Statement of the Board of Directors
regarding the Board of Director’s Responsibility for
Consolidated Financial Statements
as of March 31, 2020 and for the year ended
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk and its Subsidiaries
On behalf of the Board of Directors, weundersigned:
1. | Name | : | Ririek Adriansyah |
| Business Address | : | Jl. Japati No.1 Bandung 40133 |
| Address | : | Jl. Kenanga V B-6 No. 6 Taman Duta RT 002 RW 009 Kelurahan Cisalak, Kecamatan Sukma Jaya, Depok |
| Phone | : | (022) 452 7101 |
| Position | : | President Director |
| | : | |
2. | Name | : | Heri Supriadi |
| Business Address | : | Jl. Japati No.1 Bandung 40133 |
| Address | : | Jl. Rancamayar No. 18 RT 001 RW 008 Kelurahan Gumuruh Kecamatan Batununggal, Bandung |
| Phone | : | (022) 452 7201/ 021 520 9824 |
| Position | : | Director of Finance |
We hereby state as follows:
| |
1. | We are responsible for the preparation and presentation of the consolidated financial statement of Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (the “Company”) and its subsidiaries; |
2. | The Company and its subsidiaries’ consolidated financial statement have been prepared and presented in accordance with Indonesian financial accounting standards; |
3. | All information has been fully and correctly disclosed in the Company and its subsidiaries’ consolidated financial statement; |
4. | The Company and its subsidiaries’ consolidated financial statement do not contain false material information or facts, nor do they omit any material information or facts; |
5. | We are responsible for the Company and its subsidiaries’ internal control system. |
This statement is considered to be true and correct.
Jakarta, June 29, 2020
| |
/s/ Ririek Adriansyah Ririek Adriansyah President Director | /s/ Heri Supriadi Heri Supriadi Director of Finance |
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2020 AND FOR THE THREE MONTHS PERIOD THEN ENDED
(UNAUDITED)
TABLE OF CONTENTS
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| Page | |
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1 | | |
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Consolidated Statement of Profit or Loss and Other Comprehensive Income | 2 | |
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3-4 | | |
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5 | | |
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6-128 | |
These consolidated financial statements are originally issued in the Indonesian language.
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of March 31, 2020 (unaudited) and December 31, 2019 (audited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
| | | | | | |
|
| Notes |
| March 31, 2020 |
| December 31, 2019 |
ASSETS | | | | | | |
| | | | | | |
CURRENT ASSETS | | | | | | |
Cash and cash equivalents |
| 2c,2e,2u,3,33,38 |
| 24,365 |
| 18,242 |
Other current financial assets |
| 2c,2e,2u,4,33,38 |
| 1,234 |
| 554 |
Trade receivables - net provision for impairment of receivables |
| 2g,2u,2ae,5,38 |
| | | |
Related parties |
| 2c,33 |
| 2,435 |
| 1,792 |
Third parties |
| |
| 12,489 |
| 10,005 |
Contract assets |
| 2r,2u,2ae,6,38 |
| 748 |
| - |
Other receivables - net of provision for impairment of receivables | | 2g,2u,38 | | 176 |
| 292 |
Inventories - net provision for obsolescence |
| 2h,7 |
| 681 |
| 585 |
Assets held for sale |
| 2j,11 |
| 39 |
| 39 |
Contract cost | | 2r,2ae,9 | | 342 |
| - |
Prepaid taxes | | 2t,28a | | 2,702 |
| 2,569 |
Claim for tax refund | | 2t,28b | | 914 |
| 992 |
Other current assets |
| 2c,2i,2m,8,33 |
| 4,839 |
| 6,652 |
Total Current Assets |
| |
| 50,964 |
| 41,722 |
| | | | | | |
NON-CURRENT ASSETS |
| |
| |
| |
Long-term investments |
| 2f,2u,10 |
| 2,059 |
| 1,944 |
Property and equipment - net of accumulated depreciation |
| 2l,2m,2ab,11,36 |
| 153,575 |
| 156,973 |
Right of use assets | | 2m,2ae,12 | | 19,980 | | - |
Intangible assets - net of accumulated amortization | | 2d,2k,2n,2ab,14 | | 6,391 |
| 6,446 |
Deferred tax assets - net | | 2t,2ae,28f | | 2,824 |
| 2,898 |
Contract assets | | 2r,2u,2ae,6,38 | | 327 | | - |
Contract cost | | 2r,2ae,9 | | 757 | | - |
Other non-current assets |
| 2c,2g,2i,2n,2t,2u,13,28,33,38 |
| 5,037 |
| 11,225 |
Total Non-Current Assets |
|
|
| 190,950 |
| 179,486 |
TOTAL ASSETS | | | | 241,914 |
| 221,208 |
| | | | | | |
LIABILITIES AND EQUITY | | | | | | |
| | | | |
| |
CURRENT LIABILITIES |
| |
| |
| |
Trade payables |
| 2o,2u,15,38 |
| |
| |
Related parties |
| 2c,33 |
| 691 |
| 819 |
Third parties |
| |
| 12,957 |
| 13,078 |
Other payables |
| 2u,38 |
| 733 |
| 449 |
Taxes payable | | 2t,28c | | 4,278 |
| 3,431 |
Accrued expenses | | 2c,2u,16,33,38 | | 14,854 |
| 13,736 |
Unearned income - current |
| 2r |
| 666 |
| 7,352 |
Contract liabilities |
| 17a | | 6,748 | | - |
Advances from customers |
| 2c,33 |
| 2,194 |
| 1,289 |
Short-term bank loans | | 2c,2p,2u,18a,33,38 | | 8,624 |
| 8,705 |
Current maturities of long-term borrowings |
| 2c,2m,2p,2u,2v,18b,33,38 |
| 12,301 |
| 9,510 |
Total Current Liabilities |
| |
| 64,046 |
| 58,369 |
| | | | | | |
NON-CURRENT LIABILITIES |
| |
| |
| |
Deferred tax liabilities - net |
| 2t,2ae,28f |
| 1,008 |
| 1,230 |
Unearned income - net of current portion |
| 2r |
| - |
| 803 |
Contract liabilities |
| 2r,2ae,17b | | 823 | | - |
Long service award provisions |
| 2s,32 |
| 1,094 |
| 1,066 |
Pension benefits and other post-employment |
|
|
| |
| |
benefits obligations | | 2s,31 | | 8,230 |
| 8,078 |
Long-term borrowings - net of current maturities |
| 2c,2m,2p,2u,2v,19,33,38 |
| 39,503 |
| 33,869 |
Other liabilities | | 2o,2u | | 663 |
| 543 |
Total Non-Current Liabilites |
| |
| 51,321 |
| 45,589 |
TOTAL LIABILITIES |
| |
| 115,367 |
| 103,958 |
| | | | | | |
EQUITY |
| |
| |
| |
Capital stock |
| 1c,21 |
| 4,953 |
| 4,953 |
Additional paid-in capital |
| 2w,22 |
| 2,711 |
| 2,711 |
Other equity | | 2f,2u,23 | | 779 |
| 408 |
Retained earnings | | | | |
| |
Appropriated |
| 30 |
| 15,337 |
| 15,337 |
Unappropriated |
|
|
| 82,667 |
| 76,152 |
Net equity attributable to: | | | | |
| |
Owners of the parent company | | | | 106,447 |
| 99,561 |
Non-controlling interest |
| 2b,20 |
| 20,100 |
| 17,689 |
TOTAL EQUITY |
| |
| 126,547 |
| 117,250 |
TOTAL LIABILITIES AND EQUITY |
| |
| 241,914 |
| 221,208 |
The accompanying notes form an integral part of these consolidated financial statements.
1
These consolidated financial statements are originally issued in the Indonesian language.
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
| | | | | |
| Notes | | 2020 | | 2019 |
REVENUES | 2c,2r,24,33 | | 34,194 |
| 34,840 |
| | | | | |
Operation, maintenance and telecommunication service expenses | 2c,2r,26,33 |
| (8,252) |
| (10,709) |
Depreciation and amortization expenses | 2k,2l,2m,11,12,14 |
| (6,849) |
| (5,642) |
Personnel expenses | 2c,2r,2s,25,33 |
| (3,451) |
| (3,132) |
Interconnection expenses | 2c,2r,33 |
| (1,519) |
| (1,268) |
General and administrative expenses | 2c,2r,27,33 |
| (1,572) |
| (1,294) |
Marketing expenses | 2c,2r,33 |
| (641) |
| (907) |
Gains (losses) on foreign exchange - net | 2q |
| 205 |
| (45) |
Other income (expenses) - net | 2l,2r |
| (186) |
| 186 |
| | | | | |
OPERATING PROFIT | |
| 11,929 |
| 12,029 |
| | | | | |
Finance income | 2c,33 |
| 219 |
| 276 |
Finance cost | 2c,2p,2r,33 |
| (1,215) |
| (996) |
Share of profit (loss) of associated companies - net | 2f,10 |
| (9) |
| 20 |
| | | | | |
PROFIT BEFORE INCOME TAX | |
| 10,924 |
| 11,329 |
| | | | | |
INCOME TAX (EXPENSE) BENEFIT | 2t,2ae,28 |
| |
| |
Current | |
| (2,831) |
| (2,849) |
Deferred | |
| 208 |
| 24 |
| | | (2,623) | | (2,825) |
| | | | | |
PROFIT FOR THE PERIOD | |
| 8,301 |
| 8,504 |
| | | | | |
OTHER COMPREHENSIVE INCOME | |
| |
| |
Other comprehensive income to be reclassified to profit | |
| |
| |
or loss in subsequent periods: | |
| |
| |
Foreign currency translation | 2f,2q,23 |
| 419 |
| (26) |
Change in fair value of available-for-sale financial assets | 2u,23 |
| - |
| 3 |
Share of other comprehensive income of associated companies | 2f,10 |
| 4 |
| (4) |
Other comprehensive income not to be reclassified to profit | |
| |
| |
or loss in subsequent periods: | |
| |
| |
Defined benefit actuarial gains (losses) - net | 2s,31 |
| - |
| - |
Other comprehensive income (losses) - net | |
| 423 |
| (27) |
| | | | | |
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | |
| 8,724 |
| 8,477 |
| | | | | |
Profit for the period attributable to: | |
| |
| |
Owners of the parent company | ��� |
| 5,862 |
| 6,224 |
Non-controlling interests | 2b,20 |
| 2,439 |
| 2,280 |
| | | 8,301 | | 8,504 |
Total comprehensive income for the period attributable to: | |
| |
| |
Owners of the parent company | |
| 6,285 |
| 6,197 |
Non-controlling interests | 2b | | 2,439 |
| 2,280 |
| | | 8,724 | | 8,477 |
BASIC EARNING PER SHARE | |
| |
| |
(in full amount) | 2x,29 |
| |
| |
Net income per share | |
| 59.17 | | 62.83 |
Net income per ADS (100 Series B shares per ADS) | |
| 5,917.49 | | 6,282.92 |
The accompanying notes form an integral part of these consolidated financial statements.
2
These consolidated financial statements are originally issued in the Indonesian language.
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
| | | | Attributable to owners of the parent company | | | ||||||||||||
| | | | | | | | | | Retained earnings | | | | | | | ||
Description | | Notes | | Capital stock | | Additional paid-in capital | | Other equity | | Appropriated | | Unappropriated | | Net | | Non-controlling interests | | Total equity |
Balance, Deceember 31, 2019 | | | | 4,953 |
| 2,711 |
| 408 |
| 15,337 |
| 76,152 |
| 99,561 | | 17,689 |
| 117,250 |
The impact of applying new accounting standards | | 2ad | | - | | - | | (48) | | - | | 649 | | 601 | | (47) | | 554 |
Balance, January 1, 2020 | | | | 4,953 | | 2,711 | | 360 | | 15,337 | | 76,801 | | 100,162 | | 17,642 | | 117,804 |
Adjustment of non-controlling interest | | | | - | | - | | - | | - | | - | | - | | 69 | | 69 |
Cash dividends | | | | - | | - | | - | | - | | - | | - | | (50) | | (50) |
Profit for the period | | 2b,20 | | - | | - | | - | | - | | 5,862 | | 5,862 | | 2,439 | | 8,301 |
Other comprehensive income | | 2f,2q,2s,2u | | - | | - | | 419 | | - | | 4 | | 423 | | - | | 423 |
Balance, March 31, 2020 | | | | 4,953 | | 2,711 | | 779 | | 15,337 | | 82,667 | | 106,447 | | 20,100 | | 126,547 |
The accompanying notes form an integral part of these consolidated financial statements.
3
These consolidated financial statements are originally issued in the Indonesian language.
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
| | | | | | | | | | | | | | | | | | | |
| | | | Attributable to owners of the parent company | | | |||||||||||||
|
| |
| | | |
| |
| Retained earnings | | | | | | ||||
Description | | Notes | | Capital stock | | Additional paid-in capital | | Other equity | | Appropriated | | Unappropriated | | Net | | Non-controlling interests | | Total equity | |
Balance, January 1, 2019 |
| |
| 4,953 |
| 2,455 |
| 507 |
| 15,337 |
| 75,658 |
| 98,910 | | 18,393 |
| 117,303 | |
Capital contribution to subsidiaries | | | | - | | - | | - | | - | | - | | - | | 59 | | 59 | |
Acquisition of businesses | | | | - | | - | | - | | - | | - | | - | | 37 | | 37 | |
Acquisition of non-controlling interest | | | | - | | - | | - | | - | | - | | - | | 42 | | 42 | |
Cash dividends |
|
| - | | - | | - | | - | | | | - | | (1) | | (1) | ||
Profit for the period |
| 2b,20 |
| - | | - | | - | | - | | 6,224 | | 6,224 | | 2,280 | | 8,504 | |
Other comprehensive income - net | | 2f,2q,2s,2u | | - | | - | | (23) | | - | | (3) | | (26) | | - | | (26) | |
Balance, March 31, 2019 |
| |
| 4,953 | | 2,455 | | 484 | | 15,337 | | 81,879 | | 105,108 | | 20,810 | | 125,918 |
The accompanying notes form an integral part of these consolidated financial statements.
4
These consolidated financial statements are originally issued in the Indonesian language.
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
| | | | | |
| Notes | | 2020 | | 2019 |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
Cash receipts from customers and other operators | | | 29,273 | | 31,366 |
Cash receipts from tax refund | | | 1,816 | | - |
Cash receipts from value added taxes - net | | | 365 | | 804 |
Cash receipts from finance income | | | 209 | | 257 |
Cash payments for expenses | | | (8,625) | | (14,607) |
Cash payments to employees | | | (2,492) | | (2,724) |
Cash payments for corporate and final income taxes | | | (1,364) | | (1,176) |
Cash payments for finance costs | | | (1,229) | | (955) |
Cash payments for short-term and low-value lease asset | | | (909) | | - |
Cash receipts from others - net | | | 559 | | 90 |
Net cash provided by operating activities | | | 17,603 | | 13,055 |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
Proceeds from sale of property and equipment | 11 | | 45 | | 267 |
Dividen received from associated company | 10 | | 5 | | - |
Proceeds from insurance claims | 11 | | 3 | | 54 |
Purchase of property and equipment | 11,39 | | (4,051) | | (4,565) |
Acquisition of businesses, net of acquired cash | | | - | | (1,108) |
Purchase of intangible assets | 13,39 | | (736) | | (261) |
Placement in other current financial assets - net | | | (411) | | (252) |
Additional contribution on long-term investments | | | (52) | | (16) |
Increase (decrease) in advances and other assets - net | | | 108 | | (327) |
Net cash used in investing activities | | | (5,089) | | (6,208) |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
Proceeds from bank loans and other borrowings | 18,19 | | 1,533 | | 3,175 |
Repayments of loan and other borrowings | 18,19 | | (6,064) | | (4,132) |
Payment of principal portion of lease liabilities | | | (2,269) | | - |
Cash dividends paid to non-controlling interests of subsidiaries | | | (50) | | - |
Capital contribution from non-controling interests of subsidiaries | | | - | | 59 |
Net cash used in financing activities | | | (6,850) | | (898) |
| | | | | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | | | 5,664 | | 5,949 |
| | | | | |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND | | | | | |
CASH EQUIVALENTS | | | 459 | | (8) |
| | | | | |
ALLOWANCE FOR EXPECTED CREDIT LOSSES | | | (0) | | - |
| | | | | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 3 | | 18,242 | | 17,439 |
| | | | | |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 3 | | 24,365 | | 23,380 |
The accompanying notes form an integral part of these consolidated financial statements.
5
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL |
a. | Establishment and general information |
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk. (the “Company”) was originally part of “Post en Telegraafdienst”, which was established and operated commercially in 1884 under the framework of Decree No. 7 dated March 27, 1884 of the Governor General of the Dutch Indies which 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 ultimate parent of the Company is the Government of the Republic of Indonesia (the “Government”) (Notes 1c and 22).
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 Ministry of Justice of the Republic of Indonesia in its 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 has been amended several times, the latest amendments of which were pertaining to the increase in the flexibility and independency of the Board Commissioners in approving the Directors’ actions at a certain threshold as stated in notarial deeds No. 32 dated June 21, 2019 of Ashoya Ratam, S.H., M.Kn. Such amendments were accepted and approved by the Ministry of Law and Human Rights of the Republic of Indonesia (“MoLHR”) in its letter No. AHU-0032595.AH.01.02 dated June 24, 2019.
In accordance with Article 3 of the Company’s Articles of Association, the scope of its activities is to provide telecommunication network and telecommunication and information services, and to optimize the Company’s resources to provide high quality and competitive goods and/or services to gain/pursue profit in order to increase the value of the Company by applying the Limited Liability Company principle. In regard to achieving its objectives, the Company is involved in the following activities:
i. Main business:
(a) | Planning, building, providing, developing, operating, marketing or selling or leasing, and maintaining telecommunications and information networks in a broad sense in accordance with prevailing laws and regulations. |
(b) | Planning, developing, providing, marketing or selling, and improving telecommunications and information services in a broad sense in accordance with prevailing laws and regulations. |
(c) | Investing including in the form of equity capital in other companies in line with and to achieve the purposes and objectives of the Company. |
ii. Supporting business:
(a) | Providing payment transactions and money transferring services through telecommunications and information networks. |
(b) | Performing other activities and undertakings in connection with the optimization of the Company's resources, which among others, include the utilization of the Company's property and equipment and movable assets, information systems, education and training, and repairs and maintenance facilities. |
(c) | Collaborating with other parties in order to optimize the information, communication or technology resources owned by other parties as service provider in information, communication and technology industry, as to achieve the purposes and objectives of the Company. |
The Company’s head office is located at Jalan Japati No. 1, Bandung, West Java.
6
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL (continued) |
a. | Establishment and general information (continued) |
The Company was granted several networks and/or services provision licenses by the Government which are valid for an unlimited period of time as long as the Company complies with prevailing laws and regulations and fulfills the obligation stated in those licenses. For every license issued by the Ministry of Communication and Information (“MoCI”), an evaluation is performed annually and an overall evaluation is performed every five years. The Company is obliged to submit reports of networks and/or services annually to the Indonesian Directorate General of Post and Informatics (“DGPI”), which replaced the previous Indonesian Directorate General of Post and Telecommunications (“DGPT”).
The reports comprise information such as network development progress, service quality standard achievement, numbers of customers, license payment and universal service contribution, while for internet telephone services for public purpose, internet interconnection service, and internet access service, there is additional information required such as operational performance, customer segmentation, traffic, and gross revenue.
Details of these licenses are as follows:
| | | | | | | |
License | | License No. | | Type of services | | Grant date/latest renewal date | |
License of electronic money issuer | | Bank Indonesia License No. 11/432/DASP | | Electronic money | | July 3, 2009 | |
License of money remittance | | Bank Indonesia License No. 11/23/bd/8 | | Money remittance service | | August 5, 2009 | |
License to operate internet telephone services for public purpose | | 127/KEP/DJPPI/ KOMINFO/3/2016 | | Internet telephone services for public purpose | | March 30, 2016 | |
License to operate fixed domestic long distance network | | 839/KEP/M.KOMINFO/ 05/2016 | | Fixed domestic long distance and basic telephone services network | | May 16, 2016 | |
License to operate fixed closed network | | 844/KEP/M.KOMINFO/ 05/2016 | | Fixed closed network | | May 16, 2016 | |
License to operate fixed international network | | 846/KEP/M.KOMINFO/ 05/2016 | | Fixed international and basic telephone services network | | May 16, 2016 | |
License to operate circuit switched based local fixed line network | | 948/KEP/M.KOMINFO/ 05/2016 | | Circuit switched based local fixed line network | | May 31, 2016 | |
License to operate data communication system services | | 191/KEP/DJPPI/ KOMINFO/10/2016 | | Data communication system services | | October 31, 2016 | |
License to operate internet service provider | | 2176/KEP/M.KOMINFO/ 12/2016 | | Internet service provider | | December 30, 2016 | |
License to operate content service provider | | 1040/KEP/M.KOMINFO/ 16/2017 | | Content service provider | | May 16, 2017 | |
License for the implementation of internet interconnection services | | 1004/KEP/M.KOMINFO/ 2018 | | Interconnection services | | December 26, 2018 | |
7
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL (continued) |
b. | Company’s Board of Commissioners, Directors, Audit Committee, Corporate Secretary, Internal Audit, and Employees |
1.Board of Commissioners and Directors
Based on resolutions made at the Annual General Meeting (“AGM”) of Stockholders of the Company as covered by notarial deed No. 133 of Ashoya Ratam., S.H., M.Kn., dated May 24, 2019, the composition of the Company’s Boards of Commissioners and Directors as of March 31, 2020 and December 31, 2019, respectively, were as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
President Commissioner | Rhenald Kasali | | Rhenald Kasali |
Commissioner* | - | | - |
Commissioner* | - | | - |
Commissioner | Ismail | | Ismail |
Commissioner | Marcelino Rumambo Pandin | | Marcelino Rumambo Pandin |
Independent Commissioner | Marsudi Wahyu Kisworo | | Marsudi Wahyu Kisworo |
Independent Commissioner | Cahyana Ahmadjayadi | | Cahyana Ahmadjayadi |
Independent Commissioner | Margiyono Darsasumarja | | Margiyono Darsasumarja |
President Director | Ririek Adriansyah | | Ririek Adriansyah |
Director of Finance | Harry Mozarta Zen | | Harry Mozarta Zen |
Director of Digital Business | Faizal Rochmad Djoemadi | | Faizal Rochmad Djoemadi |
Director of Strategic Portfolio | Achmad Sugiarto | | Achmad Sugiarto |
Director of Enterprise and | | | |
Business Service | Bogi Witjaksono | | Bogi Witjaksono |
Director of Wholesale and | | | |
International Services | Edwin Aristiawan | | Edwin Aristiawan |
Director of Human Capital | | | |
Management | Edi Witjara | | Edi Witjara |
Director of Network, Information | | | |
Technology and Solution | Zulhelfi Abidin | | Zulhelfi Abidin |
Director of Consumer Service | Siti Choiriana | | Siti Choiriana |
* Based on SK-271/MBU/11/2019 dated November 18, 2019, Edwin Hidayat Abdullah was appointed as Vice President Director of PT Angkasa Pura II (Persero) and based on SK-327/MBU/12/2019 dated December 23, 2019, Isa Rachmatarwata was appointed as Commissioner of PT Pertamina (Persero) hence their positions as Commissioners of the Company was ended by law.
2.Audit Committee, Corporate Secretary, and Internal Audit
The composition of the Company’s Audit Committee, Corporate Secretary, and Internal Audit as of March 31, 2020 and December 31, 2019, were as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
Chairman | Margiyono Darsasumarja | | Margiyono Darsasumarja |
Secretary | Tjatur Purwadi | | Tjatur Purwadi |
Member | Marsudi Wahyu Kisworo | | Ismail |
Member | Marcelino Rumambo Pandin | | Marcelino Rumambo Pandin |
Member | Sarimin Mietra Sardi | | Sarimin Mietra Sardi |
Corporate Secretary | Andi Setiawan | | Andi Setiawan |
Internal Audit | Harry Suseno Hadisoebroto | | Harry Suseno Hadisoebroto |
3.Employees
As of March 31, 2020 and December 31, 2019, the Company and subsidiaries (“Group”) had 26,044 employees and 24,272 employees (unaudited), respectively.
8
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL (continued) |
c. | Public offering of securities of the Company |
The Company’s shares prior to its Initial Public Offering (“IPO”) totalled 8,400,000,000, consisting of 8,399,999,999 Series B shares and 1 Series A Dwiwarna share, and were wholly-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 the public through an IPO and listed on the Indonesia Stock Exchange (“IDX”) 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 were 35,000,000 ADS and each ADS represented 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, distributed 2,670,300 Series B shares as incentive to the Company’s 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 on Limited Liability Companies, at the AGM of Stockholders of the Company on April 16, 1999, the Company’s stockholders resolved to increase the Company’s issued share capital by the distribution of 746,666,640 bonus shares through the capitalization of certain additional paid-in capital, which was made to the Company’s stockholders in August 1999. On August 16, 2007, Law No. 1/1995 on Limited Liability Companies was amended by the issuance of Law No. 40/2007 on Limited Liability Companies which became effective on the same date. Law No. 40/2007 has no effect on the public offering of shares of the Company. The Company has complied with Law No. 40/2007.
In December 2001, the Government had another block sale of 1,200,000,000 shares or 11.9% of the total outstanding Series B shares. In July 2002, the Government further sold a block of 312,000,000 shares or 3.1% of the total outstanding Series B shares.
At the AGM of Stockholders of the Company held on July 30, 2004, the minutes of which are covered by notarial deed No. 26 of A. Partomuan Pohan, S.H., LLM., the Company’s stockholders approved the Company’s 2-for-1 stock split for Series A Dwiwarna and Series B share. The Series A Dwiwarna share with par value of Rp500 per share was split into 1 Series A Dwiwarna share with par value of Rp250 per share and 1 Series B share with par value of Rp250 per share. The stock split resulted in an increase of the Company’s 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 the 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.
At the AGM held on April 19, 2013, the minutes of which were covered by notarial deed No. 38 of Ashoya Ratam, S.H., M.Kn., the stockholders approved the Company’s 5-for-1 stock split for Series A Dwiwarna and Series B shares. Series A Dwiwarna share with par value of Rp250 per share was split into 1 Series A Dwiwarna share with par value of Rp50 per share and 4 Series B shares with par value of Rp50 per share. The stock split resulted in an increase of the Company’s authorized capital stock from 1 Series A Dwiwarna and 79,999,999,999 Series B shares to 1 Series A Dwiwarna and 399,999,999,999 Series B shares. The issued capital stock increase from 1 Series A Dwiwarna and 20,159,999,279 Series B shares to 1 Series A Dwiwarna and 100,799,996,399 Series B shares. After the stock split, each ADS represented 200 Series B shares. Effective from October 26, 2016, the Company change the ratio of Depositary Receipt from 1 ADS representing 200 series B shares to become 1 ADS representing 100 series B shares (Note 18). Profit per ADS information have been retrospectively adjusted to reflect the changes in the ratio of ADS.
On May 16 and June 5, 2014, the Company deregistered from Tokyo Stock Exchange (“TSE”) and delisted from the LSE, respectively.
As of March 31, 2020, all of the Company’s Series B shares are listed on the IDX and 44,487,666 ADS shares are listed on the NYSE (Note 21).
9
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL (continued) |
c. | Public offering of securities of the Company (continued) |
On June 25, 2010 the Company issued the second rupiah bonds with a nominal amount of Rp1,005 billion for Series A, a five-year period and Rp1,995 billion for Series B, a ten-year period, respectively, are listed on the IDX (Note 19.b.i).
On June 16, 2015, the Company issued Continuous Bonds I Telkom Phase I 2015, with a nominal amount Rp2,200 billion for Series A, a seven-year period, Rp2,100 billion for Series B, a ten-year period, Rp1,200 billion for Series C, a fifteen-year period and Rp1,500 billion for Series D, a thirty-year period, respectively which are listed on the IDX (Note 19.b.i).
d. | Subsidiaries |
As of March 31, 2020 and December 31, 2019, the Company has consolidated the following directly or indirectly owned subsidiaries (Notes 2b and 2d):
(i) | Direct subsidiaries: |
| | | | | | | | | | | | |
| | | | | | | | Total assets before | ||||
| | Nature of business/date of | | Year of start | | Percentage of ownership* | | elimination | ||||
Subsidiary/place of incorporation |
| Incorporation or acquisition by the Company |
| of commercial operations |
| March 31, 2020 |
| December 31, 2019 |
| March 31, 2020 |
| December 31, 2019 |
PT Telekomunikasi | | Telecommunication - provides | | 1995 | | 65 | | 65 | | 108,833 | | 82,730 |
Selular | | telecommunication facilities | | | | | | | | | | |
("Telkomsel"), | | and mobile celuller | | | | | | | | | | |
Jakarta, Indonesia | | services using Global | | | | | | | | | | |
| | Systems for Mobile | | | | | | | | | | |
| | Communication ("GSM") | | | | | | | | | | |
| | technology/ | | | | | | | | | | |
| | May 26, 1995 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Dayamitra | | Leasing of towers and other | | 1995 | | 100 | | 100 | | 23,543 | | 20,114 |
Telekomunikasi | | telecommunication services/ | | | | | | | | | | |
("Dayamitra"), | | May 17, 2001 | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Multimedia | | Network telecommunication | | 1998 | | 100 | | 100 | | 16,521 | | 16,478 |
Nusantara | | services and multimedia/ | | | | | | | | | | |
("Metra"), | | May 9, 2003 | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Telekomunikasi | | Telecommunication/ | | 1995 | | 100 | | 100 | | 13,399 | | 10,970 |
Indonesia | | July 31, 2003 | | | | | | | | | | |
International | | | | | | | | | | | | |
(“TII”), | | | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Graha Sarana Duta | | Leasing of offices and | | 1982 | | 100 | | 100 | | 6,245 | | 6,055 |
("GSD"), | | providing building | | | | | | | | | | |
Jakarta, Indonesia | | management and | | | | | | | | | | |
| | maintenance services, civil | | | | | | | | | | |
| | consultant and developer/ | | | | | | | | | | |
| | April 25, 2001 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Telkom Akses | | Construction, service and | | 2013 | | 100 | | 100 | | 3,953 | | 4,436 |
(“Telkom Akses”), | | trade in the field of | | | | | | | | | | |
Jakarta, Indonesia | | telecommunication/ | | | | | | | | | | |
| | November 26, 2012 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Telkom Satelit | | Telecomunication - provides | | 1996 | | 100 | | 100 | | 3,295 | | 3,309 |
Indonesia | | satellite communication | | | | | | | | | | |
("Telkomsat"), | | system, services and | | | | | | | | | | |
Jakarta, Indonesia | | facilities/ | | | | | | | | | | |
| | September 28, 1995 | | | | | | | | | | |
| | | | | | | | | | | | |
PT PINS Indonesia | | Telecommunication | | 1995 | | 100 | | 100 | | 2,743 | | 2,995 |
(“PINS”), | | construction and services/ | | | | | | | | | | |
Jakarta, Indonesia | | August 15, 2002 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Infrastruktur | | Construction, service and | | 2014 | | 100 | | 100 | | 1,898 | | 1,706 |
Telekomunikasi | | Trade in the field of | | | | | | | | | | |
Indonesia | | telecommunication/ | | | | | | | | | | |
(“Telkom Infratel”), | | January 16, 2014 | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
*Percentage of ownership amounting to 99.99% is presented with rounding 100%.
10
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL (continued) |
d. | Subsidiaries (continued) |
(i) | Direct subsidiaries (continued): |
| | | | | | | | | | | | |
| | | | | | | | Total assets before | ||||
| | Nature of business/date of | | Year of start | | Percentage of ownership* | | elimination | ||||
Subsidiary/place of incorporation |
| Incorporation or acquisition by the Company |
| of commercial operations |
| March 31, 2020 |
| December 31, 2019 |
| March 31, 2020 |
| December 31, 2019 |
PT Metra-Net | | Multimedia portal service/ | | 2009 | | 100 | | 100 | | 1,088 | | 996 |
(“Metra-Net”), | | April 17, 2009 | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Napsindo Primatel | | Telecommunication - | | 1999; ceased | | 60 | | 60 | | 5 | | 5 |
Internasional | | provides Network Access | | operations on | | | | | | | | |
(“Napsindo”), | | Point (NAP), Voice Over | | January 13, | | | | | | | | |
Jakarta, Indonesia | | Data (VOD) and other | | 2006 | | | | | | | | |
| | related services/ | | | | | | | | | | |
| | December 29, 1998 | | | | | | | | | | |
| | | | | | | | | | | | |
*Percentage of ownership amounting to 99.99% is presented with rounding 100%.
(ii) | Indirect subsidiaries: |
| | | | | | | | | | | | |
| | | | | | | | Total assets before | ||||
| | Nature of business/date of | | Year of start | | Percentage of ownership* | | elimination | ||||
Subsidiary/place of incorporation |
| Incorporation or acquisition by the Company |
| of commercial operations |
| March 31, 2020 |
| December 31, 2019 |
| March 31, 2020 |
| December 31, 2019 |
PT Sigma Cipta Caraka | | Information technology | | 1988 | | 100 | | 100 | | 6,468 | | 6,796 |
(“Sigma”), | | service - system | | | | | | | | | | |
Tangerang, Indonesia | | implementation and | | | | | | | | | | |
| | integration service, | | | | | | | | | | |
| | outsourcing and software | | | | | | | | | | |
| | license maintenance/ | | | | | | | | | | |
| | May 1,1987 | | | | | | | | | | |
| | | | | | | | | | | | |
Telekomunikasi | | Telecommunication/ | | 2008 | | 100 | | 100 | | 4,505 | | 3,635 |
Indonesia | | December 6, 2007 | | | | | | | | | | |
International Pte. Ltd., | | | | | | | | | | | | |
("Telin Singapore") | | | | | | | | | | | | |
Singapore | | | | | | | | | | | | |
| | | | | | | | | | | | |
Telekomunikasi | | Telecommunication/ | | 2010 | | 100 | | 100 | | 3,196 | | 1,830 |
Indonesia | | December 8, 2010 | | | | | | | | | | |
International Ltd, | | | | | | | | | | | | |
("Telin Hong Kong") | | | | | | | | | | | | |
Hong Kong | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Infomedia Nusantara | | Data and information | | 1984 | | 100 | | 100 | | 2,491 | | 2,626 |
(“Infomedia”), | | service - provides | | | | | | | | | | |
Jakarta, Indonesia | | telecommunication | | | | | | | | | | |
| | information services and | | | | | | | | | | |
| | other information services | | | | | | | | | | |
| | in the form of print and | | | | | | | | | | |
| | electronic media and call | | | | | | | | | | |
| | center services/ | | | | | | | | | | |
| | September 22,1999 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Telkom Landmark | | Service for property | | 2012 | | 55 | | 55 | | 2,113 | | 2,056 |
Tower | | development and | | | | | | | | | | |
(“TLT”), | | management/ | | | | | | | | | | |
Jakarta, Indonesia | | February 1, 2012 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Metra Digital | | Trading and/or providing | | 2013 | | 100 | | 100 | | 1,671 | | 1,475 |
Investama | | service related to | | | | | | | | | | |
(“MDI”), | | information and | | | | | | | | | | |
Jakarta, Indonesia | | tehnology, multimedia, | | | | | | | | | | |
| | entertainment and | | | | | | | | | | |
| | investment/ | | | | | | | | | | |
| | January 8, 2013 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Metra Digital Media | | Directory information | | 2013 | | 100 | | 100 | | 1,141 | | 1,146 |
(“MD Media”), | | services/ | | | | | | | | | | |
Jakarta, Indonesia | | January 22, 2013 | | | | | | | | | | |
| | | | | | | | | | | | |
*Percentage of ownership amounting to 99.99% is presented with rounding 100%.
11
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL (continued) |
d. | Subsidiaries (continued) |
(ii) | Indirect subsidiaries (continued): |
| | | | | | | | | | | | |
| | | | | | | | Total assets before | ||||
| | Nature of business/date of | | Year of start | | Percentage of ownership* | | elimination | ||||
Subsidiary/place of incorporation |
| Incorporation or acquisition by the Company |
| of commercial operations |
| March 31, 2020 |
| December 31, 2019 |
| March 31, 2020 |
| December 31, 2019 |
PT Finnet Indonesia | | Information technology | | 2006 | | 60 | | 60 | | 1,133 | | 1,001 |
(“Finnet”), | | services/ | | | | | | | | | | |
Jakarta, Indonesia | | October 31, 2005 | | | | | | | | | | |
| | | | | | | | | | | | |
Telekomunikasi | | Telecommunication/ | | 2012 | | 100 | | 100 | | 874 | | 706 |
Indonesia | | September 11, 2012 | | | | | | | | | | |
International | | | | | | | | | | | | |
(“Telin TL”) S.A., | | | | | | | | | | | | |
Dili, Timor Leste | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Persada Sokka | | Providing telecommunication | | 2008 | | 95 | | 95 | | 818 | | 870 |
Tama | | network infrastucture/ | | | | | | | | | | |
("PST"), | | February 19, 2019 | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
TS Global Network | | Satellite services/ | | 1996 | | 70 | | 70 | | 791 | | 732 |
Sdn. Bhd. | | December 14, 2017 | | | | | | | | | | |
(“TSGN”), | | | | | | | | | | | | |
Petaling Jaya, | | | | | | | | | | | | |
Malaysia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Swadharma Sarana | | Cash replenishment service | | 2001 | | 51 | | 51 | | 607 | | 520 |
Informatika | | and ATM maintenance/ | | | | | | | | | | |
(“SSI”) | | April 2, 2018 | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Telkomsel Mitra | | Bussiness management | | 2019 | | 100 | | 100 | | 588 | | 569 |
Inovasi | | consulting and capital | | | | | | | | | | |
(“TMI”), | | venture services/ | | | | | | | | | | |
Jakarta, Indonesia | | January 18, 2019 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Melon | | Digital content exchange | | 2010 | | 100 | | 100 | | 578 | | 578 |
(“Melon”) | | hub services/ | | | | | | | | | | |
Jakarta, Indonesia | | November 14, 2016 | | | | | | | | | | |
| | | | | | | | | | | | |
PT Administrasi | | Health insurance | | 2002 | | 100 | | 100 | | 465 | | 395 |
Medika | | administration services/ | | | | | | | | | | |
(“Ad Medika”), | | February 25, 2010 | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Graha Yasa | | Tourism service/ | | 2012 | | 51 | | 51 | | 281 | | 288 |
Selaras | | April 27, 2012 | | | | | | | | | | |
(”GYS”), | | | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Nusantara Sukses | | Service and trading/ | | 2014 | | 100 | | 100 | | 271 | | 272 |
Investasi | | September 1, 2014 | | | | | | | | | | |
(“NSI”), | | | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Nutech Integrasi | | System integrator/ | | 2001 | | 60 | | 60 | | 173 | | 177 |
(“Nutech”), | | December 13, 2017 | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
| | | | | | | | | | | | |
Telekomunikasi | | Telecomunication | | 2014 | | 100 | | 100 | | 169 | | 89 |
Indonesia | | December 11, 2013 | | | | | | | | | | |
International Inc., | | | | | | | | | | | | |
(“Telkom USA”), | | | | | | | | | | | | |
Los Angeles, USA | | | | | | | | | | | | |
| | | | | | | | | | | | |
*Percentage of ownership amounting to 99.99% is presented with rounding 100%.
12
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL (continued) |
d. | Subsidiaries (continued) |
(ii) | Indirect subsidiaries (continued): |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | Total assets before | ||||
| | Nature of business/date of | | Year of start | | Percentage of ownership* | | elimination | ||||
Subsidiary/place of incorporation |
| Incorporation or acquisition by the Company |
| of commercial operations |
| March 31, 2020 |
| December 31, 2019 |
| March 31, 2020 |
| December 31, 2019 |
PT Metraplasa | | Network & e-commerce | | 2012 | | 60 | | 60 | | 113 | | 214 |
(“Metraplasa”), | | services/ | | | | | | | | | | |
Jakarta, Indonesia | | April 9, 2012 | | | | | | | | | | |
| | | | | | | | | | | | |
Telekomunikasi | | Telecommunication/ | | 2013 | | 100 | | 100 | | 110 | | 86 |
Indonesia | | January 9, 2013 | | | | | | | | | | |
International Pty Ltd, | | | | | | | | | | | | |
(“Telkom Australia”), | | | | | | | | | | | | |
Sydney, Australia | | | | | | | | | | | | |
| | | | | | | | | | | | |
Telekomunikasi | | Telecommunication/ | | 2013 | | 70 | | 70 | | 95 | | 67 |
Indonesia Intl | | July 2, 2013 | | | | | | | | | | |
(Malaysia) Sdn. Bhd | | | | | | | | | | | | |
(“Telin Malaysia”) | | | | | | | | | | | | |
Malaysia | | | | | | | | | | | | |
| | | | | | | | | | | | |
PT Satelit Multimedia | | Satellite services/ | | 2013 | | 100 | | 100 | | 16 | | 16 |
Indonesia | | March 25, 2013 | | | | | | | | | | |
(“SMI”), | | | | | | | | | | | | |
Jakarta, Indonesia | | | | | | | | | | | | |
*Percentage of ownership amounting to 99.99% is presented with rounding 100%.
e. | Acquisition transactions of subsidiaries |
i. | Dayamitra |
PST
On February 19, 2019, Dayamitra purchased 95% ownership in PST from Rahina Dewayani and Rahayu based on a Conditional Stock Sale and Purchase Agreement. Based on the agreement, Dayamitra purchased 95% ownership of PST amounting to Rp1,113 billion and is required to purchase the remaining 5% ownership of PST within a maximum of 24 months from March 8, 2019, at the same price per share as the acquisition of 95% shares. In connection with such requirement, on December 31, 2019 Dayamitra recognized the liabilities to the previous shareholder of Rp80 billion. Based on an analysis of the terms and conditions associated with the transaction, it was concluded that at the acquisition date Dayamitra had substantially held 100% ownership of PST shares and as such there were no non-controlling interests.
PST is a company engaged in managing tower rental. This new investment is expected to strengthen the Company's business portfolio. From the acquisition date to December 31, 2019, total revenue and profit before tax recorded by PST and recognized in the consolidated statements of profit or loss and other comprehensive income amounted to Rp200 billion and Rp41 billion, respectively. This acquisition was accounted as a business combination.
Purchase of Indosat’s Towers
On October 14, 2019, Dayamitra signed a Sales Purchase Agreement ("SPA") with PT Indosat, Tbk. ("Indosat") related to the purchase of Indosat's towers. The matters stipulated and agreed simultaneously with the SPA are as follows:
(a)Transfer of ownership 2,100 telecommunication towers (3,982 tenants) and their licenses;
(b)Transfer of 1,731 leases of lands previously leased by Indosat from third parties;
(c)369 leases of lands owned by Indosat; and
(d) | Transfer of the collocation contracts and the related user's details of 3,982 existing tenants in the towers being acquired. |
13
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
1. | GENERAL (continued) |
e. | Acquisition transactions of subsidiaries (continued) |
i. | Dayamitra (continued) |
On December 20, 2019, Dayamitra and Indosat have signed Letter Agreement (Closing Memo), as a follow-up on the SPA, amounting to Rp4,443 billion.
