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For the fiscal year ended December 31, 2003 | Commission file number 1-14406 |
Name of each exchange on | ||||
Title of Each class | which registered | |||
American Depositary Shares representing Series B Shares, par value 500 Rupiah per share | New York Stock Exchange | |||
Series B Shares, par value 500 Rupiah per share | New York Stock Exchange** |
Series A Shares, par value 500 Rupiah per share | 1 | |
Series B Shares, par value 500 Rupiah per share | 10,079,999,639 |
* | Investor Relations Unit, Graha Citra Caraka, Jl. Gatot Subroto, No. 52, 5th Floor, Jakarta 12570. |
** | The Series B Shares were registered in connection with the registration of the American Depositary Shares. The Series B Shares are not listed for trading on the New York Stock Exchange. |
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* | Omitted because the item is not applicable. |
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“ADS” | American Depositary Share, which is a certificate (known as an ADR) being traded on a U.S. securities market (such as New York Stock Exchange) representing a number of foreign shares. One ADS of TELKOM represents twenty of TELKOM’s Series B shares. The ratio of shares to ADS is 20:1. | |
“ADSL” | (Asymmetric Digital Subscriber Line) is a technology that allows combinations of services including voice, data and one way full motion video to be delivered over existing copper feeder distribution and subscriber lines. | |
“AMPS” | (Advanced Mobile Phone System) is an analog mobile cellular system standard. | |
“ARPU” | (Average Revenue Per User) serves as an evaluation statistic in connection with a network operator’s subscriber base. | |
“ASR” | (Answer to Seizure Ratio). See “Call Completion Rate”. | |
“ATM” | (Asynchronous Transfer Mode) is a transfer mode in which the information is organized into cells. It is asynchronous in the sense that the recurrence of cells containing information from an individual user is not necessarily periodic. | |
“B2B” | (Business-to-Business Electronic Commerce) is a technology-enabled application environment to facilitate the exchange of business information and automate commercial transaction designed to automate and optimize interactions between business partners. | |
“backbone” | refers to the main telecommunications network consisting of transmission and switching facilities connecting several network access nodes. The transmission links between nodes and switching facilities include microwave, submarine cable, satellite, optical fiber and other transmission technology. | |
“bandwidth” | refers to the capacity of a communications link. | |
“BTS” | (Base Transceiver Station) refers to equipment that transmits and receives radio telephony signals to and from other telecommunication systems. | |
“call completion rate” | is the percentage of calls that are successfully completed, as measured by the number of calls successfully answered divided by the number of call attempts that are recognized by the caller’s local exchange, in the case of call completion rates for local calls and call attempts that are recognized by the trunk exchange, in the case of call completion rates for long-distance calls. Call completion rate is measured by the answer to seizure ratio, or “ASR”. | |
“capacity utilization” | refers to the ratio of lines in service to local exchange capacity or installed lines. | |
“CDMA” | (Code Division Multiple Access) is a wide-band spread-spectrum network technology. |
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“DCS 1800” | (Digital Communication System) is a mobile cellular system using GSM technology operating in the 1800Mhz frequency band. | |
“DGPT” | is the Director General of Post and Telecommunications. | |
“distribution point” | is the point of interconnection between the dropwire and the secondary cable running to a cabinet and/or a local exchange. | |
“DLD” | refers to domestic long-distance telecommunications services such as long-distance telephone calls and leased lines services. | |
“downlink” | refers to the receiving portion of a satellite circuit extending from the satellite to the Earth. | |
“dropwire” | is the wire connecting the subscriber’s premises to the distribution point. | |
“DTR” | (Distributable TELKOM Revenues) is the monthly revenue share payable by each KSO Unit to TELKOM under the KSO Agreements, being a specified percentage of total KSO revenues in a KSO Unit after deduction of specified KSO operating expenses and MTR. | |
“dual band” | refers to the capability of a mobile cellular network and mobile cellular handsets to operate across two frequency bands, for example GSM 900 and GSM 1800. | |
“duopoly system” | is a system allowing only two national operators, which in Indonesia’s case are TELKOM and Indosat, to provide fixed-line telecommunication services. | |
“earth station” | is the antenna and associated equipment used to receive or transmit telecommunication signals via satellite. | |
“existing installations” | refer to telecommunications facilities, including telephone lines, network infrastructure and related assets in existence in each KSO Division as of the beginning of each KSO Period plus certain facilities and equipment constructed or installed by TELKOM in the KSO Units after such dates to be managed by a KSO Investor. | |
“fixed cellular” | refers to a form of fixed wireless technology which uses conventional cellular network configurations to link a subscriber at a fixed location to a local exchange. | |
“fixed wireless” | refers to a local wireless transmission link using cellular, microwave or radio technology to link a subscriber at a fixed location to a local exchange. | |
“fixed wireline” | refers to a fixed path (wire or cable) linking a subscriber at a fixed location to a local exchange, usually with an individual phone number. | |
“frame relay” | is a packet-switching protocol (in which messages are divided into packets before they are sent) for connecting devices on a computer network that spans a relatively large geographical area. | |
“Government” | refers to the Government of the Republic of Indonesia. |
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“GPRS” | (General Packet Radio Service) is a data packet switching technology that allows information to be sent and received across a mobile network and only utilizes the network when there is data to be sent. | |
“GSM” | (Global System for Mobile Telecommunication) is a European standard for digital cellular telephone. | |
“IDD” | (International Direct Dialing) is a service that allows a subscriber to make an international call without the assistance or intervention of an operator from any telephone terminal. | |
“installed lines” | refer to complete lines fully built-out to the distribution point and ready to be connected to subscribers. | |
“intelligent network” or “IN” | is a service-independent telecommunications network where the logic functions are taken out of the switch and placed in computer nodes distributed throughout the network. This provides the means to develop and control services more efficiently allowing new or advanced telephony services to be introduced quickly. | |
“ISDN” | (Integrated Services Digital Network) is a network that provides end-to-end digital connectivity and allows simultaneous transmission of voice, data and video and provides high-speed Internet connectivity. | |
“Kbps” | (Kilobits per second) is a measure of speed for digital signal transmission expressed in thousands of bits per second. | |
“KSO�� | (Kerjasama Operasi) or Joint Operating Scheme, is a unique type of Build, Operate and Transfer arrangement with a consortium of partners in which the consortium invests and operates TELKOM facilities in regional divisions. The consortium partners are owned by international operators and private domestic companies, or in cases where TELKOM has acquired the consortium partner, by TELKOM. | |
“KSO Agreements” | refer to the agreements, as amended from time to time, governing the operation of the network in the relevant KSO region for the KSO Period. | |
“KSO Period” | refers to period covered by the KSO Agreement. | |
“KSO Unit” | refers to a regional division of TELKOM managed and operated — pursuant to the relevant KSO Agreement. | |
“leased line” | is a dedicated telecommunications transmissions line linking one fixed point to another, rented from an operator for exclusive use. | |
“lines in service” | refer to revenue-generating lines connected to subscribers, including payphones, but not including mobile cellular subscribers or lines used internally by TELKOM. | |
“local call” | is the call among subscribers in the same numbering area without any prefix number being required. | |
“local exchange capacity” | refers to the aggregate number of lines at a local exchange connected and available for connection to outside plant. |
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“MHz” | (Megahertz) is a unit of measure of frequency. 1 MHz is equal to one million cycles per second. | |
“microwave transmission” | is a transmission consisting of electromagnetic waves in the radio frequency spectrum above 890 million cycles per second and below 20 billion cycles per second. | |
“MoC” | refers to the Ministry of Communications. | |
“Modern License” | is an operational license, contemplated in the Telecommunication Law, which replaces the existing operational license for basic telecommunications services. | |
“MoF” | refers to the Ministry of Finance. | |
“MTR” | (Minimum TELKOM Revenues) is the specified minimum amount payable monthly by each KSO Unit to TELKOM under the KSO Agreements. | |
“NMT-450” | (Nordic Mobile Telephone) is a form of analog mobile cellular service primarily installed in vehicles. | |
“optical fiber” | refers to cables using optical fiber and laser technology whereby modulating light beams representing data are transmitted through thin filaments of glass. | |
“outside plant” | is the equipment and facilities used to connect subscriber premises to the local exchange. | |
“PBH” or “Revenue Sharing Arrangement” | (Pola Bagi Hasil) is a type of Build, Operate and Transfer arrangement scheme between TELKOM and domestic private companies. Under this scheme the private company invests in the telecommunication facilities to be operated by TELKOM. | |
“PSDN” | (Packet Switched Data Networks) is a network using a switch device and sending packets of data through the network to some remote location. | |
“PSTN” | (Public Switched Telephone Network) is a telephone network operated and maintained by TELKOM and the KSO Units for and on behalf of TELKOM. | |
“RUIM” or “RUIM card” | (Removable Unit Identity Card) is a “smart” card designed to be inserted into a fixed wireless telephone that uniquely identifies a CDMA network subscription and that contains subscriber-related data such as phone numbers, service details and memory for storing messages. | |
“satellite transponder” | is the radio relay equipment embedded on a satellite that receives signals from earth and amplifies and transmits the signal back to earth. | |
“SIM” or “SIM card” | (Subscriber Identity Module) is a “smart” card designed to be inserted into a mobile cellular telephone that uniquely identifies a GSM network subscription and that contains subscriber-related data such as phone numbers, service details and memory for storing messages. |
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“SMS” | Short Messaging Service, a technology allowing the exchange of text messages between mobile cellular phones and between fixed wireless phones. | |
“switch” | is a mechanical, electrical or electronic device that opens or closes circuits, completes or breaks an electrical path, or selects paths or circuits, used to route traffic in a telecommunications network. | |
“trunk exchange” | is a switch that has the function of connecting one telephony switch to another telephony switch, which can be either a local or trunk switch. | |
“USO” | (Universal Service Obligation) is the service obligation imposed by the Government on all providers of telecommunications services for the purpose of providing public services in Indonesia. | |
“VoIP” | (Voice over Internet Protocol) is a means of sending voice information using the Internet Protocol. | |
“VPN” | (Virtual Private Network) is a secure private network connection, built on top of publicly-accessible infrastructure, such as the Internet or the public telephone network. VPNs typically employ some combination of encryption, digital certificates, strong user authentication and access control to provide security to the traffic they carry. They usually provide connectivity to many machines behind a gateway or firewall. | |
“VSAT” | (Very Small Aperture Terminal) is a relatively small antenna, typically 1.5 to 3.0 meters in diameter, placed in the user’s premises and used for two-way communications by satellite. | |
“WAP” | (Wireless Application Protocol) is an open and global standard of technology platform that enables mobile users to access and interact with mobile information services such as e-mail, Web sites, financial information, on-line banking, information and entertainment (infotainment), games and micro payments. |
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Year Ended December 31, | |||||||||||||||||||||||||||||
1999 | 2000 | 2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||
(unaudited) | (audited) | (audited) | (audited) | (audited) | |||||||||||||||||||||||||
(Rp. in billion, except for data relating to shares, | (US$ million) | ||||||||||||||||||||||||||||
Dividends and ADS) | |||||||||||||||||||||||||||||
Consolidated Income Statement Data | |||||||||||||||||||||||||||||
Indonesian GAAP | |||||||||||||||||||||||||||||
Operating revenues(1) | |||||||||||||||||||||||||||||
Telephone | |||||||||||||||||||||||||||||
Fixed lines | |||||||||||||||||||||||||||||
Local and domestic long-distance usage | 3,571 | 4,097 | 5,226 | 5,448 | 6,562 | 777 | |||||||||||||||||||||||
Monthly subscription charges | 799 | 887 | 998 | 1,475 | 1,949 | 231 | |||||||||||||||||||||||
Installation charges | 68 | 75 | 98 | 130 | 223 | 27 | |||||||||||||||||||||||
Others | 91 | 119 | 93 | 211 | 163 | 19 | |||||||||||||||||||||||
Total fixed lines revenues | 4,529 | 5,178 | 6,415 | 7,264 | 8,897 | 1,054 | |||||||||||||||||||||||
Cellular | |||||||||||||||||||||||||||||
Air time charges | 1,458 | 2,484 | 3,988 | 5,454 | 7,678 | 910 | |||||||||||||||||||||||
Monthly subscription charges | 236 | 356 | 581 | 593 | 581 | 68 | |||||||||||||||||||||||
Features | 4 | 7 | 10 | 8 | 6 | 1 | |||||||||||||||||||||||
Connection fee charges | 51 | 43 | 129 | 172 | 194 | 23 | |||||||||||||||||||||||
Total cellular revenues | 1,749 | 2,890 | 4,708 | 6,227 | 8,459 | 1,002 | |||||||||||||||||||||||
Total telephone revenues | 6,278 | 8,068 | 11,123 | 13,491 | 17,356 | 2,056 | |||||||||||||||||||||||
Joint Operation Schemes | |||||||||||||||||||||||||||||
Minimum TELKOM Revenues (MTR) | 1,453 | 1,557 | 1,474 | 1,320 | 900 | 107 | |||||||||||||||||||||||
Share in Distributable KSO Revenues (DKSOR) | 209 | 695 | 733 | 801 | 583 | 69 | |||||||||||||||||||||||
Amortization of unearned initial investor payments | 15 | 15 | 13 | 7 | 3 | 0 | |||||||||||||||||||||||
Total revenue under Joint Operation Schemes | 1,677 | 2,267 | 2,220 | 2,128 | 1,486 | 176 | |||||||||||||||||||||||
Interconnection — Net | 706 | 981 | 1,424 | 2,831 | 4,162 | 493 | |||||||||||||||||||||||
Network | 343 | 340 | 415 | 316 | 518 | 62 | |||||||||||||||||||||||
Data and Internet | 54 | 108 | 673 | 1,552 | 3,109 | 368 | |||||||||||||||||||||||
Revenue-Sharing Arrangement | 360 | 288 | 264 | 264 | 258 | 31 | |||||||||||||||||||||||
Other telecommunications-related services | 19 | 138 | 165 | 221 | 227 | 27 | |||||||||||||||||||||||
Total Operating Revenues | 9,437 | 12,190 | 16,284 | 20,803 | 27,116 | 3,213 | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||
Personnel | 1,349 | 1,770 | 2,281 | 4,388 | 4,440 | 526 | |||||||||||||||||||||||
Depreciation | 2,627 | 2,419 | 2,870 | 3,474 | 4,779 | 566 | |||||||||||||||||||||||
Operations, maintenance and telecommunication services | 1,146 | 1,386 | 2,150 | 2,290 | 3,339 | 396 | |||||||||||||||||||||||
General and administrative | 571 | 872 | 1,343 | 1,146 | 2,079 | 246 | |||||||||||||||||||||||
Marketing | 76 | 147 | 220 | 375 | 503 | 60 | |||||||||||||||||||||||
Total Operating Expenses | 5,769 | 6,594 | 8,864 | 11,673 | 15,140 | 1,794 | |||||||||||||||||||||||
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Year Ended December 31, | |||||||||||||||||||||||||
1999 | 2000 | 2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||
(unaudited) | (audited) | (audited) | (audited) | (audited) | |||||||||||||||||||||
(Rp. in billion, except for data relating to shares, | (US$ million) | ||||||||||||||||||||||||
Dividends and ADS) | |||||||||||||||||||||||||
Operating Income | 3,668 | 5,596 | 7,420 | 9,130 | 11,976 | 1,419 | |||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||
Gain on sale of long-term investment in Telkomsel | — | — | — | 3,196 | — | — | |||||||||||||||||||
Interest expense | (1,492 | ) | (817 | ) | (1,330 | ) | (1,583 | ) | (1,383 | ) | (164 | ) | |||||||||||||
Interest income | 762 | 692 | 572 | 480 | 366 | 44 | |||||||||||||||||||
Gain (loss) on foreign exchange — net | 326 | (944 | ) | (379 | ) | 557 | 126 | 15 | |||||||||||||||||
Equity in net income (loss) of associated companies | 137 | (232 | ) | (86 | ) | 5 | 3 | 0 | |||||||||||||||||
Other — net | 101 | 313 | 353 | (36 | ) | 364 | 43 | ||||||||||||||||||
Other Income (Expense) — net | (166 | ) | (988 | ) | (870 | ) | 2,619 | (524 | ) | (62 | ) | ||||||||||||||
Income Before Tax | 3,502 | 4,608 | 6,550 | 11,749 | 11,452 | 1,357 | |||||||||||||||||||
Tax expense | (1,004 | ) | (1,520 | ) | (2,007 | ) | (2,899 | ) | (3,861 | ) | (458 | ) | |||||||||||||
Income before minority interest in net income of subsidiaries | 2,498 | 3,088 | 4,543 | 8,850 | 7,591 | 899 | |||||||||||||||||||
Minority interest in net income of Subsidiaries | (162 | ) | (313 | ) | (475 | ) | (810 | ) | (1,503 | ) | (178 | ) | |||||||||||||
Net Income | 2,336 | 2,775 | 4,068 | 8,040 | 6,087 | 721 | |||||||||||||||||||
Weighted average shares outstanding (millions) | 9,644 | 10,080 | 10,080 | 10,080 | 10,080 | ||||||||||||||||||||
Net income per share | 242.26 | 275.30 | 403.61 | 797.59 | 603.89 | ||||||||||||||||||||
Net income per ADS | 4,845.29 | 5,505.96 | 8,072.20 | 15,951.80 | 12,077.83 | ||||||||||||||||||||
Dividend declared per share | 50.99 | 107.76 | 88.16 | 210.82 | 331.16 | ||||||||||||||||||||
U.S. GAAP(2) | |||||||||||||||||||||||||
Net income | 2,679 | 2,216 | 4,298 | 8,587 | 5,791 | ||||||||||||||||||||
Net income per share | 277.80 | 219.87 | 426.41 | 851.91 | 574.47 | ||||||||||||||||||||
Net income per ADS | 5,555.90 | 4,397.47 | 8,528.17 | 17,038.21 | 11,489.40 |
As of December 31, | |||||||||||||||||||||||||
1999 | 2000 | 2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||
(unaudited) | (audited) | (audited) | (audited) | (audited) | |||||||||||||||||||||
(Rp. in billion) | (US$ million) | ||||||||||||||||||||||||
Consolidated Balance Sheet Data | |||||||||||||||||||||||||
Indonesian GAAP | |||||||||||||||||||||||||
Total assets | 28,574 | 32,019 | 33,036 | 44,307 | 50,283 | 5,957 | |||||||||||||||||||
Current liabilities(3) | 4,058 | 4,138 | 9,543 | 9,708 | 11,201 | 1,327 | |||||||||||||||||||
Other liabilities | 2,630 | 3,048 | 3,447 | 5,383 | 6,227 | 738 | |||||||||||||||||||
Long-term debt | 8,541 | 9,546 | 9,730 | 12,006 | 11,834 | 1,402 | |||||||||||||||||||
Total liabilities | 15,229 | 16,732 | 22,720 | 27,097 | 29,262 | 3,467 | |||||||||||||||||||
Minority interest | 534 | 814 | 1,235 | 2,596 | 3,708 | 439 | |||||||||||||||||||
Capital stock(4) | 5,040 | 5,040 | 5,040 | 5,040 | 5,040 | 597 | |||||||||||||||||||
Total stockholders’ equity | 12,810 | 14,473 | 9,081 | 14,614 | 17,313 | 2,051 | |||||||||||||||||||
U.S. GAAP(2) | |||||||||||||||||||||||||
Total assets | 27,236 | 30,900 | 32,449 | 44,623 | 51,347 | 6,084 | |||||||||||||||||||
Total stockholders’ equity | 11,419 | 12,928 | 7,766 | 13,911 | 16,285 | 1,929 |
(1) | Beginning 2002, TELKOM reclassified its revenue into eight major revenue categories: fixed-line, cellular, joint operation scheme (“KSO”), interconnection, network, data and Internet, revenue-sharing arrangements and other telecommunications services. For purposes of comparability, TELKOM has also reclassified its revenues for prior periods. |
(2) | U.S. GAAP amounts reflect adjustments resulting from differences in the accounting treatment of termination benefits, foreign exchange differences capitalized to property under construction, interest capitalized on property under construction, revenue-sharing arrangements, revaluation of property, plant and equipment, pension, equity in net income or loss of associated companies, land rights, equipment to be installed, revenue recognition, goodwill, capital leases, acquisition of Dayamitra, reversal of difference due to change of equity in associated companies, asset retirement obligations, and deferred |
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income taxes. See Item 5. “Operating and Financial Review and Prospects — A. Operating Results — Summary of Significant Differences between Indonesian GAAP and U.S. GAAP” and Note 58(1) to the Company’s consolidated financial statements. | |
(3) | Includes current maturities of long-term debt. |
(4) | Issued and Paid-Up Capital Stock consists of one Series A Dwiwarna share having a par value of Rp.500 and 10,079,999,639 Series B shares having a par value of Rp.500 from an authorized capital stock comprising one Series A Dwiwarna share and 39,999,999,999 Series B shares. |
At period | |||||||||||||||||
Year | end | Average(1) | High(2) | Low(2) | |||||||||||||
(Rp. per US$1.00) | |||||||||||||||||
1999 | 7,100 | 7,809 | 8,950 | 6,726 | |||||||||||||
2000 | 9,595 | 8,534 | 9,595 | 7,425 | |||||||||||||
First Quarter | 7,590 | 7,507 | 7,590 | 7,425 | |||||||||||||
Second Quarter | 8,735 | 8,433 | 8,620 | 7,945 | |||||||||||||
Third quarter | 8,780 | 8,691 | 9,003 | 8,290 | |||||||||||||
Fourth quarter | 9,595 | 9,507 | 9,595 | 9,395 | |||||||||||||
2001 | 10,400 | 10,266 | 11,675 | 8,865 | |||||||||||||
First Quarter | 10,400 | 9,895 | 10,400 | 9,450 | |||||||||||||
Second Quarter | 11,440 | 11,391 | 11,440 | 11,058 | |||||||||||||
Third quarter | 9,675 | 9,355 | 9,675 | 10,350 | |||||||||||||
Fourth quarter | 10,400 | 10,422 | 10,435 | 10,400 | |||||||||||||
2002 | 8,940 | 9,316 | 10,473 | 8,460 | |||||||||||||
First Quarter | 9,655 | 10,192 | 10,473 | 9,542 | |||||||||||||
Second Quarter | 8,730 | 9,109 | 9,775 | 8,460 | |||||||||||||
Third quarter | 9,015 | 8,949 | 9,218 | 8,695 | |||||||||||||
Fourth quarter | 8,940 | 9,058 | 9,326 | 8,815 | |||||||||||||
2003 | 8,465 | 8,573 | 9,120 | 8,165 | |||||||||||||
First Quarter | 8,919 | 8,907 | 9,120 | 8,836 | |||||||||||||
Second Quarter | 8,285 | 8,488 | 8,906 | 8,165 | |||||||||||||
Third Quarter | 8,389 | 8,427 | 8,665 | 8,166 | |||||||||||||
Fourth Quarter | 8,465 | 8,471 | 8,583 | 8,365 |
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At period | |||||||||||||||||
Year | end | Average(1) | High(2) | Low(2) | |||||||||||||
(Rp. per US$1.00) | |||||||||||||||||
2004 | |||||||||||||||||
First Quarter | 8,587 | 8,460 | 8,645 | 8,323 | |||||||||||||
January | 8,441 | 8,386 | 8,574 | 8,323 | |||||||||||||
February | 8,447 | 8,425 | 8,452 | 8,390 | |||||||||||||
March | 8,587 | 8,569 | 8,645 | 8,442 | |||||||||||||
April | 8,661 | 8,608 | 8,661 | 8,574 | |||||||||||||
May | 9,210 | 8,965 | 9,225 | 8,679 | |||||||||||||
June 24, 2004 | 9,410 | — | — | — |
(1) | The average of the middle exchange rate announced by Bank Indonesia applicable for the period. |
(2) | The high and low amounts are determined based upon the daily middle exchange rate announced by Bank Indonesia during the applicable period. |
Source: | Bank Indonesia |
TELKOM did not file a fully compliant 2002 Annual Report on Form 20-F until February 9, 2004 and may face an SEC enforcement action, or other legal liability or adverse consequences. |
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• | remove the 2002 reports of TELKOM’s prior auditors, KAP Eddy Pianto, and the auditors of TELKOM’s subsidiary, Telkomsel; | |
• | identify the consolidated financial statements therein for 2002 as “unaudited” and indicate that TELKOM’s consolidated financial statements therein for 2002 had not been audited by an independent accounting firm qualified in accordance with SEC requirements; | |
• | furnish an explanation of the foregoing; | |
• | describe the review by the SEC’s Division of Corporation Finance of TELKOM’s 2002 Annual Report on Form 20-F and of TELKOM’s public statements regarding its annual report, and the referral of those matters to the SEC’s Division of Enforcement; | |
• | discuss the material consequences of the deficiencies in its 2002 Annual Report on Form 20-F, of TELKOM’s public statements regarding such Annual Report and of an SEC enforcement action regarding the same; and | |
• | describe TELKOM’s plan to bring its 2002 Annual Report on Form 20-F into full compliance with applicable SEC regulations. |
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Current political and social events in Indonesia may adversely impact business activity in Indonesia. |
Declines or volatility in Indonesia’s currency exchange rates can have a material adverse impact on business activity in Indonesia. |
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Indonesia ended its Extended Financing Facility with the International Monetary Fund and the consequences thereof are unpredictable. |
Indonesia no longer has access to the Paris Club but continues to rely on loans from official creditors. |
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Indonesia’s high level of sovereign debts may result in it being unable to service its debt obligations when they become due. |
Indonesia’s sovereign debt rating continues to be reviewed and revised by international rating agencies. |
TELKOM’s expansion plans may strain key resources and thereby adversely affect its business, financial condition and prospects. |
Failure to amicably resolve KSO disputes may in some areas result in limited network expansion in some regions and impede TELKOM’s access to subscribers and ability to compete effectively. |
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TELKOM’s controlling stockholder’s interests may differ from those of TELKOM’s other stockholders. |
Certain systems failures could, if they occur, adversely affect TELKOM’s results of operations. |
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TELKOM’s regulators and other telecommunications operators may challenge TELKOM’s ability to apply PSTN tariffs to its new CDMA-based fixed wireless phone service, which is marketed under the brand name TELKOMFlexi. |
TELKOM may need to raise funds required for certain future expenditure requirements and the terms of any debt financing may subject TELKOM to restrictive covenants. |
TELKOM’s ability to develop adequate financing arrangements is critical to support its capital expenditures. |
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Employee unions may negatively affect TELKOM’s business. |
New technologies may adversely affect TELKOM’s ability to remain competitive. |
TELKOM operates in a legal and regulatory environment that is undergoing significant reforms and such reforms may adversely affect TELKOM’s business. |
• | Interconnection:TELKOM is obligated to allow other operators to interconnect their networks with those of TELKOM subject to entering into interconnection agreements with those other operators. As of the date of the Original Annual Report, TELKOM’s ability to negotiate such interconnection agreements is limited by the provisions set forth in various Ministerial Decrees governing interconnection rates. Following the enactment of the Telecommunications Law, a restructuring of the interconnection policy was proposed based upon a cost-based tariff as mutually determined by the operators rather than the revenue sharing scheme implemented as of the date of the Original Annual Report. As of the date of the Original Annual Report, the MoC has issued a decree stating that cost-based interconnection will commence beginning January 1, 2005 and the MoC is in the process of appointing an independent consultant that will assist in determining the basis for the new cost-based tariffs. The MoC is also drafting detailed regulations that will implement this new policy. TELKOM expects that the current interconnection fees may be adjusted as a result of the new cost-based interconnection scheme but TELKOM can give no assurance regarding the impact, if any, of such adjustment on TELKOM’s business, financial condition, results of operations and prospects. |
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• | Licenses:The Government is in the process of amending certain TELKOM licenses to comply with the Telecommunications Law and to establish the so-called Modern License. The Government, with due regard to prevailing laws and regulations, may amend the terms of TELKOM’s licenses and business authority at its discretion. Any breach of the terms and conditions of its licenses or business authority or failure to comply with applicable regulations may result in such licenses or business authority being revoked. Any revocation or unfavorable amendment of the licenses or business authority, or any failure to renew them on comparable terms, could have a materially adverse effect on TELKOM’s business, financial condition, results of operations and prospects. | |
• | Tariffs:In 1995, the Government implemented regulations providing a formula to establish the tariff adjustment for domestic fixed line telecommunications services. However, such annual tariff review adjustment has not been applied on a consistent basis. In addition, amendments to the current price cap policy allow operators to calculate yearly tariff adjustments beginning January 1, 2002, based on a formula to be stipulated by the Government. On January 29, 2002, the Government issued a letter to TELKOM stipulating a 45.49% increase in domestic fixed line telephone tariffs to be implemented over three years. For the year 2002 a tariff increase, with a weighted average 15% increase, was implemented. In January 2003, the Government postponed the second tariff increase due to numerous public protests. However, on March 30, 2004, the Government, through the ITRB, announced that it would allow operators to rebalance their tariffs, with the resulting weighted average of tariffs increasing by 9%. There is no assurance as to when or whether the remaining tariff increases will be implemented by the Government. | |
• | Indonesian Telecommunications Regulatory Body (“ITRB”): The Telecommunications Law contemplates the establishment of a new independent regulatory body to regulate, monitor and control the telecommunications industry. The ITRB comprises officials from the Directorate General of Post and Telecommunication and the Committee of Telecommunications Regulations and was officially established on July 11, 2003. There can be no assurance that the ITRB will not take actions that may be detrimental to TELKOM’s business or prospects. | |
• | Competition in the Fixed Line Domestic Telecommunications Market: Historically, TELKOM has had the exclusive right to provide fixed line domestic telecommunications services in Indonesia. Pursuant to regulations introduced to implement the Telecommunications Law, the Government plans to terminate TELKOM’s monopoly in providing fixed line domestic telecommunications services. It has issued Indosat a principal license to provide local telephone services from August 2002, an operational license for local telephone services. On May 13, 2004, Indosat received its commercial license to provide domestic long-distance telephone services. As of the date of the Original Annual Report, TELKOM cannot provide any assurance as to when Indosat will commence offering domestic long-distance services to customers, thereby creating a “duopoly system” in Indonesia’s fixed line domestic telecommunications market. In June 2004, Indosat launched its own CDMA fixed wireless service, called “StarOne.” As of the date of the Original Annual Report, Indosat only offers this service in Surabaya but is expected to expand service coverage to other cities in Indonesia. This greater competition in the fixed line market, including fixed wireless, could lead to a decline in TELKOM’s existing subscriber base as subscribers choose to receive services from other providers. | |
• | DLD and IDD Services:On March 11, 2004, the MoC issued Decree No. 28/2004, Decree No. 29/2004 and Decree No. 30/2004 regarding DLD and IDD services. These Decrees further implement the Government’s policy of encouraging competition in the markets for DLD and IDD services. Among other matters, the Decrees state that consumers will be able to choose their DLD and IDD providers among various competitors, including TELKOM and Indosat, and require operators to create separate 3-digit access codes for DLD and IDD services. TELKOM expects to incur costs in connection with these new DLD and IDD requirements (including establishing DLD and IDD access codes), such as expenditures required to create a new routing database, costs relating to customer education and other marketing costs. In addition, competi- |
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tion in the market for DLD services could lead to a decline in TELKOM’s DLD revenues as subscribers choose to receive DLD services from other providers, such as Indosat. With regard to IDD services, on May 13, 2004 TELKOM received its commercial license from the Government to provide IDD services and began offering such services to customers on June 7, 2004. Nevertheless, competition among IDD service providers may limit TELKOM’s ability to generate significant IDD revenues. | ||
• | Compensation Risk:The Telecommunications Law provides that TELKOM and Indosat will be compensated for the early termination of their exclusive rights. TELKOM previously had exclusive rights to provide fixed local and domestic long-distance services in Indonesia. TELKOM’s exclusive right to provide fixed local telecommunications services was terminated by the Government in August 2002 and TELKOM’s exclusive right to provide domestic long-distance services was terminated on March 30, 2004. The Government has determined the scheme of compensation for the termination of TELKOM’s exclusive rights, which will consist of (i) expedited issuance of an IDD license to TELKOM, which was issued on May 13, 2004; (ii) approval of the reissuance and transfer of TELKOM’s DCS 1800 license to Telkomsel, which took place on July 12, 2002; and (iii) a net cash payment to TELKOM and its KSO partners of Rp.478 billion (after taxes). While the amount of the compensation payable to TELKOM and its KSO partners has been determined, payment is contingent on appropriations to the State Budget for the MoC, which requires approval by Parliament. As of the date of the Original Annual Report, TELKOM can provide no assurance with regard to when Parliament will approve the necessary appropriations or as to the effects the net cash payment will have on TELKOM’s financial condition, results of operations and prospects. | |
• | USO Risk:All telecommunications network operators and service providers are bound by a Universal Service Obligation, or USO, which requires provision of certain telecommunications facilities and infrastructure in rural and remote areas. As a local network provider, TELKOM is obligated to build and operate telecommunications networks in the USO areas. Historically, TELKOM has been obligated to contribute 5% of its capital expenditures to its USO requirements. TELKOM has typically experienced financial losses in providing such network capacity in rural and remote areas. On March 30, 2004, the Government issued a new regulation which requires telecommunications operators in Indonesia to contribute 0.75% of gross revenues (with due consideration for bad debt and interconnection charges) for USO development. The Government is also in the process of drafting detailed regulations that will fully implement the USO program for telecommunications operators in Indonesia. |
TELKOM’s increasingly important cellular operations face significant constraints and competitive pressures. |
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TELKOM’s satellites have a limited life and substantial risk exists for TELKOM-1 and Palapa B-4 to be damaged or interrupted during operation and satellite loss or reduced performance may adversely affect our financial condition, results of operations and ability to provide certain services. |
TELKOM is subject to Indonesian accounting and corporate disclosure standards that differ in significant respects from those applicable in other countries. |
You are unable to pursue claims against Prasetio, Utomo & Co., a member firm of Arthur Andersen, which was the former auditor for Telkomsel. |
TELKOM is incorporated in Indonesia and it may not be possible for investors to effect service of process or to enforce judgments obtained in the United States against TELKOM. |
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Forward-looking statements reflect current expectations and may not be correct. |
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• | Fixed-line (which consists of fixed wireline and fixed wireless); | |
• | Cellular; | |
• | Joint Operation Scheme (KSO); | |
• | Interconnection; | |
• | Network; | |
• | Data and Internet; | |
• | Revenue Sharing Arrangements; and | |
• | Other Telecommunications-related Services (including revenues from telephone directory services). |
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As of or for the year ended | |||||||||||||
December 31, | |||||||||||||
2001 | 2002 | 2003 | |||||||||||
Cellular subscribers(1) | |||||||||||||
KartuHALO (Postpaid) | 865,211 | 923,005 | 1,007,034 | ||||||||||
SimPATI (Prepaid) | 2,386,821 | 5,087,767 | 8,581,773 | ||||||||||
Deactivations(2) | |||||||||||||
KartuHALO (Postpaid) | 177,514 | 279,648 | 265,355 | ||||||||||
SimPATI (Prepaid) | 120,403 | 470,298 | 2,823,025 | ||||||||||
Average monthly churn rate(3) | |||||||||||||
KartuHALO (Postpaid) | 2.0 | % | 2.5 | % | 2.3 | % | |||||||
SimPATI (Prepaid) | 0.7 | % | 1.1 | % | 4.0 | % | |||||||
ARPU(4) | |||||||||||||
KartuHALO (Postpaid) (Rp.’000) | 287 | 298 | 314 | ||||||||||
SimPATI (Prepaid) (Rp.’000) | 111 | 103 | 95 |
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(1) | Prepaid subscribers may purchase SIM-cards and refill vouchers with values ranging from Rp.50,000 to as much as Rp.1,000,000. The following table shows the respective active periods for Telkomsel’s SimPATI prepaid packages: |
Period during which | ||
subscribers will have | ||
Value of Voucher or SIM Card | access to services | |
Rp.50,000 | 60 days | |
Rp.100,000 | 90 days | |
Rp.150,000 | 150 days | |
Rp.200,000 | 180 days | |
Rp.300,000 | 210 days | |
Rp.500,000 | 240 days | |
Rp.1,000,000 | 270 days |
(2) | Includes voluntary and involuntary deactivations. |
(3) | The average monthly churn rate for a year is computed by adding the monthly churn rates during the year and dividing by 12. The monthly churn rate is computed by dividing the number of subscribers deactivated during the month by the number of subscribers at the beginning of the month. |
(4) | Refers to Average Revenue per User which is calculated by taking the sum of the ARPU for each month of the year and dividing by 12. ARPU is computed by dividing total cellular revenues for either postpaid or prepaid subscribers (excluding connection fees, interconnection revenues, international roaming revenues from visitors and dealer discounts) for each month by the respective average number of postpaid or prepaid cellular subscribers for that month. |
Joint Operation Scheme |
2001 | 2002 | 2003 | |||||||||||||||||||||||
KSO Division | MTR | DTR | MTR | DTR | MTR | DTR | |||||||||||||||||||
(Rp. in billion) | (Rp. in billion) | (Rp. in billion) | |||||||||||||||||||||||
Division I (Sumatera)(1) | 497.9 | 259.8 | 296.3 | 197.3 | — | — | |||||||||||||||||||
Division III (West Java and Banten)(2) | 366.3 | 117.8 | 390.1 | 157.8 | 242.4 | 90.0 | |||||||||||||||||||
Division IV (Central Java) | 371.3 | 133.6 | 387.5 | 183.2 | 404.3 | 184.6 | |||||||||||||||||||
Division VI (Kalimantan)(3) | — | — | — | — | — | — | |||||||||||||||||||
Division VII (Eastern Indonesia) | 238.7 | 221.8 | 245.8 | 262.7 | 253.2 | 308.4 | |||||||||||||||||||
Total | 1,474.2 | 733.0 | 1,319.7 | 801.0 | 899.9 | 583.0 | |||||||||||||||||||
(1) | TELKOM consolidated Regional Division I (Sumatera) from August 2002, following an agreement to acquire 100% of the equity interest in and control of Pramindo on August 15, 2002. For 2002, the numbers included in this table for Regional Division I (Sumatera) represent the revenues generated by Regional Division I from January 1, 2002 to July 31, 2002. TELKOM consolidated Rp.364.4 billion and Rp.1,252.7 billion of operating revenues from Regional Division I (Sumatera) in 2002 and 2003, respectively. |
(2) | For 2003, MTR and DTR are from January 1 to July 31, 2003. TELKOM consolidated Regional Division III (West Java and Banten) as of and for the year ended December 31, 2003 following the acquisition of a 100% equity interest in AriaWest on July 31, 2003. TELKOM consolidated Rp.482.3 billion of operating revenues from Regional Division III (West Java and Banten) from July 31, 2003 through December 31, 2003. |
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(3) | TELKOM consolidated Regional Division VI (Kalimantan) as of and for the year ended December 31, 2001, following the acquisition of a 90.32% equity interest in Dayamitra on May 17, 2001. TELKOM consolidated Rp. 260.3 billion, Rp. 323.4 billion and Rp.449.2 billion of operating revenues from Regional Division VI (Kalimantan) in 2001, 2002 and 2003, respectively. |
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US$’million | ||||
Acquisition of Telkomsel by Telkom | (945 | ) | ||
Sale of Satelindo to Indosat | 186 | |||
Sale of Lintasarta to Indosat | 38 | |||
Amount paid in advance by Telkom for acquisition and sales of the above entities | 523 | |||
Net amount to be settled by Telkom | (198 | ) | ||
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Division IV | Division VII(1) | |||
KSO Partner | Mitra Global Telekomunikasi Indonesia | Bukaka SingTel International | ||
Shareholders in the KSO partner: | ||||
Foreign | ||||
telecommunications | ||||
operator | Telstra Global Ltd. (20.37%); Nippon Telegraph and Telephone Corporation (15.27%) | Singapore Telecom International Pte. Ltd. (40.00%) | ||
Indonesian and Other | ||||
Shareholders | PT Widya Duta Informindo (31.31%); Indosat (30.55%); Itochu Corporation (1.25%); Sumitomo Corporation (1.25%) | PT Bukaka Telekomindo International (60.00%) | ||
MTR (in Rp. billions) | 404.3 | 253.2 | ||
Revenue Sharing | ||||
(TELKOM: KSO | ||||
Partners) | 30 : 70 | 35 : 65 | ||
End of KSO Period | 2010 | 2010 |
(1) | On January 27, 2004, Transpac Capital acquired an 8.5% ownership interest in Bukaka SingTel International. As of the date of the Original Annual Report, the ownership of Bukaka SingTel is as follows: Singapore Telecom International Pte Ltd., 40%; PT Bukaka Telekomindo International, 51.5%; and Transpac Capital, 8.5%. |
Interconnection Services |
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Year ended December 31, | ||||||||||||||||||||||
1999 | 2000 | 2001 | 2002 | 2003 | ||||||||||||||||||
(millions of minutes) | ||||||||||||||||||||||
Mobile Cellular Interconnection(1) | ||||||||||||||||||||||
Digital | ||||||||||||||||||||||
Incoming paid minutes | 1,396.8 | 1,968.6 | 2,284.9 | 2,757.9 | 3,357.7 | |||||||||||||||||
Outgoing paid minutes | 873.2 | 1,687.1 | 2,645.8 | 3,807.5 | 4,848.7 | |||||||||||||||||
Analog | ||||||||||||||||||||||
Incoming paid minutes | 62.9 | 71.8 | 70.5 | 73.0 | 106.0 | |||||||||||||||||
Outgoing paid minutes | 24.7 | 34.0 | 43.5 | 47.0 | 23.4 | |||||||||||||||||
Subtotal | 2,357.6 | 3,761.5 | 5,044.7 | 6,685.4 | 8,335.8 | |||||||||||||||||
Fixed Wireless Interconnection(2) | ||||||||||||||||||||||
Incoming paid minutes | 41.9 | 72.5 | 83.7 | 100.2 | 107.3 | |||||||||||||||||
Outgoing paid minutes | 33.1 | 39.3 | 30.5 | 36.3 | 29.6 | |||||||||||||||||
Subtotal | 75.0 | 111.8 | 114.2 | 136.5 | 136.9 | |||||||||||||||||
Fixed Wireline Interconnection | ||||||||||||||||||||||
Incoming paid minutes | 26.1 | 30.1 | 31.9 | 28.2 | 22.8 | |||||||||||||||||
Outgoing paid minutes | 2.9 | 3.3 | 4.2 | 3.3 | 1.3 | |||||||||||||||||
Total paid minutes | 29.0 | 33.4 | 36.1 | 31.5 | 24.1 | |||||||||||||||||
Satellite Phone Interconnection | ||||||||||||||||||||||
Incoming paid minutes | — | — | 2.4 | 12.6 | 16.1 | |||||||||||||||||
Outgoing paid minutes | — | — | 0.5 | 5.6 | 7.5 | |||||||||||||||||
Total paid minutes | — | — | 2.9 | 18.2 | 23.6 | |||||||||||||||||
International Interconnection(3) | ||||||||||||||||||||||
Incoming paid minutes | 403.2 | 345.8 | 286.8 | 303.3 | 444.1 | |||||||||||||||||
Outgoing paid minutes | 251.1 | 250.6 | 241.9 | 200.3 | 149.7 | |||||||||||||||||
Total paid minutes | 654.3 | 596.4 | 528.7 | 503.6 | 593.8 | |||||||||||||||||
Total | ||||||||||||||||||||||
Incoming paid minutes | 1,930.9 | 2,488.8 | 2,760.2 | 3,275.2 | 4,054.0 | |||||||||||||||||
Outgoing paid minutes | 1,185.0 | 2,014.3 | 2,966.4 | 4,100.0 | 5,060.2 | |||||||||||||||||
Total paid minutes | 3,115.9 | 4,503.1 | 5,726.6 | 7,375.2 | 9,114.2 | |||||||||||||||||
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(1) | Includes interconnection with Telkomsel. TELKOM’s paid minutes from Telkomsel for 1999-2003 are set forth in the following table. |
Year ended December 31, | ||||||||||||||||||||
1999 | 2000 | 2001 | 2002 | 2003 | ||||||||||||||||
(millions of minutes) | ||||||||||||||||||||
Incoming paid minutes | 706.0 | 1,025.0 | 1,289.9 | 1,672.6 | 2,011.8 | |||||||||||||||
Outgoing paid minutes | 430.0 | 771.0 | 1,266.0 | 2,001.6 | 2,610.3 |
(2) | Fixed wireless interconnection minutes are derived from interconnection with the network of PT Bakrie Telecom (formerly PT Radio Telepon Indonesia or Ratelindo). |
(3) | International interconnection minutes are derived from interconnection with Indosat’s and Satelindo’s international networks, which does not include minutes from mobile cellular and fixed wireless operators that interconnect directly with international gateways. |
Network Services |
Data and Internet Services |
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Item | TELKOMGlobal 017 | TELKOMSave | ||
Tariff | 40% of normal IDD rate | Up to 60% of normal IDD rate | ||
Dial | One stage | Two stage | ||
Quality/ Technology | Premium VoIP | Standard VoIP |
Revenue Sharing Arrangements (PBHs) |
Other Telecommunications-related Services |
• | telephone directory, which TELKOM provides through its majority-owned subsidiary, Infomedia; | |
• | cable and pay television and related services, which it provides through its majority-owned subsidiary, Indonusa; and | |
