,216,193,600	6.18	304,049
The Bank of New York Mellon Corporation
(formerly The Bank of New York
Company, Inc.)	2,001,372,016	10.18	500,343
Directors (Note 1b):
Ermady Dahlan	17,604		4
Indra Utoyo	5,508		1
Public (individually less than 5%)	6,131,365,340	31.17	1,532,841
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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26. 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	1,738,727,056	8.84	434,682
Directors (Note 1b):
Ermady Dahlan	17,604		4
Indra Utoyo	5,508		1
Public (individually less than 5%)	7,610,203,900	38.69	1,902,551
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. |

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ADDITIONAL PAID-IN CAPITAL

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| 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 | |

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TREASURY STOCK

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| | 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. |
| --- | --- |
| | As of March 31, 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 March
31, 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. |
| | For the period from January 1 to March 31, 2009 and 2010, the Company did not repurchase any
treasury shares. As of the issuance date of the consolidated financial statements, no shares
were repurchased or sold. |
| 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 March 31, 2009 and 2010, the development
of the related infrastructures amounted to Rp.296,871 million and Rp.416,773 million,
respectively. |
| | As of March 31, 2009 and 2010, the Company has received an aggregate of Rp.360,000 million and
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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TELEPHONE REVENUES

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Fixed lines
Local and SLJJ	2,572,391	2,411,778
Monthly subscription charges	912,731	849,342
Installation charges	31,836	23,115
Others	66,308	57,852
Total	3,583,266	3,342,087
Cellular
Usage charges	5,882,379	6,352,216
Features	115,632	193,653
Monthly subscription charges	443,961	107,575
Connection fee charges	57,391	37,776
Total	6,499,363	6,691,220
Total Telephone Revenues	10,082,629	10,033,307

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INTERCONNECTION REVENUES

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Cellular interconnection	757,716	684,928
International interconnection	272,527	263,158
Others	61,681	68,571
Total Net	1,091,924	1,016,657

| 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. |

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DATA, INTERNET AND INFORMATION TECHNOLOGY REVENUES

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Short Messaging Services (SMS)	2,498,118	2,786,459
Internet, data communication and information technology services	1,476,830	2,155,330
VoIP	24,085	38,664
e-Business	7,866	14,297
Total	4,006,899	4,994,750

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NETWORK REVENUES

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Leased lines	180,052	159,899
Satellite transponder lease	83,418	117,571
Total	263,470	277,470

Refer to Note 45 for details of related party transactions.

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OTHER TELECOMMUNICATIONS SERVICES

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Customer Premise Equipment (CPE) and terminal	101,158	105,428
Universal Service Obligation		79,063
Directory assistance	30,373	13,665
Others	41,852	66,982
Total	173,383	265,138

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PERSONNEL EXPENSES

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Salaries and related benefits	762,429	762,827
Vacation pay, incentives and other benefits	657,481	516,237
Employees income tax	152,454	329,466
Net periodic pension costs (Notes 42a)	132,030	88,061
Net periodic post-retirement health care
benefits costs (Note 44)	82,811	59,736
Housing	52,049	53,174
Other post-retirement cost (Note 42b)	20,367	16,469
LSA and LSA termination costs (Notes 43a,b)	6,855	11,188
Other employees benefits (Note 42c)	3,711	3,879
Medical	1,581	1,560
Others	32,998	31,503
Total	1,904,766	1,874,100

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OPERATIONS, MAINTENANCE AND TELECOMMUNICATION SERVICES EXPENSES

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Operations and maintenance	1,904,855	2,102,929
Radio frequency usage charges (Note 49c.iii)	557,790	907,921
Concession fees and Universal Service Obligation charges	261,396	284,241
Cost of handset, phone, SIM and RUIM cards	277,913	196,521
Electricity, gas and water	149,014	161,485
Leased lines and CPE	110,833	100,654
Insurance	75,808	94,570
Vehicles rental and supporting facilities	63,396	59,084
Cost of IT services	44,030	41,340
Travelling	13,297	13,267
Others	2,596	4,345
Total	3,460,928	3,966,357

Refer to Note 45 for details of related party transactions.

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GENERAL AND ADMINISTRATIVE EXPENSES

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| Amortization of goodwill and other intangible assets
(Note 14) | 316,688 | 367,678 |
| --- | --- | --- |
| Collection expenses | 148,695 | 181,063 |
| Provision for doubtful accounts and inventory
obsolescence (Notes 6d and 7) | 126,291 | 150,218 |
| Security and screening | 64,359 | 57,635 |
| Travelling | 51,616 | 56,977 |
| Training, education and recruitment | 33,647 | 40,699 |
| Professional fees | 16,126 | 38,825 |
| Meetings | 15,834 | 18,807 |
| General and social contribution | 17,433 | 18,244 |
| Stationery and printing | 13,421 | 14,590 |
| Vehicle rental | 17,208 | 11,053 |
| Research and development | 951 | 2,060 |
| Others | 18,988 | 25,820 |
| Total | 841,257 | 983,669 |

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INTERCONNECTION EXPENSES

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Cellular interconnection	427,007	388,320
International interconnection	273,439	243,390
Others	43,388	38,510
Total	743,834	670,220

Refer to Note 45 for details of related party transactions.

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TAXATION

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a. Claim for tax refund


Subsidiaries
Corporate income tax	5,484	62,133
Income tax including interest
Article 21 Individual income tax	388
Article 23 Withholding tax on services delivery	211,321
Article 26 Withholding tax on non-resident income tax	3,950	213
Value Added Tax (VAT) including interest	1,811	216,237
	222,954	278,583

b. Prepaid taxes


The Company
Corporate income tax	255,168	255,168
	255,168	255,168
Subsidiaries
Corporate income tax	535,708	82,501
VAT	11,299	44,948
Article 22 Withholding tax on goods delivery and
imports		37
Article 23 Withholding tax on services delivery	1,525	5,797
	548,532	133,283
	803,700	388,451

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TAXATION (continued)

c. Taxes payable


The Company
Income taxes
Article 4 (2) Final tax		5,575
Article 21 Individual income tax	34,588	35,189
Article 22 Withholding tax on goods delivery and
imports	3,510	2,050
Article 23 Withholding tax on services delivery	12,241	7,476
Article 25 Installment of corporate income tax	6,714	5,411
Article 26 Withholding tax on non-resident income tax	1,298	3,849
Article 29 Underpayment of corporate income tax	220,976	46,941
VAT	258,545	247,133
	537,872	353,624
Subsidiaries
Income taxes
Article 4 (2) Final tax		18,452
Article 21 × Individual income tax	22,445	31,324
Article 22 Withholding tax on goods delivery and
imports	2	2
Article 23 Withholding tax on services delivery	56,184	64,491
Article 25 Installment of corporate income tax	321,936	320,099
Article 26 Withholding tax on non-resident income tax	16,919	47,467
Article 29 Underpayment of corporate
income tax	72,209	785,607
VAT	136,269	179,810
	625,964	1,447,252
	1,163,836	1,800,876