In addition, Dayamitra and Indosat also signed Master Tower Lease Agreement ("MTLA"), which stipulated that Indosat agreed to lease back for one each of the slot in 2,100 telecommunication towers acquired. This acquisition was accounted for as an asset acquisition.
The fair values of the identifiable assets and liabilities acquired for these two transactions were:
| | | |||
| Indosat’s Tower | | PST shares | | Total |
Assets | | | | | |
Current assets | 517 | | 146 | | 663 |
Property and equipment | 3,453 | | 634 | | 4,087 |
Non-current assets | - | | 91 | | 91 |
Liabilities | - | | (610) | | (610) |
Net book value of net assets | 3,970 | | 261 | | 4,231 |
| | | | | |
The difference between fair value and | | | | | |
book value of fixed assets | - | | 398 | | 398 |
Other non-current assets | 473 | | 194 | | 667 |
Deferred tax | - | | (148) | | (148) |
| | | | | |
Fair value of identifiable net assets acquired | 4,443 | | 705 | | 5,148 |
Fair value consideration transferred | 4,443 | | 1,172 | | 5,615 |
Goodwill (Note 13) | - | | 467 | | 467 |
ii. | Telkomsel |
Based on notarial deed of Bonardo Nasution, S.H. No. 12 dated January 18, 2019, Telkomsel established TMI. On February 18, 2019, Telkomsel paid Rp550 billion for 549,989 shares from the total 550,000 shares of TMI.
TMI is a company engaged in innovation and strategic investment. This new investment is expected to strengthen the Company's business portfolio in order to transform to telecommunication digital company.
f. | Completion and authorization for the issuance of the consolidated financial statements |
The Company’s management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board which have been completed and authorized for issuance by the Directors of the Company on June 29, 2020.
14
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The consolidated financial statements of the Company and subsidiaries (collectively referred to as “the Group”) have been prepared in accordance with Financial Accounting Standards ("Standar Akuntansi Keuangan” or “SAK") including Indonesian Statement of Financial Accounting Standards ("Pernyataan Standar Akuntansi Keuangan" or “PSAK”) and interpretation of Financial Accounting Standards ("Interpretasi Standar Akuntansi Keuangan" or “ISAK”) in Indonesia published by the Financial Accounting Standards Board of Institute of Indonesian Chartered Accountants and Regulation No. VIII.G.7 of the Capital Market and Financial Institution Supervisory Agency (“Bapepam-LK”) regarding the Presentation and Disclosure of Financial Statements of Issuers or Public Companies, enclosed in the decision letter KEP-347/BL/2012.
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. The measurement basis used is historical cost, except for certain accounts which are measured using the basis mentioned in the relevant notes herein.
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 presented and rounded to billions of Indonesian rupiah (“Rp”), unless otherwise stated. For the figures in the consolidated financial statements which still contain values but below Rp1 billion, are presented with zeros.
Accounting standards issued but not yet effective
Effective January 1, 2021
● | PSAK 22: Business Combination |
This amendment clarifies the definition of business in order to assist the entity in determining whether a transaction should be recorded as a business combination asset acquisition.
b. | Principles of consolidation |
The consolidated financial statements consist of the financial statements of the Company and the subsidiaries over which it has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has the power over the investee, exposure or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
i. | The contractual arrangement with the other vote holders of the investee, |
ii. | Rights arising from other contractual arrangements, and |
iii. | The Group's voting rights and potential voting rights. |
The Group re-assesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control over the subsidiary. Assets, liabilities, income and expenses, of a subsidiary acquired or disposed of during the year are included in the consolidated statements of profit or loss and other comprehensive income from the date the Group gain control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders of the Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
All assets and liabilities, equity, revenue and expenses and cash flow from transactions within Group have been eliminated at the time of consolidation.
15
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
b. | Principles of consolidation (continued) |
In case of loss of control over a subsidiary, the Group:
● | derecognizes the assets (including goodwill) and liabilities of the subsidiary at the carrying amounts on the date when it loses control; |
● | derecognizes the carrying amounts of any non-controlling interests of its former subsidiary on the date when it loses control; |
● | recognizes the fair value of the consideration received (if any) from the transaction, events, or condition that caused the loss of control; |
● | recognizes the fair value of any investment retained in the subsidiary at fair value on the date of loss of control; |
● | recognizes any surplus or deficit in profit or loss that is attributable to the Group. |
c. | Transactions with related parties |
The Group has transactions with related parties. The definition of related parties used is in accordance with the Bapepam-LK’s Regulation No. VIII.G.7 regarding the Presentations and Disclosures of Financial Statements of Issuers or Public Companies, enclosed in the decision letter No. KEP-347/BL/2012. The party which is considered as a related party is a person or entity that is related to the entity that is preparing its financial statements.
Under the Regulation of Bapepam-LK No. VIII.G.7, a government-related entity is an entity that is controlled, jointly controlled or significantly influenced by the government. Government in this context is the Minister of Finance or the Local Government, as the shareholder of the entity.
Key management personnel are identified as the persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of the Group. The related party status extends to the key management of the subsidiaries to the extent they direct the operations of subsidiaries with minimal involvement from the Company’s management.
d. | Business combinations and goodwill |
Business combination is accounted for using the acquisition method. The consideration transferred is measured at fair value, which is the aggregate of the fair value of the assets transferred, liabilities incurred or assumed and the equity instruments issued in exchange for control of the acquiree. For each business combination, non-controlling interest is measured at fair value or at the proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Acquisition-related costs are expensed as incurred. The acquiree’s identifiable assets and liabilities are recognized at their fair values at the acquisition date.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed, and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss.
When the determination of consideration from a business combination includes contingent consideration, it is measured at its fair value on acquisition date. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognized in profit or loss when adjustments are recorded outside the measurement period. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments made against goodwill.
16
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
d. | Business combinations and goodwill (continued) |
Measurement-period adjustments are adjustments that arise from additional information obtained during the measurement period, which cannot exceed one year from the acquisition date, about facts and circumstances that existed at the acquisition date.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group shall report in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Group shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. The measurement period ends immediately after the Company receives the information about the facts and circumstances that existed at the acquisition date or learns that additional information cannot be obtained. However, the measurement period must not exceed one year from the date of acquisition.
In a business combination achieved in stages, the acquirer remeasures its previously held equity interest in the acquiree at its acquisition-date fair value and recognizes the resulting gain or loss, if any, in profit or loss.
Based on PSAK 38 (Revised 2012), “Common Control Business Combination”, the transfer of assets, liabilities, shares or other ownership instruments among the companies under common control would not result in a gain or loss for the Company or individual entity in the same group. Since the restructuring transaction between entities under common control does not result in a change of the economic substance of the ownership of assets, liabilities, shares or other instruments of ownership, which are exchanged, assets or liabilities transferred are recorded at book value using the pooling-of-interests method.
In applying the pooling-of-interests method, the components of the financial statements for the period during the restructuring occurred must be presented in such a manner as if the restructuring has occurred since the beginning of the earliest period presented. The excess of consideration paid or received over the carrying value of interest acquired, net of income tax, is directly recognized to equity and presented as “Additional Paid-in Capital” under the equity section of the consolidated statement of financial position.
At the initial application of PSAK 38 (Revised 2012), all balances of the Difference In Value of Restructuring Transactions of Entities under Common Control was reclassified to “Additional Paid-in Capital” in the consolidated statement of financial position.
e. | Cash and cash equivalents |
Cash and cash equivalents comprises cash on hand, cash in banks and all unrestricted time deposits with original maturities of three months or less at the time of placement.
Time deposits with maturities of more than three months but not more than one year are presented as part of “Other Current Financial Assets” in the consolidated statements of financial position (Note 2u).
f. | Investments in associated companies |
An associate is an entity over which the Group (as investor) has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but does not include control or joint control over those operating policies. The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.
The Group’s investments in its associates are accounted for using the equity method.
Under the equity method, the investment in an associate is initially recognized at cost. The carrying amount of the investment is adjusted to recognise changes in the investor’s share of the net assets of the associate since the acquisition date.
17
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
f. | Investments in associated companies (continued) |
On acquisition of the investment, any difference between the cost of the investment and the entity's share of the net fair value of the investee's identifiable assets and liabilities is accounted for as follows:
i. | Goodwill relating to an associate or a joint venture is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment, and |
ii. | Any excess of the entity's share of the net fair value of the investee's identifiable assets and liabilities over the cost of the investment is included as income in the determination of the entity's share of the associate or joint venture's profit or loss in the period in which the investment is acquired. |
The consolidated statements of profit or loss and other comprehensive income reflect the Group’s share of the results of operations of the associate. Any change in the other comprehensive income of the associate is presented as part of other comprehensive income. In addition, when there has been a change recognized directly in the equity of the associate, the Group recognizes it share of the change in the consolidated statements of changes in equity. Unrealized gain and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.
The Group determines at each reporting date whether there is any objective evidence that the investments in associated companies are impaired. If there is, the Group calculates and recognizes the amount of impairment as the difference between the recoverable amount of the investments in the associated companies and their carrying value.
These assets are included in “Long-term Investments” in the consolidated statements of financial position.
For the purpose of reporting these investments using the equity method, the assets and liabilities of these companies as of the statement of financial position date are translated into Indonesian rupiah using the rate 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 equity section of the consolidated statements of financial position.
g.Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost, less a loss allowance based on lifetime expected credit losses at each reporting date. The Group has established a credit provision methodology that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Receivables are written off in the year they are determined to be uncollectible (Note 2u).
h.Inventories
Inventories consist of components, which are subsequently expensed upon use. Components represent telephone terminals, cables, and other spare parts. Inventories also include Subscriber Identification Module (“SIM”) cards, handsets, wireless broadband modems and blank prepaid vouchers, which are expensed upon sale.
The costs of inventories consist of the purchase price, import duties, other taxes, transport, handling, and other costs directly attributable to their acquisition. Inventories are recognized at the lower of cost and net realizable value. Net realizable value is the estimate of selling price less the costs to sell.
Cost is determined using the weighted average method.
18
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
h.Inventories (continued)
The amounts of any write-down of inventories below cost to net realizable value and all losses of inventories are recognized as 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 general and administrative expenses in the year in which the reversal occurs.
Provision for obsolescence is primarily based on the estimated forecast of future usage of these inventory items.
i.Prepaid expenses
Prepaid expenses are amortized over their future beneficial periods using the straight-line method.
j. | Assets held for sale |
Assets (or disposal groups) are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.
Assets that meet the criteria to be classified as held for sale are reclassified from property and equipment and depreciation on such assets is ceased.
k. | Intangible assets |
Intangible assets mainly consist of software. Intangible assets are recognized if it is highly probable that the expected future economic benefits that are attributable to each asset will flow to the Group, and the cost of the asset can be reliably measured.
Intangible assets are stated at cost less accumulated amortisation and impairment losses, if any. Intangible assets are amortized over their estimated useful lives. The Group estimates the recoverable value of its intangible assets. When the carrying amount of an intangible asset exceeds its estimated recoverable amount, the asset is written down to its estimated recoverable amount.
Intangible assets except goodwill are amortized using the straight-line method, based on the estimated useful lives of the intangible assets as follows:
| | |
| Years | |
Software | 3-6 | |
License | 3-20 | |
Other intangible assets | 1-30 | |
Intangible assets are derecognized on disposal, or when no further economic benefits are expected, either from further use or from disposal. The difference between the carrying amount and the net proceeds received from disposal is recognized in the consolidated statements of profit or loss and other comprehensive income.
l.Property and equipment
Property and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
The cost of an item of property and equipment includes: (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 and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
19
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
l.Property and equipment (continued)
Property and equipment, except land rights, are depreciated using the straight-line method based on the estimated useful lives of the assets as follows:
| | |
| Years | |
Buildings | 5-40 | |
Leasehold improvements | 2-15 | |
Switching equipment | 3-15 | |
Telegraph, telex and data communication equipment | 5-15 | |
Transmission installation and equipment | 3-25 | |
Satellite, earth station and equipment | 3-20 | |
Cable network | 5-25 | |
Power supply | 3-20 | |
Data processing equipment | 3-20 | |
Other telecommunication peripherals | 5 | |
Office equipment | 2-5 | |
Vehicles | 4-8 | |
Customer Premises Equipment (“CPE”) asset | 4-5 | |
Other equipment | 2-5 | |
Significant expenditures related to leasehold improvements are capitalized and depreciated over the lease term.
The depreciation method, useful life and residual value of an asset are reviewed at least at each financial year-end and adjusted, if appropriate. The residual value of an asset is the estimated amount that the Group would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset is already of the age and in the condition expected at the end of its useful life.
Property and equipment acquired in exchange for a non-monetary asset or for a combination of monetary and non-monetary assets are measured at fair value unless, (i) the exchange transaction lacks commercial substance; or (ii) the fair value of neither the asset received nor the asset given up is measured reliably.
Major spare parts and standby equipment that are expected to be used for more than 12 months are recorded as part of property and equipment.
When assets are retired or disposed of, their cost and the related accumulated depreciation are derecognized from the consolidated statement of financial position and the resulting gains or losses on the disposal or sale of the property and equipment are recognized in the consolidated statements of profit or loss and other comprehensive income.
Certain computer hardware can not be used without the availability of certain computer software. In such circumstance, the computer software is recorded as part of the computer hardware. If the computer software is independent from its computer hardware, it is recorded as part of intangible assets.
The cost of maintenance and repairs are charged to the consolidated statements of profit or loss and other comprehensive income as incurred. Significant renewals and betterments are capitalized.
Property under construction is stated at cost until the construction is completed, at which time it is reclassified to the property 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 on loans obtained to finance the construction of the asset, as long as it meets the definition of a qualifying asset are, capitalized in proportion to the average amount of accumulated expenditures during the period. Capitalization of borrowing cost ceases when the construction is completed and the asset is ready for its intended use or sale.
20
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
m.Leases
Accounting policy for leases applied from January 1, 2020
PSAK 73 sets out a comprehensive model for identification of lease agreements and its treatment in the financial statements of both lessees and lessors. PSAK 73 introduces a control model for the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer.
The Group adopted PSAK 73 as at January 1, 2020 using the modified retrospective method by recognizing the cumulative effect of initially applying PSAK 73 as an adjustment to the opening balance of equity at January 1, 2020. Accordingly, the comparative information presented for 2019 has not been restated and it is presented, as previously reported, under PSAK 30 and the related interpretations.
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term corresponds to the non-cancellable period of each contract, except in cases where the Group is reasonably certain of exercising renewal options contractually foreseen.
The Group has made use of the package of practical expedients available under the transition guidance within PSAK 73, which among other things:
● | the use of a single discount rate to a portfolio of leases with reasonably similar characteristics; |
● | the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2020 as short-term leases; |
● | the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; |
● | the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease; |
● | apply PSAK 73 to leases that were previously identified under PSAK 30 and ISAK 8, and not to apply PSAK 73 to those that were not previously identified under these two standards; |
● | not to separate non-lease components from lease components, and instead, account for both as a single lease component; and |
● | not to recognize a lease liability and a Right-of-Use (“ROU”) asset for leases where the underlying assets are low-value assets (i.e. underlying assets with a maximum value of USD5,000 or IDR50 million when new). |
PSAK 73 also permits the Group not to reassess the Group prior conclusions about lease identification, lease classification and the Group has elected to carry forward the historical lease assessments and relied on its assessment made applying PSAK 30 and ISAK 8 Determining whether an Arrangement contains a Lease. The Group applies the definition of a lease and related guidance set out in PSAK 73 to all lease contracts entered into or modified on or after January 1, 2020.
i. | The Group as Lessee |
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and ROU assets representing the right to use the underlying assets.
The Group recognizes ROU assets at the commencement date of the lease. ROU assets are measured at cost, less any accumulated amortization and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of ROU assets includes the amount of lease liabilities recognized, initial direct costs incurred, restoration costs and lease payments made at or before the commencement date less any lease incentives received.
21
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
m. | Leases (continued) |
Accounting policy for leases applied from January 1, 2020 (continued)
i.The Group as Lessee (continued)
ROU assets are amortized on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
| ||
---|---|---|
|
| Years |
Land rights |
| 50 |
Buildings |
| 15-40 |
Transmission installation and equipment |
| 3-25 |
Power supply | | 3-20 |
Vehicles |
| 4-8 |
Others |
| 2-25 |
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The ROU assets are subject to impairment in accordance with PSAK 48 Impairment of Assets.
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.
Short-term leases with a duration of less than 12 months, short-term lease ends within 12 months after January 1, 2020 and low-value leases, as well as those lease elements, partially or totally not complying with the principles of recognition defined by PSAK 73 will be treated similarly to operating leases. The Group will recognize those lease payments on a straight-line basis over the lease term in the consolidated statements of profit or loss and other comprehensive income.
ii. | The Group as Lessor |
Under PSAK 73, a lessor continues to classify leases as either finance leases or operating leases and account for those two types of leases differently. Leases in which the Group transfers substantially all the risks and rewards incidental to ownership of an asset are classified as finance leases, otherwise it will be classified as an operating leases. Lease classification is made at the inception date and is reassessed only if there is a lease modification.
22
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
m. | Leases (continued) |
Accounting policy for leases applied from January 1, 2020 (continued)
ii.The Group as Lessor (continued)
At the commencement date, the Group recognizes assets held under a finance lease at an amount equal to the net investment in the lease and present it as finance lease receivable. The net investment in the lease include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and residual value guarantees provided to the lessor by the lessee. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the lessee and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate.
As required by PSAK 73, an allowance for expected credit loss has been recognized on the finance lease receivables.
Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.
If an arrangement contains lease and non-lease components, the Group applies PSAK 72 Revenue from Contracts with Customers to allocate the consideration in the contract.
Accounting policy for leases applied until December 31, 2019
i. | As lessee |
A lease is classified at the commencement date as a finance lease or operating lease. A lease that transfers substantially all the risks and benefits associated with ownership of shares to the Group is classified as a finance lease.
The finance lease is capitalized at the beginning of lease terms at the fair value of the leased assets or, if lower, present value of the minimum lease payment. Lease payments are apportioned between the finance charge and rental expenses. The finance charge is allocated to each period during the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability. Financial charges are recognized as finance costs in profit or loss.
The Group did not change the initial carrying amounts of recognized assets and liabilities at the date of initial application for leases previously classified as finance leases (i.e. the ROU assets and lease liabilities equal the lease assets and liabilities recognized under PSAK 30). The requirements of PSAK 73 were applied to these leases from January 1, 2020.
Leased assets are depreciated based on the useful lives. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the leasfe terms, the leased assets are fully depreciated over the shorter of the lease terms and their economic useful lives.
Operating leases are leases other than finance leases. Payments are charged under operating leases are recognized as an expense in profit or loss on a straight-line basis over the lease period.
ii. | As lessor |
Leases where the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The initial direct costs incurred in negotiating and arranging operating leases are added to the carrying value of the leased assets and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as income in the period in which they are earned.
23
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
n.Deferred charges - land rights
Costs incurred to process the initial legal land rights are recognized as part of the property and equipment and are not amortized. Costs incurred to process the extension or renewal of legal land rights are deferred and amortized using the straight-line method over the shorter of the legal term of the land rights or the economic life of the land.
o. | Trade payables |
Trade payables are obligations to pay for goods and/or services that have been acquired from suppliers in the ordinary course of business. Trade payables are classified as current liabilities if the payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
p. | Borrowings |
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statements of profit or loss and other comprehensive income over the period of the borrowings using the effective interest method.
Fees paid on obtaining loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facilities will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facilities will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facilities to which it relates.
q. | Foreign currency translations |
The functional currency and the reporting currency of the Group are both the Indonesian rupiah, except for the functional currency of Telekomunikasi Indonesia International Ltd., Hong Kong, Telekomunikasi Indonesia International Pte. Ltd., Singapore, Telekomunikasi Indonesia International Inc., USA and Telekomunikasi Indonesia International S.A., Timor Leste whose functional currency is maintained in U.S. dollars and Telekomunikasi Indonesia International, Pty. Ltd., Australia whose functional currency is Australian dollars, TS Global Network Sdn. Bhd. and Telekomunikasi Indonesia International Sdn. Bhd. whose functional currency is Malaysian ringgit.
Transactions in foreign currencies are translated into Indonesian rupiah at the rates of exchange prevailing at transaction date. At the consolidated statements of financial position dates, monetary assets and liabilities denominated in foreign currencies are translated into Indonesian rupiah based on the buy and sell rates quoted by Reuters prevailing at the consolidated statements of financial position dates, as follows (in full amount):
| | | | | | | |
| March 31, 2020 | | December 31, 2019 | ||||
| Buy | | Sell | | Buy | | Sell |
United States dollar (“US$”) 1 | 16.300 | | 16.320 | | 13,880 | | 13,885 |
Australian dollar (“AU$”) 1 | 10.013 | | 10.034 | | 9,724 | | 9,729 |
Euro ("EUR") 1 | 17.896 | | 17.923 | | 15,559 | | 15,571 |
Japanese yen ("JPY") 1 | 150,24 | | 150,44 | | 127.76 | | 127.82 |
Malaysian ringgit (“MYR”) 1 | 3.775 | | 3.788 | | 3,390 | | 3,394 |
The resulting foreign exchange gains or losses, realized and unrealized, are credited or charged to the consolidated statements of profit or loss and other comprehensive 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 2l).
24
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
r.Revenue and expense recognition
Revenue from contract with customers
PSAK 72 establishes a comprehensive framework to determine how, when and how much revenue is to be recognized. The standard provides a single, principles-based five-step model for the determination and recognition of revenue to be applied to all contracts with customers. The standard also provides specific guidance requiring certain types of costs to obtain and/or fulfil a contract to be capitalized and amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the capitalized cost relates.
The Group adopted PSAK 72 as at January 1, 2020 using the modified retrospective method by recognising the cumulative effect of initially applying PSAK 72 as an adjustment to the opening balance of equity at January 1, 2020.
The Group has also elected to apply the following practical expedients on the transition date:
(i) | Completed contracts - the Group applied PSAK 72 only to customer contracts that had not been completed on January 1, 2020; and |
(ii) | Contract modifications - instead of applying a retrospective approach to quantify the cumulative effects of contract modifications from the time each modification was made; the Group aggregated the effects of all contract modifications that occured before January 1, 2020 in order to: |
(a) | identify satisfied and unsatisfied performance obligations; |
(b) | determine the transaction price of the latest modified contract; and |
(c) | allocate the transaction price to the satisfied and unsatisfied performance obligations as of January 1, 2020. |
Moreover, the Group also elected to apply practical expedient to not account for the effect of financing component when the period between the payment for a promised good or service and the transfer for such good or service to the customer is less than one year, in adopting PSAK 72.
Below is the summary of the Group’s revenue recognition accounting policy for each revenue stream:
i. | Mobile |
Revenue from mobile primarily comprises of revenue from cellular service which among others: telephone service, interconnection service, internet and data service and Short Messaging Services (“SMS”) service. Those services are offered on postpaid or prepaid basis, which for prepaid, the sales of starter packs (also known as SIM cards and start-up load vouchers) and pulse reload vouchers are recognized initially as contract liabilities. The Group recognise contract assets for provision of service from postpaid customers not yet billed.
All mobile services revenues are recognized based on output method, either per actual usage or allowance unit used (if services sold in plan basis), because the customer simultaneously receives and consumes the benefits provided by the Group.
For services sold in bundled plan, total consideration is allocated to performance obligations based on stand-alone selling price for each of product and/or service. The Group estimated the stand-alone selling price using the price enacted if the services are sold on a stand-alone basis. Most bundled plans sold by the Group only include services which are generally satisfied over the same period of time. Therefore the revenue recognition pattern is generally not impacted by the allocation.
25
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
r.Revenue and expense recognition (continued)
Revenue from contract with customers (continued)
i. | Mobile (continued) |
As part of its marketing programme, the Group had a customer loyalty programme named “Telkomsel Poin”, which allows customers to accumulate points for every certain multiple of the telecommunication service usage. The points can be redeemed in the future for free or discounted products or services, provided that other qualifying conditions are achieved.
The consideration that is received is allocated between the telecommunication services and the points issued, with the consideration allocated to points that are equal to its fair value. The fair value of the points is determined according to historical information relating to the redemption rate of award points. The fair value of the points that are issued is deferred and recognized as revenue when the points are redeemed or have expired.
ii. | Consumer |
Revenue from Consumer primarily comprises of revenue from fixed telephone and Indihome services. Revenues from fixed telephone service are derived from customer who subscribes to fixed telephone service only. While revenues from Indihome service are derived from customer who subscribes to internet service or to more than one retail products. Those services are offered on postpaid basis which billed in in the following month. The contracts are offered as month to month contract.
All consumer services are recognized using the output method based on the customer's actual usage or time elapsed if the service sold as plan basis as the customer simultaneously receives and consumes the benefits provided by the Group.
The Group has a bundled services plan named “Indihome”. Under this bundled plan, the customer is allowed to subscribe to a combination of Consumer’s service (i.e. telephone, internet and data and paid TV). Prior to 2018, the Group allocates the total contract price to the distinct performance obligations based on the stand-alone selling price of each performance obligation. The Group estimates the stand-alone selling price using the price enacted if the services are sold on a stand-alone basis. Starting from 2019, this bundled service presented under single line item “Indihome” in note to financial statements (Note 24) in order to be more appropriate and representative of services delivered to customers.
Customers may be required to pay an upfront fee at the commencement of the contract. The upfront fee is considered to be a material right because the customer is not required to pay an upfront fee when the customer renews the service beyond the original contract period. The Group values the renewal option in the amount of the consideration received from the upfront fee for the installation service. The Group defers the amount of renewal option and recognizes it as revenue on a straight-line basis over the expected term of the customer relationships. The Group estimates the expected customer life based on the historical information and customer trends and updates the evaluation on an annual basis.
26
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
r.Revenue and expense recognition (continued)
Revenue from contract with customers (continued)
iii. | Enterprise |
Revenue from Enterprise primarily comprises of revenue from providing telephone service, data and internet service, information technologies service, and other services (e.g. sales of peripherals, manage service, call center service, e-health, e-payment, and others.). Some of the contracts with enterprise customers are bespoke in nature.
Revenues from enterprise are recognized overtime using output method based on actual usage or time elapsed if the provision of service does not depend on usage (i.e. minute of voice, kilobyte of data, etc.), except for sales of goods which are recognized as a point in time, because the customer simultaneously receives and consumes the benefits provided by the Group. Revenues for performance obligations that are satisfied at a point in time is recognized when control of goods is transferred to the customer, typically when the customer has physical possession of the goods.
Some of the arrangements in enterprise are offered as bundled arrangements. For bundled arrangements, the product and/or service in the contract is accounted for as an individual performance obligation when it is separately identifiable from other promises in the contract and the customer can benefit from the product/service on its own. The total consideration is allocated to each distinct performance obligation that has been included in the contract, based on its stand-alone selling price. The stand-alone selling price is determined according to the observable prices at which individual product and/or service are sold separately, adjusted for market conditions and normal discounts as appropriate. Alternatively, when the observable prices are not available, the expected cost plus margin approach is used to determine the stand-alone selling prices.
Certain contracts with enterprise customers may give rise to variable consideration as the contract price depends on a future event (e.g. usage based contract or revenue-share based contract). In estimating the variable consideration, the Group is required to use either the expected value method or the most likely amount method based on the method that better predicts the amount of consideration to which it will be entitled. The Group determines that the most expected value method is the appropriate method to use in estimating the variable consideration for a single contract with a large number of possible outcomes.
Before including any amount of variable consideration in the transaction price, the Group considers whether the amount of variable consideration is constrained. The Group determines that the estimates of variable consideration are not constrained based on its historical experience, business forecast and the current economic conditions and only includes variable consideration to the extent that it is highly probable that a significant reversal in the amount of cummulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
When another party is involved in providing products and/or services to a customer, the Group is the principal if it controls the specified products and/or services before those products and/or services are transferred to the customer. Revenues are recorded on the net amount that has been retained (the amount paid by the customer less the amount paid to the suppliers), when, in substance, the Group has acted as agent and earned commission from the suppliers of the products and/or services sold.
27
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
r.Revenue and expense recognition (continued)
Revenue from contract with customers (continued)
iv. | Wholesale and International Business (“WIB”) |
Revenue from WIB is mainly comprised of interconnections service for interconnection of other telecommunications carriers’ subscriber calls to the Group’s subscribers (incoming) and calls between other telecommunications carriers subscribers through the Group’s network (transit) and network service with other telecommunications carriers. All of these services are recognized based on output method using the basis of the actual recorded traffic for the month.
Incremental cost of obtaining/fulfilling contract with customers
The incremental costs of obtaining/fulfiling contracts with customers, which principally is comprised of sales commissions and contract fulfilment costs, are initially recognized on the statement of financial position. These costs are subsequently amortized on a systematic basis that is consistent with the period and pattern of transfer to the customer of the related products or services. Costs that do not qualify as costs of obtaining/fulfilling contract with customers are expensed as incurred or in accordance with other relevant standards.
Revenue from other sources
Revenue from other sources’s comprise of revenue from telecommunication tower leases and other rental. Rental income is recognized on a straight-line basis over the lease term and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.
Accounting policy for revenue applied until December 31, 2019
i. | Cellular revenues |
Revenues from postpaid service, which consist of usage and monthly charges, are recognized as follows:
(a) | Airtime and charges for value added services are recognized based on usage by subscribers. |
(b) | Monthly subscription charges are recognized as revenues when incurred by subscribers. |
Revenues from prepaid service, which consist of the sale of starter packs (also known as SIM cards and start-up load vouchers) and pulse reload vouchers, are recognized initially as unearned income and recognized as revenue based on 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.
ii. | Fixed line telephone revenues |
Revenues from usage charges are recognized as customers incur the charges. Monthly subscription charges are recognized as revenues when incurred by subscribers.
Revenues from fixed line installations are deferred and recognized as revenue on the straight-line basis over the expected term of the customer relationships. The Group estimates the expected customer life based on the historical information and customer trends and updates the evaluation on an annual basis.
28
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
r.Revenue and expense recognition (continued)
Accounting policy for revenue applied until December 31, 2019 (continued)
iii.Indihome’s revenues
Revenues from Indihome service is derived from customer who subscribes to internet service or to more than one retail products. Those services are offered on postpaid basis which is billed in the following month. The contracts are offered as month to month contract and revenues are recognized monthly as its billed.
Revenues from Indihome connection installations are deferred and recognized as revenue on a straight-line basis over the estimated term of customer relationship based on historical information and customer trends and also update its annually evaluation.
iv. | Interconnection revenues |
Revenues from network interconnection with other domestic and international telecommunications carriers are recognized monthly on the basis of the actual recorded traffic for the month. Interconnection revenues consist of revenues derived from other operators’ subscriber calls to the Group’s subscribers (incoming) and calls between subscribers of other operators through the Group’s network (transit).
v. | Data, internet, and information technology service revenues |
Revenues from data communication and internet are recognized based on service activity and performance which are measured by the duration of internet usage or based on the fixed amount of charges depending on the arrangements with customers.
Revenues from sales, installation and implementation of computer software and hardware, computer data network installation service and installation are recognized when the goods are delivered to customers or the installation takes place.
Revenue from computer software development service is recognized using the percentage-of-completion method.
vi. | Network revenues |
Revenues from network consist of revenues from leased lines and satellite transponder leases which are recognized over the period in which the services are rendered.
vii. | Other revenues |
Revenues from sales of peripherals or other telecommunications equipments are recognized when delivered to customers.
Revenues from telecommunication tower leases are recognized on straight-line basis over the lease period in accordance with the agreement with the customers.
Revenues from other services are recognized when services are rendered to customers.
viii. | Multiple-element arrangements |
Where two or more revenue-generating activities or deliverables are sold under a single arrangement, each deliverable that is considered to be a separate unit of accounting is accounted for separately. The total revenue is allocated to each separately identifiable component based on the relative fair value of each component and the appropriate revenue recognition criteria are applied to each component as described above.
29
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
r.Revenue and expense recognition (continued)
Accounting policy for revenue applied until December 31, 2019 (continued)
ix. | Agency relationship |
Revenues from an agency relationship are recorded based on the gross amount billed to the customers when the Group acts as principal in the sale of goods and services. Revenues are recorded based on the net amount retained (the amount paid by the customer less amount paid to the suppliers) when, in substance, the Group has acted as agent and earned commission from the suppliers of the goods and services sold.
x.Customer loyalty programme
The Group operates a loyalty programme, which allows customers to accumulate points for every certain multiple of the telecommunication services usage. The points can be redeemed in the future for free or discounted products or services, provided other qualifying conditions are achieved.
Consideration received is allocated between the telecommunication services and the points issued, with the consideration allocated to the points equal to their fair value. Fair value of the points is determined based on historical information about redemption rate of award points.
Fair value of the points issued is deferred and recognized as revenue when the points are redeemed or expired.
xi.Expenses
Expenses are recognized as they are incurred.
s. | Employee benefits |
i. Short-term employee benefits
All short-term employee benefits which consist of salaries and related benefits, vacation pay, incentives and other short-term benefits are recognized as expense on undiscounted basis when employees have rendered service to the Group.
ii.Post-employment benefit plans and other long-term employee benefits
Post-employment benefit plans consist of funded and unfunded defined benefit pension plans, defined contribution pension plan, other post-employment benefits, post-employment health care benefit plan, defined contribution health care benefit plan and obligations under the Labor Law.
Other long-term employee benefits consist of Long Service Awards (“LSA”), Long Service Leave (“LSL”), and pre-retirement benefits.
The cost of providing benefits under post-employment benefit plans and other long-term employee benefits calculation is performed by an independent actuary using the projected unit credit method.
The net obligations in respect of the defined pension benefit plans 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. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of Government bonds that are denominated in the currencies in which the benefits will be paid and that have terms to maturity approximating the terms of the related retirement benefit obligation. Government bonds are used as there are no deep markets for high quality corporate bonds.
30
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
s.Employee benefits (continued)
ii.Post-employment benefit plans and other long-term employee benefits (continued)
Plan assets are assets owned by defined benefit pension plan and post-retirement health care benefits plan as well as qualifying insurance policy. The assets are measured at fair value as of reporting dates. The fair value of qualifying insurance policy is deemed to be the present value of the related obligations (subject to any reduction required if the amounts receivable under the insurance policies are not recoverable in full).
Remeasurement, comprising of actuarial gain and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability (asset)) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability (asset)) are recognized immediately in the consolidated statements of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized immediately in profit or loss on the earlier of:
(a) | The date of plan amendment or curtailment; and |
(b) | The date that the Group recognized restructuring-related costs. |
Net interest is calculated by applying the discount rate to the net defined benefit liability or assets.
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 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 (other than the payment of benefit in accordance with the program and included in the actuarial assumptions).
For defined contribution plans, the regular contributions constitute net periodic costs for the period in which they are due and, as such, are included in “Personnel Expenses” as they become payable.
iii. Share-based payments
The Company operates an equity-settled, share-based compensation plan. The fair value of the employee’s services rendered which are compensated with the Company’s shares is recognized as an expense in the consolidated statements of profit or loss and other comprehensive income and credited to additional paid-in capital at the grant date.
iv. | Early retirement benefits |
Early retirement benefits are accrued at the time the Group 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.
t.Taxes
Income tax
Current and deferred income taxes are recognized as income or an expense and included in the consolidated statements of profit or loss and other comprehensive income, except to the extent that the tax arises from a transaction or event which is recognized directly in equity, in which case, the tax is recognized directly in equity.
31
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
t.Taxes (continued)
Income tax (continued)
Current income tax assets and liabilities are measured at the amounts expected to be recovered or paid using the tax rates and tax laws that have been enacted or substantively enacted at each reporting date. Management periodically evaluates positions taken in Annual Tax Returns ("Surat Pemberitahuan Tahunan"/ "SPT Tahunan") with respect to situations in which applicable tax regulation is subject to interpretation. Where appropriate, management establishes provisions based on the amounts expected to be paid to the Tax Authorities.
Tax assessment
Amendment to taxation obligation is recorded when an assessment letter (“Surat Ketetapan Pajak” or “SKP”) is received or, if appealed against, when the results of the appeal are determined. The additional taxes and penalty imposed through an SKP are recognized in the current year profit or loss, unless objection/appeal is taken. The additional taxes and penalty imposed through the SKP are deferred as long as they meet the asset recognition criteria. The changes due to an error will be disclosed in accordance with PSAK 25: Accounting Policies, Changes in Accounting Estimates and Error
Deferred tax
The Group recognizes deferred tax assets and liabilities for temporary differences between the financial and tax bases of assets and liabilities at each reporting date. The Group also recognizes 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 or substantively 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.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced if there is no longer probable that sufficient taxable profit will be available to compensate part or all of the benefits of deferred tax assets. Unrecognized deferred tax assets are reassessed at each reporting date and recognized if it is probable that future taxable profits will be available for recovery. Tax deductions arising from the reversal of deferred tax assets are excluded from estimates of future taxable income.
Deferred tax transactions which are recognized outside profit or loss are recognized outside profit or loss. Therefore, deferred taxes on these transactions are recognized either in other comprehensive income or recognized directly in equity.
Deferred tax assets and liabilities are offset in the consolidated statements of financial position, if and only if it has a legally enforceable right to set off current tax assets and liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same Tax Authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
Value added tax (“VAT”)
Revenues, expenses and assets are recognized net of the VAT amount except:
i. | VAT arising from the purchase of assets or services that cannot be credited by the Tax Office, which VAT is recognized as part of the acquisition cost of the asset or as part of the applied expenses; and |
ii. | Receivables and payables are presented including the amount of VAT. |
32
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
t.Taxes (continued)
Uncertainty over income tax
In accordance with ISAK 34: Uncertainty Over Income Tax Treatments which is effective on January 1, 2019, stated that the recognition and measurement of tax assets and liabilities that contain uncertainty over income tax are determined by considering whether to be treated separately or together, the assumptions used in the examination of tax treatments by the Tax Authorities, consideration the probability that the Tax Authorities will accept uncertain tax treatment and re-consideration or estimation if there is a change in facts and circumstances.
If the acceptation of tax treatment is probable, the measurement is in line with income tax fillings. If the acceptation of tax treatment is not probable, the Group uses tax amounts using the method that provides the better predict of resolution (i.e. most likely amount or expected value).
Accordingly, management believes that the interpretation did not have a significant impact on the consolidated financial statements.
Final tax
Indonesian tax regulations impose final tax on several types of transactions based on the gross value of the transaction. Therefore, final tax which is charged based on such transaction remains subject to tax even though the tax payer incurred a loss on the transaction.
Final tax on construction services and lease is presented as part of “Other Income (Expenses) - net”.
u.Financial instruments
The Group classifies financial instruments into financial assets and financial liabilities. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The group adopted PSAK 71 as at January 1, 2020
i. | Financial assets |
Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently measured at amortized cost, fair value through OCI (“FVTOCI”), and fair value through profit or loss (“FVTPL”).
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component of for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transactions costs. Trade receivables that do not contain a significant financing component or which the Group has applied the practical expedient are measured at the transaction price determined under PSAK 72.
In order for a financial asset to be classified and measured at amortized cost or FVTOCI, it needs to give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. This assessment is referred to as the solely payments of principal and interest (SPPI) testing and it is performed at instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to buy or sell the asset.
33
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
u.Financial instruments (continued)
i. | Financial assets (continued) |
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
a. | Financial assets at amortized cost (debt instruments) |
This category is the most relevant to the Group. The Group measures financial assets at amortized cost if both of the following conditions are met:
● | The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and |
● | The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
Financial assets at amortized cost are subsequently measured using the effective interest rate (“EIR”) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. The Group’s financial assets at amortized cost consist of cash and cash equivalents, other current financial assets, trade and other receivables, and other non-current assets.
The Group measures debt instruments at FVTOCI if both of the following conditions are met:
● | The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and |
● | The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
For debt instruments at FVTOCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the statement of profit or loss and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in OCI. Upon derecognition, the cumulative fair value change recognized in OCI is recycled to profit or loss.
The Group have no debt instruments classified at FVTOCI with recycling of cumulative gains and losses as of March 31, 2020.
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at FVTOCI when they meet the definition of equity under PSAK 71 and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at FVTOCI are not subject to impairment assessment. There’s no equity investments elected under this category as of March 31, 2020.
34
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
u.Financial instruments (continued)
i. | Financial assets (continued) |
Subsequent measurement (continued)
Financial assets at FVTPL include financial assets held for trading, financial assets designated upon initial recognition at FVTPL, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not fulfilled with solely payments of principal and interest (SPPI) testing are classified and measured at FVTPL, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at FVTOCI, as described above, debt instruments may be designated at FVTPL on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at FVTPL are carried in the statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss. The Group’s financial assets at FVTPL consists of equity investments, other long-term investments, mutual funds, and convertible bonds.
Expected credit losses (“ECL”)
The Group recognizes an allowance for ECL for all debt instruments not held at FVTPL. ECL are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECL are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECL are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECL. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECL at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
For debt instruments at FVTOCI, the Group applies the low credit risk simplification. At every reporting date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the external credit rating of the debt instrument. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.
The Group’s debt instruments at FVTOCI comprise solely of quoted bonds that are graded in the top investment category (Very Good and Good) by the Good Credit Rating Agency and, therefore, are considered to be low credit risk investments. It is the Group’s policy to measure ECL on such instruments on a 12-month basis. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. The Group uses the ratings from the Good Credit Rating Agency both to determine whether the debt instrument has significantly increased in credit risk and to estimate ECL.
35
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
u.Financial instruments (continued)
Expected credit losses (“ECL”) (continued)
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. Trade receivables is written off when there is low possibility of recovering the contractual cash flow, after all collection efforts have been done and have been fully provided for allowance.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loan and borrowings and payables, net of directly attributable transaction costs.
The Group classifies its financial liabilities as: (i) financial liabilities at FVTPL or (ii) financial liabilities measured at amortized cost.
The Group’s financial liabilities include trade and other payables, accrued expenses, interest-bearing loans, other borrowings and other liabilities. Interest-bearing loans consist of short-term bank loans, two-step loans, bonds and notes, long-term bank loans, and obligations under finance leases.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a. | Financial liabilities at FVTPL |
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss.
Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of recognition, and only if the criteria in PSAK 71 are satisfied. The Group has not designated any financial liability as at FVTPL.
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and other borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortisation process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. This category generally applies to interest-bearing loans and other borrowings. For more information, refer to Note 19 Long-Term Loans and Other Borrowings.
36
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
u.Financial instruments (continued)
iii. | Offsetting financial instruments |
Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle them on a net basis, or realize the assets and settle the liabilities simultaneously. The right of set-off must not be contingent on a future event and must be legally enforceable in all of the following circumstances:
iv. | Derecognition of financial instruments |
The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when the Group transfers substantially all the risks and rewards of ownership of the financial asset.
The Group derecognizes a financial liability when the obligation specified in the contract is discharged or cancelled or has expired.
v. | Hedge Accounting |
The Group does not apply hedge accounting.