• | telex and telegram services. |
Fixed-line Network and Backbone |
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As of or for the Year Ended December 31, | ||||||||||||||||||||||
1999(1) | 2000(1) | 2001(2) | 2002(3) | 2003(4) | ||||||||||||||||||
Operating Statistics | ||||||||||||||||||||||
Exchange capacity | ||||||||||||||||||||||
Non-KSO Divisions | 4,449,552 | 4,515,615 | 5,135,108 | 6,643,688 | 8,476,816 | |||||||||||||||||
KSO Divisions(9) | 3,909,179 | 3,946,407 | 3,669,336 | 2,459,950 | 1,670,005 | |||||||||||||||||
Total | 8,358,731 | 8,462,022 | 8,804,444 | 9,103,638 | 10,146,821 | |||||||||||||||||
Installed lines | ||||||||||||||||||||||
Non-KSO Divisions | 3,957,815 | 4,086,298 | 4,725,268 | 6,165,770 | 7,894,532 | |||||||||||||||||
KSO Divisions(9) | 3,471,447 | 3,581,779 | 3,316,406 | 2,234,892 | 1,664,220 | |||||||||||||||||
Total | 7,429,262 | 7,668,077 | 8,041,674 | 8,400,662 | 9,558,752 | |||||||||||||||||
Lines in service(5) | ||||||||||||||||||||||
Non-KSO Divisions | 3,256,992 | 3,610,363 | 4,270,243 | 5,710,427 | 7,030,049 | |||||||||||||||||
KSO Divisions | 2,823,201 | 3,052,242 | 2,948,695 | 2,039,608 | 1,449,066 | |||||||||||||||||
Total | 6,080,193 | 6,662,605 | 7,218,938 | 7,750,035 | 8,479,115 | |||||||||||||||||
Lines in service per 100 inhabitants | ||||||||||||||||||||||
Non-KSO Divisions | 5.3 | 5.7 | 5.6 | 4.64 | 4.36 | |||||||||||||||||
KSO Divisions(9) | 1.9 | 2.0 | 2.0 | 2.00 | 1.85 | |||||||||||||||||
Combined | 2.9 | 3.1 | 3.25 | 3.45 | 3.54 | |||||||||||||||||
Subscriber lines | ||||||||||||||||||||||
Non-KSO Divisions | 3,101,885 | 3,394,075 | 4,005,106 | 5,394,940 | 6,679,173 | |||||||||||||||||
KSO Divisions(9) | 2,709,066 | 2,923,223 | 2,831,168 | 1,952,226 | 1,392,152 | |||||||||||||||||
Total | 5,810,951 | 6,317,298 | 6,836,274 | 7,347,166 | 8,071,325 | |||||||||||||||||
Public telephones | ||||||||||||||||||||||
Non-KSO Divisions | 155,107 | 216,288 | 265,137 | 315,487 | 350,876 | |||||||||||||||||
KSO Divisions(9) | 114,135 | 129,019 | 117,527 | 87,382 | 56,914 | |||||||||||||||||
Total | 269,242 | 345,307 | 382,664 | 402,869 | 407,790 | |||||||||||||||||
Leased lines in service | ||||||||||||||||||||||
Non-KSO Divisions(6) | 2,446 | 3,300 | 4,973 | 8,193 | 8,213 | |||||||||||||||||
KSO Divisions(9) | 2,143 | 2,702 | 2,631 | 1,879 | 1,162 | |||||||||||||||||
Total | 4,589 | 6,002 | 7,604 | 10,072 | 9,375 |
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As of or for the Year Ended December 31, | ||||||||||||||||||||||||
1999(1) | 2000(1) | 2001(2) | 2002(3) | 2003(4) | ||||||||||||||||||||
Subscriber Pulse | ||||||||||||||||||||||||
Production(7)(8)(millions) | ||||||||||||||||||||||||
Non-KSO Divisions | 25,077 | 28,231 | 34,342 | 44,340 | 51,062 | |||||||||||||||||||
KSO Divisions(9) | 22,182 | 24,628 | 24,047 | 16,788 | 11,417 | |||||||||||||||||||
Total | 47,259 | 52,859 | 58,389 | 61,128 | 62,479 | |||||||||||||||||||
Call completion rate (%) | ||||||||||||||||||||||||
Local | ||||||||||||||||||||||||
Non-KSO Divisions | 72.0 | 77.0 | 75.8 | 75.8 | 76.8 | |||||||||||||||||||
KSO Divisions | 70.1 | 71.4 | 72.5 | 75.5 | 78.4 | |||||||||||||||||||
Combined | 70.6 | 73.0 | 73.9 | 75.6 | 77.3 | |||||||||||||||||||
Domestic long-distance | ||||||||||||||||||||||||
Non-KSO Divisions | 64.0 | 69.3 | 65.4 | 65.5 | 67.5 | |||||||||||||||||||
KSO Divisions | 62.4 | 64.5 | 85.6 | 68.1 | 74.7 | |||||||||||||||||||
Combined | 63.0 | 65.8 | 65.7 | 66.6 | 69.5 | |||||||||||||||||||
Fault rate(8) | ||||||||||||||||||||||||
Non-KSO Divisions | 0.39 | 0.42 | 0.8 | 4.6 | 4.4 | |||||||||||||||||||
KSO Divisions | 2.02 | 1.69 | 3.1 | 8.9 | 3.5 | |||||||||||||||||||
Combined | 4.25 | 4.08 | 3.94 | 5.19 | 4.11 | |||||||||||||||||||
Lines in service per employee | ||||||||||||||||||||||||
Non-KSO Divisions | 171 | 191 | 209 | 233 | 290 | |||||||||||||||||||
KSO Divisions(9) | 149 | 163 | 174 | 201 | 220 | |||||||||||||||||||
Combined | 160 | 177 | 193 | 223 | 275 |
(1) | For 1999 and 2000, Non-KSO Divisions refer to Divisions II and V, while KSO Divisions refer to Divisions I, III, IV, VI and VII. |
(2) | For 2001, Non-KSO Divisions refer to Divisions II, V and VI, while KSO Divisions refer to Divisions I, III, IV and VII. |
(3) | For 2002, Non-KSO Divisions refer to Divisions I, II, V and VI, while KSO Divisions refer to Divisions III, IV and VII. |
(4) | For 2003, Non-KSO Divisions refer to Divisions I, II, III, V and VI, while KSO Divisions refer to IV and VII. |
(5) | Lines in service comprise subscriber lines (including fixed wireless) and public telephone lines and include the following number of lines in service operated by TELKOM pursuant to revenue sharing arrangements as of December 31, 1999: 405,643, 2000: 409,818, 2001: 430,477, 2002: 443,316 and 2003: 519,316. |
(6) | Excludes leased lines for TELKOM’s network and multimedia businesses. |
(7) | Consists of pulses generated from local and domestic long-distance calls, excluding calls made from pay phones and cellular phones. |
(8) | Faults per 100 connected lines per month. The calculation formula was changed in January 2002 to include indoor installation and mass fault. The previous measure of fault consisted of exchange and outdoor cable fault. |
(9) | Includes lines in KSO Divisions I, III, IV, VI and VII which are owned by the KSO partners and will be transferred to TELKOM at the end of the KSO period. Total for 2003 excludes 40,000 CDMA fixed wireless line units established under BOT scheme. |
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Division I | Division II | Division III | Division IV | Division V | Division VI | Division VII | ||||||||||||||||||||||||||
(West Java | ||||||||||||||||||||||||||||||||
and | (Central | (East | (East | |||||||||||||||||||||||||||||
(Sumatera) | (Jakarta) | Banten) | Java) | Java) | (Kalimantan) | Indonesia) | Total | |||||||||||||||||||||||||
Local Exchange Capacity | 1,467,674 | 3,697,273 | 976,854 | 770,289 | 1,875,112 | 459,903 | 899,716 | 10,146,821 | ||||||||||||||||||||||||
Total Lines in Service | 1,239,409 | 3,036,372 | 733,462 | 668,261 | 1,594,827 | 425,979 | 780,805 | 8,479,115 | ||||||||||||||||||||||||
Capacity Utilization (%) | 84.45 | 82.12 | 75.08 | 86.75 | 85.05 | 92.62 | 86.78 | 83.56 | ||||||||||||||||||||||||
Installed Lines(1) | 1,428,831 | 3,429,529 | 867,912 | 792,527 | (5) | 1,714,351 | 453,909 | 871,693 | 9,558,752 | |||||||||||||||||||||||
Utilization Rate | 86.74 | 88.54 | 84.51 | 84.32 | 93.16 | 97.50 | 89.70 | 88.90 | ||||||||||||||||||||||||
Employees(2) | 4,689 | 7,527 | 2,308 | 2,802 | 3,470 | 1,218 | 3,812 | 25,826 | ||||||||||||||||||||||||
Population (millions)(3) | 53.53 | 29.83 | 26.15 | 45.53 | 37.75 | 14.11 | 32.74 | 239.66 | ||||||||||||||||||||||||
Line Penetration(%)(4) | 2.32 | 10.18 | 2.80 | 1.47 | 4.22 | 3.02 | 2.38 | 3.54 |
(1) | Total for 2003 excludes 40,000 CDMA fixed wireless line units established under BOT scheme. |
(2) | Includes employees seconded to KSOs in Divisions IV and VII. Does not include employees for support divisions, such as TELKOM’s long distance, fixed wireless, multimedia and construction divisions. |
(3) | Source:Indonesian Central Bureau of Statistics (estimated figures). |
(4) | Based on the estimated population figures. |
(5) | Includes installed lines that utilize exchange capacity from Division V. |
Capacity | Percentage | ||||||||
(number of | of total | ||||||||
Transmission medium | circuits) | capacity | |||||||
Optical fiber cable | 253,050 | 50.5 | |||||||
Microwave | 194,100 | 38.8 | |||||||
Submarine cable | 24,180 | 4.8 | |||||||
Satellite | 29,590 | 5.9 | |||||||
Total | 500,920 | 100.0 | |||||||
Wireless Network |
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• | Network backbone transmission; | |
• | Rural telecommunications services; | |
• | Back-up transmission capacity for the national telecommunications network; | |
• | Satellite broadcasting, VSAT and multimedia services; | |
• | Satellite transponder capacity leasing; | |
• | Satellite-based lease line; and | |
• | Teleport (earth station satellite uplinking and downlinking services to and from other satellites). |
• | fiber optic backbone infrastructure in Sumatera to provide additional backbone capacity and to extend the backbone to the island of Batam, which will facilitate connections in the future from Batam to nearby Singapore; | |
• | fiber optic backbone infrastructure in Kalimantan (Borneo) and Sulawesi; and | |
• | fiber optic regional junction in greater Jakarta, Surabaya (East Java) and Bandung — Cirebon (West Java). |
• | Implement soft switch technologies to move towards a next generation network; | |
• | Expand its broadband access network utilizing ADSL, which, as of the date of the Original Annual Report, covers Division II (Jakarta) and Division V (East Java); | |
• | Enhance its network through the progressive replacement of its old copper access network with optical access network; |
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• | Develop and promote additional advanced telephony services and features; and | |
• | Continue network integration and quality improvement. |
Capital Expenditures |
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Strengthening the Fixed-line Business |
Division I | Division II | Division III | Division IV | Division V | Division VI | Division VII | Total | |||||||||||||||||||||||||
LIS | 1,239,409 | 3,036,372 | 733,462 | 668,261 | 1,594,827 | 425,979 | 780,805 | 8,479,115 | ||||||||||||||||||||||||
Population (millions) | 53.53 | 29.83 | 26.15 | 45.53 | 37.75 | 14.11 | 32.74 | 239.66 | ||||||||||||||||||||||||
Penetration (per 100) | 2.32 | 10.18 | 2.80 | 1.47 | 4.22 | 3.02 | 2.38 | 3.54 |
• | increasing its fixed-line penetration rate more quickly and with lower capital expenditure per line through the rapid roll-out of fixed wireless technology, revenue sharing arrangements, new partnership agreements and pay as you grow schemes; | |
• | increasing ARPU through the use of TELKOMFlexi and value added services; | |
• | concentrating on its top 20 products in the top 40 cities and targeting the top 20% of its customers with ARPUs of more than Rp.150,000 by providing multiservice bundling, broadband access, a customer care service center for business customers, price packaging and other benefits; | |
• | strengthening its interconnection business by establishing a service center dedicated to telecommunications operators and other interconnection customers, opening more gateways to other telecommunications operators, offering more attractive pricing and providing enhanced billing services; | |
• | strengthening PlasaTELKOM as a point of sale for TELKOM’s services; and | |
• | developing and expanding its IDD fixed-line business, which TELKOM began offering to customers on June 7, 2004. |
Strengthening its Backbone Network |
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Maintaining Telkomsel’s Dominant Position in the Industry |
• | taking advantage of commercial, operational and network synergies with TELKOM and sharing best-practices and know-how with SingTel Mobile; | |
• | ensuring that Telkomsel has the necessary network capacity at predefined quality levels to handle subscriber growth; | |
• | maintaining or improving market share, ARPU and churn rates by continuously aligning the characteristics and features of Telkomsel’s service offerings to the evolving needs of its customer, enhancing its products and services portfolio (including its EDGE and GPRS services), expanding network capacity and improving service quality; | |
• | ensuring that Telkomsel has the IT infrastructure in place to fulfill its vision and mission, with special focus on areas such as billing, service delivery and customer service; and | |
• | achieving service levels at par with world class mobile service providers through its call center footprint and aggressive pursuit of service oriented goals. |
Developing its Fixed Wireless Business |
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Developing its Data and Internet Business |
• | increased investment in TELKOM’s broadband infrastructure (such as ADSL, Hybrid Fiber/ Coax and satellite); | |
• | focusing on retaining and acquiring customers with high demand for data services by offering competitive pricing for high-speed data and Internet services (including value-added services) and full VPN IPs, and by expanding TELKOM’s backbone and network access technology; | |
• | giving customers greater Internet access options, such as through wireless hotspot technology and the bundling of Internet access services with TELKOMFlexi and Telkomsel products; | |
• | developing and offering new value-added services and products, such as e-payment services for banks and other financial institutions and wireless data content for GPRS and MMS users; and | |
• | expanding the international coverage of TELKOM’s data and Internet services by entering into agreements with additional global carriers and wholesalers. |
Reducing Cost of Capital |
• | share investment risks with its suppliers; | |
• | reduce its asset base and outsource non-core businesses; and | |
• | mitigate financing, commercial, operational, technical and capacity risks. |
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TELKOM |
• | Walk-in customer services points.Customer service points provide convenient and comprehensive access to TELKOM’s customer services and handle product and service information requests and complaints, activation of services, customer billing, payments, account suspensions, service features and marketing promotions. TELKOM has more than 100 customer service points in total, including eight large centers in Jakarta, two in Surabaya and customer service points operated by its KSO Units. | |
• | Call centers and Internet.TELKOM operates call centers in many cities in Indonesia, including in the KSO regions. Customers are provided a toll free number to speak directly to customer service operators who are trained to handle customer requests and complaints and to provide up-to-date information on matters such as customer bills, promotions and service features. Billing information may also be obtained through the Internet for customers in Jakarta. Customers are also provided access to directory services for which a charge is levied. TELKOM intends to promote the use of call centers and the Internet over walk-in customer service points for its retail customers. | |
• | Enterprise center and account management teams.TELKOM regards the top 20% of its corporate customers, particularly corporations with national operations, as its most important customers. To focus on these customers, TELKOM has set up an enterprise center in Jakarta, which seeks to develop its business in this segment of the market. TELKOM provides these customers with account management teams, each comprising an account manager supported by personnel from the relevant operational departments, to provide a single point of contact for all of the customer’s communications needs. To cater to such customers, the enterprise center works on integrating various product and service offerings to provide total communications solutions, including Internet access and customized data communications-related products and services. TELKOM has also set up similar account management teams at the regional level to focus on corporations with regional operations within Indonesia. As of the date of the Original Annual Report, TELKOM has over 74 national-level account management teams and over 101 regional-level account management teams that cover Divisions II and V. It plans to further increase the number of such teams. | |
• | TELKOM has had a service level guarantee program for its fixed-line customers in Divisions II and V since May 2001 and has been implementing a service level guarantee program on a national basis since June 2002. The service level guarantee program provides guarantees of certain minimum levels of service relating to new line installations, restoration of disconnected lines and billing complaints, and provides for non-cash compensation, such as free subscription for a certain period, to be awarded to customers where such minimum service levels are not met. |
Telkomsel |
• | GraPARI Customer Services Centers:Telkomsel’s GraPARI customer service centers (“GraPARI centers”) provide convenient and comprehensive access to Telkomsel’s customer services. GraPARI centers handle product and service information requests and complaints and typically focus on activation of services, customer billing, payments, account suspensions, service features, network coverage, IDD, roaming information and marketing promotions. See “— Sales, Marketing and Distribution”. | |
• | Caroline:“Caroline”, or Customer Care On-Line, is a 24 hour toll-free telephone service. Telkomsel’s customers may speak directly to customer service operators who are trained to |
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handle customer requests and complaints and to provide up-to-date information on matters such as customer bills, payments, promotions and service features. | ||
• | Anita:“Anita”, or Aneka Informasi dan Tagihan, is an SMS service available only to Telkomsel’s KartuHALO subscribers. Subscribers may use dedicated Anita telephone lines to obtain billing information as well as usage information through SMS. |
TELKOM |
• | Walk-in customer service points.Customers have access to certain products and services in these walk-in customer service points. See “— Customer Service” above. | |
• | Account management teams.Account management teams promote TELKOM’s products and services in an integrated manner to TELKOM’s larger business customers. See “— Customer Service” above. | |
• | Public telecommunications kiosks.Small businesses in cooperation with TELKOM have established public telecommunications kiosks throughout Indonesia. Customers can access basic telecommunications services, including local, domestic long-distance and international telephony, send facsimiles, telex and telegrams, access the Internet and purchase phone-cards. TELKOM generally provides discounts to such kiosks ranging from 20% to 30% compared with subscriber telephone rates. Kiosks operate on a non-exclusive basis and may provide products and services of other operators. | |
• | Authorized dealers and retail outlets.These are located throughout Indonesia and primarily sell phone-cards and TELKOMFLexi subscriptions. Independent dealers and retail outlets pay a discount to face value for all products they receive, operate on a non-exclusive basis and may also sell products and services of other operators. | |
• | Website.Through its website, customers can obtain information on TELKOM’s major products and services and gain access to certain of its multimedia products. | |
• | Public telephones.Customers can make local, domestic long-distance and international telephone calls through public telephones. |
Telkomsel |
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Stage | Overdue Payment | Charge | Penalty | |||
I | 1-10 days | 5% of the total outstanding receivables, subject to the minimum charge of Rp.5,000 | Not isolated | |||
II | 11-40 days | 10% of overdue bill subject to minimum charge of Rp.10,000 | Out-going isolation (i.e., restricted to receiving incoming calls only) | |||
III | 41-70 days | 15% of overdue bill subject to minimum charge of Rp.15,000 | Out-going isolation (i.e., restricted to receiving incoming calls only) | |||
IV | More than 70 days | Customer must fulfill overdue payment, 100% of installation fee | Terminated |
Management of Customer Receivables |
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Telkomsel |
Telkomsel |
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Overview |
• | Continued growth.TELKOM believes the telecommunications industry will continue to grow, as continued development of Indonesia’s economy is expected to increase demand for telecommunications services. | |
• | Migration to wireless networks.TELKOM anticipates that wireless services will become increasingly popular as a result of wider coverage areas and improving wireless network quality, declining handset costs and the proliferation of prepaid services. | |
• | Increasing competition.TELKOM anticipates an increasingly competitive Indonesian telecommunications market as a result of the Government’s regulatory reforms. |
Overview |
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• | Deregulation; | |
• | Promoting competition; | |
• | Liberalization; | |
• | Restructuring; | |
• | Improving market access; and | |
• | Introducing market-oriented regulations. |
• | Increase the sector’s performance in the era of globalization; | |
• | Liberalize the sector with a competitive structure by removing monopolistic controls; | |
• | Increase transparency and predictability of the regulatory framework; | |
• | Create opportunities for national telecommunications operators to form strategic alliances with foreign partners; and | |
• | Create business opportunities for small and medium enterprises; and | |
• | Facilitate new job opportunities. |
Telecommunications Law |
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New Service Categories |
Modern License |
Exclusivity |
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Competition |
Interconnection |
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DLD and IDD Services |
• | DLD and IDD network operators may offer DLD and IDD service as part of basic telephony service; | |
• | Each DLD and IDD operator must use a distinct 3-digit access code for its DLD and IDD service; | |
• | Customers may freely select their DLD and IDD providers; | |
• | DLD and IDD fixed telecommunication network operators (as of the date of the Original Annual Report, only TELKOM and Indosat) may now provide DLD and IDD basic telephony services; and | |
• | DLD and IDD service providers are entitled to determine retail rates for customers and provide such services to their customers. |
Indonesian Telecommunications Regulatory Body |
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Consumer Protection |
Universal Service Obligations |
Implementing Regulations |
Satellite regulation |
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Fixed Wireless Access regulation |
Fixed-line |
Cellular |
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Operator | ||||||||
Telkomsel | Indosat | Excelcomindo | ||||||
Launch date | May 1995 | November 1994(2) | October 1996 | |||||
Licensed frequency bandwidth (GSM 900 & 1800) | 30 MHz | 15 MHz | 15 MHz | |||||
Licensed coverage | Nationwide | Nationwide | Nationwide | |||||
Network coverage | Nationwide | Major cities in Significantly populated areas of Java and Bali, as well as major cities in Sumatera, Sulawesi and Kalimantan | Jakarta and primary business cities in Java, Bali, Lombok, Medan and Batam | |||||
Market share (as of December 31, 2003)(1) | 51.0% | 31.9% | 15.7% | |||||
Subscribers (as of December 31, 2003)(1) | 9.6 million | 5.99 million | 2.95 million |
(1) | Based on statistics compiled by TELKOM. |
(2) | In November 2003, Indosat and Satelindo merged, and Indosat has taken over Satelindo’s cellular operations. |
IDD |
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VoIP |
Satellite |
Other |
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• | Tariffs for the provision of telecommunications services; and | |
• | Tariffs for provision of telecommunications networks. |
Tariffs for the Provision of Telecommunications Services |
Fixed-line Tariffs |
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Access charges | Business | Residential | Social | |||||||||
(Rp.) | (Rp.) | (Rp.) | ||||||||||
Installation | 175,000 – 450,000 | 75,000 – 295,000 | 50,000 – 205,000 | |||||||||
Monthly Subscription | 30,700 – 46,100 | 16,500 – 26,100 | 11,100 – 16,500 |
Beginning February 1, 2002 | ||||||||
Price per Pulse | Pulse Duration | |||||||
(Rp.) | ||||||||
Local | ||||||||
Up to 20 km | 195 | 3 min (off peak) | ||||||
and 2 min (peak) | ||||||||
Over 20 km | 195 | 2 min (off peak) | ||||||
and 1.5 min (peak) |
Rounding Time | ||||||||
Price Per Minute | Block Duration | |||||||
(Rp.) | ||||||||
Domestic Long-distance | ||||||||
0-20 km | 69 – 102 | 1 min | ||||||
20-30 km | 102 – 136 | 1 min | ||||||
30-200 km | 327 – 1,627 | 6 sec | ||||||
200-500 km | 463 – 2,271 | 6 sec | ||||||
Over 500 km | 570 – 2,842 | 6 sec |
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Access charges | Business | Residential | Social | |||||||||
(Rp.) | (Rp.) | (Rp.) | ||||||||||
Installation | 175,000 – 450,000 | 75,000 – 295,000 | 50,000 – 205,000 | |||||||||
Monthly Subscription | 38,400 – 57,600 | 20,600 – 32,600 | 12,500 – 18,500 |
Beginning April 1, 2004 | ||||||||
Price per Pulse | Pulse Duration | |||||||
(Rp.) | ||||||||
Local | ||||||||
Up to 20 km | 250 | 3 min (off peak) | ||||||
and 2 min (peak) | ||||||||
Over 20 km | 250 | 2 min (off peak) | ||||||
and 1.5 min (peak) |
Rounding Time | ||||||||
Price Per Minute | Block Duration | |||||||
(Rp.) | ||||||||
Domestic Long-distance | ||||||||
0-20 km | 83 – 122 | 1 minute | ||||||
20-30 km | 122 – 163 | 1 minute | ||||||
30-200 km | 325 – 1,290 | 6 sec | ||||||
200-500 km | 460 – 1,815 | 6 sec | ||||||
Over 500 km | 570 – 2,270 | 6 sec |
CDMA Fixed Wireless Tariffs |
Price Per Pulse | Pulse Duration | |||||||
(Rp.) | ||||||||
Local | 250 | 2 min (off peak) and 1.5 min (peak) |
Rounding Time | ||||||||
Price Per Minute | Block Duration | |||||||
(Rp.) | ||||||||
Domestic Long Distance | ||||||||
0-200 km | 325 – 1,290 | 6 sec | ||||||
200-500 km | 460 – 1,815 | 6 sec | ||||||
Over 500 km | 570 – 2,270 | 6 sec |
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Rounding Time | ||||||||
Price Per Minute | Block Duration | |||||||
(Rp.) | ||||||||
Flexi to Flexi/Fixed Wireline: | ||||||||
Local | 260 | 30 sec | ||||||
Domestic Long-distance | ||||||||
0-200 km | 700 – 1,100 | 30 sec | ||||||
Over 200 km | 1,600 – 2,500 | 30 sec | ||||||
Flexi to mobile cellular: | ||||||||
Local | 650 – 810 | 30 sec | ||||||
Domestic Long-distance | ||||||||
0-200 km | 1,100 – 1,540 | 30 sec | ||||||
Over 200 km | 2,250 – 3,150 | 30 sec |
IDD Tariffs |
Rounding Time | ||||||||
Region | Price Per Minute | Block Duration | ||||||
(Rp.) | ||||||||
Africa | 5,090 – 6,440 | 6 sec | ||||||
Americas and Caribbean | 5,090 – 7,470 | 6 sec | ||||||
Asia and Oceania | 4,410 – 9,630 | 6 sec | ||||||
Europe | 5,090 – 9,630 | 6 sec | ||||||
Middle East | 5,090 – 8,460 | 6 sec |
Cellular Tariffs |
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Activation | Rp.200,000 | ||
Monthly Charge (including frequency charge) | Rp.65,000/month | ||
Usage Charge: | |||
Air Time | Rp.325/minute | ||
Roaming | Rp.1,000/call plus incoming charge/ minute | ||
Local Cellular Conversation | PSTN local tariff | ||
DLD Cellular Conversation | PSTN DLD tariff |
Rounding Time | ||||||||
Price Per Minute | Block Duration | |||||||
(Rp.) | ||||||||
Mobile cellular to mobile cellular: | ||||||||
Local | 650 – 938 | 1 min | ||||||
Domestic Long-distance | ||||||||
30-200 km | 1,110 – 2,628 | 1 min | ||||||
Over 200 km | 1,220 – 3,083 | 1 min | ||||||
Mobile cellular to fixed line: | ||||||||
Local | 450 – 531 | 1 min | ||||||
Domestic Long-distance | ||||||||
30-200 km | 650 – 1,696 | 1 min | ||||||
200-500 km | 785 – 2,221 | 1 min | ||||||
Over 500 km | 895 – 2,676 | 1 min | ||||||
International Long-distance: | ||||||||
Group I | 7,500 – 8,000 | 1 min | ||||||
Group II | 11,000 – 12,000 | 1 min |
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Rounding Time | ||||||||
Price Per Minute | Block Duration | |||||||
(Rp.) | ||||||||
Calls to mobile cellular: | ||||||||
Local | 1,000 – 1,900 | 1 min | ||||||
Domestic Long-distance | ||||||||
30-200 km | 1,000 – 4,000 | 1 min | ||||||
Over 200 km | 1,000 – 4,500 | 1 min | ||||||
Calls to fixed line: | ||||||||
Local | 700 – 990 | 1 min | ||||||
Domestic Long-distance | ||||||||
30-200 km | 2,000 – 2,300 | 1 min | ||||||
200-500 km | 3,200 – 3,720 | 1 min | ||||||
Over 500 km | 3,200 – 4,150 | 1 min | ||||||
International Long-distance: | ||||||||
Group I | 7,500 – 8,000 | 1 min | ||||||
Group II | 11,000 – 12,000 | 1 min |
Leased Line Tariffs |
Maximum tariff | ||||
(Rp.) | ||||
Installation charge | ||||
Customer access | 600,000 – 700,000(1) | |||
Other operator access | 900,000 | |||
Monthly subscription charge | ||||
Analog line | ||||
Local (or up to 25 km) | 60,000 – 250,000(2) | |||
Inter-local (over 25 km) | 779,400 – 3,557,750(3) | |||
Digital line | ||||
Local (or up to 25 km) | 380,000 – 172,268,000(4) | |||
Inter-local (over 25 km) | 1,009,850 – 2,308,628,250(5) |
(1) | Price differs by equipment provided by TELKOM. |
(2) | Price differs by user (private, other licensed operator, or government) and equipment provided by TELKOM. |
(3) | Price differs by user (private, other licensed operator, or government) and distance. |
(4) | Price differs by user (private, other licensed operator, or government) and speed. |
(5) | Price differs by user (private, other licensed operator, or government), speed and distance. |
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VoIP Tariffs |
Kiosk phone Tariffs |
Satellite Tariffs |
Broadband Access |
TELKOMLink ADSL(1) | Activation Fee | Monthly Fee | Free Usage | |||||||||
(Rp.) | (Rp.) | |||||||||||
Limited 384 kbps | 250,000 | 250,000 | 500 MB | |||||||||
Limited 512 kbps | 250,000 | 300,000 | 1.0 GB | |||||||||
Unlimited 512 kbps | 500,000 | 1,200,000 | Unlimited |
AstiNet MMA(2) | Activation Fee | Monthly Fee | Free Usage | |||||||||
(Rp.) | (Rp.) | |||||||||||
Limited 384 kbps | 500,000 | 350,000 | 500 MB | |||||||||
Limited 512 kbps | 600,000 | 1,100,000 | 1.0 GB | |||||||||
Unlimited Silver | 2,500,000 | 3,800,000 | Unlimited | |||||||||
Unlimited Gold | 4,000,000 | 11,500,000 | Unlimited |
(1) | Does not include Internet access. The subscriber is responsible for obtaining Internet access with an Internet service provider. |
(2) | Includes Internet access. |
Tariffs for Other Services |
Tariffs for Interconnection and Access |
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Interconnection with Fixed-line Network |
Cellular Interconnection |
Fixed Wireless Interconnection |
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Fixed Wireline Interconnection |
International Interconnection |
Description | Tariff | |||
Access Charge | Rp.850/successful call | |||
Usage Charge | Rp.550/successful paid minute | |||
USO | Rp.750/successful call |
Local Fixed-line Interconnection with Indosat |
Satellite Phone Interconnection |
VoIP Interconnection |
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• | For calls originating on TELKOM’s network: Rp.240 per minute; | |
• | For calls terminating on TELKOM’s network: Rp.240 per minute; and | |
• | For calls transiting on TELKOM’s network: Rp.525 per minute (zone 1), Rp.870 per minute (zone 2) and Rp.1,170 per minute (zone 3). |
Subsidiaries |
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Legal Ownership (%) | ||||||||||
As of | ||||||||||
Company | December 31, 2003 | Notes | Business Operations | |||||||
Where TELKOM owns more than 50% or fully controls the company: | ||||||||||
AriaWest | 100.00 | (1) | Fixed-phone (KSO-III W. Java & Banten) | |||||||
Metra | 100.00 | (2) | Multimedia, special pay TV | |||||||
GSD | 99.99 | Real estate, construction and services | ||||||||
Indonusa | 90.39 | (3) | Interactive multimedia, special pay TV | |||||||
Dayamitra | 90.32 | Fixed-phone (KSO-VI Kalimantan) | ||||||||
Telkomsel | 65.00 | GSM cellular phone services | ||||||||
Napsindo | 60.00 | (4) | Network Access Point | |||||||
Infomedia | 51.00 | Telephone directory and other information services (electronic based business, call center and data segment) | ||||||||
PII | 51.00 | (5) | Telecommunication & information services, especially e-Government, e-Indonesia programs and B2B | |||||||
Pramindo | 45.00 | (6) | Fixed-phone (KSO-I Sumatera) | |||||||
Where TELKOM owns between 20% to 50%: | ||||||||||
PT Patra Telekomunikasi Indonesia (“Patrakom”) | 30.00 | VSAT services | ||||||||
PT Citra Sari Makmur (“CSM”) | 25.00 | VSAT and other telecommunications services | ||||||||
PT Pasifik Satelit Nusantara (“PSN”) | 22.57 | (7) | Satellite transponder & communications | |||||||
Where TELKOM owns less than 20%: | ||||||||||
PT Mobile Selular Indonesia (“Mobisel”) | 7.44 | (8) | NMT-450 cellular and CDMA services | |||||||
PT Batam Bintan Telekomunikasi (“Babintel”) | 5.00 | Fixed-phone (in Batam & Bintan islands) | ||||||||
PT Pembangunan Telekomunikasi Ind. (“Bangtelindo”) | 3.18 | Construction and consulting | ||||||||
Telesera | 0.00 | (9) | AMPS cellular phone services | |||||||
Komselindo | 0.00 | (10) | AMPS cellular services | |||||||
PT Menara Jakarta (“MJ”) | 0.00 | (11) | Infrastructure for multimedia services | |||||||
Metrosel | 0.00 | (12) | AMPS cellular services |
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(1) | On July 31, 2003, TELKOM and the shareholders of AriaWest consummated the sale and purchase of AriaWest, pursuant to which TELKOM acquired 100% of AriaWest from PT Aria Infotek (52.50%), MediaOne International I B.V. (35%) and The Asian Infrastructure Fund (12.50%). One share in AriaWest was transferred to Mr. Woeryanto Soeradji in order to comply with the legal requirement that Indonesian limited liability companies should have more than one shareholder. | |
(2) | On April 8, 2003, TELKOM increased its ownership in Metra to 100% by acquiring 69% (1,725,000) of the shares of Metra from PT Indocitra Grahabawana under a share swap transaction. TELKOM intends to use Metra to operate multimedia services in line with TELKOM’s strategy to focus on phone, mobile and multimedia services. One share in Metra was transferred to Mr. Woeryanto Soeradji in order to comply with the legal requirement that Indonesian limited liability companies should have more than one shareholder. | |
(3) | On August 8, 2003, TELKOM and PT Centralindo Pancasakti Cellular (“CPSC”) signed a share swap agreement pursuant to which TELKOM received an additional 30.58% (1,712,370) of the shares of Indonusa from CPSC. Following this transaction, TELKOM’s ownership in Indonusa increased to 88.08%. Pursuant to an EGM of the shareholders of Indonusa on October 29, 2003, all of the shareholders agreed to convert an additional Rp.13,500 million of debt owed by Indonusa to TELKOM into newly issued shares of Indonusa. Following such conversion, TELKOM’s ownership in Indonusa increased from 88.08% to 90.39%. As of December 31, 2003, CPSC owned 1.84% of the shares in Indonusa, a subsidiary of TELKOM. CPSC is not a major customer of TELKOM. | |
(4) | TELKOM increased its ownership in Napsindo from 32% to 60% by acquiring 28% of the shares of Napsindo from PT Info Asia Sukses Makmur Mandiri (“InfoAsia”). The agreement between TELKOM and InfoAsia was signed on December 30, 2002. The purchase price was paid on 28 January 2003, on which date TELKOM acquired control of Napsindo. | |
(5) | In January 2003, TELKOM, PT Indonesia Comnets Plus (“ICON+”), a subsidiary of Perusahaan Perseroan (Persero) Listrik Negara (“PLN”) and PT Prima Infokom Indonesia established PII to provide B2B, e-Government and e-Indonesia services. As of the date of the Original Annual Report, TELKOM holds 51%, while ICON+ holds 25% and Prima Infokom Indonesia holds 24%. Pursuant to an Executive General Meeting of the shareholders of PII on October 9, 2003, ICON+ and PT Prima Infokom Indonesia stated their intention to dispose of their shareholding in PII to TELKOM. Following that date, TELKOM has been negotiating with the other two shareholders for a fair price of the shares. | |
(6) | On April 19, 2002, TELKOM and the shareholders of Pramindo signed a Conditional Sale and Purchase Agreement for the sale of the Pramindo shares. TELKOM received 30% of the shares of Pramindo in August 2002 and in September 2003 received an additional 15%, while the remaining 55% was to be transferred to TELKOM on December 15, 2004, subject to certain conditions, including that TELKOM continues to meet its payment obligations under the terms of the promissory notes issued as consideration for the purchase price and protective rights granted to the selling shareholders. TELKOM obtained control of Pramindo at the closing on August 15, 2002 and consequently has consolidated 100% of Pramindo from that date even though its ownership in Pramindo was only 30% as of December 31, 2002. On January 29, 2004, TELKOM signed a short-term loan agreement with ABN AMRO Bank N.V. Jakarta in the amount of approximately US$130 million and on March 15, 2004, TELKOM used the loan proceeds to repurchase the promissory notes that were due on June 15, 2004, September 15, 2004 and December 15, 2004, and so accelerated the acquisition of the remaining 55%. Following this transaction, TELKOM owned 100% of Pramindo. One share in Pramindo has been transferred to TELKOM’s corporate secretary in order to comply with the legal requirement that Indonesian limited liability companies should have more than one shareholder. | |
(7) | As part of the agreement signed on August 8, 2003 between TELKOM and CPSC, TELKOM was entitled to receive CPSC’s 21.12% (16,641,637 shares) interest in PSN within a period of one year from the date the agreement was signed. During this period, all of CPSC’s rights in relation to the shares are granted to TELKOM. When TELKOM receives the shares of CPSC in PSN, its legal ownership interest in PSN will increase to 43.69%. PSN and its creditors; PT Bank Mandiri, PT Bank Merincorp, PT Danareksa, PT Bank Rakyat Indonesia and Credit Suisse First Boston International (CSFBI), have agreed to a debt-to-equity conversion, pursuant to which PSN is required to issue approximately 20 million new shares to the creditors. The conversion will in effect dilute the shareholding percentage of the existing shareholders of PSN, including TELKOM. As of the date of the Original Annual Report, the debt-to-equity conversion has not been effected. Once the conversion is effected, TELKOM’s ownership interest in PSN will be reduced to 18%. | |
(8) | Pursuant to an Extraordinary General Meeting held on July 28, 2003, the shareholders of Mobisel agreed to restructure Mobisel. The restructuring program includes: (i) a debt to equity conversion involving accrued interconnection expenses owed by Mobisel to TELKOM; (ii) a new class of Series B shares being issued to the new shareholders while shares held by the existing shareholders are reclassified as Series A shares; and (iii) an equity investment of approximately US$2 million by PT Multi Investama. Following the completion of this restructuring program, TELKOM’s ownership in Mobisel was diluted from 25% to 7.44%. In January 2004, Mobisel’s shareholders enacted resolutions approving the conversion of Mobisel’s debt to PT Property Java, Boston Investment Limited and Inquam (Indonesia) Limited Company to Series B shares. As a result, TELKOM’s ownership in Mobisel has been diluted to 6.40%. Effective on December 22, 2003, PT Mobile Selular Indonesia changed its corporate name to PT Mandara Selular Indonesia (“MSI”). | |
(9) | TELKOM delivered 100% (25,000) of its shares in PT Telekomindo Selular Raya to CPSC pursuant to an agreement signed on August 8, 2003 between TELKOM and CPSC. TELKOM no longer owns any shares in this company. |
(10) | Pursuant to the agreement signed on August 8, 2003 between TELKOM and CPSC, TELKOM sold and delivered 14.20% (29,069,250 shares) of Komselindo to CPSC. TELKOM no longer owns any shares in this company. |
(11) | On April 8, 2003, TELKOM sold its 21.34% interest in PT Menara Jakarta (10,000 shares) to PT Indocitra Grahabawana as part of the share swap transaction with PT Indocitra Grahabawana. TELKOM no longer owns any shares in this company. |
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(12) | As part of the agreement signed on August 8, 2003 between TELKOM and CPSC, TELKOM sold and delivered 20.17% (2,612,015 shares) of Metrosel to CPSC. TELKOM no longer owns any shares in this company. |
Unconsolidated Associated Companies |
PT Patra Telekomunikasi Indonesia (“Patrakom”) |
PT Citra Sari Makmur (“CSM”) |
PT Pasifik Satelit Nusantara (“PSN”) |
PT Mobile Selular Indonesia (“Mobisel”) |
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PT Batam Bintan Telekomunikasi (“Babintel”) |
PT Pembangunan Telekomunikasi Indonesia (“Bangtelindo”) |
PT Komunikasi Selular Indonesia (“Komselindo”) |
PT Metro Selular Nusantara (“Metrosel”) |
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PT Menara Jakarta (“MJ”) |
PT Telekomindo Selular Raya (“Telesera”) |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
72
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Economic Situation in Indonesia |
Limited Increases in Tariffs |
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Increase in TELKOM’s interconnection revenues |
Increase in Telkomsel’s revenues |
Increase in TELKOM’s data and Internet revenues |
Sale of 12.72% equity interest in Telkomsel to SingTel |
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Early Retirement Program |
Changes in Indonesian GAAP Information Previously Reported |
Changes in U.S. GAAP Information Previously Disclosed |
75
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Consolidation of TELKOM’s Financial Statements |
Foreign Exchange Translations |
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Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. (billion) | % | Rp. (billion) | % | Rp. (billion) | % | US$ (million) | |||||||||||||||||||||||
Operating Revenues | |||||||||||||||||||||||||||||
Telephone | |||||||||||||||||||||||||||||
Fixed lines | 6,415.1 | 39.4 | 7,264.1 | 34.9 | 8,896.9 | 32.8 | 1,054.1 | ||||||||||||||||||||||
Cellular | 4,708.0 | 28.9 | 6,226.8 | 29.9 | 8,458.8 | 31.2 | 1,002.2 | ||||||||||||||||||||||
Revenue under Joint Operation Schemes | 2,219.5 | 13.6 | 2,128.1 | 10.2 | 1,486.3 | 5.5 | 176.1 | ||||||||||||||||||||||
Interconnection revenues | 1,423.7 | 8.7 | 2,831.3 | 13.6 | 4,162.1 | 15.3 | 493.1 | ||||||||||||||||||||||
Data and Internet | 673.2 | 4.1 | 1,551.6 | 7.5 | 3,108.6 | 11.5 | 368.3 | ||||||||||||||||||||||
Network | 415.0 | 2.6 | 316.1 | 1.5 | 517.9 | 1.9 | 61.4 | ||||||||||||||||||||||
Revenue sharing arrangement | 264.3 | 1.6 | 263.8 | 1.3 | 258.5 | 1.0 | 30.6 | ||||||||||||||||||||||
Other telecommunications-related services | 165.0 | 1.1 | 221.0 | 1.1 | 226.9 | 0.8 | 26.9 | ||||||||||||||||||||||
Total Operating Revenues | 16,283.8 | 100.0 | 20,802.8 | 100.0 | 27,116.0 | 100.0 | 3,212.7 | ||||||||||||||||||||||
Fixed Line Telephone Revenues |
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Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ (million) | |||||||||||||||||||||||
(billion) | (billion) | (billion) | |||||||||||||||||||||||||||
Fixed Line Telephone Revenues | |||||||||||||||||||||||||||||
Local and domestic long-distance usage | 5,225.7 | 32.1 | 5,447.9 | 26.2 | 6,561.8 | 24.2 | 777.5 | ||||||||||||||||||||||
Monthly subscription charges | 997.7 | 6.2 | 1,474.8 | 7.1 | 1,948.8 | 7.2 | 230.9 | ||||||||||||||||||||||
Installation charges | 98.0 | 0.6 | 130.2 | 0.6 | 223.1 | 0.8 | 26.4 | ||||||||||||||||||||||
Phone cards | 25.4 | 0.1 | 29.3 | 0.1 | 34.4 | 0.1 | 4.1 | ||||||||||||||||||||||
Others | 68.3 | 0.4 | 181.9 | 0.9 | 128.8 | 0.5 | 15.2 | ||||||||||||||||||||||
Total | 6,415.1 | 39.4 | 7,264.1 | 34.9 | 8,896.9 | 32.8 | 1,054.1 | ||||||||||||||||||||||
Cellular Telephone Revenues |
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Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ (million) | |||||||||||||||||||||||
(billion) | (billion) | (billion) | |||||||||||||||||||||||||||
Cellular Telephone Revenues | |||||||||||||||||||||||||||||
Air time charges | 3,987.8 | 24.4 | 5,453.6 | 26.1 | 7,677.9 | 28.3 | 909.7 | ||||||||||||||||||||||
Monthly subscription charges | 581.6 | 3.6 | 593.3 | 2.9 | 580.5 | 2.2 | 68.8 | ||||||||||||||||||||||
Connection fee charges | 128.5 | 0.8 | 172.3 | 0.8 | 194.1 | 0.7 | 23.0 | ||||||||||||||||||||||
Features | 10.1 | 0.1 | 7.6 | 0.1 | 6.3 | 0.0 | 0.7 | ||||||||||||||||||||||
Total | 4,708.0 | 28.9 | 6,226.8 | 29.9 | 8,458.8 | 31.2 | 1,002.2 | ||||||||||||||||||||||
Joint Operation Scheme (“KSO”) Revenues |
• | Initial payment made by the KSO partners, which is amortized over the life of the KSO Agreement; | |
• | Minimum TELKOM Revenues (“MTR”), being a specified minimum payment, which is payable monthly; and | |
• | Distributable TELKOM Revenues (“DTR”), being a specified percentage of KSO revenues after deduction of operating expenses and MTR obligation, which is payable monthly. |
Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ (million) | |||||||||||||||||||||||
(billion) | (billion) | (billion) | |||||||||||||||||||||||||||
KSO Revenues | |||||||||||||||||||||||||||||
Minimum TELKOM Revenues | 1,474.2 | 9.0 | 1,319.7 | 6.3 | 899.9 | 3.3 | 106.6 | ||||||||||||||||||||||
Share in distributable KSO Revenues | 732.9 | 4.5 | 801.0 | 3.9 | 583.0 | 2.2 | 69.1 | ||||||||||||||||||||||
Amortization of unearned initial investor payments under Joint Operation Schemes | 12.4 | 0.1 | 7.4 | 0.0 | 3.4 | 0.0 | 0.4 | ||||||||||||||||||||||
Total | 2,219.5 | 13.6 | 2,128.1 | 10.2 | 1,486.3 | 5.5 | 176.1 | ||||||||||||||||||||||
Interconnection Revenues |
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Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ (million) | |||||||||||||||||||||||
(billion) | (billion) | (billion) | |||||||||||||||||||||||||||
Interconnection Revenues | |||||||||||||||||||||||||||||
TELKOM(1) | 1,212.3 | 7.4 | 2,740.7 | 13.3 | 4,069.1 | 15.0 | 482.1 | ||||||||||||||||||||||
Telkomsel(2) | 211.4 | 1.3 | 90.6 | 0.3 | 93.0 | 0.3 | 11.0 | ||||||||||||||||||||||
Total | 1,423.7 | 8.7 | 2,831.3 | 13.6 | 4,162.1 | 15.3 | 493.1 | ||||||||||||||||||||||
(1) | After elimination of unconsolidated net interconnection revenues with Telkomsel. |
(2) | After elimination of unconsolidated net interconnection revenues (expense) with TELKOM. |
Data and Internet Revenues |
Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ (million) | |||||||||||||||||||||||
(billion) | (billion) | (billion) | |||||||||||||||||||||||||||
Data and Internet Revenue | |||||||||||||||||||||||||||||
SMS | 344.6 | 2.1 | 997.2 | 4.9 | 2,205.1 | 8.2 | 261.3 | ||||||||||||||||||||||
Multimedia | 218.3 | 1.3 | 337.8 | 1.6 | 494.7 | 1.8 | 58.6 | ||||||||||||||||||||||
VoIP | 25.6 | 0.2 | 152.2 | 0.7 | 328.3 | 1.2 | 38.9 | ||||||||||||||||||||||
ISDN | 84.7 | 0.5 | 64.4 | 0.3 | 80.5 | 0.3 | 9.5 | ||||||||||||||||||||||
Total | 673.2 | 4.1 | 1,551.6 | 7.5 | 3,108.6 | 11.5 | 368.3 | ||||||||||||||||||||||
Network Revenues |
Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ (million) | |||||||||||||||||||||||
(billion) | (billion) | (billion) | |||||||||||||||||||||||||||
Network Revenue | |||||||||||||||||||||||||||||
Satellite transponder lease | 203.6 | 1.3 | 190.2 | 0.9 | 270.9 | 1.0 | 32.1 | ||||||||||||||||||||||
Leased line | 211.4 | 1.3 | 125.9 | 0.6 | 247.0 | 0.9 | 29.3 | ||||||||||||||||||||||
Total | 415.0 | 2.6 | 316.1 | 1.5 | 517.9 | 1.9 | 61.4 | ||||||||||||||||||||||
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Revenues under Revenue Sharing Arrangements |
Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ (million) | |||||||||||||||||||||||
