Telkom Indonesia Annual Report 2014

FY2014 Annual Report · Telkom Indonesia

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2014 Annual Report

SUSTAINABLE COMPETITIVE GROWTH
Through Digital Business

SUSTAINABLE
COMPETITIVE GROWTH
THROUGH DIGITAL BUSINESS

Investing in the digital business is a necessity for us to improve
our competitiveness while maintaining sustainable growth in the
future. In 2014, one of our main programs was to continue
developing infrastructure to support growth of the digital business.

We have continued to develop our optical fiber-based access
network, which at the end of 2014 had 13.2 million homes passed.
Subsequently, weplan to deploy optical fiber connections to
homes and buildings to revive ourfixed line business.

In the cellular business unit, during 2014 we have built 15,556
new BTS, 75% of which are 3G/4G BTS. At the end of 2014, we
had 85,420 BTSs, of which 45% were 3G/4GBTSs. Our BTS
infrastructure demonstrates our superiority in terms of coverage
and capacity and also reflects our commitment to provide the
best digital experience. Telkomsel is the first commercial operator
in Indonesia to provide 4G services to further enhance the digital
experience of our customers. In addition, we have also installed
170,000 Wi-Fi access points to help off-load our mobile customer
data traffic.

Our fixed line broadband services and Telkomsel's cellular services
are supported by a superior backbone network. At the end of
2014, we have built 76,700 kilometers of fiber-optic backbone
network. We are continuing to build our backbone network so
as to eventually reach all parts of the archipelago. We have also
built a 54,800 m2 data center to support cloud computing
services (cloud services).

We seek to provide a comprehensive range of services to meet
customer needs by developing digital services, through various
content and applications that can support their digital lifestyle.
These are important parts of our efforts to generate demand for
increasingly more data traffic, accompanied by various programs
to accelerate the use of smart devices.

Our efforts in building broadband infrastructure, coupled with
various supporting strategies, have shown positive results of high
growth in revenue from the digital business, with its contribution
to total revenue also increasing significantly. Digital business will
be the Company’s driver of future growth.

We are on the right track towards becoming a digital company

and simultaneously helping to realize the digital society.

ANNUAL REPORT THEME
CONTINUITY
We are consistently on our strategic measure to build a sustainable
competitive growth. This is reflected on our Annual Reports theme
continuity:

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Annual Report 2010

PT TELEKOMUNIKASI INDONESIA, Tbk.

Investor Relations

Grha Citra Caraka 5th Floor

Jl. Jend. Gatot Subroto Kav. 52

Jakarta 12710

Tel.

: (62-21) 521 5109

Fax.

: (62-21) 522 0500

e-mail : investor@telkom.co.id

IDX

: TLKM

NYSE : TLK

LSE

: TKIA

www.telkom.co.id

PT TELEKOMUNIKASI INDONESIA, Tbk.

Annual Report
2010

Moving Forward Beyond
Telecommunications

2012 Annual Report
PT Telekomunikasi Indonesia, Tbk

Bringing
Indonesia
to the Digital Society

Your Future

Starts Today

2011 Annual Report
PT TELEKOMUNIKASI INDONESIA, Tbk.

Melangkah Melampaui Batas Telekomunikasi

2010:

2011

2012

Your Future Starts Today

Moving Forward Beyond
Telecommunications

Bringing Indonesia to the
Digital Society

With focus on TIME (telecommunication,
information, media & edutainment)
services, we are committed to ensuring
that every customer can enjoy the lifestyle
of the future, starting today.

The advances in broadband technology-
based further narrow the distance
between users. We take this opportunity
to strengthen the infrastructure of
broadband-based to support innovation
of services and products leading to
Information, Media, and Edutainment
(“IME").

We pioneered the digital society in
Indonesia with a focus on service
implementation of Telecommunications,
Information, Media, Edutainment and
Services ("TIMES"), including the
development of Indonesia Digital
Network.

2013 Annual Report

PT Telekomunikasi Indonesia, Tbk

PT Telekomunikasi Indonesia, Tbk.

Investor Relations
Grha Merah Putih 5th floor
Jl. Jend. Gatot Subroto Kav. 52
Jakarta 12710, Indonesia

T +62 21 521 5109
F +62 21 522 0500
email : investor@telkom.co.id

IDX : TLKM
NYSE : TLK
LSE : TKID

www.telkom.co.id

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2013 Annual Report
PT Telekomunikasi Indonesia, Tbk

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2014 Annual Report

• Telkom’s Solid
Profitability

Increasing in Net
Income

Rp 14.2 trillion

10.5%

• Increasing
number of
customers above
Industry

Increasing number of
cellular subscribers

131.5 million

5.1%

Increasing number of
broadband subscribers

27.8 million

45.4%

Increasing number of
Fixedline subscribers

9.3 million

4.5%

Creating Global Talents
and Opportunities

• Network

Strengthening

Number of BTS

75,579 BTS

25.9%

SUSTAINABLE COMPETITIVE GROWTH
Through Digital Business

2013

Creating Global Talents
and Opportunities

International expansion has become a
necessity for us to be able to maintain
a high and sustainable growth rate. This
strategic initiative has led us achieve
double-digit growth and solidify us as
dominant TIMES service provider
Company in Indonesia and taken into
account in the regional area.

2014
Sustainable
Competitive Growth
Through Digital
Business

We are responding to global
market challenges by
transforming ourselves into a
digital business so that we
remain able to grow
competitively and sustainably.

Toward "The King of Digital"

TELKOM'S
MAIN PROGRAMS

Dealing with the dynamic and fast-changing challenges
of the telecommunication, information technology and
media industries, we are focusing our business strategy
on 3 main programs that we call Telkom’s Masterpieces
in 2014.

1. Telkomsel Double Digit Revenue Growth

With our leading-edge infrastructure, both in coverage and capacity, as well as analytical capabilities,
we can position ourselves as the cellular operator with a double-digit revenue growth. To ensure
the achievement of double-digit revenue growth, we are currently prioritizing the deployment of
our fiber network over Telkomsel's BTS in order to consistently improve our data service quality.

2. Indonesia Digital Network (IDN) 2015

IDN 2015 is our vision of a true end-to-end broadband infrastructure development from the end
user terminal, access network, transport network to the services. IDN 2015 was developed to enable
equal access, and to improve the quality, and increase the capacity, of broadband infrastructure in
all parts of Indonesia.

3. International Expansion

International expansion is one of the steps to realize our objective "To Become a leading TIMES
player in the region". We are developing and expanding our business outside of Indonesia to broaden
and diversify our market. By expanding internationally, we are also preparing our human resources
to be ready in facing the ASEAN Economic Community which will begin by the end of 2015.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Telkomsel
Double Digit
Revenue
Growth

2014 Annual Report

PT Telkom Indonesia Tbk (Persero)

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESTelkomsel is the main backbone to our revenue, contributing up
to 60% of our consolidated revenues. To maintain its position as
the main contributor, Telkomsel is committed to continuing
developing its infrastructure, particularly broadband infrastructure,
with the aim of improving its service quality and coverage.
Telkomsel is also adopting state-of-the-art technology to improve
customers’ experience. We have therefore supported Telkomsel
in developing its business by allocating the largest portion of
our capital expenditure to strengthen its business to maintainan
above industry average growth.

Triple double-digit growth
- 10.4% in Revenues
- 10.0% in EBITDA
- 11.9% in Net Income

The first mobile operator to
commercially market the 4G
LTE in Indonesia

15,500 new BTS (75% 3G BTS)
Total BTS reached 85,420 units

2014 Annual Report

PT Telkom Indonesia Tbk (Persero)

2014 Annual Report PT Telkom Indonesia Tbk (Persero)IDN Indonesia Digital Network

2020

Telkom Master Plan to Realize
Broadband Network Digital Ecosystem

Smart City (county town)
Accelerating digital creative community
Nationwide ecosystem-based apps (e-health, e-tourism, etc)

100% broadband in sub-district
Mobile signal 100% in village
100.000km Fiber Optic

30 million household fixed broadband
200 mobile broadband cities

Build
Ecosystem

Service

Deploy
Infrastructure

Backbone

Access

Internet Cloud

Telkom Cloud

IP & Optical Transport

Fixed
Broadband

WiFi

Mobile
Broadband

Convergence
Digital
Innovation

Nationwide
Broadband
Backbone

True
Broadband
Access

2014 Annual Report PT Telkom Indonesia Tbk (Persero)International Expansion

Perancis

Italia

Mesir

Yaman

Djibouti

Sri Lanka

Batam

SEA-ME-WE 5
(South East Asia-Middle East-Western Europe 5)

SEA-US
(South East Asia-United States)

Guam

Filipina

Manado

IGG
(Indonesia Global Gateway)

Telekomunikasi Indonesia International Pte. Ltd.
(“Telin Singapore”)
Singapore

Telekomunikasi Indonesia International (Hong Kong) Limited.
(“Telin Hong Kong”)
Hong Kong

Telekomunikasi Indonesia International (TL) S.A.
(“Telin Timor Leste”)
Dili – Timor Leste

presence in the region with a profitable business model and well-managed risks. We operate Mobile

Virtual Network Operator (MVNO) schemes in 4 countries, namely Malaysia, Hong Kong, Macau, and

Saudi Arabia. We also operate a Mobile Network Operator (MNO) in Timor Leste, provide Business Process

Outsourcing (BPO) services in Australia and New Zealand, and have other telecommunications-related

businesses in Taiwan, Myanmar and the United States. The international markets offer significant business

opportunities.

In addition, to develop Indonesia into a “hub” for data communication traffic in the region, we are

developing the Indonesia Global Gateway (IGG) to connect Indonesia to Middle East and West Europe

via the SEA-ME-WES submarine cable communications system, and to connect Indonesia to the United

States via the SEA-US submarine cable communications system.

Los Angeles

Hawaii

Telekomunikasi Indonesia International Pty Ltd.,Australia
(“Telkom Australia”)
Melbourne – Australia

Telkom Macau Limited
Macau

Telkom Taiwan Limited
Taipe City – Taiwan

Telekomunikasi Indonesia International (USA) Inc.
Los Angeles – Amerika Serikat

Telekomunikasi Indonesia
International (Malaysia) Sdn. Bhd.
Kuala Lumpur – Malaysia

Telin's Branch in Myanmar
Yangon – Myanmar

Launching SIM Card co-branding “simPATI Saudi”
Riyadh - Arab Saudi

2014 Annual Report PT Telkom Indonesia Tbk (Persero)TAble of conTenTs

00 PREFACE
00 TELKOM'S AR THEME

01 TELKOM’S THREE MAIN PROGRAMS

09 ANNUAL REPORT HIGHLIGHTS

10 ANNUAL REPORT SUMMARY

13 FINANCIAL AND PERFORMANCE HIGHLIGHTS
14 Financial Highlights

16 Business and Operational Highlights

18 Stock Highlights

20 Bond Highlights

21 Dividend Highlights

03 23 MANAGEMENT REPORT

24 Report of the Board of Commissioners

30 Report of the President Director

39 GENERAL INFORMATION OF TELKOM INDONESIA
40 Telkom Indonesia Highlights

58 Products and Services

42 Telkom Indonesia Profile

60 Trademarks, Copyrights, Industrial

44 Telkom Indonesia Milestones

46 Awards and Certifications

50 Significant Events 2014

Designs and Patents

62 Management of Telkom Indonesia

76 Telkom Business Group

54 Corporate Identity of Telkom Indonesia

84 Stock Overview

55 Vision and Mission

56 Culture Values

58 Articles of Association

91 Capital Market Supporting Professional

92 Capital Market Trading Mechanism and

Telkom ADS

94 Addresses of Telkom Indonesia

99 MANAGEMENT DISCUSSION AND ANALYSIS OF

TELKOM INDONESIA PERFORMANCE

101 Economic and Industry Overview

106 Business Overview

119 Financial Overview

150 Operational Overview

158 Functional Overview

2014 Annual Report PT Telkom Indonesia Tbk (Persero)06 175 CORPORATE GOVERNANCE

177 Concept and Foundation
177 Corporate Governance Awards
178 Rating and Assessment Of Corporate

Governance

178 Road Map and Strengthening of Corporate

Governance

180 Corporate Governance Framework
181 Corporate Governance Structure
237 Risk Management
260 Legal Matters

262 Acces and Transparation Information
268 Relationship with Stakeholders
269 Business Ethics and Corporate Culture
271 Whistleblowing System
273 Corporate Governance Socialization
275 Consistency in Implementing GCG
280 Summary of Significant Differences

Between Indonesian Corporate Governance
Practices and The NYSE’s Corporate
Governance Standards

07 283 SOCIAL AND ENVIRONMENTAL

288 Corporate Social Responsibility Awards 2014

284 Telkom Commitment to Social Responsibility

RESPONSIBILITY

289 Achievement of Performance Based on ISO 26000 CSR

290 CSR Activities and Programs

08 309 APPENDICES

310 Definitions

316 Cross Reference to Bapepam-LK Regulation No.X.K.6

ANNUAL REPORT TELKOM HIGHLIGHTS

PT Telkom Indonesia Tbk (Persero), or referred to as "Telkom", "Company",

This Annual Report contains statements that are forward looking,

or "we", presents the Annual Report for the year ended on December

including expectations and projections about the operating performance

31, 2014, prepared in accordance with the Decree of the Financial Services

and business prospects in the future. Statements such as these generally

Authority ("OJK"), replacement of Bapepam-LK number X.K.6 and X.K.7.

uses words such as "believe", "expect", "anticipate", "estimate", "projecting"

Certain sections of this Annual Report also contains information published

or other similar words. In addition, all statements that are not historical

in the Form 20-F according to the regulation of the Securities and

facts, in this Annual Report can be categorized as forward-looking

Exchange Commission ("SEC") the United States. However, no part of

statements. Although we believe that the expectations in the statement

this document are combined to refer to the Form 20-F. The information

containing the forward looking is quite reasonable, We can not guarantee

and data presented in this Annual Report is sourced on the Company's

that these expectations will prove correct. Statements containing forward

consolidated financial data and its subsidiaries.

looking contains risks and uncertainties, including the effect of changes

The term "Indonesia" in this Annual Report 2014 refers to the Republic

section "Risk Management" and other sections of this Annual Report

of Indonesia while the "Government" means the Government of Indonesia,

disclosed the important factors that could cause actual results that

in the economic, political and social environment in Indonesia. In the

and the "United States" or "US" means the United States. The mentioning

differ materially from our expectations.

of the currency unit of "Rupiah" or "Rp" refers to the lawful currency of

Indonesia, while "US Dollar" or "US$" are to the lawful currency of the

For more information about Telkom’s Annual Report, you can contact

United States. Certain figures (including percentages) have been rounded.

our Investor Relations at Graha Merah Putih 5th Floor, Jl. Jend. Gatot

Unless otherwise stated, all financial information is presented in Rupiah

Subroto Kav. 52 Jakarta 12710, Indonesia. Tel: +62-21-5215 109, Fax: +62-

in accordance with Indonesia Financial Accounting Standards ("IFAS").

21-5220 500 or e-mail: investor@telkom.co.id. You can also download

this document online through our website at http://www.telkom.co.id

2014 Annual Report PT Telkom Indonesia Tbk (Persero)AnnUAl RePoRT sUMMARY

Telkom's Achievement in 2014
In 2014, we were able to record an excellent performance, achieving
growth above the industry average. This achievement is a result
of our investment in developing broadband infrastructure and a
manifestation of our commitment to become a leading player in
the digital business. In 2014, the contribution of our digital business
revenue increased significantly to 32.5% compared to 28.2% in
the previous year.

8.1%

Asset
Rp140.9 trillion

10.1%

Mobile
Data Users

Numbers of
cellular
BTS

67.9 million

12.1%

85,420 BTS

22.3%

2014 Annual Report PT Telkom Indonesia Tbk (Persero)02

FINANCIAL AND
PERFORMANCE
HIGHLIGHT

14 Financial Highlights

16 Business and Operational Highlights

18 Stock Highlights

20 Bond Highlights

21 Dividend Highlights

fInAncIAl HIGHlIGHT

Consolidated Statements of Comprehensive Income
(in billions of Rupiah, except for net income per share and per ADS)

Total Revenues

Total Expenses

Adjusted EBITDA

Operating profit

Profit for the year

Profit for the year attributable to:

• Owners of the parent company

• Non-controlling interest

Years ended December 31,

2014

2013

2012

2011

2010

89,696

82,967

77,143

71,253

68,629

61,393

57,700

54,005

49,960

46,240

46,508

43,626

40,154

36,821

37,549

29,377

27,846

25,698

21,958

22,937

21,446

20,290

18,362

15,470

15,870

14,638

14,205

12,850

10,965

11,537

6,808

6,085

5,512

4,505

4,333

Total comprehensive income for the year

21,471

20,402

18,388

15,481

15,904

Total comprehensive income attributable to:

• Owners of the parent company

• Non-controlling interest

14,663

14,317

12,876

10,976

11,571

6,808

6,085

5,512

4,505

4,333

Net income per share

149.8

147.4

133.8

111.9

117.3

Net income per ADS (1 ADS : 200 common stock)

29,966.7 29,483.6 26,767.6 22,386.8 23,461.6

Consolidated Statements of Financial Position
(in billions of Rupiah)

Assets

Liabilities

Years ended December 31,

2014

2013

2012

2011

2010

140,895

127,951

111,369

103,054

100,501

54,770

50,527

44,391

42,073

44,086

Equity attributable to owners of the parent company

67,807

60,542

51,541

47,510

44,419

Net working capital (Current Asset - Current Liabilities)

1,976

4,638

3,866

(931)

(1,745)

Investment in associate entities

1,767

304

275

235

254

Capital Expenditures
(in billions of Rupiah)

Telkom

Telkomsel

Others Subsidiaries

Total

Years Ended December 31,

2014

2013

2012

2011

2010

8,099

5,313

4,040

4,202

3,623

13,002

15,662

10,656

8,472

8,197

3,560

3,923

2,576

1,929

831

24,661

24,898

17,272

14,603

12,651

Consolidated Financial and Operational Ratios

Years ended December 31,

Return on Asset (ROA) (%) 1

Return on Equity (ROE) (%) 2

Operating Profit Margin (%) 3

Current Ratio (%) 4

Total Liabilities to Equity (%) 5

Total Liabilities to Total Assets (%) 6

2014

2013

2012

2011

2010

10.4

21.6

32.8

106.2

80.8

38.9

11.1

23.5

33.6

116.3

83.5

39.5

11.5

24.9

33.3

116.0

86.1

39.9

10.6

23.1

30.8

95.8

88.6

40.8

11.5

26.0

33.4

91.5

99.3

43.9

(1) ROA is calculated as profit for the year attributable to owner of the parent company divided by total assets at year end December 31.
(2) ROE is calculated as profit for the year attributable to owners of the parent company divided by total equity attributable to owner of the parent

company at year end December 31.

(3) Operating Profit Margin is calculated as operating profit divided by revenues.
(4) Current Ratio is calculated as current assets divided by current liabilities at year end December 31.
(5) Liabilities to Equity Ratio is calculated as total liabilities divided by total equity attributable to owners of the parent company at year end

December 31.

(6) Liabilities to total assets ratio is calculated as total liabilities divided by total assets at year end December 31.

Adjusted EBITDA

(in billions of Rupiah)

Adjusted EBITDA: including gain (loss) an foreign
exchange - net and other income (expenses) - net

Net Income

Net Income per share

(in billions of Rupiah)

(in Rupiah)

tessA

ytiuqE

)haipuR fo snoillib ni(

2014 Annual Report

PT Telkom Indonesia Tbk (Persero)

bUsIness AnD oPeRATIonAl HIGHlIGHT

Broadband Subscribers

Fixed broadband (Speedy)

Mobile broadband (Flash)

Blackberry

Total Broadband Subscribers

Cellular Subscribers

Postpaid (kartuHalo)

Prepaid (simPATI, Kartu As)

Total Cellular Subscribers

Fixed Line Subscribers

Fixed wireline

Fixed wireless

Total Fixed Line Subscribers

Other Subscribers

Datacomm

Satellite transponder

Network

BTS

Customer Services

PlasaTelkom

Grapari

Mobile Grapari

Employees

Unit

Years ended December 31,

2014

2013

2012

(000) subscribers

3,400

31,216

5,835

40,451

2,851

137,734

140,585

9,698

4,404

14,102

3,013

17,271

7,556

27,840

2,489

129,023

131,513

9,351

6,766

16,117

2,341

11,039

5,764

19,144

2,149

122,997

125,146

8,946

17,870

26,816

(000) Mbps

(000) MHz

930,327

381,440

281,063

3,560

3,007

2,650

unit

85,420

75,579

60,011

location

unit

people

572

409

268

572

408

268

572

410

25,284

25,011

25,683

* Related to ReFlexi Program, hence since 2014 base stations that we disclose was a cellular BTS

Cellular
Subscribers

(in thousands)

Fixed Wireline
Subscribers

Satellite Transponder
Subscribers

(in thousands)

Employees

(in unit)

(people)

2014 Annual Report PT Telkom Indonesia Tbk (Persero)sTocK HIGHlIGHT

The following figures are the report of the highest, lowest, and closing of stock price, trading volume, outstanding
shares and market capitalization of common stock listed on the Indonesia Stock Exchange ("IDX") for the periods
indicated:

Calendar Year

Price per Share of Common
Stock

High

Low

Closing

(in Rupiah)

Volume
(shares)

Outstanding
Shares

Market
Capitalization
(Rp billion)

2010

2011

2012

2013

2014

2015

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

September

October

November

December

January

February

1,590

28,539,250,000

98,347,123,900

1,410

22,207,895,000

96,931,696,600

1,810

23,002,802,500

95,745,344,100

2,150

27,839,305,000

97,100,853,600

2,200

5,993,025,000

95,745,344,100

160,272

142,128

182,448

216,720

221,760

2,250

8,265,647,500

96,044,401,100

226,800

1,390

1,320

1,330

1,760

1,900

1,950

1,980

2,060

1,960

1,610

1,990

2,580

2,230

2,580

2,450

2,375

3,010

2,420

2,700

3,010

2,930

3,010

2,930

2,830

2,890

2,100

7,206,438,500

97,100,853,600

2,150

6,374,194,000

97,100,853,600

2,865

24,035,761,600

98,175,853,600

2,215

6,647,275,800

97,100,853,600

2,150

2,465

6,736,807,600

98,175,853,600

2,465

2,590

2,675

2,680

2,590

2,725

2,915

5,313,076,900

98,175,853,600

2,865

5,338,601,300

98,175,853,600

2,915

1,769,250,600

98,175,853,600

2,750

2,482,524,900

98,175,853,600

2,825

2,865

1,559,250,500

98,175,853,600

1,296,825,900

98,175,853,600

211,680

216,720

288,792

223,272

248,472

293,832

288,792

293,832

277,200

284,760

288,792

285,264

295,848

2,930

2,780

2,830

1,403,802,200

98,175,853,600

3,020

2,800

2,935

1,785,881,500

98,175,853,600

(1) We conducted a 1:2 ratio of our common stock from a nominal value of Rp500 per share to Rp250 per share as resolved by the AGMS on July

30, 2004, effective October 1, 2004.

(2) We conducted a five for one split of our common stock from a nominal value of Rp250 per share to Rp50 per share as resolved by the AGMS

on April 19, 2013, effective September 2, 2013.

(3) The price per share of the common stock reflects this two splits above for all periods shown.
(4) Market capitalization is multiplying between the share price and issued and fully paid shares which is 100,799,996,400 shares.

On December 30, 2014, the last trading day in the IDX in 2014, the closing price for our common stock was Rp2,865
per share.

Calendar Year

High

Low

Closing

Price per ADS (NYSE)

(in US Dollars)

Volume
in ADS
(shares)

Price per ADS (LSE)

High

Low

Closing

(in US Dollars)

Volume
in ADS
(shares)

2010

2011

2012

2013

43.80

30.33

35.65

69,803,576

42.00

30.76

34.91

19,673

36.96

30.29

30.74

69,279,100

35.89

21.02

30.50

1,406,292

41.14

29.26

36.95

88,190,589

40.12

30.24

36.50

746,278

50.61

33.75

35.85

67,061,105

50.59

33.44

35.33

6,579,103

First Quarter

45.32

36.17

45.08

13,876,752

45.83

37.06

45.28

12,819

Second Quarter

50.61

38.75

42.74

15,688,290

50.59

39.31

45.34

6,465,258

Third Quarter

47.20

34.54

36.31

18,713,653

47.44

35.62

36.27

Fourth Quarter

41.69

33.75

35.85

18,782,410

41.69

33.44

35.33

2014

48.75

33.91

45.23

52,250,948

43.75

38.42

First Quarter

40.59

33.91

39.37

16,346,799

39.55

38.42

39.55

Second Quarter

44.45

39.00

41.66

16,409,533

43.75

39.95

43.00

79,240

21,786

12,008

986

11,022

Third Quarter

48.75

41.69

48.10

9,670,921

Fourth Quarter

48.43

42.29

45.23

9,823,695

September

October

November

December

2015

January

February

48.75

44.85

48.10

2,722,429

48.43

44.26

45.35

4,383,362

46.39

34.70

36.54

5,866,608

46.89

42.29

45.23

3,254,644

47.07

43.84

44.10

3,796,653

45.42

44.82

44.91

128,606

The last trading day in the NYSE in 2014 was on December 31, and the closing price for one Telkom ADS was US$45.23.
Effective from June 5, 2014, due to the low level of our ADSs traded, we delisted our ADSs listing from London Stock
Exchange. The closing price of Telkom ADS last transaction on the LSE for our ADS on June 4, 2014 was US$43.00.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)bonDs HIGHlIGHT

The following table was bond summary:

Bond

Out standing
(Rp million)

Issuance
Date

Maturity
Date

Term
(Year)

Interest
Rate

Underwriter

Trustee

Rating

1,005,000

June 25,
2010

July 6, 2015

9.6%

1,995,000

June 25,
2010

July 6,
2020

10.2%

PT Bahana
Securities; PT
Danareksa
Sekuritas; PT
Mandiri Sekuritas

PT CIMB
Niaga
Tbk

idAAA

PT CIMB
Niaga
Tbk

idAAA

Telkom's
Bond II
2010

Serie A

Telkom's
Bond II
2010

Serie B

The Annual General Meeting of Shareholders (“AGMS”) has the authority to determine the amount of dividends we
pay. Our dividend payout ratio for 2014 will be decided at the AGMS scheduled for 2015.

Dividend Year Date of AGMS

Payout Ratio (%)1

Amount of Dividends (Rp million)

Dividend per Share after
stock split (Rp)

Table Chronology of Cash Dividend

2009

June 11,2010

2010

2011

2012

2013

May 19, 2011

May 11,2012

April 19, 2013

April 4, 2014

5,666,070

6,345,3502

7,127,3333

8,352,5974

57.61

64.52

74.21

87.24

9,943,2945

102.40

(1) Represents the percentage of profit attributable to owners of the parent paid to shareholders in dividends.
(2) Including interim cash dividend paid in December 2010 and January 2011 amounting to Rp276,072 million and Rp250,085 million respectively.
(3) Consists of cash dividend amounting to Rp6,030,820 million and special cash dividend amounting Rp1,096,513 million.
(4) Consists of cash dividend amounting to Rp7,067,582 million and special cash dividend amounting Rp1,285,015 million.
(5) Consists of cash dividend amounting to Rp7,812,588 million and special cash dividend amounting Rp2,130,705 million.

Telkomsel Dividend
Pursuant to AGMS on April 1, 2014, Telkomsel approved the payment of a cash dividend of Rp15,612 billion, which
represented 90% of Telkomsel’s net profit in 2014, Rp4,917 billion of this dividend was distributed to Singapore
Telecom Mobile Pte Ltd (“SingTel Mobile”).

In 2012, 2013, and 2014 cash dividends were paid to SingTel Mobile, a non-controlling shareholder of Telkomsel,
amounting to Rp3,231.2 billion Rp4,675 billion and Rp4,917 billion.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
03 MANAGEMENT
REPORT

24 Report of the Board of Commissioners

30 Report of the President Director

Hendri Saparini
The President Commissioner

To Realize the Expectation
as the Leading Digital Company

Throughout 2014, the Company continued its excellent performance,
growing at a rate above the industry average. In light of its performance
achievement, we believe the Company is on track to realize its
hopes of becoming a 'Digital Company'. In line with our vision,
Telkom is making the most of all its potential to strengthen its
presence in the region.

Esteemed Shareholders and Stakeholders,

The world economic situation in general in 2014 saw a
weakness, especially in Europe and some of the key
Asian countries such as Japan and China, despite a
significant economic recovery in the United States of
America. The Indonesian economy was still growing
quite well thanks to the relatively stable domestic
consumption as a result of activities relating to the
democratic general election in 2014 . Meanwhile, the
Indonesian telecommunications industry in 2014 was
marked by a consolidation which resulted in a reduced
number of players in the industry. We hope this is a part
of the government's efforts to build a healthier telecom
industry in the future.

Views on Business Prospects
Apart from a number of challenges, such as competition
in the mobile and fixed broadband industry, we assess
that the Company has good prospects. The
telecommunications industry in Indonesia still offers
great opportunities to grow. Currently the greatest
opportunity arises from the fact that the mobile broadband
penetration and consumption are still relatively low. The
Company also has assets in the fixed line business, which
if managed with the right strategy will bring substantial
growth potential. Other opportunities arise from the
possibility of international expansion that has significant
potential to be explored and developed.

The BOC has assessed the adequacy of the Board of
Directors in mapping various scopes that affect the
Company’s growth expectations. The Board also considers
that the Board of Directors has set targets based on the
results of analysis of various aspects, including the
internal and external conditions of the Company.

View on the Company's Performance in
2014
The Company recorded a very good performance in
2014 with revenue growth surpassing the industry average.
The Company's performance was especially supported
by our subsidiary PT Telekomunikasi Selular (Telkomsel),
a mobile cellular operator, which continued excellent
performance with Revenues, EBITDA and Net Income
growing by double digits. Other businesses in the areas
of fixed line, telecommunications infrastructure and
other business units also grew quite well.

The BOC believes that this performance achievement
shows that the Company has the right strategies and
also has had the ability to execute these strategies well.
The Company’s three main programs, namely
Strengthening Telkomsel in order to continue recording
performance higher than the industry’s performance,
building and utilizing the Indonesia Digital Network o
realize the digital society, and expanding its presence
in the regional and international markets. In the future,
the Company will continue using this strategy to create
a better performance.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Left to Right : Virano Gazi Nasution Independent Commissioner, Johnny Swandi Sjam Independent Commissioner,
Dolfie Othniel Fredric Palit Commissioner, Hendri Saparini President Commissioner, Parikesit Suprapto
Independent Commissioner, Hadiyanto Comissioner, Imam Apriyanto Putro Comissioner

Corporate Governance and Oversight by
the Board of Commissioners
The Company continues upholding the application and
enforcement of good corporate governance in accordance
with best practices, which provides a solid foundation
for the Company to continue growing sustainably in the
future.

So far, the Company has practiced good corporate
governance, as reflected in a number of prestigious
awards in the field of corporate governance application
in 2014, including the award of Indonesia Sustainability
Reporting Awards (ISRA), CGPI and five other awards
in Finance Asia Best Managed Company in 2014. In the
future, the Company will continue strengthening its good
governance practices in conformity with the best standards
to ensure that the Company is well managed and
accountable.

View on Performance of Committees under
the BOC
In carrying out its oversight function, the Board is assisted
by committees under its aegis, namely the Audit
Committee, Risk Monitoring Committee as well as
Remuneration and Nomination Committee, which have
worked very well and provide optimal support to the
Board of Commissioners so that the board can perform
its tasks and functions to oversee the management of
Telkom Indonesia in 2014. Some of the key areas of
oversight tasks are implementation of the corporate
action, organizational transformation, modernization of
the network, international business development, and
working performance of the subsidiary. The Board of
Commissioners also provides advice to the Board of
Directors to ensure that the business strategy and good
corporate governance have been executed correctly.
Supervision and advice of the Board of Commissioners
are delivered either through the Audit Committee, Risk
Monitoring Committee, or the Nomination and
Remuneration Committee.

Changes in Composition of the Board of
Commissioners
In 2014 there was a change in the composition of the
Board of Commissioners. The General Meeting of
Shareholders (AGM) on April 4, 2014 approved the
resignation of Mr. Gatot Trihargo and appointed Mr. Imam
Apriyanto Putro as a Commissioner. Pursuant to the
AGM on April 4, 2014, the Board of Commissioners
comprised the following members:

Jusman Syafii Djamal
Parikesit Suprapto
Hadiyanto
Imam Apriyanto Putro
Johnny Swandi Sjam
Virano Gazi Nasution

: President Commissioner
: Commissioner
: Commissioner
: Commissioner
: Independent Commissioner
: Independent Commissioner

The composition of the Board of Commissioners was
further changed based on the results of the Extraordinary
General Meeting held on December 19, 2014, which
approved the resignation of Jusman Syafii Djamal and
appointed Mrs. Hendri Saparini as a Commissioner of
the Company. The EGM also approved the appointment
of Mr. Dolfie Othniel Fredric Palit as a Commissioner,
increasing the number of members of the Board of
Commissioners from six to seven people, as follows:

: President Commissioner

Hendri Saparini
Dolfie Othniel Fredric Palit : Commissioner
: Commissioner
Imam Apriyanto Putro
: Commissioner
Hadiyanto
: Independent Commissioner
Parikesit Suprapto
: Independent Commissioner
Johnny Swandi Sjam
: Independent Commissioner
Virano Gazi Nasution

Target in the Future
The BOC assessed that the Company's business portfolios,
consisting of Telecommunication, Information, Media
Edutainment, and Services (TIMES), should be strengthened
by creating synergies among the subsidiaries, considering
that the industry will be more competitive in the future.
The mobile business, as a major contributor to the
Company, must be strengthened to protect against the
changes in the legacy business segments, and the
Company should also aggressively grow its digital
business segment. The development of Indonesian Digital
Network should bring business and economic benefits
for the Company and Indonesian society in general. In
addition, the Company has to be well-prepared to be
able to expand internationally, so that the Company can
represent Indonesia in Asia.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)The mobile
business, as a major
contributor to the
Company, must be
strengthened to
protect against the
changes in the
legacy business
segments

Appreciation to Stakeholders
On this auspicious occasion, the Board expressed thanks and appreciation to Mr.
Gatot Trihargo and Mr. Jusman Syafii Djamal who have carried out their duties as
members of the Board of Commissioners. Their role and contributions have helped
delivered outstanding performance in 2014.

The Board also thanks and gives greatest appreciation to the Board of Directors,
who have worked hard to record a very good performance. In particular, the Board
congratulates Mr. Arief Yahya, Director of the Company until the 2014 EGMS, on his
appointment as the Minister of Tourism. The BOC regards his appointment as a
minister as the trust of the nation toward the Company's performance.

Thanks and deepest appreciation also go to all management and employees of
Telkom Indonesia for their dedication and hard work so that 2014 be a very good
year. Hopefully the performance achievement in 2014 spurs the spirit of all stakeholders
to carve a better performance again in 2015.

Jakarta, March 26, 2015
On behalf of the Board of Commissioners,

Hendri Saparini
The President Commissioner

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Alex J. Sinaga
President Director

To Drive Digital Business to Create
Sustainable Competitive Growth

Telkom recorded excellent financial and operational performances in 2014, along

with the high performance of its subsidiary PT Telekomunikasi Selular ("Telkomsel").

At the same time, Telkom has aggressively continued developing broadband

infrastructure to support its digital business growth in the future.

Esteemed Shareholders and Stakeholders,

On behalf of the Board of Directors of PT Telkom Indonesia
(Persero), allow us to report the Company’s management
during 2014 and their key performance achievements
to both shareholders and stakeholders.

Macroeconomic conditions and
Telecommunications Industry 2014
Throughout 2014, the Indonesian economy grew quite
healthily, with gross domestic product rising by 5.1%,
particularly supported by domestic consumption, one
of which was the telecommunications sector. In line with
the growing middle class whose needs for various
telecommunications services increased remarkably, the
telecommunications sector grew by 9.1%, which was
higher than the national economic growth.

The telecommunications industry itself has been very
dynamic, consequently requiring industry players to
adapt very quickly as well. Telecommunications customer
demand has shifted from the legacy of voice and SMS
to data services. The growth of youth segment,
accompanied by an increasing number of middle class
with the characteristics of a digital lifestyle, has increasingly
pushed high demand for data services. Meanwhile, the
performance of voice and SMS services was limited by
the presence of various replacement applications such
as instant messaging applications. The SIM-card
penetration rate was estimated to have exceeded 125%
in 2014, indicating a relatively high degree of saturation.

In the future, the growth of the telecommunications
industry will be supported by growth in the digital
business. Penetration of data users in Indonesia is still
relatively low at about 50% presently, with the use of
smartphone also still low at less than 30% in spite of
rapid increases in adoption in recent years. Data traffic
increased significantly, more than 100% year on year,
mainly driven by the use of data via smartphones.

At the same time, the telecommunications industry in
Indonesia has to face many challenges. Among the most
important challenge is the emergence of Over the Top
("OTT") services that offer substitutes for traditional
voice and SMS services. In addition, the weakening of
the Rupiah against the US dollar is also potentially
detrimental to industry players given that most of the
capital expenditures (capex) in the telecommunications
sector are in foreign currencies, especially the US dollar.
Furthermore, the implementation of the ASEAN Economic
Community ("AEC") in 2015 would certainly provide a
significant challenge, given the competition area becomes
wider, namely in the ASEAN region. The Indonesian
telecommunications sector in 2014 was characterized
by an industry consolidation. We see consolidation in
the telecommunications sector has resulted in a reduced
number of players in this industry, which is expected to
have a positive impact for the creation of a more healthy
competition level.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)E
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from Left to Right: Abdus Somad Arief Director, Honesti Basyir Director, Herdy Rosadi Harman Director,
Muhammad Awaluddin Director, Alex J. Sinaga President Director, Dian Rachmawan Director, Indra Utoyo
Director, Heri Sunaryadi Director.

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Strategic Work Program
In order to maintain sustainable growth, in 2014, we
continued implementing the Three Main Programs,
namely: double-digit growth in Telkomsel's cellular
business, broadband network development on the
Indonesia Digital Network platform, as well as international
expansion.

Telkomsel is still the backbone of our revenues, contributing
an more than 70% of our consolidated revenues. In
line with the potential growth of mobile data services,
Telkomsel’s strategy is to build the infrastructure to meet
the demand for traffic data, which has been growing
very signiﬁcantly, to ensure that Telkomsel’s customers
get the best mobile data experience. Between 60% and
65% of our capital expenditure is allocated to Telkomsel.
In addition, Telkomsel is also still trying to exploit the
revenue growth from voice and SMS services such as
through intelligent pricing strategy based on cluster,
which analyze various factors, including competition
level and network utilization in each cluster.

The Indonesia Digital Network or IDN program is the
infrastructure foundation to support data services for
our mobile and ﬁxed-line businesses. Telkom has focused
on providing the best experience for its customers, by
building broadband network infrastructures that is
superior in terms of coverage, capacity and capability.
IDN consists of Id-Access, a high-speed broadband
access via optical ﬁber network, Id-Ring, a nationwide
ﬁber optic backbone network based on internet protocol
(IP), and Id-Convergence, a high-capacity data center
that is integrated with Telkom's network.

In addition, we have also expanded our business
internationally, and strengthened our regional presence
with a business model that is proﬁtable with well-managed
risks. Under the mobile virtual network operator ("MVNO")
scheme, Telkom is present in four countries namely
Malaysia, Hong Kong, Macau and Saudi Arabia. Telkom
also has a subsidiary that operates fully as a mobile
network operator in Timor Leste. In addition, we are

2014 Annual Report

PT Telkom Indonesia Tbk (Persero)

present in Australia and New Zealand, providing Business
Process Outsourcing services, as well as in several other
countries where we have satellite and network-related
businesses.

With all of the above programs, we aim to achieve the
goal of becoming a digital company, with the main
benchmark to have the digital business contribute to
more than half of our total business. We hope we can
achieve our aim to become a digital company in the next
few years.

Company Performance in 2014
Our performance in 2014 is the evidence that we are on
the right track to bring Telkom to become a digital
Company. On a consolidated basis, the contribution of
the data, internet and IT segment increased to 32.5%
from 28.2% in the previous year, while contribution of
the digital business segment in our cellular subsidiaries
has signiﬁcantly increased to approximately 23.6% from
19.4% last year. Our digital business revenue growth was
supported by data users, with the number of data users
increasing by 12.1% to 71.3 million subscribers by the end
of 2014.

We recorded excellent ﬁnancial performance in 2014.
Our consolidated revenue grew 8.1% to reach Rp89.7
trillion. The Data, Internet & IT segment (excluding SMS)
grew by 24.0%, the highest increase among our business
lines, due to the increase in demand for this segment
and excellent infrastructure support.

We were also able to manage costs efficiently, with
operating costs growing by only 6.5% to Rp43.9 trillion.
We were therefore able to record a fairly high EBITDA
growth of 9.7% to Rp45.8 trillion, with EBITDA margin
of 51.1%, which was better than the previous year's margin
of 50.4%.

Our Net Income increased 3.0% to Rp14.6 trillion in 2014.
The relatively low growth in net proﬁt was mainly because
of the proceeds from the divestment of 80% ownership
of Telkom Vision in 2013.

From the operational aspect, our subsidiary, Telkomsel,
continued strengthening its network infrastructure so
that by the end of 2014 it had 85,420 BTS, an increase
of 22.3% from the previous year, of which 45% was 3G
base stations and 200 4G base stations, which was
aimed at supporting growth in data services. Data traffic
increased signiﬁcantly by 143% to 235 Peta-Bytes, mainly

2014 Annual Report

PT Telkom Indonesia Tbk (Persero)

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triggered by the use of data services via smartphones.
By the end of 2014, Telkomsel smartphone users totaled
40.4 million, a 71% increase from the previous year.

of a Joint Venture Company between Telkom Metra and
the largest operator of Australia, Telstra; as well as the
acquisition of a 75% stake in Contact Centres Australia
Pty Ltd (CCA).

To maintain Telkomsel's position as the market leader,
we always adopted the most advanced technology. In
December 2014, Telkomsel successfully performed the
ﬁrst commercial 4G services launch in Indonesia to
enhance customer experience in using data services.

In 2014, we decided to discontinue our ﬁxed wireless
services, namely Flexi by 2015, and encourage Flexi
customers to switch to our mobile subsidiary Telkomsel.
In addition, the 800MHz spectrum previously used by
Flexi has been decided by the Government to be allocated
to Telkomsel. We believe that the termination of our
ﬁxed wireless services will be compensated by the
strengthening of mobile services so that overall it would
be optimal for us.

We have further strengthened broadband infrastructure
to support our digital services business, both for the
needs of the cellular and ﬁxed line business units. By
the time this report is written, we have built 76,700 km of our nationwide
ﬁber-based backbone network connecting the Indonesian
region of Aceh to Papua, as well as installing 170,000
Wi-Fi access points. We have also had ﬁber that passed
more than 13.2 million homes at the end of 2014. In
addition, we have developed a 54,800 m2 data center
to meet the demand for cloud services.

We consistently maintain the level of capital expenditure
to sufficiently support growth. Throughout 2014, we
spent Rp24.6 trillion, which was relatively stable compared
to Rp24.9 trillion in the previous year, in building
infrastructure with a focus on supporting data services.
Approximately 60% of the capital expenditure was
allocated to build mobile business-related infrastructure.
Approximately 20% was used for infrastructure
development to strengthen the ﬁxed broadband business
lines and access strengthening, while the rest was used
for business development entities of other subsidiaries
in the ﬁeld of telecommunication towers, information
technology, and international expansion.

In 2014 we completed several corporate actions in order
to create value through synergies with our business
units. These include: the purchase of a 25% stake in
Tiphone Mobile Indonesia Tbk, which is one of the largest
distributors of gadgets in Indonesia; the establishment

Company Prospects
With our investments in the past several years, particularly
to build broadband infrastructure, we believe that the
Company has good prospects. For our mobile business
unit, nearly half of Telkomsel's BTS supported data
services. With approximately 50% of user being data
users and smartphone penetration still low at about
30%, the data business segment has a very high growth
potential, in light of the data traffic growth over the past
year of more than 100%. We also have excellent IT skills
to support complex pricing strategies for voice and SMS
services so that we can exploit the growth of legacy
businesses.

We also have assets in the ﬁxed line business unit, which
if managed with the right strategies will bring substantial
growth potential. We will put all our efforts to revive the
ﬁxed line business through IndiHome, which is our product
bundling that consists of ﬁxed voice, the internet and
IP TV services.

We also plan to grow inorganically through international
expansions, which has signiﬁcant potential to be explored
and developed. Through our international business unit
of PT Telkom Indonesia International, we have been
present in 10 countries with a variety of business models.
We will widen and strengthen the business in the countries
where we have had the track record, as well as seek new
business opportunities to be developed. We are committed
to expanding our market, diversifying our business and
strengthening our human resources so as to be ready
in facing the ASEAN Economic Community in 2015.

Corporate Governance
We uphold the application of Good Corporate Governance
("GCG"), and have been consistently increasing its
implementation from year to year. One of our signiﬁcant
developments in the implementation of GCG is the
strengthening of organizational governance structure
with a character of a holding company, through the
implementation of the Executive Board mechanism for
our subsidiaries. We have also implemented Enterprise
Risk Management ("ERM") as a whole, producing an

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2014 Annual Report

PT Telkom Indonesia Tbk (Persero)

integrity pact within the scope of the group, strengthening
IT governance, and remediation of internal controls to
ensure the reliability of ﬁnancial statements. As part of
the implementation of GCG practices, since 2011 we
have adopted the standards of the International Financial
Reporting Standards ("IFRS").

We have met the criteria of the ASEAN Corporate
Governance Scorecard, which assesses the quality of
the GCG implementation in public companies in six
ASEAN countries.

Recognition of the quality of our GCG implementation
is reﬂected in the awards we have received. In 2014 we
received the "Most Trusted Company", which is the sixth
consecutive time we've received the award. In addition,
at the IMAC 2014 awards, we simultaneously achieved
awards for Best Managed Companies, Best Corporate
Governance, Best Investor Relations, Best CSR, and the
Most Committed to a Strong Dividend. In the Public
Company Awards 2014, we were awarded Best Listed
Company of the Year, The Best CEO of Listed Company
2014, the CEO of the Year, and the ﬁrst winner of the
category of Corporate Communications, Risk Management,
and Infrastructure Working Group. We also received an
award for the Most Trusted Company for six consecutive
times in a survey of Corporate Governance Perception
Index ("CGPI") and Capital Market Award 2014 award
for the category Large Companies on the Indonesia
Stock Exchange.

Corporate Social Responsibility
We align our CSR activities with our vision and mission
as well as our business portfolio. In deﬁning our CSR,
we have adopted the theme of "Telkom Indonesia for
Indonesia". Telkom CSR programs were undertaken in
an effort to support the advancement of the welfare of
the people of Indonesia including disadvantaged and
remote communities, through a series of activities, based
on the three main pillars of our CSR, aimed at developing
the Digital Environment, Digital Society, and the Digital
Economy.

efficiency of BTSs, increase use of renewable energy,
encourage the concept of a paperless office, implement
waste management and water management and recycle
water.

Of all the social development objectives channeled
through the Community Development Program, we have
prioritized the provision of assistance in the areas of
education and health as well as development of a creative
camp facilities to cultivate the digital creative industries.
From all these efforts, we obtained the grand Platinum
award for awards in nine areas and categories in the
Indonesian CSR Award 2014. The award is a testament
to the achievement of our performance, which is in line
with the ISO 26000-based CSR foundation.

Human Resource Development
Our human resource management strategy consists of
three components, each with different weighting: character
has the greatest weight (50%), followed by competence,
with a weight of 30%, and coopetition, with a weight of
20%. We are constantly developing leadership programs,
based on the Telkom Group Leadership Architecture,
with the philosophy of "Always The Best" through our
Talent Development Framework. To develop globally
competitive human resources, we also have a Global
Leadership Capability Development program.

This human resource development strategy is in line
with our business transformation that focuses on TIMES.
To anticipate the changing needs of competence, we
strengthen the competence of human resources through
structured and planned training and education, in order
to prepare our human resources for the digital age.

Each year, we provide employees with a variety of awards
as a token of appreciation for their dedication and hard
work. The success of our programs include, among
others, nine employees rece iving Satyalencana
Pembangunan and Satyalencana Wira Karya awards
from the Government of the Republic of Indonesia for
their dedication in raising the name of Telkom.

We seek to perform a variety of programs related to
environmental preservation, which are summarized in
our "Telkom Go Green Action" program. The program
includes efforts to minimize carbon emissions, improve
energy efficiency of office buildings, optimize energy

Corporate Culture
Our corporate culture is embodied in "The Telkom Way",
which is the belief system and the reference values for
all employees of Telkom, with supporting pillars for
corporate culture comprising three core elements: namely

2014 Annual Report

PT Telkom Indonesia Tbk (Persero)

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We have Telkom way that is our belief system and
our foundation value for all Telkom employees

Philosophy to be the Best, that contains basic philosophy
for all employees to always provide their best; Principles
to be the Star, which refer to three core values to be a
star, known as 3S, for Solid, Speed, Smart; and Practices
to be the Winner, which refer to key behaviors and
practices to be winners. The concept for the development
for the Telkom Group's organizational culture is based
on the 8S elements, namely Spirituality, Style, Shared
Values, Strategy, Staff, Skill, System and Structure.

Changes in Composition of the Board of
Directors
Let us express our gratitude and highest appreciation
to our predecessors on the board of directors, especially
to Mr. Arief Yahya, who served as the President Director
up to December 19, 2014. We should be proud because
the best son of this Company has been entrusted as one
of the ministers in the Cabinet. Thanks also go to Mr.
Sukardi Silalahi, Mr. Rizkan Chandra, Mr. Priyantono
Rudito, and Mr. Ririek Adriansyah, who had stints on the
Board of Directors since their appointment by the General
Meeting of Shareholders ("AGMS") of Telkom on April
23, 2013 to the Extraordinary General Meeting of
Shareholders ("EGMS") of Telkom on December 19, 2014.

Appreciation
On behalf of the entire ranks of the Board of Directors,
we express our thanks and deepest appreciation to all
shareholders, the Board of Commissioners, and all
employees for their hard work and achievements of this
remarkable performance. We also express great
appreciation for the trust of customers and partners
who have supported us throughout the year.

Furthermore, we present the Company’s performance
and achievements in 2014 comprehensively in this Annual
Report, including the Financial Statements that consists
of the consolidated statement of ﬁnancial position and
consolidated statement of comprehensive income for
the ﬁnancial year 2014. The Consolidated Financial
Statements have been audited by Purwantono, Suherman
& Surja ( a member ﬁrm of Ernst & Young Global Limited)
with an "unqualiﬁed" opinion.

Jakarta, March 26, 2015

Subsequently, since December 19, 2014, the composition
of the new Board of Directors is as follows:

Alex J. Sinaga
President Director

: President Director
Alex J. Sinaga
: Director
Indra Utoyo
: Director
Abdus Somad Arief
: Director
Heri Sunaryadi
: Director
Herdy Rosadi Harman
: Director
Dian Rachmawan
Honesti Basyir
: Director
Muhammad Awaluddin : Director

S
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2014 Annual Report

PT Telkom Indonesia Tbk (Persero)

Our performance in 2014 is the evidence
that we are on the right track to bring
Telkom to become a digital Company

2014 Annual Report PT Telkom Indonesia Tbk (Persero)04

GENERAL INFORMATION
OF TELKOM INDONESIA

40 Telkom Indonesia in Overview

42 Telkom Indonesia Profile

44 Telkom Indonesia Milestones

46 Awards and Certifications

50 Significant Events 2014

54 Corporate Identity of Telkom Indonesia

55 Vision and Mission

56 Culture Values

58 Articles of Association

58 Products and Services

60 Trademarks, Copyrights, Industrial

Designs and Patents

62 Management of Telkom Indonesia

76 Telkom Business Group

84 Stock Overview

91 Capital Market Supporting

Professional

92 Capital Market Trading Mechanism

and Telkom ADS

94 Addresses of Telkom Indonesia

TelKoM InDonesIA HIGHlIGHTs

Telkom is a State-Owned Enterprises ("SOE") which is engaged in the field of

telecommunications and network services in Indonesia and therefore subject to

the laws and regulations in Indonesia. With its status as a state-owned company

whose shares are traded on the stock exchange, the Company's majority shareholder

is the Government of the Republic of Indonesia at 52.56% while the rest 47.44%

is controlled by the public. The Company's shares are traded on the Stock Exchange

and the NYSE.

We strengthen our organization with the formation of the Executive Board
("BOE"). BoE facilitate parenting mechanism toward subsidiaries by grouping
subsidiaries into four categories, namely cellular business, media, infrastructure,
and international. Cellular business is led by PT Telkom Indonesia Cellular
("Telkomsel"), the media business is led by PT Multimedia Nusantara
("TelkomMetra"), the infrastructure business is under coordination of PT
Indonesian Telecommunications Infrastructure ("TelkomInfra"), while the
international business is controlled by PT Telkom Indonesia International ("
Telin ").

We have a vision of "To Become a Leading Telecommunications, Information,
Media & Edutainment and Services (TIMES) Player in the Region". The
Company's mission is "To Provide More for Less TIMES Services" and "To be
the Role Model as the Best Managed Indonesian Corporation". To achieve
the vision and mission, we conduct a thorough transformation in five aspects
to address the challenges of global market to help the Company achieve
sustainable competitive growths. The five aspects of transformations include
transformation in human resources, business, structure, cultural and
infrastructure/systems. Telkom Group's management concept is based on
element of 8S, namely Spirituality, Style, Shared Values, Strategy, Staff, Skill,
System, and Structure.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)TelKoM InDonesIA PRofIle

Name of the Company
Perusahaan Perseroan (Persero) PT Telekomunikasi
Indonesia Tbk

Address
Gedung Graha Merah Putih, Jl. Japati No. 1 – Bandung,
Indonesia 40133

Abbreviated Name
PT Telkom Indonesia Tbk (Persero)

Commercial Name
Telkom

Line of Business
Telecommunication and network services

Group of Business
Good and Service Trading

Telephone
+62-22-4521404

Facsimile
+62-22-7206757

Call Center
147

Website
www.telkom.co.id

Taxpayer Identification Number
01.000.013.1-093.000

Email
corporate_comm@telkom.co.id, investor@telkom.co.id

Certificate of Company Registration
101116407740

Rating
idAAA (Pefindo) for 2012, 2013 and 2014

Business License
510/3-0689/2013/7985-BPPT

Domicile
Bandung - West Java

Date of Legal Establishment
November 19, 1991

Telkom Property

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESLegal Basis of Establishment
Based on Government Regulation No.25 of 1991, we were
converted from a state agency existing at that time to
a state-owned limited liability company based on the
Notarial Deed of Imas Fatimah, SH No. 128 dated
September 24, 1991 which was approved by the Minister
of Justice of the Republic of Indonesia in Decree No.C2-
6870.HT.01.01 year 1991 dated November 19, 1991 and
published in State Gazette of the Republic of Indonesia
No.5 dated January 17, 1992, Supplement No.210.
Amendments to our Articles of Association by notarial
deed of A. Partomuan Pohan, SH, LLM. No. 4 dated April
6, 2006 and published in the State Gazette of the Republic
of Indonesia No.51 dated June 27, 2006, Supplement
No.666, among other matters, changed the authority
and responsibilities of our Board of Directors and
Commissioners.

Authorized Capital
1 Series A Dwiwarna and 399.999.999.9999 Series B
shere

1 Head Office

Offices
-
- 7 Regional Division (“Divre") Offices
- 58 Regional Telecommunications ("Witel")

Service Offices consisting of
- 572 Plasa Telkom outlets
-
- 409 GraPARI (including third party managed outlets)
- 268 units Mobile GraPARI

1 Foreign GraPARI in Hong Kong

Stock Listed
-
Indonesia Stock Exchange (“IDX”)
- New York Stock Exchange (“NYSE”)

Since June 5, 2014, Telkom shares are no longer
traded on the London Stock Exchange ("LSE")

Capital Market Profession
Public Accountants
Purwantono, Suherman, & Surja Public Accountant Office
Member Firm of Ernst & Young Global Limited

Issued and Fully Paid Capital
1 Series A shere and 100.799.996.399 Series B shere

Ownership
- The Government of the Republic of Indonesia 52.56%
- Public 47.44%

Registrar
PT Datindo Entrycom

Trustee
PT Bank CIMB Niaga Tbk.

Stock Code
- TLKM on Indonesia Stock Exchange (“IDX”), Jakarta,

Custodian
PT Kustodian Sentral Efek Indonesia

Indonesia

- TLK on The New York Stock Exchange (“NYSE”),

New York, United State of America

Rating Agency
PT Pemeringkat Efek Indonesia

Listing on the Stock Exchange
The Company's shares were listed on the Jakarta Stock
Exchange and Surabaya Stock Exchange on July 14,
2003The Company's shares were listed on the NYSE,
Indonesia Stock Exchange (then Jakarta Stock Exchange)
and Surabaya Stock Exchange (which merged with the
Jakarta Stock Exchange in 2007) on November 14, 1995.

Depositary Receipts
The Bank of New York Mellon

Details of capital market profession visible on General
Information of Telkom Indonesia – Stock Information.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)TelKoM InDonesIA MIlesTones

1856-1884
On October 23, 1856, the Dutch colonial

government deployed the first

electromagnetic telegraph service

operation in Indonesia, which connected

Jakarta (Batavia) and Bogor. We consider

this event to be part of the beginnings

of Telkom’s history and have thus adopted

October 23 as the anniversary of our

“beginning”.

In 1884, the Dutch colonial government

established a private entity, "Post en

Telegraafdienst" to provide postal and

telegraph services.

1991
Perumtel was transformed into a limited

liability company and renamed Perusahaan

Perseroan (Persero) PT Telekomunikasi

Indonesia (Telkom) under Government

Regulation No.25 of 1991. Our business

operations was then divided into 12

telecommunication regions which was

later reorganized in 1995 into seven regional

divisions (Divre), namely Divre I Sumatra,

Divre II Jakarta and the surrounding areas,

Divre III West Java, Divre IV Central Java

and Yogyakarta, Divre V East Java, Divre

VI Kalimantan, and Divre VII Eastern

Indonesia.

1999
Law No. 36/1999 on the Elimination

of Telecommunications Monopoly,

which became effective in September

2000, facilitated the entrance of

new players to foster competition

in the telecommunications industry.

1906-1965
In 1906, the Dutch Colonial Government

established a government agency to

assume control postal services and

telecommunications in Indonesia, named

Jawatan Pos, Telegrap dan Telepon (Post,

Telegraph en Telephone Dienst/PTT). In

1961, its status was changed to newly-

established state-owned company,

Perusahaan Negara Pos dan Telekomunikasi

(PN Postel). In 1965, the Government

separated postal and telecommunications

services by dividing PN Postel into

Perusahaan Negara Pos dan Giro (PN

Post & Giro) and Perusahaan Negara

Telekomunikasi (PN Telekomunikasi).

1995
On May 26, 1995, we and Indosat established

Telkomsel, Our Initial Public Offering/IPO

2001
We acquired 35% of Telkomsel

was on November 14, 1995, with our shares

shares from PT Indosat as part of

listed on the Jakarta Stock Exchange (now

the restructuring of the tele com-

Indonesia Stock Exchange) and the Surabaya

munications service industry in

Stock Exchange (SSX). Our shares were also

Indonesia, which was characterized

listed on the NYSE and the LSE in the form

by the elimination of joint ownership

of American Depositary Shares (“ADSs”),

and cross-ownership between us

and publicly offered without listing (POWL)

and Indosat. With this transaction,

in Japan.

1974
PN Telekomunikasi was turned into Perusahaan

Umum Telekomunikasi Indonesia (Perumtel),

which provided domestic and international

telecommunications services, and sub-

sequently spun-off PT Industri Telekomunikasi

Indonesia (PT INTI), which manufactured

telecommunications equipment, into an

independent company.

we controlled 77.7% shares in

Telkomsel. Indosat then took over

22.5% of our shares in Satelindo

and 37,7% of our shares in

PT Lintasarta Aplikanusa. At the

same time, we lost our exclusive

rights as the sole operator of fixed

line services in Indonesia.

to Singapore Telecom Mobile Pte Ltd

(Sing Tel Mobile), and were left with

65% of shares in Telkomsel.

We acquired the entire share capital of

Pramindo in three stages, with 30% of

the shares acquired on the date of the

contract on August 15, 2002, 15% on

September 30, 2003 and the remaining

55% on December 31, 2004.

2009
We underwent a transformation from an

information telecommunication company

to TIME Company. Our new image was

introduced to the public with a new corporate

logo and tagline of "the world in your hand".

2010
The Submarine fiber optic cable project

JaKaLaDeMa linking Java, Kalimantan,

Sulawesi, Denpasar, and Mataram was

successfully completed in April 2010.

2013
As of 2013, we begin to operate

in seven countries, namely,Hong

Kong-Macau, East Timor, Australia,

Myanmar, Malaysia, Taiwan, and

the United States of America.

2004
We launched an international direct

dialing service for fixed lines with

the access code 007.

2011
We commenced the reform of the

telecommunications infrastructure

through the Telkom Nusantara Super

Highway project, which unites the

archipelago from Sumatra to Papua, as

well as the True Broadband Access

project to provide Internet access with

a capacity of 20-100 Mbps to customers

throughout Indonesia.

2014
We were the first operator in
Indonesia to commercially
launch 4G LTE services in
December 2014.

2005
TheTelkom-2 Satellite was launched to

2012
We increased broadband penetration

replace all satellite transmission services

through the development of Indonesia

that were previously provided by Palapa

Wi-Fi to as part of our “Indonesia Digital

B-4, which brought the total of satellite

Network” program. We reconfigured

launched by us to eight satellites,

our business portfolio from TIME to

including Palapa A-1.

TIMES (Telecommunication, Information,

Media, Edutainment & Service) to

increase business value creation.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)AWARDs & ceRTIfIcATIons

January 4, 2014
•
•

1st in Infrastructure, Utilities and Transportations,
The Best 20 of Most Admired Companies in Indonesia, and
Highest Leap in FIMAC Ranking

Fortune Indonesia and Hay Group Indonesia Magazine

April 30, 2014
Platinum Winner Anugerah Kartini BUMN 2014
Executive General Manager, Enterprise Service Division.
BUMN Track and Leadership Inc

May 13, 2014
Best Issuer 2014
Capital Market Awards

May 14, 2014
• TOP IT, TOP Green IT, TOP IT Solution, TOP Telco 2014
• Top IT Agility in Telco 2014 for KartuHalo (post paid), Simpati, and

Kartu As (prepaid), and Telkomsel Flash (wireless internet).

• Top Data Center Services 2014, Top Cloud Application Provider 2014

(TelkomSigma)

• Top Contact Center Solution 2014 (Infomedia)
• TOP IT Innovation in IT Services for Health 2014 (AdMedika)
TOP IT & TOP Telco 2014

May 28, 2014
Platinum The Best Team Work, Platinum The Best Technology
Innovation, Gold The Best Operation, Gold The Best Business
Contribution, Gold The Best Technology Innovation, Silver The
Best HR Retention Program, Silver The Best Operation, Silver The
Best HR Retention Program, Silver The Best Business Contribution
Indonesia Contact Center Association (ICCA)

June 4, 2014
Internet Provider and Telecommunication Company
Corporate Image Award – Indonesia’s Most Admired Companies (IMAC),
Frontier Consulting Group and Tempo Magazine

June 19, 2014
Best SME Service through
Indonesia Digital Interpreneur
(IndiPreneur) program, Project of
The Year Indonesia Digital School
(IndiSchool)
Asia Communication Awards
2014, Total Telecom in Singapore

June 5, 2014
Best Managed Companies, Best Corporate Governance
Best Investor Relations, Best CSR, Most Committed Company to a Strong
Dividend Policy
Finance Asia Best Managed Companies” & “Corporate Image Award
Indonesia’s Most Admired Companies (IMAC)” 2014, Frontier Consulting
Group and Tempo Magazine

July 16, 2014
Winner 2014 Indonesia MAKE
Award
Dunamis Organization Services

June 26, 2014
Best Sustainable Business Innovation
Company in Green
Telecommunication Technology and
Best Green CEO 2014
Social Business Innovation Award
2014, Warta Ekonomi.

July 16, 2014
2nd Rank Indonesia Top 100 Most
Value Brand 2014,
1st Rank In Strongest Indonesia
Brands, 2nd Rank of The Highest
Brand Value Growth In Indonesia
SWA and Brand Finance

2014 Annual Report PT Telkom Indonesia Tbk (Persero)July 31, 2014
Sustainable Marketing Excellence Award through Telkom Solution
program, Marketing Campaign of the Year through Indonesia Digital
School (IndiSchool) program, Effective Use of Marketing
Communication Award through Indonesia Digital Entrepreneur
(IndiPreneur) program, Marketing Professional of the Year
5th CMO Asia Awards for Excellence in Branding & Marketing 2014 in
Singapore

September 23, 2014
• Data Communication Service
Provider of the Year, Telecom
Service Provider of the Year
2014 (Telkom),

• Indonesia Green BTS Operator
of the Year, Indonesia Mobile
Broadband Service Provider of
the Year, Indonesia Mobile Data
Service Provider of the Year,
Indonesia Mobile Service
Provider of the Year (Telkomsel)
• Contact Center Outsourcing
Service Provider of the Year
(Infomedia)

• Data Service Provider of the

Year (Telkomsigma)

Frost & Sullivan Indonesia
Excellence Awards 2014

November 28, 2014
• Grand Platinum “Freedom of
Associating and Assembling”
(category of Human Rights)

• Telkom Go Green Action: Mitigation
of carbon dioxide emission and
stimulation of Environment Friendly
Business activities (category of
Environment)

• Telkom Customer Satisfaction
Based on Global Customer
Satisfaction Standard (GCSS) in
the form of Measurement CSI and
CLI (category of Consumer)

Indonesian CSR Awards 2014 (ICA
2014)

August 21, 2014
Gold Winner for Strategic
Marketing & Tactical
Marketing, First The Best
Chief Marketing Officer
(CMO)
BUMN Marketing Awards
2014

August 29, 2014
Best Listed Company of The Year, The Best CEO Listed Company 2014,
CEO of The Year, 1st winner for the category of Corporate Communication,
1st winner for the category of Risk Management, 1st winner for the
category of Performance Group (Infrastructure).
Anugerah Perusahaan Terbuka Indonesia 2014

2 Desember 2014
Telkom menerima World Communication Awards (WCA) 2014 yang
berlangsung di London, Inggris. Ajang yang diikuti seluruh operator Telco
di dunia ini memberikan penghargaan kategori "Best Small Business
Service" kepada program IndiPreneur (Indonesia Digital Entrepreneur)
dari Telkom.
WCA 2014

ceRTIfIcATIon

No Date

Sertification

Receiver

Given by

Valid until

2013

ISO 9001:2008

PT Dayamitra Telekomunikasi
(Mitratel)

United Register for System
(URS)

2013

ISO 9001:2008

Divisi Business Service

TUV Rheinland Cert GmbH

2013

ISO 9001:2008

PT Telkom Akses

TUV Rheinland Cert GmbH

2012

ISO 9001:2008

PT Finnet

DQS GmbH

2012

AS/NZS ISO
9001:2008

PT Administrasi Medika
(AdMedika)

Verification New Zealand
Limited

2012

ISO/IEC 27001:2005

PT Finnet

DQS Gmbh

2012

ISO/IEC 27001:2005

Divisi Infratel dan Divisi Access TUV Rheinland Japan Ltd

2011

ISO 9001:2008

Divisi Telkom Flexi

TUV Rheinland Cert GmbH

ISO 9001:2008

Divisi Enterprise Service

TUV Rheinland Cert GmbH

2016

2015

2014

2014 Annual Report PT Telkom Indonesia Tbk (Persero)sIGnIfIcAnT eVenTs 2014

JANUARY
10 Through subsidiary PT Sigma Cipta Caraka (Telkomsigma), Telkom has
the fourth and fifth data center in 2014. Data center specification tier
3 and 4 located in Balikpapan, East Kalimantan and industry area of
Cikarang, West java.

