Telekomunikasi Indonesia (Persero)
6 May 2005
40
Table of Contents
PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
5. CASH AND CASH EQUIVALENTS (continued)
Range of interest rates per annum for time deposits is as follows:
2003 2004
Rupiah 5.5% - 14.25% 3.00% - 9.50%
Foreign currencies 0.92% - 0.55% 2.25% - 1.95%
The related parties which the Company places its funds are Government-owned banks. The Company places a majority
of its cash and cash equivalents in these banks because they have the most extensive branch network in Indonesia
and are considered to be financially sound banks as they are owned by the Government.
Refer to Note 47 for details of related party transactions.
6. TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable from related parties and third parties arise from services provided to both retail and
non-retail customers.
a. By Debtor
Related parties:
2003 2004
KSO Units 265,517 145,810
Government agencies 181,551 289,644
PT Mandara Selular Indonesia 37,326 -
PT Citra Sari Makmur 20,450 20,127
PT Patra Telekomunikasi Indonesia 8,513 8,824
PT Aplikanusa Lintasarta 5,819 8,780
Others 2,679 10,847
Total 521,855 484,032
Allowance for doubtful accounts (110,932) (64,928)
Net 410,923 419,104
Trade accounts receivable from certain related parties are presented net of the Company's liabilities to such
parties due to legal right of offset in accordance with agreements with those parties.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
6. TRADE ACCOUNTS RECEIVABLE (continued)
a. By Debtor (continued)
Third parties:
2003 2004
Residential and business subscribers 2,682,288 3,213,598
Overseas international carriers 42,836 143,539
Others 29,841 -
Total 2,754,965 3,357,137
Allowance for doubtful accounts (332,960) (457,138)
Net 2,422,005 2,899,999
b. By Age
Related parties:
2003 2004
Up to 6 months 350,348 396,425
7 to 12 months 42,250 14,947
13 to 24 months 42,920 19,659
More than 24 months 86,337 53,001
Total 521,855 484,032
Allowance for doubtful accounts (110,932) (64,928)
Net 410,923 419,104
Third parties:
2003 2004
Up to 3 months 2,358,570 2,773,992
More than 3 months 396,395 583,145
Total 2,754,965 3,357,137
Allowance for doubtful accounts (332,960) (457,138)
Net 2,422,005 2,899,999
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
6. TRADE ACCOUNTS RECEIVABLE (continued)
c. By Currency
Related parties
2003 2004
Rupiah 443,930 447,657
United States Dollar 77,925 36,375
Total 521,855 484,032
Allowance for doubtful accounts (110,932) (64,928)
Net 410,923 419,104
Third parties
2003 2004
Rupiah 2,720,331 3,198,875
United States Dollar 34,634 158,262
Total 2,754,965 3,357,137
Allowance for doubtful accounts (332,960) (457,138)
Net 2,422,005 2,899,999
d. Movements in the allowance for doubtful accounts
2002 2003 2004
Beginning balance 578,785 502,989 443,892
Additions 523,024 296,099 342,895
Reversal of allowance for trade accounts (511,933) - -
receivable from AWI (Note 4c)
Bad debts write-off (86,887) (355,196) (264,721)
Ending balance 502,989 443,892 522,066
Management believes that the allowance for doubtful receivables is adequate to cover probable losses on
uncollectible accounts.
Except for the amounts receivable from Government Agencies, management believes that there are no
significant concentrations of credit risk on these receivables.
Refer to Note 47 for details of related party transactions.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
7. INVENTORIES
2003 2004
Components:
Telephone terminals and spare parts 27,407 29,910
Cable and transmission installation spare parts 1,540 3,155
Other spare parts 13,521 20,546
Total 42,468 53,611
Allowance for obsolescence (14,757) (20,188)
Net 27,711 33,423
Modules:
Cable and transmission installation spare parts 55,997 53,683
Telephone terminals and spare parts 37,917 34,434
Other spare parts 272 142
Total 94,186 88,259
Allowance for obsolescence (25,584) (34,063)
Net 68,602 54,196
Cards:
SIM cards, RUIM cards and prepaid voucher blanks 57,838 115,948
Allowance for obsolescence (148) (482)
Net 57,690 115,466
Total 154,003 203,085
Movements in the allowance for obsolescence are as follows:
2003 2004
Beginning balance 53,795 40,489
Additions 4,523 14,800
Inventory write-off (17,829) (556)
Ending balance 40,489 54,733
Management believes that the allowance is adequate to cover probable losses from decline in inventory value due
to obsolescence.
At December 31, 2004, inventory held by a certain subsidiary was insured against fire, theft and other specified
risks for US$0.8 million. Management believes that the insurance amount is adequate to cover such risks.
44
Table of Contents
PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
8. PREPAID EXPENSES
2003 2004
Rental 173,242 268,287
Salary 124,061 218,329
Insurance 98,167 98,485
Telephone directory issuance cost 11,091 27,246
Other 23,134 15,722
Total 429,695 628,069
9. OTHER CURRENT ASSETS
2003 2004
Bank Mandiri 45,083 44,608
As of December 31, 2003, the balance consists of the Company's time deposits of US$4.6 million (Rp38,778
million) pledged as collateral for credit facility obtained by Napsindo (Note 20a) and Rp2,412 million pledged
as collateral for bank guarantees, and Telkomsel's Rupiah time deposits of Rp3,893 million pledged as collateral
for bank guarantees covering payments of customs duties.
As of December 31, 2004, the balance consists of the Company's time deposits of US$4.6 million (Rp42,688
million) pledged as collateral for credit facility obtained by Napsindo (Note 20a) and Rp1,920 million pledged
as collateral for bank guarantees.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
10. LONG-TERM INVESTMENTS
2003
Percentage Equity in
of Opening Addition/ net income Translation Ending
ownership balance (deduction) (loss) adjustment balance
Equity method:
PT Citra Sari 25.00 62,270 - 1,585 (11,433) 52,422
Makmur
PT Patra 30.00 12,843 (2,745) 1,234 - 11,332
Telekomunikasi
Indonesia**
PT Napsindo 60.00 4,693 (4,693) - - -
Primatel
International*
PT Multimedia 100.00 1,928 (1,928) - - -
Nusantara *
PT Telekomindo - 26,642 (26,642) - - -
Selular Raya
PT Metro - 16,307 (16,307) - - -
Selular
Nusantara
PT Pasifik 43.69 - - - - -
Satelit
Nusantara
124,683 (52,315) 2,819 (11,433) 63,754
Cost method:
PT Batam 5.00 587 - - - 587
Bintan
Telekomunikasi
PT Pembangunan 3.18 199 - - - 199
Telekomunikasi
Indonesia
Medianusa Pte. 9.44 108 - - - 108
Ltd.
PT Komunikasi - 57,570 (57,570) - - -
Selular
Indonesia
PT Mandara 7.44 - - - - -
Selular
Indonesia
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
*
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Table of Contents
PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
10. LONG-TERM INVESTMENTS (continued)
2004
Percentage Equity in
of Opening Addition/ net income Translation Ending
ownership balance (deduction) (loss) adjustment balance
Equity method:
PT Citra Sari Makmur 25.00 52,422 - 2,331 5,363 60,116
PT Patra 30.00 11,332 - 1,089 - 12,421
Telekomunikasi
Indonesia
PT Pasifik Satelit 43.69 - - - - -
Nusantara
63,754 - 3,420 5,363 72,537
Cost method:
PT Batam Bintan 5.00 587 - - - 587
Telekomunikasi
PT Pembangunan 3.18 199 - - - 199
Telekomunikasi
Indonesia
Bridge Mobile Pte. 14.29 - 9,290 - - 9,290
Ltd.
Medianusa Pte. Ltd. - 108 (108) - - -
PT Mandara Selular 3.63 - - - - -
Indonesia
894 9,182 - - 10,076
64,648 9,182 3,420 5,363 82,613
On August 8, 2003, the Company and PT Centralindo Pancasakti Cellular ('CPSC') signed a share-swap
agreement ('KMT-IP share-swap transaction') in which the Company delivered its 14.20% outstanding
shares in PT Komunikasi Selular Indonesia ('Komselindo'), its 20.17% outstanding shares in PT Metro
Selular Nusantara ('Metrosel'), and its 100% outstanding shares in PT Telekomindo Selular Raya ('
degreesTelesera') to CPSC. In return, CPSC delivered its 30.58% outstanding shares in PT Indonusa Telemedia
('Indonusa'), 21.12% outstanding shares in PT Pasifik Satelit Nusantara ('PSN') under
certain terms and paid cash of Rp5,398 million to the Company.
From the KMT - IP share-swap transaction, the Company recognized a loss of Rp47,307 million being the
difference between the fair value of assets received and the carrying amount of the Company's investments given
to CPSC, and reversal of difference due to change of equity in Metrosel previously recognized directly in
equity.
a. PT Citra Sari Makmur ('CSM')
CSM is engaged in providing Very Small Aperture Terminal ('VSAT'), network application services
and consulting services on telecommunications technology and related facilities.
As of December 31, 2003 and 2004, the carrying amount of investment in CSM was equal to the underlying
equity in net assets of CSM.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
10. LONG-TERM INVESTMENTS (continued)
b. PT Patra Telekomunikasi Indonesia ('Patrakom')
Patrakom is engaged in providing satellite communication system services and related services and facilities
to companies in the petroleum industry.
As of December 31, 2003 and 2004, the carrying amount of investment in Patrakom was equal to the underlying
equity in net assets of Patrakom.
c. PT Pasifik Satelit Nusantara ('PSN')
PSN is engaged in providing satellite transponder leasing and satellite-based communication services in the
Asia Pacific Region.
As of December 31, 2001, the Company's share of losses in PSN has exceeded the carrying amount of the
investment. Accordingly, the investment has been reduced to zero.
On August 8, 2003, as a result of share-swap transaction with CPSC, the Company interest in PSN effectively
increased to 43.69%. The Company decided to increase its ownership interest in PSN as part of the share-swap
transactions that was premised on the Company's assessment that PSN's satellite services will allow it to
capitalize on a government program which calls for the provision of telecommunication services to remote
areas of Indonesia.
In 2003, PSN entered into a negotiation with its current creditors to restructure its debts. As of the date
of issuance of these consolidated financial statements, the debt restructuring was not yet effective.
d. PT Batam Bintan Telekomunikasi ('BBT')
BBT is engaged in providing fixed line telecommunication services at Batamindo Industrial Park in Muka
Kuning, Batam Island and at Bintan Beach International Resort and Bintan Industrial Estate in Bintan Island.
e. PT Pembangunan Telekomunikasi Indonesia ('Bangtelindo')
Bangtelindo is primarily engaged in providing consultancy services on the installation and maintenance of
telecommunications facilities.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
10. LONG-TERM INVESTMENTS (continued)
f. Bridge Mobile Pte. Ltd
On November 3, 2004, Telkomsel together with six other international mobile operators in Asia Pacific
established Bridge Mobile Pte. Ltd. (Singapore), a company that is engaged in providing regional mobile
services in the Asia Pacific region.
Telkomsel contributed US$1.0 million (Rp9,290 million) which represents a 14.286% ownership interest.
g. Medianusa Pte. Ltd.
Medianusa Pte. Ltd. is an associated company of Infomedia, which is engaged as a sales agent, in search of
advertisers for telephone directories. On November 30, 2004, Infomedia sold its entire ownership in
Medianusa Pte. Ltd. for SGD0.024 million (Rp135 million) and recognized a gain of Rp27 million.
h. PT Mandara Selular Indonesia ('Mobisel')
Mobisel is engaged in providing mobile cellular services and related facilities. These services were
previously provided by the Company under a revenue-sharing arrangement with PT Rajasa Hazanah Perkasa ('
degreesRHP'). The capital contribution made by the Company of Rp10,398 million represented a 25% equity
ownership in Mobisel.