(billion) | (billion) | (billion) | |||||||||||||||||||||||||||
Revenues Under Revenue Sharing Arrangements | |||||||||||||||||||||||||||||
Net share in revenue earned under Revenue Sharing Arrangement | 191.5 | 1.2 | 211.5 | 1.0 | 200.1 | 0.8 | 23.7 | ||||||||||||||||||||||
Amortization of unearned income under Revenue Sharing Arrangement | 72.8 | 0.4 | 52.3 | 0.3 | 58.4 | 0.2 | 6.9 | ||||||||||||||||||||||
Total | 264.3 | 1.6 | 263.8 | 1.3 | 258.5 | 1.0 | 30.6 | ||||||||||||||||||||||
Other Telecommunications-related Services Revenues |
Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ (million) | |||||||||||||||||||||||
(billion) | (billion) | (billion) | |||||||||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||
Depreciation | 2,869.8 | 17.6 | 3,473.4 | 16.7 | 4,779.5 | 17.6 | 566.3 | ||||||||||||||||||||||
Operations, maintenance and telecommunications services | 2,149.9 | 13.2 | 2,290.2 | 11.0 | 3,338.7 | 12.3 | 395.6 | ||||||||||||||||||||||
Personnel | 2,281.2 | 14.0 | 4,387.6 | 21.1 | 4,440.1 | 16.4 | 526.1 | ||||||||||||||||||||||
General and administrative | 1,343.5 | 8.3 | 1,146.3 | 5.5 | 2,078.8 | 7.7 | 246.3 | ||||||||||||||||||||||
Marketing | 220.0 | 1.3 | 375.1 | 1.8 | 502.9 | 1.9 | 59.6 | ||||||||||||||||||||||
Total Operating Expenses | 8,864.4 | 54.4 | 11,672.6 | 56.1 | 15,140.0 | 55.8 | 1,793.9 | ||||||||||||||||||||||
Depreciation Expense |
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Operations, Maintenance and Telecommunications Services Expense |
Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ | |||||||||||||||||||||||
(billion) | (billion) | (billion) | (million) | ||||||||||||||||||||||||||
Operations, Maintenance and Telecommunications Services Expense | |||||||||||||||||||||||||||||
Operations and maintenance | 891.4 | 5.5 | 1,042.6 | 5.0 | 1,744.8 | 6.4 | 206.7 | ||||||||||||||||||||||
Radio frequency usage charges | 101.3 | 0.6 | 292.7 | 1.4 | 371.7 | 1.4 | 44.1 | ||||||||||||||||||||||
Electricity, gas and water | 157.1 | 1.0 | 219.9 | 1.1 | 300.4 | 1.1 | 35.6 | ||||||||||||||||||||||
Cost of phone cards | 173.4 | 1.1 | 197.7 | 1.0 | 181.3 | 0.7 | 21.5 | ||||||||||||||||||||||
Concession fees | 63.6 | 0.4 | 163.9 | 0.8 | 239.0 | 0.9 | 28.3 | ||||||||||||||||||||||
Insurance | 67.8 | 0.4 | 142.9 | 0.7 | 157.1 | 0.6 | 18.6 | ||||||||||||||||||||||
Leased line | 82.9 | 0.5 | 103.6 | 0.5 | 127.0 | 0.5 | 15.1 | ||||||||||||||||||||||
Motor vehicles | 38.2 | 0.2 | 80.0 | 0.3 | 115.7 | 0.4 | 13.7 | ||||||||||||||||||||||
Travel | 15.7 | 0.1 | 16.5 | 0.1 | 29.8 | 0.1 | 3.5 | ||||||||||||||||||||||
Telephone kiosks’ commissions | 520.9 | 3.2 | — | — | — | — | — | ||||||||||||||||||||||
Others | 37.6 | 0.2 | 30.4 | 0.1 | 71.9 | 0.2 | 8.5 | ||||||||||||||||||||||
Total | 2,149.9 | 13.2 | 2,290.2 | 11.0 | 3,338.7 | 12.3 | 395.6 | ||||||||||||||||||||||
Personnel Expense |
Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ | |||||||||||||||||||||||
(billion) | (billion) | (billion) | (million) | ||||||||||||||||||||||||||
Personnel Expense | |||||||||||||||||||||||||||||
Salaries and related allowances | 883.4 | 5.4 | 1,410.7 | 6.8 | 1,574.2 | 5.8 | 186.5 | ||||||||||||||||||||||
Vacation pay, incentives and other allowances | 364.7 | 2.2 | 655.5 | 3.2 | 816.1 | 3.0 | 96.7 | ||||||||||||||||||||||
Severance for early retirement plan | 140.0 | 0.9 | 717.3 | 3.4 | 355.7 | 1.3 | 42.1 | ||||||||||||||||||||||
Long service awards | 94.5 | 0.6 | 289.9 | 1.4 | 207.1 | 0.8 | 24.5 | ||||||||||||||||||||||
Net periodic pension cost | 86.2 | 0.5 | 362.3 | 1.7 | 190.9 | 0.7 | 22.6 | ||||||||||||||||||||||
Employee income tax | 132.9 | 0.8 | 201.5 | 1.0 | 468.8 | 1.7 | 55.5 | ||||||||||||||||||||||
Net periodic post-retirement benefit cost | 374.5 | 2.3 | 616.5 | 3.0 | 641.4 | 2.4 | 76.0 | ||||||||||||||||||||||
Housing | 93.3 | 0.6 | 89.5 | 0.4 | 116.9 | 0.4 | 13.9 | ||||||||||||||||||||||
Medical | 81.7 | 0.5 | 28.2 | 0.1 | 9.7 | 0.0 | 1.2 | ||||||||||||||||||||||
Others | 30.0 | 0.2 | 16.2 | 0.1 | 59.3 | 0.2 | 7.0 | ||||||||||||||||||||||
Total | 2,281.2 | 14.0 | 4,387.6 | 21.1 | 4,440.1 | 16.3 | 526.1 | ||||||||||||||||||||||
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General and Administrative Expense |
Year ended December 31, | |||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ | |||||||||||||||||||||||
(billion) | (billion) | (billion) | (million) | ||||||||||||||||||||||||||
General and Administrative Expense | |||||||||||||||||||||||||||||
Provision for doubtful accounts and inventory obsolescence | 342.9 | 2.1 | 31.1 | 0.1 | 326.4 | 1.2 | 38.7 | ||||||||||||||||||||||
Professional fees | 325.3 | 2.0 | 219.0 | 1.0 | 115.6 | 0.4 | 13.7 | ||||||||||||||||||||||
Collection expenses | 181.9 | 1.1 | 224.8 | 1.1 | 273.8 | 1.0 | 32.4 | ||||||||||||||||||||||
Training, education and recruitment | 147.3 | 0.9 | 122.1 | 0.6 | 126.9 | 0.5 | 15.0 | ||||||||||||||||||||||
Travel | 92.8 | 0.6 | 111.4 | 0.5 | 144.7 | 0.5 | 17.1 | ||||||||||||||||||||||
Amortization of intangible assets | 55.7 | 0.4 | 188.0 | 0.9 | 730.7 | 2.7 | 86.5 | ||||||||||||||||||||||
Security and screening | 48.8 | 0.3 | 77.1 | 0.4 | 110.3 | 0.4 | 13.1 | ||||||||||||||||||||||
Printing and stationery | 37.6 | 0.2 | 43.5 | 0.2 | 50.5 | 0.2 | 6.0 | ||||||||||||||||||||||
Meetings | 26.5 | 0.2 | 31.7 | 0.2 | 42.8 | 0.2 | 5.1 | ||||||||||||||||||||||
Research and development | 39.5 | 0.2 | 10.5 | 0.1 | 9.1 | 0.0 | 1.1 | ||||||||||||||||||||||
General and social contribution | 36.8 | 0.2 | 69.4 | 0.3 | 113.8 | 0.4 | 13.5 | ||||||||||||||||||||||
Others | 8.4 | 0.3 | 17.7 | 0.1 | 34.2 | 0.1 | 4.1 | ||||||||||||||||||||||
Total | 1,343.5 | 8.3 | 1,146.3 | 5.5 | 2,078.8 | 7.6 | 246.3 | ||||||||||||||||||||||
Marketing Expense |
Year ended December 31, | ||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2003 | |||||||||||||||||||||||||
Rp. | % | Rp. | % | Rp. | % | US$ | ||||||||||||||||||||||
(billion) | (billion) | (billion) | (million) | |||||||||||||||||||||||||
Marketing Expense | ||||||||||||||||||||||||||||
Advertising | 169.8 | 1.0 | 310.3 | 1.5 | 381.7 | 1.4 | 45.2 | |||||||||||||||||||||
Customer education | 40.6 | 0.2 | 52.3 | 0.2 | 102.2 | 0.4 | 12.1 | |||||||||||||||||||||
Others | 9.6 | 0.1 | 12.5 | 0.1 | 19.0 | 0.1 | 2.3 | |||||||||||||||||||||
Total | 220.0 | 1.3 | 375.1 | 1.8 | 502.9 | 1.9 | 59.6 | |||||||||||||||||||||
Year ended December 31, 2003 compared to year ended December 31, 2002 |
Operating Revenues. |
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• | increases of 18.0% and 13.0% in usage for DLD and local call services, respectively, which generate revenue based on number of pulses. | |
• | 9.4% growth in the number of fixed lines in service in the non-KSO and KSO regions, including kiosk phones, from 7,750,035 lines as of December 31, 2002 to 8,479,115 lines as of December 31, 2003, particularly 23.1% growth in the number of fixed lines in service in the non-KSO regions, which led to a 71.3% increase in installation fees, to Rp.223.1 billion. | |
• | the consolidation of KSO III Unit revenues, as a result of TELKOM’s acquisition of AriaWest on July 31, 2003, which contributed Rp.482.3 billion (US$47.3 million) to the increase in operating revenues. |
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• | salaries and related benefits increased by Rp.163.5 billion to Rp.1,574.2 billion (US$186.5 million), an increase of 11.6%; | |
• | vacation pay, incentives and other allowances increased by Rp.160.6 billion to Rp.816.1 billion (US$96.7 million), an increase of 24.5%; and | |
• | employee income tax increased by Rp.267.3 billion to Rp.468.8 billion (US$55.5 million), an increase of 132.7%, primarily due to the payment of significant withholding tax on payments under TELKOM’s early retirement program. |
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• | an increase in operations and maintenance expenses by Rp.702.2 billion to Rp.1,744.8 (US$206.7 million), an increase of 67.4%, due to an increase in Telkomsel’s operations and maintenance expenses arising from the growth in the number of Telkomsel’s BTSs, which grew by 38.4% to 4,820 in 2003, and the increase in the number of Telkomsel’s transmitting and receiving exchanges; | |
• | total radio frequency usage charges increased by Rp.79.0 billion to Rp.371.7 billion (US$44.0 million) in 2003, an increase of 27.0%, primarily due to a 26.1% increase in usage charges by Telkomsel of Rp.73.2 billion from Rp.280.4 billion in 2002 to Rp.353.6 billion (US$41.9 million) in 2003, in line with the 38.4% increase in the number of BTSs from 3,483 in 2002 to 4,820 in 2003; | |
• | total concession fees increased by Rp.75.1 billion to Rp.239.0 billion (US$28.4 million) in 2003, an increase of 45.8% due to an increase in the revenues of TELKOM and Telkomsel; and | |
• | gas, electricity and water charges increased by 36.6%, from Rp.219.9 billion in 2002 to Rp.300.4 billion (US$35.6 million) in 2003, reflecting primarily the consolidation of the gas electricity and water charges of AriaWest and other subsidiaries, as well as an increase in electricity and gas rates in 2003 compared to 2002. |
• | amortization of intangible assets increased by Rp.542.7 billion to Rp.730.7 billion (US$86.6 million), or 288.7%, mainly due to additional amortization of intangible assets arising from the acquisitions of AriaWest; | |
• | provision for doubtful accounts and inventory obsolescence increased by Rp.295.3 billion to Rp.326.4 billion (US$38.7 million) in 2003, primarily due to an increase in TELKOM and Telkomsel customer defaults and, in addition, the amount for 2003 represented TELKOM’s provisions for doubtful accounts following the reversal in 2002 of certain provisions for doubtful accounts as a result of the settlement of TELKOM’s dispute with AriaWest. | |
• | collection costs increased by Rp.49.0 billion to Rp.273.8 billion (US$32.4 million), an increase of 21.8%, generally in line with the growth in TELKOM’s fixed line subscriber base and Telkomsel’s mobile cellular subscriber base, but also reflecting higher fees charged by third party collection agents used in some regional divisions; | |
• | general and social contribution increased by Rp.44.4 billion to Rp.113.8 billion (US$13.5 million), an increase of 63.9%, reflecting TELKOM’s various charitable donations and community services; | |
• | security and screening increased by Rp.33.2 billion to Rp.110.3 billion (US$13.1 million), an increase of 43.1%, primarily due to the consolidation of the KSO III Unit; and |
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• | professional fees decreased by Rp.103.4 billion, or 47.2%, to Rp.115.6 billion (US$13.7 million) in 2003, principally due to a decline in financial advisory and legal fees in 2003. |
Operating Income and Operating Margin |
Other Income (Expense) |
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• | Rp.248.6 billion (US$29.5 million) in income from fines from late-paying subscribers; | |
• | gain on sale of fixed assets (net), primarily property, plant and equipment, amounting to Rp.182.9 billion (US$21.7 million). |
Income Before Tax and Pre-Tax Margin |
Income Tax Expense |
Minority Interest in Net Income of Subsidiaries |
Net Income |
Equity |
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Year ended December 31, 2002 compared to year ended December 31, 2001 |
Operating Revenues. |
• | 7.4% growth in the number of fixed lines in service in the non-KSO and KSO regions, including kiosk phones, from 7,218,938 lines at December 31, 2001 to 7,750,035 lines at December 31, 2002, particularly 33.7% growth in the non-KSO regions; and | |
• | the consolidation of KSO I Unit revenues, as a result of TELKOM’s acquisition of Pramindo on August 15, 2002, which contributed Rp.364.4 billion to the increase in operating revenues. |
• | 84.8% growth in Telkomsel’s total cellular subscribers, from 3,252,032 subscribers in 2001 to 6,010,772 subscribers in 2002, which was caused by 76.3% growth in net-additional subscribers from 1,564,693 subscribers in 2001 to 2,758,740 subscribers in 2002. In addition, 6.7% growth in postpaid subscribers to 923,005 subscribers and 113.2% growth in prepaid subscribers to 5,087,767 at December 31, 2002; and | |
• | 3.8% growth in postpaid monthly ARPU to Rp.298,000, offset by a 7.2% decline in prepaid monthly ARPU to Rp.103,000 in 2002 due in part to Telkomsel’s attraction of additional low-usage customers and the upgrading of the high-usage prepaid customers to postpaid. |
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• | severance for early retirement plan increased by Rp.577.3 billion to Rp.717.3 billion, an increase of 412.4% compared to 2001, primarily reflecting early retirement that was accrued in 2002; and | |
• | net periodic pension cost increased by Rp.276.1 billion to Rp.362.3 billion, an increase of 320.1%, reflecting the increase of pension benefit. |
• | vacation pay (mainly long-leave allowances), incentives and other allowances increased by Rp.290.8 billion to Rp.655.5 billion, an increase of 79.7%, reflecting primarily new bonus scheme introduced in 2002 which amounted to Rp.171.0 billion and the consolidation of KSO I Unit and Pramindo vacation pay, incentives and other allowances; | |
• | long service awards increased by Rp.195.4 billion to Rp.289.9 billion, an increase of 206.7%, due to the introduction of long leave allowance payable by TELKOM to eligible employees; and | |
• | net periodic post-retirement benefit cost increased by Rp.242.0 billion to Rp.616.5 billion, an increase of 64.6%, primarily due to an increased number of pensioners from the early-retirement program. |
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• | the consolidation of relevant Pramindo expenses in the various components of operation, maintenance and telecommunications services expenses in 2002, which amounted to Rp.57.4 billion; | |
• | total radio frequency usage charges increased by Rp.191.4 billion, mainly contributed from the increase in usage charges from Telkomsel by Rp.191.8 billion from Rp.88.6 billion in 2001 to Rp.280.4 billion in 2002, or 216.5%, in line with the 74.6% increase in the number of BTS from 1,995 in 2001 to 3,483 in 2002; | |
• | total concession fees increased by Rp.100.3 billion or 157.8% compared to 2001 due to an increase in the applicable tariff payable by Telkomsel to the Government and an increase in the number of Telkomsel’s BTSs; | |
• | gas, electricity and water charges increased by 40.0% reflecting primarily higher electricity and gas charges as a result of higher rates charged by the Government for these services in 2002; | |
• | total insurance expense increased by Rp.75.1 billion, or 110.9% reflecting higher insurance coverage due to the consolidation of Pramindo and an increase in the number of insurable fixed assets; and | |
• | cost of phone cards increased by Rp.24.3 billion to Rp.197.7 billion, an increase of 14.0%, reflecting higher procurement of phone cards to supply increased sales of SIM cards and refill vouchers for Telkomsel’s prepaid mobile cellular services. |
• | allowance for doubtful accounts and inventory obsolescence decreased by Rp.311.8 billion to Rp.31.1 billion, a decrease of 90.9%, as TELKOM reversed a provision applicable to doubtful accounts in the name of KSO III following the execution of a closing agreement with AriaWest on July 31, 2003; |
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• | amortization of intangible assets from investment in Pramindo, Dayamitra and GSD amounted to Rp.188.0 billion in 2002; | |
• | professional fees declined by Rp.106.3 billion, or 32.7%, from Rp.325.3 billion in 2001 to Rp.219.0 billion in 2002, principally due to higher professional consultant fees in 2001 in relation to the cross-ownership transaction involving the sale of our interest in Satelindo and the acquisition of additional equity in Telkomsel; | |
• | collection costs increased by Rp.42.9 billion to Rp.224.8 billion, an increase of 23.6%, generally in line with the growth in TELKOM’s fixed line subscriber base and Telkomsel’s mobile cellular subscriber base, but also reflecting higher fees charged by third party collection agents used in some regional divisions; | |
• | general and social contribution increased by Rp.32.7 billion to Rp.69.4 billion, an increase of 88.8%, reflecting TELKOM’s implementation of the good corporate citizenship program in 2002; and | |
• | security and screening increased by Rp.28.3 billion to Rp.77.1 billion, an increase of 58.0%, reflecting the consolidation of KSO I Unit in 2002. |
Operating Income and Operating Margin |
Other Income (Expense) |
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• | Rp.171.2 billion in income from fines from subscribers; | |
• | gain on sale of fixed assets net amounting to Rp.130.4 billion; | |
• | Rp.101.5 billion impairment loss from investment in Telesera; and | |
• | Rp.179 billion provision for settlement of AriaWest. |
Income Before Tax and Pre-Tax Margin |
Income Tax Expense |
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Minority Interest in Net Income of Subsidiaries |
Year Ended December 31, | ||||||||||||||||
2001 | 2002 | 2003 | 2003 | |||||||||||||
Rp. (billion) | Rp. (billion) | Rp. (billion) | US$ (million) | |||||||||||||
Net income in accordance with | ||||||||||||||||
Indonesian GAAP | 4,068.4 | 8,039.7 | 6,087.2 | 721.2 | ||||||||||||
U.S. GAAP | 4,298.2 | 8,587.3 | 5,790.6 | 686.1 |
Year Ended December 31, | ||||||||||||||||
2001 | 2002 | 2003 | 2003 | |||||||||||||
Rp. (billion) | Rp. (billion) | Rp. (billion) | US$ (million) | |||||||||||||
Equity in accordance with | ||||||||||||||||
Indonesian GAAP | 9,081.0 | 14,613.6 | 17,312.9 | 2,051.3 | ||||||||||||
U.S. GAAP | 7,765.5 | 13,910.9 | 16,284.7 | 1,929.5 |
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Termination Benefits |
Foreign Exchange Differences Capitalized to Property under Construction |
Interest Capitalized on Property under Construction |
Revenue-Sharing Arrangements |
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Revaluation of Property, Plant and Equipment |
Pension |
Equity in Net Income (Loss) of Associated Companies |
Land rights |
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Equipment to be Installed |
Revenue Recognition |
Goodwill |
Capital Leases |
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Acquisition of Dayamitra |
Reversal of Difference Due to Change of Equity in Associated Companies |
Asset Retirement Obligations |
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Deferred Income Taxes |
Impairment of Assets |
Gain (Loss) on Sale of Property, Plant and Equipment |
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2001 | 2002 | 2003 | |||||||||||
Rp. million | Rp. million | Rp. million | |||||||||||
Net income according to the consolidated statements of income prepared under Indonesian GAAP | 4,068,391 | 8,039,709 | 6,087,227 | ||||||||||
U.S. GAAP adjustments — increase (decrease) due to: | |||||||||||||
Termination benefits | 140,000 | 530,981 | (670,981 | ) | |||||||||
Capitalization of foreign exchange differences, net of related depreciation of (76,732) million, (79,797) million and (76,756) million, respectively | 74,987 | 107,365 | 76,756 | ||||||||||
Interest capitalized on property under construction, net of related depreciation of (nil), (3,061) million and (8,787) million, respectively | 19,690 | 43,045 | 39,077 | ||||||||||
Revenue-sharing arrangements | 43,999 | 67,959 | 23,159 | ||||||||||
Revaluation of property, plant and equipment | 4,095 | 3,929 | — | ||||||||||
Pension | (19,640 | ) | 111,415 | (109,334 | ) | ||||||||
Equity in net income/(loss) of associated companies | (3,786 | ) | (182 | ) | (170 | ) | |||||||
Amortization of landrights | (6,409 | ) | (11,781 | ) | (10,212 | ) | |||||||
Depreciation of equipment to be installed | — | 9,706 | — | ||||||||||
Revenue recognition | 81,429 | (89,274 | ) | (53,226 | ) | ||||||||
Goodwill | — | 21,269 | 21,270 | ||||||||||
Capital leases | — | 14,241 | 6,882 | ||||||||||
Adjustment for Dayamitra accounted at 100% | (4,191 | ) | (9,270 | ) | (24,476 | ) | |||||||
Reversal of difference due to change of equity in associated companies | — | (65,158 | ) | (38,425 | ) | ||||||||
Asset retirement obligations | — | — | (848 | ) | |||||||||
Deferred income tax: | |||||||||||||
Deferred income tax on equity method investments | — | — | 119,456 | ||||||||||
Deferred income tax effect on U.S. GAAP adjustments | (100,942 | ) | (220,724 | ) | 323,089 | ||||||||
229,232 | 513,521 | (297,983 | ) | ||||||||||
Minority interest | 577 | 34,029 | 1,396 | ||||||||||
Net adjustments | 229,809 | 547,550 | (296,587 | ) | |||||||||
Net income in accordance with U.S. GAAP | 4,298,200 | 8,587,259 | 5,790,640 | ||||||||||
Net income per share — in full Rupiah amount | 426.41 | 851.91 | 574.47 | ||||||||||
Net income per ADS (20 Series B shares per ADS) — in full Rupiah amount | 8,528.17 | 17,038.21 | 11,489.40 | ||||||||||
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2002 | 2003 | ||||||||
Rp. million | Rp. million | ||||||||
Equity according to the consolidated balance sheets prepared under Indonesian GAAP | 14,613,617 | 17,312,877 | |||||||
U.S. GAAP adjustments — increase (decrease) due to: | |||||||||
Early retirement benefits | 670,981 | — | |||||||
Capitalization of foreign exchange differences — net of related depreciation | (627,229 | ) | (550,473 | ) | |||||
Interest capitalized on property under construction — net of related depreciation | 62,735 | 101,812 | |||||||
Revenue-sharing arrangements | (470,855 | ) | (447,696 | ) | |||||
Revaluation of property, plant and equipment: | |||||||||
Increment | (664,974 | ) | (664,974 | ) | |||||
Accumulated depreciation | 664,974 | 664,974 | |||||||
Pension | 231,490 | 122,156 | |||||||
Equity in net loss of associated companies | (18,082 | ) | (18,252 | ) | |||||
Amortization of land rights | (54,999 | ) | (65,211 | ) | |||||
Revenue recognition | (715,322 | ) | (768,548 | ) | |||||
Goodwill | 21,269 | 42,539 | |||||||
Capital leases | 14,241 | 21,123 | |||||||
Adjustment for Dayamitra accounted at 100% | (14,242 | ) | (38,718 | ) | |||||
Asset retirement obligations | — | (848 | ) | ||||||
Deferred income tax: | |||||||||
Deferred income tax on equity method investments | — | 52,186 | |||||||
Deferred income tax effect on U.S. GAAP adjustments | 132,736 | 455,825 | |||||||
(767,277 | ) | (1,094,105 | ) | ||||||
Minority interest | 64,524 | 65,920 | |||||||
Net adjustments | (702,753 | ) | (1,028,185 | ) | |||||
Equity in accordance with U.S. GAAP | 13,910,864 | 16,284,692 | |||||||
• | capital expenditures for existing and new network and backbone infrastructure, including the expansion of TELKOM’s CDMA network, a satellite, fiber optic transmission network from Kalimantan and Sulawesi, fiber optic transmission networks in Jakarta, Surabaya and Bandung-Cirebon, a submarine optical cable to connect Dumai (Indonesia) to Melaka (Malaysia), |
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installation and upgrading of fixed lines and increased capacity in its mobile cellular service conducted through Telkomsel (see “— Capital Expenditures”); | ||
• | debt service requirements relating to existing indebtedness, including two-step loans and indebtedness of subsidiaries; | |
• | installment payments of the purchase price for shares of AriaWest in 2003; | |
• | payments under the Short-Term Loan Agreement with ABN AMRO Bank N.V. Jakarta which financed the payment of the outstanding installments of the purchase price for shares in Pramindo; | |
• | payment of post-retirement benefits and long-service awards in 2004; and | |
• | fixed monthly payments to MGTI pursuant to the amended and restated agreement for KSO IV, commencing March 2004 and terminating in 2010. |
Defaults and Waivers of Defaults under our Debt Facilities |
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Year Ended December 31, | |||||||||||||||||
2001 | 2002 | 2003 | 2003 | ||||||||||||||
Rp. | Rp. | Rp. | US$ | ||||||||||||||
(billion) | (billion) | (billion) | (million) | ||||||||||||||
Net cash flows: | |||||||||||||||||
from operating activities | 7,012.6 | 10,864.5 | 12,852.5 | 1,522.8 | |||||||||||||
from investing activities | (6,115.8 | ) | (6,050.0 | ) | (7,305.9 | ) | (865.6 | ) | |||||||||
from financing activities | (1,662.8 | ) | (2,670.2 | ) | (6,177.4 | ) | (731.9 | ) | |||||||||
Change in cash and cash equivalents | (766.0 | ) | 2,144.3 | (630.8 | ) | (74.7 | ) | ||||||||||
Effect of foreign exchange changes | 76.6 | (89.5 | ) | 26.2 | 3.1 | ||||||||||||
Cash and cash equivalents, beginning of period | 4,333.7 | 3,644.3 | 5,699.1 | 675.2 | |||||||||||||
Cash and cash equivalents, end of Period | 3,644.3 | 5,699.1 | 5,094.5 | 603.6 |
Net Cash Flows from Operating Activities |
Year ended December 31, 2003 compared to year ended December 31, 2002. |
• | an increase of Rp.2,798.5 billion, or 19.5%, in cash receipts from telephone services, primarily from the increase in the number of subscribers for cellular and fixed wireless services, as well as from the acquisition of AriaWest; | |
• | an increase of Rp.2,506.7 billion, or 147.7%, in cash receipts from interconnection, primarily due to an increase in interconnection fees collected from mobile cellular operators; |
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• | an increase of Rp.2,800.0 billion, or 247.3%, in cash receipts from other services, primarily due to an increase in cash receipts from data and Internet services, particularly from greater SMS usage among Telkomsel subscribers; and | |
• | an increase of Rp.3,061.3 billion, or 52.8%, in cash payments for operating expenses, which had the effect of increasing cash outflows from operating activities. |
Year ended December 31, 2002 compared to year ended December 31, 2001. |
• | an increase of Rp.2,781.8 billion, or 24.1%, in cash receipts from telephone services primarily cellular services resulting from an increased number of subscribers as well as an increase in cash receipts from fixed line due to the consolidation of Pramindo in 2002, which enhanced cash inflows from operating activities; | |
• | an increase of Rp.569.5 billion or 50.5% in cash receipts from interconnection primarily resulting from the acquisition of Pramindo; | |
• | a decrease of Rp.139.2 billion or 8.1%, in cash receipts from Joint Operation Schemes, primarily due to a reclassification of cash receipts from KSO I from Joint Operation Schemes to Fixed Lines following the acquisition of Pramindo; and | |
• | an increase of Rp.478.6 billion, or 9.0%, in cash payments for operating expenses, which had the effect of increasing cash outflows from operating activities. |
Net Cash Flows from Investing Activities |
Year ended December 31, 2003 compared to year ended December 31, 2002. |
• | an increase of Rp.2,381.9, or 36.0%, in cash used for capital expenditures; | |
• | an increase of Rp.397.3 billion, or 26.5%, in the cash proceeds from investments and the maturity of time deposits; and | |
• | a decrease of Rp.1,542.7 billion, or 69.4%, in cash used for the purchase of marketable securities and placements in time deposits. |
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Year ended December 31, 2002 compared to year ended December 31, 2001. |
• | an increase of Rp.3,033.8 billion of cash out for capital expenditure; | |
• | a cash receipt of Rp.3,948.9 billion from the sale of a 12.72% shareholding in Telkomsel; | |
• | an increase in net cash out of Rp.4,246.4 billion from a net cash in of Rp.3,522.1 billion in 2001 to a net cash out of Rp.724.3 billion in 2002 for the investment in time deposits and medium term notes; and | |
• | a decrease in cash out for cross-ownership transactions of Rp.3,561.1 billion as the liability for cross-ownership transactions have been fully paid in 2002. |
Net Cash Flows from Financing Activities |
Repayment of Current Indebtedness. |
Payment of Cash Dividends and General Reserve. |
Dividend | Total Cash | Dividend | General | |||||||||||||
Date of AGM | Year | Dividend | per Share | Reserve | ||||||||||||
(Rp. Billion) | (Rp.) | (Rp. Billion) | ||||||||||||||
May 10, 2001 | 2000 | 888.654 | 88.16 | 127.0 | ||||||||||||
June 21, 2002 | 2001 | 2,125.055 | 210.81 | 425.0 | ||||||||||||
May 9, 2003 | 2002 | 3,338.109 | 331.16 | 813.7 |
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Escrow Account. |
Current Assets |
• | a decrease in cash and cash equivalents of Rp.604.6 billion, or 10.6%, from Rp.5,699.1 billion at December 31, 2002 to Rp.5,094.5 billion (US$603.6 million) at December 31, 2003; | |
• | a decrease in trade receivables from related parties of Rp.475.9 billion, or 53.7%, from Rp.886.8 billion at December 31, 2002 to Rp.410.9 billion (US$48.7 million) at December 31, 2003; | |
• | a decrease in temporary investments of Rp.569.0 billion, or 99.3%, from Rp.573.0 billion at December 31, 2002 to Rp.4.0 billion (US$0.5 million) at December 31, 2003; and | |
• | a decrease in other current assets, which primarily consisted of restricted time deposits, of Rp.646.7 billion, or 93.5% from Rp.691.8 billion at December 31, 2002 to Rp.45.1 billion (US$5.3 million) at December 31, 2003. |
Trade Accounts Receivable. |
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Other Current Assets and Escrow Accounts. |
Current Liabilities |
Current Maturities of Long-term Liabilities. |
Accrued Expenses. |
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At December 31, | |||||||||||||||||
2001(1) | 2002(1) | 2003(1) | 2003(1) | ||||||||||||||
(Rp. in billion) | (US$ in million) | ||||||||||||||||
Indonesian Rupiah | 6,805.7 | 4,294.1 | 4,485.1 | 531.4 | |||||||||||||
U.S. Dollar(2),(3) | 5,660.7 | 8,766.4 | 8,764.7 | 1,038.5 | |||||||||||||
Japanese Yen(4) | 1,452.1 | 1,358.9 | 1,377.7 | 163.2 | |||||||||||||
French Franc(5) | 190.9 | — | — | — | |||||||||||||
NLG(6) | 70.3 | — | — | — | |||||||||||||
EURO(7) | — | 215.7 | 890.7 | 105.5 | |||||||||||||
Total | 14,179.7 | 14,635.1 | 15,518.2 | 1,838.6 | |||||||||||||
(1) | Including imputed interest on liabilities for the acquisition of a 90.32% equity interest in Dayamitra, a 100% equity interest in Pramindo and a 100% equity interest in AriaWest. |
(2) | Amounts at December 31, 2001, 2002 and 2003 translated into Rupiah at Rp.10,450, Rp.8,950 and Rp.8,440 = US$1, respectively, being the prevailing exchange rates for buying and selling U.S. Dollars at each of those dates. |
(3) | Amounts at December 31, 2002 includes imputed interest on liability for acquisition of subsidiary (which relates to Dayamitra and Pramindo) of US$1.1 million (Rp.10.0 billion) and US$31.1 million (Rp.278.1 billion), respectively, being imputed interest for installment payments of the liability. Amounts at December 31, 2003 includes imputed interest on liability for the acquisition of subsidiary (which relates to Pramindo and AriaWest) of US$9.5 million (Rp.80.2 billion) and US$14.5 million (Rp.122.4 billion), respectively, being imputed interest for installment payments of the liability. |
(4) | Amounts at December 31, 2001, 2002 and 2003 translated into Rupiah at Rp.79.6, Rp.75.5 and Rp.79.05 = Yen 1, respectively, being the prevailing exchange rates for buying yen at each of those dates. |
(5) | Amount at December 31, 2001 translated into Rupiah at Rp.1,409.3 = FRF 1, respectively, being the prevailing exchange rates to buy French francs at such date. |
(6) | Comprises amounts expressed in Netherland Guilders translated into Rupiah. |
(7) | Amounts at December 31, 2002 and 2003 translated into Rupiah at Rp.9,377.5 and Rp.10,663.9 = EURO 1, respectively, being the prevailing exchange rate for buying Euros at each of these dates. |
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• | Rp.7,691.0 billion (US$911.3 million) (including current maturities) in two-step loans through the Government; | |
• | Rp.1,121.2 billion (US$132.5 million) (after discount) in guaranteed notes which is owed by Telkomsel; | |
• | Rp.981.3 billion (US$116.3.0 million) (after discount) IDR bonds issued by TELKOM; | |
• | US$172.3 million (Rp.1,456.1 billion) representing a loan of AriaWest that was assumed by TELKOM; and | |
• | Rp.2,334.7 billion (US$276.6 million) (including current maturities) in acquisition indebtedness relating to TELKOM’s acquisition of 100% equity interest in each of Pramindo and AriaWest. |
• | Rp.857.0 billion (US$101.5 million) (including current maturities) from Telkomsel’s loan facilities; | |
• | Rp.255.9 billion (US$30.3 million) (including current maturities) from Dayamitra’s supplier credit loans and bridge facility (see “Dayamitra’s Indebtedness” below); | |
• | Rp.458.6 billion (US$54.3 million) (including current maturities) from loan facilities relating to TELKOM’s Sumatera backbone network and Regional Division V junction project; | |
• | Rp.160.8 billion (US$19.1 million) (including current maturities) from other loan facilities for other subsidiaries, including GSD, Infomedia and Napsindo. |
Two-Step Loans |
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• | Projected net revenue to projected debt service ratio should exceed 1.5:1 and 1.2:1 for two-step loans originating from World Bank and Asian Development Bank (“ADB”), respectively; and | |
• | Internal financing (earnings before depreciation and interest expenses) should exceed 50% and 20% compared to capital expenditures for loans originally from the World Bank and ADB, respectively. |
Guaranteed Notes |
IDR Bond Issuance |
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• | Debt service coverage ratio must exceed 1.5:1; | |
• | Debt to equity ratio must not exceed (i) 3:1 for the period January 1, 2002 to December 31, 2002; (ii) 2.5:1 for the period January 1, 2003 to December 31, 2003; and (iii) 2:1 for the period January 1, 2004 to the date the bonds are redeemed; and | |
• | Debt to EBITDA ratio must not exceed 3:1. |
Acquisition Indebtedness and Option Purchase Price |
Dayamitra |
Pramindo |
• | US$76.5 million (Rp.646.1 billion), representing the unpaid portion of the purchase price for France Cable et Radio; | |
• | US$66.9 million (Rp.565.5 billion), representing the unpaid portion of the purchase price for Astratel; | |
• | US$24.9 million (Rp.210.0 billion), representing the unpaid portion of the purchase price for Indosat; | |
• | US$15.3 million (Rp.129.2 billion), representing the unpaid portion of the purchase price for Marubeni; | |
• | US$5.7 million (Rp.48.5 billion), representing the unpaid portion of the purchase price for IFC USA; and | |
• | US$1.9 million (Rp.16.2 billion), representing the unpaid portion of the purchase price for NMP Singapore. |
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AriaWest |
Sumatera backbone network |
Regional Division V Junction Project |
Telkomsel’s Indebtedness (including facilities) |
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Hermes Export Facility |
EKN-Backed Facility |
Dayamitra’s Indebtedness |
• | US$5.96 million (Rp.50.3 billion), representing a bridging loan payable by Dayamitra to Cable and Wireless Plc. The bridging facility is repayable in ten semi-annual installments from 2000 through 2004. Aggregate scheduled annual repayment of principal under the loans in 2004 is US$5.96 million. This loan is secured by an assignment of KSO revenues and bank accounts, fiduciary transfer of Dayamitra’s movable assets, assignment of Tomen construction contract, assignment of proceeds of early termination of the KSO license by TELKOM and assignment of insurance proceeds. The loan bears interest at LIBOR plus 4% per annum; | |
• | US$19.6 million (Rp.165.4 billion), representing supplier’s loan payable by Dayamitra to Cable and Wireless Plc. and Tomen. The supplier’s credit loans are repayable in ten semi-annual installments commencing December 15, 2000. Aggregate scheduled annual repayment of principal under the loans in 2004 and 2005 is US$19.5 million and US$0.1 million, respectively. This loan is secured proportionally with collateral for bridging loan facility Cable & Wireless Plc. The loan bears interest at LIBOR plus 4.5% per annum; and | |
• | Rp.39.9 billion (US$4.7 million), representing a loan payable by Dayamitra to Bank Mandiri pursuant to the terms of a loan agreement entered into on November 20, 2003. The loan is payable on a quarterly basis until the fourth quarter of 2005 and bears interest at 14.5% per annum. |
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• | Infrastructure, which consists of the transmission network, access network (including fixed wireless networks), data backbone and fixed line network backbone infrastructure; | |
• | Phone, which is essentially fixed wireline and fixed wireless; | |
• | Mobile, which consists of GSM mobile wireless telephone services and is presently conducted principally through Telkomsel; | |
• | Multimedia, which consists of cable and satellite direct to home (DTH) television, Internet access, VoIP services, data services and B2B commerce; and | |
• | Service-Net, which consists of various commercial services intended to increase traffic on TELKOM’s network, including interconnection, Internet network and third-party call centers. |
Year ended December 31, | ||||||||||||||||||||||
2001(1) | 2002(1) | 2003(1) | 2004(2) | 2005(2) | ||||||||||||||||||
Rp. (billion) | ||||||||||||||||||||||
TELKOM: | ||||||||||||||||||||||
Infrastructure: | ||||||||||||||||||||||
Transmission Network and Backbone(3) | 78.2 | 337.1 | 1,767.4 | 1,653.4 | 3,363.3 | |||||||||||||||||
Access Network | 661.0 | 862.9 | 1,849.6 | 2,517.4 | 1,530.9 | |||||||||||||||||
Subtotal Infrastructure | 739.2 | 1,200.0 | 3,617.0 | 4,170.8 | 4,894.2 | |||||||||||||||||
Commercial Services: | ||||||||||||||||||||||
Phone(4) | 285.5 | 523.6 | 161.9 | 305.6 | 381.3 | |||||||||||||||||
Mobile Cellular(5) | 263.9 | — | — | — | — | |||||||||||||||||
Multimedia(6) | 113.7 | 154.7 | 76.2 | 197.4 | 179.4 | |||||||||||||||||
Services-Net | 275.6 | 59.8 | 99.9 | 32.2 | 235.4 | |||||||||||||||||
Subtotal Commercial Services | 938.7 | 738.1 | 338.0 | 535.2 | 796.1 | |||||||||||||||||
Supporting Services | 196.3 | 140.2 | 151.1 | 313.8 | 433.3 | |||||||||||||||||
Subtotal TELKOM | 1,874.2 | 2,078.3 | 4,106.1 | 5,019.8 | 6,123.6 | |||||||||||||||||
Long Term Investment(7) | 12,614.6 | 3,752.1 | 3,914.6 | 3,906.0 | — | |||||||||||||||||
Subtotal for TELKOM (unconsolidated) | 14,488.8 | 5,830.4 | 8,020.7 | 8,925.8 | 6,123.6 | |||||||||||||||||
TELKOM’s Subsidiaries: | ||||||||||||||||||||||
Telkomsel | 2,964.0 | 4,531.0 | 5,348.8 | 5,000.0 | 5,000.0 | |||||||||||||||||
Dayamitra | 30.2 | 40.6 | 109.5 | 76.5 | 157.3 | |||||||||||||||||
Infomedia | — | 25.9 | 44.6 | 78.0 | 61.0 | |||||||||||||||||
Pramindo | — | 109.4 | 37.4 | 25.0 | — | |||||||||||||||||
Indonusa | — | 2.6 | 0.8 | 3.4 | — |
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Year ended December 31, | ||||||||||||||||||||
2001(1) | 2002(1) | 2003(1) | 2004(2) | 2005(2) | ||||||||||||||||
Rp. (billion) | ||||||||||||||||||||
GSD | — | 0.8 | 17.0 | 19.2 | 21.2 | |||||||||||||||
PII | — | — | 0.6 | 9.0 | — | |||||||||||||||
PT Metra (Holding) | — | — | 6.1 | 0.2 | 88.4 | |||||||||||||||
AriaWest | — | — | 0.2 | — | — | |||||||||||||||
Napsindo | — | — | 53.8 | 2.2 | 2.9 | |||||||||||||||
Subtotal for subsidiaries | 2,994.2 | 4,710.3 | 5,618.8 | 5,213.5 | 5,330.8 | |||||||||||||||
Total for TELKOM (consolidated) | 17,483.0 | 10,540.7 | 13,639.5 | 14,139.3 | 11,454.4 | |||||||||||||||
(1) | Amounts for 2001, 2002 and 2003 are actual capital expenditures. |
(2) | Amounts for 2004 and 2005 are planned capital expenditures included in TELKOM’s budgets for the years 2004 and 2005, respectively, and are subject to upward or downward adjustment. |
(3) | Consists of data backbone and fixed-line network backbone. |
(4) | Consists of capital expenditures by TELKOM and subsidiaries other than Dayamitra and Pramindo. |
(5) | Consists of capital expenditures by TELKOM and subsidiaries other than Telkomsel. TELKOM’s investment in its GSM mobile cellular business has been entirely through Telkomsel since April 3, 2002. |
(6) | Consists of VoIP, Internet and, from 2003 onwards, includes hybrid fiber/coax (HFC) and cable television (CATV) systems. |
(7) | Planned long term investments for 2004 consist only of capital expenditures for the takeover of KSO IV operations. |
Planned Investments in 2004 |
Planned Investments in Infrastructure |
• | Rp.1,653.4 billion for capital investments in transmission infrastructure, which are expected to include investments in a fiber optic transmission network in the city of Surabaya, a backbone transmission network on the island of Kalimantan and Sulawesi and an additional ground satellite segment in Jakarta; and | |
• | Rp.2,517.4 billion for capital investments in access infrastructure, which are expected to include investments in fiber optic cable fixed line, copper wire fixed line and CDMA wireless access networks. |
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Planned Investments in Commercial Services |
• | Rp.305.6 billion for capital investments in fixed-line commercial services (including fixed wireless services), which include additional capacity, service enhancements and upgrades, including to its value added services and software and mechanical and electrical systems; | |
• | Rp.197.4 billion for capital investments in multimedia (including Internet, HFC and CATV services), which include increases in the number of VoIP access points, Internet multiplexing (IMUX) systems for Internet and data access, Internet value added services such as B2B e-commerce, and improving TELKOM’s HFC and CATV systems; | |
• | Rp.32.2 billion for capital investments in customer support and customer care, including the establishment of call center facilities, billing systems and TELKOM’s business enterprise project, which caters to the largest 20% by value of TELKOM’s corporate clients, as well as better network management and management information systems. |
Planned Investments in Supporting Services |
Financing |
Two-Step Loans |
Revenue Sharing |
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Direct Borrowing |
Pay as You Grow |
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IDR Bond Issuance |
Consolidation/ Equity method |
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Revenue Recognition |
• | Sales of starter packs are recognized as revenue upon delivery of the starter packs to distributors, dealers or directly to customers; and | |
• | Sales of pulse reload vouchers are recognized initially as unearned income and recognized proportionately as revenue based on successful calls made by the subscribers or whenever the unused stored value of the voucher has expired. |
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Allowances for Doubtful Accounts |
Estimated Useful Lives of Property, Plant and Equipment — Direct Acquisitions |
Acquisitions and Business Divestitures |
Pension and Post-retirement Benefits |
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Income Taxes |
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Legal Contingencies |
C. | Research and Development and Intellectual Property |
• | ongoing consequences related to TELKOM’s failure to file a compliant Form 20-F for 2002 by June 30, 2003; | |
• | upgrading of the network with soft switching technology; | |
• | increasing relative contribution of Telkomsel to our consolidated revenues; | |
• | higher domestic fixed line tariffs beginning in 2004 and ability of Government to implement additional planned tariff increases; | |
• | implementation of TELKOM’s early retirement program; | |
• | ongoing issues with KSO Investors; | |
• | acquisition of control in Pramindo; | |
• | acquisition of AriaWest; | |
• | competition in the market for DLD services; and | |
• | commencement of TELKOM’s IDD fixed-line services. |
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F. | Tabular Disclosure of Contractual Obligations |
Payments Due by Period | |||||||||||||||||||||
Less than | |||||||||||||||||||||
Contractual Obligations | Total | 1 year | 1-3 years | 4-5 years | After 5 years | ||||||||||||||||
(Rp. in billion) | |||||||||||||||||||||
Short Term Loans(1) | 37.6 | 37.6 | — | — | — | ||||||||||||||||
Long Term Debt(2) | 15,480.7 | 3,563.4 | 3,511.6 | 4,276.3 | 4,129.4 | ||||||||||||||||
Capital Lease Obligations(3) | — | — | — | — | — | ||||||||||||||||
Operating Leases(3) | 219.0 | 101.1 | 107.9 | — | — | ||||||||||||||||
Unconditional Purchase Obligations(4) | 12,797.8 | 12,138.1 | 659.6 | — | — | ||||||||||||||||
Other Long Term Obligations(5) | 2,536.9 | 2,536.9 | — | — | — | ||||||||||||||||
Total Contractual Cash Obligations | 31,072.0 | 18,377.1 | 4,279.1 | 4,276.3 | 4,129.4 | ||||||||||||||||
(1) | Relates to liability under a short term loan obtained by Napsindo from Bank Mandiri. See Note 22 to the Company’s consolidated financial statements included elsewhere in this Amendment No. 1. |
(2) | See “— Liquidity and Capital Resources — Indebtedness” and Notes 24, 25, 26, 27, 28 and 29 to the Company’s consolidated financial statements included elsewhere in this Amendment No. 1. |
(3) | Relates primarily to leases of motor vehicles and computers. |
(4) | Relates to commitments of TELKOM’s suppliers and vendors to provide telecommunications-related equipment and infrastructure. |
(5) | Relates to the present value as of December 31, 2003 of TELKOM’s long term liabilities for post-retirement benefits and long service awards. |
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
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Age as of | ||||||||
Name | January 1, 2004 | Title | Since | |||||
Bacelius Ruru | 56 | President Commissioner | April 7, 2000 | |||||
P. Sartono | 59 | Independent Commissioner | June 21, 2002 | |||||
Arif Arryman | 48 | Independent Commissioner | June 21, 2002 | |||||
Agus Haryanto | 52 | Commissioner | June 21, 2002 | |||||
Djamhari Sirat | 58 | Commissioner | June 21, 2002 |
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Age as of | ||||||||
Name | January 1, 2004 | Title | Since | |||||
Tanri Abeng | 62 | President Commissioner | March 10, 2004 | |||||
P. Sartono | 59 | Independent Commissioner | June 21, 2002 | |||||
Arif Arryman | 48 | Independent Commissioner | June 21, 2002 | |||||
Anggito Abimanyu | 41 | Commissioner | March 10, 2004 | |||||
Gatot Trihargo | 43 | Commissioner | March 10, 2004 |
Tanri Abeng |
P. Sartono |
Arif Arryman |
Anggito Abimanyu |
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Gatot Trihargo |
• | Overseeing the Company’s financial reporting process on behalf of the Board of Commissioners. As part of its responsibilities, the committee will recommend to the Board of Commissioners, subject to shareholder approval, the selection of TELKOM’s external auditor; | |
• | Discussing with TELKOM’s internal and external auditors the overall scope and specific plans for their respective audits. The committee will also discuss TELKOM’s consolidated financial statements and the adequacy of TELKOM’s internal controls; | |
• | Meeting regularly with TELKOM’s internal and external auditors, without management present, to discuss the results of their examinations, their evaluation of TELKOM’s internal controls and the overall quality of TELKOM’s financial reporting; and | |
• | Carrying out additional tasks that are assigned by the Board of Commissioners, especially on financial and accounting related matters. |