Accounting policy for financial instruments applied until December 31, 2019
The Group classifies financial instruments into financial assets and financial liabilities. A Financial assets and liabilities are recognized initially at fair value including transaction costs. These are subsequently measured either at fair value or amortized cost using the effective interest method in accordance with their classification.
i. | Financial assets |
The Group classifies its financial assets as (i) financial assets at fair value through profit or loss, (ii) loans and receivables, (iii) held-to-maturity investment or (iv) available-for-sale financial assets. The classification depends on the purpose for which the financial assets are acquired. Management determines the classification of financial assets at initial recognition.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the assets.
The Group’s financial assets include cash and cash equivalents, other current financial assets, trade receivables and other receivables, other non-current financial assets, and available-for-sale investments.
‘(a) | Financial assets at fair value through profit or loss |
Financial assets at fair value through profit or loss are financial assets classified as held for trading. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling or repurchasing it in the near term and for which there is evidence of a recent actual pattern of short-term profit taking. Gains or losses arising from changes in fair value of the trading securities are presented as other income (expense) in consolidated statements of profit or loss and other comprehensive income in the period in which they arise.
37
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
u.Financial instruments (continued)
Accounting policy for financial instruments applied until December 31, 2019 (continued)
i.Financial assets (continued)
(b) | Loans and receivables |
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Loans and receivables consist of, among other, cash and cash equivalents, other current financial assets, trade and other receivables, and other non-current assets (long-term trade receivables and restricted cash).
These are initially recognized at fair value including transaction costs and subsequently measured at amortized cost, using the effective interest method.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities on which management has the positive intention and ability to hold to maturity, other than:
● | those that the Group, upon initial recognition, designates as at fair value through profit or loss; |
● | those that the Group designates as available-for-sale; and |
● | those that meet the definition of loans and receivables. |
(d) | Available-for-sale financial assets |
Available-for-sale investments are non-derivative financial assets that are intended to be held for indefinite periods of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Available-for-sale investments primarily consist of mutual funds, corporate and government bonds and capital stock, which are recorded as part of “Other current financial assets” and “Long-term investments” in the consolidated statements of financial position.
Available-for-sale investments are stated at fair value. Unrealized holding gains or losses on available-for-sale investments are excluded from income of the current period and are reported as a separate component in the equity section of the consolidated statements of financial position until realized. Realized gains or losses from the sale of available-for-sale investments are recognized in the consolidated statements of profit or loss and other comprehensive income, and are determined on the specific identification basis.
Impairment of financial assets
The Group assesses the impairment of financial assets if there is objective evidence that a loss event has a negative impact on the estimated future cash flows of the financial assets. Impairment is recognized when the loss can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognized.
For financial assets carried at amortized cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a Group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in the collective assessment of impairment.
38
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
u.Financial instruments (continued)
Accounting policy for financial instruments applied until December 31, 2019 (continued)
i. | Financial assets (continued) |
Impairment of financial assets (continued)
The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognized in profit or loss.
For available-for-sale financial assets, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. When a decline in the fair value of an available-for-sale financial asset has been recognized in other consolidated comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in other consolidated comprehensive income is recognized in profit or loss as an impairment loss. The amount of the cumulative loss is the difference between the acquisition cost (net of any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized.
ii. | Financial liabilities |
The Group classifies its financial liabilities as (a) financial liabilities at fair value through profit or loss or (b) financial liabilities measured at amortized cost.
The Group’s financial liabilities include trade and other payables, accrued expenses, interest-bearing loans, other borrowings and other liabilities. Interest-bearing loans consist of short-term bank loans, two-step loans, bonds and notes, long-term bank loans, and obligations under finance leases.
(a) | Financial liabilities at fair value through profit or loss |
Financial liabilities at fair value through profit or loss are financial liabilities classified as held for trading. A financial liability is classified as held for trading if it is incurred principally for the purpose of selling or repurchasing it in the near term and for which there is evidence of a recent actual pattern of short-term profit taking.
(b) | Financial liabilities measured at amortized cost |
Financial liabilities that are not classified as liabilities at fair value through profit or loss fall into this category and are measured at amortized cost. Financial liabilities measured at amortized cost are trade and other payables, accrued expenses, interest-bearing loans, other borrowings, and other liabilities. Interest-bearing loans consist of short-term bank loans, two-step loans, bonds and notes, long-term bank loans, and obligations under finance leases.
iii. | Offsetting financial instruments |
Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle them on a net basis, or realize the assets and settle the liabilities simultaneously. The right of set-off must not be contingent on a future event and must be legally enforceable in all of the following circumstances:
(c) | the event of insolvency or bankruptcy of the Group and all of the counterparties. |
39
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
u.Financial instruments (continued)
iv. | Fair value of financial instruments |
Fair value is the amount for which an asset could be exchanged, or liability settled, in an arm’s length transaction.
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially the same, a discounted cash flow analysis or other valuation models.
v.Derecognition of financial instrument
The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when the Group transfers substantially all the risks and rewards of ownership of the financial asset.
The Group derecognizes a financial liability when the obligation specified in the contract is discharged or cancelled or has expired.
v. | Sukuk Ijarah |
Sukuk Ijarah issued by the Group is recognized at nominal value, adjusted to the premium or discount and related transaction costs. The difference between the carrying amount and the nominal value is amortized on a straight-line basis over the period of the sukuk and is recognized in the income statement as the sukuk issuance expense.
Sukuk Ijarah, after adjusting for premium or discount and unamortized transaction costs, is presented as part of liabilities.
w. Treasury stock
Reacquired Company shares of stock are accounted for at their reacquisition cost and classified as “Treasury Stock” and presented as a deduction in equity. The cost of treasury stock sold/transferred is accounted for using the weighted average method. The portion of treasury stock transferred for employee stock ownership program is accounted for at its fair value at grant date. The difference between the cost and the proceeds from the sale/transfer of treasury stock is credited to “Additional Paid-in Capital”.
x. | Dividends |
Dividend for distribution to the stockholders is recognized as a liability in the consolidated financial statements in the year in which the dividend is approved by the stockholders. The interim dividend is recognized as a liability based on the Board of Directors’ decision supported by the approval from the Board of Commissioners.
y.Basic and diluted earnings per share and earnings per ADS
Basic earnings per share is computed by dividing profit for the year attributable to owners of the parent company by the weighted average number of shares outstanding during the year. Income per ADS is computed by multiplying the basic earnings per share by 100, the number of shares represented by each ADS.
The Company does not have potentially dilutive financial instruments.
40
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
z. | Segment information |
The Group's segment information is presented based upon identified operating segments. An operating segment is a component of an entity:
i. | that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity); |
ii. | whose operating results are regularly reviewed by the Group’s Chief Operating Decision Maker (“CODM”) i.e., the Directors, to make decisions about resources to be allocated to the segment and assess its performance; and |
iii. for which discrete financial information is available.
aa. | Provisions |
Provisions are recognized when the Group has present obligations (legal or constructive) arising from past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and the amount can be measured reliably.
Provisions for onerous contracts are recognized when the contract becomes onerous for the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfill the contract.
ab. | Impairment of non-financial assets |
At the end of each reporting period, the Group assesses whether there is an indication that an asset may be impaired. If such indication exists, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the Cash-Generating Unit (“CGU”) to which the asset belongs (“the asset’s CGU”).
The recoverable amount of an asset (either individual asset or CGU) is the higher of the asset’s fair value less costs to sell and its value in use (“VIU”). Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated net future cash flows 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 determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, the Group uses an appropriate valuation model to determine the fair value of the asset. These calculations are corroborated by valuation multiples or other available fair value indicators.
Impairment losses of continuing operations are recognized in profit or loss as part of “Depreciation and Amortisation” in the consolidated statements of profit or loss and other comprehensive income.
At the end of each reporting period, the Group assesses whether there is any indication that previously recognized impairment losses for an asset, other than goodwill, may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss for an asset, other than goodwill, is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited such that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the carrying amount that would have been determined, net of depreciation, had no impairment been recognized for the asset in prior periods. Reversal of an impairment loss is recognized in profit or loss.
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment loss relating to goodwill can not be reversed in future periods.
41
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
ac.Current and non current classifications
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is presented current when it is:
Asset which do not meet above criterias, classified as non current assets.
A liability is current when:
The terms of liability that could, at the option of counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Liabilities which do not meet above criterias, classified as long term liabilities.
Deffered tax assets and liabilities are classified as non-current assets and liabilities.
ad. | Changes in accounting policy and disclosures |
PSAK 71
The Group has applied PSAK 71 modified retrospective approach on the required effective date, January 1, 2020. The 2020 opening balances have been adjusted, but the previous periods have not been restated. Some of the key changes that impacted the Group include the following:
a. | Classification and measurement |
Under PSAK 71, the Group classifies its financial assets as at amortized cost, at FVTPL, and
at FVTOCI. Previously under PSAK 55, its classified as loan and receivables and available for sale. The classification is based on two criteria: the Group’s business model for managing the assets; and whether the instruments’ contractual cash flows represent solely payments of principal and interest on the principal amount outstanding.
The assessment of the Group’s business model was made as of the date of initial application,
January 1, 2020, and then applied retrospectively to those financial assets that were not derecognized before January 1, 2020. The assessment of whether contractual cash flows on debt instruments are solely payments of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.
The classification and measurement requirements of PSAK 71 have an impact on some of the Group’s available for sale financial assets as they have to be measured at FVTPL as the instruments’ contractual cash flow does not represent solely payments of principal and interest. The Group continued measuring at amortized cost for all financial assets previously classified as loans and receivables under PSAK 55.
42
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
ad. | Changes in accounting policy and disclosures (continued) |
PSAK 71 (continued)
The table below illustrates the classification and measurement of financial assets under PSAK 71 and PSAK 55 at the date of initial application, January 1, 2020:
| | | | |
| | Original measurement | | New measurement |
| | category under PSAK 55 | | category under PSAK 71 |
Cash and cash equivalents | | Loans and receivables | | Amortized cost |
Trade receivables | | Loans and receivables | | Amortized cost |
Convertible bonds | | Available for sale | | FVTPL |
Debt instruments | | Available for sale | | FVTOCI |
Equity investments | | Available for sale | | FVTPL |
The adoption of PSAK 71 has fundamentally changed the Group’s accounting for impairment losses for financial assets by replacing PSAK 55’s incurred loss approach with a forward-looking ECL approach. PSAK 71 requires the Group to recognise an allowance for ECL for all debt instruments not held at FVTPL and contract assets.
PSAK 72
The Group has adopted PSAK 72 from January 1, 2020 using the modified retrospective approach, which means the Group elected not to restate comparative figures but any adjustments to the carrying amounts at transition date were recognized in the opening balance of retained earnings and non-controlling interest. Some of the key changes that impacted the Group include the following:
● | Based on the new requirements under PSAK 72, contract assets and contract liabilities have been added as new lines in the consolidated statements of financial position. Previously, contract assets were reported as trade receivables and contract liabilities were reported as unearned income. |
● | Contract costs that consist of costs to obtain and fulfill the contract have been added as new line in the consolidated statement of financial position. Previously, these contract costs were expensed as incurred or amortized with systematic basis that is inconsistent with the recognition of related revenue. |
● | Revenues from contracts with customers which measured under PSAK 72 are separately presented from revenues from other sources. |
In the transition date of PSAK 72, the application of variable consideration and timing of revenue recognition principle results in the Group recognized an increase in retained earnings as the amount of revenue recognized for the completed performance obligation under PSAK 72 is greater than the revenue recognized under the previous revenue standard. In return, the Group recognizes contract assets as the Group’s right to consideration in exchange for the completed performance obligation. The contract assets are subsequently reclassified as trade receivables when the consideration becomes unconditional.
The Group also recognizes capitalisation of incremental costs of obtaining and fulfilling the contracts with customers. In contrast to the previous standards that required the Group to expense these costs as incurred, the capitalised contract costs are now amortized on a consistent basis with the transfer to the customer of the goods or services to which the contract costs relate.
43
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
ad. | Changes in accounting policy and disclosures (continued) |
PSAK 73
The Group has applied PSAK 73 using modified retrospective approach on the required effective date, January 1, 2020. The 2019 opening balances have been adjusted, but the previous periods have not been restated. Some of the key changes that impacted the Group include the following:
Adoption of PSAK 73 resulted in the Group’s future minimum lease payments under non-cancellable operating leases to be recognized as lease liabilities with corresponding
Right-of-Use (“ROU”) assets.
Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2020. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2020 was 8.67%.
The Group has reclassified certain of its sublease agreements as finance leases. The portion of the ROU assets subject to sublease is de-recognized and a sublease receivable is recognized in the balance sheet when the sublease commences.
The effect of adopting PSAK 71, PSAK 72, and PSAK 73 were as follows:
| | |
| PSAK 71,72, and 73 | |
ASSETS | | |
Trade receivables – net provision for impairment | | |
of receivables | (1,114 | ) |
Contract assets | 968 | |
Other receivables – net provision for impairment | | |
of receivables | (92 | ) |
Contract cost | 487 | |
Other current assets | (1,781 | ) |
Long-term investments | 244 | |
Property and equipment - net of accumulated depreciation | (2,154 | ) |
ROU assets | 20,997 | |
Deferred tax assets | (87 | ) |
Contract cost - noncurrent | 698 | |
Other non-current assets | (3,170 | ) |
| 14,996 | |
| | |
LIABILITIES | | |
Accrued expenses | 85 | |
Unearned income - current | 903 | |
Contract liabilities | (1,065 | ) |
Deferred tax liabilities | 62 | |
Unearned income - net of current portion | 83 | |
Long-term borrowings - net of current maturities | (14,510 | ) |
| (14,442 | ) |
| | |
EQUITY | | |
Other equity | 48 | |
Retained earnings - unappropriated | (649 | ) |
Non-controlling Interests | 47 | |
| (554 | ) |
44
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
ad. | Changes in accounting policy and disclosures (continued) |
The impact of the changes to the current period financial statements is as follow:
| | | | | | |
| | | | Previous | | |
| | New standard | | standard | | Adjusment |
STATEMENT OF FINANCIAL POSITION | | | | | | |
ASSETS | | | | | | |
Cash and cash equivalents | | 24,365 | | 24,365 | | 0 |
Trade receivables - net provision for impairment | | | | | | |
of receivables | | 15,284 | | 15,548 | | (264) |
Contract asset | | 748 | | - | | 748 |
Other receivables - net provision for impairment | | | | | | |
of receivables | | 176 | | 283 | | (107) |
Contract cost | | 342 | | - | | 342 |
Other current assets | | 4,839 | | 6,650 | | (1,811) |
Long-term investments | | 2,059 | | 1,861 | | 198 |
Property and equipment - net of accumulated | | | | | | |
depreciation | | 153,575 | | 155,729 | | (2,154) |
Right-of-use assets | | 19,980 | | - | | 19,980 |
Deferred tax assets - net | | 2,824 | | 2,765 | | 59 |
Contract asset - nettoff current portion | | 327 | | - | | 327 |
Contract cost - nettoff current portion | | 757 | | - | | 757 |
Other non-current assets | | 5,037 | | 8,113 | | (3,076) |
TOTAL ASSETS | | 230,313 | | 215,314 | | 14,999 |
| | | | | | |
LIABILITIES | | | | | | |
Accrued expenses | | 14,854 | | 14,629 | | (225) |
Unearned income | | 666 | | 6,428 | | 5,762 |
Contract Liabilities | | 6,748 | | - | | (6,748) |
Short-term loans and current maturities | | | | | | |
of long-term borrowings | | 12,301 | | 9,223 | | (3,078) |
Deferred tax liabilities | | 1,008 | | 1,043 | | 35 |
Contract liabilities – netoff current portion | | 823 | | - | | (823) |
Long-term loans and other borrowings | | 39,503 | | 30,003 | | (9,500) |
TOTAL LIABILITIES | | 75,903 | | 61,326 | | (14,577) |
| | | | | | |
EQUITY | | | | | | |
Other equity | | 779 | | 827 | | 48 |
Retained earnings | | 82,667 | | 82,129 | | (538) |
Non-controlling Interests | | 20,100 | | 20,168 | | 68 |
TOTAL EQUITY | | 103,546 | | 103,124 | | (422) |
| | | | | | |
STATEMENT OF PROFIT OR LOSS | | | | | | |
REVENUES | | 34,194 | | 34,126 | | (68) |
Operations, maintenance and telecommunication | | | | | | |
service | | (8,252) | | (9,244) | | (992) |
Depreciation and amortization | | (6,849) | | (5,888) | | 961 |
General and administrative | | (1,572) | | (1,448) | | 124 |
Marketing | | (641) | | (726) | | (85) |
Other income (expenses) - net | | (186) | | (158) | | 28 |
Finance income | | 219 | | 263 | | 44 |
Finance costs | | (1,215) | | (976) | | 239 |
Tax effect | | 208 | | 89 | | (119) |
| | | | | | |
OTHER COMPREHENSIVE INCOME (EXPENSES) | | | | | | |
Foreign currency translation | | 419 | | 487 | | 68 |
Net (loss) gain on available for sale | | | | | | |
financial assets | | - | | 1 | | 1 |
| | | | | | |
Profit for the year attributable to: | | | | | | |
Owners of the parent company | | 5,862 | | 5,973 | | 111 |
Non-controlling interests | | 2,439 | | 2,460 | | 21 |
45
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
ad. | Changes in accounting policy and disclosures (continued) |
The impact of the changes to the current period financial statements is as follow (continued):
| | | | | | |
| | | | | | (In billions of |
| | | | | | Indonesia Rupiah) |
STATEMENT OF CASHFLOWS | | | | | | |
Net cash flows from operating activities (PSAK 30R) | | | | | | |
Operating lease payments | | | | | | 909 |
Net cash flows from financing activities (PSAK 73) | | | | | | |
Payment of principal portion of lease liabilities | | | | | | 2,269 |
ae. | Critical accounting considerations, estimates and assumptions |
The preparation of the Group's consolidated financial statements requires management to make decisions, estimates and assumptions that affect the amount of revenue, expenses, assets and liabilities reported, and the accompanying disclosures, and disclosures of contingent liabilities, at the end of the reporting period.
Uncertainty about these assumptions and estimates can produce results that require a material adjustment to the carrying amounts of assets and liabilities affected in the coming periods.
i. | Consideration |
The following considerations were made by management in applying the Group's accounting policies that have the most significant influence on the amounts recognized in the consolidated financial statements:
Income taxes
Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the year in which such determination is made. Details of the nature and carrying amounts of income tax are disclosed in Note 28.
ii. | Estimates and assumptions |
Estimates and assumption are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
The present value of the retirement benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate and return on investment (ROI). Any changes in these assumptions will impact the carrying amount of the retirement benefit obligations.
46
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
ae. | Critical accounting considerations, estimates and assumptions (continued) |
ii. | Estimates and assumptions (continued) |
(a) | Retirement benefits (continued) |
The Group determines the appropriate discount rate at the end of each reporting period. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the obligations. In determining the appropriate discount rate, the Group considers the interest rates of Government bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related retirement benefit obligations.
If there is an improvement in the ratings of such Government bonds or a decrease in interest rates as a result of improving economic conditions, there could be a material impact on the discount rate used in determining the post-employment benefit obligations.
Other key assumptions for retirement benefit obligations are based in part on current market conditions. Additional information is disclosed in Notes 31 and 32.
(b) | Useful lives of property and equipment |
The Group estimates the useful lives of its property and equipment based on expected asset utilization, considering strategic business plans, expected future technological developments and market behavior. The estimates of useful lives of property and equipment are based on the Group’s collective assessment of industry practice, internal technical evaluation, and experience with similar assets.
The Group reviews its estimates of useful lives at least each financial year-end and such estimates are updated if expectations differ from previous estimates due to changes in expectation of physical wear and tear, technical or commercial obsolescence, and legal or other limitations on the continuing use of the assets. The amounts of recorded expenses for any year will be affected by changes in these factors and circumstances. A change in the estimated useful lives of the property and equipment is a change in accounting estimates and is applied prospectively in profit or loss in the period of the change and future periods.
Details of the nature and carrying amounts of property and equipment are disclosed in Note 11.
(c) | Determining the lease term of contracts with renewal and termination options - Group as lessee |
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.
47
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
ae. | Critical accounting considerations, estimates and assumptions (continued) |
ii. | Estimates and assumptions (continued) |
(d) Credit loss provision for financial assets
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a credit provision methodology that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors, and the economic environment.
For term deposits and debt instruments at fair value through OCI, the Group applies the low credit risk simplification. At every reporting date, the Group evaluates whether the deposits or debt instrument are considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the internal credit rating of the instrument. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.
The Group assesses whether there is objective evidence that other receivables or other financial assets have been impaired at the end of each reporting period. Provision for impairment of receivables is calculated based on a review of the current status of existing receivables and historical collection experience. Such provisions are adjusted periodically to reflect the actual and anticipated experience. Details of the nature and carrying amounts of provision for impairment of other receivables are disclosed in Note 5.
(e) | Revenue |
(i) | Critical judgements in determining the performance obligation, timing of revenue recognition and revenue classification |
The Group provides information technology services that are bespoke in nature. Bespoke products consist of various goods and/or services bundled together in order to provide integrated solution services to customers. In addition to the bespoke service, Group also provide multiple standard product as bundling product in contract with customer. Significant judgment is required in determining the number and nature of performance obligations promised to customers in those contracts. The number and nature of performance obligations will determine the timing of revenue recognition for such contract.
The Group reviews the determination of performance obligations on a contract-by-contract basis. When a contract consisting of several goods and/or service is assessed to have one performance obligations, the Group applies a single method of measuring progress for the performance obligation based on the measurement method that best depicts the economics of the contract, which in most cases is over time.
The Group also presents the revenue classification using consistent approach. When a contract consisting of several goods and/or service is assessed to have one performance obligations, the Group presents that performance obligations in one financial statement line items which best represent the main service of the Group, which in most cases is the internet, data communication and information technology services.
48
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
ae. | Critical accounting considerations, estimates and assumptions (continued) |
ii. | Estimates and assumptions (continued) |
(e) | Revenue (continued) |
(ii) | Critical judgements in determining the stand-alone selling price |
The Group provides wide array of products related to telecommunication and technology. To determine the stand-alone selling price for goods and/or services that do not have any readily available observable price, the Group uses the expected cost-plus margin approach.
Significant judgment is required in determining the margin for each contract that contains goods and/or services with an unobservable price. The Group currently determines the appropriate margin based on historical achievement and information from an independent party.
(f) | Test for impairment of non-current assets and goodwill |
The application of the acquisition method in a business combination requires the use of accounting estimates in allocating the purchase price to the fair market value of the assets and liabilities acquired, including intangible assets. Certain business acquisitions by the Group resulted goodwill, which is not amortized but is tested for impairment annually and every indication of impairment exists.
The calculation of future cash flows in determining the fair value of fixed assets and other non-current assets of entities acquired at the acquisition date with significant estimates. Although management believes that the assumptions used are appropriate, significant changes to those assumptions can materially affect the evaluation of recoverable amounts and may result in impairment according to PSAK 48: Impairment of Assets.
(g) | Acquisition |
The Group evaluates each acquisition transaction to determine whether it will be treated as an asset acquisition or business combination. For transactions that are treated as an asset acquisition, the purchase price is allocated to the assets obtained, without the recognition of goodwill. For acquisitions that meet the business combination definition, the Group applies the accounting acquisition method for assets acquired and liabilities assumed are recorded at fair value at the acquisition date, and the results of operations are included with the Group's results from the date of each acquisition.
Any excess from the purchase price paid for the amount recognized for assets acquired and liabilities incurred is recorded as goodwill. The Group continues to evaluate acquisitions that are counted as a business combination for a period not exceeding one year after the applicable acquisition date of each transaction to determine whether additional adjustments are needed to allocate the purchase price paid for the assets acquired and liabilities assumed. The fair value of assets acquired and liabilities incurred are usually determined using either an estimated replacement cost or a discounted cash flow valuation method. When determining the fair value of tangible assets acquired, the Group estimates the cost of replacing assets with new assets by considering factors such as the age, condition and economic useful lives of the assets. When determining the fair value of the intangible assets obtained, the Group estimates the applicable discount rate and the time and amount of future cash flows, including the rates and terms for the extension and reduction.
49
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
3. | CASH AND CASH EQUIVALENTS |
| | | March 31, 2020 | | December 31, 2019 | ||||
| | | Balance | | Balance | ||||
| | | Foreign | | | | Foreign | | |
| | | currency | | Rupiah | | currency | | Rupiah |
| Currency | | (in millions) | | equivalent | | (in millions) | | equivalent |
Cash on hand | Rp | | - | | 51 | | - | | 37 |
Cash in banks | | | | | | | | | |
Related parties | | | | | | | | | |
PT Bank Mandiri (Persero) Tbk. (“Bank Mandiri”) | Rp | | - | | 1,045 | | - | | 1,407 |
| US$ | | 19 | | 314 | | 9 | | 122 |
| EUR | | 1 | | 26 | | 1 | | 23 |
| JPY | | 1 | | 0 | | 1 | | 0 |
| HKD | | 1 | | 2 | | 0 | | 1 |
| AUD | | 0 | | 0 | | 0 | | 1,033 |
PT Bank Negara Indonesia (Persero) Tbk. (“BNI”) | Rp | | - | | 1,224 | | - | | 1,033 |
| US$ | | 5 | | 75 | | 6 | | 86 |
| EUR | | - | | - | | 0 | | 0 |
| SGD | | 0 | | 0 | | 0 | | 0 |
PT Bank Rakyat Indonesia (Persero) Tbk. (“BRI”) | Rp | | - | | 202 | | - | | 198 |
| US$ | | 0 | | 5 | | 3 | | 44 |
PT Bank Tabungan Negara (Persero) Tbk. (“BTN”) | Rp | | - | | 49 | | - | | 51 |
Others | Rp | | - | | 16 | | - | | 20 |
Sub-total | | | | | 2,958 | | | | 2,985 |
| | | | | | | | | |
Third parties | | | | | | | | | |
The Hongkong and Shanghai Banking | | | | | | | | | |
Corporation Ltd. ("HSBC Hongkong") | US$ | | 12 | | 272 | | 14 | | 188 |
| HKD | | 5 | | 10 | | 6 | | 10 |
PT Bank Bukopin Tbk. ("Bank Bukopin") | Rp | | - | | 275 | | - | | 76 |
PT Bank Permata Tbk. (“Bank Permata”) | Rp | | - | | 213 | | - | | 335 |
| US$ | | - | | - | | 4 | | 62 |
Standard Chartered Bank (“SCB”) | Rp | | - | | 0 | | - | | 0 |
| US$ | | 2 | | 33 | | 11 | | 150 |
| SGD | | 7 | | 79 | | 1 | | 7 |
PT Bank Pembangunan Daerah ("BPD") | Rp | | - | | 74 | | - | | 121 |
PT Bank HSBC Indonesia ("HSBC") | Rp | | - | | 11 | | - | | 3 |
Others | Rp | | - | | 1,060 | | - | | 358 |
| US$ | | 16 | | 257 | | - | | 113 |
| MYR | | 6 | | 23 | | 4 | | 12 |
| EUR | | 1 | | 17 | | 1 | | 17 |
| EUR | | 1 | | 15 | | 0 | | 3 |
| TWD | | 26 | | 14 | | 27 | | 13 |
| AUD | | 0 | | 5 | | 1 | | 7 |
| MOP | | 0 | | 1 | | 0 | | 1 |
| HKD | | 0 | | 0 | | 0 | | 0 |
Sub-total | | | | | 2,359 | | | | 1,476 |
| | | | | | | | | |
Total cash in banks | | | | | 5,317 | | | | 4,461 |
| | | | | | | | | |
Time deposits | | | | | | | | | |
Related parties | | | | | | | | | |
BRI | Rp | | - | | 3,508 | | - | | 2,561 |
| US$ | | 42 | | 682 | | 36 | | 500 |
BNI | Rp | | - | | 3,031 | | - | | 2,693 |
| US$ | | 40 | | 660 | | 32 | | 450 |
BTN | Rp | | - | | 3,512 | | - | | 2,733 |
| US$ | | - | | - | | 4 | | 49 |
Bank Mandiri | Rp | | - | | 3,276 | | - | | 1,129 |
| US$ | | 12 | | 200 | | 16 | | 215 |
Sub-total | | | | | 14,869 | | | | 10,330 |
| | | | | | | | | |
50
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
3. | CASH AND CASH EQUIVALENTS (continued) |
| | | March 31, 2020 | | December 31, 2019 | ||||
| | | Balance | | Balance | ||||
| | | Foreign | | | | Foreign | | |
| | | currency | | Rupiah | | currency | | Rupiah |
| Currency | | (in millions) | | equivalent | | (in millions) | | equivalent |
Time deposits (continued) | | | | | | | | | |
Third parties | | | | | | | | | |
PT Bank Pembangunan Daerah Jawa Barat | | | | | | | | | |
dan Banten Tbk. (“BJB”) | Rp | | - | | 2,500 | | - | | 1,394 |
PT Bank CIMB Niaga Tbk. | | | | | | | | | |
(“Bank CIMB Niaga”) | Rp | | - | | 600 | | - | | 992 |
| US$ | | 12 | | 193 | | 29 | | 398 |
PT Bank Maybank Indonesia Tbk. (“Maybank”) | Rp | | - | | 29 | | - | | 14 |
| US$ | | 15 | | 237 | | 5 | | 70 |
PT Bank Mega Tbk. (“Bank Mega”) | Rp | | - | | 250 | | - | | 400 |
PT Bank DBS Indonesia ("Bank DBS") | Rp | | - | | 159 | | - | | - |
Others | Rp | | - | | 127 | | - | | 74 |
| US$ | | 1 | | 17 | | 8 | | 42 |
| MYR | | 4 | | 16 | | 9 | | 30 |
Sub-total | | | | | 4,128 | | | | 3,414 |
| | | | | | | | | |
Total time deposits | | | | | 18,997 | | | | 13,744 |
Allowance for expexted credit losses | | | | | (0) | | | | - |
Total | | | | | 24,365 | | | | 18,242 |
| | | | | | | | | |
Interest rates per annum on time deposits are as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
Rupiah | 3.75% - 7.25% | | 4.00% - 9.25% |
Foreign currency | 0.50% - 3.30% | | 0.50% - 3.30% |
The related parties in which the Group places its funds are state-owned banks. The Group placed the majority of its cash and cash equivalents in these banks because they have the most extensive branch networks in Indonesia and are considered to be financially sound banks, as they are owned by the State.
51
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
4.OTHER CURRENT FINANCIAL ASSETS
| | | | | | | | | |
| | | | | | | | | |
| | | 2020 | | 2019 | ||||
| | | Balance | | Balance | ||||
| | | Foreign currency | | Rupiah | | Foreign currency | | Rupiah |
| Currency | | (in millions) | | equivalent | | (in millions) | | equivalent |
Time deposits | | | | | | | | | |
Related parties | | | | | | | | | |
Bank Mandiri | Rp | | - | | 240 | | - | | - |
BRI | Rp | | - | | 415 | | - | | - |
Others | Rp | | - | | 30 | | - | | - |
Third parties | | | | | | | | | |
SCB | US$ | | 4 | | 65 | | 8 | | 111 |
Others | Rp | | - | | 18 | | - | | 18 |
| US$ | | 5 | | 83 | | - | | 71 |
Total time deposits | | | | | 851 | | | | 200 |
| | | | | | | | | |
Mutual funds | | | | | | | | | |
Related parties | | | | | | | | | |
PT Bahana TCW Investment | | | | | | | | | |
Management ("Bahana TCW") | Rp | | - | | 71 | | - | | 71 |
Total mutual funds | | | - | | 71 | | | | 71 |
| | | | | | | | | |
Escrow accounts | Rp | | - | | 140 | | - | | 142 |
| US$ | | 3 | | 42 | | 1 | | 15 |
| MYR | | 6 | | 22 | | 6 | | 19 |
Others | Rp | | - | | 102 | | - | | 102 |
| MYR | | 2 | | 6 | | 2 | | 5 |
Total | | | | | 1,234 | | | | 554 |
The time deposits have maturities of more than three months but not more than one year, with interest rates as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
Rupiah | 5.60% - 6.50% | | 6.50% |
Foreign currency | 1.20% - 2.51% | | 1.20% - 2.51% |
52
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
5. | TRADE RECEIVABLES |
Trade receivables arise from services provided to both retail and non-retail customers, with details as follows:
a. | By debtor |
| | | |
| March 31, 2020 | | December 31, 2019 |
State-owned enterprises | 1,336 | | 1,604 |
Indonusa | 515 | | 494 |
Indosat | 311 | | 150 |
Others | 1,157 | | 459 |
Total | 3,319 | | 2,707 |
Provision for impairment of receivables | (884) | | (915) |
Net | 2,435 | | 1,792 |
| | | |
| March 31, 2020 | | December 31, 2019 |
Individual and business subscribers | 16,389 | | 13,710 |
Overseas international carriers | 2,255 | | 1,583 |
Total | 18,644 | | 15,293 |
Provision for impairment of receivables | (6,155) | | (5,288) |
Net | 12,489 | | 10,005 |
b. | By age |
| | | |
| March 31, 2020 | | December 31, 2019 |
Up to 3 months | 2,500 | | 1,563 |
3 to 6 months | 160 | | 237 |
More than 6 months | 659 | | 907 |
Total | 3,319 | | 2,707 |
Provision for impairment of receivables | (884) | | (915) |
Net | 2,435 | | 1,792 |
| | | |
| March 31, 2020 | | December 31, 2019 |
Up to 3 months | 12,363 | | 9,270 |
3 to 6 months | 1,353 | | 1,077 |
More than 6 months | 4,928 | | 4,946 |
Total | 18,644 | | 15,293 |
Provision for impairment of receivables | (6,155) | | (5,288) |
Net | 12,489 | | 10,005 |
| | | | | | | | | |
| March 31, 2020 | | December 31, 2019 | ||||||
| | | Allowance for | | Expected | | | | Provision for |
| | | expected | | credit | | | | impairment of |
| Gross | | credit losses | | loss rate | | Gross | | receivables |
Not past due | 10,147 | | 780 | | 7.7% | | 8,250 | | 395 |
Past due up to 3 months | 4,716 | | 1,008 | | 21.4% | | 2,583 | | 513 |
Past due more than 3 to 6 months | 1,513 | | 605 | | 40.0% | | 1,314 | | 458 |
Past due more than 6 months | 5,587 | | 4,646 | | 83.2% | | 5,853 | | 4,837 |
Total | 21,963 | | 7,039 | | | | 18,000 | | 6,203 |
53
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
5. | TRADE RECEIVABLES (continued) |
b. | By age (continued) |
The Group has made provision for impairment of trade receivables based on the collective assessment of historical impairment rates and individual assessment of its customers’ credit history. The Group does not apply a distinction between related party and third party receivables in assessing amounts past due. As of March 31, 2020 and December 31, 2019, the carrying amounts of trade receivables of the Group considered past due but not impaired amounted to Rp5,557 billion and Rp3,942 billion, respectively. Management believes that receivables past due but not impaired, along with trade receivables that are neither past due nor impaired, are due from customers with good credit history and are expected to be recoverable.
c. | By currency |
| | | |
| March 31, 2020 | | December 31, 2019 |
Rupiah | 3,312 | | 2,705 |
U.S. dollar | 7 | | 2 |
Others | 0 | | 0 |
Total | 3,319 | | 2,707 |
Provision for impairment of receivables | (884) | | (915) |
Net | 2,435 | | 1,792 |
| | | |
| March 31, 2020 | | December 31, 2019 |
Rupiah | 15,327 | | 12,883 |
U.S. dollar | 3,160 | | 2,298 |
Australian dollar | 8 | | 12 |
Others | 149 | | 100 |
Total | 18,644 | | 15,293 |
Provision for impairment of receivables | (6,155) | | (5,288) |
Net | 12,489 | | 10,005 |
d.Movements in the provision for impairment of receivables
| | | |
| March 31, 2020 | | December 31, 2019 |
Beginning balance | 6,203 | | 5,029 |
Adjustment on initial application of PSAK 71 | 146 | | - |
Provision recognized during the year | 690 | | 2,283 |
Receivables written off | - | | (1,109) |
Ending balance | 7,039 | | 6,203 |
The receivables written off relate to both related party and third party trade receivables.
Management believes that the provision for expected credit losses of trade receivables is adequate to cover losses on uncollectible trade receivables.
As of March 31, 2020, certain trade receivables of the subsidiaries amounting to Rp6,721 billion have been pledged as collateral under lending agreements (Notes 18 and 19c).
Refer to Note 33 for details of related parties transactions.
54
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
6. | CONTRACT ASSETS |
| |
| March 31, 2020 |
Contract assets | 1,168 |
Provision for expected credit losses | (93) |
Net | 1,075 |
Short term portion | (748) |
Long term portion | 327 |
7. | INVENTORIES |
| | | |
| March 31, 2020 | | December 31 2019 |
Components | 435 | | 351 |
SIM cards and blank prepaid vouchers | 176 | | 154 |
Others | 169 | | 172 |
Total | 780 | | 677 |
Provision for obsolescence | | | |
Components | (68) | | (62) |
SIM cards and blank prepaid vouchers | (28) | | (28) |
Others | (3) | | (2) |
Total | (99) | | (92) |
Net | 681 | | 585 |
Movements in the provision for obsolescence are as follows:
| | | |
| March 31, 2020 | | December 31 2019 |
Beginning balance | 92 | | 67 |
Provision recognized during the year | 7 | | 25 |
Ending balance | 99 | | 92 |
Management believes that the provision is adequate to cover losses from decline in inventory value due to obsolescence.
The inventories recognised as expense and included in operations, maintenance and telecommunication service expenses as of March 31, 2020 and 2019 amounted to Rp123 billion and Rp 605 billion, respectively (Note 26).
Certain inventories of the subsidiaries amounting to Rp343 billion have been pledged as collateral under lending agreements (Notes 19c).
As of March 31, 2020 and December 31, 2019, modules and components held by the Group with book value amounting to Rp108 billion and Rp112 billion, respectively, have been insured against fire, theft, and other specific risks. Total sum insured as of March 31, 2020 and December 31, 2019 amounted to Rp155 biliion, respectively.
Management believes that the insurance coverage is adequate to cover potential losses of inventories arising from the insured risks.
55
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
8. | OTHER CURRENT ASSETS |
The breakdown of other current assets is as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
Prepaid annual frequency license (Note 36c.i) | 3,307 | | 3,879 |
Advances | 918 | | 670 |
Prepaid salaries | 242 | | 189 |
Prepaid rental | 101 | | 1,403 |
Others | 271 | | 511 |
Total | 4,839 | | 6,652 |
| | | |
9. CONTRACT COST
Movement of contract costs for the three months period ended March 31, 2020 is follow:
| | | | | | |
| | | | | | |
| | March 31, 2020 | ||||
| | Cost to obtain | | Cost to fulfill | | Total |
At January 1, 2020 | | 696 | | 489 | | 1,185 |
Amortisation during the year | | (29) | | (234) | | (263) |
Addition current year | | 114 | | 63 | | 177 |
At March 31, 2020 | | 781 | | 318 | | 1,099 |
Short term portion | | (120) | | (222) | | (342) |
Long term portion | | 661 | | 96 | | 757 |
LONG-TERM INVESTMENTS |
The Group has investments in several entities as follows:
| | | | | | | | | | | | | | | | | | |
| March 31, 2020 | | ||||||||||||||||
| Percentage | | Beginning balance | | Adjustment on initial application of PSAK 71 | | Share of additions (deductions) | | Changes of net fair value | | Share of | | Dividend | | Share of other comprehensive income | | Ending balance | |
Long-term investments | | | | | | | | | | | | | | | | | | |
in associated | | | | | | | | | | | | | | | | | | |
companies: | | | | | | | | | | | | | | | | | | |
Tiphonea | 24.00 | | 526 | | - | | - | | - | | 25 | | - | | 3 | | 554 | |
Finaryab | 26.58 | | 267 | | - | | | | - | | (36) | | - | | - | | 231 | |
Indonusac | 20.00 | | 210 | | - | | - | | - | | - | | - | | - | | 210 | |
Jalind | 33.00 | | 77 | | - | | - | | - | | 3 | | (5) | | - | | 75 | |
Othersi | 6.32-51.00 | | 130 | | - | | - | | - | | (1) | | - | | - | | 129 | |
Sub-total | | | 1,210 | | - | | - | | - | | (9) | | (5) | | 3 | | 1,199 | |
Other long-term | | | | | | | | | | | | | | | | | | |
investments | | | 734 | | 244 | | (72) | | (46) | | - | | - | | - | | 860 | |
Total long-term | | | | | | | | | | | | | | | | | | |
investments | | | 1,944 | | 244 | | (72) | | (46) | | (9 ) | | (5) | | 3 | | 2,059 | |
56
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
10. | LONG-TERM INVESTMENTS (continued) |
Summarized financial information of the Group’s investments accounted under the equity method for period March 31, 2020:
| | | | | | | | | | |
| | | | | | | | | | |
| Tiphone* | | Finarya | | Indonusa* | | Jalin | | Others | |
Statements of financial position | | | | | | | | | | |
Current assets | 8,165 | | 3,622 | | 495 | | 125 | | 1,056 | |
Non-current assets | 778 | | 115 | | 253 | | 214 | | 4,364 | |
Current liabilities | (3,824) | | (2,891) | | (534) | | (73) | | (1,404) | |
Non-current liabilities | (741) | | (3) | | (278) | | (38) | | (5,493) | |
Equity (deficit) | 4,378 | | 843 | | (64) | | 228 | | (1,477) | |
| | | | | | | | | | |
Statements of profit or loss and other | | | | | | | | | | |
comprehensive income | | | | | | | | | | |
Revenues | 28,442 | | 19 | | 794 | | 62 | | 852 | |
Operating expenses | (27,621) | | (171) | | (738) | | (49) | | (886) | |
Other income (expenses) including | | | | | | | | | | |
finance costs – net | (321) | | 18 | | 1 | | 0 | | (137) | |
Profit (loss) before tax | 500 | | (134) | | 57 | | 13 | | (171) | |
Income tax benefit (expense) | (138) | | (1) | | (10) | | (3) | | 3 | |
Profit (loss) for the year | 362 | | (135) | | 47 | | 10 | | (168) | |
Other comprehensive income (loss) | 77 | | - | | (1) | | - | | - | |
Total comprehensive income (loss) | | | | | | | | | | |
for the year | 439 | | (135) | | 46 | | 10 | | (168) | |
* Based on financial information as of December 31,2019 and in the period ended the same year.
| | | | | | | | | | | | | | | |
| 2019 | ||||||||||||||
| Percentage of | | Beginning | | | | Share of net profit (loss) | | Dividend | | Share of other | | Impairment | | Ending |
Long-term investments | | ||||||||||||||
in associated | | ||||||||||||||
companies: | | ||||||||||||||
Tiphonea | 24.00 | | 1,602 | | - | | 88 | | (11) | | 19 | | (1,172) | | 526 |
Finaryab | 26.58 | | - | | 484 | | (217) | | - | | - | | - | | 267 |
Indonusac | 20.00 | | 210 | | - | | - | | - | | - | | - | | 210 |
Jalind | 33.00 | | - | | 70 | | 7 | | - | | (0) | | - | | 77 |
Cellume | 30.40 | | 79 | | - | | (8) | | - | | - | | - | | 71 |
ILCSf | 49.00 | | 44 | | - | | (13) | | - | | 0 | | - | | 31 |
GSNg | 45.00 | | 14 | | - | | (1) | | - | | - | | - | | 13 |
Teltraneth | 51.00 | | - | | 34 | | (24) | | - | | 1 | | - | | 11 |
Othersi | 6.32-32.00 | | 4 | | (2) | | 2 | | - | | - | | - | | 4 |
Sub-total | | | 1,953 | | 586 | | (166) | | (11) | | 20 | | (1,172) | | 1,210 |
Other long-term | | | | | | | | | | | | | | | |
investments | | | 519 | | 215 | | - | | - | | - | | - | | 734 |
Total long-term | | | | | | | | | | | | | | | |
investments | | | 2,472 | | 801 | | (166) | | (11) | | 20 | | (1,172) | | 1,944 |
Summarized financial information of the Group’s investments accounted under the equity method for 2019:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Tiphone | | Finarya | | Indonusa | | Jalin | | Cellum | | ILCS | | GSN | | Teltranet | | Others |
Statements of financial position | | | | | | | | | | | | | | | | | |
Current assets | 8,165 | | 2,382 | | 495 | | 100 | | 14 | | 119 | | 17 | | 291 | | 615 |
Non-current assets | 778 | | 132 | | 253 | | 222 | | 17 | | 41 | | 169 | | 66 | | 4,033 |
Current liabilities | (3,824) | | (1,533) | | (534) | | (78) | | (10) | | (95) | | (2) | | (356) | | (1,089) |
Non-current liabilities | (741) | | (3) | | (278) | | (10) | | (27) | | (2) | | (155) | | (58) | | (5,101) |
Equity (deficit) | 4,378 | | 978 | | (64) | | 234 | | (6) | | 63 | | 29 | | (57) | | (1,542) |
| | | | | | | | | | | | | | | | | |
Statements of profit or loss and other | | | | | | | | | | | | | | | | | |
comprehensive income | | | | | | | | | | | | | | | | | |
Revenues | 28,442 | | 38 | | 794 | | 205 | | 13 | | 206 | | 7 | | 195 | | 784 |
Operating expenses | (27,621) | | (877) | | (738) | | (148) | | (40) | | (212) | | (9) | | (242) | | (800) |
Other income (expenses) including | | | | | | | | | | | | | | | | | |
finance costs - net | (321) | | 17 | | 1 | | 2 | | - | | (16) | | (0) | | (15) | | (128) |
Profit (loss) before tax | 500 | | (822) | | 57 | | 59 | | (27) | | (22) | | (2) | | (62) | | (144) |
Income tax benefit (expense) | (138) | | 1 | | (10) | | (17) | | - | | (4) | | (0) | | (43) | | (1) |
Profit (loss) for the year | 362 | | (821) | | 47 | | 42 | | (27) | | (26) | | (2) | | (105) | | (145) |
Other comprehensive income (loss) | 77 | | - | | (1) | | (0) | | - | | 0 | | -) | | 2 | | - |
Total comprehensive income (loss) | | | | | | | | | | | | | | | | | |
for the year | 439 | | (821) | | 46 | | 42 | | (27) | | (26) | | (2) | | (103) | | (145) |
57
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
10. | LONG-TERM INVESTMENTS (continued) |
a | Tiphone was established on June 25, 2008 as PT Tiphone Mobile Indonesia Tbk. Tiphone is engaged in the telecommunication equipment business, such as celullar phone including spare parts, accessories, pulse reload vouchers, repair service and content provider through its subsidiaries. On September 18, 2014, the Company through PINS acquired 25% ownership in Tiphone for Rp1,395 billion. |
As of March 31, 2020 and December 31, 2019, the fair value of the investment amounted to Rp198 billion and Rp526 billion, respectively. The fair value was calculated by multiplying the number of shares by the published price quotation as of March 31, 2020 and December 31, 2019 amounting to Rp113 and Rp300 per share, respectively.