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


Current
The Company	434,005		131,335
Subsidiaries	971,605		905,124
	1,405,610		1,036,459
Deferred
The Company	(36,758	)	266,982
Subsidiaries	30,011		68,938
	(6,747	)	335,920
	1,398,863		1,372,379

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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	4,754,846		5,138,948
Add back consolidation eliminations	1,621,543		1,806,834
Consolidated income before tax and eliminations	6,376,389		6,945,782
Less: income before tax of the subsidiaries	(3,521,257	)	(3,789,597	)
Income before tax attributable to the Company	2,855,132		3,156,185
Less: income subject to final tax	(200,327	)	(134,879	)
	2,654,805		3,021,306
Tax calculated at applicable rates	743,345		755,326
Non-taxable income	(454,293	)	(451,818	)
Non-deductible expenses	86,046		89,175
Deferred tax assets that cannot be utilized net	(1,669	)	(2,668	)
Corporate income tax expense	373,429		390,015
Final income tax expense	23,818		8,302
Total income tax expense of the Company	397,247		398,317
Income tax expense of the subsidiaries	1,001,616		974,062
Total consolidated income tax expense	1,398,863		1,372,379

The reconciliation between income before tax attributable to the Company and the estimated taxable income for the three months period ended March 31, 2009 and 2010, are as follows:

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TAXATION (continued)

e. (continued)

Income before tax attributable to the Company	2,855,132		3,156,185
Less: income subject to final tax	(200,327	)	(134,879	)
	2,654,805		3,021,306
Temporary differences:
Amortization of intangible assets	245,871		245,741
Depreciation of property, plant and equipment	9,061		(4,525	)
Allowance for doubtful accounts	84,401		109,411
Accrued employees benefits	84,153		112,038
Depreciation of property, plant and equipment
under RSA	17,164		12,933
Finance leases	(7,150	)	(11,332	)
Foreign exchange (gain) loss on deferred
consideration for business combinations	97,414		(23,878	)
Allowance for inventory obsolescence	3,037		3,343
Amortization of land rights	(1,021	)	(1,059	)
Gain on sale of property, plant and equipment			(9,518	)
Amortization of unearned income on RSA	(31,651	)	(16,823	)
Net periodic pension and other post-retirement
benefits costs	(101,119	)	(140,122	)
Temporary differences:
Payments of deferred consideration for business
combinations	(294,983	)	(292,548	)
Accrued early retirement benefits			(1,028,639	)
Other provisions	20,144		(33,621	)
Total temporary differences	125,321		(1,078,599	)
Permanent differences:
Net periodic post-retirement health care
benefit costs	82,811		57,459
Amortization of discounts on promissory notes	520
Equity in net income of associates
and subsidiaries	(1,622,474	)	(1,807,271	)
Others	223,972		299,240
Total permanent differences	(1,315,171	)	(1,450,572	)
Taxable income	1,464,955		492,135

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TAXATION (continued)

e. (continued)

Current corporate income tax expense	410,187	123,033
Final income tax expense	23,818	8,302
Total current income tax expense of the Company	434,005	131,335
Current income tax expense of the subsidiaries	971,605	905,124
Total current income tax expense	1,405,610	1,036,459

f. Tax assessment

| (i) |
| --- |
| Currently, the Company is being audited by the Directorate General of Tax (DGT) for
fiscal year 2008. As of the issuance date of the consolidated financial statements, the
tax audit has not been completed yet. |

| (ii) |
| --- |
| 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. |
| 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. On March 3, 2010, the Tax Court pronounced that it approved most of Telkomsels
appeal on VAT for fiscal years 2004 and 2005 amounting to Rp.215 billion. However, as
of the
issuance date of the consolidated financial statements, Telkomsel has not received any
formal decision from the Tax Court. |
| 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. |

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TAXATION (continued)

f. Tax assessment (continued)

| (ii) |
| --- |
| 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 (Note 52). |
| 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. |

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


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

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TAXATION (continued)

g. Deferred tax assets and liabilities (continued)


		credited to the
		consolidated
December 31,		statements		March 31,
2008		of income*)		2009
The Company (continued)
Deferred tax liabilities:
Difference between accounting and tax property, plant and
equipments net book value	(1,570,559	)	(42,031	)	(1,612,590	)
Land rights	(4,922	)	(285	)	(5,207	)
RSA	(57,869	)	(4,057	)	(61,926	)
Intangible assets	(573,918	)	110,545		(463,373	)
Total deferred tax liabilities	(2,207,268	)	64,172		(2,143,096	)
Deferred tax liabilities of the Company net	(590,439	)	36,759		(553,680	)
Deferred tax liabilities of the
subsidiaries net	(2,314,434	)	(106,728	)	(2,421,162	)
Total deferred tax liabilities net	(2,904,873	)	(69,969	)	(2,974,842	)
Total deferred tax assets net			76,716		76,716

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


		credited to the
		consolidated
December 31,		statements		Acquisition		March 31,
2009		of income		of Ad Medika		2010
The Company
Deferred tax assets:
Deferred consideration for business
combinations	335,409		(79,107	)			256,302
Allowance for doubtful accounts	268,427		26,131				294,558
Net periodic pension and other
post-retirement benefits costs	160,310		(35,030	)			125,280
Accrued expenses	36,239		7				36,246
Early termination expenses	257,160		(257,160	)
Accrued for employee benefits	84,719		28,019				112,738
Finance leases	18,432		(4,375	)			14,057
Allowance for inventory obsolescence	17,672		835				18,507
Total deferred tax assets	1,178,368		(320,680	)			857,688
Deferred tax liabilities:
Difference between accounting
and tax property, plant and
equipments net book value	(1,650,200	)	(4,865	)			(1,655,065	)
Land rights	(5,808	)	(264	)			(6,072	)
RSA	(44,596	)	(2,610	)			(47,206	)
Intangible assets	(271,202	)	61,438				(209,764	)
Total deferred tax liabilities	(1,971,806	)	53,699				(1,918,107	)
Deferred tax liabilities of the Company net	(793,438	)	(266,981	)			(1,060,419	)
Deferred tax liabilities of the
subsidiaries net	(2,549,763	)	(71,662	)	(4,973	)	(2,626,398	)
Total deferred tax liabilities net	(3,343,201	)	(338,643	)	(4,973	)	(3,686,817	)
Total deferred tax assets net	94,953		2,723				97,676

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TAXATION (continued)

g.	Deferred tax assets and liabilities (continued)
	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.
h.	Administration
	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. As of March 31, 2009 and
2010, the Company and its subsidiaries measured the effect of the change of enacted tax rate
in calculating its deferred tax assets and liabilities depending on the timing of
realization of its estimates.
	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, except for the minimum 6 months period in
one fiscal year eligibility. Therefore, for the purposes of calculating income tax expenses
and liabilities for the financial reporting periods of March 31, 2009 and 2010, the Company
did not implement the decrease in tax rates.
	The Company is currently undergoing a tax audit for the 2008 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.