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Age as of | ||||||||
Name | January 1, 2004 | Title | Since | |||||
Kristiono | 49 | President Director | June 21, 2002 | |||||
Agus Utoyo | 51 | Director of Human Resources and Support Business | June 21, 2002 | |||||
Guntur Siregar | 53 | Director of Finance | June 21, 2002 | |||||
Garuda Sugardo | 54 | Director of Telecommunications Service Business | June 21, 2002 | |||||
Suryatin Setiawan | 49 | Director of Telecommunications Network Business | June 21, 2002 |
Age as of | ||||||||
Name | January 1, 2004 | Title | Since | |||||
Kristiono | 49 | President Director | June 21, 2002 | |||||
Woeryanto Soeradji | 49 | Director of Human Resources and Support Business | March 10, 2004 | |||||
Rinaldi Firmansyah | 43 | Director of Finance | March 10, 2004 | |||||
Suryatin Setiawan | 49 | Director of Telecommunications Service Business | March 10, 2004 | |||||
Abdul Haris | 48 | Director of Telecommunications Network Business | March 10, 2004 |
Kristiono |
Woeryanto Soeradji |
Rinaldi Firmansyah |
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Suryatin Setiawan |
Abdul Haris |
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TELKOM regions | KSO regions | ||||||||
as at | as at | ||||||||
December 31, | December 31, | ||||||||
2003 | 2003(1) | ||||||||
Senior management | 175 | — | |||||||
Middle management | 2,027 | 164 | |||||||
Supervisors | 6,445 | 1,478 | |||||||
Others | 15,559 | 4,972 | |||||||
Total | 24,206 | 6,614 | |||||||
(1) | This includes employees in KSO IV and KSO VII. |
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ITEM 7. | MAJOR STOCKHOLDERS AND RELATED PARTY TRANSACTIONS |
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Title of Class | Identity of Person or Group | Amount Owned | Percent of Class | |||||||
Series A | Government | 1 | 100.00% | |||||||
Series B | Government | 5,160,235,355 | 51.19% | |||||||
Series B | JPMCB US Resident (Norbax Inc.) | 896,045,651 | 8.89% | |||||||
Series B | The Bank of New York (BoNY) | 657,263,408 | 6.52% | |||||||
Series B | Board of Directors and Commissioners | 63,180 | 0.0006% |
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Government as Regulator |
Government as Lender |
Government as Customer |
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Proportion of securities of TELKOM held in Indonesia and outside Indonesia |
Change in Control |
Government of the Republic of Indonesia |
Indosat (including Satelindo and IM3) |
• | The Company provides a local network for customers to make or receive international calls. Indosat provides the international network for the customers, except for certain border towns, as determined by the Director General of Post and Telecommunication of the Republic of Indonesia. The international telecommunication services include telephone, telex, telegram, package switched data network, television, teleprinter, Alternate Voice/Data Telecommunication (AVD), hotline and teleconferencing. The Company receives compensation for the services, |
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based on the interconnection tariff determined by the Minister of Tourism, Post and Telecommunication of the Republic of Indonesia; | ||
• | The Company has also entered into an interconnection agreement between the Company’s PSTN network and Indosat’s STBS network in connection with the implementation of Indosat Multimedia Mobile services and the settlement of the related interconnection rights and obligation. Pursuant to the Minister of Communication Decree regarding the transfer of license of Indosat’s mobile cellular network operation from Indosat to PT Indosat Multimedia Mobile (“IM3”), the Company agreed to transfer all interconnection rights and obligations to IM3 based on Interconnection Cooperation Agreement, as regulated in the Amendment of Agreement in the side letter No. 656 dated March 18, 2002; | |
• | The Company’s compensation relating to leased lines/ channel services, such as IBS, AVD and bill printing is calculated at 15% of Indosat’s revenues from such services. Indosat also leases circuits from the Company to link Jakarta, Medan and Surabaya; and | |
• | The Company has been handling customer billing and collection for Indosat. Indosat is gradually taking over the activities and performing its own direct billing and collection. The Company receives compensation from Indosat computed at 1% of the collections made by the Company beginning January 1, 1995, plus the billing process expenses which are fixed at a certain amount per record. |
• | Telkomsel’s GSM mobile cellular telecommunication network is connected with Indosat’s international gateway exchanges to make outgoing or receive incoming international calls through Indosat’s international gateway exchanges; | |
• | Telkomsel receives as compensation for the interconnection, a specific percentage of Indosat’s revenues from the related services made through Indosat’s international gateway exchanges; | |
• | Billings for international calls made by customers of GSM mobile cellular telecommunication are handled by Telkomsel. Telkomsel is obliged to pay Indosat’s share of revenue although billings to customers have not been collected; and | |
• | The agreement dated March 29, 1996, was initially valid for one year, but extendable for one-year periods as agreed by both parties. The latest extension expired on February 29, 2004. Pending negotiations on a new agreement, Telkomsel and Indosat have entered into an interim agreement with terms similar to those set forth above. Under the terms of the interim agreement, Telkomsel will receive 27% of the applicable tariff for outgoing international calls from Telkomsel subscribers and Rp.800 per minute for incoming international calls to Telkomsel subscribers. The interim agreement will be effective from March 1, 2004 until such date that Telkomsel and Indosat enter into a new agreement. |
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• | Supply and installation of interconnection tools needed is Telkomsel’s responsibility; and | |
• | The agreement is effective upon the signing date and extendable for a period agreed by both parties. |
• | Interconnection of the Company’s PSTN with Satelindo’s international gateway exchange, enabling the Company’s customers to make outgoing or receive incoming international calls through Satelindo’s international gateway exchange; and | |
• | Billings for the international telecommunication services used by domestic customers through Satelindo’s international gateway exchange will be handled by the Company. |
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C. | Interest of experts and counsel |
ITEM 8. | FINANCIAL INFORMATION |
A. | Consolidated statements and other financial information |
Aria West |
KAP Eddy Pianto |
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B. | Significant changes |
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ITEM 9. | THE OFFER AND LISTING |
A. | Offer and listing details |
Price per Share | ||||||||
Calendar Year | High | Low | ||||||
(in Rupiah) | ||||||||
1999 | 4,629 | 2,407 | ||||||
2000 | 4,350 | 2,025 | ||||||
First Quarter | 4,350 | 3,325 | ||||||
Second Quarter | 3,775 | 2,675 | ||||||
Third Quarter | 3,325 | 2,600 | ||||||
Fourth Quarter | 2,890 | 2,025 | ||||||
2001 | 3,400 | 1,825 | ||||||
First Quarter | 3,150 | 1,775 | ||||||
Second Quarter | 3,200 | 2,175 | ||||||
Third Quarter | 3,525 | 2,650 | ||||||
Fourth Quarter | 3,250 | 2,425 | ||||||
2002 | ||||||||
First Quarter | 4,300 | 2,825 | ||||||
Second Quarter | 4,725 | 3,700 | ||||||
Third Quarter | 3,900 | 3,125 | ||||||
Fourth Quarter | 4,000 | 2,350 | ||||||
2003 | ||||||||
First Quarter | 3,725 | 3,225 | ||||||
Second Quarter | 4,950 | 3,650 | ||||||
Third Quarter | 6,000 | 4,125 | ||||||
Fourth Quarter | 6,750 | 5,650 | ||||||
December | 6,900 | 5,850 | ||||||
2004 | ||||||||
January | 8,050 | 6,700 | ||||||
February | 7,800 | 7,000 | ||||||
March | 7,550 | 6,350 | ||||||
April | 8,800 | 7,000 | ||||||
May | 8,100 | 6,600 | ||||||
June 24, 2004 | 7,250 | 7,100 |
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Price per ADS | Price per ADS | |||||||||||||||
(NYSE) | (LSE) | |||||||||||||||
Calendar Year | High | Low | High | Low | ||||||||||||
(in US Dollar) | (in US Dollar) | |||||||||||||||
1999 | 13.63 | 5.27 | 13.17 | 5.37 | ||||||||||||
2000 | 12.00 | 4.13 | 12.15 | 4.27 | ||||||||||||
First Quarter | 12.00 | 9.1 | 12.1 | 9.2 | ||||||||||||
Second Quarter | 9.7 | 6.4 | 9.6 | 6.4 | ||||||||||||
Third Quarter | 8.0 | 5.9 | 7.9 | 6.1 | ||||||||||||
Fourth Quarter | 6.3 | 4.1 | 6.4 | 4.3 | ||||||||||||
2001 | 7.06 | 3.65 | 7.05 | 3.80 | ||||||||||||
First Quarter | 6.7 | 4.0 | 6.5 | 3.9 | ||||||||||||
Second Quarter | 5.6 | 3.7 | 5.6 | 3.8 | ||||||||||||
Third Quarter | 7.1 | 5.5 | 7.1 | 5.5 | ||||||||||||
Fourth Quarter | 5.8 | 4.7 | 6.1 | 4.8 | ||||||||||||
2002 | 9.77 | 5.56 | 9.82 | 5.27 | ||||||||||||
First Quarter | 8.6 | 5.5 | 8.6 | 5.5 | ||||||||||||
Second Quarter | 9.8 | 8.4 | 9.8 | 8.4 | ||||||||||||
Third Quarter | 8.7 | 7.0 | 8.7 | 7.1 | ||||||||||||
Fourth Quarter | 8.9 | 5.6 | 8.9 | 5.3 | ||||||||||||
2003 | 8.44 | 7.30 | 8.53 | 7.27 | ||||||||||||
First Quarter | 8.44 | 7.30 | 8.53 | 7.27 | ||||||||||||
Second Quarter | 12.09 | 8.19 | 11.78 | 8.33 | ||||||||||||
Third Quarter | 13.73 | 9.85 | 13.90 | 9.60 | ||||||||||||
Fourth Quarter | 16.42 | 13.13 | 16.05 | 13.40 | ||||||||||||
December | 16.42 | 13.64 | 16.05 | 14.35 | ||||||||||||
2004 | ||||||||||||||||
January | 19.48 | 16.60 | 18.50 | 16.15 | ||||||||||||
February | 18.58 | 16.75 | 18.15 | 16.95 | ||||||||||||
March | 17.75 | 15.00 | 17.55 | 14.75 | ||||||||||||
April | 20.19 | 17.10 | 19.95 | 16.55 | ||||||||||||
May | 19.15 | 15.15 | 18.55 | 14.55 | ||||||||||||
June 24, 2004 | 15.65 | 14.85 | 14.95 | 14.95 |
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Overview of the JSX |
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Trading on the NYSE and LSE |
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• | dividend rights. Dividends are to be paid based upon the financial condition of TELKOM and in accordance with the resolution of the stockholders in a general meeting, which will also determine the form of and time for payment of the dividend; | |
• | voting rights. The holder of each voting share is entitled to one vote at a general meeting of stockholders; | |
• | rights to share in the Company’s profits. See dividend rights; | |
• | rights to share in any surplus in the event of liquidation. Stockholders are entitled to surplus in the event of liquidation in accordance with their proportion of shareholding, provided the nominal value of the Common Stock that they hold is fully paid-up; | |
• | redemption provisions. There are no stock redemption provisions in the Articles. However, based on Article 30 of Indonesian Company Law, TELKOM may buy back at the maximum 10% of its issued shares; | |
• | reserved fund provisions. Retained earnings up to a minimum of 20% of the issued capital of the Company is to be set aside to cover potential losses suffered by the Company. If the amount in the reserved fund exceeds 20% of the issued capital of the Company, general meeting of stockholders may authorize the Company to utilize such excess funds as dividends; | |
• | liability to further capital calls. Stockholders of the Company may be asked to subscribe for new shares in the Company from time to time. Such right is to be offered to stockholders prior to being offered to third parties and may be transferred at the option of the shareholder. The Board of Directors of the Company is authorized to offer the new shares to third parties in the event that the existing shareholder is unable or unwilling to subscribe for such new shares; and | |
• | provisions discriminating against any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares. The Articles do not contain any such provision. |
149
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Overview of Indonesia law |
150
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Composition of Board of Directors; Independence |
Committees |
151
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Disclosure regarding corporate governance |
Code of Business Conduct and Ethics |
152
Table of Contents
153
Table of Contents
154
Table of Contents
155
Table of Contents
156
Table of Contents
157
Table of Contents
158
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Dividends |
Capital Gains |
159
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Stamp Duty |
160
Table of Contents
Taxation of Distributions |
Taxation of Capital Gains |
161
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Passive Foreign Investment Company Status |
162
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Interest Rate Risk |
163
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Outstanding Balance as at | ||||||||||||||||||||||||||||||||||||||
December 31, 2003 | ||||||||||||||||||||||||||||||||||||||
Expected Maturity Date | ||||||||||||||||||||||||||||||||||||||
Foreign | Rp. | |||||||||||||||||||||||||||||||||||||
Currency | Equivalent | Rate | 2004 | 2005 | 2006 | 2007 | 2008 | 2009-2025 | ||||||||||||||||||||||||||||||
(In thousand) | (Rp. in million) | (%) | (Rp. in million) | |||||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||
Fixed Rate | ||||||||||||||||||||||||||||||||||||||
Cash and Cash equivalents | ||||||||||||||||||||||||||||||||||||||
Time deposit Rupiah | ||||||||||||||||||||||||||||||||||||||
Principal | 3,253,587 | 3,253,587 | — | — | — | — | — | |||||||||||||||||||||||||||||||
Interest | 6.90 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
U.S. Dollar | ||||||||||||||||||||||||||||||||||||||
Principal | 118,903 | 1,002,349 | 1,002,349 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Interest | 1.00 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Euro | ||||||||||||||||||||||||||||||||||||||
Principal | 39,454 | 420,726 | 420,726 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Interest | 1.90 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Temporary Investments | ||||||||||||||||||||||||||||||||||||||
Time deposits Rupiah | ||||||||||||||||||||||||||||||||||||||
Principal | — | 4,006 | 4,006 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Interest | 6.00 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Available-for-Sale | ||||||||||||||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||||||||||||||
Rupiah | — | — | — | — | — | — | — | — | — |
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Outstanding Balance as at | ||||||||||||||||||||||||||||||||||||||
December 31, 2003 | ||||||||||||||||||||||||||||||||||||||
Expected Maturity Date | ||||||||||||||||||||||||||||||||||||||
Foreign | Rp. | |||||||||||||||||||||||||||||||||||||
Currency | Equivalent | Rate | 2004 | 2005 | 2006 | 2007 | 2008 | 2009-2025 | ||||||||||||||||||||||||||||||
(In thousand) | (Rp. in million) | (%) | (Rp. in million) | |||||||||||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||||||||
Short Term Bank | ||||||||||||||||||||||||||||||||||||||
Loan | ||||||||||||||||||||||||||||||||||||||
U.S. Dollar | ||||||||||||||||||||||||||||||||||||||
Principal | 4,455 | 37,642 | — | 37,642 | — | — | — | — | — | |||||||||||||||||||||||||||||
Interest | 3.00 | 753 | — | — | — | — | — | |||||||||||||||||||||||||||||||
Long-term debt(1) | ||||||||||||||||||||||||||||||||||||||
Variable Rate | ||||||||||||||||||||||||||||||||||||||
Rupiah | ||||||||||||||||||||||||||||||||||||||
Principal | — | 2,535,279 | 335,721 | 347,732 | 257,531 | 190,058 | 189,326 | 1,214,911 | ||||||||||||||||||||||||||||||
Interest | 11.90 | 301,766 | 261,449 | 219,506 | 189,083 | 166,543 | 144,088 | |||||||||||||||||||||||||||||||
U.S. Dollar | ||||||||||||||||||||||||||||||||||||||
Principal | 388,836 | 3,285,660 | 800,190 | 579,577 | 574,678 | 351,090 | 122,516 | 857,609 | ||||||||||||||||||||||||||||||
Interest | 5.69 | 186,965 | 146,126 | 117,173 | 88,409 | 69,687 | 60,976 | |||||||||||||||||||||||||||||||
Euro | ||||||||||||||||||||||||||||||||||||||
Principal | 64,765 | 690,646 | 153,477 | 153,477 | 153,477 | 153,477 | 76,738 | |||||||||||||||||||||||||||||||
Interest | 2.98 | 20,581 | 16,008 | 11,434 | 6,860 | 2,287 | ||||||||||||||||||||||||||||||||
Fixed Rate | ||||||||||||||||||||||||||||||||||||||
Rupiah | ||||||||||||||||||||||||||||||||||||||
Principal | — | 1,949,838 | 160,353 | 113,968 | 72,688 | 1,053,966 | 72,688 | 476,175 | ||||||||||||||||||||||||||||||
Interest | 15.40 | 298,803 | 273,678 | 256,351 | 246,852 | 70,535 | 61,035 | |||||||||||||||||||||||||||||||
U.S. Dollar | ||||||||||||||||||||||||||||||||||||||
Principal | 643,954 | 5,441,410 | 2,013,056 | 515,943 | 471,450 | 1,524,910 | 311,985 | 604,066 | ||||||||||||||||||||||||||||||
Interest | 7.29 | 211,647 | 194,175 | 175,458 | 159,431 | 38,013 | 30,945 | |||||||||||||||||||||||||||||||
Japanese Yen | ||||||||||||||||||||||||||||||||||||||
Principal | 17,429,464 | 1,377,726 | 55,266 | 90,183 | 90,183 | 90,183 | 75,361 | 976,550 | ||||||||||||||||||||||||||||||
Interest | 3.13 | 43,169 | 41,437 | 38,611 | 35,786 | 32,960 | 30,599 | |||||||||||||||||||||||||||||||
Euro | ||||||||||||||||||||||||||||||||||||||
Principal | 18,756 | 200,014 | 45,333 | 45,333 | 45,333 | 37,968 | 26,047 | — | ||||||||||||||||||||||||||||||
Interest | 7.64 | 15,285 | 11,821 | 8,356 | 4,892 | 1,991 | — |
(1) | Long-term debt consists of loans which are subject to interest; namely two-step loans, guaranteed notes and bonds, liabilities for acquisition of subsidiaries, suppliers’ credit loans, bridging loans and long-term bank loans, in each case including their current maturities. Long-term debt, for the purpose of this table, includes liability for acquisition of a subsidiary and incorporated deferred interest. |
Exchange Rate Risk |
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Outstanding Balance as at | ||||||||||||||||||||||||||||||||||
December 31, 2003 | ||||||||||||||||||||||||||||||||||
Expected Maturity Date | ||||||||||||||||||||||||||||||||||
Foreign | Rp. | |||||||||||||||||||||||||||||||||
Currency | Equivalent | 2004 | 2005 | 2006 | 2007 | 2008 | 2009-2025 | |||||||||||||||||||||||||||
(in thousand) | (Rp. in million) | (Rp. in million) | ||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 123,536 | 1,043,400 | 1,043,400 | — | — | — | — | — | ||||||||||||||||||||||||||
Japanese Yen | 454 | 35 | 35 | — | — | — | — | — | ||||||||||||||||||||||||||
Euro | 39,583 | 421,288 | 421,288 | — | — | — | — | — | ||||||||||||||||||||||||||
Trade accounts receivable | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 13,332 | 112,559 | 112,559 | — | — | — | — | — | ||||||||||||||||||||||||||
Other accounts receivable | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 12,605 | 106,258 | 106,258 | — | — | — | — | — | ||||||||||||||||||||||||||
Japanese Yen | 5,441 | 429 | 429 | |||||||||||||||||||||||||||||||
French Franc | 4,805 | 5,447 | 5,447 | |||||||||||||||||||||||||||||||
Netherland Guilder | 814 | 2,745 | 2,745 | |||||||||||||||||||||||||||||||
Euro | 21 | 224 | 224 | |||||||||||||||||||||||||||||||
Other current assets | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 4,658 | 39,269 | 39,269 | — | — | — | — | — | ||||||||||||||||||||||||||
Advances and other noncurrent assets | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 12,290 | 103,651 | 103,651 | — | — | — | — | — | ||||||||||||||||||||||||||
Escrow account | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 61,302 | 516,128 | 516,128 | — | — | — | — | — | ||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||||
Trade accounts payable | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 106,544 | 900,408 | 900,408 | — | — | — | — | — | ||||||||||||||||||||||||||
Japanese Yen | 126,925 | 10,033 | 10,033 | — | — | — | — | — | ||||||||||||||||||||||||||
Great Britain Pound | ||||||||||||||||||||||||||||||||||
Sterling | 61 | 916 | 916 | — | — | — | — | — | ||||||||||||||||||||||||||
Euro | 2,768 | 29,463 | 29,463 | — | — | — | — | — | ||||||||||||||||||||||||||
Singapore Dollar | 144 | 717 | 717 | — | — | — | — | — | ||||||||||||||||||||||||||
Other accounts payable | ||||||||||||||||||||||||||||||||||
U.S. Dollar | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Accrued expenses | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 28,946 | 244,925 | 244,925 | — | — | — | — | — | ||||||||||||||||||||||||||
Japanese Yen | 14,135 | 1,117 | 1,117 | — | — | — | — | — | ||||||||||||||||||||||||||
Euro | 40,698 | 433,155 | 433,155 | — | — | — | — | — | ||||||||||||||||||||||||||
French Franc | 710 | 808 | 808 | |||||||||||||||||||||||||||||||
Great Britain Pound | ||||||||||||||||||||||||||||||||||
Sterling | 46 | 689 | 689 | — | — | — | — | — | ||||||||||||||||||||||||||
Netherland Guilder | 482 | 1,631 | 1,631 | — | — | — | — | — | ||||||||||||||||||||||||||
Singapore Dollar | 189 | 940 | 940 | — | — | — | — | — | ||||||||||||||||||||||||||
Advance from customers and suppliers | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 3,041 | 25,701 | 25,701 | — | — | — | — | — | ||||||||||||||||||||||||||
Japanese Yen | 23,940 | 1,892 | 1,892 | |||||||||||||||||||||||||||||||
Great Britain Pound | ||||||||||||||||||||||||||||||||||
Sterling | 1 | 7 | 7 | — | — | — | — | — | ||||||||||||||||||||||||||
Short term bank loans | ||||||||||||||||||||||||||||||||||
U.S. Dollar | 4,462 | 37,642 | 37,642 | — | — | — | — | — |
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Outstanding Balance as at | |||||||||||||||||||||||||||||||||
December 31, 2003 | |||||||||||||||||||||||||||||||||
Expected Maturity Date | |||||||||||||||||||||||||||||||||
Foreign | Rp. | ||||||||||||||||||||||||||||||||
Currency | Equivalent | 2004 | 2005 | 2006 | 2007 | 2008 | 2009-2025 | ||||||||||||||||||||||||||
(in thousand) | (Rp. in million) | (Rp. in million) | |||||||||||||||||||||||||||||||
Long term debt(1) | |||||||||||||||||||||||||||||||||
U.S. Dollar | 1,032,526 | 8,727,070 | 2,813,246 | 1,095,520 | 1,046,128 | 1,876,000 | 434,501 | 1,461,675 | |||||||||||||||||||||||||
Japanese Yen | 17,429,464 | 1,377,726 | 55,266 | 90,183 | 90,183 | 90,183 | 75,361 | 976,550 | |||||||||||||||||||||||||
Euro | 83,647 | 890,660 | 198,810 | 198,810 | 198,810 | 191,444 | 102,786 | — |
(1) | Long-term debt for the purpose of this table consists of loans denominated in foreign currencies namely, two-step loans, suppliers’ credit loan, bridging loan, liabilities for acquisition of subsidiaries, long-term bank loan and guaranteed notes, in each case including their current maturities. |
Equity Price Risk |
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. | CONTROL AND PROCEDURES |
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(a) | Changes in Indonesian GAAP Information Previously Reported |
2000 | 2001 | 2002 | |||||||||||||||
Rp. million | Rp. million | Rp. million | |||||||||||||||
Net income under Indonesian GAAP as previously reported | 3,010,003 | 4,250,110 | 8,345,274 | ||||||||||||||
Adjustments: | |||||||||||||||||
Long service awards | (i) | (19,116 | ) | (65,675 | ) | (151,773 | ) | ||||||||||
Post-retirement healthcare benefits | (ii) | (141,160 | ) | (186,758 | ) | (414,564 | ) | ||||||||||
Deferred income taxes | (iii) | (54,027 | ) | 66,723 | (286,213 | ) | |||||||||||
Acquisition accounting | (iv) | — | (2,008 | ) | (55,763 | ) | |||||||||||
Operating revenues | (v) | (20,695 | ) | (27,359 | ) | 18,975 | |||||||||||
Trade accounts payable | (vi) | — | 36,323 | 22,167 | |||||||||||||
Correction of loan balance | (vii) | — | — | 117,078 | |||||||||||||
Correction of taxes payable | (viii) | — | — | 75,796 | |||||||||||||
Telkomsel equity transactions | (ix) | — | — | 65,158 | |||||||||||||
Other items | (x) | — | — | (65,503 | ) | ||||||||||||
Corporate tax | (xi) | — | (2,965 | ) | 36,144 | ||||||||||||
Subsequent event: | |||||||||||||||||
AriaWest | (xii) | — | — | 332,933 | |||||||||||||
Net adjustments | (234,998 | ) | (181,719 | ) | (305,565 | ) | |||||||||||
Net income under Indonesian GAAP as restated | 2,775,005 | 4,068,391 | 8,039,709 | ||||||||||||||
Basic earnings per share (full amount) | |||||||||||||||||
As previously reported | 298.61 | 421.64 | 827.90 | ||||||||||||||
As restated | 275.30 | 403.61 | 797.59 | ||||||||||||||
Basic earnings per ADS (full amount) | |||||||||||||||||
As previously reported | 5,972.23 | 8,432.76 | 16,558.08 | ||||||||||||||
As restated | 5,505.96 | 8,072.20 | 15,951.80 |
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2000 | 2001 | 2002 | |||||||||||||||
Rp. million | Rp. million | Rp. million | |||||||||||||||
Stockholders’ equity under Indonesian GAAP as previously reported | 14,909,176 | 9,323,575 | 15,899,183 | ||||||||||||||
Adjustments: | |||||||||||||||||
Long service awards | (i) | (210,159 | ) | (275,834 | ) | (427,607 | ) | ||||||||||
Post-retirement healthcare benefits | (ii) | (341,106 | ) | (527,864 | ) | (942,428 | ) | ||||||||||
Deferred income taxes | (iii) | 83,588 | 525,528 | (136,875 | ) | ||||||||||||
Acquisition accounting | (iv) | — | (2,008 | ) | (353,810 | ) | |||||||||||
Operating revenues | (v) | 31,565 | 4,206 | 23,181 | |||||||||||||
Trade accounts payable | (vi) | — | 36,323 | 58,490 | |||||||||||||
Correction of loan balance | (vii) | — | — | 117,078 | |||||||||||||
Correction of taxes payable | (viii) | — | — | 75,796 | |||||||||||||
Telkomsel equity transactions | (ix) | — | — | — | |||||||||||||
Other items | (x) | — | — | (65,503 | ) | ||||||||||||
Corporate tax | (xi) | — | (2,965 | ) | 33,179 | ||||||||||||
Subsequent event: | |||||||||||||||||
AriaWest | (xii) | — | — | 332,933 | |||||||||||||
Net adjustments | (436,112 | ) | (242,614 | ) | (1,285,566 | ) | |||||||||||
Stockholders’ equity under Indonesian GAAP as restated | 14,473,064 | 9,080,961 | 14,613,617 |
(i) | Long service awards. TELKOM’s employees are entitled to receive certain cash awards, such as long service, housing, transport and other allowances, based on length of service. Depending on the type of award, they are either paid at the time an employee reaches a certain anniversary date or upon termination or retirement if the employee has met the requisite number of years of service. TELKOM had not previously made provision for these liabilities and was only accounting for the awards at the time payments were made to the employees. TELKOM determined that these awards should have been accounted for under the accrual method. | |
(ii) | Post-retirement healthcare benefits. TELKOM provides a post-retirement healthcare plan for pensioners who were employed by TELKOM for over 20 years. As described in Notes 2r and 47 to the consolidated financial statements in Item 18 of Amendment No. 2 to 2002 Annual Report on Form 20-F/ A, these costs are accounted for in accordance with U.S. GAAP applying SFAS 106. TELKOM had been recognizing the benefit obligations and the related benefit costs based on actuarial calculations. |
TELKOM requested the Company’s actuary to review the actuarial calculations in respect of disclosures for the post-retirement healthcare plan for the years 2000 and 2001. As a consequence of this review, the Company’s actuary in consultation with the Company’s management deemed it necessary to withdraw its original reports and substitute revised reports. | |
TELKOM determined that the change in actuarial calculations represents the correction of an error and therefore requires retroactive restatement of its 2000 and 2001 financial statements. |
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The Company did not previously engage an actuary for 2002 but did so for the purposes of the restated financial statements. |
(iii) | Deferred income taxes. TELKOM identified the need to make adjustments to correct errors to prior calculations of deferred income taxes to reflect certain temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. TELKOM also concluded it should remove the deferred tax liability previously recorded in relation to the undistributed earnings of its subsidiaries and associates, principally those relating to Telkomsel, because the Company did not correctly determine the amount of the temporary difference. (See “Adjustments related to Stockholders’ Equity” below). | |
(iv) | Acquisition accounting. In respect of the acquisition of Pramindo in August 2002, the Company previously consolidated a 30% interest in Pramindo in accordance with the 30% legal ownership interest in the shares held by the Company. The Company had not, however, previously considered other factors affecting its ability to exercise control over Pramindo and its right to obtain all of the future economic benefits of ownership as though the Company owned 100% of the shares. The factors that the Company now considered include, among others, the fact that the selling price is fixed, its ability to vote 100% of the shares at general stockholders meetings, subject to certain protective rights retained by the selling stockholders, its ability to appoint all of the board members and management and its consequent ability to exclusively determine the financial and operating policies of Pramindo subject to certain protective rights, its issuance of irrevocable and unconditional promissory notes in settlement of the purchase consideration to the selling stockholders, the placement of the 70% of Pramindo shares not yet transferred to the Company in an escrow account by the selling stockholders, the protective provisions in the various agreements for the Company to take over all shares (including powers of attorney issued by the selling stockholders) or collapse the KSO arrangement once the full amount payable for the shares has been paid. (See Note 6b to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/ A). As a consequence, the Company determined that consolidation of a 100% interest in Pramindo from the date of acquisition is appropriate. |
In addition, in connection with the acquisition of Pramindo in August 2002 and Dayamitra in May 2001, TELKOM did not properly allocate the purchase consideration to certain acquired assets. The restated consolidated financial statements for 2001 and 2002 reflect adjustments to record such assets at their fair values as of the date of acquisition and subsequent depreciation thereof. | |
TELKOM previously presented the consolidation of newly acquired subsidiaries from the beginning of the year of acquisition, consistent with the principles of U.S. GAAP set out in “Accounting Research Bulletin 51: Consolidated Financial Statements”. In 2002, the Company changed the manner in which it presents acquisitions to a presentation starting from the date of acquisition in accordance with PSAK 4. This change did not affect the reported net income in any of the years presented. | |
The Company also should have reflected an element of this transaction as a transaction between entities under common control (see “Adjustments Related to Stockholders’ Equity” below). |
(v) | Operating revenues. As a result of a review of certain terms of the revenue sharing agreements and other telecommunication service agreements, TELKOM determined that there were certain errors in previous calculations relating to the amortization of unearned revenue which resulted in a net overstatement of revenues recorded in the consolidated financial statements for 2001 and an understatement of such revenue in 2002. |
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(vi) | Trade accounts payable. As a result of the reconciliation of balances with other telephone operators in 2002, TELKOM determined that there were some errors in trade accounts payable balances that resulted in an overstatement of the payables recorded in the consolidated financial statements for 2001 and 2002. | |
(vii) | Correction of loan balance. As a result of reconciliation of outstanding loans at the end of 2002, TELKOM determined that there was a double recording of a loan balance which had a corresponding effect of overstating the foreign exchange loss in the consolidated financial statements for 2002. | |
(viii) | Correction of taxes payable. As a result of reconciliation of taxes payable at the end of 2002, TELKOM determined that there was an over-accrual of value-added tax payable. | |
(ix) | Telkomsel equity transactions. As a result of the sale of a 12.72% interest in Telkomsel (see Note 1b to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/ A) in 2002, an adjustment should have been made to stockholders’ equity to reflect the realization of a gain in the 2002 statement of income attributable to past equity transactions in Telkomsel. | |
(x) | Other items. Other adjustments represented individually insignificant adjustments to correct errors as a result of understatement of depreciation expenses, understatement of allowance for doubtful accounts and amortization of deferred interest and other issues. | |
(xi) | Corporate tax. Certain of the above adjustments also impacted the corporate tax calculation for the 2001 and 2002 tax years. As a result, TELKOM reflected the related adjustments to the corporate tax charge in the restated consolidated financial statements for the respective years. |
(xii) | AriaWest. Subsequent to the date on which TELKOM issued the 2002 consolidated financial statements, TELKOM settled its dispute with AriaWest. In the previously issued consolidated financial statements for 2002, TELKOM had made provisions against its trade receivables relating to the dispute with AriaWest and recorded Rp.830 billion received from KSO III as “Advances from customers and suppliers” in the balance sheet pending settlement of the dispute. As a result of the settlement, the Company reversed these provisions (see Notes 9 and 56d to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/ A), applied the advance received against the outstanding trade receivable and accrued the settlement amount (see Note 56d to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/ A). |
a. | TELKOM incorrectly recorded an adjustment directly to stockholders’ equity in the previously issued 2002 consolidated financial statements to reverse the deferred tax liability TELKOM had previously recorded in relation to the undistributed earnings of Telkomsel. This balance should have been reversed as part of the accounting for the cross ownership transactions in 2001 (see Note 5 to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/ A) and was adjusted as part of the corrections to the Company’s deferred tax accounting referred to in (iii) above. | |
b. | At the time TELKOM acquired Pramindo in August 2002, 13% of the issued and paid up share capital of Pramindo was owned by Indosat, a company that, at that time, was majority owned and controlled by the Government, the Company’s major stockholder. In the previously issued consolidated financial statements for 2002, the Company did not account for the acquisition of Pramindo recognizing that a portion of the transaction was between entities under common control. As a result, TELKOM made an adjustment as a result of |
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accounting for the acquisition of 13% of Pramindo as a transaction between entities under common control by debiting the “Difference in value from restructuring transactions of entities under common control” in stockholders’ equity to reflect the excess of the purchase price over the proportional historical book value of the net assets of Pramindo that were acquired from Indosat. |
a. | Reclassification of completed constructions in progress of Rp.765,753 million and advances and other non-current assets of Rp.83,608 million to fixed assets in 2002. | |
b. | Reclassification in 2002 of intangible assets amortization of Rp.166,721 million (2001: Rp.42,643 million) and amortization of goodwill of Rp.21,269 million (2001: Rp.13,066 million) from other charges to operating expenses. | |
c. | Reclassification of other accounts receivable to trade accounts receivable of Rp.82,174 million in 2002. | |
d. | Reclassification of related party trade accounts receivable to third party trade accounts receivable of total Rp.27,677 million in 2002. | |
e. | Reclassification of restricted time deposits from non-current assets to current assets of Rp.46,027 million in 2002. | |
f. | Reclassification of billing processing fees revenue of Rp.30,359 million from other income to other operating revenue in 2002. | |
g. | Reclassification of restricted time deposits from temporary investments to other current assets of Rp.500,000 million in 2002. | |
h. | Reclassification of provision for post-retirement benefits from accrued expenses of Rp.1,602,494 million in 2002 (2001: Rp.1,045,525 million). | |
i. | Reclassification in 2002 of revenue of certain subsidiaries from other income (charges) to operating revenues amounting to Rp.98,877 million, Rp.144,055 million and Rp.217,567 million in 2000, 2001 and 2002. |
2000 | 2001 | 2002 | |||||||||||||||||||||||
As | As | As | |||||||||||||||||||||||
Previously | Previously | Previously | |||||||||||||||||||||||
Reported | As Restated | Reported | As Restated | Reported | As Restated | ||||||||||||||||||||
Rp. Million | Rp. Million | Rp. Million | Rp. Million | Rp. Million | Rp. Million | ||||||||||||||||||||
Temporary investments | 3,870,990 | 3,870,990 | 348,915 | 348,915 | 1,073,000 | 573,000 | |||||||||||||||||||
Trade accounts receivable | |||||||||||||||||||||||||
Related parties | 694,074 | 694,074 | 1,037,154 | 1,055,387 | 1,308,102 | 886,763 | |||||||||||||||||||
Third parties | 919,569 | 919,569 | 1,415,686 | 1,389,246 | 1,890,679 | 1,919,904 | |||||||||||||||||||
Other current assets | — | — | 139,075 | 139,075 | 145,761 | 691,788 | |||||||||||||||||||
Total current assets | 10,299,704 | 10,299,704 | 7,308,519 | 7,300,312 | 10,980,544 | 10,547,030 | |||||||||||||||||||
Property, plant and equipment — net | 20,019,464 | 20,019,464 | 22,288,766 | 22,891,039 | 27,645,780 | 28,448,606 | |||||||||||||||||||
Advances and other non-current assets | 867,653 | 867,653 | 694,879 | 677,519 | 528,568 | 299,474 |
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2000 | 2001 | 2002 | |||||||||||||||||||||||
As | As | As | |||||||||||||||||||||||
Previously | Previously | Previously | |||||||||||||||||||||||
Reported | As Restated | Reported | As Restated | Reported | As Restated | ||||||||||||||||||||
Rp. Million | Rp. Million | Rp. Million | Rp. Million | Rp. Million | Rp. Million | ||||||||||||||||||||
Intangible assets — net | — | — | 1,356,144 | 1,327,868 | 2,052,126 | 3,898,817 | |||||||||||||||||||
Total non-current assets | 21,719,236 | 21,719,236 | 25,161,761 | 25,735,758 | 31,341,623 | 33,760,066 | |||||||||||||||||||
Total assets | 32,018,940 | 32,018,940 | 32,470,280 | 33,036,070 | 42,322,167 | 44,307,096 | |||||||||||||||||||
Trade accounts payable | |||||||||||||||||||||||||
Related parties | 685,891 | 685,891 | 721,009 | 719,626 | 1,032,942 | 790,227 | |||||||||||||||||||
Third parties | 939,435 | 939,435 | 1,056,644 | 1,039,937 | 2,356,284 | 2,272,624 | |||||||||||||||||||
Other accounts payable | 26,357 | 26,357 | 49,392 | 49,392 | 58,708 | 215,775 | |||||||||||||||||||
Taxes payable | 732,218 | 732,218 | 1,875,023 | 1,877,988 | 1,212,575 | 1,109,632 | |||||||||||||||||||
Accrued expenses | 993,109 | 621,506 | 1,437,575 | 919,914 | 2,510,402 | 1,949,914 | |||||||||||||||||||
Advances from customers and suppliers | 123,832 | 123,832 | 213,432 | 213,432 | 1,132,319 | 293,522 | |||||||||||||||||||
Current maturities of long-term liabilities | 818,516 | 818,516 | 1,542,600 | 1,542,600 | 2,012,251 | 2,590,227 | |||||||||||||||||||
Total current liabilities | 4,509,355 | 4,137,752 | 10,075,323 | 9,542,537 | 10,854,981 | 9,708,181 | |||||||||||||||||||
Deferred tax liabilities — net | 1,787,214 | 1,703,627 | 1,767,759 | 1,818,236 | 1,521,209 | 3,083,166 | |||||||||||||||||||
Unearned income on revenue- sharing arrangement | 299,409 | 267,843 | 225,714 | 195,068 | 165,978 | 142,797 | |||||||||||||||||||
Provision for long service award | — | 210,159 | — | 275,834 | — | 489,231 | |||||||||||||||||||
Provision for post-retirement benefits | — | 712,709 | — | 1,045,525 | — | 1,602,494 | |||||||||||||||||||
Liabilities for acquisition of subsidiaries | — | — | 260,840 | 260,840 | — | 1,618,979 | |||||||||||||||||||
Total non-current liabilities | 11,786,375 | 12,594,090 | 11,836,048 | 13,177,238 | 12,124,440 | 17,389,499 | |||||||||||||||||||
Difference in value of restructuring transactions between entities under common control | — | — | (7,402,343 | ) | (6,992,233 | ) | (7,032,455 | ) | (7,288,271 | ) | |||||||||||||||
Difference due to change of equity in associated companies | 426,397 | 609,139 | 342,425 | 489,178 | 342,425 | 424,020 | |||||||||||||||||||
Translation adjustment | 177,114 | 253,020 | 179,672 | 256,674 | 164,966 | 235,665 | |||||||||||||||||||
Unappropriated retained earnings | 6,777,522 | 6,082,762 | 9,770,303 | 8,893,824 | 15,565,511 | 14,383,466 | |||||||||||||||||||
Total stockholders’ equity | 14,909,176 | 14,473,064 | 9,323,575 | 9,080,961 | 15,899,183 | 14,613,617 | |||||||||||||||||||
Total liabilities and stockholders’ equity | 32,018,940 | 32,018,940 | 32,470,280 | 33,036,070 | 42,322,167 | 44,307,096 |
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2000 | 2001 | 2002 | ||||||||||||||||||||||
As | As | As | ||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||
Reported | As Restated | Reported | As Restated | Reported | As Restated | |||||||||||||||||||
Rp. Million | Rp. Million | Rp. Million | Rp. Million | Rp. Million | Rp. Million | |||||||||||||||||||
Operating revenues | 12,111,996 | 12,190,178 | 16,130,789 | 16,283,807 | 21,399,737 | 20,802,818 | ||||||||||||||||||
Operating expenses | (6,433,843 | ) | (6,594,119 | ) | (8,515,089 | ) | (8,864,400 | ) | (11,998,053 | ) | (11,672,603 | ) | ||||||||||||
Other income/(charges) | (888,953 | ) | (987,830 | ) | (928,411 | ) | (869,516 | ) | 2,940,890 | 2,618,687 | ||||||||||||||
Income before tax | 4,789,200 | 4,608,229 | 6,687,289 | 6,549,891 | 12,342,574 | 11,748,902 | ||||||||||||||||||
Tax expense | (1,466,267 | ) | (1,520,294 | ) | (2,070,654 | ) | (2,006,895 | ) | (2,745,857 | ) | (2,898,971 | ) | ||||||||||||
Pre-acquisition loss (income) | — | — | 108,080 | — | (142,817 | ) | — | |||||||||||||||||
Minority interest | (312,930 | ) | (312,930 | ) | (474,605 | ) | (474,605 | ) | (1,108,626 | ) | (810,222 | ) | ||||||||||||
Net income | 3,010,003 | 2,775,005 | 4,250,110 | 4,068,391 | 8,345,274 | 8,039,709 | ||||||||||||||||||
Basic and diluted earnings per share (full amount) | 298.61 | 275.30 | 421.64 | 403.61 | 827.90 | 797.59 | ||||||||||||||||||
Earnings per ADS (full amount) | 5,972.23 | 5,505.96 | 8,432.76 | 8,072.20 | 16,558.08 | 15,951.80 |
(b) | Changes in U.S. GAAP Information Previously Disclosed |
2000 | 2001 | 2002 | ||||||||||||||||
Rp. million | Rp. million | Rp. million | ||||||||||||||||
Net income under U.S. GAAP as previously reported | 2,952,133 | 4,036,641 | 9,274,249 | |||||||||||||||
Impact of Indonesian GAAP restatements on U.S. GAAP net income: | ||||||||||||||||||
Aggregate Indonesian GAAP restatements | (234,998 | ) | (181,719 | ) | (305,565 | ) | ||||||||||||
Amount which are not restatements for U.S. GAAP | (i) | 16,663 | (10,632 | ) | (66,456 | ) | ||||||||||||
(218,335 | ) | (192,351 | ) | (372,021 | ) | |||||||||||||
Effect of restatements on previously reported U.S. GAAP net income: | ||||||||||||||||||
Installation revenue: | (ii) | |||||||||||||||||
Cumulative effect of accounting change | (814,799 | ) | — | — | ||||||||||||||
Current year amortization | 107,322 | 81,429 | (22,870 | ) | ||||||||||||||
Revenue-sharing arrangements | (iii) | (27,041 | ) | 37,650 | 67,959 | |||||||||||||
Deferred taxes | (iv) | 214,108 | 347,333 | (337,864 | ) | |||||||||||||
Acquisition of Dayamitra | (v) | — | (12,809 | ) | (9,374 | ) | ||||||||||||
Others | (vi) | 2,937 | 307 | (12,820 | ) | |||||||||||||
Net adjustments | (517,473 | ) | 453,910 | (314,969 | ) |
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2000 | 2001 | 2002 | |||||||||||||||
Rp. million | Rp. million | Rp. million | |||||||||||||||
Net income under U.S. GAAP as restated | 2,216,325 | 4,298,200 | 8,587,259 | ||||||||||||||
Basic earnings per share (full amount) | |||||||||||||||||
As previously reported | 292.87 | 400.46 | 920.06 | ||||||||||||||
As restated | 219.87 | 426.41 | 851.91 | ||||||||||||||
Basic earnings per ADS (full amount) | |||||||||||||||||
As previously reported | 5,857.41 | 8,009.21 | 18,401.29 | ||||||||||||||
As restated | 4,397.47 | 8,528.17 | 17,038.21 | ||||||||||||||
Stockholders’ equity under U.S. GAAP as previously reported | 14,146,168 | 8,240,598 | 15,745,181 | ||||||||||||||
Impact of Indonesian GAAP restatements on U.S. GAAP stockholders’ equity: | |||||||||||||||||
Aggregate Indonesian GAAP restatements | (436,112 | ) | (242,614 | ) | (1,285,566 | ) | |||||||||||
Amounts which are not restatements for U.S. GAAP | (i) | (598 | ) | (11,229 | ) | (12,527 | ) | ||||||||||
(436,710 | ) | (253,843 | ) | (1,298,093 | ) | ||||||||||||
Effect of restatements on previously reported U.S. GAAP equity: | |||||||||||||||||
Installation revenue | (ii) | (707,477 | ) | (626,048 | ) | (648,918 | ) | ||||||||||
Revenue-sharing arrangements | (iii) | (166,575 | ) | (128,925 | ) | (60,966 | ) | ||||||||||
Deferred taxes | (iv) | 119,561 | 421,243 | 93,284 | |||||||||||||
Acquisition of Dayamitra | (v) | — | 139,342 | 129,968 | |||||||||||||
Others | (vi) | (27,174 | ) | (26,867 | ) | (49,592 | ) | ||||||||||
Net adjustments | (781,665 | ) | (221,255 | ) | (536,224 | ) | |||||||||||
Stockholders’ equity under U.S. GAAP as restated | 12,927,793 | 7,765,500 | 13,910,864 |
i) | Impact of Indonesian GAAP Restatements |
The restatements to the financial position and results of operations under Indonesian GAAP as described above, had the same impact on consolidated stockholders’ equity and net income presented under U.S. GAAP, except for restatements with respect to revenue sharing arrangements and related deferred taxes. Accordingly, no restatement of stockholders’ equity or net income under U.S. GAAP was required with respect to these items. |
ii) | Installation Revenue |
TELKOM was required to adopt the provisions of the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) No. 101, “Revenue Recognition in Financial Statements” in 2001, and retroactively apply its provisions as of January 1, 2000. TELKOM did not initially record the full impact of SAB No. 101 on its results. SAB 101 requires TELKOM to defer certain non-recurring fees, such as service activation and installation fees, and recognize those revenues over the expected term of the customer relationship. For 2000, the adjustment presented included an amount which represents the initial impact of adopting SAB 101. For U.S. GAAP purposes this should have been recorded as a cumulative effect of an accounting change. |
iii) | Revenue Sharing Arrangements |
Based on further review, TELKOM concluded that the accounting provided for the revenue sharing arrangements under Indonesian GAAP required an adjustment to conform to |
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U.S. GAAP. A discussion of the differences in accounting for the revenue sharing arrangements under the respective GAAPs may be found in Note 57(1)d to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/ A. |