Reconciliation of financial information to the carrying amount of long-term investment in Tiphone as of December 31, 2019 is as follows:
| | | |
| | | 2019 |
Assets | | | 8,943 |
Liabilities | | | (4,565) |
Net Assets | | | 4,378 |
Group's proportionated share of net assets | | | 1,051 |
Goodwill | | | 647 |
Impairment | | | (1,172) |
Carrying amount of long-term invesment | | | 526 |
bOn January 21, 2019, Telkomsel established a subsidiary of PT Fintek Karya Nusantara ("Finarya”) with an initial investment amounted to Rp25 billion and on February 22, 2019 Telkomsel transferred its assets amounted to Rp150 billion. For this transaction, Telkomsel obtained 2,499 and 14,974 shares, respectively (equal to 100% ownership). Telkomsel with PT Mandiri Capital Indonesia, PT BRI Ventura Indonesia, PT BNI Sekuritas, PT Jasamarga Tollroad Operator, PT Dana Tabungan dan Asuransi Pegawai Negeri (Persero), PT Pertamina Retail, PT Kereta Commuter Indonesia (“KCI”), PT Asuransi Jiwasraya (Persero) and PT Danareksa Capital, entered in to shareholder agreement on July 31, 2019, October 31, 2019 and December 31, 2019 relating to the increasing issued and paid up capital made by each shareholder. On December 31, 2019, Telkomsel owned 48,530 shares or equivalent to 26.58% ownership.
cIndonusa had been a subsidiary of the Company until 2013 when the Company disposed 80% of its interest in Indonusa. On May 14, 2014, based on the Circular Resolution of the Stockholders of Indonusa as covered by notarial deed No. 57 dated April 23, 2014 of FX Budi Santoso Isbandi, S.H., which was approved by the MoLHR in its Letter No. AHU-02078.40.20.2014 dated April 29, 2014, Indonusa’s stockholders approved an increase in its issued and fully paid capital by Rp80 billion. The Company waived its right to own the new shares issued and transferred it to Metra, as the result, Metra’s ownership in Indonusa increased to 4.33% and the Company’s ownership become 15.67%.
d | Jalin was previously a subsidiary. On June 19, 2019 the company sold 67% of its shares to PT Danareksa (Persero) (“Danareksa”) amounted to Rp395 billion. |
e | Investment in Cellum is accounted for under the equity method, which covered by a conditional shares subsciption agreement between Metranet and Cellum in January 30, 2018. Cellum is a company which engaged in mobile payment and commerce services. |
f | PT Integrasi Logistik Cipta Solusi (“ILCS”) is engaged in providing E-trade logistic services and other related services. |
g | On August 31, 2017, NSI and third party established PT Graha Sakura Nusantara (“GSN”) which engaged in real estate, residential and apartment marketing business. |
h | Investment in Teltranet is accounted for under the equity method, which covered by an agreement between Metra and Telstra Holding Singapore Pte. Ltd. dated August 29, 2014. Teltranet is engaged in communication system services. Metra does not have control to determine the financial and operating policies of Teltranet. |
i | The unrecognised share of losses in other investments cumulatively as of March 31, 2020 are Rp487 billion. |
58
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
11. | PROPERTY AND EQUIPMENT |
| | | | | | | | | |
| January 1, 2020 | | Additions | | Deductions | | Reclassifications/ translations | | March 31, 2020 |
At cost: | | | | | | | | | |
Directly acquired assets | | | | | | | | | |
Land rights | 1,644 | | 9 | | (1) | | 4 | | 1,656 |
Buildings | 14,062 | | 24 | | - | | 416 | | 14,502 |
Leasehold improvements | 1,549 | | - | | (27) | | 2,220 | | 3,742 |
Switching equipment | 17,348 | | 39 | | (1,918) | | (1,852) | | 13,617 |
Telegraph, telex, and data communication | | | | | | | | | |
equipment | 2,258 | | - | | - | | (223) | | 2,035 |
Transmission installation and equipment | 151,750 | | 430 | | (640) | | 1,599 | | 153,139 |
Satellite, earth station, and equipment | 12,344 | | 26 | | - | | (291) | | 12,079 |
Cable network | 54,357 | | 924 | | (22) | | 594 | | 55,853 |
Power supply | 20,113 | | 23 | | (56) | | 342 | | 20,422 |
Data processing equipment | 16,409 | | 15 | | (164) | | (196) | | 16,064 |
Other telecommunication peripherals | 5,340 | | 12 | | - | | (174) | | 5,178 |
Office equipment | 2,361 | | 24 | | (83) | | 187 | | 2,489 |
Vehicles | 568 | | 1 | | - | | (1) | | 568 |
Other equipment | 123 | | - | | - | | (1) | | 122 |
Property under construction | 2,619 | | 2,138 | | - | | (1,887) | | 2,870 |
Asset under finance lease | | | | | | | | | |
Transmission installation and equipment | 5,500 | | - | | - | | (5,500) | | - |
Data processing equipment | 1 | | - | | - | | (1) | | - |
Vehicles | 503 | | - | | - | | (503) | | - |
Office equipment | 42 | | - | | - | | (42) | | - |
CPE assets | 22 | | - | | - | | (22) | | - |
Power supply | - | | - | | - | | - | | - |
RSA assets | 89 | | - | | - | | (89) | | - |
Total | 309,002 | | 3,665 | | (2,911) | | (5,420) | | 304,336 |
| | | | | | | | | |
Accumulated depreciation: | | | | | | | | | |
Directly acquired assets | | | | | | | | | |
Buildings | 4,113 | | 177 | | - | | 73 | | 4,363 |
Leasehold improvements | 1,091 | | 46 | | (25) | | - | | 1,112 |
Switching equipment | 11,976 | | 392 | | (1,917) | | 42 | | 10,493 |
Telegraph, telex, and data communication | | | | | | | | | |
equipment | 1,580 | | - | | - | | - | | 1,580 |
Transmission installation and equipment | 79,993 | | 2,776 | | (634) | | 93 | | 82,228 |
Satellite, earth station, and equipment | 5,809 | | 215 | | - | | 16 | | 6,040 |
Cable network | 14,171 | | 562 | | (22) | | 71 | | 14,782 |
Power supply | 13,596 | | 481 | | (154) | | 60 | | 13,983 |
Data processing equipment | 11,977 | | 381 | | (164) | | 2 | | 12,196 |
Other telecommunication peripherals | 1,766 | | 239 | | - | | - | | 2,005 |
Office equipment | 1,678 | | 84 | | (76) | | 8 | | 1,694 |
Vehicles | 210 | | 11 | | (2) | | (1) | | 218 |
Other equipment | 66 | | 1 | | - | | - | | 67 |
Asset under finance lease | | | | | | | | | |
Transmission installation and equipment | 3,734 | | - | | - | | (3,734) | | - |
Data processing equipment | 1 | | - | | - | | (1) | | - |
Vehicles | 115 | | - | | - | | (115) | | - |
Office equipment | 44 | | - | | - | | (44) | | - |
CPE assets | 20 | | - | | - | | (20) | | - |
Power supply | - | | - | | - | | - | | - |
RSA assets | 89 | | - | | - | | (89) | | - |
Total | 152,029 | | 5,365 | | (2,994) | | (3,639) | | 150,761 |
Net book value | 156,973 | | | | | | | | 153,575 |
59
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
11. | PROPERTY AND EQUIPMENT (continued) |
| | | | | | | | | | | |
| January 1, 2019 | | Acquisition | | Additions | | Deductions | | Reclassifications/ translations | | December 31, 2019 |
At cost: | | | | | | | | | | | |
Directly acquired assets | | | | | | | | | | | |
Land rights | 1,626 | | 6 | | 16 | | - | | (4) | | 1,644 |
Buildings | 11,833 | | 12 | | 779 | | (4) | | 1,442 | | 14,062 |
Leasehold improvements | 1,375 | | - | | 37 | | (58) | | 195 | | 1,549 |
Switching equipment | 15,921 | | - | | 1,228 | | (61) | | 890 | | 17,348 |
Telegraph, telex, and data communication | | | | | | | | | | | |
equipment | 1,586 | | - | | 675 | | - | | (3) | | 2,258 |
Transmission installation and equipment | 141,408 | | 686 | | 6,768 | | (6,240) | | 9,128 | | 151,750 |
Satellite, earth station, and equipment | 11,972 | | - | | 108 | | (11) | | 275 | | 12,344 |
Cable network | 45,451 | | - | | 8,197 | | (113) | | 822 | | 54,357 |
Power supply | 17,864 | | - | | 793 | | (253) | | 1,709 | | 20,113 |
Data processing equipment | 14,265 | | 10 | | 709 | | (107) | | 1,532 | | 16,409 |
Other telecommunication peripherals | 3,423 | | - | | 1,904 | | - | | 13 | | 5,340 |
Office equipment | 2,142 | | 7 | | 208 | | (101) | | 105 | | 2,361 |
Vehicles | 641 | | - | | 99 | | (167) | | 95) | | 568 |
Other equipment | 94 | | - | | 57 | | - | | (28) | | 123 |
Property under construction | 4,876 | | 81 | | 14,923 | | (20) | | (17,241) | | 2,619 |
Asset under finance lease | | | | | | | | | | | |
Transmission installation and equipment | 5,603 | | - | | - | | - | | (1) | | 5,500 |
Data processing equipment | 1 | | - | | - | | (80) | | - | | 1 |
Vehicles | 578 | | 1 | | 54 | | (4) | | (50) | | 503 |
Office equipment | 16 | | - | | 30 | | - | | - | | 42 |
CPE assets | 22 | | - | | - | | - | | - | | 22 |
Power supply | 125 | | - | | - | | - | | (125) | | - |
RSA assets | 252 | | - | | - | | - | | (163) | | 89 |
Total | 280,444 | | 803 | | 36,585 | | (7,321) | | (1,509) | | 309,002 |
| | | | | | | | | | | |
Accumulated depreciation: | | | | | | | | | | | |
Directly acquired assets | | | | | | | | | | | |
Buildings | 3,405 | | - | | 726 | | (4) | | (14) | | 4,113 |
Leasehold improvements | 949 | | - | | 198 | | (56) | | - | | 1,091 |
Switching equipment | 10,550 | | - | | 1,488 | | (45) | | (17) | | 11,976 |
Telegraph, telex and data communication | | | | | | | | | | | |
equipment | 1,320 | | - | | 260 | | - | | - | | 1,580 |
Transmission installation and equipment | 74,247 | | - | | 11,059 | | (5,260) | | (53) | | 79,993 |
Satellite, earth station and equipment | 5,005 | | - | | 818 | | (10) | | (4) | | 5,809 |
Cable network | 12,185 | | - | | 2,349 | | (102) | | (261) | | 14,171 |
Power supply | 12,316 | | - | | 1,454 | | (239) | | 65 | | 13,596 |
Data processing equipment | 10,747 | | - | | 1,304 | | (61) | | (13) | | 11,977 |
Other telecommunication peripherals | 1,029 | | - | | 737 | | - | | - | | 1,766 |
Office equipment | 1,312 | | - | | 383 | | (55) | | 38 | | 1,678 |
Vehicles | 281 | | - | | 72 | | (137) | | (6) | | 210 |
Other equipment | 75 | | - | | 1 | | - | | (10) | | 66 |
Asset under finance lease | | | | | | | | | | | |
Transmission installation and equipment | 3,241 | | - | | 587 | | (94) | | - | | 3,734 |
Data processing equipment | 1 | | - | | - | | - | | - | | 1 |
Vehicles | 126 | | - | | 72 | | (58) | | (25) | | 115 |
Office equipment | 70 | | - | | 3 | | (3) | | (26) | | 44 |
CPE assets | 20 | | - | | - | | - | | - | | 20 |
Power supply | 73 | | - | | - | | - | | (73) | | - |
RSA assets | 244 | | - | | - | | - | | (155) | | 89 |
Total | 137,196 | | - | | 21,511 | | (6,124) | | (554) | | 152,029 |
Net book value | 143,248 | | | | | | | | | | 156,973 |
a. | Gain on sale of property and equipment |
| | | |
| 2020 | | 2019 |
Proceeds from sale of property and equipment | 45 | | 267 |
Net book value | (7) | | (86) |
Gain on disposal or sale of property and equipment | 38 | | 181 |
60
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
11. | PROPERTY AND EQUIPMENT (continued) |
b.Other
(i) | As of December 31, 2019, the CGUs that independently generate cash inflows are fixed wireline, cellular and others. Management believes that there is no indication of impairment in the assets of such CGUs as of December 31, 2019. |
(ii) | Interest capitalized to property under construction amounted to Rp22 billion and Rp62 billion for the three months period ended March 31, 2020 and 2019, respectively. The capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranged from 1.29% to 11% and 2.13% to 11% for the three months period ended March 31, 2020 and 2019, respectively. |
(iii) | No foreign exchange loss was capitalized as part of property under construction for the three months ended March 31, 2020 and for the year ended December 31, 2019. |
(iv) | On March 31, 2020 and 2019, the Group obtained proceeds from the insurance claim on lost and broken property and equipment, with a total value of Rp3 billion and Rp54 billion, respectively, and were recorded as part of “Other Income (expenses) - net” in the consolidated statements of profit or loss and other comprehensive income. On March 31, 2020 and 2019, the net carrying value of those assets of Rp1 billion and Rp7 billion, respectively, were charged to the consolidated statements of profit or loss and other comprehensive income. |
(v) | In 2019, Telkomsel decided to replace certain equipment units with net carrying amount of Rp192 billion, as part of its modernization program and accelerated the depreciation of such equipment units. |
In 2018, the estimated useful lives of radio software license and data processing equipment were changed from 7 to 10 years and from 3 to 5 years, respectively. The impact of reduction in the depreciation expense for the nine months ended March 31, 2020 amounting to Rp103 billion.
The change in useful lives will increase/(decrease) profit before income tax in future years as follows:
| | |
Years | | Increase (Decrease) |
2021 | | 18 |
2022 | | (106) |
(vi) | In 2020 Telkomsel’s certain equipment units with net carrying amount of Rp803 billion were exchanged with equipment from Ericsson AB, PT Ericsson Indonesia, PT Huawei Tech Investment, PT Nokia Solutions and Network Indonesia, and PT ZTE Indonesia. As of March 31, 2020, Telkomsel’s equipment units with net carrying amount of Rp39 billion are going to be exchanged and, therefore, these equipment were reclassified as “Assets held for sale” in the consolidated statements of financial position. |
(vii) | The Group owns several pieces of land located throughout Indonesia with Building Use Rights (“Hak Guna Bangunan” or “HGB”) for a period of 10-50 years which will expire between 2020 and 2069. Management believes that there will be no issue in obtaining the extension of the land rights when they expire. |
(viii) | As of March 31, 2020, the Group’s property and equipment excluding land rights, with net carrying amount of Rp150,621 billion were insured against fire, theft, earthquake and other specified risks, including business interruption, under blanket policies totalling Rp22,276 billion, US$38 million, HK$7 million, SG$269 million, TW$21 million, and MYR72 million and first loss basis amounted to Rp2,760 billion. Management believes that the insurance coverage is adequate to cover potential losses from the insured risks. |
61
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
11. PROPERTY AND EQUIPMENT (continued)
(ix) | As of March 31, 2020, the percentage of completion of property under construction was around 32.03% of the total contract value, with estimated dates of completion until November 2021. The balance of property under construction mainly consists of buildings, transmission installation and equipment, cable network and power supply. Management believes that there is no impediment to the completion of the construction in progress. |
(x) | All assets owned by the Company have been pledged as collateral for bonds (Note 19b.i). Certain property and equipment of the Company’s subsidiaries with gross carrying value amounting to Rp11,110 billion have been pledged as collateral under lending agreements (Notes 18, 19c, and 19d). |
(xi) | As of March 31, 2020, the cost of fully depreciated property and equipment of the Group that are still used in operations amounted to Rp59,782 billion. The Group is currently performing modernization of network assets to replace the fully depreciated property and equipment. |
(xii) | In 2019, the total fair values of land rights and buildings of the Group, which are determined based on the sale value of the tax object (Nilai Jual Objek Pajak or “NJOP”) of the related land rights and buildings, amounted to Rp36,842 billion. |
12. | RIGHT OF USE ASSETS |
The Group leases several assets including land rights, building, transmission installation and equipments, power supply, vehicles, and other equipments used in its operations, which generally have lease term between 2 and 15 years.
The Group also has certain leases with lease terms of twelve months or less and low-value leases. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases. There are no lease contracts with variable lease payments. Short-term and low-value assets lease expense of Rp909 billion were incurred for the period ended March 31, 2020.
The carrying amounts of right of use assets recognized and the movement during the period:
| | | | | | | | | | | | | |
| December 31 | | Effect | | January 1, | | | | | | Reclassification/ | | March 31, |
| 2019 | | Adoption PSAK 73 | | 2020 | | Additions | | Deduction | | translation | | 2020 |
At cost: | | | | | | | | | | | | | |
Land rights | - | | 3,972 | | 3,972 | | 40 | | - | | 1 | | 4,013 |
Buildings | - | | 708 | | 708 | | 211 | | (232) | | 73 | | 760 |
Transmission installation | | | | | | | | | | | | | |
and equipment | - | | 15,065 | | 15,065 | | - | | (2) | | (58) | | 15,005 |
Power supply | - | | 509 | | 509 | | - | | - | | - | | 509 |
Vehicles | - | | 558 | | 558 | | 85 | | - | | (46) | | 597 |
Others | - | | 185 | | 185 | | - | | - | | 69 | | 254 |
Total | - | | 20,997 | | 20,997 | | 336 | | (234) | | 39 | | 21,138 |
| | | | | | | | | | | | | |
Accumulated amotization: | | | | | | | | | | | | | |
Land rights | - | | - | | - | | (189) | | - | | - | | (189) |
Buildings | - | | - | | - | | (115) | | 25 | | (9) | | (99) |
Transmission installation | | | | | | | | | | | | | |
and equipment | - | | - | | - | | (776) | | - | | 15 | | (761) |
Power supply | - | | - | | - | | (40) | | - | | - | | (40) |
Vehicles | - | | - | | - | | (57) | | - | | 13 | | (44) |
Others | - | | - | | - | | (24) | | - | | (1) | | (25 ) |
Total | - | | - | | - | | (1,201) | | 25 | | 18 | | (1,158) |
Net book value | - | | 20,997 | | 20,997 | | | | | | | | 19,980 |
62
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
12. | RIGHT OF USE ASSETS (continued) |
Maturity analysis of lease payments are as follows:
Years |
| March 31, 2020 |
| December 31, 2019 |
2020 | | 4,688 | | 936 |
2021 | | 1,872 | | 785 |
2022 | | 3,285 | | 607 |
2023 | | 2,520 | | 255 |
2024 | | 1,776 | | 85 |
Thereafter | | 3,377 | | 45 |
Total lease payments | | 17,518 | | 2,713 |
Interest | | (2,600) | | (373) |
Net present value of lease payments | | 14,918 | | 2,340 |
Adjustment on initial application of PSAK 73 | | - | | 14,510 |
Total lease liability | | 14,918 | | 16,850 |
Current maturities (Note 18b) | | (3,842) | | (3,622) |
Long-term portion (Note 19) | | 11,076 | | 13,228 |
Reconciliation of operating lease commitment and lease liabilities are as follows:
| |
Operating lease commitments | 18,272 |
Less: | |
Commitments relating to short-term leases | (660) |
Commitments relating to leases of low-value assets | (37) |
Operating lease commitments as at January 1, 2020 | 17,575 |
Weighted average incremental borrowing rate as at January 1, 2020 | 8.67% |
Discounted operating lease commitments as at January 1, 2020 | 14,480 |
Add: | |
Adjustments as a result of a different treatment of extension and termination option | 30 |
Lease liabilities as at January 1, 2020 | 14,510 |
13. | OTHER NON-CURRENT ASSETS |
The breakdown of other non-current assets is as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
Prepaid annual frequency license | | | |
net of current portion (Note 8) | 1,426 | | 1,488 |
Claim for tax refund (Note 28b) | 1,107 | | 3,666 |
Prepaid income taxes (Note 28a) | 649 | | 678 |
Deferred charges | 613 | | 570 |
Advances for purchases of property and equipment | 412 | | 481 |
Convertible bonds | 312 | | 319 |
Security deposit | 149 | | 210 |
Prepaid rent | 94 | | 3,170 |
Others | 275 | | 643 |
Total | 5,037 | | 11,225 |
Prepaid rental covers rent of leased line, telecommunication equipment, land and building under lease agreements of the Group with remaining rental periods over 1 years.
As of March 31, 2020 and 2019, deferred charges represent deferred Indefeasible Right of Use (“IRU”) agreement charges. Total amortization of deferred charges for the year ended March 31, 2020 and 2019 amounted to Rp16 billion and Rp17 billion, respectively.
63
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
14. | INTANGIBLE ASSETS |
The details of intangible assets are as follows:
| | | | | | | | | |
| Goodwill | | Software | | License | | Other intangible assets | | Total |
Gross carrying amount: | | | | | | | | | |
Balance, January 1, 2020 | 1,432 | | 12,480 | | 96 | | 1,571 | | 15,579 |
Additions | - | | 671 | | 4 | | 38 | | 713 |
Deductions | - | | (34) | | (10) | | (96) | | (140) |
Reclassifications/translations | 2 | | (176) | | 10 | | (21) | | (185) |
Balance, March 31, 2020 | 1,434 | | 12,941 | | 100 | | 1,492 | | 15,967 |
Accumulated amortization: | | | | | | | | | |
Balance, January 1, 2020 | (29) | | (8,400) | | (93) | | (611) | | (9,133) |
Amortization | - | | (540) | | (93) | | (44) | | (677) |
Deductions | - | | 3 | | 4 | | 14 | | 21 |
Reclassifications/translations | - | | 111 | | 84 | | 18 | | 213 |
Balance, March 31, 2020 | (29) | | (8,826) | | (98) | | (623) | �� | (9,576) |
Net book value | 1,405 | | 4,115 | | 2 | | 869 | | 6,391 |
| | | | | | | | | |
| Goodwill | | Software | | License | | Other intangible assets | | Total |
Gross carrying amount: | | | | | | | | | |
Balance, January 1, 2019 | 1,066 | | 10,680 | | 94 | | 687 | | 12,527 |
Additions | - | | 1,942 | | 4 | | 511 | | 2,457 |
Acquisition | 467 | | - | | - | | 379 | | 846 |
Deductions | (104) | | (166) | | (12) | | (14) | | (296) |
Reclassifications/translations | 3 | | 24 | | 10 | | 8 | | 45 |
Balance, December 31, 2019 | 1,432 | | 12,480 | | 96 | | 1,571 | | 15,579 |
Accumulated amortization: | | | | | | | | | |
Balance, January 1, 2019 | (29) | | (5,714) | | (81) | | (489) | | (7,495) |
Amortization | - | | (1,226) | | (357) | | (145) | | (1,667) |
Deductions | - | | 51 | | 2 | | 14 | | 87 |
Reclassifications/translations | - | | (7) | | 343 | | 9 | | (58) |
Balance, December 31, 2019 | (29) | | (6,896) | | (93) | | (611) | | (9,133) |
Net book value | 1,403 | | 3,784 | | 3 | | 960 | | 6,446 |
(i) | Goodwill resulted from the acquisition of Sigma (2008), Admedika (2010), data center PT Bina Data Mandiri (“BDM”) (2012), Contact Centres Australia Pty. Ltd. (2014), PT Media Nusantara Data Global (“MNDG”) (2015), Melon and PT Griya Silkindo Drajatmoerni (“GSDm”) (2016), TSGN and Nutech (2017), SSI, CIP, and Telin Malaysia (2018), and PST (2019) (Note 1e). |
(ii) | The amortization is presented as part of “Depreciation and Amortization” in the consolidated statements of profit or loss and other comprehensive income. The remaining amortization periods of software range from 1-5 years. |
(iii) | As of December 31, 2019, the cost of fully amortized intangible assets that are still utilized in operations amounted to Rp5,867 billion. |
5. | TRADE PAYABLES |
The breakdown of trade payables is as follows:
| | | |
| March 31, 2020 |
| December 31, 2019 |
Related parties | | | |
Purchases of equipments, materials, and services | 544 |
| 683 |
Payables to other telecommunication providers | 147 |
| 136 |
Sub-total | 691 |
| 819 |
| | | |
Third parties | | | |
Purchases of equipments, materials, and services | 8,436 |
| 10,634 |
Radio frequency usage charges, concession fees, | | | |
and Universal Service Obligation (“USO”) charges | 1,797 | | 1,374 |
Payables to other telecommunication providers | 2,724 |
| 1,070 |
Sub-total | 12,957 |
| 13,078 |
Total | 13,648 |
| 13,897 |
64
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
5. | TRADE PAYABLES (continued) |
Trade payables by currency are as follows:
| | | |
| March 31, 2020 |
| December 31, 2019 |
Rupiah | 10,841 |
| 12,027 |
U.S. dollar | 2,756 |
| 1,823 |
Others | 51 |
| 47 |
Total | 13,648 |
| 13,897 |
Refer to Note 33 for details of related parties transactions.
16.ACCRUED EXPENSES
The breakdown of accrued expenses is as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
Operation, maintenance, and telecommunication services | 9,170 | | 8,450 |
Salaries and benefits | 3,030 | | 2,412 |
General, administrative, and marketing expenses | 2,439 | | 2,658 |
Interest and bank charges | 215 | | 216 |
Total | 14,854 | | 13,736 |
17. | CONTRACT LIABILITIES |
a. | Current portion |
| | | |
| | | |
| March 31, 2020 | | December 31, 2019 |
Prepaid pulse reload vouchers | 5,128 | | 5,212 |
Material rights for contract renewal | 81 | | 76 |
Others | 1,539 | | 1,447 |
Total | 6,748 | | 6,735 |
| | | |
b. | Non-current portion |
| | | |
| March 31, 2020 | | December 31, 2019 |
Indefeasible Right of Use | 315 | | 327 |
Material rights for contract renewal | 425 | | 389 |
Others | 83 | | 87 |
Total | 823 | | 803 |
The balance of contract liabilities as of December 31, 2019 is presented as unearned income in the consolidated statements of financial position.
Contract liabilities at the beginning period which recognized as revenue in current year is Rp6,735 billion.
65
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
18. | SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS |
a. | Short-term bank loans |
| | | | | | | | | | | |||||||||
| | | | March 31, 2020 | | December 31, 2019 | |||||||||||||
| | | | Outstanding | | Outstanding | |||||||||||||
|
| |
| Foreign currency |
| Rupiah |
| Foreign currency |
| Rupiah | |||||||||
Lenders | | Currency | | (in millions) | | equivalent | | (in millions) | | equivalent | |||||||||
Related parties | |
| |
| |
| |
| |
| |||||||||
Bank Mandiri |
| Rp |
| - | | 2,400 |
| - | | 2,400 | |||||||||
BNI |
| Rp |
| - | | 1,133 |
| - | | 1,238 | |||||||||
PT Bank BNI Syariah (“BNI Syariah”) | | Rp | | - | | - | | - | | 17 | |||||||||
Sub-total |
|
|
| | | 3,533 |
| | | 3,655 | |||||||||
Third parties |
|
|
|
|
|
|
|
|
|
| |||||||||
HSBC | | Rp | | - | | 1,732 |
| - | | 1,754 | |||||||||
| | US$ | | 0 | | 4 |
| 0 | | 4 | |||||||||
MUFG Bank, Ltd. |
| |
| | | | | | | | |||||||||
("MUFG Bank") |
| Rp |
| - | | 1,706 |
| - | | 1,705 | |||||||||
Bank DBS |
| Rp | | - | | 698 | | - | | 722 | |||||||||
| | US$ |
| 1 | | 13 |
| 1 | | 13 | |||||||||
PT Bank UOB Indonesia ("UOB") | | Rp | | - | | 576 |
| - | | 500 | |||||||||
PT Bank Central Asia Tbk. ("BCA") | | Rp | | - | | 125 |
| - | | 124 | |||||||||
SCB | | Rp | | - | | 100 | | - | | 150 | |||||||||
Bank CIMB Niaga | | Rp | | - | | 78 |
| - | | 78 | |||||||||
Others |
| Rp |
| - | | 59 |
| - | | - | |||||||||
Sub-total |
|
|
| | | 5,091 |
| | | 5,050 | |||||||||
Total |
|
|
| | | 8,624 |
| | | 8,705 | |||||||||
31 | | | | | | | | | | | |||||||||
| | | | | | | | | | |
Other significant information relating to short-term bank loans as of March 31, 2020 is as follows:
| | | | | | | | | | Inter | | | | |
| | Borrower | | Currency | | Total facility | | Maturity date | | Interest payment period | | Interest rate per annum | | Security** |
Mandiri | | | | | | | | | | | | | | |
2019 | | the Company | | Rp | | 2,400 | | November 21, 2020 | | Quarterly | | 3 months | | None |
BNI | | | | | | | | | | | | | | |
2014 - 2017 | | Sigmaa, GSD | | Rp | | 525 | | January 9, 2020 - | | Monthly | | 8.41% - 9.00% | | Trade receivables and property and equipment |
2013 - 2019 | | Telkom Infratel, Infomediab, Sigmah, | | Rp | | 3,160 | | January 9, 2020 - | | Monthly | | 1 month | | Trade receivables |
HSBC | | | | | | | | | | | | | | |
2018 | | Sigmac,h | | Rp | | 600 | | July 31, 2020 | | Monthly | | 6.74% | | Trade receivables |
2018 | | Sigmac,h | | US$ | | 0.004 | | July 31, 2020 | | Monthly | | 4.12% | | Trade receivables |
2018 - 2019 | | Sigma, Melon, Metra, MD Media, PINS | | Rp | | 1,834 | | April 8, 2020 - August 30, 2020 | | Monthly, | | 1 month | | Trade receivables |
MUFG Bank | | | | | | | | | | | | | | |
2018 - 2019 | | the Company, Infomedia, Metra, GSD, PINS, Telkom Infratel | | Rp | | 2,560 | | January 23, 2020 - | | Monthly | | 1 month | | None |
DBS | | | | | | | | | | | | | | |
2018 | | Telkom Infratel, Infomedia | | Rp | | 600 | | February 26, 2020 | | Monthly | | 1 month | | None |
2016 | | Nutech | | Rp | | 4 | | October 18, 2020 | | Monthly | | 10.50% | | None |
2016 | | Sigmad,e | | US$ | | 0.02 | | July 31, 2020 | | Semi-annually | | 3.25% (US$) | | Trade receivables |
66
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
18. | SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS (continued) |
a. | Short-term bank loans (continued) |
| | | | | | | | | | Inter | | | | |
| | Borrower | | Currency | | Total facility | | Maturity date | | Interest payment period | | Interest rate per annum | | Security** |
UOB | | | | | | | | | | | | | | |
2016 | | Finnetf | | Rp | | 500 | | December 20, 2020 | | Monthly | | 1 month | | None |
SCB | | | | | | | | | | | | | | |
2015 | | GSDg | | Rp | | 150 | | April 16, 2020 | | Monthly | | Cost of fund + 2.50% | | None |
BCA | | | | | | | | | | | | | | |
2019 | | Telkom Infratel | | Rp | | 600 | | April 30, 2020 - | | Monthly | | 1 month | | Trade receivables |
Bank CIMB Niaga | | | | | | | | | | | | | | |
2013 | | GSDh | | Rp | | 85 | | January 1, 2020 | | Monthly | | 10.90% - 11.50% | | Trade receivables and property and equipment |
* | In original currency |
** | Refer to Note 5 and Note 11 for details of trade receivables and property and equipment pledged as collaterals. |
a | Based on the latest amendment on April 23, 2019. |
b | Based on the latest amendment on March 28, 2018 and July 6, 2018. |
c | Based on the latest amendment on July 16, 2018. |
d | Based on the latest amendment on December 5, 2018. |
e | Facility in U.S. Dollar. Withdrawal can be executed in U.S. Dollar and Rupiah. |
f | Based on the latest amendment on June 5, 2018. |
g | Based on the latest amendment on January 18, 2019. |
h | Unsettled loan will be automatically extended. |
As stated in the agreements, the Group is required to comply with all covenants or restrictions such as limitation that the Company must have a majority shareholding of at least 51% of the subsidiaries in the agreement and maintaining financial ratios. As of December 31, 2019, the Group has complied with all covenants or restrictions, except for certain loans. As of December 31, 2019, the Group obtained waiver from lenders to not demand the loan payment as consequence of the breach of covenants, except for Telkom Infratel, the waiver from BCA was received on January 27, 2020.
On February 26, 2018, the Company, Telkom Infratel, and Infomedia entered credit agreements with DBS amounting to Rp600 billion. As of March 31, 2020, the unused facilities was amounting to Rp125 billion.
On March 27, 2019, the Company, TII, Infomedia, and Metra entered credit agreements with MUFG Bank amounting to Rp600 billion. As of March 31, 2020, the unused facilities was amounting toRp180 billion.
On April 8, 2019, the Company, Metra, MD Media, and Metranet entered credit agreements with HSBC amounting to Rp1,000 billion. As of March 31, 2020, the unused facilities was amounting toRp426 billion.
On June 24, 2019, the Company, Infomedia, MD Media, and Telkom Infratel entered credit agreements with MUFG Bank amounting to Rp1,560 billion. As of March 31, 2020, the unused facilities was amounting to Rp400 billion.
On August 30, 2019, the Company, Sigma, and Melon entered credit agreements with HSBC amounting to Rp500 billion. As of March 31, 2020, the unused facilities was amounting to Rp50 billion.
On October 29, 2019, the Company and GSD entered credit agreements with MUFG Bank amounting to Rp900 billion. As of March 31, 2020, the unused facilities was amounting to Rp814 billion.
67
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
18. | SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS (continued) |
a. | Short-term bank loans (continued) |
On November 21, 2019, the Company, Dayamitra, and GSD entered credit agreements with Bank Mandiri amounting to Rp2,400 billion. As of March 31, 2020, all facilities had been used.
The credit facilities were obtained by the Group for working capital purposes.
b. | Current maturities of long-term borrowings |
| | | | | |
| | | | | |
| Notes | | March 31, 2020 | | December 31, 2019 |
Two-step loans | 19a | | 222 | | 194 |
Bonds and notes | 19b | | 2,491 | | 2,491 |
Bank loans | 19c | | 4,895 | | 5,434 |
Other borrowings | 19d | | 851 | | 627 |
Obligation under finance lease | 12 | | - | | 764 |
Lease liabilities | 12 | | 3,842 | | - |
Total | | | 12,301 | | 9,510 |
19. | LONG-TERM LOANS AND OTHER BORROWINGS |
| | | | | |
| Notes | | March 31, 2020 | | December 31, 2019 |
Two-step loans | 19a | | 583 | | 542 |
Bonds and notes | 19b | | 7,468 | | 7,467 |
Bank loans | 19c | | 17,579 | | 21,171 |
Other borrowings | 19d | | 2,797 | | 3,113 |
Obligation under finance lease | 12 | | - | | 1,576 |
Lease liabilities | 12 | | 11,076 | | - |
Total | | | 39,503 | | 33,869 |
Scheduled principal payments as of March 31, 2020 are as follows:
| | | | | | | | | | | | | |
| Year | ||||||||||||
| Notes | | Total | | 2021 | | 2022 | | 2023 | | 2024 | | Thereafter |
Two-step loans | 19a | | 583 | | 164 | | 161 | | 142 | | 116 | | - |
Bonds and notes | 19b | | 7,468 | | 477 | | 2,199 | | - | | - | | 4,792 |
Bank loans | 19c | | 17,579 | | 5,825 | | 3,666 | | 3,049 | | 2,523 | | 2,516 |
Other borrowings | 19d | | 2,797 | | 535 | | 853 | | 863 | | 460 | | 86 |
Lease liabilities | 12 | | 11,076 | | 1,376 | | 2,382 | | 2,221 | | 1,581 | | 3,066 |
Total | | | 39,503 | | 8,377 | | 9,711 | | 6,275 | | 4,680 | | 10,460 |
a. | Two-step loans |
Two-step loans are unsecured loans obtained by the Government from overseas banks which are then re-loaned to the Company. Loans obtained up to July 1994 are payable in Rupiah based on the exchange rate at the date of drawdown. Loans obtained after July 1994 are payable in their original currencies and any resulting foreign exchange gain or loss is borne by the Company.
| | | | | | | | | | |
| | | | March 31, 2020 | | December 31, 2019 | ||||
| | | | Outstanding | | Outstanding | ||||
|
| |
| Foreign currency |
| Rupiah |
| Foreign currency |
| Rupiah |
Lenders | | Currency | | (in millions) | | equivalent | | (in millions) | | equivalent |
Overseas banks |
| Yen |
| 3,839 |
| 578 |
| 3,839 |
| 491 |
|
| US$ |
| 6 |
| 105 |
| 9 |
| 120 |
|
| Rp |
| - |
| 122 |
| - |
| 125 |
Total |
|
|
| | | 805 |
|
|
| 736 |
Current maturities (Note 18b) |
|
|
| | | (222) |
|
|
| (194) |
Long-term portion |
|
|
| | | 583 |
|
|
| 542 |
68
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
19. | LONG-TERM LOANS AND OTHER BORROWINGS (continued) |
a. | Two-step loans (continued) |
| | | | | | | | | |
Lenders | | Currency | | Principal payment schedule | | Interest payment period | | Interest rate per annum | |
Overseas banks | | Yen | | Semi-annually | | Semi-annually | | 2.95% | |
| | US$ | | Semi-annually | | Semi-annually | | 3.85% | |
| | Rp | | Semi-annually | | Semi-annually | | 7.50% | |
The loans were intended for the development of telecommunications infrastructure and supporting telecommunications equipment. These loans will be settled semi-annually and due on various dates until 2024.
The Company had used all facilities under the two-step loans program since 2008 and the withdrawal period for the two-step loans has ended.
Under the loan covenants, the Company is required to maintain financial ratios as follows:
i. | Projected net revenue to projected debt service ratio should exceed 1.2:1 for the two-step loans originating from Asian Development Bank (“ADB”). |
ii. | Internal financing (earnings before depreciation and finance costs) should exceed 20% compared to annual average capital expenditures for loans originating from the ADB. |
As of March 31, 2020, the Company has complied with the above-mentioned ratios.
b. | Bonds and notes |
| | | | | | | | | | |
| | | | March 31, 2020 | | December 31, 2019 | ||||
| | | | Outstanding | | Outstanding | ||||
| | | | Original currency | | Rupiah | | Original currency | | Rupiah |
Bonds and notes | | Currency | | (in millions) | | equivalent | | (in millions) | | equivalent |
Bonds | | | | | | | | | | |
2010 | | | | | | | | | | |
Series B |
| Rp |
| - | | 1,995 |
| - | | 1,995 |
2015 |
|
|
| | | |
| | | |
Series A |
| Rp |
| - | | 2,200 |
| - | | 2,200 |
Series B |
| Rp |
| - | | 2,100 |
| - | | 2,100 |
Series C |
| Rp |
| - | | 1,200 |
| - | | 1,200 |
Series D |
| Rp |
| - | | 1,500 |
| - | | 1,500 |
Medium Term Notes ("MTN") | | | | | | | | | | |
MTN I Telkom 2018 | | | | | | | | | | |
Series A | | Rp | | - | | - | | - | | - |
Series B | | Rp | | - | | 200 | | - | | 200 |
Series C | | Rp | | - | | 296 | | - | | 296 |
MTN Syariah Ijarah I Telkom 2018 | | | | | | | | | | |
Series A | | Rp | | - | | - | | - | | - |
Series B | | Rp | | - | | 296 | | - | | 296 |
Series C | | Rp | | - | | 182 | | - | | 182 |
Total |
|
|
|
|
| 9,969 | |
|
| 9,969 |
Unamortized debt issuance cost |
|
|
| | | (10) | | | | (11) |
Total |
|
|
|
|
| 9,959 | |
|
| 9,958 |
Current maturities (Note 18b) |
|
|
| | | (2,491) | | | | (2,491) |
Long-term portion |
|
|
| | | 7,468 | | | | 7,467 |
i. | Bonds |
2010
| | | | | | | | | | | | | | | |
Bonds | | Principal | | Issuer | | Listed on | | Issuance date | | Maturity date | | Interest | | Interest rate per annum | |
Series B | | 1,995 | | The Company | | IDX | | June 25, 2010 | | July 6, 2020 | | Quartely | | 10.20% | |
The bonds are not secured by specific security but by all of the Company’s assets, movable or non-movable, either existing or in the future (Note 11b.ix). The underwriters of the bonds are
PT Bahana Securities (“Bahana”), PT Danareksa Sekuritas, and PT Mandiri Sekuritas and the trustee is Bank CIMB Niaga. Based on the General Meeting of Bondholders on
September 26, 2018, the trustee was replaced by BTN.