22 Telkom Group built 11 Integrated Services Posts for Mount Sinabung
eruption refugees in Karo District, North Sumatra. Telkom Group also
distributed food assistance, medicine, and clean water supply by
deploying five cars.

FEBRUARY
8 Participating in the re-operation of Halim Perdanakusuma Airport for
commercial flight, Telkom held Indonesia Wifi internet service (Wifi.id)
at the airport.

14 The Launching of UseeTV in conjunction with art performances of Erros

Djarot 40 Years Opus at the Jakarta Convention Center.

21 Telkomsel synergize with Telkom to bring the first Seamless Wi-Fi Mobile
solution in Indonesia, Telkomsel Flashzone-Seamless that utilize Telkom
Wi-Fi network as an additional cellular network. This collaboration
provides the experience of surfing with high speed and stability. It also
allows customers to switch network connection from 2G/3G to Wi-Fi
automatically (auto connect).

MARCH
6-7 Telkom Internasional (Telin) in cooperation with other 17 global
telecommunication providers signed MoU of submarine cable
development project, South East Asia - Middle East -Western Europe
5 (SEA-ME-WE 5) in Kuala Lumpur, Malaysia

27 Telkom for the first time operate vending machine technology that is
integrated with the e-ticketing service in Kualanamu International
Airport, North Sumatra. This was stated by EBIS Director, Muhammad
Awaluddin on the sidelines of the inauguration of the airport by the
President of the Republic of Indonesia Susilo Bambang Yudhoyono.

APRIL
4 Telkom Annual General Meeting of Shareholders (AGMS) with the agenda
of to change the composition of Telkom Board of Commissioners and
Directors

22 The development of Telkom TMoney service starts to target on railway
transportation service. KRL Jabodetabek e-ticketing has already reached
600.000 transactions each day. Out of that number, around 55% are
multi trip card (KMT) users.

28 Telkom organizes an international certification training program
called "Indonesia Digital Creative", which is jointlyheld with Intel
Indonesia Corporation and fully supportedby MIKTI, IWAPI, and PGRI
with a target of 100,000participants in 2015.

JUNI
10 Telkom launced WiFi Corner 100Mbps in Surabaya and Denpasar. This
innovation was driven by the growing public demand to high-speed
data access.

JULY
10 Telkom supports the Indonesian digitization program in 2015 to enhance
the global competitiveness, especially in technology and communications.
This was announced by the Director of ISP, Indra Utoyo, when met with
the Minister of Communications and Information, Tiffatul Sembiring and
Hermawan Kartajaya at the GMP, Jakarta.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)22 Telkom launched Delima Remittance service in Taiwan for providing
remittance service for Indonesian people in Taiwan. The launched
was marked by the signing of Cooperation Agreement between
President Director of Finnet Indonesia (Telkom subsidiary), Otong
Iip with Director of Indonesia Delivery Service (Index) Chou Lin Chieh
in Taipei City, Taiwan.

AUGUST
17 Enliven the momentum of Indonesian 69thIndependence Day, Telkom
received an award from the Indonesian Record Museum on the success
of holding 1.000 WiFi.ID Corner 100 Mbps throughout Indonesia
within a month. MURI award was presented by the Director, Jaya
Soeprana at the Independence Day ceremony in the courtyard GMP
Building, Jakarta.

SEPTEMBER
17 – 18 Telkom presented performance exposure through the Investor
Summit and Capital Market Expo held at The Ritz-Carlton Pacific
Place Jakarta.

OCTOBER
20 Telkom provides full support in one of the activities of People
Thanksgiving, which was "Video Conference President Joko Widodo
with People." Telkom provide the services of Video Conference or
the so-called e-Blusukan followed by volunteers from eight cities.

NOVEMBER
3 Director of Enterprise & Business Service Telkom launched CRM
Mobile Apps of UKM Hebat (Terrific SME) named ZAPA in Jakarta.
Telkom targeted, in 2015 there will be 1.000.000 SMEs involved and
connected with various applications that have been developed.

DECEMBER
19 Extraordinary General Meeting of Shareholders, with the agenda of
altering the compositition of Telkom Board of Commissioners and
Board of Directors.

Alex J. Sinaga

coRPoRATe IDenTITY of TelKoM InDonesIA

LOGO
The new logo of the Company established based on the Company's Regulations
No. PD.201.03/2014 on New Corporate/Brand Identity dated June 20, 2014.

Tagline: the world in your hand
Which in Bahasa means “Dunia dalam genggaman Anda”, where the message
conveyed is that Telkom will make everything easier and more enjoyable in accessing
the world.

Meaning of Logo
Referring to Telkom Corporate philosophy, which is Always The Best - a basic
belief to always provide the best in every job completed and continually amend
ordinary condition becoming better, and eventually led to become the best.

Color Philosophy
Red - Courage, Love, Energy, Tenacious
Reflects the spirit of Telkom to always optimistic and brave in facing the challenges
and the company.

White - Holy, Peace, Light, Unite
Reflects the spirit of Telkom to provide the best for the nation.

Black - Basic Colors
Symbolizes determination.

Grey – Transition Color
Symbolizes technology.

Our vision and mission is stated in our long-term plan approved by the Board
of Commissioners on May 30, 2014 by the Decree of the BOC No. 11/KEP/DK/2014/
RHS and amendment approved on December 31, 2014 by the Decree of the BOC
No. 18/KEP/DK/2014/RHS.

Vision

To become a leading Telecommunication,
Information, Media, Edutainment and
Services ("TIMES") player in the region.

Mission

● To provide "more for less" service with

respect to TIMES.

● Being exemplary of best corporate
management in Indonesia.

Explanation on Vision and Mission:
Leading means leading in terms of our performance on the financial aspects (revenue

and profit) and market capitalization and being included in the leading telecommunication

operators group (both of which only have telecommunication portfolio and TIMES) in

the region.

Region means Asian region, so that our performance will be compared with the telecom

operators in the region.

More for less is a new business model seeks to promotes benefits before price. This

business model is often called as Paradox Marketing, which provide more benefits or

value at a lower price (for less).

We develop our quality of service standards in the Telkom Quality System based on

international standards. We seek to manage our business using the best methods and

tools applied by world-class companies, in order to be the best company in Indonesia

and a role model for other companies

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
cUlTURe VAlUes

Telkom Corporate Philosophy

: Always The Best

Telkom Leadership Architecture : Lead by Heart, Managed by Head

The Telkom Way

: Solid-Speed-Smart

The Telkom Corporate Philosophy: Always The Best
Corporate Philosophy Always the Best is a basic spirit to continuously provide the best in every job. Always the Best
is a mental attitude to become the best, which has the essence of Ihsan, which contains three meanings; repair,
better, and best.

Telkom Leadership Architecture: Lead by Heart, Managed by Head
The Leadership Architecture contains three core elements are referred to as 3P, namely philosophy, principle and
practice.

Leadership Philosophy to be the Best is the basic belief that contains basic philosophies for the whole range of
Telkom to be the best leader; basic belief that should always create harmony between the Heart and Head (2H) and
create synergies between the Spirit and Strategy (2S); and commitment that should always be embedded within
the whole range.

Leadership Principles to be the Star is the core values that contain the basic principles to be the star leader that
include two core values, namely; Lead by Heart & Managed by Head. Principles Lead by Heart and Managed by
Head are interpreted into the behavior practices in achieving its goal, which is to become a winner in TIMES business
competition.

Leadership Practices to be the Winner is standard behaviors that contain noble practices to become the winner
leader.

The Telkom Way
The Telkom Way contains 3P three core elements, namely philosophy, principle, and practice.

Philosophy to be the Best: Always The Best
Philosophy Always the Best is the basic belief that contains basic philosophies for the whole range of Telkom to be
the best being.

Principles to be the Star: Solid-Speed-Smart (3S)
Principles to be the Star, which is the core value that contains the basic principles to be the star being. Principle to
be the Star contains three core values called 3S: Solid, Speed, Smart.

Speed is to act rapidly in every job. Speed is an interpretation of the second elements Always the Best, namely
enthusiasm.

Smart is to behave, to think, and to act intelligently in every job through sharp intuition, the course of ratio through
creativity and innovation that produces breakthrough, and the course of body through impressive actions. Smart
is the interpretation of the third elements of Always the Best, namely totality.

Practices to be the Winner: Imagine-Focus-Action
Practices to be the Winner are standard behaviors that contain noble practices to become a winner being. Practices
to be the winner containing standards of behavior : Imagine - Focus - Action.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)ARTIcles of AssocIATIon

Articles of Association of the Company ("Articles of Association") has been registered under the Limited Liability
Company Law No.1/1995 and has been approved by the Minister of Justice of the Republic of Indonesia based on
the Decree of Ministry of Justice No.C2-7468.HT.01.04.TH.97 of 1997. In connection with the issuance of the Limited
Liability Company Law No.40/2007, which replaced the Limited Liability Company Law No.1/1995, the Company
has adjusted its Articles of Association and has been approved by the Minister of Law and Human Rights of the
Republic of Indonesia based on the Decree of Ministry of Justice and Human Rights No.AHU.46312.AH.01.02/2008
dated July 31, 2008 and was registered in the State Gazette of the Republic of Indonesia No.84 dated October 17,
2008, Appendix Official Gazette No.20155.

Amendments to the last Articles of Association include changes in the capital structure through a stock split of the
Company from Rp 250, - to Rp50, - and the suppression of the Partnership and Community Development Program
from the content of the Company’s Work Plan and Budget. Amendments to the Articles of Association has been
carried out based on notarial deed Ashoya Ratam, SH, Mkn. No.11 dated May 8, 2013. Notification of the amendment
has been received by the Minister of Justice and Human Rights of the Republic of Indonesia by virtue of No.AHU-
AH.01.10-22500 dated June 7, 2013.

PRoDUcTs AnD seRVIces

Corresponding to the Article of Association, the Company’s main business is telecommunication services that include
fixed wireline and fixed wireless, mobile communication, network and interconnection service, as well as internet
service and data communication. We also provides various services in the field of information, media and edutainment,
including cloud-based and server based managed services, e-Payment and IT enabler, e-Commerce and other portal
services.

Telkom continues to innovate in other sectors than telecommunications and to build synergy among the entire
products, services and solutions. To increase business value, in 2012, we transform its business portfolio into TIMES
(Telecommunication, Information, Media and Edutainment & Service). To run the business portfolio, based on the
Board of Executive we classify subsidiaries into four groups, they are; cellular business led by Telkomsel, international
business led by Telin, multimedia business led by Telkom Metra, and infrastructure business led by Telkom Infra.

Telecommunication
We serve fixed services (fixed phone, fixed broadband and Wi-Fi), mobile services (full and limited mobility), network
& infrastructure services (interconnection & international traffic, network services, satellite and tower).

Information
Information services consist of platform services (managed application & SI, BPM, e-payment, premise integration,
data center & cloud, M2M), big data and ecosystem solution (e-health, e-logistics, e-tourism, e-transportation and
e-governance).

Media and Edutainment
Media and Edutainment services offered digital life, digital home and digital advertising.

Services
Services became one of the Company's business model oriented to the customer. This is in line with our Customer
Portfolio to Personal customer, Consumer/Home, Business, Enterprise, Wholesale, and International.

Vision & Mission

To Become a Leading
TIMES Player in the Region

Corporate
Strategic
Objective

Creating
Superior
Value

To Provide More for Less
TIMES Services

To be the Role Model as the
Best Managed Indonesian
Corporation

Corporate Strategy

Directional Strategy :
Sustainable Competitive
Growth

Portfolio Strategy :
Converged TIMES
Portfolio

Parenting Strategy :
Strategic Guidance

sTRATeGIc obJecTIVe TelKoM

We have defined our corporate strategies broadly as follows:

1. Directional Strategy
2. Portfolio Strategy
3. Parenting Strategy

: Sustainable competitive growth
: Converged TIMES portfolio
: Strategic guidance

Directional Strategy refers to a sustainable competitive growth strategy that supports and grows our market
capitalization.

Portfolio Strategy refers our strategy to develop a converged TIMES portfolio that provides seamless converged
services (multiservice in multi device) by exploiting the synergies of the Telkom Group.

Parenting Strategy calls for us to manage multiple businesses with different maturity levels. To support growth, the
strategic guidance covers all aspects of planning and optimizing of synergies within the Telkom Group.

To ensure that our business transformation is progressing well and thoroughly, from the corporate to the functional
level, we applied the strategic formulation model in stages. Corporate Strategy consists of a strategic situation
analysis (SSA), Strategy Formulation (SF), Strategy Implementation (SI), Strategy Evaluation & Control (SEC), and
translating those deeper at the various levels from division to functional level.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)TRADeMARKs, coPYRIGHTs, InDUsTRIAl DesIGns AnD PATenTs

We constantly seek to develop product and service innovations in line with a dynamic business portfolio. To provide
both protection for and recognition of the creativity involved, we have registered a number of intellectual property
rights, including trademarks, copyrights, industrial design and patents with the Directorate General of Intellectual
Property Rights ("Ditjen HKI") at the Ministry of Law and Human Rights of the Republic of Indonesia.

The intellectual property rights we have registered include: (i) trademarks for our products and services, corporate
logo and name; (ii) copyrights on our corporate name and logo, product and service logos, computer programs,
research and songs; and (iii) simple and ordinary patents on technological inventions in the form of telecommunications
products, systems and methods.

The following table lists the trademark submitted for the application registration for the period of 2013 and 2014:

Title

Application No.

Application Date

IndiHome

t-money

Bos Toko

Telkom Indonesia

Telkom Indonesia (with tag line “the
world in your hand”)

J002014043700

September 25, 2014

J002014028601

J002014028602

J002014028603

June 23, 2014

J002014028604

June 23, 2014

Delima (new logo)

J002014028605

June 23, 2014

U See Zone

UTV

U Zone

U meet me

J002013014812

J002013014813

J002013014814

J002013014815

J002013022833

April 2, 2013

May 16, 2013

The following table lists of registration letter of copyrights accepted for the period of 2014:

No Innovation Title

Application No.

Application Date Registration Date

Innovation
Number

“Super Resolution in Speedy
Monitoring” Computer Program

“Monitoring Penerimaan Pendapatan
Tunai” Computer Program

“Kesehatan Ibu dan Anak (KIA)
Online” Computer Program

C00201400479

February 5, 2014

March 17, 2014

67906

C00201400480

February 5, 2014

March 17, 2014

67907

C00201400481

February 5, 2014

March 17, 2014

67908

“Upoint” Computer Program

C00201400482

February 5, 2014

March 17, 2014

67909

“Wifi.id finder” Computer Program

C00201400483

March 14, 2014

67827

Innovation Title

Type of Intellectual
Property Rights

Application No.

Application Date

Registration
Date

New Indihome

Logo

C00201403674

September 25, 2014

Telkom Game Center
Application

Computer Program

C00201300509

February 7, 2013

ART Promo Application

Computer Program

C00201300510

February 7, 2013

Telkom Store Application

Computer Program

C00201300511

February 7, 2013

Qonnect Application

Computer Program

C00201300512

February 7, 2013

Telkom SNS Hub Client

Computer Program

C00201300513

February 7, 2013

U See Zone

U Zone

U TV

Logo

C00201301288

April 2, 2013

C00201301289

April 2, 2013

C00201301290

April 2, 2013

C00201301291

April 2, 2013

Firmware Telkom
Homegateaway

Computer Program

C00201301292

April 2, 2013

Indi Home

Logo

C00201305330

December 3, 2013

We did not submit or register any patents in 2013 and 2014.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)MAnAGeMenT of TelKoM InDonesIA

In accordance with Telkom Annual General Meeting of Shareholders (AGMS) on April 4, 2014, the
composition of the Board of Commissioners and Directors are as follows:

Commissioners
Jusman Syafii Djamal
Parikesit Suprapto
Hadiyanto
Gatot Trihargo
Johnny Swandi Sjam
Virano Gazi Nasution

Directors
Arief Yahya
Honesti Basyir
Indra Utoyo
Sukardi Silalahi
Muhammad Awaluddin
Rizkan Chandra
Priyantono Rudito
Ririek Adriansyah

: President Commissioner
: Commissioner
: Commissioner
: Commissioner
: Independent Commissioner
: Independent Commissioner

: President Director
: Director
: Director
: Director
: Director
: Director
: Director
: Director

In accordance with Extraordinary General Meeting of Shareholders (EGMS) on December 19, 2014,
the composition of the Board of Commissioners and Board of Directors went through some
changes.

: President Commissioner

Commissioners
Hendri Saparini
Dolfie Othniel Fredric Palit : Commissioner
: Commissioner
Imam Apriyanto Putro
: Commissioner
Hadiyanto
: Independent Commissioner
Parikesit Suprapto
: Independent Commissioner
Johnny Swandi Sjam
: Independent Commissioner
Virano Gazi Nasution

Directors
Alex J. Sinaga
Indra Utoyo
Abdus Somad Arief
Heri Sunaryadi
Herdy Rosadi Harman
Dian Rachmawan
Honesti Basyir
Muhammad Awaluddin

: President Director
: Director
: Director
: Director
: Director
: Director
: Director
: Director

2014 Annual Report PT Telkom Indonesia Tbk (Persero)President Director

TELKOM ORGANIZATIONAL STRUCTURE

Senior Vice President
Corporate Secretary
Department
VP Legal & Compliance
VP Regulatory Management
VP Corporate Office Support
VP Corporate Communication

Senior Vice President
Program Management
Office

PMO Controller

Head of Internal
Audit

VP Infrastructure & Operations Audit
VP Support & Subsidiary Audit
VP Enterprise Management Audit

Director of Consumer
Service

VP Consumer Product Planning
VP Consumer Relationship

Management

VP Consumer Marketing & Sales
VP Consumer Service Supervision

Director of Enterprise
& Business Service

VP Enterprise Business Strategy
VP Enterprise Service
VP Business Service
VP Marketing & Operation

Alignment

Director of Wholesale
& International Service
VP Wholesale & International

Development

VP Wholesale & International

Voice Service

VP Wholesale & International

Network Service

EGM Regional 1-7 Division

EGM Enterprise Service Division
EGM Business Service Division
EGM Government Service Division

EGM Wholesale Service

Division

Director of Finance
VP Management Accounting
VP Corporate Finance
VP Financial & Logistic Policy
VP Investor Relation
VP Risk & Process Management
VP Supply & Planning Control
SGM Finance Billing & Collection Center
SGM Supply Center

Director of Innovation &
Strategic Portofolio
SVP Strategic Investment

VP Strategic Investment Execution
VP Strategic Investment Planning

SVP Sinergy

VP Integration & Portfolio Management
VP Corporate Strategic Planning
VP Innovation Strategy
EGM Digital Business Division
SGM Innovation & Design Center

Director of Network, IT &
Solution
VP Infrastructure Service &

Governance

VP Information Technology Strategy

& Governance

VP Solution

EGM Broadband Division
EGM Wireless Broadband Division
EGM Network of Broadband Division
EGM Information Technology Service

& Solution Division

We have adopted a holding company approach to corporate
management, which we believe will provide productive flexibility for
all our business entities in accordance with the needs of the respective
units.

In implementing this holding company approach:
1.

the role of the corporate office is focused on the Corporate Level
Strategy function (i.e. directing overall strategy, portfolio strategy
and parenting strategy).

2. we tailor parenting style to the particular characteristics of the

business entity.

3. we seek to empower each business entity in line with their

respective particular characteristics.

In addition, we introduced the Board of Executives to improve our
parenting mechanism. The Board’s membership comprises all members
of Telkom’s Board of Directors and a number of Chief of Business.
The Chiefs of Business title is reserved for senior business experts,
who are our senior executives and horizontally positioned equivalent
to our Directors. Our Chief of Business is meant to serve in formulating
corporate level strategy decisions as well as fostering a harmonious
relationship between subsidiaries and the parent.

Telkom’s Organizational Structure

Network, IT & Solution Directorate
Focuses on managing the Infrastructure Strategy and Governance,
IT Strategy and Governance, and Solution, as well as managing
the IT utilization and service operation and management, in order
to support the capitalization of established businesses and also
controlling infrastructure operations through the Network of
Broadband, Information System Center Division, Wireless Broadband
Division and Broadband Division.

Inovation & Strategic Portfolio Directorate
Focuses on managing the functions of corporate strategic planning,
strategic business development, innovation strategy and synergy,
as well as the operational management of the Digital Business
Division and Innovation and Design Center units.

Consumer Service Directorate
Focuses on managing the consumer product planning, consumer
realtionship amagement, consumer marketing and sales and
consumer service supervision.

Enterprise & Business Service Directorate
Focuses on managing marketing and operation aligment, enterprise
business strategy, enterprise service, business service, through
the Enterprise Services Division and Business Services Division.

Wholesale & International Service Directorate
Focuses on managing the wholesale and international business
segment, and the operational management of the Wholesale
Services Division.

Human Capital Management Directorate
Focuses on managing the company’s human resources and the
operational management of human resources centrally through
the Human Capital Center unit, as well as controlling operations
of the Telkom Corporate University Center, Assessment Center
Indonesia, and Community Development Center units.

Finance Directorate
Focuses on the company’s financial management through
Corporate Finance unit, Managemnt Accounting unit, Investor
Relations unit, Financial Logistic Policy, Risk and Process
Management unit, and managing financial operations centrally
through the Finance, Billing and Collection Center unit.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)BOARD OF COMMISIONERS PROFILE

DR. HENDRI SAPARINI (PRESIDENT COMMISSIONER)

Personal
Born

: Kebumen, June 16, 1964.

Age

: 50 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
President Commissioner, appointed based on the result of Telkom Extraordinary General

Meeting of Shareholders (EGMS) on December 19, 2014.

Education
Bachelor of Arts in Economics from Gajah Mada University (1988); Master in International

Development Policy from Tsukuba University, Japan and a doctorate degree in International
Political Economy from Tsukuba University, Japan.

Career
Hendri Saparini was a Expert Staff of Minister of Cooperation and SME/Head of Indonesian

SME Development Agency, Economic Lecturer on Magister Management Gajah Mada

University, Magister Management Faculty of Development Studies Bandung Institute of

Technology, Doctoral Program Economic Faculty UMS, Economic Consultant in several

financial institutions, Bank Indonesia, and international institution, as well as Managing

Director Centre of Reformation (CORE Indonesia).

DOLFIE OTHNIEL FREDRIC PALIT (COMMISSIONER)

Personal
Born

: Kijang, Riau Islands, October 27, 1968.

Age

: 46 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Commissioner, appointed by Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014.

Education
Bandung Institute of Technology, 1995

Career
Dolfie Othniel Fredric Palit has served as Executive Director at Yayasan Bumi Indonesia

(2001-2003), Executive Director at the Institute for Strategic Consultant (Strategic

Planning) Research Policy and Regional Autonomy - REKODE (2004 - 2009), as a member

of the House of Representatives (2009 - 2014 ), Member of Special Committee Act of

Prevention and Combating Money Laundering, Bank Century Supervisory team Member,

Member of Budget Committee of the House of Representatives, and Member of the

Special Committee of the Law on BPJS.

Personal
Born

: Cilacap, March 22, 1964.

Age

: 50 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Commissioner, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014. Imam Apriyanto Putro served as Telkom Commissioners

since April 2014.

Education
Economic Faculty Diponegoro University Semarang, Magister Management from Institut

Bisnis Indonesia (IBI) Jakarta, and a doctotare degree Management from State University

Jakarta.

Career
Imam Apriyanto Putro was the Commissioner of PT Semen Indonesia Tbk and currently

served as the Secretary of Ministry of SOE.

HADIYANTO (COMMISSIONER)

Personal
Born

: Ciamis, October 10, 1962

Age

: 52 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia.

Position and Appointment Basis
Commissioner, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014. Hadiyanto served as Telkom Commissioners since May 11,

2012.

Education
Law degree from the University of Padjadjaran, Bandung; Master of Law (LLM) from

Harvard University Law School, USA, and a doctorate degree in Legal Studies from the

University of Padjadjaran, Bandung.

Career
Currently Hadiyanto also served as the Director General of State Assets in the Ministry

of Finance. Previously, Hadiyanto served as Head of the Legal Secretariat General of the

Ministry of Finance, and Alternate Executive Director of the World Bank. In the corporate

environment, Hadiyanto has served as President Commissioner of PT Garuda Indonesia

Tbk (2007 - 2012) and President Commissioner of PT Bank Ekspor Indonesia (2007-2009).

2014 Annual Report PT Telkom Indonesia Tbk (Persero)JOHNY SWANDI SJAM (INDEPENDENT COMMISSIONER)

Personal
Born

: Jakarta, August 15, 1960.

Age

: 54 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Independent Commissioner, appointed based on Telkom Extraordinary General Meeting

of Shareholders (EGMS) on December 19, 2014. Johny Swandi Sjam served as Telkom

Independent Commissioners since January 1, 2011.

Education
Diploma III of Computer Engineering from Bandung Institute of Technology, Diploma IV

in Industrial Management from the School of Industrial Management Department of

Industry, Bachelor of Informatics Management from Gunadarma University, Jakarta, and

Masters in Business Administration and Policy from the University of Indonesia, Jakarta.

Career
Johny Swandi Sjam has served as Commissioner of PT INTI (2010-2011), President Director

of PT Indosat Tbk (2005 - 2007), President Director of Satelindo (2002 - 2003) and

several other important positions in subsidiaries Indosat such as Sisindosat and Intikom

(1997- 2002).

PARIKESIT SUPRAPTO (INDEPENDENT COMMISSIONER)

Personal
Born

: Surabaya, August 8, 1951

Age

: 54 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Independent Commissioner, appointed based on Telkom Extraordinary General Meeting

of Shareholders (EGMS) on December 19, 2014. Parikesit Suprapto served as Telkom

Independent Commissioners since May 11, 2013.

Education
Bachelor in Corporate Economics from Sekolah Tinggi Manajemen Industri (1980), Master

in Economic Development from Indiana University, USA (1990); and doctorate degree in

Economic Development from Notre Dame University, Indiana, USA (1995).

Career
Currently serving as commissioner of Indonesian Central Securities Depository. Parikesit

Suprapto served as Deputy for Services, the Ministry of SOEs (2010 - 2012), Deputy for

Banking and Financing Industry, the Ministry of SOEs (2008 - 2010), and Advisor to the

Minister of Cooperatives and SMEs Small Business Sector (2006 - 2008). In the corporate

environment, Parikesit Suprapto served as Commissioner of PT Indosat Tbk (2011 - 2012)

and Commissioner of PT Bank Negara Indonesia (Persero) Tbk.

Personal
Born

: Bandung, August 23, 1968

Age

: 46

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Independent Commissioner, appointed based on Telkom Extraordinary General Meeting

of Shareholders (EGMS) on December 19, 2014. Virano Nasution served as Telkom

Independent Commissioners since May 11, 2012.

Education
Bachelors degree in the field of Systems Engineering, University of Arizona and a master's

degree in Economic Engineering, Stanford University, USA.

Career
Virano Gazi Nasution served as Commercial Director of PT Indonesia Comnet Plus, a

subsidiary of PT PLN (2009 - 2012), Expert Staff to the Minister of Communications and

Informatics Technology (2008 - 2009), and President Director of PT Bakrie Telecom Tbk

(2001 - 2005).

2014 Annual Report PT Telkom Indonesia Tbk (Persero)BOARD OF DIRECTOR PROFILE

ALEx J. SINAGA (PRESIDENT DIRECTOR)

Personal
Born
Age

: Pematang Siantar, September 27, 1961.
: 53 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
President Director, appointed based on Telkom Extraordinary General Meeting of

Shareholders (EGMS) on December 19, 2014.

Education
Bachelor degree of Electronic Telecommunications of Bandung Institute of Technology

and Master of Telematics of the University of Surrey, Guidford-UK.

Career
Alex J. Sinaga previously served as President Director of Telkomsel, President Director

of PT Multimedia Nusantara, Division Head of Fixed Wireless Networks, Head of Enterprise

Services, President Commissioner of PT Sigma Cipta Caraka, and Vice President of Toba

Lake Golf Club, General Manager Telkom West Jakarta, Senior Manager of Performance

- Regional Division II Jakarta.

ABDUS SOMAD ARIEF (DIRECTOR)

Personal
Born
Age

: Sidoarjo, September 25, 1963.
: 51 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Director, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014.

Education
Bachelor degree of Electrical Engineering from Bandung Institute of Technology and

Master of Information Systems and Technology from Bandung Institute of Technology.

Career
Abdus Somad Arief’s career mostly in Telkom. Previously, Abdus Somad Arief was Director

of Network Telkomsel, Executive General Manager of the Enterprise Service Division

Telkom (2009 - 2012), Vice President of Business Development - Enterprise & Wholesale

Telkom (2008 - 2009), and Deputy Executive General Manager - Enterprise Service

Division Telkom (2007 - 2008). Abdus Somad Arief also been the President Commissioner

of PT Pramindo Ikat Nusantara (2011 - 2012) and Commissioner of PT Infomedia Nusantara

(2010 - 2011).

Personal
Born

: Jakarta, January 15, 1968.

Age

: 46 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Director, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014.

Education
Bachelor degree of Electrical Engineering from Sriwijaya University (1990); Master of

Business Administration from European University Antwerp Belgium (1998).

Career
Muhammad Awaluddin started his career at Telkom since 1991. Awaluddin has served as

General Manager of Kandatel Bogor, General Manager of Kandatel Central Jakarta,

Executive General Manager of Divre I Sumatra, Vice President of Public and Marketing

Communications and Executive General Manager of the Division of Access. Previously,

Awaluddin was the President Director of PT Infomedia Nusantara.

HERI SUNARYADI (DIRECTOR)

Personal
Born

: Jember, June 26, 1965.

Age

: 49 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia.

Position and Appointment Basis
Director, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014.

Education
Bachelor Degree Faculty of Agriculture from Bogor Agricultural University (1987).

Career
Heri Sunaryadi previously was the President Director of PT Bahana Pembinaan Usaha

Indonesia (Persero) in 2009 - 2013 and President Director of PT Kustodian Sentral Efek

Indonesia (2013 - 2014).

2014 Annual Report PT Telkom Indonesia Tbk (Persero)HONESTI BASYIR (DIRECTOR)

Personal
Born

: Padang, June 24, 1968.

Age

: 46 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Director, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014.

Education
Bachelor Degree of Industrial Engineering from Bandung Institute of Technology (1992)

and Master Degree of Corporate Finance from Sekolah Tinggi Manajemen Bandung (2004).

Career
Honesti Basyir has served as Finance Director of Telkom (2012 - 2014), Vice President of

Strategic Business Development Directorate of IT Solutions and Strategic Portfolio Telkom.

Assistant Vice President of Business and Finance Analysis and Project Controller-1 Project

Management Office Telkom.

HERDY ROSADI HARMAN (DIRECTOR)

Personal
Born

: Bandung, June 28, 1963.

Age

: 51 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Director, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014.

Education
Bachelors Degree of Law from University of Padjadjaran, Bandung; MBA from the Asian

Institute of Management Philippines-Institute Management Telkom University, and Master

of Law (LLM) from Washington College of Law, DC, USA.

Career
Herdy Rosadi Harman previously served as the Director of Human Capital Management

Telkomsel (2012 - 2014). Herdy Rosadi Harman served as Vice President of Legal &

Compliance Telkom (2006 - 2007) as well as Vice President of Regulatory Management

Telkom (2007 - 2012).

Personal
Born

: Bangil, May 14, 1964.

Age

: 50 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Director, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014.

Education
Master in Telecommunication Engineering of Bradford University, England.

Career
Dian Rachmawan previously was the CEO of PT Telekomunikasi Indonesia International

(Hong Kong) Limited or Telin HK.

INDRA UTOYO (DIRECTOR)

Personal
Born

: Bandung, February 17, 1962.

Age

: 53 years.

Citizenship and Domicile
Indonesian citizen, domiciled in Indonesia

Position and Appointment Basis
Director, appointed based on Telkom Extraordinary General Meeting of Shareholders

(EGMS) on December 19, 2014. Indra Utoyo served as Director since February 28, 2007

and had served as Acting President Director by virtue of the BOC No.201/SRT/DK/2014

dated October 31, 2014.

Education
Bachelor of Electrical Telecommunication Engineering from Bandung Institute of Technology

and Master Degree in Communication and Signal Processing from Imperial College of

Science, Technology and Medicine, University of London, England.

Career
Indra Utoyo joined Telkom since 1986. Indra Utoyo has served as a Senior General Manager

of Information System Center Telkom, and Director of IT Solutions & Supply Telkom.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)ExECUTIVES PROFILE

Position

Name

Senior Vice President Corporate Secretary Department

Triana Mulyatsa

Senior Vice President Program Management Office Department

Ikhsan

Head of Internal Audit

Vice President Corporate Communication

Vice President Regulatory Management

Vice President Corporate Office Support

Vice President Legal and Compliance

Vice President Infrastructure and Operations Audit

Vice President Support and Subsidiary Audit

Vice President Enterprise Management Audit

Mohammad Nuhin

Arif Prabowo

Henry Christiadi

Dodi Irawan

Rudy Agustian

Rubi Handojo

Purwadi Siswana

Purwoto

Vice President Financial and Logistic Policy

Agus Hery Prasetyo

Vice President Management Accounting

Vice President Corporate Finance

Vice President Risk and Process Management

Vice President Supply Planning and Control

Vice President Investor Relation

Edi Witjara

Roby Roediyanto

Jajat Sutarjat

I K Dody Wirawan

Andi Setiawan

Senior General Manager Finance Billing and Collection Center

Martinus Wisnu Adji

Senior General Manager Supply Center

Vice President Human Capital Policy

Vice President Organization Development

Vice President Industrial Relation

Vice President Telkom Smart Office

Senior General Manager Human Capital Center

Weriza

Aris Hartoni

Danang Baskoro

Djonet Hartono

Ardi Purwanto

Nurdito Waluyo

Senior General Manager Telkom Corporate University Center

Dwi Heriyanto B.

Senior General Manager Assessment Center Indonesia

Rini Lestari Utami

Senior General Manager Community Development Center

Nur Hassim Haji Rusdi

Vice President Corporate Strategic Planning

Executive Vice President Strategic Investment

Vice President Strategic Investment Execution

Vice President Strategic Investment Planning

Andy Revara

N/A

Setyanto Hantoro

Yusuf Wibisono

Vice President Innovation Strategy

IGN. Wiseto Prasetyo Agung

Senior Vice President Synergy Department

Joddy Hernady

Executive General Manager Digital Business

Senior General Manager Innovation & Design Center

Vice President Consumer Product Planning

Vice President Consumer Relationship Management

Vice President Consumer Marketing & Sales

Operational Vice President Consumer Service Supervision

Vice President Marketing & Operation Alignment

Vice President Enterprise Business Strategy

Vice President Enterprise Service

Vice President Business Service

Executive General Manager Enterprise Service Division

Executive General Manager Business Service Division

Name

Achmad Sugiarto

Saiful Hidajat

Teni Agustini

Agus Winarno

Jemy

Sujito

Bagyo Nugroho

Wisnu Haryadi

Indrawan Ditapradana

Ilmianto

Siti Choiriana

Yusron Hariyadi

Executive General Manager Government Service Division

Mohammad Salsabil

Vice President Wholesale & International Development

Mohamad Ramzy

Vice President Wholesale & International Voice Service

Erik Orbandi

Vice President Wholesale & International Network Service

Budi Satria Dharma Purba

Executive General Manager Wholesale Service Division

Faizal Rochmad Djoemadi

Vice President Infrastructure Service & Governance

Vice President IT Strategy & Governance

Vice President Solution

Arief Musta’in

Alip Priyono

Dani Ramdani

Executive General Manager Broadband Division

Revolin Simulsyah

Executive General Manager Wireless Broadband Division

Pramasaleh Hario Utomo

Executive General Manager Network of Broadband Division

Era Kamali Nasution

Executive General Manager IT Service & Solution Division

Halim Sulasmono

Executive General Manager Regional 1 Division

Teuku Muda Nanta

Executive General Manager Regional 2 Division

Executive General Manager Regional 3 Division

Executive General Manager Regional 4 Division

Executive General Manager Regional 5 Division

Executive General Manager Regional 6 Division

Executive General Manager Regional 7 Division

Prasabri Pesti

Suparwiyanto

Rosydul Umam Aly

Iskriono Windarjanto

Joko Raharjo

Mohammad Firdaus

2014 Annual Report PT Telkom Indonesia Tbk (Persero)TELKOM BUSINESS GROUP
To perform a business portfolio according to the principles of good corporate governance and best practices,
as well as with regard to the provisions of legislation in force, Telkom Group formed a Board of Executive
("BOE"), facilitating parenting mechanism towards subsidiaries. Subsidiaries are divided into some category,
the cellular business led by Telkomsel, media led by Telkom Metra, infrastructure led by Telkom Infra, and
international led by Telin.

TELKOM BUSINESS GROUP STRUCTURE
Business group structure and composition of the Telkom Group's shares are presented in the following diagram.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)SUBSIDIARIES AND ASSOCIATED COMPANIES

According to the Telkom Group Board of Executive Charter that was decided on December 19, 2013, the management
structure grouped by Corporate Strategic Scenario ("CSS"). CSS is set up a framework of rules, basic principles, and
reference in the management as well as the mechanism of the relationship between the subsidiary and us in an
integrated manner. CSS is applied in order to achieve the objectives of the company with the principles of Good
Corporate Governance (GCG) and best practices, as well as taking into account the legislation in force.

The following table presents the company structure, including the direct and indirect holdings in various subsidiaries,
which are divided into of cellular business, international, media, and infrastructure category.

Subsidiaries and Associated Companies in Cellular Business Category

Company

Shareholdings Line of Business

Operation
Status

Description

PT Telekomunikasi
Selular (“Telkomsel”),
Jakarta

65%

Telecommunication Operate

Telkomsel, was established on May 26,
1995, provides telecommunications and
mobile phone service. Using the Global
System for Mobile Communication
technology (GSM).

Company

Shareholdings

Line of Business

Operation
Status

Description

PT Telekomunikasi
Indonesia
International (“Telin”),
Jakarta

Telekomunikasi
Indonesia
International Pte. Ltd.
(“Telin Singapore”),
Singapore

Telekomunikasi
Indonesia
International (Hong
Kong)
Limited. (“Telin Hong
Kong), Hong Kong

Telekomunikasi
Indonesia
International (TL) S.A.
(“Telin Timor Leste ”),
Dili

Telekomunikasi
Indonesia
International Pty
Ltd.,Australia
(“Telkom Australia”),
Melbourne

Telkom Macau
Limited,
Macau

Telkom Taiwan
Limited,
Taipe City

Telekomunikasi
Indonesia
International (USA)
Inc., Los Angeles

Telekomunikasi
Indonesia
International
(Malaysia) Sdn. Bhd.,
Kuala Lumpur

100%

Telecommunication

Operate

100% through
Telin

Telecommunication

Operate

100% through
Telin

Telecommunication

Operate

100% through
Telin

Telecommunication

Operate

100% through
Telin

Telecommunication
business and
IT-based services

Operate

100% through
Telin Hong
Kong

MVNO Service

Operate

MVNO Service

Operate

100% through
Telin

Telecommunication
and IT

Operate

49% through
Telin

Telecommunication,
MVNO Service

Operate

Previously known as PT Ariawest
International, Telin was acquired on
July 31, 2003 and is a wholly owned
subsidiary of Telkom. Currently, Telin
has obtained the fixed closed network
(“Jartaptup”) license and Network
Access Provider license. Telin provides
network services and international
telecommunication services, as well as
international business.

Telin Singapore was established on
December 6, 2007, pursuant to the
laws of Singapore. Telin Singapore is a
wholly owned subsidiary of TII. The
Company has obtained Facility Based
Operator License. Currently, it provides
wholesale voice, wholesale data and
Managed Service.

Telin Hong Kong was established in
Hong Kong on December 8, 2010 a
wholly owned subsidiary of TII. Telin
Hong Kong obtained Unified Carrier
License on March 1, 2011, Service Based
Operator for MVNO on July 27 2011
and License for Operating Money
Service on July 18, 2012. Currently, it
provides wholesale voice, wholesale
data and retail mobile services. The
MVNO service is provided under the
brand Kartu As 2in1.

Telin Timor Leste was a subsidiary of
Telin Indonesia, established on
September 17, 2012. Telin Timor Leste
has obtained radio spectrum and
general registration certificate license.
The service currently provided Fixed
Telephone Connections; Mobile
Connections; Internet Connections;
Traffic-Fixed Line; Traffic-Mobile

Telkom Australia is a subsidiary owned
exclusively by Telin Indonesia.
Established on January 14, 2013 by
running Business Process Outsourcing
(BPO), Information Technology
Outsourcing (ITO), and
Telecomunication Services.

Telkom Macau is a subsidiary of Telin
Hong Kong Limited, which was
established on May 13, 2013.

Telkom Taiwan is a subsidiary of
TelinHong Kong Limited, which was
established on June 3, 2013.

Telekomunikasi Indonesia International
(USA) Inc. is a subsidiary that entirely
owned by Telin Indonesia. Established
on December 11, 2013.

Telekomunikasi Indonesia International
(Malaysia) Sdn. Bhd.s a joint venture
company with Compudyne. Sdh. Bhd,
providing MVNO after receiving
Applications Service Provider Class
("ASPCC") license on July 23, 2013 and
Network Service Provider (“NSP”) on
August 23, 2013. Officially operated on
August 25, 2013.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Subsidiaries and Associated Companies in Media Business Category

Company

Shareholdings

Line of Business

Operation
Status

Description

PT Multimedia
Nusantara
(“Telkom metra”),
Jakarta

100%

Telecommunications
networks and multimedia
services

Operate

PT PINS Indonesia
(“PINS”), Jakarta

100%

PT Patra
Telekomunikasi
Indonesia
(“Patrakom”),
Depok

PT Sigma Cipta
Caraka
(“Telkomsigma”),
Tangerang

100%

100% through
Telkom metra

PT Infomedia
Nusantara
(“Infomedia”),
Jakarta

100% (including
through 49%
ownership of
the Company)

Services and
telecommunications
development

Services of satellite
communication systems,
related services and
facilities for companies
engaged in the oil
industry

Informatics technology
service – implementation
and integration system,
outsourcing, and license
& software maintenance

Data and information
services - providing
telecommunications
information services and
other information
services in print and
electronic media, and call
center services

Telkom Metra, founded on May 9,
2003, managing our multimedia
bussines. Telkom Metra provides the
development service, construction,
and network maintenance as well as
multimedia services (data
communication system services,
portal services, and online
transaction services).

PINS was originally established to
operate our KSO in Sumatra and
was acquired on August 15, 2002.

Patrakom was established on
September 28, 1995. On September
25 and November 29, 2013, the
Company acquired additional
interest of 40% and 20%,
respectively, of Patrakom.

Operate

Telkomsigma was established on
May 1, 1987, provides IT and
solutions service.

Operate

Infomedia was acquired on
September 22, 1999 to organize
KSO in Sumatra. Infomedia has
transformed from focusing on 3
pillars of business (directory
services, contact center services,
and content services) into a
Business Process Outsourcing and
Digital Media & Rich Content
service.

PT Metra Digital
Media (“MD Media”),
Jakarta

99,99% through
Telkom metra

Information
telecommunication
service

Operate

MD Media was established on
January 22, 2013.

PT Finnet Indonesia
(“Finnet”),
Jakarta

60% through
Telkom metra

Banking communication
and data

Operate

75% through
Telkom metra

Administration and
insurance/health services

Operate

60% through
Telkom metra

99,99% through
Telkom metra

Portal service

Operate

Multimedia portal service Operate

51% through
Telkom metra

Travel agent/bureau
service

Operate

Finnet was established on October
31, 2005, as provider of IT
infrastructure, applications, and
content for information system and
financial transactions for the
banking industries and other
financial services industries.

Ad Medika was established on
February 25, 2010, provides online
claim service between the hospitals
and health insurance companies.

Metra Plasa established on April 9,
2012

Metranet was established on April
17, 2009.

Pointer was established on April 18,
2008. On August 30, 2013, Metra
changed its ownership in pointer
become 51%

99,99% through
Telkom metra

Trade services and
telecommunications
network, satellite, and
multimedia tools

Operate

SMI was established on March 25,
2013.

PT Administrasi
Medika (“Ad
Medika”),
Jakarta

PT Metra Plasa
(“Metra Plasa”),
Jakarta

PT Metranet
(“Metranet”),
Jakarta

PT Pojok Celebes
Mandiri (“Pointer”),
Jakarta

PT Satelit
Multimedia
Indonesia (“SMI”),
Jakarta

Shareholdings

Line of Business

Operation
Status

Description

PT Metra Digital
Investama (“MDI”),
Jakarta

99,99 % through
Telkom metra

Trading, supplier,
construction services

Operate

MDI was established on January 8,
2013

PT Metra TV (“Metra
TV”), Jakarta

99,83% through
Telkom metra

Broadcasting
subscription service

Operate

Metra TV was established on
January 8, 2013.

PT Indonusa
Telemedia (
“TelkomVision”),
Jakarta

20% (including
through 4,33%
ownership by
Telkom metra)

TV and content
subscription

Operate

Established on May 7, 1997,
Indonusa is a multimedia (pay-TV,
internet service) service provider.
Since 2007, Indonusa was the first
Pay TV operator in Indonesia to
launch DTH Prepaid (Prepaid
Satellite Pay TV), under the
“TelkomVision” brand. On October
8, 2013, 1,036,059, 483 Indonusa
shares (equivalent to 80% of its
ownership in Indonusa) were sold
to PT Trans Corpora and PT Trans
Media Corpora.

PT Integrasi Logistik
Cipta Solusi
(“ILCS”), Jakarta

49% through
Telkom metra

E-trade logistic service
and other related service.

Operate

Telkom Metra establish ILCS with
Pelindo II on September 21, 2012.

PT Melon Indonesia
(“Melon”), Jakarta

51% through
Telkom metra

Digital Content Exchange
Hub (“DCEH”) service

Operate

Melon is a joint venture company
between Telkom and SK Telecom
Korea. Melon was established on
August 16, 2010. The Company
expanded into media and
edutainment business, providing
digital music content and related
content services for mobile phone,
computer, consumer electronics
channels, and other digital media.

PT Citra Sari
Makmur (“CSM”),
Jakarta

25%

Provision of
Communication Systems
Micro Earth Station (Very
Small Aperture Terminal
or "VSAT"), network
application services and
consulting services on
telecommunications
technology and related
facilities

Operate

CSM was established on February
14, 1986.

PT Pasifik Satelit
Nusantara (“PSN”),
Jakarta

14.60%

Satellite transponder
leasing services and
satellite-based
communication services
in the Asia Pacific region

Operate

PSN was established on July 2, 1991.
PSN conduct an initial public
offering of common stock shares
with the National Association of
Securities Dealers Automated
Quotations ("NASDAQ") in June
1996, but the company delisted on
November 6, 2001 failed to meet
NASDAQ National Market Listing
certain requirements.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Subsidiaries and Associated Companies in Infrastructure Business Category

Company

Shareholdings

Line of Business

Operation
Status

Description

PT Infrastruktur
Telekomunikasi
Indonesia (“Telkom
Infra”),
Jakarta

100%

Telecommunication
development service

Operate

PT Dayamitra
Telekomunikasi
(“Mitratel”),
Jakarta

100%

Telecommunication

Operate

On January 16, 2014,
The Company established a
subsidiary
with the name of PT Infrastructure
Telecommunications Indonesia.

Mitratel provides fixed line
telephone services, supply of
telecommunications facilities and
infrastructure and
telecommunications services.
Acquired on May 17, 2001, Mitratel
transformed it self by entering the
telecommunications infrastructure
supply business, which includes
supplying telecommunications
towers to meet the BTS installment
needs of telecommunications
operators all over Indonesia.

On October 9, 2014, the Company
signed a Conditional Shares
Exchange Agreement with PT
Tower Bersama Infrastructure Tbk
("TBI") to exchange its 49%
ownership in Mitratel for 5.7%
ownership in TBI. In addition, there
is an option to exchange the
Company’s remaining 51%
ownership in Mitratel within 2 years
that will increase the Company’s
ownership up to 13.7% in TBI. As of
the date of approval and
authorization for the issuance of the
consolidated financial statements,
the transaction is still in progress

PT Graha Sarana Duta
(“TelkomProperty”
atau "GSD"),
Jakarta

99,99%

Office leasing and
building management,
maintenance service,
civil consultant, and
developer.

Operate

Acquired on April 25, 2001, Telkom
Property operates throughout
Indonesia and manages buildings
owned by us and third parties.

55% through
Telkom Property

Property management
and developer service.

Operate

51% through
Telkom Property

Tourism service

Not yet
operating

Telkom Property establishes TLT
with Yakes Telkom on February 1,
2012.

TelkomProperty founded GYS
together with Yakes Telkom on
April 27, 2012 focus on of
hospitality services.

100%

Construction, services
and trade in
telecommunications

99,99% through
Telkom Property

Building management
and hotel services

Operate

Telkom Akses was established on
November 26, 2012.

Not yet
operating

NSN was established on September
1, 2014

99,99% through
Telkom Property

Service and Trading

Not yet
operating

NSI was established on September
1, 2014

99,99% through
Telkom Property

Service and Trading

Not yet
operating

NSR was established on September
1, 2014

PT Telkom
Landmark Tower
(“TLT”),
Jakarta

PT Graha Yasa
Selaras (“GYS”),
Jakarta

PT Telkom Akses
(“Telkom Akses”),
Jakarta

PT Nusantara Sukses
Sarana (“NSS”) ,
Jakarta

PT Nusantara Sukses
Investasi (“NSI”) ,
Jakarta

PT Nusantara Sukses
Realiti (“NSR”),
Jakarta

2014 Annual Report PT Telkom Indonesia Tbk (Persero)sTocK oVeRVIeW

SHAREHOLDER COMPOSITION
The authorized capital of the Company consists of 1 stock of Series A Dwiwarna, and 399.999.999.999 Series B
stocks (ordinary stocks). The authorized issued and fully paid capital of 100.799.996.400, consisting of 1 stock of
Series A Dwiwarna and 100.799.996.399 Series B stocks. 1 stock of Series A Dwiwarna belongs to Government of
the Republic of Indonesia ("Government").

Company Shareholders per December 31, 2014

Series A
Dwiwarna Share

Series B Shares
(Common Stock)

Percentage of
Ownership

Government

Public

Capital Subtotal (issued and fully paid)

Treasury Stock

Total

51,602,353,559

46,573,500,040

98,175,853,599

2,624,142,800

100,799,996,399

52.56

47.44

100.00

Composition of Telkom shareholders per December 31, 2014 is as follows:

1. Shareholders with Ownership More Than 5% (Main/Controlling Shareholder)

Title of Class

Person or Group

Number of Shares

Series A

Series B

Government

1.00

51,602,353,559

Percentage of
Ownership

52.56

Relationship with The Government and Goverment
Agencies
The Government is our majority and controlling shareholder.
It is also our regulator as it adopts, administers and
enforces relevant laws that regulate telecommunications
sector, sets tariffs and issues licenses. It is also one of
our customers and one of our lenders.

As used in this section, the term “Government” includes
the Government of Indonesia and its ministries, directly-
owned government departments and agencies, but
excludes SOEs.

The Government as Shareholder
The Government is our majority and controlling shareholder
and owns 52.56 % of our common stock as of December
31, 2014. Its ownership of the Series A Dwiwarna share
gives it special voting and veto rights. Under the relevant
laws, the “ownership” of our common stock and the
single outstanding Series A Dwiwarna share is vested
in the Ministry of Finance (“MoF”). In turn, and under

the authority of the MoF, the Minister of State-Owned
Enterprise (“MSOE”) exercises the rights vested in these
securities as our “controlling shareholder.”

As our majority shareholder and controlling shareholder,
the Government has an interest in our performance, both
in terms of the service we provide to the nation and our
ability to operate on a commercial basis. The material
rights and restrictions that apply to our common stock
also apply to the Series A Dwiwarna share, except that
the Government may not transfer the Series A Dwiwarna
share, and has special right with regard to: (i) the
nomination, appointment and removal of our Directors;
(ii) the nomination, appointment and removal of our
Commissioners; (iii) the issuance of new shares and (iv)
any amendments to our Articles of Association, including
with respect to actions to merge or dissolve our Company,
increase or reduce our authorized capital, or reduce our
subscribed capital.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICES The Government as Regulator
The Government regulates the telecommunications
sector through the MoCI. The MoCI has the authority to
issue regulations that implement laws, which are typically
broad in scope. Through such decrees the MoCI defines
the structure of the industry, determines tariff formulas,
establishes our USO, and otherwise controls many factors
that could influence our competitive position, operations
and financial position. Through the DGPT, the MoCI
regulates the allocation of frequencies and sets numbers
for fixed telephone lines.

We are required to obtain a license from the DGPT for
each type of service offered, including licenses for the
frequencies we use (as allocated by the MoCI). We and
other operators are required to pay frequency usage
fees. Telkomsel also holds licenses issued by the MoCI
(some of which were previously issued by the Minister
of Communications) for the provision of cellular services,
and from the Indonesian Investment Coordinating Board
in relation to Telkomsel’s investments for the development
of cellular phone services with national coverage, including
the expansion of network coverage. The Government,
through the MoCI as regulator, has the authority to issue
new licenses for the establishment of new joint ventures
and other new arrangements, particularly in
telecommunications.

The Government as Lender
In July 1994, the Government arranged a facility under
which certain foreign institutions provided us with a
two-step loan for certain expenditures (the “sub-loan
borrowings”). The sub-loan borrowings were made
through the Government and are guaranteed by it. As

A number of ministries
and government
agencies utilize
our services as direct
commercial customers

of December 31, 2014, we had a total of Rp1,615 billion,
or US$130 million, in such outstanding two-step loans,
including current maturities. We are required to pay the
Government interest and repay the principal, which the
Government then remits to the respective lenders. As
of December 31, 2014, 72.9% of such sub-loan borrowings
were denominated in foreign currencies, with the remaining
27,1% denominated in Rupiah. In 2014, the annual interest
rates charged 8.5% on loans repayable in Rupiah, 4.0%
on those denominated in US Dollar and 3.1% for those
denominated in Japanese Yen.

The Government as Customer
A number of ministries and government agencies utilize
our services as direct commercial customers. No services
are provided for free or on an in-kind basis. We deal with
these departments and agencies as separate customers.
In 2014, the amount of revenues from Government
departments and agencies was Rp749 billion, which was
approximately 1.95% of our consolidated revenues and
did not constitute a material part of our revenues. The
Government departments and agencies are treated for
tariff purposes with respect to connection charges and
monthly charges as “residential”, which tariffs are lower
than the business service rates. This does not apply to
the tariffs for local, long distance and IDD calls.

It is our policy not to enter into any transactions with
affiliates unless the terms are no less favorable to us
than they would be with a third party. The MSOE has
advised us that it would not cause us to enter into
transactions with other entities under its control unless
the terms were consistent with our policy as referred to
above.

Pursuant to OJK regulations, because we are listed on
the IDX, any transaction where there is an inherent
conflict of interest (as defined below) with another IDX-
listed company must be approved by majority of the
holders of our common stock who do not have a conflict
of interest in the proposed transaction, unless such
conflict of interest existed before listing and was fully
disclosed in the offering documents.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)2. Ownership of Stocks by Directors and Commissioners
On December 31, 2014, none of our Director or senior managers who have more than 1.0% of our stocks. In addition,
on December 31, 2014 none of our Commissioners owned our common stock.

Directors or Commissioners

Number of Shares

Percentage of
Ownership (%)

Directors

Total

Indra Utoyo

Honesti Basyir

Dian Rachmawan

27,540

540

60,540

88,620

<0.01

3. Shareholders with Less than 5% Ownership

Group

Foreign

Business

Individual

Local

Business Entities

Companies

Mutual Funds

Insurance Companies

Pension Funds

Other Business Entities

Individuals

Total

Number of Shares of Common
Stock Owned

Percent (%) of Common Stock
Owned

38,969,793,385

14,222,600

2,415,515,005

2,383,296,000

1,672,652,600

563,724,750

74,945,790

479,349,910

46,573,500,040

39.69

0.01

2.46

2.43

1.70

0.57

0.08

0.49

47.44

5. List of the 20 Biggest Public Shareholders
The following was our twentieth biggest of public shareholders on December 31, 2014.

Shareholders Name

Percentage of Ownership (%)

BPJS KETENAGAKERJAAN-JHT

BNYM SA/NV AS CUST OF EMPLOYEES PROVIDEN

BBH BOSTON S/A VANGRD EMG MKTS STK INFD

GIC S/A GOVERNMENT OF SINGAPORE

JPMCB-VIRTUS EMERGING MARKETS OPPORTUNIT

PT PRUDENTIAL LIFE ASSURANCE-REF

HSBC BANK PLC S/A SAUDI ARABIAN MONETARY

BBH BOSTON S/A MATTHEWS PACIFIC TIGER FU

RBC ISB S/A VONTOBEL FUND-EMERGING MARKE

SSB OBIH S/A ISHARES MSCI EMERGING MARKE

THE NORTHERN TRUST CO S/A SAUDI ARABIAN

JPMCB-STICHTING DEPOSITARY APG EME MRKT

SSB 1BA9 ACF MSCI EQUITY INDEX FUND B-IN

JPMCB-JPMORGAN FUNDS -2157804185

SSB ZM47 S/A INVESCO DEVELOPING MARKETS

JPMCB-VANGUARD TOTAL INTERNTNL STOCK IND

PT AIA FINL - UL EQUITY

HSBC BK PLC RE AGUS FUND MANAGER S/A ABU

BNYM SA/NV AS CUST OF NEWTON ASIAN INCOM

BBH BOSTON S/A MATTHEWS ASIA DIVIDEND FU

1.07

1.06

0.97

0.95

0.72

0.64

0.58

0.52

0.48

0.43

0.41

0.39

0.38

0.35

0.34

0.32

0.31

0.26

2014 Annual Report PT Telkom Indonesia Tbk (Persero)CHRONOLOGY OF STOCK ISSUED

Date

Corporate Actions

Share Ownership Composition

Government of the
Republic Indonesia

Public

13/11/1995

Pre Initial Public Offering (“Pre-IPO”)

8,400,000,000

100.0

14/11/1995

IPO

Sale of Government’s shares

(933,334,000)

New shares issued by Telkom

933,334,000

933,333,000

Share Ownership Composition

7,466,666,000

80.0

1,866,667,000

20.0

11/12/1996

Block Sale of Government’s shares

(388,000,000)

388,000,000

Share Ownership Composition

7,078,666,000

75.8

2,254,667,000

24.2

15/05/1997

Distribution of incentive shares by the
Government to public shareholders

(2,670,300)

2,670,300

Share Ownership Composition

7,075,995,700

75.8

2,257,337,300

24.2

07/05/1999 Block Sale of Government’s shares

(898,000,000)

898,000,000

Share Ownership Composition

6,177,995,700

66.2

3,155,337,300

33.8

02/08/1999

Distribution of bonus shares (emission)
(every 50 shares acquire 4 shares)

494,239,656

252,426,984

Share Ownership Composition

6,672,235,356

66.2

3,407,764,284

33.8

07/12/2001

Block Sale of Government’s shares

(1,200,000,000)

1,200,000,000

Share Ownership Composition

5,472,235,356

54.3

4,607,764,284

45.7

16/07/2002 Block Sale of Government’s shares

(312,000,000)

312,000,000

Share Ownership Composition

5,160,235,356

51.2

4,919,764,284

48.8

01/10/2004

Stock Split (1:2)

10,320,470,712

51.2

9,839,528,568

48.8

21/12/2005

Share repurchase program (I)

(211,290,500)

Share Ownership Composition

10,320,470,712

51.7 9,628,238,068

48.3

29/06/2007 Share repurchase program (II)

(215,000,000)

Share Ownership Composition

10,320,470,712

52.3

9,413,238,068

47.7

20/06/2008 Share repurchase program (III)

(64,284,000)

Share Ownership Composition

10,320,470,712

52.5 9,348,954,068

47.5

19/05/2011

Share repurchase program (IV)

(520,355,960)

Share Ownership Composition

10,320,470,712

53.9

8,828,598,108

46.1

14/06/2013

Transferred a portion of Share repurchase
program III to employees through ESOP
Program

59,811,400

Share Ownership Composition

10,320,470,712

53.7 8,888,409,508

46.3

30/07/2013

Transferred share repurchase program I by
private placement

211,290,500

Share Ownership Composition

10,320,470,712

53.1 9,099,700,008

46.9

02/09/2013

Stock Split (1:5)

51,602,353,560

53.1 45,498,500,040

46.9

13/06/2014

Transferred share repurchase program I by
private placement

1,075,000,000

Share Ownership Composition

51,602,353,560

52.6 46,573,500,040

47.4

(1) The first share repurchase program started on December 21, 2005 (the date of the Extraordinary General Meeting of Shareholders at which the

program was approved) and ended in June 2007.

(2) The second share repurchase program started on June 29, 2007 (the date of the Extraordinary General Meeting of Shareholders at which the

program was approved) and ended in June 2008.

(3) The third share repurchase program started on June 20, 2008 (the date of the Extraordinary General Meeting of Shareholders at which the

program was approved) and ended in December 2009.

(4) The fourth share repurchase program started on May 19, 2011 (the date of the Annual General Meeting of Shareholders at which the program

was approved) and ended in November 2012.

stock to its employees as part of the 2012 annual incentives.
The 59,811,400 (equal to 299,057,000 shares after stock
split) reasury stock transferred to 24.993 employees
which had a total fair value of Rp661 billion. As of
December 31, 2014, 139,140,110 of our shares were owned
by 16,805 of our employees and our retirees. In 2014,
we did not conduct the ESOP.

2. Purchases of Equity Securities by The Issuer and Affiliated Purchasers

Share
Buy Back
Program

Accordance with

Purchase
Periode

Total Number
of Shares
Purchased

Average
Price Paid
per Share
in Rp

Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans

Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans

SBB I

SBB II

SBB III

EGMS December 21,
2005

AGMS June 29,
2007

AGMS June 20,
2008

SBB IV

AGMS May 19, 2011

December 21,
2006 - June 20,
2007

June 29, 2007
- December 28,
2008

June 20, 2008
- December 20,
2009

May 19, 2011
- November 20,
2012

1,056,452,500

1,731

1,056,452,500

1,075,000,000

1,832

1,075,000,000

321,420,000

1,448

321,420,000

2,601,779,800

1,461

2,601,779,800

As of December 31, 2012, we had repurchased
5,054,652,300 common stock shares, equivalent to 5.0%
of our issued and outstanding common stock, at an
aggregate repurchase price of Rp8,067 billion, excluding
broker and custodian fees. Under our repurchase program,
we repurchased 591,882,500 shares in 2006, 631,820,000
shares in 2007, 1,229,170,000 shares in 2008, 1,415,427,300
shares in 2011 and 1,186,352,500 shares in 2012. In last
program, SBB IV in 2011 and 2012, we repurchased
2,601,779,800 common stock shares at an aggregate
repurchase price Rp3,803 billion.

On April 19, 2013 in accordance with the Resolution of
the AGMS and regard with clause 4 letter a number (3)
Bapepam-LK XI.B.2 we executed the transfer of
299,057,000 shares of Series B from Share Buyback
Phase III through Employee Stock Ownership Program.

On July 30, 2013, we sold 1,056,452,500 shares which
are part of Share Buyback Phase I by private placement.
The selling price was Rp2,280 per share, which is not
lower than Rp1,731 per share which is the average
repurchase price of treasury stock, Rp2,258 per share
which is the average closing price for the last 90 (ninety)
days before the sale, and Rp2,280per share, which is
the closing price on the day before the selling date.

On June 13, 2014, we sold 1,075.000,000 shares which
are part of Share Buyback Phase II by private placement.
The selling price after stock split was Rp2,405 per share,
which is not lower than Rp1,832 per share which is the
average repurchase price of treasury stock, Rp2,330 per
share which is the average closing price for the last 90
(ninety) days before the sale, and Rp2,405 per share,
which is the closing price on the day before the selling
date.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)As of December 31, 2014, our treasury stock balance is 2,624,142,800.0 common stock shares, equivalent to 2.6%
of our issued and outstanding common stock which comprise of Share Buyback Phase IV with average repurchase
price after stock split were Rp1,454, excluding broker and custodian fees. (See Note 25 to our Consolidated Financial
Statement).

The nominal value of the above has considered the results of the stock split 1: 5, which became effective
September 2, 2013.

C. Chronology of Bonds
The Company issued bonds worth Rp 1.000 billion at July 16, 2002, at a nominal price for a period of five years.
These bonds bear fixed interest of 17% per annum, payable quarterly since October 16, 2002. The bonds are traded
on the Surabaya Stock Exchange with maturity date on July 16, 2007. The trustee of the bonds is BRI, which since
January 17, 2006 effectively replaces BNI. PT Kustodian Sentral Efek act as custodian. The Company has made the
settlement of the debt bonds on July 16, 2007.

We issued the second Rupiah bonds on June 25, 2010, respectively Rp 1.005 billion for Series A with a term of five
years and Rp 1.995 billion for Series B with a period of ten years. The issuance of bonds were listed on the Indonesia
Stock Exchange with the bond underwriters PT Bahana Securities, PT Danareksa Sekuritas, and PT Mandiri Sekuritas.
The trustees are PT CIMB Niaga Tbk., PT Pemeringkat Efek Indonesia (Pefindo) on December 31, 2014, provides
idAAA bond rating (Triple A.

Capital Market
Supporting
Professional

Address

Service

ExTERNAL Auditor

PAF Purwantono,
Suherman & Surja
(Member firm of Ernst
& Young Global
Limited)

Gedung Bursa Efek
Jakarta Tower 2, 7th
Floor
Jl. Jend. Sudirman Kav.
52-53
Jakarta - 12100

Conducted Integrated
Audit of PT
Telekomunikasi Indonesia,
Tbk. (“Telkom”) and
General Audit over the
financial statement of
subsidiary.

The issuance of Consent
Letter.

Assignment
Period

2012, 2013, 2014

ADMINISTRATION
SECURITIES
BUREAU

PT Datindo
Entrycom

Wisma Sudirman
Jl. Jendral Sudirman
Kav. 34-35
Jakarta - 10220

Acts as Custodian of
Telkom common stocks
which being traded in
Indonesia Stock Exchange.

Since IPO
Telkom 1995

TRUSTEE

PT Bank CIMB Niaga
Tbk.

Graha Niaga, 20th Floor
Jl. Jend. Sudirman Kav.
58
Jakarta - 12190

Represents the interest of
Bondholders with the
Company for bonds II
Telkom.

2010

CENTRAL
CUSTODIAN

PT Kustodian Sentral
Efek Indonesia

Gedung Bursa Efek
Jakarta Tower 1, 5th
Floor
Jl. Jend Sudirman Kav.
52-53
Jakarta - 12190

• Provide central

Since 1995

custodian service and
stock transaction
settlement at Indonesia
Stock Exchange.
• Storage service and

settlement for securities
transaction, distribution
of corporate action
result.

RATING AGENCY

PT Pemeringkat Efek
Indonesia

Panin Tower Senayan
City, 17th Floor
Jl. Asia Afrika Lot. 19
Jakarta - 10270

Provide rating over credit
risk for Telkom bond
issuance.

2012, 2013, 2014

ADS CUSTODIAN
bank

The Bank of New York
Mellon
Depositary Receipts

101 Barclay Street, New
York, United State of
America - 10286

Acts as ADS stock
Custodian which being
traded at NYSE.

Since 1995

2014 Annual Report PT Telkom Indonesia Tbk (Persero)CAPITAL MARKET TRADING MECHANISM AND TELKOM ADS

Our common stock is listed and traded on the IDX. Our ADSs are also listed and traded on the NYSE as ADSs, where
one ADS represents 200 shares of Common Stock.

A. The Indonesian Stock Market
Indonesia’s stock market, known as the IDX, grew out of the December 1, 2007 merger of two stock exchanges
operating in two different locations in Indonesia, the Jakarta Stock Exchange in the capital and the Surabaya Stock
Exchange in East Java.

As at December 31, 2014, the IDX had 506 issuers for equity and 110 active brokerage houses. In 2014, IDX recorded
a trading volume of 169 billion shares. As at December 31, 2014, the total market capitalization was valued at Rp5,227
trillion (US$429.5billion).