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TAXATION (continued)

| h. |
| --- |
| 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 and 2008, unless
the Company files for overpaid Annual SPT then a tax assessment will be performed. |

| 40. |
| --- |
| Basic earnings per share is computed by dividing net income by the weighted average number of
shares outstanding during the period, totaling 19,748,574,254 and 19,669,424,780 for three
months period ended March 31, 2009 and 2010, respectively. |
| Basic earning per share amounting to Rp.124.46 and Rp.141.16 (full amount) for three months
period ended March 31, 2009 and 2010, respectively. |
| The Company does not have potentially dilutive ordinary shares. |

| 41. |
| --- |
| 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. |
| On November 18, 2009, the Company decided the interim distribution of cash dividend for 2009
amounting to Rp.524,190 million or Rp.26.65 per share to its stockholder. |

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xbrl,n

PENSION AND OTHER POST-RETIREMENT BENEFITS

xbrl,body


Accrued pension and other post-retirement
benefit costs
Pension
The Company	662,197	253,707
Telkomsel	105,952	131,732
Accrued pension costs	768,149	385,439
Other post-retirement benefits	222,379	218,643
Obligation under Labor Law	66,981	80,724
Accrued pension and other post-retirement
benefit costs	1,057,509	684,806
Prepaid pension benefit costs	176	614
Net periodic pension costs
The Company	118,354	69,296
Telkomsel	13,674	18,741
Infomedia	2	24
Net periodic pension costs (Note 35)	132,030	88,061
Other post-retirement cost (Note 35)	20,367	16,469
Other employee benefits (Note 35)	3,711	3,879

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 three months period
ended March 31, 2009 and 2010 amounted to Rp.222,265 million and Rp.180,946 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.867 million and Rp.990 million for three months period ended
March 31, 2009 and 2010, respectively. |

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

| 1. |
| --- |
| The following table presents the change in projected benefits obligation, change in plan
assets, funded status of the plan and net amount recognized in the Companys
consolidated balance sheets as of March 31, 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	56,184		77,854
Interest costs	278,893		289,355
Plan participants contributions	11,081		10,211
Actuarial losses (gains)	65,642		(693,280	)
Expected benefits paid	(110,267	)	(180,673	)
Projected benefits obligation at end of period	9,818,508		11,256,906
Change in plan assets
Fair value of plan assets at beginning of year	8,713,418		12,300,181
Expected return on plan assets	257,707		321,680
Employers contributions	222,265		180,946
Plan participants contributions	11,081		10,211
Actuarial gains (losses)	66,398		(673,493	)
Expected benefits paid	(101,308	)	(155,146	)
Fair value of plan assets at end of period	9,169,561		11,984,379
Funded status	(648,947	)	727,473
Unrecognized prior service costs	1,442,389		1,221,068
Unrecognized net actuarial gains	(1,455,639	)	(2,202,248	)
Accrued pension benefit costs	(662,197	)	(253,707	)

| 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.316,975 million and Rp.572,637 million for three
months period ended March 31, 2009 and 2010, respectively. |

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

1.
The movement of the accrued pension benefits costs during the three months period ended
March 31, 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	118,354		69,296
Amounts charged to subsidiaries
under contractual agreements	166		462
Employers contributions	(222,265	)	(180,946	)
Benefits paid by the Company	(9,715	)	(45,314	)
Accrued pension benefits costs at end of year	662,197		253,707

| As of March 31, 2009 and 2010, plan assets consisted mainly of Indonesian
Government bonds and corporate bonds. As of March 31, 2009 and 2010, plan assets
included Series B shares issued by the Company with fair value totaling Rp.299,564
million and Rp.300,904 million, respectively, representing 3.27% and 2.51% of total
assets of Dapen as of March 31, 2009 and 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 %

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

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

Service costs	56,184		77,854
Interest costs	278,893		289,355
Expected return on plan assets	(257,707	)	(321,680	)
Amortization of prior service costs	55,330		55,330
Recognized actuarial gain	(14,180	)	(31,101	)
Net periodic pension costs	118,520		69,758
Amount charged to subsidiaries
under contractual agreements	(166	)	(462	)
Total net periodic pension costs less
amounts charged to subsidiaries (Note 35)	118,354		69,296

| 2. |
| --- |
| Telkomsel provides a defined benefit pension plan to its employees. Under this plan,
employees are entitled to pension benefits based on their latest basic salary or
take-home pay and the number of years of their service. PT Asuransi Jiwasraya
(Jiwasraya), a state-owned life insurance company, manages the plan under an
annuity insurance contract. Until 2004, the employees contributed 5% of their monthly
salaries to the plan and Telkomsel contributed any remaining amount required to fund the
plan. Starting 2005, the entire contributions are fully made by Telkomsel. |
| The following table reconciles the unfunded status of the plans with the amounts
included in the consolidated balance sheets as of March 31, 2009 and 2010: |

Projected benefits obligation	(301,332	)	(420,755	)
Fair value of plan assets	129,239		154,091
Unfunded status	(172,093	)	(266,664	)
Unrecognized items in the consolidated
balance sheet:
Unrecognized prior service costs	(766	)	(703	)
Unrecognized net actuarial losses	65,301		134,207
Unrecognized net obligation at the date of
initial application of PSAK 24	1,606		1,428
Accrued pension benefits costs	(105,952	)	(131,732	)

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

a. Pension (continued)

2.
The components of the net periodic pension costs are as follows:

Service costs	8,487		10,877
Interest costs	8,521		10,478
Expected return on plan assets	(3,864	)	(4,040	)
Amortization of past service costs	(16	)	(16	)
Recognized actuarial losses	501		1,397
Amortization of net obligation at the date of
initial application of PSAK 24	45		45
Net periodic pension costs (Note 35)	13,674		18,741

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 March 31, 2009 and 2010, are as follows: |

Projected benefits obligation	(5,387	(7,337
Fair value of plan assets	5,563	7,951
Funded status	176	614
Prepaid pension benefits costs	176	614

The net periodic pension costs of Infomedia amounted to Rp.2 million and Rp.24 million for three months period ended March 31, 2009 and 2010, respectively (Note 35).