The Company received the proceeds from the issuance of bonds on July 6, 2010.
69
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
19. | LONG-TERM LOANS AND OTHER BORROWINGS (continued) |
b. | Bonds and notes (continued) |
i. | Bonds (continued) |
2010 (continued)
The funds received from the public offering of bonds net of issuance costs, were used to finance capital expenditures which consisted of wave broadband (bandwidth, softswitching, datacom, information technology, and others), infrastructure (backbone, metro network, regional metro junction, internet protocol, and satellite system) and to optimize legacy and supporting facilities (fixed wireline and wireless).
As of December 31, 2019, the rating of the bonds issued by PT Pemeringkat Efek Indonesia (“Pefindo”) is idAAA (Triple A).
Based on the Indenture Trusts Agreement, the Company is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:
1. | Debt to equity ratio should not exceed 2:1 |
2. | EBITDA to interest ratio should not be less than 5:1. |
3. | Debt service coverage is at least 125%. |
As of March 31, 2020, the Company has complied with the above-mentioned ratios.
2015
| | | | | | | | | | | | | | | | |||||||||||||||
| | | | | | | | | | | | | | | ||||||||||||||||
Bonds | | Principal | | Issuer | | Listed on | | Issuance date | | Maturity date | | Interest payment period | | Interest rate per annum | | |||||||||||||||
Series A | | 2,200 | | The Company | | IDX | | June 23, 2015 | | June 23, 2022 | | Quarterly | | 9.93% | | |||||||||||||||
Series B | | 2,100 | | The Company | | IDX | | June 23, 2015 | | June 23, 2025 | | Quarterly | | 10.25% | | |||||||||||||||
Series C | | 1,200 | | The Company | | IDX | | June 23, 2015 | | June 23, 2030 | | Quarterly | | 10.60% | | |||||||||||||||
Series D | | 1,500 | | The Company | | IDX | | June 23, 2015 | | June 23, 2045 | | Quarterly | | 11.00% | | |||||||||||||||
Total | | 7,000 | | | | | | | | | | | | | |
The bonds are not secured by specific security but by all of the Company’s assets, movable or non-movable, either existing or in the future (Note 11b.ix). The underwriters of the bonds are Bahana, PT Danareksa Sekuritas, PT Mandiri Sekuritas, and PT Trimegah Sekuritas Indonesia, Tbk. and the trustee is Bank Permata.
The Company received the proceeds from the issuance of bonds on June 23, 2015.
The funds received from the public offering of bonds net of issuance costs, were used to finance capital expenditures which consisted of wave broadband, backbone, metro network, regional metro junction, information technology application and support, and acquisition of some domestic and international entities.
As of March 31, 2020, the rating of the bonds issued by Pefindo is idAAA (Triple A).
Based on the Indenture Trusts Agreement, the Company is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:
1. | Debt to equity ratio should not exceed 2:1. |
2. | EBITDA to interest ratio should not be less than 4:1. |
3. | Debt service coverage is at least 125%. |
As of March 31, 2020, the Company has complied with the above-mentioned ratios.
ii. | MTN |
MTN I Telkom Year 2018
| | | | | | | | | | | | | | | ||||||||||||||
| | | | | | Issuance | | Maturity | | payment | | Interest rate | | | ||||||||||||||
Notes | | Currency | | Principal | | date | | date | | period | | per annum | | Security | ||||||||||||||
Series A | | Rp | | 262 | | September 4, 2018 | | September 14, 2019 | | Quarterly | | 7.25% | | All assets | ||||||||||||||
Series B | | Rp | | 200 | | September 4, 2018 | | September 4, 2020 | | Quarterly | | 8.00% | | All assets | ||||||||||||||
Series C | | Rp | | 296 | | September 4, 2018 | | September 4, 2021 | | Quarterly | | 8.35% | | All assets | ||||||||||||||
| | | | 758 | | | | | | | | | | |
70
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
19. | LONG-TERM LOANS AND OTHER BORROWINGS (continued) |
b. | Bonds and notes (continued) |
ii. | MTN (continued) |
MTN I Telkom Year 2018 (continued)
Based on Agreement of Issuance and Appointment of Monitoring Agents of Medium Term Notes (“MTN”) I Telkom Year 2018 dated August 31, 2018 as covered by notarial deed No. 24 of Fathiah Helmi, S.H., the Company issued MTN with the principal amount up to Rp758 billion in series.
Bahana, PT BNI Sekuritas, PT CGS-CIMB Sekuritas Indonesia, PT Danareksa Sekuritas, and PT Mandiri Sekuritas act as the Arranger, BTN as the Monitoring Agent and PT Kustodian Sentral Efek Indonesia (“KSEI”) as the Payment Agent and the Custodian. The MTN are traded in private placement programs. The funds obtained from MTN are used for access network and backbone development.
As of March 31, 2020, the rating of the MTN issued by Pefindo is idAAA (Triple A).
Under to the agreement, the Company is required to comply with all covenants or restrictions including maintaining financial ratios as follows:
1. | Debt to equity ratio should not exceed 2:1 |
2. | EBITDA to interest ratio should not be less than 4:1. |
3. | Debt service coverage is at least 125%. |
As of March 31, 2020, the Company has complied with the above-mentioned ratios.
MTN Syariah Ijarah I Telkom Year 2018
| | | | | | | | | | | | | | |
| | | | | | | | | | | | Annual | | |
| | | | | | Issuance | | Maturity | | Return | | return | | |
Notes | | Currency | | Principal | | date | | date | | period | | payment | | Security |
Series A | | Rp | | 264 | | September 4, 2018 | | September 14, 2019 | | Quarterly | | 19 | | The Right to benefit of ijarah objects |
Series B | | Rp | | 296 | | September 4, 2018 | | September 4, 2020 | | Quarterly | | 24 | | The Right to benefit of ijarah objects |
Series C | | Rp | | 182 | | September 4, 2018 | | September 4, 2021 | | Quarterly | | 15 | | The Right to benefit of ijarah objects |
| | | | 742 | | | | | | | | 58 | | |
| | | | | | | | | | | | | | |
Based on Agreement of Issuance and Appointment of Monitoring Agents of MTN Syariah Ijarah Telkom Year 2018 dated August 31, 2018 as covered by notarial deed No. 26 of Fathiah Helmi, S.H., the Company issued MTN Syariah Ijarah with the principal amount up to Rp742 billion in series.
Bahana, PT BNI Sekuritas, PT CGS-CIMB Sekuritas Indonesia, PT Danareksa Sekuritas, and PT Mandiri Sekuritas act as the Arranger, BTN as the Monitoring Agent and KSEI as the Payment Agent and the Custodian. The MTN Syariah Ijarah are traded in private placement programs. The funds obtained from MTN Syariah Ijarah are used for investment projects. The object of MTN Syariah Ijarah transaction is telecommunication network which is located in the special region of Yogyakarta, its network telecommunication involves cable network, information technology equipments, and other production tools of telecommunication services.
As of March 31, 2020, the rating of the MTN Syariah Ijarah issued by Pefindo is idAAA sy (Triple A Syariah).
Under to the agreement, the Company is required to comply with all covenants or restrictions including maintaining financial ratios as follows:
1. | Debt to equity ratio should not exceed 2:1. |
2. | EBITDA to interest ratio should not be less than 4:1. |
3. | Debt service coverage is at least 125%. |
As of March 31, 2020, the Company has complied with the above-mentioned ratios.
71
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
19. | LONG-TERM LOANS AND OTHER BORROWINGS (continued) |
c. | Bank loans |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | March 31, 2020 | | December 31, 2019 | ||||
| | | | Outstanding | | Outstanding | ||||
| | | | Foreign | | | | Foreign | | |
| | | | currency | | Rupiah | | currency | | Rupiah |
Lenders | | Currency | | (in millions) | | equivalent | | (in millions) | | equivalent |
Related parties | |
| |
| |
| |
| |
|
BNI | | Rp | | - | | 5,841 |
| - | | 5,898 |
Bank Mandiri | | Rp | | - | | 4,678 |
| - | | 7,611 |
BRI | | Rp | | - | | 1,644 |
| - | | 1,758 |
BNI Syariah | | Rp | | - | | 50 | | - | | 52 |
Sub-total | |
| | | | 12,213 |
| | | 15,319 |
Third parties | |
| | | | |
| | | |
MUFG Bank | | Rp | | - | | 2,672 |
| - | | 2,981 |
| | US$ | | 7 | | 109 | | 8 | | 108 |
BCA | | Rp | | - | | 1,561 |
| - | | 1,665 |
Bank Sindikasi | | Rp | | - | | 1,000 |
| - | | 1,250 |
| | US$ | | 34 | | 549 | | 37 | | 514 |
DBS | | Rp | | - | | 716 |
| - | | 770 |
UOB Singapore | | US$ | | 35 | | 577 |
| 40 | | 556 |
Citibank | | Rp | | - | | 500 | | - | | 500 |
HSBC | | Rp | | - | | 500 | | - | | 500 |
Bank of China | | Rp | | - | | 500 | | - | | 500 |
ANZ | | Rp | | - | | 440 |
| - | | 440 |
Bank CIMB Niaga | | Rp | | - | | 402 |
| - | | 439 |
UOB | | Rp | | - | | 357 |
| - | | 357 |
PT Bank BTPN ("BTPN") (dahulu | | | | | | | | | | |
"Sumitomo") | | Rp | | - | | 250 |
| - | | 537 |
PT Bank ICBC Indonesia ("ICBC") | | Rp | | - | | 147 |
| - | | 159 |
Exim Bank of Malaysia Berhad | | MYR | | 4 | | 16 |
| 8 | | 28 |
Others | | Rp | | - | | 16 |
| - | | 9 |
| | MYR | | 2 | | 9 |
| 11 | | 38 |
Sub-total | |
| | | | 10,321 |
| | | 11,351 |
Total | |
|
| | | 22,534 |
| | | 26,670 |
Unamortized debt issuance cost | |
|
| | | (60) | | | | (65) |
|
|
|
| | | 22,474 |
| | | 26,605 |
Current maturities (Note 18b) | |
|
| | | (4,895) | | | | (5,434) |
Long-term portion | |
|
| | | 17,579 |
| | | 21,171 |
Other significant information relating to bank loans as of March 31, 2020 is as follows:
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | Borrower | | Currency | | Total facility (in billions)* | | Current period payment (in billions)* | | Principal payment schedule | | Interest payment period | | Interest rate per annum | | Security** |
BNI | | | | | | | | | | | | | | | | |
2018 - 2019 | | GSD, The Company | | Rp | | 2,542 | | 12 | | 2018 - 2026 | | Monthly, Quarterly | | 8.75%, 9.00% | | Trade receivables and all assets |
2013 - 2018 | | The Company, GSD, TLT, Sigma, Dayamitra, Telkom Infratel | | Rp | | 7,062 | | 348 | | 2016 - 2033 | | Monthly, | | 1 month JIBOR + 2.20% - 3.00%; | | Trade receivables, and Property and equipment |
Bank Mandiri | | | | | | | | | | | | | | | | |
2017 - 2018 | | The Company, Balebat | | Rp | | 1,455 | | 68 | | 2018 - 2025 | | Monthly, | | 8.50% - 9.00% | | Trade receivables, Inventory, and Property and equipment |
2017 - 2019 | | GSD, Dayamitra, Telkomsel | | Rp | | 3,763 | | 65 | | 2019 - 2026 | | Quarterly | | 3 months JIBOR + 0.60% - 1.85% | | None |
BRI | | | | | | | | | | | | | | | | |
2019 | | The Company | | Rp | | 2,000 | | - | | 2021 - 2026 | | Quarterly | | 9.00% | | All assets |
2017 - 2019 | | The Company, Dayamitra, GSD | | Rp | | 1,253 | | 114 | | 2019 - 2025 | | Quarterly | | 3 months JIBOR + 1,85% - 2,00% | | Property and equipment |
72
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
19. | LONG-TERM LOANS AND OTHER BORROWINGS (continued) |
c. | Bank loans (continued) |
Other significant information relating to bank loans as of March 31, 2020 is as follows (continued):
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | Borrower | | Currency | | Total facility (in billions)* | | Current period payment (in billions)* | | Principal payment schedule | | Interest payment period | | Interest rate per annum | | Security** |
MUFG Bank | | | | | | | | | | | | | | | | |
2015 - 2018 | | GSD, Metra, Dayamitra | | Rp | | 3,200 | | 42 | | 2016 - 2025 | | Quarterly | | 3 months JIBOR + 1.43% - 2.60% | | Property and equipment and lease agreement |
2018 | | TII | | US$ | | 0.01 | | 0.001 | | 2019 - 2022 | | Quarterly | | 3 months LIBOR + 1.25% | | None |
Syndication of | | | | | | | | | | | | | | | | |
Banks | | | | | | | | | | | | | | | | |
2015 | | The Company, GSD | | Rp | | 3,000 | | 250 | | 2016 - 2022 | | Quarterly | | 3 months JIBOR + 2.00% | | All Assets |
2018 | | TII | | US$ | | 0.09 | | 0.003 | | 2019 - 2024 | | Semi-annually | | 6 months LIBOR + 1.25% | | None |
Citibank | | | | | | | | | | | | | | | | |
2018 | | The Company | | Rp | | 1,000 | | - | | 2019 - 2020 | | Quarterly | | 8.50% | | None |
BCA | | | | | | | | | | | | | | | | |
2016 - 2018 | | PST | | Rp | | 805 | | 67 | | 2017 - 2024 | | Quarterly | | 10.00%-10.50% | | Property and equipment |
2017 - 2019 | | Metra, Dayamitra, Telkom Infratel | | Rp | | 1,470 | | 38 | | 2018 - 2027 | | Quarterly | | 3 months JIBOR + 1.50% - 1.85% | | Property and equipment |
UOB Singapore | | | | | | | | | | | | | | | | |
2016 | | TII | | US$ | | 0.06 | | 0.005 | | 2019 - 2024 | | Monthly | | 1 month JIBOR + 1.25% | | None |
BTPN | | | | | | | | | | | | | | | | |
2017 - 2019 | | GSD, Metra, Dayamitra, TII | | Rp | | 559 | | 20 | | 2018 - 2023 | | Quarterly | | 3 months JIBOR + 1.44% - 1.50% | | None |
Bank CIMB | | | | | | | | | | | | | | | | |
Niaga | | | | | | | | | | | | | | | ||
2017-2019 | | GSD, Metra | | Rp | | 495 | | 30 | | 2018 - 2024 | | Quarterly | | 3 months JIBOR + 1.50% | | None |
ANZ | | | | | | | | | | | | | | | ||
2015 - 2017 | | GSD, PINS | | Rp | | 500 | | - | | 2020 | | Quarterly | | 3 months JIBOR + 2.00% | | None |
UOB | | | | | | | | | | | | | | | ||
2016 | | Dayamitra | | Rp | | 500 | | - | | 2018 - 2024 | | Quarterly | | 3 months JIBOR + 2.20% | | Property and equipment |
DBS | | | | | | | | | | | | | | | ||
2016-2017 | | Nutech,Telkomsat | | Rp | | 136 | | 17 | | 2017 - 2022 | | Monthly, Quarterly | | 8.61% - 11.00%, | | Trade receivables and Property and equipment |
2017-2019 | | PINS, Dayamitra | | Rp | | 900 | | 38 | | 2018 - 2026 | | Quarterly | | 3 months JIBOR + 1.50%-1.85% | | None |
ICBC | | | | | | | | | | | | | | | | |
2017 | | GSD | | Rp | | 272 | | 11 | | 2017 - 2023 | | Quarterly | | 3 months JIBOR + 2.36% | | Trade receivables and Property and equipment |
Exim Bank of | | | | | | | | | | | | | | | | |
Malaysia | | | | | | | | | | | | | | | ||
Berhad | | | | | | | | | | | | | | | | |
2016 | | TII | | MYR | | 0.06 | | 0,003 | | 2017 - 2020 | | Monthly | | ECOF + 1.89% | | None |
HSBC | | | | | | | | | | | | | | | | |
2019 | | Telkomsela | | Rp | | 1.000 | | - | | 2019 - 2021 | | Monthly | | 3 month JIBOR + 0.60% | | None |
Bank of China | | | | | | | | | | | | | | | | |
2019 | | Telkomsela | | Rp | | 1.000 | | - | | 2019 - 2021 | | Monthly | | 3 month JIBOR + 0.60% | | None |
BNI Syariah | | | | | | | | | | | | | | | | |
2018-2019 | | SSI | | Rp | | 55 | | 2 | | 2019 - 2024 | | Monthly | | 10% | | None |
* | In original currency |
** | Refer to Note 5, note 7 and Note 11 for details of trade receivables, inventories, and property and equipment pledged as collaterals. |
a | Telkomsel has no collateral for its bank loans, or other credit facilities. The terms of the various agreements with Telkomsel’s lenders and financiers require compliance with a number of covenants and negative covenants 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 Telkomsel’s capacity to comply with its obligation under the facility. The terms of the relevant agreements also contain default and cross default clauses. As of December 31, 2019 Telkomsel has complied with the above covenants. |
b Based on the latest amendment on December 11, 2018.
73
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
19.LONG-TERM LOANS AND OTHER BORROWINGS (continued)
c. | Bank loans (continued) |
As stated in the agreements, the Group is required to comply with all covenants or restrictions such as dividend distribution, obtaining new loans, and maintaining financial ratios. As of March 31, 2020, the Group has complied with all covenants or restrictions, except for certain loans. As of December 31, 2019, the Group obtained waiver from lenders for the non-fulfillment financial ratios except for the current ratios in Telkom Infratel. Waiver for Telkom Infratel received on January 27, 2020, as a result, as of December 31, 2019, bank loans from BCA amounting to Rp50 billion are reclassified as current liabilities.
On March 13, 2015, the Company, GSD, Metra, and Infomedia entered into several credit facilities agreements with BTPN, MUFG Bank, ANZ, and syndication of banks (BCA and BNI) with total facilities amounting to Rp750 billion, Rp750 billion, Rp500 billion, and Rp3,000 billion, respectively. Based on amendment on August 2, 2016, Dayamitra and Telkom Akses are included as borrowers into BTPN and MUFG Bank credit facilities agreement and excluded GSD from those agreement. Based on the latest amendment on March 13, 2017, PINS is included as one of borrower into ANZ’s credit facility agreement. In 2017, PINS drawn down the facility amounted to Rp200 billion. As of March 31, 2020, the unused facilities for BTPN, MUFG Bank, and ANZ amounted to Rp82.5 billion, Rp82.5 billion, and Rp60 billion, respectively.
On March, 24, 2017, the Company, Dayamitra, Sigma, GSD, and TII entered several credit agreements with BRI, BNI, and Bank Mandiri with total facilities amounting to Rp1,000 billion, Rp2,005 billion and Rp1,500 billion, respectively. As of March 31, 2020, the unused facility for BNI and Bank Mandiri amounted to Rp68 billion and Rp5 billion, respectively.
On March 30, 2017, The Company, GSD, Metra, Dayamitra, PINS, and Telkomsat entered into several credit agreements with MUFG Bank, BTPN, DBS, Bank CIMB Niaga, and BCA with total facilities amounting to Rp400 billion, Rp400 billion, Rp850 billion, Rp495 billion, and Rp850 billion, respectively. Based on amendment on June 29, 2017, Telkom Infratel is included as one of borrower into BCA’s credit facility agreement to replace PINS. As of March 31, 2020, the unused facilities for MUFG Bank, BTPN, DBS, Bank CIMB Niaga, and BCA amounted to Rp79 billion, Rp79 billion, Rp420 billion, Rp20 billion, and Rp564 billion, respectively.
On March, 27, 2018, the Company and Dayamitra entered into several credit agreements with BRI, Bank Mandiri and MUFG Bank with total facilities amounting to Rp200 billion, Rp775 billion, and Rp800 billion, respectively. As of March 31, 2020, all facilities has been used.
On January 15, 2019, the Company, Infomedia, TII, Telkom Infratel, Telkomsat, and Sigma entered into several agreements with BTPN with total facilities amounting to Rp628 billion. As of March 31, 2020, the unused facility for BTPN amounting to Rp538 billion.
On June 19, 2019, the Company and Dayamitra entered into a credit agreement with BNI with total facilities amounting to Rp2,160 billion and Rp840 billion, respectively. As of March 31, 2020, the unused facility for BNI amounting to Rp2,800 billion.
On July 8, 2019, The Company, PINS, and GSD entered into a credit agreement with Bank CIMB Niaga with total facilities amounting to Rp500 billion, Rp300 billion, and Rp200 billion, respectively. As of March 31, 2020, the unused facilities for Bank CIMB Niaga amounting to Rp908 billion.
On November 21, 2019, The Company, Dayamitra, and GSD entered into a credit agreement with Bank Mandiri with total facilities amounting to Rp1,400 billion, Rp1,113 billion, and Rp200 billion, respectively. As of March 31, 2020, the unused facilities for Bank Mandiri amounting to Rp1,805 billion.
These credit facilities were obtained by the Group for working capital purposes.
74
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
19.LONG-TERM LOANS AND OTHER BORROWINGS (continued)
d. | Other borrowing |
| | | | | | | |||||||
| | |
| Outstanding | |||||||||
Lenders | | Currency | | March 31, 2020 | | December 31, 2019 | |||||||
PT Sarana Multi Infrastruktur | | Rp | | 3,655 | | 3,748 | |||||||
Unamortized debt issuance cost | | | | (7) | | (8) | |||||||
Total | | | | 3,648 | | 3,740 | |||||||
Current maturities (Note 18b) | | | | (851) | | (627) | |||||||
Long-term portion | | | | 2,797 | | 3,113 |
i. | Dayamitra |
| | | | | | | | |||||||
| | Borrower | | Currency | | Total facility (in billions) | | Current period payment (in billions) | | Principal payment schedule | | Interest rate per annum | | Security |
PT Sarana Multi | | | | | | | | | | | | | | |
Infrastruktur | | | | | | | | | | | | | | |
October 12, 2016 | | Dayamitra | | Rp | | 700 | | 50 | | Semi-annually | | 3 months JIBOR + 1.85% | | Property and equipment (Note 9) |
March 29, 2017 | | Dayamitra | | Rp | | 600 | | 43 | | Semi-annually | | 3 months JIBOR + 2.20% | | Property and equipment (Note 9) |
Under the agreement, Dayamitra is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:
1. | Debt to equity ratio should not exceed 5:1. |
2. | Net debt to EBITDA ratio should not exceed 4:1. |
3. | Minimal debt service coverage at least 100%. |
As of March 31, 2020, Dayamitra has complied with the above-mentioned ratios.
i. | The Company |
| | | | | | | | | | | | | | |
| | Borrower | | Currency | | Total facility (in billions) | | Current period payment (in billions) | | Principal payment schedule | | Interest rate per annum | | Security |
PT Sarana Multi | | | | | | | | | | | | | | |
Infrastruktur | | | | | | | | | | | | | | |
November 14, 2018 | | The Company | | Rp | | 1,000 | | - | | Semi-annually | | 8.35% | | None |
March 29, 2019 | | The Company | | Rp | | 2,273 | | - | | Semi-annually | | 8.49% | | None |
Under the agreement, The Company is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:
1. | Debt to equity ratio should not exceed 2:1. |
2. | EBITDA to interest ratio should not be less than 4:1. |
3. | Minimal debt service coverage at least 125%. |
As of March 31, 2020, The Company has complied with the above-mentioned ratios.
iii. | Telkomsat |
| | | | | | | | |||||||
| | Borrower | | Currency | | Total facility (in billions) | | Current period payment (in billions) | | Principal payment schedule | | Interest rate per annum | | Security |
PT Sarana Multi | | | | | | | | | | | | | | |
March 29, 2019 | | Telkomsat | | Rp | | 164 | | - | | Quarterly | | 8.49% | | None |
| | | | | | | | | | (2020-2024) | | | | |
Under the agreement, Telkomsat is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:
1. | Debt to equity ratio should not exceed 2:1. |
2. | EBITDA to interest ratio should not be less than 4:1. |
3. | Minimal debt service coverage at least 125%. |
As of March 31, 2020, Telkomsat has complied with the above-mentioned ratios.
On March 29, 2019, The Company, Telkomsat, and Telkom Infratel entered into a credit agreement with PT Sarana Multi Infrastruktur amounting to Rp2,273 billion, Rp164 billion, and Rp563 billion, respectively. As of March 31, 2020, the unused facility for PT Sarana Multi Infrastruktur amounting to Rp1,206 billion, included Telkom Infratel amounting to Rp563 billion.
75
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
20. | NON-CONTROLLING INTERESTS |
The details of non-controlling interests are as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
Non-controlling interests in net assets of subsidiaries: | | | |
Telkomsel | 19,646 | | 17,221 |
GSD | 224 | | 230 |
Metra | 126 | | 130 |
TII | 104 | | 108 |
Total | 20,100 | | 17,689 |
| | | |
| 2020 | | 2019 |
Non-controlling interests in net income (loss) | | | |
of subsidiaries: | | | |
Telkomsel | 2,452 | | 2,287 |
GSD | (4) | | (7) |
Metra | (4) | | (1) |
TII | (5) | | 1 |
Total | 2,439 | | 2,280 |
Material partly-owned subsidiary
As of March 31, 2020 and December 31, 2019, the non-controlling interest holds 35% ownership interest in Telkomsel which is considered material to the company (Note 1d).
The summarized financial information of Telkomsel below is provided based on amounts before elimination of inter-company balances and transactions.
Summarized statement of financial position
| | | |
| March 31, 2020 | | December 31, 2019 |
Current assets | 23,637 | | 18,657 |
Non-current assets | 85,160 | | 64,073 |
Current liabilities | (27,656) | | (20,892) |
Non-current liabilities | (24,952) | | (12,629) |
Total equity | 56,189 | | 49,209 |
Attributable to: | | | |
Equity holders of parent company | 36,525 | | 31,988 |
Non-controlling interest | 19,664 | | 17,221 |
Summarized statements of profit or loss and other comprehensive income
| | | |
| 2020 | | 2019 |
Revenues | 22,424 | | 22,198 |
Operating expenses | (13,276) | | (13,491) |
Other expense - net | (269) | | (10) |
Profit before income tax | 8,879 | | 8,697 |
Income tax expense - net | (1,823) | | (2,161) |
Profit for periode from continuing operations | 7,056 | | 6,536 |
Other comprehensive income (loss) - net | - | | - |
Net comprehensive income for the year | 7,056 | | 6,536 |
| | | |
Attributable to non-controlling interest | 2,469 | | 2,287 |
Dividend paid to non-controlling interest | - | | - |
Summarized statements of cash flows
| | | |
| 2020 | | 2019 |
Operating activities | 12,451 | | 11,415 |
Investing activities | (1,719) | | (2,637) |
Financing activities | (5,804) | | (1,946) |
Net increase in cash and cash equivalents | 4,928 | | 6,832 |
76
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
21.CAPITAL STOCK
| | | | | | |
| | March 31, 2020 | ||||
Description | | Number of shares | | Percentage of ownership | | Total paid-in capital |
Series A Dwiwarna share | | | | | | |
Government | | 1 | | 0 | | 0 |
Series B shares | | | | | | |
Government | | 51,602,353,559 | | 52.09 | | 2,580 |
The Bank of New York Mellon Corporation* | | 4,448,766,580 | | 4.49 | | 223 |
Directors (Note 1b): | | | | | | |
Ririek Adriansyah | | 1,156,955 | | 0 | | 0 |
Harry Mozarta Zen | | 977,292 | | 0 | | 0 |
Faizal R. Djoemadi | | 182,000 | | 0 | | 0 |
Edi Witjara | | 32,500 | | 0 | | 0 |
Siti Choiriana | | 540 | | 0 | | 0 |
Bogi Witjaksono | | 300 | | 0 | | 0 |
Public (individually less than 5%) | | 43,008,746,873 | | 43.42 | | 2,150 |
Total | | 99,062,216,600 | | 100 | | 4,953 |
| | | | | | |
| | | | December 31, 2019 | | |
Description | | Number of shares | | Percentage of ownership | | Total paid-in capital |
Series A Dwiwarna share | | | | | | |
Government | | 1 | | 0 | | 0 |
Series B shares | | | | | | |
Government | | 51,602,353,559 | | 52.09 | | 2,580 |
The Bank of New York Mellon Corporation* | | 4,601,837,380 | | 4.65 | | 230 |
Directors (Note 1b): | | | | | | |
Ririek Adriansyah | | 1,156,955 | | 0 | | 0 |
Harry Mozarta Zen | | 474,692 | | 0 | | 0 |
Faizal R. Djoemadi | | 126,800 | | 0 | | 0 |
Bogi Witjaksono | | 55,000 | | 0 | | 0 |
Edi Witjara | | 32,500 | | 0 | | 0 |
Siti Choiriana | | 540 | | 0 | | 0 |
Public (individually less than 5%) | | 42,856,179,173 | | 43.26 | | 2,143 |
Total | | 99,062,216,600 | | 100 | | 4,953 |
* The Bank of New York Mellon Corporation serves as the Depositary of the registered ADS holders for the Company’s ADSs.
The Company issued only 1 Series A Dwiwarna share which is held by the Government and can not 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 Boards of Commissioners and Directors, issuance of new shares, and amendments of the Company’s Articles of Association.
77
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
22. | ADDITIONAL PAID-IN CAPITAL |
| | | | |
| | March 31, 2020 | | December 31, 2019 |
Proceeds from sale of 933,333,000 shares in excess of | | | | |
par value through IPO in 1995 | | 1,446 | | 1,446 |
Excess of value over cost of selling 211,290,500 shares | | | | |
under the treasury stock plan phase I | | 544 | | 544 |
Excess of value over cost of selling 215,000,000 shares | | | | |
under the treasury stock plan phase II | | 576 | | 576 |
Excess of value over cost of treasury stock transferred to | | | | |
employee stock ownership program | | 228 | | 228 |
Excess of value over cost of selling 22,363,000 shares | | | | |
under the treasury stock plan phase III | | 36 | | 36 |
Excess of value over cost of selling 864,000,000 shares | | | | |
under the treasury stock plan phase IV | | 1,996 | | 1,996 |
Capitalization into 746,666,640 Series B shares in 1999 | | (373) | | (373) |
Reduction additional paid in capital as a result of | | | | |
cancellation treasury stock | | (2,454) | | (2,454) |
Differences from acquisition of non-controlling interest | | (22) | | (22) |
Difference in value arising from restructuring transactions | | | | |
between entities under common control | | 734 | | 734 |
Net | | 2,711 | | 2,711 |
23. | OTHER EQUITY |
| | | | ||
| March 31, 2020 | | December 31, 2019 | ||
Translation adjustment | 987 | | 568 | ||
Effect of change in equity of associated companies | 386 | | 386 | ||
Unrealized holding gain on available-for-sale securities | 6 | | 54 | ||
Difference due to acquisition of non controlling interests in | | | | ||
subsidiaries | (637) | | (637) | ||
Other equity components | 37 | | 37 | ||
Total | 779 | | 408 |
24. | REVENUES |
| | | | | | | | | | | | |
| | |
| |
| |
| |
| | | Consolidated |
2020 | | Mobile | | Consumer | | Enterprise | | WIB | | Others | | revenue |
Telephone revenues | | 5,073 | | 290 | | 245 | | 77 | | - | | 5,685 |
Interconnection revenues | | 129 | | - | | - | | 1,922 | | - | | 2.051 |
Data, internet, and information | | | | | | | | | | | | |
technology service revenues | | | | | | | | | | | | |
Cellular internet and data | | 15,120 | | - | | - | | - | | - | | 15.120 |
Internet, data communication, and | | | | | | | | | | | | |
information technology services | | - | | 4 | | 1,941 | | 380 | | - | | 2,325 |
Short Messaging Services (“SMS”) | | 1,250 | | - | | 110 | | - | | - | | 1,360 |
Others | | - | | - | | 229 | | 115 | | 58 | | 402 |
Total data, internet, and information | | | | | | | | | | | | |
technology service revenues | | 16,370 | | 4 | | 2,280 | | 495 | | 58 | | 19,207 |
Network revenues | | 1 | | - | | 202 | | 236 | | - | | 439 |
Indihome revenues | | - | | 4,473 | | 604 | | - | | - | | 5,077 |
Other revenues | | | | | | | | | | | | |
Manage service and terminal | | - | | - | | 279 | | - | | - | | 279 |
Call center service | | - | | - | | 163 | | 22 | | - | | 185 |
E-health | | - | | - | | 140 | | - | | - | | 140 |
E-payment | | - | | - | | 100 | | - | | 3 | | 103 |
Others | | - | | 7 | | 328 | | 81 | | 99 | | 515 |
Total other revenues | | - | | 7 | | 1,010 | | 103 | | 102 | | 1,222 |
Total revenues from | | | | | | | | | | | | |
contract with customer | | 21,573 | | 4,774 | | 4,341 | | 2,833 | | 160 | | 33,681 |
Revenues from other source | | - | | - | | - | | 513 | | - | | 513 |
Total revenues | | 21,573 | | 4,774 | | 4,341 | | 3,346 | | 160 | | 34,194 |
Adjustments and eliminations | | - | | (2) | | (17) | | 13 | | (96) | | |
Total external revenues as reported in | | | | | | | | | | | | |
note operating segment | | 21,573 | | 4,772 | | 4,324 | | 3,359 | | 64 | | |
78
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
24. | REVENUES (continued) |
| | | | | | | | | | | | |
| | |
| |
| |
| |
| | | Consolidated |
2019 | | Mobile | | Consumer | | Enterprise | | WIB | | Others | | revenue |
Telephone revenues | | 6,334 | | 372 | | 311 | | 69 | | - | | 7,086 |
Interconnection revenues | | 160 | | - | | - | | 1,454 | | - | | 1,614 |
Data, internet, and information | | | | | | | | | | | | |
technology service revenues | | | | | | | | | | | | |
Cellular internet and data | | 13,049 | | - | | - | | - | | - | | 13,049 |
Internet, data communication, and | | | | | | | | | | | | |
information technology services | | - | | 2 | | 3,130 | | 296 | | - | | 3,428 |
Short Messaging Services (“SMS”) | | 1,787 | | - | | 90 | | - | | - | | 1,877 |
Others | | - | | - | | 67 | | 77 | | 26 | | 170 |
Total data, internet, and information | | | | | | | | | | | | |
technology service revenues | | 14,836 | | 2 | | 3,287 | | 373 | | 26 | | 18,524 |
Network revenues | | 2 | | - | | 198 | | 237 | | - | | 437 |
Indihome revenues | | - | | 3,704 | | 538 | | - | | - | | 4,242 |
Other revenues | | | | | | | | | | | | |
Manage service and terminal | | - | | - | | 811 | | - | | - | | 811 |
Tower lease | | - | | - | | - | | 266 | | - | | 266 |
Call center service | | - | | - | | 129 | | 39 | | - | | 168 |
E-payment | | - | | - | | 141 | | - | | 7 | | 148 |
E-health | | - | | - | | 136 | | - | | - | | 136 |
Others | | - | | - | | 769 | | 481 | | 158 | | 1,408 |
Total other revenues | | - | | - | | 1,986 | | 786 | | 165 | | 2,937 |
Total revenues | | 21,332 | | 4,078 | | 6,320 | | 2,919 | | 191 | | 34,840 |
Adjustments and eliminations | | - | | 1 | | 1 | | (1) | | (159) | | |
Total external revenues as reported in | | | | | | | | | | | | |
note operating segment | | 21,332 | | 4,079 | | 6,321 | | 2,918 | | 32 | | |
Management expects that most of the transaction price allocated to the unsatisfied contracts as of March 31, 2020 will be recognised as revenue during the next reporting period. Unsatisfied performance obligations as of March 31, 2020, wihich management expect to be realised within one year is Rp7,811 billion, and more than one year Rp4,544 billion.
The Group entered into non-cancelable lease agreements. The lease agreements cover leased lines, telecommunication equipment, and land building. These leases have terms of between 1 to 10 years. All leases include a clause to enable upward revision of the rental charge on annual basis according to prevailing market conditions. These lessee is also required to provide a residual value guaranted on the properties. Rental income recognized by the Group for the three months period ended March 31, 2020 is Rp513 billion.
There is no revenue from major customer with exceeds 10% of total revenues for the three months period ended March 31, 2020.
Refer to Note 33 for details of related parties transactions.
Presentation of revenue accounts in the consolidated financial statement for the three months period ended March 31, 2019 have been adjusted in accordance with the presented accounts in the consolidated financial statement for the three months period ended March 31, 2020. Summary of adjusted revenue accounts for the three months ended March 31, 2019, are as follows:
| | | | | | | | |
| Before adjustment | | Adjustment | | After adjustment | |||
| Consumer | Enterprise | | Consumer | Enterprise | | Consumer | Enterprise |
Telephone revenues | 801 | 523 | | (429) | (212) | | 372 | 311 |
Data, internet, and information technology | | | | | | | | |
service revenues | | | | | | | | |
Internet, data communication, and information | | | | | | | | |
technology services | 2,820 | 3,411 | | (2,818) | (281) | | 2 | 3,130 |
Pay TV | 449 | 41 | | (449) | (41) | | - | - |
Others | 8 | 68 | | (8) | (1) | | - | 67 |
Network revenues | - | 201 | | - | (3) | | - | 198 |
Indihome revenues | - | - | | 3,704 | 538 | | 3,704 | 538 |
79
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
25. | PERSONNEL EXPENSES |
The breakdown of personnel expenses is as follows:
| | | |
| 2020 | | 2019 |
Salaries and related benefits | 1,992 | | 1,945 |
Vacation pay, incentives, and other benefits | 1,026 | | 829 |
Pension benefit cost (Note 31) | 262 | | 223 |
Net periodic post-employment health care | | | |
benefit cost (Note 31) | 71 | | 50 |
LSA expense (Note 32) | 43 | | 38 |
Obligation under the Labor Law (Note 31) | 40 | | 36 |
Other post-employment benefit cost (Note 31) | 6 | | 8 |
Others | 11 | | 3 |
Total | 3,451 | | 3,132 |
Refer to Note 33 for details of related parties transactions.
26. OPERATION, MAINTENANCE AND TELECOMMUNICATION SERVICE EXPENSES
The breakdown of operation, maintenance and telecommunication service expenses is as follows:
| | | |
| 2020 | | 2019 |
Operation and maintenance | 4,583 | | 6,595 |
Radio frequency usage charges (Note 36c.i) | 1,450 | | 1,376 |
Leased lines and CPE | 810 | | 884 |
Concession fees and USO charges | 603 | | 593 |
Electricity, gas, and water | 270 | | 261 |
Cost of SIM cards and vouchers (Note 7) | 121 | | 173 |
Vehicles rental and supporting facilities | 96 | | 104 |
Tower leases | 3 | | 117 |
Cost of sales of handset (Note 7) | 2 | | 432 |
Others | 314 | | 174 |
Total | 8,252 | | 10,709 |
Refer to Note 33 for details of related parties transactions.
27. GENERAL AND ADMINISTRATIVE EXPENSES
The breakdown of general and administrative expenses is as follows:
| | | |
| 2020 | | 2019 |
Provision for impairment of receivables | | | |
and contract assets | 697 | | 496 |
General expenses | 332 | | 316 |
Professional fees | 190 | | 96 |
Training, education, and recruitment | 126 | | 92 |
Travelling | 91 | | 96 |
Others | 136 | | 198 |
Total | 1,572 | | 1,294 |
Refer to Note 33 for details of related parties transactions.