Trading is divided into three segments, the regular market, negotiated market and the cash market (except for rights
issues, which can only be traded on the cash market and the negotiated market for the first session). The regular
market is the mechanism for trading stock in standard lots on a continuous auction basis during exchange hours.
Auctions on the IDX on regular market and cash market take place according to the price and time priorities. Price
priority refers to the giving of priority to buying orders at a higher price or selling orders at a lower price. If buying
or selling orders are placed at the same price, priority is given to the earlier placed buying or selling order (time
priority). Trading on the negotiated market is conducted through direct negotiation between (i) IDX members, (ii)
clients through one IDX member, (iii) a client and an IDX member, or (iv) an IDX member and the PT Kliring Penjaminan
Efek Indonesia (“KPEI”). KPEI provides clearing and guarantee services of stock exchange transactions settlement.
It also improves efficiency and certainty of transactions settlement in IDX.

On November 14, 2012 IDX issued a Decree of BOD No.Kep-00399/BEI/11-2012 regard with the Change of Trading
Regulation No. IIA on Equity – Type Securities Trading that mentioned about the change of IDX’ trading hours, which
effected on January 2, 2013 with trading sessions as follow:

Trading Session

Pre-opening

1st

2nd

Market

Regular

Cash

Negotiation

Regular

Day

Monday - Friday

Monday-Thursday

Friday

Monday-Thursday

Friday

Negotiation

Monday-Thursday

Pre-closing

Post Trading

Regular

Friday

Monday-Friday

Trading Hours

08.45.00-08.55.00

09.00.00-12.00.00

09.00.00-11.30.00

13.30.00-15.49.59

14.00.00-15.49.59

13.30.00-16.15.00

14.00.00-16.15.00

15.50.00-16.00.00

16.05.00-16.15.00

On November 8, 2013 IDX issued a Decree of BOD No.Kep-00071/BEI/11-2013 regard with the Change of Trading
Regulation No. IIA on Equity – Type Securities Trading that mentioned about the change of lot size, tick price and
maximum price movement, which effected on January 2, 2013.

New

Group Price (Rp)

Tick Price
(Rp)

Maximum Share
Price Movement (Rp)

Group Price
(Rp)

Tick Price
(Rp)

Maximum Share Price
Movement (Rp)

≤ 200

200 – 500

500 – 2,000

2,000 – 5,000

≥ 5,000

100

250

500

≤ 500

500 – 5,000

≥ 5,000

100

500

Transactions on the IDX regular market must be settled no later than the third trading day after the transaction.
Transactions on the negotiated market are settled on the basis of the agreement between the selling exchange
members and the buying exchange members, on a transaction by transaction basis. Transactions on the IDX cash
market must be settled on the day of the transaction and reported to the IDX. If an exchange member defaults on
the settlement of a transaction, the securities can be traded by direct negotiation on cash and carry terms. Each
exchange member is required to pay a transaction fee as stipulated by the IDX. Any delay in payment of the transaction
fee is subject to a fine of 1.0% of the outstanding amount for each day of delay. The IDX may impose sanctions on
its members for any violation of exchange rules, which may include fines, written warnings, suspension or revocation
of licenses.

When conducting share transactions on the IDX, each exchange member is required to pay a transaction cost for
transactions on the regular market and cash market of 0.03%, guarantee fund 0.01% of the transaction value and
VAT and other tax obligation. For the negotiated market, a transaction cost is 0.03% or depended on exchange
policy. A minimum monthly transaction fee of Rp2 million is applied as a contribution for the provision of exchange
facilities and continues in effect for members who are suspended or Exchange Member Approval (“SPAB”) revoked.

B. Trading on the NYSE
Bank of New York Mellon (previously “The Bank of New York”) serves as the “Depositary” for our ADSs which are
traded on the NYSE.

Investors pay a depositary fee directly or through a broker acting on their behalf for the delivery or surrender of
ADSs for the purpose of withdrawal. The Depositary also collects fees for making distributions to investors by
deducting the fee from the amount distributed or by selling a portion of the distributable property to pay the fee.
The Depositary may collect its annual fee for depositary services by making a deduction from the cash distributions
or by directly billing investors or by charging the book-entry system accounts of the parties acting on their behalf.
The Depositary may refuse to provide fee-generating services until its bills for such services are paid.

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
ADDResses of TelKoM InDonesIA

Corporate Office
Graha Merah Putih, 1st Floor
Jl. Japati No. 1 Bandung 40133
q 022-4521108
p 022-4240313

Sekretariat of President
Director
Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52, Jakarta 12710
q 021-52922007 ext. 114/112
p 021-5202702

2. Director Human Capital

10.

Management
Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52922007 ext. 106
p 021-5209632

3. Director of Consumer Service

Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52922007 ext. 108
p 021-5209637

4. Directorate of Wholesale &
International Business Service
Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52922007 ext. 117
p 021-5205072

5. Director of Innovations &

Strategic Portfolio
Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52922007 ext. 104
p 021-52963102

6. Director of Network IT &

Solution
Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52922007 ext. 121
p 021-5209835

7. Direktur Enterprise & Business

Service
Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52922007 ext. 102
p 021-5213834

8. Director of Finance

Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto Kav.
52 Jakarta 12710
q 021-52922007 ext. 110/118
p 021-5220900

9. Department of Corporate

17. Community Development

Secretary
Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52922007 ext. 124
p 021-5203322

Internal Auditor
Graha Merah Putih, 5th Floor
Jl. Japati No. 1
Bandung 40133
q 022-4525227
p 022-7206870

11. Department of Project

Management Office
Graha Merah Putih, 1st Floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710,
q 021-52920014
p 021-52922511

12. Finance & Billing Collection

Center (FBCC)
Graha Merah Putih,3rd Floor
Jl. Japati No. 1 Bandung 40133
q 022-4523371
p 022-4523377

13. Human Capital Center

Graha Merah Putih, 5th Floor
Jl. Japati No. 1
Bandung 40133
q 022-4525121
p 022-7206986

14. Telkom Corporate University

Center
Jl. Gegerkalong Hilir No. 47
Bandung 40152
q 022-2014343
p 022-2014429, 022-

2013238

15. Supply Center

Graha Merah Putih, 6th Floor
Jl. Japati No. 1
Bandung 40133
q 022-4526170
q 022-4526327
p 022-7206583
p 022-4526431

16.

Innovation & Design Center
(IDeC)
Jl. Gegerkalong Hilir No. 47
Bandung 40152
q 022-4574784, 022-

2014669, 022-2013505

p 022-2014669

Center (CDC)
Graha Merah Putih, 8th Floor
Jl. Japati No. 1
Bandung 40133
q 022-4528219
p 022-4528206

18. Human Resource Assessment

Service (Assesment Center
Indonesia)
Jl. Kapten Tendean No. 1
Bandung 40141
q 022-2035269, 022-2035287,

022-2035259
p 022-2034201

19.

ITSS Division
Graha Merah Putih, 4th Floor
Jl. Japati No. 1
Bandung 40133
q 022-4524228
p 022-7201890

20. Enterprise Service Division
Gedung Menara Multimedia
19th Floor, Jl. Kebon Sirih No. 12
Central Jakarta 10110
q 021-23515000

21. Business Service Division
Jl. S. Parman Kav. 8
West Jakarta 11440
q 021-5656500, 021-5651700
p 021-5652600, 021-5656000

22. Wholesale Service Division
Graha Merah Putih, 8th floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52917007
p 021-52892080

23. Broadband Division

Graha Merah Putih, 7th floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-52903482
p 021-5221300

24. Wireless Broadband Division

Jl. Kebon Sirih No. 36
Central Jakarta 10110
q 021-3447070 ext. 103
p 021-3440707

25. Network of Broadband Division
Graha Merah Putih, 9th floor
Jl. Jenderal Gatot Subroto
Kav. 52 Jakarta 12710
q 021-5221500, 021-5221400
p 021-5229600

26. Solution Convergence

37. Witel of Jambi

Division
Gedung Menara Multimedia
17th floor Jl. Kebon Sirih No. 12
Central Jakarta 10110
q 021-38600500
p 021-3860300,
p 021-3860370

27. Regional Division I of

Sumatera
Jl. Prof HM Yamin SH No. 2,
Medan 20111
q 061-4151747
p 061-4150747

28. Witel of Western North

Sumatera
Jl. Prof HM Yamin SH
Medan 20111
q 061-4530011

29. Witel of Bangka Belitung
Jl. Rustam Effendi No.03,
Pangkalpinang 33128
q 0717-421861

30. Witel of Riau Islands

Jl. Jaksa Agung R Suprapto,
Sekupang, Batam
q 0778-322000
p 0778-322720

31. Witel of Lampung

Jl. Majapahit No. 14,
Lampung 35118
q 0721-266525
p 0721-263699

32. Witel of Eastern North

Sumatra
Jl. Asahan Km 4.5,
Pematangsiantar
q 0622-7550300
p 0622-7554082

33. Witel of South Sumatra

Jl. Jendral Sudirman No. 459
KM - 3,5
Palembang 30129
q 0711 - 360360
p 0711 - 310444

34. Witel of West Sumatra

Jl. KH Ahmad Dahlan No. 17,
Padang 25138
q 0751-7050000
p 0751-7050001

35. Witel of Riau Land

Jl. Jend. Sudirman 199,
Pekanbaru 28111
q 0761-31000
p 0761-40404

36. Witel of Nanggroe Aceh

Darussalam
Jl. S.A Mahmudsyah No.10,
Banda Aceh
q 0651-32500
p 0651-21818

Jl. Sumantri Brojonegoro
No. 54, Jambi
q 0741-60000
p 0741-64000

48. Witel of Western West Java
Jl. Padjadjaran No. 37
Bogor
q 0251-8301107
p 0251-8329999

38. Witel of Bengkulu

49. Regional Division III West

Jl. Soeprapto No. 132,
Bengkulu 38221
q 0736-28000
p 0736-20000

39. Regional Division II Jakarta
Graha Merah Putih, lt, 10
Jl. Jenderal Gatot Subroto
Kav. 52
Jakarta 12710
q 021-5215100
p 021-5202733

40. Witel of West Banten

(Serang)
Jl. Raya Jakarta Km. 9,5
Ciruas Serang
q 0254-282001

41. Witel of East Banten

(Tangerang)
Graha Telkom BSD,
Jl. Pahlawan Seribu
Serpong Tangerang
q 021-5380000
p 021-5371500

Java
JL. WR. Supratman No. 66A
Bandung
q 022-4532225
p 022-4532134

50. Witel of Northern West Java

Jl. Tuparev No. 24
Karawang
q 0267-404444
p 0267-410002

51. Witel of Southern West Java

JL. Mesjid No. 17 Sukabumi
q 0266-212710
p 0266-225765

52. Witel of Central West Java
JL. Lembong No.11 Bandung
q 022-4540362

53. Witel of Eastern West Java
JL. Papagongan No. 11
Cirebon
q 0231-255001
p 0231-201800

42. Witel of West Jakarta

54. Witel of West Java of Eastern

Jl. S Parman Kav. 8
West Jakarta
q 021-56969100
p 021-5655100

South
JL. Merdeka No. 23
Tasikmalaya
q 0265-322400

43. Witel of Central Jakarta

55. Regional Division IV Central

Jl. Kebon Sirih No. 36
Central Jakarta
q 021-3447070

44. Witel of South Jakarta

Jl. Sisingamangaraja Kav 4 - 6
Kebayoran Baru,
South Jakarta
q 021-7257171
p 021-7228400

45. Witel of North Jakarta

Jl Yos Sudarso Kav. 23 - 24
North Jakarta
q 021-4366000
p 021-43921550

Java & DI Yogyakarta
Jl. Pahlawan No. 10,
Semarang
q 024-8303306

56. Witel of Central Java of

Western North
Jl. Merak No. 2, Pekalongan
q 0285-421000
q 0285-459118
p 0285-424355

57. Witel of Central Java of

Western South
Jl. Merdeka No. 26, Purwokerto
q 0281-645122, 0281-645201

46. Witel of East Jakarta

58. Witel of Northern Central

Jl. DI Panjaitan Kav. 42
North Jakarta 13350
q 021-8560000
p 021-8560196

Java
Jl. Pahlawan No. 10, Semarang
q 024-8303627,
q 024-8303628

47. Witel of West Java of

59. Witel of Central Java of

Northern West
Jl. Rawa Tembaga No. 4
Bekasi 17141
q 021-8890000
p 021-8894100

Eastern North
Jl. Jenderal Sudirman
No. 66 - 68 Kudus
q 0291-4250293

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

73. Regional Division VI Borneo
Jl. MT.Haryono No.169
Balikpapan 76114
q 0542-872104
p 0542-873340

85. Witel of SouthSulawesi

Jl. AP. Pettarani No.2
Makassar 90221
q 0411-880000
p 0411-888804

74. Witel of Central East Borneo

86. Witel of Western South

60. Witel of Southern Central

Java
JL. Yos Sudarso No. 2,
Magelang
q 0293-364755,
q 0293-362757

61. Witel Yogyakarta

JL.Yos Sudarso No.9,
Yogyakarta
q 0274- 577200,
q 0274-577227

62. Witel of Central Java of

Eastern South
Jl. Mayor Kusmanto No. 1,
Solo 57113
q 0271-634400,
q 0271-678253

63. Regional Division V East Java

Jl. Ketintang No. 156
Surabaya 60231
q 031-8297100
p 031-8286080

64. Witel of Central West Java

Jl. Hayam Wuruk No. 45 - 47
Kediri 64122
q 0354-680942

65. Witel of Western East Java

Jl. D.I Panjaitan No. 19 Madiun
q 0351 - 493900
p 0351-494104

67. Witel of Southern East Java
Jl. A Yani No. 11 Malang 65125
q 0341-489100
p 0341-499111

68. Witel of Northern East Java
Jl. Wachid Hasyim No. 11
Gresik 61444
q 031-3977000
p 031-3971000

69. Witel of East Java Suramadu

Jl. Ketintang No. 156
Surabaya 60231
q 031 - 8298837
p 031-8299350

Jl. Awang long No.54
Samarinda 75121
q 0541-732000
p 0541-762010

75. Witel of Northern East Borneo

Jl. Simpang Tiga
Tarakan 77111
q 0551-21000

76. Witel of Southern East Borneo

Jl. MT.Haryono no 169
Balikpapan 76114
q 0542-873500
p 0542-873030

77. Witel of West Borneo

Jl. Teuku Umar No.2
Pontianak 78117
q 0561-734055
p 0561-78000

78. Witel of Central Borneo

Jl. A.Yani No.45
Palangkaraya 73111
q 0536-3221116
p 0536-3224321

79. Witel of South Borneo

Jl. Pangeran Samudra No 42
Banjarmasin 70111
q 0511-436500
p 0551-3366220

80. Regional Division VII Eastern

Indonesia Area
Jl. AP. Pettarani No.2
Makassar 90221
q 0411-867777
p 0411-881651

81. Witel of South Bali

Jl. Raya Puputan Renon
No. 33
Denpasar
q 0361-222021
p 0361-262111

70. Witel of East Java of Central

82. Witel of North Bali

East
Jl. Sultan Agung No. 48
Sidoarjo 61211
q 031 - 8941000
p 031-8962500

71. Witel of Eastern East Java
Jl. Gajah Mada No. 182-184
Jember
q 0331 – 353200
p 0331-483321

72. Witel of East Java of

Southern East
Jl. Alun-Alun No. 1 Pasuruan
q 0343-432100

Jl. Letkol Wisnu No. 2,
Singaraja
q 0362-231187
p 0362-231187

83. Witel of West Nusa Tenggara

Jl. Pendidikan No.23
Mataram
q 0370-632000
p 0370-632000

84. Witel of East Nusa Tenggara
Jl. WJ. Lalamentik No.93
Kupang 85111
q 0380-840000
p 0380-840000

Sulawesi
Jl. Andi Isa No.7
Pare-Pare
q 0421-24044
p 0421-24697

87. Witel of Central Sulawesi
Jl. Ir. Juanda No. 25
Palu 94125
q 0451-421759
p 0451-421759

88. Witel of Southeast Sulawesi

Jl. A. Yani No.8
Kendari 93117
q 0401-3912100
p 0401-3912100

89. Witel of North Sulawesi &

North Maluku
Jl. WR. Supratman No.5
Manado 95112
q 0431-853000
p 0431-853000

90. Witel of Maluku

Jl. JB. Sintala No.9
Ambon 97115
q 0911-349100
p 0911-349100

91. Witel of West Papua
Jl. A.Yani No. 16,
Sorong
q 0951-3102009
p 0951-3102009

92. Witel of Papua

Jl. Kayu Batu Base G,
Jayapura
q 0967-541499
p 0967-541499

93. PT Telekomunikasi Selular

(Telkomsel)
Wisma Mulia, Jl. Jenderal
Gatot Subroto Kav. 42
Jakarta 12710
www.telkomsel.com
q 021-5240811
q 021-52906090
p 021-52906123

94. PT Telekomunikasi Indonesia

Internasional (Telin)
Menara Jamsostek North
Tower 24th floor
Jl. Gatot Subroto No. 38
Jakarta 12710
www.telin.co.id
q 021-29952330
q 021-2962358
p 021-52962358

95. PT Multimedia Nusantara

100. PT Sigma Cipta Caraka

104. PT Finnet Indonesia

(Metra)
Gedung EAST 37th floor,
Jl. Dr. Ida Anak Agung Gede
Agung Kav. E.3.2. No. 1
East Kuningan Setiabudi
South Jakarta 12950,
www.metra.co.id
q 021-521013
p 021-5210124

96. PT Infrastruktur

Telekomunikasi Indonesia
(Telkom Infra)
Mugi Griya Building 5th floor,
JL. MT Haryono Kav 10 Jakarta
www. telkominfra.com
q 021-83708471

97. PT Dayamitra Telekomunikasi

(Mitratel)
Gedung Graha Pratama 5th
floor, Jl. MT Haryono kav. 15
Jakarta 12810,
www.mitratel.co.id
q 021-83709593
p 021-83709591

98. PT Infomedia Nusantara
Jl. Fatmawati No. 77 - 81,
Jakarta Selatan 12510
q 021-7201221
p 021-720126, 021-7258116

(Telkom Sigma)
Desa Sigma, German Center
5th Floor,
Jl. Kapt. Subijanto Dj BSD
Tangerang 15321,
www.telkomsigma.co.id
q 021-5388538
p 021-5388505

101. PT Metra-Net (Plasa MSN)

Menara DEA 8th Floor, Mega
Kuningan District,
Jl. Mega Kuningan Barat IX
Kav. E.4.3 Jakarta Selatan
www.metranet.co.id
q 021-5762150
p 021-5762155

102. PT PINS Indonesia (PINS)
Plasa Kuningan, Gd. Anex
7th floor Kav.C 11 - 14
Jl. HR Rasuna Said
South Jakarta 12940

MuliaBusiness Park Building J
Jl. MT Haryono Kav 56 - 60,
South Jakarta 12780,
www.pramindo.com
q 021-79187250,
q 021-5202560
p 021-79187252,
p 021-52920156

99. PT MD Media

103. PT Administrasi Medika

Mulia Business Park Building J,
Jl. MT Haryono Kav 56 - 60,
South Jakarta 12780,
www.mdmedia.co.id
q 021-7997488, 021-7997469
p 021-7258116

(AdMedika)
STO Gambir Gedung C,
Jl. Medan Merdeka Selatan
No.12, Central Jakarta,
www.admedika.co.id
q 021-34831100
p 021-34830101

Menara Bidakara 12th floor,
Jl. Jenderal Gatot Subroto
Kav. 71 - 73 Pancoran
Jakarta 12780
www.finnet-indonesia.com
q 021-8299999
p 021-8281999

105. PT Melon Indonesia

Jl. Sisingamangaraja Kav. 4 - 6,
South Jakarta,
www.melon.co.id
q 021-7244956, 021-7244390

106. Telkom Property (PT Graha

Sarana Duta)
Jl. Kebon Sirih No. 10 - 12,
Central Jakarta 10110, www.
telkomproperty.co.id
q 021-3800900,
q 021-34830653,
q 021-3800686, 021-500473
p 021-34835489

107. PT Telkom Akses

Jl. S Parman Kav. 8 ,
West Jakarta 11440,
www.telkomakses.co.id
q 021-29337000,
q 021-29336000

TELKOM OVERSEAS ADDRESS

1. Telin Singapore

4. Telkom Australia

1Maritime Square, #09-63
Harbour Front Center,
Singapore - 099253
q +65 6278 8189
p +65 6273 1169

2. Telin Hong Kong

Suite 905, 9/F, Ocean Center,
5 Canton Road, Tsim Sha Tsui,
Kowloon, Hongkong
q +852 3102 3309
p +852 3102 3306

3. Telin Timor-Leste

www.telkomcel.tl
Timor Plaza 4th floor, Rua
Presidente Nicolao Lobato,
Comoro, Dili
q +670 737373
p +670 747474

www.telkom.com.au
Lantai 5, 30 Collins Street,
Melbourne VIC 3000
q +613 963 98 270

5. Telkom Macau

Av.Praia Grande No. 369, Keng
Ou, Commercial Building, 17/
FL, Macau
q +853 2855 3191

6. Telkom Taiwan

10F No.15 Sec.2, Keelung Road,
Xinyi District, Taipei City
11052 Taiwan
q +886 2875 2507102

Telin Malaysia
Suite 23 A-1, 23 A Floor,
Wisma UOA II, Number 21,
Jalan
Pinang, 50450 Kuala Lumpur,
Malaysia
q +60 3233 20680
p +60 3216 12276

8. Telkom USA

The Bloc Executive Suites
700 S. Flower Street, 11th floor,
Office no: 36, 37A-B, Los
Angeles, CA 90017

9. Telin Branch Office in

Myanmar
No.#0502, Level 5, Sakura
Tower Nomor.339, Bogyoke
aungsan
street Kyauktada township,
Yangon, Myanmar
q +95 9420182434

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
05 MANAGEMENT’S DISCUSSION AND

ANALYSIS OF THE COMPANY’S
PERFORMANCE

101 Economic and Industry Overview

106 Business Overview

119 Financial Overview

150 Operational Overview

158 Functional Overview

Continuing a solid performance

The growth of Indonesian economy in 2014, measured
by Gross Domestic Product (GDP) at current prices,
grew by 5.1%, with be supported by strong domestic
consumption. The rupiah against the US dollar exchange
rate determined based upon by Bank Indonesia exchange
rate reached Rp 12,440 or depreciated 2.1% at the close
of December 31, 2014, a better from depreciation rate
in the previous year at 25.8%.

Such global economic condition provided less significant
impact to our business thus the foreign exchange rate
encouraged certain risks on sales, purchase and financing
transaction primarily denominated in foreign currencies.

Our revenues over 2012 to 2014 period reflected a
progressive growth in revenues. The growth was largely
driven by increase in revenues from data, internet and
information technology service, which increased by
15.7%. This growth was primarily driven by increasing of
data usage and mobile broadband subscriptions. Moreover,
revenues growth was also driven by increasing in cellular
voice revenue at 6.7%.

On the other hand, operating income for 2012 to 2014
period also reflected increase in expenses which was
triggered by operating, maintenance and telecommunication
service expenses which were primarily as the result of
network capacity expansion required to support our
services to the customers, especially for data and internet
services, as well as in fixed line and cellular subscribers.

The following management’s discussion and analysis on
the performance of this company is based on Consolidated
Financial Statements for the years ended on December
31, 2012, 2013, and 2014 which is also attached in this
Annual Report. The presentation of Consolidated Financial
Statements complies with FAS applied in Indonesia,
which in several terms differ with IFRS.

Our principal business is providing local, domestic and
international telecommunication service in Indonesia.
Through our 65% of ownership in Telkomsel, we become
the biggest mobile cellular service provider.

Our consolidated revenues increased by 8.1% to Rp89,696
billion. We successfully maintain a high level of profitability
with EBITDA margin of 51.1%, an increase from the
previous year by 50.4%. While the net profit margin
recorded at 16.3% slightly lower than the previous year
by 17.1%.

As of December 31, 2014 we had 140.6 million cellular
phone subscribers through Telkomsel, 9.7 million
subscribers on fixed wireline networks, 4.4 million
subscribers on fixed wireless networks. Our broadband
subscribers consisted of 31.2 million Telkomsel Flash
users, 5.8 million Blackberry users and 3.4 million fixed
broadband subsribers. We also provide wide range of
communication services, including multimedia, data and
internet communication-related services, satellite
transponder leasing, leased line, interconnection, cable
television and VoIP services, as well as multimedia
business such as contents and applications. We also
operate Multimedia businesses such as content and
applications.

100

GLOBAL MACRO ECONOMY
Overall global economic landscape in 2014 was showing
a moderation trend. European economic condition was
relatively unstable with Greek and some of other countries’
crises as notable issues. This encouraged Europe Central
Bank (ECB) to apply interest cut and to implement
monetary stimulus as an initiative to drive the economics.

On the other hand, China as Asian economic booster
also indicated an economic growth deceleration despite
relatively high growth at 7% level. The decrease in growth
rate was due to export weakening as the impact of
decreasing global demand, concerning that export has
a prominent factor for China’s economic. Thus, the
slowdown was still saved by economic growth posted
by India and several ASEAN countries that booked
positive growth trend.

INDONESIAN MACRO ECONOMY
Indonesian economic growth was managed to grow
progressively at 5.1% along 2014, underpinned by household
consumption and primary commodities export. Prominent
household consumption was triggered by increasing
number of middle class, supported by Indonesian
demography model at productive age as well as increase
in income per capita growth. Meanwhile, political activity
of General Election (Pemilu) and Local Election
(Pemilukada) occurred in 2014 also encouraged high
domestic consumption. Hence, this economic growth
dynamic obligates discipline and consistency in
determining policies to maintain stability and sustainability
of economic development.

Moderate global economic will potentially suppress
domestic economic landscape. Non-recovered economy
of emerging countries market also has reduced demand
on Indonesian export, mainly for primary commodities.
The Government and Bank Indonesia has implementing
accurate and integrated policies that Indonesian economic
was maintained at positive growth level.

On November 18, 2014, the Government has decided
significantly reduce subsidy post by increasing oil fuel
(BBM) price. The policy is driving the Government to
have more stable State Budget with higher allocation
for infrastructure development. Having higher capital

Economic recovery took place in United States over
2014 brought a hope amid decelerating performance of
other global economic engines. This economic recovery
was a result of series of monetary policies implemented
namely stimulus given by Federal Reserve. Economic
key indicators have indicated improvement such as
through job creation and real sector performance.

In 2015, global trading is estimated to grow higher. The
growth of global trading volume will be underpinned by
economic recovery both in developed and developing
countries, including the recovery of United States and
most of European countries economics, which were
expected to boost export volume to these countries. In
ASEAN region, ASEAN Economy Community is expected
to encourage inter-state production and trading activities
in the region.

expenditure allocation for building bigger supporting
infrastructure that is expected to provide multiplier effect
to our economics.

Nearly throughout 2014, BI Rate remained at 7.5% level
showing stability of domestic economy. BI Rate booked
an increase in November 2014 by 25bps to 7.75% as BI
took prudent initiative in responding increasing oil fuel
price. Meanwhile, Rupiah against US Dollar exchange
rate reached to Rp12,440 or depreciated by 2.1% as
closing of December 31, 2014, well beyond depreciation
level posted in preceded year at 25.8%.

The Government is assumed to retain fiscal room flexibility
while also increase expenditure allocation for infrastructure
sector. Adequate budget spending in infrastructure
development will encourage real sector investment which
will later expand job opportunity and increasing domestic
consumption. Further, various incentives are also needed
namely by simplifying licensing process to boost foreign
investment inflow to Indonesia to support economic
development. The Government is expected to achieve
domestic economic growth at approximately 5.4% - 5.8%
in 2015.

101

2014 Annual Report PT Telkom Indonesia Tbk (Persero)TELECOMMUNICATIONS INDUSTRY IN INDONESIA
Ever since the changes in telecommunication sector
management scheme was implemented by the Government,
from a monopoly to competition scheme under Law No.
36 of 1999 on Telecommunication, Indonesian
telecommunication industry indicated a rapid growth.
The growth is further accelerated by advance in
communication technology which occupies radio
frequency spectrum as an alternative means of
telecommunication which previously relied on wired and
satellite networks.

There are several factors or conditions which support
prospect of telecommunication industry growth in
Indonesia, such as:
1.

Indonesia's demographics, with the fourth largest
population in the world and a fast growing middle
class segment, as well as Indonesia's economy that
has shown stable and respectable growth in recent
years, are expected to drive further demands for
telecommunication and data services.

2. Relatively low internet penetration compared with
other countries in the region, while, the society is
more exposed by digital lifestyle globalization and
mostly rapid growth on smartphone occupation with
more affordable price or high traffic on social media,
are expected to boost mobile internet service growth.
We believe that the growth of mobile internet service
will sustain in line with increasing popularity of

102

smartphone, tablet as well as other mobile devices
with internet access features, faster wireless network
data transmission and growing trend of smart devices
and affordable internet service trends.

3. The increasingly open and significant competition
among telecommunication operators, which is
expected to result in improved service quality, higher
industry efficiency, and constant innovations in
products and services, and eventually drive more
growth in Indonesia's telecommunication industry.
The consolidation of the telecommunications industry
resulting from the recent merger of XL and Axiata
has led to a reduction in the number of major
competitors operating in the industry. Future
technology Road Map shifts to Neutral technology,
4G/LTE and IP-based network. The 4G/LTE will
upgrade wireless data capacity and speed from
existing network, with most significant challenge on
availability of frequency in domectic market.
Comprehensive IP-based network coverage will affect
on cost transformation and competitiveness. New
digital technology and trend, mainly as substitution
for our legacy product might transform into
telecommunication industry threat which also provides
new opportunity to the operators

Competition Law
The Government currently promotes liberalization,
competition and transparency in the telecommunications
sector. It does not prevent providers from attaining and
capitalizing upon a dominant market position. However,
the Government does prohibit operators from abusing
a dominant position. In March 2004, the MoC issued
Decree No.33/2004, which prescribes measures to
prohibit such abuse by dominant network and service
providers. A provider is considered dominant based on
factors such as scope of business, service coverage area
and control of a particular market. Specifically, Decree
No.33/2004 prohibits dumping, predatory pricing, cross-
subsidies, mandatory use of a provider’s services (to
the exclusion of competitors) and hampering mandatory
interconnection (including discrimination against specific
providers).

Competition in the telecommunications sector, like all
Indonesian business sectors, is also governed more
generally by Law No.5/1999 dated March 5, 1999 regarding
Prohibition of Monopolistic Practice and Unfair Business
Competition (“Competition Law”). The Competition Law
bans agreements and activities tending toward unfair
business competition, as well as the abuse of a dominant
market position. Pursuant to the Competition Law, the
Commission for the Supervision of Business Competition
(“KPPU”) has been established as Indonesia’s antitrust
regulator with the authority to enforce the provisions
of the Competition Law.

The Competition Law is implemented by various
regulations, including Government Regulation No.57/2010
dated July 20, 2010 regarding Mergers and Acquisitions
Potentially Causing Monopolistic Practices or Unfair
Business Practices. Government Regulation No.57/2010
permits voluntary consultation with the KPPU prior to
a merger or acquisition, which will result in the KPPU

issuing a non-binding opinion. Government Regulation
No.57/2010 also requires that a mandatory report be
made to the KPPU after a merger or acquisition is
completed if the transaction exceeds certain asset or
sales value thresholds.

Fixed Wireline and DLD
Our exclusive right to provide domestic fixed line
telecommunications services in Indonesia ended following
the Telecommunications Law’s implementation in 2000.
The MoC issued licenses to Indosat for domestic fixed
line services in August 2002 and for DLD telephone
services in May 2004. We entered into an interconnection
agreement with Indosat dated September 23, 2005 to
allow interconnection between our local fixed line services
in Jakarta, Surabaya, Batam, Medan, Balikpapan, Denpasar
and certain other areas. By 2006, Indosat was able to
provide nationwide DLD services through its CDMA-
based fixed wireless network, its fixed line network and
these interconnection arrangements with us.

In an attempt to liberalize DLD services, the Government
required each DLD provider to implement a three-digit
access code to be dialed by customers making DLD
calls. These regulations were first implemented in
Balikpapan in 2008, with Balikpapan residents given the
option to make a normal DLD call or to select a three-
digit code assigned to Indosat or to us. Under current
regulations, this system is to be applied nationally
beginning September 27, 2011. See “Management
Discussion and Analysis of Telkom Indonesia Performance
– Financial Overview - The Impact of the Regulation
Changes towards the Company - Introduction of
Competition in the Indonesian Telecommunications
Industry”.

We compete against other major fixed broadband service
providers such as PT First Media Tbk and PT Supra
Primatama Nusantara (BizNet Networks) as well as a
new and upcoming competitor, PT Media Nusantara
Citra. We expect to face increasing competition especially
in key parts of the big cities in the future. Nonetheless,
we expect demand for fixed broadband services to rise
as a result of the growing middle class and changing
consumer trends.

103

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Cellular
We operate our cellular service business through our
majority-owned subsidiary, Telkomsel. As of December
31, 2014, Indonesia’s cellular market is dominated by
Telkomsel, Indosat and XL Axiata, which collectively
account for 97.5 % of the full-mobility cellular market.
Other providers include Hutchison, Smart Telecom and
Bakrie Telecom.

There were approximately 270 million mobile cellular
subscribers in Indonesia as of December 31, 2014, a 12.9%
decrease from approximately 310 million as of December
31, 2013.

We believe that Telkomsel competes effectively in the
Indonesian cellular market on the basis of price, coverage,
service quality and value added services. As of December
31, 2014, Telkomsel remained the largest national licensed
provider of cellular services in Indonesia, with approximately
140.6 million cellular subscribers and a market share of
52.1% of the mobile cellular market. The second and the
third largest providers were Indosat and XL Axiata, which
have a market share of 23.3% and 22.1% respectively,
based on the estimated number of subscribers as of
December 31, 2014. In addition to the nationwide GSM
operators, a number of smaller regional GSM, analog
and CDMA fixed wireless providers operate in Indonesia.

Hutchison also provide cellular services in Indonesia and
has been allocated frequency spectrum of 20 MHz.

IDD
We compete in traditional IDD services (non-VoIP) in
Indonesia primarily with Indosat, as well as Bakrie Telecom.
IDD also faces competition with VoIP and other internet-
based voice services like Skype and Google Talk.

VoIP
We formally launched our VoIP services in September
2002. VoIP uses data communications to transfer voice
traffic over the internet, which usually provides substantial
cost savings to subscribers. A number of other companies,
including XL Axiata, Indosat, Atlasat Solusindo Pte, Ltd.,
PT Gaharu Sejahtera, PT Satria Widya Prima, PT Primedia
Armoekadata Internet and PT Jasnita Telekomindo also
provide licensed VoIP services in Indonesia. Other
unlicensed operators also provide VoIP services that
may be accessed through websites or through software
that allows voice communications through the internet
using computers or smartphones.

104

VoIP operators compete primarily on the basis of price
and service quality. VoIP operators, including us, offer
budget calls and other products such as prepaid calling
cards aimed at price sensitive users. We currently offer
our primary VoIP service “Telkom Global-01017” and the
lower-cost alternative “Telkom Save”. Telkom Save offers
discounted rates for certain countries to which there is
heavy traffic from Indonesia while offering regular VoIP
tariff rates for other countries. In addition to other VoIP
operators, we also compete with internet-based voice
services likes Skype and Google Talk.

Satellite
The Asia-Pacific region and especially Southeast Asia
continues to need satellites for both telecommunications
and broadcasting infrastructure. This need is driven by
the high demand from services such as cellular backhaul,
broadband backhaul, enterprise network, OUTV
(Occasional Usage TV), military and goverment network,
video distribution, DTH television, flight communication
and disaster recovery.

Supply transponders in Southeast Asia at this time could
only meet 75% of the existing demand. Some operators
are in the process of development of a satellite in orbit
slot position and coverage of Southeast Asia such as:
satellite MEASAT-3B (91.8 oBT), Telkom-4 (108oBT),
satellite SES-9 (108.2oBT), Telkom-3S (118oBT), satellite
THAICOM-7 (119oBT), satellite APSTAR-9 (142oBT), satellite
PSN-VI (146oBT), and BRI SAT (150.5oBT). In 2019 an
estimated supply will approach the demand, but it still
remains lacking.

There are 18 satellite operators with satellites covering
Southeast Asia:
1. SES Global (Luxembourg)
2. Eutelsat Asia (France)
3. APT Satellite (Hong Kong)
4. AsiaSat (Hong Kong)
5. JSAT (Japan)
6. MEASAT (Malaysia)
7. MCI – Media Citra Indostar (Indonesia)
8. Indosat (Indonesia)
9. VinaSat (Vietnam)
10. SingTel/Optus (Singapore)
11. Telkom (Indonesia)
12. ChinaSat (China)
13. Mabuhay (Philippines)
14. Thaicom (Thailand)

Satellite service delivery essentially consists of a satellite
transponder leasing to the broadcaster, VSAT service
provider backhaul, enterprise networks and military
networks. In the provision of transponder, the competition
was not relatively high, which contained the competition
is on VSAT service providers. This condition generally
causes the satellite transponder market prices remained
stable. The big difference in price was caused by the
quality of power.

Viewing the market opportunities and limitations of
satellite transponder, we developed a satellite business
with build Telkom-3S (substitute) and Telkom-4. Currently,
Telkom-3S is in the process of manufacturing with the
RFS targets by the end of 2016, while Telkom-4 is in the
process of planning. Telkom-4 as a substitute for Telkom-1
satellite in orbit slot 108oBT will be used to maintain the
continuity of existing services. For the service expansion
in the international market, we conduct development of
beam to India with the capacity of 24 TPE C-Band
through Telkom-4.

STRATEGIC WORKING PROGRAM 2014

As part of State-Owned Enterprise (SOE), in 2014, we
are honorary mandated by the President of Republic of
Indonesia and Minister of SOE in carrying out our business.

The mandate from President of RI is as follows:
becoming a global player who listed on Fortune-500,
considered as Top 500 reputable companies worldwide.

becoming a Company with blue chips shares.
building excellent broadband infrastructure as a

means of nation integration.

The mandate from Minister of SOE is translated to 3E
principles which are Existence of the nation, Engine of
Growth and Emperor of the region. The Minister of SOE
mandated us to:
strengthen national resilience.
lead frontline of national economic growth engine.
have global expansion and global competitive

advantage.

The current trend in the satellite business is the
development of broadband satellite. As the bandwidths
in the C-Band and Ku-Band frequencies are fully utilized,
utilization of the Ka-Band frequencies will become an
option. The technology for Ka-Band frequencies has
been progressing rapidly in the last decade. Broadband
satellite utilize Ka-Band frequencies with a re-use
configuration, resulting in capacities of up to 100 Gbps.
Currently, we are engaged in design and demand studies
for broadband satellites.

BTS
As of December 31, 2014, we operated 85,420 BTS
located throughout Indonesia. Through our subsidiary,
Dayamitra, we lease out space to other operators to
place their telecommunications equipment on these
towers, for which we receive a fee. Our principal
competitors in this business are XL Axiata, Indosat,
Bakrie Telecom and PT Tower Bersama Infrastructure
Tbk.

Others
Deregulation in the Indonesian telecommunications
sector has encouraged competition in the multimedia,
internet, and data communications services businesses.
The diversification of businesses has gained momentum
resulting in intense competition, particularly in terms of
price, range of services offered, quality and network
coverage, as well as customer service quality.

To answer global market challenge and exercise those
mandates, we implement Key Program 2014 prepared
under 3S (Sustaining – Scaling – Scoping) framework.
The key programs are based on Great Spirit Solid – Speed
– Smart and Grand Strategy also backed with correct
portfolio selection (focusing on center of growth) and
efficient resource allocation.

In 2014, we had three Main Program, Telkomsel Revenue
Double Digit Growth (Sustaining), Indonesia Digital
Network 2015 (Scaling), and the International Expanssion
& King of Digital (Scoping).

105

2014 Annual Report PT Telkom Indonesia Tbk (Persero)BUSINESS OVERVIEW

BUSINESS PORTFOLIO
As the largest TIMES service provider and a SOE, we serve millions of subscribers all over Indonesia. We booked a
revenue of Rp82,967 billion for the year ended on December 31, 2013 and Rp89,696 billion for the year ended on
December 31, 2014.

Historically and up to the present, the largest share of our revenue is contributed from services related with
telecommunications, data and internet. As a TIMES provider, we continuously pursue innovation in other non-
telecommunication sectors, and seek to build synergies among our products, services, and solutions.

Our converged TIMES portfolio is part of our business transformation. We have organized our TIMES portfolio into
15 business portfolios comprising of nine products portfolios and 6 customers portfolios.

Our business portfolios are classified under several
business lines as follows:

Telecommunications Business
Our telecommunication business portfolios include:
Fixed Services (fixed wireline services, fixed broadband,

Wi-Fi)

Mobile Services (full mobility, or cellular services and

limited mobility, or fixed wireless services)

Network and Infrastructure Services (interconnection
(including international) traffic, network services,
satellite, and tower)

Information Business
Our information business portfolios include:
Platform Services (Managed Applications and System
Integration, Business Process Management, e-payment,
premises integration, data center & cloud, and M2M
(machine to machine)

Big Data
Ecosystem Solution (e-health, e-logistic, e-tourism,

e-transportation, and e-governance)

106

Our customer portfolios include
Personal
Consumer/Home
Business
Enterprise
Wholesale
International

OPERATIONAL OVERVIEW BY SEGMENT
As part of the Company’s strategy to provide a one-stop
solution to our customers, since 2013, we have changed
our business segment approach from product based to
customers based. These changes result in our segment

information presentation from fixed wireline, fixed
wireless, cellular and others becomes segmental reports
of corporate, home, personal and others.

We have four main operating segments, described in
more details as follows:
Our corporate segment provides telecommunications
services including interconnection, leased lines,
satellite, VSAT, contact center, broadband access,
information technology services, data and internet
services to companies and institutions.

Our home segment provides fixed wireline
telecommunications services, pay TV, data and internet
services to home consumers.

Our personal segment provides mobile cellular and
fixed wireless telecommunications to individual
consumers.

Our others segment provides building management

services.

Corporate Segment

Satelit-transponder

Leased Channel & Satellite

IPLC

Datacomm

Corporate Internet

Fixed wireline

Fixed broadband (Speedy)

Home Segment

Fixed wireline

Fixed broadband (Speedy)

Individual Segment

Seluler

Unit

(000) MHz

(000) e1

(000) Mbps

(000) subscribers

3,560

91,817

8,639

930,327

93,368

1,465

353

8,233

3,047

(000) subscribers

140,585

Fixed wireless (Classy + Trendy)

(000) subscribers

Mobile broadband (Flash)

Blackberry

(000) subscribers

4,404

31,216

5,835

Year ended on December 31,

2014

2013

2012

3,007

2,650

415,540

388,462

9,421

381,440

62,687

1,408

315

7,943

2,698

131,513

6,766

17,271

7,556

15,782

281,063

66,340

1,343

263

7,603

2,078

125,146

17,870

11,039

5,764

107

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Year ended December 31, 2014 compared
to year ended December 31, 2013.

Corporate Segment
Our corporate segment revenues increase by Rp3,824,9
billion, or 14.9%, from Rp25,590 billion in 2013 to Rp29,414.3
billion in 2014. The increase was mainly due to an increased
in others telecommunications services by Rp1,855.5
billion, or 41.1%, was reflect by an increase in tower lease
revenue by Rp678.1 billion, or 34.1%, in line with growth
in BTS number by 31.2% and tower tenats by 31.4%,
Customer Premise Equipment (“CPE”) also increased
by Rp342 billion, or 29.1 %, management service revenue
by Rp391.4 billion, or 1261.7%, and E-payment revenue
to Rp341.2 billion, or 180.7%. An increased in network
revenue by Rp694.7 billion, or 18.6%, due to the increased
in transporder revenue by Rp 691.9 billion, 41.7%. Data
and internet revenue increased by Rp554.6 billion, or
8.1%, due to an increased in Astinet revenue of Rp 390.6
billion, or 71.2%, and Metro E revenue by Rp430.3 billion
or 43.3%. Interconnection revenues increased by Rp394.5
billion, or 7.0%, due to the increased in our wholesale
voice revenue by Rp146.5 billion, or 25.1%, IP Transit
revenue by Rp130.8 billion, or 16.8%, SLI 007 incoming
interconnection revenue of Rp 91.2 billion or 6.1%. Rp
309.1 billion, or 6.6%, increased in our wireline revenue
due to the increase in call center by Rp393.6 billion, or
33.9%.

Our corporate segment expenses increase by Rp2,200.9
billion, or 10.8%, from Rp20,375.9 billion in 2013 to
Rp22,575.8 billion in 2014, primarily due to an increased
of Rp 1,219.9 billion, or 12.9% in operating and maintenance
expenses as a result of higher tower rent expenses
Rp599.0 billion, or 129.2%, as well as an increased in
tower lease revenue, site operating expense by Rp300.9
billion, and Rp292.4 billion. or 1,928.1%. managed services
expense. Depreciation expense increased by Rp322.4
billion, or 14.7% due to the increased in depreciation of
equipment and installation of transmission and depreciation
expense of power supply by Rp186.9 billion, or 33.7%,
and Rp115.1 billion or 50.7%. Rp178.0 billion, or 4.6%,
increased in interconnection expenses due to the increased
in cellular long distance transit interconnection expense
by Rp 121.9 billion, or 20.3% and Telkom Global 017
interconnection charges by Rp109.4 billion, or 68.4%,
and the decline in foreign exchange loss by Rp 616.1
billion, or 92.5%.

Home Segment
Our home segment revenues decrease by Rp114 billion,
or 1.2%, from Rp9,463 billion in 2013 to Rp9,349.3 billion
in 2014 mainly due to the decline in wireline revenues
by Rp 399.5 billion, or 8.6% decrease in local usage. This
decrease was partially offset by the increased in data
and internet revenues by Rp 287.7 billion, or 8.0%, due
to the increased in speedy revenue in line with the
customer growth from 3,013 thousand to 3,400 thousand,
or 12.8%, in 2014.

Our home segment expenses increase by Rp9.7 billion,
or 0.1% from Rp8,885 billion in 2013 to Rp8,894 billion
in 2014, primarily due to a decreased in other income
by Rp 511.0 billion, or 70.6%, and a decrease in the
difference of fair value investments Rp 228.2 billion, or
98.3%. This decreased was offset by a decreased in
operating expense by Rp266.9 billion, down 2.9%, due
to a decreased in personnel expense Rp461.6 billion, or
12.4%, due to a decreased in bonus expense by Rp200.4
billion, or 23.3%, and net periodic post-retirement
healthcare expense by Rp170.9 billion, or 80.2 %.

Personal Segment
Our personal segment revenues increase by Rp5,299.4
billion, or 8.6% from Rp61,386 billion in 2013 to Rp66,685.8
billion in 2014, mainly due to the increased in data and
internet revenues by Rp4,270.0 billion, or 18.3%, which
increased in Telkomsel cellular data by Rp4,007.9 billion,
or 38.6%, parallel with the increase in 67.9 million, or
48.3%, the number of subscribers (including pay as you
use) subscribers. Payload data traffic increased to 234.862
TB, or 142.9%. Rp547.8 billion, or 4.2%, increased in our
SMS revenue. Revenue in mobile increased by Rp2,035.0
billion, or 6.3%, due to an increase in cellular monthly
subscription revenue by Rp1,200.0 billion, or 17.8%, mobile
long distance revenues increased by Rp 487.8 billion, or
5.4%, and Rp380.8 billion, or 2.7%, in local cellular.
Supported by the increased in mobile subscribe by 6.9%
from 131.5 billion in 2013 to 140.6 billion in 2014. Chargable
MoU increased by 15.0% to 161.4 billion minutes in 2014.

Our personal segmen expenses increase by Rp5,307.7
billion, or 13.4% from Rp39,463 billion in 2013 to Rp44,770.7
billion in 2014, primarily due to the increased in operation
and maintenance expenses by Rp4,192.7 billion, or 25.4%,
due to the increased of antenna and tower expense by

109

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Rp1,014.5 billion, or 40.8%, and radio base station expense
by Rp446.9 billion, or 11.7%, due to the growth of BTS
number by 22.3% from 69,864 unit in 2013 to 85.420
units in 2014. Increased in leased line expense by Rp799.3
billion, or 8027.4%, an increased in satellite transmission
expense by Rp411.5 billion, or 9,724.6%, Rp 432.5 billion
,or 5,714.3%, in outsourcing. Land and buildings expense
increased by Rp270.1 billion, or 65.5%, in line with the
increased in the number of BTS and GraPARI. USO
expense increased by Rp222.9 billion, or 29.4%.
Depreciation expense increased by Rp159.2 billion, or
8.3%, due to the increased in depreciation of equipment
and installation of transmission by Rp1,279.0 billion, or
7.45%, were offset by a decreased in depreciation expense
lease assets - equipment and installations transmission
by Rp264.2 billion, or 29.5%. Impairment of fixed assets
increased Rp 209.6 billion, or 35.2%.

Other Segment
Our other segment revenues increase by Rp745 billion,
or 65,5%, from Rp1,138 billion in 2013 to Rp1,883 billion
in 2014 mainly due to an increase in building management
revenue by Rp499.3 billion, or 112.6%, due to the addition

of building management combine with energy
management, and additional rental of completed buildings.
Total area of the building being leased in 2014 increased
by 5.5%, transport management services revenue increased
by Rp 66.5 billion, or 116.8%. Security services revenue
increased by Rp55.1 billion, or 20.6%, due to the addition
of personnel and an increase in the UMR in 2014, and
management projects revenue increased by Rp50.2
billion, or 29.6%, and property development revenue
increased by Rp44.4 billion, or 62.1%.

Our other segment expenses increase by Rp710 billion,
or 70,46%, from Rp1,008 billion in 2013 to Rp1,718 billion
in 2014 mainly due to an increased in operating and
maintenance expense by Rp 652.8 billion, or 79.0%, due
to the increased in electric by Rp494.7 billion, or 345.8%,
increased in security services expenses by Rp 40.7 billion,
or 17.2%, due to the addition of personnel and salary
increased as a result of the minimum wage, increased
in transport management by Rp 38.3 billion, or 321.7%.
The increased was also due to an increased in the
personnel expenses by Rp 27.2 billion, or 28.7%, due to
an increase in outsourcing expense.

Year ended December 31, 2013 compared to year ended December 31, 2012

Corporate Segment
Our corporate segment revenues increased by Rp3,543.0
billion, or 16.1%, from Rp22,047.0 billion in 2012 to
Rp25,590.0 billion in 2013. The increase was mainly due
to an increase of Rp1,192.4 billion, or 27.0%, in revenues
from data and internet revenues, reflecting an increase
in value added services revenue as well as an increase
in Metro Ethernet E-LINE monthly revenue due to the
migration from low cap connectivity to high cap
connectivity. Revenues from other telecommunications
services increased by Rp1,192.4 billion, or 35.7%, as a
result of an increase in tower lease revenues in line with
the growth in tenancy ratio, and an increase in support
CPE revenues. Network revenues increased by Rp516.9
billion, or 16.1%, primarily reflecting an increase in C-band
satellite transponder monthly subscription revenue due
to higher market demand, and an increase in International
Ethernet Private Line (IEPL) revenue. Interconnection
revenues increased by Rp347.4 billion, or 6.2%, mainly
as a result of an increase in IP transit monthly subscription
revenue due to higher demand for internet connectivity

from ISPs and corporate customers, and an increase in
revenues from wholesale voice. A decline of Rp243.4
billion, or 29.3%, was recorded in IDD 007 retail OLO
origin interconnection revenue due to the discontinuance
of a promotion which we operated in 2012 which had
driven interconnection revenues but which did not
provide satisfactory margins and thus was discontinued
in 2013.

Our corporate segment expenses increased by Rp2,399.0
billion, or 13.3%, from Rp17,976.0 billion in 2012 to
Rp20,375.0 billion in 2013, primarily due to an increase
of Rp1,985.3 billion, or 26.9%, in operation and maintenance
expenses as a result of higher tower rent expenses as
well as an increase in hardware system integration
expense in line with the growth of solution services
provided to our corporate customers. General and
administration expenses increased by Rp1,087.1 billion,
or 99.0% reflecting increases in provision expenses for
telecommunication services receivables, director and

110

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICEScommisioner remuneration, and in employee training
expenses relating to our global talent program. Marketing
expenses increased by Rp252.7 billion, or 52.6%, reflecting
increases in customer education expense and in marketing
expenses primarily relating to promoting and educating
customers about our new products. A decline of Rp897.6
billion, or 69.2%, was recorded in other expenses due
to a decline in other operating expenses primarily relating
to loss of Telkom-3 satellite which was built and launched
but failed to reach useable orbit in 2012, which was not
repeated in 2013, while the decline of Rp6.4 billion, or
0.2%, in personnel expenses reflected a decline in employee
severance payments, partially offset by an increase in
post-retirement healthcare benefit expenses.

Home Segment
Our home segment revenues decreased by Rp120.0
billion, or 1.3%, from Rp9,583.0 billion in 2012 to Rp9,463.0
billion in 2013, mainly due to a decline of Rp710.9 billion
or 13.2%, in fixed wireline revenue, reflecting a decline
in local usage revenue and in monthly subscription
revenue in line with the shift in customer communication
behavior trends. These were partially offset by an increase
in other telecommunication services of Rp225.9 billion,
or 24.6%, due to increases in CPE lease revenue. Data
and internet revenues increased by Rp159.3 billion, or
4.7%, due to an increase in monthly subscription revenue
for Speedy in line with the 28.7% growth in Speedy
customer base to 3.0 million subscribers.

Our home segment expenses increased by Rp946.0
billion, or 11.9%, from Rp7,939.0 billion in 2012 to Rp8,885.0
billion in 2013, primarily due to an increase of Rp1,496.7
billion, or 136.8%, in operation and maintenance expenses.
A decline of Rp568.5 billion, or 86.0%, was recorded in
other expenses, due to a decline in other operating
expenses primarily relating to supervising construction.

Personal Segment
Our personal segment revenues increased by Rp5,111.0
billion, or 9.1%, from Rp56,275.0 billion in 2012 to Rp61,386.0
billion in 2013, mainly due to an increase of Rp1,316.8
billion, or 4.3%, in cellular revenues, reflecting an increase
in long distance cellular revenue as well as in cellular
monthly subscription revenue due to a 5.1% growth in
our cellular subscriber base to 131.5 million subscribers.
Data and internet revenue increased by Rp3,275.1 billion,
or 16.3%, due to an increase in cellular data communication
revenue in line with the 10.8% growth in our data services
users to 60.5 million users, and an 86.1% growth in data
traffic. Cellular SMS revenue also increased due to the

promotion of our simPATI and kartu As products. Other
telecommunication services revenue increased by Rp270.9
billion, or 114.3%. Network revenues increased by Rp173.5
billion, or 64.8%. Revenue from fixed wireless decreased
by Rp174.0 billion, or 14.3%, reflecting a decline of Rp129.1
billion, or 22.2%, in local prepaid usage in line with our
migration strategy for our fixed wireless business.

Our personal segment expenses increased by Rp3,091.0
billion, or 8.5%, from Rp36,372.0 billion in 2012 to
Rp39,463.0 billion in 2013, mainly due to an increase of
Rp1,475.5 billion, or 14.6%, in depreciation expense, which
reflected an increase in provision for asset impairment
loss primarily relating to our fixed wireless business as
a result of lower tariffs and declining customers in the
fixed wireless market and an increase in depreciation of
leased assets. Operation and maintenance expenses
increased by Rp1,930.3 billion, or 13.2%, as a result of
the increase in operation and maintenance expenses for
support facilities, operation and maintenance expenses
for antenna and towers due to accelerated BTS construction
by Telkomsel, and in operation and maintenance expenses
for building installations.

Other Segment
Our other segment revenues increased by Rp373.0 billion,
or 48.8%, from Rp765.0 billion in 2012 to Rp1,138.0 billion
in 2013, reflecting an increase of Rp372.0 billion, or
48.6%, in Telkom Property's other telecommunication
revenues, mainly as a result of an increase of Rp105.0
billion, or 31.0%, in building maintenance services revenue
as well as an increase in security services revenue due
to tariff adjustments. Revenue from project management
increased by Rp57.5 billion, or 51.3%, reflecting enhanced
synergies within the Telkom Group as we implemented
a strategy for all our subsidiaries to use Telkom Property
for building management in 2013. Revenue from
management transport services a new line of business
recorded an increase of Rp56.9 billion, or 100%, from
2012, while revenue from building lease increased by
Rp46.2 billion, or 65.0%, due to an increase in rental
rates.

Our other segment expenses increased by Rp323.0
billion, or 47.2%, from Rp685.0 billion in 2012 to Rp1,008.0
billion in 2013, mainly reflecting an increase of Rp260.4
billion, or 46.0%, in operation and maintenance expenses,
due to increases in project management expenses,
electricity bills, and in third-party cooperation expenses.
Personnel expenses increased by Rp28.9 billion, or 44.0%,
mainly due to an increase in outsourcing expenses.

111

2014 Annual Report PT Telkom Indonesia Tbk (Persero)PRODUCT OVERVIEW

Telecommunication Business

1. Fixed Wireline Services
Our fixed wireline services include plain old telephone
services (“POTS”), value-added services (“VAS”), Intelligent
Network (“IN”) services and session initiation protocol
(“SIP”) services. IN services are IP-based network services
that are connected to our exchange systems and
telecommunications network. Session Initiation Protocol
services are IP multimedia subsystem (“IMS”) services
which combines wireless and fixed line technologies for
voice and data communications.

In 2014, we continued our “More for Less” program,
which helped promote our fixed wireline business by
offering fixed broadband and IPTV services as part of
a bundle with our fixed wireline services.

"triple play" services). We also provide a prepaid on-
demand, “pay as you use” broadband internet service
using Speedy or Wi-Fi access under the commercial
name of “Speedy Instan”.

3. Cellular Services
We provide cellular communications services using GSM
technology through our subsidiary, Telkomsel. Cellular
services (including mobile data services) remained the
largest contributor to our consolidated revenues in 2014.
We have two primary types of cellular products and
services, postpaid services represented by kartuHalo
and prepaid services represented by simPATI, Kartu As
and Loop.

2. Fixed Broadband
Our primary non-cellular based broadband internet
service, using ADSL and fiber optic technology, is offered
under the commercial name “Speedy” (which is in the
process of being rebranded to "IndiHome", which offers

in 2014, Telkomsel adopt 4G as the latest technologies
for mobile devices. Telkomsel also launched the "Loop"
as an independent brand that specifically target the
youth segment by offering a variety of attractive data
packets.

112

simPATI is a prepaid premium service that can be
purchased at any cellular shop in the form of starter
packs and top up vouchers. Our brand proposition
is “Discover Excitement”

Kartu As is a prepaid service with a more price
sensitive market segment compared to simPATI.
Loop is a prepaid service that targets the youth
segment through the provision of attractive data
packages.

In 2014, we continued with marketing programs for
cellular services generally to promote sales and enhance
awareness of Telkomsel's brands. We also focused on
making our loyalty programs, such as Telkomsel Points,
more attractive to our customers. We also provided Flexi
subscribers with incentives through vouchers to be used
toward the purchase of GSM phones or credit. We also
launched 4G services in December 2014, with initial
coverage in Jakarta and Bali, and were the first operator
in Indonesia to launch 4G services commercially.Our
mobile cellular subscriber base increased from 131.5
million subscribers at the end of 2013 to 140.6 million by
the end of 2014, an increase of 6.9% or 9.1 million
subscribers.

4. Fixed Wireless Services
Our fixed wireless business, which uses limited mobility
CDMA technology and operates under the "Flexi" brand,
its business was transfered to our subsidiary, Telkomsel,
effective as of October 1, 2014. However, we continue
to serve Flexi customers who do not migrate yet until
the end of 2015, and then we will stop Flexi. During 2014,
with our migration strategy, we have also continued with
our migration strategy to encourage our fixed wireless
customers to enter into plans operated by Telkomsel.
The number of our fixed wireless connections in service
continued to decline in 2014, from approximately 6.8
million as of December 31, 2013 to 4.4 million as of
December 31, 2014.

5. Interconnection Services
We also earn revenue from other telecommunications
operators that utilize our extensive network infrastructure
in Indonesia, both for calls that end at or transit via our
network. Similarly, we also pay interconnection fees to
other telecommunications operators when we use their
networks to connect a call from our customers.

Interconnection services that we provide to other
telecommunications operators comprise domestic and
international interconnection services.

6. Network Services
We directly manage the provision of network services
such as leased lines to customers comprising of our
business partners, commercial businesses and OLOs.
Our network services customers may enter into short-
term deals for several minutes of broadcasting to longer-
term agreements for one to five year periods.

7. Satellite
Our satellite operations consist primarily of leasing satellite
transponders capacity to broadcasters and operators of
VSAT, cellular and IDD services and ISPs, as well as
providing earth station satellite up linking and down
linking services to domestic and international users.

In view of market opportunities and the limited supply,
we plan to expand our satellite business with the
construction of Telkom-3S satellite through a partnership
on acquired orbital slot. The Telkom-3S satellite is currently
under development.

We manage our satellite business through our subsidiaries,
Metra and Patrakom.

8. Tower
Through our subsidiary, Dayamitra, we lease out space
to other operators to place their telecommunications
equipment on these towers for which we receive a fee.

Information Business

Our information business portfolio includes:

1. Platform Services, which includes Managed
Applications and System Integration, Business Process
Management, E-Payment, Premises Integration, Data
Center and Cloud, and Machine to Machine "M2M".
Managed Applications and System Integration services
provide software development cloud-based IT and
server-based management services. Business Process
Management services provide customer relationship
management, analytic consulting, services operation
management and enterprise shared services.
E-Payment includes services related to billing payment,
remittance, e-payment platform (e-money) and
e-payment solution (e-Voucher services). Premises

113

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Integration services includes customer premises
equipment ("CPE”) trading, managed CPE services,
managed network services and managed security
services. Data Center and Cloud Services includes
server colocation, hosting, disaster recovery center,
content delivery network services, IaaS (infrastructure
as a service, which offers configurable virtual servers
and storage) and SaaS (software as a service, which
offers cloud-based software and IaaS services).

To complement and leverage our information business,
our subsidiary Telkom Metra formed a joint venture
on August 29, 2014 with Telstra Holding Singapore
Pte. Ltd. to provide network application services to
Indonesian enterprises, multinationals and Australian
companies operating in Indonesia. The joint venture
will focus on four key areas, namely, managed network
services, managed security services, and unified
communications and cloud solutions.

2. Big Data, which includes mobile subscriber pattern
analytics churn prevention, infrastructure site
deployment recomendation, targeted digital
advertising, post call marketing and analytics, M2M
analytics, data monetization for enterprise service

providers and sentiment analytics. We are currently
exploring opportunities to provide services in this
area.

3. Ecosystem Solution, which includes services involving
e-Tourism, e-Gov, e-logistic, e-Education, e-Health
and e-Transportation. We are currently exploring
opportunities to provide services in this area.

Media and Edutainment Business

Our Media and Edutainment business portfolio includes
the following :
1. Digital Life refers to digital content services (such
as music and e-books), applications and games which
are distributed through apps store and web stores,
e-commerce marketplace, portals, e-radio and internet-
based UseeTV.

2. Digital Home refers to a development of home media
content convergence services for multi-screen/device,
and multi-platform, which are consists of media
entertainment (Pay TV : DTH, UseeTV cable), digital
media storage, home automation and security.
Television broadcast services comprising of:

114

IPTV is an Internet Protocol-based television
("IPTV") under the commercial name ”UseeTV
Cable”. The service is delivered using Speedy
broadband access network, and offers ”pause
and rewind” features for contents such as video-
on-demand programming, FTA TV, premium TV,
internet radio and TV on demand, which allows
playback of program content from the last seven
days.

OTT TV (Over the Top TV) is an internet TV service
under the commercial name ”UseeTV” that can
be accessed from Telkom's internet network,
offering free content such as video-on-demand
programming, live TV, internet radio, and some
pay video programming. Similar to UseeTV Cable,
the OTT TV is also capable of allowing play back
of program content from the last three days.

3. Digital Advertising is a commercial service for the
promotion of products or services of any third party
that are presented in digital or print media, such as
radio, television, internet, newspapers, brochures/
leaflets and billboards.

TELECOMMUNICATIONS SERVICES
AND TARIFFS OVERVIEW

We set our telecommunications tariffs in accordance
with government regulations. Based on Law No.36/1999
and Government Regulation No.52/2000, tariffs for
operating telecommunications network and/or services
are determined by providers based on the tariff type,
structure and the price cap formula set by the Government.

Fixed line telephone tariffs
The Government issued a new tariff adjustment formula
in 2008, which is stipulated in the MoCI Decree No.15/
PER/M.KOMINFO/4/2008 dated April 30, 2008 concerning
“Procedure for Tariff Determination for Basic Telephony
Service which Connected through Fixed Line Network”.

Under the Decree, the tariff structure for basic telephony
services, which is connected through fixed line network
consists of the following:
activation fee
monthly subscription charges
usage charges
additional facilities fee.

Mobile cellular telephone tariffs
On April 7, 2008, the MoCI issued Decree No.09/PER/M.
KOMINFO/04/2008 (“MoCI Decree 09/2008”) regarding
“Mechanism to Determine Tariff of Telecommunication
Services which Connected through Mobile Cellular
Network” which provides guidelines to determine cellular
tariffs with a formula consisting of network element cost
and retail services activity cost.

Under the Decree, the cellular tariffs of operating
telecommunication services which connected through
mobile cellular network consist of basic telephony
services tariff, roaming tariff and/or multimedia service
tariff, with the following structure:
activation fee
monthly subscription charges
usage charges
additional facilities fee.

Interconnection tariffs
ITRA, in its letter No.227/BRTI/XII/2010 dated December
31, 2010, decided to implement new interconnection
tariffs effective from January 1, 2011 for mobile cellular
networks, satellite mobile networks and fixed local
networks and effective from July 1, 2011 for fixed wireless
local network with a limited mobility.

Based on Director General of Post and Informatics Decree
No.201/KEP/DJPPI/KOMINFO/7/2011 dated July 29, 2011,
ITRA approved our revision of RIO regarding the
interconnection tariff. ITRA, in its letter No.262/BRTI/
XII/2011 dated December 12, 2011, changed the basis for
SMS interconnection tariffs from Sender Keep All (“SKA”)
basis to a cost-based interconnection fee calculation
(“Non-SKA”) effective from June 1, 2012, for all
telecommunication provider operators.

We derive substantial revenue from interconnection
services because we have the largest network in Indonesia
and our competitors must pay tariffs to connect to our
network. As regulated by the MoCI, although SMS
interconnection rates as a result of ITRB No.60/BRTI/
III/2014 and No.125/BRTI/IV/2014 effective from April
2104 increase from Rp23 to Rp24, SMS interconnection
rates have been decreasing prior to that in recent years
and may decrease again in the future.

Network lease tariffs
Through the MoCI Decree No.03/PER/M.KOMINFO/1/2007
dated January 26, 2007 concerning “Network Lease”,
the Government regulated the form, type, tariff structure,
and tariff formula for services of network lease. Pursuant

115

2014 Annual Report PT Telkom Indonesia Tbk (Persero)to the MoCI Decree, the Government released Director
General of Post and Telecommunication Decision Letter
No.115/2008 dated March 24, 2008, regarding “The
Agreement on Network Lease Service Type Document,
Network Lease Service Tariff, Available Capacity of
Network Lease Service, Quality of Network Lease Service,
and Provision Procedure of Network Lease Service in
2008 Owned by Dominant Network Lease Service
Provider”, in conformity with our proposal.

Tariff for other services
The tariffs for satellite lease, telephony services and
other multimedia services are determined by the service
provider by taking into account the expenditures and
market price. The Government only determines the tariff
formula for basic telephony services. There is no stipulation
for the tariff of other services.

IMES tariffs
In providing IME services, our New Economy Business,
we work with a number of partners. These collaborations
are based on considerations of capability, time to market
and idea creation. Tariffs for our IME services are
determined in agreement with these partners based on
the scheme of cooperation between us and each respective
partner.