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PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

| 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). |
| The movement of the other post-retirement benefits for three months period ended March 31,
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 | 20,367 | | 16,469 | |
| Other post-retirement benefits paid | (8,333 | ) | (7,009 | ) |
| Total accrued other post-retirement benefits costs
at end of year after early retirement benefits | 222,379 | | 218,643 | |

The components of the net periodic other post-retirement benefits costs for three months period ended March 31, 2009 and 2010, are as follows:

Service costs	5,432	4,673
Interest costs	11,540	8,975
Amortization of past service costs	1,706	1,706
Recognized actuarial losses	1,689	1,115
Total net periodic other post-retirement
benefits costs (Note 35)	20,367	16,469

| 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
March 31, 2009 and 2010 amounted to Rp.66,981 million and Rp.80,724 million, respectively.
The related employees benefits cost charged to expense amounted to Rp.3,711 million and
Rp.3,879 million for three months period ended March 31, 2009 and 2010, respectively (Note
35). |

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| 43. |
| --- |
| 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.108,722 million and Rp.209,959
million as of March 31, 2009 and 2010, respectively (Note 45). The related benefits cost
charged to expense amounted to Rp.6,855 million and Rp.11,188 million for three months period
ended March 31, 2009 and 2010, respectively (Note 35). |

| 44. |
| --- |
| 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 March 31, 2009 and 2010: |


Change in projected benefits obligation
Projected benefits obligation at beginning of year	5,855,224		7,165,974
Service costs	18,002		20,980
Interest costs	171,692		186,138
Actuarial (gains) losses	76,459		(27,522	)
Expected post-retirement health care paid	(66,084	)	(71,981	)
Projected benefits obligation at end of year	6,055,293		7,273,589
Change in plan assets
Fair value of plan assets at beginning of year	4,018,693		6,022,263
Expected return on plan assets	102,595		147,382
Employers contributions	100,084		180,000
Actuarial (losses)gains	77,297		(27,522	)
Expected post-retirement health care paid	(66,084	)	(71,981	)
Fair value of plan assets at end of year	4,232,585		6,250,142
Funded status	(1,822,708	)	(1,023,447	)
Unrecognized net actuarial gains	(730,823	)	(658,065	)
Accrued post-retirement health care benefits costs	(2,553,531	)	(1,681,512	)

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44.
The actual return on plan assets was Rp.55,143 million and Rp.104,342 million for three
months period ended March 31, 2009 and 2010, respectively.
The components of net periodic post-retirement health care benefits cost are as follows:

Service costs	18,002		20,980
Interest costs	171,692		186,138
Expected return on plan assets	(102,595	)	(147,382	)
Recognized actuarial (gains) losses	(4,204	)
Net periodic post-retirement benefits costs	82,895		59,736
Amounts charged to subsidiaries under contractual agreements	(84	)
Total net periodic post-retirement health care benefits
costs less amounts charged to subsidiaries (Note 35)	82,811		59,736

As of March 31, 2009 and 2010, plan assets included the Companys Series B shares with total fair value of Rp.67,474 million and Rp.77,646 million, respectively.

The movements of the accrued post-retirement health care benefits costs for three months period ended March 31, 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) | 82,811 | | 59,736 | |
| Amounts charged to subsidiaries under
contractual agreements | 84 | | | |
| Employers contributions | (100,084 | ) | (180,000 | ) |
| Accrued post-retirement health care benefits
costs at end of year | 2,553,531 | | 1,681,512 | |

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.66,522 million and Rp.40,850 million
for three months period ended March 31, 2009 and 2010, respectively. Interest expense
for two-step loans represent 12.9% and 8.1% 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.75,248 million and Rp.82,430 million for three months
period ended March 31, 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.557,790 million and Rp.907,921 million for three months period
ended March 31, 2009 and 2010, respectively (Note 36), representing 5.4% and 8.1% 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.186,148 million and Rp.201,811 million for three months
period ended March 31, 2009 and 2010, respectively (Note 36), representing 1.8% of the
total operating expenses for each period. |

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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.10,035 million and Rp.11,460 million for three months period ended March
31, 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.28,908 million and Rp.31,220 million for three months period ended March 31, 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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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 charged net interconnection charges from Indosat of Rp.282,954 million and Rp.225,474 million for three months period ended March 31, 2009 and 2010, respectively, representing 2.7% and 2.0% of the total operating revenues for each period.

The Company and its subsidiaries were earned net interconnection income from Indosat of Rp.302,680 million and Rp.257,461 million for three months period ended March 31, 2009 and 2010, respectively, representing 1.9% and 1.6% of the total operating revenues for each period.

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RELATED PARTY TRANSACTIONS (continued)

| c. |
| --- |
| Telkomsel also has an agreement with Indosat on the usage of Indosats telecommunications
facilities. The agreement, which was made in 1997 and is valid for eleven years, is subject
to change based on annual review and mutual agreement by both parties. The charges for the
usage of the facilities amounted to Rp.8,218 million and Rp.5,561 million for three months
period ended March 31, 2009 and 2010, respectively, representing 0.08% and 0.05% 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.915 million and
Rp.106 million for three months period ended March 31, 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 March 31, 2009 and 2010, the prepaid portion is shown in the consolidated balance sheets as Advances from customers and suppliers.