As of December 31, 2002, the value of investment has been reduced to nil because the Company's share of loss
exceeded the carrying amount of investment in Mobisel.
On July 28, 2003, Mobisel's stockholders agreed to a restructuring program which included a debt to equity
conversion of Mobisel's interconnection payables to the Company, and an equity investment by a new
stockholder. The debt conversion was completed in August 2003 which resulted in dilution of the Company's
interest to 7.44%.
In January 2004, the Company's ownership interest was further diluted to 6.4% following the debt to equity
conversion of Mobisel's debt to PT Property Java, Boston Investment Limited and Inquam (Indonesia) Limited
Company.
On December 20, 2004, Mobisel's stockholders agreed to issue 306,000,000 new Series B shares to a new
stockholder and an existing stockholder. The issuance of 306,000,000 new Series B shares resulted in
dilution of the Company's interest in Mobisel to 3.63%
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
10. LONG-TERM INVESTMENTS (continued)
i. PT Telekomindo Seluler Raya ('Telesera')
In 2001, the Minister of Justice and Human Rights approved the corporate restructuring of PT Telekomindo
Primabhakti ('Telekomindo'), an associated company engaged in the construction and development of
telecommunications facilities. Pursuant to the restructuring, Telekomindo's authorized and paid-up capital
was reduced and the capital reduction became the paid-up capital of two new companies: PT Telekomindo Media
Informatika ('TMI') and PT Griya Insani Primabhakti ('GIP').
Based on a share-swap agreement dated December 5, 2001 among the Company, PT Rajawali Corporation
('RC'), Telekomindo and TMI, the parties agreed on the following:
- The Company sold its investments in Telekomindo, TMI and GIP to RC for 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.
This transaction resulted in the Company owning 69.77% shares of Telesera as of December 31, 2001. In 2002,
the Company acquired the remaining 30.23% interest in Telesera from Dana Pensiun Telkom for Rp38,093
million. In 2002, the Company also recognized a loss of Rp101,000 million to write down the carrying amount
of this investment to net asset value.
On August 8, 2003, the Company exchanged its investment in Telesera to CPSC.
j. PT Metro Selular Nusantara ('Metrosel')
Metrosel is engaged in providing national mobile cellular services and related facilities in Central Java,
Yogyakarta, East Java, Maluku and Irian Jaya.
On May 30, 2002, Metrosel made an equity call. The Company made additional capital contributions amounting
to Rp13,513 million to maintain its ownership in Metrosel at 20.17%.
On August 8, 2003, the Company exchanged its investment in Metrosel to CPSC.
k. PT Menara Jakarta ('MJ')
MJ was engaged in the construction and the operation of towers and related facilities. The economic
difficulties faced by Indonesia have resulted in the termination of MJ's construction projects at the end of
1997. The value of this investment has been reduced to nil.
On April 8, 2003, the Company exchanged all its shares in MJ to PT Indocitra Grahabawana ('Indocitra')
for Indocitra's 69% ownership interest in Metra (Note 1c).
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
10. LONG-TERM INVESTMENTS (continued)
l. PT Komunikasi Selular Indonesia ('Komselindo')
Komselindo is a joint venture between the Company and PT Elektrindo Nusantara ('Elektrindo'), and
is engaged in providing analog mobile cellular services. These services were previously provided by the
Company under a revenue-sharing arrangement with Elektrindo.
On August 30, 2002, Komselindo's stockholders through an Extraordinary Stockholders Meeting approved the
equity call for debt restructuring which was included in the Settlement Agreement and the Settlement,
Termination and Release Agreement dated August 30, 2002. The Company released and waived its pre-emptive
right to subscribe newly issued shares resulting in the dilution of the Company's ownership in Komselindo to
14.20%.
This debt restructuring transaction resulted in a net equity of Komselindo amounting to Rp405,421 million.
As of December 31, 2002, the Company recorded its 14.20% interest in Komselindo at its net equity value of
Rp57,570 million.
On August 8, 2003, the Company sold its investment in Komselindo to CPSC.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
11. PROPERTY, PLANT AND EQUIPMENT
January 1, AWI
2003 acquisitions Additions Deductions
At cost or revalued amounts:
Direct acquisitions
Land 267,933 - 52,738 (20,762)
Buildings 1,658,390 2,436 43,301 (43,293)
Switching equipment 9,629,203 402,598 144,658 (10)
Telegraph, telex and data communication equipment 206,667 - 3,833 (86)
Transmission installation and equipment 10,340,314 7,565 278,020 (11,903)
Satellite, earth station and equipment 5,798,011 - 21,512 -
Cable network 13,122,336 1,075,987 637,068 (59,275)
Power supply 1,032,534 9,549 18,473 (3,996)
Data processing equipment 2,739,837 2,269 131,942 (1,810)
Other telecommunications peripherals 681,363 - 33,769 (369)
Office equipment 639,682 - 25,585 (1,802)
Vehicles 187,353 - 1,298 (1,760)
Other equipment 87,370 - 1,890 (6)
Property under construction:
Buildings 42,913 - 36,173 -
Switching equipment 348,286 - 222,275 -
Transmission installation and equipment 139,499 - 5,843,119 -
Satellite, earth station and equipment 264,029 - 390,994 -
Cable network 115,420 55,865 1,567,652 -
Power supply 5,715 - 18,416 -
Data processing equipment 10,807 - 63,945 (634)
Other telecommunications peripherals 13,649 - 15,853 (1,392)
Leased assets
Vehicles 3,640 - 73 (1,689)
Total 47,334,951 1,556,269 9,552,587 (148,787)
Accumulated depreciation:
Direct acquisitions
Buildings 736,997 - 115,602 (41,293)
Switching equipment 4,569,287 - 668,136 (4)
Telegraph, telex and data communication equipment 202,043 - 3,365 (59)
Transmission installation and equipment 3,183,736 - 1,784,031 (4,534)
Satellite, earth station and equipment 2,001,671 - 153,506 -
Cable network 5,286,209 - 1,300,460 (20,312)
Power supply 724,985 - 77,765 (3,437)
Data processing equipment 990,054 - 492,799 (2,394)
Other telecommunications peripherals 499,093 - 71,217 (240)
Office equipment 460,518 - 37,251 (1,088)
Vehicles 167,226 - 7,986 (1,705)
Other equipment 63,020 - 2,028 (6)
Leased assets
Vehicles 1,506 - 307 (848)
Total 18,886,345 - 4,714,453 (75,920)
Net Book Value 28,448,606
January 1, December 31,
2003 Reclassifications 2003
At cost or revalued amounts:
Direct acquisitions
Land 267,933 (945) 298,964
Buildings 1,658,390 158,261 1,819,095
Switching equipment 9,629,203 296,943 10,473,392
Telegraph, telex and data communication 206,667 (11,100) 199,314
equipment
Transmission installation and equipment 10,340,314 6,204,183 16,818,179
Satellite, earth station and equipment 5,798,011 390,304 6,209,827
Cable network 13,122,336 712,681 15,488,797
Power supply 1,032,534 92,898 1,149,458
Data processing equipment 2,739,837 380,429 3,252,667
Other telecommunications peripherals 681,363 20,425 735,188
Office equipment 639,682 (2,974) 660,491
Vehicles 187,353 962 187,853
Other equipment 87,370 18,319 107,573
Property under construction:
Buildings 42,913 (24,198) 54,888
Switching equipment 348,286 (412,505) 158,056
Transmission installation and equipment 139,499 (5,888,711) 93,907
Satellite, earth station and equipment 264,029 (47,851) 607,172
Cable network 115,420 (1,724,413) 14,524
Power supply 5,715 (24,025) 106
Data processing equipment 10,807 (63,592) 10,526
Other telecommunications peripherals 13,649 (11,627) 16,483
Leased assets
Vehicles 3,640 (1,785) 239
Total 47,334,951 61,679 58,356,699
Accumulated depreciation:
Direct acquisitions
Buildings 736,997 1,013 812,319
Switching equipment 4,569,287 29,069 5,266,488
Telegraph, telex and data communication
equipment 202,043 (11,100) 194,249
Transmission installation and equipment 3,183,736 (6,338) 4,956,895
Satellite, earth station and equipment 2,001,671 3,202 2,158,379
Cable network 5,286,209 46,924 6,613,281
Power supply 724,985 (1,388) 797,925
Data processing equipment 990,054 (10,643) 1,469,816
Other telecommunications peripherals 499,093 2,120 572,190
Office equipment 460,518 786 497,467
Vehicles 167,226 (373) 173,134
Other equipment 63,020 4,260 69,302
Leased assets
Vehicles 1,506 (851) 114
Total 18,886,345 56,681 23,581,559
Net Book Value 28,448,606 34,775,140
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
11. PROPERTY, PLANT AND EQUIPMENT (continued)
January 1, KSO IV December 31,
2004 acquisitions Additions Deductions Reclassifications 2004
At cost or
revalued amounts:
Direct
acquisitions
Land 298,964 - 34,212 (156) (5,681) 327,339
Buildings 1,819,095 7,021 29,722 (14,448) 328,665 2,170,055
Switching 10,473,392 16,769 209,463 (52,829) (886,695) 10,360,100
equipment
Telegraph,
telex 199,314 - 4,071 (14) 10,484 213,855
and data
communication
equipment
Transmission 16,818,179 271,678 245,170 (573,950) 10,161,066 26,922,143
installation and
equipment
Satellite, earth 6,209,827 - 30,998 (165,130) (2,720,892) 3,354,803
station and
equipment
Cable network 15,488,797 1,427,049 195,947 (44,651) 633,932 17,701,074
Power supply 1,149,458 18,644 22,784 (6,116) 9,940 1,194,710
Data processing 3,252,667 32,012 469,470 (11,671) 44,263 3,786,741
equipment
Other 735,188 - 62,550 (3,872) 30,768 824,634
telecommunications
peripherals
Office equipment 660,491 102 32,513 (8,470) (22,970) 661,666
Vehicles 187,853 3,859 4,972 (9,285) 4,004 191,403
Other equipment 107,573 - 1,855 (71) 3,269 112,626
Property under
construction:
Buildings 54,888 - 46,137 - (47,613) 53,412
Switching 158,056 - 57,033 - (215,089) -
equipment
Transmission 93,907 - 5,067,293 - (4,986,069) 175,131
installation and
equipment
Satellite, earth 607,172 - 234,354 - (64,627) 776,899
station and
equipment
Cable network 14,524 - 2,006,243 - (1,995,259) 25,508
Power supply 106 - 24,953 - (24,990) 69
Data processing 10,526 - 30,065 - (23,910) 16,681
equipment
Other 16,483 - 10,594 - (27,077) -
telecommunications
peripherals
Leased assets
Vehicles 239 - 11 - 163 413
Total 58,356,699 2,377,134 8,820,410 (890,663) 205,682 68,869,262
Accumulated
depreciation:
Direct
acquisitions
Buildings 812,319 - 136 ,083 (11,209) 15,445 952,638
Switching 5,266,488 - 748,667 (36,795) (377,087) 5,601,273
equipment
Telegraph,
telex 194,249 - 853 (791) 4,342 198,653
and data
communication
equipment
Transmission 4,956,895 - 2,747,743 (513,618) 1,017,239 8,208,259
installation and
equipment
Satellite,
earth 2,158,379 - 199,729 (165,075) (660,751) 1,532,282
station and
equipment
Cable
network 6,613,281 - 1,560,387 (33,777) 95,770 8,235,661
Power
supply 797,925 - 108,436 (5,642) 4,061 904,780
Data
processing 1,469,816 - 680,399 (11,221) (26,173) 2,112,821
equipment
Other 572,190 - 75,248 (3,664) 68,804 712,578
telecommunications
peripherals
Office
equipment 497,467 - 68,822 (7,291) 3,759 562,757
Vehicles 173,134 - 11,730 (8,224) 4,224 180,864
Other
equipment 69,302 - 17,469 (71) 7,827 94,527
Leased assets
Vehicles 114 - 33 - (77) 70
Total 23,581,559 - 6,355,599 (797,378) 157,383 29,297,163
Net Book
Value 34,775,140 39,572,099
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
11. PROPERTY, PLANT AND EQUIPMENT (continued)
2003 2004
Proceeds from sale of property, plant and equipment 255,750 67,196
Net book value 72,867 93,285
Gain/(loss) on disposal 182,883 (26,089)
In accordance with the amended and restated KSO agreement with MGTI (Note 4d), ownership rights to the acquired
property, plant and equipment in KSO IV are legally retained by MGTI until the end of the KSO period (December
31, 2010). As of December 31, 2004, the net book value of these property, plant and equipment was Rp2,000,073
million.