MARKETING AND PROMOTION
ASPECTS

Distribution Channels
The following are the primary distribution marketing
channels for our products and services:

1. Plasa Telkom and GraPARI

are outlets that function as walk-in customer service
points, where customers have access to the full range
of Telkom and Telkomsel’s respective products and
services, including billing, payment, subscription
cancellation and promotion to complaint handling.
As of December 31, 2014, we managed 572 Plasa
Telkom outlets and 88 GraPARI outlets in Indonesia
and one GraPARI in Hong Kong, and had an additional
321 GraPARI outlets which were managed by thirdparty
business partners.

Several of the GraPARI outlets operate on a 24 hour
basis. We also operate 263 mobile GraPARI outlets
which are sales points located in vehicles which can
travel to reach customers across the country.

116

are call centers that support our customers’ ability
to access certain of our products and services,
including make billing enquiries, submit complaints,
and access certain promotions and service features.

We operate 24-hour contact center facilities in five
cities, namely Medan, Jakarta, Bandung, Makassar
and Surabaya.

Inbound calls to our contact centers have generally
been decreasing due to changes in methods used
by the customers in seeking out product information,
subscribing or submitting complaints, from voice
calls to online requests on our websites.

3. Partnership Stores
Are extensions of our distribution channels, in
cooperation with a variety of third party marketing
outlets such as computer or electronic stores, banks,
and others.

To increase sales, we also use above and below the line
marketing channels, to promote our services to certain
parties and communities. We also continue to place
advertisement in printed and electronic media and
implement marketing methods such as point of sales
broadcasting as well as promotion and sponsorship
events.

In line with shifting consumer behavior and lifestyles,
we have also actively developed national scale
partnerships with several partners such as Intel and
Bank BTN. Through the partnership, we sell bundle-
based products at our partners’ sales outlets.

4. Feet on The Street
Are sales agents that conduct direct marketing of
our products, particularly for our IndiHome products,
through door-to-door sales, open table discussions,
exhibitions, product demonstrations, and other similar
activities.

5. Authorized dealers and retail outlets
Are distribution outlets for a variety of
telecommunication products such as Speedy Instant
cards, starter packs, prepaid SIM cards and top-up
vouchers. These dealers are non-exclusive, and they
receive a discount on all of the products they receive.
Retail outlets also include outlets jointly operated
by us, Telkomsel and PT Pos Indonesia, as well as
other outlets such as banks.

6. Account Management Teams
Are teams that manage relationships with our individual,
business and corporate customers. We also provide
a Tele Account Manager service to support customers
or prospective business customers through inbound
and outbound calls for pre-sales, sales and other
customer services requirements.

7. Telkom Solution Houses
Are places where an enterprise customer can obtain
information on a variety of TIMES solutions, products
and services, and the latest technology. At Telkom
Solution Houses, we provide free live demon for
free(such as IndiHome, Hotspot, PDN, IP-Phone), live
demonstrations for commercial products (such as
video conferene), enterprise consultation and
ecosystem business solutions for customized TIMES
for corporations and simulated demonstrations (such
as e-Payment and VPN over GSM and Flexi).

8. SME Centers

These centers function as a communication center
supported with advanced office facilities, a community
center where our customers can interact and a
commerce center specifically for e-Commerce
solutions.

9. Website
Our website, www.telkom.co.id and www.telkomsel.
com enables customers to access certain of our
products and services. Available services include
e-billing registration, collective billing registration
and submission of complaints.

10. Social Media
We use social media, primarily Facebook and Twitter,
to enable the customers to interact with us regarding
our products and services.

To increase sales, we
also use above and
below the line
marketing channels, to
promote our services
to certain parties and
communities

117

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

Marketing Strategy

We implement a “paradox marketing” framework in managing our marketing as illustrated in following diagram:

In our implementation of the “paradox marketing” framework as illustrated above, the “more for less” concept is
based on the value preposition of the products and services we offer to customers, with the aim that customers
can acquire more relevant benefits at a lower price compare to our competitors, with mass customization that is in
line with customers’ requirements for our product and services.

In the consumer segment, for example, and particularly in the Home segment, our Indihome service has been
developed as one of our innovations for customers. IndiHome is an integrated TIMES service that incorporates
internet broadband access, telephony, IPTV (under the USeeTV brand) and home automation services.

We have implemented a comprehensive marketing strategy to bolster our brand and to boost sales as well, including
through marketing communication activities and product and service distribution channel development. Our Plasa
Telkom outlet is one of our principal distribution channels for our products and services, in addition to other service
distribution networks.

118

FINANCIAL POSITION OVERVIEW

Consolidated Statements of Financial Position

Total Current Assets

Total Non-Current Assets

Total Assets

Total Current Liabilities

Total Non-Current Liabilities

Total Liabilities

Total equity attributable to owners of the parent
company

As of December 31,

2014

2013

2012*

(Rp billion)

(US$
million)

(Rp
billion)

(Rp billion)

33,762

107,133

140,895

31,786

22,984

54,770

67,807

2,726

8,650

11,376

2,566

1,856

4,422

33,075

94,876

127,951

28,437

22,090

50,527

27,973

83,396

111,369

24,107

20,284

44,391

5,475

60,542

51,541

*As re-stated, see Note 48 to the Consolidated Financial Statements 2012

Year ended December 31, 2014 compared to year ended December 31, 2013

1. Assets
a. Current Assets

As of December 31, 2014, our current assets were Rp33,762 billion (US$2,726 million) compare to Rp33,075
billion as of December 31, 2013. The increase in current assets was mainly due to an increase in our cash and
cash equivalents by Rp2,976 billion, or 20.3%, and Rp796 billion, or 20.2% in our advances and prepaid expenses.
This increase was partially offset by a decrease in our other current financial assets of Rp4,075 billion, or 59.3%.

b. Non Current Assets

As of December 31, 2014, our non current assets were Rp107,133 billion (US$8,650 million) compare to Rp94,876
billion as of December 31, 2013. This increase was due to:
-
- An increase in our advanced and other non-current asset of Rp1,684 billion, or 35.1%, and
- An increase in long term investment-net of Rp1,463 billion or 481.3%.

An increase in property, plant and equipment-net accumulated depreciation by Rp8,048 billion, or 9.3%,

2. Liabilities dan Equity
a. Current Liabilities

Current liabilities were Rp31,786 billion (US$2,566 million) as of December 31, 2014 and Rp28,437 billion as of
December 31, 2013. This increase was primarily due to:
-
-
-

An increase of Rp1,378 billion, or 319.0 %, in short-term bank loans;
An increase of Rp806 billion, or 15.8%, in current maturities of long-term liabilities, and
An increase of Rp678 billion, or 39.9%, in tax payable.

119

2014 Annual Report PT Telkom Indonesia Tbk (Persero)b. Non Current Liabilities
Non current liabilities were Rp22,984 billion (US$1,856
million) as of December 31, 2014 compare to Rp22,090
billion as of December 31, 2013. The increase was
partially due to increase in bank loans of Rp2,243,
or 39.8%. This increase was partially offset by a
decrease in bond and notes of Rp834 billion, or 27.1%.

c. Equity

Total equity increase by Rp8,701 billion, or 11.2%, from
Rp77,424 billion as of December 31, 2013 to Rp86,125
billion as of December 31, 2014. The increase of equity

was primarily the result of total comprehensive income
for the year attributable to owners of the parent of
Rp21,470 billion in 2014, the sale of treasury stock
of Rp1,969 billion, increase in paid in capital by Rp576
billion. This increase offset by cash deviden of
Rp9.943,6 billion. Our retained earnings increase by
Rp4,695 billion, or 8.0%, and total equity attributable
to owner of the parent increase by Rp7,265 billion,
or 12.0%, from Rp60,542 billion as of December 31,
2013 to Rp67,807 billion as of December 31, 2014.

Year ended December 31, 2013 compared to year ended December 31, 2012

1. Assets
a. Current Assets

As of December 31, 2013, our current assets were
Rp33,075 billion (US$2,718 million) compare to
Rp27,973 billion as of December 31, 2012. The increase
in current assets was mainly due to the increase of
Rp2,534 billion, or 58.4%, in other current financial
assets and in cash and cash equivalents Rp1,578
billion, or 12.0%, and our third party trade receivable
of Rp604 billion, or 13.3%.

This increase was partially offset by a decrease of
Rp426 billion, or 97.7%, in claim for tax refund.

b. Non Current Assets
As of December 31, 2013 our non current assets were
Rp94,876 billion (US$7,796 million) and Rp83,396
billion as of December 31, 2012. This increase was
primarily due to an increase in property, plant and
equipment of Rp9,714 billion, or 12.6%, and advance
and prepaid expense of Rp1,784 billion or 50.8%.

This increase was partially offset by a decrease of
Rp105 million, or 10.2%, in prepaid pension benefit
costs.

2. Liabilities dan Equity
a. Current Liabilities

Current liabilities were Rp28,437 billion (US$2,337
million) as of December 31, 2013 and Rp24,107 billion
as of December 31, 2012. This increase was primarily
due to:

- An increase of Rp3,926 billion, or 57.3%, in third

party trade payable, and

- An increase of Rp761 billion, or 27.9%, in unearned

income.

This increase was partially offset by a decrease of
Rp899 million, or 14.6%, in accrued expense.

b. Non Current Liabilities

Non current liabilities were Rp22,090 billion (US$1,815
million) as of December 31, 2013 and Rp20,284 billion
as of December 31, 2012. Our non-current liabilities
increase primarily due to an increase of Rp2,507
billion, or 138.2%, in obligation under finance lease.
This increase was partially offset by a decrease of
Rp1,148 million, or 16.9%, in bank loan.

c. Equity

Total equity increase by Rp10,446 billion, or 15.6%,
from Rp66,978 billion as of December 31, 2012 to
Rp77,424 billion as of December 31, 2013. The increase
of equity was primarily the result of increase of total
comprehensive income for the year attributable to
owners of the parent of Rp14,317 billion in 2013, the
sale of treasury stock of Rp2,262 billion, paid in capital
of Rp1,250 billion. This increase offset by cash dividend
of Rp Rp7.068 billion. As a result of foregoing, our
retained earnings increase by Rp5,851 billion, or 15.6%
and total equity attributable to owner of the parent
increase by Rp9,001 billion, or 17.5% from Rp51,541
billion as of December 31, 2012 to Rp60,542 billion
as of December 31, 2013.

120

The following table sets out our Consolidated Statements of Comprehensive Income, itemized according to our
main products and services, for the three years 2014 through 2012. Each item is expressed as a percentage of total
revenues or expenses:

Revenues

Telephone Revenues

Cellular

Usage charges

Features

Monthly subscription charges

Total Cellular

Fixed Line

Usage charges

Monthly subscription charges

Call center

Installation charges

Others

Total Fixed Line

As of December 31,

2014

(Rp
billion)

(US$
million)

2013

(Rp
billion)

2012

(Rp
billion)

32,972

2,662

36.8

30,722

37.0

29,477

38.2

751

567

0.8

0.6

686

730

0.8

0.9

558

696

0.7

0.9

34,290

2,769

38.2

32,138

38.7

30,731

39.8

5,347

2,697

736

432

218

6.0

3.0

0.8

0.1

6,453

2,682

7.8

3.2

7,323

2,805

324

0.4

230

0.3

228

112

194

9.5

3.6

0.3

0.1

0.3

8,881

717

9.9

9,701

11.7

10,662

13.8

Total Telephone Revenues

43,171

3,486

48.1

41,839 50.4

41,393 53.6

Data, Internet and Information Technology Services Revenues

Internet, data communication and information
technology services

23,550

1,902

26.3

19,267

23.3

14,857

19.3

Short Messaging Service ("SMS")

14,034

1,133

15.7

13,134

15.8

12,631

16.4

e-Business

VoIP

Total Data, Internet and Information Technology
Services Revenues

Interconnection Revenues

Network Revenues

Others Telecommunications Services Revenues

Total Revenues

Expenses

103

0.1

119

0.1

37,712

3,045

42.1 32,603

39.3

27,624

35.9

4,708

380

5.3

4,843

1,280

2,825

103

228

1.4

3.1

1,253

2,429

5.9

1.5

2.9

4,273

1,208

2,645

5.5

1.6

3.4

89,696

7,242

100

82,967

100

77,143

100

Operations, Maintenance and Telecommunication Services Expenses

Operations and maintenance

12,583

1,016

20.5

10,667

18.5

9,012

16.7

Radio frequency usage charges

3,207

259

5.2

3,098

5.4

3,002

5.6

Concession fees and Universal Service Obligation
(USO) charges

Electricity, gas and water

Cost of phone,set top boxes, SIM and RUIM cards

Leased lines and CPE

Vehicles rental and supporting facilities

Cost of IT service

Insurance

1,818

147

3.0

1,595

2.8

1,452

2.7

1,180

1,031

758

581

357

335

1.9

1.7

1.2

0.9

0.6

0.5

1,063

752

440

439

677

374

1.8

1.3

0.8

1.2

0.6

879

687

407

293

222

671

1.6

1.3

0.8

0.5

0.4

1.2

121

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Project Management Expenses

Others

Total Operations, Maintenance and
Telecommunication Services Expenses

As of December 31,

2014

(Rp
billion)

(US$
million)

180

258

2013

(Rp
billion)

138

0.3

0.4

2012

(Rp
billion)

102

0.2

0.1

22,288

1,800

36.2

19,332

33.6

16,803

31.1

Depreciation and Amortization Expenses

17,131

1,383

27.9

15,780

27,3

14,456

26.8

Personnel Expenses

Salaries and related benefits

Vacation pay, incentives and other benefits

Employees’ income tax

Net periodic pension costs

Housing

LSA expense

Other employee benefit

Insurance

Net periodic post-retirement health care benefits
costs

Other post-retirement benefits costs

Early Retirement Program

Others

Total Personnel Expenses

Interconnection Expenses

Marketing Expenses

General and Administrative Expenses

Gain (loss) on foreign exchange – net

Other expenses

Total Expenses

Other Income

Operating Profit

Finance income

Finance costs

Share of loss of associated companies

Profit Before Income Tax

Income Tax (Expense) Benefit

Profit for the Year

Total other comprehensive income - net

3,759

3,182

1,317

645

224

115

108

9,616

4,893

3,092

3,963

396

303

257

106

6.1

5.2

2.1

1.1

0.4

0.2

0.1

3,553

3,252

1,160

873

6.2

5.6

2.0

1.5

220

0.4

0.1

0.2

3,257

3,400

1,022

789

200

121

6.0

6.3

1.9

1.4

0.4

0.2

0.1

0.2

374

0.7

0.2

0.1

699

0.1

1.3

0.1

776

15.8

9,733

16.9

9,786

18.2

395

250

320

8.0

5.0

6.5

0.6

4,927

3,044

4,155

249

480

8.5

5.3

7.2

0.4

0.8

4,667

3,094

3,036

189

1,973

8.6

5.7

5.6

0.3

3.7

61,393

4,957

100

57,700

100 54,004

100

1,074

29,377

2,372

1,238

100

(1,814)

(146)

(17)

(1)

28,784

2,324

(7,338)

(592)

21,446

1,734

2,579

27,845

836

(1,504)

(29)

27,149

(6,859)

20,290

112

2,559

25,698

596

(2,055)

(11)

24,227

(5,866)

18,362

18,388

Total comprehensive income for the year

21,471

1,734

20,402

Profit for the year attributable to owners of the
parent company

Profit for the year attributable to non-controlling
interest

Total comprehensive income for the year
attributable to owners of the parent company

Total comprehensive income for the year
attributable to non-controlling interest

14,638

1,182

14,205

12,850

6,808

550

6,085

5,512

14,663

1,184

14,317

12,876

6,808

550

6,085

5,512

Income per share (in full amount)

149.83

147.42

133.84

122

1. Revenues
Total revenues increased by Rp6,729 billion, or 8.1%, from
Rp82,967 billion in 2013 to Rp89,696 billion in 2014. The
increase in revenues was primarily contributed by data
internet and information technology service revenues,
and cellular telephone revenues, and to a lesser extend
others telecomunication services revenues.

a. Cellular Telephone Revenues

Cellular telephone revenues increased by Rp2,152
billion, or 6.7%, from Rp32,138 billion in 2013 to
Rp34,290 billion in 2014.

Usage charges increased by Rp2,250 billion, or 7.3%,
from Rp30,722 billion in 2013 to Rp32,972 billion in
2014 due to an increase of 6.9% in both our prepaid
and postpaid subscribers, also due to increasing of
our local and long distance usage. Revenues from
features increased by Rp65 billion, or 9.5%, from
Rp686 billion in 2013 to Rp751 billion in 2014 due to
increase in usage features by our subscribers. Monthly
subscription charges decreased by Rp163 billion, or
22.3%, from Rp730 billion in 2013 to Rp567 billion in
2014.

Our total cellular telephone revenues accounted for
38.2% of our consolidated revenues for the year ended
December 31, 2014.

b. Fixed Lines Revenues

Fixed lines revenues decreased by Rp821 billion, or
8.5%, from Rp9,701 billion in 2013 to Rp8,881 billion
in 2014. The decrease in fixed lines revenues due to
decrease in fixed line revenue and and fixed wireless
revenues by 4.8% and 42.1%. The decrease was
primarily due to decrease in usage charges of Rp1,106
billion, or 17.1%, caused by a decrease in local and
domestic long distance usage.

The decreased in fixed line revenue was partially
offset by an increased in our call center revenues by
Rp412 billion, or 127.2%.

revenues for the year ended December 31, 2014,
compared to 39.3% for the year ended December 31,
2013.

Data, internet and information technology service
revenues increased by Rp5,109 billion, or 15.7%, from
Rp32,603 billion in 2013 to Rp37,712 billion in 2014.
This increase was primarily due to an increase in
revenues from internet, data communication and
information technology services by Rp4,283 billion,
or 22.2%, which was driven cellular data usage and
revenues, witch increased by Rp3,538 billion, primarily
from an increased of 80.7% in Flash subscribers from
17,3 million in 2013 to 31,2 million in 2014..

SMS revenues increased by Rp900 billion, or 6.9%,
from Rp13,134 billion in 2013 to Rp14,034 billion in
2014.

d. Interconnection Revenues

Interconnection revenues comprised interconnection
revenues from our fixed line network and interconnection
revenues from Telkomsel’s mobile cellular network.
Interconnection revenues included incoming
international long-distance revenues from our IDD
service (TIC-007). Interconnection revenues decreased
by Rp135 billion, or 2.8%, from Rp4,843 billion in 2013
to Rp4,708 billion in 2014 primarily due to an decrease
in incoming calls subcribers.

e. Network Revenues

Network revenues increased by Rp27 billion, or 2.2%,
from Rp1,253 billion in 2013 to Rp1,280 billion in 2014
primarily due to an increase in our satellite transponder
lease revenue by Rp278 billion, or 71.0%, from 392
billion in 2013 to Rp670 billion in 2014 as result of an
increase in satellite transponder capacity lease by
18,4% from 3.007 million Mhz in 2013 to 3.560 million
MHz in 2014.

f. Other Telecommunications Services Revenues

Other telecommunications service increased by Rp396
billion, or 16.3%, from Rp2,429 billion in 2013 to Rp2,825
billion in 2014. The increase was primarily due to an
increase of Rp730 billion, or 240.9%, in CPE revenue
from Rp303 billion in 2013 to Rp1,033 billion in 2014.

c. Data, Internet and Information Technology
Services Revenues

Our data, internet and information technology service
revenues accounted for 42.0% of our consolidated

The increase was partly offset primarily by decrease
in revenues from USO by Rp327 billion, or 64.4%, from
Rp508 billion in 2013 to Rp181 billion in 2014.

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2014 Annual Report PT Telkom Indonesia Tbk (Persero)
g. Other Income

b. Depreciation and Amortization Expenses

Other income decreased by Rp1,505 billion, from
Rp2,579 billion in 2013 to Rp1,074 billion in 2014 as
we had recognized a gain on the sale of 80% of our
ownership in PT Indonusa.

2. Expenses
Total expenses increased by Rp3,693 billion, or 6.4%,
from Rp57,700 billion in 2013 to Rp61,393 billion in 2014.
For futher explaination as shown below:

Depreciation and amortization expenses increased
by Rp1,352 billion, or 8.6%, from Rp15,780 billion in
2013 to Rp17,131 billion in 2014, primarily due to an
increase in depreciation expense related to switching
equipment as an efforts improving service to customers
and by our allowance for impairment losses of fixed
assets due to changes in business strategies for our
fixed wireless phone.

c. Personnel Expenses

a. Operations, Maintenance and Telecommunication

Service Expenses
Operations, maintenance and telecommunication
service expenses increased by Rp2,956 billion, or
15.3%, from Rp19,332 billion in 2013 to Rp22,288
billion in 2014.

Personnel expenses decreased by Rp117 billion, or
1.2%, from Rp9,733 billion in 2013 to Rp9,616 billion
in 2014 due to a decreased by Rp300 billion, or 80.2%
in net periodic post-retirement health care benefit
and a decrease in net periodic pension cost by Rp228
billion, or 26.1%, due to actuarial calculations.

The increase in operations, maintenance and
telecommunication service expenses was primarily
attributable the following:
- Operations and maintenance of Rp1,916 billion,
or 18.0%, due to an increase in expenses associated
with network maintenance to improve our cellular
business performance;

- Leased lines and CPE increased by Rp318 billion,
or 72.3%, which was used for operation and
maintenance of leased lines as a result of an
increased in projects from our corporate customers;
- Cost of phone, set top boxes, SIM and RUIM cards
increase by Rp279 billion, or 37.1%, from Rp752
billion in 2013 to Rp1,031 billion in 2014 due to
modem and terminal bundling program.

The above increases were offset by a decrease in
cost of IT services decreased by Rp320 billion, or
47.3%, from Rp677 billion in 2013 to Rp357 billion in
2014 due to efficiency gain as a result of using an
from integrated system.

The decreased was offset by increase in salaries and
related benefits by Rp206 billion or 5.8% due to an
increase in employee number by 1,37% from 25,011
people in 2013 to 25,284 people in 2014. This resulted
in increase in employees’ income tax by Rp157 billion,
or 13.5%, from Rp1,160 billion in 2013 to Rp1,317 billion
in 2014.

d. Interconnection Expense

Interconnection expense decreased by Rp34 billion,
or 0.7%, from Rp4,927 billion in 2013 to Rp4,893 billion
in 2014 primarily due to an decrease of Rp81 billion,
or 2.2% in domestic interconnection and transit
interconnection expense.

e. Marketing Expense

Marketing expenses increased by Rp48 billion, or
1.6%, from Rp3,044 billion in 2013 to Rp3,092 billion
in 2014 due to an increase of Rp80 billion, or 15.1%,
in customer education expenses primarly for our
broadband service. The increase was offset by decrease
in advertising and promotion expenses by Rp18 billion,
or 0.7%, due to the selective use of media for promotion
and increase group synergy to market the product.

124

7. Profit for the Year Attributable to Owners of the
Parent Company
Profit for the year attributable to owners of the parent
company increased by Rp433 billion, or 3.0%, from
Rp14,205 billion in 2013 to Rp14,638 billion in 2014.

8. Profit for the Year Attributable to Non-controlling
Interest
Profit for the year attributable to non-controlling interest
increased by Rp723 billion, or 11.9%, from Rp6,085 billion
in 2013 to Rp6,808 billion in 2014.

9. Comprehensive Income for the Year
Comprehensive income for the year increased by Rp1,068
billion, or 5.2%, from Rp20,402 billion in 2013 to Rp21,471
billion in 2014.

10. Net Income per Share
Net income per share increased by Rp2,4, or 1.6%, from
Rp147.42 in 2013 to Rp149.83 in 2014.

f. General and Administrative Expense

General and administrative expense decreased by
Rp192 billion, or 4.6%, from Rp4,155 billion in 2013 to
Rp3,963 billion in 2014 primarly due in part to an
decrease in provision for doubtful accounts by Rp805
billion, or 50.6%. This decreased was partially offset
with an increase in general expense by Rp292 billion,
or 43.3% and also an in our training, education and
recruitment expense by Rp117, or 28.3%.

g. Gain (loss) on Foreign Exchange - nett

Loss on foreign exchange - net decreased by Rp235
billion, from Rp249 billion in 2013 to Rp14 billion in
2014.

h. Other Expenses

Other expenses decreased by Rp84 billion, from
Rp480 billion in 2013 to Rp396 billion in 2014.

3. Operating Profit and Operating Profit Margin
As a result of the foregoing, operating profit increased
by Rp1,531 billion, or 5.5%, from Rp27,846 billion in 2013
to Rp29,377 billion in 2014. Operating profit margin
decreased from 33.6% in 2013 to 32.8% in 2014.

4. Profit before Income Tax and Pre-Tax Margin
As a result of the foregoing, profit before income tax
increased by Rp1,635 billion, or 6.0%, from Rp27,149
billion in 2013 to Rp28,784 billion in 2014. Pre-tax margin
decreased from 32.7% in 2013 to 32.1% in 2014.

5. Income Tax Expense
Income tax expense increased by Rp479 billion, or 7.0%,
from Rp6,859 billion in 2013 to Rp7,338 billion in 2014,
in line with the increase in profit before income tax.

125

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Year ended December 31, 2013 compared
to year ended December 31, 2012

Year ended December 31, 2013 compared to year ended
December 31, 2012

1. Revenues
Total revenues increased by Rp5,824 billion, or 7.5%,
from Rp77,143 billion in 2012 to Rp82,967 billion in 2013.
The increase in revenues in 2013 was due to the increase
in all sub revenues exclude revenues from fixed lines
telephone. The increase in revenues in 2013 was primarily
contributed by cellular telephone revenues and data,
internet and information technology services revenues.

a. Cellular Telephone Revenues

Cellular telephone revenues increased by Rp1,407
billion, or 4.6%, from Rp30,731 billion in 2012 to
Rp32,138 billion in 2013 due to increases in all sub
cellular telephone revenues. The increased primarily
due to 5.1% increase in our cellular subscriber.

Usage charges increased by Rp1,245 billion, or 4.2%,
from Rp29,477 billion in 2012 to Rp30,731 billion in
2013 due to an increase in both our prepaid and
postpaid subscriber, also due to increasing of our
Long Distance Usage. Revenues from features increased
by Rp128 billion, or 22.9%, from Rp558 billion in 2012
to Rp686 billion in 2013. Monthly subscription charges
increased by Rp34 billion, or 4.9%, from Rp696 billion
in 2012 to Rp730 billion in 2013 due to 15.8% increase
in our postpaid subscriber.

Our total cellular telephone revenues accounted for
38.7% of our consolidated revenues for the year
ended December 31, 2013, compared to 39.8% for
the year ended December 31, 2012.

b. Fixed Lines Revenues

Fixed lines revenues decreased by Rp961 billion, or
9.0%, from Rp10,662 billion in 2012 to Rp9,701 billion
in 2013. The decrease in fixed lines revenues was
primarily due to a decrease in usage charges, of
Rp870 billion, or 11.9%, and monthly subscription
charges revenues of Rp123 billion, or 4.4% which was
primarily caused by a decrease in local and domestic
long distance usage due to the shifting usage to
cellular telephone services.

126

c. Data, Internet and Information Technology Services

Revenues
Our total data, internet and information technology
service revenues accounted for 38.2% of our
consolidated revenues for the year ended December
31, 2013, compared to 35.9% for the year ended
December 31, 2012.

Data, internet and information technology services
revenues increased by Rp4,085 billion, or 14.8%, from
Rp27,624 billion in 2012 to Rp31,709 billion in 2013.
This increase was primarily due to an increase in
revenues from internet, data communication and
information technology services by Rp3,516 billion,
or 23.7%, which was driven by this following revenues:

cellular data communication revenues from an
increase in Flash mobile broadband subscribers
of 56.5%, from 11 million subscribers in 2012 to
17.3 million subscribers in 2013.
Speedy monthly subscription revenues due to an
increase in Speedy subscribers of 28.7% from 2.3
million subscribers in 2012 to 3.0 million subscribers
in 2013.
data communication Ethernet revenue due to
increase in data volume which pass through metro
Ethernet of 39.4%, from 240,315 Mbps in 2012 to
334,935 Mbps in 2013, and
data communication VPN revenue due to increase
in data volume which pass through VPN network
of 14.1%, from 40,750 Mbps in 2012 to 46,505
Mbps in 2013.

SMS revenues increased by Rp503 billion, or 4.0%,
from Rp12,631 billion in 2012 to Rp13,134 billion in
2013 due to a 25.2% increased of our SMS volumes
from 118.1 billion messages to 147.9 billion messages
in 2013. Effective June 1, 2012, in line with the cost-
based interconnection regime for voice calls, the
Government implemented cost-based interconnection
for SMS. As Telkomsel historically had more incoming
SMS than outgoing SMS, cost-based interconnection
for SMS resulted in an overall benefit for Telkomsel.

Interconnection revenues increased by Rp570 billion,
or 13.3%, from Rp4,273 billion in 2012 to Rp4,843
billion in 2013. This increase was triggered by an
increase in domestic interconnection revenues of
Rp353 billion, or 13.5%, and an increase of Rp218
billion, or 13.2%, in international interconnection
revenues, due to our promotion rate offers for
international calls and the increased number of
incoming calls to mobile subscribers.

e. Network Revenues

Network revenues increased by Rp45 billion, or 3.7%,
from Rp1,208 billion in 2012 to Rp1,253 billion in 2013
mainly due to a increase in our revenues from leased
lines services by Rp37 billion, or 4.5%, from Rp824
billion in 2012 to Rp861 billion in 2013. This increase
was due to increasing number of our subscriber by
27,078, or 7.0%.

f. Other Telecommunications Services Revenues

Revenues from other telecommunications services
increased by Rp678 billion, or 25.6%, from Rp2,645
billion in 2012 to Rp3,323 billion in 2013. The increase
was primarily due to an increase of Rp260 billion, or
64.8%, in lease revenue, an increase in revenues from
USO compensation due to an increase in USO projects
to establish internet service centers in various provincial
capital cities in 2013 and an increase of Rp151 billion,
or 14.4%, in CPE and terminal revenue.

The increase was partly offset by a decrease in
revenues from pay TV of Rp131 billion, or 32.3%due
to our corporate action the sale of TelkomVision one
of our subsidiaries in pay TV.

g. Other Income

Other income increased by Rp20 billion, from Rp2,559
billion in 2012 to Rp2,579 billion in 2013.

2. Expenses
Total expenses increased by Rp3,695 billion, or 6.8%,
from Rp54,005 billion in 2012 to Rp57,700 billion in 2013.
The increase in expenses was attributable primarily due
to increases in operations, maintenance and
telecommunication services, depreciation and amortization
also general and administrative expenses. These expenses
are further explained below:

a. Operations, Maintenance and Telecommunication

Services Expenses
Operations, maintenance and telecommunication
services expenses increased by Rp2,529 billion, or
15.1%, from Rp16,803 billion in 2012 to Rp19,332 billion
in 2013.

The increase in operations, maintenance and
telecommunication services expenses was attributable
by the following:
- An increase in operations and maintenance of
Rp1,655 billion, or 18.4%, due to a decrease in
expenses associated with increasing the capacity
of receiver and transmission stations and Telkomsel’s
broadband services.

- Cost of IT services increased by Rp455 billion, or
205.0%, from Rp222 billion in 2012 to Rp677 billion
in 2013. This increase was primarily due to the
increase in integration system expenses.

- Electricity, gas and water expenses increased by
Rp184 billion, or 20.9%, from Rp879 billion in 2012
to Rp1,063 billion in 2013, due to an increase in
electricity expenses due to increasing number of
our BTS and network for Telkomsel’s broadband
services and electricity tariff.

The above increases were offset by insurance expenses
decreased by Rp297 billion, or 44.3%, from Rp671
billion in 2012 to Rp374 billion in 2013 due to no
satellite insurance payment for Telkom-3.

Our total operations, maintenance and
telecommunication services expenses accounted for
33.5% of our consolidated expenses for the year
ended December 31, 2013, compared to 31.1% for the
year ended December 31, 2012.

127

2014 Annual Report PT Telkom Indonesia Tbk (Persero)b. Depreciation and Amortization Expenses

f. General and Administrative Expenses

Depreciation and amortization expenses increased
by Rp1,324 billion, or 9.2%, from Rp14,456 billion in
2012 to Rp15,780 billion in 2013 primarily due to
increased in depreciation expense by Rp1,476 billion,
or 10.8%, from Rp13,635 billion in 2012 to Rp15,109
billion in 2013. The increase in depreciation expense
primarily related to depreciation of transmission
installation and equipment amounting to Rp1,065
billion, or 14.0%, and an increase of loss in impairment
of Rp349 billion, or 141.3%, compare to prior year.

c. Personnel Expenses

Personnel expenses decreased by Rp53 billion, or
0.5%, from Rp9,786 billion in 2012 to Rp9,733 billion
in 2013 due to no early retirement programs were
offered in 2013 that cause a decrease by Rp699 billion
or 100.0% in early retirement program expenses.

This decrease above was partially offset by an increase
in salaries and related benefits by Rp296 billion or
9.1% from Rp3,257 billion in 2012 to Rp3,553 billion
in 2013 and an increase in net periodic post-retirement
health care benefit costs by Rp284 billion, or 315.6%.

d. Interconnection Expenses

Interconnection expenses increased by Rp260 billion,
or 5.6%, from Rp4,667 billion in 2012 to Rp4,927
billion in 2013 primarily due to an increase of Rp256
billion, or 7.4%, in domestic interconnection and
transit interconnection expenses, in line with an
increase of 13.5% in domestic interconnection and
transit revenues.

e. Marketing Expenses

Marketing expenses decreased by Rp50 billion, or
1.6%, from Rp3,094 billion in 2012 to Rp3,044 billion
in 2013 primarily due to a decrease in advertising
and promotion expenses by Rp93 billion, or 3.8%,
due to using selective media for promotion and
increasing group synergy.

General and administrative expenses increased by
Rp1,119 billion, or 36.9%, from Rp3,036 billion in 2012
to Rp4,155 billion in 2013 due in part to an increase
in provision for impairment of receivables by Rp674
billion, or 73.7.0%, from Rp915 billion in 2012 to Rp1,589
billion in 2013. This increase primarily resulted from
current year individual and collective assessment for
impairment of receivables. The increased also
contribute by a 59.1% increased in training, education
and recruitment by Rp153 billion and a 28.1% increased
by Rp148 billion in general expenses.

This increase above was partially offset by a 34.1%
decreased in social contribution expenses by Rp44
billion, or 34.4%.

g. (Gain) loss on Foreign Exchange – net

Loss on foreign exchange - net increased by Rp60
billion, from Rp189 billion in 2012 to Rp249 billion in
2013. The increase was primarily due to the appreciation
of the US Dollar by 26.3%.

h. Other expenses
Other expenses decreased by Rp1,493 billion, from
Rp1,973 billion in 2012 to Rp480 billion in 2013. The
decrease primarily related to derecognition in 2012
of the carrying value of the Telkom-3 Satellite, which
was built and launched, but failed to reach usable
orbit, amounting to Rp1,606 billion.

3. Operating Profit and Operating Profit Margin
As a result of the foregoing, operating profit increased
by Rp2,148 billion, or 8.4%, from Rp25,698 billion in 2012
to Rp27,846 billion in 2013. Operating profit margin
increased from 33.3% in 2012 to 33.6% in 2013.

4. Profit before Income Tax and Pre - Tax Margin
As a result of the foregoing, profit before income tax
increased by Rp2,921 billion, or 12.1%, from Rp24,228
billion in 2012 to Rp27,149 billion in 2013. Pre - tax margin
increased from 31.4% in 2012 to 36.7% in 2013.

128

6. Other Comprehensive Income (Expenses) - Net
Other comprehensive expenses increased by Rp86 billion,
or 330.8%, from Rp26 billion in 2012 to Rp112 billion in
2013 due to increase in foreign currency translation by
Rp89 billion offset by decrease in change in fair value
of available-for-sale financial assets by Rp3 billion.

7. Profit for the Year Attributable to Owners of the
Parent Company
Profit for the year attributable to non-controlling interest
increased by Rp573 billion, or 10.4%, from Rp5,512 billion
in 2012 to Rp6,085 billion in 2013.

8. Profit for the Year Attributable to Non-controlling
Interest
Profit for the year attributable to owners of the parent
company increased by Rp1.355 billion, or 10.5%, from
Rp12,850 billion in 2012 to Rp14,205 billion in 2013.

9. Comprehensive Income for the year
Comprehensive income for the year increased by Rp2,014
billion, or 11.0%, from Rp18,388 billion in 2012 to Rp20,402
billion in 2013.

10. Net Income per Share
Net income per share increased by Rp14, or 10.4%, from
Rp133.84 in 2012 to Rp147.42 in 2013.

129

2014 Annual Report PT Telkom Indonesia Tbk (Persero)CASH FLOW STATEMENT OVERVIEW

The following table sets out information concerning our consolidated cash flows, as set out in (and prepared on the
same basis as) our Consolidated Financial Statements:

As of December 31,

2014

2013

2012

(Rp billion)

(US$ million)

(Rp billion)

Net cash :

provided by operating activities

used in investing activities

used in financing activities

Net increase in cash and cash equivalents

Effect of exchange rate changes on cash and cash
equivalents

37,736

(24,748)

(10,083)

2,905

Cash and cash equivalents at beginning of year

14,696

Ending balance of disposed subsidiary

Cash and cash equivalents at end of year

17,672

3,047

36,574

(1,998)

(22,702)

27,941

(11,311)

(814)

235

1,187

1,428

(13,327)

(13,314)

545

1,039

13,118

(6)

3,316

168

9,634

14,696

13,118

Year ended December 31, 2014 compared
to year ended December 31, 2013

deposit, a decrease in advances and other non-current
assets by Rp783 billion, or 99.0% and proceeds from
sale of property and equipment by Rp35 billion, or 7.5%.

1. Cash Flows from Operating Activities
Net cash provided by operating activities in 2014 was
Rp37,736 billion (US$3,047 million) compared to Rp36,574
billion in 2013. The increase was primarily due to an
increase of Rp7,549 billion, or 9.8%, in cash receipts from
customers, Rp404 billion, or 48.6%, increase on our
interest income received. This was partially offset by an
increase in cash payment for expense by Rp5,707 billion,
or 20.8%, and increase in payment for value added tax-
net of Rp493 billion.

2. Cash Flows from Investing Activities
Net cash flows used in investing activities in 2014 was
Rp24,748 billion (US$1,998 million) compared to Rp22,702
billion in 2013. This increase was primarily due to an
increase of Rp5,154 billion, or 26.2% in acquisition of
property and equipment, Rp2,121 billion placement in
escrow account, and acquisition of long-term investments
by Rp1,467 billion. This was partially offset by an increase
of Rp8,466 billion or 370.0% on our placement in time

3. Cash Flows from Financing Activities
Net cash flows used in financing activities was Rp10,083
billion (US$814 million) in 2014 compared with Rp13,327
billion in 2013. This increase was primarily due to decrese
in repayment of short-term borrowings by Rp1,840
billion, or 452.1%. Increase of Rp1,589 billion, or 19.0%,
in cash dividends paid to our stockholders and an increase
of Rp795 billion, or 17.0%, in our cash devidens paid to
non-controling stockholder of subsidiaries.

Year ended December 31, 2013 compared
to year ended December 31, 2012

1. Cash Flows from Operating Activities
Net cash provided by operating activities in 2013 was
Rp36,574 billion (US$3,005 million) compared to Rp27,941
billion in 2012. The increase was primarily due to an
increase of Rp5,103 billion, or 7.1%, in cash receipts from
customers and from other operators of Rp528 billion,

130

or 13.2%, due to the increase of our operating revenue
and also due to the decrease in cash payment for our
expense of Rp.6,211 billion, or 18.5%. This was partially
offset by an increase of Rp1,809 billion, or 32.4%, in
payment for income tax and cash payment to employees
of Rp1,721 billion, or 21.1%.

2. Cash Flows from Investing Activities
Net cash flows used in investing activities in 2013 was
Rp22,702 billion (US$1,865 million) compared to Rp11,311
billion in 2012. This increase was primarily due to an
increase of Rp11,423 billion in acquisition of property
and equipment. This was partially offset by a decrease
of Rp1,720 billion, or 42.9%, in placement in time deposit

and an increase of cash received in divestment of subsidiary
and associate company Rp926 billion.

3. Cash Flows from Financing Activities
Net cash flows used in financing activities totaled Rp13,327
billion (US$1,095 million) in 2013 compared to Rp13,314
billion in 2012. This increase by Rp13 billion, or 0.1%, was
primarily due to a increase of Rp2,368 billion in proceed
from sale of treasury stock and a decrease of Rp1,744
billion, in payments for treasury stock. This was partially
offset by an increase of Rp1,227 billion, or 17.2%, in cash
dividends paid to our stockholders and Rp1,083, or 30%,
to non-controlling stockholders subsidiaries due to the
increase of our operating profit and a decrease of Rp1,271
billion obtain from additional bank loan.

Obligation and Commitment

A. Contractual Obligation
The following table sets forth information on certain of our material contractual obligations as of December 31, 2014.

By Payment Due Dates

Contractual Obligations

Total

Less than 1
year (7)

1-3 years (7)

3-5 years (7) More than 5

years (7)

(Rp billion)

Long-Term Debts(1)(5)

Capital Lease Obligations(2)

Operating Leases(3)

16,853

4,789

29,373

5,328

571

3,847

5,035

1,175

6,791

3,059

1,163

6,426

Interest on Long-term Debts and Capital
Lease Obligations(6)

6,097

1,718

2,323

1,337

Unconditional Purchase Obligations(4)

16,195

3,431

1,880

12,309

719

Total

73,307

27,659

15,324

11,985

18,339

(1) See Notes 18-21 to our Consolidated Financial Statements.
(2) Related to the leases of the slot of the tower, property and equipment
under RSA, transmission installation and equipment, data processing
equipment, office equipment, vehicles and CPE assets.

(4) Capital expenditures committed under contractual arrangements.
(5) Excludes the related contractually committed interest obligations.
(6) See “Risk Management - Risk Factors –We are exposed to interest

rate risk”.

(3) Related primarily to leases of leased line, telecommunication

(7) Less than 1 year = 2015, 1-3 years = 2016-2017, 3-5 years = 2018-2019,

equipment and land and building.

more than 5 years=2020 thereafter.

131

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

See Note 41 to our Consolidated Financial Statements for further details on our contractual commitments. In addition
to the above contractual obligations, as of December 31, 2014, we had long-term liabilities for pension plan and
post-retirement health care benefits and contributed Rp226 billion to plan. See Notes 36 to our Consolidated
Financial Statements..

B. Indebtedness
Consolidated total indebtedness consisting of short-term and long-term loans and other borrowings as of December
31, 2014, 2013 and 2012 were as follows:

Indonesian Rupiah

US Dollar(1)

Japanese Yen(2)

Total

As of December 31,

2014

2013

2012

(Rp billion)

(US$ million)

(Rp billion)

20,013

2,643

796

23,452

1,615

213

1,892

17,543

1,734

979

20,256

16,192

2,053

1,031

19,276

(1) The amounts as of December 31, 2012, 2013 and 2014 translated into Rupiah at Rp9,645, Rp12,180 and Rp12,390 = US$1, respectively, being the

Reuters sell rates for US Dollar at each of those dates.

(2) The amounts as of December 31, 2012, 2013 and 2014 translated into Rupiah at Rp111.8, Rp115.9 and Rp103.6 = Yen 1, respectively, being the

Reuters sell rates for Yen at each of those dates.

Of our total indebtedness, as of December 31, 2014,
Rp7,709 billion Rp6,210 billion, Rp4,222 billion and Rp5,311
billion were scheduled for repayment in 2015, 2016 to
2017, 2018 to 2019 and thereafter, respectively.

For further information on our Company’s indebtedness,
see Notes 17-21 to our Consolidated Financial Statements.

C. Material Contract
In 2014 and 2013, we did not enter into any new material
contracts nor did we amend any existing material contracts,
other than contracts entered into or amended in the
ordinary course of business.

LIQUIDITY

Liquidity Sources
The main source of our corporate liquidity is cash provided
by operating activities and long-term debt through the
capital markets as well as long-term and short-term
loans through bank facilities. We divide our liquidity
sources into internal and external liquidity.

A. Internal Liquidity Sources
To fulfill our obligations, we rely primarily on our internal
liquidity. As of December 31, 2014, we had Rp17,672
billion in cash and cash equivalents available, which
increased by Rp2,976 billion compared to Rp14,696
billion in 2013. In 2014, the increase of cash flow provided
by operating activities primarily arise from cash receipts
from customers of Rp84,748 billion.

We made net repayments of current indebtedness for
borrowed money of Rp5,843 billion in 2012, Rp6,239
billion in 2013 and Rp7,724 billion in 2014. Cash outflows
in 2014 reflected payments for short-term loans and
other borrowings of Rp2,247 billion and long-term loans
and other borrowings of Rp4,538 billion.

Our internal liquidity strength reflected in our current
ratio, which we calculate as current assets divided by
current liabilities, maintain over 100%. In 2014 our curent
ratio was to 106.2% compared to 116.3% in 2013.

132

B. External Liquidity Sources
Our primary external sources of liquidity are short and
long-term bank loans, two-step loans, bonds and notes
payable. In 2014 we used external liquidity bank loans
of Rp6,626 billion and other borrowings of Rp3,580
billion.

C. Outstanding Liquidity Sources
We had undrawn loan facilities which include the following
sources of unused liquidity:

CIMB Niaga loan facility in the amount of Rp820
billion;
BNI loan facility in the amount of Rp234 billion;
BRI loan facility in the amount of Rp6 billion;
Danamon Bank loan facility in the amount of Rp20
billion;
Bank Ekonomi Raharja loan facility in the amount
of Rp70 billion;
Syndicated loan facility of BNI, BRI and Bank Mandiri
in the amount of Rp103 million.

(US$160 million) as of December 31, 2014. The decrease
in net working capital was primarily due to:

A decrease of Rp4,075 billion in other current financial
assets;
A decrease of Rp48 billion in asset held for sale;
A decrease of Rp35 billion in inventories – net of
provision for obsolescene; and
A decrease of Rp12 billion in other receivable - net
of provision for impairment of receivable.

This was partially offset by:

An increase of Rp1,378 billion in short-term bank
loan;
An increase of Rp806 billion in current marturities
of long-term liabilities;
An increase of Rp473 billion in unearned income;
and
An increase of Rp286 billion in trade payable – third
parties.

WORKING CAPITAL
Net working capital, calculated as the difference between
current assets and current liabilities, amounted to Rp4,638
billion as of December 31, 2013 and Rp1,976 billion

We believe that our working capital is sufficient for our
present requirements. We expect that our working capital
will continue to be addressed by various funding sources,
including cash from operating activities and bank loans.

SOLVENCY

Our solvency or our ability to meet our short-term and long-term obligations highly influenced by our source of
liquidity. Refer to explanation on “Liquidity”.

A. Current Liabilities
Our ability to pay our current liabilities is indicated by the ratios on the table below:

Ratios

Current ratio

Quick ratio

Cash ratio

2014

106.2%

104.7%

64.4%

B. Non-Current Liabilities
Our ability to pay our debt is indicated by the ratios on the table below

Ratios

Debt to equity ratio

Debt to EBITDA

2014

34.6%

50.4%

2013

116.3%

114.5%

75.8%

2013

33.5%

46.4%

2012

116.0%

113.6%

74.4%

2012

37.4%

48.0%

Times interest earned ratio

25.6 times

29.0 times

19.5 times

For detail discussion about our debt, see Notes 17-21 to our Consolidated Financial Statements.

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2014 Annual Report PT Telkom Indonesia Tbk (Persero)
RECEIVABLE COLLECTIBILITY

Our receivable collectability, indicated by the ratios average collection period that show an average of days that we
take to collect our receivable and receivable turnover that show how many times in average the funds invested in
receivable are turned in one year.

Our average collection period were 25.4 days in 2014 and 24.7 days in 2013. Our receivable turnover for 2014 and
2013 were 14.4 and 14.8.

We have made provision for impairment of receivables based on the collectability amount of the historical impairment
rates and individual account of its customers’ credit quality and credit history, amounted to Rp3.096 in 2014 and
Rp2.872 billion in 2013.

As of December 31, 2014 and 2013, the carrying amount of our receivables considered past due but not impaired
amounted to Rp3.355 billion and Rp2.418 billion, respectively. We concluded that past due but not impaired receivables,
along with receivables that are neither past due nor impaired, are due from customers with good debt history and
are expected to be recoverable.

For detail discussion about our receivable, see Note 6 to our Consolidated Financial Statements.

CAPITAL STRUCTURE

Our capital structure as of December 31, 2014 is described as follows:

Short Term

Long Term

Debt

Equity

Total Invested Capital

Amount

(Rp billion)

Portion (%)

1,810

21,642

23,452

67,807

91,259

1.99

23.76

25.75

74.25

100

We take a qualitative approach towards our capital structure and debt levels. Under our syndicated loan agreement
with BNI and BRI, we are required to maintain a debt to equity ratio of not more than 2.0 and debt service coverage
ratio of more than 1.25. As of December 31, 2014, our debt to equity ratio was 34.6 and our debt service coverage
ratio was 4.8 times, indicating our strong ability to meet our debt obligations. Our debt levels are primarily driven
by our plans to develop our existing and new strategic businesses. In determining our optimum debt levels, we also
consider our debt ratios with reference to regional peers in the telecommunications industry.

For detail discussion about management policy on capital structure, see Note 45 to our Consolidated Financial
Statements.

CAPITAL ExPENDITURES

In 2014, we incurred capital expenditures of Rp24,661 billion (US$1,991 million). Our capital expenditures are grouped
into the following categories for planning purposes:
Broadband services, which consist of broadband, IT, application and content and service node;
Network infrastructure, which consists of core transmission network, metro-ethernet and Regional Metro Junction

(“RMJ”), IP backbone and satellite;
Optimizing legacy, for fixed lines; and
Capex supports.

134

Table of realization of our capital expenditure

Telkom (parent company)

8,099

5,313

4,040

Years Ended December 31,

2014

2013

2012

(Rp billion)

Subsidiaries

Telkomsel

Others

Subtotal for subsidiaries

Total for Telkom Group

13,002

3,560

16,562

24,661

15,662

3,923

19,585

24,898

10,656

2,576

13,232

17,272

The realization of the future capital expenditures may differ from the amounts indicated above due to various factors,
including but not limited to the Indonesian and global economy environments, the Rupiah/US Dollar or other
applicable foreign exchange rates, the availability of supply or vendor or other financing on terms acceptable to us,
and also any technical or other problems in the implementation.

MATERIALITY LIMITATIONS

Materiality in our Consolidated Financial Statement was
based on BAPEPAM/LK decision letter No. KEP-347/
BL/2012 about Presentation and Disclosure of Financial
Statements Public Company dated June 25, 2012, with
appendix Regulation No. VIII.G.7 about Presentation of
Financial Statements of the Company or Public Company
where 5% of the total assets for asset accounts, 5% of
the total liability for the liabilities accounts, 5% of the
total equity for equity accounts, 10% of revenue for items
of comprehensive income, and 10% of the profit from
continuing operations before taxes for the effect of an
event or transaction.

MATERIAL COMMITMENT FOR CAPITAL
INVESTMENT

A. Purpose of the Commitment
As of December 31, 2014, we had material commitments
for capital expenditures under certain contractual
arrangements of Rp16,195 billion, principally relating to
procurement and installation of the broadband network,
transmission equipment and cable system.

These include for cooper wire access modernization
through Trade In/Trade Off method project, Luwuk-
Tutuyan Cabel System project, Outside Plant Fiber To

The Home (OSP FTTH) project, Sulawesi Maluku Papua
Cable System (SMPCS) project, expansion and Maintenance
Support (MS) Service for Metro Ethernet Platform ALU
project, expansion of DWDN platform ALU project, WIFI
CISCO project, IP Radio Equipment for Backhaul Node-B
project, Cabel System for Broadband Network Division
2014 project, Telkom-3 Subtitution (T3S) Satelite System
project.

Our subsidiary, Telkomsel, has material commitment for
capital expenditures related , among others, the combined
2G and 3G CS Core Network Rollout project, 2G BSS
and 3G UTRAN Rollout agreement for the provision of
2G GSM BSS and 3G UMTS Radio Access Network project,
Next Generation Convergence (“NGC”) IP RAN Rollout
and Technical Support project, Maintenance and
procurement of equipment and related service agreement
for NGC Core Transport Rollout and Technical Support
project, Online Charging System (“OCS”) and Service
Control Points (“SCP”) System Solution Development
project, OCS dan CSP technical support project, Customer
Relationship Management dan Contact Center Solutions
project, CS Core System Rollout dan CS Core System
Technical Support project, OSDSS Solution project, GGSN
service complex rollout project, Gateway GPRS Support
Node Service Complex technical support project.

135

2014 Annual Report PT Telkom Indonesia Tbk (Persero)In addition, PT Graha Sarana Duta (“TelkomProperty”)
dan Telin also have material commitment for capital
expenditure, facade Unitized System Telkom Landmark
Tower project, Development of Infomedia’s building
project , Operational Supporting System, Base Sub
Station project, Value Added System, System Rollout,
Radio Access Network dan Core System Rollout project.

D. Planned Actions to Mitigate Foreign Exchange
Risks
We are exposed to foreign exchange risk on sales,
purchases and borrowings transactions that are
denominated in foreign currencies, primarily in US Dollars
and Japanese Yen. Nevertheless, our exposure to foreign
exchange rates risk is not material.

For more detailed discussion regarding our material
commitments for capital expenditures, see Note 41 to
our Consolidated Financial Statements.

B. Source of Funds
We have historically funded our capital expenditures
primarily with cash generated from operations. In 2014,
we expect that our capital expenditure to revenue ratio
will be approximately in the range of 25%-30%. We
expect that of the total increase in amount of capital
expenditure in 2014 over 2013, the most significant
proportions will be allocated broadband services with
a portion of the increase allocated to our subsidiaries.
We expect to fund the above commitments with our
internal and external source of funds.

We expect to fund the above commitments with our
internal and external sources of funds. See explanation
on “Capital Expenditures”.

C. Denomination of Currency
As of December 31, 2014, details of material commitment
for capital investment by currency are as follows:

Currencies

Rupiah

US Dollar

Euro

SGD

Amounts in
Foreign
Currencies
(in millions)

Equivalent in
Rupiah
(in billions)

512

0.35

0.40

9.837

6.349

16,195

Management provides written policy for foreign currency
risk management mainly through time deposits placements
and hedging to cover foreign currency risk exposures
for the time range of 3 up to 12 months. Increasing risks
of foreign currency exchange rates on our obligations
are expected to be offset by time deposits and receivables
in foreign currencies that are equal to at least 25% of
the outstanding current liabilities.

For detail discussion on material commitments for capital
investment, exchange rate and interest rate see Notes
41 and 44 to our Consolidated Financial Statements.

MATERIAL INFORMATIONS OF
INVESTMENT, ExPANSION, DIVESTMENT,
ACQUISITION AND DEBT/CAPITAL
RESTRUCTURE

In 2014, we did some activities related to investments,
divestments, acquisitions and debt/capital restructuring.
The activities are as follows:

A. Investment
- On August 29, 2014, Telkom Metra entered into a
shareholders agreement with Telstra Holding Singapore
Pte. Ltd. to establish a joint venture known as PT
TeltraNet Application Solutions ("Teltranet"). Telkom
Metra acquired ownership of 51% or US$4,29 million
of the total issued share capital US$8,43 million, but
Telkom Metra was not have control in determining
the financial and operating policies of Teltranet.
Teltranet engaged in services and communication
systems.

136

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESB. Expansion
- On January 16, 2014, we establish 100% ownership
subsidiary under the name PT Infrastruktur
Telekomunikasi Indonesia ("Telkom Infra") was accepted
and approved by the Ministry of Law and Human
Rights of the Republic of Indonesia (“MoLHR”) in its
Letter No. AHU-03196.AH.01.01.2014 dated January
23, 2014 with. Telkom Infra is engaged in the
construction, services and telecommunications trade.
- On August 27, 2014, based on notarial deed Zulkifli
Harahap, SH 21 dated August 27, 2014, was accepted
and approved by the MoLHR in its Letter No AHU-
22722. 40.10.2014 dated September 1, 2014, Telkom
Property formed a 99.99% ownership subsidiary
called PT Nusantara Sukses Sarana ("NSS"). NSS
focused on the building and hotel management
services and other services.

- On August 27, 2014, based on notarial deed Zulkifli
Harahap, SH 22 dated August 27, 2014, was accepted
and approved by the MoLHR in its Letter No AHU-
22723. 40.10.2014 dated September 1, 2014, Telkom
Property formed a 99.99% ownership subsidiary
called PT Nusantara Sukses Realti ("NSR"). NSR
focused on services and trade.

- On August 27, 2014, based on notarial deed Zulkifli
Harahap, SH, No. 23 dated August 27, 2014, was
accepted and approved by the MoLHR in its Letter
No AHU-22724. 40.10.2014 dated September 1, 2014,
Telkom Property formed a 99.99% ownership subsidiary
called PT Nusantara Sukses Investasi ("NSI"). NSI
focused on services and trade.

- On September 11, 2014, based on notarial deed Jimmy
TANAL, SH, MH, No. 118 dated September 11, 2014,
PINS buy 25% of outstanding shares of PT Tiphone
Mobile Indonesia, Tbk ("Tiphone") with an acquisition
cost of Rp1.395 billion. Tiphone establish on June 25,
2008 with the name Tiphone Mobile Indonesia Tbk,
with the main activities of running a business in the
field of telecommunications equipment trade in the
form of the following mobile phone spare parts,
accessories, pulses as well as repair services and the
provision of content through its subsidiaries.

C. Divestation

In 2014, we have no divestation transacation.

D. Acquisition
- On September 25, 2014, Telkom Australia Telin through
acquisitions over 75% share of Australia Pty Ltd
Contact Centres. ("CCA") with an acquisition cost of

AU$ 10,843,000 or equivalent to Rp116 billion. CCA
is a private company based in Surry Hills, Sydney
and founded in 2002. The company provides solutions
Business Process Outsourching ("BPO"), engaged in
the contact center services for fundraising (not for
profit organization) and commercial business, a
comprehensive and integrated with other services
for end-to-end solution that is complete.

E. Debt/Capital Restructure

In 2014, we have no debt/capital restructure.

MATERIAL INFORMATION OF CONFLICT
OF INTEREST AND/OR AFFILIATED
TRANSACTION

In 2014, we have no conflict of interest or affiliated
transaction.

MATERIAL INFORMATION AND FACTS
AFTER ACCOUNTANT REPORTING DATE

We are not aware of any subsequent events occurred
after the accountant’s report date until the issuance date
of this Annual Report.

CHANGE IN ACCOUNTING POLICIES

The consolidated financial statements of the Group has
been prepared in accordance with Financial Accounting
Standards (Standar Akuntansi Keuangan or “SAK”)
including Indonesian Financial Accounting Standards
(Pernyataan Standar Akuntansi Keuangan or “PSAK”)
and Interpretation of Financial Accounting Standards
(Interpretasi Standar Akuntansi Keuangan or “ISAK”) in
Indonesia published by Financial Accounting Standard
Board of Indonesian Institute of Accountants and
Regulation No. VIII.G.7 of the Capital Market and Financial
Institution Supervisory Agency (“Bapepam-LK”) regarding
the Presentation and Disclosures of Financial Statements
of Issuers or Public Companies, enclosed in the decision
letter KEP- 347/BL/2012.

Changes to the statements of financial accounting
standards (PSAKs) and interpretations of statements of
financial accounting standards (Interpretasi Standar
Akuntansi Keuangan or “ISAKs”)

137

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

On January 1, 2014, the Group adopted new and revised
PSAKs, which were effective in 2014. Changes to the
Group’s accounting policies have been made as required
in accordance with the transitional provisions in the
respective standards and interpretations.

The adoption of these new/revised standards and
interpretations had no material effect to the consolidated
financial statements:
ISAK 27, “Transfer of Assets from Customers”
ISAK 28, “Extinguishing Financial Liabilities with Equity
Instruments”

Several PSAKs and ISAKs have been issued by the
Indonesian Financial Accounting Standards Board (DSAK)
that are considered relevant to the financial reporting
of the Group but are effective only for financial statements
covering the periods beginning on or after either January
1, 2015.

Effective beginning on or after January 1, 2015

PSAK 1 (2013), “Presentation of Financial Statements”,
adopted from International Accounting Standards (IAS)
1. These amendments are expected to only impact the
presentation of the consolidated financial statements
and not expected to impact the Group’s consolidated
financial position and performance.

PSAK 4 (2013), “Separate Financial Statements”, adopted
from IAS 4. The amendments are not expected to impact
the Group’s consolidated financial position and
performance.

PSAK 15 (2013), “Investments in Associates and Joint
Ventures”, adopted from IAS 28. The amendments are
not expected to impact the Group’s consolidated financial
position and performance.

PSAK 24 (2013), “Employee Benefits”, adopted from IAS
19. The amendments are expected to impact the Group’s
consolidated financial position and performance mainly
for the changes in: past service costs is no longer deferred
and recognized over the vesting period; actuarial gains
or losses are recognized immediately; interest cost and
expected return on plan assets are replaced with net
interest cost which is calculated by applying the discount
rate to the net defined benefit liability or asset at the
beginning of period.

PSAK 46 (2014), “Income Tax”, adopted from IAS 12.
The amendments are not expected to impact the Group’s
consolidated financial position and performance.

PSAK 48 (2014), “Asset Impairment”, adopted from IAS
36. The amendments are not expected to impact the
Group’s consolidated financial position and performance.

PSAK 50 (2014), “Financial Instrument: Presentation”,
adopted from IAS 32. The amendments are expected
to only impact the presentation of the consolidated
financial statements and not expected to impact the
Group’s consolidated financial position and performance.

PSAK 55 (2014), “Financial Instrument: Measurement
and Recognition”, adopted from IAS 39. The amendments
are not expected to impact the Group’s consolidated
financial position and performance.

PSAK 60 (2014), “Financial Instrument: Disclosure”
adopted from International Financial Reporting Standards
(IFRS) 7”. The amendments are expected to impact the
disclosure of consolidated financial statements and not
expected to impact the Group’s consolidated financial
position and performance.

PSAK 65, “Consolidated Financial Statements”, adopted
from IFRS 10. The amendments are not expected to
impact the Group’s consolidated financial position and
performance.

138

PSAK 68, “Fair Value Measurement”, adopted from IFRS
13. The standards are not expected to impact the Group’s
consolidated financial position and performance.

PSAK 67, “Disclosure of Interest in Other Entities”,
adopted from IFRS 12. The standards are not expected
to impact the Group’s consolidated financial position
and performance.

ISAK 26 (2014), “Revaluation of Embedded Derivatives”,
adopted from IFRIC 9. The interpretations are not
expected to impact the Group’s consolidated financial
position and performance.

SUMMARY OF SIGNIFICANT
DIFFERENCES BETWEEN IFAS
AND IFRS

a. Employee benefits
Under PSAK, the actuarial gains or losses are recognized
as income or expense when the net cumulative
unrecognized actuarial gains or losses at the end of the
previous reporting period exceed 10% of the present
value of the defined benefit obligation. These gains or
losses are recognized on a straight-line basis over the
expected average remaining service years of the
employees. The change in the defined benefit obligation
due to plan changes affecting vested benefits is recognized
immediately in profit or loss, while the effect of plan
changes affecting unvested benefits is amortized over
future periods to the date the amended benefits vest.
Interest income on plan assets is determined based on
their long-term rate of expected return. PSAK does not
specify which administration costs to include as part of
the return on plan assets.

Under IFRS, remeasurements consist of actuarial gains
or losses, including the difference between the actual
return on plan assets (net of taxes and administration
costs) with return implied by the discount rate, and
changes in the asset ceiling are recognized directly to
other comprehensive income. The entire change in the
defined benefit obligation due to plan changes is to be
recognized immediately through profit or loss. Net
interest on the net deﬁned beneﬁt liability or asset
comprises interest cost on the deﬁned beneﬁt obligation

and interest income on plan assets that are measured
using the discount rate at the beginning of the year.
Only administration costs directly related to the
management of plan assets are included as part of the
return on plan assets.

b. Land rights
Under PSAK, land rights are recorded as part of property
and equipment and are not amortized, unless there is
indication that the extension or renewal of land rights
is not expected to be or will not be received. Costs
incurred to process the extension or renewal of land
legal rights are recognized as intangible assets and
amortized over the shorter of the term of the land rights
or the economic life of the land.

Under IFRS, land rights are accounted for as finance
lease and presented as part of property and equipment.
Land rights are amortized over the lease term.

c. Related party transactions
Under Bapepam - LK (OJK) Regulation No. VIII.G.7
regarding the Presentation and Disclosures of Financial
Statements of Issuers or Public Companies, a government-
related entity is an entity that is controlled, jointly
controlled or significantly influenced by a government.
Government in this context is the Ministry of Finance or
the Local Government, as the shareholder of the entity.

139

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Under IFRS, a government-related entity is an entity
that is controlled, jointly controlled or significantly
influenced by a government. Government in this context
refers to the Government of Indonesia, government
agencies and similar bodies whether local, national or
international.

d. Offsetting financial assets and liabilities
Under PSAK, financial assets and financial liabilities are
offset and the net amount presented in the statement
of financial position when currently there is a legally
enforceable right to set-off the recognized amounts and
there is an intention to realize the assets and settle the
liabilities simultaneously. PSAK does not specify the
circumstances in which the right of set-off must be
legally enforceable in order to meet the criterion of the
right of set-off.

Under IFRS, financial assets and financial liabilities are
offset and the net amount presented in the statement
of financial position when currently there is a legally
enforceable right to set-off the recognized amounts and
there is an intention either to settle on a net basis, or to
realize the assets and settle the liabilities simultaneously.
The right of set-off must be legally enforceable in all of
the following circumstances: (a) the normal course of
business, (b) the event of default, and (c) the event of
insolvency or bankruptcy of the entity and all of the
counterparties.

Refer to Note 48 our consolidate financial statement.

TAxATION
The following summary contains a description of the
principal Indonesian and US federal tax consequences
of the purchase, ownership and disposition of ADSs or
shares of common stock. This summary does not purport
to be a complete description of all of the tax considerations
that may be relevant to a decision to purchase, own or
dispose of ADSs or shares of common stock.

Investors should consult their tax advisors about the
Indonesian and US Federal, state and local tax
consequences to them of the purchase, ownership and
disposition of ADSs or shares of common stock.

a. Indonesian Taxation
The following is a summary of the principal Indonesian
tax consequences of the ownership and disposition of
common stock or ADSs to a non-resident individual or
non-resident entity that holds common stock or ADSs
(a “Non-Indonesian Holder”). A “non-resident individual”
is a foreign national individual who does not reside or
intend to reside in Indonesia and is not physically present
in Indonesia at the most 183 days within 12 month period,
during which period such non-resident individual receives
income in respect of the ownership or disposition of
common stock or ADSs and a “non-resident entity” is a
corporation or a non-corporate body that is established,
domiciled or organized under the laws of a jurisdiction
other than Indonesia and does not have a fixed place of
business or otherwise conducts business or carries out
activities through a permanent establishment in Indonesia
during an Indonesian tax year in which such non-resident
entity receives income in respect of the ownership or
disposition of common stock or ADSs. In determining
the residency of an individual or entity, consideration
will be given to the provisions of any applicable double
taxation treaty to which Indonesia is a party.

1. Dividends
Dividends declared by us out of retained earnings and
distributed to a Non-Indonesian Holder in respect of
common stock or ADSs are subject to Indonesian
withholding tax, which, as of the date of this Annual
Report is at the rate of 20%, on the amount of the
distribution (in the case of cash dividends) or on the
shareholders’ proportional share of the value of the
distribution. A lower rate provided under double taxation
treaties may be applicable provided the recipient is able
to comply with the following strict requirements: (i) the
recipient of the income is the beneficial owner of the
dividends, (ii) the recipient of the income must have
submitted a specific form set by the Indonesian Tax
Office acting as a Certificate of Residency (the “Certificate
of Residency”) that is filled in by the recipient of the
income and validated by the competent authority of the
country where the recipients are resident and (iii) the
recipient of the income does not misuse the tax treaty
as set out in the provision on the prevention of misuse
the tax treaty. Indonesia has concluded double taxation
treaties with a number of countries, including Australia,
Belgium, Canada, France, Germany, Japan, Malaysia, the
Netherlands, Singapore, Sweden, Switzerland, the United

140

2. Capital Gains
The sale or transfer of common stock through the IDX
is subject to a final withholding tax at the rate of 0.1%
of the value of the transaction. The broker executing the
transaction is obligated to withhold such tax. The holding
of founder shares or the sale or transfer of founder shares
through an IDX may, under current Indonesian tax
regulations, be subject to additional 0.5% final income
tax.