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RELATED PARTY TRANSACTIONS (continued)

c.	Indosat (continued)
	The Company provides leased lines to Indosat and its subsidiaries, namely Indosat Mega
Media, Lintasarta and PT Sistelindo Mitralintas. The leased lines can be used by these
companies for telephone, telegraph, data, telex, facsimile or other telecommunication
services. Revenues earned from these transactions amounted to Rp.35,049 million and
Rp.34,671 million for three months period ended March 31, 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.6,550 million and Rp.8,761 million for three
months period ended March 31, 2009 and 2010, respectively, representing less than 0.1% and
0.05%of total operating revenues for each period.
	Telkomsel has an agreement with Lintasarta (valid until October 31, 2010) and PT Artajasa
Pembayaran Elektronis (Artajasa) (valid until May 2008) (a 39.8% owned subsidiary of
Indosat) for the usage of data communication network system. The charges from Lintasarta and
Artajasa for the services amounted to Rp.8,561 million and Rp.9,574 million for three months
period ended March 31, 2009 and 2010, respectively, representing 0.1% of the total operating
expenses for each period.
d.	Others
	Transactions with all BUMN are considered as related parties transactions:

| (i) | The Company provides telecommunication services to substantially all Government
Agencies in Indonesia 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.40,731 million and Rp.31,187 million for three months period ended March 31, 2009
and 2010, respectively, representing 0.3% and 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.12,271 million and Rp.11,275
million for three months period ended March 31, 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.32,260 million and Rp.14,602 million for
three months period ended March 31, 2009 and 2010, respectively, representing 0.6% and
0.1% of the total fixed assets purchased in each period. |

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RELATED PARTY TRANSACTIONS (continued)

d. Others (continued)

| (v) | INTI is also a major contractor and supplier of equipment, including
construction and installation services of Telkomsel. Purchases from INTI for three
months period ended March 31, 2009 and 2010 amounted to Rp.24,910 million and Rp.26,055
million, respectively, representing 0.5% and 0.1% 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.60,934 million and Rp.45,058 million for three months period
ended March 31, 2009 and 2010, respectively, representing 0.6% 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.75,910 million and Rp.95,327 million for three months period
ended March 31, 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.4,829,230 million and Rp.5,597,554
million as of March 31, 2009 and 2010, respectively, representing 5.3% and 5.8% of the
total assets. Interest income recognized for three months period ended March 31, 2009
and 2010 amounted to Rp.55,676 million and Rp.23,852 million, representing 40.0% and
29.9% 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 three months period ended March 31, 2009 and 2010
amounted to Rp.177,608 million and Rp.238,455 million, respectively, representing
34.3% and 47.3% of the total interest expense for each period. |
| (x) | The Company leases buildings, leases vehicles, purchases materials and
construction services, and utilizes maintenance and cleaning services of Kopegtel and
PT Sandhy Putra Makmur (SPM), a subsidiary of Yayasan Sandikara Putra Telkom a
foundation managed by Dharma Wanita Telkom. Total charges from these transactions
amounted to Rp.86,878 million and Rp.97,347 million for three months period ended March
31, 2009 and 2010, respectively, representing 0.8% and 0.9% of the total operating
expenses for each period. |

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RELATED PARTY TRANSACTIONS (continued)

d. Others (continued)

| (xi) | The Company and its subsidiaries incurred interconnection expenses from PSN,
with a total of Rp.1,317 million and Rp.1,306 million for three months period ended
March 31, 2009 and 2010, respectively, representing less than 0.01% of the total
operating expenses for each period. And earned interconnection income from PSN, with a
total of Rp.1,232 million and Rp.1,271 million for three months period ended March 31,
2009 and 2010, respectively, representing less than 0.01% of the total operating
revenues for each period |
| --- | --- |
| (xii) | The Company has RSA with Kopegtel. Kopegtels share in revenues from these
arrangements amounted to Rp.1,628 million and Rp.166 million for three months period
ended March 31, 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.64,253 million and Rp.50,952 million for three months period ended March 31, 2009
and 2010, respectively, representing 0.6% and 0.5% 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.121,124 million and Rp.168,720 million
for three months period ended March 31, 2009 and 2010, respectively, representing 1.2%
and 1.5% of the total operating expenses for each period. Telkomsel also has dealership
agreements with Kisel for distribution of SIM cards and pulse reload vouchers. Total
SIM cards and pulse reload vouchers which were sold to Kisel amounted to Rp.525,361
million and Rp.539,135 million for three months period ended March 31, 2009 and 2010,
respectively, representing 3.4% and 3.3% 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.7,743 million for three months period
ended March 31, 2009 and 2010, respectively; representing 0.8% and 0.04% of the total
acquisition of fixed assets for each period; and for maintenance of equipment amounted
to Rp.9,376 million and Rp.7,000 million for three months period ended March 31, 2009
and 2010, respectively, representing 0.1% and 0.06% of the total operating expenses for
each period. |

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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)	4,269,004	4.67	4,985,354	5.16
b.	Temporary investments	287,531	0.31	295,350	0.31
c.	Trade receivables net (Note 6)	770,121	0.84	849,181	0.88
d.	Other receivables
	Patrakom	4,725	0.01	4,692	0.00
	State-owned banks (interest)			4,129	0.00
	Kopegtel	3,827	0.00	3,831	0.00
	Government Agencies	2,442	0.00	196	0.00
	Other	425	0.00	269	0.00
	Total	11,419	0.01	13,117	0.00
e.	Prepaid expenses (Note 8)	1,284,159	1.41	1,870,292	1.94
f.	Other current assets (Note 9)
	BNI	21,232	0.02	49,611	0.05
	Bank Mandiri	21,169	0.02	2,541	0.00
	BRI			347	0.00
	Total	42,401	0.04	52,499	0.05
g.	Advances and other non-current
	assets (Note 13)
	Bank Mandiri	91,198	0.10	124,524	0.13
	BNI	94,039	0.10	96,511	0.10
	Perusahaan Umum Percetakan Uang Republik Indonesia (Peruri)	813	0.00	813	0.00
	Kisel	1,088	0.00
	BRI	347	0.00
	Total	187,485	0.20	221,848	0.23
h.	Escrow accounts (Note 15)	42,811	0.05	42,503	0.04

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RELATED PARTY TRANSACTIONS (continued)


		% of total		% of total
	Amount	liabilities	Amount	liabilities
i.	Trade payables (Note 16)
	Government Agencies	847,774	1.93	990,140	2.31
	Yakes	9,588	0.02	81,529	0.19
	Kopegtel	62,898	0.14	70,944	0.17
	PSN			34,330	0.08
	Indosat	24,492	0.06	32,564	0.08
	SPM	7,377	0.02	9,205	0.02
	Gratika	3,955	0.01	5,370	0.01
	INTI	6,916	0.02	438	0.00
	Patrakom			704	0.00
	CSM	1,012	0.00
	Others	274,101	0.62	264,640	0.62
	Total	1,238,113	2.82	1,489,864	3.48
j.	Accrued expenses (Note 17)
	Employees	1,128,243	2.56	904,082	2.11
	Government Agencies and state-owned banks	85,694	0.19	76,757	0.18
	PT Jaminan Sosial Tenaga Kerja (Persero)	21,032	0.05	25,547	0.06
	Jasindo	93	0.00
	Total	1,235,062	2.80	1,006,386	2.35
k.	Short-term bank loans (Note 19)
	BSM			10,500	0.02
l.	Accrued LSA (Note 43)	108,722	0.25	209,959	0.49
m.	Accrued post-retirement health care benefits (Note 44)	2,553,531	5.80	1,681,512	3.93
n.	Accrued pension and other post-retirement benefits costs (Note 42)	1,057,509	2.40	684,805	1.60
o.	Two-step loans (Note 21)	4,347,468	9.88	3,292,197	7.69
p.	Notes (Note 22)			105,000	0.25
q.	Long-term bank loans (Note 23)
	BNI	3,450,000	7.84	3,900,000	9.11
	BRI	3,060,000	6.96	3,348,611	7.82
	Bank Mandiri	2,030,000	4.61	2,707,778	6.32
	BTN			8,534	0.02
	Total	8,540,000	19.41	9,964,923	23.27