As of December 31, 2003 and 2004, the net book value of property, plant and equipment included in the Company's
property, plant and equipment that are utilized by the KSOs amounted to Rp795,838 million and Rp449,016 million,
respectively. The legal ownership of these property, plant and equipment are still retained by the Company.
Interest capitalized to property under construction amounted to Rp20,108 million, Rp22,925 million and Rp57,690
million in 2002, 2003 and 2004, respectively.
Foreign exchange (gains) losses capitalized as part of property under construction amounted to (Rp27,568
million), nil and Rp74,283 million in 2002, 2003 and 2004, respectively.
The Company and its subsidiaries own several pieces of land located throughout Indonesia with Building Use
Rights (Hak Guna Bangunan or HGB) for a period of 20-30 years, which will expire between 2005-2034. Management
believes that there will be no difficulty in obtaining the extension of the landrights when they expire.
Some of the Company's land is still under the name of the Ministry of Tourism, Post and Telecommunications and
the Ministry of Communications of the Republic of Indonesia. The transfer to the Company of the legal title of
ownership on those parcels of land is still in progress.
As of December 31, 2004, the Company operated two satellites which primarily provide backbone transmission links
for its Network and earth station satellite up-linking and down-linking services to domestic and international
users. The Company can allocate the transponders in the satellite following to customer's demand. As of December
31, 2004, there were no events or changes in circumstances which indicate that the carrying amount of the
Company's satellites may not be recoverable.
The estimated date of completion of assets under construction is between January 2005 and June 2005. Management
believes that there is no impediment to the completion of the construction in progress.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
11. PROPERTY, PLANT AND EQUIPMENT (continued)
As of December 31, 2004, property, plant and equipment of the Company and subsidiaries, except for land, were
insured with various insurance companies against fire, theft and other specified risks for a coverage of
Rp23,055,406 million plus US$2,288 million. In addition, the Telkom-1 satellite is insured for US$51.6 million.
Management believes that the insurance coverage is adequate.
On December 26, 2004, telecommunication facilities of the Company and its subsidiaries in Banda Aceh and
certain areas nearby in Nanggroe Aceh Darusallam with net book value of Rp54,863 million were destroyed by
earthquake and tsunami. As of December 31, 2004, the Company has recorded the loss in 'Other Income
(Expense)' in the consolidated statements of income. These telecommunication facilities were covered by
insurance. As of the date of issuance of these financial statements, verification by insurance companies is
still in progress. The Company and its subsidiaries will recognize insurance claims on the loss when the
insurance companies have completed their verification and agreed on the claimed amounts.
Certain property, plant and equipment of the Company and subsidiaries have been pledged as collateral for
lending agreements (Note 24).
12. PROPERTY, PLANT AND EQUIPMENT UNDER REVENUE-SHARING ARRANGEMENTS
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 107,558 - (14,530) - 93,028
and equipment
Cable network 333,188 27,314 - (42,121) 318,381
Other telecommunications 129,196 - (2,711) (2,513) 123,972
peripherals
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 95,198 9,052 (14,530) - 89,720
and equipment
Cable network 246,244 17,231 - (38,300) 225,175
Other telecommunications 129,196 - (2,711) (2,513) 123,972
peripherals
Total 842,964 65,067 (26,395) (89,991) 791,645
Net Book Value 377,622 305,041
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
12. PROPERTY, PLANT AND EQUIPMENT UNDER REVENUE-SHARING ARRANGEMENTS (continued)
January 1, December 31,
2004 Additions Deductions Reclassifications 2004
At cost:
Land 3,160 222 - - 3,382
Buildings 20,255 225 - (7,058) 13,422
Switching equipment 537,890 12,473 - (132,226) 418,137
Transmission installation and 93,028 200,251 - (34,160) 259,119
equipment
Cable network 318,381 117,228 - (39,469) 396,140
Other telecommunications peripherals 123,972 234 - (20,709) 103,497
Total 1,096,686 330,633 - (233,622) 1,193,697
Accumulated depreciation:
Land 1,449 152 - - 1,601
Buildings 9,804 802 - (3,529) 7,077
Switching equipment 341,525 34,757 - (90,160) 286,122
Transmission installation and 89,720 13,406 - (34,160) 68,966
equipment
Cable network 225,175 33,817 - (31,475) 227,517
Other telecommunications peripherals 123,972 24 - (20,709) 103,287
Total 791,645 82,958 - (180,033) 694,570
Net Book Value 305,041 499,127
In accordance with revenue-sharing arrangements agreements, ownership rights to the property, plant and
equipment under revenue-sharing arrangements are legally retained by the investors until the end of the
revenue-sharing period.
The unearned income on revenue-sharing arrangements is as follows:
2003 2004
Gross amount 1,096,686 1,193,697
Accumulated amortization:
Beginning balance (1,077,789) (984,954)
Addition (Note 37) (58,379) (82,033)
Deduction 151,214 233,622
Ending balance (984,954) (833,365)
Net 111,732 360,332
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
13. ADVANCES AND OTHER NON-CURRENT ASSETS
Advances and other non-current assets consist of:
2003 2004
Advances for purchase of property, plant and equipment 28,698 1,070,065
Security deposits 22,851 28,345
Restricted cash 5,053 114,202
Deferred landrights charges 74,299 93,843
Others 45,053 65,896
Total 175,954 1,372,351
Restricted cash represents time deposits with original maturities of more than one year held by the Company and
its subsidiaries and are pledged as collateral for bank guarantee.
Deferred landrights charges represent costs to extend the contractual life of the landrights which are deferred
and amortized over the new contractual life.
14. GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amount of goodwill and other intangible assets for the years ended December 31,
2003 and 2004 are as follows:
Other
intangible
Goodwill assets Total
Gross carrying amount:
Balance as of December 31, 2002 106,348 4,028,842 4,135,190
Addition - acquisition of AWI (Note 4c) - 1,982,564 1,982,564
Balance as of December 31, 2003 106,348 6,011,406 6,117,754
Accumulated amortization:
Balance as of December 31, 2002 (33,681) (209,364) (243,045)
Amortization expense for 2003 (21,270) (709,389) (730,659)
Balance as of December 31, 2003 (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
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
14. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
Other
intangible
Goodwill assets Total
Gross carrying amount:
Balance as of December 31, 2003 106,348 6,011,406 6,117,754
Addition - acquisition of Dayamitra (Note 4a) - 231,477 231,477
Addition - acquisition of KSO IV (Note 4d) - 908,228 908,228
Balance as of December 31, 2004 106,348 7,151,111 7,257,459
Accumulated amortization:
Balance as of December 31, 2003 (54,951) (918,753) (973,704)
Amortization expense for 2004 (21,270) (851,060) (872,330)
Balance as of December 31, 2004 (76,221) (1,769,813) (1,846,034)
Net book value 30,127 5,381,298 5,411,425
Weighted-average amortization period 5 years 7.97 years
Other intangible assets resulted from the acquisitions of Dayamitra, Pramindo, AWI and KSO IV, and represent
the rights to operate the business in the KSO areas (Note 4). Goodwill resulted from the acquisition of GSD
(Note 1c).
The estimated annual amortization expense relating to goodwill for the years ending December 31, 2005 and 2006
is Rp21,269 million and Rp8,858 million, respectively. The estimated annual amortization expense relating to
other intangible assets for each of the next five years beginning from January 1, 2005 is Rp896,883 million per
year.
15. ESCROW ACCOUNTS
Escrow accounts consist of the following:
2003 2004
Citibank N.A., Singapore 239,689 30,059
JP Morgan Chase Bank 276,439 -
Bank Mandiri 6,018 6,222
522,146 36,281
a. Citibank N.A., Singapore
This escrow account with Citibank N.A., Singapore ('Dayamitra Escrow Agent') was established to
facilitate the payment of the Company's obligations under the Conditional Sale and Purchase Agreement and
Option Agreement entered into with the selling stockholders of Dayamitra (Note 4a).
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
15. ESCROW ACCOUNTS (continued)
a. Citibank N.A., Singapore (continued)
In 2004, the Company has repaid the entire obligations under the Conditional Sale and Purchase Agreement;
therefore, as of December 31, 2004, this escrow account is used to facilitate the payment of the Company's
obligations under the Option Agreement with TMC.
The escrow account earns interest at LIBOR minus 0.75% per annum, which is computed on a daily basis. The
interest income earned is included as part of the escrow funds. The remaining funds available will be
transferred to the Company after all of the obligations related to the Dayamitra transaction are satisfied.
b. JP Morgan Chase Bank
This escrow account with JP Morgan Chase Bank ('Pramindo Escrow Agent') was established to
facilitate the settlement of the Company's obligations under its Conditional Sale and Purchase Agreement for
the acquisition of Pramindo (Note 4b).
In accordance with the Escrow Agreement, the Company was required to make installment payments of US$12.8
million for eleven months and US$15.0 million for sixteen months. The first installment was due on October
1, 2002.
The escrow account earned interest at LIBOR minus 0.4% per annum, which was computed on a daily basis. The
interest income earned was included as part of the escrow funds.
On March 15, 2004, the Company repaid the entire obligations related to the Pramindo transaction. On March
18, 2004, the escrow account was closed and the remaining balance of US$7.8 million was transferred to the
Company's account.
c. Bank Mandiri
The escrow account with Bank Mandiri was established by Dayamitra in relation with the credit facilities
from Bank Mandiri (Note 24f).
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
16. TRADE ACCOUNTS PAYABLE
2003 2004
Related parties
Payables to other telecommunications carriers 322,842 196,127
Concession fees 224,370 254,665
Purchases of equipment, materials and services 110,266 192,302
Total 657,478 643,094
Third parties
Purchases of equipment, materials and services 2,892,803 3,366,320
Payables related to revenue-sharing arrangements 94,508 220,158
Payables to other telecommunication providers 122,543 24,978
Total 3,109,854 3,611,456
Total 3,767,332 4,254,550
Trade accounts payable by currency are as follows:
2003 2004
Rupiah 2,825,795 3,613,715
U.S. Dollar 900,408 638,861
Euro 29,463 -
Japanese Yen 10,033 715
Great Britain Pound Sterling 916 1,092
Singapore Dollar 717 147
Myanmar KYAT - 20
Total 3,767,332 4,254,550
Refer to Note 47 for details of related party transactions.