Subject to the promulgation of implementing regulations,
the estimated net income received or accrued from the
sale of movable assets in Indonesia, which may include
common stock not listed on an IDX or ADSs, by a Non-
Indonesian holder (with the exception of the sale of
assets under Article 4 paragraph (2) of the Indonesian
income tax law) may be subject to Indonesian withholding
tax at the rate of 20%. In 1999, the Ministry of Finance
issued a decision that stipulates the estimated net income
for the sale of shares received by a non-resident taxpayer
in a non-public company to be 25% of the sale price,
resulting in an effective withholding tax rate of 5% of
the sales price. This is a final withholding tax and the
obligation to pay lies with the buyer (if it is an Indonesian
taxpayer) or our Company (if the buyer is a non-resident
taxpayer). Exemption from withholding tax on income
from the sale of shares in a non-public company may
be available to non-resident sellers of shares depending
on the provisions of the relevant double taxation treaties.
In order to benefit from the exemption under the relevant
double taxation treaty, the non-resident seller must
provide a specific form set by the Indonesian Tax Office
acting as a Certificate of Residence that is completed
by the recipient of the income and validated by the
competent authority of the country where the recipients
are resident to the buyer or our Company and to the
Indonesian Tax Office that has jurisdiction over the buyer
or our Company (if the buyer is a non-resident taxpayer).

In cases where a purchaser or Indonesian broker will be
required under Indonesian tax laws to withhold tax on
payment of the purchase price for common stock or
ADSs through the IDX, theoretically, that payment may
be exempt from Indonesian withholding or other

Indonesian income tax under applicable double taxation
treaties to which Indonesia is a party (including the US-
Indonesia double taxation treaty). However, except for
the sale or transfer of shares in a non-public company,
the current Indonesian tax regulations do not provide
specific procedures for removing the purchaser’s or
Indonesian broker’s obligation to withhold tax from the
proceeds of such sale. To take advantage of the double
taxation treaty relief, Non-Indonesian Holders may have
to seek a refund from the Indonesian Tax Office through
the IDX by making a specific application accompanied
by a specific form set by the Indonesian Tax Office acting
as a Certificate of Residency that is filled in by the
recipient of the income and validated by the competent
authority of the country where the recipients are resident.

3. Stamp Duty
Stock transactions in Indonesia are subject to stamp
duty. Pursuant to Government Regulation No. 24/2000
on the amendment and the amount of stamp duty rates
Imposing Limits Imposed Price Nominal stamp duty, a
transaction of up to Rp1,000,000 needs a stamp duty
of Rp3,000, while any transaction of more than
Rp1,000,000 needs a stamp duty of Rp6,000.

b. Considerations Regarding Certain US
Federal Income Tax
Pursuant to requirements relating to practice before the
Internal Revenue Service, any tax advice in this
communication (including any attachments) is not
intended to be used and cannot be used, for the purpose
of (i) avoiding penalties imposed under the US Internal
Revenue Code, or (ii) promoting, marketing, or
recommending to another person any tax-related matter.

The following is a summary of certain US federal income
tax considerations relating to the acquisition ownership
and disposition of ADSs or common stock by US Holders
(as defined below) that hold their ADSs or common
stock as “capital assets” (generally, property held for
investment) under section 1221 of the US Internal Revenue
Code (the “Tax Code”). This summary is based upon
existing US federal income tax law, which is subject to
differing interpretations or change, possibly with
retroactive effect.

This summary does not discuss all aspects of US federal
income taxation which may be important to particular
investors in light of their individual investment

141

2014 Annual Report PT Telkom Indonesia Tbk (Persero)circumstances, including investors subject to special tax
rules (for example, financial institutions, insurance
companies, broker-dealers, partnerships and their partners,
and tax-exempt organizations (including private
foundations), holders who are not US Holders, investors
that will hold ADSs or common stock as part of a straddle,
hedge, conversion, constructive sale, or other integrated
transaction for US federal income tax purposes, or
investors that have a functional currency other than the
US Dollar, all of whom may be subject to tax rules that
differ significantly from those summarized below. In
addition, this summary does not discuss any US federal
estate and gift tax considerations, or state, local, or
non-US tax considerations. Each holder is urged to
consult their tax advisors regarding the US federal, state,
local and non-US income, and other tax considerations
of their investment in the ADSs or common stock.

For purposes of this summary, a “US Holder” is a beneficial
owner of ADSs or common stock that is, for US federal
income tax purposes, (i) an individual who is a citizen
or resident of the US, (ii) a corporation, or other entity
treated as a corporation for US federal income tax
purposes, created in, or organized under the laws of,
the US or any state or the District of Columbia, (iii) any
entity created or organized in or under the laws of any
other jurisdiction if treated as a domestic corporation
pursuant to the Tax Code, (iv) an estate the income of
which is includible in gross income for US federal income
tax purposes regardless of its source, or (v) a trust (A)
the administration of which is subject to the primary
supervision of a US court and which has one or more
US persons who have the authority to control all substantial
decisions of the trust or (B) that has otherwise elected
to be treated as a US person under the Tax Code.

If a partnership (or other entity treated as a “tax
transparent” entity for US tax purposes) is the beneficial
owner of ADSs or common stock, the tax treatment of
a partner in the partnership (or interest holder in the
“tax transparent” entity) will generally depend upon the
status of the partner (or interest holder) and the activities
of the partnership (or “tax transparent” entity). For US
federal income tax purposes, US Holders of ADSs will
be treated as the beneficial owners of the underlying
Common Stock represented by the ADSs.

1. Threshold Passive Foreign Investment Company

(“PFIC”) Classification Matters

A non-US corporation, such as our Company, will be
treated as a PFIC, for US federal income tax purposes,
if 75% or more of its gross income consists of certain
types of “passive” income or 50% or more of its assets
are passive. Based on our 2014 income and assets, we
do not believe that we should be classified as a PFIC for
2013. Because PFIC status is a fact-intensive determination
made on an annual basis, no assurance can be given
that we are not or will not become classified as a PFIC.
The discussion below under “Dividends” and “Sale or
Other Disposition of ADSs or common stock” is written
on the basis that we will not be classified as a PFIC for
US federal income tax purposes.

2. Dividends
Any cash distributions paid by us out of earnings and
profits, as determined under US federal income tax
principles, will be subject to tax as dividend income and
will be includible in the gross income of a US Holder
upon receipt. A non-corporate recipient of dividend
income will generally be subject to tax on dividend
income from a “qualified foreign corporation” at a
maximum US federal tax rate of 15% rather than the
marginal tax rates generally applicable to ordinary income
provided that certain holding period requirements are
met. Note that as from January 1, 2011, dividends from
a qualified foreign corporation are treated as ordinary
income with a maximum tax rate of 39.6% for non-
corporate recipients of dividends received after the end
of 2010. A non-US corporation (other than a PFIC)
generally will be considered to be a qualified foreign
corporation (i) if it is eligible for the benefits of a
comprehensive tax treaty with the US which the Secretary
of Treasury of the US determines is satisfactory for
purposes of this provision and which includes an exchange
of information program or (ii) with respect to any dividend
it pays on stock (or ADSs backed by such stock) which
is readily tradable on an established securities market
in the US. There is currently a tax treaty in effect between
the US and Indonesia which the Secretary of Treasury
has determined is satisfactory for these purposes and
we believe that we should be eligible for the benefits of
the treaty. Additionally, because the ADSs are listed on
the NYSE, an established securities market in the US,
they are considered readily tradable on that exchange.

142

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESThe amount of any cash distribution paid in Rupiah
should equal the US Dollar value of such Rupiah on the
date of receipt of the distribution, regardless of whether
the Rupiah are actually converted into US Dollar at that
time. Gain or loss, if any, recognized on a subsequent
sale, conversion, or other disposition of Rupiah generally
will be US source ordinary income or loss. Dividends
received on the ADSs or common stock will generally
not be eligible for the dividends received deduction
allowed to corporations.

Dividends generally will be treated as income from
foreign sources for US foreign tax credit purposes. A
US Holder may be eligible, subject to a number of complex
limitations, to claim a foreign tax credit in respect of any
foreign withholding taxes imposed on dividends received
on ADSs or common stock. A US Holder who does not
elect to claim a foreign tax credit for foreign tax withheld,
may instead claim a deduction, for US federal income
tax purposes, in respect of such withholdings, but only
for a year in which such holder elects to do so for all
creditable foreign income taxes.

3. Sale or Other Disposition of ADSs or Common Stock
A US holder will generally recognize capital gain or loss
upon the sale or other disposition of ADSs or common
stock in an amount equal to the difference between the
amount realized upon the disposition and the holder’s
adjusted tax basis in such ADSs or common stock. Any
capital gain or loss will be long-term if the ADSs or
Common Stock have been held for more than one year
and will generally be US source gain or loss for US foreign
tax credit purposes. The deductibility of a capital loss
is subject to limitations.

4. PFIC Considerations
If we were to be classified as a PFIC in any taxable year,
a US Holder would be subject to special rules generally
intended to reduce or eliminate any benefits from the
deferral of US federal income tax that a US Holder could
derive from investing in a non-US company that does
not distribute all of its earnings on a current basis. In
such event, a US Holder may be subject to tax at ordinary
income tax rates on (i) any gain recognized on the sale
of ADSs or common stock and (ii) any “excess distribution”
paid on ADSs or common stock (generally, a distribution
in excess of 125% of the average annual distributions

paid by us in the three preceding taxable years). In
addition, a US Holder will be subject to an interest charge
on such gain or excess distribution. Finally, the 15%
maximum rate on Company dividends would not apply
if we become classified as a PFIC. Each US Holder is
urged to consult its tax advisor regarding the potential
tax consequences to such holder if we are or become
classified as a PFIC, as well as certain elections that may
be available to mitigate such consequences.

5. Backup Withholding Tax and Information Reporting

Requirements

US backup withholding tax and information reporting
requirements generally apply to certain payments to
certain non corporate holders of stock. Information
reporting generally will apply to payments of dividends
on and to proceeds from the sale or redemption of,
ordinary shares made within the US or by a US pay or
US middleman to a holder of ordinary shares (other than
an “exempt recipient,” including a corporation, a payee
that is not a US person that provides an appropriate
certification and certain other persons). A payor will be
required to withhold backup withholding tax from any
payments of dividends on, or the proceeds from the
sale or redemption of, ADSs or common stock within
the US or by a US payor or US middleman to a holder,
other than an exempt recipient, if such holder fails to
furnish its correct taxpayer identification number or
otherwise fails to comply with, or establish an exemption
from, such backup withholding tax requirements. The
backup withholding tax rate is 25% for years through
2014. The backup withholding tax is not an additional
tax and may be credited against a US holder’s regular
US federal income tax liability or, if in excess of such
liability, refunded by the Internal Revenue Service (“IRS”)
if a timely refund claim is filed with the IRS. Copies of
any information returns or tax returns for claims for
refund filed by non-US Holders with the IRS may be
made available by the IRS, under the provisions of a
specific treaty or other agreement providing for information
exchange, to the taxing authorities of the country in
which a non-US Holder resides.

143

2014 Annual Report PT Telkom Indonesia Tbk (Persero)IMPACT OF THE REGULATION
CHANGES TOWARDS THE COMPANY
The framework for the telecommunications industry is
comprised of specific laws, government regulations,
ministerial regulations and ministerial decrees enacted
and issued from time to time. The current
telecommunications policy was first formulated and
articulated in the Government’s “Blueprint of the
Indonesian Government’s Policy on Telecommunications”,
contained in MoC Decree No.KM.72/1999 dated September
17, 1999.

1. Telecommunications Law
The telecommunications sector is primarily governed
by Law No.36 of 1999 (“Telecommunications Law”),
which became effective on September 8, 2000. The
Telecommunications Law sets guidelines for industry
reforms, including industry liberalization, facilitation of
new entrants and enhanced transparency and competition.

The Telecommunications Law eliminated the concept
of “organizing entities” thereby ending our and Indosat’s
responsibility for coordinating domestic and international
telecommunications services, respectively. To enhance
competition, the Telecommunications Law prohibits
monopolistic practices and unfair competition among
telecommunications operators.

The Telecommunications Law was implemented through
several Government Regulations, Ministerial Regulations
and Ministerial Decrees. The most important of such
regulations include:
Government Regulation No.52/2000 regarding

Telecommunications Services.

MoCI Regulation No.1/PER/M.KOMINFO/01/2010
dated January 25, 2010 regarding Operation of
Telecommunications Networks.

MoC Decree No.KM.21/2001 regarding the Provision
of Telecommunications Services that was most
recently amended by MoCI Regulation No.8/2015
regarding the Fourth Amendment of Decree of the
Minister of Communication No.KM.21/2001 regarding
the Provision of Telecommunications Services.
MoC Decree No.33/2004 regarding Supervision of
Healthy Competition in the Provision of Fixed Network
and Basic Telephony Services.

MoC Decree No.KM.4/2001 dated January 16, 2001
regarding the Determination of Fundamental Technical
Plan National 2000 for National Telecommunications
Development most recently amended by MoCI
Regulation No.09/PER/M.KOMINFO/06/2010 dated

144

June 9, 2010 regarding the sixth amendment of MoC
Decree No.KM.4/2001 regarding the Determination
of Fundamental Technical Plan National 2000 for
National Telecommunications Development.

2. Telecommunications Regulators
In February 2005, the authority to regulate the
telecommunications industry was transferred from the
MoC to a newly-established Ministry, the MoCI. Pursuant
to authorities assigned to him through Telecommunication
Law, the Minister of Communication and Information
sets policies, regulates, supervises and controls
telecommunications industry in Indonesia. On October
28, 2010, MoCI engaged in certain organizational and
administrative reforms that included transferring licensing
and regulatory authority to two newly established general
directorates, the Directorate General of Posts and
Informatics Resources and Equipment (“DGRE”) and
Directorate General of Post and Informatics Operations
(“DGPIO”) pursuant to MoCI Regulation No.17/PER/M.
KOMINFO/10/2010 regarding the Organization and
Administration of Ministry of Communication and
Information. Following the reforms, certain adjustments
were made through MoCI Regulation No.15/PER/M.
KOMINFO/06/2011 dated June 20, 2011 regarding title
adjustments in a number of Decrees and/or MoCI
regulations that regulate Special Materials in Post and
Telecommunications and/or in Decrees of the Director
General of Posts and Telecommunications, which transfer
all substances related to the postal and telecommunications
sectors to the DGPIO including licensing, numbering,
interconnection, universal service obligation and business
competition. Meanwhile, matters related to radio frequency
spectrum and standardization of telecommunications
equipments were transferred to the DGRE.

Following the enactment of the Telecommunications
Law, the MoC established an independent regulatory
body as stipulated in MoC Decree No.KM.31/2003 dated
July 11, 2003 regarding the Establishment of the ITRA
which was later revoked by MoC Regulation No.KM.36/
PER/M.KOMINFO/10/2008 dated October 31, 2008 and
amended by MoCI Regulation No.1/PER/M.
KOMINFO/02/2011 dated February 7, 2011 (“MoCI
Regulation No.36/2008”). Pursuant to MoCI Regulation
No.36/2008, the ITRA was assigned the authority to
regulate the Indonesian telecommunication industry,
including the provision of telecommunication networks
and services. The ITRA which is chaired by the Director
General of Post and Informatics Operations and comprises
of nine members, including six members of the public,

3. C l a ss i f i c at i o n a n d L i ce n s i n g o f
Telecommunications Providers
The Telecommunications Law organized telecommunication
services into following three categories: (i) provision of
telecommunication networks, (ii) provision of
telecommunication services, and (iii) provision of special
telecommunications services.

Licenses issued by MoCI are required for each category
of telecommunications services. MoCI Regulation No.1/2010
and MoC Decree No.KM.21/2001 dated May 31, 2001
regarding the Operation of Telecommunications Services,
as last amended by MoCI Regulation No.8/2015 regarding
the Fourth Amendment of Decree of the Minister of
Communication No.KM.21/2001 regarding the Provision
of Telecommunications Service, are the principal
implementing regulations governing licensing.

MoCI Regulation No.1/2010 classified network operations
into fixed and mobile networks. MoC Decree No.KM.21/2001
categorized the provision of services into basic telephony
services, value-added telephony services, and multimedia
services.

4. Introduction of Competition in the
Indonesian Telecommunications Industry
In 1995, we were granted a monopoly to provide local
fixed line telecommunications services until December
31, 2010, and DLD services until December 31, 2005.
Indosat and Satelindo (which subsequently merged with
Indosat) were granted a duopoly for provision of basic
international telecommunications services until 2004.

As a consequence of the Telecommunications Law, the
Government terminated our exclusive rights to provide
domestic fixed line telephone and DLD services and
Indosat’s and Satelindo’s duopoly rights to provide basic
international telephone services. Instead, the Government
adopted a duopoly policy to create competition between
Indosat and us as comprehensive service and network
providers.

5. DLD Services
To liberalize DLD services, the Government amended
the National Telecommunications Technical Plan pursuant
to MoCI Decree No.6/P/M.KOMINFO/5/2005 dated May
17, 2005 (“MoCI Decree No.6/2005”) to assign each
provider of DLD services a three-digit access code that
would permit their customers to select an alternative
DLD services provider by dialing the three-digit access
number. MoCI Decree No.6/2005 did not provide for
immediate implementation of the three-digit system for
DLD calls, but as the first DLD service provider, we were
required to gradually open our network to the three-digit
access codes in all coded areas throughout Indonesia
by April 1, 2010. We were assigned the “017” DLD access
code, while Indosat was assigned “011”. The MoCI thereafter
amended the National Telecommunications Plan as
provided in MoCI Decree No.43/P/M.KOMINFO/12/2007
dated December 3, 2007, (“MoCI Decree No.43/2007”),
which delayed the deadline for the implementation of
three digit access code for DLD calls throughout all the
area code in Indonesia until September 27, 2011.

Pursuant to MoCI Decree No.43/2007, we opened our
network to the “01X” three-digit DLD access service in
Balikpapan by April 3, 2008. Since that date, our customers
are able to make DLD calls from Balikpapan by first
dialing Indosat’s “011”. As stipulated in MoCI Regulation
No.43/2007, we have provided a nation-wide network
for three-digit access code for fixed and fixed wireless
DLD with “01X” that can be used by Indosat or other
licensed operator starting September 27, 2011. To date,
no other licensed operators have submitted a request
to us to connect their networks and enable DLD access.

6. IDD Services
We received our IDD license in May 2004 and began
offering IDD fixed line services to customers in June
2004 using the “007” IDD access code. The Indosat IDD
access code is “001”. Our December 2005 interconnection
agreement with Indosat enables Indosat’s network
customers to access our IDD services by dialing “007”
and our network customers to access Indosat’s IDD
services by dialing “001”.

7. Limited Mobility Wireless Services
MoC Decree No.KM.35/2004 dated March 11, 2004
regarding Implementation of Fixed Wireless Networks
with Limited Mobility, as amended by MoCI Decree No.16/
PER/M.KOMINFO/06/2011 dated June 27, 2011, (“MoC

145

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Decree No.KM.35/2004”) provides that only local fixed
network operators holding licenses issued by the MoC
may offer limited mobility wireless (or fixed wireless)
access services. In addition, MoC Decree No.35/2004
states that each limited mobility wireless access operator
must provide basic telephone services. Under an automated
migration feature, customers are able to make and receive
calls on their fixed limited mobility wireless access phones
using a different number with a different area code.

8. Cellular
Cellular telephone service is provided in Indonesia on
the radio frequency spectrum of 1.8 GHz (DCS technology),
2.1 GHz (UMTS technology) and 900 MHz (GSM and
UMTS technology). The MoCI regulates the use and
allocation of the radio frequency spectrum for mobile
cellular networks. Telkomsel has obtained frequency
allocation for cellular services on the 900 MHz, 1.8 GHz
and 2.1 GHz frequency bands. For the allocation of radio
frequency spectrum 2.1 GHz, in 2006 the government
allocates a tender process for the allocation of 5 MHz,
whereas for the allocation of additional radio spectrum
allocated through an evaluation mechanism in 2009 and
selection in 2013 where each is the addition of 5 MHz.
The allocation of bandwidth in the 2.1 GHz frequency
spectrum is regulated by:
MoCI Decree No.19/KEP/M.KOMINFO/2/2006 dated
February 14, 2006 regarding the Determination of
Winner of IMT-2000 Mobile Cellular Operator Selection
at 2.1 GHz Radio Frequency Band.

MoCI Decree No.268/KEP/M.KOMINFO/9/2009
regarding the Determination of Additional Allocation
of Radio Frequency Bandwidth Blocks, Tariffs, and
Payment Scheme Radio Frequency Spectrum Right
of Usage Fees for IMT-2000 Moble Cellular Operators
at 2.1 GHz Radio Frequency Band.

MoCI Decree No.191 Year 2013 regarding the
Determination of PT Telekomunikasi Selular as Winner
in the Selection of Users of Additional Frequency
Bandwidth at 2.1 GHz Radio Frequency Band for
IMT-2000 Moble Cellular Operators.

9. Interconnection
The Telecommunications Law expressly prohibits
monopolistic and unfair business practices and requires
network providers to allow users to access other users
or obtain services from other networks by paying
interconnection fees agreed upon by each network
operator. Government Regulation No.52/2000 dated
July 11, 2000 regarding Telecommunications Operations
provides that interconnection charges between two or

146

more network operators must be transparent, mutually
agreed upon and fair.

On February 8, 2006, the MoCI issued Regulation No.8/
PER/M.KOMINFO/02/2006 on Interconnection (“MoCI
Regulation No.8/2006”), mandated a cost-based
interconnection tariff scheme for all network and services
operators replacing the previous revenue-sharing scheme.
Under the new scheme, interconnection charges are
determined by the network operator on which a call
terminates based on a long-run incremental cost formula.

MoCI Regulation No.8/2006 requires operators to submit
to the ITRA annual RIO proposals containing proposed
interconnection tariffs for the coming year. Operators
are required to use the cost-based methodology in
preparing RIO proposals, and the ITRA and MoCI are
required to use the same methodology in evaluating the
RIO proposals and approving interconnection tariffs.

Pursuant to MoCI Regulation No.8/2006 and ITRA Letter
No.246/BRTI/VIII/2007 dated August 6, 2007, we
submitted a RIO proposal to the ITRA in October 2007,
which covered adjustments for operational, configuration,
technical and service offerings. In December 2007, we
and all other network operators signed new interconnection
agreements that superseded previous interconnection
agreements between us and other network operators
which also amended all interconnection agreements
signed in December 2006.

On February 5, 2008, the ITRA required that we and
other operators begin implementing the cost-based
interconnection tariff regime. On April 11, 2008, pursuant
to Directorate General of Post and Telecommunication
(“DGPT”) Decree No.205/2008, the ITRA and the MoCI
approved RIO proposals from all operators to replace
previous interconnection agreements. The RIO approved
in 2008 was effective until July 29, 2011 when new
interconnection charges were implemented as stipulated
in ITRA Letter No.227/BRTI/XII/2010 dated December
31, 2010 regarding the Implementation of Interconnection
Charges in 2011. This is the result of interconnection
charges recalculation conducted in 2010 by MoCI that
was agreed on by all operators and outlined in a
Memorandum of Understanding. The results of this
interconnection charges reform caused a slight decrease
in interconnection costs.

On December 12, 2011, the ITRA changed the SMS
interconnection fee basis from a “Sender Keep All” basis
to a cost basis interconnection fee calculation which

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESrequired certain amendments to RIOs agreed upon in
2011. MoCI Regulation No.8/2006 stipulates that the RIO
of telecommunications network operators generating
operating revenue that is equal to or more than 25% of
the combined revenues of all telecommunication operators
that serve the same respective segment, must obtain
ITRA’s approval, necessitating changes in our and
Telkomsel’s RIOs which were approved on June 20, 2012.
Until this report is published, no recalculation of
interconnection fees for 2012 had been done as doing
such should have been preceded by an evaluation on
interconnection charges in 2011.

10. VoIP
In January 2007, the Government implemented new
interconnection regulations and a five-digit access code
system for VoIP services pursuant to MoCI Decree
No.06/P/M.KOMINFO/5/2005. Under the Decree, the
prefix for VoIP, which was originally 01X, was changed
to 010XY. On April 27, 2011, the MoCI issued Regulation
No.14/PER/M.KOMINFO/04/2011, as partly revoked by
MoCI Regulation No. 11 of 2014, which imposed quality
control standards in relation to VoIP services, which
became effective three months thereafter, to which we
and other operators must adhere the regulation.

11. IPTV
Several provisions in the MoCI Regulation No.11/PER/M.
KOMINFO/07/2010 (“MoCI Regulation No.11/2010”)
regarding the Implementation of Internet Protocol
Television (IPTV) Service has been amended by Regulation
No.15/2014 regarding the Implementation of Internet
Protocol Television (IPTV) Service that became the legal
basis for the IPTV licensing and regulates the provision
of IPTV services, including the rights and obligations of
IPTV providers, technical standards, foreign ownership
requirements and the use of domestic independent
content providers.

MoCI Regulation No.11/2010 recognizes IPTV as a
convergence of telecommunications, broadcasting,
multimedia and electronic transactions and provides
that only a consortium comprising at least two Indonesian
entities may be licensed as an IPTV provider. Referring
to MOCI Regulation No.15/2014, the licenses that we
needed, among others: (a) Local Fixed Network License,
Mobile Network or Fixed Closed Network License; (b)
Operating Internet Access / ISP License; and (c)
Broadcasting Operation of Subscription Television
Broadcasting Services Institution License. Such a
consortium may only provide IPTV services in the area
covered by all three required licenses. This was in line

with abolition of the provisions of the Implementation
of Broadcasting Operation of Subscription Television
Broadcasting Services Institution via cable, become
Broadcasting Operation of Subscription Television
Broadcasting Services Institution.

In the Government Regulation No.52/2005 regarding
the Broadcasting Implementation of Broadcasting
Subscription Institute ("LPB") mentioned that the
broadcasting could be conducted via satellite, cable and
terrestrial. Broadcasting via satellite could reach
nationwide, while cable and terrestrial has a range of a
particular region. LPB licenses of broadcasting via satellite
owned by PT Indonusa (Telkomvision) became our legal
basis became our legal basis to enforce IPTV services
nationally.

12. Satellite
Our international satellite business is highly regulated.
In addition to being subject to domestic licensing
requirements and regulation for the use of orbital slots
and radio frequencies, our satellite operations also been
the subject of Radio Communications Agency of the
International Telecommunication Union.

Furthermore, MoCI Regulation No.37/2006 dated
December 6, 2006 requires foreign satellite operators
to obtain a landing right license to operate in Indonesia
which requires (i) foreign satellite operators to coordinate
with domestic satellite operators, including us, to ensure
that no Indonesian satellite and terrestrial systems will
be disrupted by their operation,and (ii) the country of
origin of the foreign satellite operators must also give
permission to the Indonesian satellite operators to operate
in that country.

13. Consumer Protection
Under the Telecommunications Law, each network
provider is required to protect consumer rights in relation
to, among others, quality of services, tariffs and
compensation. Customers injured or damaged by negligent
operations may file claims against negligent providers.
Telecommunications consumer protection regulations
provide service standards for telecommunication
operators.

14.USO
All telecommunications operators, whether network or
service providers, are bound by a USO regulation that
requires them to contribute to providing telecommunication
facilities and infrastructure in the interest of opening

147

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

equal access to telecommunications throughout all
regions in Indonesia, which is generally done by way of
financial contribution. MoCI Regulation No.32/PER/M.
KOMINFO/10/2008 dated October 1, 2008 regarding
the USO (as amended by MoCI Regulation No.03/PER/M.
KOMINFO/02/2010 dated February 1, 2010) (“MoCI
Regulation No.32/2008”) provides that USO funds
received will be used to fund telephone, SMS and internet
access in remote and other areas of Indonesia that have
been classified as USO regions where it is not economical
to provide these services.

USO payment requirements are calculated as a percentage
of our unconsolidated gross revenues less uncollectable
receivables from the telecommunication operation (e.g.,
bad debt expense) and payments received for
interconnection expense which belong to other parties.
Pursuant to Government Regulation No.7/2009 dated
January 16, 2009 regarding Tariffs for Non-Tax State
Revenue that apply to the Ministry of Communication
and Information (“GR No.7/2009”), the current USO
tariff rate is 1.25% of gross revenue.

15. Telecommunication Regulatory Charges
On January 16, 2009, the Government issued Government
Regulation No.7/2009, which sets the types of non-tax
state revenues that apply to the MoCI derived from
various services, including telecommunications.

On December 13, 2010, the Government issued Government
Regulation No.76/2010 amending Government Regulation
No.7/2009. Pursuant to Government Regulation
No.76/2010, we are no longer required to pay right-of-
use fees calculated with reference to the BTSs that we
deploy in our network, except for BTSs deployed in our
backbone, with effect from December 15, 2010. As a
result, our right-of-use fees are now calculated based
on the bandwidth of the radio frequency spectrum that
we use.

In addition to radio frequency spectrum right-of-use
fees, Government Regulation No.7/2009 requires all
telecommunications operators to pay an annual license
fee for telecommunication operation, which is equal to
0.5% of unconsolidated gross revenues, from which

148

Pursuant to Law No.28/2009 regarding Local Taxes and
Local Fees, local governments are permitted to impose

fees on the sites that we use for telecommunications
towers. The fees may not exceed 2% of the site’s assessed
tax value. Currently, there are some 525 local (provincial
and regency level) governments through out Indonesia
that may be authorized to impose these fees to increase
in the future.

16. Telecommunications Towers
On March 17, 2008, the MoCI issued MoCI Regulation
No.02/PER/M.KOMINFO/3/2008 regarding Guidelines
on Construction and Utilization of Sharing
Telecommunication Towers (“MoCI Regulation
No.02/2008”). Under MoCI Regulation No.02/2008, the
construction of telecommunications towers requires
permits from the relevant governmental institution, while
the local government determines the placement and
locations at which telecommunications towers may be
constructed. In addition, telecommunications providers
that own telecommunication towers and other tower
owners are obligated to allow other telecommunication
operators to utilize their telecommunication towers
without any discrimination, with due regards to the
technical capacity of the respective tower.

Since the operations of telecommunication towers
involves a number of relevant Government bodies, on
March 30, 2009, a joint regulation is issued in the forms
of Minister of Home Affairs Regulation No.18/2009,

Minister of Public Works Regulation No.07/PRT/M/2009,
MoCI Regulation No.19/PER.M.KOMINFO/03/2009 and
Head of the Investment Coordinating Board Regulation
No.3/P/2009 regarding Guidelines for the Construction
and Shared Use of Telecommunications Towers (“Joint
Decree”).

The Joint Decree regulates that license for
telecommunication tower construction is to be issued
by regents or mayors, and for Jakarta Province, its
Governor. The Joint Decree also provides for tower
construction standards and requires that
telecommunications towers be made generally available
for shared use by telecommunications service providers.
The owner of a telecommunications tower is allowed to
collect a fee, which is negotiated with reference to costs
associated with investment and operational costs, the
return of investment and a profit. Monopolistic practices
in the ownership and management of telecommunications
towers is prohibited.

149

2014 Annual Report PT Telkom Indonesia Tbk (Persero)PROPERTY, PLANT & EQUIPMENT
Our property and equipment is used for telecommunication
operations, which mainly consist of transmission installation
and equipment, cable network and switching equipment.
A description of these is contained elsewhere in Note
11 to our Consolidated Financial Statements.

Except for ownership rights granted to individuals in
Indonesia, reversionary rights to land rests with the
Republic of Indonesia, pursuant to Agrarian Law No.5/1960.
Land title is designated through land rights, including
Right to Build (Hak Guna Bangunan or HGB) and Right
of Use (Hak Guna Usaha or HGU). Land title holders
enjoy full use of the land for a specified period, subject
to renewal and extensions. In most instances, land rights
are freely tradable and may be pledged as security under
loan agreements.

We own several pieces of land located throughout
Indonesia with the right to build and use for a period of
10 to 45 years, which will expire between 2015 and 2053.
We believe that there will be no difficulty in obtaining
the extension of the land rights when they expire.

We hold registered rights to build and use for most of
our properties. Pursuant to Government Regulation
No.40/1996, the maximum initial period for the right to
build is 30 years and is renewable for an additional 20
years. We are not aware of any environmental issues
that could affect the utilization of our property and
equipment.

All assets owned by the Company have been pledged
as collateral for bonds (Notes 20a). Certain property
and equipment of the Company’s subsidiaries have been
pledged as collateral under lending agreements (Notes
17 and 21).

As of December 31, 2014 the cost of fully depreciated
property and equipment of Company that are still used
in operations amounted to Rp47,910 billion. We are
currently performing modernization of network assets
to replace the fully depreciated property and equipment.

INSURANCE
As of December 31, 2014, our property and equipment
except land rights, with net carrying amount of Rp85,352
billion were insured against fire, theft, earthquake and
other specified risks, with a maximum loss claim of
Rp15,244 billion, US$119 million, EURO133 thousand,
SGD29 million and HKD19 million. Management believes
that the insurance coverage is adequate to cover potential
losses from the insured risks.

150

OPERATIONAL OVERVIEW

NETWORK INFRASTRUCTURE
DEVELOPMENT
Our network infrastructure can be categorized into
national and international network infrastructure. National
network infrastructure was held to realize one of our
major programs, namely Indonesia Digital Network
("IDN").

International Networks
We operate international gateways in Batam, Jakarta,
and Surabaya to route outgoing and incoming calls on
our IDD service (“007”).

After the Batam Singapore Cable System (BSCS), Asia
America Gateway (AAG), and Singapore Japan Cable
System (SJC) on March 7, 2014, our subsidiary TII or
Telin, in cooperation with other 17 global telecommunication
providers signed MoU of submarine cable development
project, South East Asia – Middle East -Western Europe
5 (SEA-ME-WE 5) in Kuala Lumpur, Malaysia. SEA-ME-
WE5 is a submarine cable system with a length of
approximatelly 20.000 km stretching from Dumai,
Indonesia to several countries in Southeast Asia, France
and Italy with direct connection from Indonesia to Europe,
SEA-ME-WE 5.

Development of submarine cable system infrastructure
was also carried out by signing MoU of Southeast Asia
– United States (SEA – USA) Cable System, where Telin
is also joined as member on a consortium with other 6
global telecommunication companies. SEA – US connects
Manado (Indonesia), Davao (Philippines), Piti (Guam),
Oahu (Hawaii, United States), and Los Angeles (California,
United States). In line with SEA-ME-WE5, the submarine
cable system has a capacity to accommodate data and
internet requirement from Indonesia directly to the owner
of the majority of the world internet content, silicon
valley.

To support the international services both voice and
data, Telin operates 16 points of presence (“POP”) in
various parts of the world, including in Asia (Dubai,
Singapore, Hong Kong, Malaysia and Tokyo), Europe
(London , Frankfurt and Amsterdam) and the USA
(Ashburn, New York, Los Angeles, San Jose and Palo
Alto).

National Network
In the master plan and IDN infrastructure, our target was

We continue to pursue development of our network infrastructure to offer a more efficient and cost-competitive
service as part of the Government’s Master Plan for the Acceleration and Expansion of Indonesia's Economic
Development (“MP3EI”) in line with our transformation into a TIMES provider under our Indonesia Digital Network
("IDN") program. In the framework of developing high-quality, efficient and competitive infrastructure in terms of
the costs in delivery services, we continue to pursue the development and improvement of the network infrastructure,
known as Telkom One Network, which was built and operated by Telkom Group.

Our IDN program involves the following three program developments:
1.

id-Convergence (“id-Con”): convergence of the node service network infrastructure into a multi-service and
multi-screen integrated NGN.

2. id-Ring: development of our transport network infrastructure into an IP-based and optical backbone network.
3. id-Access: development of our customer access network infrastructure into a high speed broadband access

through fiber optic and Wi-Fi networks.

Fixed Wireline Network
As of December 31, 2014, we managed 9.7 million fixed wireline connections. In the master plan and IDN infrastructure,
our target was to modernize legacy network into a network that used a broadband access infrastructure.

Operating Statistics

Exchange capacity

Installed lines

Lines in service*

As and for the year ended December 31,

2014

2013

2012

2011

2010

13,946,801

13,918,369

13,908,003

12,180,214

11,237,229

10,341,807

10,650,652

11,109,156

11,005,208

10,510,048

9,698,255

9,350,806

9,034,010

8,688,526

8,302,818

* Lines in service are subscriber lines and public telephone lines, including the lines in service that we operate under revenue-sharing arrangements.

Fixed Wireless Network
Our fixed wireless infrastructure consists primarily of mobile switching centers (“MSC”) and base station sub systems
(“BSS”), which consists of a base station controller (“BSC”) and a base transceiver station (“BTS”). According to the
Decree of the Minister of Communication and Information of the Republic of Indonesia No. 934, dated September
26, 2014, approval has been given for the allocation of radio frequency 8 MHz in the range of 880-887.5 MHz paired
with 925-932.5 MHz from our Company to Telkomsel. On June 27, 2014, we entered into a Conditional Business
Transfer Agreement with Telkomsel to transfer parts of our fixed wireless business and migrated subscribers to
Telkomsel. However, we plan to continue to operate the Flexi service till the end of 2015 or until our remaining Flexi
customers have migrated to Telkomsel, if earlier.

Cellular Network
Our cellular services, which are operated by our subsidiary, Telkomsel, have the most extensive network coverage
of any cellular operators in Indonesia. Telkomsel currently operates on the GSM/DCS, GPRS, EDGE,3.5G and 4G
networks. The GSM/DCS network consists of 7.5 MHz of bandwidth on the 900 MHz frequency and 22.5 MHz of
bandwidth on the 1.8 GHz frequency. Telkomsel’s 3G network uses 15 MHz of bandwidth on the 2.1 GHz frequency.
The range of cellular services on the GSM network provided by Telkomsel extends to all cities and districts in Indonesia.
In 2014, Telkomsel has added 15,556 unit of BTS. As of December 31, 2014, Telkomsel’s digital network was supported
by 85,420 BTS.

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2014 Annual Report PT Telkom Indonesia Tbk (Persero)

Data and Internet Network
In 2014, we continued to improve the quality of our data
network by providing additional capacity and coverage.
In this year, we provided broadband access using MSAN
technology with 13.3 million homepass. As of December
31, 2014, we have expanded our metro ethernet network
by 874,450Mbps which is able to provide broadband
services throughout Indonesia. The Metro ethernet is
also used as the main link for the IP DSLAM, MSAN for
Speedy (which is in the process of being rebranded to
IndiHome) broadband, softswitch, IP VPN and GPON
broadband for mobile backhaul, corporate business
solutions and triple pay services. As of December 31,
2014, we have added additional 11,802 BTS node B,
bringing it to a total of 38,836 BTS node B.

As of December 31, 2014, we have extended the capacity
of our internet gateway to reach an installed capacity
of 390,2 Gbps. This ensures the adequacy of the capacity
of the internet gateway so that it is able to anticipate
the expected growth in broadband traffic for both fixed

and mobile. In 2014, we also operated a content distribution
network (“CDN”) with a capacity of 261Gbps in
collaboration with Akamai, Google and Yahoo.

Throughout 2014, we continued to expand the scope of
Indonesia’s Wi-Fi services by deploying additional
network access points either through internal development
programs and various forms of cooperation with third
parties. As of December 2014, a total of 177,514 access
points have been installed.

Data Center
Our subsidiary, Telkomsigma, manages our data center.
With the support of Telkom Indonesia’s network across
Indonesia, we expect Telkomsigma’s data center to reach
a total building area of 100,000m2 by 2015. With the
capabilities of this network, Telkomsigma will be able
to provide integrated data storage solutions for many
companies in Indonesia, including for those located far
from the big cities.

Transmission Network
As of 2014, our broadband network serves as the backbone for our entire network infrastructure. Our backbone
telecommunications network consists of transmission networks, remote switching facilities and core routers, which
connect a number of access nodes. The transmission links between nodes and switching facilities comprise a terrestrial
transmission network, in particular fiber optic, microwave and submarine cable networks, as well as satellite
transmission networks and other transmission technologies.

Transmission Network

As of December 31,

2012

2013

2014

Capacity (number of Transmission medium circuits)

STM-1

STM-4

STM-16

STM-64

STM-256

131,546

131,303

129,557

720

736

708

100

108

260

337

398

Note: The backbone transmission unit uses E1, STM1 (equivalent to 63 E1), STM4 (equivalent to 4 STM1), STM16 (equivalent to 4 STM4), STM64
(equivalent to 4 STM16), and STM256 (equivalent to 4 STM64). STM or Synchronous Transfer Mode ("STM") is the unit typically used in backbone
transmission networks. Facilitating broadband services requires high capacity transmission networks using nxSTM-1 units. E1 units are used to
support legacy services.

152

In addition to our Telkom-1 and Telkom-2 satellites, we
also lease transponder capacity for 35 TPE (transponder
equivalent, @36 Mhz), comprising 9 TPE from the JSAT-
5A (132 BT) satellite, 10 TPE from the Etuelsat 172A (172
BT) satellite, 8 TPE from the Chinasat-10 (110 BT) satellite,
6 TPE from the Intelsat-8 (169 BT) satellite, and 1 TPE
from Koreasat (75 BT).

Besides operating the satellite, we also provides 161 link
of IP backhaul links for ourselves network or as well as
322 earth station with around 1.36 Gbps capacity.
Transponder capacity for this link mostly through lease
transponder capacity from Foreign.

To maintain the continuity and developing of this business,
we have entered into a contract for the construction of
Telkom-3S (satelite) and are preparing for the procurement
of Telkom-4 as a replacement for Telkom-1. Telkom-3S
has a 49 TPE capacity that consists of 24 TPE standard
C-band, 12 TPE Extended C-band and 13 TPE Ku-Band.
Meanwhile, Telkom-4 as a replacement for Telkom-1 with
the development of coverage to India has a capacity of
60 TPE which consists of 24 TPE standard C-band with
coverage of Indonesia, 24 TPE standard C-band with
India coverage and 12 TPE extended C-band with coverage
of Indonesia. Telkom-3S which is currently under
construction is planned to be rolled at the end of 2016,
while Telkom-4 is planned to be rolled at the end of 2017.

In line with the construction of Telkom-3S and Telkom-4,
we are currently planning the placement of Telkom-2 RFS
post Telkom-3S and Telkom-1 RFS post Telkom-4. The
placement of these two satellites, then in 2018, we will
operate four satellites with a total capacity of 169 TPE.

To increase the value, we formulate one door policy in the
provision of capacity for Telkom Group. In order to
implementate this policy, we are currently exploring the
patterns of of cooperation with operators include cooperation

in providing capacity through long-term leases, joint
development of a satellite in the orbit slot which covers
Indonesia and acquisition of satellites in the orbit.

RESEARCH AND DEVELOPMENT
As a technology-based company, we continue to focus
on our product and service through ongoing research
and development program to create new innovations.
Our research and development activity are under
Innovation & Strategic Portfolio Directorate, Innovation
& Design Center (“IDeC”) unit.
The following are main activity of IDeC:
Act as TIMES product development center, through
innovation incubation management, either from
internal or external party of the Company.
Product/service innovation activity is carried out in
a product incubation adopting Lean Startup method.
Under this method, customer’s admired product will
be created to be the solution for the customer’s issue.
Product innovation incubation phase in Telkom covers
customer/problem validation, product validation,
business model validation, and market validation.
These phases are also applied for innovation driven
from internal and external of the company’s proposed
by the Startup through Indigo program.

New digital business ecosystem development.

Through a convergent perspective and coherent
effort carried out, several new digital business
ecosystem developments is performed through series
of business analysis phase on current ecosystem and
by giving new benefits acquired from digital technology
implementation. In this digital business ecosystem,
comprising of ready to be developed products.

Research on new technology, infrastructure, product

and business.
Infrastructure research is a new technology
implementation view activity starting with technology
scanning to the determination of it system/equipment
standardization, prove of concept practice and quality
assurance activity performed through laboratory
testing or sampling test activity on its implementation.
The infrastructure developed is supporting factors
and integrated part with the developed products
and services. These infrastructure research activities
refer to technology roadmap applied by NITS
Directorate.

153

2014 Annual Report PT Telkom Indonesia Tbk (Persero) Preparation of technology standard and implementation of product & infrastructure quality assurance.

As sequence of technology and product implementation preparation, a technology standard is prepared as a
specification manual for infrastructure equipment. This technology standard will be further functioned as quality
assurance testing reference for the infrastructure equipments to be implemented. Besides undertaking quality
assurance on infrastructure equipment, a product quality assurance function is also developed before entering
commercial phase. The execution of quality assurance product includes namely testing phase for application
security, response time and user experience/user interface.

Provision of solutions and technical analysis on operational issues

Besides developing new technology and conducting quality assurance, IDeC Unit supports problem solving for
operational issue in form of technical analysis. To support this function implementation, an infrastructure test
bed has been developed to simulate infrastructure behavior and provide solution of occurred problems.

According to our 2014 Core Program, to support Telkomsel Double Digit Growth, Indonesia Digital Network and
International Expansion, the IDeC also covers 10 areas including: Creative Center & Indigo Incubator, eTourism,
Portal Hi Indonesia, Apps. Hi City, Mini Lab IDN, Radio 2.0, Smart Home Box, Smart Building, Upoint Phase 2,
SDP & IMS Integration.

As part of our Indigo Incubator Program in 2014 for external innovations, there were 398 proposals submitted
by startups of which we selected 17 product innovations to be incubated through Bandung Digital Valley (BDV)
and Jogja Digital Valley (JDV) business incubators.

We routinely make investments to improve products and services. We have spent about Rp 13 billion, Rp 14 billion
and Rp 4 billion (US $ 3 million) respectively for the years 2012, 2013 and 2014.

154

Following the issuance of MoCI Regulation No.01/PER/M.
KOMINFO/01/2010 (“MoCI Decree No.01/2010”) dated
January 25, 2010 concerning the Provision of
Telecommunication Network, we were required to adjust
our telecommunications license to provide
telecommunications services. We have secured new
licenses that have been adjusted as required, of which
are as follows:

Fixed Network and Basic Telephony
Services
Based on the report submitted by us concerning the
operation of fixed network and as part of the adjustment
to MoCI Decree No.01/2010, we had our licenses adjusted
in 2010 for the operation of local fixed network, direct
long distance, international call and closed fixed network,
explained as follows:
- MoCI Decree No.381/KEP/M.KOMINFO/10/2010 dated
October 28, 2010 on the License of Operating Local
Fixed Network and Basic Telephony Services of PT
Telekomunikasi Indonesia Tbk;

- MoCI Decree No.382/KEP/M.KOMINFO/10/2010 dated
October 28, 2010 on the License of Operating Fixed
Network of Domestic Long Distance and Basic
Telephony of PT Telekomunikasi Indonesia Tbk;
- MoCI Decree No.383/KEP/M.KOMINFO/10/2010 dated
October 28, 2010 on the License of Operating Fixed
Network of International Call and Basic Telephony
Services of PT Telekomunikasi Indonesia Tbk; and
- MoCI Decree No.398/KEP/M.KOMINFO/11/2010 dated
November 12, 2010 on the License of Operating
Closed Fixed Network of PT Telekomunikasi Indonesia
Tbk.

Following the issuance of MoCI Decrees No.381, 382 and
383, our previous licenses for operating a fixed network
and basic telephony services previously owned by us
based on MoC Decree No.KP.162 of 2004 dated May 13,
2004 ceased to be in effect. The licenses do not have a
set expiry date, but are evaluated every five years.

Cellular
Telkomsel holds licenses to operate a nationwide mobile
cellular telephone network using 7.5 MHz of radio frequency
bandwidth in the 900 MHz band, 22.5 MHz of radio

frequency bandwidth in the 1.8 GHz band and 15 MHz
of radio frequency bandwidth in the 2.1 GHz band. The
licenses do not have a set expiry date, but will be evaluated
every five years. Telkomsel also holds licenses from the
Indonesian Investment Coordinating Board that permits
Telkomsel to develop cellular services with national
coverage, including the expansion of its network capacity.
In addition, Telkomsel holds permits and licenses from
and registrations with certain regional governments and/
or governmental agencies, primarily in connection with
its operations in such regions, the properties it owns
and/or the construction and use of its BTS.

In connection with the transfer of the Flexi business to
Telkomsel, in September 2014, the MOCI, through Decree
No. 934 of 2014, approved the reallocation of the 800
MHz frequency spectrum being used for our Flexi business
to Telkomsel. The reallocation is expected to take place
after we terminate our Flexi service on the earlier of
December 31, 2015 or the migration of our Flexi customers
to Telkomsel.

International Calls
We commenced our international call service in 2004.
Our license for operating a fixed network to provide
international call services was adjusted in 2010 to meet
the requirements of MoCI Decree No.01/2010 with the
issuance of MoCI Decree No.383/2010. The license does
not have a set expiry date, but it will be evaluated in
2015.

We have a license to operate a closed fixed network
based on MoCI Decree No.398/KEP/M.KOMINFO/11/2010,
which amends the previous license to meet the provisions
in MoCI Decree No.01/2010. The license allows us to
lease the installed closed fixed network to, among others,
telecommunication network and service operators, and
to provide an international telecommunication transmission
facility through a SCCS directly to Indonesia for overseas
telecommunication operators.

According to MoCI Decree No.16/PER/M.KOMINFO/9/2005
dated October 6, 2005 concerning Provision of
International Telecommunications Transmission Facilities
through SCCS, overseas telecommunications operators
wishing to provide international telecommunications
transmission facilities through the SCCS directly to
Indonesia are required to set up a partnership with a
fixed network of international call services or closed

155

2014 Annual Report PT Telkom Indonesia Tbk (Persero)fixed network provider. In line with MoCI Decree
No.16/2005, the international telecommunication
transmission facilities provided through SCCS are served
by us on the basis of landing rights attached to our
license to operate fixed network of international call
services. We have also secured landing rights based on
the landing right Letter No.006-OS/DJPT.6/HLS/3/2010
dated March 2, 2010 from MoCI.

Internet Interconnection Service
We hold a license to provide internet interconnection
services by referring to DGPI Decree No.331/KEP/M.
KOMINFO/09/2013 dated on September 24, 2013 regarding
the license for Internet Interconnection Service (Network
Access Point) for PT Telekomunikasi Indonesia Tbk. This
license does not have a set expiry date, but it will be
evaluated every five years.

On March 2, 2010, the MoCI issued Decree No.75/KEP/M.
KOMINFO/03/2010 granting our subsidiary, Telin, a
license to operate a closed fixed line network which
enables Telin to provide international infrastructure
services. Separately, Telin secured landing rights in
Indonesia from the DGPT to provide international
telecommunications transmission facilities through SCCS.

VoIP
We are licensed to provide internet telephony services
for public needs as stated in DGPT Decree No.384/KEP/
DJPT/M.KOMINFO/11/2010 dated November 29, 2010
on Voice over Internet Protocol ("VoIP") services. This
license does not have a set expiry date, but it will be
evaluated every five years.

Telkomsel is also licensed to provide public VoIP services
based on DGPT Decree No.65 of 2015 dated February
3, 2015 regarding the provision of ITKP services. This
license does not have a set expiry date, but it will be
evaluated every five years by the Government.

ISP
We are licensed as an ISP under DGPI Decree No.83/
KEP/DJPPI/KOMINFO/4/2011 dated April 7, 2011, as
amended by Director General of Post and Informatics
Operations Decree No. 302 0f 2013. This license does
not have a set expiry date, but it will be evaluated every
five years.

Telkomsel is also licensed to provide multimedia internet
access services with nation-wide coverage under DGPT
Decree No.213/DIRJEN/2010. This license does not have
a set expiry date, but it will be evaluated annually, with
a comprehensive evaluation every five years.

BWA
In July 2009, we won a tender for a wireless broadband
access license and the right to provide BWA services in
12 zones, comprising eight zones on 3.3 GHz (North
Sumatra, South Sumatra, Central Sumatra, West
Kalimantan, East Kalimantan, West Java, JABODETABEK
and Banten) and five zones on 2.3 GHz (Central Java,
East Java, Papua, Maluku, and the northern part of
Sulawesi).

In August 2009, the MoCI issued Ministerial Decree
No.237/KEP/M.KOMINFO/7/2009 regarding the
Appointment of the Winning Bidders for Packet Switched-
Based Local Fixed Access Network Operators Using the
2.3 GHz Radio Frequency for Wireless Broadband Services,
as last amended by MoCI Decree No 325/KEP/M.
KOMINFO/05/2012. Due to inadequate implementation
by the winning bidders, the MoCI later issued Regulation
No.19/PER/M.KOMINFO/09/2011 dated September 14,
2011 (“MoCI Regulation No.19/2011”), which released
operators on the 2.3GHz radio frequency from the
obligation to use the particular technology specified in
the bid terms for the 2.3 GHz radio frequency, which
were set out in MoCI Regulation No.22/PER/M.
KOMINF0/04/2009 April 24, 2009 (“MoCI Regulation
No.22/2009”). Pursuant to MoCI Regulation No.19/2011,
operators on the 2.3 GHz radio frequency are now
permitted to freely choose their technology in providing
BWA on the 2.3 GHz radio frequency, subject to a
requirement that they pay an annual usage rights fee
for the third through the tenth year of the license period
in which a technology divergent from that specified in
MoCI Regulation No.22/2009 is used. On January 9,
2012, MoCI announced that it plans to make available
for bidding additional 2.3 GHz radio frequency in the
2300-2360 MHz range for BWA services utilizing neutral
technology.

156

As a result of the switch to neutral technology under
MoCI Regulation No.19/2011, we lost vendor support for
our preferred technology, which is based on fixed BWA
technology. Vendors instead preferred to support the
mobile BWA technology selected by other operators.
Mobile BWA technology competes with Telkomsel.
We therefore returned 4 of the 5 zones, which we had
received. We retained our BWA license for Maluku zone
so we would continue to qualify as a BWA operator on
2.3 GHz and have the right to access the BWA networks
maintained by other operators.

Becoming a wireless broadband access operator is in
line with the transformation of our business to TIMES,
which requires us to have infrastructure that is capable
of responding to an increasingly complex market and
the demand for ever more convergent products and
services, whether in the consumer, enterprise or wholesale
segments.

In July 2011, we are licensed to operate packet switched
based on local fixed network by referring to MoCI Decree
No.331/KEP/M.KOMINFO/07/2011 dated July 27, 2011 on
the License of Operating Packet Switched Based Local
Fixed Network of PT Telekomunikasi Indonesia Tbk. This
license does not have a set expiry date, but it will be
evaluated annually, with a comprehensive evaluation
every five years.

Data Communication System
(“SISKOMDAT”)
We provide SISKOMDAT services under DGPI Decree
No. 169/KEP/DJPPI/KOMINFO/6/2011 dated June 6, 2011
regarding License for Data Communications Systems
Services Operation for PT Telekomunikasi Indonesia Tbk.
This license does not have a set expiry date but will be
thoroughly evaluated every five years.

Payment Method Using e-Money
Following the implementation of Bank Indonesia’s
Regulation No.11/11/PBI/2009 and Circular Letter of Bank
Indonesia No.11/10/DASP each dated on May 13, 2009
regarding how to use card-based payment instruments
(“APMK”) and Bank Indonesia’s Regulation No.11/12/
PBI/2009 and Circular Letter of Bank Indonesia No.11/11/
DASP each dated May 13, 2009 on e-money, Bank
Indonesia has redefined the meaning of “principal” and
“acquirer” in operating APMK and e-money business. In
light of these regulations, Bank Indonesia confirmed our
status as an issuer of e-money based on letter of
Directorate of Accounting and Payment System of Bank
Indonesia No.11/13/DASP dated May 25, 2009. We operate
our e-money business under the brand names “T-cash”.

With the issuance of Bank Indonesia Circular Letter No.
9/9/DASP dated January 19, 2007, Telkomsel is also
permitted to conduct APMK activities, with the launch
of Telkomsel Tunai prepaid card.

Remittance Service
Based on a license from Bank Indonesia No.11/23/Bd/8,
dated August 5, 2009 and No.12/48/DASP/13, we and
Telkomsel may operate as a money transfer services
provider.

IPTV
On April 27, 2011, we and TelkomVision together obtained
a license to operate IPTV services through the MoCI
Decree No.MCIT.160/KEP/M.KOMINFO/04/2011 regarding
the Telkom and TelkomVision IPTV Service Consortium
Agreement. In accordance with Regulation 15 year 2014
on Amendment of MCIT Decree No.11/PER/M.
KOMINFO/07/2010 regarding the Implementation Services
Internet Protocol Television ("IPTV"), that the IPTV service
can be applied nationally.

Construction Services Business License
(“IUJK”)
On June 6, 2012, the City Government of Bandung issued
a construction services business license to us through
IUJK No. 1-3273-858971-2-001772 for Telkom. The IUJK
is valid for the execution of construction services
throughout the domain of the Republic of Indonesia,
comprising architecture, civil, mechanical and electrical
works. The IUJK is valid until June 5, 2015. We are in the
process of renewing this license.

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2014 Annual Report PT Telkom Indonesia Tbk (Persero)
FUNCTIONAL OVERVIEW

HUMAN CAPITAL
In order to win the global competition, we continuously develop the professionalism of our Human Capital through
global certification and global talent programs. This becomes our preparation in welcoming ASEAN Economic
Community (“AEC”) in 2015. Telkom realizes that Human Capital plays a strategic position and role towards achieving
our vision as a world-class company with global standards. Therefore, Telkom continues to develop existing Human
Capital, while also enhancing industrial relations aspects with the employees.

GLOBAL TALENT PROGRAM (“GTP”)
As TIMES provider with vision to become global market player, human capital holdsvery important role. To win
international level competition, strong leadership and excellent employees with global experience and internationally
acknowledge certification are required.

Respective international-scale leadership and employees are prepared under Global Talent Program (GTP) by
delegating particular assignment to chosen employee. GTP is performed by referring to Competency Development
Policy pursuant to Decree No.PR.206.03/2013 dated April 12, 2013. The policy states that GTP is a special assignment
for talented employee to be trained as Great People. The special assignment aims to win the competition and achieve
corporate business targets throughout international assignment experience and certification.

158

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESGTP is part of Corporate University (CorpU). We have committed by implementing Center of Excellence as first and
principal Strategic Initiative of the Company to develop learning organization. CorpU becomes a means of competency
development by utilizing knowledge to support corporate business requirement to establish International Standard
Center of Excellent Human Capital in TIMES industry. The effort is also carried out to support business performance
enhancement as well as to implement new corporate culture under the tagline “From Competence to Commerce.”
The tagline means that competent employee will create business.

EMPLOYEE PROFILE AND COMPOSITION
In 2014, our employees reached to 25,284 employees, comprised of 17,279 Telkom employees and 8,005 subsidiaries
employees. Employees of Telkom recorded 3.4% decrease from position as of December 31, 2013 in line with
continuation of multi exit program as part of our effort in undertaking HR revitalization and efficiency improvement
since 2002.

Employee Profile and Composition

Composition

Telkom Employees as of December 31,

2012

2013

2014

Subsidiaries Employees as of December 31,

2012

2013

2014

Employee Numbers

Composition changes to
the previous year (%)

19,185

17,881

17,279

6,498

7,130

8,005

(6.8)

(3.4)

9.7

12.3

159

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Employee profile based on position was changed. In 2014, senior management were of 541 employees, increased
from 2013 which was 441 employees. Total employees on middle management position grew from 3,987 employees
in 2013 to 4,181 employees in 2014. Increase in total employees based on position was also recorded on supervisor
level from 12,031 employees in 2013 to 12,031 employees in 2014. Meanwhile, on other positions, employees profile
decreased from 8,552 employees in 2013 to 7,485 employees in 2014.

Employee Profile by Position

Position

Position in 2014

Senior Management

Middle Management

Supervisors

Others

Total in 2014

Position in 2013

Senior Management

Middle Management

Supervisors

Others

Total in 2013

Telkom Subsidiaries

Telkom
Group

(%)

151

2,939

10,233

3,956

17,279

135

2,711

9,936

5,099

17,881

390

1,242

2,844

3,529

8,005

306

1,276

2,095

3,453

7,130

541

4,181

13,077

7,485

25,284

441

3,987

12,031

8,552

25,011

2.1

16.5

51.7

29.6

100.0

1.8

15.9

48.1

34.2

100.0

2.2%

29.6%

16.5%

1.8%

15.9%

34.2%

51.7%

48.1%

2014

2013

Senior Management

Middle Management

Supervisors

Others

160

Employee Profile by Educational Background

Level of Education

Telkom

Subsidiaries

Level of Education in 2014

Pre University

Diploma Graduates

University Graduates

Post Graduates

Total in 2014

Level of Education in 2013

Pre University

Diploma Graduates

University Graduates

Post Graduates

Total in 2013

Telkom
Group

5,995

5,184

11,769

2,336

(%)

23.7

20.5

46.5

9.2

5,289

4,093

6,159

1,738

706

1,091

5,610

598

17,279

8,005

25,284

100.0

5,632

4,260

6,262

1,727

17,881

665

974

6,297

5,234

5,002

11,264

489

2,216

25.2

20.9

45.0

8.9

7,130

25,011

100.0

Pre University

Diploma Graduates

University Graduates

Post Graduates

161

2014 Annual Report PT Telkom Indonesia Tbk (Persero)In 2014, employees profile based on age is as follows. Employees over 45 years old were 13,740 employees while
the employees under 30 years were 2,643 employees and employees between 31-45 years were 8,901 employees.

Employee Profile by Age

Age Group

Age Group in 2014

<30

31 - 45

>45

Total in 2014

Age Group in 2013

<30

31 - 45

>45

Telkom

Subsidiaries

Telkom
Group

(%)

680

3,784

12,815

1,963

5,117

925

2,643

8,901

13,740

10.5

35.2

54.3

17,279

8,005

25,284

100.0

756

4,170

1,644

2,001

2,400

6,171

12,955

3,485

16,440

9.6

24.7

65.7

Total in 2013

17,881

7,130

25,011

100.0

162

Employee Profile by Gender

Gender Group

Gender Group in 2014

Male

Female

Total in 2014

Gender Group in 2013

Male

Female

Total in 2013

Telkom

Subsidiaries

Telkom
Group

(%)

14,091

3,188

5,824

2,181

19,915

5,369

78.8

21.2

17,279

8,005

25,284

100.0

14,662

5,204

19,866

3,219

17,881

1,926

7,130

5,145

79.4

20.6

25,011

100.0

Male

Female

163

2014 Annual Report PT Telkom Indonesia Tbk (Persero)HUMAN CAPITAL MANAGEMENT

We have completed the formulation of a Human Capital
Master Plan in order to optimize the potentials of human
capital within the Telkom Group. The Human Capital
Master Plan has been prepared as a comprehensive and
integrated formulation with reference to our long term
and annual strategic plan, as well as the business strategies
of each company within the Telkom Group. The formulation
of the Human Capital Master Plan is also based on an
accurate and measurable supply and demand analysis
using relevant reference data, particularly on productivity
ratios of a number of peer companies. Information
contained on Telkom Group Human Capital Master Plan
was as follows:
projections of Telkom Group human capital numbers,
calculated on the basis of the business portfolios for
the next five years;

projections of the composition of our human capital
with reference to job stream, education, age and
position; and

a workforce plan that contains annual human capital
planning for each company in the Telkom Group

Formulation of an integrated Human Capital Master Plan
helps the Company to accurately project the human
capital needs, in terms of both numbers and competencies;
develop staffing plan and employee career development
plan; and measure the human capital productivity.

Fulfillment of HC requirement and related infrastructure
is addressed with emphasis on the synergy and
optimization of internal resources existing within the
Telkom Group.

Our human capital management strategies emphasizes
on the harmonization of the number and competencies
of our workforce in line with our business portfolio that
has already more focused on TIMES. We are also striving
to improve synergy and efficiency among companies
within Telkom Group and continuously enforce
implementation of corporate values as implemented.
The effort is implemented by preparing a five year
employee allocation and workforce plan annually to
provide more accurate information to support the
company’s growth.

164

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESRecruitment
Our recruitment program has a strategic objective in
capturing best talents on workforce market, aiming not
only to prepare future Telkom leader succession but also
to strengthen our excellence in the business. The program
is prepared and carried out particularly throughout fresh
graduate recruitment to hire future leader potential
employee with international standard, as well as to recruit
professional with deeper skill. Series of tight selection
is performed to ensure suitability of the candidate’s
competency with the Company’s needs.

We implemented recruitment program by optimizing
internal resource through synergy between the Company
and subsidiaries including carrier days event, campus
recruitment event, sharing database management, sharing
infrastructure & facilities as well as other synergies based
on necessity.

As of December 31, 2014, we have hired 224 new
employees.

HC Competency Development
Competency Based Human Resources
Management (”CBHRM”)
We implemented human capital competency development
stated on Human Capital Human Capital Master Plan,
which is in line with implemented corporate business
strategy throughout CSS and Corporate Annual Message
(“CAM”). Further, the competency development strategy
is gradually translated by means of Learning Blueprint
Development of Curriculum (DACUM), Learning Road
Map, and Human Capital Development Plan (“HCD Plan”).
The HCD Plan is continuously revised annually to align
with our business dynamics.

Being consistent with prior initiatives taken in previous
years, we implement CBHRM approach on the management
of entire human capital system including employee
competency assessment. The assessment is performed
by referring to several competencies required on the
job as stated under Distinct Job Manual (DJM) for each
position. We also have competency list managed by the
Company under Competency Directory which is prepared
through competency model comprising of Mandatory
Competency (values), Generic Competency (Personal
Quality), and Specific Competency (Skill & Knowledge).
All of these three models are developed, adjusted and
refined to support fair and transparent employee
performance assessment process.

The concept of Telkom Group management is grounded
on 8S’s elements which are Spiritual, Style, Share values,
Strategy, Staff, Skill, System, Structure. “Spiritual” will
become a guidance for a “Leader” in exercising leadership,
other cultures and elements in the Company.

Employee competency development program is focused
on following aspects:
Culture development, focusing on core values
internalization and enforcement as the culture shaping
basis which are Solid, Speed, Smart or Telkom 3S.
Role skill Development, focusing on personal quality
development required by each preferred/defined
role category.

Competency development based on job demand.

Following the corporate business transformation which
focuses on TIMES business, HC competency development
may be conducted through series of training and
educational programs, either directly or indirectly related
with business and operational strategies. In preparing
2015 competition, we set up competency and skill
development programs toward digital company ear.
Besides hard skill (Telco 1.0), related with infrastructure,
soft skill (Telco 2.0) also needed which in relation with
product innovation business (service development,
partnership, software and design, customer experience
management, customer data, financial model), big data
related with utilization of data base linked to customer
behavior (psychology, statistic, math), digital (user
experience, user interface, design).

Employee Remuneration
Telkom offers competitive remuneration package based
on prevailing law and periodically benchmarking the
market price.

Objectives of Telkom Remuneration System comprises
of 4 (four) main pillars are:
a. To attract

Remuneration system of Telkom is designed and
developed particularly to attract potential and highly
qualified employee candidate, both fresh graduate
and professional staff which will be directly placed
on certain positions.

b. To retain

Remuneration system of Telkom is designed as a tool
to establish comfort working sphere that will retain
and enhance loyalty of high quality professional
employee.

165

2014 Annual Report PT Telkom Indonesia Tbk (Persero)c. To motivate

b. Benefit

Remuneration system of Telkom is designed as a
mean to raise motivation of each employee to always
improve personal quality and to become high
performed employee.

d. To support

Remuneration system of Telkom is designed to support
the management in pursuing the objectives,
performance target and corporate business strategy
comprehensively.