80
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28.TAXATION
| | | |
| March 31, 2020 | | December 31, 2019 |
The Company: |
| |
|
Income Tax | | | |
Article 22 - Witholding tax on goods delivery | | | |
and imports | 6 | | 6 |
Article 23 - Witholding tax on service delivery | 90 | | 90 |
VAT | 649 | | 678 |
Subsidiaries: | | | |
Income tax | 66 | | - |
Income tax corporate | | | |
Article 4 (2) - Final tax | - | | 13 |
Article 22 - Witholding tax on goods delivery | | | |
and imports | 3 | | - |
Article 23 - Witholding tax on service delivery | 136 | | 2 |
VAT | 2,401 | | 2,458 |
Total prepaid taxes | 3,351 | | 3,247 |
Current portion | (2,702) | | (2,569) |
Non-current portion (Note 13) | 649 | | 678 |
b.Claims for tax refund
| | | |
| March 31, 2020 |
| December 31, 2019 |
The Company | | | |
Corporate income tax | 103 | | 406 |
VAT | 230 | | 2,046 |
Subsidiaries | | | |
Corporate income tax | 985 | | 992 |
Income tax article 23 - Witholding tax on | | | |
services delivery | 44 | | 44 |
VAT | 659 | | 1,170 |
Total claims for tax refund | 2,021 |
| 4,658 |
Current portion | (914) | | (992) |
Non-current portion (Note 13) | 1,107 |
| 3,666 |
81
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28.TAXATION (continued)
c. | Taxes payable |
| | | | |||
| March 31, 2020 | | December 31, 2019 | |||
The Company: | | | | |||
Income taxes | | | | |||
Article 4 (2) - Final tax | 31 | | 43 | |||
Article 21 - Individual income tax | 47 | | 101 | |||
Article 22 - Withholding tax on goods delivery | | | | |||
and imports | 11 | | 7 | |||
Article 23 - Withholding tax on services | 20 | | 38 | |||
Article 25 - Installment of corporate income tax | 6 | | 6 | |||
Article 26 - Withholding tax on non-resident | | | | |||
income | 6 | | 9 | |||
Article 29 - Corporate income tax | 1,576 | | 1,059 | |||
VAT - Tax collector | 207 | | 487 | |||
| 1,904 |
| 1,750 | |||
Subsidiaries: |
|
|
| |||
Income taxes | | | | |||
Article 4 (2) - Final tax | 62 | | 153 | |||
Article 21 - Individual income tax | 82 | | 108 | |||
Article 22 - Withholding tax on goods delivery | | | | |||
and imports | 1 | | 3 | |||
Article 23 - Withholding tax on services | 22 | | 80 | |||
Article 25 - Installment of corporate income tax | 732 | | 7 | |||
Article 26 - Withholding tax on non-resident | | | | |||
income | 37 | | 5 | |||
Article 29 - Corporate income tax | 536 | | 473 | |||
VAT | 902 | | 852 | |||
| 2,374 |
| 1,681 | |||
Total taxes payable | 4,278 |
| 3,431 |
d. The components of consolidated income tax expense (benefit) are as follows:
| | | | |||
| 2020 |
| 2019 | |||
Current | | | | |||
The Company | 600 | | 537 | |||
Subsidiaries | 2,231 | | 2,312 | |||
| 2,831 | | 2,849 | |||
Deferred |
| |
| |||
The Company | 38 | | (49) | |||
Subsidiaries | (246) | | 25 | |||
| (208) | | (24) | |||
Net income tax expense | 2,623 | | 2,825 |
82
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
d. The components of consolidated income tax expense (benefit) are as follows (continued):
The reconciliation between the profit before income tax and the estimated taxable income of the Company for the three months period ended March 31, 2020 and 2019 are as follows:
| | | | |||
| 2020 |
| 2019 | |||
Profit before income tax consolidation | 10,924 | | 11,329 | |||
Add back consolidation eliminations | 5,372 | | 6,825 | |||
Consolidated profit before income tax and eliminations | 16,296 | | 18,154 | |||
Less: profit before income tax of the subsidiaries | (9,721) | | (11,386) | |||
Profit before income tax attributable to the Company | | | | |||
before deduction of income subject to final tax | 6,575 | | 6,768 | |||
Less: income subject to final tax | (104) | | (115) | |||
Profit before income tax attributable to the Company | | | | |||
after deduction of income subject to final tax | 6,471 | | 6,653 | |||
| | | | |||
Temporary differences: | | | | |||
Provision for impairment of receivables | 365 | | 350 | |||
Provision for employee benefits | 248 | | (27) | |||
Deferred installation fee | 41 | | 27 | |||
Depreciation and gain on sale of property | | | | |||
and equipment | (70) | | (50) | |||
Net periodic pension and other post-employment | | | | |||
benefits costs | (58) | | (9) | |||
Finance leases | (12) | | (9) | |||
Other provisions | 242 | | 214 | |||
Net temporary differences | 756 | | 496 | |||
Permanent differences: | | | | |||
Net periodic post-retirement health care benefit costs | 71 | | 51 | |||
Employee benefits | 44 | | 41 | |||
Donations | 39 | | 20 | |||
Equity in net income of associates and subsidiaries | (4,322) | | (4,668) | |||
Others | 33 | | 20 | |||
Net permanent differences | (4,135) | | (4,536) | |||
Taxable income of the Company | 3,092 | | 2,613 | |||
Current corporate income tax expense | 587 | | 523 | |||
Final income tax expense | 13 | | 14 | |||
Total current income tax expense of the Company | 600 | | 537 | |||
Current income tax expense of the subsidiaries | 2,231 | | 2,312 | |||
Total current income tax expense | 2,831 | | 2,849 |
83
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28.TAXATION (continued)
The reconciliation between the income tax expense calculated by applying the applicable tax rate of 19% to the profit before income tax less income subject to final tax, and the net income tax expense as shown in the consolidated statements of profit or loss and other comprehensive income is as follows:
| | | |
| 2020 |
| 2019 |
Profit before income tax consolidation | 10,924 | | 11,329 |
(Less) add: consolidated income subject to final tax - net | (513) | | (651) |
| 10,411 |
| 10,678 |
| | | |
Income tax expense calculated at the Company’s | | | |
applicable statutory tax rate of 19% | 1,979 | | 2,136 |
Difference in applicable statutory tax rate for | | | |
subsidiaries | 250 | | 436 |
Non-deductible expenses | 196 | | 99 |
Final income tax expense | 13 | | 14 |
Unrecognized deferred tax | 10 | | - |
Others | 175 | | 140 |
Net income tax expense | 2,623 |
| 2,825 |
Tax Law No. 36/2008 with implementing rules under Government Regulation No.56/2015 stipulates a reduction of 5% from the top rate applicable to qualifying listed companies, for those whose stocks are traded in the IDX which meet the prescribed criteria that the public owns 40% or more of the total fully paid and traded shares, and such shares are owned by at least 300 parties, with each party owning less than 5% of the total paid-up shares. These requirements must be met by a company for a period of 183 days in one fiscal year. The Company has met all of the required criteria; therefore, for the purpose of calculating current income tax expense and liabilities for the financial reporting the years ended December 31, 2019, the Company has reduced the applicable tax rate by 5%.
On March 2020, the Government issued Government Regulation in lieu of Law No. 1 of 2020 governing the adjustment of domestic corporate taxpayer income tax rates and permanent establishment to be 22% for fiscal years 2020 and 2021 and 20% starting in the fiscal year 2022. For domestic taxpayers who meet certain terms and conditions, can get a 3% lower tax rate. For the three months period ended March 31, 2020, the Company still met all the required criteria, so the Company used a tax rate of 3% lower in calculating the Company's corporate income tax expense and liabilities.
The Company applied the tax rate of 19% for the three months period ended March 31, 2020 and 20% for the year ended December 31, 2019. The subsidiaries applied the tax rate of 22% for the three monts period ended March 31, 2020 and 25% for the year ended December 31, 2019.
The Company will submit the above taxable income and current income tax expense computation in its income tax return (“Surat Pemberitahuan Tahunan” or Annual Tax Return) for fiscal year 2020 that will be reported to the tax office based on prevailing regulations.
84
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28.TAXATION (continued)
e.Tax assessment
(i) | The Company |
VAT fiscal year 2007
On November 15, 2013, the Company received Tax Underpayment Assessment Letters (“SKPKBs”) for the underpayment of VAT for the fiscal period January to September and
November 2007 amounting to Rp142 billion.
On January 20, 2014, the Company filed its objection to the Tax Authorities, and in December 2014, Tax Authorities issued a decision which rejected the objections. The Company accepted the assessment on the underpayment of VAT amounting to Rp22 billion (including penalty of Rp10 billion). The accepted portion was charged to the 2014 consolidated statements of profit or loss and other comprehensive income. The portion of VAT international incoming call interconnection amounting to Rp120 billion (including penalty of Rp39 billion) is recognized as claim for tax refund.
On March 12, 2015, the Company has filed an appeal to the Tax Court on the rejection of its objection to the assessment of VAT international incoming call interconnection.
On August 1 and 2, 2017, the Tax Court issued a verdict regarding to VAT international incoming call interconnection appeal process. The verdict stated that the international incoming call interconnection transaction is the taxable services and categorized as export service that subject to 0% VAT and granted all the Company’s appeal. In September 2017, the Company received tax refund amounting to Rp116 billion and for remaining balance amounting to Rp5 billion has been compensated to Tax Collection Letter (”STP”) for withholding tax article 21 and SKPKBs of VAT on tax collected and self-assessed offshore VAT for fiscal year 2012. On October 26 and November 23, 2017, the Company received a notification from Tax Court that Tax Authorities filed a request for judicial review. On November 23 and December 21, 2017, to response the judicial review from Tax Authorities, the Company filed the contra memorandum for judicial review to Supreme Court (“SC”) regarding to VAT international incoming call interconnection.
In September and November 2018, the Company received the verdicts from the SC, which were decided in April and October 2018, as the result of the tax audit for fiscal period June to August and November 2007. Based on the verdict, the SC rejected the Tax Authorities’ judicial review and strengthen the Tax Court’s verdict.
In January, February and March 2019, the Company received the SC’s verdicts, which were decided in October and December 2018, as the result of the tax audit for fiscal period January to April and September 2007. On September 19, 2019, the Company received the verdict from the SC, which was decided on May, 8, 2019, as the result of the tax audit for fiscal period
May 2007. Based on the verdict, the SC rejected the Tax Authorities’ judicial review and strengthen the Tax Court’s verdict. Accordingly, the Company has received all the SC’s verdicts as the result of the assessment regarding to VAT international incoming call interconnection for fiscal period January to September and November 2007 that strengthen the Company’s tax treatment regarding to the VAT for international incoming call interconnection transactions.
Income tax and VAT fiscal year 2011
On October 21, 2014, the Company received SKPKBs from the Tax Authorities as the result of the tax audit for fiscal year 2011. Based on SKPKBs, the Company received VAT underpayment assessment for the fiscal period January to December 2011 amounting to Rp182.5 billion (including penalty of Rp60 billion) and corporate income tax underpayment amounting to Rp2.8 billion (including penalty of Rp929 million). The accepted portion of SKPKBs amounting to Rp4.7 billion (including penalty of Rp2 billion) was charged to the 2014 consolidated statements of profit or loss and other comprehensive income. The portion of VAT international incoming call interconnection amounting to Rp177.9 billion (including penalty of Rp58 billion) is recognized as claim for tax refund.
85
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
e.Tax assessment (continued)
(i) | The Company (continued) |
VAT fiscal year 2011
On January 7, 2015, the Company filed an objection and on October 20, 2015, Tax Authorities issued a rejection regarding this objection.
On January 20, 2016, the Company filed an appeal on the Tax Court on the rejection of its objection to the assessment of VAT international incoming call interconnection.
On April 4 and 5, 2017, the Tax Court issued a verdict which were decided on March 20, 2017, regarding to VAT international incoming call interconnection appeal process. The verdict stated that the international incoming call interconnection transaction is the taxable services and categorized as export service that subject to 0% VAT and granted the Company’s appeal for the fiscal period January and September to December 2011 amounting to Rp73.9 billion. Tax Court rejected the Company’s appeal for the fiscal period February to August 2011 amounting to Rp104 billion, since the Company did not meet the administrative requirement. Regarding this rejection, on June 19 and 21, 2017, the Company filed judicial review. In May 2017, the Company received tax refund for the fiscal period January and September to December 2011 amounting to Rp73,9 billion which compensated with STP 2013 and 2014 amounting to Rp59.9 billion and Rp14 billion, respectively.
On October 15, 2018, the Company received a notification from Tax Court that Tax Authorities filed the judicial review for the fiscal period January and September to December 2011. On November 13, 2018, to response the judicial review from Tax Authorities, the Company filed contra memorandum for judicial review to SC for the fiscal period January and September to December 2011. In April and November 2018, the Company received a notification from Tax Court that Tax Authorities filed a contra memorandum for judicial review for the fiscal period February to August 2011.
In May to September, and November, 2019, the Company has received the SC’s verdicts, which were decided in March, April, May, July, August, and September 2019, wherein the SC has granted the Company’s judicial review for fiscal period February, March, and May to August 2011 and rejected the Tax Authorities’s judicial review for the fiscal period January and September to December 2011. On August 21, 2019, the Company received tax refund for fiscal period March, May, and June 2011 amounting to Rp44 billion. Regarding the verdict for the fiscal period April 2011, which was decided in April 2019, the SC granted the Company’s appeal request and the verdict has been uploaded through the SC’s website. Accordingly, as of the date of approval and authorization for the issuance of these consolidated financial statements, the appeal process for fiscal period January to December 2011 has obtained the legal force from the SC.
86
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
e.Tax assessments (continued)
(i) | The Company (continued) |
Income tax and VAT fiscal year 2012
On May 3, 2016, the Tax Authorities issued Field Tax Audit Notification Letter for fiscal period January to December 2012. On November 3, 2016, Tax Authorities issued SKPKBs for fiscal year 2012, wherein the Company was liable for underpayment of corporate income tax amounting to Rp991.6 billion (including penalty of Rp321.6 billion), VAT underpayment amounting to Rp467 billion (including penalty of Rp153.5 billion), self-assessed offshore VAT underpayment amounting to Rp1.2 billion (including penalty of Rp392 million), VAT on tax collected underpayment amounting to Rp57 billion (including penalty of Rp18.5 billion). The Company also received STP for VAT amounting to Rp37.5 billion, withholding tax article 21 underpayment amounting to Rp16.2 billion (including penalty of Rp5.3 billion), final withholding tax article 21 underpayment amounting to Rp1.2 billion (including penalty of Rp407 million), withholding tax article 23 underpayment amounting to Rp63.5 billion (including penalty of Rp20.6 billion), withholding tax article 4 (2) underpayment amounting to Rp25 billion (including penalty of Rp8.1 billion), and withholding tax article 26 underpayment amounting to Rp197.6 billion (including penalty of Rp64 billion). The Company has agreed to the recalculation of input tax credit on international incoming call interconnection services amounting to Rp35.2 billion, corporate income tax amounting to Rp613.3 million, and withholding tax article 26 amounting to Rp311.5 million that have been charged in the 2016 consolidated statements of profit or loss and other comprehensive income. On November 16, 2016, the Company filed an objection regarding to the remaining assessments.
On March 1, 2017 and May 9, 2017, the Company received the decision letter from Tax Authorities for the underpayment of self-assessed offshore VAT amounting to Rp1.8 million (including penalty of Rp0.6 million) and the underpayment of VAT on tax collected amounting to Rp4.4 billion (including penalty of Rp1.4 billion). Based on the decision letter, the Company decided to accept the decision from Tax Authorities. On October 19, 2017, the Tax Authorities issued decision letter on Company’s objections, wherein the Tax Authorities has decreased the Company’s underpayment for corporate income tax and increased of the Company’s underpayment for withholding tax article 21, final withholding tax article 21, withholding tax article 23, withholding tax article 4 (2), and withholding tax article 26. Based on decision letter, the Company was liable for underpayment of withholding tax article 21 amounting to Rp20.7 billion (including penalty of Rp6.7 billion), underpayment of final withholding tax article 21 amounting to Rp23.8 billion (including penalty of Rp7.7 billion), underpayment of withholding tax article 23 amounting to Rp115.7 billion (including penalty of Rp37.5 billion), underpayment of withholding tax article 4 (2) amounting to Rp25 billion (including penalty of Rp8.1 billion), underpayment of withholding tax article 26 amounting to Rp197.6 billion (including penalty of Rp64.1 billion), and underpayment of corporate income tax amounting to Rp496.4 billion (including penalty of Rp161 billion). On October 30 and 31, 2017, the Tax Authorities issued decision letter on Company’s objection, wherein the Tax Authorities has decreased and increased the Company’s underpayment of VAT for the fiscal period January to December 2012 amounting to Rp429.3 billion (including penalty of Rp141.2 billion).
On January, 17 and 26, 2018, the Company filed an appeal on the rejection of its objection. In September 2018, the Tax Authorities issued the revision of decision letter on Company’s objection, wherein the Tax Authorities has decreased the Company’s underpayment of VAT for fiscal period March, April, September, and December 2012 amounting to Rp9.9 billion (including penalty of Rp3.2 billion). Therefore, as of December 31, 2018, the underpayment of VAT fiscal period January to December 2012 amounting to Rp419.4 billion (including penalty of Rp138 billion).
87
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
e.Tax assessments (continued)
(i) | The Company (continued) |
Income tax and VAT fiscal year 2012 (continued)
On December 16, 2019, the Company received the Tax Court’s verdict regarding tax dispute for all taxes for fiscal year 2012. The Tax Court granted the several Company’s request regarding withholding tax. Therefore, the amount should be paid by the Company for withholding tax article 21 amounting to Rp52.4 milion (including penalty of Rp17 million), withholding tax article 23 amounting to Rp1.4 billion (including penalty of Rp 0.4 billion), withholding tax article 26 amounting to Rp802.6 million (including penalty of Rp260.3 million), and withholding tax article 4 (2) amounting to Rp1.3 million (including penalty of Rp0.4 million). Regarding appeal request for final withholding tax article 21, the Tax Court granted all the Company’s appeal. Furthermore, the Tax Court granted the several Company’s appeal regarding corporate income tax and VAT. Therefore, the amount should be paid by the Company for corporate income tax amounting to Rp29.6 billion (including penalty of Rp9.6 billion) and VAT amounting to Rp51.1 billion (including penalty of Rp17.5 billion). On February 7, 2020, the Company received a refund of Rp.46.7 billion in December 2012 VAT refunds, all of which was compensated for the January to November 2012 tax return SKPKB.
Income tax and VAT fiscal year 2015
On August 23, 2016, the Tax Authorities issued Field Tax Audit Notification Letter for fiscal period January to December 2015.
On April 25, 2017, the Tax Authorities issued Tax Overpayment Assessment Letter (“SKPLB”) for overpayment of corporate income tax amounting to Rp147 billion, and SKPKBs for underpayment of VAT amounting to Rp13 billion (including penalty of Rp4.1 billion), underpayment of VAT on tax collected amounting to Rp6 billion (including penalty of Rp1.5 billion), underpayment of self-assessed offshore VAT amounting to Rp55.3 billion (including penalty of Rp16.8 billion). The Company also received STP for VAT amounting to Rp34 billion, VAT on tax collected amounting to Rp7 billion, and self-assessed offshore VAT amounting to Rp8 billion. The Company accepted tax audit decision amounting to Rp17 billion for corporate income tax, to transfer deductible temporary differences related to provision for incentives to fixed wireless (Flexi) subscribers’ migration amounting to Rp42 billion from Annual Tax Return of corporate income tax fiscal year 2015 to Annual Tax Return of corporate income tax fiscal year 2016. The Company also accepted underpayment of VAT, underpayment of VAT on tax collected, and STP for VAT on tax collected amounting to Rp26 billion. The accepted portion was charged to the 2017 consolidated statements of profit or loss and other comprehensive income. On July 24, 2017, the Company filed Objection Letter to the Tax Authorities for corporate income tax amounting to Rp210.5 billion and self-assessed offshore VAT amounting to Rp55 billion.
On May 3 and 22, 2018, the Tax Authorities issued decision letter on Company’s objections for SKPLB of self-assessed offshore VAT amounting to Rp54.6 billion, wherein Tax Authorities has decreased the Company’s underpayment and granted all the Company’s objection. The Company has agreed with the Tax Authorities’s decision regarding SKPLB of self-assessed offshore VAT amounting to Rp793 million and has been charged in the 2018 consolidated statements of profit or loss and other comprehensive income. On July 18, 2018, the Tax Authorities issued Decision Letter on Company’s objections for SKPLB of corporate income tax, wherein the Tax Authorities has granted the several Company’s objection and additional amount of overpayment which should be received amounting to Rp76 billion. On October 10, 2018, the Company filed an appeal. As of the date of approval and authorization for the issuance of these consolidated financial statements, the appeal is still in process.
88
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
e.Tax assessments (continued)
(i) | The Company (continued) |
Income tax and VAT fiscal year 2016
On August 25, 2017, the Tax Authorities issued Field Tax Audit Notification Letter for fiscal periods January to December 2016.
On June 7, 2018, Tax Authorities issued SKPLB of corporate income tax amounting to Rp15.3 billion, SKPKB of withholding tax article 26 amounting to Rp556.7 million (including penalty of Rp180.5 million) and SKPLB of VAT amounting to Rp922.7 billion. The Company accepted the assessment on the overpayment of corporate income tax amounting to Rp15.3 billion and for the remaining balance amounting to Rp99.1 billion was charged as current income tax expense on tax assesment, underpayment of withholding tax article 26 amounting to Rp557 million, and correction of VAT In amounting to Rp10.5 billion, STP for VAT on tax collected amounting to Rp7.1 billion, VAT on free gifts amounting to Rp7.3 billion, VAT on transfer asset amounting to Rp1.2 billion, and STP for VAT amounting to Rp1.7 billion. The accepted portion was charged to the 2018 consolidated statements of profit or loss and other comprehensive income. In July 2018, the Company received tax refund amounting to Rp882.7 billion and for the remaining balance amounting to Rp39.9 billion has been compensated to STP for VAT amounting to Rp31.9 billion, VAT on tax collected amounting to Rp7.1 billion, withholding tax article 23 amounting to Rp556 million, and withholding tax article 21 amounting to Rp300 million. On August 31, 2018, the Company filed an objection to the Tax Authorities for VAT international incoming call interconnection services amounting to Rp151.7 billion and STP for VAT amounting to Rp30.3 billion.
On March 11 and May 27, 2019, the Tax Authorities issued decision letter on Company’s objections, wherein the Tax Authorities granted all objections from the Company and increased the amount of overpayment for the fiscal period January to December 2016. In April and July 2019, the Company received tax refund amounting to Rp151.7 billion and amounting to Rp1.9 million has been compensated to withholding tax article 21 for several fiscal periods.
Income tax and VAT fiscal year 2017
On November 6, 2018, the Tax Authorities issued Field Tax Audit Notification Letter for fiscal period January to December 2017.
On November 13 and 14, 2019, the Tax Authorities issued SKPLB of corporate income tax amounting to Rp294.4 billion from overpayment amounting to Rp294.5 billion, SKPLB of VAT amounting to Rp746.9 billion from overpayment amounting to Rp748.3 billion, and SKPKB of withholding tax article 21 amounting to Rp1.8 billion (including penalty of Rp0.5 billion). The Company accepted the tax corrections amounting to Rp1.5 billion which consists of corporate income tax amounting to Rp0.1 billion and input VAT which cannot be credited amounting to Rp1.4 billion. Furthermore, the Company received STP and SKPKB regarding VAT on tax collected amounting to Rp1.2 billion and Rp957 million (including penalty of Rp0.3 billion), respectively. On November 14, 2019, the Tax Authorities issued Notice of Nil Tax Assessment (“SKPN”) regarding self-assessed offshore VAT, withholding tax article 21 final, withholding tax article 22, withholding tax article 26, withholding tax article 4 (2). On January 23 and 24, 2020, the Company received VAT refunds of Rp.746.9 billion and Corporate Income Taxes of Rp.292.3 billion and Rp.2.1 billion has been compensated to SKPKB and STP VAT WAPU.
89
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
e.Tax assessments (continued)
(i) | The Company (continued) |
Income tax fiscal year 2018
On February 17, 2020, the Tax Authorities issued a Field Tax Audit Notification Letter for January to December 2018. On February 25, 2020, the Company has received an Introductory Return for VAT refunds for the January to December 2018 tax period aounting to Rp979.1 billion and Rp30.3 billion which have been compensated to the SKPKB Corporate Income Tax and Withholding Income in the 2012 tax year. As of the date of approval and authorization for the issuance of these consolidated financial statements, the tax audit process is still ongoing.
Income tax and VAT fiscal year 2006
In December 2013, the Tax Court accepted Telkomsel’s appeal on the 2006 VAT and withholding taxes totaling Rp116 billion.
In February 2014, Telkomsel received the refund.
On July 3, 2015, in response to Telkomsel’s letter claiming for interest income related to favorable 2006 VAT and withholding tax verdicts, the Tax Authorities informed Telkomsel that the claim cannot be granted since the Tax Authorities filed a request for judicial review to the SC.
On August 19, 2016, Telkomsel received a notification from the Tax Court that the Tax Authorities filed a request for judicial review to SC for the fiscal year 2006 VAT amounting to Rp108 billion. Telkomsel filed a contra memorandum for judicial review to the SC on September 14, 2016.
In April 2017, Tax Authorities has granted Telkomsel’s claim for interest income which subsequently compensate with the corporate income tax installment for the period of April 2017.
In July 2018, Telkomsel received the official verdict from the SC which stated that the SC has rejected the Tax Authorities request for judicial review.
Income tax and VAT fiscal year 2010
In May and June 2012, Telkomsel received the refund of the penalty on the underpayment of income tax article 25 for fiscal year 2010 amounting to Rp15.7 billion based on the Tax Court’s verdict. On July 17, 2012, the Tax Authorities filed a judicial review to the SC on the Tax Court’s Verdict. On September 14, 2012, Telkomsel filed a contra memorandum for judicial review to the SC. On May 24, 2012, Telkomsel filed an objection to the Tax Authorities for the 2010 underpayment of VAT amounting to Rp290.6 billion (including penalty of Rp67 billion) and recorded it as a claim for tax refund.
On May 2, 2016, Telkomsel received a notification from the Tax Court that the Tax Authorities filed a judicial review for 2010 underpayment of VAT amounting to Rp290.6 billion. On May 27, 2016, Telkomsel filed a contra memory to the SC. In July 2016, conservatively, Telkomsel recognized the tax penalty amounting to Rp15.7 billion as expense based on its previous experience on a similar income tax case.
On May 9, 2017, Telkomsel received the official verdict from the SC which rejected Telkomsel’s request, therein Telkomsel paid the underpayment on July 10, 2017. On July 19, 2017, Telkomsel filed the second judicial review to contest against the SC’s verdict.
On August 8, 2018, the SC accepted Telkomsel’s judicial review.
90
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
e.Tax assessments (continued)
Income tax and VAT fiscal year 2010 (continued)
On February 18, 2019, Telkomsel received ”Surat Pelaksanaan Putusan Peninjauan Kembali” (”SP2PK”) from the Tax Authorities regarding the VAT for fiscal year 2010 amounting to Rp290.6 billion. On March 25, 2019, Telkomsel received the refund from the Tax Authorities regarding the VAT for fiscal year 2010 amounting to Rp290.6 billion.
Income tax and VAT fiscal year 2011
On February 15, 2016, Telkomsel filed an appeal to the Tax Authorities for the 2011 underpayment of corporate income tax amounting to Rp250 billion (including penalty of Rp81.1 billion). Subsequently, on March 17, 2016, Telkomsel also filed an appeal to the Tax Court for the underpayment of VAT amounting to Rp1.2 billion (including penalty of Rp392 million).
On February 6, 2017, Telkomsel received the Tax Court’s verdict for VAT cases of Rp1.2 billion in favor of Telkomsel. Subsequently, Telkomsel received the tax refund in March and June 2017. On March 2, 2017, Telkomsel received the Tax Court’s verdict for the underpayment of corporate income tax which partially accepted Telkomel’s appeal amounting to Rp247.6 billion and recorded the amount as part of claim for tax refund. On August 31, 2017, Telkomsel received the tax refund. In July and October 2017, Telkomsel received notification that the Tax Authorities had filed a judicial review to the SC for corporate income tax and VAT amounting to Rp62 billion and Rp1.2 billion, respectively. Telkomsel submitted its contra memorandum for judicial review in August and November 2017.
As of December 31, 2018, Telkomsel has received partial official verdicts from the SC which rejected the Tax Authorities’s judicial review for VAT case amounting to Rp1.1 billion.
On October 17, 2019, Telkomsel filed a letter to Tax Court requesting the remaining official verdicts regarding VAT which have been announced by SC in favor of Telkomsel. In October 2019, Telkomsel has received the official verdicts from the SC which rejected the Tax Authorities’ judicial review for corporate income tax amounting to Rp62 billion.
Income tax and VAT fiscal year 2014
On May 31, 2019, Telkomsel received the SKPKB and STP for the fiscal year 2014 amounting to Rp150.6 billion (including penalty of Rp54.6 billion). Telkomsel accepted and paid the portion of Rp16.5 billion on June 27, 2019 and recorded it as other expense. On August 20, 2019, Telkomsel has paid amounting to Rp99.1 billion and recorded it as claim for tax refund. Subsequently, on August 23, 2019, Telkomsel filed an objection to the Tax Authorities amounting to Rp134.1 billion. As of the date of approval and authorization for the issuance of these consolidated financial statements, the objection is still in process.
Income tax and VAT fiscal year 2015
On August 1, 2019, Telkomsel received the SKPKB and STP for fiscal year 2015 amounting to Rp384.8 billion (including penalty of Rp128.6 billion). On August 28, 2019, Telkomsel has paid the whole amount. For the amount of Rp34.6 billion was charged to the statement of profit or loss and other comprehensive income and for the remaining portion amounting to Rp350.2 billion was recorded as claim for tax refund. On September 24, 2019, Telkomsel filed an objection to the Tax Authorities amounting to Rp350.2 billion. As of the date of approval and authorization for the issuance of these consolidated financial statements, the objection is still in process.
91
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
f.Deferred tax assets and liabilities
The details of the Group's deferred tax assets and liabilities are as follows:
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | Effect of adoption | | | | Credited to | | | | |
| | | of new | | (Charged) | | other | | Charged to | | |
| December 31, | | accounting | | credited to profit | | comprehensive | | equity and | | March 31, |
| 2019 | | standards | | or loss | | income | | reclassification | | 2020 |
The Company | | | | | | | | | | | |
Deferred tax assets: |
| |
| |
| |
| |
| |
|
Provision for impairment of receivables | 760 | | 46 | | (34) | | - | | - | | 772 |
Net periodic pension and other | | | | | | | | | | | |
post-employment benefit costs | 837 | | - | | (108) | | - | | - | | 729 |
Difference between accounting and tax | | | | | | | | | | | |
bases of property and equipment | 427 | | - | | 18 | | - | | - | | 445 |
Provision for employee benefits | 230 | | - | | 55 | | - | | - | | 285 |
Deferred installation fee | 92 | | - | | (3) | | - | | - | | 89 |
Land rights, intangible assets and others | 19 | | - | | (1) | | - | | - | | 18 |
Accrued expenses and provision for | | | | | | | | | | | |
inventory obsolescence | 75 | | (133) | | 34 | | - | | - | | (24) |
Total deferred tax assets | 2,440 | | (87) | | (39) | | - | | - | | 2,314 |
Deferred tax liabilities: | | | | | | | | | | | |
Finance leases | (5) | | - | | (2) | | - | | - | | (7) |
Valuation of long-term investment | (11) | | - | | 2 | | - | | - | | (9) |
Total deferred tax liabilities | (16) | | - | | - | | - | | - | | (16) |
Deferred tax assets of the Company - net | 2,424 | | (87) | | (39) | | - | | - | | 2,298 |
Deferred tax assets of the other | | | | | | | | | | | |
subsidiaries - net | 474 | | - | | 52 | | - | | - | | 526 |
Total deferred tax asset - net | 2,898 | | (87) | | 13 | | - | | - | | 2,824 |
Telkomsel | | | | | | | | | | | |
Deferred tax assets: | | | | | | | | | | | |
Provision for employee benefits | 865 | | - | | (37) | | - | | - | | 828 |
Provision for impairment of receivables | 259 | | 56 | | 10 | | - | | - | | 325 |
Total deferred tax assets | 1,124 | | 56 | | (27) | | - | | - | | 1,153 |
Deferred tax liabilities: | | | | | | | | | | | |
Finance leases | (1,099) | | - | | 85 | | - | | - | | (1,014) |
Difference between accounting and tax | | | | | | | | | | | |
bases of property and equipment | (557) | | - | | 272 | | - | | - | | (285) |
License amortization | (151) | | - | | 17 | | - | | - | | (134) |
Total deferred tax liabilities | (1,807) | | - | | 374 | | - | | - | | (1,433) |
Deferred tax liabilities of Telkomsel - net | (683) | | 56 | | 347 | | - | | - | | (280) |
Deferred tax liabilities of the other | | | | | | | | | | | |
subsidiaries - net | (547) | | 6 | | (148) | | - | | (39) | | (728) |
Total deferred tax liabilities - net | (1,230) | | 62 | | 199 | | - | | (39) | | (1,008) |
| | | | | | | | | | | |
92
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
f.Deferred tax assets and liabilities (continued)
The details of the Group's deferred tax assets and liabilities are as follows (continued):
| | | | | | | | | | |||
| | | | | Credited to | | | | | |||
| | | (Charged) | | other | | Charged to | | | |||
| December 31, | | credited to profit | | comprehensive | | equity and | | December 31, | |||
| 2018 | | or loss | | income | | reclassification | | 2019 | |||
The Company | | | | | | | | | | |||
Deferred tax assets: |
| |
| |
| |
| |
| |||
Net periodic pension and other | | | | | | | | | | |||
post-employment benefit costs | 663 | | (70) | | 244 | | - | | 837 | |||
Provision for impairment of receivables | 632 | | 128 | | - | | - | | 760 | |||
Difference between accounting and tax | | | | | | | | | | |||
bases of property and equipment | 420 | | 7 | | - | | - | | 427 | |||
Provision for employee benefits | 215 | | 15 | | - | | - | | 230 | |||
Deferred installation fee | 92 | | 0 | | - | | - | | 92 | |||
Accrued expenses and provision for | | | | | | | | | | |||
inventory obsolescence | 79 | | (4) | | - | | - | | 75 | |||
Land rights, intangible assets and others | 9 | | 10 | | - | | - | | 19 | |||
Total deferred tax assets | 2,110 | | 86 | | 244 | | - | | 2,440 | |||
Deferred tax liabilities: | | | | | | | | | | |||
Valuation of long-term investment | (11) | | - | | - | | - | | (11) | |||
Finance leases | (1) | | (4) | | - | | - | | (5) | |||
Total deferred tax liabilities | (12) | | (4) | | - | | - | | (16) | |||
Deferred tax assets of the Company - net | 2,098 | | 82 | | 244 | | - | | 2,424 | |||
Deferred tax assets of the other | | | | | | | | | | |||
subsidiaries - net | 406 | | 152 | | 10 | | (94) | | 474 | |||
Total deferred tax assets - net | 2,504 | | 234 | | 254 | | (94) | | 2,898 | |||
Telkomsel | | | | | | | | | | |||
Deferred tax assets: | | | | | | | | | | |||
Provision for employee benefits | 641 | | 83 | | 141 | | - | | 865 | |||
Provision for impairment of receivables | 270 | | (11) | | - | | - | | 259 | |||
Total deferred tax assets | 911 | | 72 | | 141 | | - | | 1,124 | |||
Deferred tax liabilities: | | | | | | | | | | |||
Finance leases | (896) | | (203) | | - | | - | | (1,099) | |||
Difference between accounting and tax | | | | | | | | | | |||
bases of property and equipment | (616) | | 68 | | - | | (9) | | (557) | |||
License amortization | (118) | | (33) | | - | | - | | (151) | |||
Total deferred tax liabilities | (1,630) | | (168) | | - | | (9) | | (1,807) | |||
Deferred tax liabilities of Telkomsel - net | (719) | | (96) | | 141 | | (9) | | (683) | |||
Deferred tax liabilities of the other | | | | | | | | | - | |||
subsidiaries - net | (533) | | 165 | | 16 | | (195) | | (547) | |||
Total deferred tax liabilities - net | (1,252) | | 69 | | 157 | | (204) | | (1,230) |
As of March 31, 2020 and December 31, 2019, the aggregate amounts of temporary differences associated with investments in subsidiaries and associated companies, for which deferred tax liabilities have not been recognised were Rp35,172 billion and Rp29,731 billion, respectively.
Realization of the deferred tax assets is dependent upon the Group’s capability in generating future profitable operations. Although realization is not assured, the Group believes that it is probable that these deferred tax assets will be realized through reduction of future taxable income when temporary differences reverse. The amount of deferred tax assets is considered realizable; however, it can be reduced if actual future taxable income is lower than estimates.
g. | Administration |
From 2008 to 2019, the Company has been consecutively entitled to income tax rate reduction of 5% for meeting the requirements in accordance with the Government Regulation No. 81/2007 as amended by Government Regulation No. 77/2013 and the latest by Government Regulation No. 56/2015 in conjunction with PMK No. 238/PMK.03/2008. On the basis of historical data, for the year ended December 31, 2019 and 2018, the Company calculates the deferred tax using the tax rate of 20%.
93
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
28. | TAXATION (continued) |
g. | Administration (continued) |
The taxation laws of Indonesia require that the Company and its local subsidiaries submit to individual tax returns on the basis of self-assessment. Under prevailing regulations, the Directorate General of Taxes (”DGT”) may assess or amend taxes within a certain period. For fiscal years 2007 and earlier, the period is within ten years from the time the tax became due, but not later than 2013, while for fiscal years 2008 and onwards, the period is within five years from the time the tax became due.
The Ministry of Finance of the Republic of Indonesia has issued Regulation No. 85/PMK.03/2012 dated June 6, 2012 as amended by PMK No. 136 - PMK.03/2012 dated August 16, 2012 concerning the appointment of State-Owned Enterprises ("SOEs") to withhold, deposit and report VAT and Sales Tax on Luxury Goods ("PPnBM") according to the procedures outlined in the Regulation which is effective from July 1, 2012. The Ministry of Finance of the Republic of Indonesia also has issued Regulation No. 224/PMK.011/2012 dated December 26, 2012 concerning the appointment of SOEs to withhold income tax article 22 as amended by PMK No. 34/PMK.010/2017 dated March 1, 2017. The Company has withheld, deposited, and reported the VAT, PPnBM and also income tax article 22 in accordance with the Regulations.
In May 2019, the Company was appointed as Low Risk Taxable Entrepreneur through DGT Decree No.KEP-00080/WPJ.19/KP.04/2019. In accordance with the Ministry of Finance Regulation No. 39/PMK.03/2018 dated April 12, 2018 as amended by PMK No. 117/PMK.03/2019 dated August 16, 2019, the Company was given the preliminary return on tax overpayment as referred to the taxation laws.
29. | BASIC EARNINGS PER SHARE |
Basic earnings per share is computed by dividing profit for the year attributable to owners of the parent company amounting to Rp5,862 billion and Rp6,224 billion by the weighted average number of shares outstanding during the period totaling 99,062,216,600 shares for the three months period ended March 31, 2020 and 2019, respectively. The weighted average number of shares takes into account the weighted average effect of changes in treasury stock transaction during the year.
Basic earnings per share amounting to Rp59.17 and Rp62.83 (in full amount) for the three months period ended March 31, 2020 and 2019, respectively.
The Company does not have potentially dilutive financial investments for the three months period ended March 31, 2020 and 2019.
30. | CASH DIVIDENDS AND GENERAL RESERVE |
Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 133 dated
May 24, 2019 of Ashoya Ratam, S.H., M.Kn., the Company’s stockholders approved the distribution of cash dividend and special cash dividend for 2018 amounting to Rp10,819 billion (Rp109.2 per share) and Rp5,410 billion (Rp54.61 per share), respectively.
Under the Limited Liability Company Law, the Company is required to establish a statutory reserve amounting to at least 20% of its issued and paid-up capital. The balance of the appropriated retained earnings of the Company as of March 31, 2020 and December 31, 2019 amounting to Rp15,337 billion, respectively.
94
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS |
The details of pension and other post-employment benefit liabilities are as follow:
| | | |||
| Notes | | March 31, 2020 | | December 31, 2019 |
Pension benefit and other post-employment | | | | | |
benefit obligations | | | | | |
Pension benefit | | | | | |
The Company - funded | 31a.i.a | | | | |
Defined pension benefit obligation | 31a.i.a.i | | 2,404 | | 2,338 |
Additional pension benefit obligation | 31a.i.a.ii | | - | | - |
The Company - unfunded | 31a.i.b | | 1,371 | | 1,479 |
Telkomsel | 31a.ii | | 2,310 | | 2,209 |
Telkomsat | | | - | | 0 |
MD Media | | | - | | 0 |
Infomedia | | | | | 0 |
Projected pension benefit obligations | | | 6,085 | | 6,026 |
Net periodic post-employment health care | | | | | |
benefit | 31b | | 1,067 | | 996 |
Other post-employment benefit | 31c | | 348 | | 366 |
Obligation under the Labor Law | 31d | | 730 | | 690 |
Total | | | 8,230 | | 8,078 |
The details of net pension benefit expense recognized in the consolidated statements of profit or loss and other comprehensive income is as follows:
| | | | | |
| Notes | | 2020 | | 2019 |
Pension benefit cost | | | | | |
The Company - funded | 31a.i.a | | | | |
Defined pension benefit obligation | 31a.i.a.i | | 123 | | 102 |
Additional pension benefit obligation | 31a.i.a.ii | | 0 | | - |
The Company - unfunded | 31a.i.b | | 29 | | 40 |
Telkomsel | 31a.ii | | 110 | | 81 |
MD Media | | | - | | - |
Infomedia | | | - | | - |
Telkomsat | | | - | | - |
Total periodic pension benefit cost | 25 | | 262 | | 223 |
Net periodic post-employment health care | | | | | |
benefit cost | 25,31b | | 71 | | 50 |
Other post-employment benefit cost | 25,31c | | 6 | | 8 |
Obligation under the Labor Law | 25,31d | | 40 | | 36 |
Total | | | 379 | | 317 |
a. | Pension benefit cost |
i. | The Company |
a. | Funded pension plan |
i. | Defined pension benefit obligation |
The Company sponsors a defined benefit pension plan for employees with permanent status prior to July 1, 2002. The plan is governed by the pension laws in Indonesia and managed by Telkom Pension Fund (“Dana Pensiun Telkom” or “Dapen”). Pension Fund Management in accordance with the Pension Fund and Investment Directives Regulations determined by the Founder is carried out by the Board of Management. The Board of Mangement is monitored by the Oversight Board consisting of representatives of the Company and participants.
95
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
a. | Pension benefit costs (continued) |
i. | The Company (continued) |
a. | Funded pension plan (continued) |
i. | Defined pension benefit obligation (continued) |
The pension benefits are paid based on the participating employees’ latest basic salary at retirement and the number of years of their service. The participating employees contribute 18% (before March 2003: 8.4%) of their basic salaries to the pension fund. The Company made contributions to the pension fund amounted to Rp57 billion and Rp233 billion, for the three months period ended March 31, 2020 and for the years ended December 31, 2019, respectively.
Risks exposed to defined benefit programs are risks such as asset volatility and changes in bond yields. The project liabilities are calculated using a discount rate that refers to the level of government bond yields, if the return on program assets is lower, it will result in a program deficit. A decrease in the yield of government bonds will increase the program liabilities, although this will be offset in part by an increase in the value of the program bonds held. The Company ensures that the investment position is set within the framework of asset-liability matching ("ALM") that has been formed to achieve long-term results that are in line with the liabilities in the defined benefit pension plan. Within the ALM framework, the Company's objective is to adjust its pension assets and liabilities by investing in a well diversified portfolio to produce an optimal rate of return, taking into account the level of risk. Investment in the program has been well diversified, so that one investment's poor performance will not have a material impact on all asset groups.