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SEGMENT INFORMATION

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| 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	5,170,418		744,413		9,655,288		48,186		15,618,305				15,618,305
Inter-segment operating revenues	1,044,102		17,819		423,798		81,365		1,567,084		(1,567,084	)
Total segment revenues	6,214,520		762,232		10,079,086		129,551		17,185,389		(1,567,084	)	15,618,305
External operating expenses	(4,447,164	)	(586,380	)	(5,140,929	)	(155,634	)	(10,330,107	)			(10,330,107	)
Inter-segment operating expenses	(592,067	)			(1,020,942	)	(9,006	)	(1,622,015	)	1,622,015
Segment expenses	(5,039,231	)	(586,380	)	(6,161,871	)	(164,640	)	(11,952,122	)	1,622,015		(10,330,107	)
Segment results	1,175,289		175,852		3,917,215		(35,089	)	5,233,267		54,931		5,288,198
Interest expense													(517,388	)
Interest income													138,451
Loss on foreign exchange net													(211,718	)
Other income net													56,371
Income tax expense													(1,398,863	)
Equity in net income of
associated companies													931
Income before minority interest													3,355,982
Unallocated minority interest													(898,098	)
Net income													2,457,884
Other information
Segment assets	30,909,659		8,152,772		53,222,294		747,301		93,032,026		(1,832,724	)	91,199,302
Investments in associates	149,825				20,359				170,184				170,184
Total consolidated assets													91,369,486
Total consolidated liabilities	(19,297,231	)	(2,565,550	)	(23,635,051	)	(329,877	)	(45,827,709	)	1,832,724		(43,994,985	)
Capital expenditures	(893,119	)	(448,634	)	(2,156,983	)	(4,385	)	(3,503,121	)			(3,503,121	)
Depreciation and amortization	(874,021	)	(140,878	)	(1,940,513	)	(13,841	)	(2,969,253	)			(2,969,253	)
Amortization of goodwill and
other intangible assets	(289,623	)			(27,065	)			(316,688	)			(316,688	)
Other non-cash expenses	(99,865	)			(24,840	)	(1,586	)	(126,291	)			(126,291	)

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SEGMENT INFORMATION (continued)


Fixed		Fixed						Total before				Total
wireline		wireless		Cellular		Others		elimination		Elimination		consolidated
Segment results
External operating revenues	5,199,597		788,272		10,565,837		33,616		16,587,322				16,587,322
Inter-segment operating revenues	1,248,212		9,345		450,799		92,172		1,800,528		(1,800,528	)
Total segment revenues	6,447,809		797,617		11,016,636		125,788		18,387,850		(1,800,528	)	16,587,322
External operating expenses	(4,336,412	)	(785,547	)	(5,974,751	)	(168,855	)	(11,265,565	)			(11,265,565	)
Inter-segment operating expenses	(856,917	)			(1,002,292	)	(8,274	)	(1,867,483	)	1,867,483
Segment expenses	(5,193,329	)	(785,547	)	(6,977,043	)	(177,129	)	(13,133,048	)	1,867,483		(11,265,565	)
Segment results	1,254,480		12,070		4,039,593		(51,341	)	5,254,802		66,955		5,321,757
Interest expense													(504,235	)
Interest income													79,674
Loss on foreign exchange net													164,054
Other income net													77,261
Income tax expense													(1,372,379	)
Equity in net income of
associated companies													437
Income before minority interest													3,766,569
Unallocated minority interest													(989,979	)
Net income													2,776,590
Other information
Segment assets	33,734,013		5,484,502		58,877,194		805,823		98,901,532		(2,523,229	)	96,378,303
Investments in associates	135,535				20,359				155,894				155,894
Total consolidated assets													96,534,197
Total consolidated liabilities	(18,322,880	)	(1,676,064	)	(25,014,602	)	(328,568	)	(45,342,114	)	2,523,229		(42,818,885	)
Capital expenditures	(574,833	)	(746	)	(2,071,416	)	(5,038	)	(2,652,033	)			(2,652,033	)
Depreciation and amortization	(831,667	)	(183,674	)	(2,336,347	)	(7,608	)	(3,359,296	)			(3,359,296	)
Amortization of goodwill and
other intangible assets	(321,752	)	(1,867	)	(44,017	)	(42	)	(367,678	)			(367,678	)
Other non-cash expenses	(118,142	)			(29,147	)	(2,929	)	(150,218	)			(150,218	)

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REVENUE-SHARING ARRANGEMENTS (RSA)

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| The Company has entered into agreements with several investors under RSA to develop fixed lines,
public card-phone booths (including their maintenance), data and internet network and related
supporting telecommunications facilities. |
| --- |
| As of March 31, 2010, the Company has 24 RSAs with 22 investors. The RSA are located mainly in
Pekanbaru, East Java, Kalimantan, Makassar, Pare-pare, Manado, Denpasar, Mataram and Kupang,
with concession periods ranging from 68 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. |
| --- |
| 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.nil and Rp.4,418 million as of March
31, 2009 and 2010, respectively (Note 12). |
| The investors share of revenues amounted to Rp.41,905 million and Rp.29,026 million for the
three months period ended March 31, 2009 and 2010, respectively. |

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

| a. |
| --- |
| 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

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

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

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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 April 1, 2009, the Company reduced its
internet tariff by an average of 20% depending on subscription packages.
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 trilion, 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 |

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COMMITMENTS

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| a. |
| --- |
| As of March 31, 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		3,502,365
U.S. Dollars	474	4,315,309
Euro	4	49,595
Total		7,867,269

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COMMITMENTS (continued)

a. Capital expenditures (continued)

The above balance includes the following significant agreements:

(i) Company

				Outstanding
				purchase commitment
	Date of	Significant provisions		as of March 31,
Contracting parties	agreement	of the agreement	Total contract value	2010
Company and ZTE
Consortium		Procurement and installation
agreement for Expansion of NSS, BSS
and PDN System in:
	November 28, 2006	a. Divre VI (Kalimantan)	US$14.9 million and
Rp.28,075 million	US$0.17 million and
Rp.122 million
	July 10, 2007	Divre VII (Sulawesi, Maluku and Papua)	US$15.6 million and
Rp.20,932 million	US$0.2 million and
Rp.181 million
Company and Huawei
Consortium (Huawei)	September 28, 2007	Procurement and installation
agreement for Speedy Access Batch 3	US$19.2 million and
Rp.130,774 million	Rp.740 million
Company and Huawei Tech	March 31, 2008	Procurement and installation
agreement for Metro Ethernet Batch 3
in Divre V	Rp.103,376 million	Rp.1,271 million
Company and G-Pas
Consortium	April 18, 2008	Procurement and installation
agreement for Outside Plant Fiber
Optic 2008 Batch 8 Divre VII	Rp.116,340 million	Rp.5,729 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.216,647 million	Rp.66,870 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.79,337 million	Rp.21,205 million
Company and PT
Telekomindo Primakarya
(Telekomindo)	April 18, 2008	Procurement and
installation
agreement for
Outside Plant Fiber
Optic 2008 Batch 11
Netre Sumbagsel	Rp.128,942 million	Rp.10,350 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.144,919 million	Rp.7,538 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase commitment
	Date of	Significant provisions		as of March 31,
Contracting parties	agreement	of the agreement	Total contract value	2010
Company and Huawei	May 12, 2008	Procurement and
installation
agreements for FWA
CDMA Expansion
Project System NSS,
BSS and PDN in
Divre I, II, III
and IV	US$134 million and
Rp.542,013 million	US$1.7 million and
Rp.4,568 million
Company and PT Nokia
Siemens Networks	December 5, 2008	Procurement and installation
agreement for Softswitch and
modernization of MSAN Divre V and
trial location of Bali and Timika	Rp.71,327 million	Rp.6,433 million
Company and NSW -
Fujitsu Consortium	December 30, 2008	Procurement and installation
agreement for Capacity Ring
JaKa2LaDeMa Project	US$117.2 million	US$74.7 million
Company and ISS
Reshetnev	March 2, 2009	Procurement agreement for Telkom-3 Satellite	US$178.9 million	US$129.3 million
Company and APT
Satellite Company
Limited	March 23, 2009	142E Degree Orbital Position Cooperation Agreement	US$18.5 million	US$13.3 million
Company and Sansaine
Huawei Consortium	May 27, 2009	a. Cooperation agreement for
procurement and installation of
MSAN ALU and Secondary Access 2008
Batch 3	US$5.9 million and
Rp.66,287 million	US$4.8 million and
Rp.50,844 million
	June 15, 2009	b. Cooperation agreement for
procurement and installation of
MSAN ALU and Secondary Access 2008
Batch 1	US$5.7 million and
Rp.53,730 million	US$4.96 million and
Rp.43,688 million
Company and ZTE
Consortium	June 2, 2009	Cooperation agreement for
procurement and installation of
MSAN ALU and Secondary Access 2008
Batch 2	US$7.8 million and
Rp.43,137 million	US$4.2 million and
Rp.11,327 million
Company and PT Aldomaru	June 11, 2009	Procurement agreement Roll Out Infusion PL 2009	Rp.63,761 million	Rp.34,272 million

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COMMITMENTS (continued)

a. Capital expenditures (continued)

(i) Company (continued)

				Outstanding
				purchase commitment
	Date of	Significant provisions		as of March 31,
Contracting parties	agreement	of the agreement	Total contract value	2010
Company and PT Dharma
Kumala Utama	July 29, 2009	Procurement and
installation
agreement for Fiber
Optic Cable Access
& RMJ 2009 in
Central Java and
East Java Batch 1	Rp.64,198 million	Rp.47,696 million
Company and Sansaine -
Huawei Consortium	August 3, 2009	Procurement and
installation
agreement for
Softswitch and
modernization of
MSAN Divre I, Divre
II, Divre III and
Divre IV	US$13.3 million and
Rp.23,239 million	US$6.8 million and
Rp.13,921 million
Company and Huawei -
Sansaine Consortium	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
Company and NEC NSN
Consortium	December 16, 2009	Procurement and
installation
agreement for
Capacity Expansion
Ring Jasuka
Backbone 2009	US$5.7 million and
Rp.85,441 million	US$1.97 million and
Rp.85,441 million
Company and ZTE	December 21, 2009	Procurement and
installation
agreement for
Improvement and
Upgrade Jawa
Backbone 2009	Rp.55,950 million	Rp.34,122 million

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

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

The agreements contain list of charges to be used in determining the fees payable by Telkomsel for all equipment and related services to be procured during the rollout period upon the issue of Purchase Orders (PO).

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COMMITMENTS (continued)

a. Capital expenditures (continued)

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

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

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. |

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 March 31, 2008.

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COMMITMENTS (continued)

a. Capital expenditures (continued)

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

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

| 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 current period 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 March 31, 2010, Telkomsel has issued a bank guarantee of Rp.20,000
million (equivalent to US$2.19 million) for a 3G performance bond (Note 49c.i). Borrowings
under the facilities bear interest at Singapore Interbank Offered Rate (SIBOR) plus 1.25%
per annum (US$). As of March 31, 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 first year of the additional license was paid in September 2009 (Note 14iii). The commitments arising from the BHP as of March 31, 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 2 3 4 5 6 7 8 9 10	R1 R2 R3 R4 R5 R6 R7 R8 R9	I1 = (1 + R1) I2 = I1(1 + R2) I3 = I2(1 + R3) I4 = I3(1 + R4) I5 = I4(1 + R5) I6 = I5(1 + R6) I7 = I6(1 + R7) I8 = I7(1 + R8) I9 = I8(1 + R9)	20% x HL 40% x I1 x HL 60% x I2 x HL 100% x I3 x HL 130% x I4 x HL 130% x I5 x HL 130% x I6 x HL 130% x I7 x HL 130% x I8 x HL 130% x I9 x HL	100% x HL 100% x I1 x HL 100% x I2 x HL 100% x I3 x HL 100% x I4 x HL 100% x I5 x HL 100% x I6 x HL 100% x I7 x HL 100% x I8 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)	Palapa Ring Consortium
	On November 10, 2007, the Company entered into a C&MA with 5 other companies for Palapa
Ring Consortium. This consortium was formed to build optical fiber network in 32 cities
in Eastern Indonesia with total initial investment of Rp.2,070,336 million. The Company
will obtain 4 lambdas bandwidth of total capacity of 8.44 lambdas from this consortium
(Note 15). In 2008, 2 companies draw back from the consortium, hence the total number of
Palapa Ring Consortiums member become 4 companies including the Company.
(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 46,763 TX in operation as
of March 31, 2010, with a fee ranging from Rp.0.07 million to Rp.17.55 million for each
TX and based on 306,411 TRXs in operation as of March 31, 2010, with a fee ranging from
Rp.3.40 million to Rp.15.90 million for each TRX (Note 8).