Based on objectives of remuneration distribution,
Remuneration system component in Telkom is divided
into 3 (three) major parts known as 3P Remuneration
System which are:

a. Pay for Person

A remuneration component to appraise individual
competency of each employee according to
competency profile required on chaired position and
working period. Pay for person shifting throughout
Remuneration Adjustment is determined based on
competency assessment result and also aligned with
the remuneration comparation condition.

b. Pay for Position

A remuneration component provided to appraise
policy, mastery and accountability required for certain
position. Shifting on pay for position through the
Remuneration Adjustment is determined by employee
position class as well as Job Characteristics and Unit
Function.

c. Pay for Performance

A remuneration component provided to appraise
employee performance in achieving target as
implemented on certain period. Process in determining
employee remuneration on pay for performance is
carried out by considering Individual Performance
Score and Unit Performance Score.

Based on type and nature of remuneration components,
Telkom Remuneration Structure comprises of 2 (two)
major components which are:
a. Compensation

The component consists of Monthly Salary, Holiday
Feast Allowance, Leaves Allowance and Income Tax
(PPh 21).

The component consists of Fixed Benefit and Variable
Benefit. These two sub-components are provided in
form of Cash Benefit and Non Cash Benefit.

For incentive distribution, the Company budgeted on
current year but the realization will be distributed on
next years after the publication of audited Financial
Statements and approved on the General Meetings of
Shareholders (GMS). The incentive distribution will only
be conducted if Net Income target is achieved.

Employee Reward
We annually grant several rewards to raise employee’s
working spirit to support achievement of business target,
corporate value, service quality to the customers and
employee performance.

IT based HC Services
IT based HC services which have been developed since
2009 are continuously optimized such as E-Learning,
Online Scholarship Registration, Online Individual Working
Target, Online Presence, Online Official Travel Order
Letter (SPPD), Online Leaves, Online Career, Competency
Assessment, Online Distinct Job Manual, Online SPT,
Retirement Application, Learning Card, ESOP Shares
Trading Application, Knowledge Management Application
(KAMPIUN) and Health Information Website.

Telkom also implements several IT applications such as
corporate business automation both in form of electronic
official note, virtual meeting, unified communication,
shared files, online survey, personal workbook and
intranet.

Moreover, to strengthen internal communication, which
is mainly related with HC policy, Human Capital
Management and employee helpdesk are provided and
accessible for the employee who wishes to acknowledge
other policies and information related with HC management
and development.

We also optimize employee media relation and HC service
center to ensure that several employee-related issues
will be handled and communicated effectively. Besides,
we also prepare phone line, personal service, email and
website that will facilitate communication between the
employees and HC Division.

166

a. Defined Benefit Pension Plan (PPMP)
Defined Benefit Pension Plan (“PPMP”) Pension calculation
for PPMP participant is based on working period, salary
level on the retirement period and is transferrable to
insured parties if respective employee passed away.
Telkom Pension Fund is in charge to manage this program
and primary source of the Pension Fund is acquired form
employees contribution and from the Company. Employees’
participation on this program is 18% from basic salary
(before March 2003, level of the employees contribution
is 8.4%) while the Company supports the rest of the
contribution. Monthly pension benefit for retired employees
are around Rp425,000 per months. Contribution of the
Company to the Pension Fund reached to Rp187 billion,
Rp186 billion and Rp nil billion each for years ended on
December 31, 2011, 2012 and 2013.

Telkomsel also held PPMP for its employees. Under this
program, employee reserves the rights on pension benefit
calculated based on latest basic or net salary received
and employee working period on PT Asuransi Jiwasraya
(Persero), which manages this program based on annual
insurance contract. Up to 2004, employee’s contribution
on this program was 5% from monthly paid salary while
Telkomsel pays rest of implemented contribution. Since
2005, contribution for the program is fully paid by
Telkomsel. Moreover, Telkomsel also provides reward
program for the employees with long working period in
form of cash reward or additional leaves. The reward is
provided for the employees with certain working period
or during the employment dismissal.

Infomedia also holds PPMP program for its employees.

167

2014 Annual Report PT Telkom Indonesia Tbk (Persero)b. Defined Contribution Pension Program (PPIP)
Telkom holds Defined Contribution Pension Program for
permanent employees recruited since July 1, 2002. The
PPIP is managed by Financial Institution Pension Fund
(DPLK), where the employees may choose over several
DPLK to perform this program. Annual contribution of
the Company on PPIP is determined based on certain
percentage from basic salary of participated employee,
which reached to Rp5 billion, Rp6 billion and Rp5 billion
for years ended on December 31, 2011, 2012 and 2013.

To establish more effective and competitive business
environment, we also have Advance Retirement Program
(“Pendi”). The program is implemented align with Human
Capital Master Plan implementation for 2014 – 2018
period which is estimated will reduce number of Telkom’s
employee to improve employee’s composition. The
program is offered voluntarily to the employee who is
considered has fulfilled certain requirement related with
education level, age, position and performance. Since
2002 to December 31, 2014, the Company has allocated
Rp7.3 trillion fund as a compensation for 14,195 employees
as the participation of this program

Health Service Program
Health service for employees and core families as
dependents were managed by Yakes. The health service
is expected to contribute in improving the Company’s
productivity. We hold medical check-up annual for the
employees with health status (stakes) as the result.

We have also issued healthy life perspective policy. The
health facility is also available for retired employees
including dependent family, through two following
scheme:
Employee was appointed as permanent employee
before November 1, 1995 and has working period for
more than 20 years is illegible to participate on health
service facility managed by Yakes Telkom; and
All other permanent employees are also illegible to
get health facility in form of insurance allowance.

Employees of subsidiaries entitle to a government-
sponsored health facility program, acknowledged as
BPJK.

Total budget allocated for employee insurance program
in recent 5 years is shown on below table:

Employee Health
Service Budget

2010 2011

2012 2013 2014

Total (Rp billion)

136

121

150

162

153

Industrial Relation Management
Pursuant to Presidential Decree No. 83/1998 on Ratification
of ILO Convention No.87 of 1948 on Freedom to Unite
and Protection on Rights to Establish Organization,
Telkom’s employee established “Telkom Workers Union”
or known as “SEKAR.” As of August 2014, SEKAR has
15,526 members from employees or 89.9% from total
Telkom’s employees.

In compliance with Law No.13/2003 on Employment and
Joint Labor Agreement (“PKB”) and Regulation of
Ministry of Workforce and Transmigration No.16/2011 on
Company Establishment and Regulation Authorization
as well as Preparation and Registration of Joint Labor
Agreement, SEKAR is authorized to represent employees
on PKB discussion with the Company’s management.

In 2014, PKB V is applied which had been authorized in
2014. The PKB is always be reviewed through Bipartite
Cooperation Institution (LKS). Several communications
conducted by the Company and workers union are as
follows:

Evaluating PKB Agreement.
Incidental Meeting, to discuss technical aspects

related with PKB realization.

Socialization in cooperation between management
and SEKAR related with PKB and other corporate
policies.

Industrial relation training for SEKAR’s committee.

As of November 2014, there were seven meetings held
between the Company and SEKAR to discuss various
issues related with the Company’s policy.

Telkomsel and Infomedia also have a workers union. The
workers union in Telkomsel, “SEPAKAT” or “Serikat
Pekerja Karyawan Telkomsel” consists of 3,723 employees
as members or 81.1% from total Telkomsel’s employees.

168

Employee’s extracurricular activity includes religious,
cultural and sport aspects. On religious aspect,
extracurricular activities held were namely Telkom
Bandung Raya Christmas Celebration, Telkom Bandung
Raya Easter Celebration, Book Review, Qoran Recital
Competition, Utsawa Dharma Gita (Hindu), Musabaqoh
Tilawatil Quran, Ramadhan Boarding School, and others.
On cultural sector, activities held were namely Gamelan
Art, Keroncong, Bakti Bagi Negeri, Photography (Photo
– 135), Toastmaster Club (Public Speaking & Leadership),
and others. For sport aspect, the activities held were
namely Tennis, Basket Ball, Cycling, Motor Cycle, Table
Tennis, Nature Adventure, Zumba, Yoga, Aerobic and
others.

million per employee who participated on the program.
In 2013, we spent Rp265.3 billion, or average budget per
employee of Rp10.6 million.

INFORMATION TECHNOLOGY
Information Technology has a vital role for the Company
in supporting the business process, both in front office
and back office. As an integrated part of all of organization
function, information technology division is managed
based on strategic plan translated into vision and mission.

Information technology management in Telkom is
grounded by firm vision, “To become an excellent IT
service & solution provider.” The vision illustrates that
Information Technology of Telkom serves as IT service
provider as core business of the Company towards a
reliable and superior business with an excellent utilization
through a structured and controlled process and innovation
environment.

HUMAN CAPITAL INVESTMENT
To implement training and education program in 2014,
the Company spent of Rp195 billion or average of Rp7.7

Further, the vision needs to be achieved by carrying
mission of “Nurturing digital culture in providing integrated,
effective, and efficient business solution as well as

169

2014 Annual Report PT Telkom Indonesia Tbk (Persero)competitive IT service innovation.” The mission determined
information technology management direction by growing
and implementing digital culture under following principles:

Information system solution as business enabler for

Telkom as an integrated solution.

Quality of Information Technology solution in Telkom
has to be created from effectiveness and productivity
of business process and the business supported.
Information technology management is directed
towards efficient and cost-effective management to
give optimum value to the Company.

Development of conducives environment to encourage
IT innovation to support Telkom business transformation.
Excellent IT solution creation to bring differentiation
and competitive value for Telkom’s initiative in winning
digital market competition.

IT Governance Structure
Information Technology management in Telkom Group,
which way too complex, requires a good and firm
governance. Information Technology governance in
Telkom Group is directed to provide operational and
business support by providing IT Shared Service developed
by optimizing existing resource. Below illustrated the
governance structure scheme:

OSS BSS Development
& Operation

r
e
t
n
e
C
s
e
c
i
v
r
e
S
d
e
r
a
h
S

ERP Development
& Operation

Data Center
Infrastructure &
Operation

Cloud Services

Data Analytics

IT Service
(Integration &
Solution)

Service Delivery
Platform

IT Operation
Outsourching

Office Operation
System

IT Shared
Services thru
Center of IT
Excellence

170

Information Technology in Telkom Group is managed by Personnel with competency and skill in line and according
to the Company’s business planning, development, operation and support. Several knowledge has to be equipped
by IT Telkom personnel, among others:

TM Forum Framework overview knowledge including business process, application and information.
ITIL Foundation
COBIT Foundation

Having those three knowledge, Telkom IT Personnel will have understanding and providing solution on the Company’s
business issue and demand. Further personnel’s knowledge and competency development will be aligned with
scope of duty and expertise hold. For the personnel certification requirement will be adjusted with Company/unit
necessity with adequate quantity level including Expert/Master/Career Certification, Specialized Certification, and
Fundamental/Basic Certification as illustrated on below scheme:

Expert/Master/Career Certification

TMForum
Career
Cert.

CISA,CISM
C GEIT
CRISC

Open Group
Cert.Architec
IT Specialist

Specialized Certification

CISSP
CSSLP

CDCE

ISO/IEC
Lead Auditor

CISA, CISM,
C3EIT, CRISC

Open Group
TOGAF Cert.

EC
Council

BCM
Institut

CDCS

ISO/IEC
Auditor

Vendor Prncipal
Specific Sertification

Master Level

Expert Level

Associate Level

Fundamental/Basic Certification

ITIL

Project
Management

COBIT
ISACA

Framework
TMForum

Enterprise
Solution
Architecture

Agile/SDLC

Data Center

I/S Security

BILLING, PAYMENT AND COLLECTION
We apply periodic billing system based on product
characteristic and customers segment. We provide range
of payment channels to support the telecommunication
service customers by cooperating with Collecting Agents
(“CA”), such as national commercial banks, regional
commercial banks, PT Pos Indonesia, employee
cooperatives, mini market and others. The payment can
be done in cash and non-cash method. Cash payment
can be performed through Telkom service payment
locket such as Plasa Telkom, Cooperatives, bank, Post
Office, Minimarket and other sub-CA lockets, meanwhile,
for non-cash payment is done through auto debit, credit
card, transfer to Telkom account (for corporate/OLO
subscribers), Authorized Teller Machine (“ATM”), mobile
banking, internet banking or source of fund (Mcash atau
Tcash).

Particularly for mobile service users, Telkomsel as one
of our subsidiaries has implemented collection system
based on Online Charging System (“OCS”) applied for
prepaid and postpaid products. This new system is
expected to improve quality of service to the customers
by giving an access to choose payment method and to
give a flexibility to Telkomsel to take regional/cluster
based pricing.

Previously, Telkomsel implemented periodic billing system
with centralized, accurate and standardized system in
each area. Subscribers of kartuHalo post-paid service
will receive billing statement delivered to the subscriber’s
domicile address every month with usage calculation
based on: (i) total usage minutes for mobile service; (ii)
value-added service charged by periodic usage cost;
and (iii) subscription fee for basic service and other
services. In July 2013, Telkomsel provides a support for
postpaid subscriber through e-billing statement where
the billing notification is sent via email.

171

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Telkomsel billing payment can be done through direct
payment at GraPARI Plasa outlet or ATM, cash payment
through bank teller, phone banking, internet banking,
mobile banking, credit card and auto debit. Telkomsel
also cooperates with CA, including National Commercial
Banks, Regional Banks and PT Pos Indonesia, which are
authorized to receive payment from KartuHalo subscribers.
Hence, the subscribers are also able to pay through
TCare web (https://my.telkomsel.com).

Customer Receivable Management
The Finance, Billing and Collection Center Unit (“FBCC”)
manage billing and payment of receivables of customers
who are grouped according to customer and product
segments service management concept, by applying
Telkom Revenue Management System (“TREMS”). The
application of TREMS has features that it:
allows customers to pay bills throughout the service

area.

receives both cash and non-cash payment.
receives Security Deposit (“SD”) from a customer
who plans to unsubscribe which is estimated based
on average, warm or pro-rata usages, the SD will be
recalculated in the next bill.

receives an advance as down payment which will be

stated in the next month’s billing statement.

facilitates partial payments from corporate customers.
facilitates payment by installments.
features Telkom Single Invoice (“TSI”) which combines
multiple invoices from multiple services into a single
billing statement, in addition to other various
comfortable payment transactions.

In a case a customer has not made payment until the
due date, the customer will be penalized according to
the type of products and services he/she uses. Sanctions
imposed may include the imposition of late fees, call
limitation and line disconnection as set out in the
Subscription Contract. We have applied Integrated
Dunning Management System (“IDMS”) designed to
provide initial billing information and reminding calls for
current, 1-month and 2-month overdue bills. IDMS is also
used for electronic billing statement (“eBS”) which is
sent to subscribers’ e-mail accounts. Invoices for corporate
and OLO customers are printed and sent by special
couriers.

Telkomsel has its own mechanism for receivable collection.
If a customer has not made payment until his/her bill’s
due date, Telkomsel will suspend the customer outgoing
calls. If such customer fails to make payments until the
second month after the due date, Telkomsel will disconnect

172

the customers’ line. In the mean time, Telkomsel will
keep seeking payment from such customer, including
in collaboration with debt-collecting agents.
A customer whose line has been disconnected, but
intends to continue subscribing to Telkomsel services
must first settle his/her overdue bill and fill out an
application for new services. Telkomsel does not charge
fees or impose interest on late payments.

SERVICE OVERVIEW
As a realization of Good Corporate Governance (“GCG”)
implementation for our customers and society, we
maintain communication with our customers. We believe
that efficient and proactive communication has an
important role for the Company’s business continuity,
and to assure above average quality standard.

Service to Customers
Service Level Guarantee (SLG) compliance survey is
carried out in several processes of delivery, assurance
& service billing. SLG which has been predetermined for
each product and customer segment covers new
installations service process, trouble handling and customer
complaint handling. After delivery & assurance process
done, a Post Delivery Survey (PDS) will be performed
as customer satisfaction survey towards quality of service
delivery.

Customer Protection
In 2014, we seek to implement various initiatives and
improvement in product safety management, complaint
service and after sales assurance to provide comfort
and consumer protection assurance, which covers
following activities:
Ensuring a new developed product will become the
right product as a well-received commercial product
in the market. We have implemented a standard
manual for innovation product incubation process
trough several phases which includes idea submission,
customer and idea validation, product validation,
business model validation, and market validation.
Holding a principle to ensure product and service
produced have high-quality and able to generate
optimum benefit and contribute to economic growth.
Always preserve ethical code in product sales (direct

sales), advertising and promotion activity.

Implementing ethical advertising practice by
concerning with advertising ethical code in Indonesia.
Ensuring that after sales product and service are

accessible by public.

Supporting fair competition principle and practice

implementation.

Giving compensation if the service does not comply

with required indicators.

Service Quality Assessment
Service quality assessment is performed through several
stages based on service process. In the interaction
process with distribution channel, mystery shopping
and mystery calling are done to ensure service standard
has been implemented consistently and with high quality.
Indicators as the assessment result took form as Service
Quality Index which is monthly monitored and evaluated.

By end-to-end, Customer Satisfaction and Loyalty Survey
(CSLS) is conducted annually. The indicators assessed
are Customer Satisfaction Index (CSI), Customer
Dissatisfaction Index (CDI) and Customer Loyalty Index
(CLI). These indicators are measured from customer
satisfaction on four pillars including product, price,
promotion and service.

Beside measurement on these indicators, an improvement
priority of service attributes in the four pillars that
effective evaluation and follow-up on service quality
and customer satisfaction improvement will be able to
be carried.

Service Quality Improvement Initiative
Service quality and customer satisfaction improvement
program consist of following initiatives:

Higher Speed Same Price (“HSSP”)
HSSP program is a customer retention program, with
the provision of a fixed price so that the customers gain
better experience experience as part of appreciation to
our loyal customers.

Indihome Suggested Package (ISP)
ISP Program is Indihome bundling package which offering
to our existing customers using “suggested package,”
which is Indihome package adjusted with each customers
specifically.

TAM – Tele Account Management
TAM is a customer management on retail segment.
Number of customers are managed under one agent to
deliver caring or selling for respective customers.

Telkom Membership
Telkom Membership is a membership card for our loyal
customer with various benefit and advantages. The
program is performed by inviting banking partner (Bank
Mandiri). Benefit and advantages for our customers are
including:
a. Offering Telkom billing payment with Mandiri Credit

Card.

b. Offering promotion package for cross-sel and product

upgrade.

c. Special sales promotion offer for Mandiri Credit Card

holder.

173

2014 Annual Report PT Telkom Indonesia Tbk (Persero)06 CORPORATE
GOVERNANCE

177 Concept and Foundation
177 Corporate Governance Awards
178 Rating and Assessment Of Corporate

Governance

178 Road Map and Strengthening of Corporate

Governance

180 Corporate Governance Framework
181 Corporate Governance Structure
237 Risk Management
260 Legal Matters
262 Acces and Transparation Information

268 Relationship with Stakeholders
269 Business Ethics and Corporate Culture
271 Whistleblowing System
273 Corporate Governance Socialization
275 Consistency in Implementing GCG
280 Summary of Significant Differences
Between Indonesian Corporate
Governance Practices and The NYSE’s
Corporate Governance Standards

CORPORATE GOVERNANCE
The year 2014 was a momentous year in relation to the results of tests of the Company’s Good
Corporate Governance (“GCG”) practices. In an annual evaluation by the Indonesian Institutes for
Corporate Governance (“IICG”), an independent corporate governance rating agency in Indonesia,
the Company was once again rated The Most Trusted Company in accordance with GCG assessment
year 2013/2014 theme of “Corporate Governance in the Learning Organization Perspective”.

In the “BUMN Bersih” evaluation programme conducted by the Development and Financial
Supervisory Agency (“BPKP”), Telkom also received a declaration of very satisfactory. The criterion
of “Bersih” which was used in the “BUMN Bersih” program includes the assessment of the good
corporate governance principles, namely: transparency, accountability, responsibility, independence
and fairness towards the Board of Directors and Board of Commissioners. Upon evaluation, Telkom
received a value of 8.3 (on a scale from 0 to10). The “BUMN Bersih” programmed has been applied
in the corporate governance of the Company.

The implementation of GCG will strengthen the corporate reputation as a healthy and competitive
Company as well as provide added value creation to the company (sustainable value creation)
by being sustainably ethically and dignified in the long term.

176

As our shares are listed and traded on the Indonesia
Stock Exchange (“BEI”) and New York Stock Exchange
(“NYSE”), apart from the implementation of the GCG,
the Company also has to comply with Indonesian laws
and regulations as well as the Code of Good Corporate
Governance issued by the Indonesian National Committee
on Governance (locally abbreviated as “KNKG”). In
addition, the Company has to comply with Sarbanes
Oxley Act (“SOA”) in 2002 and other SEC regulations.
Currently, there are two SOA regulations and provisions
that are relevant to the company. Firstly, section 404 of
the SOA stipulates that the management is responsible
for Internal Control Over Financial Reporting (“ICOFR”)

to ensure the reliability of financial reporting and the
preparation of financial statements. Secondly, section
302 of the SOA requires management to take responsibility
over the manufacture, maintenance and evaluation of
the effectiveness procedure to ensure that the information
contained in the report has been in conformity with the
provisions of the US Capital Market Law.

In 2014, the Company and the Group sharpened its GCG
practice to steamline with business demands and the
latest changes in the industries. Telkom Group GCG is
strengthened to create an ethical and dignified business
practices (GCG as ethics).

In implementing GCG, we seek to ensure that the company
is well managed. Currently, in addition to being able to
manage risk well, the Company is also able to respond
to the latest changes and capitalize on the change to
increase the Company’s capacity and value so as to
achieve the Company’s objectives and the sustainability
of the Company in the long term.

CORPORATE GOVERNANCE AWARDS
In 2014, the Company has gained a number of awards in the field of Corporate Governance. It depicts that the
implementation of corporate governance is heading towards Good Corporate Governance Excellence.

The list of awards received is as follow:
1. Indonesia Sustainability Reporting Awards (ISRA).
2. Finance Asia Best Managed Company in 2014, which consists of:

- Best Managed Companies,
- Best Corporate Governance,
- Best Investor Relations,
- Best CSR,
- Most Committed to a Strong Dividend Company Policy.

177

2014 Annual Report PT Telkom Indonesia Tbk (Persero)RATING AND ASSESSMENT OF
CORPORATE GOVERNANCE

The Company’s corporate governance performance is
monitored through an annual evaluation by the Indonesian
Institutes for Corporate Governance ("IICG"), an
independent corporate governance rating agency in
Indonesia. IICG routinely conducts research and rating
of Corporate Governance Perception Index ("CGPI") of
public companies, SOEs and other companies.

The process of assessment and ranking of CGPI consists
of four stages with different weighting for each stage:

1. Selfassessment stage, where the Company is asked
to fill in a questionnaire based on the GCG assessment
theme.

2. Document observation stage, where the Company
deliver policies, procedures and other evidence that
depicts the implementation of GCG in the Company.

ROAD MAP AND STRENGTHENING
OF CORPORATE GOVERNANCE

We continue sharpening our GCG implementation
primarily in relation to new initiatives to integrate the
management of Governance Risk and Compliance (GRC)
integrally through business performance management,
corporate governance, risk management, legal compliance
and social responsibility where they support each other
for the realization of the Company’s business growth
and sustainability.

The Company realizes that we must anticipate business
dynamics, and therefore we continue to explore and
design good governance initiatives to ensure the
sustainability of the organization. This is because we
believe that GCG is not a barrier but rather a way of
sustaining the Company’s growth performance. Our GCG
implementations have been recognized by both our
external appraisers and investors. We continually strive
to improve the policies and infrastructure that supports
GCG through new initiatives to strengthen governance
which we have grouped into three main pillars, namely:

1. Strengthening Governance Structure
Building governance initiatives to further strengthen the
effectiveness of the communication and relationships
between the Company’s organs to avoid potential agency
issues and to achieve effectiveness of the chemistry
between the different elements within the organization

178

3. Papers and presentations assessment stage, where
the Company writes a paper explaining the company’s
activities in implementing GCG assessment in
conformity with the assessment theme and presents
the paper to the jury.

4. Observation stage, where the board of Jury IICG
visits the Company to perform question and answer
session, observes and visits sites to review the
implementation of GCG certainty referring to the
selfassessment result, document observation and
papers.

From the results of the assessment and the ratings,
Telkom was once again accorded the best award as the
Most Trusted Company in accordance with 2013/2014
GCG assessment theme of “Corporate Governance in
Perspective Learning Organization”.

of our Company, while observing checks and balances.
This is characterized by the speed and accuracy of
decisionmaking, through evaluation and strengthening
of the BoD/BoC/Audit Charter, empowering committees,
implementing “six eyes principles” to ensure the
accountability of business initiatives, implementation
notarized power and others initiatives.

2. Strengthening Governance Process
Building governance initiatives to further strengthen
corporate governance to be more effective and efficient
through: implementing enterprise risk management and
integrity pacts within the scope of the business group,
strengthening the IT governance, and remediating internal
controls to ensure the reliability of financial reports,
strengthening leadership system, and others initiatives.

3. Strengthening Culture
Instilling noble values through the implementation of
our corporate culture and business ethics as a role model
of doing business and having honorable employees with
moral and integrity through the segregation of duties
(“SOD”) in business processes, role modeling leadership,
ensuring business ethics and trustworthy business
practices / running prudential practices, reinforcing
the corporate values, and others initiatives.

PERIOD

ACTIVITY

• Strengthening governance departments through a notarized power policy and strengthening the

2010

Company’s culture of The Telkom Way.

• Strengthening governance processes through the management of risk as an inherent culture.

2011

• Strengthening governance organs through initiatives to build the Telkom Group GCG by determination

of Guidance of Telkom Group as set out in the Company's policy No.PD.602 / 2011.

• Strengthening the governance process to ensure that risk management and compliance runs effectively

in the Company

• Strengthening governance organs through empowering the Telkom Group GCG, designing checklists of

GCG implementation and self assessment guidelines for GCG of its subsidiaries, and the determination

of the Board of Directors of subsidiaries as members of executive board of Telkom Group and Vice

2012

President of Telkom in line with his/her tasks and responsibilities as Group Head of Telkom Group as set

out in the Policy Office Organization No.PD.202 / 2012.

• Strengthening the governance process to make sure that business processes is aligned with business

and organizational transformations.

• Strengthening governance departments through the development, implementation of GCG involving
business group through the preparation of the Executive Board in framework of conditioning the company's

ability to execute a strategic step in managing portfolios, which is supported by parenting mechanism

2013

that is more appropriate with the demands of the business ecosystem.

• Continue strengthening the governance process to ensure that business processes are in conformity

with business and organizational transformations of "New Telkom" in accordance with the Company's

Office Organization Policy of the Telkom Group No.202.11 / 2013.

• Strengthening governance organs through GCG for implementation of a holding organization which
includes subsidiaries through the implementation of the Executive Board mechanism and improved

application.

2014

• Strengthening governance processes through the implementation of disciplined process based on ISO

/ ISO certification for new organization of "New Telkom".

• Implementing COSO 2013 Framework as the basis for the implementation of Internal Control and

Integrated Audit.

• Sharpening of Business Ethics policies, including Telkom Group.

• Launching of Cultural Year.

• Strengthening governance organs through the GCG implementation assessment for subsidiaries.

• Strengthening the governance process to ensure certification / surveillance of ISO.

• Implementing "Governance Risk and Compliance (GRC)".

• Strengthening Mechanism for the Executive Board.

2015

2016

179

2014 Annual Report PT Telkom Indonesia Tbk (Persero)CORPORATE GOVERNANCE FRAMEWORK
The company’s commitment to implementing GCG is based on the Decision of the Board of Directors on GCG
guidance No.29/2007 and the Group GCG Guidance No.602/2011. The Board Directors decision contains several
GCG implementation systems to ensure that GCG has been implemented both for internal and external transaction
ethically and in accordance with sound and good corporate governance practices.

The GCG implementation systems encompasses: business ethics, policies and procedures, risk management, internal
control and supervision, leadership, management of tasks and responsibilities, management empowerment and
employee’s competency, performance evaluation, and rewards as well as recognition.

Telkom developed the GCG framework and road map to ensure that the implementation of GCGis organized on the
basis of mutual understanding between the management and all departments of the Company. The GCG framework
also internalises four (4) main pillars which includes:

Implementation of business ethics covering the Company’s cultural values, which is disseminated to employees
each year, with surveys testing the employees’ understanding;

2. Management of effective operational policies and procedures which are in conformity with the demands of the

business, as guidelines in managing the Company and guidance for employees’ work;

3. Implementation of an integrated risk management based on the COSO Enterprise Risk Management; and
4. Internal controls and implementation of internal control based on the COSO Internal Control especially internal

control over financial reporting.

To achieve these, Telkom has formulated Telkom GCG system as follows:

Business
Performance

Corporate
Governance

Risk

Legal
Compliance

Social
Responsibility

BoD
Charter

BoC
Charter

Audit
Charter

Audit
Independent

Corporate Governance Structure

Executive
Committeee

Six Eyes
Principles

Notarial
Proxy

Audit Committee &
KEMPR

ERM

PMS

IT
Governance

Internal
Control
& CSA

Early
Warning

Note Regularisasi
& Discrepancies
Report

Anti Fraud
Program

Whistle
blowing
System

Governance

Integrity
Pact

SOD

Job
Manual

Procedure
& Policy

Leadership
System

Competences
Development

Rewards &
Consequences

Legal &
Compliance

Governance Process

Organizational
Sustainability

Prudential

Communication

Culture

Role
Modelling

Business
Ethics

Core Values

Organizational Beliefs

180

GENERAL MEETING OF
SHAREHOLDERS

We continue improving the implementation of GCG in
terms of its structure and procedure, and ensuring the
application of the principles of transparency, accountability,
responsibility, independence and fairness. This is aimed
at mitigating the potential risk of conflict of interest at
all levels including the Board of Commissioners, Board
of Directors and management.

Internally, the GCG structure and procedure are set in
the Decision of the Board of Directors on GCG Management
Guidelines No.29/2007 and No.602/2011, which state
that every transaction made both internally and externally
has been in accordance with sound and good corporate
governance practices.

Every year, we evaluate the effectiveness of any
implementation of policies. At the same time, we monitor
the implementation of the GCG to ensure they are
conducted independently and thoroughly to achieve
efficiency targets across organizational lines while at
the same time maintaining the Company’s integrity in
the eyes of the authorities and the public at large.
.

The General Meeting of Shareholders, both the Annual
General Meeting (AGM) and Extraordinary General
Meeting (EGM), are institutions with highest authority
in the organization of corporate governance. They are
also major fora where shareholders exercise their rights
and authorities toward the management of the company.

AGM shall be held once a year while the EGM can be
held at any time deemed necessary. In exercising its
authority, the AGM must consider the interests of the
development and health of the Company, the interests
of the stakeholders as well as the rights of the Company.

1. Telkom’s Shareholders
Our shareholders can be classified into two (2) types,
namely one share of Series A Dwiwarna (as the controlling
shareholder) and 100,799,996,400 Shares Series B. For
more details on the composition diagram of our
shareholders, see “General Information on Telkom Indonesia
– Securities Information - Composition Shareholders”.

181

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
2. Rights and Responsibilities of
Shareholders at the General Meeting of
Shareholders
In the AGM and EGM shareholders are entitled to receive
the same treatment and balanced position, especially
in voicing their opinions and contributing to important
and strategic decision-making processes relating to the:
1. Appointment and dismissal of the Board of
Commissioners and Board of Directors of Telkom;
2. Determination on the remuneration and allowances
of the Board of Commissioners and Board of Directors
of Telkom;

3. Assessment the Company’s performance for the

fiscal year reviewed;

4. Determination and approval of the use of the Company’s

profits including dividends;

5. Amendments to the Articles of Association; and
6. Determination of entire corporate actions requiring
the GMS decision as stated in the articles of association
of the Company.

The AGM also has the authority to certify the Financial
Statements and the Annual Report of the Company. The
Government of the Republic of Indonesia as a controlling
shareholder, which is manifested in its possession of
Series A Dwiwarna, must pay attention to their
responsibilities when using their right to influence the
company’s management decisions, both when using the
voting rights or in other matters. The government has
special rights that can be used when giving approval to
the plan of mergers, acquisitions, divestitures or liquidation
through the AGM and EGM.

3. Procedures for the Implementation of
the Shareholders General Meeting
The mechanism of voting right by the shareholders in
the AGM or EGM has been arranged in such away that
shareholders can use their voting rights directly or
through proxies. As stated in the Limited Liability Company
Law and the Company’s Articles of Association, GMS
consists of Annual General Meeting that must be held
at the longest of six months after the end of the fiscal
year.

During the Annual General Meeting, the Board of
Commissioners and members of the Board of Directors
should present the following things:
1. Annual Report Book.
2. Recommendations on the utilization of net profit as

long as the company netted a profit.

3. Recommendations on public accounting firm to audit
the Company’s financial statements for the current
financial year, based on the advice of the Board of
Commissioners, or transfer this authority to appoint
the Board of Commissioners.

4. Other matters that require shareholder approval at
the Shareholders General Meeting in the interests of
the Company without prejudice to the provisions of
the Articles of Association.

As a State-Owned Enterprise, Telkom is subject to Article
23 of Law No.19/2003 on State Owned Enterprises and
the Law No.40/2007 on Limited Liability Company,
which requires Board of Commissioners to submit an
annual report to shareholders in a general meeting for
approval at the latest of five months after the end of the
recent fiscal year.

182

Sending announcement letter to Financial Services Authority

Advertising the notification of the planned Shareholders General Meeting

Activities

Deadline of filing proposed agenda of Shareholders General Meeting by holders of at least 5% share.

Delivery of meeting materials and proxy to BNY Mellon

Recording Date of those who are entitled to attend Shareholders General Meeting

Advertisement of invitation of Shareholders General Meeting

Shareholders General Meeting

Advertisement of the results of Shareholders General Meeting

Time

H - 44

H - 37

H - 29

H – 24

H – 23

H – 22

H + 2

The Company shall make an announcement/notification 14 days prior to the invitation/call on the holding of the
AGM.
The Company invites/calls on shareholders by registered letter or advertisement in newspapers published at
least 21 days prior to the date of GMS, out of dates of spreading invitation and meeting .

- As a public company, in order to ensure the coherence of the information about the plan or implementation of
the GMS, and in accordance with the OJK Regulation No.32 / POJK.04 / 2014, the company must provide details
of the plan to the OJK at least seven days before the invitations.

- After holding the Shareholders General Meeting, the company must report to the OJK no later than two working

days and announced the decision of the AGM in at least one nationally circulated Indonesian newspapers.

- All issued shares have one vote unless stated otherwise in the Articles of Association of the Company.

183

2014 Annual Report PT Telkom Indonesia Tbk (Persero)In 2014, we have both heldand Extraordinary General Meeting once with a detailed description as follows:

GMS

Schedule

Venues

Agenda

Newspapers

AGM

April 4, 2014 Ballroom 2
Hotel Mulia
Senayan
Jl. Asia Afrika
Senayan South
Jakarta 10270

EGM

December
19, 2014

Ballroom III, The
Ritz Carlton
Jakarta Pacific
Place Lt. 4
Jl. Jenderal
Sudirman Kav
52-53
Sudirman
Central Business
District South
Jakarta 12190

1. Approval of the Annual Report for

Fiscal Year 2013, including the Report
of Supervisory Board of
Commissioners.

2. Approval of the Financial Statements of
the Company and the Annual Report of
the Partnership and Community
Development Program for Fiscal Year
2013, as well as the Responsibility
Liberation of Board of Directors and
Board of Commissioners.

3. Determination on the utilization of Net

Income for the Fiscal Year 2013.

4. Determination of remuneration for the

members of the Board of Directors and
Board of Commissioners for Fiscal Year
2014.

5. Appointment of public accounting firm
to examine the Company's Financial
Statements for Fiscal Year 2014,
including Audit Internal Control over
Financial Reporting and the
appointment of Public Accountant to
examine the financial statements of the
Partnership and Community
Development for the Fiscal Year 2014.

6. Changes in Composition of the

Company’s Boards of Director.

Change of the Company’s management
composition

Advertisement of
Announcements in
newspapers of Investor
Daily, Indonesia Bisnis and
The Jakarta Post dated
March 5, 2014.

Advertisement of Invitation
in Investor Daily
newspaper, Binis Indonesia
and The Jakarta Post on
March 20, 2014.

Advertisement of result of
AGM in Investor Daily,
Bisnis Indonesia and The
Jakarta Post on April 8,
2014.

Advertisement of
Announcements in Investor
Daily, Indonesia Bisnis and
The Jakarta Post on
November 19, 2014.

Advertisement of
Invitation on Investor Daily,
Binis Indonesia and The
Jakarta Post dated
December 4, 2014.

Advertisements of result of
the EGM in Investor Daily,
Bisnis Indonesia and The
Jakarta Post on December
23, 2014.

184

Agenda

Agenda 1

Decision

Approval of the Company's Annual Report with the content having been delivered at the
Meeting by the Board of Directors on the situation and the Company’s course of the
Financial Year 2013, including the Report of the Supervisory Board of Commissioners for
the Financial Year 2013.

Agenda 2

1. To ratify:

a. The Company’s Consolidated Financial Statements for the Fiscal Year 2013, which has
been audited by Purwantono, Suherman & Surja (a member firm of Ernst & Young
Global Limited) in the report number: RPC- 4912 / PSS / 2014 dated February 28, 2014
stating that the financial statements are presented fairly, in all material respects, and
that the consolidated financial position of the Company (Persero) PT Telekomunikasi
Indonesia Tbk and its subsidiaries dated December 31, 2013 and its financial performance
and cash flows for the year then ended are in accordance with Accounting Standards
Finance in Indonesia;

b. Annual Report of the Partnership and Community Development Program for the Fiscal
Year 2013, formulated on the base of the rules of Ministry of State Enterprises which
is a comprehensive basis of accounting other than generally accepted accounting
principles in Indonesia and has been audited by Purwantono, Suherman & Surja (a
member firm of Ernst & Young Global Limited) in the report No. RPC-4744 / PSS /
2014 dated February 14, 2014 stating that the financial statements are presented fairly,
in all material respects, the financial position of Centre Management Partnership
Program and Community Development Program (Community Development Center )
Limited Liability Company (Persero) PT Telekomunikasi Indonesia Tbk and its subsidiaries
dated December 31, 2013 as well as the activities and cash flows for the year then
ended on that date are in accordance with Financial Accounting Standards of Entities
Without Public Accountability.

2. Subsequently, with the approval of the Company's Annual Report for Fiscal Year 2013 and
the ratification of the Company's Financial Statements for Fiscal Year 2013 and the Annual
Report of the Partnership and Community Development Program for the Fiscal Year 2013,
the Meeting releases and fully discharges from any responsibility (volledig acquit et
decharge) the members of the Company's Board of Directors on their management of
the Company and members of the Board of Commissioners on their supervision of the
Company, as well as on the management and overseeing of the Partnership and Community
Development Program which has been implemented for FY 2013, as long as the actions
are not a criminal act or have not violated the provisions and procedures of the existing
law and is recorded in the Company's Financial Statements for Fiscal Year 2013 and the
Annual Report of the Partnership and Community Development Program for the Fiscal
Year 2013.

Agenda 3

1. To approve the determination of using the Company's net profit for fiscal year 2013 totaling

Rp14,204,705,801,896 to the following designations:
a. Cash Dividend by 55% of the net profit or a total of Rp7,812,588,191,043, or a minimum
of Rp80.458 per share, based on the number of issued shares (excluding shares bought
back) by the Company as of the date of the Meeting;

b. Special Cash Dividend by 15% of net income or a total of Rp2,130,705,870,284, or a
minimum of Rp21.943 per share based on the number of issued shares (excluding
shares bought back) by the Company as of the date of the Meeting;

c. Recorded as retained earnings at the amount of Rp4,261,411,740,569, which will be

used to finance the Company's business development.

2. To approve the distribution of dividends and Special Cash Dividend for Fiscal Year 2013

which is carried out with the following conditions:
a. Shareholders whose names are recorded in the Register of Shareholders of the Company
as of May 2, 2014 until 16:00 pm are entitled to receive Cash Dividend and Special
Cash Dividend;

b. Dividend and Special Cash Dividend will be paid in a lump sum on May 19, 2014.

3. The Board of Directors is authorized to further regulate the procedure of the dividend
distribution and to announce the above in accordance with the relevant regulations on
the stock exchanges where the shares of the Company are listed.

185

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Agenda

Agenda 4

Decision

Delegating the authority and power to the Board of Commissioners with the prior approval
of Shareholders of Series A Dwiwarna cq Deputy Strategic Industrial and Manufacturing, to
determine the amount of the bonus given to members of the Board of Directors and Board
of Commissioners for the Fiscal Year 2013 and salary/honorarium, facilities, and allowance
and other benefits for members of the Board of Directors and Board of Commissioners for
2014.

Agenda 5

1. Re-appointing Purwantono, Suherman & Surja (a member firm of Ernst & Young Global

Limited) to perform an integrated audit for Fiscal Year 2014, which covers the Company’s
Consolidated Financial Statements and the Company's Audit and Audit of Internal
Control over Financial Reporting and the use of the Fund and the Partnership Program
Community Development Fiscal Year 2014.

2. Delegating authority to the Board of Commissioners to determine the amount of audit

fee and the terms of appointment of the Public Accounting Firm.

3. Delegating authority to the Board of Commissioners with the prior approval of

shareholders of Series A Dwiwarna to appoint the replacement for the Public Accounting
Office and to establish the terms and conditions of the appointment, if the appointed
Public Accounting Firm is unable to perform or continue his duties for any reason,
including not being able to reach an agreement on the amount of audit fee.

Agenda 6

1. To approve the resignation of Mr. Gatot Trihargo as the Company’s Commissioner since

the end of the Meeting, with thanks for his contributions to the Company thus far.

2. To approve the appointment of Mr. Imam Apriyanto Putro as Commissioner to replace

Mr. Gatot Trihargo with the term of office commencing from the close of the meeting and
ending at the close of the fifth Annual General Meeting after his appointment, namely at
the close of the company’s Annual General Meeting to be held in 2019.

3. The full composition of the Members of the Board of Commissioners since the close of

the Meeting is as follow:
Board Of Commissioners
Mr. Jusman Syafii Djamal as the President Commissioner;
Mr. Parikshit Suprapto as Commissioner;
Mr. Hadiyanto as Commissioner;
Mr. Virano Nasution as Independent Commissioner;
Mr. Johnny Swandi Sjam as Independent Commissioner;
Mr. Imam Apriyanto Putro as Commissioner;

for the period until the close of the Company's Annual General Meeting to be held in
2017 except for Mr. Jusman Syafii Djamal and Mr. Johnny Swandi Sjam whose terms of
office will end at the close of the Company's Annual General Meeting to be held in 2015;
and for Mr. Imam Apriyanto Putro whose term of office will end at the close of the
Company's Annual General Meeting to be held in 2019.

4. Authorising the Board of Directors with a substitution right to restate the decision of the
meeting unto Notarial Deed and subsequently notify any changes in the composition of
the Board of Commissioners to the Minister of Justice and Human Rights and register the
decision in the Company Register in accordance with the existing legislation.

186

Agenda

Agenda 1

Decision

We hereby notify the Company's shareholders of the Company (Persero) PT Telekomunikasi Indonesia
Tbk., abbreviated Telkom (subsequently called the Company), that the Extraordinary General Meeting
of Shareholders (or "Meeting") which was held on 19 December 2014 in Jakarta, with the sole agenda
of changes to the Company's Management, has approved and decided:

Meeting with majority vote, or 71.865% of the total votes, cast at the Meeting has approved the
following:

1. Approves the resignation of Mr. Arief Yahya as the President Director of the Company who has

served since October 27, 2014 with thanks for his contribution of service and thought given during
his tenure as a Director.

2. Dismiss with honor:

a. Mr. Ririek Adriansyah as Director;
b. Mr. Rizkan Chandra as Director;
c. Mr. Sukardi Silalahi as Director
d. Mr. Priyantono Rudito as Director;
e. Jusman Syafii Djamal as Commissioner

which became effective as of the close of the meeting with thanks for their contribution of service
and thought given during their tenures.

3. a. To appoint:

i. Mr. Alex J. Sinaga as the President Director;
ii. Mr. Heri Sunaryadi as Director;
iii. Mr. Abdus Somad Arief as Director;
iv. Mr. Herdy Rosadi Harman as Director;
v. Mr. Dian Rachmawan as Director;
vi. Mrs. Hendri Saparini as President;
vii. Mr. Dolfie Othniel Fredric Palit as Commissioner

the tenure of Director, Director, Commissioner and the Commissioner effective from the close of
the Meeting until the fifth Annual General Meeting since these appointments without prejudice in
relation to the right of the GMS to dismiss at any time.

b. Change of position of Mr. Parikesit Suprapto from Commissioner to Independent Commissioner with

the term in office continuing from his previous remaining term.

187

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Agenda

Decision

Thus the structure of the Members of Directors and Board of Commissioners at the
cloe of the Meeting is as follow:

BOARD OF DIRECTORS:
Mr. Alex J. Sinaga as the President Director;
Mr. Indra Utoyo as Director;
Mr. Muhammad Awaluddin as Director;
Mr. Honesti Basyir as Director;
Mr. Heri Sunaryadi as Director;
Mr. Abdus Somad Arief as Director;
Mr. Herdy Rosadi Harman as Director;
Mr. Dian Rachmawan as Director.

BOARD OF COMMISSIONERS:
Mrs. Hendri Saparini as President Commissioner;
Mr. Imam Apriyanto Putro as Commissioner;
Mr. Hadiyanto as Commissioner;
Mr. Parikesit Suprapto as Independent Commissioner;
Mr. Dolfie Othniel Fredric Palit as Commissioner
Mr. Johnny Swandi Sjam as Independent Commissioner;
Mr. Virano G. Nasution as Independent Commissioner;

with tenures:
DIRECTORS:
- Mr. Indra Utoyo; Mr. Muhammad Awaluddin; Mr. Honesti Basyir until the close of the Company's

Annual General Meeting to be held in 2017;

- Mr. Alex J. Sinaga; Mr. Heri Sunaryadi; Mr. Abdus Somad Arief; Mr. Herdy Rosadi Harman; Mr. Dian

Rachmawan until the close of the Company's Annual General Meeting to be held in 2019.

BOARD OF COMMISSIONERS:
- Mr. Johnny Swandi Sjam until the close of the Company's Annual General Meeting to be held in

2015;

- Mr. Hadiyanto; Mr. Parikesit Suprapto; Mr. Virano G Nasution until the close of the Company's

Annual General Meeting to be held in 2017;

- Mr. Imam Apriyanto Putro; Mrs. Hendri Saparini; Mr. Dolfie Othniel Fredric Palit until the close of the

Company's Annual General Meeting to be held in 2019.

4. Authorise the Board of Directors with the substitution right to restate the decision of the meeting
unto the Notarial Deed and subsequently to notify the change of the Company's Board to the
Minister of Justice and Human Rights and to register the decision in the Register of Companies as
well as to perform other necessary actions in accordance with the existing laws and regulations.

Controlling Shareholder Information
The controlling shareholder of Telkom Indonesia is the government of Republic of Indonesia with a stake of 52.56%,
while the remaining shares are owned by the public which amount to 47.44%.

188

Criteria and Provision of Board of
Commissioners
The criteria for the Board of Commissioners is determined
by Series A Shareholder, specifically for Independent
Commissioner which amounts to at least 30% of all the
members of the Board Commissioners.

The Board of Commissioners Charter
(Board Manual)
According to the Charter of the Board of Commissioners
No.16/KEP/DK/2013 on December 17, 2013, the Board
of Commissioners adopts the following code of conduct
1. The Board of Commissioners is an assembly and each
member of the Board of Commissioners is not
permitted to act alone except if it is based on the
decision of the Board of Commissioners.

2. Appointment as a member of the Board of
Commissioners is open to any individual with
Indonesian nationality who is legally competent,
except individual who has, within five (5) years prior
to the appointment (a) been declared bankrupt, (b)
is a member of the board of directors or members
of the Board of Commissioners, or supervisory board
who is found guilty for causing a company or public
Company to be declared bankrupt, and (c) is convicted
of a criminal offense for causing financial losses to
the country and/ or state-owned companies and/
or the financial sector.

3. Members of the Board of Commissioners are appointed
from Indonesian citizens who meet the requirements
in accordance with the legislation. The members of
the Board of Commissioners and the relationship
between the members of the Board of Commissioners
andthe members of the Board of Directors should
not be related by blood up to three degrees, either
vertically or horizontally, or as a result of marriage
(or by marriage).

4. The term of office of the members of the Board of
Commissioners is for a period of five (5) years from
the date of his/ her appointment in an AGM until the
close of the fifth AGM after their appointment.
5. The provisions concerning the term of office of the
members of the Board of Commissioners does not
diminish the right of the AGMS to dismiss the members

of the Board of Commissioners at any time before
his term ends. Termination can be done if the members
of the Board of Commissioners, among others: (a)
can not perform their duties properly, (b) does not
implement provisions of law or the Articles of
Association, or (c) engaged in acts detrimental to
the Company or the State.

6. After the term of office expire, the member of the
Board of Commissioners may be reappointed for
only a further term of office in an AGM.

7. Members of the Board of Commissioners may not
hold another position as: (a) members of the Board
of Directors on the state and regional enterprises
and private enterprises, (b) other positions in
accordance with the provisions of law, political party
officials and / or candidates/ legislative and or
candidates for regional head / deputy head of the
region, and or (c) other positions that may give rise
to a conflict of interest.

8. A member of the Board of Commissioners is entitled
to resign by giving written notification of the intention
of the Company with a copy to the holders of Series
A Dwiwarna, BOC and other members of the Board
of Directors no later than sixty (60) days before the
date of his resignation. If the request does not specify
a resignation effective date of resignation and no
decision on the resignation of the General Meeting,
the members of the Board of Commissioners is
effectively stopped since the passage of the sixty
(60) days from the date of receiving the letter of
resignation.

9. Position of the Board of Commissioners shall terminate
if: (a) the term of office expires, (b) resigns in accordance
with the provisions of the Articles of Association, (c)
no longer meets the requirements of laws and
regulations, (d) died, and (e) dismissed by GMS.

Duties of the Board of Commissioners
1. Oversee the Company’s policies made by the Board
of Directors and provide the Board of Directors with
advice on, among others, the Company’s development
plan, the Company’s annual budget and work plan,
the implementation of the provisions of the Articles
of Association of the Company and AGM decisions
and legislation with regard to the interests of the
Company.

2. Performe duties, authorities and responsibilities in
accordance with the Articles of Association of the
Company and AGM decision.

3. Research and review the Annual Report prepared by
the Board of Directors as well as sign the Annual
Report.

189

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Authorities of Board of Commissioners
1. Give opinion and suggestion to AGM regarding periodic reports and other reports of the Board of Directors.
2. Oversee the implementation of the Company’s work plan and budget (including the investment budget) for the

previous financial year and submit the results of the assessment and opinion to the AGM.

3. Follow the Company’s development activities and in the event that the Company show withdrawal symptoms,
immediately ask the Board of Directors to announce to shareholders and provide advice on corrective measures
that should be taken.

4. Provide opinion and suggestion to the AGM on any other issues deemed important to the management of the

Company.

5. Propose to the AGM, through the Board of Directors, on the appointment of a public accounting firm to audit
the Company’s Financial Statements, including the audit of internal control over financial reporting, according
to existing regulations from the capital market authority in which the Company’s shares are registered and / or
recorded.

6. Provide a report on the monitoring task has been carried out during the past financial year to the GMS.
7. Perform other supervisory duties which is prescribed in the AGM.

Board of Commissioners Composition and Term of Office
At the AGM held on April 4, 2014, shareholders approved the resignation of Gatot Trihargo from his position as
commissioner which coincided with the end of this AGM. In the AGM, shareholders approved the appointment of
Imam Apriyanto Putro as Commissioner to replace Gatot Trihargo with the term of office commencing from the end
of this AGM until the end of the fifth AGM to be held in 2019. Thus, the new composition of the Board of Commissioners
is as follow:

Board of Commissioners

Position

Term of Office Since

Jusman Syafii Djamal

President Commissioner

Parikesit Suprapto

Hadiyanto

Imam Apriyanto Putro

Johnny Swandi Sjam

Virano Gazi Nasution

Commissioner

Independen Commissioner

Independent Commissioner

2011

2012

2014

2011

2012

The composition of the Board of Commissioners again experienced a change in accordance with the results of the
EGM held on December 19, 2014. Thus, the composition of the Board of Commissioners is as follows:

Board of Commissioners

Position

Term of Office Since

Hendri Saparini

President Commissioner

Dolfie Othniel Fredric Palit

Imam Apriyanto Putro

Hadiyanto

Parikesit Suprapto

Johnny Swandi Sjam

Virano Gazi Nasution

Commissioner

Independent Commissioner

2014

2012

2011

2012

The brief profiles of the members of the Board of Commissioner are presented in the section General Information
Telkom Indonesia - Indonesian Telkom Management - Board of Commissioners.

190

The Board of Commissioners’ Fit and Proper Test
The Fit and proper test (“UKK”) of the Board of Commissioners is conducted based on the Minister of SOE Regulation
No. PER-19/MBU/10/2014 concerning Requirements and Procedures for Appointment and Dismissal of Members of
the Board of Commissioners and the Board of Trustees of State Owned Enterprises and its amendment, Minister
Regulation No.PER-21/MBU/11/2014 on the Amendment of Minister Regulation No.PER-19/MBU/10/2014, relating to
the Requirements and Procedures for Appointment and Dismissal of Members of the Board of Commissioners and
Board of Trustees of State Owned Enterprises.

In conducting the assessment of the candidate Commissioner, the Minister establishes an assessment team comprising
of:
1. Deputy Technical (as the team chairman);
2. Secretary of the Ministry of SOEs;
3. Deputy of Business Infrastructure; and
4. Two (2) Special Staff of the Minister of SOEs.

Independence, Dual Posts and Share Ownership

Independence of the Board of Commissioners
Membership of the Board of Commissioners has complied with the laws and legislation as well as regulations in the
capital market that relate to the independence of members of the Board of Commissioners and the number of
Independent Commissioner, to maintain the independence of the supervisory functions of the Board of Commissioners
and ensure the implementation of the mechanism of checks and balances. There is a restriction on the relationship
between members of the Board of Commissioners, and the relationship between the members of the Board of
Commissioners and the Board of Directors members, whereby they must not be related by blood up to the third
degree, either vertically or horizontally or relationship by marriage. The number of Independent Commissioner is
three (3) people, or 43% of the total members of the Board of Commissioners.

This number has also exceeded the 30% minimum threshold of the number of independent directors established
by the Indonesia Stock Exchange. The main task of the Independent Commissioner, in addition to supervising, is
also to uphold the interests of minority shareholders.

Dual Post Of Board of Commissioner

Name

Dual Posts in Board Of
Commissioner

Position at Other
Institution/Company

Name of Other Institution/
Company

Hendri Saparini

President Commissioner

Executive Director

Center of Reform on Economics
(CORE Indonesia)

Hadiyanto

Commissioner

Director General of State
Wealth

Ministry of Finance

Dolfie Othniel Fredric Palit

Commissioner

Not Dual Posts

Nil

Imam Apriyanto Putro

Commissioner

Secretary

Ministry of SOE

Parikesit Suprapto

Independent Commissioner Commissioner

Kliring Penjamin Efek Indonesia
(KPEI)

Johnny Swandi Sjam

Independent Commissioner Not Dual Posts

Virano Gazi Nasution

Independent Commissioner Not Dual Post

Nil

Shareholdings of the Board of Commissioners
The entire members of the Board of Commissioners do not own shares of Telkom and other companies.

191

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Implementation of Corporate action.

Report of the Board of Commissioners 2014
Throughout 2014, the Board of Commissioners has
conducted a series of activities in the framework of
supervisory tasks such as:
1.
2. Implementation of organizational transformation.
3. Determination of network modernization.
4. Flexi migration.
5. International business development.
6. Mobile performance.
In practice, the form of supervision of the Board of
Commissioners is conducted through the following
activities:
1.

The Board of Commissioners holds joint meeting
with the Board of Directors at least once every
month. In the meeting, the Company’s Board of
Directors delivers both the Company’s operational
and financial performance and the Company’s stock
prices in a report named the Management Report.
2. Through other meetings with the management,
which is coordinated by the Secretariat of the Board
of Commissioner and committees within the
Secretariat of the Board of Commissioner.

3. Together with a team, the Board of Commissioner
conducts field visits to monitor Telkom’s performance
achievement in that field and to monitor the progress
of the construction of the investment.

4. Receiving reports on the processes considered

strategic, which become mutual concerns.

From the series of supervision that the Board of
Commissioners has undertaken throughout 2014, the
Board of Commissioners believes that the implementation
of the management in 2014 has been quite good. The
Management has been able to create revenue growth
by 20% above the industry average, achieve a positive
growth in POTS businesses and a double digit growth
in mobile revenue. As a whole, the financial performance
has been reflected by the share price performance that
has grown faster than that of the stock index.

Meetings of the Board of Commissioners
The Board of Commissioners held at least one meeting
a month or at any time if deemed necessary by one or
more members of the Board of Commissioners, or upon
written request by one or more shareholders who own
at least one-tenth of the outstanding shares. The quorum
for all meetings of the Board of Commissioners is more
than half of the members of the Board of Commissioners
who are present or represented by proxy granted to one
of the Commissioners who is present at the meeting.
The decision-making mechanism in the Board of
Commissioners meeting is based on the discussion for
consensus. If consensus cannot be reached, then the
decision making is based on a majority of vote by the
members of the Board of Commissioners who are present
or represented at the meeting. If there is a tie in terms
of the number of votes, then the decision is made in
accordance with the opinion of the Chairman of the
Meeting.

Internal meeting of the Board of Commissioners
In 2014, the Board of Commissioner held fifteen (15) internal meetings of the Board of Commissioners.

Name

Jusman Syafii Djamal(1)

Johnny Swandi Sjam

Virano Gazi Nasution

Hadiyanto

Parikesit Suprapto

Gatot Trihargo(2)

Imam Apriyanto Putro(3)

Hendri Saparini(4)

Position

Attended Meeting

President Commissioner

Independen Commissioner

IndependenCommissioner

Commissioner

President Commissioner

13 of 13

15 of 15

11 of 15

14 of 15

4 of 4

6 of 11

2 of 2

Dolfie Othniel Fredric Palit(5)

Commissioner

(1) as of December 19, 2014
(4) starting from December 19, 2014

(2) as of April 4, 2014
(5) starting from December 19, 2014

(3) starting from April 4, 2014

192

Board of Commissioners and Board of Directors Joint Meeting
The Board of Commissioners has also held fifteen (15) joint meetings with the Board of Directors4.

Name

Position

Attended Meeting

Jusman Syafii Djamal(1)

President Commissioner

Johnny Swandi Sjam

Virano Gazi Nasution

Hadiyanto

Parikesit Suprapto

Gatot Trihargo(2)

Imam Apriyanto Putro(3)

Independent Commissioner

Commissioner

Hendri Saparini(4)

President Commissioner

Dolfie Othniel Fredric Palit(5)

Commissioner

Arief Yahya(6)

President Director /CEO

Muhammad Awaluddin

Enterprise & Business Service Director

Honesti Basyir

Priyantono Rudito(7)

Rizkan Chandra(8)

Sukardi Silalahi(9)

Ririek Adriansyah(10)

Indra Utoyo

Alex J. Sinaga(11)

Heri Sunaryadi(12)

Finance Director

Human Capital Management Director

Network, IT & Solution Director

Consumer Service Director

Wholesale & International Service Director

Innovation & Strategic Portfolio Director

President Director/CEO

Finance Director

Herdi Rosadi Harman(13)

Human Capital Management Director

Abdus Somad Arief(14)

Network, IT & Solution Director

Commissioner Dian Rachmawan(15)

Consumer Direktur

14 of 14

13 of 15

12 of 15

13 of 15

15 of 15

4 of 4

8 of 11

1 of 1

9 of 10

12 of 15

14 of 15

14 of 14

11 of 14

13 of 14

14 of 14

14 of 15

1 of 1

(1) as of December 19, 2014
(4)starting from December 19, 2014
(7)as of December 19, 2014
(10)as of Desember 19, 2014
(13) starting from December 19, 2014

(2) as of April 4, 2014
(5)starting from December 19, 2014
(8)as of December 19, 2014
(11) starting from December 19, 2014
(14) starting from December 19, 2014

(3)starting from April 4, 2014
(6)as of October 27, 2014
(9)as of December 19, 2014
(12) starting from December 19, 2014
(15) starting from December 19, 2014

Remuneration for the Board of
Commissioners
Each member of the Board of Commissioners is entitled
to a monthly remuneration and allowances. They are
also eligible for bonuses based on the Company’s
performance and achievements, in which the amount is
determined by the shareholders at the AGM. Members
of the Board of Commissioners are also entitled to
benefits as a lump sum allowance upon resignation.

Remuneration for the Board of Commissioners is calculated
based on a formula prepared by the Nomination and
Remuneration Committee and is also used for the
determination of the Directors’ salaries, and the amount
refers to the percentage of Director salary approved in
the AGM. In line with provisions of the Regulation of the
Minister of SOEs PER-04 /MBU / 2014, GMS can specify

the type of income and/ or specific amount that is
different from the stipulation of the Ministerial Regulation.'

Procedure and Mechanism of Remuneration
for the Board of Commissioners
The procedure to determine the remuneration of the
Board of Commissioners’ is as follows:
-

The Board of Commissioners asked the Nomination
and Remuneration Committee (NRC) to draft a
proposal of remuneration for the Board of
Commissioners.
The Nomination and Remuneration Committee then
request the independent party to develop a framework
for the remuneration of the Board of Commissioners.

193

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

-
-

The Nomination and Remuneration Committee proposes the framework to the Board of Commissioners.
The Board of Commissioners proposed remuneration of the members of the Board of Commissioners to the
GMS.
The GMS delegates authority and power to the Board of Commissioners with the prior approval of Shareholders
Series A Dwiwarna to set the remuneration for the members of the Board of Commissioners.

Number of Remuneration of Board of Commissioners in 2014
For 2014, the aggregate remuneration of the entire Board of Commissioners, including bonuses but excluding other
benefits, was Rp25.3 billion.

The total accrued remuneration of the entire Board of Commissioners for 2014 was Rp37.1 billion, including long-
term incentives and allowance upon resignation. In addition, the tax on the aggregate remuneration of the Board
of Commisisoners, borne by Telkom, was Rp17.2 billion.The total remuneration of the boards of commissioners of
Telkom’s subsidiaries in 2014 was Rp80.2 billion.

Board of Commissioners

Honorarium

Tantiem & THR

Allowance

Total

Value (Rp million)

Hendri Saparini

Dolfie Othniel Fredric Palit

Imam Apriyanto Putro

Hadiyanto

Parikesit Suprapto

Johnny Swandi Sjam

Virano Gazi Nasution

Jusman Syafii Djamal (2)

Gatot Trihargo(1)

Description:
(1) as of AGMS date of April 4, 2014
(2) as of EGMs date of December 19, 2014

577.5

868.1

964.5

289.4

72.3

2,909.2

3,232.4

1,969.2

477.2

410.7

420.7

592.0

407.0

614.9

229.4

1,127.0

4,187.9

4,198.0

4,369.2

4,184.3

4,811.8

2,487.9

Board of Commissioners Training and Competency Enhancement Programmes
In 2014, the members of the Board of Commissioners has participated in several training programmes to increase
their competences such as:

Board of Commissioners Competence Improvement

Name

Program

Location

Date l

Jusman Syafii Djamal

Group CEO SingTel

Singapore

January 29, 2014

Parikesit Suprapto

Group CEO SingTel

Singapore

January 29, 2014

Hadiyanto

Technology Development Update

Swedia

April 25 – 29, 2014

Johnny Swandi Sjam

• Indonesia Corporate Day
• LTE Technology Development Update

• UK & US
• US

- August 30 –September 6, 2014
- September 5 – 13, 2014

Imam Apriyanto Putro

European HR Summit

September 22 – 24, 2014

Assessment of Members of the Board of Commissioners Performance
Overall, the GMS assesses the performance of the Board of Commissioners’,regarding the discharge of their duties
and responsibilities in the respective year. Accountability for the implementation of the Board of Commissioners’
duties and responsibilities for the Fiscal Year 2014 will be made at the AGM to be held in 2015.

194

GCG Assessment of BOC
We also assess the performance of GCG implementation conducted by the Board of Commissioners as one of the
organs of GCG. The GCG ssessment process is performed out by IIGC, an independent party that performs a CGPI
rating on Telkom. There are twelve aspects being assessed in the implementation of GCG , namely the aspect of
commitment, transparency, accountability, responsibility, independence, fairness, competence, leadership, strategy,
ethics, vision-mission-values, culture, and implementation of a learning organization.

In this GCG assessment, Telkom received the rating of “Indonesia Most Trusted Company”.

In addition to the assessment, we are also assessed by
the BPKP in the program of “BUMN Bersih”. The program
was launched by the Minister of SOEs and is characterized
by the signing of a commitment by the entire SOEs
Managing Director.

The assessment of “BUMN Bersih” is aimed at directing
the whole SOEs to implement good corporate governance
(GCG) both administratively and substantively as well
as to realize SOEs which are strong (professional),
superior (priority system, quality, and innovation) and
dignified (clean from all forms of irregularities and fraud,
including corruption).

The assessment is conducted in stagesg and gradually.
The first stage is the assessment to the Board of Directors
and the Board of Commissioners in the third month since
the signing of the Company’s commitment “BUMN
Bersih”. The criteria of “Bersih” used in the program
“BUMN Bersih”, is broadly defined. This includes
assessment of the principles of good corporate governance,
namely transparency, accountability, responsibility,
independency and fairness. These five principles are the
foundation for management systems ranging from

planning to accountability, commitment not to do any
form of fraud / cheating, including all forms of corruption,
receiving and/ or giving gratification associated with
his/ her position.

When BPKP assessed the entire ranks of Board of
Directors and Commissioners, we should be grateful
with the assessed value of the survey results. Telkom is
the top ranks with a value of 8.3 (range 10). This means
that the “BUMN Bersih” program has been implemented
in the Good Corporate Governance.

The Board of Commissioners Secretariat
The Board of Commissioner is assisted by a Secretary
of the Board of Commissioners, who is responsible for
ensuring that the execution of the Board of Commissioners
duties is in accordance with the Company’s Articles of
Association and existing legislation.

The Board of Commissioners Address
The official address of Telkom’s Board of Commissioners
is Graha Merah Putih, 5th Floor, Jl. Jend. Gatot Subroto,
Kav.52, Jakarta 12710, Indonesia.

195

2014 Annual Report PT Telkom Indonesia Tbk (Persero)BOARD OF DIRECTORS
Directors are appointed and dismissed by the GMS. To be elected, candidates must be nominated by the Shareholder
Series A Dwiwarna. Each Director of Telkom have tenure for five (5) years starting from the date of appointment,
unless the date of expiration of the term of office falls on a day other than a workday, in which case such term of
office shall expire on the following workday. Shareholder, through an AGM or EGM, are entitled to dismiss the
members of the Board of Directors at any time before the expiration of his/ her term of office.

Criteria of Board of Directors Members
Based on the Act 40 of 2007 on Limited Liability Company, Regulation of SOE Ministry No.1/MBU/2012 on Procedures
for Appointment of Directors of SOEs and OJK Regulation No.33/ POJK.4/ 2014 on the Board of Directors and
Board of Commissioners of the Public Company public or Issuer, an individual is eligible to be a member of the
Board of Directors if he/ she is an individual who meets the following requirements upon appointment and during
his/ her tenure:

1. Has good character, morals, and integrity.
2. Of legal age.
3

In the five (5) years prior to the appointment and during his tenure:
a. Has not been declared bankrupt;
b. Has never been member of the Board of Directors and/ or members of the Board of Commissioners who was

found guilty of causing a company to go bankrupt;

c. Has never been convicted of a criminal offense that harms the country’s financial and/ or relating to the

financial sector; and

d. Has never been a member of the Board of Directors and/ or members of the Board of Commissioners that
during his tenure: (a) never held AGM, (b) His/her accountability as a member of the Board of Directors and/
or members of the Board of Commissioners have ever ‘not accepted’ by the GMS or ever not give an account
as a member of the Board of Directors and/ or members of the Board of Commissioners to the General
Meeting of Shareholders, and (c) ever led companies --that obtain a permit, approval, or registration of the
OJK--, do not fulfill their obligation to submit annual reports and / or financial reports to the OJK.