iv) | Deferred Taxes |
As discussed above, the deferred tax liability related to investments in consolidated subsidiaries was adjusted in the restated Indonesian GAAP financial statements to conform to SFAS 109. Accordingly, an adjustment was made to eliminate the U.S. GAAP and Indonesian GAAP difference related to the deferred tax liability on the undistributed earnings of subsidiaries and associates. | |
TELKOM also made adjustments in relation to other restated amounts. |
v) | Acquisition of Dayamitra |
The adjustment reflected the U.S. GAAP requirement, as described in Note 57(1) to the Company’s consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/ A, to record the Dayamitra acquisition as an acquisition of 100% of the outstanding interest during the year ended December 31, 2001, and the effect of the reversal of foreign exchange capitalized by Dayamitra as the related assets were carried at fair value upon application of purchase accounting. |
Effect on | ||||||||
Net Income | Equity | |||||||
Rp. million | Rp. million | |||||||
Option | 2,050 | 2,050 | ||||||
Foreign exchange capitalized | (14,859 | ) | 137,292 | |||||
(12,809 | ) | 139,342 |
vi) | Others |
Other adjustments represented individually insignificant adjustments consisting of land rights amortization and certain capitalized foreign exchange gains and losses. |
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• | TELKOM took steps to improve the understanding of relevant Indonesian GAAP and U.S. GAAP and financial reporting responsibilities across all its business units by: |
— | holding seminars in November and December 2003 and November 2004 involving outside consultants and members of the accounting department at a major Indonesian university, covering relevant accounting and internal control issues and attended by senior management and certain accounting and finance-related personnel; and | |
— | subscribing to a U.S. GAAP information web-site through E&Y in May 2004. |
• | On December 31, 2003, TELKOM retained PT Parardhya Mitra Karti, a human resources consulting firm, under the supervision of the Human Resources Department, to assist TELKOM in assessing job competency requirements and the adequacy of the organizational structure throughout TELKOM. | |
• | On January 7, 2004, TELKOM established a team comprised of 75 personnel from various departments of TELKOM and chaired by the vice president of TELKOM’s budget department for the purpose of preparing TELKOM for the compliance with Section 404 of the Sarbanes-Oxley Act of 2002. | |
• | On February 27, 2004, TELKOM added a new oversight function to its accounting department organization structure to improve the assessment of critical, significant and judgmental accounting areas. This would involve hiring consultants for the accounting department (1) to monitor changes in Indonesian GAAP and U.S GAAP, and differences between Indonesian GAAP and US GAAP and (2) to train TELKOM’s staff accountants. On May 1, 2004, TELKOM hired two experienced personnel for such roles. | |
• | On April 1, 2004, TELKOM hired a consultant for its internal audit department with responsibility for (1) improving the role of internal audit for TELKOM, (2) improving the internal control system of TELKOM and (3) reviewing the financial reporting of TELKOM. | |
• | From April 2004 to June 2004, TELKOM held internal meetings to establish a task force team to enhance its finance-related policies and procedures covering accounting and financial reporting. On July 12, 2004, TELKOM formally established such task force with responsibility for enhancing all finance-related policies and procedures covering accounting and financial reporting. The task force collected and reviewed the previously dispersed accounting policies and updated and created new accounting policies. | |
• | On April 7, 2004, TELKOM prepared a draft Action Plan to address the material weaknesses in TELKOM’s internal control over financial reporting identified by PwC and KPMG. TELKOM’s draft Action Plan involves several additional steps which TELKOM intends to take throughout 2005 to address the material weaknesses in its internal control over financial reporting. The steps set forth in the draft Action Plan were specifically aimed at addressing the directions of TELKOM’s senior management referred to in the immediately preceding paragraph, as well as enabling TELKOM to comply with Section 404 of the Sarbanes-Oxley Act of 2002. | |
• | On June 7, 2004, TELKOM retained KAP Prasetio, Sarwoko & Sandjaja, the member firm of Ernst & Young in Indonesia (“E&Y”), under the supervision of the Audit Committee, to assist TELKOM in improving its internal control over financial reporting. TELKOM, with the assistance of E&Y, assessed thoroughly the organizational structure of its finance department. In particular, TELKOM focused on determining the separation of each function and identifying the personnel in charge of such function, such personnel’s effectiveness in performing such function and the |
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need for additional personnel and expertise in performing such function. Since the assessment, TELKOM has been in the process of establishing a job description for newly identified functions, searching for additional accounting and financial reporting personnel and identifying the appropriate personnel to fill certain of the positions. TELKOM currently has 26 full-time employees and two part-time employees in its accounting department (based at Head Office) and 74 full-time employees and one part-time employee in its internal audit department. | ||
• | On December 7, 2004, TELKOM modified the mandate of its internal audit function to place greater emphasis on the adequacy of and compliance with, procedures relating to internal control over financial reporting. |
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Year Ended | ||||||||
December 31, | ||||||||
2002 | 2003 | |||||||
(in Rp. million) | ||||||||
Audit Fees | 33,578.0 | 10,715.0 | ||||||
Audit-Related Fees | — | — | ||||||
Tax Fees | — | — | ||||||
Other Fees | — | — |
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ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
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4.1** | Agreement for the Sale and Purchase of the Assets Relating to TELKOM Mobile between TELKOM and Telkomsel, dated April 3, 2002. | |||
4.2** | Settlement Agreement between TELKOM and the shareholders of AriaWest, dated July 31, 2003. | |||
4.3** | Credit Agreement between TELKOM and the AriaWest lenders, dated July 31, 2003. | |||
4.4** | First Amendment to the Conditional Sale and Purchase Agreement between TELKOM and the shareholders of AriaWest, dated July 31, 2003. | |||
4.5** | Conditional Sale and Purchase Agreement between TELKOM and the shareholders of AriaWest, dated May 8, 2002. | |||
4.6** | Conditional Sale and Purchase Agreement between TELKOM and Singapore Telecom Mobile Pte. Ltd., dated April 3, 2002. | |||
4.7** | Conditional Sale and Purchase Agreement between TELKOM and the shareholders of Pramindo, dated April 19, 2002. | |||
4.8** | Cooperation Agreement on the Interconnection between TELKOM’s Fixed Network and Indosat’s Local Fixed Network and the Settlement of the Interconnection Financial Rights and Obligations between TELKOM and Indosat, dated September 3, 2002, including an English translation thereof. | |||
4.9*** | Kontrak Pengadaan Satelit TELKOM-2 (Contract on Procurement of TELKOM-2 Satellite) between TELKOM and Orbital Sciences Corporation, dated October 24, 2002. | |||
4.10* | First Amendment to Contract on Procurement of TELKOM-2 Satellite between TELKOM and Orbital Sciences Corporation, dated December 15, 2003. | |||
4.11*** | Kontrak Jasa Peluncur Satelit TELKOM-2 (Agreement on Launch Services of TELKOM-2 Satellite) between TELKOM and Arianespace S.A., dated November 8, 2002. | |||
4.12** | Master Procurement Partnership Agreement between TELKOM and a consortium led by Samsung Electronics, dated December 23, 2003. | |||
4.13** | Amendment No. 1 to the Master Procurement Partnership Agreement between TELKOM and a consortium led by Samsung Electronics, dated December 31, 2003. | |||
4.14** | Service Level Agreement between TELKOM and a consortium led by Samsung Electronics, dated December 23, 2002. | |||
4.15** | Loan Agreement between TELKOM and The Export-Import Bank of Korea, dated August 27, 2003. |
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4.16** | Master Procurement Partnership Agreement between TELKOM and a consortium led by Ericsson, dated December 23, 2002. | |||
4.17** | Service Level Agreement between TELKOM and a consortium led by Ericsson, dated December 23, 2002. | |||
4.18** | Master Procurement Partnership Agreement between TELKOM and PT Industri Telekomunikasi Indonesia (Persero), dated August 26, 2003, including an English translation thereof. | |||
4.19** | Service Level Agreement between TELKOM and PT Industri Telekomunikasi Indonesia Tbk., dated August 26, 2003. | |||
4.20** | Partnership Agreement for the Procurement and Construction of Backbone Transmission Network between TELKOM and a consortium led by Siemens AG, dated September 24, 2003. | |||
4.21*** | Development Contract PSTN Excellence Regional Junction Divre-II between TELKOM and the Olex-Lucent-Brimbun consortium, dated February 8, 2002. | |||
4.22* | Co-Operation Agreement on Fixed Wireless CDMA Facilities Construction in KSO Divre VII Area between TELKOM and PT Bukaka SingTel International, dated January 14, 2003. | |||
4.23** | Amendment No. 1 to the Development Contract PSTN Excellence Regional Junction Divre-II between TELKOM and the Olex-Lucent-Brimbun consortium, dated August 22, 2002. | |||
4.24** | Amendment No. 2 to the Development Contract PSTN Excellence Regional Junction Divre-II between TELKOM and the Olex-Lucent-Brimbun consortium, dated October 25, 2002. | |||
4.25** | Amendment No. 3 to the Development Contract PSTN Excellence Regional Junction Divre-II between TELKOM and the Olex-Lucent-Brimbun consortium, dated December 20, 2002. | |||
4.26** | Amendment No. 4 to the Development Contract PSTN Excellence Regional Junction Divre-II between TELKOM and the Olex-Lucent-Brimbun consortium, dated March 20, 2003. | |||
4.27** | Amendment No. 5 to the Development Contract PSTN Excellence Regional Junction Divre-II between TELKOM and the Olex-Lucent-Brimbun consortium, dated June 26, 2003. | |||
4.28* | Amendment No. 6 to the Development Contract PSTN Excellence Regional Junction Divre-II between TELKOM and the Olex-Lucent-Brimbun consortium, dated October 9, 2003. | |||
4.29* | Amendment No. 7 to the Development Contract PSTN Excellence Regional Junction Divre-II between TELKOM and the Olex-Lucent-Brimbun consortium, dated December 4, 2003. | |||
4.30** | Master Procurement Partnership Agreement between TELKOM and Motorola, Inc., dated March 24, 2003. | |||
4.31** | Partnership Agreement for Procurement and Construction of Regional Metro Junction and Optic Access Network for Regional Division III between TELKOM and PT Industri Telekomunikasi Indonesia (Persero), dated November 12, 2003, including an English translation thereof. | |||
4.32** | Contract Agreement in connection with the Softswitch System Class-4 Procurement Program Through Buy or Return Scheme between TELKOM and the Santera-Olex consortium, dated December 18, 2003. | |||
4.33** | Side Letter to the Partnership Agreement for the Construction and Provision of the High Performance Backbone in Sumatera, dated June 12, 2003. |
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4.34** | Amendment No. 1 to the Partnership Agreement for the Development of a PSTN Regional Junction for Regional Division V (East Java), dated September 27, 2002. | |||
4.35** | Amendment No. 2 to the Partnership Agreement for the Development of a PSTN Regional Junction for Regional Division V (East Java), dated December 30, 2002. | |||
4.36* | Amendment No. 3 to the Partnership Agreement for the Development of a PSTN Regional Junction for Regional Division V (East Java), dated December 11, 2003. | |||
4.37** | Supply Contract among TELKOM, NEC Corporation, the Communication Authority of Thailand and Singapore Telecommunications Limited, dated November 27, 2002. | |||
4.38** | Thailand-Indonesia-Singapore Cable Network Construction and Maintenance Agreement among TELKOM, NEC Corporation, the Communication Authority of Thailand and Singapore Telecommunications Limited, dated November 27, 2002. | |||
4.39** | Amended and Restated KSO Agreement between TELKOM and PT Mitra Global Telekomunikasi Indonesia, dated January 20, 2004. | |||
4.40** | Service Level Agreement between TELKOM and Motorola, Inc., dated March 24, 2003. | |||
4.41** | Indemnity Agreement between TELKOM and KAP Hans Tuanakotta Mustofa & Halim (formerly KAP Hans Tuanakotta & Mustofa), dated February 9, 2004. | |||
4.42* | Supply Contract for the Procurement and Installation of Dumai-Melaka Cable System among TELKOM, Telekom Malaysia Berhad and NEC Corporation, dated May 14, 2004. | |||
4.43* | Loan Agreement and Acknowledgement of Indebtedness between TELKOM and ABN AMRO Bank N.V. Jakarta Branch, dated January 28, 2004. | |||
4.44* | Letter Agreement between Indosat and TELKOM, dated December 11, 2003 (with regard to the merger of PT Indonesian Satellite Corporation Tbk with PT Indosat Multi Media Mobile, PT Satelit Palapa Indonesia and PT Bimagraha Telekomindo), including an English translation thereof. | |||
4.45* | Indemnity Agreement between TELKOM and KAP Hans Tuanakotta Mustofa & Halim (formerly KAP Hans Tuanakotta & Mustofa), dated June 29, 2004. |
* | Filed with Annual Report on Form 20-F for the fiscal year ended December 31, 2003 filed on June 30, 2004 and incorporated herein by reference. |
** | Filed with Amendment No. 2 to Annual Report of Form 20-F/A for the fiscal year ended December 31, 2002 filed on February 9, 2004 and incorporated herein by reference. |
*** | Filed with Annual Report on Form 20-F for the fiscal year ended December 31, 2002 filed on April 17, 2003 and incorporated herein by reference. |
184
Table of Contents
Name Under Which | ||||
Jurisdiction of | Subsidiary Conducts | |||
Name of Subsidiary | Incorporation | its Business | ||
PT AriaWest International | Indonesia | AriaWest | ||
PT Multimedia Nusantara | Indonesia | Metra | ||
PT Graha Sarana Duta | Indonesia | GSD | ||
PT Indonusa Telemedia | Indonesia | Indonusa | ||
PT Dayamitra Telekomunikasi | Indonesia | Mitratel | ||
PT Telekomunikasi Selular | Indonesia | Telkomsel | ||
PT Napsindo Primatel Internasional | Indonesia | Napsindo | ||
PT Infomedia Nusantara | Indonesia | Infomedia | ||
PT Pro Infokom Indonesia | Indonesia | PII | ||
PT Pramindo Ikat Nusantara | Indonesia | Pramindo |
185
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By: | /s/ Kristiono |
Table of Contents
Page | |||||
F-2 | |||||
Financial Statements | |||||
F-9 | |||||
F-12 | |||||
F-13 | |||||
F-16 | |||||
F-18 |
F-1
Table of Contents
F-2
Table of Contents
Drs. Istata Taswin Siddharta
F-3
Table of Contents
F-4
Table of Contents
F-5
Table of Contents
F-6
Table of Contents
F-7
Table of Contents
F-8
Table of Contents
Notes | 2002 | 2003 | |||||||||||||||||
Rp | Rp | US$ (Note 3) | |||||||||||||||||
CURRENT ASSETS | |||||||||||||||||||
Cash and cash equivalents | 2c,2f,6,49 | 5,699,070 | 5,094,472 | 603,610 | |||||||||||||||
Temporary investments | 2c,2g,7,49 | 573,000 | 4,006 | 475 | |||||||||||||||
Trade accounts receivable | 2c,2h,8,49 | ||||||||||||||||||
Related parties — net of allowance for doubtful accounts of Rp95,676 million in 2002, and Rp110,932 million in 2003 | 886,763 | 410,923 | 48,687 | ||||||||||||||||
Third parties — net of allowance for doubtful accounts of Rp407,313 million in 2002, and Rp332,960 million in 2003 | 1,919,904 | 2,422,005 | 286,967 | ||||||||||||||||
Other accounts receivable — net of allowance for doubtful accounts of Rp24,253 million in 2002, and Rp45,544 million in 2003 | 2c,2h,49 | 198,493 | 170,121 | 20,157 | |||||||||||||||
Inventories — net of allowance for obsolescence of Rp53,795 million in 2002, and Rp40,489 million in 2003 | 2i,9 | 139,682 | 154,003 | 18,247 | |||||||||||||||
Prepaid expenses | 2c,2j,10,49 | 353,656 | 717,917 | 85,061 | |||||||||||||||
Prepaid taxes | 43a | 84,674 | 212,282 | 25,152 | |||||||||||||||
Other current assets | 2c,11,49 | 691,788 | 45,083 | 5,342 | |||||||||||||||
Total Current Assets | 10,547,030 | 9,230,812 | 1,093,698 | ||||||||||||||||
NON-CURRENT ASSETS | |||||||||||||||||||
Long-term investments | 2g,12 | 183,147 | 64,648 | 7,660 | |||||||||||||||
Property, plant and equipment — net of accumulated depreciation of Rp18,886,345 million in 2002, and Rp23,581,560 million in 2003 | 2k,2l,13 | 28,448,606 | 34,775,140 | 4,120,277 | |||||||||||||||
Property, plant and equipment under revenue- sharing arrangements — net of accumulated depreciation of Rp842,964 million in 2002, and Rp791,645 million in 2003 | 2m,15,52 | 377,622 | 305,041 | 36,142 | |||||||||||||||
Advances and other non-current assets | 2c,49 | 306,363 | 175,954 | 20,847 | |||||||||||||||
Intangible assets — net of accumulated amortization of Rp243,045 million in 2002, and Rp973,704 million in 2003 | 1c,2d,16 | 3,898,817 | 5,144,050 | 609,485 | |||||||||||||||
Advance payments for investments in shares of stock | 5e | 247,583 | 65,458 | 7,756 | |||||||||||||||
Escrow accounts | 17 | 297,928 | 522,146 | 61,866 | |||||||||||||||
Total Non-current Assets | 33,760,066 | 41,052,437 | 4,864,033 | ||||||||||||||||
TOTAL ASSETS | 44,307,096 | 50,283,249 | 5,957,731 | ||||||||||||||||
F-9
Table of Contents
Notes | 2002 | 2003 | |||||||||||||||||
Rp | Rp | US$ (Note 3) | |||||||||||||||||
CURRENT LIABILITIES | |||||||||||||||||||
Trade accounts payable | 2c,18,49 | ||||||||||||||||||
Related parties | 790,227 | 657,478 | 77,900 | ||||||||||||||||
Third parties | 2,272,624 | 3,109,854 | 368,466 | ||||||||||||||||
Other accounts payable | 215,775 | 188,112 | 22,288 | ||||||||||||||||
Taxes payable | 2s,43b | 1,109,632 | 1,513,038 | 179,269 | |||||||||||||||
Dividends payable | 1,494 | 3,779 | 448 | ||||||||||||||||
Accrued expenses | 2c,19,49 | 1,949,914 | 1,215,872 | 144,061 | |||||||||||||||
Unearned income | 20 | 445,561 | 763,211 | 90,428 | |||||||||||||||
Advances from customers and suppliers | 21 | 293,522 | 268,148 | 31,771 | |||||||||||||||
Short-term bank loans | 2c,22,49 | 39,205 | 37,642 | 4,460 | |||||||||||||||
Current maturities of long-term liabilities | 2c,23,49 | 2,590,227 | 3,443,516 | 407,999 | |||||||||||||||
Total Current Liabilities | 9,708,181 | 11,200,650 | 1,327,090 | ||||||||||||||||
NON-CURRENT LIABILITIES | |||||||||||||||||||
Deferred tax liabilities — net | 2s,43e | 3,083,166 | 3,546,770 | 420,234 | |||||||||||||||
Unearned income on revenue-sharing arrangements | 2m,15,52 | 142,797 | 111,732 | 13,238 | |||||||||||||||
Unearned initial investor payments under joint operation schemes | 2n,36,51 | 66,117 | 31,584 | 3,742 | |||||||||||||||
Provision for long service awards | 2r,47 | 489,231 | 473,614 | 56,115 | |||||||||||||||
Provision for post-retirement health care benefits | 2r,48 | 1,602,494 | 2,063,350 | 244,474 | |||||||||||||||
Long-term liabilities — net of current maturities | |||||||||||||||||||
Two-step loans — related party | 2c,24,49 | 7,734,033 | 6,858,910 | 812,667 | |||||||||||||||
Guaranteed notes and bonds | 25 | 2,313,510 | 2,102,502 | 249,112 | |||||||||||||||
Bank loans | 2c,26,49 | 85,355 | 2,115,797 | 250,687 | |||||||||||||||
Liabilities for acquisitions of subsidiaries | 27 | 1,618,979 | 746,974 | 88,504 | |||||||||||||||
Suppliers’ credit loans | 28 | 175,625 | 671 | 80 | |||||||||||||||
Bridging loan | 29 | 53,405 | 510 | 60 | |||||||||||||||
Other long-term debt | 9,275 | 9,153 | 1,084 | ||||||||||||||||
Project cost payables | 15,512 | — | — | ||||||||||||||||
Total Non-current Liabilities | 17,389,499 | 18,061,567 | 2,139,997 | ||||||||||||||||
MINORITY INTEREST | 30 | 2,595,799 | 3,708,155 | 439,355 | |||||||||||||||
F-10
Table of Contents
Notes | 2002 | 2003 | |||||||||||||||||
Rp | Rp | US$ (Note 3) | |||||||||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Capital stock — Rp 500 par value per Series A | |||||||||||||||||||
Dwiwarna share and Series B share | |||||||||||||||||||
Authorized — one Series A Dwiwarna share and 39,999,999,999 Series B shares | |||||||||||||||||||
Issued and fully paid — one Series A Dwiwarna share and 10,079,999,639 Series B shares | 31 | 5,040,000 | 5,040,000 | 597,156 | |||||||||||||||
Additional paid-in capital | 32 | 1,073,333 | 1,073,333 | 127,172 | |||||||||||||||
Difference in value of restructuring transactions between entities under common control | 33 | (7,288,271 | ) | (7,288,271 | ) | (863,539 | ) | ||||||||||||
Difference due to change of equity in associated companies | 2g | 424,020 | 385,595 | 45,687 | |||||||||||||||
Translation adjustment | 2e | 235,665 | 224,232 | 26,568 | |||||||||||||||
Retained earnings | |||||||||||||||||||
Appropriated | 745,404 | 1,559,068 | 184,724 | ||||||||||||||||
Unappropriated | 14,383,466 | 16,318,920 | 1,933,521 | ||||||||||||||||
Total Stockholders’ Equity | 14,613,617 | 17,312,877 | 2,051,289 | ||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 44,307,096 | 50,283,249 | 5,957,731 | ||||||||||||||||
F-11
Table of Contents
Notes | 2001 | 2002 | 2003 | |||||||||||||||||
Rp | Rp | Rp | US$ (Note 3) | |||||||||||||||||
OPERATING REVENUES | ||||||||||||||||||||
Telephone | 2p,34 | |||||||||||||||||||
Fixed lines | 6,415,156 | 7,264,099 | 8,896,865 | 1,054,131 | ||||||||||||||||
Cellular | 4,707,998 | 6,226,801 | 8,458,830 | 1,002,231 | ||||||||||||||||
Interconnection | 2p,35,49 | 1,423,686 | 2,831,334 | 4,162,148 | 493,145 | |||||||||||||||
Joint operation schemes | 2n,36,49,51 | 2,219,586 | 2,128,145 | 1,486,307 | 176,103 | |||||||||||||||
Data and Internet | 37 | 673,184 | 1,551,626 | 3,108,562 | 368,313 | |||||||||||||||
Network | 38 | 414,929 | 316,098 | 517,865 | 61,358 | |||||||||||||||
Revenue-sharing arrangements | 2m,39,52 | 264,253 | 263,754 | 258,464 | 30,624 | |||||||||||||||
Other telecommunications services | 165,015 | 220,961 | 226,882 | 26,882 | ||||||||||||||||
Total Operating Revenues | 16,283,807 | 20,802,818 | 27,115,923 | 3,212,787 | ||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Personnel | 40 | 2,281,245 | 4,387,568 | 4,440,096 | 526,078 | |||||||||||||||
Depreciation | 2k,2l,2m,13,15 | 2,869,772 | 3,473,370 | 4,779,520 | 566,294 | |||||||||||||||
Operations, maintenance and telecommunication services | 41 | 2,149,921 | 2,290,219 | 3,338,693 | 395,580 | |||||||||||||||
General and administrative | 42 | 1,343,456 | 1,146,294 | 2,078,777 | 246,300 | |||||||||||||||
Marketing | 220,006 | 375,152 | 502,898 | 59,585 | ||||||||||||||||
Total Operating Expenses | 8,864,400 | 11,672,603 | 15,139,984 | 1,793,837 | ||||||||||||||||
OPERATING INCOME | 7,419,407 | 9,130,215 | 11,975,939 | 1,418,950 | ||||||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||||||
Gain on sale of long-term investment in Telkomsel | 1c | — | 3,196,380 | — | — | |||||||||||||||
Interest income | 49 | 571,586 | 479,802 | 366,024 | 43,367 | |||||||||||||||
Interest expense | 49 | (1,329,642 | ) | (1,582,750 | ) | (1,383,446 | ) | (163,915 | ) | |||||||||||
Gain (loss) on foreign exchange — net | 2e | (378,720 | ) | 556,613 | 126,121 | 14,943 | ||||||||||||||
Equity in net income (loss) of associated companies | 2g,12 | (85,686 | ) | 4,598 | 2,819 | 334 | ||||||||||||||
Others — net | 352,946 | (35,956 | ) | 364,338 | 43,169 | |||||||||||||||
Other income (expense) — net | (869,516 | ) | 2,618,687 | (524,144 | ) | (62,102 | ) | |||||||||||||
INCOME BEFORE TAX | 6,549,891 | 11,748,902 | 11,451,795 | 1,356,848 | ||||||||||||||||
TAX EXPENSE | 2s,43c | |||||||||||||||||||
Current tax | (2,177,366 | ) | (2,747,762 | ) | (3,791,280 | ) | (449,203 | ) | ||||||||||||
Deferred tax | 170,471 | (151,209 | ) | (69,810 | ) | (8,271 | ) | |||||||||||||
(2,006,895 | ) | (2,898,971 | ) | (3,861,090 | ) | (457,474 | ) | |||||||||||||
INCOME BEFORE MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES | 4,542,996 | 8,849,931 | 7,590,705 | 899,374 | ||||||||||||||||
MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES, net | 30 | (474,605 | ) | (810,222 | ) | (1,503,478 | ) | (178,137 | ) | |||||||||||
NET INCOME | 4,068,391 | 8,039,709 | 6,087,227 | 721,237 | ||||||||||||||||
BASIC EARNINGS PER SHARE | 2t,44 | |||||||||||||||||||
Net income per share | 403.61 | 797.59 | 603.89 | 0.07 | ||||||||||||||||
Net income per ADS | ||||||||||||||||||||
(20 Series B shares per ADS) | 8,072.20 | 15,951.80 | 12,077.83 | 1.43 | ||||||||||||||||
F-12
Table of Contents
Difference in | |||||||||||||||||||||||||||||||||||||||||||||
Value of | Equity in | ||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Difference Due | Unrealized | Subsidiary | ||||||||||||||||||||||||||||||||||||||||||
Transactions | to Change | Loss on | Resulting from | ||||||||||||||||||||||||||||||||||||||||||
Additional | Between | of Equity | Decline in | the Recast of | Retained earnings | Total | |||||||||||||||||||||||||||||||||||||||
Capital | Paid-In | Entities Under | in Associated | Translation | Value of | Financial | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
Description | Notes | Stock | Capital | Common Control | Companies | Adjustment | Securities | Statements | Appropriated | Unappropriated | Equity | ||||||||||||||||||||||||||||||||||
Rp | Rp | Rp | Rp | Rp | Rp | Rp | Rp | Rp | Rp | ||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2001 | 5,040,000 | 1,073,333 | — | 609,139 | 253,020 | (165 | ) | 1,221,533 | 193,442 | 6,082,762 | 14,473,064 | ||||||||||||||||||||||||||||||||||
Restructuring transactions between entities under common control | 4 | — | — | (6,992,233 | ) | — | — | — | (1,221,533 | ) | — | (241,725 | ) | (8,455,491 | ) | ||||||||||||||||||||||||||||||
Reversal of difference due to change of equity in Satelindo | — | — | — | (290,442 | ) | — | — | — | — | — | (290,442 | ) | |||||||||||||||||||||||||||||||||
Difference due to change of equity in Telkomsel | — | — | — | 170,481 | — | — | — | — | — | 170,481 | |||||||||||||||||||||||||||||||||||
Unrealized loss on decline in value of securities | — | — | — | — | — | (42 | ) | — | — | — | (42 | ) | |||||||||||||||||||||||||||||||||
Foreign currency translation of CSM | 2g,12 | — | — | — | — | 3,654 | — | — | — | — | 3,654 | ||||||||||||||||||||||||||||||||||
Resolved during the Annual General Meeting of the Stockholders on May 10, 2001: | |||||||||||||||||||||||||||||||||||||||||||||
Declaration of cash dividend | 45 | — | — | — | — | — | — | — | — | (888,654 | ) | (888,654 | ) | ||||||||||||||||||||||||||||||||
Appropriation for general reserve | 45 | — | — | — | — | — | — | — | 126,950 | (126,950 | ) | — | |||||||||||||||||||||||||||||||||
Net income for the year | — | — | — | — | — | — | — | — | 4,068,391 | 4,068,391 | |||||||||||||||||||||||||||||||||||
Balance as of December 31, 2001 | 5,040,000 | 1,073,333 | (6,992,233 | ) | 489,178 | 256,674 | (207 | ) | — | 320,392 | 8,893,824 | 9,080,961 | |||||||||||||||||||||||||||||||||
F-13
Table of Contents
Difference in | |||||||||||||||||||||||||||||||||||||||||
Value of | |||||||||||||||||||||||||||||||||||||||||
Restructuring | Difference Due | Unrealized | |||||||||||||||||||||||||||||||||||||||
Transactions | to Change | Loss on | |||||||||||||||||||||||||||||||||||||||
Additional | Between Entities | of Equity | Decline in | Retained earnings | Total | ||||||||||||||||||||||||||||||||||||
Capital | Paid-In | Under Common | in Associated | Translation | Value of | Stockholders’ | |||||||||||||||||||||||||||||||||||
Description | Notes | Stock | Capital | Control | Companies | Adjustment | Securities | Appropriated | Unappropriated | Equity | |||||||||||||||||||||||||||||||
Rp | Rp | Rp | Rp | Rp | Rp | Rp | Rp | Rp | |||||||||||||||||||||||||||||||||
Balance as of January 1, 2002 | 5,040,000 | 1,073,333 | (6,992,233 | ) | 489,178 | 256,674 | (207 | ) | 320,392 | 8,893,824 | 9,080,961 | ||||||||||||||||||||||||||||||
Foreign currency translation of CSM | 2g,12 | — | — | — | — | (21,009 | ) | — | — | — | (21,009 | ) | |||||||||||||||||||||||||||||
Sale of investment in mutual fund Reksa Dana Seruni | — | — | — | — | — | 207 | — | — | 207 | ||||||||||||||||||||||||||||||||
Acquisition of Pramindo | 5b | — | — | (296,038 | ) | — | — | — | — | — | (296,038 | ) | |||||||||||||||||||||||||||||
Realized difference due to change of equity in associated companies as the result of sale of 12.72% of Telkomsel | 1c | — | — | — | (65,158 | ) | — | — | — | — | (65,158 | ) | |||||||||||||||||||||||||||||
Resolved during the Annual General Meeting of the Stockholders on June 21, 2002: | |||||||||||||||||||||||||||||||||||||||||
Declaration of cash dividend | 45 | — | — | — | — | — | — | — | (2,125,055 | ) | (2,125,055 | ) | |||||||||||||||||||||||||||||
Appropriation for general reserve | 45 | — | — | — | — | — | — | 425,012 | (425,012 | ) | — | ||||||||||||||||||||||||||||||
Net income for the year | — | — | — | — | — | — | — | 8,039,709 | 8,039,709 | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2002 | 5,040,000 | 1,073,333 | (7,288,271 | ) | 424,020 | 235,665 | — | 745,404 | 14,383,466 | 14,613,617 | |||||||||||||||||||||||||||||||
F-14
Table of Contents
Difference in | |||||||||||||||||||||||||||||||||||||
Value of | |||||||||||||||||||||||||||||||||||||
Restructuring | Difference Due | ||||||||||||||||||||||||||||||||||||
Transactions | to Change | ||||||||||||||||||||||||||||||||||||
Additional | Between | of Equity | Retained earnings | Total | |||||||||||||||||||||||||||||||||
Capital | Paid-In | Entities Under | in Associated | Translation | Stockholders’ | ||||||||||||||||||||||||||||||||
Description | Notes | Stock | Capital | Common Control | Companies | Adjustments | Appropriated | Unappropriated | Equity | ||||||||||||||||||||||||||||
Rp | Rp | Rp | Rp | Rp | Rp | Rp | Rp | ||||||||||||||||||||||||||||||
Balance as of January 1, 2003 | 5,040,000 | 1,073,333 | (7,288,271 | ) | 424,020 | 235,665 | 745,404 | 14,383,466 | 14,613,617 | ||||||||||||||||||||||||||||
Realized difference due to change of equity in associated companies as the result of disposal of investment in Metrosel | 12 | — | — | — | (38,425 | ) | — | — | — | (38,425 | ) | ||||||||||||||||||||||||||
Foreign currency translation of CSM | 2g,12 | — | — | — | — | (11,433 | ) | — | — | (11,433 | ) | ||||||||||||||||||||||||||
Resolved during the Annual General Meeting of the Stockholders on May 9, 2003: | |||||||||||||||||||||||||||||||||||||
Declaration of cash dividend | 45 | — | — | — | — | — | — | (3,338,109 | ) | (3,338,109 | ) | ||||||||||||||||||||||||||
Appropriation for general reserve | 45 | — | — | — | — | — | 813,664 | (813,664 | ) | — | |||||||||||||||||||||||||||
Net income for the year | — | — | — | — | — | — | 6,087,227 | 6,087,227 | |||||||||||||||||||||||||||||
Balance as of December 31, 2003 | 5,040,000 | 1,073,333 | (7,288,271 | ) | 385,595 | 224,232 | 1,559,068 | 16,318,920 | 17,312,877 | ||||||||||||||||||||||||||||
F-15
Table of Contents
2001 | 2002 | 2003 | ||||||||||||||||||
Rp | Rp | Rp | US$ (Notes 3) | |||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||||||
Cash receipts from operating revenues | ||||||||||||||||||||
Telephone and interconnection — net | ||||||||||||||||||||
Fixed lines | 6,310,052 | 7,230,394 | 8,201,928 | 971,792 | ||||||||||||||||
Cellular | 5,237,087 | 7,098,585 | 8,925,503 | 1,057,524 | ||||||||||||||||
Joint operation scheme | 1,717,154 | 1,577,976 | 1,195,563 | 141,654 | ||||||||||||||||
Interconnection — net | 1,127,545 | 1,697,073 | 4,203,802 | 498,081 | ||||||||||||||||
Other services | 697,348 | 1,132,077 | 3,932,084 | 465,887 | ||||||||||||||||
Total cash receipts from operating revenues | 15,089,186 | 18,736,105 | 26,458,880 | 3,134,938 | ||||||||||||||||
Cash payments for operating expenses | (5,321,836 | ) | (5,800,470 | ) | (8,861,797 | ) | (1,049,976 | ) | ||||||||||||
Cash generated from operations | 9,767,350 | 12,935,635 | 17,597,083 | 2,084,962 | ||||||||||||||||
Interest received | 590,966 | 480,288 | 369,982 | 43,836 | ||||||||||||||||
Income tax payments | (2,098,272 | ) | (1,914,895 | ) | (3,905,317 | ) | (462,715 | ) | ||||||||||||
Interest paid | (1,256,404 | ) | (900,660 | ) | (1,178,332 | ) | (139,613 | ) | ||||||||||||
Cash receipt (refund) from/to customers and advances | 8,949 | 264,105 | (30,884 | ) | (3,659 | ) | ||||||||||||||
Net Cash Provided by Operating Activities | 7,012,589 | 10,864,473 | 12,852,532 | 1,522,811 | ||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||||||
Proceeds from investments and maturity of time deposits | 7,892,554 | 1,497,883 | 1,895,199 | 224,550 | ||||||||||||||||
Proceeds from sale of property, plant and equipment | 10,944 | 204,008 | 255,750 | 30,302 | ||||||||||||||||
Purchase of marketable securities and placements in time deposits | (4,370,479 | ) | (2,222,175 | ) | (679,500 | ) | (80,509 | ) | ||||||||||||
Sale of 12.72% of Telkomsel | — | 3,948,945 | — | — | ||||||||||||||||
Payment for cross ownership transactions | (5,967,430 | ) | (2,406,309 | ) | — | — | ||||||||||||||
Acquisition of businesses, net of cash acquired | (275,849 | ) | (243,561 | ) | 141,985 | 16,823 | ||||||||||||||
Acquisition of property, plant and equipment | (3,591,449 | ) | (6,625,292 | ) | (9,007,186 | ) | (1,067,202 | ) | ||||||||||||
Decrease in advances and others | 187,313 | 71,569 | 96,830 | 11,473 | ||||||||||||||||
Payments of advances for investments in shares of stock | — | (230,223 | ) | (14,338 | ) | (1,699 | ) | |||||||||||||
Acquisition of long-term investments | (1,400 | ) | (37,607 | ) | — | — | ||||||||||||||
Sale of long-term investments | — | — | 5,398 | 640 | ||||||||||||||||
Acquisition of intangible assets | — | (7,213 | ) | — | — | |||||||||||||||
Net Cash Used in Investing Activities | (6,115,796 | ) | (6,049,975 | ) | (7,305,862 | ) | (865,622 | ) | ||||||||||||
F-16
Table of Contents
2001 | 2002 | 2003 | ||||||||||||||||
Rp | Rp | Rp | US$ (Notes 3) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||||
Payment for debt issuance cost | — | (53,915 | ) | — | — | |||||||||||||
Proceeds from bonds | — | 2,365,314 | — | — | ||||||||||||||
Repayments of long-term liabilities | (985,403 | ) | (2,493,738 | ) | (1,536,941 | ) | (182,102 | ) | ||||||||||
Repayments of promissory notes | (247,640 | ) | (771,066 | ) | (1,513,064 | ) | (179,273 | ) | ||||||||||
Cash dividends paid | (1,023,355 | ) | (2,327,458 | ) | (3,738,586 | ) | (442,960 | ) | ||||||||||
Increase in escrow accounts | (171,077 | ) | (126,848 | ) | (224,219 | ) | (26,566 | ) | ||||||||||
Redemption of Telkomsel’s bonds | — | — | (160,509 | ) | (19,019 | ) | ||||||||||||
Decrease in other non-current assets | 264,664 | — | — | — | ||||||||||||||
Receipts from loan | 500,000 | 737,495 | 995,903 | 117,998 | ||||||||||||||
Net Cash Used in Financing Activities | (1,662,811 | ) | (2,670,216 | ) | (6,177,416 | ) | (731,922 | ) | ||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (766,018 | ) | 2,144,282 | (630,746 | ) | (74,733 | ) | |||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 76,568 | (89,425 | ) | 26,148 | 3,098 | |||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 4,333,663 | 3,644,213 | 5,699,070 | 675,245 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | 3,644,213 | 5,699,070 | 5,094,472 | 603,610 | ||||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||||||||||
Noncash investing and financing activities: | ||||||||||||||||||
Increase in property under construction through the incurrence of long-term debts | 60,341 | 480,756 | 536,248 | 63,536 | ||||||||||||||
Payment of insurance premium through incurrence of long-term debts | — | — | 81,186 | 9,619 | ||||||||||||||
Increase in property and equipment through lease liabilities | 2,483 | — | — | — | ||||||||||||||
Capitalization of borrowing costs during construction: | ||||||||||||||||||
Losses (gains) on foreign exchange, net | 1,746 | (27,568 | ) | — | — | |||||||||||||
Interest | 8,089 | 20,108 | 22,925 | 2,716 | ||||||||||||||
Conversion of receivables to long-term investments | 92,750 | — | 13,500 | 1,600 | ||||||||||||||
Acquisition of subsidiary through the issuance of Promissory Notes | 1,171,157 | 3,329,004 | 927,273 | 109,866 |
F-17
Table of Contents
1. | GENERAL |
1. | The Company’s objective is to provide telecommunications and information facilities and services, in accordance with prevailing regulations. | |
2. | To achieve the above objective, the Company is involved in the following activities: |
i. Planning, building, providing, developing, operating, marketing or selling, leasing and maintaining telecommunications and information networks in accordance with prevailing regulations. | |
ii. Planning, developing, providing, marketing or selling and improving telecommunications and information services in accordance with prevailing regulations. | |
iii. Performing activities and other undertakings in connection with the utilization and development of the Company’s resources and optimizing the utilization of the Company’s property, plant and equipment, information systems, education and training, and repairs and maintenance facilities. |
F-18
Table of Contents
i. Telecommunications networks | |
ii. Telecommunications services | |
iii. Special telecommunications |
F-19
Table of Contents
President Commissioner | : | Bacelius Ruru | ||
Commissioner | : | Agus Haryanto | ||
Commissioner | : | Djamhari Sirat | ||
Independent Commissioner | : | Arif Arryman | ||
Independent Commissioner | : | Petrus Sartono | ||
President Director | : | Kristiono | ||
Director of Finance | : | Guntur Siregar | ||
Director of Telecommunications Service Business | : | Garuda Sugardo | ||
Director of Human Resources and Support Business | : | Agus Utoyo | ||
Director of Telecommunications Network Business | : | Suryatin Setiawan |
President Commissioner | : | Tanri Abeng | ||
Commissioner | : | Anggito Abimanyu | ||
Commissioner | : | Gatot Trihargo | ||
Independent Commissioner | : | Arif Arryman | ||
Independent Commissioner | : | Petrus Sartono | ||
President Director | : | Kristiono | ||
Director of Finance | : | Rinaldi Firmansyah | ||
Director of Telecommunications Service Business | : | Suryatin Setiawan | ||
Director of Human Resources and Support Business | : | Woeryanto Soeradji | ||
Director of Telecommunications Network Business | : | Abdul Haris |
F-20
Table of Contents
F-21
Table of Contents
Percentage of | Total Assets Before | |||||||||||||||
Ownership | Start of | Eliminations | ||||||||||||||
Commercial | ||||||||||||||||
Subsidiaries | Domicile | Nature of Business | 2002 | 2003 | Operations | 2002 | 2003 | |||||||||
% | % | |||||||||||||||
PT Pramindo Ikat Nusantara | Medan | Telecommunications construction & services | 100.00 | 100.00 | 1995 | 1,911,183 | 1,954,907 | |||||||||
PT AriaWest International | Bandung | Telecommunications | — | 100.00 | 1995 | — | 1,628,605 | |||||||||
PT Multimedia Nusantara | Jakarta | Pay TV | 31.00 | 100.00 | 1998 | 9,290 | 7,908 | |||||||||
PT Graha Sarana Duta | Jakarta | Real estate, construction and services | 99.99 | 99.99 | 1982 | 44,998 | 69,752 | |||||||||
PT Indonusa Telemedia | Jakarta | Multimedia | 57.50 | 90.39 | 1997 | 49,787 | 54,319 | |||||||||
PT Dayamitra Telekomunikasi | Balikpapan | Telecommunications | 90.32 | 90.32 | 1995 | 854,007 | 797,810 | |||||||||
PT Telekomunikasi Selular | Jakarta | Telecommunications | 65.00 | 65.00 | 1995 | 11,255,500 | 15,386,289 | |||||||||
PT Napsindo Primatel International | Jakarta | Telecommunications | 32.00 | 60.00 | 1999 | 45,668 | 47,389 | |||||||||
PT Infomedia Nusantara | Jakarta | Data and information service | 51.00 | 51.00 | 1984 | 265,830 | 247,646 | |||||||||
PT Pro Infokom Indonesia | Jakarta | System information network | — | 51.00 | 2003 | — | 5,032 |
Ownership | ||||||||||||||||||||||
Percentage | Start of | |||||||||||||||||||||
Nature of | Commercial | |||||||||||||||||||||
Indirect Subsidiaries | Stockholders | Domicile | Business | 2002 | 2003 | Operations | ||||||||||||||||
% | % | |||||||||||||||||||||
Telekomunikasi Selular Finance Limited | PT Telekomunikasi Selular | Mauritius | Fund raising | 100.00 | 100.00 | 2002 | ||||||||||||||||
Aria West International Finance B.V. | PT AriaWest International | Netherlands | Finance | — | 100.00 | 1996 | ||||||||||||||||
PT Balebat Dedikasi Prima | PT Infomedia Nusantara | Bogor | Printing | — | 51.00 | 2000 |
PT Pramindo Ikat Nusantara (“Pramindo”) |
F-22
Table of Contents
PT AriaWest International (“AWI”) |
PT Multimedia Nusantara (“Metra”) |
PT Graha Sarana Duta (“GSD”) |
PT Indonusa Telemedia (“Indonusa”) |
F-23
Table of Contents
PT Dayamitra Telekomunikasi (“Dayamitra”) |
PT Telekomunikasi Selular (“Telkomsel”) |
PT Napsindo Primatel Internasional (“Napsindo”) |
F-24
Table of Contents
PT Infomedia Nusantara (“Infomedia”) |
Telekomunikasi Selular Finance Limited (“TSFL”) |
Aria West International Finance B.V. (“AWI BV”) |
PT Balebat Dedikasi Prima (“Balebat”) |
d. Authorization of the Financial Statements |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-25
Table of Contents
F-26
Table of Contents
F-27
Table of Contents
F-28
Table of Contents
F-29
Table of Contents
Years | ||||
Buildings | 20 | |||
Switching equipment | 5–15 | |||
Telegraph, telex and data communication equipment | 5–15 | |||
Transmission installation and equipment | 5–20 | |||
Satellite, earth station and equipment | 3–15 | |||
Cable network | 5–15 | |||
Power supply | 3–10 | |||
Data processing equipment | 3–10 | |||
Other telecommunications peripherals | 5 | |||
Office equipment | 3–5 | |||
Vehicles | 5–8 | |||
Other equipment | 5 |
F-30
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F-31
Table of Contents
1. | Sale of starter packs is recognized as revenue upon delivery of the starter packs to distributors, dealers or directly to customers. | |
2. | Sale of pulse reload vouchers is recognized initially as unearned income and recognized proportionately as revenue based on successful calls made by the subscribers or whenever the unused stored value of the voucher has expired. |
F-32
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F-33
Table of Contents
F-34
Table of Contents
i. Acquisition by the Company of Indosat’s 35% equity interest in Telkomsel for US$945,000,000 (“Telkomsel Transaction”); | |
ii. Acquisition by Indosat of the Company’s 22.5% equity interest in PT Satelit Palapa Indonesia (“Satelindo”) for US$186,000,000 (“Satelindo Transaction”); | |
iii. Acquisition by Indosat of the Company’s 37.66% equity interest in PT Aplikanusa Lintasarta (“Lintasarta”) for US$38,000,000 plus convertible bonds of Rp4,051 million issued by Lintasarta (“Lintasarta Transaction”); and | |
iv. The acquisition by Indosat of all of the Company’s rights and novation of all of the Company’s obligations, under the KSO IV Agreement dated October 20, 1995, between the Company and PT Mitra Global Telekomunikasi Indonesia (“MGTI”), together with all of the Company’s assets being used as KSO IV assets, for US$375,000,000 (“KSO IV Transaction”). |
F-35
Table of Contents
Historical | ||||||||||||||||||||||||||||
Consideration | Amount of | Deferred | Change | |||||||||||||||||||||||||
Paid/ | Net Assets/ | Income | in | |||||||||||||||||||||||||
(Received) | Investment | Tax | Equity | Total | Tax | Net | ||||||||||||||||||||||
Telkomsel | 10,782,450 | 1,466,658 | 337,324 | — | 8,978,468 | — | 8,978,468 | |||||||||||||||||||||
Satelindo | (2,122,260 | ) | — | — | (290,442 | ) | (2,412,702 | ) | (627,678 | ) | (1,785,024 | ) | ||||||||||||||||
Lintasarta | (437,631 | ) | 116,834 | — | — | (320,797 | ) | (119,586 | ) | (201,211 | ) | |||||||||||||||||
Total | 8,222,559 | 1,583,492 | 337,324 | (290,442 | ) | 6,244,969 | (747,264 | ) | 6,992,233 | |||||||||||||||||||
F-36
Table of Contents
Rp | |||||
Purchase consideration — net of discount on promissory notes | 1,351,299 | ||||
Fair value of net assets acquired: | |||||
— Cash and cash equivalents | 93,652 | ||||
— Distributable KSO revenue receivable | 62,398 | ||||
— Other current assets | 9,450 | ||||
— Property, plant and equipment | 1,401,479 | ||||
— Intangible assets | 1,276,575 | ||||
— Other non-current assets | 19,510 | ||||
— Current liabilities | (236,265 | ) | |||
— Deferred tax liabilities | (581,816 | ) | |||
— Non-current liabilities | (693,684 | ) | |||
1,351,299 | |||||
F-37
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F-38
Table of Contents
Rp | ||||
Purchase consideration — net of discount on promissory notes | 3,338,653 | |||
Historical amount of net assets | 1,061,437 | |||
Difference in value for 100% ownership | 2,277,216 | |||
Difference adjusted to stockholders’ equity for Indosat’s 13% ownership in Pramindo | 296,038 | |||
Rp | |||||
Purchase consideration — net of discount on promissory notes | 3,338,653 | ||||
Fair value of net assets acquired: | |||||
— Cash and cash equivalents | 141,475 | ||||
— Distributable KSO revenue receivable | 187,468 | ||||
— Other current assets | 13,839 | ||||
— Property, plant and equipment | 1,807,338 | ||||
— Intangible assets | 2,752,267 | ||||
— Other non-current assets | 160,139 | ||||
— Current liabilities | (284,120 | ) | |||
— Deferred tax liabilities | (1,115,645 | ) | |||
— Non-current liabilities | (620,146 | ) | |||
Fair value of net assets | 3,042,615 | ||||
Difference adjusted to equity for 13% Indosat’s ownership in Pramindo | 296,038 | ||||
Total purchase consideration | 3,338,653 | ||||
F-39
Table of Contents
Rp | ||||
Distributable KSO revenue receivable | 540,267 | |||
Property, plant and equipment | 1,556,269 | |||
Intangible assets | 1,982,564 | |||
Other assets | 34,372 | |||
Deferred tax liabilities | (393,794 | ) | ||
Fair value of net assets acquired | 3,719,678 | |||
Borrowings assumed | (2,577,926 | ) | ||
Amount of cash and promissory notes given up | 1,141,752 | |||
F-40
Table of Contents
2001 | 2002 | 2003 | ||||||||||
Operating revenues | 17,622,331 | 22,297,575 | 27,513,766 | |||||||||
Operating income | 7,215,988 | 8,778,831 | 11,819,863 | |||||||||
Income before tax | 5,797,788 | 11,726,254 | 11,531,510 | |||||||||
Net income | 3,409,285 | 8,127,080 | 6,571,287 | |||||||||
Net income per share (full amount) | 338.22 | 806.26 | 651.91 | |||||||||
Net income per ADS (full amount) | 6,764.45 | 16,125.16 | 13,038.27 |
2002 | 2003 | |||||||
Dayamitra (Note 5a) | 51,120 | 65,458 | ||||||
AWI | 196,463 | — | ||||||
247,583 | 65,458 | |||||||
2002 | 2003 | ||||||||||
Cash on hand | 12,696 | 6,790 | |||||||||
Cash in banks | |||||||||||
Related parties | |||||||||||
Rupiah | |||||||||||
Bank Negara Indonesia | 152,774 | 217,276 | |||||||||
Bank Mandiri | 64,603 | 109,887 | |||||||||
Bank Rakyat Indonesia | 8,059 | 9,988 | |||||||||
Bank Pos Nusantara | 2,582 | 1,135 | |||||||||
Total | 228,018 | 338,286 | |||||||||
Foreign currencies | |||||||||||
Bank Mandiri | 29,019 | 32,016 | |||||||||
Bank Negara Indonesia | 4,560 | 1,576 | |||||||||
Bank Rakyat Indonesia | 479 | 453 | |||||||||
Total | 34,058 | 34,045 | |||||||||
Total — related parties | 262,076 | 372,331 | |||||||||
F-41
Table of Contents
2002 | 2003 | ||||||||||
Third parties | |||||||||||
Rupiah | |||||||||||
