Telekomunikasi Indsa

Annual Report & Accounts P2

Telekomunikasi Indonesia (Persero)
6 May 2005


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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)

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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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)


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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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)


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.

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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)


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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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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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)

     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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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)


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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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)


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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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)


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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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

      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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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)

        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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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 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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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)

        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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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)

     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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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)

     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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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)

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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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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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)

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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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)

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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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)

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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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)

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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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)

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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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)

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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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

                                                                                                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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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)

     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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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

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


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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)

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.

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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)


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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