4. Is committed to comply with laws and regulations; and
5. Has knowledge and/ or expertise in the field that is needed by the publicly listed company or entity.

Criteria of directors will be adjusted based on the regulation of SOE Ministry No.PER.03/MBU/02/2015 on the
requiretments and procedures for the appointment and dismissal of Directors of SOEs

The Board of Directors Composition and Tenures
In accordance with the decision of the General Meeting of Shareholders (AGM) of Telkom on April 23, 2013, the
composition of the Company’s Board of Directors is as follows:

Board of Directors

Position

Term of Office since

Arief Yahya

Honesti Basyir

Indra Utoyo

Sukardi Silalahi

Muhammad Awaluddin

Rizkan Chandra

Priyantono Rudito

Ririek Adriansyah

President Director

Director

2005(1)

2012

2007(2)

2012

Description:
(1) He served as Enterprise and Wholesale Director based on the resolutions in AGM 2005 and he was appointed the President Director in AGM

2012.

(2) He was appointed as Information Technology Solution and Supply Director in AGM 2007 and was appointed as Innovation & Strategic Portfolio

Director in AGM 2012.

196

On October 27, 2014, Arief Yahya who was then the President Director of Telkom was appointed as Minister of
Tourism, Republic of Indonesia. Therefore, in accordance with the Articles of Association and regulations, the Board
of Directors meeting held on October 28, 2014 had elected Indra Utoyo, who was a Director of Innovation and
Strategic Portfolio at that time, as Acting President Director.

In accordance with the results of the EGM held on December 19, 2014, the composition of the Board of Directors
has been amended as follow:

BOD

Alex J. Sinaga

Heri Sunaryadi

Indra Utoyo

Dian Rachmawan

Muhammad Awaluddin

Abdus Somad Arief

Herdy Rosadi Harman

Honesti Basyir

POSITION

President Director

Director

TERM OF OFFICE SINCE

2014

2007(1)

2014

2012

2014

2012

Description :
(1) Based on the results of EGM 2007 he served as Information Technology Solution & Supply Director through the realization of EGM 2012 where

he was appointed Innovation & Strategic Portfolio Director.

As the follow up on the implementation of the EGM on
Friday, December 19, 2014, we held a Board of Directors
meeting on the same date and assigned a nomenclature
of Telkom’s Board of Directors as follow:
1. Alex J. Sinaga as the President Director
2. Heri Sunaryadi as Director of Finance
3. Indra Utoyo as Director of Innovation and Strategic

Portfolio (ISP)

4. Dian Rachmawan as Director of Consumer Service

(CONS)

5. Muhammad Awaluddin as Director of Enterprise and

Business Service (EBIS)

6. Abdus Somad Arief as Director of IT and Network

Solution (NITS)

7. Herdy Rosadi Harman as Director of Human Capital

Management (HCM)

8. Honesti Basyir as Director of Wholesale and

International Service (WINS)

Scope and Main Duties of the Board of
Directors
Pursuant to the Company’s Articles of Association, the
BoD is primarily responsible for leading and managing
the Company’s operations as well as controlling and
managing its assets, under the supervision of the BoC.
The BoD also has the right to act for and on behalf of
the company, inside or outside the Court of Law, on any
matters and for any events, with any other parties.

1. President Director as CEO of Telkom Group

To coordinate the process of structuring and/or
reconstruction of the aspects of corporate
philosophy, which includes but is not limited to
vision, mission, objectives, corporate culture, and
leadership architecture;
To formulate and to state the strategic direction
for the conditioning of the Company’s capability
in realizing sustainable competitive growth across
Telkom Group’s business portfolio and risk
management as well as interfacing with external
constituent;
To control the strategic planning function within
the Telkom Group and to direct businesses
development by focusing on new businesses
portfolio;
To control corporate direction in driving new
business, entering/ developing new markets and
for internationalization/regionalization.
To control the management of strategic aspects
and finance, human capital and innovation and
strategic portfolio management on the entire
businesses portfolio of Telkom’s group;
In charge of leadership development program in
Telkom Group, and to appoint and to dismiss
certain official positions, in accordance with the
established career management regulations, and

197

2014 Annual Report PT Telkom Indonesia Tbk (Persero) -

leadership development program for the entire
Telkom Group;
To submit reports on the Company’s performance
as required for a public company on a regular
basis.

2. Finance Director (“KEU”)

To determine the concept and the formula of the
Company’s Long-Term Financial Planning for
Telkom Group;
To facilitate the process of formulating the concept
of corporate level strategy, particularly the financial
perspective on, but is not limited to, strategic
budgeting, business & investment, parenting strategy,
subsidiary performance, and capital management;
To determine financial and logistic strategy and
policies, which include, but is not limited to Financial
Policy, Financial System Support Policy, Asset
Management & Logistic Policy, Asset Management
& Logistic;
To determine the governance policies and the
financial accounting management, accounting
management (budgeting), and corporate finance
(treasury);

- To determine the policies, governance, and
mechanism of managing the Annual Work Plan
Budget (RKAP);
To carry out the advisory role in determining
corporate level strategy, particularly for matters
related to Telkom Group’s financial resources.

3. Director of Innovation & Strategic Portfolio (“ISP”)
To determine the concept and formula of the
Company’s Long-Term Plan (corporate strategic
scenario);
To determine the governance policies and the
mechanisms of the management of corporate
planning and strategy (policies on the level of
planning and strategy - corporate level, business
level and functional level);
To determine the strategy and the policy of the
Telkom Group’s business portfolio;

- To determine the strategy, policy and
recommendation for corporate action and strategic
investment for the development of Telkom Group’s
business;
To determine the innovation strategy in order to
explore new sources of growth for Telkom Group’s
business portfolio;
To determine the parenting strategy to harmonize
and optimize the capability of the Telkom Group’s
business entities

198

4. Director of Consumer Service (“CONS”)

To define the strategy and business planning to
leverage the Company’s resources capability in
creating competitive advantage to win the
competition and long term growth of the consumer
segment business portfolio (consumer home
services and consumer personal services) within
Telkom Group;
To determine the parenting policies and mechanisms
in order to create value through the optimization
and harmonization of the interrelation between
the parent company and the entire entities
managing the consumer segment business within
Telkom Group;

- To determine the policy, governance, and
mechanisms of the management of the consumer
segment marketing functions;

- To determine the policy, governance, and
mechanisms of the management of the consumer
segment sales and/ or partnership function;
- To determine the policy, governance, and
mechanism of the management of customer
relationship management on the consumer
segment;
Ensuring the effectiveness of business risk
management in all units under the Directorate of
Consumer Service.

5. Director of Enterprise Business Service (“EBIS”)

To define the business strategy and planning to
leverage the Company’s resources capability in
creating a competitive advantage to win the
competition and to achieve long term growth of
the corporate segment business portfolio
(enterprise and business) of Telkom Group;
To determine the parenting policies and mechanisms
in order to create value through the optimization
and harmonization of the interrelation between
the parent company and the entities managing
the corporate segment business (enterprise and
business) of Telkom Group;

- To determine the policy, governance, and
mechanisms of the management of corporate
segment marketing function (enterprise and
business);

- To determine the policy, governance, and
mechanisms of the management of the corporate
segment sales and/or account management
function (enterprise and business);

- Determine the policy, governance, and mechanism
of customer relationship management for corporate
segment (enterprise and business);

Ensuring the effectiveness of risk management
in all business processes of the entire units under
the Directorate of Enterprise Service.

6. Director of Network, IT& Solution (“NITS”)

- Determining the business plan and strategy in
order to leverage the capability of company’s
resources to develop/exploit the established
business/ services by utilizing infrastructure, IT
and solution to support Telkom Group business
portfolio synergistically;

- Determining the policy, governance, and mechanism
for the utilization of infrastructure/ network to
support the growth of Telkom Group business
portfolio;

- Determining the policy, governance, and mechanism
for the utilization of IT to support the growth of
Telkom Group business portfolio;

- Determining the policy, governance, and mechanism
for the conditioning of excellent performance of
services/solutions to support sustainable
competitive growth of Telkom Group;
To manage and to control the parenting mechanism
in accordance with the parenting strategy on the
entire units under the Directorate of NITS and/or
other units directly involved in the process of
managing the infrastructure utilization and
operation;
Ensuring the effectiveness of risk management
in all business processes in all units under the
Directorate of NITS.

7. Director of Human Capital Management (“HCM”)

To determine the concept and formula for Human
Capital Long Term Plan and Human Capital Master
Plan in Group;
To facilitate the process of formulating corporate
level strategy, particularly on aspects related to
the development of center of excellent, organization
behavior, corporate culture, and leadership
architecture;
To determine the strategy and policies for human
capital function, including but is not limited to
human capital policy, organisation development,
and industrial relation;
To determine the governance policy and the
management mechanism and planning of resources
related to the development, utilization and
management of human resource;

- To determine the policy, governance, and
mechanism for the development and interrelation

of the entities/institutions related to human
resources management, including but is not limited
to the pension fund management institutions,
employee and retire health care institutions, skill
and competence development institution or
educational institution, and labour union;
To conduct the advisory role in determining
corporate level strategy, especially for matters
related to Telkom Group’s human resources
development.

8. Director of Wholesale & International Service

(“WINS”)
-

To define the strategy and business planning to
leverage the Company’s resources capability in
creating competitive advantages to win
thecompetition and to achieve long term growth
of the Wholesale & International segment business
portfolio of Telkom Group;

- Determining the parenting policies and mechanisms
in order to create value through the optimization
and harmonization of the interrelation between
the parent company and the entire entities
managing the business operations for the Wholesale
& International segment of Telkom Group;

- Determining the policy, governance, and
mechanisms of the management of Wholesale &
International segment marketing functions;
- Determine the policy, governance, and mechanisms
of the management of the Wholesale & International
segment sales and/or account management
function;

- Determining the policy, governance, and
mechanisms of the management of customer
relationship management for Wholesale &
International segment;
Ensuring the effectiveness of risk management
in all business processes of the entire units under
the Directorate of Wholesale & International
segment.

199

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
BoD Charter
In the case of activities and actions in the Company’s
management that are not governed by our Articles of
Association or theprovisions of the law, procedures are
followed that support the principle of accountability
through consensus, agreement and/or rules between the
members of the BoD. The BOD charter is aimed at
expediting the decision making process, reducing
bureaucracy in the administration of the Company’s
management, and supporting improvements in performance.
This charter also governs the working relationship between
the BoD and the BoC, which is an institutional relationship
in that it is based on countable management and supervisory
mechanisms in accordance with the prevailing provisions.

Feasibility and Proper Test of Board of
Directors Member
The implementation of Fit and proper test (UKK) for
members of the Board of Directors is conducted based
on the SOE Ministerial Regulation No.Per 01/ MBU/ 2012
on Requirements and Procedures for Appointment and
Dismissal of Directors of State-Owned Enterprises as
well as several changes, among which are:

- Regulation of SOE Ministry No.Per-06/ MBU/ 2012
on the Amendment of Regulation od SOE Ministry
No.Per 01/ MBU/ 2012 on the Requirements and
Procedures for Appointment and Dismissal of Board
of Directors Members of State Owned Enterprises;
- Regulation of SOE Ministry No.Per-16/ MBU/ 2012
on the Second Amendment Regulation of SOE Ministry
No.Per 01/ MBU/ 2012 on the Requirements and
Procedures for Appointment and Dismissal of Board
of Directors Members of State Owned Enterprises;

- Regulation of SOE Ministry No.-09/ MBU/ 2014 on
Third Amendment of Regulation of SOE Ministry
No.Per 01/ MBU/ 2012 on the Requirements and
Procedures for Appointment and Dismissal of Directors
Member State Owned Enterprises; and

- Regulation of SOE Ministry No.Per-20/ MBU/ 2014
on the Fourth Amendment of Regulation of SOE
Ministry No.Per 01/ MBU/ 2012 on the Requirements
and Procedures for Appointment and Dismissal of
Directors Member State Owned Enterprises.

In Article 8 of the Regulation of SOE Ministry No.PER-
20/ MBU/ 2014 of the Fourth Amendment of Regulation
of SOE Ministry No.Per 01/ MBU / 2012 on Requirements
and Procedures for Appointment and Dismissal of
Directors Member State-Owned Enterprises, UKK and
evaluation are conducted by a Team consisting of:
a. Technical Deputy (as the team leader);
b. Secretary of the Ministry of SOEs;
c. Business Infrastructure Deputy and
d. Two (2) special staffs of the Minister of SOEs.

According to Regulation of SOE Ministry No.Per-01/ MBU/
2012, UKK is conducted by the team as mentioned above and
is assisted by the Professional Institute in accordance with
Regulation of SOE Ministry No.Per SOE-01/ MBU/ 2012.

BoD Remuneration Policy
Each member of the Board of Director is entitled to a
monthly remuneration consisting of a monthly salary
and other allowances. They are also eligible for bonuses
based on the Company’s performance and achiement,
which amount is determined by the shareholders at the
AGM. Members of the Board of Directors are also entitled
to a lump sum allowance upon resignation.

Comissioners request
NRC to provide
remuneration plans.
The draft is presented
to the GMS

NRC* asks
advices from
independent
party

Independent
party provides
advices to NRC

GMS

200

Procedure and Mechanism of
BoC and BoD Remuneration

*NRC : Nomination and Remuneration Committee

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICES
The remuneration for the members of the Board of Directors is calculated based on a formula prepared by the
Nomination and Remuneration Committee (NRC), which is also used to determine the salary of the Board of Directors.
The amount refers to the percentage of President Director’s salary approved in the AGM. In line with the Regulation
of the Minister of SOEs No. PER-04/ MBU/ 2014, the GMS can specify the type of income and/ or a specific amount
that is different from that which is stipulated in the Ministerial Regulation.

Procedures and Mechanisms of BOD Remuneration
The procedures to determine the remuneration for members of the Board of Directors are as follow:
1. The Board of Commissioners asks the NRC to draft remuneration proposals for the Board of Commissioners.
2. The Nomination and Remuneration Committee requests an independent party to develop a framework for the

remuneration of the Board of Commissioners.

3. The Nomination and Remuneration Committee proposes the framework to the Board of Commissioners.
4. The Board of Commissioners proposes remuneration of the members of the Board of Commissioners to the

General Meeting of Shareholders (GMS).

5. The GMS delegates the authority and power to the Board of Commissioners with the prior approval of Shareholders

of Series A Dwiwarna to set the remuneration for the members of the Board of Commissioners.

Total Board of Directors Remuneration in 2014
For 2014, the total remuneration of the entire Board of Directors, including bonuses but excluding other benefits,
was Rp70.4 billion. The total accrued remuneration of Board of Directors for 2014 was Rp123.5 billion, including
long-term incentives and allowance upon resignation. In addition, the tax on the aggregate remuneration of the
Board of Directors, borne by Telkom, was Rp27.3 billion. The remuneration of the boards of directors of Telkom’s
Subsidiaries in 2014 was Rp300.9 billion.

Board of Directors

Alex J. Sinaga

Heri Sunaryadi

Indra Utoyo

Dian Rachmawan

Muhammad Awaluddin

Abdus Somad Arief

Herdy Rosadi Harman

Honesti Basyir

Arief Yahya*

Sukardi Silalahi**

Rizkan Chandra**

Priyantono Rudito**

Ririek Adriansyah**

Description:
*) until October 27,2014
**) as of EGM of December 19, 2014.

Honorarium

Tantiem & THR

Allowance

Total

Value (Rp million)

1,782.0

1,650.0

1,782.0

5,822.1

6,469.1

5,822.1

5,882.1

1,138.7

1,040.1

1,138.7

8,742.8

9,159.2

8,742.8

The Board of Directors meeting
The meeting of the Board of Directors is chaired by the President Director. In the event that the President Director
is unable to attend or is absent for a reason, the meeting will be chaired by a member of the BoD appointed in the
meeting. The meeting of the Board of Directors may be held at any time deemed necessary at the request of one
or more members of the Board of Directors or at the request of the Board of Commissioners or upon a written
request from one or more shareholders representing one-tenth or more of the total number of outstanding common
shares.

201

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
The decisions of the BoD meeting shall be reached by consensus. If this method fails, the decision shall be passed
by voting based on the majority votes by BoD members cast in the meeting.

A quorum is reached at a BoD meeting if more than half of the members of the Board of Directors are present or
are legally represented at the meeting. Each member of the Board of Directors who is present at the meeting shall
be entitled to cast one vote (and one vote for each other Director who that he/ she represents).

As of December 2014, the Board of Director meetings were conducted with the following agenda:

Month

Agenda

1. Reports Discussion and Breakthrough Transformation Program (BTP) Discussion and Transformation of

Corporate Holding, Global Human Capital Readiness Index (GMI) and Decision KM BOD 2014.

2. Report of Development and Management of Indonesia’s Digital Creative Industries and Corporate

January

Strategic Planning Approval System.

3. Signing of Commitment Telin-Infomedia related Australia INEX program, Telin-Sigma related program
INEX Jurong Data Center, Telkomsel Telin-Telkomsel related branding, Telin-Metra related Metra Group
product and service portfolio development for overseas.

February

1. Reports & Breakthrough Transformation Program (BTP) Discussion.

1. Report of Handbook and Presentation Material of CRO, DPI (Interconnection Request Data), Dividend

March

Effect on Stocks.

2. Discussion of Telkom Cloud: Telkom Group Synergy Commitment.

April

1. Approval Letter of Submission of Materials explaining on Telkom Vision for Board of Commissioners,
Task Force of ROSE Program in 2014, PD Organization of Pro-business Network Application Services.

May

June

July

1. Reports & Discussion of Breakthrough Transformation Program (BTP), Official Songs and Telkom

Corporate Uniform, Entry Strategy and INEX business Plan, Follow up of IDSA (Digital City
Development).

2. BoD agenda Update, Progress on PT MD Network Establishment, Content Management Report April

2014, INEX Progress KSA, Project to-buy Telkom Australia (TAU)

1. Approval of the resolution to prepare the internet gateway IP transit between Telkom and Telin,

approval for the injection of capital into Telkom Metra's joint venture with Telstra Singapore

2. BoD Agenda Update, Social Security, Pension Fund Regulatory and Approval of KM VP and SGM 2014,

PD Determination of Telkom’s Human Capital Management System.

1. Approval of Task Force CSO Support, PD Organizational Change of IDEC-M2M Digital Ecosystem, SBR

Justification Development Services Satellite Control PSN -VI.

2. Reports of Sell First then Buy WiFi Business, Corporate Action UseeTV, CVC Formation Dico.
3. Approval To Increase in Investment (Equity Call) to PT Sigma Cipta Caraka (Telkom Sigma) in order to
Devekop Capacity Data Center 100 K m2 through Telkom Metra, Report of Procurement of Telkom
Satellite 3-S In Orbit Slot 118 BT.

1. Reports of IDN 2020 (Master Plan Telekomunikasi RI), BUMN Holding, Satelite Maritime Business,

August

Personal Service for Telkom Group, Security Operations Center.

2. BoD Agenda Update, JV NAS and Report of NKU TW 2 2014, Progress Report of TCUC utilization.

1. Reports & Discussion of Breakthrough Transformation Program (BTP) and PD Agreement on the

Implementation Project Organization for Telkom 3S.

2. Report: WiFi Business (Integrator and Benchmark System), NKU TW-2 2014 and Presentation Deloitte

September

(Internationalization Observations).

3. Evaluation Report and Roadmap of WiFi Business, Frequency Spectrum Strategy for Telkomsel, Telkom

Satellite going Global, International Data Network Regional, Launching of Telkom Macau, Business
Studies on the Establishment of GM Segment Maritime & Probis MILES.

1. BoD Agenda Update, Executive Business, CSS, ReFlexi, PD Corporate Culture and Decision on Regional

Division Resourses Allocation.

October

2. Report of Telkom Evaluation System and Culture, Regional Division Resourses Allocation, TLT Progress,
Launching InEx KSA, agreement on corporate regulation related to spirit-based Telkom Group Sinergy,
Corporate regulation on “difficult people”.

November

1. Decision of Tourism Segment Formation Studies at DES and the Implementation of e-tourism working

Program in the Ministry of Tourism, approval of Regulations Related Spirit-based Telkom Group Synergy,
Corporate Regulations regarding the handling of "difficult people”

December

1. Reports and discussion of Breakthrough Transformation Program (BTP).
2. Decision on the Telkom Group Integrated Supply Chain Management

202

Director

Alex J. Sinaga

Heri Sunaryadi

Indra Utoyo

Dian Rachmawan

Muhammad Awaluddin

Abdus Somad Arief

Herdy Rosadi Harman

Honesti Basyir

Arief Yahya(1)

Rizkan Chandra(1)

Sukardi Silalahi(1)

Ririek Adriansyah(1)

Priyantono Rudito(1)

Description:
(1) as of EGM of Desember 19, 2014

Attended Meeting

Percentage (%)

2 of 2

43 of 46

1of 2

40 of 46

2 of 2

1 of 2

41 of 46

36 of 36

40 of 44

39 of 44

41 of 44

100

93.5

87.0

100

89.1

100

90.9

88.6

93.2

203

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Directors Competency Enhancement Program
In 2014, the members of the Board of Directors have attended various training programs, workshops, conferences
and seminars, both as participants and as a speaker, in order to increase of the competence of the Board of Directors.

Table of Competence Enhancement Programmes for Directors:
Board of Directors attended as a speaker in the Seminar/Workshop/Conference/Training

Name

Alex J. Sinaga

Heri Sunaryadi

Dian Rachmawan

Abdus Somad Arief

Herdy Rosadi
Harman

Programme

Venue

Date

Indra Utoyo

(Speaker) at the National Seminar and
Workshop on Data Center and Disaster
Recovery Plan best practices for Indonesia
(Telkom PDC) / Theme: Indonesia Digital
Cloud Through Always on Data Center

(Speaker) on SOE TRACK: SOE Outlook
2014 - Welcoming the 2015 ASEAN
Economic Community / Topic: SOE
Strategic Agenda 2014 and the 2015
ASEAN Economic Community

(Panelist) Technopreneurship in the 21st
Century Critical Issues and Challenges /
Theme: NTC-SBM Technopreneurship
Forum: Driving Sustainable Economic
Growth - Science, Innovation and Business.

(Speaker) CISCO Business Planning
Workshop / Keynote Speech for Executives
/ Material: PINs in Telkom's Strategic
Portfolio

(Sources) Consumer Protection in Financial
Industry Seminar 2014 / Session: Innovation
Towards Implementation of Marketing 3.0
in the Financial Services Industry / Topic:
Educating Marketing and Consumer
Products Based Technology.

Hotel Shangri-La, Jln. Jend.
Sudirman Kav.1, Jakarta

January 22, 2014

Hotel Borobudur, Jln. Lap.
Banteng Selatan, JakPus

January 29, 2014

Ballroom JS Luwansa Hotel,
Rasuna Said, Jakarta

February 26, 2014

JS Luwansa Hotel, Rasuna
Said, Jakarta

March 5, 2014

Ballroom The JS Luwansa
Hotel & Convention Center,
Jln. H.R. Rasuna Said Kav.
C.22, JakSel

April 14, 2014

Honesti Basyir

(Participants) Forum Yakes Investment
Management and Evaluation of Q4

Hotel Hyatt, Jl. Kaliurang
Jogjakarta

(Keynote Speaker) Workshop ISCM &
Telkom Group Procurement Synergy

Ruang Rapat Delima, Jakarta

January 18, 2014

March 26, 2014

(Speaker) Non-Deal Roadshow (NDR) with
Bahana and Bahana's Clients

Financial Hall, 27th Floor,
Grah Niaga, Jakarta

April 16, 2014

(Speaker) seminar on national committee
governance policy - GCG: Towards Well
Governed Society/theme: Implementation
of GCG to the Well-Governed Societe

Ball Room Dua Mutiara I,
Hotel JW Marriot

May 6, 2014

(Speaker) Workshop on Implementation of
IFRS in SOEs

Hotel Aston Orimera
Bandung

May 9, 2014

(Participants, Speakers) 5th Annual DB
Access Asia Conference

(Keynote Speaker) Opening SUSPIM
International

(Keynote Speaker) Technical Cooperation
Jointly held by Auditor Telkom Group and
BPKP

Marina Bay Sands Singapore May 21, 2014

Corpu, Bandung

June 9, 2014

Corpu Telkom Gerlong

June 9, 2014

204

Programme

Venue

Date

(Speaker, Participant) Meeting with Credit
Suisse Analyst and Banker ECM Team

Credit Suisse Office, One
Rafles Link, South Tower

June 18, 2014

(Participants) Global Bond Update by
Credit Suisse

Rr. Dirkeu Jkt

June 18, 2014

(Participant) Global Bond Update by ANZ

Rr. Dirkeu Jkt

June 19, 2014

(Speaker) Debriefing EGM Regional
Division

(Speaker) In the talk show "Inspiration
Movement For Indonesia" OSKM ITB 2014

(Participant) CFO Forum, hosted by Singtel

(Participant) Macquarie ASEAN
Conference

(Speaker) In Andalas University Seminar
theme "Participation of Industrial
Engineering Program in Industrial
Engineering Profession Forming In
Anticipation to the Law of Engineering"

(Participant) Presentation and Press
Conference on Investors Investor Summit
and Capital Market Expo 2014

Hotel Padma, Bandung

July 2, 2014

Gedung Sasana Budaya
Ganesa (Sabuga) ITB,
Bandung

Intercontinental Hotel
Sydney, Australia

August 22, 2014

August 25-26 2014

Fullerton Hotel, Singapura

August 28-29, 2014

The Hills Bukit Tinggi, Padang September 3, 2014

Ritz Carlton, Pacific Place,
Jakarta

September 17, 2014

(Participant) Daiwa Capital Markets
Conference 2014

The Imperial Hotel, Tokyo,
Jepang

November 5-7, 2014

Muhammad
Awaluddin

(Speaker) ISCLO 2014, "2nd International
Seminar & Conference on Learning
Organization"

Ritz Carlton PP, Jakarta

November 5, 2014

(Participant) Business Leader Forum
“Fewer, Bigger, Bolder”

(Speaker) CEO goes to Campus
“Technopreneurship”

Ritz Carlton PP, Jakarta

October 16, 2014

UNJ, Jakarta

October 1, 2014

(Speaker) ICISS 2014, “2014 International
Conference on ICT for Smart Society”

Grand Royal Panghegar
Bandung,

September 25, 2014

(Speakers) Briefing Participants SUSPIM 3
Regular Batch 5 "

GMP Jakarta – CorpU
Gerlong (Vicon)

September 17, 2014

(Speaker) Session BoD SUSPIM BOD-2
International Batch # 2 INSEAD

Fontainebleau, Perancis

September 9, 2014

(Participant) FGD Global Leading Public
Transport Practice - PwC

Belanda

September 8, 2014

(Speaker) FTU Telematics Cluster
"Improving Interwoven Partnership
Cooperation Between Employers Large and
Small Entrepreneurs"

(Speaker) Indonesia’s Top 100 Most
Valuable Brand

(Speaker) Media Gathering STAR Data
Center Services

Cimahi, Jawa Barat

September 4, 2014

Shangri La, Jakarta

August 16, 2014

Resto Nine, Surabaya

July 14, 2014

(Speaker) Media Gathering IndiCampus

Amaroosa, Bandung

June 26, 2014

(Speaker) Fire Briefing Suspim
International NUS Batch #3

(Speaker) Conference e-Health 2014,
“E-Indonesia Initiative Forum X”

NUS, Singapore

June 20, 2014

Mega Kuningan, Jakarta

June 5, 2014

(Speaker) International Seminar “The Role
of Academia, Business Government and
Community toward Sustainable City”

Universitas Padjadjaran,
Bandung

June 4, 2014

205

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Name

Programme

Venue

Date

(Speaker) Conference: Corporate Secretary,
the Secret Journey to Success

Merchantile, WTC, Jakata

April 2, 2014

Arief Yahya

(Speaker) Stadium Generale (Telkom
University)

Telkom University, Bandung

March 7, 2014

(Speaker) Seminar MM UNPAD; Theme:
"Collaboration with Industry in Supporting
World Class University

Universitas Padjadjaran,
Bandung

March 26, 2014

(Speaker) Talkshow Indonesian Leaders
Talk 2014

Jakarta Convention Center,
Jakarta

September 3, 2014

(Speaker) Briefing Suspim International
BOD-1

Telkom Corporate University,
Bandung

September 22, 2014

(Speaker) National Seminar / Theme:
Building Indonesia Global Competitiveness
through Digital Creative Industry
Development with Triple Helix Concept

Aula Graha Sanusi
Hardjadinata, Kampus
UNPAD, Bandung

(Participants) SOE Executive Club / Event:
SOE Executive and Commissioner /
Supervisory Workshop

Mutiara Ballroom Lower
Ground Floor, The Ritz
Carlton Jakarta, Jakarta

May 9, 2014

May 14, 2014

(Speaker) Seminar: Indonesian Maritime
Telecommunication

Ballroom Mutiara 1, Hotel
Gran Melia, Jakarta

May 20, 2014

(Speaker) Talk Show di MNC News TV /
Topik: Pengembangan Bisnis Kreatif Digital
di ICT for Indonesia

(Speaker) FUSECO Forum ASIA 2014 /
Theme: Future Telco Ecosystems within the
Smart Cities and Beyond / Topic: Enabling
a Converged World Through Ecosystem
Solution

(Participants) Executive Programme
INSEAD Business School / Theme: Merger
& Acquisition and Coporate Strategy

(Panelist) Panel Discussion on RAPIMDIT
EBIS / Theme: Winning the Future -
Creating a Dominant Market Share in ICT
Transportation & Logistic Ecosystem

MNC News TV, Kebonsirih,
Jakarta

May 22, 2014

Ayodia, Nusa Dua, Bali

June 9, 2014

INSEAD Business School
Fountainebleu, Perancis

July 1, 2014

JS Luwansa Hotel, Jln. HR
Rasuna Said, JakSel

July 24, 2014

(Sources) INDOTELKO / Theme:
Encouraging ICT to Grow State Economy

Kembang Goela Resto, Plaza
Sentral, Annex Building,
Jakarta

September 10, 2014

(Participants) IBM Leaders 'Dialogue /
panelist in the "Client Speaker Panel: What
Clients Value in a Partnership with IBM -
Leaders' Dialogue

(Sources) National Seminar on "Indonesian
Cyber Crime Summit 2014" / Topic:
Indonesia Digital Network and Hubber as
qn Alternative National Information
Security Solutions

(Participants) Committee on National
Economy / Theme: Indonesian Economic
Prospect 2015 - Opportunities and
Challenges

(Speaker) National Broadband Symposium
/ Topic: Embracing the Roadmap Toward
Broadband Implementation in Indonesia

Tapis Room, The Four
Seasons Hotel, Jakarta

September 11, 2014

Aula Barat ITB, Jln. Ganesha
No.10, Bandung

October 9, 2014

Grand Ballroom Hotel Grand
Hyatt, Jakarta

October 17, 2014

Assembly Hall, JCC

November 5, 2014

Priyantono Rudito

(Speaker) Forum Human Capital Indonesia
SOE

Pertamina, Palembang

March 5, 2014

(Speaker) Sharing Session management of
Human Capital

(Welcome Speech & Participants) Forum
Human Capital Indonesia SOE

Ministry of SOE

April 25, 2014

Jasa Tirta – Malang

May 14, 2014

206

Programme

Venue

Date

(Speaker) SUSPIM International at INSEAD
& Orange Campus

Perancis

May 27, 2014

(Participants) Q-Journal paper award
(TESCA) 2014

(Welcome Speech & Participant) Forum
Human Capital Indonesia BUMN

(Participant) Aerotropolis Seminar with
John Kasarda

(Participants) Workshop B20 focus on
Human Capital

(Speaker) Public Lecture on the topic of
Leadership & Human Resources

(Speaker) One day seminar on TPCC - Role
of Certification Bodies in improving the
competitiveness of Indonesian workers

(Speaker) Indonesia Leadership and Human
Capital Summit 2014

(Speaker) International Conference on
Management, Hospitality & Tourism
Accounting (IMHA)

(Speaker) Co-Teach with Professor Mathew
Hayward in the course on Strategy
Management

Hotel JW Luwansa

June 17, 2014

Headquarter of BNI

June 23, 2014

SBM ITB

Sydney

UNPAD

June 25, 2014

July 16-17, 2014

August 27, 2014

Telkom CorpU

August 28, 2014

Hotel Pullman Jakarta

October 16, 2014

Hotel Pullman Jakarta

October 16, 2014

Hotel Grand Royal Panghegar September 3, 2014

Monash University

September 18, 2014

(Speaker) National Business Case
Competition (NBCC)

Universitas Padjadaran

(Speaker) 1st Indonesia Digital & Social
Learning Conference (IDSL)

Hotel Ritz Carlton SCBD
Jakarta

(Speaker dan Participant ) “2nd
International Seminar Conference Learning
Organization (ISCLO)”

Hotel Ritz Carlton Mega
Kuningan Jakarta

September 22,
2014

September 24, 2014

November 5, 2014

(Speaker) Winning best talent through
greta human capital system alignment

(Speaker) Talent Management world class
SOE

Balai Kartini, Jakarta

November 27, 2014

Hotel Haris Bali

November 28, 2014

Sukardi Silalahi

(Speaker) Speedy Instant Malaysia

Kuala Lumpur Malaysia

January 18, 2014

(Participant) SOE Marketeer Club in Semen
Indonesia

The East Tower Lt.18, Jl Dr Ide
AA Gde Agung Jakarta

February 27, 2014

(Speaker) Chief Editor Meeting.

Ritz Carlton Jakarta

March 18, 2014

(Participant) Seminar on "Malaysia -
Indonesia: Past, Now and Forever" together
with Dr.Mahathir Mohamad

Auditorium Menara Bank
Mega Lt.3 Jl. Kapten Tendean
Jakarta

April 14, 2014

(Speaker) INDIHome Woman Award 2014

Metro TV Jakarta

April 25, 2014

(Participant) Jakarta Marketing Week 2014

Grand Atrium Kota
Casablanca Jakarta

May 7, 2014

(Participant) Benchmark on Best Practise
Telco Consumer Business at Detecon and
British Telecom

(Speaker) IDSA program at Metro with
Aceh Mayor.

Germany

May 11-17, 2014

Metro TV Jakarta

May 22, 2014

(Speaker) Indonesia Digital Learning

Novotel Jogjakarta

(Speaker) UseeTV Brasil

Pacific Place Jakarta

May 30, 2014

June 5, 2014

(Speaker) International Leadership
Program (ILP) BoD-3 Bacth#2

Orange, France

June 16, 2014

207

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Name

Programme

Venue

Date

(Participant) Benchmark Broadband
Business in ORANGE

(Speaker) Kick Off the Implementation of
100 Mbps WiFi.id Corner

(Speaker) MURI record breaking 1000 100
Mbps WiFi.id Corners

(Speaker) Industrial Understanding of
Financial Aspects for Non-Financial Senior
Leaders

Paris France

June 17-18, 2014

STIMIK Jayakarta, Jakarta

July 16, 2014

GMP Telkom Jakarta

August 17, 2014

CorPU Bandung

August 18, 2014

(Speaker) Public Lecture at the Institute of
Technology DEL.

IT DEL Pematang Siantar
Sumut

August 30, 2014

(Speaker) Student Public Lecture on the
theme of "Building Broadband, Advancing
the Nation"

(Speaker) International Leadership
Program (ILP) BoD-3

(Participant) Benchmark Broadband
Business at Telstra Australia.

Uninversitas Santo Thomas
Medan

September 25, 2014

MBS Melbourne Australia

October 27, 2014

Melbourne Australia

October 28-29,
2014

November 10, 2014

January 17–23,
2014

(Speaker) Press Conference Mark Plus
Conference 2014

MarkPlus Main Campus,
Casablanca Jakarta

Ririek Adriansyah

(Speaker) Pacific Telecomunication
Conference – 2014

Honolulu, Hawaii

(Participant) BUMN Marketer

Graha Merah Putih Jakarta

January 29, 2014

(Speaker) Open Senate on Corporate
University & SUSPIM

Telkom Corporate University,
Bandung

February 5, 2014

(Speaker) Workshop For Possible
Acquisition of 2Degrees Share

Graha Merah Putih Jakarta

February 7, 2014

(Participant) Chief Editor Meeting Summit

The Ritz Carlton Pacific Place
Jakarta

March 18, 2014

(Speaker) Public Lecture Malaysia-
Indonesia: Past, Present And Forever
Together Dr.Mahathir Tun Mohamad

(Participant) Program Exevutive Education
For BOD: Building The Business: Strategies
For Asia Pacific

(Participant) SOE Marketing Day

(Speaker) Telkom International Leadership
Program, National University of Singapore
(NUS)

(Participant) South-East Asia Summit 2014:
From Neighborhood to Community

(Speaker) Leader as a Father "Merger &
Acquisition Strategy & Planning for Global
Telco Business Development"

Auditorium Menara Bank
Mega, Jakarta

April 14, 2014

INSEAD, Singapore

May 5-9, 2014

MarkPlus & Kementrian
BUMN,
JS Luwansa Hotel Jl. Rasuna
Said Kav.C-22 JKT

August 21, 2014

Graha Merah Putih, Jakarta

August 22, 2014

The Ritz - Carlton Jakarta

August 27, 2014

Hotel Salak, Bogor

September 1, 2014

(Speaker) Opening Workshop Updating
Valution with Deloitte

Sigma Room Graha Merah
Putih, Jakarta

September 25,
2014

(Speaker) Berita Satu TV

Graha Merah Putih, Jakarta

September 29, 2014

(Participant) MarkPlus Business Leader
Forum

The Ritz Carlton Hotel,
Jakarta

October 16, 2014

(Speaker) Firebriefing Telkom International
Leadership Program, National University of
Singapore (NUS)

NUS, Singapore

October 17, 2014

208

Programme

Venue

Date

Rizkan Chandra

(Courtesy visit) Juniper Exe Brief Center

Melbourne

(Speaker) YLi satellite “Lead Change in
Indonesia”

Lt 6 Graha Merah Putih
Jakarta

(Participant) Talent review (career day)

IDeC Bandung

(Participant) National Discussion ASTI

Melbourne

February 17–20,
2014

January 13, 2014

February 13, 2014

February 17–20,
2014

(Participant ) CTO Council

Kampus ITB Bandung

March 8, 2014

(Speaker) Indo Telco Forums "Sharing
infrastructure to reduce the trade balance
deficit"

(Interviewer) for IT & Operations award
team

(Participant ) NBN Co Australia Sharing
Session

Hotel Pullman d/a Niko Hotel
Thamrin

March 13, 2014

Balai Kartini Jakarta

March 18, 2014

Hotel Santika Jakarta

March 19, 2014

(Participant) Technical Workshop Telstra

WTC Jend Sudirman Jakarta May 5, 2014

(Speaker) Seminar on Indonesia WiFI

Sydney

May 14–15, 2014

(Participant) Seminar FUSECO

Melbourne

May 16, 2014

(Speaker) Seminar on Satellite APSAT

CorpU Bandung

May 19, 2014

(Speaker) Closure SUSPIM Int'l MBS
Australia

(Speaker) Lemhanas Discussion
“Anticipating the World Cyber Crime"

(Participant) Workshop on JV NAS
coordination

Ayodia Bali

May 22, 2014

Grand Hyatt Jakarta

June 11, 2014

Melbourne

June 19–20, 2014

(Speaker) Telkom Sigma Training

Hotel Padma Bandung

July 2, 2014

(Speaker) Telkom University “ Toward
Asean Economy Community 2015”

Gedung Astragatra, jl.
Merdeka selatan Jakarta

July 23, 2014

(Participant) Signing Ceremony SEA-US
C&MA dan Supply Contract

Graha Merah Putih Jakarta

August 7, 2014

(Speaker) SL Forum ITSS

Mojopia, CorpU, Gerlong,
Bandung

August 28, 2014

(Speaker) Closure of Wifi Forums

Hotel Kempinski Jakarta

August 28, 2014

(Participant) Exe Education The University
Melbourne

CorpU Bandung

August 29, 2014

(Participant) Seminar on 2nd Indonesia Wifi Hotel Mercure Jakarta

September 4, 2014

(Speaker) Connect Expo Comm Indonesia
2014 ag. Realizing the Nusantara Super
Highway/TelkomTrue Broadband

(Participant) National Conference ASTI
(award recipient) IDC - Asia Pacific
Telecom Summit

Hotel Inna Yogyakarta

September 5, 2014

Melbourne

October 5-10, 2014

(Participant )seminar 2nd Indonesia Wifi

Menara IDeC Bandung

October 16, 2014

(Speaker) Connect Expo Comm Indonesia
2014 ag. Realizing the Nusantara Super
Highway/TelkomTrue Broadband

(Participant) National Conference ASTI
(award recipient) IDC - Asia Pacific
Telecom Summit

JCC Jakarta

November 5, 2014

Amara Sanctuary Resort,
Sentosa, Singapore

November 11, 2014

209

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Assessment on the Performance of the
Board of Directors
Process for the Assessment on the Performance of
the Board of Directors
The assessment on the performance of the members of
BoD is performed by the BoC as well as by GMS, which
makes reference to the achievement of key performance
indicator (“KPI”) of the BoD in the discharge of its duties
and responsibilities as stipulated by the Articles of
Association, and the achievement of RKAP.

The achievement of the directors’ KPI as a basis for the
evaluation by the BoC is determined through internal
processes. The assessment process is initiated by filing
the realization of Management Contract (“KM”) online
which is followed up by a face to face meeting for
clarification and the determination of the final performance
scores. This will then be presented to the Performance
Committee and the President Director for final
determination which will be subsequently submitted to
the Board of Commissioners.

In 2014, the Board of Directors’ performance was also
evaluated by a team designated by the State Ministry
of SOEs to assess the company’s superior performance
on the basis of the Superior Performance Assessment
Criteria (“KPKU”) of SOEs. The KPKU is an adaptation
from the Malcom Baldrige Criteria for Performance
Excellence (MBCFPE).

Criteria Used in the Assessment on the Performance
of the Board of Directors
The criteria used in the assessment of the performance
of the Board of Directors is based on the balanced
scorecard method to measure four main aspects, namely
financial, customer, internal business process and learning
and growth. This method is translated into three types
of KPIs, namely shared KPI, common KPI and specific KPI.

Shared KPI refers to KPI with the nomination, target,
realization and achievement of the same for the entire
Board of Directors. Common KPI refers to KPI with the
same nomination and target, but the realization and
achievement are different for each member of Board of
Directors. Specific KPI refers to KPI used differently for
each of the Directors with specific program that focuses
on the main duties and priorities for the respective
Director and Directorate.

Parties Performing the Assessment
The internal parties performing the assessment of Director
Management Contract is the Performance Committee

210

and the President Director. Overall, assessment of the
performance of the Board of Directors is conducted by
the Board of Commissioners through the GMS mechanism
in accordance with established regulations.

GCG Assessment for the Board of Directors
We also conduct an assessment on the Board of Director
as well as the Board of Director’s implementation of
GCG. The assessment process was conducted by IICG
as an independent party who perform a CGPI rating on
Telkom. There are 12 aspects being assessed in the
implementation of GCG towards an ethical, honourable
and responsible and fair business, namely the aspects
of commitment, transparency, accountability, responsibility,
independence, fairness, competence, leadership, strategy,
ethics, vision, mission, values, culture and implementation
of a learning organization.

In this GCG assessment, Telkom was rated “Indonesia
Most Trusted Company”.

In addition to the above-mentioned assessment, we are
also assessed by BPKP in the programme “BUMN Bersih”.
The programme is launched by the Minister of State-
owned Enterprises (SOE), marked by the signing of a
commitment by the entire President Director of SOEs.
The assessment of “SOE Clean is intended to ensure all
SOEs implement the GCG both administratively and in
substance as well as to make state-owned enterprises
formidable (professional), superior (prioritizing systems,
quality and innovation) and honourable (no irregularities
and fraud, including corruption).

The assessment is done in stages and gradually. The first
stage is the assessment to theBoard of Directors and
the Board of Commissioners on the third month of the
signing of commitment “BUMN Bersih”. The criteria
“Bersih”, which is used in the program “BUMN Bersih”,
includes the principles of good corporate governance,
namely transparency, accountability, responsibility,
independence and fairness. These five principles are the
cornerstone of management systems ranging from
planning to accountability, a commitment not to take
any action that is fraudulent/ cheating, including all
forms of corruption, receiving and/ or providing gratuities
associated with the position.

After BPKP conducted an assessment of the entire Board
of Directors and Commissioners, the survey results show
that Telkom is given a rating of 8.3 (range 10). This rating
means that the program of “BUMN Bersih” has been
implemented in the Good Corporate Governance (GCG).

Board of Commissioners

Board of Directors

Shareholder

Affiliate Relationsship with

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(1) as of EGM of December 19, 2014.

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211

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

COMMITTEE UNDER THE BOARD OF
COMMISSIONERS
In performing their duties the Board of Commissioners
is assisted by three committees under its supervision,
namely Nomination and Remuneration Committee, Audit
Committee, and Evaluation and Monitoring Committee
Planning & Risk (“KEMPR”).

Profiles of Committee under the Board of
Commissioners

1. Nomination and Remuneration Committee
The composition of the Nomination and Remuneration
Committee based on the decision of the Board of
Commissioners No.13/ KEP/ DK/ 2014 dated August 19,
2014 is as follow:

Chairman/Member

Secretary

Members

Jusman Syafii Djamal /
President Commissioner

Ario Guntoro / Secretary of
Board of Commissioners

Hadiyanto / Commissioner

Parikesit Suprapto /
Commissioner

Imam Apriyanto Putro /
Commissioner

Johnny Swandi Sjam /
Independent Commissioner

Virano Gazi Nasution /
Independent Commissioner

On February 2, 2015, the composition of the Nomination
and Remuneration Committee was amended in accordance
with the decision of the Board of Commissioners 1/ KEP/
DK/ 2015 as follow:

Chairman/Member

Secretary

Members

Hendri Saparini / Komisaris
Utama

Ario Guntoro / Sekretaris
Dewan Komisaris

Hadiyanto / Komisaris

Imam Apriyanto Putro /
Komisaris

Dolfie Othniel Fredric Palit /
Komisaris

Parikesit Suprapto / Komisaris
Independen

Johnny Swandi Sjam /
Komisaris Independen

Virano Gazi Nasution /
Komisaris Independen

Hendri Saparini – Chairman / Commissioner
Hendri Saparini is the chairman of Nomination and
Remuneration Committee. He is responsible for giving
the direction and coordination of the implementation
of the Committee’s tasks.

Hadiyanto, Imam Apriyanto Putro, Dolfie Othniel Fredric
Palit - Komisaris
Parikesit Suprapto, Johnny Swandi Sjam, dan Virano
Gazi Nasution – Independent Commissioners
are members of the Committee and are responsible for
coordinating input from parties related to the controlling
shareholder concerning nomination and remuneration
issues.

Ario Guntoro – Secretary of the Board of Commissioners
Ario Guntoro is the secretary of the Committee who is
not a member of the Committee. He is responsible for
preparing and managing the Committee’s administration
and documentation.

2. Audit Committee
The composition of the Audit Committee as determined
by the Board of Commissioners decision No. 05/KEP/
DK/2014 dated March 25, 2014 is as follow.

Chairman

Secretary

Members

Johnny Swandi Sjam

Tjatur Purwadi

Virano Gazi Nasution

Parikesit Suprapto

AgusYulianto

On February 2015, Telkom has changed the composition
of the Audit Committee. The new composition of the
Audit Committee as determined by the Board of
Commissioners No. 02/ KEP/ DK/ 2015 dated February
2, 2015 is as follow:

Chairman

Secretary

Members

Johnny Swandi Sjam

Tjatur Purwadi

Parikesit Suprapto

Dolfie Othniel Fredic Palit

Virano Gazi Nasution

AgusYulianto

In accordance with the applicable regulations concerning
independence in the capital market, Mr. Othniel Dolfie
Palit Fredric is appointed as a non-voting member.

212

Tjatur Purwadi - Secretary / Member
Tjatur Purwadi became a member of the Audit Committee
since 1 March 2014 and was tasked to facilitate the
operations of the Audit Committee, take charge of
correspondence, prepare documents, report changes
in the Audit Committee Charter, as well as coordinate
the independent auditor selection process.

Before becoming secretary of the Telkom Audit Committee,
Tjatur Purwadi worked at Telkom from 1979 to 2012.
During his time at Telkom Tjatur Purwadi held several
strategic positions such as Vice President (“VP”) -
Financial and Logistic Policy and Head of Internal Audit.
After retiring from Telkom, he served as Director -
Assurance Team Tanudiredja, Wibisana & Partners / PwC.
He holds a degree in accounting from the University of
Gadjah Mada University and holds a Master degree in
Management from Padjadjaran University.

Parikesit Suprapto and Virano Gazi Nasution –
Independent Commissioner
Dolfie Othniel Fredric Palit – Commissioner
In charge of supervising and monitoring corporate
governance, capital market regulations and other laws
relating to the Company’s operations, supervising and
monitoring the Company’s information technology.

Agus Yulianto-Member
AgusYulianto’s duty is to supervise and monitor the
integrated audit process, the consolidated financial
statements, the application of accounting standards,
and the effectiveness of internal control over financial
reporting (“ICOFR”) as well as the effectiveness of risk
management (especially financial reporting risks)
implemented by the Board of Directors.

Agus is a certified accountant and has experience in
auditing, accounting and finance. Between the years of
1983 and 1999, he was an officer of the Agency for
Financial Supervision and Development. He also worked
as a senior consultant in Jakarta Initiative Task Force as
an audit procurement specialist for projects funded by
the World Bank. Before he was appointed as a member
of the Audit Committee, he worked in the Office of the
Public Accountant HLB Hadori Keswick Adiand Partners
as Chairman of the Financial Management Specialist for

a project in Aceh, which is managed and funded by the
World Bank Multi Donor Fund. He holds a bachelor’s
degree in accounting from the State College of
Accountancy, Jakarta and holds a Master in Accountancy
from Case Western Reserve University, Cleveland, Ohio,
United States.

Fit and proper test for Committees under
the Board of Commissioners
Based on the Audit Committee Charter, the requirements
for a member of the Audit Committee are as follow:

Independent Commissioner
1. Not a person who works or has the authority and
responsibility for planning, directing, controlling or
supervising the activities of the Company within the
last six (6) months;

2. Does not have stock, either directly or indirectly to

the Company

3. Is not affiliated with the Company, the Board of
Commissioners, members of the Board of Directors,
or the Shareholders of the Company

4. Does not have a business relationship that is directly
or indirectly related to the Company’s business
activities.

Independence Requirements
1. Not a person in a public accounting firm, law firm,
Office Services Public appraiser, or other parties who
give assurance services, non-assurance services,
appraisal services and / or other consulting services
to the Company for a minimum of six (6) months
before being appointed by the Board of Commissioners;
2. Not a person who works or has the authority and
responsibility for planning, directing, controlling or
supervising the activities of the Company within the
six (6) months prior to appointment by the Board
of Commissioners;

3. Does not have stock, either directly or indirectly to
the Company. In the case of members of the Audit
Committee acquire the Company’s shares either
directly or indirectly as a result of a legal event, the
shares shall be transferred to the other party within
a maximum period of 6 (six) months after the shares
acquired.

4. Does not have a business relationship, directly or
indirectly related to the use within the Company’s
business activities;

5. Is not affiliated with members of the Board of
Commissioners, members of the Board of Directors
or main Shareholders of the Company.

213

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

Integrity and Competence Requirements
1. Has high integrity, ability, knowledge, experience
according to the field of work and be able to
communicate well;

2. Complies with the code of conduct established by

2. May not have been our Telkom executive officer
within six months prior to his appointment as a
member of the Audit Committee;

3. May not to be affiliated with our majority shareholder;
4. May not be a family member of the Board of

Commissioners or Board of Directors;

5. May not own, directly or indirectly, shares of the

Company; and

6. May not have any business relationship that relates

to the Company’s business.

Excemption from the Registration Standard in The
United States
Regulation No. 40 Year 2007 on Limited Liability Company
does not make it compulsory for a public companies to
form an audit committee as required under the Standard
Recording of the New York Stock Exchange (“NYSE”).
However, regulation of the Financial Services Authority
(“OJK”) No. IX.I.5 and Regulation of Indonesia Stock
Exchange (“IDX”) No. 1-A requires the Board of
Commissioners of public companies listed on the Stock
Exchange to establish an Audit Committee consisting
of at least three members. One of these three members
must be an independent commissioner who acts as
chairman of the Audit Committee while the other two
members must be independent and a minimum of one
of the members must have expertise in accounting and/
or finance.

NYSE Listing Standards established under Rule 10A-3
of the Exchange Act requires foreign private issuers
whose shares are listed on the NYSE to have an audit
committee which consists of independent directors.
However, pursuant to Rule 10A-3 (c) (3), foreign private
issuers may be exempt from the independence
requirements if (i) the Government or the home country
stock exchanges requires public companies to have an
audit committee; (ii) a separate Audit Committee of the
Board of Directors, which has members from both inside
and outside the Board of Commissioners; (iii) the Audit
Committee members are not elected by the management
and no executive officer of the company who are members
of the audit committee; (iv) the Government or the home
country stock exchanges requires that the audit committee
must be independent of the management company; and
(v) the Audit Committee is responsible for the appointment,
retention and oversight of the work of the external
auditors.

the Company;

3. At least one member of the Audit Committee shall
have the educational background and experience in
finance, accounting and auditing in which the
concerned or one of them is declared as a financial
expert and accounting (finance and accounting
expert).

4. Must have the knowledge to read and understand

financial statements and the audit process;

5. Mandatory to understand the company’s business,
especially related to the services or business activities
of the issuer or Public Company, auditing process,
risk management and regulations in the capital market
as well as legislation related;

6. Improves continuous competence through education

and training;

7. Knows and understands the function of the Audit

Committee.

Financial and Accounting Expert Requirement
1. Understands Financial Accounting Standards in

Indonesia and in the US;

2. Has experience in applying accounting standards
primarily that relates with judgments and accounting
estimates, Accrued and establishment of reserves;
3. Has experience in preparing and implementing a

general audit of the financial statements;

4. Knows and understands internal control over financial

reporting, including the audit process.

Independence of the Audit Committee
OJK Regulations on Audit Committee require that the
Audit Committee consists of at least three members,
one of whom must be an independent commissioner
who acts as chairman, while the other two members
must be independent. At least one of these two members
must have the expertise (in the context of Item 16A of
Form 20 F) in the field of accountancy and/ or finance.
To be considered independent under the prevailing
applicable regulations in Indonesia, an external member
of the Audit Committee:

1. May not be an executive officer of a public accounting
firm that has provided audit services and/ or non-
audit services to the Company within six months
prior to his appointment as a member of the Audit
Committee;

214

Telkom has an Audit Committee consisting of six (6)
members: three (3) Independent Commissioners, one
Commissioner, and two (2) independent external members
who are not affiliated with Telkom.

Not all members of Telkom Audit Committee are
independent directors as required in Rule 10A-3 of the
Exchange Act. Telkom refers to the general exemption
under Rule 10A-3 (c) (3) regarding the composition of
the Audit Committee. We believe that our reliance on
this exemption will not materially adversely affect the
ability of the Audit Committee to act independently. We
also believe that the intent of the restriction that each
member of the Audit Committee are independent
directors is to ensure that the Audit Committee is
independent from the influence of management and
provides a forum separate from management in which
auditors and other interested parties can perform a
straightforward discussion of the problem. Regulations
issued by the Audit Committee of the OJK require that
each member of the Audit Committee must be independent.
Regulations issued by the OJK Audit Committee also
require that at least two members of the Audit Committee
are external independent members who are not only
independent of the management but also independent
of the Board of Commissioners and Board of Directors
and the Company as a whole. Therefore, we believe that
the standards set out in the regulations issued by the
Audit Committee of the OJK is effective in ensuring the
ability of the Audit Committee to act independently.

Aside from the above matters, unlike the requirements
set forth in the NYSE listing standards, based on the
provisions applicable to the Audit Committee in Indonesia,
Telkom Audit Committee does not have direct responsibility
for the appointment, compensation and retention of the
external auditors. Telkom Audit Committee can only
recommend the appointment of external auditors to the
Board of Commissioners and Board of Commissioner’s
decision must be approved by shareholders.

Audit Committee Financial Expert
The Board of Commissioners has determined that Agus
Yulianto, as a member of the Audit Committee, qualifies
as an Audit Committee Financial Expert as described in
Item 16A of Form 20-F, and as an “independent” member
in accordance with Rule 10A-3 of the Exchange Act.
Agus Yulianto has been a member of the Audit Committee
since November 2010.

Audit Committee Pre-Approval Policies and Procedures
Telkom adopted pre-approval policies and procedures
which requires that all non-audit services provided by
the public accounting firm must be pre-approved by
our Audit Committee, as set forth in the Audit Committee
Charter. Pursuant to the charter, permissible non-audit
services may be carried out by our independent auditors
provided that: (i) the Board of Directors must deliver to
the Audit Committee (through the Board of Commissioners)
a detailed description of non-audit services that is to
be performed by the independent public accounting
firm; and (ii) the Audit Committee shall determinewhether
the proposed non-audit servicewill affect the independence
of the independent public accounting firm or would give
rise to any conflict of interest.

Pursuant to Section 10 (i) (1) (B) of the Exchange Act
paragraph (c) (7) (i) (C) of Regulation S-X Rule 2-01
issued pursuant to the Act, the Audit Committee Charter
waives the pre-approval requirement for permissible
non-audit services where (i) the total cost of the non-
audit services constitutes no more than five per cent of
the total amount of audit fees paid by Telkom to the
independent auditors for the fiscal year in which the
services are provided or (ii )the proposed services are
not regarded as non-audit services at the time the
agreement was signed. In addition to these two
requirements, the performance of non-audit services
must be approved prior to the completion of the audit
by a member of the Audit Committee who has been
delegated pre-approval authority by the full Audit
Committee or by the full Audit Committee itself.

3. The Planning and Risk Evaluation and Monitoring
Committee (“KEMPR”)
In 2014, the Company amended the membership
composition KEMPR through BoC Decree No.02/ KEP/
DK/ 2014, so that the membership PREMC as of January
10, 2014 is as follow:

Chairman

Parikesit Suprapto

Secretary

: Widuri Meintari Kusumawati

Members

Hadiyanto

Johnny Swandi Sjam

Virano Gazi Nasution

Gatot Trihargo

Adam Wirahadi

Agus Yulianto

Rustanto Hadimartono

215

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

On April 30, 2014, the Company amended the composition
of KEMPR in accordance with the Decision of Board of
Commissioners No.09/KEP/DK/2014, so that the
composition of KEMPR is as follow:

Chairman

Secretary

Members

Parikesit Suprapto

: Widuri Meintari Kusumawati

Hadiyanto

Johnny Swandi Sjam

Virano Gazi Nasution

Imam Apriyanto Putro

Rustanto Hadimartono

On February 2, 2015, the company amended the
composition of KEMPR again in accordance with BoC
Decree No.03/KEP/DK/2015, so that the membership
KEMPR is as follows:

Chairman

Members

Hadiyanto

Dolfie Othniel Fredric Palit

Imam Apriyanto Putro

Parikesit Suprapto

Johnny Swandi Sjam

Virano Gazi Nasution

Rustanto Hadimartono

All members of KEMPR (except Hadiyanto, Dolfie Othniel
Fredic Palit, dan Imam Apriyanto Putro) are external and
independent members.

Hadiyanto - Commissioner
Hadiyanto is the chairman of KEMPR and is responsible
for directing, coordinating and monitoring the
implementation of the duties of all members of the
Committee.

Dolfie Othniel Fredric Palit - Commissioner
Commissioner Dolfie Othniel Fredic Palit was appointed
as a member of the Board of Commissioners KEMPR by
Decree No. 03/ KEP/ DK/ 2014 dated February 2, 2015
regarding the composition of the Membership of the
Committee of Evaluation and Monitoring of Planning
and Risk. As a member of KEMPR, Gatot Trihargo is
responsible for the supervision and monitoring of the
implementation RJPP/ CSS, CBP implementation and
implementation of enterprise risk management and
implementation of business initiatives of non-organic
growth.

216

Imam Apriyanto Putro - Commissioner
Commissioner Imam Apriyanto Putro was appointed as
a member of the Board of Commissioners PREMC by
Decree No. 09/ KEP/ DK/ 2014 dated April 30, 2014
regarding the composition of the Telkom’s Membership
Committee of Evaluation and Monitoring of Planning
and Risk. As a member of PREMC, Imam Apriyanto Putro
is responsible for the supervision and monitoring the
implementation of RJPP/ CSS, the implementation of
CBP and the implementation of enterprise risk management
and the implementation of inorganic business initiative
development.

Parikesit Suprapto - Commissioner
As a member of KEMPR, Parikesit Suprapto is responsible
for the supervision and monitoring of the implementation
of RJPP / CSS, the implementation of RKAP and the
implementation of enterprise risk management and the
implementation of inorganic business initiative
development.

Johnny Swandi Sjam - Commissioner
As a member of KEMPR, Johnny Swandi Sjam is responsible
for the supervision and monitoring the implementation
of RJPP/ CSS, the implementation of CBP and the
implementation of enterprise risk management and
implementation of inorganic business initiative
development.

Virano Gazi Nasution - Commissioner
As a member of KEMPR, Virano Gazi Nasution is responsible
for the supervision and monitoring the implementation
RJPP/ CSS, the implementation of CBP and the
implementation of enterprise risk management and the
implementation of inorganic business initiative
development.

Rustanto Hadimartono - Member
The main task of Rustanto Hadimartono is to monitor
the implementation of the Company’s risk management,
monitor the implementation of the Company’s compliance
with regulatory legislation and legal aspects of the
evaluation of certain actions that require the approval
of the Board of Directors Board of Commissioners.

Prior to joining KEMPR in early 2014, Rustanto Hadimartono
worked as a civil servant in the Investment Coordinating
Board (1983-1992). He then moved to private sector tot
Marathon Petroleum Indonesia, Ltd. (1992), PT Rothmans
of Pall Mall Indonesia (1992-1994), PT Anwar Sierad, Tbk
(1994-1997), PT Drassindo Persada Utama (1997-1998),

Duties and Responsibilities of the
Committees under the Board of
Commissioners

1. Nomination and Remuneration Committee
Duties and responsibilities of the Nomination and
Remuneration Committee are as follows:

Nomination:
-

Formulate policies, criteria and selection required
for strategic positions within the Company, namely
positions that is one level below the office of the
Director and the Board (the Board of Directors and
the Board of Commissioners) of consolidated
subsidiaries referring to the principles of good
corporate governance;

- Assist the Board of Commissioners who jointly or in
consultation with the Board of Directors to select
candidates for strategic positions in the Company’s
consolidated subsidiaries (the Board of Directors
and the Board of Commissioners);

- Provide recommendations to the Board of
Commissioners to be submitted to the shareholders
of series A Dwiwarna on:
a. Composition of position of the Board of Directors.
b. Succession planning of the members of the Board.
c. Assessment is based on a benchmark that has
been prepared as an evaluation material for the
purposes of developing the skills of th members
of the Board of Directors.

Remuneration:
- Provide recommendations to the Board of
Commissioners to be submitted to the General Meeting
of shareholders through shareholder of series A
Dwiwarna regarding policies, the amount and / or
the structure of the remuneration of Directors and
Board of Commissioners;

- Remuneration of Board of Directors and the Board
of Commissioners in the form of fixed salary or
honorarium, allowances and facilities and variable
incentive.

2. The Audit Committee
Based on the Audit Committee Charter, in general, the
Audit Committee is responsible for the following:
- Oversee the process of auditing and financial reporting

process;

- Provide recommendations to the Board of
Commissioners on the appointment of the external
auditor;

- Discuss with internal and external auditors all scopes
of work, either audit and non-audit jobs as well as
their audit plan;

- Review the Company’s consolidated financial
statements and the effectiveness of internal control
over financial reporting (“ICOFR”);

- Hold regular meetings with internal and external
auditors, without management present, each to
discuss the results of the evaluation and the results
of their audit and quality of Telkom’s financial
statements as a whole;

- Receive and handle complaints; and
- Carry out other tasks given by the Board of
Commissioners, especially in financial and accounting-
related matters, as well as other obligations required
under the capital markets regulation.

To help his duties, if necessary, the Audit Committee
may appoint an independent consultant or professional
adviser.

3. The Planning and Risk Evaluation and Monitoring
Committee (KEMPR)
The scope of duties of KEMPR involves the following:
- Conduct a comprehensive evaluation on the proposed
Long Term Plan of the Company (“RJPP”) or CSS
and Budget Action Plan proposed by the Company’s
Board of Directors;
Evaluate the implementation RJPP and CBP to fit
the target RJPP and CBP adopted by the Board of
Commissioners; and
To monitor the implementation of enterprise risk
management in the Company.

217

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

REPORTS OF COMMITTEES UNDER THE BOARD OF COMMISSIONERS

1. Report of the Nomination and Remuneration Committee in 2014
This report is a report on tasks that have been performed by the Nomination and Remuneration Committee in 2014.
This report consists of the composition of membership, reports on nomination and report on remuneration matters
that are the responsibility and under the authority of the Nomination and Remuneration Committee of the Board
of Commissioners of PT Telkom Tbk.

a. Membership Composition of the Committee

Proposed name of candidate Director of PT Telkom

The composition of the Nomination and Remuneration
Committee based on the Charter of the Board of
Commissioners is chaired by the President
Commissioner. The Secretary of the Committee is
held by the Secretary of the Board of Commissioners
and members of the committee, which consists of
all Members of the Board of Commissioners. To date,
there has been no member from outside the Board
of Commissioners.

OJK has issued regulations Number 34/POJK.04/2014
dated December 8, 2014 regarding the Nomination
and Remuneration Committee of a public company.
Telkomplans to adopt the OJK regulation at the
Annual General Meeting of Telkom in 2015, subsequent
to which the BOC will observe these rules.

During 2014, the number of nominations and
Remuneration Committee meetings held was as many
as 50 meeting, of which 15 were part of the Internal
Meeting of the Board of Commissioners and 32 were
held in the form of circulation of minutes for approval.

b. Nomination Report

In 2014, the Nomination and Renumeration Commitrtee
completed four (4) processes of granting the proposed
name (nomination) for each of the following:

Proposed Acting officers of President Director of PT

Telkom Indonesia Tbk (Persero).
This is in accordance with the letter of The Board of
Commissioners to the Minister of SOE No. 201/ SRT/
DK/ 2014 dated October 31, 2014 regarding Progress
Report of PT Telkom Indonesia, Tbk. The position of
Commissioner of PT Telkomsel is the ex-officio
President Director of PT Telkom Indonesia Tbk
(Persero).

Indonesia Tbk (Persero).
BOC after meeting of the Nomination and Remuneration
Committee dated December 1, 2014 has issued a
letter to the minister SOE No. 218/ SRT/ DK/ 2014
dated Desember 1, 2014 regarding: Proposed Candidate
Director of PT Telkom Indonesia Tbk (Persero).

Proposed name a replacement candidate of Director
Director of PT Telkom Indonesia Tbk (Persero).
BOC after Nomination and Remuneration Committee
Meeting dated December 4, 2014 has issued a letter
to the Minister of SOE No. 221/ SRT/ DK/ 2014 dated
December 4, 2014 regarding the Proposed Candidate
of President Director of PT Telkom Indonesia Tbk
(Persero).

Approval for the composition of the Board of Directors
and Board of Commissioners of PT Telkomsel. After
a meeting of the Nomination and Remuneration
Committee on December 24, 2014, the Board of
Commissioners issued a letter to the Board of Directors
of Telkom through a letter No. 234/ SRT/ DK/ 2014
dated December 24, 2014 regarding the approval of
the composition of the Board of Commissioners of
PT Telkomsel.

c. Remuneration Report
In 2014, the Nomination and Remuneration Committee
has conducted as many as six (6) activities of remuneration
processes, namely:
1. The proposed remuneration for the Company’s
management to the Shareholders of Series A for the
year 2014 based on the letter of Board of Commissioners
No.057/ SRT/ DK/ 2014 dated April 8, 2014 regarding
the Proposed Remuneration for Board of Directors
and Commissioners 2014 (for AGM) and number 075/
SRT/ DK/ 2014 dated April 8, 2014 regarding the
remuneration for the Board of Directors and the

218

Board of Commissioners for the Fiscal Year 2014 and
Fiscal Year 2013. The Proposals have been studied
by an independent consultant.