The following table presents the changes in projected pension benefit obligations, changes in pension benefit plan assets, funded status of the pension plan and net amount recognized in the consolidated statements of financial position as of March 31, 2020, and December 31, 2019 under the defined benefit pension plan:
| | | | |
| March 31, 2020 | | December 31, 2019 | |
Changes in projected pension benefit | | | | |
obligation | | | | |
Projected pension benefit obligations at | | | | |
beginning of year | 22,061 | | 20,121 | |
Charged to profit or loss: | | | | |
Service costs | 65 | | 259 | |
Interest costs | 386 | | 1,599 | |
Pension plan participants’ contributions | 7 | | 33 | |
Actuarial (gain) losses recognized in OCI | (2,292) | | 1,514 | |
Pension benefits paid | (383) | | (1,465) | |
Projected pension benefit obligations at | | | | |
end of period | 19,844 | | 22,061 | |
Changes in pension benefit plan assets | | | | |
Fair value of pension plan assets at | | | | |
beginning of year | 19,723 | | 19,064 | |
Interest income | 346 | | 1,524 | |
Return on plan assets (excluding amount | | | | |
included in net interest expense) | (2,292) | | 398 | |
Employer’s contributions | 57 | | 233 | |
Pension plan participants’ contributions | 7 | | 32 | |
Pension benefits paid | (383) | | (1,465) | |
Provision of additional benefit | - | | - | |
Plan administration cost | (18) | | (63) | |
Fair value of pension plan assets at | | | | |
end of period | 17,440 | | 19,723 | |
Projected pension benefit obligations at | | | | |
end of period | 2,404 | | 2,338 |
96
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
| | | |
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
b. | Pension benefit costs (continued) |
ii. | The Company (continued) |
a. | Funded pension plan (continued) |
i. | Defined pension benefit obligation (continued) |
As of March 31, 2020 and December 31, 2019, plan assets consist of:
| | | | | | | | ||||||
| March 31, 2020 | | December 31, 2019 | ||||||||||
| Quoted in | | | Quoted in | | ||||||||
| active market | | Unquoted | | active market | | Unquoted | ||||||
Cash and cash equivalents | 883 | | - | | 521 | | - | ||||||
Equity instruments: | | | | | | | | ||||||
Finance | 1,159 | | - | | 1,735 | | - | ||||||
Consumer goods | 843 | | - | | 1,085 | | - | ||||||
Infrastructure, utilities and | | | | | | | | ||||||
transportation | 378 | | - | | 540 | | - | ||||||
Construction, property and | | | | | | | | ||||||
real estate | 93 | | - | | 210 | | - | ||||||
Basic industry and chemical | 106 | | - | | 135 | | - | ||||||
Trading, service and investment | 240 | | - | | 395 | | - | ||||||
Mining | 96 | | - | | 159 | | - | ||||||
Agriculture | 31 | | - | | 70 | | - | ||||||
Miscellaneous industries | 174 | | - | | 292 | | - | ||||||
Equity-based mutual fund | 514 | | - | | 1,027 | | - | ||||||
Fixed income instruments: | | | | | | | | ||||||
Corporate bonds | - | | 5,826 | | - | | 6,077 | ||||||
Government bonds | 6,126 | | - | | 6,493 | | - | ||||||
Mutual funds | 133 | | - | | 85 | | - | ||||||
Non-public equity: | | | | | | | | ||||||
Direct placement | - | | 374 | | - | | 374 | ||||||
Property | - | | 185 | | - | | 186 | ||||||
Others | - | | 279 | | - | | 339 | ||||||
Total | 10,776 | | 6,664 | | 12,747 | | 6,976 |
Pension plan assets include Series B shares issued by the Company with fair values totalling to Rp275 billion and Rp346 billion, representing 1.58% and 1.75% of total plan assets as of March 31, 2020 and December 31, 2019, respectively, and bonds issued by the Company with fair value totalling to Rp321 billion and Rp341 billion representing 1.84% and 1.73% of total plan assets as of March 31, 2020 and December 31, 2019, respectively.
The expected return is determined based on market expectation for returns over the entire life of the obligation by considering the portfolio mix of the plan assets. The actual return on plan assets was Rp(1,964) billion and Rp1,858 billion for the three months period ended March 31, 2020 and for the years ended December 31, 2019, respectively. Based on the Company’s policy issued on January 14, 2014 regarding Dapen’s Funding Policy, the Company will not contribute to Dapen when Dapen’s Funding Sufficiency Ratio (FSR) is above 105%. Based on Dapen’s financial statement as of December 31, 2019, Dapen’s FSR is below 105%. Therefore, the Company will contribute to the defined benefit pension plan in 2020.
Based on the Company's policy issued on June 7, 2017 regarding Pension Regulation by Dapen, the Company provided other benefits in the form of additional benefit in 2017 amounted to Rp4.5 million to monthly pension beneficiaries who retired before end of June 2002 and Rp2.25 million to monthly pension beneficiaries who retired starting from the end of June 2002 until the end of April 2017.
97
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
a. | Pension benefit costs (continued) |
i. | The Company (continued) |
a. | Funded pension plan (continued) |
i. | Defined pension benefit obligation (continued) |
The movement at the projected pension benefit obligations for the three months period ended March 31, 2020 and for the year ended December 31, 2019 are as follow:
| | | |
| March 31, 2020 | | December 31, 2019 |
Projected pension benefit obligations | | | |
(prepaid pension benefit cost) at | | | |
beginning of year | 2,338 | | 1,057 |
Net periodic pension benefit cost | 123 | | 398 |
Employer Contribution | (57) | | (233) |
Actuarial (gain) losses recognized in OCI | (2,292) | | 1,514 |
Return on plan assets (excluding amount | | | |
(included in net interest expense) | 2,292 | | (398) |
Projected pension benefit obligations at | | | |
end of period | 2,404 | | 2,338 |
The components of net periodic pension benefit cost for the three months period ended March 31, 2020 and 2019 are as follow:
| | | |
| 2020 | | 2019 |
Service costs | 65 | | 65 |
Plan administration cost | 18 | | 191 |
Net interest cost | 40 | | 18 |
Net periodic pension benefit cost | 123 | | 102 |
Amount charged to subsidiaries under | | | |
contractual agreements | - | | - |
Net periodic pension benefit cost less | | | |
cost charged to subsidiaries | 123 | | 102 |
Amounts recognised in other comprehensive for the three months period ended
March 31, 2020 and 2019 are as follow:
| | | |
| 2020 | | 2019 |
Actuarial (gain) losses recognized during | | | |
the period | (2,292) | | 478 |
Return on plan assets (excluding amount | | | |
included in net interest expense) | 2,292 | | (478) |
Net | - | | - |
The actuarial valuation for the defined benefit pension plan was performed based on the measurement date as of December 31, 2019 and 2018, with reports dated April 20, 2020 and April 1, 2019, respectively, by PT Towers Watson Purbajaga (“TWP”), an independent actuary in association with Willis Towers Watson (“WTW”) (formerly Towers Watson). The principal actuarial assumptions used by the independent actuary for the years ended December 31, 2019 and 2018 are as follows:
| | | |
| 2019 | | 2018 |
Discount rate | 7.25% | | 8.25% |
Rate of compensation increases | 8.00% | | 8.00% |
Indonesian mortality table | 2011 | | 2011 |
98
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
a.Pension benefit costs (continued)
i. | The Company (continued) |
a. | Funded pension plan (continued) |
ii. | Additional pension benefit obligation |
Based on the Company’s policy issued on June 7, 2017 regarding Pension Regulation by Dapen, the Company established additional benefit fund at maximum 10% of surplus of defined benefit plan, when FSR is above 105% and return on investment is above actuarial discount rate of pension fund.
| | | |
| March 31, 2020 | | December 31, 2019 |
Changes in projected pension benefit | | | |
obligations | | | |
Projected pension benefit obligations at | | | |
beginning of year | - | | 104 |
Charged to profit or loss: | | | |
Interest costs | - | | 9 |
Actuarial gain recognized in OCI | - | | (17) |
Pension benefits paid | - | | (96) |
Projected pension benefit obligations | | | |
at end of period | - | | - |
Changes in pension benefit plan assets | | | |
Fair value of pension plan assets at | | | |
beginning of year | 5 | | 98 |
Interest income from assets | - | | 8 |
Provision of additional benefit | - | | - |
Return of benefit plan assets | - | | (5) |
Pension benefits paid | - | | (96) |
Fair value of pension plan assets at | | | |
end of period | 5 | | 5 |
(Surplus) deficit in the program | (5) | | (5) |
Changes in asset ceiling excluding amount | | | |
in net interest | 5 | | 5 |
Projected pension benefit obligations | | | |
at end of period | - | | - |
As of March 31, 2020 there is no plan asset on additional pension benefit obligation. Plan asset will be recognised in accordance with the reserve of additional benefits funds determined by the management of Dapen with the approval of the Oversight Board.
Changes in additional pension benefit obligation for the three months period ended March 31, 2020 and for the year ended December 31, 2019 are as follow:
| | | |
| March 31, 2020 | | December 31, 2019 |
Additional pension benefit obligation at | | | |
beginning of year | - | | 6 |
Net periodic pension benefit cost | 0 | | 1 |
Actuarial gain recognized in OCI | 0 | | (12) |
Return on plan asset | 0 | | 5 |
Projected additional pension benefit | | | |
obligation at end of period | 0 | | - |
99
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
a.Pension benefit costs (continued)
i. | The Company (continued) |
a. | Funded pension plan (continued) |
ii. | Additional pension benefit obligation (continued) |
The components of additional pension benefit cost for the three months period ended March 31, 2020 and 2019 are as follows:
| | | |
| 2020 | | 2019 |
Net interest costs | 0 | | - |
Pension benefit costs | 0 | | - |
Amounts recognized in other comprehensive amounted to RpNil as of March 31, 2020 and 2019, respectively.
The actuarial valuation for the additional pension benefit plan was performed based on the measurement date as of December 31, 2019 and 2018, with report dated April 20, 2020 and April 1, 2019, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary for the years ended December 31, 2019 and 2018 is as follows:
| | | |
| 2019 | | 2018 |
Rate of return on investment | 9.00% - 9.50% | | 9.30% - 10.00% |
Discount rate | 7.25% | | 8.25% |
Actuarial discount rate of pension fund | 9.25% - 9.50% | | 9.25% - 9.50% |
Rate of compensation increases | 8.00% | | 8.00% |
Indonesian mortality table | 2011 | | 2011 |
b. | Unfunded pension plan |
The Company sponsors unfunded defined benefit pension plans and a defined contribution pension plan for its employees.
The defined contribution pension plan is provided to employees with permanent status hired on or after July 1, 2002. The plan is managed by Financial Institutions Pension Fund (Dana Pensiun Lembaga Keuangan or “DPLK”). The Company’s contribution to DPLK is determined based on a certain percentage of the participants’ salaries and amounted to Rp4 billion and Rp55 billion, for the three months period ended March 31, 2020 and for the years ended December 31, 2019, respectively.
Since 2007, the Company has provided pension benefit based on uniformization for both participants prior to and from April 20, 1992 effective for employees retiring beginning February 1, 2009. In 2010, the Company replaced the uniformization with Manfaat Pensiun Sekaligus (“MPS”). MPS is given to those employees reaching retirement age, upon death or upon becoming disabled starting from February 1, 2009.
The Company also provides benefits to employees during a pre-retirement period in which they are inactive for 6 months prior to their normal retirement age of 56 years, known as pre-retirement benefits (Masa Persiapan Pensiun or “MPP”). 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. Since 2012, the Company has issued a new requirement for MPP effective for employees retiring since April 1, 2012, whereby the employee is required to file a request for MPP and if the employee does not file the request, such employee is required to work until the retirement date.
100
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
a.Pension benefit costs (continued)
i. | The Company (continued) |
b. | Unfunded pension plan (continued) |
The following table presents the changes in the unfunded projected pension benefit obligations for MPS and MPP for the three months period ended March 31, 2020 and for the year ended December 31, 2019:
| | | | ||||
| March 31, 2020 | | December 31, 2019 | ||||
Unfunded projected pension benefit | | | | ||||
obligations at beginning of year | 1,479 | | 1,830 | ||||
Charged to profit or loss: | | | | ||||
Service costs | 7 | | 29 | ||||
Net Interest costs | 22 | | 134 | ||||
Actuarial (gain) losses recognized in OCI | - | | 94 | ||||
Benefits paid by employer | (137) | | (608) | ||||
Unfunded projected pension benefit | | | | ||||
obligations at end of period | 1,371 | | 1,479 |
The components of total periodic pension benefit cost the three months period ended March 31, 2020 and 2019 are as follow:
| | | |
| | | |
| 2020 | | 2019 |
Service costs | 7 | | 7 |
Net interest costs | 22 | | 33 |
Total periodic pension benefit cost | 29 | | 40 |
Amounts recognized in other comprehensive amounted to RpNil as of March 31, 2020 and 2019, respectively.
The actuarial valuation for the defined benefit pension plan was performed, based on the measurement date as of December 31, 2019 and 2018, with reports dated April 20, 2020 and April 1, 2019, respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary for the years ended December 31, 2019 and 2018 are as follow:
| | | |
| 2019 | | 2018 |
Discount rate | 6.50% - 7.25% | | 8.00% - 8.25% |
Rate of compensation increases | 6.10% - 8.00% | | 6.10% - 8.00% |
Indonesian mortality table | 2011 | | 2011 |
ii. | Telkomsel |
Telkomsel sponsors 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 (excluding functional allowance) and number of years of their service. PT Asuransi Jiwasraya (Persero) (“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 have been fully made by Telkomsel.
Telkomsel did not make contributions to Jiwasraya for the three months period ended March 31, 2020 and 2019, respectively.
101
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
a.Pension benefit costs (continued)
ii. | Telkomsel (continued) |
The following table presents the changes in projected pension benefit obligation, changes in pension benefit plan assets, funded status of the pension plan and net amount recognised in the consolidated statement of financial position for the three months period ended March 31, 2020 and for the year ended December 31, 2019, under Telkomsel’s defined benefit pension plan:
| | ||
| March 31, 2020 | | December 31, 2019 |
Changes in projected pension benefit | | | |
obligations | | | |
Projected pension benefit obligation at | | | |
beginning of year | 3,738 | | 2,734 |
Charged to profit or loss: | | | |
Service costs | 66 | | 187 |
Net interest costs | 77 | | 224 |
Actuarial (gain) losses recognized in OCI | - | | 614 |
Benefit paid | - | | (21) |
Projected pension benefit obligation at | | | |
end of period | 3,881 | | 3,738 |
| | | |
Changes in pension benefit plan assets | | | |
Fair value of pension plan assets at | | | |
beginning of year | 1,529 | | 1,193 |
Interest income | 33 | | 97 |
Return on plan assets (excluding amount | | | |
included in net interest expense) | - | | 53 |
Employer’s contributions | 9 | | 207 |
Benefit paid | - | | (21) |
Fair value of pension plan assets at | | | |
end of period | 1,571 | | 1,529 |
Pension benefit obligation at | | | |
end of period | 2,310 | | 2,209 |
Movements of the pension benefit obligation for the three months period ended March 31, 2020 and for the year ended December 31, 2019:
| | | |
| March 31, 2020 | | December 31, 2019 |
Pension benefit obligation at beginning of year | 2,209 | | 1,541 |
Periodic pension benefit cost | 110 | | 314 |
Actuarial (gain) losses recognized in OCI | - | | 614 |
Return on plan assets (excluding amount included in | | | |
net interest expense) | - | | (53) |
Employer's contributions | (9) | | (207) |
Pension benefit obligation at end of period | 2,310 | | 2,209 |
The components of the periodic pension benefit cost for the three months period ended March 31, 2020 and 2019 are as follow:
| | | |
| 2020 | | 2019 |
Service costs | 66 | | 47 |
Net interest costs | 44 | | 34 |
Total | 110 | | 81 |
Amounts recognized in OCI amounted to RpNil as of March 31, 2020 and 2019, respectively.
102
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
a.Pension benefit costs (continued)
ii. | Telkomsel (continued) |
The actuarial valuation for the defined benefit pension plan was performed based on the measurement date as of December 31, 2019 and 2018, with reports dated February 28, 2020 and February 14, 2019 respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary as of December 31, 2019 and 2018, are as follow:
| | | |
| 2019 | | 2018 |
Discount rate | 7.50% | | 8.25% |
Rate of compensation increases | 8.00% | | 8.00% |
Indonesian mortality table | 2011 | | 2011 |
b. | Post-employment health care benefit cost |
The Company provides post-employment health care benefits 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 are no longer entitled to this plan. The plan is managed by Yayasan Kesehatan Telkom (“Yakes Telkom”).
The defined contribution post-employment health care benefit plan is provided to employees with permanent status hired on or after November 1, 1995 or employees with terms of service less than 20 years at the time of retirement. The Company did not make contributions to Yakes Telkom for the three months period ended March 31, 2020 and for the year ended December 31, 2019.
The following table presents the changes in projected post-employment health care benefit provision, changes in post-employment health care benefit plan assets, funded status of the post-employment health care benefit plan and net amount recognized in the Company’s consolidated statement of financial position as of March 31, 2020 and December 31, 2019:
| | | |
| March 31, 2020 | | December 31, 2019 |
Changes in projected post-employment health care | | | |
benefit obligation | | | |
Projected post-employment health care benefit | | | |
obligation at beginning of year | 13,823 | | 12,423 |
Charged to profit or loss: | | | |
Interest costs | 271 | | 1,062 |
Actuarial (gain) losses recognized in OCI | (1,669) | | 905 |
Post-employment health care benefits paid | (140) | | (567) |
Projected post-employment health care benefit | | | |
obligation at end of period | 12,285 | | 13,823 |
Changes in post-employment health care benefit | | | |
plan assets | | | |
Fair value of plan assets at beginning of year | 12,827 | | 12,228 |
Interest income | 251 | | 1,045 |
Return on plan assets (excluding amount included in | | | |
net interest expense) | (1,669) | | 271 |
Post-employment health care benefits paid | (140) | | (567) |
Plan administration cost | (51) | | (150) |
Fair value of plan assets at end of period | 11,218 | | 12,827 |
Projected for post-employment health care benefit | | | |
obligation-net | 1,067 | | 996 |
103
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31.PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)
b. | Post-employment health care benefit cost (continued) |
As of March 31, 2020 and December 31, 2019, plan assets consists of:
| | | | | | | | ||||||||
| March 31, 2020 | | December 31, 2019 | ||||||||||||
| Quoted in | | | Quoted in | | ||||||||||
| active market | | Unquoted | | active market | | Unquoted | ||||||||
Cash and cash equivalents | 1,818 | | - | | 563 | | - | ||||||||
Equity instruments: | | | | | | | | ||||||||
Finance industries | 690 | | - | | 954 | | - | ||||||||
Manufacturing and consumer | 549 | | - | | 706 | | - | ||||||||
Infrastructure and telecommunication | 224 | | - | | 317 | | - | ||||||||
Wholesale | 108 | | - | | 159 | | - | ||||||||
Construction | 77 | | - | | 181 | | - | ||||||||
Mining | 75 | | - | | 117 | | - | ||||||||
Other Industries: | | | | | | | | ||||||||
Biotechnology and pharma industry | 70 | | - | | 96 | | - | ||||||||
Services | 54 | | - | | 75 | | - | ||||||||
Agriculture | 22 | | - | | 49 | | - | ||||||||
Others | 1 | | - | | 3 | | - | ||||||||
Equity-based mutual funds | 373 | | - | | 1,202 | | - | ||||||||
Fixed income instruments: | | | | | | | | ||||||||
Fixed income mutual funds | 6,805 | | - | | 8,071 | | - | ||||||||
Unlisted shares: | | | | | | | | ||||||||
Private placement | - | | 352 | | - | | 334 | ||||||||
Total | 10,866 | | 352 | | 12,493 | | 334 |
Yakes Telkom plan assets also include Series B shares issued by the Company with fair value totalling Rp179 billion and Rp222 billion, representing 1.60% and 1.73% of total plan assets as of March 31, 2020 and December 31, 2019, respectively.
The expected return is determined based on market expectation for the returns over the entire life of the obligation by considering the portfolio mix of the plan assets. The actual return on plan assets was Rp(1,470) and Rp1,166 billion for the three months period ended March 31, 2020 and for the years ended December 31, 2019, respectively.
The movements of the projected post-employment health care benefit obligation for the three months period ended March 31, 2020 and the year ended December 31, 2019 are as follow:
| | | | |||
| March 31, 2020 | | December 31, 2019 | |||
Projected post-employment health care benefit | | | | |||
obligation at beginning of year | 996 | | 195 | |||
Net periodic post-employment health care benefit costs | 71 | | 167 | |||
Actuarial (gain) losses recognized in OCI | 1,669 | | 905 | |||
Return on plan assets (excluding amount included in | | | | |||
net interest expense) | (1,669) | | (271) | |||
Projected post-employment health care benefit | | | | |||
obligation at end of period | 1,067 | | 996 |
The components of net periodic post-employment health care benefit cost for the three months period ended March 31, 2020 and for the year ended December 31, 2019 are as follows:
| | | |
| 2020 | | 2019 |
Plan administration costs | 51 | | 46 |
Net interest costs | 20 | | 4 |
Periodic post-employment health care benefit cost | 71 | | 50 |
104
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31.PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)
b. | Post-employment health care benefit cost (continued) |
Amounts recognized in OCI for the three months period ended March 31, 2020 and 2019 are as follow :
| | | |
| | | |
| 2020 | | 2019 |
Actuarial (gain) losses recognized during the period | 1,669 | | (342) |
Return on plan assets (excluding amount | | | |
included in net interest expense) | (1,669) | | 342 |
Net | - | | - |
The actuarial valuation for the post-employment health care benefits plan was performed based on the measurement date as of December 31, 2019 and 2018, with reports dated April 20, 2020 and April 1, 2019, respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary as of December 31, 2019 and 2018 are as follow:
| | | |
| 2019 | | 2018 |
Discount rate | 8.00% | | 8.75% |
Health care costs trend rate assumed for next year | 7.00% | | 7.00% |
Ultimate health care costs trend rate | 7.00% | | 7.00% |
Year that the rate reaches the ultimate trend rate | 2019 | | 2018 |
Indonesian mortality table | 2011 | | 2011 |
c.Other post-employment benefits cost
The Company provides other post-employment benefits in the form of cash paid to employees on their retirement or termination. These benefits consist of final housing allowance (Biaya Fasilitas Perumahan Terakhir or “BFPT”) and home passage leave (Biaya Perjalanan Pensiun dan Purnabhakti or “BPP”).
The components of the projected other post-employment benefit cost for the three months period ended March 31, 2020 and for the year ended December 31, 2019 are as follow:
| | | |
| March 31, 2020 | | December 31, 2019 |
Projected other post-employment | | | |
benefit obligations at beginning of year | 366 | | 419 |
Charged to profit or loss: | | | |
Service costs | 1 | | 4 |
Net interest costs | 5 | | 29 |
Actuarial (gain) losses recognized in OCI | - | | 15 |
Benefits paid by employer | (24) | | (101) |
Projected other post-employment benefits | | | |
obligations at end of period | 348 | | 366 |
The components of the projected other post-employment benefit cost for the three months period ended March 31, 2020 and 2019 are as follow:
| | | |
| 2020 | | 2019 |
Current service costs | 1 | | 1 |
Net interest costs | 5 | | 7 |
Total | 6 | | 8 |
Amounts recognized in OCI amounted to RpNil as of March 31, 2019 and 2018, respectively.
105
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31.PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)
c.Other post-employment benefits cost (continued)
The actuarial valuation for the other post-employment benefits plan was performed based on measurement date as of December 31, 2019 and 2018, with reports dated April 20, 2020 and April 1, 2019, respectively, by TWP, an independent actuary in association with WTW.The principal actuarial assumptions used by the independent actuary as of December 31, 2019 and 2018, are as follow:
| | | |
| 2019 | | 2018 |
Discount rate | 6.25% | | 8.00% |
Indonesian mortality table | 2011 | | 2011 |
d. | Obligation under the Labor Law |
Under Law No. 13 Year 2003, the Group is required to provide minimum pension benefits, if not covered yet by the sponsored pension plans, to its employees upon retirement. Total obligation recognized as of March 31, 2020 and December 31, 2019 amounted to Rp730 billion and Rp690 billion, respectively. The related pension employee benefits cost charged to expense amounted to Rp40 billion and Rp36 billion for the three months period ended March 31, 2020 and 2019, respectively (Note 25).
e. | Maturity Profile of Defined Benefit Obligation (“DBO”) |
The timing of benefits payments and weighted average duration of DBO for 2019 are as follow:
9 | | | | | | | | | | | |
| | | | | | | | | | | |
| Expected Benefits Payment | ||||||||||
| The Company | | | | | | | ||||
| Funded | | | | | | | | | ||
| Defined | | Additional | | | | | | Post-employment | | Other post- |
| pension benefit | | pension benefit | | | | | | health care | | employment |
Time Period | obligation | | obligation | | Unfunded | | Telkomsel | | benefits | | benefits |
| | | | | | | | | | | |
March 31, 2020 | | | | | | | | | | | |
Within next 10 years | 18,009 | | - | | 1,450 | | 3,486 | | 5,924 | | 397 |
Within 10-20 years | 21,855 | | - | | 125 | | 9,420 | | 8,001 | | 68 |
Within 20-30 years | 20,154 | | - | | 52 | | 7,150 | | 7,501 | | 38 |
Within 30-40 years | 15,351 | | - | | 18 | | 1,267 | | 4,123 | | 3 |
Within 40-50 years | 4,265 | | - | | - | | - | | 958 | | - |
Within 50-60 years | 468 | | - | | - | | - | | 42 | | - |
Within 60-70 years | 32 | | - | | - | | - | | 0 | | - |
Within 70-80 years | 0 | | - | | - | | - | | - | | - |
| | | | | | | | | | | |
Weighted average | | | | | | | | | | | |
duration of DBO | 10,16 years | | 10,16 years | | 4,69 years | | 10,44 years | | 13,34 years | | 3,64 years |
| | | | | | | | | | | |
December 31, 2019 | | | | | | | | | | | |
Within next 10 years | 18,392 | | - | | 1,587 | | 3,486 | | 6,064 | | 418 |
Within 10-20 years | 21,855 | | - | | 125 | | 9,420 | | 8,001 | | 68 |
Within 20-30 years | 20,154 | | - | | 52 | | 7,150 | | 7,501 | | 38 |
Within 30-40 years | 15,351 | | - | | 18 | | 1,267 | | 4,123 | | 3 |
Within 40-50 years | 4,265 | | - | | - | | - | | 958 | | - |
Within 50-60 years | 468 | | - | | - | | - | | 42 | | - |
Within 60-70 years | 32 | | - | | - | | - | | 0 | | - |
Within 70-80 years | - | | - | | - | | - | | - | | - |
| | | | | | | | | | | |
Weighted average | | | | | | | | | | | |
duration of DBO | 10.16 years | | 10.16 years | | 4.69 years | | 10.44 years | | 13.34 years | | 3.65 years |
| | | | | | | | | | | |
106
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
31. | PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued) |
f. | Sensitivity Analysis |
1% change in discount rate and rate of compensation would have effect on DBO ,as follow :
| | | | | | | |
| | | | | | | |
| Discount Rate | | Rate of Compensation | ||||
| 1% Increase | | 1% Decrease | | 1% Increase | | 1% Decrease |
| Increase (decrease) in amounts | | Increase (decrease) in amounts | ||||
Sensitivity | | | | | | | |
March 31, 2020 | | | | | | | |
Funded: | | | | | | | |
Defined pension benefit obligation | (1.756) | | 2.173 | | 231 | | (247) |
Additional pension benefit obligation | - | | - | | - | | - |
Unfunded | (39) | | 31 | | 33 | | (42) |
Telkomsel | (686) | | 777 | | 390 | | (366) |
Post-employment health care benefits | (1.551) | | 1.888 | | 2.030 | | (1.689) |
Other post-employment benefits | (11) | | 13 | | - | | - |
| | | | | | | |
December 31, 2019 | | | | | | | |
Funded: | | | | | | | |
Defined pension benefit obligation | (1,952) | | 2,416 | | 257 | | (275) |
Additional pension benefit obligation | - | | - | | - | | - |
Unfunded | (40) | | 33 | | 34 | | (43) |
Telkomsel | (686) | | 777 | | 390 | | (366) |
Post-employment health care benefits | (1,551) | | 1,888 | | 2,030 | | (1,689) |
Other post-employment benefits | (12) | | 13 | | - | | - |
| | | | | | | |
The sensitivity analysis has been determined based on a method that extrapolates the impact on DBO as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
The sensitivity results above determine the individual impact on the Plan’s DBO at the end of the year. In reality, the Plan is subject to multiple external experience items which may move the DBO in similar or opposite directions, and the Plan’s sensitivity to such changes can vary over time.
There are no changes in the methods and assumptions used in preparing the sensitivity analysis from the previous period.
32. | LSA PROVISIONS |
Telkomsel and Telkomsat provide certain cash awards or certain number of days leave benefits to their employees based on the employees’ length of service requirements, including LSA and LSL. LSA are either paid at the time the employees reach certain years of 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 meet the requisite number of years of service and reach a certain minimum age.
The obligation with respect to these awards which was determined based on an actuarial valuation using the Projected Unit Credit method, amounted to Rp1,094 billion and Rp1,066 billion as of March 31, 2020 and December 31, 2019, respectively. The related benefit costs charged to expense amounted to Rp43 billion and Rp38 billion for the three months period ended March 31, 2020 and 2019, respectively (Note 25).
107
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
33. | RELATED PARTIES TRANSACTIONS |
a. | Nature of relationships and accounts/transactions with related parties |
Details of the nature of relationships and accounts/transactions with significant related parties are as follows:
| | | | | |
Related parties | | Nature of relationships parties | | Nature of accounts/transactions | |
The Government Ministry of Finance | | Majority stockholder | | Internet and data service revenues, other telecommunication service revenues, operation and maintenance expense, finance income, finance costs and investment in financial instruments | |
State-owned enterprises | | Entity under common control | | Internet and data service revenues, other telecommunication services revenues, operating expenses and purchase of property and equipment | |
Indosat | | Entity under common control | | Interconnection revenues, leased lines revenues, satellite transponder usage revenues, interconnection expenses, telecommunication facilities usage expenses, operating and maintenance expenses, and usage of data communication network system expenses | |
State-owned banks | | Entities under common control | | Finance income and finance costs | |
BRI | | Entity under common control | | Internet and data service revenues, other telecommunication service revenues, finance income and finance costs | |
PT Perusahaan Listrik Negara (“PLN”) | | Entity under common control | | Electricity expenses | |
PT Mandiri Manajemen Investasi | | Entity under common control | | Available-for-sale financial assets | |
Bahana TCW | | Entity under common control | | Available-for-sale financial assets, bonds and notes | |
PT Sarana Multi Infrastruktur | | Entity under common control | | Finance costs | |
Tiphone | | Associated company | | Distribution of SIM cards and pulse reload voucher | |
Koperasi Pegawai Telkom (“Kopegtel”) | | Other related entity | | Purchase of property and equipment, construction and installation services, leases of buildings expenses, lease of vehicles expenses, purchases of vehicles, purchases of materials and construction service, maintenance and cleaning service expenses, and RSA revenues | |
Koperasi Pegawai Telkomsel (“Kisel”) | | Other related entity | | Internet and data service revenues, other telecommunication service revenues, leases of vehicles expenses, printing and distribution of customer bills expenses, collection fee, other services fee, distribution of SIM cards and pulse reload voucher, and purchase of property and equipment | |
PT Graha Informatika Nusantara (“Gratika”) | | Other related entity | | Network service revenues, operation and maintenance expenses, purchase of property and equipment and construction services, and distribution of SIM card and pulse reload voucher | |
Directors | | Key management personnel | | Honorarium and facilities | |
Commissioners | | Supervisory personnel | | Honorarium and facilities |
The outstanding balances of trade receivables and payables at year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. As of March 31, 2020 the Group recorded for impairment of receivables from related parties of Rp31 billion. Impairment assessment is undertaken each financial year through examining the current status of existing receivables and historical collection experience.
b. | Significant transactions with related parties |
The following are significant transactions with related parties:
| | | | | | | |
| 2020 | | 2019 | ||||
| | | % of total | | | | % of total |
| Amount | | revenues | | Amount | | revenues |
REVENUES |
| |
| |
| |
|
Majority Stockholder |
| |
| |
| |
|
Ministry of Finance | 44 | | 0.13 | | 39 | | 0.11 |
Entities under common control |
| |
| | | | |
Indosat | 285 | | 0.83 | | 200 | | 0.57 |
BRI | 91 | | 0.27 | | 155 | | 0.44 |
Others | 556 | | 1.63 | | 552 | | 1.58 |
Sub-total | 932 | | 2.73 | | 907 | | 2.59 |
Other related entities | 21 | | 0.06 | | 21 | | 0.06 |
Associated companies | 12 | | 0.04 | | 8 | | 0.02 |
Total | 1,009 | | 2.96 | | 975 | | 2.78 |
108
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
33. | RELATED PARTIES TRANSACTIONS (continued) |
b. | Transactions with related parties (continued) |
The following are significant transactions with related parties (continued):
| | | | | | | |
| 2020 | | 2019 | ||||
| | | % of total | | | | % of total |
| Amount | | expenses | | Amount | | expenses |
EXPENSES | | | | | | | |
Entities under common control | | | | | | | |
PLN | 326 | | 1.46 | | 198 | | 0.86 |
Indosat | 173 | | 0.78 | | 189 | | 0.82 |
Others | 95 | | 0.43 | | 225 | | 0.98 |
Sub-total | 594 | | 2.67 | | 612 | | 2.66 |
Other related entitas |
| |
| |
| |
|
Kopegtel | 218 | | 0.98 | | 219 | | 0.95 |
Others | 82 | | 0.37 | | 747 | | 3.26 |
Sub-total | 300 | | 1.35 | | 966 | | 4.21 |
Associated companies | 42 | | 0.19 | | 24 | | 0.10 |
Total | 936 | | 4.21 | | 1,602 | | 6.97 |
| | | | | | | | ||
| 2020 | | 2019 | ||||||
| | | % of total | | | | % of total | ||
| Amount | | finance income | | Amount | | finance income | ||
FINANCE INCOME |
| |
| |
| |
| ||
Entities under common control |
| |
| |
| |
| ||
State-owned banks | 162 | | 73.97 | | 168 | | 60.87 | ||
Total | 162 | | 73.97 | | 168 | | 60.87 |
| | | | | | | | |
| 2020 | | 2019 | |||||
| | | % of total | | | | % of total | |
| Amount | | finance cost | | Amount | | finance cost | |
FINANCE COSTS |
|
|
| |
| |
| |
Majority stockholder |
| |
| |
| |
| |
Ministry of Finance | 8 | | 0.66 | | 9 | | 0.90 | |
Entities under common control |
| |
| |
| |
| |
State-owned banks | 239 | | 19.67 | | 238 | | 23.90 | |
Sarana Multi Infrastruktur | 76 | | 6.26 | | 50 | | 5.02 | |
Total | 323 | | 26.59 | | 297 | | 29.82 |
| | | | | | | | |
| 2020 | | 2019 | |||||
| | | % of total | | | | % of total | |
| Amount | | purchases | | Amount | | purchases | |
PURCHASE OF PROPERTY |
| |
| |
| |
| |
AND EQUIPMENTS (Note 11) | | | | | | | | |
Entities under common control | 13 | | 0.35 | | 7 | | 0.10 | |
Other related entities | 32 | | 0.87 |
| 81 | | 1.12 | |
Total | 45 | | 1.22 | | 88 | | 1.22 |
| | | | | | | |
| 2020 | | 2019 | ||||
| | | % of total | | | | % of total |
| Amount | | revenues | | Amount | | revenue |
DISTRIBUTION OF SIM |
| |
| |
| |
|
CARD AND VOUCHER | | | | | | | |
Other related entities |
| |
| |
| |
|
Kisel | 1,489 | | 4.35 | | 944 | | 2.71 |
Tiphone | 1,073 | | 3.14 | | 1,220 | | 3.50 |
Gratika | 103 | | 0.30 | | 157 | | 0.45 |
Total | 2,665 | | 7.79 | | 2,321 | | 6.66 |
109
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
33. | RELATED PARTIES TRANSACTIONS (continued) |
c. | Balance of accounts with related parties |
| | | | | | | |
| March 31, 2020 | | December 31, 2019 | ||||
| | | % of total | | | | % of total |
| Amount | | assets | | Amount | | assets |
Cash and cash equivalents | | | | | | | |
(Note 3) | 17,827 | | 7.37 | | 13,315 | | 6.02 |
Other current financial | | | | | | | |
asset (Note 4) | 756 | | 0.31 | | 71 | | 0.03 |
Trade receivables - net | | | | | | | |
(Note 5) | 2,435 | | 1.01 | | 1,792 | | 0.81 |
Other current asset (Note 8) | 211 | | 0.09 | | 111 | | 0.05 |
Other non-current asset | 30 | | 0.01 | | 31 | | 0.01 |
| | | | | | | |
| March 31, 2020 | | December 31, 2019 | ||||
| | | % of total | | | | % of total |
| Amount | | liabilities | | Amount | | liabilities |
Trade payables (Note 15) |
| |
| |
| |
|
Majority stockholder | | | | | | | |
Ministry of Finance | 109 | | 0.09 | | 5 | | 0.00 |
Entities under common | | | | | | | |
control | | | | | | | |
State-owned Enterprises | 100 | | 0.09 | | 206 | | 0.07 |
Indosat | 89 | | 0.08 | | 68 | | 0.20 |
Others | 3 | | 0.00 | | - | | - |
Sub-total | 192 | | 0.17 | | 274 | | 0.27 |
Other related entities | | | | | | | |
Entitas berelasi lainnya | | | | | | | |
Kopegtel | 151 | | 0.13 | | 269 | | 0.26 |
Others | 239 | | 0.21 | | 271 | | 0.26 |
Sub-total | 390 | | 0.34 | | 540 | | 0.52 |
Total | 691 | | 0.60 | | 819 | | 0.79 |
| | | | | | | |
Accrued expenses |
| |
| |
| |
|
Majority stockholder |
| |
| |
| |
|
Government | 11 | | 0.01 | | 6 | | 0.01 |
Entities under common | | | | | | | |
State-owned enterprises | 81 | | 0.07 | | 88 | | 0.09 |
State-owned banks | 38 | | 0.03 | | 75 | | 0.07 |
Sub-total | 119 | | 0.10 | | 163 | | 0.16 |
Other related entities | | | | | | | |
Kisel | 85 | | 0.07 | | 188 | | 0.18 |
Others | 9 | | 0.01 | | 15 | | 0.01 |
Total | 224 | | 0.19 | | 372 | | 0.36 |
| | | | | | | |
Advances from customers |
| |
| |
| |
|
Majority stockholder |
| |
| |
| |
|
Government | 20 | | 0.02 | | 19 | | 0.02 |
Entities under common | | | | | | | |
control | | | | | | | |
PLN | 7 | | 0.01 | | 6 | | 0.01 |
Total | 27 | | 0.03 | | 25 | | 0.03 |
| | | | | | | | |
Short-term bank loans | | | | | | | | |
(Note 18) | 3,533 | | 3.06 | | 3,655 | | 3.52 | |
Two-step loans (Note 19a) | 805 | | 0.70 | | 736 | | 0.71 | |
Long-term bank loans | | | | | | | | |
(Note 19c) | 12,213 | | 10.59 | | 15,319 | | 14.74 | |
Other borrowings (Note 19d) | 3,648 | | 3.16 | | 3,740 | | 3.60 |
110
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
33. | RELATED PARTIES TRANSACTIONS (continued) |
d. | Significant agreements with related parties(continued) |
i. | The Government |
The Company obtained two-step loans from the Government (Note 19a).
ii. | Indosat |
The Company has an agreement with Indosat to provide international telecommunications services to the public.
The Company has also entered into an interconnection agreement between the Company’s fixed line network (Public Switched Telephone Network or “PSTN”) and Indosat’s GSM mobile cellular telecommunications network in connection with the implementation of Indosat Multimedia Mobile services and the settlement of related interconnection rights and obligations.
The Company also has an agreement with Indosat for the interconnection of Indosat's GSM mobile cellular telecommunications network with the Company's PSTN, which enable each party’s customers to make domestic calls between Indosat’s GSM mobile network and the Company’s fixed line network, as well as allowing Indosat’s mobile customers to access the Company’s 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 has received compensation from Indosat computed at 1% of the collections made by the Company starting from January 1, 1995, as well as 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 which already took into account the compensation for billing and collection. The agreement is valid and effective in the current year and can be applied until a new agreement becomes 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 Regulation No.8/Year 2006. These amendments took effect starting 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 Company provides leased lines to Indosat and its subsidiaries, namely PT Indosat Mega Media and PT Aplikanusa Lintasarta (“Lintasarta”). The leased lines can be used by these companies for telephone, telegraph, data, telex, facsimile or other telecommunication services.
Dayamitra signed a SPA with Indosat related to the purchase of Indosat’s towers. In addition, Dayamitra and Indosat also signed MTLA, which stipulated that Indosat agreed to lease back telecommunication towers that were acquired (Note 1e).
iii. | Others |
Kisel is a co-operative that was established by Telkomsel’s employees to engage in car rental services, printing and distribution of customer bills, collection and other services principally for the benefit of Telkomsel. Telkomsel also has dealership agreements with Kisel for distribution of SIM cards and pulse reload vouchers.
111
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
33. | RELATED PARTIES TRANSACTIONS (continued) |
d.Remuneration of key management and supervisory personnel
Key management personnel consists of the Directors of the Company and supervisory personnel consists of Board of Commissioners.
The Company provides remuneration in the form of salaries/honorarium and facilities to support the governance and oversight duties of the Board of Commissioners and the leadership and management duties of the Directors. The total of such remuneration is as follow:
| | | | | | | |
| 2020 | | 2019 | ||||
| |
| % of total |
| |
| % of total |
| Amount | | expenses | | Amount | | expenses |
Board of Directors | 85 | | 0.38% | | 82 | | 0.36% |
Board of Commissioners | 38 | | 0.17% | | 38 | | 0.17% |
The amounts disclosed in the table are the amounts recognised as an expense during the reporting periods.
34. | OPERATING SEGMENT |
The Group has four primary reportable segments, namely mobile, consumer, enterprise and WIB. The mobile segment provides mobile voice, SMS, value added services, and mobile broadband. The consumer segment provides Indihome (bundled services of fixed wireline, pay TV and internet) and other telecommunication services to home customers. The enterprise segment provides end-to-end solution to corporate and institutions. The WIB segment provides interconnection services, leased lines, satellite, VSAT, broadband access, information technology services, data and internet services to Other Licensed Operator companies and institutions. Other segment represents Digital Service Operating Segments that does not meet the disclosure requirements for a reportable segments. There is no operating segments have been agregated to form the reportable segments.
Management monitors the operating results of the business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, the financing activities and income taxes are managed on a group basis and not separately monitored and allocated to operating segments.