Citibank | 10,426 | 302 | |||||||||
Bank Bukopin | 6,428 | 9,463 | |||||||||
Bank Central Asia | 5,630 | 7,889 | |||||||||
Bank Niaga | 540 | 2,102 | |||||||||
Bank Mizuho Indonesia | 142 | — | |||||||||
ABN Amro Bank | 140 | 251 | |||||||||
Bank Danamon | 103 | 172 | |||||||||
Lippo Bank | 97 | 274 | |||||||||
Chase Manhattan | 39 | — | |||||||||
Bank International Indonesia | 136 | 3 | |||||||||
Bank Buana Indonesia | 2 | 218 | |||||||||
Bank Muamalat Indonesia | — | 76 | |||||||||
Bank Mega | — | 4,239 | |||||||||
Deutsche Bank | — | 6,097 | |||||||||
Total | 23,683 | 31,086 | |||||||||
Foreign currencies | |||||||||||
Citibank | 940 | 3,231 | |||||||||
Deutsche Bank | 456 | 2,412 | |||||||||
Standard Chartered Bank | 194 | 1,808 | |||||||||
ABN Amro Bank | 33 | 73 | |||||||||
Bank Internasional Indonesia | — | 22 | |||||||||
Bank Central Asia | — | 31 | |||||||||
Bank of Tokyo Mitsubishi | — | 26 | |||||||||
Total | 1,623 | 7,603 | |||||||||
Total — third parties | 25,306 | 38,689 | |||||||||
Total cash in banks | 287,382 | 411,020 | |||||||||
F-42
Table of Contents
2002 | 2003 | ||||||||||
Time deposits | |||||||||||
Related parties | |||||||||||
Rupiah | |||||||||||
Bank Mandiri | 779,983 | 968,829 | |||||||||
Bank Rakyat Indonesia | 607,420 | 529,350 | |||||||||
Bank Negara Indonesia | 298,565 | 485,115 | |||||||||
Bank Tabungan Negara | 108,480 | 169,590 | |||||||||
Total | 1,794,448 | 2,152,884 | |||||||||
Foreign currencies | |||||||||||
Bank Mandiri | 3,022,661 | 526,384 | |||||||||
Bank Negara Indonesia | 2,447 | 5,789 | |||||||||
Total | 3,025,108 | 532,173 | |||||||||
Total — related parties | 4,819,556 | 2,685,057 | |||||||||
Third parties | |||||||||||
Rupiah | |||||||||||
Standard Chartered Bank | 142,000 | 287,122 | |||||||||
Bank Mega | 129,757 | 91,342 | |||||||||
Bank Bukopin | 58,214 | 96,099 | |||||||||
Bank Yudha Bhakti | 6,000 | 1,000 | |||||||||
Bank Niaga | 5,000 | 4,500 | |||||||||
Bank Internasional Indonesia | 2,000 | — | |||||||||
Deutsche Bank | — | 359,342 | |||||||||
Bank Danamon | — | 145,725 | |||||||||
ABN Amro Bank | — | 1,000 | |||||||||
Bank NISP | — | 47,369 | |||||||||
Bank Jabar | — | 67,204 | |||||||||
Total | 342,971 | 1,100,703 | |||||||||
Foreign currencies | |||||||||||
Standard Chartered Bank | — | 5,697 | |||||||||
Deutsche Bank | 236,465 | 885,205 | |||||||||
Total | 236,465 | 890,902 | |||||||||
Total — third parties | 579,436 | 1,991,605 | |||||||||
Total time deposits | 5,398,992 | 4,676,662 | |||||||||
Total cash and cash equivalents | 5,699,070 | 5,094,472 | |||||||||
2002 | 2003 | |||||||
Rupiah | 11.59% – 18.45% | 5.5% – 14.25% | ||||||
Foreign currencies | 1.15% – 5.03% | 0.92% – 2.25% |
F-43
Table of Contents
2002 | 2003 | ||||||||||
Time deposits | |||||||||||
Related parties | |||||||||||
Rupiah | |||||||||||
Bank Mandiri | 100,000 | — | |||||||||
Bank Rakyat Indonesia | 423,000 | — | |||||||||
523,000 | — | ||||||||||
Third parties | |||||||||||
Bank Muamalat Indonesia | — | 4,006 | |||||||||
Total time deposits | 523,000 | 4,006 | |||||||||
Available-for-sale securities | |||||||||||
Medium Term Notes — PSSI | 50,000 | — | |||||||||
Total available-for-sale securities | 50,000 | — | |||||||||
Total temporary investments | 573,000 | 4,006 | |||||||||
2002 | 2003 | |||||||
Rupiah | 11.14% – 14.33% | 6.00% – 6.76% |
F-44
Table of Contents
2002 | 2003 | |||||||
KSO Units | 633,327 | 265,517 | ||||||
Government agencies | 253,845 | 181,551 | ||||||
PT Mandara Selular Indonesia (formerly PT Mobile Selular Indonesia) | 33,560 | 37,326 | ||||||
PT Citra Sari Makmur | 16,262 | 20,450 | ||||||
PT Bakrie Telecom (formerly PT Radio Telepon Indonesia) | 18,233 | — | ||||||
PT Komunikasi Selular Indonesia* | 7,500 | — | ||||||
PT Metro Selular Nusantara* | 5,607 | — | ||||||
PT Patra Telekomunikasi Indonesia | — | 8,513 | ||||||
PT Aplikanusa Lintasarta | 3,578 | 5,819 | ||||||
Other | 10,527 | 2,679 | ||||||
Total | 982,439 | 521,855 | ||||||
Allowance for doubtful accounts | (95,676 | ) | (110,932 | ) | ||||
Net | 886,763 | 410,923 | ||||||
* | no longer related parties in 2003 |
2002 | 2003 | |||||||
Residential and business subscribers | 2,140,894 | 2,682,288 | ||||||
Overseas international carriers | 167,853 | 42,836 | ||||||
Others | 18,470 | 29,841 | ||||||
Total | 2,327,217 | 2,754,965 | ||||||
Allowance for doubtful accounts | (407,313 | ) | (332,960 | ) | ||||
Net | 1,919,904 | 2,422,005 | ||||||
F-45
Table of Contents
2002 | 2003 | |||||||
Up to 6 months | 763,820 | 350,348 | ||||||
7 to 12 months | 143,773 | 42,250 | ||||||
13 to 24 months | 30,227 | 42,920 | ||||||
More than 24 months | 44,619 | 86,337 | ||||||
Total | 982,439 | 521,855 | ||||||
Allowance for doubtful accounts | (95,676 | ) | (110,932 | ) | ||||
Net | 886,763 | 410,923 | ||||||
2002 | 2003 | |||||||
Up to 3 months | 1,919,904 | 2,358,570 | ||||||
More than 3 months | 407,313 | 396,395 | ||||||
Total | 2,327,217 | 2,754,965 | ||||||
Allowance for doubtful accounts | (407,313 | ) | (332,960 | ) | ||||
Net | 1,919,904 | 2,422,005 | ||||||
2002 | 2003 | |||||||
Rupiah | 911,065 | 443,930 | ||||||
United States Dollar | 71,374 | 77,925 | ||||||
Total | 982,439 | 521,855 | ||||||
Allowance for doubtful accounts | (95,676 | ) | (110,932 | ) | ||||
Net | 886,763 | 410,923 | ||||||
2002 | 2003 | |||||||
Rupiah | 2,251,199 | 2,720,331 | ||||||
United States Dollar | 76,018 | 34,634 | ||||||
Total | 2,327,217 | 2,754,965 | ||||||
Allowance for doubtful accounts | (407,313 | ) | (332,960 | ) | ||||
Net | 1,919,904 | 2,422,005 | ||||||
F-46
Table of Contents
2001 | 2002 | 2003 | ||||||||||
Beginning balance | 429,579 | 578,785 | 502,989 | |||||||||
Additions | 266,433 | 523,024 | 296,099 | |||||||||
Reversal of allowance for trade accounts receivable from AWI (Note 5c) | — | (511,933 | ) | — | ||||||||
Bad debts write-off | (117,227 | ) | (86,887 | ) | (355,196 | ) | ||||||
Ending balance | 578,785 | 502,989 | 443,892 | |||||||||
2002 | 2003 | ||||||||
Components: | |||||||||
Telephone terminals and spare parts | 29,311 | 27,407 | |||||||
Cable and transmission installation spare parts | 15,226 | 1,540 | |||||||
Other spare parts | 11,020 | 13,521 | |||||||
Total | 55,557 | 42,468 | |||||||
Allowance for obsolescence | (30,160 | ) | (14,757 | ) | |||||
Net | 25,397 | 27,711 | |||||||
Modules: | |||||||||
Cable and transmission installation spare parts | 54,912 | 55,997 | |||||||
Telephone terminals and spare parts | 42,563 | 37,917 | |||||||
Other spare parts | 434 | 272 | |||||||
Total | 97,909 | 94,186 | |||||||
Allowance for obsolescence | (23,464 | ) | (25,584 | ) | |||||
Net | 74,445 | 68,602 | |||||||
SIM cards and prepaid voucher blanks | 40,011 | 57,838 | |||||||
Allowance for obsolescence | (171 | ) | (148 | ) | |||||
Net | 39,840 | 57,690 | |||||||
Total | 139,682 | 154,003 | |||||||
F-47
Table of Contents
2002 | 2003 | |||||||
Beginning balance | 48,997 | 53,795 | ||||||
Additions | 20,012 | 4,523 | ||||||
Inventory write-off | (15,214 | ) | (17,829 | ) | ||||
Ending balance | 53,795 | 40,489 | ||||||
10. | PREPAID EXPENSES |
2002 | 2003 | |||||||
Pension cost (Note 46) | 28,181 | 286,652 | ||||||
Rental | 131,906 | 173,242 | ||||||
Salary | 105,090 | 124,061 | ||||||
Insurance | 9,144 | 98,167 | ||||||
Telephone directory issuance cost | 68,382 | 11,091 | ||||||
Other | 10,953 | 24,704 | ||||||
Total | 353,656 | 717,917 | ||||||
11. | OTHER CURRENT ASSETS |
2002 | 2003 | |||||||
Bank Mandiri | 540,520 | 45,083 | ||||||
Deutsche Bank and Citibank | 151,268 | — | ||||||
Total | 691,788 | 45,083 | ||||||
F-48
Table of Contents
2002 | ||||||||||||||||||||||||
Percentage | Equity in | |||||||||||||||||||||||
of | Opening | Addition/ | Net Income | Translation | Ending | |||||||||||||||||||
Ownership | Balance | (Deduction) | (Loss) | Adjustment | Balance | |||||||||||||||||||
Equity method: | ||||||||||||||||||||||||
PT Citra Sari Makmur | 25.00 | 74,833 | — | 8,446 | (21,009 | ) | 62,270 | |||||||||||||||||
PT Telekomindo Selular Raya | 100.00 | 87,907 | (62,907 | ) | 1,642 | — | 26,642 | |||||||||||||||||
PT Metro Selular Nusantara | 20.17 | 1,657 | 13,513 | 1,137 | — | 16,307 | ||||||||||||||||||
PT Patra Telekomunikasi Indonesia | 30.00 | 12,133 | — | 710 | — | 12,843 | ||||||||||||||||||
PT Napsindo Primatel International | 32.00 | 12,030 | — | (7,337 | ) | — | 4,693 | |||||||||||||||||
PT Multimedia Nusantara | 31.00 | 1,928 | — | — | — | 1,928 | ||||||||||||||||||
PT Mandara Selular Indonesia | 25.00 | — | — | — | — | — | ||||||||||||||||||
PT Pasifik Satelit Nusantara | 22.57 | — | — | — | — | — | ||||||||||||||||||
PT Menara Jakarta | 20.00 | — | — | — | — | — | ||||||||||||||||||
190,488 | (49,394 | ) | 4,598 | (21,009 | ) | 124,683 | ||||||||||||||||||
Cost method: | ||||||||||||||||||||||||
PT Batam Bintan Telekomunikasi | 5.00 | 587 | — | — | — | 587 | ||||||||||||||||||
PT Komunikasi Selular Indonesia | 14.20 | — | 57,570 | — | — | 57,570 | ||||||||||||||||||
PT Pembangunan Telekomunikasi Indonesia | 3.18 | 199 | — | — | — | 199 | ||||||||||||||||||
Medianusa Pte. Ltd. | 9.44 | 108 | — | — | — | 108 | ||||||||||||||||||
894 | 57,570 | — | — | 58,464 | ||||||||||||||||||||
191,382 | 8,176 | 4,598 | (21,009 | ) | 183,147 | |||||||||||||||||||
F-49
Table of Contents
2003 | |||||||||||||||||||||||||
Equity in | |||||||||||||||||||||||||
Percentage | Net | ||||||||||||||||||||||||
of | Opening | Addition/ | Income | Translation | Ending | ||||||||||||||||||||
Ownership | Balance | (Deduction) | (Loss) | Adjustment | Balance | ||||||||||||||||||||
Equity method: | |||||||||||||||||||||||||
PT Citra Sari Makmur | 25.00 | 62,270 | — | 1,585 | (11,433 | ) | 52,422 | ||||||||||||||||||
PT Patra Telekomunikasi Indonesia** | 30.00 | 12,843 | (2,745 | ) | 1,234 | — | 11,332 | ||||||||||||||||||
PT Napsindo Primatel International* | 60.00 | 4,693 | (4,693 | ) | — | — | — | ||||||||||||||||||
PT Multimedia Nusantara* | 100.00 | 1,928 | (1,928 | ) | — | — | — | ||||||||||||||||||
PT Telekomindo Selular Raya | — | 26,642 | (26,642 | ) | — | — | — | ||||||||||||||||||
PT Metro Selular Nusantara | — | 16,307 | (16,307 | ) | — | — | — | ||||||||||||||||||
PT Pasifik Satelit Nusantara | 43.69 | — | — | — | — | — | |||||||||||||||||||
PT Menara Jakarta | — | — | — | — | — | — | |||||||||||||||||||
124,683 | (52,315 | ) | 2,819 | (11,433 | ) | 63,754 | |||||||||||||||||||
Cost method: | |||||||||||||||||||||||||
PT Batam Bintan Telekomunikasi | 5.00 | 587 | — | — | — | 587 | |||||||||||||||||||
PT Pembangunan Telekomunikasi Indonesia | 3.18 | 199 | — | — | — | 199 | |||||||||||||||||||
Medianusa Pte. Ltd. | 9.44 | 108 | — | — | — | 108 | |||||||||||||||||||
PT Komunikasi Selular Indonesia | — | 57,570 | (57,570 | ) | — | — | — | ||||||||||||||||||
PT Mandara Selular Indonesia | 7.44 | — | — | — | — | — | |||||||||||||||||||
58,464 | (57,570 | ) | — | — | 894 | ||||||||||||||||||||
183,147 | (109,885 | ) | 2,819 | (11,433 | ) | 64,648 | |||||||||||||||||||
* | Consolidated in 2003 |
** | Deduction represents cash dividends received by the Company |
F-50
Table of Contents
• | The Company sold its investments in Telekomindo, TMI and GIP to RC for Rp101,838 million and recognized a gain of Rp101,838 million. | |
• | TMI sold its investments in PT Telekomindo Selular Raya (“Telesera”) and the fixed assets of PT Multisaka Mitra (“MSM”) to the Company for Rp87,907 million and Rp17,442 million, respectively. |
F-51
Table of Contents
F-52
Table of Contents
January 1, | Pramindo | December 31, | |||||||||||||||||||||||
2002 | Acquisition | Additions | Deductions | Reclassifications | 2002 | ||||||||||||||||||||
At cost or revalued amounts: | |||||||||||||||||||||||||
Direct ownership | |||||||||||||||||||||||||
Land | 195,153 | 8,881 | 60,553 | (54 | ) | 3,400 | 267,933 | ||||||||||||||||||
Buildings | 1,596,806 | — | 42,130 | (18,888 | ) | 38,342 | 1,658,390 | ||||||||||||||||||
Switching equipment | 8,842,943 | 456,062 | 53,341 | (15,606 | ) | 292,463 | 9,629,203 | ||||||||||||||||||
Telegraph, telex and data communication equipment | 206,592 | — | 4,141 | (3,001 | ) | (1,065 | ) | 206,667 | |||||||||||||||||
Transmission installation and equipment | 4,899,964 | 776,597 | 2,349,624 | (8,942 | ) | 2,323,071 | 10,340,314 | ||||||||||||||||||
Satellite, earth station and equipment | 5,772,334 | — | 5,892 | — | 19,785 | 5,798,011 |
F-53
Table of Contents
January 1, | Pramindo | December 31, | ||||||||||||||||||||||||
2002 | Acquisition | Additions | Deductions | Reclassifications | 2002 | |||||||||||||||||||||
Cable network | 11,689,767 | 333,111 | 267,993 | (7,602 | ) | 839,067 | 13,122,336 | |||||||||||||||||||
Power supply | 998,461 | — | 30,037 | (538 | ) | 4,574 | 1,032,534 | |||||||||||||||||||
Data processing equipment | 1,863,387 | 104,895 | 442,409 | (79,550 | ) | 408,696 | 2,739,837 | |||||||||||||||||||
Other telecommunications peripherals | 507,652 | 97,316 | 55,511 | (6,704 | ) | 27,588 | 681,363 | |||||||||||||||||||
Office equipment | 615,046 | 9,492 | 40,429 | (26,589 | ) | 1,304 | 639,682 | |||||||||||||||||||
Vehicles | 187,874 | — | 3,968 | (1,717 | ) | (2,772 | ) | 187,353 | ||||||||||||||||||
Other equipment | 68,048 | 4,736 | 14,951 | (365 | ) | — | 87,370 | |||||||||||||||||||
Property under construction: | ||||||||||||||||||||||||||
Buildings | 17,556 | — | 67,666 | — | (42,309 | ) | 42,913 | |||||||||||||||||||
Switching equipment | 187,125 | — | 519,066 | — | (357,905 | ) | 348,286 | |||||||||||||||||||
Transmission installation and equipment | 291,861 | 16,248 | 2,157,089 | — | (2,325,699 | ) | 139,499 | |||||||||||||||||||
Satellite, earth station and equipment | 306,365 | — | — | — | (42,336 | ) | 264,029 | |||||||||||||||||||
Cable network | 189,883 | — | 806,897 | — | (881,360 | ) | 115,420 | |||||||||||||||||||
Power supply | 6,258 | — | 5,095 | — | (5,638 | ) | 5,715 | |||||||||||||||||||
Data processing equipment | 133,543 | — | 287,916 | — | (410,652 | ) | 10,807 | |||||||||||||||||||
Other telecommunications peripherals | 3,492 | — | 10,157 | — | — | 13,649 | ||||||||||||||||||||
Leased assets | ||||||||||||||||||||||||||
Vehicles | 3,804 | — | 215 | — | (379 | ) | 3,640 | |||||||||||||||||||
Total | 38,583,914 | 1,807,338 | 7,225,080 | (169,556 | ) | (111,825 | ) | 47,334,951 | ||||||||||||||||||
Accumulated depreciation: | ||||||||||||||||||||||||||
Direct ownership | ||||||||||||||||||||||||||
Buildings | 654,142 | — | 93,210 | (10,471 | ) | 116 | 736,997 | |||||||||||||||||||
Switching equipment | 3,985,490 | — | 650,215 | (568 | ) | (65,850 | ) | 4,569,287 | ||||||||||||||||||
Telegraph, telex and data communication equipment | 201,748 | — | 4,186 | (2,703 | ) | (1,188 | ) | 202,043 | ||||||||||||||||||
Transmission installation and equipment | 2,075,653 | — | 1,120,179 | (1,653 | ) | (10,443 | ) | 3,183,736 | ||||||||||||||||||
Satellite, earth station and equipment | 1,875,016 | — | 126,658 | — | (3 | ) | 2,001,671 | |||||||||||||||||||
Cable network | 4,482,733 | — | 829,627 | (1,102 | ) | (25,049 | ) | 5,286,209 | ||||||||||||||||||
Power supply | 667,615 | — | 42,673 | (654 | ) | 15,351 | 724,985 | |||||||||||||||||||
Data processing equipment | 679,382 | — | 388,453 | (58,618 | ) | (19,163 | ) | 990,054 | ||||||||||||||||||
Other telecommunications peripherals | 437,610 | — | 65,036 | (326 | ) | (3,227 | ) | 499,093 | ||||||||||||||||||
Office equipment | 425,057 | — | 49,706 | (16,244 | ) | 1,999 | 460,518 | |||||||||||||||||||
Vehicles | 158,945 | — | 14,385 | (3,361 | ) | (2,743 | ) | 167,226 | ||||||||||||||||||
Other equipment | 48,815 | — | 13,820 | (298 | ) | 683 | 63,020 | |||||||||||||||||||
Leased assets | ||||||||||||||||||||||||||
Vehicles | 669 | — | 837 | — | — | 1,506 | ||||||||||||||||||||
Total | 15,692,875 | — | 3,398,985 | (95,998 | ) | (109,517 | ) | 18,886,345 | ||||||||||||||||||
Net Book Value | 22,891,039 | 28,448,606 | ||||||||||||||||||||||||
F-54
Table of Contents
January 1, | AWI | December 31, | ||||||||||||||||||||||||
2003 | Acquisitions | Additions | Deductions | Reclassifications | 2003 | |||||||||||||||||||||
At cost or revalued amounts: | ||||||||||||||||||||||||||
Direct ownership | ||||||||||||||||||||||||||
Land | 267,933 | — | 52,738 | (20,762 | ) | (945 | ) | 298,964 | ||||||||||||||||||
Buildings | 1,658,390 | 2,436 | 43,301 | (43,293 | ) | 158,261 | 1,819,095 | |||||||||||||||||||
Switching equipment | 9,629,203 | 402,598 | 144,658 | (10 | ) | 296,943 | 10,473,392 | |||||||||||||||||||
Telegraph, telex and data communication equipment | 206,667 | — | 3,833 | (86 | ) | (11,100 | ) | 199,314 | ||||||||||||||||||
Transmission installation and equipment | 10,340,314 | 7,565 | 278,020 | (11,903 | ) | 6,204,183 | 16,818,179 | |||||||||||||||||||
Satellite, earth station and equipment | 5,798,011 | — | 21,512 | — | 390,304 | 6,209,827 | ||||||||||||||||||||
Cable network | 13,122,336 | 1,075,987 | 637,068 | (59,275 | ) | 712,681 | 15,488,797 | |||||||||||||||||||
Power supply | 1,032,534 | 9,549 | 18,473 | (3,996 | ) | 92,898 | 1,149,458 | |||||||||||||||||||
Data processing equipment | 2,739,837 | 2,269 | 131,942 | (1,810 | ) | 380,429 | 3,252,667 | |||||||||||||||||||
Other telecommunications peripherals | 681,363 | — | 33,769 | (369 | ) | 20,425 | 735,188 | |||||||||||||||||||
Office equipment | 639,682 | — | 25,585 | (1,802 | ) | (2,974 | ) | 660,491 | ||||||||||||||||||
Vehicles | 187,353 | — | 1,298 | (1,760 | ) | 962 | 187,853 | |||||||||||||||||||
Other equipment | 87,370 | — | 1,890 | (6 | ) | 18,319 | 107,573 | |||||||||||||||||||
Property under construction: | ||||||||||||||||||||||||||
Buildings | 42,913 | — | 36,173 | — | (24,198 | ) | 54,888 | |||||||||||||||||||
Switching equipment | 348,286 | — | 222,275 | — | (412,505 | ) | 158,056 | |||||||||||||||||||
Transmission installation and equipment | 139,499 | — | 5,843,119 | — | (5,888,711 | ) | 93,907 | |||||||||||||||||||
Satellite, earth station and equipment | 264,029 | — | 390,994 | — | (47,851 | ) | 607,172 | |||||||||||||||||||
Cable network | 115,420 | 55,865 | 1,567,652 | — | (1,724,413 | ) | 14,524 | |||||||||||||||||||
Power supply | 5,715 | — | 18,416 | — | (24,025 | ) | 106 | |||||||||||||||||||
Data processing equipment | 10,807 | — | 63,945 | (634 | ) | (63,592 | ) | 10,526 | ||||||||||||||||||
Other telecommunications peripherals | 13,649 | — | 15,853 | (1,392 | ) | (11,627 | ) | 16,483 | ||||||||||||||||||
Leased assets | ||||||||||||||||||||||||||
Vehicles | 3,640 | — | 73 | (1,689 | ) | (1,785 | ) | 239 | ||||||||||||||||||
Total | 47,334,951 | 1,556,269 | 9,522,587 | (148,787 | ) | 61,679 | 58,356,699 | |||||||||||||||||||
Accumulated depreciation: | ||||||||||||||||||||||||||
Direct ownership | ||||||||||||||||||||||||||
Buildings | 736,997 | — | 115,602 | (41,293 | ) | 1,013 | 812,319 | |||||||||||||||||||
Switching equipment | 4,569,287 | — | 668,136 | (4 | ) | 29,069 | 5,266,488 | |||||||||||||||||||
Telegraph, telex and data communication equipment | 202,043 | — | 3,365 | (59 | ) | (11,100 | ) | 194,249 | ||||||||||||||||||
Transmission installation and equipment | 3,183,736 | — | 1,784,031 | (4,534 | ) | (6,338 | ) | 4,956,895 | ||||||||||||||||||
Satellite, earth station and equipment | 2,001,671 | — | 153,506 | — | 3,202 | 2,158,379 | ||||||||||||||||||||
Cable network | 5,286,209 | — | 1,300,460 | (20,312 | ) | 46,924 | 6,613,281 | |||||||||||||||||||
Power supply | 724,985 | — | 77,765 | (3,437 | ) | (1,388 | ) | 797,925 | ||||||||||||||||||
Data processing equipment | 990,054 | — | 492,799 | (2,394 | ) | (10,643 | ) | 1,469,816 | ||||||||||||||||||
Other telecommunications peripherals | 499,093 | — | 71,217 | (240 | ) | 2,120 | 572,190 | |||||||||||||||||||
Office equipment | 460,518 | — | 37,251 | (1,088 | ) | 786 | 497,467 |
F-55
Table of Contents
January 1, | AWI | December 31, | |||||||||||||||||||||||
2003 | Acquisitions | Additions | Deductions | Reclassifications | 2003 | ||||||||||||||||||||
Vehicles | 167,226 | — | 7,986 | (1,705 | ) | (373 | ) | 173,134 | |||||||||||||||||
Other equipment | 63,020 | — | 2,028 | (6 | ) | 4,260 | 69,302 | ||||||||||||||||||
Leased assets | |||||||||||||||||||||||||
Vehicles | 1,506 | — | 307 | (848 | ) | (851 | ) | 114 | |||||||||||||||||
Total | 18,886,345 | — | 4,714,453 | (75,920 | ) | 56,681 | 23,581,559 | ||||||||||||||||||
Net Book Value | 28,448,606 | 34,775,140 | |||||||||||||||||||||||
2002 | 2003 | |||||||
Proceeds from sale of property, plant and equipment | 204,008 | 255,750 | ||||||
Net book value | 73,558 | 72,867 | ||||||
Gain on sale | 130,450 | 182,883 | ||||||
F-56
Table of Contents
14. | PROPERTY, PLANT AND EQUIPMENT UNDER JOINT OPERATION SCHEME |
2002 | 2003 | |||||||
Land | 3,783 | 200 | ||||||
Buildings | 203,660 | 237,045 | ||||||
Switching equipment | 1,346,764 | 871,799 | ||||||
Telegraph, telex and data communication equipment | 62,501 | 34,014 | ||||||
Transmission installation and equipment | 513,601 | 351,172 | ||||||
Satellite, earth station and equipment | 51,878 | 51,455 | ||||||
Cable network | 1,638,469 | 1,164,364 | ||||||
Power supply | 146,045 | 145,993 | ||||||
Data processing equipment | 87,745 | 67,213 | ||||||
Other telecommunications peripherals | 93,045 | 58,103 | ||||||
Office equipment | 42,133 | 48,765 | ||||||
Vehicles | 22,391 | 16,901 | ||||||
Other equipment | 463 | 463 | ||||||
Property under construction | 60,106 | 3,322 | ||||||
Total cost | 4,272,584 | 3,050,809 | ||||||
Accumulated depreciation | (3,073,555 | ) | (2,254,971 | ) | ||||
Net book value | 1,199,029 | 795,838 | ||||||
15. | PROPERTY, PLANT AND EQUIPMENT UNDER REVENUE-SHARING ARRANGEMENTS |
January 1, | December 31, | ||||||||||||||||||||
2002 | Additions | Deductions | Reclassifications | 2002 | |||||||||||||||||
At cost: | |||||||||||||||||||||
Land | 3,160 | — | — | — | 3,160 | ||||||||||||||||
Buildings | 23,952 | — | — | (225 | ) | 23,727 | |||||||||||||||
Switching equipment | 624,794 | — | — | (1,037 | ) | 623,757 | |||||||||||||||
Transmission installation and equipment | 107,558 | — | — | — | 107,558 | ||||||||||||||||
Cable network | 334,345 | — | — | (1,157 | ) | 333,188 | |||||||||||||||
Other telecommunications peripherals | 199,842 | — | (69,267 | ) | (1,379 | ) | 129,196 | ||||||||||||||
Total | 1,293,651 | — | (69,267 | ) | (3,798 | ) | 1,220,586 | ||||||||||||||
F-57
Table of Contents
January 1, | December 31, | ||||||||||||||||||||
2002 | Additions | Deductions | Reclassifications | 2002 | |||||||||||||||||
Accumulated depreciation: | |||||||||||||||||||||
Land | 1,146 | 132 | — | — | 1,278 | ||||||||||||||||
Buildings | 9,334 | 1,183 | — | (106 | ) | 10,411 | |||||||||||||||
Switching equipment | 322,455 | 38,776 | — | (594 | ) | 360,637 | |||||||||||||||
Transmission installation and equipment | 87,143 | 8,055 | — | — | 95,198 | ||||||||||||||||
Cable network | 221,034 | 26,203 | — | (993 | ) | 246,244 | |||||||||||||||
Other telecommunications peripherals | 199,806 | 36 | (69,267 | ) | (1,379 | ) | 129,196 | ||||||||||||||
Total | 840,918 | 74,385 | (69,267 | ) | (3,072 | ) | 842,964 | ||||||||||||||
Net Book Value | 452,733 | 377,622 | |||||||||||||||||||
January 1, | December 31, | ||||||||||||||||||||
2003 | Additions | Deductions | Reclassifications | 2003 | |||||||||||||||||
At cost: | |||||||||||||||||||||
Land | 3,160 | — | — | — | 3,160 | ||||||||||||||||
Buildings | 23,727 | — | — | (3,472 | ) | 20,255 | |||||||||||||||
Switching equipment | 623,757 | — | (9,154 | ) | (76,713 | ) | 537,890 | ||||||||||||||
Transmission installation and equipment | 107,558 | — | (14,530 | ) | — | 93,028 | |||||||||||||||
Cable network | 333,188 | 27,314 | — | (42,121 | ) | 318,381 | |||||||||||||||
Other telecommunications peripherals | 129,196 | — | (2,711 | ) | (2,513 | ) | 123,972 | ||||||||||||||
Total | 1,220,586 | 27,314 | (26,395 | ) | (124,819 | ) | 1,096,686 | ||||||||||||||
Accumulated depreciation: | |||||||||||||||||||||
Land | 1,278 | 171 | — | — | 1,449 | ||||||||||||||||
Buildings | 10,411 | 1,155 | — | (1,762 | ) | 9,804 | |||||||||||||||
Switching equipment | 360,637 | 37,458 | (9,154 | ) | (47,416 | ) | 341,525 | ||||||||||||||
Transmission installation and equipment | 95,198 | 9,052 | (14,530 | ) | — | 89,720 | |||||||||||||||
Cable network | 246,244 | 17,231 | — | (38,300 | ) | 225,175 | |||||||||||||||
Other telecommunications peripherals | 129,196 | — | (2,711 | ) | (2,513 | ) | 123,972 | ||||||||||||||
Total | 842,964 | 65,067 | (26,395 | ) | (89,991 | ) | 791,645 | ||||||||||||||
Net Book Value | 377,622 | 305,041 | |||||||||||||||||||
F-58
Table of Contents
2002 | 2003 | |||||||
Gross amount | 1,220,586 | 1,096,686 | ||||||
Accumulated amortization: | ||||||||
Beginning balance | (1,098,583 | ) | (1,077,789 | ) | ||||
Addition (Note 39) | (52,271 | ) | (58,379 | ) | ||||
Deduction | 73,065 | 151,214 | ||||||
Ending balance | (1,077,789 | ) | (984,954 | ) | ||||
Net | 142,797 | 111,732 | ||||||
16. | INTANGIBLE ASSETS |
2002 | 2003 | |||||||
Intangible assets | 3,892,145 | 5,144,050 | ||||||
License — net | 6,672 | — | ||||||
3,898,817 | 5,144,050 | |||||||
Other | |||||||||||||
Intangible | |||||||||||||
Goodwill | Assets | Total | |||||||||||
Gross carrying amount: | |||||||||||||
Balance as of December 31, 2001 | 106,348 | 1,276,575 | 1,382,923 | ||||||||||
Addition — acquisition of Pramindo (Note 5b) | — | 2,752,267 | 2,752,267 | ||||||||||
Balance as of December 31, 2002 | 106,348 | 4,028,842 | 4,135,190 | ||||||||||
Accumulated amortization: | |||||||||||||
Balance as of December 31, 2001 | (12,412 | ) | (42,643 | ) | (55,055 | ) | |||||||
Amortization expense for 2002 | (21,269 | ) | (166,721 | ) | (187,990 | ) | |||||||
Balance as of December 31, 2002 | (33,681 | ) | (209,364 | ) | (243,045 | ) | |||||||
Net book value | 72,667 | 3,819,478 | 3,892,145 | ||||||||||
Gross carrying amount: | |||||||||||||
Balance as of December 31, 2002 | 106,348 | 4,028,842 | 4,135,190 | ||||||||||
Addition — acquisition of AWI (Note 5c) | — | 1,982,564 | 1,982,564 | ||||||||||
106,348 | 6,011,406 | 6,117,754 | |||||||||||
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Table of Contents
Other | |||||||||||||
Intangible | |||||||||||||
Goodwill | Assets | Total | |||||||||||
Accumulated amortization: | |||||||||||||
Balance as of December 31, 2002 | (33,681 | ) | (209,364 | ) | (243,045 | ) | |||||||
Amortization expense for 2003 | (21,270 | ) | (709,389 | ) | (730,659 | ) | |||||||
(54,951 | ) | (918,753 | ) | (973,704 | ) | ||||||||
Net book value | 51,397 | 5,092,653 | 5,144,050 | ||||||||||
Weighted average amortization period | 5 years | 8.26 years |
17. | ESCROW ACCOUNTS |
2002 | 2003 | |||||||
Citibank N.A., Singapore | 129,188 | 239,689 | ||||||
JP Morgan Chase Bank | 168,740 | 276,439 | ||||||
Bank Mandiri | — | 6,018 | ||||||
297,928 | 522,146 | |||||||
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Table of Contents
18. | TRADE ACCOUNTS PAYABLE |
2002 | 2003 | ||||||||
Related parties | |||||||||
Payables to other telecommunications carriers | 365,786 | 322,842 | |||||||
Concession fees | 359,665 | 224,370 | |||||||
Purchases of equipment, materials and services | 64,776 | 110,266 | |||||||
Total | 790,227 | 657,478 | |||||||
Third parties | |||||||||
Purchases of equipment, materials and services | 2,015,145 | 2,892,803 | |||||||
Payables related to revenue-sharing arrangements | 81,710 | 94,508 | |||||||
Payables to other telecommunication providers | 175,769 | 122,543 | |||||||
Total | 2,272,624 | 3,109,854 | |||||||
Total | 3,062,851 | 3,767,332 | |||||||
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2002 | 2003 | |||||||
Rupiah | 1,961,804 | 2,825,795 | ||||||
U.S. Dollars | 831,258 | 900,408 | ||||||
Euro | 264,959 | 29,463 | ||||||
Japanese Yen | 229 | 10,033 | ||||||
Great Britain Pound Sterling | 4,598 | �� | 916 | |||||
Singapore Dollars | 3 | 717 | ||||||
Total | 3,062,851 | 3,767,332 | ||||||
19. | ACCRUED EXPENSES |
2002 | 2003 | |||||||
Early retirement benefits | 670,981 | 132,810 | ||||||
Salaries and employee bonuses | 411,739 | 473,447 | ||||||
Interest and bank charges | 298,840 | 261,050 | ||||||
General, administrative and marketing | 199,625 | 259,462 | ||||||
Operations, maintenance and telecommunications services | 180,740 | 89,103 | ||||||
AWI settlement (Note 5c) | 179,000 | — | ||||||
Other | 8,989 | — | ||||||
Total | 1,949,914 | 1,215,872 | ||||||
20. | UNEARNED INCOME |
2002 | 2003 | |||||||
Prepaid pulse reload vouchers | 375,021 | 740,077 | ||||||
Telephone directory | 52,729 | — | ||||||
Other telecommunication services | 8,069 | 16,361 | ||||||
Other | 9,742 | 6,773 | ||||||
Total | 445,561 | 763,211 | ||||||
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21. | ADVANCES FROM CUSTOMERS AND SUPPLIERS |
22. | SHORT-TERM BANK LOANS |
2002 | 2003 | |||||||
Bank Mandiri | — | 37,642 | ||||||
Citibank N.A. | 39,205 | — | ||||||
Total | 39,205 | 37,642 | ||||||
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Notes | 2002 | 2003 | ||||||||||
Two-step loans | 24 | 836,109 | 832,135 | |||||||||
Bank loans | 26 | 162,077 | 808,793 | |||||||||
Liabilities for acquisitions of subsidiaries | 27 | 1,385,956 | 1,587,775 | |||||||||
Suppliers’ credit loans | 28 | 163,072 | 164,958 | |||||||||
Bridging loan | 29 | 42,112 | 49,855 | |||||||||
Other | 901 | — | ||||||||||
Total | 2,590,227 | 3,443,516 | ||||||||||
Notes | Total | 2005 | 2006 | 2007 | 2008 | Later | ||||||||||||||||||||||
(In billions of Rupiah) | ||||||||||||||||||||||||||||
Two-step loans | 24 | 6,858.9 | 843.3 | 748.8 | 660.5 | 578.3 | 4,028.0 | |||||||||||||||||||||
Guaranteed notes | 25 | 1,121.2 | — | — | 1,121.2 | — | — | |||||||||||||||||||||
Bonds | 25 | 981.3 | — | — | 981.3 | — | — | |||||||||||||||||||||
Bank loans | 26 | 2,115.8 | 817.4 | 732.2 | 454.2 | 112.0 | — | |||||||||||||||||||||
Liabilities for acquisitions of subsidiaries | 27 | 747.0 | 151.4 | 159.4 | 167.8 | 176.6 | 91.8 | |||||||||||||||||||||
Suppliers’ credit loans | 28 | 0.7 | 0.7 | — | — | — | — | |||||||||||||||||||||
Bridging loan | 29 | 0.5 | 0.5 | — | — | — | — | |||||||||||||||||||||
Other long-term debt | 9.1 | — | — | — | — | 9.1 | ||||||||||||||||||||||
Total | 11,834.5 | 1,813.3 | 1,640.4 | 3,385.0 | 866.9 | 4,128.9 | ||||||||||||||||||||||
Interest Rate | Outstanding | |||||||||||||||
Creditors | 2002 | 2003 | 2002 | 2003 | ||||||||||||
Overseas banks | 2.95% – 18.41% | 3.10% – 14.90% | 8,271,096 | 7,441,076 | ||||||||||||
Consortium of contractors | 3.20% – 18.41% | 3.20% – 14.90% | 299,046 | 249,969 | ||||||||||||
Total | 8,570,142 | 7,691,045 | ||||||||||||||
Current maturities | (836,109 | ) | (832,135 | ) | ||||||||||||
Long-term portion | 7,734,033 | 6,858,910 | ||||||||||||||
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Interest Rate | Outstanding | |||||||||||||||
Currencies | 2002 | 2003 | 2002 | 2003 | ||||||||||||
U.S. Dollars | 3.85% – 8.70% | 4.00% – 7.98% | 3,500,678 | 2,946,687 | ||||||||||||
Rupiah | 12.00% – 18.41% | 9.69% – 14.90% | 3,366,297 | 3,050,043 | ||||||||||||
Japanese Yen | 2.95% | 3.10% | 1,188,369 | 1,244,331 | ||||||||||||
Euro | 7.18% – 8.30% | 7.33% – 8.45% | 215,752 | 200,015 | ||||||||||||
Total | 8,271,096 | 7,441,076 | ||||||||||||||
Interest Rate | Outstanding | |||||||||||||||
Currencies | 2002 | 2003 | 2002 | 2003 | ||||||||||||
Rupiah | 13.25% – 18.41% | 12.66% – 14.90% | 143,365 | 116,574 | ||||||||||||
Japanese Yen | 3.20% | 3.20% | 155,681 | 133,395 | ||||||||||||
Long-term portion | 299,046 | 249,969 | ||||||||||||||
a. Projected net revenue to projected debt service ratio should exceed 1.5:1 and 1.2:1 for two-step loans originating from World Bank and Asian Development Bank (“ADB”), respectively. | |
b. Internal financing (earnings before depreciation and interest expenses) should exceed 50% and 20% compared to capital expenditures for loans originally from World Bank and ADB, respectively. |
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25. | GUARANTEED NOTES AND BONDS |
2002 | 2003 | |||||||
Guaranteed Notes | 1,337,518 | 1,121,224 | ||||||
Bonds | 975,992 | 981,278 | ||||||
2,313,510 | 2,102,502 | |||||||
a. | Guaranteed Notes |
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2002 | 2003 | |||||||||||||||
Foreign Currency | Rupiah Equivalent | Foreign Currency | Rupiah Equivalent | |||||||||||||
US$ | US$ | |||||||||||||||
Principal | 150,000,000 | 1,341,000 | 132,727,000 | 1,123,534 | ||||||||||||
Discount | (389,468 | ) | (3,482 | ) | (272,857 | ) | (2,310 | ) | ||||||||
Net | 149,610,532 | 1,337,518 | 132,454,143 | 1,121,224 | ||||||||||||
b. | Bonds |
2002 | 2003 | |||||||
Principal | 1,000,000 | 1,000,000 | ||||||
Discount | (24,008 | ) | (18,722 | ) | ||||
Net | 975,992 | 981,278 | ||||||
1. | Debt service coverage ratio should exceed 1.5:1 | |
2. | Debt to equity ratio should not exceed: |
a. | 3:1 for the period of January 1, 2002 to December 31, 2002 | |
b. | 2.5:1 for the period of January 1, 2003 to December 31, 2003 |
c. | 2:1 for the period of January 1, 2004 to the redemption date of the bonds |
3. | Debt to EBITDA ratio should not exceed 3:1 |
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26. | BANK LOANS |
2002 | 2003 | |||||||||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||||||||
Original | Original | |||||||||||||||||||||||
Total Facility | Currency | Rupiah | Currency | Rupiah | ||||||||||||||||||||
Lenders | Currency | (in million) | (in million) | Equivalent | (in million) | Equivalent | ||||||||||||||||||
Group of lenders | US$ | 196.970 | — | — | 172.315 | 1,456,063 | ||||||||||||||||||
Citibank N.A. | EUR | 73.365 | — | — | 64.890 | 690,646 | ||||||||||||||||||
US$ | 114.883 | 7.690 | 68,911 | 51.340 | 434,059 | |||||||||||||||||||
Bank Central Asia | Rp | 173,000.000 | — | 25,903 | — | 139,826 | ||||||||||||||||||
Deutsche Bank | Rp | 108,817.710 | — | — | — | 95,418 | ||||||||||||||||||
Bank Finconesia | Rp | 31,767.818 | — | — | — | 15,884 | ||||||||||||||||||
Bank Mandiri | Rp | 82,425.262 | — | — | — | 42,115 | ||||||||||||||||||
Syndicated banks | Rp | 90,000.000 | — | 60,438 | — | 34,263 | ||||||||||||||||||
US$ | 4.000 | 3.288 | 29,460 | 1.864 | 15,751 | |||||||||||||||||||
Bank Niaga | Rp | 565.000 | — | — | — | 565 | ||||||||||||||||||
Japan Bank for International Cooperation | US$ | — | 7.000 | 62,720 | — | — | ||||||||||||||||||
Total | 247,432 | 2,924,590 | ||||||||||||||||||||||
Current maturities of bank loans | (162,077 | ) | (808,793 | ) | ||||||||||||||||||||
Long-term portion | 85,355 | 2,115,797 | ||||||||||||||||||||||
a. | Group of Lenders |
b. | Citibank N.A. |
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Amount | ||||||||
EUR | Rupiah | |||||||
Year | Full Amount | Equivalent | ||||||
2004 | 14,420,187 | 153,477 | ||||||
2005 | 14,420,187 | 153,477 | ||||||
2006 – 2008 | 36,050,466 | 383,692 |
2. | High Performance Backbone (“HP Backbone”) Loans |
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Amount | ||||||||
US$ | Rupiah | |||||||
Year | (in Full Amount) | Equivalent | ||||||
2004 | 4,340,025 | 36,738 | ||||||
2005 | 4,340,025 | 36,738 | ||||||
2006 – 2008 | 10,850,063 | 91,846 |
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F-72
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2002 | 2003 | |||||||
Rupiah | 17.14% – 19% | 14.87% – 19% | ||||||
U.S. Dollar | 3.5% – 4.38% | 3.31% – 3.68% |
2002 | 2003 | |||||||
Total outstanding amount | 62,720 | — | ||||||
Current maturities | (62,720 | ) | — | |||||
Long-term portion | — | — | ||||||
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2002 | 2003 | ||||||||
Dayamitra transaction(Note 5a) | |||||||||
PT Intidaya Sistelindomitra | 99,500 | — | |||||||
PT Mitracipta Sarananusa | 68,398 | — | |||||||
Cable and Wireless plc | 64,260 | — | |||||||
Less discount on promissory notes | (10,033 | ) | — | ||||||
222,125 | — | ||||||||
Pramindo transaction(Note 5b) | |||||||||
France Cables et Radio S.A. | 1,224,296 | 646,100 | |||||||
PT Astratel Nusantara | 1,071,343 | 565,497 | |||||||
Indosat | 397,928 | 210,042 | |||||||
Marubeni Corporation | 244,878 | 129,220 | |||||||
International Finance Corporation, USA | 91,829 | 48,457 | |||||||
NMP Singapore Pte. Ltd. | 30,610 | 16,157 | |||||||
Less discount on promissory notes | (278,074 | ) | (80,184 | ) | |||||
2,782,810 | 1,535,289 | ||||||||
AriaWest transaction(Note 5c) | |||||||||
PT Aria Infotek | — | 483,955 | |||||||
The Asian Infrastructure Fund | — | 115,227 | |||||||
MediaOne International I B.V. | — | 322,636 | |||||||
Less discount on promissory notes | — | (122,358 | ) | ||||||
— | 799,460 | ||||||||
Total | 3,004,935 | 2,334,749 | |||||||
Current maturity — net of discount | (1,385,956 | ) | (1,587,775 | ) | |||||
Long-term portion — net of discount | 1,618,979 | 746,974 | |||||||
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28. | SUPPLIERS’ CREDIT LOANS |
2002 | 2003 | |||||||
Tomen Corporation | 290,498 | 139,608 | ||||||
Cable & Wireless plc | 48,199 | 26,021 | ||||||
Total | 338,697 | 165,629 | ||||||
Current maturities | (163,072 | ) | (164,958 | ) | ||||
Long-term portion | 175,625 | 671 | ||||||
a. | Tomen Corporation (“Tomen”) |
b. | Cable and Wireless plc (“C&W plc”) |
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29. | BRIDGING LOAN |
2002 | 2003 | |||||||
Total outstanding amount | 95,517 | 50,365 | ||||||
Current maturities | (42,112 | ) | (49,855 | ) | ||||
Long-term portion | 53,405 | 510 | ||||||
30. | MINORITY INTEREST |
2002 | 2003 | ||||||||
Minority interest in net assets of subsidiaries: | |||||||||
Telkomsel | 2,516,180 | 3,608,874 | |||||||
Infomedia | 43,744 | 60,353 | |||||||
Dayamitra | 22,173 | 32,999 | |||||||
Indonusa | 13,700 | 1,959 | |||||||
Napsindo | — | 2,068 | |||||||
PII | — | 1,899 | |||||||
GSD | 2 | 3 | |||||||
Total | 2,595,799 | 3,708,155 | |||||||
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2001 | 2002 | 2003 | |||||||||||
Minority interest in net income (loss) of subsidiaries: | |||||||||||||
Telkomsel | 455,331 | 782,870 | 1,482,897 | ||||||||||
Infomedia | 15,067 | 19,031 | 22,399 | ||||||||||
Dayamitra | 6,241 | 15,151 | 11,584 | ||||||||||
Indonusa | (2,034 | ) | (6,831 | ) | (2,351 | ) | |||||||
Napsindo | — | — | (8,541 | ) | |||||||||
PII | — | — | (2,511 | ) | |||||||||
GSD | — | 1 | 1 | ||||||||||
Total | 474,605 | 810,222 | 1,503,478 | ||||||||||
2002 | ||||||||||||||
Percentage | Total | |||||||||||||
Number of | of | Paid-up | ||||||||||||
Description | Shares | Ownership | Capital | |||||||||||
% | ||||||||||||||
Series A Dwiwarna share | ||||||||||||||
Government of the Republic of Indonesia | 1 | — | — | |||||||||||
Series B shares | ||||||||||||||
Government of the Republic of Indonesia | 5,160,235,355 | 51.19 | 2,580,118 | |||||||||||
JPMCB US Resident (Norbax Inc.) | 879,723,798 | 8.73 | 439,862 | |||||||||||
The Bank of New York | 610,489,548 | 6.06 | 305,245 | |||||||||||
Board of Commissioners: | ||||||||||||||
Petrus Sartono | 8,262 | — | 4 | |||||||||||
Board of Directors: | ||||||||||||||
Kristiono | 12,690 | — | 6 | |||||||||||
Garuda Sugardo | 8,262 | — | 4 | |||||||||||
Guntur Siregar | 9,990 | — | 5 | |||||||||||
Agus Utoyo | 11,826 | — | 6 | |||||||||||
Suryatin Setiawan | 10,854 | — | 5 | |||||||||||
Public (below 5% each) | 3,429,489,054 | 34.02 | 1,714,745 | |||||||||||
Total | 10,079,999,640 | 100.00 | 5,040,000 | |||||||||||
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2003 | ||||||||||||||
Percentage | Total | |||||||||||||
Number of | of | Paid-up | ||||||||||||
Description | Shares | Ownership | Capital | |||||||||||
% | ||||||||||||||
Series A Dwiwarna share | ||||||||||||||
Government of the Republic of Indonesia | 1 | — | — | |||||||||||
Series B shares | ||||||||||||||
Government of the Republic of Indonesia | 5,160,235,355 | 51.19 | 2,580,118 | |||||||||||
JPMCB US Resident (Norbax Inc.) | 896,045,651 | 8.89 | 448,023 | |||||||||||
The Bank of New York | 657,263,408 | 6.52 | 328,632 | |||||||||||
Board of Commissioners: | ||||||||||||||
Petrus Sartono | 9,558 | — | 5 | |||||||||||
Board of Directors: | ||||||||||||||
Kristiono | 12,690 | — | 6 | |||||||||||
Garuda Sugardo | 8,262 | — | 4 | |||||||||||
Guntur Siregar | 9,990 | — | 5 | |||||||||||
Agus Utoyo | 11,826 | — | 6 | |||||||||||
Suryatin Setiawan | 10,854 | — | 5 | |||||||||||
Public (below 5% each) | 3,366,392,045 | 33.40 | 1,683,196 | |||||||||||
Total | 10,079,999,640 | 100.00 | 5,040,000 | |||||||||||
2002 | 2003 | |||||||
Proceeds from sale of 933,333,000 shares in excess of par value through initial public offering in 1995 | 1,446,666 | 1,446,666 | ||||||
Capitalization into 746,666,640 series B shares in 1999 | (373,333 | ) | (373,333 | ) | ||||
Total | 1,073,333 | 1,073,333 | ||||||
33. | DIFFERENCE IN VALUE OF RESTRUCTURING TRANSACTIONS BETWEEN ENTITIES UNDER COMMON CONTROL |
Represents the difference between the consideration paid or received and the historical amount of the net assets of the investee acquired or carrying amount of the investment sold, arising from transactions with entities under common control. |
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2001 | 2002 | 2003 | |||||||||||
Fixed lines | |||||||||||||
Local and domestic long-distance usage | 5,225,705 | 5,447,925 | 6,561,800 | ||||||||||
Monthly subscription charges | 997,651 | 1,474,823 | 1,948,830 | ||||||||||
Installation charges | 98,017 | 130,234 | 223,130 | ||||||||||
Phone cards | 25,455 | 29,265 | 34,371 | ||||||||||
Others | 68,328 | 181,852 | 128,734 | ||||||||||
Total | 6,415,156 | 7,264,099 | 8,896,865 | ||||||||||
Cellular | |||||||||||||
Air time charges | 3,987,738 | 5,453,597 | 7,677,884 | ||||||||||
Monthly subscription charges | 581,566 | 593,347 | 580,550 | ||||||||||
Connection fee charges | 128,543 | 172,302 | 194,053 | ||||||||||
Features | 10,151 | 7,555 | 6,343 | ||||||||||
Total | 4,707,998 | 6,226,801 | 8,458,830 | ||||||||||
Total Telephone Revenues | 11,123,154 | 13,490,900 | 17,355,695 | ||||||||||
2001 | 2002 | 2003 | ||||||||||
Cellular | 1,241,603 | 2,383,667 | 3,908,292 | |||||||||
International | 116,770 | 344,500 | 184,097 | |||||||||
Other | 65,313 | 103,167 | 69,759 | |||||||||
Total | 1,423,686 | 2,831,334 | 4,162,148 | |||||||||
2001 | 2002 | 2003 | ||||||||||
Minimum Telkom Revenues | 1,474,200 | 1,319,715 | 899,862 | |||||||||
Share in Distributable KSO Revenues | 732,960 | 801,010 | 583,012 | |||||||||
Amortization of unearned initial investor payments under Joint Operation Schemes | 12,426 | 7,420 | 3,433 | |||||||||
Total | 2,219,586 | 2,128,145 | 1,486,307 | |||||||||
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2001 | 2002 | 2003 | ||||||||||
SMS | 344,600 | 997,249 | 2,205,058 | |||||||||
Multimedia | 218,300 | 337,796 | 494,747 | |||||||||
VoIP | 25,589 | 152,195 | 328,284 | |||||||||
ISDN | 84,695 | 64,386 | 80,473 | |||||||||
Total | 673,184 | 1,551,626 | 3,108,562 | |||||||||
2001 | 2002 | 2003 | ||||||||||
Satellite transponder lease | 203,558 | 190,220 | 270,860 | |||||||||
Leased lines | 211,371 | 125,878 | 247,005 | |||||||||
Total | 414,929 | 316,098 | 517,865 | |||||||||
2001 | 2002 | 2003 | ||||||||||
Revenue-Sharing Arrangement revenues | 191,478 | 211,483 | 200,085 | |||||||||
Amortization of unearned income (Note 15) | 72,775 | 52,271 | 58,379 | |||||||||
Total | 264,253 | 263,754 | 258,464 | |||||||||
2001 | 2002 | 2003 | ||||||||||
Salaries and related benefits | 883,409 | 1,410,670 | 1,574,181 | |||||||||
Vacation pay, incentives and other benefits | 364,707 | 655,518 | 816,055 | |||||||||
Early retirements | 140,000 | 717,289 | 355,735 | |||||||||
Net periodic post-retirement benefit cost (Note 48) | 374,510 | 616,512 | 641,435 | |||||||||
Net periodic pension cost (Note 46) | 86,233 | 362,298 | 190,914 | |||||||||
Employee income tax | 132,855 | 201,468 | 468,805 | |||||||||
Long service awards (Note 47) | 94,540 | 289,922 | 207,126 | |||||||||
Housing | 93,315 | 89,495 | 116,858 | |||||||||
Medical | 81,698 | 28,209 | 9,682 | |||||||||
Others | 29,978 | 16,187 | 59,305 | |||||||||
Total | 2,281,245 | 4,387,568 | 4,440,096 | |||||||||
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41. | OPERATING EXPENSES — OPERATIONS, MAINTENANCE AND TELECOMMUNICATION SERVICES |
2001 | 2002 | 2003 | ||||||||||
Operations and maintenance | 891,435 | 1,042,588 | 1,744,806 | |||||||||
Radio frequency usage charges | 101,305 | 292,703 | 371,740 | |||||||||
Electricity, gas and water | 157,068 | 219,913 | 300,432 | |||||||||
Cost of phone cards | 173,412 | 197,683 | 181,272 | |||||||||
Concession fees | 63,561 | 163,891 | 238,979 | |||||||||
Insurance | 67,783 | 142,932 | 157,075 | |||||||||
Leased lines | 82,880 | 103,643 | 127,021 | |||||||||
Vehicles and supporting facilities | 38,235 | 79,961 | 115,697 | |||||||||
Travelling | 15,700 | 16,523 | 29,815 | |||||||||
Telephone kiosks’ commissions | 520,947 | — | — | |||||||||
Others | 37,595 | 30,382 | 71,856 | |||||||||
Total | 2,149,921 | 2,290,219 | 3,338,693 | |||||||||
42. | OPERATING EXPENSES — GENERAL AND ADMINISTRATIVE |
2001 | 2002 | 2003 | ||||||||||
Professional fees | 325,268 | 218,949 | 115,598 | |||||||||
Collection expenses | 181,925 | 224,782 | 273,767 | |||||||||
Amortization of intangible assets (Note 16) | 55,709 | 187,990 | 730,659 | |||||||||
Training, education and recruitment | 147,312 | 122,045 | 126,927 | |||||||||
Travel | 92,828 | 111,427 | 144,677 | |||||||||
Security and screening | 48,792 | 77,103 | 110,278 | |||||||||
General and social contribution | 36,762 | 69,419 | 113,785 | |||||||||
Printing and stationery | 37,589 | 43,513 | 50,535 | |||||||||
Meetings | 26,498 | 31,719 | 42,813 | |||||||||
Provision for doubtful accounts and inventory obsolescence | 342,900 | 31,103 | 326,419 | |||||||||
Research and development | 39,523 | 10,483 | 9,111 | |||||||||
Others | 8,350 | 17,761 | 34,208 | |||||||||
Total | 1,343,456 | 1,146,294 | 2,078,777 | |||||||||
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2002 | 2003 | ||||||||||
a. Prepaid taxes | |||||||||||
The Company | |||||||||||
Refundable corporate income tax overpayment | — | 38,370 | |||||||||
— | 38,370 | ||||||||||
Subsidiaries | |||||||||||
Corporate income tax | 265 | 2,443 | |||||||||
Value added tax | 84,409 | 171,469 | |||||||||
84,674 | 173,912 | ||||||||||
84,674 | 212,282 | ||||||||||
b. Taxes payable | |||||||||||
The Company | |||||||||||
Income tax | |||||||||||
Article 21 | 10,959 | 91,229 | |||||||||
Article 22 | 2,189 | 2,577 | |||||||||
Article 23 | 25,325 | 19,131 | |||||||||
Article 25 | 3,450 | 87,219 | |||||||||
Article 26 | 1,892 | 7,045 | |||||||||
Article 29 | 631,124 | 363,566 | |||||||||
Value added tax | 34,487 | 120,206 | |||||||||
709,426 | 690,973 | ||||||||||
Subsidiaries | |||||||||||
Income tax | |||||||||||
Article 4 | — | 4,012 | |||||||||
Article 21 | 16,613 | 47,265 | |||||||||
Article 22 | 187 | 765 | |||||||||
Article 23 | 26,408 | 66,793 | |||||||||
Article 25 | 77,881 | 66,289 | |||||||||
Article 26 | 4,931 | 39,488 | |||||||||
Article 29 | 220,377 | 498,826 | |||||||||
Value added tax | 53,809 | 98,627 | |||||||||
400,206 | 822,065 | ||||||||||
1,109,632 | 1,513,038 | ||||||||||
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2001 | 2002 | 2003 | |||||||||||
Current | |||||||||||||
The Company | 1,291,206 | 1,671,104 | 1,886,283 | ||||||||||
Subsidiaries | 886,160 | 1,076,658 | 1,904,997 | ||||||||||
2,177,366 | 2,747,762 | 3,791,280 | |||||||||||
Deferred | |||||||||||||
The Company | (168,815 | ) | (153,019 | ) | 142,089 | ||||||||
Subsidiaries | (1,656 | ) | 304,228 | (72,279 | ) | ||||||||
(170,471 | ) | 151,209 | 69,810 | ||||||||||
2,006,895 | 2,898,971 | 3,861,090 | |||||||||||