17. ACCRUED EXPENSES
2003 2004
Early retirement benefits 132,810 -
Salaries and employee bonuses 442,785 321,237
Interest and bank charges 261,050 163,203
General, administrative and marketing 259,462 242,597
Operations, maintenance and telecommunications services 89,103 324,329
Total 1,185,210 1,051,366
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
17. ACCRUED EXPENSES (continued)
Based on the Board of Directors' Resolution No. KD.20/PS900/SDM-10/2001 dated June 11, 2001 and Resolution of
Human Resources Director No. KR.18/PS900/SDM-30/2003 dated October 9, 2003 concerning Early Retirement, the
Company offered an Early Retirement Program for interested and eligible employees. Employees' rights under the
early retirement program, method of calculation and payments for compensation and other benefits in 2003 and
2004 are provided in the Board of Directors' Resolution No. KD.80/PS900/SDM-20/2002 regarding Employees' Rights
under Early Retirement Program Year 2003 and Resolution of Human Resources Director No. KR 1217/PS900/SDM.30/
2004 regarding Early Retirement, respectively. Accrued early retirement benefits as of December 31, 2003 and
early retirement benefits for 2004 were fully paid in 2004.
18. UNEARNED INCOME
2003 2004
Prepaid pulse reload vouchers 740,077 1,017,530
Other telecommunication services 16,361 7,669
Other 6,773 4,801
Total 763,211 1,030,000
19. ADVANCES FROM CUSTOMERS AND SUPPLIERS
Represent security deposits received from customers related to services and performance guarantee deposits from
suppliers related to procurement contracts.
20. SHORT-TERM BANK LOANS
Short-term bank loans consist of:
2003 2004
Bank Mandiri 37,642 41,433
ABN AMRO Bank - 604,500
Bank Central Asia - 455,700
Total 37,642 1,101,633
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
20. SHORT-TERM BANK LOANS (continued)
a. Bank Mandiri
On August 28, 2001, Napsindo entered into a loan agreement with Bank Mandiri for a facility of US$1.8
million for a one-year term. The loan is secured with the Company's time deposits (Note 9) with
interest rate at 2% above the pledged time deposits interest rate (i.e. 3% as of December 31, 2003 and 2.65%
as of December 31, 2004). On November 11, 2003, the facility was extended until August 28, 2004. The
facility can be extended upon approval by the Company. Subsequently, on September 23, 2004, this loan
facility was extended for another one-year term and will expire on August 28, 2005.
On April 24, 2003, Napsindo also entered into a loan agreement with Bank Mandiri for a facility of US$2.7
million for a one-year term. On May 4, 2004, the facility was extended for another one year term and
will expire on April 24, 2005. The loan is secured by the Company's time deposits and bears interest at 2%
above the pledged time deposits interest rate (i.e. 3% as of December 31, 2003 and 2.65% as of December 31,
2004).
As of December 31, 2003 and 2004, principal outstanding under these facilities amounted to US$4.5 million
(Rp37,642 million) and US$4.5 million (Rp41,433 million).
b. ABN AMRO Bank
On January 28, 2004, the Company signed a short-term loan agreement with ABN AMRO Bank N.V., Jakarta Branch
for a facility of US$129.7 million. The loan was used to settle the outstanding promissory notes at March
15, 2004 which were issued for the acquisition of Pramindo (Note 4b). The principal and interest are payable
in 10 monthly installments from March 2004 to December 2004. The loan bears interest at LIBOR plus 2.75%. As
of December 31, 2004, the loan was repaid and the loan agreement was terminated on January 6, 2005.
On December 21, 2004, the Company entered into a loan agreement with ABN AMRO Bank N.V. for a short-term
loan with a maximum facility of US$65.0 million. The loan principal of US$30.0 million and US$35.0 million
is due on March 31, 2005 and June 30, 2005, respectively. The loan is unsecured and bears interest at
3-month U.S. Dollar LIBOR plus 2.5% (i.e. 5.02% as of December 31, 2004). Principal outstanding as of
December 31, 2004 was Rp604,500 million (US$65.0 million).
c. Bank Central Asia
On December 27, 2004, the Company entered into a loan agreement with Bank Central Asia for a short-term loan
with a maximum facility of US$49.0 million. The loan is due on June 28, 2005. The facility is unsecured and
bears interest at 1-month LIBOR plus 2.85% (i.e. 5.27% as of December 31, 2004). Principal outstanding as of
December 31, 2004 amounted to Rp455,700 million (US$49.0 million).
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
21. MATURITIES OF LONG-TERM LIABILITIES
a. Current maturities
Notes 2003 2004
Two-step loans 22 832,135 655,422
Medium-term Notes 23 - 468,976
Bank loans 24 808,793 602,516
Liabilities of business acquisitions 25 1,587,775 573,908
Suppliers' credit loans 26 164,958 -
Bridging loan 27 49,855 -
Total 3,443,516 2,300,822
b. Long-term portion
(In billions of Rupiah)
Notes Total 2006 2007 2008 2009 Later
Two-step loans 22 5,363.3 570.7 501.6 460.4 444.9 3,385.7
Guaranteed Notes 23 736.2 - 736.2 - - -
Bonds 23 986.6 - 986.6 - - -
Medium-term Notes 23 608.7 144.7 464.0 - - -
Bank loans 24 1,775.8 750.9 623.6 400.8 0.4 0.1
Liabilities of business 25 3,743.3 746.7 690.4 767.8 748.0 790.4
acquisitions
Total 13,213.9 2,213.0 4,002.4 1,629.0 1,193.3 4,176.2
22. TWO-STEP LOANS
Two-step loans are loans, which were obtained by the Government from overseas banks and a consortium of
contractors, which are then re-loaned to the Company. The loans entered into up to July 1994 were recorded and
are payable in Rupiah based on the exchange rate at the date of drawdown. Loans entered into after July 1994
are payable in their original currencies and any resulting foreign exchange gain or loss is borne by the
Company.
On December 15, 2004, the Company repaid a portion of its Rupiah denominated two-step loans totaling Rp701,272
million before its maturity. Further, on December 24, 2004, the Company repaid a portion of its U.S. Dollar
denominated two-step loans with principal amount of US$48.8 million and its entire Euro denominated two-step
loans with principal amount of EUR14.5 million before their maturities. These early repayments of two-step
loans have been approved by the Ministry of Finance of the Republic of Indonesia - Directorate General
of Treasury.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
22. TWO-STEP LOANS (continued)
The details of the two-step loans are as follows:
Interest Rate Outstanding
Creditors 2003 2004 2003 2004
Overseas banks 3.10% - 14.90% 3.10% - 13.25% 7,441,076 5,889,703
Consortium of contractors 3.20% - 14.90% 3.20% - 13.25% 249,969 129,002
Total 7,691,045 6,018,705
Current maturities (832,135) (655,422)
Long-term portion 6,858,910 5,363,283
The details of two-step loans obtained from overseas banks as of December 31, 2003 and 2004 are as follows:
Interest Rate Outstanding
Currencies 2003 2004 2003 2004
U.S. Dollar 4.00% - 7.98% 4.00% - 7.98% 2,946,687 2,397,437
Rupiah 9.69% - 14.90% 8.30% - 13.25% 3,050,043 2,098,948
Japanese Yen 3.10% 3.10% 1,244,331 1,393,318
Euro 7.33% - 8.45% 7.33% - 8.45% 200,015 -
Total 7,441,076 5,889,703
The loans are intended for the development of telecommunications infrastructure and supporting equipment. The
loans are repayable in semi-annual installments and they are due on various dates until 2024.
Details of two-step loans obtained from a consortium of contractors as of December 31, 2003 and 2004 are as
follows:
Interest Rate Outstanding
Currencies 2003 2004 2003 2004
Rupiah 12.66% - 14.90% 8.30% - 13.25% 116,574 9,924
Japanese Yen 3.20% 3.20% 133,395 119,078
Total 249,969 129,002
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
22. TWO-STEP LOANS (continued)
The consortium of contractors consists of Sumitomo Corporation, PT NEC Nusantara Communications and PT Humpuss
Elektronika (SNH Consortium). The loans were obtained to finance the second digital telephone exchange project.
The loans are repayable in semi-annual installments and they are due on various dates until June 15, 2008.
Two-step loans which are payable in Rupiah bear either a fixed interest rate, a floating rate based upon the
average interest rate on 3-month Certificates of Bank Indonesia during the six-months preceding the installment
due date plus 1% or a floating interest rate offered by the lenders plus 5.25%. Two-step loans which are
payable in foreign currencies bear either a fixed rate interest or the floating interest rate offered by the
lenders, plus 0.5%.
As of December 31, 2004, the Company has used all facilities under the two-step loan program and the draw-down
period for the two-step loans has expired.
The Company should maintain financial ratios as follows:
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 originating from World Bank and ADB, respectively.
As of December 31, 2004, the Company complied with the above mentioned ratios.
23. NOTES AND BONDS
2003 2004
Guaranteed Notes 1,121,224 736,174
Bonds 981,278 986,564
Medium-term Notes - 1,077,703
Total 2,102,502 2,800,441
Current maturities - (468,976)
Long-term portion 2,102,502 2,331,465
a. Guaranteed Notes
In April 2002, TSFL, Telkomsel's wholly-owned subsidiary, issued US$150.0 million Guaranteed Notes (the '
degreesNotes') which are unconditionally and irrevocably guaranteed by Telkomsel. The Notes bear interest
at 9.75%, payable semi-annually on April 30 and October 30 of each year and will mature on April 30, 2007.
The trustee of the Notes is Deutsche Bank Trustees (Hongkong Limited) and the custodian is Deutsche Bank AG,
Hongkong Branch.
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
23. NOTES AND BONDS (continued)
a. Guaranteed Notes (continued)
Telkomsel has unconditionally and irrevocably guaranteed the due and punctual payment of all sums from time
to time payable by the Issuer in respect of the Notes. So long as any Notes remains outstanding, among
others, neither the Issuer nor the Guarantor will create or permit to subsist any mortgage, charge, pledge,
lien or other form of encumbrance or security interest including without limitation anything analogous to
any of the foregoing under the laws of any jurisdiction (each a 'Security Interest') on the whole
or any part of its present or future assets, undertakings, property or revenues as security for any Relevant
Debt or any guarantee of or indemnity in respect of any Relevant Debt.
TSFL may, on the interest payment date falling on or about the third anniversary of the issue date redeem
the Notes, in whole or in part, at 102.50% of the principal amount of such Notes, together with interest
accrued to the date fixed for redemption, provided that if only part of the Notes are redeemed, the
principal amount of the outstanding Notes after such redemption will be at least US$100.0 million.
The Notes are listed on the Singapore Exchange Securities Trading Limited. The Notes will constitute direct,
unconditional, unsubordinated and unsecured obligations of TSFL and will at all times rank pari passu and
without any preference among themselves. The payment obligations of TSFL under the Notes shall, save for
such exceptions as may be provided by applicable laws, at all times rank at least equivalent with all other
present and future unsecured and unsubordinated obligations of TSFL. The net proceeds from the sale of the
Notes were used by TSFL to lend to Telkomsel in financing its capital expenditures.
Based on the 'On-Loan Agreement', dated April 30, 2002 between Telkomsel and TSFL, TSFL lent the
proceeds from the subscription of the Notes to Telkomsel at an interest rate of 9.765% per annum, payable
under the same terms as above. Subsequently, on September 8, 2003, the agreement was amended such that if
any Notes are cancelled, the principal amount of the outstanding loan will be reduced by the principal
amount of the Notes cancelled. The loan will mature on April 30, 2007 or on such an earlier date as the loan
may become repayable.
The current rating for the Notes issued by Pefindo is AAA, by Standard and Poor's is BB- and by Fitch is B+.
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
23. NOTES AND BONDS (continued)
b. Bonds
On July 16, 2002, the Company issued bonds amounting to Rp1,000,000 million. The bonds were issued at par
value and have a term of five years. The bonds bear interest at a fixed rate of 17% per annum, payable
quarterly beginning October 16, 2002. The bonds are traded on the Surabaya Stock Exchange and will mature on
July 15, 2007. The trustee of the bonds is PT Bank Negara Indonesia (Persero) Tbk and the custodian is PT
Danareksa Sekuritas.