Segment revenues dan expenses include transactions between operating segments and are accounted at prices that management believes represent market prices.
| | | | | | | | | | | | | | | |
| 2020 | ||||||||||||||
| Mobile | | Consumer | | Enterprise | | WIB | | Others | | Total segment | | Adjustment and elimination | | Total consolidated |
Segment results | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | |
External revenues | 21,573 | | 4,772 | | 4,324 | | 3,359 | | 64 | | 34,092 | | 102 | | 34,194 |
Inter-segment revenues | 862 | | 163 | | 4,023 | | 4,261 | | 276 | | 9,585 | | (9,585) | | - |
Total segment revenues | 22,435 | | 4,935 | | 8,347 | | 7,620 | | 340 | | 43,677 | | (9,483) | | 34,194 |
Segment expenses | (13,290) | | (4,076) | | (8,231) | | (5,979) | | (332) | | (31,908) | | 9,643 | | (22,265) |
Segment results | 9,145 | | 859 | | 116 | | 1,641 | | 8 | | 11,769 | | 160 | | 11,929 |
Other information | | | | | | | | | | | | | | | |
Capital Expenditures | (1,143) | | (818) | | (610) | | (997) | | (6) | | (3,574) | | (91) | | (3,665) |
Depreciation and amortization | (4,060) | | (890) | | (778) | | (1,129) | | (6) | | (6,863) | | 14 | | (6,849) |
Provision recognized in | | | | | | | | | | | | | | | |
current period | (241) | | (264) | | (152) | | (9) | | (0) | | (666) | | (24) | | (690) |
112
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
34. | OPERATING SEGMENT (continued) |
| | | | | | | | | | | | | | | |
| 2019 | ||||||||||||||
| Mobile | | Consumer | | Enterprise | | WIB | | Others | | Total segment | | Adjustment and elimination | | Total consolidated |
Segment results | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | |
External revenues | 21,332 | | 4,079 | | 6,321 | | 2,918 | | 32 | | 34,682 | | 158 | | 34,840 |
Inter-segment revenues | 856 | | 134 | | 4,943 | | 4,257 | | 292 | | 10,482 | | (10,482) | | - |
Total segment revenues | 22,188 | | 4,213 | | 11,264 | | 7,175 | | 324 | | 45,164 | | (10,324) | | 34,840 |
Segment expenses | (13,598) | | (3,930) | | (10,223) | | (5,369) | | (351) | | (33,471) | | 10,660 | | (22,811) |
Segment results | 8,590 | | 283 | | 1,041 | | 1,806 | | (27) | | 11,693 | | 336 | | 12,029 |
Other information | | | | | | | | | | | | | | | |
Capital Expenditures | (2,869) | | (1,427) | | (1,253) | | (1,618) | | (5) | | (7,172) | | (89) | | (7,261) |
Depreciation and amortization | (3,396) | | (893) | | (630) | | (735) | | (5) | | (5,659) | | 17 | | (5,642) |
Provision recognized in | | | | | | | | | | | | | | | |
current period | (131) | | (148) | | (176) | | (36) | | (0) | | (491) | | (5) | | (496) |
Adjustment and elimination:
| | | |
| 2020 | | 2019 |
Segment result | 11,586 | | 11,693 |
Operating loss of operating business | (162) | | (249) |
Other elimination and adjustment | 505 | | 585 |
Consolidated operating income | 11,929 | | 12,029 |
Geographic information:
The revenue information below is based on the location of the customers.
| | | |
| 2020 | | 2019 |
External revenues | | | |
Indonesia | 32,531 | | 33,682 |
Foreign countries | 1,663 | | 1,158 |
Total | 34,194 | | 34,840 |
Non-current operating assets for this purpose consist of property and equipment and intangible assets.
| | | |
| March 31, 2020 | | December 31, 2019 |
Non-current operating assets | | | |
Indonesia | 155,671 | | 159,811 |
Foreign countries | 4,295 | | 3,608 |
Total | 159,966 | | 163,419 |
113
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
35. | TELECOMMUNICATIONS SERVICE TARIFFS |
Under Law No. 36 Year 1999 and Government Regulation No. 52 Year 2000, tariffs for operating telecommunications network and/or services are determined by providers based on the tariff type, structure, and with respect to the price cap formula set by the Government.
a. | Fixed line telephone tariffs |
The Government has issued a new adjustment tariff formula which is stipulated in the Decree No. 15/PER/M.KOMINFO/4/2008 dated April 30, 2008 of the MoCI concerning “Mechanism to Determine Tariff of Basic Telephony Services Connected through Fixed Line Network”. This Decree replaced the previous Decree No. 09/PER/M.KOMINFO/02/2006.
Under the Decree, tariff structure for basic telephony services connected through fixed line network consists of the following:
i.Activation fee
ii.Monthly subscription charges
iii.Usage charges
iv.Additional facilities fee
b. | Mobile cellular telephone tariffs |
On April 7, 2008, the MoCI issued Decree No. 09/PER/M.KOMINFO/04/2008 regarding “Mechanism to Determine Tariff of Telecommunication Services 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 No. 12/PER/M.KOMINFO/02/2006.
b. | Mobile cellular telephone tariffs (continued) |
Under MoCI Decree No. 09/PER/M.KOMINFO/04/2008 dated April 7, 2008, the cellular tariffs of operating telecommunication services connected through mobile cellular network consist of the following:
with the following traffic structure:
(iv) Additional facilities fee
c.Interconnection tariffs
The Indonesian Telecommunication Regulatory Body (“ITRB”), in its letter No. 262/BRTI/XII/2011 dated December 12, 2011, decided to change the basis for SMS interconnection tariff to cost basis with a maximum tariff of Rp23 per SMS effective from June 1, 2012, for all telecommunication provider operators.
114
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
35. | TELECOMMUNICATIONS SERVICE TARIFFS (continued) |
c.Interconnection tariffs (continued)
Based on letter No.118/KOMINFO/DJPPI/PI.02.04/01/2014 dated January 30, 2014 of the Director General of Post and Informatics, the Director General of Post and Informatics decided to implement new interconnection tariff effective from February 1, 2014 until December 31, 2016, subject to evaluation on an annual basis. Pursuant to the Director General of Post and Informatics letter, the Company and Telkomsel are required to submit the Reference Interconnection Offer (“RIO”) proposal to ITRB to be evaluated.
Subsequently, ITRB in its letters No. 60/BRTI/III/2014 dated March 10, 2014 and No. 125/BRTI/IV/2014 dated April 24, 2014 approved Telkomsel and the Company’s revision of RIO regarding the interconnection tariff. Based on the letter, ITRB also approved the changes to the SMS interconnection tariff to Rp24 per SMS.
On January 18, 2017, ITRB in its letters No. 20/BRTI/DPI/I/2017 and No. 21/BRTI/DPI/I/2017, decided to use the interconnection tariff based on the Company and Telkomsel’s RIO in 2014 until the new interconnection tariff is set.
d.Network lease tariffs
Through MoCI Decree No. 03/PER/M.KOMINFO/1/2007 dated January 26, 2007 concerning “Network Lease”, the Government regulated the form, type, tariff structure, and tariff formula for services of network lease. Pursuant to the MoCI Decree, the Director General of Post and Telecommunication issued its Letter No. 115 Year 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 Company’s proposal.
e.Tariff for other services
The tariffs for satellite lease, telephony services, and other multimedia 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.
36.SIGNIFICANT COMMITMENTS AND AGREEMENTS
a. | Capital expenditures |
As of March 31, 2020, capital expenditures committed under the contractual arrangements, principally relating to procurement and installation of data, internet and information technology, cellular, transmission equipment and cable network are as follows:
| | | | |
Currencies | | Amounts in foreign currencies (in millions) | | Equivalent in Rupiah |
Rupiah | | - | | 9,944 |
U.S. dollar | | 49.97 | | 816 |
HKD | | 0.34 | | 1 |
Total | | | | 10,761 |
115
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
36.SIGNIFICANT COMMITMENTS AND AGREEMENTS
a. | Capital expenditures (continued) |
The above balance includes the following significant agreements:
(i) | The Company |
| | |
Contracting parties | Initial date of agreement | Significant provisions of the agreement |
The Company, TII and NEC Corporation | 12 May 2016 | Procurement and installation agreement of Sistem Komunikasi Kabel Laut (“SKKL”) Indonesia Global Gateway |
The Company and PT Lintas Teknologi Indonesia | 06 April 2019 | Procurement and installation agreement of Dual Wavelength Division Multiplexing ("DWDM") Platform Nokia 2018 |
The Company and ZTE | 10 October 2019 | Procurement for ONT Platform ZTE |
The Company and PT ZTE Indonesia | 16 December 2019 | Procurement and installation agreement of DWDM and OTN Platform ZTE |
The Company and PT Pembangunan Deltamas | 19 December 2019 | Land Purchase Agreement in Greenland International Industrial Center (GIIC) - Kota Deltamas |
The Company and PT ZTE Indonesia | 27 December 2019 | Procurement and installation agreement of VIMS Platform ZTE |
The Company and PT NEC Indonesia | 31 December 2019 | Procurement and installation agreement of Radio IP Backhaul Node-B Telkomsel Platform NEC |
The Company and PT NEC Indonesia | 31 December 2019 | Procurement and installation agreement of ISP SKKL Platform Expansion |
The Company and PT Huawei Tech Investment | 21 January 2020 | Procurement and installation agreement of OTN SCN Platform Huawei |
The Company and Konsorsium Bisnis Submarine Cable | 14 February 2020 | Procurement and installation agreement of Sistem Komunikasi Kabel Laut (SKKL) Repeaterless Luwuk - Morowali - Kendari (LUMORI) dan Bali - Lombok (BALOM) |
The Company and Konsorsium Bisnis Submarine Cable | 14 February 2020 | Procurement and installation agreement of Sistem Komunikasi Kabel Laut (SKKL) Labuan Bajo - Raba dan SKKL Gresik - Bawean |
The Company and Konsorsium Fiberhome - Abhimata | 16 March 2020 | Procurement agreement of ONT and STB Platform Fiberhome |
The Company and PT Huawei Tech Investment | 16 March 2020 | Procurement agreement of ONT Retail Platform Huawei |
116
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
36. | SIGNIFICANT COMMITMENTS AND AGREEMENTS (continued) |
a. | Capital expenditures (continued) |
(ii) | Telkomsel |
| | |
Contracting parties | Initial date of agreement | Significant provisions of the agreement |
Telkomsel, PT Ericsson Indonesia, Ericsson AB, PT Nokia Siemens Networks, NSN Oy, and Nokia Siemens Network GmbH & Co, KG | April 17, 2008 | The combined 2G and 3G CS Core Network Rollout Agreement |
Telkomsel, PT Ericsson Indonesia, and PT Nokia Siemens Networks | April 17, 2008 | Technical Service Agreement (“TSA”) for combined 2G and 3G CS Core Network |
Telkomsel, Amdocs Software Solutions Limited Liability Company, and | February 8, 2010 | Online Charging System (“OCS”) and Service Control Points (“SCP”) System Solution Development Agreement |
Telkomsel and PT Application Solutions | February 8, 2010 | Technical Support Agreement to provide technical support services for the OCS and SCP |
Telkomsel and PT Huawei Tech Investment | March 25, 2013 | Technical Support Agreement for the procurement of Gateway GPRS Support Node (“GGSN”) Service Complex |
Telkomsel and Wipro Limited and PT WT Indonesia | April 23, 2013 | Development and Procurement of OSDSS Solution Agreement |
Telkomsel and PT Ericsson Indonesia | October 22, 2013 | Procurement of GGSN Service Complex Rollout Agreement |
Telkomsel, PT Ericsson Indonesia, PT Nokia Siemens Networks Indonesia, NSN Oy, PT Huawei Tech Investment, and PT ZTE Indonesia | February 1, 2018 | Procurement agreement for Ultimate Radio Network Infrastructure ROA and TSA |
Telkomsel, PT Dimension Data Indonesia, and PT Huawei Tech Investment | April 1, 2018 | Agreement for Mobile Network Router Infrastructure |
Telkomsel, PT Sigma Solusi Integrasi, Oracle Corporation, and PT Phincon | July 5, 2019 | Development and Rollout Agreement (“DRA”) and Technical Support of Customet Relationship Management (“CRM”) solution System Integrator. |
(iii) | TII |
| | |
Contracting parties | Initial date of agreement | Significant provisions of the agreement |
Telin Hongkong, Indonusa and Measat Global Berhad | 04 May 2016 | Lease Agreement of Ku-band Transponders Capacity |
b. | Borrowings and other credit facilities |
(i) | As of March 31, 2020 , the Company has bank guarantee facilities for tender bond, performance bond, maintenance bond, deposit guarantee, and advance payment bond for various projects of the Company, as follows: |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | Facility utilized | ||
|
| |
| |
| |
| Foreign currency | | Rupiah |
Lenders | | Total facility | | Maturity | | Currency | | (In million) | | equivalent |
BRI |
| 500 |
| March 14, 2022 |
| Rp |
| - | | 64 |
BNI |
| 500 |
| March 31, 2021 |
| Rp |
| - | | 212 |
Bank Mandiri |
| 500 |
| December 23, 2021 |
| Rp |
| - | | 104 |
Total |
| 1,500 |
|
|
|
|
| | | 380 |
117
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
36. SIGNIFICANT COMMITMENTS AND AGREEMENTS (continued)
b. | Borrowings and other credit facilities(continued) |
(ii) | Telkomsel has a Rp1,000 billion bank guarantee facility with BRI. The facility will expire on September 25, 2022. Under this facility, as of March 31, 2020, Telkomsel has issued a bank guarantee amounting to Rp531 billion as payment commitment guarantee for annual right of usage fee valid until March 31, 2020 and Rp20 billion as frequency performance bond valid until May 31, 2020 (Note 36c.i). |
Telkomsel has a Rp150 billion bank guarantee facility with BCA. The facility will expire on April 15, 2020. As of December 31, 2019, The Company has issued a bank guarantee of Rp2 billion as M2M performance bond.
Telkomsel also has a Rp2,100 billion bank guarantee facility with BNI. The facility will expire on December 11, 2020. Telkomsel uses this facility for surety bond of 2.3 Ghz radio frequency amounting to Rp1,030 billion (Note 36c.i) and Rp4 billion as M2M performance bond.
(iii) | TII has a US$15 million or equal to Rp202 billion bank guarantee from Bank Mandiri and has been renewed in accordance with the addendum VIII (eight) on December 18, 2019, with a maximum credit limit of US$25 million or equal to Rp408 billion. The facility will expire on December 23, 2020. As of March 31, 2020, TII has not used the facility. |
(iv) | As of March 31, 2020, Sigma has unused facilities of bank guarantee from BNI amounting to Rp119 billion. |
c. | Others |
(i) | Radio Frequency Usage |
Based on Decree No. 80 dated November 2, 2015 of the Government of the Republic of Indonesia which replaced Decree No. 76 dated December 15, 2010, Telkomsel is required to pay the annual frequency usage fees for the 800 MHz, 900 MHz and 1800 MHz bandwidths using the formula set out in the decree.
As an implementation of the above decree, the Company and Telkomsel paid annual frequency usage fees since 2010.
Based on Decision letter No. 1987 Year 2017 dated November 15, 2017, which amended Decree No. 42 Year 2014 dated January 29, 2014, whereby the MoCI granted Telkomsel the rights to provide:
1. | Mobile telecommunication services with radio frequency bandwidth in the 800 MHz, 900 MHz, 1800 MHz, 2.1 GHz and 2.3 GHz; and |
2. | Basic telecommunication services. |
With reference to Decision Letters No. 268/KEP/M.KOMINFO/9/2009, No. 191 Year 2013, No. 509 Year 2016, No. 1896 Year 2017 and No. 806 Year 2019 of the MoCI, Telkomsel is required, among other things, to:
1. | Pay an annual right of usage Biaya Hak Penyelenggara (“BHP”) over the license term (10 years) as set forth in the decision letters. The BHP is payable upon receipt of Surat Pemberitahuan Pembayaran (notification letter) from the DGPI. The BHP fee is payable annually up to the expiry period of the license. |
2. | Issue a performance bond each year amounting to Rp20 billion for spectrum 2.1 GHz and a surety bond each year amounting Rp1.03 trillion for spectrum 2.3 GHz (Note 36b.ii). |
(ii) | Receivable under non-cancelable lease agreements |
Receivables under lease agreements as of December 31, 2019 are as follows:
| | | | | | | |
| Total | | Less than 1 year | | 1-5 years | | More than 5 years |
As lessor | 9,316 | | 1,823 | | 4,746 | | 2,747 |
118
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
36. SIGNIFICANT COMMITMENTS AND AGREEMENTS (continued)
c. | Others (continued) |
(iii) USO
The MoCI issued Regulation No. 17 year 2016 dated September 26, 2016 which replaced Decree No. 45 year 2012 and other previous regulations regarding policies underlying the USO program. The regulation requires telecommunications operators in Indonesia to contribute 1.25% of gross revenues (with due consideration for bad debts and/or interconnection charges and/or connection charges and/or the exclusion of certain revenues that are not considered as part of gross revenues as a basis to calculate the USO charged) for USO development.
Subsequently, Decree No. 17 year 2016 dated September 26, 2016 was replaced by Decree No. 19 year 2016 which was effective from November 4, 2016. The latest Decree stipulates, among other things, the USO charged was effective for fiscal year 2016 and thereafter.
Based on MoCI Regulation No. 25 year 2015 dated June 30, 2015, 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 Penyedia dan Pengelola Pembiayaan Telekomunikasi dan Informatika (“BPPPTI”). BPPPTI replaced Balai Telekomunikasi dan Informatika Pedesaan (“BTIP”) based on Decree No. 18/PER/M.KOMINFO/11/2010 dated November 19, 2010 of MoCI. Based on MoCI No. 3 year 2018 dated May 23, 2018, BPPPTI has been renamed as Badan Aksesibilitas Telekomunikasi dan Informasi (“BAKTI”). Subsequently, MOCI Regulation No. 25 year 2015 was replaced by MOCI Regulation No. 10 year 2018.
On December 27, 2011, Telkomsel (on behalf of Konsorsium Telkomsel, a consortium which was established with Dayamitra on December 9, 2011) was selected by BPPPTI as a provider of the USO Program in the border areas for all packages (package 1 - 13) with a total price of Rp830 billion. On such date, Telkomsel was also selected by BPPPTI as a provider of the USO Program (Upgrading) of “Desa Pinter” or “Desa Punya Internet” for packages 1, 2, and 3 with a total price of Rp261 billion.
In 2015, the Program was ceased. In January 2016, Telkomsel filed an arbitration claim to BANI for the settlement of the outstanding receivables of USO Programs.
On June 22, 2017, Telkomsel received a decision letter from BANI No.792/1/ARB-BANI/2016 requesting BPPPTI to pay compensation to Telkomsel amounting to Rp217 billion, and as of the date of the issuance of these consolidated financial statements, Telkomsel has received Rp91 billion (before tax) and no additional payment from BAKTI.
119
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
37. | ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES |
Assets and liabilities denominated in foreign currencies are as follows:
| | | | ||||
| March 31, 2020 | ||||||
| U.S dollar | | Japanese yen | | Others* | | Rupiah equivalent |
| (in millions) | | (in millions) | | (in millions) | | (in billions) |
Assets | | | | | | | |
183.34 | | 3.63 | | 13.16 | | 3,204 | |
Other current financial assets | 11.62 | | - | | 1.67 | | 217 |
Trade receivables | | | | | | | |
Related parties | 0.42 | | - | | - | | 7 |
Third parties | 193.09 | | - | | 10.37 | | 3,317 |
Other receivables | 0.25 | | - | | 0.09 | | 5 |
Other current assets | 2.55 | | - | | 3.10 | | 92 |
Other non-current assets | 57.42 | | 48.87 | | 12.27 | | 1,121 |
Total assets | 448.69 | | 52.50 | | 40.66 | | 7,963 |
Liabilities | | | | | | | |
Trade payables | | | | | | | |
Related parties | (0.08) | | - | | - | | (1) |
Third parties | (168.45) | | (15.09) | | (5.26) | | (2,806) |
Other payables | (5.47) | | - | | (10.04) | | (249) |
Accrued expenses | (31.33) | | (180.80) | | (1.85) | | (561) |
Short-term bank loan | (1.01) | | - | | - | | (17) |
Advances from customers | (0.23) | | - | | - | | (4) |
Current maturities of long-term borrowings | (22.31) | | (767.90) | | (1.22) | | (500) |
Long-term borrowings - net of current maturities | (59.70) | | (3,071.59) | | (0.30) | | (1.443) |
Other liabilities | (29.87) | | - | | (12.98) | | (701) |
Total liabilities | (318.45) | | (4,035.38) | | (31.65) | | (6,282) |
Assets (liabilities) - net | 130.24 | | (3,982.88) | | 9.01 | | 1.681 |
| | | | ||||
| December 31, 2019 | ||||||
| U.S dollar | | Japanese yen | | Others* | | Rupiah equivalent |
| (in millions) | | (in millions) | | (in millions) | | (in billions) |
Assets | | | | | | | |
Cash and cash equivalents | 178.66 | | 1.18 | | 9.42 | | 2,612 |
Other current financial assets | 14.18 | | - | | 1.74 | | 221 |
Trade receivables | | | | | | | |
Related parties | 0.12 | | - | | - | | 2 |
Third parties | 165.16 | | - | | 8.96 | | 2,409 |
Other receivables | 0.31 | | - | | 0.05 | | 5 |
Other current assets | - | | - | | 0.89 | | 12 |
Other non-current assets | 63.29 | | 49.15 | | 12.28 | | 1,044 |
Total assets | 421.72 | | 50.33 | | 33.34 | | 6,305 |
Liabilities | | | | | | | |
Trade payables | | | | | | | |
Related parties | (0.08) | | - | | - | | (1) |
Third parties | (131.14) | | (4.25) | | (5.23) | | (1,869) |
Other payables | (4.17) | | - | | (13.92) | | (251) |
Accrued expenses | (46.57) | | (152.56) | | (2.02) | | (691) |
Short-term bank loan | (1.19) | | - | | - | | (16) |
Advances from customers | (0.23) | | - | | - | | (3) |
Current maturities of long-term borrowings | (22.31) | | (767.90) | | (4.36) | | (469) |
Long-term borrowings - net of current maturities | (71.12) | | (3,071.59) | | (0.38) | | (1,386) |
Other liabilities | (13.94) | | - | | (0.01) | | (194) |
Total liabilities | (290.75) | | (3,996.30) | | (25.92) | | (4,880) |
Assets (liabilities) - net | 130.97 | | (3,945.97) | | 7.42 | | 1,425 |
* Assets and liabilities denominated in other foreign currencies are presented as U.S. dollar equivalents using the buy and sell rates quoted by Reuters prevailing at the end of the reporting period.
The Group’s 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.
If the Group reports monetary assets and liabilities in foreign currencies as of March 31, 2020 using the exchange rates on June 29, 2020, the unrealized foreign exchange loss amounting to Rp245 billion.
120
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
38. | FINANCIAL INSTRUMENTS |
a. | Fair value of financial assets and financial liabilities |
i. | Classification |
(a) | Financial asset |
| | | |
| March 31, 2020 | | December 31, 2019 |
Loans and receivables | | | |
Cash and cash equivalents | - | | 18,242 |
Other current financial assets | - | | 483 |
Trade and other receivables, net | - | | 12,089 |
Other non-current financial assets | - | | 258 |
Available-for-sale financial assets | | | |
Available-for-sale investments | - | | 1,124 |
Amortized cost | | | |
Cash and cash equivalents | 24,365 | | - |
Other current financial assets | 1,164 | | - |
Trade and other receivables, net | 15,100 | | - |
Contract assets | 1,075 | | - |
Other non-current financial assets | 247 | | - |
FVTPL | | | |
Equity investments | 1,199 | | - |
Other long-term investments | 860 | | - |
Mutual funds | 71 | | - |
Convertible bonds | 312 | | - |
Total financial assets | 44,393 | | 32,196 |
| | | |
| March 31, 2020 | | December 31, 2019 |
Financial liabilities measured at amortized cost | | | |
Trade and other payables | 14,381 | | 14,346 |
Accrued expenses | 14,854 | | 13,736 |
Short-term bank loans | 8,623 | | 8,705 |
Two-step loans | 805 | | 736 |
Bonds and notes | 9,959 | | 9,958 |
Long-term bank loans | 22,474 | | 26,605 |
Obligation under finance leases | - | | 2,340 |
Lease liabilities | 14,918 | | - |
Other borrowings | 3,648 | | 3,740 |
Total financial liabilities | 89,662 | | 80,166 |
ii. | Fair values |
The following table presents comparison of the carrying amounts and fair values of the Company’s financial instruments, other than those the fair values are considered to approximate their carrying amounts as the impact of discounting is not significant:
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | Fair value measurement at reporting date using | ||||
| | | | | | Quoted prices in | | | | |
| | | | | | active markets | | Significant | | |
| | | | | | for identical | | other | | Significant |
| | | | | | assets or | | observable | | unobservable |
| | Carrying | | | | liabilities | | inputs | | inputs |
March 31, 2020 | | value | | Fair value | | (level 1) | | (level 2) | | (level 3) |
Financial assets measured at fair value | | | | | | | | | | |
Mutual funds | | 71 | | 71 | | 71 | | - | | - |
Convertible bonds | | 312 | | 312 | | - | | - | | 312 |
Other long-term investments | | 860 | | 860 | | - | | - | | 860 |
Financial liabilities at amortized cost | | | | | | | | | | |
Interest-bearing loans and other | | | | | | | | | | |
borrowings: | | | | | | | | | | |
Two-step loans | | 805 | | 829 | | - | | - | | 829 |
Bonds and notes | | 9,959 | | 10,431 | | 9,444 | | - | | 987 |
Long-term bank loans | | 22,474 | | 22,501 | | - | | - | | 22,501 |
Lease liabilities | | 14,918 | | 14,918 | | - | | - | | 14,918 |
Other borrowings | | 3,648 | | 3,630 | | - | | - | | 3,630 |
Total | | 53,047 | | 53,552 | | 9,515 | | - | | 44,037 |
121
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
38. | FINANCIAL INSTRUMENTS (continued) |
a. | Fair value of financial assets and financial liabilities (continued) |
ii. | Fair values (continued) |
The following table presents comparison of the carrying amounts and fair values of the Company’s financial instruments, other than those the fair values are considered to approximate their carrying amounts as the impact of discounting is not significant (continued):
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | Fair value measurement at reporting date using | ||||
| | | | | | Quoted prices in | | | | |
| | | | | | active markets | | Significant | | |
| | | | | | for identical | | other | | Significant |
| | | | | | assets or | | observable | | unobservable |
| | Carrying | | | | liabilities | | inputs | | inputs |
December 31, 2019 | | value | | Fair value | | (level 1) | | (level 2) | | (level 3) |
Financial assets measured at fair value | | | | | | | | | | |
Available-for-sale investments | | 1,124 | | 1,124 | | 71 | | - | | 1,053 |
Financial liabilities for which | | | | | | | | | | |
fair values are disclosed | | | | | | | | | | |
Interest-bearing loans and other borrowings | | | | | | | | | | |
Two-step loans | | 736 | | 759 | | - | | - | | 759 |
Bonds and notes | | 9,958 | | 10,897 | | 9,906 | | - | | 991 |
Long-term bank loans | | 26,605 | | 26,537 | | - | | - | | 26,537 |
Obligation under finance leases | | 2,340 | | 2,340 | | - | | - | | 2,340 |
Other borrowings | | 3,740 | | 3,709 | | - | | - | | 3,709 |
Other liabilities | | 194 | | 194 | | - | | - | | 194 |
Total | | 44,697 | | 45,560 | | 9,977 | | - | | 35,583 |
Loss on fair value measurement recognised in consolidated statements of profit or loss and other comprehensive income for the three months period ended March 31, 2020 amounting to Rp49 billion. There is no movement between fair value hierarchy during 2020.
Reconciliations of the beginning and ending balances for items measured at fair value using significant unobservable inputs (level 3) for the three months period ended March 31, 2020 and December 31, 2019, are as follows:
| | | | |
| | March 31, 2020 | | December 31, 2019 |
Beginning balance | | 1,053 | | 734 |
Adjustment on initial application of PSAK 71 | | 282 | | - |
Gain (loss) recognized in consolidated statement | | | | |
of profit or loss and other comprehensive income | | (46) | | 3 |
Purchase/addition | | 7 | | 390 |
Settlement/deduction | | (124) | | (74) |
Ending balance | | 1,172 | | 1,053 |
| | | | |
iii. | Fair value measurement |
Fair value is the amount for which an asset could be exchanged, or a liability settled, between parties in an arm's length transaction.
The fair values of short-term financial assets and financial liabilities with maturities of one year or less (cash and cash equivalents, trade and other receivables, other current financial assets, trade and other payables, accrued expenses, and short-term bank loans) and other non-current assets are considered to approximate their carrying amounts as the impact of discounting is not significant.
The fair values of long-term financial assets and financial liabilities (other non-current assets (long-term trade receivables and restricted cash) and liabilities) approximate their carrying amounts as the impact of discounting is not significant.
122
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
38. | FINANCIAL INSTRUMENTS (continued) |
a. | Fair value of financial assets and financial liabilities (continued) |
iii. | Fair value measurement (continued) |
The Group determined the fair value measurement for disclosure purposes of each class of financial assets and financial liabilities based on the following methods and assumptions:
The fair value estimates are inherently judgemental and involve various limitations, including:
(a) | fair values presented do not take into consideration the effect of future currency fluctuations. |
(b) | estimated fair values are not necessarily indicative of the amounts that the Group would record upon disposal/termination of the financial assets and liabilities. |
b. | Financial risk management objectives and policies |
The Group’s activities expose it to a variety of financial risks such as market risks (including foreign exchange risk, market price risk, and interest rate risk), credit risk, and liquidity risk. Overall, the Group’s financial risk management program is intended to minimize losses on the financial assets and financial liabilities arising from fluctuation of foreign currency exchange rates and the fluctuation of interest rates. Management has a written policy on foreign currency risk management mainly on time deposit placements and hedging to cover foreign currency risk exposures for periods ranging from 3 up to 12 months.
Financial risk management is carried out by the Corporate Finance unit under policies approved by the Board of Directors. The Corporate Finance unit identifies, evaluates and hedges financial risks.
i.Foreign exchange risk
The Group is exposed to foreign exchange risk on sales, purchases and borrowings that are denominated in foreign currencies. The foreign currency denominated transactions are primarily in U.S. Dollars and Japanese yen. The Group’s exposures to other foreign exchange rates are not material.
Increasing risks of foreign currency exchange rates on the obligations of the Group are expected to be partly offset by the effects of the exchange rates on time deposits and receivables in foreign currencies that are equal to at least 25% of the outstanding current foreign currency liabilities.
123
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
38. | FINANCIAL INSTRUMENTS (continued) |
b. | Financial risk management objectives and policies (continued) |
i.Foreign exchange risk (continued)
The following table presents the Group’s financial assets and financial liabilities exposure to foreign currency risk:
| | | | | | | |
| | | | | | | |
| March 31, 2020 | | December 31, 2019 | ||||
| U.S. Dollar | | Japanese yen | | U.S. Dollar | | Japanese yen |
| (in billions) | | (in billions) | | (in billions) | | (in billions) |
Financial assets | 0.45 | | 0.05 | | 0.42 | | 0.05 |
Financial liabilities | (0.32) | | (4.04) | | (0.29) | | (4.00) |
Net exposure | 0.13 | | (3.99) | | 0.13 | | (3.95) |
Sensitivity analysis
A strengthening of the U.S. Dollar and Japanese yen, as indicated below, against the Rupiah at March 31, 2020 would have decreased equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the reporting date. The analysis assumes that all other variables, in particular interest rates, remain constant.
| | | | | | | |
| | | | | | | |
| | | | | | | Equity/profit (loss) |
March 31, 2020 | | | | | | | |
U.S. dollar (1% strengthening) | | | | | | | 21 |
Japanese yen (5% strengthening) | | | | | | | (30) |
A weakening of the U.S. dollar and Japanese yen against the Rupiah at March 31, 2020 would have had an equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
ii. Market price risk
The Group is exposed to changes in debt and equity market prices related to financial assets measured at FVTPL carried at fair value. Gains and losses arising from changes in the fair value of financial assets measured at FVTPL are recognised in the consolidated statements of profit or loss and other comprehensive income.
The performance of the Group’s financial assets measured at FVTPL is monitored periodically, together with a regular assessment of their relevance to the Group’s long-term strategic plans.
As of March 31, 2020, management considered the price risk for the Group’s financial assets measured at FVTPL to be immaterial in terms of the possible impact on profit or loss and total equity from a reasonably possible change in fair value.
iii. | Interest rate risk |
Interest rate fluctuation is monitored to minimize any negative impact to financial performance. Borrowings at variable interest rates expose the Group to interest rate risk (Notes 18 and 19). To measure market risk pertaining to fluctuations in interest rates, the Group primarily uses interest margin and maturity profile of the financial assets and liabilities based on changing schedule of the interest rate.
124
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
38. | FINANCIAL INSTRUMENTS (continued) |
b. | Financial risk management objectives and policies (continued) |
iii. | Interest rate risk (continued) |
At reporting date, the interest rate profile of the Group’s interest-bearing borrowings was as follows:
| | | |
| March 31, 2020 | | December 31, 2019 |
Fixed rate borrowings | (32,519) | | (23,001) |
Variable rate borrowings | (27,908) | | (29,083) |
Sensitivity analysis for variable rate borrowings
As of March 31, 2020, a decrease (increase) by 25 basis points in interest rates of variable rate borrowings would have increased (decreased) equity and profit or loss by Rp70 billion, respectively. The analysis assumes that all other variables, in particular foreign currency rates, remain constant.
iv. | Credit risk |
The following table presents the maximum exposure to credit risk of the Group’s financial assets:
| | | |
| March 31, 2020 | | December 31, 2019 |
Cash and cash equivalents | 24,365 | | 18,242 |
Other current financial assets | 1,234 | | 554 |
Trade and other receivable, net | 15,100 | | 12,089 |
Contract assets | 1,075 | | - |
Other non-current assets | 247 | | 258 |
Total | 42,021 | | 31,143 |
The Group is exposed to credit risk primarily from cash and cash equivalents and trade and other receivables. The credit risk is controlled by continuous monitoring of outstanding balance and collection. Credit risk from balances with banks and financial institutions is managed by the Group’s Corporate Finance Unit in accordance with the Group’s written policy.
The Group placed the majority of its cash and cash equivalents in state-owned banks because they have the most extensive branch networks in Indonesia and are considered to be financially sound banks. Therefore, it is intended to minimize financial loss through banks and financial institutions’ potential failure to make payments. The customer credit risk is managed by continuous monitoring of outstanding balances and collection. Trade and other receivables do not have any major concentration of risk whereas no customer receivable balance exceeds 3.41% of trade receivables as of March 31, 2020.
Management is confident in its ability to continue to control and sustain minimal exposure to the customer credit risk given that the Group has recognised sufficient provision for impairment of receivables to cover incurred loss arising from uncollectible receivables based on existing historical data on credit losses.
v. | Liquidity risk |
Liquidity risk arises in situations where the Group has difficulties in fulfilling financial liabilities when they become due.
Prudent liquidity risk management implies maintaining sufficient cash in order to meet the Group’s financial obligations. The Group continuously performs an analysis to monitor financial position ratios, such as liquidity ratios and debt-to-equity ratios, against debt covenant requirements.
125
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
38. | FINANCIAL INSThfpRUMENTS (continued) |
The following is the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
| | | | | | | | | | | | | |
| Carrying | | Contractual | | | | | | | | | | 2025 and |
| amount | | cash flows | | 2021 | | 2022 | | 2023 | | 2024 | | thereafter |
March 31, 2020 | | | | | | | | | | | | | |
Trade and other payables | 14,381 | | (14,381) | | (14,381) | | - | | - | | - | | - |
Accrued expenses | 14,854 | | (14,854) | | (14,854) | | - | | - | | - | | - |
Interest bearing loans and | | | | | | | | | | | | | |
other borrowings | | | | | | | | | | | | | |
Two-step loans | 805 | | (872) | | (250) | | (179) | | (175) | | (150) | | (118) |
Bonds and notes | 9,959 | | (17,201) | | (3,341) | | (1,039) | | (2,817) | | (507) | | (9,497) |
Bank loans | 31,097 | | (35,094) | | (14,913) | | (6,565) | | (4,362) | | (3,522) | | (5,732) |
Other borrowings | 3,648 | | (4,347) | | (1,131) | | (698) | | (1,007) | | (945) | | (566) |
Lease liabilities | 14,918 | | (17,517) | | (4,688) | | (1,872) | | (3,285) | | (2,520) | | (5,152) |
Total | 89,662 | | (104,266) | | (53,558) | | (10,353) | | (11,646) | | (7,644) | | (21,065) |
| | | | | | | | | | | | | |
| Carrying | | Contractual | | | | | | | | | | 2024 and |
| amount | | cash flows | | 2020 | | 2021 | | 2022 | | 2023 | | thereafter |
December 31, 2019 | | | | | | | | | | | | | |
Trade and other payables | 14,346 | | (14,346) | | (14,346) | | - | | - | | - | | - |
Accrued expenses | 13,736 | | (13,736) | | (13,736) | | - | | - | | - | | - |
Interest bearing loans and | | | | | | | | | | | | | |
other borrowings | | | | | | | | | | | | | |
Two-step loans | 736 | | (804) | | (222) | | (196) | | (154) | | (132) | | (100) |
Bonds and notes | 9,958 | | (17,454) | | (3,402) | | (1,231) | | (2,817) | | (507) | | (9,497) |
Bank loans | 35,310 | | (40,732) | | (15,956) | | (8,495) | | (4,435) | | (6,417) | | (5,429) |
Other borrowings | 3,740 | | (4,534) | | (926) | | (1,082) | | (1,010) | | (948) | | (568) |
Obligations under | | | | | | | | | | | | | |
finance leases | 2,340 | | (2,713) | | (936) | | (785) | | (607) | | (255) | | (130) |
Other liabilities | 194 | | (223) | | (12) | | (52) | | (53) | | (53) | | (53) |
Total | 80,360 | | (94,542) | | (49,536) | | (11,841) | | (9,076) | | (8,312) | | (15,777) |
The difference between the carrying amount and the contractual cash flows is interest value. The interest value of variable-rate borrowings are determined based on the interest rates effective as of reporting date.
39. | CAPITAL MANAGEMENT |
The capital structure of the Group is as follows:
| | | | | | | |
| March 31, 2020 | | December 31, 2019 | ||||
| Amount | | Portion | | Amount | | Portion |
Short-term debts | 8,624 | | 5.17% | | 8,705 | | 5.74% |
Long-term debts | 51,804 | | 31.04% | | 43,379 | | 28.61% |
Total debts | 60,428 | | 36.21% | | 52,084 | | 34.35% |
Equity attributable to owners | | | | | | | |
of the parent company | 106,447 | | 63.79% | | 99,561 | | 65.65% |
Total | 166,875 | | 100.00% | | 151,645 | | 100.00% |
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for stockholders and benefits to other stakeholders and to maintain an optimum capital structure to minimize the cost of capital.
Periodically, the Group conducts debt valuation to assess possibilities of refinancing existing debts
with new ones which have more efficient cost that will lead to more optimized cost-of-debt. In case of idle cash with limited investment opportunities, the Group will consider buying back its shares of stock or paying dividend to its stockholders.
126
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
39. | CAPITAL MANAGEMENT (continued) |
In addition to complying with loan covenants, the Group also maintains its capital structure at the level it believes will not risk its credit rating and which is comparable with its competitors.
Debt-to-equity ratio (comparing net interest-bearing debt to total equity) is a ratio which is monitored by management to evaluate the Group’s capital structure and review the effectiveness of the Group’s debts. The Group monitors its debt levels to ensure the debt-to-equity ratio complies with or is below the ratio set out in its contractual borrowings arrangements and that such ratio is comparable or better than that of regional area entities in the telecommunications industry.
The Group’s debt-to-equity ratio as of March 31, 2020 and December 31, 2019 are as follows:
| | | |
| | | |
| March 31, 2020 | | December 31, 2019 |
Total interest-bearing debts | 60,428 | | 52,084 |
Less: cash and cash equivalents | (24,365) | | (18,242) |
Net debts | 36,063 | | 33,842 |
Total equity attributable to owners of the parent company | 106,447 | | 99,561 |
Net debt-to-equity ratio | 33.88% | | 33.99% |
As stated in Notes 19, the Group is required to maintain a certain debt-to-equity ratio and debt service coverage ratio by the lenders. For the three months period ended March 31, 2020 and December 31, 2019, the Group has complied with the externally imposed capital requirements.
40. | SUPPLEMENTAL CASH FLOWS INFORMATION |
| | | |
| 2020 | | 2019 |
Acquisition of property and equipment: | | | |
Credited to trade payables | 5,051 | | 6,971 |
Borrowing cost capitalization | 22 | | 22 |
Credited to obligations under finance lease | - | | 25 |
| | | |
Acquisition of intangible assets: | | | |
Credited to trade payables | 568 | | 570 |
| | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | Non-cash changes | | | ||||||
| | | | | | | Foreign | | | | | | |
| January 1, | | | | Implementation | | exchange | | | | Other | | March 31, |
| 2020 | | Cash flows | | new standard | | movement | | New leases | | Changes | | 2020 |
Short-term bank loans | 8,705 | | (82) | | - | | - | | - | | 1 | | 8,624 |
Two step loans | 736 | | (33) | | - | | 102 | | - | | - | | 805 |
Bonds and notes payable | 9,958 | | - | | - | | - | | - | | 1 | | 9,959 |
Long-term bank loans | 26,605 | | (4,323) | | - | | 189 | | - | | 3 | | 22,474 |
Other borrowings | 3,740 | | (93) | | - | | - | | - | | 1 | | 3,648 |
Obligations under finance leases | 2,340 | | - | | - | | - | | - | | (2,340) | | - |
Lease liabilities | - | | (2,269) | | 14,537 | | - | | 466 | | 2,184 | | 14,918 |
Total liabilities from | | | | | | | | | | | | | |
financing activities | 52,084 | | (6,800) | | 14,537 | | 291 | | 466 | | (150) | | 60,428 |
127
PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATMENTS
For the Three Months Period Ended March 31, 2020 and 2019 (unaudited)
(Figures in tables are expressed in billions of Rupiah, unless otherwise stated)
41. | SUBSEQUENT EVENT |
a. | On May 11, 2020, TII paid its bank loan to MUFG Bank amounting to US$6.7 million or equal to Rp101 billion . |
b. | The Company will buy back its shares from public, with a maximum amount Rp1,500 billion, and will be carried out in stages since March 30, 2020 until June 29, 2020. Until the end of the share buyback period, there were no share buybacks conducted by the Company. |
c. | On June 19, 2020, the Annual General Meeting of Stockholders of the Company was held for book period 2019. Some of the resolutions were as follows: |
i. | The Company declared cash dividends amounting to Rp11,198 billion or Rp113,061 per share and special dividends amounting to Rp4,065 billion or Rp41,0321 per share. |
ii. | The composition of the Company’s Boards of Commissioners and Directors were changed as follows: |
| | |
Board of Commissioners | | |
President Commissioner/Independent Commissioner | Rhenald Kasali | |
Independent Commissioner | Marsudi Wahyu Kisworo | |
Independent Commissioner | Wawan Iriawan | |
Independent Commissioner | Chandra Arie Setiawan | |
Commissioner | Marcelino Rumambo Pandin | |
Commissioner | Ismail | |
Commissioner | Alex Denni | |
Commissioner | Ahmad Fikri Assegaf | |
Commissioner | Rizal Mallarangeng | |
| | |
Directors | | |
President Director | Ririek Adriansyah | |
Director of Wholesale and International Services | Dian Rachmawan | |
Director of Human Capital Management | Afriwandi | |
Director of Finance | Heri Supriadi | |
Director of Consumer Service | FM Venusiana R | |
Director of Enterprise and Business Service | Edi Witjara | |
Director of Network, Information Technology and Solution | Herlan Wijanarko | |
Director of Digital Business | Muhammad Fajrin Rasyid | |
Director of Strategic Portfolio | Budi Setyawan Wijaya | |
d. | Based on the Decision of the Company's Board of Commissioners No.09/KEP/DK/2020 dated June 29, 2020, the composition of the Company's audit committee were changed to as follows: |
| | |
President Commissioner/Independent Commissioner | Chandra Arie Setiawan | |
Independent Commissioner | Marsudi Wahyu Kisworo | |
Independent Commissioner | Wawan Iriawan | |
Commissioner | Ahmad Fikri Assegaf | |
Commissioner | Marcelino Rumambo Pandin | |
Financial Expert | Sarimin Mietra Sardi | |
128