2001 | 2002 | 2003 | ||||||||||
Consolidated income before tax | 6,549,891 | 11,748,902 | 11,451,795 | |||||||||
Add back consolidation eliminations | 1,926,439 | 2,554,407 | 3,332,176 | |||||||||
Consolidated income before tax and eliminations | 8,476,330 | 14,303,309 | 14,783,971 | |||||||||
Deduct income before tax of the subsidiaries | (3,285,548 | ) | (4,745,515 | ) | (7,009,179 | ) | ||||||
Income before tax attributable to the Company | 5,190,782 | 9,557,794 | 7,774,792 | |||||||||
Tax calculated at progressive rates | 1,557,218 | 2,867,321 | 2,332,420 | |||||||||
Income not subject to tax | (665,007 | ) | (1,785,208 | ) | (1,044,835 | ) | ||||||
Non-deductible expenses | 230,180 | 469,464 | 669,643 | |||||||||
Deferred tax (assets) liabilities originating from previously unrecognized temporary difference, net | — | (40,252 | ) | 71,144 | ||||||||
Deferred tax assets that cannot be utilized | — | 6,760 | — | |||||||||
Income tax expense of the Company | 1,122,391 | 1,518,085 | 2,028,372 | |||||||||
Income tax expense of the subsidiaries | 884,504 | 1,380,886 | 1,832,718 | |||||||||
Total consolidated income tax expense | 2,006,895 | 2,898,971 | 3,861,090 | |||||||||
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2001 | 2002 | 2003 | |||||||||||
Income before tax attributable to the Company | 5,190,782 | 9,557,794 | 7,774,792 | ||||||||||
Temporary differences: | |||||||||||||
Depreciation of property, plant and equipment | 165,239 | (170,134 | ) | 442,029 | |||||||||
Gain on sale of property, plant and equipment | (21,759 | ) | 14,774 | (25,495 | ) | ||||||||
Allowance/(write back) for doubtful accounts | 226,514 | (156,223 | ) | 166,341 | |||||||||
Accounts receivable written-off | (44,423 | ) | (82,474 | ) | (79,728 | ) | |||||||
Allowance for inventory obsolescence | 74,059 | 10,099 | 5,543 | ||||||||||
Inventory written-off | (3,013 | ) | (15,223 | ) | (693 | ) | |||||||
Provision for early retirement benefits | 140,000 | 670,981 | 293,626 | ||||||||||
Payment of early retirement benefits | — | (140,000 | ) | (831,796 | ) | ||||||||
Provision for bonus | — | — | 262,082 | ||||||||||
Net periodic pension cost | (46,852 | ) | 58,226 | (271,503 | ) | ||||||||
Long service awards | 65,675 | 213,397 | (15,617 | ) | |||||||||
Amortization of deferred stock issuance costs | (5,981 | ) | (17,942 | ) | — | ||||||||
Amortization of landrights | 5,839 | (1,524 | ) | (2,356 | ) | ||||||||
Provision for impairment of property, plant and equipment | — | 6,401 | (6,401 | ) | |||||||||
Decline in value of investments | (90,000 | ) | — | — | |||||||||
Gain on sale of long-term investments | — | — | (171,334 | ) | |||||||||
Temporary differences of KSO units | 10,694 | 6,317 | 4,782 | ||||||||||
Depreciation of property, plant and equipment under revenue sharing arrangements | 53,884 | 11,576 | 63,424 | ||||||||||
Amortization of unearned income under revenue-sharing arrangements | (15,380 | ) | (7,998 | ) | (58,379 | ) | |||||||
Revenue from transfer of property, plant and equipment under revenue-sharing arrangements | — | 765 | 34,828 | ||||||||||
Interest income/receivable | — | — | (45,835 | ) | |||||||||
Equity in net loss of associated companies | — | 41,178 | — | ||||||||||
514,496 | 442,196 | (236,482 | ) | ||||||||||
Permanent differences: | |||||||||||||
Net periodic post-retirement benefit cost | 373,074 | 611,992 | 634,385 | ||||||||||
Amortization of goodwill and intangible assets | 55,709 | 187,990 | 773,197 | ||||||||||
Amortization of discount on promissory notes and interest expense | 79,899 | 173,794 | 224,931 | ||||||||||
Tax penalties | — | 216,198 | — | ||||||||||
Equity in net income of associates and subsidiaries | (1,307,404 | ) | (2,238,300 | ) | (3,313,831 | ) | |||||||
Gain on sale of long-term investments | — | (3,166,086 | ) | (38,425 | ) | ||||||||
Interest income | (494,332 | ) | (359,049 | ) | (279,142 | ) |
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2001 | 2002 | 2003 | |||||||||||
Amortization of unearned income under revenue-sharing arrangements | (57,395 | ) | (44,273 | ) | — | ||||||||
Adjustment of equity in net income of Telkomsel as a result of the recast of financial statements | (241,725 | ) | — | — | |||||||||
Income from land/building rental | (116,831 | ) | (65,175 | ) | (40,380 | ) | |||||||
Others | 307,813 | 253,322 | 599,631 | ||||||||||
Total | (1,401,192 | ) | (4,429,587 | ) | (1,439,634 | ) | |||||||
Total taxable income of the Company | 4,304,086 | 5,570,403 | 6,098,676 | ||||||||||
Current income tax expense of the Company | 1,291,206 | 1,671,104 | 1,886,283 | ||||||||||
Current income tax expense of the subsidiaries | 886,160 | 1,076,658 | 1,904,997 | ||||||||||
Total | 2,177,366 | 2,747,762 | 3,791,280 | ||||||||||
(Charged)/ | |||||||||||||||||
Credited to | Acquisition | ||||||||||||||||
December 31, | Statements | of | December 31, | ||||||||||||||
2001 | of Income | Pramindo | 2002 | ||||||||||||||
The Company | |||||||||||||||||
Deferred tax assets: | |||||||||||||||||
Allowance for doubtful accounts | 170,419 | (69,030 | ) | — | 101,389 | ||||||||||||
Allowance for inventory obsolescence | 11,911 | (1,404 | ) | — | 10,507 | ||||||||||||
Provision for early retirement benefits | 42,000 | 159,294 | — | 201,294 | |||||||||||||
Decline in value of investments | 5,656 | (5,656 | ) | — | — |
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(Charged)/ | |||||||||||||||||
Credited to | Acquisition | ||||||||||||||||
December 31, | Statements | of | December 31, | ||||||||||||||
2001 | of Income | Pramindo | 2002 | ||||||||||||||
Deferred stock issuance costs | 5,382 | (5,382 | ) | — | — | ||||||||||||
Landrights | 618 | (457 | ) | — | 161 | ||||||||||||
Long-term investments | — | 52,605 | — | 52,605 | |||||||||||||
Provision for long service awards | 82,751 | 64,018 | — | 146,769 | |||||||||||||
Provision for impairment of property, plant and equipment | — | 1,920 | — | 1,920 | |||||||||||||
Total deferred tax assets | 318,737 | 195,908 | — | 514,645 | |||||||||||||
Deferred tax liabilities: | |||||||||||||||||
Difference between book and tax property, plant and equipment’s net book value | (1,451,655 | ) | (61,352 | ) | — | (1,513,007 | ) | ||||||||||
Revenue-sharing arrangements | (19,417 | ) | 1,298 | — | (18,119 | ) | |||||||||||
Net periodic pension cost | (25,153 | ) | 17,165 | — | (7,988 | ) | |||||||||||
Total deferred tax liabilities | (1,496,225 | ) | (42,889 | ) | — | (1,539,114 | ) | ||||||||||
Deferred tax liabilities of the Company, net | (1,177,488 | ) | 153,019 | — | (1,024,469 | ) | |||||||||||
Deferred tax liabilities of the subsidiaries, net | (638,824 | )(*) | (304,228 | ) | (1,115,645 | ) | (2,058,697 | ) | |||||||||
Total deferred tax liabilities, net | (1,816,312 | ) | (3,083,166 | ) | |||||||||||||
(*) | Including deferred tax asset of PT Infomedia Nusantara, a subsidiary, of Rp1,924 million presented separately in the “Advances and other non-current assets” as at 31 December 2001. |
(Charged)/ | |||||||||||||||||
Credited to | |||||||||||||||||
December 31, | Statements | Acquisition | December 31, | ||||||||||||||
2002 | of Income | of AWI | 2003 | ||||||||||||||
The Company | |||||||||||||||||
Deferred tax assets: | |||||||||||||||||
Allowance for doubtful accounts | 101,389 | 17,456 | — | 118,845 | |||||||||||||
Allowance for inventory obsolescence | 10,507 | 1,020 | — | 11,527 | |||||||||||||
Provision for early retirement benefits | 201,294 | (161,451 | ) | — | 39,843 | ||||||||||||
Landrights | 161 | (707 | ) | — | (546 | ) | |||||||||||
Long-term investments | 52,605 | (52,605 | ) | — | — | ||||||||||||
Provision for employee bonuses | — | 84,385 | — | 84,385 | |||||||||||||
Provision for long service awards | 146,769 | (4,685 | ) | — | 142,084 | ||||||||||||
Provision for impairment of property, plant and equipment | 1,920 | (1,920 | ) | — | — | ||||||||||||
Total deferred tax assets | 514,645 | (118,507 | ) | — | 396,138 | ||||||||||||
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(Charged)/ | |||||||||||||||||
Credited to | |||||||||||||||||
December 31, | Statements | Acquisition | December 31, | ||||||||||||||
2002 | of Income | of AWI | 2003 | ||||||||||||||
Deferred tax liabilities: | |||||||||||||||||
Difference between book and tax property, plant and equipment’s net book value | (1,513,007 | ) | 125,567 | — | (1,387,440 | ) | |||||||||||
Interest receivables | — | (13,750 | ) | — | (13,750 | ) | |||||||||||
Long-term investments | — | (14,138 | ) | — | (14,138 | ) | |||||||||||
Revenue sharing arrangements | (18,119 | ) | (40,334 | ) | — | (58,453 | ) | ||||||||||
Net periodic pension cost | (7,988 | ) | (80,927 | ) | — | (88,915 | ) | ||||||||||
Total deferred tax liabilities | (1,539,114 | ) | (23,582 | ) | — | (1,562,696 | ) | ||||||||||
Deferred tax liabilities of the Company, net | (1,024,469 | ) | (142,089 | ) | — | (1,166,558 | ) | ||||||||||
Deferred tax liabilities of the subsidiaries, net | (2,058,697 | ) | 72,279 | (393,794 | ) | (2,380,212 | ) | ||||||||||
Total deferred tax liabilities, net | (3,083,166 | ) | (3,546,770 | ) | |||||||||||||
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2002 | 2003 | |||||||
Change in benefit obligation | ||||||||
Benefit obligation at beginning of year | 2,289,134 | 4,248,110 | ||||||
Service cost | 90,869 | 119,089 | ||||||
Interest cost | 418,044 | 537,797 | ||||||
Employee contributions | 31,939 | 40,530 | ||||||
Benefits paid | (186,805 | ) | (222,421 | ) | ||||
Plan amendment | 1,676,601 | — | ||||||
Actuarial (gain) loss | (71,672 | ) | 2,129,818 | �� | ||||
Benefit obligation at end of year | 4,248,110 | 6,852,923 | ||||||
Change in plan assets | ||||||||
Fair value of plan assets at beginning of year | 2,571,714 | 3,099,648 | ||||||
Employer contributions | 359,725 | 521,816 | ||||||
Actual return on plan assets | 343,121 | 421,706 |
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2002 | 2003 | |||||||
Benefits paid | (186,805 | ) | (222,421 | ) | ||||
Actuarial gain (loss) | 11,893 | (149,440 | ) | |||||
Fair value of plan assets at end of year | 3,099,648 | 3,671,309 | ||||||
Funded status | (1,148,462 | ) | (3,181,614 | ) | ||||
Unamortized net amount resulting from changes in plan experience and actuarial assumptions | (820,394 | ) | 1,663,963 | |||||
Unamortized prior service cost | 1,812,198 | 1,655,412 | ||||||
Unrecognized net obligation at the date of initial application of PSAK No. 24 | 177,525 | 148,891 | ||||||
Prepaid pension cost | 20,867 | 286,652 | ||||||
2001 | 2002 | 2003 | ||||||||||
% | % | % | ||||||||||
Discount rate | 13 | 13 | 11 | |||||||||
Expected long-term return on plan assets | 13 | 13 | 11 | |||||||||
Salary growth rate | 6 | 6 | 8 |
2001 | 2002 | 2003 | ||||||||||
Service cost | 32,441 | 65,661 | 89,193 | |||||||||
Interest cost | 277,077 | 418,044 | 537,797 | |||||||||
Expected return on plan assets | (266,324 | ) | (343,121 | ) | (421,706 | ) | ||||||
Net amortization and deferral | 17,624 | 132,928 | (176,465 | ) | ||||||||
Increase in amortization of prior service cost | 23,806 | 88,786 | 156,784 | |||||||||
Net periodic pension cost (Note 40) | 84,624 | 362,298 | 185,603 | |||||||||
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2001 | 2002 | 2003 | ||||||||||
Service cost | 2,247 | 2,651 | 3,068 | |||||||||
Net amortization and deferral | (943 | ) | (533 | ) | 2,243 | |||||||
Net periodic pension cost | 1,304 | 2,118 | 5,311 | |||||||||
2001 | 2002 | 2003 | ||||||||||
Discount rate | 12% | 12% | 11% | |||||||||
Expected long-term return on plan assets | 12% | 12% | 7.5% | |||||||||
Salary growth rate | 10% | 10% | 9% |
2002 | 2003 | |||||||
Projected benefit obligation | 20,927 | 35,502 | ||||||
Plan assets at fair value | 27,919 | 8,504 | ||||||
Excess (shortages) of plan assets over projected benefit obligation | 6,992 | (26,998 | ) | |||||
Unrecognized past service cost | 3,135 | 1,443 | ||||||
Unrecognized experience adjustment | (2,813 | ) | 23,718 | |||||
Prepaid (unfunded) pension cost | 7,314 | (1,837 | ) | |||||
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Infomedia |
2003 | ||||
Projected benefit obligation | (3,774 | ) | ||
Fair value of plan assets | 4,432 | |||
Funded status | 658 | |||
Unamortized past service cost | 1,259 | |||
Unamortized experience adjustments | (497 | ) | ||
Unamortized changes in actuarial assumptions | 150 | |||
Prepaid pension cost recognized in the balance sheet | 1,570 | |||
Other |
i. Karya Bhakti — long term award | |
ii. Long leave allowance |
i. Purnabhakti award and Pengabdian award | |
ii. Last housing allowance | |
iii. Last transportation allowance |
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2001 | 2002 | 2003 | ||||||||||
Discount rate | 13 | % | 13 | % | 11 | % | ||||||
Salary growth rate | 8 | % | 8 | % | 8 | % |
2001 | 2002 | 2003 | ||||||||||
Liability at beginning of year | 210,159 | 275,834 | 489,231 | |||||||||
Net periodic benefit cost (Note 40) | 94,540 | 289,922 | 207,126 | |||||||||
Benefits paid | (28,865 | ) | (76,525 | ) | (222,743 | ) | ||||||
Liability at end of year | 275,834 | 489,231 | 473,614 | |||||||||
2001 | 2002 | 2003 | ||||||||||
Service cost | 46,689 | 69,345 | 80,599 | |||||||||
Interest cost | 298,541 | 424,834 | 493,596 | |||||||||
Expected return on plan assets | (49,011 | ) | (33,744 | ) | (56,004 | ) | ||||||
Amortization of unrecognized transition obligation | 26,213 | 26,213 | 24,325 | |||||||||
Amortization of prior service cost | (395 | ) | (395 | ) | (368 | ) | ||||||
Amortization of gain/losses | 52,473 | 80,683 | 99,287 | |||||||||
Net curtailment gain/loss | — | 49,576 | — | |||||||||
Net periodic post-retirement benefit cost (Note 40) | 374,510 | 616,512 | 641,435 | |||||||||
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2001 | 2002 | 2003 | ||||||||||
Discount rate | 13% | 13% | 11% | |||||||||
Expected return on plan assets | 13% | 13% | 11% | |||||||||
Health care cost trend rate assumed for next year | 16% | 14% | 12% | |||||||||
The ultimate trend rate | 10% | 10% | 8% | |||||||||
Year that the rate reaches the ultimate trend rate | 2005 | 2005 | 2006 |
2002 | 2003 | |||||||
Change in benefit obligation | ||||||||
Benefit obligation at beginning of year | 3,286,991 | 3,812,781 | ||||||
Service cost | 69,345 | 80,599 | ||||||
Interest cost | 424,834 | 493,596 | ||||||
Benefits paid | (70,491 | ) | (93,420 | ) | ||||
Actuarial (gain) loss | 102,102 | (544,785 | ) | |||||
Benefit obligation at end of year | 3,812,781 | 3,748,771 | ||||||
Change in plan assets | ||||||||
Fair value of plan assets at beginning of year | 330,461 | 343,896 | ||||||
Employer contributions | 59,543 | 180,580 | ||||||
Actual return on plan assets | 53,287 | 56,004 | ||||||
Benefits paid | (79,851 | ) | (98,612 | ) | ||||
Actuarial gain (loss) | (19,544 | ) | (14,972 | ) | ||||
Fair value of plan assets at end of year | 343,896 | 466,896 | ||||||
Funded status | (3,468,885 | ) | (3,281,875 | ) | ||||
Unrecognized net transition obligation | 291,899 | 267,574 | ||||||
Unrecognized prior service gain | (2,301 | ) | (1,934 | ) | ||||
Unrecognized net losses | 1,576,793 | 952,885 | ||||||
Accrued post-retirement benefit cost | (1,602,494 | ) | (2,063,350 | ) | ||||
2001 | 2002* | 2003 | ||||||||||
Service cost and interest cost | 623,715 | 664,741 | 594,958 | |||||||||
Accumulated post-retirement benefit obligation | 3,981,842 | 4,473,675 | 4,545,961 |
* | before curtailment |
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i. The Company obtained “two-step loans” from the Government of the Republic of Indonesia, the Company’s majority stockholder. | |
Interest expense for two-step loans amounted to Rp960,424 million, Rp968,973 million and Rp755,517 million in 2001, 2002 and 2003 respectively. Interest expense for two-step loan reflected 72.23%, 61.22% and 54.61% of total interest expenses in 2001, 2002 and 2003, respectively. | |
ii. The Company and its subsidiary pay concession fees for telecommunications services provided and radio frequency usage charges to the Ministry of Communications (formerly, Ministry of Tourism, Post and Telecommunications) of the Republic of Indonesia. | |
Concession fees amounted to Rp63,561 million, Rp163,891 million and Rp238,979 million in 2001, 2002 and 2003, respectively. Concession fees reflected 0.7%, 1.4% and 1.6% of total operating expenses in 2001, 2002 and 2003, respectively. Radio frequency usage charges amounted to Rp101,305 million, Rp292,703 million and Rp371,740 million in 2001, 2002 and 2003, respectively. Radio frequency usage charges reflected 1.1%, 2.5% and 2.5% of total operating expenses in 2001, 2002 and 2003, respectively. |
i. The Company and its subsidiaries provide honorarium and facilities to support the operational duties of the Board of Commissioners. The total of such benefits amounted to Rp7,189 million, Rp8,706 million and Rp14,047 million in 2001, 2002 and 2003, respectively, which reflected 0.1%, 0.1% and 0.1% of total operating expenses in 2001, 2002 and 2003, respectively. | |
ii. The Company and its subsidiaries provide salaries and facilities to support the operational duties of the Board of Directors. The total of such benefits amounted to Rp30,329 million, Rp35,106 million, and Rp45,586 million in 2001, 2002 and 2003, respectively, which reflected 0.3%, 0.3% and 0.3% of total operating expenses in 2001, 2002 and 2003, respectively. |
i. The Company provides a local network for customers to make or receive international calls. Indosat provides the international network for the customers, except for certain border towns, as determined by the Director General of Post and Telecommunications of the Republic of Indonesia. The international telecommunications services include telephone, telex, telegram, package |
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switched data network, television, teleprinter, Alternate Voice/ Data Telecommunications (“AVD”), hotline and teleconferencing. | |
ii. The Company and Indosat are responsible for their respective telecommunications facilities. | |
iii. Customer billing and collection, except for leased lines and public phones located at the international gateways, are handled by the Company. | |
iv. The Company receives compensation for the services provided in the first item above, based on the interconnection tariff determined by the Minister of Communications of the Republic of Indonesia. |
i. Telkomsel’s GSM mobile cellular telecommunications network is connected to Indosat’s international gateway exchanges to make outgoing or receive incoming international calls through Indosat’s international gateway exchanges. | |
ii. Telkomsel’s GSM mobile cellular telecommunications network is connected to Indosat’s mobile cellular telecommunications network, enabling Telkomsel’s cellular subscribers to make outgoing calls to or receive incoming calls from Indosat’s cellular subscribers. | |
iii. Telkomsel receives as compensation for the interconnection, a specific percentage of Indosat’s revenues from the related services which are made through Indosat’s international gateway exchanges and mobile cellular telecommunications network. |
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iv. Billings for calls made by Telkomsel’s customers are handled by Telkomsel. Telkomsel is obliged to pay Indosat’s share of revenue regardless whether billings to customers have been collected. | |
v. The provision and installation of the necessary interconnection equipment is Telkomsel’s responsibility. Interconnection equipment installed by one of the parties in another party’s locations shall remain the property of the party installing such equipment. Expenses incurred in connection with the provision of equipment, installation and maintenance are borne by Telkomsel. |
i. Agreement on Construction and Maintenance for Jakarta-Surabaya Cable System (“J — S Cable System”). | |
On October 10, 1996, Telkomsel, Lintasarta, Satelindo and Indosat (the “Parties”) entered into an agreement on the construction and maintenance of the J-S Cable System. The parties have formed a management committee which consists of a chairman and one representative of each of the parties to direct the construction and operation of the cable system. The construction of the cable system was completed in 1998. In accordance with the agreement, Telkomsel shared 19.325% of the total construction cost. Telkomsel shares in the operating and maintenance costs based on an agreed formula. | |
The cost of operation and maintenance shared amounted to Rp1,359 million, Rp956 million and Rp1,393 million for the years 2001, 2002 and 2003, respectively. | |
ii. Indefeasible Right of Use Agreement | |
On September 21, 2000, Telkomsel entered into agreement with Indosat on the use of SEA — ME — WE 3 and tail link in Jakarta and Medan. In accordance with the agreement, Telkomsel was granted an indefeasible right to use certain capacity of the Link starting from September 21, 2000 until September 20, 2015 in return for an upfront payment of US$2,727,273. In addition to the upfront payment, Telkomsel is also charged annual operation and maintenance costs amounting to US$136,364. | |
As of April 8, 2004, in connection with merger of Indosat, amendment to the agreements with Indosat, including extension of period, is still in process. |
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i. Interconnection of the Company’s fixed-line network (“PSTN”) with Satelindo’s international gateway exchange, enabling the Company’s customers to make outgoing or receive incoming international calls through Satelindo’s international gateway exchange. | |
ii. Billings for the international telecommunications services used by domestic customers through Satelindo’s international gateway exchange will be handled by the Company. |
d. | The Company provides telecommunication services to Government agencies. |
e. | The Company has entered into agreements with Government agencies and associated companies, Lintasarta, CSM and Patrakomindo, for utilization of the Company’s Palapa B4 and Telkom-1 |
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satellite transponders or frequency channels. Revenues earned from these transactions amounted to Rp89,469 million, Rp44,109 million and Rp96,877 million in 2001, 2002 and 2003, respectively, which reflected 0.5%, 0.2% and 0.4% of total operating revenues in 2001, 2002 and 2003, respectively. |
f. | The Company provides leased lines to associated companies and Indosat’s subsidiaries i.e., CSM, Lintasarta, Satelindo, Komselindo, Mobisel, Metrosel and PSN (2003: Exclude Satelindo, Komselindo and Metrosel). The leased lines can be used by the associated companies for telephone, telegraph, data, telex, facsimile or other telecommunications services. Revenue earned from these transactions amounted to Rp19,764 million, Rp75,704 million and Rp69,386 million in 2001, 2002 and 2003, respectively, reflecting 0.1%, 0.4%, and 0.3% of total operating revenues in 2001, 2002 and 2003, respectively. |
g. | The Company provides a data communication network system for Lintasarta, an Indosat subsidiary, and operates a telemetry tracking and command station for PSN, an associated company. Revenues earned by the Company from these transactions amounted to Rp27,963 million, RpNil and RpNil in 2001, 2002 and 2003, respectively, reflecting 0.2%, 0% and 0% of total operating revenues in 2001, 2002 and 2003, respectively. |
h. | The Company purchases property and equipment including construction and installation services from a number of related parties. These related parties include PT Industri Telekomunikasi Indonesia (“PT INTI”), Lembaga Elektronika Nasional, PT Adhi Karya, PT Pembangunan Perumahan, PT Nindya Karya, PT Boma Bisma Indra, PT Wijaya Karya, PT Waskita Karya, PT Gratika, Telekomindo, Bangtelindo, Telesera and Koperasi Pegawai Telekomunikasi. Total purchases made from these related parties amounted to Rp100,459 million, Rp154,808 million and Rp126,965 million in 2001, 2002 and 2003, respectively, reflecting 2.4%, 2.1%, and 1.1% of total fixed assets purchases in 2001, 2002 and 2003, respectively. |
i. | PT INTI is also a major contractor and supplier for providing equipment, including construction and installation services for Telkomsel. Total purchases from PT INTI in 2001, 2002 and 2003 amounted to Rp663,587 million, Rp34,717 million and Rp52,346 million, respectively, reflecting 15.7%, 0.5% and 0.5% of total fixed assets purchased in 2001, 2002 and 2003, respectively. | |
j. | The Company and its subsidiaries carry insurance (on their property, plant and equipment against property losses, inventory and on employees’ social security) obtained from PT Asuransi Jasa Indonesia, PT Asuransi Tenaga Kerja and PT Persero Asuransi Jiwasraya, which are state-owned insurance companies. Insurance premiums charged amounted to Rp83,945 million, Rp131,445 million and Rp159,517 million in 2001, 2002 and 2003, respectively, reflecting 0.9%, 1.1% and 1.1% of total operating expenses in 2001, 2002 and 2003, respectively. |
k. | The Company and its subsidiaries maintain current accounts and time deposits in several state-owned banks. In addition, some of those banks are appointed as collecting agents for the Company. Total placements in form of current accounts and time deposits in state-owned banks and mutual funds amounted to Rp6,161,244 million and Rp3,130,375 million as of December 31, 2002 and 2003, respectively, reflecting 13.9% and 6.2% of total assets as of December 31, 2002 and 2003, respectively. Interest income recognized during 2003 was Rp273,986 million, reflecting 74.85% of total interest income. |
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l. | The Company leases buildings, purchases materials and construction services, and utilizes maintenance and cleaning services from Dana Pensiun Telkom and PT Sandhy Putra Makmur, a subsidiary of Yayasan Sandikara Putra Telkom — a foundation managed by Dharma Wanita Telkom. Total charges from these transactions amounted to Rp18,680 million, Rp14,570 million and Rp32,785 million in 2001, 2002 and 2003, respectively, reflecting 0.2%, 0.1% and 0.2% of total operating expenses in 2001, 2002 and 2003, respectively. |
m. | The Company purchased encoded phone cards from Perusahaan Umum Percetakan Uang Republik Indonesia (“Peruri”), a state-owned company. The cost of the phone cards amounted to Rp1,781 million, Rp1,377 million and Rp7,730 million in 2001, 2002 and 2003, respectively, which reflect 0.02%, 0.01% and 0.05% of total operating expenses for 2001, 2002 and 2003, respectively. |
n. | In 1991, the Company granted loans to Koperasi Telekomunikasi (“Koptel”) amounting to Rp1,000 million to support Koptel’s activities in providing housing loans to the Company’s employees. The balance of the loans amounted to Rp100 million and RpNil in 2002 and 2003, respectively. |
o. | The Company and its subsidiary earned interconnection revenues from Komselindo, Metrosel, Mobisel, BBT and PSN (2003: excluding Komselindo and Metrosel), with a total of Rp345,284 million, Rp77,984 million and Rp20,997 million in 2001, 2002 and 2003, respectively, which reflect 2.1%, 0.4% and 0.1% of total operating revenues in 2001, 2002 and 2003, respectively. |
p. | In addition to revenues earned under the KSO Agreement (Note 51), the Company also earned income from building rental, repairs and maintenance services and training services provided to the KSO Units, amounting to Rp114,200 million, Rp73,679 million and Rp23,147 million in 2001, 2002 and 2003, respectively, which reflect 0.7%, 0.4% and 0.1% of total operating revenues in 2001, 2002 and 2003, respectively. |
q. | The Company has also seconded a number of its employees to related parties to assist them in operating their business. In addition, the Company provided certain of its related parties with the right to use its buildings free of charge. |
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2002 | 2003 | |||||||||||||||||
% of | % of | |||||||||||||||||
Rp | Total Assets | Rp | Total Assets | |||||||||||||||
a. | Cash and cash equivalents (Note 6) | 5,081,632 | 11.47 | 3,057,388 | 6.08 | |||||||||||||
b. | Temporary investments (Note 7) | 523,000 | 1.18 | — | — | |||||||||||||
c. | Trade accounts receivable, net (Note 8) | 886,763 | 2.00 | 410,923 | 0.82 | |||||||||||||
d. | Other accounts receivable | |||||||||||||||||
KSO Units | 48,221 | 0.11 | 26,969 | 0.05 | ||||||||||||||
State-owned banks (interest) | 12,523 | 0.03 | 9,453 | 0.02 | ||||||||||||||
Government agencies | 4,122 | 0.01 | 2,683 | 0.01 | ||||||||||||||
Other | 58,411 | 0.13 | 81,603 | 0.16 | ||||||||||||||
Total | 123,277 | 0.28 | 120,708 | 0.24 | ||||||||||||||
e. | Prepaid expenses (Note 10) | 20,867 | 0.05 | 17,074 | 0.03 | |||||||||||||
f. | Other current assets (Note 11) | 540,520 | 1.22 | 45,083 | 0.09 | |||||||||||||
g. | Advances and other non-current assets | |||||||||||||||||
Bank Mandiri | 16,128 | 0.04 | 27,904 | 0.06 | ||||||||||||||
Peruri | — | — | 813 | 0.00 | ||||||||||||||
16,128 | 0.04 | 28,717 | 0.06 | |||||||||||||||
2002 | 2003 | |||||||||||||||||
% of | % of | |||||||||||||||||
Rp | Total Liabilities | Rp | Total Liabilities | |||||||||||||||
h. | Trade accounts payable (Note 18) | |||||||||||||||||
Government agencies | 359,211 | 1.33 | 224,370 | 0.77 | ||||||||||||||
KSO Units | 114,717 | 0.42 | 78,664 | 0.27 | ||||||||||||||
Indosat (Including Satelindo) | 220,637 | 0.81 | 224,611 | 0.77 | ||||||||||||||
Koperasi Pegawai Telkom | 14,279 | 0.05 | 11,512 | 0.04 | ||||||||||||||
PSN | 5,183 | 0.02 | 1,035 | 0.00 | ||||||||||||||
PT INTI | 1,420 | 0.01 | 94,190 | 0.32 | ||||||||||||||
Others | 74,780 | 0.28 | 23,096 | 0.08 | ||||||||||||||
Total | 790,227 | 2.92 | 657,478 | 2.25 | ||||||||||||||
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2002 | 2003 | |||||||||||||||||
% of | % of | |||||||||||||||||
Total | Total | |||||||||||||||||
Rp | Liabilities | Rp | Liabilities | |||||||||||||||
i. | Accrued expenses (Note 19) | |||||||||||||||||
Government Agencies and State-owned banks | 298,840 | 1.10 | 176,272 | 0.60 | ||||||||||||||
Employees | 1,082,720 | 4.00 | 606,257 | 2.07 | ||||||||||||||
PT Asuransi Jasa Indonesia | 7,665 | 0.03 | 13,713 | 0.05 | ||||||||||||||
Total | 1,389,225 | 5.13 | 796,242 | 2.72 | ||||||||||||||
j. | Short-term bank loans (Note 22) | |||||||||||||||||
Bank Mandiri | — | — | 37,642 | 0.13 | ||||||||||||||
k. | Two-step loans (Note 23 and 24) | 8,570,142 | 31.63 | 7,691,045 | 26.28 | |||||||||||||
l. | Provision for long service awards (Note 47) | 489,231 | 1.81 | 473,614 | 1.62 | |||||||||||||
m. | Provision for post-retirement benefits (Note 48) | 1,602,494 | 5.91 | 2,063,350 | 7.05 | |||||||||||||
n. | Long-term bank loans (Note 26) | |||||||||||||||||
Bank Mandiri | — | — | 42,115 | 0.14 | ||||||||||||||
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2001 | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
Fixed | Before | Total | ||||||||||||||||||||||
Line | Cellular | Other | Elimination | Elimination | Consolidated | |||||||||||||||||||
Segment results | ||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||
External operating revenues | 10,549,644 | 5,590,108 | 144,055 | 16,283,807 | — | 16,283,807 | ||||||||||||||||||
Intersegment operating revenues | 1,174,993 | (671,884 | ) | — | 503,109 | (503,109 | ) | — | ||||||||||||||||
Total operating revenues | 11,724,637 | 4,918,224 | 144,055 | 16,786,916 | (503,109 | ) | 16,283,807 | |||||||||||||||||
Operating expenses | (6,966,606 | ) | (1,932,919 | ) | (121,780 | ) | (9,021,305 | ) | 156,905 | (8,864,400 | ) | |||||||||||||
Operating income | 4,758,031 | 2,985,305 | 22,275 | 7,765,611 | (346,204 | ) | 7,419,407 | |||||||||||||||||
Interest expense | (1,302,452 | ) | (27,190 | ) | — | (1,329,642 | ) | — | (1,329,642 | ) | ||||||||||||||
Interest income | 506,464 | 57,220 | 7,902 | 571,586 | — | 571,586 | ||||||||||||||||||
Loss on foreign exchange — net | (322,511 | ) | (53,946 | ) | (2,263 | ) | (378,720 | ) | — | (378,720 | ) | |||||||||||||
Other income (charges) — net | 644,492 | (35,513 | ) | 12,514 | 621,493 | (268,547 | ) | 352,946 | ||||||||||||||||
Equity in net income (loss) of associated companies | 1,334,083 | — | — | 1,334,083 | (1,419,769 | ) | (85,686 | ) | ||||||||||||||||
Tax expense | (1,114,574 | ) | (881,867 | ) | (10,454 | ) | (2,006,895 | ) | — | (2,006,895 | ) | |||||||||||||
Income before minority interest | 4,503,533 | 2,044,009 | 29,974 | 6,577,516 | (2,034,520 | ) | 4,542,996 | |||||||||||||||||
Unallocated minority interest | — | — | — | — | — | (474,605 | ) | |||||||||||||||||
Net income | 4,503,533 | 2,044,009 | 29,974 | 6,577,516 | (2,034,520 | ) | 4,068,391 | |||||||||||||||||
Other information | ||||||||||||||||||||||||
Segment assets | 29,678,357 | 7,363,322 | 253,153 | 37,294,832 | (4,449,250 | ) | 32,845,582 | |||||||||||||||||
Investments in associates | 190,488 | — | — | 190,488 | — | 190,488 | ||||||||||||||||||
Total consolidated assets | 29,868,845 | 7,363,322 | 253,153 | 37,485,320 | (4,449,250 | ) | 33,036,070 | |||||||||||||||||
Total consolidated liabilities | (20,583,335 | ) | (2,143,805 | ) | (146,137 | ) | (22,873,277 | ) | 153,502 | (22,719,775 | ) | |||||||||||||
Minority interest | — | — | — | — | — | 1,235,334 | ||||||||||||||||||
Capital expenditures | (2,903,486 | ) | (2,780,366 | ) | (14,416 | ) | (5,698,268 | ) | — | (5,698,268 | ) | |||||||||||||
Depreciation | (2,346,535 | ) | (513,065 | ) | (10,172 | ) | (2,869,772 | ) | — | (2,869,772 | ) | |||||||||||||
Amortization of intangible assets | (55,709 | ) | — | — | (55,709 | ) | — | (55,709 | ) | |||||||||||||||
Other non-cash expenses | (305,698 | ) | (35,307 | ) | (1,895 | ) | (342,900 | ) | — | (342,900 | ) | |||||||||||||
Net cash provided by operating activities | 4,215,969 | 2,759,528 | 37,092 | 7,012,589 | — | 7,012,589 | ||||||||||||||||||
Net cash used in investing activities | (3,064,442 | ) | (2,629,620 | ) | (18,539 | ) | (5,712,601 | ) | (403,195 | ) | (6,115,796 | ) | ||||||||||||
Net cash (used in) provided by financing activities | (2,291,844 | ) | 218,808 | 7,030 | (2,066,006 | ) | 403,195 | (1,662,811 | ) | |||||||||||||||
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2002 | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
Fixed | Before | Total | ||||||||||||||||||||||
Line | Cellular | Other | Elimination | Elimination | Consolidated | |||||||||||||||||||
Segment results | ||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||
External operating revenues | 13,245,303 | 7,315,028 | 242,487 | 20,802,818 | — | 20,802,818 | ||||||||||||||||||
Intersegment operating revenues | 155,105 | 245,970 | 8,624 | 409,699 | (409,699 | ) | — | |||||||||||||||||
Total operating revenues | 13,400,408 | 7,560,998 | 251,111 | 21,212,517 | (409,699 | ) | 20,802,818 | |||||||||||||||||
Operating expenses | (8,525,232 | ) | (3,446,755 | ) | (205,835 | ) | (12,177,822 | ) | 505,219 | (11,672,603 | ) | |||||||||||||
Operating income | 4,875,176 | 4,114,243 | 45,276 | 9,034,695 | 95,520 | 9,130,215 | ||||||||||||||||||
Interest expense | (1,405,409 | ) | (177,341 | ) | — | (1,582,750 | ) | — | (1,582,750 | ) | ||||||||||||||
Interest income | 367,725 | 102,176 | 9,901 | 479,802 | — | 479,802 | ||||||||||||||||||
Gain (loss) on foreign exchange — net | 554,741 | 2,311 | (439 | ) | 556,613 | — | 556,613 | |||||||||||||||||
Other income (charges) — net | 82,327 | (27,257 | ) | 4,494 | 59,564 | (95,520 | ) | (35,956 | ) | |||||||||||||||
Tax expense | (1,659,363 | ) | (1,226,958 | ) | (12,650 | ) | (2,898,971 | ) | — | (2,898,971 | ) | |||||||||||||
Equity in net income of associated companies | 2,066,277 | — | — | 2,066,277 | (2,061,679 | ) | 4,598 | |||||||||||||||||
Gain on sale of long-term investment in Telkomsel | 3,196,380 | — | — | 3,196,380 | — | 3,196,380 | ||||||||||||||||||
Income before minority interest | 8,077,854 | 2,787,174 | 46,582 | 10,911,610 | (2,061,679 | ) | 8,849,931 | |||||||||||||||||
Unallocated minority interest | — | — | — | — | — | (810,222 | ) | |||||||||||||||||
Net income | 8,077,854 | 2,787,174 | 46,582 | 10,911,610 | (2,061,679 | ) | 8,039,709 | |||||||||||||||||
Other information | ||||||||||||||||||||||||
Segment assets | 34,177,425 | 11,255,500 | 310,828 | 45,743,753 | (1,561,340 | ) | 44,182,413 | |||||||||||||||||
Investments in associates | 124,683 | — | — | 124,683 | — | 124,683 | ||||||||||||||||||
Total consolidated assets | 34,302,108 | 11,255,500 | 310,828 | 45,868,436 | (1,561,340 | ) | 44,307,096 | |||||||||||||||||
Total consolidated liabilities | (24,348,322 | ) | (4,066,412 | ) | (198,756 | ) | (28,613,490 | ) | 1,515,810 | (27,097,680 | ) | |||||||||||||
Minority interest | — | — | — | — | — | (2,595,799 | ) | |||||||||||||||||
Capital expenditures | (6,266,859 | ) | (2,730,028 | ) | (35,531 | ) | (9,032,418 | ) | — | (9,032,418 | ) | |||||||||||||
Depreciation and amortization | (2,576,073 | ) | (984,039 | ) | (7,256 | ) | (3,567,368 | ) | 4,675 | (3,562,693 | ) | |||||||||||||
Amortization of intangible assets | (187,990 | ) | — | — | (187,990 | ) | — | (187,990 | ) | |||||||||||||||
Other non-cash expenses | 106,329 | (139,214 | ) | (3,047 | ) | (35,932 | ) | — | (35,932 | ) | ||||||||||||||
Net cash provided by operating activities | 6,237,405 | 4,557,442 | 69,626 | 10,864,473 | — | 10,864,473 | ||||||||||||||||||
Net cash used in investing activities | (1,492,286 | ) | (4,531,036 | ) | (26,653 | ) | (6,049,975 | ) | — | (6,049,975 | ) | |||||||||||||
Net cash used in financing activities | (2,482,408 | ) | (146,819 | ) | (40,989 | ) | (2,670,216 | ) | — | (2,670,216 | ) | |||||||||||||
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2003 | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
Fixed | Before | Total | ||||||||||||||||||||||
Line | Cellular | Other | Elimination | Elimination | Consolidated | |||||||||||||||||||
Segment results | ||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||
External operating revenues | 16,068,496 | 10,797,555 | 249,872 | 27,115,923 | — | 27,115,923 | ||||||||||||||||||
Intersegment operating revenues | 122,653 | 337,100 | 30,824 | 490,577 | (490,577 | ) | — | |||||||||||||||||
Total operating revenues | 16,191,149 | 11,134,655 | 280,696 | 27,606,500 | (490,577 | ) | 27,115,923 | |||||||||||||||||
Operating expenses | (10,596,851 | ) | (4,802,283 | ) | (275,499 | ) | (15,674,633 | ) | 534,649 | (15,139,984 | ) | |||||||||||||
Operating income | 5,594,298 | 6,332,372 | 5,197 | 11,931,867 | 44,072 | 11,975,939 | ||||||||||||||||||
Interest expense | (1,249,795 | ) | (179,486 | ) | — | (1,429,281 | ) | 45,835 | (1,383,446 | ) | ||||||||||||||
Interest income | 342,980 | 60,407 | 8,472 | 411,859 | (45,835 | ) | 366,024 | |||||||||||||||||
Gain (loss) on foreign exchange — net | 198,803 | (73,017 | ) | 335 | 126,121 | — | 126,121 | |||||||||||||||||
Other income (charges) — net | 358,191 | (10,605 | ) | 81,988 | 429,574 | (65,236 | ) | 364,338 | ||||||||||||||||
Tax expense | (1,942,070 | ) | (1,892,821 | ) | (26,199 | ) | (3,861,090 | ) | — | (3,861,090 | ) | |||||||||||||
Equity in net income of associated companies | 3,313,831 | — | — | 3,313,831 | (3,311,012 | ) | 2,819 | |||||||||||||||||
Income before minority interest | 6,616,238 | 4,236,850 | 69,793 | 10,922,881 | (3,332,176 | ) | 7,590,705 | |||||||||||||||||
Unallocated minority interest | — | — | — | — | — | (1,503,478 | ) | |||||||||||||||||
Net income | 6,616,238 | 4,236,850 | 69,793 | 10,922,881 | (3,332,176 | ) | 6,087,227 | |||||||||||||||||
Other information | ||||||||||||||||||||||||
Segment assets | 46,884,985 | 15,386,289 | 317,398 | 62,588,672 | (12,370,071 | ) | 50,218,601 | |||||||||||||||||
Investments in associates | 64,648 | — | — | 64,648 | — | 64,648 | ||||||||||||||||||
Total consolidated assets | 46,949,633 | 15,386,289 | 317,398 | 62,653,320 | (12,370,071 | ) | 50,283,249 | |||||||||||||||||
Total consolidated liabilities | (28,020,867 | ) | (5,075,222 | ) | (166,119 | ) | (33,262,208 | ) | 3,999,991 | (29,262,217 | ) | |||||||||||||
Minority interest | — | — | — | — | — | (3,708,155 | ) | |||||||||||||||||
Capital expenditures | (5,698,401 | ) | (5,348,783 | ) | (61,672 | ) | (11,108,856 | ) | — | (11,108,856 | ) | |||||||||||||
Depreciation and amortization | (3,126,223 | ) | (1,680,554 | ) | (9,824 | ) | (4,816,601 | ) | 11,916 | (4,804,685 | ) | |||||||||||||
Amortization of intangible assets | (730,659 | ) | — | — | (730,659 | ) | — | (730,659 | ) | |||||||||||||||
Other non-cash expenses | (210,646 | ) | (113,904 | ) | (4,308 | ) | (328,858 | ) | — | (328,858 | ) | |||||||||||||
Net cash provided by operating activities | 6,028,485 | 6,753,253 | 70,794 | 12,852,532 | — | 12,852,532 | ||||||||||||||||||
Net cash used in investing activities | (1,955,079 | ) | (5,310,509 | ) | (40,274 | ) | (7,305,862 | ) | — | (7,305,862 | ) | |||||||||||||
Net cash used in financing activities | (5,425,189 | ) | (727,880 | ) | (24,347 | ) | (6,177,416 | ) | — | (6,177,416 | ) | |||||||||||||
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• | Minimum Telkom Revenue (“MTR”) Represents the amount guaranteed by the KSO investor to be paid to the Company in accordance with the KSO agreement. | |
• | Distributable KSO Revenues (“DKSOR”) DKSOR are the entire KSO revenues, less the MTR and the operational expenses of the KSO Units, as provided in the KSO agreements. These revenues are shared between the Company and the KSO Investors based on agreed upon percentages. |
The DKSOR from fixed wireless revenues (“Telkom Flexi Revenues”) are shared between the Company and KSO Investor based on a ratio of 95% and 5%, respectively. | |
The DKSOR from non-Telkom Flexi Revenues are shared between the Company and KSO Investor based on a ratio of 30% and 70%, respectively, except for KSO VII. For KSO VII, the DKSOR from non-Telkom Flexi Revenues are shared between the Company and KSO Investor at a ratio of 35% and 65%, respectively. Effective on 31 July 2003, the ratio for distribution of DKSOR from non-Telkom Flexi Revenue in KSO III was changed to 5% and 95% for the Company and KSO Investor, respectively, from the date thereof until 31 December 2005, and to 30% and 70%, respectively, thereafter. |
i. the net present value, if any, of the KSO Investor’s projected share in DKSOR from the additional new installations forming part of the KSO system on the termination date over the balance of the applicable payback periods, and | |
ii. an amount to be agreed upon between the Company and the KSO Investor as a fair compensation in respect of any uncompleted or untested additional new installations transferred. |
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i. The percentage of sharing of the distributable KSO revenues for 1998 and 1999 was 10% and 90% for the Company and the KSO Investors, respectively. | |
ii. The minimum number of access line units to be installed by the KSO Investors up to March 31, 1999 was 1,268,000 lines. | |
iii. The incremental rate of the MTR would not exceed 1% in 1998 and 1.5% in 1999 for the KSO agreements with the Investors that have MTR incremental factors. | |
iv. “Operating Capital Expenditures” in each of the KSO Units will be shared between the Company and the respective KSO Investors in proportion to the previous year’s share in the annual net income of the KSO Units, starting from 1999. | |
v. The cancellation of the requirement to maintain a bank guarantee in respect of MTR. |
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F-107
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1. Cellular to cellular: | 2 times airtime rate | |
2. Cellular to PSTN: | 1 times airtime rate | |
3. PSTN to cellular: | 1 times airtime rate | |
4. Card phone to cellular: | 1 times airtime rate plus 41% surcharges |
b. | Usage Tariffs |
1. Usage tariffs charged to a cellular subscriber who makes a call to a fixed line (“PSTN”) subscriber are the same as the usage tariffs applied to PSTN subscribers. For the use of local PSTN network, the tariffs are computed at 50% of the prevailing local PSTN tariffs. | |
2. The long-distance usage tariffs between two different service areas are the same as the prevailing tariffs for domestic long-distance call (“SLJJ”) applied to PSTN subscribers. |
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i. | International interconnection with PSTN and cellular telecommunications network |
Based on KM. 37 year 1999, effective December 1, 1998, the international interconnection tariffs are calculated by applying the following charges to successful incoming and outgoing calls to the Company’s network: |
Tarif | ||||
Access charge | Rp850 per call | |||
Usage charge | Rp550 per paid minute | |||
Universal Service Obligation (USO) | Rp750 per call |
ii. | Mobile and fixed cellular interconnection with the PSTN |
Based on KM. 46 year 1998, cellular interconnection tariffs with PSTN are as follows: |
For local calls from a mobile cellular network to PSTN, the cellular operator pays the Company 50% of the prevailing tariffs for local calls. For local calls from PSTN to a cellular network, the Company charges its subscribers the applicable local call tariff plus an airtime charge, and pays the cellular operator the airtime charge. |
KM. 46 year 1998 provides tariffs which vary among long-distance carriers depending upon the routes and the long-distance network used. Pursuant to this decree, for long-distance calls which originate from the PSTN, the Company is entitled to retain a portion of the prevailing long-distance tariffs, which portion ranges from 40% of the tariffs, in cases where the entire long-distance traffic is carried by cellular operator’s network and delivered to another, and up to 85% of the tariffs, in cases where the entire long-distance traffic is carried by the PSTN. |
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iii. Mobile cellular interconnection with other mobile cellular providers |
Based on KM. 46 year 1998, the mobile cellular interconnection tariffs with other mobile cellular providers are as follows: |
For local calls from one cellular telecommunications network to another, the originating cellular operator pays the airtime to the destination cellular operator. If the call is carried by the PSTN, the cellular operator pays the PSTN operator 50% of the prevailing tariffs for local calls. |
For long-distance calls which are originated from a cellular telecommunications network, the cellular operator is entitled to retain a portion of the prevailing long-distance tariffs, which portion ranges from 15% of the tariff in cases where the entire long-distance traffic is not carried by the cellular operator, up to 60% of the tariff in cases where the entire long-distance portion is carried by the cellular operator and the call is delivered to another cellular operator, or up to 75% if the call is delivered to the same cellular operator. |
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Amounts in | ||||||||
Foreign Currencies | Equivalent | |||||||
Currencies | (in thousands) | in Rupiah | ||||||
Rupiah | — | 9,370,973 | ||||||
U.S. Dollars | 310,056 | 2,622,237 | ||||||
Euro | 72,913 | 776,024 | ||||||
Japanese Yen | 116,276 | 9,206 | ||||||
Singapore Dollar | 3,881 | 19,316 | ||||||
Total | 12,797,756 | |||||||
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(vii) | Partnership Agreement for the Construction and Provision of High Performance Backbone in Sumatera |