The current rating for the bonds issued by Pefindo is AAA and by Standard and Poor's is BB-.
As of December 31, 2003 and 2004, the outstanding principal amount of the bonds and the unamortized bond
issuance costs are as follows:
2003 2004
Principal 1,000,000 1,000,000
Bond issuance costs (18,722) (13,436)
Net 981,278 986,564
During the period when the bonds are outstanding, the Company should comply with all covenants or
restrictions including maintaining consolidated financial ratios as follows:
1. Debt service coverage ratio should exceed 1.5:1
2. Debt to equity ratio should not exceed:
a. 3:1 for the period 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
As of December 31, 2004, the Company complied with the covenants.
c. Medium-term Notes
On December 13, 2004, the Company entered into an agreement with PT ABN AMRO Asia Securities Indonesia, PT
Bahana Securities, PT BNI Securities and PT Mandiri Sekuritas (collectively referred as 'Initial
Purchasers') to issue Medium-term Notes (the 'Notes') for a total principal amount of
Rp1,125,000 million. Proceeds from issuance of the Notes were used to finance the payment of the remaining
balance of the borrowings assumed in connection with the AWI acquisition amounting to US$123.0 million (Note
24a).
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
23. NOTES AND BONDS (continued)
c. Medium-term Notes (continued)
The Notes consist of four Series with the following maturities and interest rates:
Series Principal Maturity Interest
rate
A 290,000 June 15, 2005 7.70%
B 225,000 December 15, 2005 7.95%
C 145,000 June 15, 2006 8.20%
D 465,000 June 15, 2007 9.40%
Total 1,125,000
Interest on the Notes is payable semi-annually beginning June 15, 2005 through June 15, 2007. The Notes are
unsecured and will at all times rank pari passu with other unsecured debts of the Company. The Company may
at any time, before the maturity dates of the Notes, repurchase the Notes in whole or in part.
As of December 31, 2004, the outstanding principal and unamortized debt issuance costs are as follows:
Rp
Principal 1,080,000
Debt issuance costs (2,297)
1,077,703
Current maturities (468,976)
Long-term portion 608,727
The current rating for the Notes issued by Pefindo is AAA.
During the period when the Notes are outstanding, the Company should comply with all covenants or
restrictions including maintaining financial ratios as follows:
1. Debt service coverage ratio should exceed 1.5:1
2. Debt to equity ratio should not exceed 2:1
3. Debt to EBITDA ratio should not exceed 3:1
As of December 31, 2004, the Company complied with the covenants.
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS
The details of long-term bank loans as of December 31, 2003 and 2004 are as follows:
2003 2004
Outstanding Outstanding
Original Original
Total currency Rupiah currency Rupiah
facility
Lenders Currency (in (in equivalent (in equivalent
millions) millions) millions)
Group of lenders US$ - 172.3 1,456,063 - -
Citibank N.A. EUR 73.4 64.9 690,64 51.4 649,758
US$ 113.3 51.3 434,059 85.9 798,197
Bank Central Asia Rp 173,000.0 - 139,826 - 143,489
Deutsche Bank Rp 108,817.7 - 95,418 - 41,009
Bank Finconesia Rp - - 15,884 - -
Bank Mandiri Rp 82,425.3 - 42,115 - 59,729
Syndicated banks Rp 90,000.0 - 34,263 - 8,088
US$ 4.0 1.9 15,751 0.4 4,092
Bank Niaga Rp 7,765.0 - 565 - 7,330
The Export-Import
Bank of Korea US$ 124.0 - - 59.1 549,449
Consortium of banks Rp 150,000.0 - - - 117,174
Total 2,924,590 2,378,315
Current maturities of bank (808,793) 602,516)
loans
Long-term portion 2,115,797 1,775,799
a. Group of lenders
AWI had a loan of US$270.9 million from a group of lenders (the 'lenders') before it was 100%
acquired by the Company on July 31, 2003. Based on the Conditional Sale and Purchase Agreement related to
the acquisition, the Company assumed the loan by repaying US$74.0 million and entering into a credit
agreement with the lenders to finance the remaining outstanding balance of the loan amounting to US$197.0
million, with JP Morgan Chase Bank, Hong Kong office, as the facility agent. This loan bears an interest at
LIBOR plus 3.5% per annum, net of 10% withholding tax (i.e. 4.65% as of December 31, 2003). The Company must
pay an annual facility agent fee of US$0.1 million. The loan is repayable in 8 semi-annual installments
beginning on December 31, 2003 with the first through the seventh installment of US$24.7 million and final
installment of US$24.4 million. The Company has repaid the entire outstanding balance in December 2004 using
the proceeds from issuance of Medium-term Notes (Note 23c) and the credit agreement was terminated on
January 3, 2005.
b. Citibank N.A.
1. Hermes Export Facility
On December 2, 2002, pursuant to the partnership agreement with Siemens Aktiengesellschaft (AG) (Note
52a.i), Telkomsel entered into the Hermes Export Facility Agreement ('Facility') with Citibank
International plc (as 'Original Lender' and 'Agent') and Citibank N.A., Jakarta
branch (as 'Arranger') covering a total facility of EUR76.2 million which is divided into
several tranches.
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS (continued)
b. Citibank N.A. (continued)
1. Hermes Export Facility (continued)
The agreement was subsequently amended on October 15, 2003, amending the Facility amount to EUR73.4
million and repayment dates.
The interest rate per annum on the Facility is determined based on the aggregate of the applicable
margin, EURIBOR and mandatory cost, if any (i.e., 2.98% as of December 31, 2003 and 2.963% as of December
31, 2004). Interest is payable semi-annually, starting on the utilization date of the Facility.
In addition to the interest, in 2003, Telkomsel was also charged an insurance premium for the insurance
guarantee given by Hermes in favor of Telkomsel for each loan utilization amounting to EUR 6.1 million,
15% of which was paid in cash. The remaining balance was settled through utilization of the Facility.
As of December 31, 2003 and 2004, the outstanding balance was EUR64.9 million (Rp690,646 million) and
EUR51.4 million (Rp649,758 million), respectively.
The schedule of the principal payments on this long-term loan as of December 31, 2004 is as follows:
Amount
EUR Rupiah
Year (in equivalent
millions)
2005 14.7 185,645
2006 14.7 185,645
2007 11.0 139,234
2008 11.0 139,234
2. High Performance Backbone ('HP Backbone') Loans
a. On April 10, 2002, the Company entered into a 'Loan Agreement' with Citibank N.A. ('
Arranger') and Citibank International plc ('Agent'), which was supported by an export
credit guarantee of Hermes Kreditversicherungs AG ('Lender' and 'Guarantor'),
providing a total facility of US$23.4 million.
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS (continued)
b. Citibank N.A. (continued)
2. High Performance Backbone ('HP Backbone') Loans (continued)
The facility was obtained to finance up to 85% of the cost of supplies and services sourced in Germany
relating to the design, manufacture, construction, installation and testing of high performance
backbone networks in Sumatra pursuant to the 'Partnership Agreement' dated November 30,
2001, with PT Pirelli Cables Indonesia and PT Siemens Indonesia for the construction and provision of
a high performance backbone in Sumatra.
The lender required a fee of 8.4% of the total facility. This fee is paid twice during the agreement
period, 15% of the fee is required to be paid in cash and 85% is included in the loan balance.
As of December 31, 2003 and 2004, the outstanding loan was US$15.1 million (Rp127,664 million) and
US$16.8 million (Rp155,918 million), respectively. The loan is payable in ten semi-annual installments
beginning in July 2004.
Amounts drawn from the facility bear interest at LIBOR plus 0.75% (i.e., 1.98% and 2.97% as of
December 31, 2003 and 2004, respectively).
b. On April 10, 2002, the Company entered into a loan agreement with Citibank N.A. (as 'Arranger')
and Citibank International plc (as 'Agent'), which was supported by an export credit
guarantee obtained from Istituto per I Servizi Assicurativi del Commercio Estero ('SACE Italy')
providing a total maximum facility to US$21.0 million. The facility was used to finance up to 85%
of material and services procured in Italy in connection with the design, manufacture, development,
installation and testing of Sub System VI, as part of HP Backbone network.
Amounts drawn from the facility bear fixed interest rate of 4.14%. The loans are payable in ten
semi-annual installments beginning in December 2003. Total principal outstanding as of December 31,
2003 and 2004 was US$16.7 million (Rp141,073 million) and US$13.0 million (Rp120,809 million),
respectively.
During the period when the loans are outstanding, the Company should comply with all covenants or
restrictions including maintaining financial ratios as follows:
1. Debt service coverage ratio should exceed 1.5:1
2. Debt to equity ratio should not exceed:
a. 3:1 for the period of April 10, 2002 to January 1, 2003
b. 2.75:1 for the period of January 2, 2003 to January 1, 2004
c. 2.5:1 for the period of January 2, 2004 to January 1, 2005
d. 2:1 for the period of January 2, 2005 to the fully repayment date of the loans
3. Debt to EBITDA ratio should not exceed:
a. 3.5:1 for the period of April 10, 2002 to January 1, 2004
b. 3:1 for the period of January 2, 2004 to the fully repayment date of the loans
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS (continued)
b. Citibank N.A. (continued)
2. High Performance Backbone ('HP Backbone') Loans (continued)
The Company has breached a covenant in the loan agreement which stipulates that the Company will not make
any loans or grant any credit to or for the benefit of any person. As of June 9, 2004, the Company
obtained a written waiver from Citibank International plc with regard to entering into the AWI loan
(Notes 4c and 24a). As of December 31, 2004, the Company complied with the covenants.
3. EKN-Backed Facility
On December 2, 2002, pursuant to the partnership agreement with PT Ericsson Indonesia (Note 52a.i),
Telkomsel entered into the EKN-Backed Facility agreement ('Facility') with Citibank
International plc (as 'Original Lender' and 'Agent') and Citibank N.A., Jakarta
branch (as 'Arranger') covering a total facility amount of US$70.5 million which is divided
into several tranches.
The agreement was subsequently amended on December 17, 2004, among others, to reduce the total Facility
to US$68.9 million.
The interest rate per annum on the Facility is determined based on the aggregate of the applicable
margin, CIRR (Commercial Interest Reference Rate) and mandatory cost, if any (i.e., 4.27% and 4.02% as of
December 31, 2003 and 2004, respectively). Interest is payable semi-annually, starting on the utilization
date of the Facility.
In addition to the interest, in 2003 and 2004, Telkomsel was also charged an insurance premium for the
insurance guarantee given by EKN in favor of Telkomsel for each loan utilization amounting to US$4.2
million and US$1.5 million, respectively, 15% of which was paid in cash. The remaining balance was
settled through utilization of the Facility.
The total amount drawn down from the Facility in 2003 and 2004 amounted to US$21.7 million (equivalent to
Rp184,834 million) and US$47.3 million (equivalent to Rp428,719 million), respectively. As of December
31, 2003 and 2004, the outstanding balance was US$19.5 million (Rp165,322 million) and US$56.1 million
(Rp521,470 million), respectively.
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS (continued)
b. Citibank N.A. (continued)
3. EKN-Backed Facility (continued)
The schedule of the principal payments on this long-term loan as of December 31, 2004 is as follows:
Amount
US$ Rupiah
Year (in equivalent
millions)
2005 15.5 143,841
2006 15.5 143,841
2007 12.6 116,894
2008 12.5 116,894
The following table summarizes the principal outstanding on loans from Citibank N.A. as of December 31,
2003 and 2004:
2003 2004
Foreign Foreign
currencies Rupiah currencies Rupiah
(in equivalent (in equivalent
millions) millions)
Hermes Export Facility EUR 64.9 690,646 EUR 51.4 649,758
HP Backbone loans US$ 31.8 268,737 US$ 29.8 276,727
EKN-Backed Facility US$ 19.5 165,322 US$ 56.1 521,470
Total 1,124,705 1,447,955
Current maturities (242,116) (402,983)
Long-term portion 882,589 1,044,972
c. Bank Central Asia
On April 10, 2002, the Company entered into a 'Term Loan Agreement HP Backbone Sumatra Project'
with Bank Central Asia, providing a total facility of Rp173,000 million. The facility was obtained to
finance the Rupiah portion of the high performance backbone network in Sumatra pursuant to the '
Partnership Agreement'.