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COMMITMENTS (continued)

c. Others (continued)

(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	278,302	65,850	187,009	25,443

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

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| 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.95,081 million as of March 31, 2010. |
| --- | --- |
| 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 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. As of the issuance date of the consolidated financial statements, no decision
has been reached on both appeals. |

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CONTINGENCIES (continued)

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%.

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. As of the issuance date of the consolidated financial statements, no decision has been reached on the appeal.

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CONTINGENCIES (continued)

| 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 |
| | Management believes that Telkomsel has applied tariffs in accordance with prevailing
regulations, accordingly, such allegation has no strong basis. |
| 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. As of the issuance date of the consolidated financial
statements, the Company believes the penalty should not apply. The Company is reviewing the
letter to determine actions to be taken including consideration of filing an appeal to the
MoCI regarding the decision. |

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| 50. |
| --- |
| 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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ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

xbrl,body

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	183.20	2,123,412	160.47	1,460,249
Euro	47.87	733,626	34.73	424,298
Singapore Dollars	0.21	1,570	0.53	3,464
Malaysian Ringgit	0.03	109	0.03	96
Japanese Yen	0.18	22	0.22	21
Temporary investments
U.S. Dollars	8.00	92,280	8.62	78,376
Trade receivables
Related parties
U.S. Dollars	2.34	27,033	2.31	21,006
Euro			0.08	932
Third parties
U.S. Dollars	66.37	766,353	69.70	633,803
Other receivables
U.S. Dollars	0.79	9,080	0.72	6,589
Euro	0.02	268	0.01	174
Great Britain Pound sterling	0.01	203	0.06	831
Singapore Dollars	0.00	2	0.01	86
Other current assets
U.S. Dollars	0.64	7,429	0.84	7,674
Advances and other non-current assets
U.S. Dollars	3.28	37,901	2.48	22,627
Euro	0.07	494
Escrow accounts
U.S. Dollars	3.71	42,811	4.68	42,502
Total assets		3,842,593		2,702,728

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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	6.13	71,005	3.02	27,489
Singapore Dollars	2.29	17,477
Third parties
U.S. Dollars	451.66	5,227,853	110.74	1,008,354
Euro	52.12	798,914	11.87	144,968
Singapore Dollars	1.26	9,616	0.46	3,004
Japanese Yen	5.61	661	7.93	774
Great Britain Pound sterling	0.00	14	0.01	80
Swiss Franc	0.00	16	0.00	28
Hongkong Dollars	0.07	104	0.01	8
Australian Dollars	0.05	427
Malaysian Ringgit	0.00	4
Other payables
U.S. Dollars	0.05	573	0.13	1,220
Malaysian Ringgit			0.55	1,545
Singapore Dollars	0.00	12	0.00	9
Accrued expenses
Japanese Yen	137.74	16,227	411.70	2,588,237
U.S. Dollars	10.30	119,243	13.32	121,272
Euro			2.67	32,578
Singapore Dollars	0.03	263	1.09	7,068
Malaysian Ringgit	0.54	1,722
Great Britain Pound sterling	0.05	751
Short-term bank loans
U.S. Dollars	0.38	4,399	0.19	1,702
Advances from customers and suppliers
U.S. Dollars	1.23	14,247	0.96	8,766
Current maturities of long-term liabilities
U.S. Dollars	125.15	1,448,610	111.59	1,015,404
Japanese Yen	767.90	90,466	767.90	74,931
Notes
U.S. Dollars			2.94	26,772
Long-term liabilities
U.S. Dollars	234.66	2,716,179	129.05	1,174,314
Japanese Yen	11,518.46	1,356,990	10,750.57	1,049,041
Total liabilities		11,895,773		7,287,564
Net liabilities		(8,053,180	)	(4,584,836	)

| As of March 31, 2009, the net monetary (liabilities) assets position denominated in foreign
currencies of the Company and its subsidiaries is (US$122.12) million and Euro20.28 million. As
of March 31, 2010, the net monetary liabilities position denominated in foreign currencies of
the Company and its subsidiaries is US$561.23 million and Euro4.16 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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ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)

| 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 March 31, 2010 using the rates on April 29, 2010 the unrealized foreign
exchange gain will increase by the amount of Rp.2,570,305 million. |

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SUBSEQUENT EVENTS

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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 (Note 39f.ii). As of the issuance date of the consolidated financial statements, the appeal is still in process.

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RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA

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

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

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

RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA (continued)

(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.
(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.

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ACCOUNTS RECLASSIFICATION

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Certain accounts in the consolidated financial statement for the three months period ended March 31, 2009 has been reclassified to conform with the presentation of accounts of the consolidated financial statements for the three months period ended March 31, 2010, among others due to the implementation of PPSAK 1 (Note 2q.viii), with details of significant accounts reclassification are as follows:

reclassification		Reclassification		reclassification
Consolidated balance sheet
March 31, 2009:
NON-CURRENT ASSETS
Deferred tax assets net			76,716		76,716
CURRENT LIABILITIES
Trade payables
Related parties	(1,238,113	)	7,984		(1,230,129	)
Third parties	(8,954,257	)	42,403		(8,911,854	)
Current maturities of long-term liabilities	(6,980,674	)	(161,586	)	(7,142,260	)
NON-CURRENT LIABILITIES
Deferred tax liabilities net	(2,898,126	)	(76,716	)	(2,974,842	)
Unearned income on Revenue-Sharing
Arrangements	(267,392	)	267,392
Obligations under finance leases	(292,772	)	(156,193	)	(448,965	)
Consolidated income statement
for the three months
ended March 31, 2009:
OPERATING REVENUES
Telephone
Fixed lines	2,116,593		1,466,673		3,583,266
Cellular	6,517,451		(18,088	)	6,499,363
Interconnection revenues	2,659,347		(1,567,423	)	1,091,924
Data, internet and information
technology services	3,715,768		291,131		4,006,899
OPERATING EXPENSES
Operations, maintenance and
telecommunication services	(3,288,635	)	(172,293	)	(3,460,928	)

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