(viii) | Partnership Agreement for the Development of a PSTN Regional Junction for Regional Division V (East Java) |
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US$ | EUR | |||||||
(full amount) | (full amount) | |||||||
DB | 80,000,000 | 6,000,000 | ||||||
SCB | 12,000,000 | 18,000,000 | ||||||
Total | 92,000,000 | 24,000,000 | ||||||
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d. MPPA with Motorola |
e. Partnership Agreement with Siemens Consortium |
f. Metro Junction and Optical Network Access Agreement for Regional Division III with PT INTI |
g. Agreement for the Procurement of Softswitch System Class 4 with a Consortium Led by Santera-Olex |
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2002 | 2003 | |||||||||||||||||
Foreign | Foreign | |||||||||||||||||
Currencies | Rupiah | Currencies | Rupiah | |||||||||||||||
(in thousands) | Equivalent | (in thousands) | Equivalent | |||||||||||||||
Assets | ||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||
U.S. Dollars | 349,800 | 3,127,211 | 123,536 | 1,043,400 | ||||||||||||||
Euro | 18,148 | 170,040 | 39,583 | 421,288 | ||||||||||||||
Japanese Yen | 36 | 3 | 454 | 35 | ||||||||||||||
Trade accounts receivable | ||||||||||||||||||
Related parties | ||||||||||||||||||
U.S. Dollars | 7,984 | 71,374 | 9,224 | 77,925 | ||||||||||||||
Third parties | ||||||||||||||||||
U.S. Dollars | 8,503 | 76,018 | 4,108 | 34,634 | ||||||||||||||
Other accounts receivable | ||||||||||||||||||
U.S. Dollars | 202 | 1,808 | 12,605 | 106,258 | ||||||||||||||
Japanese Yen | — | — | 5,441 | 429 | ||||||||||||||
French Franc | — | — | 4,805 | 5,447 | ||||||||||||||
Netherland Guilder | — | — | 814 | 2,745 | ||||||||||||||
Euro | — | — | 21 | 224 | ||||||||||||||
Other current assets | ||||||||||||||||||
U.S. Dollars | 16,922 | 151,282 | 4,658 | 39,269 | ||||||||||||||
Advances and other non-current assets | ||||||||||||||||||
U.S. Dollars | 2,429 | 21,711 | 12,290 | 103,651 | ||||||||||||||
Escrow accounts | ||||||||||||||||||
U.S. Dollars | 33,325 | 297,928 | 61,302 | 516,128 | ||||||||||||||
Total Assets | 3,917,375 | 2,351,433 | ||||||||||||||||
Liabilities | ||||||||||||||||||
Trade accounts payable | ||||||||||||||||||
Related parties | ||||||||||||||||||
U.S. Dollars | 54,433 | 487,715 | 13,867 | 117,281 | ||||||||||||||
Euro | 2,027 | 19,007 | 2,720 | 28,947 | ||||||||||||||
Third parties | ||||||||||||||||||
U.S. Dollars | 38,342 | 343,543 | 92,677 | 783,127 | ||||||||||||||
Euro | 26,228 | 245,952 | 48 | 516 | ||||||||||||||
Great Britain Pound Sterling | 319 | 4,598 | 61 | 916 | ||||||||||||||
Japanese Yen | 3,039 | 229 | 126,925 | 10,033 | ||||||||||||||
Singapore Dollars | 1 | 3 | 144 | 717 |
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2002 | 2003 | |||||||||||||||||
Foreign | Foreign | |||||||||||||||||
Currencies | Rupiah | Currencies | Rupiah | |||||||||||||||
(in thousands) | Equivalent | (in thousands) | Equivalent | |||||||||||||||
Other accounts payable | ||||||||||||||||||
U.S. Dollars | 9 | 77 | — | — | ||||||||||||||
Accrued expenses | ||||||||||||||||||
U.S. Dollars | 17,981 | 161,116 | 28,946 | 244,925 | ||||||||||||||
Japanese Yen | 252,604 | 19,069 | 14,135 | 1,117 | ||||||||||||||
Singapore Dollars | — | — | 189 | 940 | ||||||||||||||
Great Britain Pound Sterling | — | — | 46 | 689 | ||||||||||||||
French Franc | — | — | 710 | 808 | ||||||||||||||
Netherland Guilder | — | — | 482 | 1,631 | ||||||||||||||
Euro | 9,633 | 90,336 | 40,698 | 433,155 | ||||||||||||||
Short-term bank loans | ||||||||||||||||||
Third parties | ||||||||||||||||||
U.S. Dollars | 4,385 | 39,205 | 4,460 | 37,642 | ||||||||||||||
Advances from customers and suppliers | ||||||||||||||||||
U.S. Dollars | 1,555 | 13,935 | 3,041 | �� | 25,701 | |||||||||||||
Great Britain Pound Sterling | — | — | 1 | 7 | ||||||||||||||
Japanese Yen | — | — | 23,940 | 1,892 | ||||||||||||||
Current maturities of long-term liabilities | ||||||||||||||||||
U.S. Dollars | 249,823 | 2,238,421 | 332,921 | 2,813,246 | ||||||||||||||
Euro | 3,781 | 35,455 | 18,671 | 198,810 | ||||||||||||||
Japanese Yen | 374,909 | 28,306 | 699,163 | 55,266 | ||||||||||||||
Long-term liabilities | ||||||||||||||||||
U.S. Dollars | 724,193 | 6,488,764 | 699,605 | 5,913,824 | ||||||||||||||
Euro | 19,226 | 180,297 | 64,976 | 691,850 | ||||||||||||||
Japanese Yen | 17,626,220 | 1,330,614 | 16,730,301 | 1,322,460 | ||||||||||||||
Total liabilities | 11,726,642 | 12,685,500 | ||||||||||||||||
Net liabilities | (7,809,267 | ) | (10,334,067 | ) | ||||||||||||||
• | Dividends for 2002 amounting to Rp3,338,109 million or Rp331.16 per share, social contribution fund (“Dana Bina Lingkungan”) of Rp20,863 million and appropriated Rp813,664 million for general reserves. | |
• | Dividends for 2001 amounting to Rp2,125,055 million or Rp210.81 per share, and appropriated Rp425,011 million for general reserves. |
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• | Dividends for 2000 amounting to Rp888,654 million or Rp88.16 per share, and appropriated Rp126.951 million for general reserves. |
1. Domestic Long Distance (DLD) and International Direct Dialing (IDD) access codes are distinctive features of the network as well as distinctive features of basic telephone services. All DLD and IDD operators use a 3 (three)-digits access code (prefix) for all parts of Indonesian territory; | |
2. Every customer can freely select (have free selection of) DLD and IDD operators as he/she desires in an automatic manner (normally opened) for each call he/she wishes to make. |
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3. DLD and IDD fixed telecommunication network operators may provide DLD and IDD basic telephony services; | |
4. Furthermore, DLD and IDD operators shall be entitled to determine retail rates for customers and provide services for their customers. |
Cost-based interconnection fees shall be applicable as from January 1, 2005. Preparation shall be made within the period commencing on January 1, 2004 and ending on December 31, 2004 for the adjustment of interconnection arrangements with the assistance of consultants, which shall include: the amount of interconnection fees, cost accounting standards, reference interconnection offer (RIO) and interconnection dispute resolutions. |
Prohibition of the abuse of position as dominant operator (dumping, cross subsidy, blocking, hampering interconnection, tied sales), as well as prohibition for dominant operator from conducting anti-competition transfer pricing. |
1. Local charges increased by an average of 28% | |
2. Domestic Long Distance charges decreased by an average of 20% for the 07.00 – 20.00 time band, while other time band are not increased, therefore the decrease of all DLD charges is 10% | |
3. Monthly subscription charges increased by an average of 12% – 25%, depending upon its customer segment. |
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58. | SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN INDONESIA AND ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA |
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2001 | 2002 | 2003 | |||||||||||
pro forma | as reported | as reported | |||||||||||
Reported net income in accordance with U.S. GAAP | 4,298,200 | 8,587,259 | 5,790,640 | ||||||||||
Amortization of goodwill | 12,412 | — | — | ||||||||||
Adjusted net income in accordance with U.S. GAAP | 4,310,612 | 8,587,259 | 5,790,640 | ||||||||||
Adjusted net income per share — in full Rupiah amount | 426.75 | 851.91 | 574.47 | ||||||||||
Adjusted net income per ADS — in full Rupiah amount | 8,534.94 | 17,038.21 | 11,489.40 | ||||||||||
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Note | 2001 | 2002 | 2003 | ||||||||||||||
Net income according to the consolidated statements of income prepared under Indonesian GAAP | 4,068,391 | 8,039,709 | 6,087,227 | ||||||||||||||
U.S. GAAP adjustments — increase (decrease) due to: | |||||||||||||||||
Termination benefits | (a | ) | 140,000 | 530,981 | (670,981 | ) | |||||||||||
Capitalization of foreign exchange differences, net of related depreciation of (76,732), (79,797) and (76,756), respectively | (b | ) | 74,987 | 107,365 | 76,756 | ||||||||||||
Interest capitalized on property under construction net of related depreciation of (nil), (3,061) and (8,787), respectively | (c | ) | 19,690 | 43,045 | 39,077 | ||||||||||||
Revenue-sharing arrangements | (d | ) | 43,999 | 67,959 | 23,159 | ||||||||||||
Revaluation of property, plant and equipment | (e | ) | 4,095 | 3,929 | — | ||||||||||||
Pension | (f | ) | (19,640 | ) | 111,415 | (109,334 | ) | ||||||||||
Equity in net income/ (loss) of associated companies | (g | ) | (3,786 | ) | (182 | ) | (170 | ) | |||||||||
Amortization of landrights | (h | ) | (6,409 | ) | (11,781 | ) | (10,212 | ) |
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Note | 2001 | 2002 | 2003 | |||||||||||||||
Depreciation of equipment to be installed | (i | ) | — | 9,706 | — | |||||||||||||
Revenue recognition | (j | ) | 81,429 | (89,274 | ) | (53,226 | ) | |||||||||||
Goodwill | (k | ) | — | 21,269 | 21,270 | |||||||||||||
Capital leases | (l | ) | — | 14,241 | 6,882 | |||||||||||||
Adjustment for Dayamitra accounted at 100% | (m | ) | (4,191 | ) | (9,270 | ) | (24,476 | ) | ||||||||||
Reversal of difference due to change of equity in associated companies | (n | ) | — | (65,158 | ) | (38,425 | ) | |||||||||||
Asset retirement obligations | (o | ) | — | — | (848 | ) | ||||||||||||
Deferred income tax: | ||||||||||||||||||
Deferred income tax on equity method investments | (p | ) | — | — | 119,456 | |||||||||||||
Deferred income tax effect on U.S. GAAP adjustments | (100,942 | ) | (220,724 | ) | 323,089 | |||||||||||||
229,232 | 513,521 | (297,983 | ) | |||||||||||||||
Minority interest | 577 | 34,029 | 1,396 | |||||||||||||||
Net adjustments | 229,809 | 547,550 | (296,587 | ) | ||||||||||||||
Net income in accordance with U.S. GAAP | 4,298,200 | 8,587,259 | 5,790,640 | |||||||||||||||
Net income per share — in full Rupiah amount | 426.41 | 851.91 | 574.47 | |||||||||||||||
Net income per ADS (20 Series B shares per ADS) — in full Rupiah amount | 8,528.17 | 17,038.21 | 11,489.40 | |||||||||||||||
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Note | 2002 | 2003 | ||||||||||||
Equity according to the consolidated balance sheets prepared under Indonesian GAAP | 14,613,617 | 17,312,877 | ||||||||||||
U.S. GAAP adjustments — increase (decrease) due to: | ||||||||||||||
Early retirement benefits | (a) | 670,981 | — | |||||||||||
Capitalization of foreign exchange differences — net of related depreciation | (b) | (627,229 | ) | (550,473 | ) | |||||||||
Interest capitalized on property under construction — net of related depreciation | (c) | 62,735 | 101,812 | |||||||||||
Revenue-sharing arrangements | (d) | (470,855 | ) | (447,696 | ) | |||||||||
Revaluation of property, plant and equipment: | (e) | |||||||||||||
Increment | (664,974 | ) | (664,974 | ) | ||||||||||
Accumulated depreciation | 664,974 | 664,974 | ||||||||||||
Pension | (f) | 231,490 | 122,156 | |||||||||||
Equity in net loss of associated companies | (g) | (18,082 | ) | (18,252 | ) | |||||||||
Amortization of landrights | (h) | (54,999 | ) | (65,211 | ) | |||||||||
Revenue recognition | (j) | (715,322 | ) | (768,548 | ) | |||||||||
Goodwill | (k) | 21,269 | 42,539 | |||||||||||
Capital leases | (l) | 14,241 | 21,123 | |||||||||||
Adjustment for Dayamitra accounted at 100% | (m) | (14,242 | ) | (38,718 | ) | |||||||||
Asset retirement obligations | (o) | — | (848 | ) | ||||||||||
Deferred income tax: | ||||||||||||||
Deferred income tax on equity method investments | (p) | — | 52,186 | |||||||||||
Deferred income tax effect on U.S. GAAP adjustments | 132,736 | 455,825 | ||||||||||||
(767,277 | ) | (1,094,105 | ) | |||||||||||
Minority interest | 64,524 | 65,920 | ||||||||||||
Net adjustments | (702,753 | ) | (1,028,185 | ) | ||||||||||
Equity in accordance with U.S. GAAP | 13,910,864 | 16,284,692 | ||||||||||||
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2001 | 2002 | 2003 | |||||||||||
Equity at beginning of year | 12,927,793 | 7,765,500 | 13,910,864 | ||||||||||
Changes during the year: | |||||||||||||
Net income under U.S. GAAP | 4,298,200 | 8,587,259 | 5,790,640 | ||||||||||
Dividends | (888,654 | ) | (2,125,055 | ) | (3,338,109 | ) | |||||||
Difference due to change in equity of investees | (119,961 | ) | — | — | |||||||||
Other comprehensive income, net of nil tax | 3,612 | (20,802 | ) | (78,703 | ) | ||||||||
Common control transaction | (8,455,490 | ) | (296,038 | ) | — | ||||||||
Equity at end of year | 7,765,500 | 13,910,864 | 16,284,692 | ||||||||||
2002 | 2003 | |||||||
Consolidated balance sheets | ||||||||
Current assets | 10,628,933 | 9,411,469 | ||||||
Non-current assets | 33,994,014 | 41,935,581 | ||||||
Total assets | 44,622,947 | 51,347,050 | ||||||
Current liabilities | 9,037,200 | 11,207,431 | ||||||
Non-current liabilities | 19,143,607 | 20,212,692 | ||||||
Total liabilities | 28,180,807 | 31,420,123 | ||||||
Minority interest in net assets of subsidiaries | 2,531,276 | 3,642,235 | ||||||
Equity | 13,910,864 | 16,284,692 | ||||||
Total liabilities and equity | 44,622,947 | 51,347,050 | ||||||
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(3) | Additional Financial Statement Disclosures Required by U.S. GAAP and U.S. SEC |
2001 | 2002 | 2003 | |||||||||||
Consolidated income before tax in accordance with U.S. GAAP | 6,880,064 | 12,483,147 | 10,711,267 | ||||||||||
Income tax in accordance with U.S. GAAP at 30% statutory tax rate | 2,064,002 | 3,744,927 | 3,213,380 | ||||||||||
Effect of non-deductible expenses (non-taxable income) at the enacted maximum tax rate (30%) | |||||||||||||
Net periodic post-retirement benefits cost | 111,922 | 183,597 | 188,375 | ||||||||||
Amortization of discount on promissory notes and interest expense | 28,515 | 58,298 | 132,876 | ||||||||||
Amortization of intangible assets | 16,713 | 55,616 | — | ||||||||||
Tax penalty | — | 72,471 | 16,521 | ||||||||||
Employee benefits | 18,707 | 24,714 | 6,342 | ||||||||||
Permanent differences of the KSO Units | 12,209 | (8,767 | ) | 16,739 | |||||||||
Amortization of landrights | 1,922 | 3,534 | 3,064 | ||||||||||
Income which was already subject to final tax | (169,447 | ) | (140,982 | ) | (61,876 | ) | |||||||
Decline in value of investments | 23,288 | — | — | ||||||||||
Gain on sale of Telkomsel’s shares | — | (949,826 | ) | — | |||||||||
Equity in net (income) loss of associated companies | 26,842 | 22,465 | (990 | ) | |||||||||
Others | (26,837 | ) | 53,648 | (95,886 | ) | ||||||||
Total | 43,834 | (625,232 | ) | 205,165 | |||||||||
Provision for income tax in accordance with U.S. GAAP | 2,107,836 | 3,119,695 | 3,418,545 | ||||||||||
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2002 | 2003 | |||||||
Deferred tax assets | ||||||||
Accounts receivable | 151,955 | 145,918 | ||||||
Inventories | 14,614 | 11,528 | ||||||
Tax loss carryforwards | 16,254 | 285,856 | ||||||
Provision for long service awards | 146,769 | 142,084 | ||||||
Deferral of revenue | 214,597 | 230,564 | ||||||
Long-term investments | 52,605 | 38,048 | ||||||
Others | — | 72,730 | ||||||
Provision for employee benefits | — | 131,757 | ||||||
Total | 596,794 | 1,058,485 | ||||||
Deferred tax liabilities | ||||||||
Property, plant and equipment | (2,406,220 | ) | (2,471,577 | ) | ||||
Intangible assets | (1,115,897 | ) | (1,527,796 | ) | ||||
Pension costs | (79,303 | ) | (125,010 | ) | ||||
Prepaid expenses and other receivables | (21,618 | ) | (49,519 | ) | ||||
Others | (842 | ) | — | |||||
Total | (3,623,880 | ) | (4,173,902 | ) | ||||
Total deferred tax liabilities — net | (3,027,086 | ) | (3,115,417 | ) | ||||
Cash and Cash Equivalents and Temporary Investments |
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Carrying Amount | Fair Value | ||||||||
2002 | |||||||||
Cash and cash equivalents | 5,699,070 | 5,699,070 | |||||||
Temporary investments | 573,000 | 573,000 | |||||||
Short-term bank loans | 39,205 | 39,205 | |||||||
Long-term liabilities: | |||||||||
Two-step loans | 8,570,142 | 9,866,256 | |||||||
Suppliers’ credit loans | 338,697 | 361,388 | |||||||
Bridging loan | 95,517 | 101,213 | |||||||
Bonds | 975,992 | 1,050,000 | |||||||
Guaranteed notes | 1,337,518 | 1,441,575 | |||||||
Liabilities for acquisitions of subsidiaries | 3,004,935 | 3,235,312 | |||||||
Bank loans | 247,432 | 268,309 | |||||||
2003 | |||||||||
Cash and cash equivalents | 5,094,472 | 5,094,472 | |||||||
Temporary investments | 4,006 | 4,006 | |||||||
Short-term bank loans | 37,642 | 37,642 | |||||||
Long-term liabilities: | |||||||||
Two-step loans | 7,691,045 | 9,230,697 | |||||||
Guaranteed notes | 1,121,224 | 1,452,826 | |||||||
Bonds | 981,278 | 1,265,606 | |||||||
Bank loans | 2,924,590 | 3,140,373 | |||||||
Liabilities for acquisitions of subsidiaries | 2,334,749 | 2,498,138 | |||||||
Suppliers’ credit loans | 165,629 | 194,006 | |||||||
Bridging loan | 50,365 | 52,393 | |||||||
Other | 9,153 | 9,153 |
i. Fair values presented do not take into consideration the effect of future currency fluctuations. |
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ii. Estimated fair values are not necessarily indicative of the amounts that the Company and its subsidiary would record upon disposal/termination of the financial instruments. |
2001 | 2002 | 2003 | ||||||||||
Net income under U.S. GAAP | 4,298,200 | 8,587,259 | 5,790,640 | |||||||||
Unrealized gain (loss) in value of securities | (42 | ) | 207 | — | ||||||||
Foreign exchange translation of associates | 3,654 | (21,009 | ) | (78,703 | ) | |||||||
4,301,812 | 8,566,457 | 5,711,937 | ||||||||||
2001 | 2002 | 2003 | ||||||||||
Unrealized losses in value of securities | (207 | ) | — | — | ||||||||
Foreign exchange translation of associates | 256,674 | 235,665 | 156,962 | |||||||||
256,467 | 235,665 | 156,962 | ||||||||||
The Company |
Pension | Health Care | |||||||||||||||||||||||
2001 | 2002 | 2003 | 2001 | 2002 | 2003 | |||||||||||||||||||
Components of Net Periodic Pension Cost | ||||||||||||||||||||||||
Service cost | 59,629 | 90,869 | 119,089 | 46,689 | 69,345 | 80,599 | ||||||||||||||||||
Interest cost | 277,077 | 418,044 | 537,797 | 298,541 | 424,834 | 493,596 | ||||||||||||||||||
Expected return on plan assets | (266,325 | ) | (343,121 | ) | (421,706 | ) | (49,011 | ) | (33,744 | ) | (56,004 | ) | ||||||||||||
Net amortization and deferral | 61,354 | 110,557 | 186,879 | 78,291 | 106,501 | 123,244 | ||||||||||||||||||
Curtailment | — | — | — | — | 49,576 | — | ||||||||||||||||||
Net periodic pension cost | 131,735 | 276,349 | 422,059 | 374,510 | 616,512 | 641,435 | ||||||||||||||||||
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Pension | Health Care | |||||||||||||||
2002 | 2003 | 2002 | 2003 | |||||||||||||
Change in benefit obligation | ||||||||||||||||
Beginning of year | 2,289,134 | 4,248,110 | 3,286,991 | 3,812,781 | ||||||||||||
Service cost | 90,869 | 119,089 | 69,345 | 80,599 | ||||||||||||
Interest cost | 418,044 | 537,797 | 424,834 | 493,596 | ||||||||||||
Employee contributions | 31,939 | 40,530 | — | — | ||||||||||||
Benefits paid | (186,805 | ) | (222,421 | ) | (70,491 | ) | (93,420 | ) | ||||||||
Plan amendment | 1,676,601 | — | — | — | ||||||||||||
Actuarial (gain) loss | (71,672 | ) | 2,129,818 | 102,102 | (544,785 | ) | ||||||||||
Benefit obligation at end of year | 4,248,110 | 6,852,923 | 3,812,781 | 3,748,771 | ||||||||||||
Change in plan assets | ||||||||||||||||
Fair value of plan assets at beginning of year | 2,571,714 | 3,099,648 | 330,461 | 343,896 | ||||||||||||
Employer contributions | 359,725 | 521,816 | 59,543 | 180,580 | ||||||||||||
Actual return on plan assets | 343,121 | 421,706 | 53,287 | 56,004 | ||||||||||||
Benefits paid | (186,805 | ) | (222,421 | ) | (79,852 | ) | (98,612 | ) | ||||||||
Actuarial gain (loss) | 11,893 | (149,440 | ) | (19,543 | ) | (14,972 | ) | |||||||||
Fair value of plan assets at end of year | 3,099,648 | 3,671,309 | 343,896 | 466,896 | ||||||||||||
Funded status | (1,148,462 | ) | (3,181,614 | ) | (3,468,885 | ) | (3,281,875 | ) | ||||||||
Unrecognized prior service cost (gain) | 2,264,095 | 2,062,830 | (2,301 | ) | (1,934 | ) | ||||||||||
Unrecognized actuarial net (gain) loss | (943,576 | ) | 1,378,701 | 1,576,793 | 952,885 | |||||||||||
Unrecognized net transition obligation | 177,525 | 148,891 | 291,899 | 267,574 | ||||||||||||
Net amount recognized | 349,582 | 408,808 | (1,602,494 | ) | (2,063,350 | ) | ||||||||||
Pension | ||||||||
2002 | 2003 | |||||||
Accumulated benefit obligation (ABO) | 3,436,184 | 4,258,022 | ||||||
Fair value of plan asset | (3,099,648 | ) | (3,671,309 | ) | ||||
336,536 | 586,713 | |||||||
Excess of ABO over fair value of plan assets | 336,536 | 586,713 | ||||||
Prepaid pension expense | 349,582 | 408,808 | ||||||
Additional minimum liability under U.S. GAAP | 686,118 | 995,521 | ||||||
Unrecognized prior service cost — intangible asset | 686,118 | 995,521 | ||||||
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Pension | Health Care | |||||||||||||||||||||||
2001 | 2002 | 2003 | 2001 | 2002 | 2003 | |||||||||||||||||||
Discount rate | 13 | % | 13 | % | 11 | % | 13 | % | 13 | % | 11 | % | ||||||||||||
Expected long-term return on plan assets | 13 | % | 13 | % | 11 | % | 13 | % | 13 | % | 11 | % | ||||||||||||
Rate of compensation increase | 6 | % | 6 | % | 8 | % | — | — | — |
2001 | 2002 | 2003 | ||||||||||
Health care cost trend assumed for next year | 16 | % | 14 | % | 12 | % | ||||||
Rate to which the cost trend is assumed to decline (the ultimate trend rate) | 10 | % | 10 | % | 8 | % | ||||||
Year that the rate reaches the ultimate trend rate | 2005 | 2005 | 2006 |
1-Percentage | ||||
Point Increase | ||||
Effect on total of service and interest cost | 107,685 | |||
Effect on postretirement benefit obligation | 758,572 |
Allocation | ||||||||||||
of Plan | ||||||||||||
Assets as of | ||||||||||||
Expected | December 31 | |||||||||||
Allocation | ||||||||||||
2004 | 2002 | 2003 | ||||||||||
Debt securities | 68 | % | 7 | % | 24 | % | ||||||
Deposit securities | 21 | % | 82 | % | 67 | % | ||||||
Equity securities | 7 | % | 7 | % | 5 | % | ||||||
Real estate | 1 | % | 2 | % | 2 | % | ||||||
Other | 3 | % | 2 | % | 2 | % | ||||||
Total | 100 | % | 100 | % | 100 | % | ||||||
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Allocation | ||||||||
of Plan | ||||||||
Assets as of | ||||||||
December 31 | ||||||||
2002 | 2003 | |||||||
Debt securities | — | — | ||||||
Deposit securities | 98 | % | 98 | % | ||||
Equity securities | — | — | ||||||
Real estate | — | — | ||||||
Other | 2 | % | 2 | % | ||||
Total | 100 | % | 100 | % | ||||
Pension | Health Care | |||||||
2004 | 242,312 | 100,054 | ||||||
2005 | 282,056 | 114,866 | ||||||
2006 | 316,589 | 131,507 | ||||||
2007 | 367,143 | 148,374 | ||||||
2008 | 437,514 | 165,132 | ||||||
2009 – 2013 | 3,503,488 | 1,170,330 |
Telkomsel |
Pension | ||||||||||||
2001 | 2002 | 2003 | ||||||||||
Service cost | 2,247 | 4,021 | 4,679 | |||||||||
Interest cost | 1,315 | 2,395 | 3,337 | |||||||||
Expected return on assets | (2,417 | ) | (2,741 | ) | (1,013 | ) | ||||||
Net amortization and deferral | (125 | ) | 437 | 1,045 | ||||||||
Net periodic benefit cost | 1,020 | 4,112 | 8,048 | |||||||||
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2002 | 2003 | |||||||
Vested benefits | 5,049 | 9,185 | ||||||
Accumulated benefit obligation | 11,073 | 21,921 | ||||||
Projected benefit obligation | 28,060 | 47,645 | ||||||
Plan assets at fair value | 27,918 | 8,504 | ||||||
Excess of plan assets over projected benefit obligation | (142 | ) | (39,141 | ) | ||||
Unrecognized net transition obligations | 7,564 | 7,106 | ||||||
Unrecognized prior service cost | — | 2,173 | ||||||
Unrecognized net (gain) loss | (667 | ) | 23,831 | |||||
Prepaid (unfunded) pension cost before adjustment for minimum liability | 6,755 | (6,031 | ) | |||||
Additional minimum liability | (1,359 | ) | (7,386 | ) | ||||
Prepaid (unfunded) pension cost after adjustment for minimum liability | 5,396 | (13,417 | ) | |||||
2001 | 2002 | 2003 | ||||||||||
Discount rate | 12 | % | 12 | % | 11 | % | ||||||
Salary growth rate | 10 | % | 10 | % | 9 | % | ||||||
Expected long term return on assets | 12 | % | 12 | % | 7.5 | % |
f. Recent Accounting Pronouncements |
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59. | RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES |
2001 | 2002 | 2003 | |||||||||||
Net income | 4,068,391 | 8,039,709 | 6,087,227 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation of property, plant and equipment | 2,869,772 | 3,473,370 | 4,779,520 | ||||||||||
Interest income | (571,586 | ) | (479,802 | ) | (366,024 | ) | |||||||
Interest expense | 1,329,642 | 1,582,750 | 1,383,446 | ||||||||||
Foreign exchange (gain) loss | (811,933 | ) | (723,831 | ) | (363,505 | ) | |||||||
Equity in net (income) loss of associated companies | 85,686 | (4,598 | ) | (2,819 | ) | ||||||||
Gain on sale of property, plant and equipment | (10,944 | ) | (130,450 | ) | (182,883 | ) | |||||||
(Gain) loss on sale of trading and investment securities | — | (3,196,380 | ) | 46,595 | |||||||||
Amortization of intangible assets | 55,709 | 187,990 | 730,659 | ||||||||||
Amortization of unearned income | (85,201 | ) | (59,691 | ) | (61,812 | ) | |||||||
Amortization of deferred charges | 36,014 | 11,903 | 26,555 | ||||||||||
Net periodic postretirement benefit cost | 374,510 | 616,512 | 641,435 | ||||||||||
Net periodic long service award benefit cost | 94,539 | 289,922 | 207,126 | ||||||||||
Provision for doubtful accounts and inventory obsolescence | 342,900 | 31,103 | 326,419 | ||||||||||
Income tax expense | 2,006,895 | 2,898,971 | 3,861,090 | ||||||||||
Minority interest in net income of subsidiaries | 474,605 | 810,222 | 1,503,478 | ||||||||||
Changes in assets and liabilities: | |||||||||||||
Trade accounts receivable | (980,196 | ) | (373,125 | ) | (827,772 | ) | |||||||
Other accounts receivable | (78,930 | ) | 882 | 6,512 | |||||||||
Inventories | (51,278 | ) | 31,398 | 76,486 | |||||||||
Prepaid expenses | (153,415 | ) | (17,936 | ) | (344,731 | ) | |||||||
Prepaid taxes | — | (84,409 | ) | (127,607 | ) | ||||||||
Trade accounts payable | 134,237 | 1,303,288 | 593,826 | ||||||||||
Other accounts payable | 23,035 | 166,383 | (27,663 | ) | |||||||||
Taxes payable | 319,412 | (1,601,223 | ) | 477,961 | |||||||||
Accrued expenses | 225,170 | 347,910 | (760,763 | ) | |||||||||
Unearned income | 60,223 | 134,850 | 317,650 | ||||||||||
Advance from customers and suppliers | 89,600 | 80,090 | (30,884 | ) | |||||||||
Contribution to Yayasan Kesehatan Pegawai Telkom | (41,693 | ) | (59,543 | ) | (180,580 | ) | |||||||
Payment of long service award benefit | (28,865 | ) | (76,525 | ) | (222,743 | ) | |||||||
Interest paid | (1,256,404 | ) | (900,660 | ) | (1,178,332 | ) | |||||||
Interest received | 590,966 | 480,288 | 369,982 | ||||||||||
Income tax paid | (2,098,272 | ) | (1,914,895 | ) | (3,905,317 | ) | |||||||
Net cash provided by operating activities | 7,012,589 | 10,864,473 | 12,852,532 | ||||||||||
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60. | RESTATEMENT OF INFORMATION PREVIOUSLY REQUIRED |
2001 | 2002 | ||||||||||||
Rp. million | Rp. million | ||||||||||||
Net income under Indonesian GAAP as previously reported | 4,250,110 | 8,345,274 | |||||||||||
Adjustments: | |||||||||||||
Long service awards | (i) | (65,675 | ) | (151,773 | ) | ||||||||
Post-retirement healthcare benefits | (ii) | (186,758 | ) | (414,564 | ) | ||||||||
Deferred income taxes | (iii) | 66,723 | (286,213 | ) | |||||||||
Acquisition accounting | (iv) | (2,008 | ) | (55,763 | ) | ||||||||
Operating revenues | (v) | (27,359 | ) | 18,975 | |||||||||
Trade accounts payable | (vi) | 36,323 | 22,167 | ||||||||||
Correction of loan balance | (vii) | — | 117,078 | ||||||||||
Correction of taxes payable | (viii) | — | 75,796 | ||||||||||
Telkomsel equity transactions | (ix) | — | 65,158 | ||||||||||
Other items | (x) | — | (65,503 | ) | |||||||||
Corporate tax | (xi) | (2,965 | ) | 36,144 | |||||||||
Subsequent event: | |||||||||||||
AriaWest | (xii) | — | 332,933 | ||||||||||
Net adjustments | (181,719 | ) | (305,565 | ) | |||||||||
Net income under Indonesian GAAP as restated | 4,068,391 | 8,039,709 |
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2001 | 2002 | ||||||||||||
Rp. million | Rp. million | ||||||||||||
Basic earnings per share (full amount) | |||||||||||||
As previously reported | 421.64 | 827.90 | |||||||||||
As restated | 403.61 | 797.59 | |||||||||||
Basic earnings per ADS (full amount) | |||||||||||||
As previously reported | 8,432.76 | 16,558.08 | |||||||||||
As restated | 8,072.20 | 15,951.80 |
2001 | 2002 | ||||||||||||
Rp. million | Rp. million | ||||||||||||
Stockholders’ equity under Indonesian GAAP as previously reported | 9,323,575 | 15,899,183 | |||||||||||
Adjustments: | |||||||||||||
Long service awards | (i) | (275,834 | ) | (427,607 | ) | ||||||||
Post-retirement healthcare benefits | (ii) | (527,864 | ) | (942,428 | ) | ||||||||
Deferred income taxes | (iii) | 525,528 | (136,875 | ) | |||||||||
Acquisition accounting | (iv) | (2,008 | ) | (353,810 | ) | ||||||||
Operating revenues | (v) | 4,206 | 23,181 | ||||||||||
Trade accounts payable | (vi) | 36,323 | 58,490 | ||||||||||
Correction of loan balance | (vii) | — | 117,078 | ||||||||||
Correction of taxes payable | (viii) | — | 75,796 | ||||||||||
Telkomsel equity transactions | (ix) | — | — | ||||||||||
Other items | (x) | — | (65,503 | ) | |||||||||
Corporate tax | (xi) | (2,965 | ) | 33,179 | |||||||||
Subsequent event: | |||||||||||||
AriaWest | (xii) | — | 332,933 | ||||||||||
Net adjustments | (242,614 | ) | (1,285,566 | ) | |||||||||
Stockholders’ equity under Indonesian GAAP as restated | 9,080,961 | 14,613,617 |
(i) | Long service awards. TELKOM’s employees are entitled to receive certain cash awards, such as long service, housing, transport and other allowances, based on length of service. Depending on the type of award, they are either paid at the time an employee reaches a certain anniversary date or upon termination or retirement if the employee has met the requisite number of years of service. TELKOM had not previously made provision for these liabilities and was only accounting for the awards at the time payments were made to the |
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employees. TELKOM determined that these awards should have been accounted for under the accrual method. | ||
(ii) | Post-retirement healthcare benefits. TELKOM provides a post-retirement healthcare plan for pensioners who were employed by TELKOM for over 20 years. As described in Notes 2r and 47 to the consolidated financial statements in Item 18 of Amendment No. 2 to 2002 Annual Report on Form 20-F/A, these costs are accounted for in accordance with U.S. GAAP applying SFAS 106. TELKOM had been recognizing the benefit obligations and the related benefit costs based on actuarial calculations. |
TELKOM requested the Company’s actuary to review the actuarial calculations in respect of disclosures for the post-retirement healthcare plan for the years 2000 and 2001. As a consequence of this review, the Company’s actuary in consultation with the Company’s management deemed it necessary to withdraw its original reports and substitute revised reports. | |
TELKOM determined that the change in actuarial calculations represents the correction of an error and therefore requires retroactive restatement of its 2000 and 2001 financial statements. The Company did not previously engage an actuary for 2002 but did so for the purposes of the restated financial statements. |
(iii) | Deferred income taxes. TELKOM identified the need to make adjustments to correct errors to prior calculations of deferred income taxes to reflect certain temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. TELKOM also concluded it should remove the deferred tax liability previously recorded in relation to the undistributed earnings of its subsidiaries and associates, principally those relating to Telkomsel, because the Company did not correctly determine the amount of the temporary difference. (See “Adjustments related to Stockholders’ Equity” below). | |
(iv) | Acquisition accounting. In respect of the acquisition of Pramindo in August 2002, the Company previously consolidated a 30% interest in Pramindo in accordance with the 30% legal ownership interest in the shares held by the Company. The Company had not, however, previously considered other factors affecting its ability to exercise control over Pramindo and its right to obtain all of the future economic benefits of ownership as though the Company owned 100% of the shares. The factors that the Company now considered include, among others, the fact that the selling price is fixed, its ability to vote 100% of the shares at general stockholders meetings, subject to certain protective rights retained by the selling stockholders, its ability to appoint all of the board members and management and its consequent ability to exclusively determine the financial and operating policies of Pramindo subject to certain protective rights, its issuance of irrevocable and unconditional promissory notes in settlement of the purchase consideration to the selling stockholders, the placement of the 70% of Pramindo shares not yet transferred to the Company in an escrow account by the selling stockholders, the protective provisions in the various agreements for the Company to take over all shares (including powers of attorney issued by the selling stockholders) or collapse the KSO arrangement once the full amount payable for the shares has been paid. (See Note 6b to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/A). As a consequence, the Company |
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determined that consolidation of a 100% interest in Pramindo from the date of acquisition is appropriate. |
In addition, in connection with the acquisition of Pramindo in August 2002 and Dayamitra in May 2001, TELKOM did not properly allocate the purchase consideration to certain acquired assets. The restated consolidated financial statements for 2001 and 2002 reflect adjustments to record such assets at their fair values as of the date of acquisition and subsequent depreciation thereof. | |
TELKOM previously presented the consolidation of newly acquired subsidiaries from the beginning of the year of acquisition, consistent with the principles of U.S. GAAP set out in “Accounting Research Bulletin 51: Consolidated Financial Statements”. In 2002, the Company changed the manner in which it presents acquisitions to a presentation starting from the date of acquisition in accordance with PSAK 4. This change did not affect the reported net income in any of the years presented. | |
The Company also should have reflected an element of this transaction as a transaction between entities under common control (see “Adjustments Related to Stockholders’ Equity” below). |
(v) | Operating revenues. As a result of a review of certain terms of the revenue sharing agreements and other telecommunication service agreements, TELKOM determined that there were certain errors in previous calculations relating to the amortization of unearned revenue which resulted in a net overstatement of revenues recorded in the consolidated financial statements for 2001 and an understatement of such revenue in 2002. | |
(vi) | Trade accounts payable. As a result of the reconciliation of balances with other telephone operators in 2002, TELKOM determined that there were some errors in trade accounts payable balances that resulted in an overstatement of the payables recorded in the consolidated financial statements for 2001 and 2002. | |
(vii) | Correction of loan balance. As a result of reconciliation of outstanding loans at the end of 2002, TELKOM determined that there was a double recording of a loan balance which had a corresponding effect of overstating the foreign exchange loss in the consolidated financial statements for 2002. | |
(viii) | Correction of taxes payable. As a result of reconciliation of taxes payable at the end of 2002, TELKOM determined that there was an over-accrual of value-added tax payable. | |
(ix) | Telkomsel equity transactions. As a result of the sale of a 12.72% interest in Telkomsel (see Note 1b to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/A) in 2002, an adjustment should have been made to stockholders’ equity to reflect the realization of a gain in the 2002 statement of income attributable to past equity transactions in Telkomsel. | |
(x) | Other items. Other adjustments represented individually insignificant adjustments to correct errors as a result of understatement of depreciation expenses, understatement of allowance for doubtful accounts and amortization of deferred interest and other issues. |
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(xi) | Corporate tax. Certain of the above adjustments also impacted the corporate tax calculation for the 2001 and 2002 tax years. As a result, TELKOM reflected the related adjustments to the corporate tax charge in the restated consolidated financial statements for the respective years. |
(xii) | AriaWest. Subsequent to the date on which TELKOM issued the 2002 consolidated financial statements, TELKOM settled its dispute with AriaWest. In the previously issued consolidated financial statements for 2002, TELKOM had made provisions against its trade receivables relating to the dispute with AriaWest and recorded Rp.830 billion received from KSO III as “Advances from customers and suppliers” in the balance sheet pending settlement of the dispute. As a result of the settlement, the Company reversed these provisions (see Notes 9 and 56d to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/A), applied the advance received against the outstanding trade receivable and accrued the settlement amount (see Note 56d to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/A). |
a. | TELKOM incorrectly recorded an adjustment directly to stockholders’ equity in the previously issued 2002 consolidated financial statements to reverse the deferred tax liability TELKOM had previously recorded in relation to the undistributed earnings of Telkomsel. This balance should have been reversed as part of the accounting for the cross ownership transactions in 2001 (see Note 5 to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 Annual Report on Form 20-F/A) and was adjusted as part of the corrections to the Company’s deferred tax accounting referred to in (iii) above. | |
b. | At the time TELKOM acquired Pramindo in August 2002, 13% of the issued and paid up share capital of Pramindo was owned by Indosat, a company that, at that time, was majority owned and controlled by the Government, the Company’s major stockholder. In the previously issued consolidated financial statements for 2002, the Company did not account for the acquisition of Pramindo recognizing that a portion of the transaction was between entities under common control. As a result, TELKOM made an adjustment as a result of accounting for the acquisition of 13% of Pramindo as a transaction between entities under common control by debiting the “Difference in value from restructuring transactions of entities under common control” in stockholders’ equity to reflect the excess of the purchase price over the proportional historical book value of the net assets of Pramindo that were acquired from Indosat. |
a. | Reclassification of completed constructions in progress of Rp.765,753 million and advances and other non-current assets of Rp.83,608 million to fixed assets in 2002. |
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b. | Reclassification in 2002 of intangible assets amortization of Rp.166,721 million (2001: Rp.42,643 million) and amortization of goodwill of Rp.21,269 million (2001: Rp.13,066 million) from other charges to operating expenses. | |
c. | Reclassification of other accounts receivable to trade accounts receivable of Rp.82,174 million in 2002. | |
d. | Reclassification of related party trade accounts receivable to third party trade accounts receivable of total Rp.27,677 million in 2002. | |
e. | Reclassification of restricted time deposits from non-current assets to current assets of Rp.46,027 million in 2002. | |
f. | Reclassification of billing processing fees revenue of Rp.30,359 million from other income to other operating revenue in 2002. | |
g. | Reclassification of restricted time deposits from temporary investments to other current assets of Rp.500,000 million in 2002. | |
h. | Reclassification of provision for post-retirement benefits from accrued expenses of Rp.1,602,494 million in 2002 (2001: Rp.1,045,525 million). | |
i. | Reclassification in 2002 of revenue of certain subsidiaries from other income (charges) to operating revenues amounting to Rp.144,055 million and Rp.217,567 million in 2001 and 2002. |
2001 | 2002 | |||||||||||||||
As | As | |||||||||||||||
Previously | Previously | |||||||||||||||
Reported | As Restated | Reported | As Restated | |||||||||||||
Rp. Million | Rp. Million | Rp. Million | Rp. Million | |||||||||||||
Operating revenues | 16,130,789 | 16,283,807 | 21,399,737 | 20,802,818 | ||||||||||||
Operating expenses | (8,515,089 | ) | (8,864,400 | ) | (11,998,053 | ) | (11,672,603 | ) | ||||||||
Other income/(charges) | (928,411 | ) | (869,516 | ) | 2,940,890 | 2,618,687 | ||||||||||
Income before tax | 6,687,289 | 6,549,891 | 12,342,574 | 11,748,902 | ||||||||||||
Tax expense | (2,070,654 | ) | (2,006,895 | ) | (2,745,857 | ) | (2,898,971 | ) | ||||||||
Pre-acquisition loss (income) | 108,080 | — | (142,817 | ) | — | |||||||||||
Minority interest | (474,605 | ) | (474,605 | ) | (1,108,626 | ) | (810,222 | ) | ||||||||
Net income | 4,250,110 | 4,068,391 | 8,345,274 | 8,039,709 | ||||||||||||
Basic and diluted earnings per share (full amount) | 421.64 | 403.61 | 827.90 | 797.59 | ||||||||||||
Earnings per ADS (full amount) | 8,432.76 | 8,072.20 | 16,558.08 | 15,951.80 |
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2001 | 2002 | |||||||||||||
Rp. million | Rp. million | |||||||||||||
Net income under U.S. GAAP as previously reported | 4,036,641 | 9,274,249 | ||||||||||||
Impact of Indonesian GAAP restatements on U.S. GAAP net income: | ||||||||||||||
Aggregate Indonesian GAAP restatements | (181,719 | ) | (305,565 | ) | ||||||||||
Amount which are not restatements for U.S. GAAP | (i) | (10,632 | ) | (66,456 | ) | |||||||||
(192,351 | ) | (372,021 | ) | |||||||||||
Effect of restatements on previously reported U.S. GAAP net income: | ||||||||||||||
Installation revenue: | (ii) | |||||||||||||
Cumulative effect of accounting change | — | — | ||||||||||||
Current year amortization | 81,429 | (22,870 | ) | |||||||||||
Revenue-sharing arrangements | (iii) | 37,650 | 67,959 | |||||||||||
Deferred taxes | (iv) | 347,333 | (337,864 | ) | ||||||||||
Acquisition of Dayamitra | (v) | (12,809 | ) | (9,374 | ) | |||||||||
Others | (vi) | 307 | (12,820 | ) | ||||||||||
Net adjustments | 453,910 | (314,969 | ) | |||||||||||
Net income under U.S. GAAP as restated | 4,298,200 | 8,587,259 | ||||||||||||
Basic earnings per share (full amount) | ||||||||||||||
As previously reported | 400.46 | 920.06 | ||||||||||||
As restated | 426.41 | 851.91 | ||||||||||||
Basic earnings per ADS (full amount) | ||||||||||||||
As previously reported | 8,009.21 | 18,401.29 | ||||||||||||
As restated | 8,528.17 | 17,038.21 | ||||||||||||
Stockholders’ equity under U.S. GAAP as previously reported | 8,240,598 | 15,745,181 | ||||||||||||
Impact of Indonesian GAAP restatements on U.S. GAAP stockholders’ equity: | ||||||||||||||
Aggregate Indonesian GAAP restatements | (242,614 | ) | (1,285,566 | ) | ||||||||||
Amounts which are not restatements for U.S. GAAP | (i) | (11,229 | ) | (12,527 | ) | |||||||||
(253,843 | ) | (1,298,093 | ) | |||||||||||
Effect of restatements on previously reported U.S. GAAP equity: | ||||||||||||||
Installation revenue | (ii) | (626,048 | ) | (648,918 | ) | |||||||||
Revenue-sharing arrangements | (iii) | (128,925 | ) | (60,966 | ) |
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2001 | 2002 | ||||||||||||
Rp. million | Rp. million | ||||||||||||
Deferred taxes | (iv) | 421,243 | 93,284 | ||||||||||
Acquisition of Dayamitra | (v) | 139,342 | 129,968 | ||||||||||
Others | (vi) | (26,867 | ) | (49,592 | ) | ||||||||
Net adjustments | (221,255 | ) | (536,224 | ) | |||||||||
Stockholders’ equity under U.S. GAAP as restated | 7,765,500 | 13,910,864 |
The restatements to the financial position and results of operations under Indonesian GAAP as described above, had the same impact on consolidated stockholders’ equity and net income presented under U.S. GAAP, except for restatements with respect to revenue sharing arrangements and related deferred taxes. Accordingly, no restatement of stockholders’ equity or net income under U.S. GAAP was required with respect to these items. |
TELKOM was required to adopt the provisions of the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) No. 101, “Revenue Recognition in Financial Statements” in 2001, and retroactively apply its provisions as of January 1, 2000. TELKOM did not initially record the full impact of SAB No. 101 on its results. SAB 101 requires TELKOM to defer certain non-recurring fees, such as service activation and installation fees, and recognize those revenues over the expected term of the customer relationship. For 2000, the adjustment presented included an amount which represents the initial impact of adopting SAB 101. For U.S. GAAP purposes this should have been recorded as a cumulative effect of an accounting change. |
Based on further review, TELKOM concluded that the accounting provided for the revenue sharing arrangements under Indonesian GAAP required an adjustment to conform to U.S. GAAP. A discussion of the differences in accounting for the revenue sharing arrangements under the respective GAAPs may be found in Note 57(1)d to the consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 20-F/A. |
As discussed above, the deferred tax liability related to investments in consolidated subsidiaries was adjusted in the restated Indonesian GAAP financial statements to conform to SFAS 109. Accordingly, an adjustment was made to eliminate the U.S. GAAP and Indonesian GAAP difference related to the deferred tax liability on the undistributed earnings of subsidiaries and associates. | |
TELKOM also made adjustments in relation to other restated amounts. |
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The adjustment reflected the U.S. GAAP requirement, as described in Note 57(1) to the Company’s consolidated financial statements for 2000, 2001 and 2002 filed in Amendment No. 2 to 2002 20-F/A, to record the Dayamitra acquisition as an acquisition of 100% of the outstanding interest during the year ended December 31, 2001, and the effect of the reversal of foreign exchange capitalized by Dayamitra as the related assets were carried at fair value upon application of purchase accounting. |
Effect on | ||||||||
Net Income | Equity | |||||||
Rp. million | Rp. million | |||||||
Option | 2,050 | 2,050 | ||||||
Foreign exchange capitalized | (14,859 | ) | 137,292 | |||||
(12,809 | ) | 139,342 |
Other adjustments represented individually insignificant adjustments consisting of land rights amortization and certain capitalized foreign exchange gains and losses. |
F-149