Amounts drawn from the facility bear interest at 4.35% plus the 3-month time deposit rate (i.e., 11.05% and
10.02% as of December 31, 2003 and 2004, respectively). The loans are payable in twelve unequal quarterly
installments beginning January 2004. The loan will mature in October 2006.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS (continued)
c. Bank Central Asia (continued)
Total principal outstanding as of December 31, 2003 and 2004 were Rp139,826 million and Rp143,489 million,
respectively.
The loan facility from Bank Central Asia is not collateralized.
During the period when the loan is outstanding, the Company should comply with all covenants or restrictions
including maintaining financial ratios as follows:
1. EBITDA to interest ratio should not exceed 4:1
2. EBITDA to interest and principal ratio should exceed 1.5:1
3. Debt to EBITDA ratio should not exceed 3:1
In 2003, the Company breached a covenant in the loan agreement which stipulated that the Company would not
make any guarantee or collateralize its assets for an amount exceeding US$2 million or its equivalent. On
June 23, 2004, the Company obtained a written waiver from Bank Central Asia with regard to the Company's time
deposits of US$4.6 million collateralized for Napsindo's loan (Notes 9 and 20a). Subsequently, the covenant
in the loan agreement was amended to increase the limit of the guarantee or collateralized assets to
Rp500,000 million (equivalent US$53.9 million).
d. Deutsche Bank AG
On June 28, 2002, the Company entered into a contract agreement with PT Siemens Indonesia and PT NEC
Nusantara Communications for addition of Central Electronic Wahler Switching Digital ('EWSD') and
Nippon Electric Automatic Exchange ('NEAX'), respectively, in Division Regional V. Subsequently,
80% of the contract amounts were factored by the vendors to Deutsche Bank AG ('Facility Agent').
The loans bear fixed interest rate at 19% per annum and are repayable in two annual installments of Rp13,400
million beginning in December 2003 for loan ex-PT NEC Nusantara Communications and Rp41,009 million
beginning in January 2004 for loan ex-PT Siemens Indonesia. As of December 31, 2003 and 2004, the
outstanding balance was Rp 95,418 million and Rp41,009 million, respectively.
e. Bank Finconesia
On June 28, 2002, the Company entered into a contract agreement with PT Olex Cables Indonesia for addition
of installation of Central Lucent in Regional Division V. Subsequently, 80% of the contract amounts were
factored by the vendor to Bank Finconesia. The loan bears fixed interest rate at 19% per annum and is
repayable in two annual installments of Rp15,884 million beginning in December 2003. As of December 31,
2004, the facility has been repaid.
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS (continued)
f. Bank Mandiri
On November 20, 2003, Dayamitra entered into a loan agreement with Bank Mandiri for a maximum facility of
Rp39,925 million. As of December 31, 2003, the facility has been fully drawn down. This facility is
repayable on a quarterly basis until the fourth quarter of 2005 and bears interest at 14.5% per annum,
payable on a monthly basis and subject to change. On December 30, 2003 and September 1, 2004, Bank Mandiri
agreed to decrease the interest rate to 14% per annum commencing in January 2004 and 11.25% per annum
commencing from September 1, 2004, respectively.
On December 20, 2003, Dayamitra also obtained a credit facility from Bank Mandiri for a maximum facility of
Rp40,000 million. The facility is repayable on a quarterly basis beginning from the end of the third quarter
of 2004 until end of the fourth quarter of 2006 and bears interest at 14% per annum. On September 1, 2004,
Bank Mandiri agreed to decrease the interest rate to 11.25% commencing from September 1, 2004. The loan is
obtained to finance the construction of Fixed Wireless CDMA project pursuant to the procurement agreement
entered between Dayamitra and Samsung Electronic Co. Ltd.
The above loans are collateralized by Dayamitra's telecommunications equipment/network with CDMA technology
financed by these facilities, and Dayamitra's share in the DKSOR of KSO Unit VI. As of December 31, 2003 and
2004, total principal outstanding under these facilities amounted to Rp39,925 million and Rp58,254 million,
respectively.
On March 13, 2003, Balebat entered into a loan agreement with Bank Mandiri for a facility of Rp2,500
million. This facility bears interest at 15% per annum payable on a monthly basis, is secured by Balebat's
operating equipment and will mature in July 2006. The principal is repayable on a monthly basis. As of
December 31, 2003 and 2004, principal outstanding under this facility amounted to Rp2,190 million and
Rp1,475 million, respectively.
g. Syndicated banks (Internet Protocol Backbone ('IP Backbone') Loan)
On February 25, 2002, the Company entered into a 'Facility Funding Agreement' with Bank DBS
Indonesia (syndicated agent and lender), Bank Bukopin (lender) and Bank Central Asia ('BCA',
lender), providing a total facility of US$4.0 million and Rp90,000 million to fund the IP Backbone project
in 7 (seven) Regional Divisions or KSO regions divided into 6 (six) batches.
Amounts drawn in U.S. Dollars bear interest at 2% plus the highest of 1, 2 or 3 month SIBOR divided by 0.87%
for the first year and 2% plus the 3 month SIBOR divided by 0.87% thereafter (i.e., 3.38% and 4.875% as of
December 31, 2003 and 2004, respectively). Amounts drawn in Rupiah bear interest at 19% fixed for the first
year and 5% plus the average of BCA's and Bukopin's interest rates (the highest of 1, 3, 6 or 12-month time
deposit rate) thereafter (i.e., 11.625% and 11.125% as of December 31, 2003 and 2004, respectively).
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS (continued)
g. Syndicated banks (Internet Protocol Backbone ('IP Backbone') Loan) (continued)
The loans are payable in eleven quarterly installments beginning in September 2002. The loans will mature on
March 15, 2005.
Total outstanding IP Backbone loans for Rupiah and U.S. Dollars as of December 31, 2003 and 2004 are
Rp34,263 million and US$1.9 million (Rp15,751 million) and Rp8,088 million and US$0.4 million (Rp4,092
million), respectively. The loans were fully repaid on March 15, 2005.
The Company pledged the property under construction as collateral for the IP Backbone loan with a maximum
amount of US$14.6 million and Rp401 million.
Average interest rates for the loans during 2003 and 2004 were as follows:
2003 2004
Rupiah
11.63% - 19.00% 10.83% - 11.63%
U.S. Dollar 3.31% - 3.69% 3.31% - 4.88%
Under the Loan Agreement, the Company should maintain quarterly financial ratios as follows:
1. Debt to equity ratio should not exceed 3:1
2. EBITDA to interest expense should exceed 5:1
As of December 31, 2004, the Company complied with the above mentioned ratios.
h. Bank Niaga
On July 18 and December 3, 2003, Balebat entered into loan agreements with Bank Niaga for facilities
totaling Rp565 million. The facilities bear interest at 15% per annum and are secured by Balebat's time
deposits and vehicles. The principal and interest are payable on a monthly basis which will end in October
2005 and December 2005, respectively. As of December 31, 2003 and 2004, principal outstanding amounted to
Rp565 million and Rp249 million, respectively.
On December 28, 2004, Balebat entered into a loan agreement with Bank Niaga providing a total facility of
Rp7,200 million comprising of Rp5,000 million to finance construction of plant ('Investment Facility')
which bears interest at 13.5% per annum and Rp2,200 million to finance purchase of machinery
('Specific Transaction Facility') which bears interest at 12% per annum. The Investment Facility is
repayable in 36 monthly installments commencing from March 31, 2005. The Specific Transaction Facility is
repayable in 60 monthly installments commencing from June 29, 2005. These facilities are secured by Balebat'
s property, plant and equipment with a value of Rp8,450 million. As of December 31, 2004, principal
outstanding under these facilities amounted to Rp7,081 million.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
24. BANK LOANS (continued)
i. The Export-Import Bank of Korea
On August 27, 2003, the Company entered into a loan agreement with the Export-Import Bank of Korea for a
total facility of US$124.0 million. The loan is used to finance the CDMA procurement from the Samsung
Consortium (Note 52a.iv) and available until April 2006. The loan bears interest, commitment and other fees
totaling 5.68%. The loan is unsecured and payable in 10 semi-annual installments on June 30 and December 30
in each year beginning in 2006. As of December 31, 2004, principal outstanding amounted to US$59.1 million
(equivalent Rp549,449 million).
j. Consortium of banks
On June 21, 2002, the Company entered into a loan agreement with a consortium of banks for a facility of
Rp400,000 million to finance the Regional Division V Junction Project. Bank Bukopin, acting as the facility
agent, charged interest at the rate of 19.5% for the first year from the signing date and at the rate of the
average 3-month deposit rate plus 4% for the remaining years. The drawdown period expires 19 months from the
signing of the loan agreement and the principal is payable in 14 quarterly installments starting from April
2004. The loan facility is secured by the project equipment, with a value of not less than Rp500,000
million.
Subsequently, based on an Addendum to the loan agreement dated April 4, 2003, the loan facility was reduced
to Rp150,000 million, the drawdown period was amended to expire 18 months from the signing of the Addendum,
the repayment schedule was amended to 14 quarterly installments starting from May 21, 2004 and ending on
June 21, 2007 and the value of the project equipment secured was reduced to Rp187,500 million.
As of December 31, 2004, interest rate charged on the loan was 10.19% and the principal outstanding amounted
to Rp117,174 million.
During the period when the loan is outstanding, the Company should comply with all covenants or restrictions
including maintaining financial ratios as follows:
1. Debt to equity ratio should not exceed 3:1
2. EBITDA to interest expense should exceed 5:1
As of December 31, 2004, the Company complied with the above mentioned ratios.
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
25. LIABILITIES OF BUSINESS ACQUISITIONS
This amount represents the Company's obligation under the Promissory Notes issued to the Selling Stockholders
of Pramindo in respect of the Company's acquisition of 100% of Pramindo, to the Selling Stockholders of AWI
in respect of the Company's acquisition of 100% of AWI, to TM Communication (HK) Ltd. in respect of the
Company's exercise of the Option Agreement to purchase the remaining 9.68% of Dayamitra shares and to MGTI in
respect of the Company's acquisition of KSO IV.
2003 2004
Pramindo transaction (Note 4b)
France Cables et Radio S.A. 646,100 -
PT Astratel Nusantara 565,497 -
Indosat 210,042 -
Marubeni Corporation 129,220 -
International Finance Corporation, USA 48,457 -
NMP Singapore Pte. Ltd. 16,157 -
Less discount on promissory notes (80,184) -
1,535,289 -
AWI transaction (Note 4c)
PT Aria Infotek 483,955 479,373
The Asian Infrastructure Fund 115,227 114,136
MediaOne International I B.V. 322,636 319,582
Less discount on promissory notes (122,358) (90,173)
799,460 822,918
Dayamitra transaction (Note 4a)
TM Communication (HK) Ltd. - 139,752
Less discount on promissory notes - (11,883)
- 127,869
KSO IV transaction (Note 4d)
MGTI - 4,305,125
Less discount - (938,687)
- 3,366,438
Total 2,334,749 4,317,225
Current maturity - net of discount (Note 21a) (1,587,775) (573,908)
Long-term portion - net of discount 746,974 3,743,317
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
26. SUPPLIERS' CREDIT LOANS
2003 2004
Tomen Corporation 139,608 -
Cable & Wireless plc 26,021 -
Total 165,629 -
Current maturities (164,958) -
Long-term portion 671 -
a. Tomen Corporation ('Tomen')
Dayamitra entered into a Design, Supply, Construction and Installation Contract dated November 18, 1998 with
Tomen, the ultimate holding company of TMC, one of the former stockholders of Dayamitra. Under the terms of
the contract, Tomen is responsible for the construction of the minimum new installations required under the
KSO VI Agreement in which Dayamitra is the investor.
In connection with the above agreement, Dayamitra entered into a Supplier's Credit Agreement ('SCA')
with Tomen on November 18, 1998. The total commitment under the SCA was US$54.0 million of which
US$50.4 million had been drawn down before the expiration date of the available credit on September 30,
1999.
Interest accrues on the amounts drawn down at LIBOR plus 4.5% per annum, and is payable semiannually in
arrears. Annual interest rates in 2003 and 2004 ranged from 5.53% to 5.92% and from 5.52% to 5.72%,
respectively.
The SCA loan is repayable in ten semi-annual installments commencing on December 15, 2000. The SCA contains
a minimum fixed repayment schedule, however, additional principal repayments are required on repayment dates
in the event that Dayamitra has excess cash, as defined in the SCA. The SCA loan is secured on a pro rata
basis by the security rights provided under the C&W plc bridging facility loan (Note 27). On May 10, 2004,
the loan was repaid and the loan agreement was terminated on November 9, 2004.
b. Cable and Wireless plc ('C&W plc')
Dayamitra entered into a Supplier's Credit Agreement ('SCA') with C&W plc on May 19, 1999.
The SCA loan is repayable in ten semi-annual installments commencing on December 15, 2000. The SCA loan
contains a minimum fixed repayment schedule, however, additional principal repayments are required on
repayment dates in the event that Dayamitra has excess cash, as defined in the SCA. Interest on this loan is
at the rate of LIBOR plus 4.5%. Annual interest rates in 2003 and 2004 ranged from 5.53% to 5.92% and from
5.22% to 5.72%, respectively.
The SCA loan is secured on a pro rata basis by the security rights provided under the C&W plc bridging
facility loan. In addition, any distributions to stockholders in the form of dividends or repayments of
share capital require the written consent of Tomen and C&W plc. On May 10, 2004, the loan was repaid and the
loan agreement was terminated on November 9, 2004.
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
27. BRIDGING LOAN
2003 2004
Total outstanding amount 50,365 -
Current maturities (49,855) -
Long-term portion 510 -
This loan is owed by Dayamitra to C&W plc under a bridging loan facility which was assigned from three local
Indonesian banks. The loan is repayable in ten semi-annual installments commencing on December 15, 2000.
Interest is payable on a monthly or a quarterly basis, at the option of Dayamitra, at the rate of LIBOR plus
4% per annum. Annual interest rates in 2003 and 2004 ranged from 5.06% to 5.42% and from 5.22% to 5.72%,
respectively.
C&W plc has agreed to the repayment of the bridging loan facility in proportion to the amounts made
available to Dayamitra under this bridging loan facility and the C&W plc and Tomen Supplier's Credit Loans.
The security provided against the bridging loan facility consists of an assignment of KSO revenues, an
assignment of bank accounts, a security interest in Dayamitra's movable assets, an assignment of the Tomen
construction contract, an assignment of proceeds from early termination of the KSO license by the Company,
and an assignment of insurance proceeds.
Distributions to stockholders in the form of dividends or repayment of share capital require the written
consent of C&W plc. On May 10, 2004, the loan was repaid.
28. MINORITY INTEREST
2003 2004
Minority interest in net assets of subsidiaries:
Telkomsel 3,608,874 4,857,089
Infomedia 60,353 80,883
Dayamitra 32,999 -
Indonusa 1,959 -
Napsindo 2,068 -
PII 1,899 456
GSD 3 4
Total 3,708,155 4,938,432
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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
28. MINORITY INTEREST (continued)
2002 2003 2004
Minority interest in net income (loss) of subsidiaries:
Telkomsel 782,870 1,482,897 1,915,543
Infomedia 19,031 22,399 37,088
Dayamitra 15,151 11,584 9,139
Indonusa (6,831) (2,351) (1,959)
Napsindo - (8,541) (2,068)
PII - (2,511) (1,443)
GSD 1 1 1
Total 810,222 1,503,478 1,956,301
29. CAPITAL STOCK
2003
Percentage Total
Description Number of shares of Paid-up
* ownership capital
% Rp
Series A Dwiwarna share
Government of the Republic of Indonesia 1 - -
Series B shares
Government of the Republic of Indonesia 10,320,470,711 51.19 2,580,118
JPMCB US Resident (Norbax Inc.) 1,792,091,302 8.89 448,023
The Bank of New York 1,314,526,816 6.52 328,632
Board of Commissioners:
Petrus Sartono 19,116 - 5
Board of Directors:
Kristiono 25,380 - 6
Garuda Sugardo 16,524 - 4
Guntur Siregar 19,980 - 5
Agus Utoyo 23,652 - 6
Suryatin Setiawan 21,708 - 5
Public (below 5% each) 6,732,784,090 33.40 1,683,196
Total 20,159,999,280 100.00 5,040,000
--------------
* Number of shares has been restated to relect a two-for-one stock split as resolved in the Annual General Meeting
of Stockholders on July 30, 2004 (Note 1b).
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
29. CAPITAL STOCK (continued)
2004
Percentage Total
Description Number of shares of Paid-up
ownership capital
% Rp
Series A Dwiwarna share
Government of the Republic of Indonesia 1 - -
Series B shares
Government of the Republic of Indonesia 10,320,470,711 51.19 2,580,118
JPMCB US Resident (Norbax Inc.) 1,378,468,925 6.84 344,617
The Bank of New York 1,568,517,736 7.78 392,129
Board of Commissioners
Petrus Sartono 19,116 - 5
Board of Directors
Kristiono 25,380 - 6
Suryatin Setiawan 21,708 - 5
Woeryanto Soeradji 16,524 - 4
Public (below 5% each) 6,892,459,179 34.19 1,723,116
Total 20,159,999,280 100.00 5,040,000
30. ADDITIONAL PAID-IN CAPITAL
2003 2004
Proceeds from sale of 933,333,000 shares in excess of par value through 1,446,666 1,446,666
initial public offering in 1995
Capitalization into 746,666,640 series B shares in 1999 (373,333) (373,333)
Total 1,073,333 1,073,333
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
31. DIFFERENCE IN VALUE OF RESTRUCTURING TRANSACTIONS BETWEEN ENTITIES UNDER
COMMON CONTROL
On April 3, 2001, the Company signed a Conditional Sale and Purchase Agreement with Indosat, for a series of
transactions to consolidate their cross-ownership in certain companies. The transactions under the agreement
are as follows:
i. Acquisition by the Company of Indosat's 35% equity interest in Telkomsel for US$945.0 million ('
Telkomsel Transaction');
ii. Acquisition by Indosat of the Company's 22.5% equity interest in PT Satelit Palapa Indonesia ('
Satelindo') for US$186.0 million ('Satelindo Transaction');
iii. Acquisition by Indosat of the Company's 37.66% equity interest in PT Aplikanusa Lintasarta ('
Lintasarta') for US$38.0 million plus convertible bonds of Rp4,051 million issued by Lintasarta ('
degreesLintasarta 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$375.0 million ('KSO IV Transaction').
Lintasarta's convertible bonds were subsequently converted into shares, thereby reducing the Company's
37.66% equity interest to 37.21% prior to the consummation of the Lintasarta Transaction.
The Telkomsel and Lintasarta Transactions were consummated on May 16, 2001 based on Deed of Share Transfer
No. 1/V/2001/triplo and No. 2/V/2001/duplo, respectively, of Notary Ny. Liliana Arif Gondoutomo, S.H.
The Satelindo Transaction was consummated on July 23, 2001 after DeTeAsia Holding GmbH and PT Bimagraha
Telekomindo (the other Satelindo stockholders) waived their pre-emptive rights on 7.26% and 13.06% of
Satelindo's shares, respectively.
On February 1, 2002, the Company and Indosat announced the cancellation of the KSO IV Transaction. As a
result, the Company settled this portion of the cross-ownership transaction in cash.
At the time of the transaction, the Government was the majority and controlling shareholder of both the
Company and Indosat. Accordingly, the Telkomsel, Satelindo and Lintasarta Transactions have been accounted
for as a restructuring of entities under common control. The Company's acquisition of a controlling interest
in Telkomsel was accounted for in a manner similar to that of pooling of interests accounting (carryover
basis). Accordingly, for reporting purposes, the financial statements of the Company and those of Telkomsel
have been combined, as if they had been combined from the beginning of the earliest period presented. The
effects of the transactions between the Company and Telkomsel before the combination were eliminated in
preparing the combined financial statements. 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,
is included as a component of stockholders' equity as 'Difference in value of restructuring
transactions between entities under common control', as follows:
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
31. DIFFERENCE IN VALUE OF RESTRUCTURING TRANSACTIONS BETWEEN ENTITIES UNDER COMMON CONTROL (continued)
Historical
Consideration amount of
paid/ net assets/ Deferred Change
(received) investment income tax in equity Total Tax Net
Cross-ownership
transactions
with Indosat in
2001:
Acquisition of 10,782,450 1,466,658 337,324 - 8,978,468 - 8,978,468
35% equity
interest in
Telkomsel
Sale of 22.5% (2,122,260) - - (290,442) (2,412,702) (627,678) (1,785,024)
equity interest
in Satelindo
Sale of 37.66% (437,631) 116,834 - - (320,797) (119,586) (201,211)
equity interest
in Lintasarta
Total 8,222,559 1,583,492 337,324 (290,442) 6,244,969 (747,264) 6,992,233
Acquisition of
13% equity
interest in
Pramindo in
2002 from
Indosat (Note
4b): 434,025 137,987 - - 296,038 - 296,038
Total 8,656,584 1,721,479 337,324 (290,442) 6,541,007 (747,264) 7,288,271
32. TELEPHONE REVENUES
2002 2003 2004
Fixed lines
Local and domestic long-distance usage 5,447,925 6,561,800 7,439,310
Monthly subscription charges 1,474,823 1,948,830 2,934,899
Installation charges 130,234 223,130 201,313
Phone cards 29,265 34,371 15,561
Others 181,852 128,734 53,938
Total 7,264,099 8,896,865 10,645,021
Cellular
Air time charges 5,453,597 7,677,884 9,825,738
Monthly subscription charges 593,347 580,550 448,472
Connection fee charges 172,302 194,053 55,797
Features 7,555 6,343 91,291
Total 6,226,801 8,458,830 10,421,298
Total Telephone Revenues 13,490,900 17,355,695 21,066,319
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
33. INTERCONNECTION REVENUES - NET
2002 2003 2004
Cellular 2,241,533 3,908,292 5,351,613
International 389,255 184,097 641,210
Other 200,546 69,759 195,158
Total 2,831,334 4,162,148 6,187,981
34. REVENUE UNDER JOINT OPERATION SCHEMES
2002 2003 2004
Minimum Telkom Revenues 1,319,715 899,862 295,955
Share in Distributable KSO Revenues 801,010 583,012 349,528
Amortization of unearned initial investor payments under Joint 7,420 3,433 11,131
Operation Schemes
Total 2,128,145 1,486,307 656,614
Distributable KSO Revenues represent the entire KSO revenues, less MTR and operational expenses of the KSO
Units. These revenues are shared between the Company and the KSO Investors based upon agreed percentages (Note
49).
The Minimum Telkom Revenue and Share in Distributable KSO Revenues decreased in 2003 and 2004 due to the
acquisitions and consolidations of AWI, the investor in KSO III (Note 4c), and KSO IV (Note 4d).
35. DATA AND INTERNET REVENUES
2002 2003 2004
SMS 997,249 2,205,058 3,562,726
Multimedia 337,796 494,747 813,330
VoIP 152,195 328,284 318,854
ISDN 64,386 80,473 113,832
Total 1,551,626 3,108,562 4,808,742
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
36. NETWORK REVENUES
2002 2003 2004
Satellite transponder lease 190,220 270,860 210,901
Leased lines 125,878 247,005 443,408
Total 316,098 517,865 654,309
37. REVENUE-SHARING ARRANGEMENT REVENUES
2002 2003 2004
Revenue-Sharing Arrangement revenues 211,483 200,085 198,543
Amortization of unearned income (Note 12) 52,271 58,379 82,033
Total 263,754 258,464 280,576
38. OPERATING EXPENSES - PERSONNEL
2002 2003 2004
Salaries and related benefits 1,410,670 1,574,181 1,796,914
Vacation pay, incentives and other benefits 655,518 816,055 1,156,069
Early retirements 717,289 355,735 243,466
Net periodic post-retirement benefit cost (Note 46) 616,512 641,435 492,240
Net periodic pension cost (Note 44) 362,298 190,974 1,034,806
Employee income tax 201,468 468,805 523,787
Long service awards (Note 45) 289,922 219,239 159,323
Housing 89,495 116,858 103,459
Medical 28,209 9,682 12,190
Other employee benefits (Note 44) - 4,439 11,510
Others 16,187 42,693 37,014
Total 4,387,568 4,440,096 5,570,778
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
39. OPERATING EXPENSES - OPERATIONS, MAINTENANCE AND TELECOMMUNICATION SERVICES
2002 2003 2004
Operations and maintenance 1,042,588 1,744,806 2,398,159
Radio frequency usage charges 292,703 371,740 492,568
Electricity, gas and water 219,913 300,432 385,662
Cost of phone cards 197,683 181,272 366,661
Concession fees 163,891 238,979 314,741
Insurance 142,932 157,075 151,297
Leased lines 103,643 127,021 132,829
Vehicles and supporting facilities 79,961 115,697 181,737
Travelling 16,523 29,815 42,213
Others 30,382 71,856 63,720
Total 2,290,219 3,338,693 4,529,587
40. OPERATING EXPENSES - GENERAL AND ADMINISTRATIVE
2002 2003 2004
Professional fees 218,949 115,598 137,355
Collection expenses 224,782 273,767 358,957
Amortization of goodwil and other intangible assets (Note 14 187,990 730,659 872,330
Training, education and recruitment 122,045 126,927 228,524
Travel 111,427 144,677 192,567
Security and screening 77,103 110,278 143,892
General and social contribution 69,419 113,785 111,838
Printing and stationery 43,513 50,535 80,972
Meetings 31,719 42,813 58,333
Provision for doubtful accounts and inventory obsolescence 31,103 326,419 357,695
Research and development 10,483 9,111 13,225
Others 17,761 34,208 44,159
Total 1,146,294 2,078,777 2,599,847
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
41. INCOME TAX
2003 2004
a. Prepaid taxes
The Company
Refundable corporate income tax - overpayment 38,370 38,370
38,370 38,370
Subsidiaries
Corporate income tax 2,443 34,515
Value added tax 171,469 4,343
173,912 38,858
212,282 77,228
b. Taxes payable
The Company
Income tax
Article 21 91,229 35,970
Article 22 2,577 3,057
Article 23 19,131 25,223
Article 25 87,219 94,857
Article 26 7,045 31,165
Article 29 363,566 508,909
Value added tax 120,206 101,683
690,973 800,864
Subsidiaries
Income tax
Article 4 4,012 4,437
Article 21 47,265 38,853
Article 22 765 930
Article 23 66,793 46,636
Article 25 66,289 151,318
Article 26 39,488 9,515
Article 29 498,826 427,641
Value added tax 98,627 112,285
822,065 791,615
1,513,038 1,592,479
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
41. INCOME TAX (continued)
c. The components of income tax expense (benefit) are as follows:
2002 2003 2004
Current
The Company 1,671,104 1,886,283 1,922,238
Subsidiaries 1,076,658 1,904,997 2,344,873
2,747,762 3,791,280 4,267,111
Deferred
The Company (153,019) (198,719) (506,084)
Subsidiaries 304,228 268,529 242,045
151,209 69,810 (264,039)
2,898,971 3,861,090 4,003,072
d. Corporate income tax is computed for each individual company as a separate legal entity (consolidated
financial statements are not applicable for computing corporate income tax).
The reconciliation of consolidated income before tax to income before tax attributable to the Company and
the components of consolidated income tax expense are as follows:
2002 2003 2004
Consolidated income before tax 11,748,902 11,451,795 12,088,582
Add back consolidation eliminations 2,554,407 3,332,176 3,936,524
Consolidated income before tax and 14,303,309 14,783,971 16,025,106
eliminations
Deduct income before tax of the (4,745,515) (7,009,179) (8,485,296)
subsidiaries
Income before tax attributable to the 9,557,794 7,774,792 7,539,810
Company
Less: Income subject to final tax - (279,142) (206,601)
9,557,794 7,495,650 7,333,209
Tax calculated at progressive rates 2,867,321 2,248,678 2,199,945
Non-taxable income (1,785,208) (1,017,791) (1,181,983)
Non-deductible expenses 469,464 328,835 345,674
Deferred tax (assets) liabilities (40,252) 71,144 (14,940)
originating from previously unrecognized
temporary differences, net
Deferred tax assets that cannot be 6,760 - 24,045
utilized, net
Corporate income tax expense 1,518,085 1,630,866 1,372,741
Final income tax expense - 56,698 43,413
Total income tax expense of the Company 1,518,085 1,687,564 1,416,154
Income tax expense of the subsidiaries 1,380,886 2,173,526 2,586,918
Total consolidated income tax expense 2,898,971 3,861,090 4,003,072
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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
41. INCOME TAX (continued)
d. The reconciliation of consolidated income before tax to income before tax attributable to the Company and the
components of consolidated income tax expense are as follows (continued):
2002 2003 2004
Income before tax attributable to 9,557,794 7,774,792 7,539,810
the Company
Less: Income subject to final tax - (279,142) (206,601)
9,557,794 7,495,650 7,333,209
Temporary differences:
Depreciation of property, plant and (170,134) 442,029 415,805
equipment
Gain on sale of property, plant and 14,774 (25,495) (12,874)
equipment
Allowance/(write back) for doubtful (156,223) 166,341 491,577
accounts
Accounts receivable written-off (82,474) (79,728) (91,865)
Allowance for inventory obsolescence 10,099 5,543 11,385
Inventory written-off (15,223) (693) -
Provision for early retirement 530,981 (538,170) (132,810)
benefits
Provision for bonus - 262,082 (139,064)
Net periodic pension cost 58,226 (271,503) 197,591
Long service awards 213,397 (15,617) 75,554
Amortization of intangible assets - 751,927 851,060
Amortization of deferred stock (17,942) - -
issuance costs
Amortization of landrights (1,524) (2,356) (3,419)
Provision for impairment of 6,401 (6,401) -
property, plant and equipment
Gain on sale of long-term - (171,334) -
investments
Temporary differences of KSO units 6,317 4,782 -
Depreciation of property, plant and 11,576 63,424 82,415
equipment under revenue-sharing
arrangements
Amortization of unearned income on (7,998) (58,379) (82,033)
revenue-sharing arrangements
Revenue from transfer of property, 765 34,828 -
plant and equipment under
revenue-sharing arrangements
Interest income/receivable - (45,835) 45,835
Equity in net loss of associated 41,178 - -
companies
Payments of liability of business - - (233,337)
acquisition and the related interest
Consultant fees for acquisition of - - (27,797)
business
Unrealized foreign exchange loss on - - 342,073
liability of business acquisitions
Foreign exchange losses capitalized - - (74,283)
to property under construction
Total temporary differences 442,196 515,445 1,715,813
90
Table of Contents
PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
41. INCOME TAX (continued)
d. The reconciliation of consolidated income before tax to income before tax attributable to the Company and the
components of consolidated income tax expense are as follows (continued):
2002 2003 2004
Permanent differences:
Net periodic post-retirement benefit cost 611,992 634,385 484,462
Amortization of goodwill and intangible 187,990 21,270 21,270
assets
Amortization of discount on promissory 173,794 224,931 109,786
notes
Tax penalties 216,198 - 14,645
Equity in net income of associates and (2,238,300) (3,313,831) (3,939,944)
subsidiaries
Gain on sale of long-term investments (3,166,086) (38,425) -
Interest income (359,049) - -
Amortization of unearned income on (44,273) - -
revenue-sharing arrangements
Income from land/building rental (65,175) (40,380) -
Others 253,322 599,631 523,568
Total permanent differences (4,429,587) (1,912,419) (2,786,213)
Taxable income subject to corporate 5,570,403 6,098,676 6,262,809
income tax
Corporate income tax expense 1,671,104 1,829,585 1,878,825
Final income tax expense - 56,698 43,413
Total current income tax expense of the 1,671,104 1,886,283 1,922,238
Company
Current income tax expense of the 1,076,658 1,904,997 2,344,873
subsidiaries
Total current income tax expense 2,747,762 3,791,280 4,267,111
In 2002, the Company received an Underpayment Tax Assessment Letter (SKPKB) from the Tax Service Office for
its corporate income tax for fiscal years 2000 and 2001 amounting to Rp34,489 million and Rp19,568 million,
respectively. The additional tax due was settled in December 2002 and the difference between the recorded
amount of tax liabilities/prepayments and the amount assessed by the Tax Service Office was charged to the
2002 statement of income.
In 2003, Telkomsel received tax assessment letters for all taxes covering the fiscal years 2000 and 2001.
Telkomsel filed an objection on a portion of the 2001 assessments which was partly approved by Director of
General of Taxes. As a result, Telkomsel charged tax underpayments to expense in 2003 amounting to Rp32,283
million.
91
Table of Contents
PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2004, AND FOR YEARS ENDED
DECEMBER 31, 2002, 2003 AND 2004
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)
41. INCOME TAX (continued)
e. Deferred tax assets and liabilities
The details of the Company's and subsidiaries' deferred tax assets and liabilities are as follows:
(Charged)/
Acquisition credited
December 31, of to statements December 31,
2002 AWI of income 2003
The Company
Deferred tax assets:
Allowance for doubtful 101,389 - 17,456 118,845
accounts
Allowance for 10,507 - 1,020 11,527
inventory obsolescence
Provision for 1,920 - (1,920) -
impairment of
property, plant and
equipment
Landrights 161 - (707) (546)
Long-term investments 52,605 - (52,605) -
Provision for early 201,294 - (161,451) 39,843
retirement benefits
Provision for employee - - 84,385 84,385
bonuses
Provision for long 146,769 - (4,685) 142,084
service awards
Total deferred tax 514,645 - (118,507) 396,138
assets
Deferred tax
liabilities:
Interest receivables - - (13,750) (13,750)
Long-term investments - - (14,138) (14,138)
Difference between (1,729,436) (29,989) 190,750 (1,568,675)
book and tax property,
plant and equipment's
net book value
Revenue-sharing (18,119) - (40,334) (58,453)
arrangements
Intangible assets (1,208,652) (594,771) 275,625 (1,527,798)
Net periodic pension (7,988) - (80,927) (88,915)
cost
Total deferred tax (2,964,195) (624,760) 317,226 (3,271,729)
liabilities
Deferred tax (2,449,550) (624,760) 198,719 (2,875,591)
liabilities of the
Company, net
Deferred tax (633,616) 230,966 (268,529) (671,179)
liabilities of the
subsidiaries, net
Total deferred tax (3,083,166) (3,546,770)
liabilities, net
92
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