2. Compliance with the remuneration for the Board of
Commissioners is proof that Telkom, as a state-owned
enterprise, has adopted Regulation of SOE Minister
No.04/2014. The adjustment is based on the result
of the Nomination and Remuneration Committee
meeting on April 22, 2014 and May 20, 2014. The
adjustment resulted in a decline in the remuneration
received by the Board of Commissioners, a condition
which was also experienced by the Board of Directors.
Previously, adjustment has also been made to the
BOC supporting organ in a bid to follow the Regulation
of the Minister of SOEs No. 12/2012.

3. The provision of operational costs to the Board of
Directors and the Board of Commissioners is in
accordance with the decision of the Board of
Commissioners No.15/ KEP/ DK/ 2014 dated September
29, 2014.

4. The proposal of demand for Long Term Incentive for
the management of Telkom. The Nomination and
Remuneration Committee, assisted by an Independent
Consultant, has submitted a request of Long Term
Incentive to the Shareholders Serie A after, according
to the Minister of SOEs number 04/2014, considering

it possible to get it. The proposal was contained in
a letter of the Board of Commissioners to the minister
of SOE No.176/ SRT/ DK/ 2014 dated October 6, 2014
regarding LTI proposal for PT Telkom. This proposal
was approved by the Shareholders of Series A through
a letter to Telkom No. S-698/ MBU/ 10/2014 dated
October 21, 2014 regarding the approval of
Remuneration in the form of LTI (Long Term Incentive).
Thus, Telkom is the first SOE to be approved to
obtain long-term incentive (LTI) from holder of
Series A Shares.

5. The approval of disbursement of post-job compensation
to former President Director of PT Telkom. Following
a circular meeting of the Nomination and Remuneration
Committee, the Board of Commissioners has issued
a letter of approval No.203/SRT/DK/2014 dated
November 5, 2014, while for the long-term incentive
(LTI) can not be processed because the Board of
Commissioners have not met the requirements.

6. Approval disbursement of long-term incentive (Long
Term Incentive) to former Board of Commissioners
and Board of Directors of PT Telkom. As a follow up
of the results of the Extraordinary General Meeting
on 19 December 2014, it has issued approval of the
Board of Commissioners through letter No. 286/
SRT/ DK/ 2014 dated December 31, 2014 regarding
the execution of the LTI program in 2014.

Jakarta, March 26, 2015

Hendri Saparini
(Chairman of Nomination and Remuneration Committee)

219

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Integrated Audit
1.

The Audit Committee has reviewed management’s
report on its evaluation of the effectiveness of the
Company’s internal control over financial reporting
and EY’s report on the effectiveness of internal
control over financial reporting. The Audit Committee
had also discussed the significant deficiencies (“SD”)
identified during the evaluation process and the
audit process with management and EY as well as
the management plans to remediate weaknesses of
internal control over financial reporting.

2. The Audit Committee had discussed with the
Company’s internal auditors and EY about the overall
scopes and plans for their audits. The Audit Committee
has held meetings with the internal auditors and EY,
without management present, to discuss the results
of the examination and the results of their evaluation
of internal control over financial reporting of the
Company as a whole.

The Audit Committee has reviewed and discussed the
audited consolidated financial statements and notes to
the consolidated financial statements in the Annual
Report (Form 20F) with the Company’s management.
This discussion includes the quality and acceptability of
financial accounting standards applied by Company, the
feasibility of accounting estimation and judgement and
the adequacy of disclosures in the consolidated financial
statements. The management has confirmed to the Audit
Committee that the consolidated financial statements:
(i) are the responsibility of management and have been
prepared with integrity and objective; and (ii) have been
presented in accordance with financial accounting
standards in Indonesia and IFRS.

2. Report of the Audit Committee in 2014

The activities that have been performed the audit
committee in 2014, are as follow:

Independent Auditor
In 2014, Telkom has reappointed Purwantono, Suherman
& Surja, a member firm of Ernst & Young Global Limited
(“EY”) as an independent auditor to conduct an integrated
audit for Fiscal Year 2014. The reappointment of EY as
an independent auditor has been approved by the Annual
General Meeting of Shareholders on April 4, 2014.

The Audit Committee, jointly with EY, has reviewed the
quality and acceptability of the financial accounting
standards adopted by the Company. Based on the results
of the integrated audit, EY is responsible to give an
opinion on the fairness of the presentation of the
consolidated financial statements in accordance with
financial accounting standards in Indonesia and
International Financial Reporting Standards (IFRS) and
the opinion on the effectiveness of internal control over
financial reporting (internal control over financial reporting)
in accordance with criteria of the Committee of Sponsoring
Organizations of Treadway Commission (COSO).

The review and discussion of the Audit Committee with
E&A also cover matters in accordance with auditing
standards on communication with the Audit Committee,
the standards of the Public Company Accounting Oversight
Board (“PCAOB”), the OJK and SEC Regulations and
other applicable regulations.

In accordance with PCAOB rules 3526 - Communication
with Audit Committees Concerning Independence, EY
has submitted a letter to Audit Committee that provides
explanation about the relationships between EY and
Company would be regarded to bear on independence.
The Audit Committee has discussed with EY about this
independence and has received confirmation that EY
professional consideration that Public Accounting Office
are independent, considering the influence of of non-
audit services from public accounting firm.

220

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESBased on the result of the discussions, the Audit
Committee had recommended to the Board of
Commissioners, and subsequently the Board of
Commissioners has approved that the audited consolidated
financial statements and notes on the consolidated
financial statements and management’s evaluation of
the effectiveness of internal control over financial reporting
to be included in the Annual Report which will be be
reported by the Company to OJK and the Annual Report
on Form 20F which will be reported by the Company
to the US SEC.

Internal Auditor
1.

The Audit Committee reviewed Annual Audit Work
Program of Internal Audit (“IA”) in 2014 which is
based on Risk Based Approach Audit before set by
Management.

2. The Audit Committee reviewed and discussed the
findings or internal consultations including its
recommendation on the implementation of Annual
Audit Work Program of IA in 2014 and monitor the
follow up IA recommendation about management
on a quarterly basis. During 2014, IA has given 424
recommendations to Management consist of 347
has completed and 67 recommendations still in
process because they were given in fourth quarter
of 2014.

3. The Audit Committee monitors the findings of the
Audit Board of the Republic of Indonesia (“BPK”)
in 2014 and follow-up that has been done by the
Management. During 2014, BPK has given 41
recommendations to Management, out of which 38
recommendations has completed and 3
recommendations could not be followed.

4. Based on limited review from IA, the Audit Committee
supervise and monitor the risk of fraud and financial
reporting risk that may have a material effect on
the Financial Statement.

Partnership and Community Development Programs
The Audit Committee reviewed and discussed with
management and EY on PKBL Financial Statement Fiscal
Year 2014 and CSR Implementation Compliance Report
with regulations.

Whistleblower
1.

The Audit Committee has developed procedures
for receiving and handling complaints regarding
accounting problem, internal controls and auditing,
including procedures to keep secrecy of the informan,
dan anonymous accusation submitted by employees
in accordance with the OJK Regulations No.IX.1.5
and Sarbanes-Oxley Act of 2002 section 301 of the
Public Company Audit Committees.

2. With regard to enterprise risk management, the
Audit Committee also oversees and monitors the
risk of fraud and financial reporting risks that may
have a material effect on the financial statements.

Jakarta, March 26, 2015

Johnny Swandi Sjam
(Chairman of Audit Committee)

221

2014 Annual Report PT Telkom Indonesia Tbk (Persero)3. Report of the KEMPR in 2014

Throughout 2014, KEMPR has conducted surveillance
and monitoring the implementation of the current CSS,
the implementation of RKAP in 2014, the implementation
of the capital expenditure (capex) in RKAP 2014, the
analysis of investments in subsidiaries and the
implementation of enterprise risk management. In
addition, KEMPR has also conducted an evaluation of
the proposed CSS 2015-2019, the proposed RKAP 2015,
as well as other tasks assigned by the Board of
Commissioners.

Activities of Planning Committee and Risk Evaluation
and Monitoring in 2014:

1. Corporate Strategic Scenario (“CSS”)
KEMPR has monitored the implementation of RJPP/ CSS
for the period from 2014 to 2018, especially that relates
to the current year and conduct evaluation of the proposed
CSS for the period from 2015 to 2019 which became the
basis for the development of Corporate Annual Message
(“CAM”) in 2015 and RKAP in 2015. In accordance updates
of RKAP strategy RJPP periodic, then the CSS period
from 2015 to 2019 is an update to the CSS period from
2014 to 2018.

2. Annual Business Budget Plan
In carrying RKAP 2014, the Board of Commissioners has
instructed the Board of Directors to seek timely
implementation of capital expenditure, particularly in
supporting the achievement of the Company’s revenues.
As for the RKAP 2015, the Board of Commissioners has
also provided strategic directions, including:
a. Synchronization of potential retail consumer demand
of Telkom and its subsidiaries that cover the same
service segment;

b. The need for concrete steps to encourage the growth

of earnings;

c. Implementation of integration in the establishment,

monitoring and coaching subsidiaries;

d. Increased capacity of subsidiaries to explore external
market in order to achieve the proportion of revenue
from external market which is higher than the
achievement in 2014.

KEMPR focus in monitoring the implementation of RKAP
in 2014 which includes monitoring the realization of
RKAP in 2014 both in the achievement of revenue,
expenses, and profits, as well as capital expenditures.
In order to obtain more optimal monitoring results,
KEMPR had performed several field visits to monitor the
progress of the implementation of capital expenditure
and progress towards CBP.
KEMPR has conducted field visits in 2014 to the regional
unit in Central Java and Yogyakarta, Sulawesi, and
Surabaya. In addition, KEMPR has also conducted field
visits to project sea cables Manado Sulawesi Papua Cable
System (“SMPCS”) segment-Ambon-Makassar Jayapura,
optical deployment by Telkom access in several locations
like Aceh, Manado and the construction of hotels by
Telkom Property in Makassar.

3. Enterprise Risk Management (“Enterprise Risk
Management”)
KEMPR is tasked to monitor the implementation of ERM
in 2014, which include the handling of risks that have a
significant impact on the RKAP 2014. For the first half
of 2014, there were some significant issues of risk, ie the
risk of the cellular business, fixed broadband, Wi-Fi, and
outsourcing. As for the second half of 2014, KEMPR
noted some risks that KEMPR namely, the risk impact
of changes in technology and regulation, increased levels
of competence in mobile and fixed broadband business,
as well as the risks of mergers, acquisitions and
partnerships. KEMPR specifically monitor efforts to
mitigate the risks that can be classified as significant
risk.

4. Measures of Directors that require approval from
the Board of Commissioners
In 2014, KEMPR has reviewed the following actions by
the Board of Directors members which require the
approval of the Board of Commissioners:
a. Permits release of the capital expenditure for the

first and second quarter of 2014;

b. Additional capital investment in Telkom Metra for
funding the joint venture (JV) Network Application
Service, which is a collaboration Telkom Metra and
Telstra;

222

In carrying out their duties during 2014 KEMPR generate various reports and studies (evaluation). Details are:

CSS

Output

RKAP

Capex

Risk/Legal

Certain Measure

Jakarta, March 26, 2015

Hadiyanto

(Chairman of KEMPR)

223

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

WORK MEETING OF COMMITTEES UNDER THE BOARD OF COMMISSIONERS

1. Work Meeting of the Nomination and Remuneration Committee
During 2014, the Nomination and Remuneration Committee has held 50 meeting, including 32 circulation of minutes
for approval

Name

Meeting Number

Attendance Number

Attendance Percentage (%)

Jusman Syafii Djamal

Johnny Swandi Sjam

Virano Gazi Nasution

Parikesit Suprapto

Hadiyanto

Gatot Trihargo (1)

Imam Apriyanto Putro

Hendri Saparini(2)

Dolfie O.F.P(2)

Ario Guntoro

Description :
(1) As of April 4, 2014
(2) Starting from Desember 19, 2014

100

2. Work Meetings of the Audit Committee
Throughout 2014, the Audit Committee met 38 times. This meeting was held in accordance with the requirements
of the Audit Committee Charter and aims to facilitate the implementation of tasks and responsibilities for each
member of the Audit Committee. The number of meetings and the attendance of the Audit Committee members
are as follows.

Table of Numbers of Audit Committee Meeting

Name

Attendance Number

Attendance Percentage (%)

Johnny SwandiSjam

TjaturPurwadi (1)

ParikesitSuprapto

Virano Gazi Nasution

SahatPardede (2)

AgusYulianto

Description :
(1) Starting from March 2014
(2) As of March 2014

224

Table of Number of Risk Planning, Evaluation and Monitoring Meetings

Number of Meeting

CSS

RKAP/Capex

Certain Action

Attendance
Number

Attendance
Percentage

100%

60%

57%

100%

60%

100%

Name

Parikesit Suprapto

Hadiyanto

Gatot Trihargo(1)

Imam Apriyanto Putro (2)

Johnny Swandi Sjam

Virano Gazi Nasution

Rustanto Hadimartono

Widuri Meintari (3)

Description :
(1) Ending since April 4, 2014
(2) Starting from April 30, 2014
(3) Ending since April 30, 2014

225

2014 Annual Report PT Telkom Indonesia Tbk (Persero)CORPORATE SECRETARY / INVESTOR RELATIONS (“IR”)

Telkom has appointed a Vice President (“VP”) of Investor Relations under the Director of Finance who was previously
under the Head of Corporate Communications and Affairs to perform the functions as Corporate Secretary in
accordance with OJK Regulation Number 35/POJK.04/2014 regarding Company Secretary of Public Company.
Investor Relations is responsible for preparing the provision of information on the process of interrelations between
the Company and the Shareholder as well as maintaining a systematic feedback mechanism to the management to
be able to respond to shareholder and capital market dynamics appropriately and effectively.

Profile Corporate Secretary
Andi Setiawan, 36 year-old, is the Company's VP Investor
Relation. He joined with Telkom Group since January
2014 as GM Investor Relations at PT Telekomunikasi
Selular. On March 4, 2015, he was appointed as Vice
President, Investor Relations (Corporate Secretary) of
our Company. He previously worked at PT Pemeringkat
Efek Indonesia (Indonesia Credit Rating Agency) as
Corporate Ratings Analyst (2004). In 2007, he joined
PT Bakrieland Development Tbk., as Corporate Secretary
Manager. In 2010, he joined PT Summarecon Agung Tbk,
where he was responsible for leading the role of Investor
Relations (IR) function, as Investor Relations Manager.
He holds a Bachelor degree in Financial Management, Faculty
of Economics from University of Indonesia.

Duties and Roles of Corporate Secretary
The duties and responsibilities of the Corporate Secretary are conducted by several units, namely:

Duties and Roles of Corporate Secretary

Corporate Governance
a. Communication, coordination with the other divisions/ units/ subsidiaries
related to the implementation, monitoring, assessment and review of corporate
governance in the company.

b. Build trust towards the management ability to manage the company and build

long-term value for stakeholders.

c. Facilitate and build effective relationships between the Board of Commissioners
and the Board of Directors with a focus on (agency problems and continue
to promote checks and balances.

d. Ensure the management of contractual relationship between the owners and
managers and the Board of Commissioners and the Board of Directors charters
to ensure effective control measures on decisions that are not explicitly stated
in the contract and under certain conditions as necessary to ensure the
continuity of the company.

e. Balancing competence and adequacy of information to the Board of
Commissioners and Board of Directors to prevent the occurrence of competency
gaps and asymmetric information between the Board of Commissioners and
Board of Directors.

f. Manage and ensure that the Company's Annual Report have included the

implementation of GCG in a corporate environment.

People in Charge

Head of Corporate
Communication & Affair

Investor Relations Sub
Directorate – Head of Corporate
Communication & Affair

CSR
a. Coordinate the implementation of the company's activities related to social

Public Relation Unit -CDC

responsibility (CSR).

Corporate philosophy
b. Socialize and monitor the implementation of the Corporate Philosophy,

Organizational Development
Sub Directorate – DIT HCM

Corporate Value, System, Business Ethics and Corporate Culture

226

Duties and Roles of Corporate Secretary

People in Charge

GCG Policy
a. Develop policy and GCG management framework including
policies of GCG within the scope of the Business Group
(subsidiary governance).

BOD Administration & Corporate Office
Assist the Board of Directors with various activities, information and documentation,
among others:
a. Set up a Special Register, relating to Directors and their families as well as
the Board of Commissioners and their families both in the Company and its
affiliates which include stock ownership, business relations and other roles
that give rise to a conflict of interest.

b. Create Shareholder Register.
c. Attend Meeting of the Board of Directors and make the minutes of meetings
d. Hold General Meeting of Shareholders.

Synergies and Coordination
a. Communicate and build synergy with the Group's Company Secretary to
adress information and matters relating to the vision, mission, governance and
management of the Telkom Group.
b. Communication and synergy programmes within the scope of the Telkom
Group.

Legal / Regulatory Compliance
a. Compliance with the financial and capital markets provisions:

- Remind and provide input to the Board of Directors to ensure that the company
always adhere to and execute capital market regulations and adhere to the
Business Ethics and Corporate Work Ethics.

- Keep updated with the development of capital markets, particularly capital
market regulations as well as international practices relating to corporate
governance.

- As a liaison or contact person that facilitates communication between the
Company and the Stock Exchange OJK, where the shares of the Company are
listed and stakeholders.

b. Compliance with the provisions of the regulation:

Remind and provide input to the Board of Directors that the company always
adhere to and comply with the appropriate regulatory provisions.
Following the development of the industry, especially the regulations in force
and future regulations that shall apply to the company.

c. Compliance with legal provisions and the company.

Subdit Risk Process
Management – Head of CRMGA

Corporate Office Support
Administrations – Sub Unit,
Corporate Communications &
Affair Unit

Subdit Innovation Strategy &
Synergy

Subdit War Room

Investor Relations Sub
Directorate – Head ofCorporate
Communication & Affair and
Legal & Compliance Sub
Directorate- Head of CRMGA

Subdit Regulatory Management
–Head of Corporate
Communication & Affair

Following the development of regulations and ensure that the company always
adhere to laws and regulations.

Subdit Legal & Compliance
Dept. of CRMGA

Communication/Disclosure (Liaison Officer)
a. Communication with the Monetary Authority, investors and capital markets:
- Manage two-way communications and maintain good relations with the OJK

Subdit Investor Relations
– Dept. Corporate
Communication & Affair

and IDX.

- Prepare and communicate information that is accurate, complete and timely
about the performance and prospects of the Company to the public capital
markets, as well as stakeholders, in collaboration with the concerned division.
- Provideng services to shareholders in terms of information relating to the
condition of the company (eg information to investors, journalist gatherings,
media and regular analysis of the impact of macro economy on the performance
of the company).

- Publicize the company's corporate action in a tactical, strategic and timely

manner.

b. Communication with the public, customers and internal:

- Determine the criteria regarding the type and content of information that can
be disclosed to stakeholders, including information that can be delivered as a
public document.

- Revise the display and governance of internal media and establish good
relationships with stakeholders through the organization of important events.
- Maintain and update information about the Company submitted to stakeholders,

Subdit Public Relations – Dept.
of Corporate Communication &
Affai

both in the website, newsletter or other information media.

227

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Competence Enhancement of Corporate Secretary
In order to develop the competence of the Corporate Secretary, we have participated in various training and
socialization which are organized by various institutions

Training Name

Executive Telecommunication MBA Program

Accounting for Finance

2014 NIRI Annual Conference

Venue

Jakarta

NIRI

Organizer

Time

Truscell

May 6-9, 2014

May 21-23, 2014

Las Vegas, US

June 8-11, 2014

Advanced Corporate Finance & Financial Analysis

Jakarta

Truscell

June 9-12, 2014

Socialization of PSAK and FGD POJK Corporate
Secretary

Jakarta

OJK

June 17, 2014

Broadband Passport

Digital 7 Social Media passport

Singapore

Communic Asia 2014 June 17-20, 2014

Management's Discussion & Analysis Workshop

London

IAS Seminars

June 19-20, 2014

Management's Discussion & Analysis Workshop

London, England

IAS Seminars

June 19-20, 2014

Certified Management Accountant

Jakarta

ICMA

July 1, 2014

7th Annual Depository Receipts Issuers Conference

Sapporo, Japan

BNY Mellon

July 10-13, 2014

Finance Essentials for IR & Think Like an Analyst

San Fransisco, US NIRI

August 12-14, 2014

228

INTERNAL CONTROL SYSTEM

Financial and Operational Control
In order to control the financial and operational,
management has evaluated the effectiveness of the
controls and procedures of disclosure of the company.
This activities have been conducted under the supervision
and participation of the management, including the
Company’s President or, those that is equivalent to the
Chief Executive Officer / CEO) and Finance Director,
which is equivalent with Chief Financial Officer (CFO),
as defined in Rules 13a-15 (e) and 15 ( d) - 15 (e) of the
Exchange Act. Based on this evaluation, the CEO and
CFO have concluded that on December 31, 2014, the
company’s controls and disclosure procedures have
been effective.

Management has conducted an evaluation on the
effectiveness of the Company’s controls and disclosure
procedures to ensure that information required to be
disclosed in reports filed under the Exchange Act is
recorded, processed, summarized and reported within
the time prescribed in accordance with the terms and
format of the SEC.

The Information is collected and communicated to the
management, including the President Director and the
Finance Director, so that decisions making can be timely
and in accordance with required disclosure.

Compliance
Our corporate compliance is managed by the Legal &
Compliance unit under the Department of Compliance,
Risk Management and General Affairs (CRMGA). This
unit seeks to ensure that the policies, decisions of
companies and all business activities are conducted in
accordance with the provisions of applicable laws and
regulations, both internal and external. Proactively, we
run a compliance policy at the business unit and
transactional levels. Some compliance activities carried
out in 2014 include:

a. Supporting business activities by providing legal
advice through the delivery of legal opinion on the
management action plans and problems related to
conformity with applicable laws or regulations (legal
advisory).

b. Supports business activity/enterprise transactional
by conducting review of any draft agreements/
contracts (procurement and non-procurement) to
ensure in advance that the procurement or partnerships
procedure hascomplied with the procurement
procedures/ partnership established by the company
and external regulations.

c. Conducting legal review of business and policy

initiatives.

d. Settlement of litigation and non-litigation cases.

Evaluation on the Effectiveness of Internal
Control

1. Management Report On Internal Control Over Financial
Reporting

The Company’s Management is responsible for
implementing and enforcing internal control over financial
reporting adequately. It is as defined in Exchange Act
Rules13a-15 (f) and 15d-15 (f). The internal control over
financial reporting is a process designed by, or under
the supervision of Chief Executive Officer and Chief
Financial Officer, and carried out by the Board of Directors,
management, and other personnel to provide reasonable
assurance regarding the reliability of financial reporting
and the preparation of the consolidated financial
statements for external purposes in accordance with
generally accepted accounting principles and includes
those policies and procedures which, (1) pertain to the
maintenance of records in reasonable detail, accurately
and fairly reflect the transactions and dispositions of
the assets of the Company, (2) provide reasonable
assurance that transactions are recorded as necessary
to permit preparation of Consolidated Financial report
in accordance with generally accepted accounting
principles, and that the Company’s revenues and expenses
received and spent only based on the authorizations
of management and directors of the Company, and (3)
provide reasonable assurance regarding prevention or
timely detection in terms of unauthorized acquisition,
use or disposition of the Company’s assets which could
have a material effect on the consolidated financial
statements.

With the existing limitations, internal control over financial
reporting may not prevent or detect all misstatements.
In addition, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls
may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or
procedures may deteriorate.

229

2014 Annual Report PT Telkom Indonesia Tbk (Persero)

The management has assessed the effectiveness of the
Company’s internal control over financial reporting as
of December 31, 2014. In making this assessment, the
management used the criteria established by the Internal
Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Tradeway Commission
(COSO). Based on this assessment, management has
concluded that as of December 31, 2014, our internal
control over financial reporting was effective.

2. Attestation Report of the Registered Public Accounting
Firm
The effectiveness of our internal control over financial
reporting as of the date of December 31, 2014 has been
audited by Purwantono, Suherman & Surja, an independent
and registered public accountants, as stated in their
report which appears in the Consolidated Financial
Statements.

3. Changes in Internal Control over Financial Reporting
There were no significant changes in internal control
over financial reporting throughout the most recently
completed fiscal year that would greatly affect or
reasonably have effect materially on the internal control
over financial reporting.

We are committed to continuously improving internal
control processes and will continue to review and monitor
the financial reporting controls and procedures to ensure
compliance with the requirements of the Sarbanes-Oxley
Act and related rules defined by COSO.
We also will continue to devote significant resources to
improve our internal control over financial reporting
from time to time.

INTERNAL AUDIT UNIT
Unit of Internal Audit (IA) plays an active role in exercising
control over the Company’s business activities.Head of
Internal Audit UnitThe Internal Audit Unit is led by a
Head of Internal Audit, who is appointed and dismissed
by the President Director with the approval of the Board
of Commissioners. As of December 31, 2014, the Head
of Internal Audit is Mohammad Nuhin.

A brief profile of Mohammad Nuhin
Served as Head of Internal Audit since 1 May 2014 and
appointed to the position based on a decree signed by
the President Director. Since 1989, he has worked with
Telkom and its subsidiaries and has had over 19 years of
professional experience in various positions at the
management level. He previously served as SVP of
Internal Audit in Telkomsel from July 1, 2012 to April 30,
2014 and as VP of Internal Audit at Telkom from February
1, 2007 to June 30, 2012.

Total Number of Personnel of the Internal Audit Unit
At the end of 2014, the number of personnel in Internal
Audit unit was 48 people. The details of the internal
audit personnels which are categorized according to
their education level are as follow:

Latest Education

Total

Percentage (%)

SMU

Total

2,0

10,4

4,2

54,2

29,2

100

Structure and Status of Internal Audit Unit
As stipulated in the applicable capital market regulations,
Internal Audit is an independent unit to other units and
reports directly to the President Director.

230

Telkom’s Internal Audit organizational chart is presented below.

Head of Internal Audit
Mohammad Nuhin

VP Infrastructure &
Operations Audit
Rubi Handojo

VP Enterprise Management
Audit
Purwoto

VP Support & Subsdidiary
Audit
Purwadi Siswana

AVP Service & Delivery
Audit
Rahadian Khrisna S

AVP Financial & Asset
Management Audit
Saul Rudy Nikson

AVP Subsidiary Audit
A. Bayu Katon

AVP Service Operation
Audit
Yanti Iswari

AVP Share Service Audit
Joni Pathibang

AVP IT Support Audit
I Ketut Darsumantra

AVP Infrastructure & Supply
Audit
Imam Santosa

AVP ICFR & Risk
Management Audit
Purwoto

AVP Quality Assurance &
System Development Audit
Edi Djoko Swasono

231

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Internal Audit Charter
Telkom’s Internal Audit unit is equipped with the Internal
Audit Charter as a corporate formal document, which
contains a description of the vision, mission, structure,
status, duties, responsibilities and authority of the Internal
Unit, including personnel requirements of Internal Auditors.
The preparation of Internal Audit Charter is based on
the international standards for professional practice of
internal auditing issued by the Institute of Internal
Auditors (“IIA”) and has been approved by the President
Director and Audit Committee based on the Board of
Directors Decision 711 / PW000 / UTA-00/2008 regarding
Internal Audit Charter of the Company.

Vision, Mission, Duties and Responsibilities
of the Internal Audit
Vision
As an integral part of the Company, IA has a vision to
be a “Smart Partner” to the Management, Business Unit
and Subsidiaries to achieve the objectives of the Company
and to be a driving force in the creation of a disciplined
cultureat all levels of the organization through the
implementation of all of laws/policy/regulations/
procedures/business process.

Mission
1. Providing professional internal audit services and
consultation, objective also independent for
management, business unit and subsidiary.

2. Providing assurance of appropriate financial reporting.
3. Guarding internal control implementing actively,
supporting the enhancement of GCG Implementation
and evaluating risk management.

The Internal Audit’s vision and mission are implemented
through systematic and measurable activities in line with
prevailing standards in each phase of the audit process
ranging from the preparation, implementation and
monitoring of follow-up actions. For this purpose, a
risk-based audit methodology is used during the
preparation phase of an audit as the primary guideline
to determine the auditability of units based on the level
of risk, that is, the higher the risk, the higher is the need
for an audit. The risk levels of an audit are based on risks
that have been mapped and defined by the Company
as well as the professional assessment by the Internal
Audit itself.

Duties and Responsibilities
To facilitate the risk-based audit paradigm in carrying
out its duties and responsibilities, IA has implemented
the Audit Management System (“AMS”) management
tool, an online application to document all of the
implementations of risk based audits via online.

Improvements in IA’s participation are carried out by
improving the quality assurance for the company's
operations through audit and non-audit activities. Audits
are performed to ensure that potential business risks
are mitigated by effective internal controls. If deficiencies
are found in the internal control mechanism of a certain
business process, or when certain risks turned out to be
out of control, a substantive test is performed on the
audit object as the next step to find the root cause of
the problem.

In addition, as consequence of our dual listing in the
Indonesian Stock Exchange (IDX) and the New York
Stock Exchange (NYSE), IA periodically examines and
audits the effectiveness and adequacy of internal control
mechanism in terms of financial reporting in line with
the Internal Control over Financial Reporting ("ICOFR")
standards. In order to support audit and encourage each
unit’s awareness of the importance of internal control,
all relevant business units perform quarterly Control Self
Assessment (“CSA”) over its internal control responsibilities.

Periodically, IA also reviews findings in the CSA to assess
their adequacy and make recommendations for
improvements in terms of design and implementation.
The next step is to participate in the activities of internal
consulting services. Internal consulting services, among
other objectives, focus on the implementation of the
Company's operations classified into infrastructure
management (of production tools), as well as product
and service support operations, including identification
of Group Financial Reporting Risk/”GFRR”, preparation
of subsidiaries’ business process and human resource
management. Internal consulting activity is more of a
preventative solution to secure that business operations
remain in the right direction and within the corridor of
prevailing regulations.

232

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICES
As part of a company highly committed to successful GCG, IA has an important role in the whistleblower mechanism
which is the domain of the Audit Committee and the Executive Investigative Committee (“EIC”) of which Head of
IA is also the secretary of EIC. Whistleblower mechanism serves to accommodate any “complaint” filed by employees
and forwarded to the management. If the Audit Committee and the EIC consider that the complaint needs further
investigations, IA is to prepare follow-up actions as part of the audit assignment.

Findings from such activities are reported to the President Director with a copy for the Audit Committee and later
distributed to the respective auditee for follow-ups and corrective measures.

Further controls are necessary to ensure that an auditee has provided adequate response over the results of the
audit and consulting service. Operational follow-ups are conducted by the auditee while being monitored by the
IA. For this purpose, follow-ups are limited to significant business process areas with an agreed time frame of
completion.

The independence
As set forth in the existing capital market regulations, namely Regulation No. XI.2.7, Internal Audit is an independent
unit to other work units and reports directly to the President Director. The Head of Telkom’s Internal Audit is appointed
and dismissed by the President Director upon the approval of the Board of Commissioners. One of the implementations
of the independence of the Internal Audit Unit in Telkom is reports sent to the President Director and the Audit
Committee (Member of the Board of Commissioners).

Professional Qualifications/Certification
To maintain and enhance the competence of auditors in order to be adequate both in quality and quantity and to
be able to act in accordance with the scope of the Internal Audit in guarding the Company’s business development,
the Internal Audit continues to make efforts to:
1. enroll Internal Audit’s auditors in training, seminars and workshops of a technical nature; and
2. enroll Internal Audit’s auditors in continuous learning certified, both locally and internationally.

Currently the Company’s Internal Auditor Unit has nine auditors with national certification of Qualified Internal
Auditor (QIA) and six auditors with international certification, consisting of one Certified Fraud Examiner, two
Certified Information Systems Audit (CISA), and one Certified Management Audit (CMA).

Currently the number of auditors that already have certification both nationally and internationally are as follows:

Type of Certification

Qualified Internal Auditor (QIA)

Certified Fraud Examiner (CFE)

Certified Information System Audit (CISA)

Certified Risk Management Audit (CRMA)

Certified Management Audit (CMA)

Total

In 2014, the Internal Audit has actively enrolled its auditors in preparation for international certification such as
certified Information System Auditor (“CISA”) and Certified Internal Auditor (“CIA”).

233

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
Telkom Internal Audit’s Active Involvement in Professional Organization
Telkom’s Internal Audit has been actively involved in the activities of the Forum Communication of Internal Control
Unit (“FKSPI”) Indonesia. This forum was established to be a vehicle to improve the quality of supervision and to
establish international standard professional auditors. FKSPI members consist of the Internal Audit Unit of state
enterprises, universities and private companies. FKSPI regularly organizes seminars and workshops to improve the
competency of its members.

There are nine personal of Telkom’s Internal Audit who are members of the Institute of Internal Auditors (IIA). These
memberships are as part of the efforts by Telkom’s Internal Audit to be continuously updated with scientific
developments in the field of audit and assurance in the world.

Audit and Consultation Implementation in 2014
In accordance with the Internal Audit Annual Work Plan, the Internal Audit Unit has conducted 47 object auditing
and consulting for 2014.

Sub Unit

Q-I

Q-II

Q-III

Q-IV

Year-2014

Enterprise Management Audit

Infrastructure & Operation Audit

Support & Subsidiary Audit

Total IA

Up to December 31, 2014, the Internal Audit has completed 47 audits/ consulting and has produced 312 recommendations
as follow:

Sub Unit

Total
Recommendation

Follow-Up Status

Closed

Open

Enterprise Management Audit

Infrastructure & Operation Audit

Support & Subsidiary Audit

Total IA

118

218

424

193

357

234

Programmes

Location and Date

Number of
Participants

Number of
Days

Advance Certified Behavioral Consultant (CBC)

National / 25-26 March

Guidance and Exam of CFE Certification

National / 10-14 February

Bootcamp Financial Risk Management (FRM) Certification

National / 24-25 and
28-30 April

Bootcamp Financial Risk Management (FRM) Certification -
PART 2

National / 13-14 May

CBC Advanced

Company Strategic Planning

National / 21-23 April

National / 24-26 Sep

COSO 2013 Implementing the Framework

International / 7-8 Oct

Digital Forensic

Exam CFE

National / 25 June

National / 24-25 Sep

Finnon 1 - Understanding Finalcial Statement

National / 1-3 July

Lead Auditor BCMS (ISO 22301) and PAS 99 (Batch-1)

National / 16-20 Juny

Lead Auditor Course (LAC) ISO 20000

Training & Workshop Evaluasi Organisasi

ISO 22301 Workshop

ISO 27001 Workshop

ISO 27001 & ISO 22301 Workshop

National / 15-19 Dec

National / 19-21 May

National / 23-27 June

National / 21-25 April

National / 14-26 April

Psycologic and Communication Audit Training

National / 11- 13 June

Seminar of Business Valuation Conference

National / 30 Sep - 1 Oct

Seminar and Musyawarah Kerja National FKSPI 2014

National / 17-19 Sep

Seminar National of Internal Audit 2014

ISO BCMS Certification

QIA Level of Manager Certification

National / 15-17 April

National / 16-20 Juny

National / 1-11 August

Sharing Session Psycology and Communicatio Audit

National / 09 Juny

Spirituality in Work for Managers (Islam) Batch-35

National / 17-21 Nov

Spriritual Capital Management

National / 11-14 March

Suspim International Thunder-Bird, Arizone

International / 8-25 May

Technic and Methods of Supply

National / 22-23 May

The European & UK Anti Corruption & Compliance Congress

International / 5-6 Juny

Workshop Negotiation Skill & Simulation

National / 19-21 March

Workshop Goods and Services Supply

Workshop Drafting UBIS Profile

National / 11-12 Sep

National / 12-14 May

235

2014 Annual Report PT Telkom Indonesia Tbk (Persero)ExTERNAL AUDIT
In line with the existing procedures and taking into consideration the independence and qualifications of the
independent auditors, our AGM dated 4 April 2014 has appointed Public Accountant Office (“KAP”) Purwantono,
Suherman & Surja (in collaboration with Ernst & Young Global Limited), which is registered KAP with the OJK, to
conduct an audit of the Consolidated Financial Statements for the year ended December 31, 2014. The fee for the
audit on the Consolidated Financial Statements for the Fiscal Year 2014 amounted to Rp31.5 billion, (excluding VAT)

Purwantono, Suherman & Surja became our public accountant since 2012. The accountant who signed the Independent
Auditors’ Report for Fiscal Year 2014 is Hari Purwantono. Purwantono, Suherman & Surjawas also appointed to audit
the Effectiveness of Internal Control over Financial Reporting for the Fiscal Year 2014 as well as to audit the use of
funds for the Partnership and Community Development (“CSR”) in the Fiscal Year 2014.

The public accounting firms that has audited the Financial Statements of the Company for the last five years are
listed below.

Year

Public Accountant Office

Public Accountant

2014

2013

2012

2011

2010

Purwantono, Suherman & Surja

Drs.Hari Purwantono

Purwantono, Suherman & Surja

Drs.Hari Purwantono

Purwantono, Suherman & Surja

Drs.Hari Purwantono

Tanudiredja, Wibisana & Rekan

Chrisna A.Wardhana, CPA

Tanudiredja, Wibisana & Rekan

Chrisna A.Wardhana, CPA

Fee
(Rp million)

31,500

28,240

26,619

40,503

41,872

External Auditor Fees and Services
The following table presents a summary of the relevant bill audit services for the years 2012, 2013, 2014.

Audit Fee

Tax Service Fee

Other Fees

Years that ended on Desember 31

2012

(Rp million)

26,619

326

2013

(Rp million)

28,240

2014

(Rp million)

31,500

Audit by Other External Audit Institutions
In addition to being audited by Public Accounting Firm (KAP), the Auditor of the Supreme Audit Agency (BPK)
conducted an audit of the procurement activities in Telkom in 2014. This audit further enhanced “control awareness”
of Telkom’s management in the process of the procurement of goods and services.

236

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICES
RISK MANAGEMENT
Risk management is important in the business of
communication because these businesses covers a wide
areawhich requires a large investment with a high level
of competition. The implementation of the risk management
system is strengthened with SOEs Minister Regulation
No.1/2011 which requires Telkom tol apply risk management.
The implementation of risk management is carried out
systematically and structurally. The Company’s risk
management is applied to minimize any possible risks
that could negatively impact the achievement of Company
goals.

Development of Risk Management Milestone
Since 2006, we have a risk management framework with
reference to the COSO Enterprise Risk Management
(ERM) as stipulated in the Board of Directors’s Decree
No.16 of 2006 on Corporate Risk Management (Telkom
Risk Management).

Telkom’s risk management in 2006 began with the
establishment of the Legal Unit of Risk Management &
Compliance (RMLC) under the coordination of the
Executive Vice President (EVP). Subsequently, in 2007
the Company established the Directorate of Compliance
and Risk Management (CRM) under the control of the
Director of CRM.

In 2013, with the improving level of awareness on risk
management and greater business challenges, the
functions of Directorate of CRM was changed to the
Directorate of Wholesale & International, while the
Company formed the Compliance Department, Risk
Management and General Affairs (CRMGA) under the
responsibility of the Head of CRMGA to run the
management of Governance, Risk & Compliance.

The long journey in managing Risk Management from
2006 to2014 has led the company to a stage where risk
are taken into consideration in strategic decision making,
operational implementation, while overseeing compliance
and in guarding the financial reporting process through
the Internal Control Processes and Procedures Disclosure
Controls.

Looking ahead, we continue to strive to maintain and
improve the maturity of the implementation of risk
management (ERM Maturity Level) with some emphasis
as follows:
2015: Enhancement of the mature implementation of
Business Continuity Management System (BCMS)
2016: Enhancement of the the mature implementation
Revenue Assurance & Fraud implementation Management
System

Organization of business risk management at the corporate level
With reference to the Board of Directors Regulation of No.202.11 / 2013 dated June 25, 2013 on Office organization
of Telkom Group, the organizational structure of the Sub-Department of Risk and Process Management is under the
coordination of the Department of Compliance, Risk Management and General Affairs (CRMGA). The diagram is as
follow:

VP Risk & Process
Management

AVP Risk Strategy

AVP Process Strategy

VP Risk & Process
System Development

237

2014 Annual Report PT Telkom Indonesia Tbk (Persero)However, in implementation, Telkom also considers and
integrates the framework with references to other relevant
guidelines including:
1.

ISO 31000 - Enterprise Risk Management as a
comparison and complementary implementation
2. ISO 27001 - Information Security Management System
(ISMS) as a reference in the development of risk
management to ensure information security in terms
of the Confidentiality, Integrity and Availability
3. ISO 22301 - Business Continuity Management System
(BCMS) as a reference in ensuring business sustainability
4. ISO 20000 - Information Technology Service
Management (ITSM) as a reference in ensuring IT
services

5. Safety and Health Management System (SMK3) based
on Government Regulation No. 50 of 2012 on the
application of SMK3

6. ISO 18001 - Occupational Health and Safety Assessment
System (OHSAS) as a reference to support the
implementation SMK3

Implementation of Risk Management Policy and
Framework

1. Efforts to provide value added to the management

of the company

With regard to basic framework (COSO ERM Framework),
the implementation of risk management at Telkom is
expected to provide added value to the achievement of
the Company’s objectives, especially in certain aspects
namely Strategic, Operation, Reporting and Compliance.

GIC

O
I
T

I
T

LIA

Internal Environment

Objective Setting

Event Identification

Risk Assessment

Risk Response

Control Activities

Information & Communication

Monitoring

Risk Management Policy and Framework
Risk Management Policy in Telkom refers to the Board
of Directors Decision No. KD.16/ PW000/ PRO-IIC/ 2006
dated February 3, 2006 on Enterprise Risk Management
(Telkom Risk Management)

Objective:
1. Ensure that all risks that may interfere the Company

in achieving goals can be anticipated.

2. Create Standard Corporate Risk Management
application framework that the management is more
coordinated and integrated.

Scope:
Enterprise Risk Management is implemented at all levels
of the organization, including:
1. Work Unit in Corporate Office.
2. Business Unit (Division / Center)
3. Subsidiaries

The main framework used in the implementation of risk
management at Telkom (COSO ERM Framework) includes
three main components:
1. The application of corporate risk management to
support the company’s goals: strategic, operational,
and compliance reporting.

2. Enterprise risk management is applied at all levels
of the organization within the company including
Enterprise-level, Division, Business unit and the
Subsidiary.

3. The process of implementation of enterprise risk
management consists of eight components, namely:
a. Development of the internal environment process
b. Objectives setting process
c. Events Identification process
d. Risk assessment process
e. Risk response process
f. Control activities process
g. Information and communication process
h. Monitoring process

238

Strategic Aspect:
Risk management strives to provide added value through
the implementation of risk management in the corporate
planning process such as during the preparation of
Corporate Strategic Scenario (CSS) and in the strategic
decision making process.

Operational aspect:
Risk management strives to provide value added through:
1. The implementation of Risk Management to protect

assets, among others through:
a. The Management of Physical Security for securing

infrastructure

b. The Management of Information Systems Security
(IT Security Management System) includes the
Confidentiality, Integrity and Availability

c. The Management of Health and Occupational

Safety Management System (K3)

d. The Management of Business Continuity
Management, Disaster Recovery Plan and Crisis
Management Team

2. The management of Revenue Assurance and Anti-

Fraud Program

Compliance Aspect:
Risk management strives to provide added value through:
a. Management of compliance over Regulations on

External and Internal Regulations

b. Management of compliance on SOX provisions through
the design and implementation of adequate internal
control

Reporting Aspects:
Risk management strives to provide added value by
setting the process of controlling disclosure of financial
reporting through Disclosure Control Procedure (DCP).

2. Enterprise Risk Management (ERM)
Telkom realizes that risk management is an integral part
of the management of Good Corporate Governance
(GCG) to ensure business continuity. Governance of risk
management basically refers to the concept of 3 Lines
of Defense, including:

a. First Line: The entire Organization Unit in the Office
of the Company, Divisions and Subsidiaries as Risk
Owners, are responsible for risk management in the
unit works ranging from the process of risk identification,
risk assessment, mitigation, monitoring and continuous
improvement.

b. Second Line: The function of Risk Management
business unit, which is under the coordination of the
CRMGA department, is to ensure the effectiveness
of risk management through the provision of policies,
frameworks, procedures and guidelines.

c. Third Line: The function of the Internal Auditor is to
carry out the audit of the effectiveness of the
implementation of risk management and internal
control independently.

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2014 Annual Report PT Telkom Indonesia Tbk (Persero)KEMPR /
Director's Meeting

Planning and Risk Evaluation
and Monitoring Comittee

CRMGA
Department

t
i
d
u
A

l
a
n
r
e
t
n
I

Division

Corporate
Directorate

Subsidiaries

Enterprise Risk Management

3. Process of Constructing and Maintaining the Enterprise

b. Operational Aspect that focuses on:

Risk Management

To be able to run the eight components of the COSO
Framework process well, we build and maintain the
Enterprise Risk Management through:

a. Structural aspects by buildings supporting internal
environments through:

1. Building Commitment and Tone at the Top
2. Laying the foundation of risk management within

the framework of GCG

3. Establishing a Risk Management Unit Management

Organization,

4. Developing Policies, Guidelines for Risk Acceptance
Criteria (RAC), Guidelines for Risk Assessment
(Risk & Control Self Assessment / RCSA) and
Governance,

5. Developing Competence in Risk Management,
6. Providing adequate tools and system

1. Guarding the implementation of the risk assessment
at the Corporate, Business Unit and Subsidiary
as well as the preparation of adequate mitigation
plan.

2. Developing risk assessment methodologies for
specific functions by combining the implementation
of the COSO ERM Framework with reference
standards or other guidelines

3. Treatment aspect, which is focused on aspects
of information processing, communicating,
reviewing and continuous improvement include:
- Guarding the implementation of the review,

monitoring and reporting system risk

- Coordinating the implementation of Risk
Management Audit Implementation Enteprise
- Maintaining Continuity Competency

Development

- Maintaining Consistency Communication and

Dissemination

- Developing effective implementation of the
assessment mechanism Risk Management.

240

No. Type of Training

Governance, Risk & Compliance Conference

SOA for PO-DC Division

Portofolio & Investment Evaluation

Business Process Management (BPM) for Division

Business Continuity Management System (BCMS) ISO 22301 integrated with ISMS ISO 27001

February2014

Enterprise Risk Management & Aplikasi ERM Online

Revenue Assurance & Anti Fraud Management Collaboration

SOA dan Aplikasi ICCA untuk Divisi PO-DC

Creation of Implementation Documentation of BCMS - ISMS (ISO 22301 & ISO 27001)

10 Business Financial Analysis

SOA for Manager Unit of Supply Management

Lead Auditor ISO 22301 Business Continuity Management System

13 Business Process Management (BPM) for Wholesale & International Business

14 Revenue Assurance & Anti Fraud Management Collaboration

15 Catastrope Insurance in Asia Conference

16 New COSO Framework 2013 Internal Control

17 Expert of Occupational Health and Safety (AK3) electricity

18 Expert of Occupational Health and Safety (AK3) Firefighter

19 Flood Emergency Evacuation Simulation

20 Financial Modelling

Lead Auditor ISO 20000 IT Service Management

Time

January 2014

February2014

March 2014

April 2014

June2014

September 2014

October 2014

November 2014

December 2014

In addition to undergoing Classical Training, competency development is also achieved through socialization and
related workshop on Risk Management in the Office of the Division and its subsidiaries.

5. The Use of Tools / Information System
To perform the function of Risk Management, Telkom has equipped the supporting infrastructure by using applications
(tools) / information systems, among others:
a. Generic Tools Enterprise Risk Management Online (ERM Online) used by all the units for the management of

Risk Assessment

b. Specific Tools for managing specific risk, example:

1. Application Fraud Management System (FRAMES) for the early detection of potential Customer Fraud.
2. i-Library applications which are managed by the Division of Broadband Network and used for an Integrated

Management System documentation.

3. SMK 3 Online Application managed by the Security and Safety Unit for the management of Occupational

Health and Safety documentation.

4. Security & Safety Application is managed by the Security & Safety Unit to monitor the management of Physical

Security.

5. Telkomcare Application for coordinating the Crisis Management Team.

241

2014 Annual Report PT Telkom Indonesia Tbk (Persero)6. Effectiveness Assessment of Risk Management Implementation
The assessment of the effectiveness of the Risk Management Implementation is performed through the evaluation
process that includes:
1. one-on-one discussion/ evaluation with business units as needed.
2. ERM implementation and development workshop sharing with subsidiaries as needed.
3. the Implementation of Risk Management Audit program as needed.
4. the evaluation with Risk, Compliance and Revenue Assurance Committee at BoD level as needed.
5. the evaluation with Planning and Risk Evaluation and Monitoring (KEMPR) as needed.

7. Sharing Session and recognition from External Parties
In 2014, Telkom was visited by external parties for a sharing session on the implementation of Risk Management,
Internal Control, Process Management, Good Corporate Governance and Management of insurance from Alfamart,
PT. Tin Indonesia, PT. Pertamina, PT. PLN, BPK and PT. Wijaya Karya.

In addition, Telkom has received recognition or awards from external parties in relation its implementation of Risk
Management in 2014, such as :

External Institution

Type of Award

PT. SGS Indonesia

Integrated Management System to manage Infrastructure, including:

•

ISO 9001:2008 Certificate - Quality Management System

ISO 27001:2013 Certificate - Information Security Management System

ISO 22301:2012 Certificate - Business Continuity Management System

The Indonesia Institute for

The Most Trusted Company

Corporate Governance

242

A. Risks Related to Indonesia

1. Political and Social Risks
Current political and social events in Indonesia may
adversely affect our business

Since 1998, Indonesia has experienced a process of
democratic change, resulting in political and social events
that have highlighted the unpredictable nature of
Indonesia’s changing political landscape. In 1999, Indonesia
conducted its first free elections for parliament and
president. Indonesia also has many political parties,
without any one party holding a clear majority. Due to
these factors, Indonesia has, from time to time, experienced
political instability, as well as general social and civil
unrest. For example, since 2000, thousands of Indonesians
have participated in demonstrations in Jakarta and other
Indonesian cities both for and against former President
Abdurahman Wahid, former President Megawati, and
former President Susilo Bambang Yudhoyono as well as
in response to specific issues, including fuel subsidy
reductions, privatization of state assets, anti-corruption
measures, decentralization and provincial autonomy and
the American-led military campaigns in Afghanistan and
Iraq. Although these demonstrations were generally
peaceful, some turned violent.

Indonesia announced in November 2014, and has
implemented with effect from January 1, 2015, a fixed
diesel subsidy of Rp1,000 per liter and scrapped the
gasoline subsidy. Although the implementation did not
result in any significant violence or political instability,
the announcement and implementation also coincided
with a period where crude oil prices had dropped very
significantly in 2014. There can be no assurance that
future increases in crude oil and fuel prices will not result
in political and social instability.

Separatist movements and clashes between religious
and ethnic groups have also resulted in social and civil
unrest in parts of Indonesia, such as in Papua, where
there have been clashes between supporters of those
separatist movements and the Indonesian military.. There
have also been inter-ethnic conflicts, for example in
Kalimantan, as well as inter-religious conflict such as in
Maluku and Poso.

Labor issues have also come to the fore in Indonesia. In
2003, the Government enacted a new labor law that
gave employees greater protections. Occasional efforts
to reduce these protections have prompted an upsurge
in public protests as workers responded to policies that
they deemed unfavorable.

There can be no assurance that social and civil disturbances
will not occur in the future and on a wider scale, or that
any such disturbances will not, directly or indirectly,
materially and adversely affect our business, financial
condition, results of operations and prospects.

Terrorist activities in Indonesia could destabilize Indonesia,
which would adversely affect our business, financial
condition and results of operations, and the market price
of our securities

There have been a number of terrorist incidents in
Indonesia, including the May 2005 bombing in Central
Sulawesi, the Bali bombings in October 2002 and 2005
and the bombings at the JW Marriot and Ritz Carlton
hotels in Jakarta in July 2009. Although the Government
has successfully countered some terrorist activities in
recent years and arrested several of those suspected of
being involved in these incidents, terrorist incidents may
continue and, if serious or widespread, might have a
material adverse effect on investment and confidence
in, and the performance of, the Indonesian economy and
may also have a material adverse effect on our business,
financial condition, results of operations and prospects
and the market price of our securities.

2. Macro Economic Risks

Negative changes in global, regional or Indonesian
economic activity could adversely affect our business

Changes in the Indonesian, regional and global economies
can affect our performance. Two significant events in
the past that impacted Indonesia’s economy were the
Asian economic crisis of 1997 and the global economic
crisis which started in 2008. The 1997 crisis was
characterized in Indonesia by, among others, currency

243

2014 Annual Report PT Telkom Indonesia Tbk (Persero)depreciation, a significant decline in real gross domestic
product, high interest rates, social unrest and extraordinary
political developments. While the global economic crisis
that arose from the subprime mortgage crisis in the US
did not affect Indonesia's economy as severely as in
1997, it still put Indonesia’s economy under pressure.
The global financial markets have also experienced
volatility as a result of the downgrade of US sovereign
debt in 2012 and concerns over the debt crisis in the
Eurozone. Uncertainty over the outcome of the Eurozone
governments’ financial support programs and worries
about sovereign finances generally are ongoing. If the
crisis becomes protracted, or extends to Asia and
Indonesia, we can provide no assurance that it will not
have a material and adverse effect on Indonesia’s economic
growth and consequently on our business.

Adverse economic conditions could result in less business
activity, less disposable income available for consumers
to spend and reduced consumer purchasing power,
which may reduce demand for communication services,
including our services, which in turn would have an
adverse effect on our business, financial condition, results
of operations and prospects. There is no assurance that
there will not be a recurrence of economic instability in
future, or that, should it occur, it will not have an impact
on the performance of our business.

Fluctuations in the value of the Indonesian Rupiah may
materially and adversely affect us

Our functional currency is the Rupiah. One of the most
important effects of the Asian economic crisis that
affected Indonesia was the depreciation and volatility
in the value of the Indonesian Rupiah as measured against
other currencies, such as the US Dollar. The Rupiah
continues to experience significant volatility. From 2010
to 2014, the Indonesian Rupiah per US Dollar exchange
rate ranged from a high of Rp8,508 per US Dollar to a
low of Rp12,440 per US Dollar. As a result, we recorded
foreign exchange losses of Rp189 billion in 2012,
Rp249billion in 2013 and Rp14 billion in 2014. As of
December 31, 2014, the Indonesian Rupiah per US Dollar
exchange rate stood at Rp 12,440 per US Dollar compared
to Rp12,189 per US Dollar as of December 31, 2013.

To the extent that the Indonesian Rupiah depreciates
further from the exchange rate as of December 2014,
our US Dollar-denominated obligations under our accounts
payable and procurements payable, as well as payments
for foreign currency-denominated loans payable and

244

bonds payable, would increase in Indonesian Rupiah
terms. A depreciation of the Rupiah would also increase
the Rupiah cost of our capital expenditures as most of
our capital expenditures are priced in or with reference
to foreign currencies, mainly US Dollars and Euros, while
a substantial majority of our revenues are in Rupiah.
Such depreciation of the Indonesian Rupiah would result
in losses on foreign exchange translation, significantly
affect our total expenses and net income and reduce
the US Dollar amounts of dividends received by holders
of our ADSs. We can give no assurances that we will be
able to control or manage our exchange rate risk
successfully in the future or that we will not be adversely
affected by our exposure to exchange rate risk.

In addition, while the Indonesian Rupiah has generally
been freely convertible and transferable, from time to
time, Bank Indonesia has intervened in the currency
exchange markets in furtherance of its policies, either
by selling Indonesian Rupiah or by using its foreign
currency reserves to purchase Indonesian Rupiah. We
can give no assurances that the current floating exchange
rate policy of Bank Indonesia will not be modified or
that the Government will take additional action to
stabilize, maintain or increase the Indonesian Rupiah’s
value, or that any of these actions, if taken, will be
successful. Modification of the current floating exchange
rate policy could result in significantly higher domestic
interest rates, liquidity shortages, capital or exchange
controls or the withholding of additional financial
assistance by multinational lenders. This could result in
a reduction of economic activity, an economic recession,
loan defaults or declining subscriber usage of our services,
and as a result, we may also face difficulties in funding
our capital expenditures and in implementing our business
strategy. Any of the foregoing consequences could have
a material adverse effect on our business, financial
condition, results of operations and prospects.

Downgrades of credit ratings of the Government or
Indonesian companies could adversely affect our business

As of the date of this Annual Report, Indonesia’s sovereign
foreign currency long-term debt was rated “Baa3” by
Moody’s, “BB+” by Standard & Poor’s and “BBB” by Fitch
Ratings. Indonesia's short-term foreign currency debt
is rated “B” by Standard & Poor’s and “F3” by Fitch
Ratings.

We can give no assurances that Moody’s, Standard &
Poor’s or Fitch Ratings, will not change or downgrade

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESthe credit ratings of Indonesia. Any such downgrade
could have an adverse impact on liquidity in the Indonesian
financial markets, the ability of the Government and
Indonesian companies, including us, to raise additional
financing and the interest rates and other commercial
terms at which such additional financing is available.
Interest rates on our floating rate Rupiah-denominated
debt would also likely increase. Such events could have
material adverse effects on our business, financial
condition, results of operations prospects and/or the
market price of our securities.

3. Disaster Risks

Indonesia is vulnerable to natural disasters and events
beyond our control, which could adversely affect our
business and operating results

Many parts of Indonesia, including areas where we
operate, are prone to natural disasters such as floods,
lightning strikes, typhoons, earthquakes, tsunamis,
volcanic eruptions, fires, droughts, power outages and
other events beyond our control. The Indonesian
archipelago is one of the most volcanically active regions
in the world as it is located in the convergence zone of
three major lithospheric plates. It is subject to significant
seismic activity that can lead to destructive earthquakes,
tsunamis or tidal waves. Flash floods and more widespread
flooding also occur regularly during the rainy season
from November to April. Cities, especially Jakarta, are
frequently subject to severe localized flooding which
can result in major disruption and occasionally, fatalities.
Landslides regularly occur in rural areas during the wet
season. From time to time, natural disasters have killed,
affected or displaced large numbers of people and
damaged our equipment. These events in the past, and
may in the future, disrupt our business activities, cause
damage to equipment and adversely affect our financial
performance and profit.

test these regularly and we have insured our assets to
protect from any losses attributable to natural disasters
or other phenomena beyond our control, there is no
assurance that the insurance coverage will be sufficient
to cover the potential losses, that the premium payable
for these insurance policies upon renewal will not increase
substantially in the future, or that natural disasters would
not significantly disrupt our operations.

We cannot assure you that future natural disaster will
not have a significant impact on us,or Indonesiaor its
economy. A significant earthquake, other geological
disturbance or weather-related natural disaster in any
of Indonesia’s more populated cities and financial centers
could severely disrupt the Indonesian economy and
undermine investor confidence, thereby materially and
adversely affecting our business, financial condition,
results of operations and prospects.

Our operations may be adversely affected by an outbreak
of an infectious disease, such as avian influenza, Influenza
A (H1N1) virus or other epidemics

An outbreak of an infectious disease such as avian
influenza, Influenza A (H1N1) or a similar epidemic, or
the measures taken by the Governments of affected
countries, including Indonesia, against such an outbreak,
could severely disrupt the Indonesian and other economies
and undermine investor confidence, thereby materially
and adversely affecting our financial condition or results
of operations and the market value of its securities.
Moreover, our operations could be materially disrupted
if our employees remained at home and away from our
principal places of business for extended period of time,
which would have a material and adverse effect on our
financial condition or results of operations and the market
value of its securities.

4. Other Risks

For example, on September 2, 2009, an earthquake in
West Java caused damage to our assets. On September
30, 2009, an earthquake in West Sumatra disrupted the
provision of telecommunications services in several
locations. Although our Crisis Management Team in
cooperation with our employees and partners was able
to restore services quickly, the earthquake caused severe
damage to our assets.

Although we have implemented a Business Continuity
Plan (“BCP”) and a Disaster Recovery Plan (“DRP”), and

Indonesian Corporate Disclosure Standards differ in
significant respects from those applicable in other
countries, including the United States

As an IDX and NYSE listed company, we are subject to
regulatory and exchange corporate governance and
reporting requirements in multiple jurisdictions. There
may be less publicly-available information about Indonesian
public companies, including us, than is regularly disclosed
by public companies in countries with more mature
securities markets. As a result, investors may not have

245

2014 Annual Report PT Telkom Indonesia Tbk (Persero)access to the same level and type of disclosure as that
available in other countries, and comparisons with other
companies in other countries may not be possible in all
respects.

Our financial results are reported to OJK (as the successor
to Bapepam-LK) in conformity with IFAS, which differs
in certain significant respects from IFRS, and we distribute
dividends based on profit for the year attributable to
owners of the parent company and net income per share
determined in reliance on IFAS

In accordance with the regulations of OJK and the IDX,
we are required to report our financial results to OJK in
conformity with IFAS. We have provided to OJK our
financial result for the financial year ended December
31, 2014, and to the SEC on a Form 6-K, which contains
our audited Consolidated Financial Statements as of
December 31, 2014 and for the year then ended and
prepared in conformity with IFAS. IFAS differs in certain
significant respects from IFRS, and, as a result, there are
differences between our financial results as reported
under IFAS and IFRS, including profit for the year
attributable to owners of the parent company and net
income per share. We distribute dividends based on
profit for the year attributable to owners of the parent
company and net income per share determined in reliance
on IFAS.

Using IFAS results, our profit for the year attributable
to owners of the parent company would be Rp14,205
billion and Rp14,638 billion for 2013 and 2014, respectively
and our net income per share would be Rp147.42 and
Rp149.83 billion for 2013 and 2014, respectively. Dividends
declared per share were Rp102,401 for fiscal year 2013.
The dividends per share for the year 2014 will be decided
at the 2015 AGMS, scheduled for April 17, 2015.

We are incorporated in Indonesia and it may not be
possible for investors to effect service of process or
enforce judgments, on us within the United States or to
enforce judgments of a foreign court against us in
Indonesia

United States. As a result, it may be difficult for investors
to effect service of process, or enforce judgments on us
or such persons within the US, or to enforce against us
or such persons in the US, judgments obtained in US
courts.

We have been advised by Hadiputranto, Hadinoto &
Partners, our Indonesian legal advisor, that judgments
of US courts, including judgments predicated upon the
civil liability provisions of the US federal securities laws
or the securities laws of any state within the US, are not
enforceable in Indonesian courts, although such judgments
could be admissible as non-conclusive evidence in a
proceeding on the underlying claim in an Indonesian
court. They have also advised that there is doubt as to
whether Indonesian courts will enter judgments in original
actions brought in Indonesian courts predicated solely
upon the civil liability provisions of the US federal
securities laws or the securities laws of any state within
the US. As a result, the claimant would be required to
pursue claims against us or such persons in Indonesian
courts.

Our controlling shareholder’s interest may differ from
those of our other shareholders

The Government has a controlling stake of 52.56% of
our issued and outstanding shares of common stock
and the ability to determine the outcome of all actions
requiring the approval of the shareholders. The Government
also holds our one Series A Dwiwarna share, which has
special voting rights and veto rights over certain matters,
including the election and removal of our Directors and
Commissioners. It may also use its powers as majority
shareholder or under the Dwiwarna share to cause us
to issue new shares, amend our Articles of Association
or bring about actions to merge or dissolve us, increase
or decrease our authorized capital or reduce our issued
capital, or veto any of these actions. One or more of
these may result in the delisting of our securities from
certain exchanges. Further, through the MoCI, the
Government exercises regulatory power over the
Indonesian telecommunications industry.

We are a limited liability company incorporated in
Indonesia, operating within the framework of Indonesian
laws relating to Indonesian companies with limited
liability, and all of our significant assets are located in
Indonesia. In addition, our Commissioners and our
Directors reside in Indonesia and a substantial portion
of the assets of such persons are located outside the

As of December 31, 2013, the Government had a 14.3%
equity stake in PT Indosat Tbk. ("Indosat"), which compete
with us, in fixed IDD telecommunications services, and
competes in cellular services of our majority owned
subsidiary, Telkomsel. The Government's stake includes
the Series A Dwiwarna share which has special voting
rights and veto rights over certain strategic matters

246

2014 Annual Report PT Telkom Indonesia Tbk (Persero)FINANCIAL AND PERFORMANCE HIGHLIGHTMANAGEMENT REPORTPREFACEGENERAL INFORMATION OF TELKOM INDONESIAMANAGEMENT’S DISCUSSION AND ANALYSIS CORPORATE GOVERNANCESOCIAL AND ENVIRONMENTAL RESPONSIBILITYAPPENDICESunder Indosat's Articles of Association, including decisions
on dissolution, liquidation and bankruptcy, and also
permits the Government to nominate one Director to
its Board of Directors and one Commissioner to its Board
of Commissioners. There may thus be instances where
the Government’s interests will conflict with ours. There
is no assurance that the Government will not direct
opportunities to Indosat or favor Indosat when exercising
regulatory power over the Indonesian telecommunications
industry. If the Government were to give priority to
Indosat’s business over ours or to expand its stake in
Indosat, our business, financial condition, and results of
operations and prospects could be materially and adversely
affected.

including earthquake, fire, flood, power loss, equipment
failure, network software flaws, transmission cable
disruption or similar events.

Although we have a comprehensive business continuity
plan and disaster recovery plan which we test and strive
to improve, we cannot guarantee that the implementation
of such plans will be completely or partially successful
should any portion of network be severely damaged or
interrupted. Any failure that results in an interruption of
our operations or of the provision of any service, whether
from operational disruption, natural disaster or otherwise,
could adversely affect our business, financial condition,
results of operations and prospects.

B. Risks Related to Our Business

1. Operational Risks
A material failure in the continuing operations of our
network, certain key systems, gateways to our network
or the networks of other network operators could adversely
affect our business, financial condition, results of operations
and prospects

We depend to a significant degree on the uninterrupted
operation of our network to provide our services. For
example, we depend on access to our fixed wireline
network (“PSTN”) for the operation of our fixed line
network and the termination and origination of cellular
telephone calls to and from fixed line telephones, and
a significant portion of our cellular and international
long-distance call traffic is routed through the PSTN.
We also depend on access to an internet and broadband
network and a cellular network. Our integrated network
includes a copper access network, fiber optic access
network, BTSs, switching equipment, optical and radio
transmission equipment, an IP core network, satellite
and application servers.

Our networks, face both potential physical and cyber
security threats, such as theft, vandalism and acts intended
to disrupt operations, which could adversely affect our
operating results

Our networks and equipment, particularly our wireline
access network, face both potential physical and cyber
security threats. Physical threats include theft and
vandalism of our equipment and organized attacks
against key infrastructure intended to disrupt operations.
In addition, telecommunications companies worldwide
face increasing cyber security threats as businesses
become increasingly dependent on telecommunications
and computer networks and adopt cloud computing
technologies. Cyber security threats include gaining
unauthorized access to our systems or inserting computer
viruses or malicious software in our systems to
misappropriate consumer data and other sensitive
information, corrupt our data or disrupt our operations.
Unauthorized access may also be gained through
traditional means such as the theft of laptop computers,
portable data devices and mobile phones and intelligence
gathering on employees with access.

In addition, we also rely on interconnection to the
networks of other telecommunications operators to
carry calls and data from our subscribers to the subscribers
of operators both within Indonesia and overseas. We
also depend on certain technologically sophisticated
management information systems and other systems,
such as our customer billing system, to enable us to
conduct our operations. Our network, including our
information systems, IT and infrastructure and the
networks of other operators with whom our subscribers
are interconnected, are vulnerable to damage or
interruptions in operation from a variety of sources

Although we have not experienced any material successful
cyber attacks to date that have affected our operations,
our network and our website are frequently targeted by
cyber attacks. A successful cyber attack may lead us to
incur substantial costs to repair damage or restore data,
implement substantial organizational changes and
training to prevent future similar attacks and lost revenues
and litigation costs due to misused sensitive information,
and cause substantial reputational damage. We take
preventive and remedial measures, including enhanced
cooperation with the police, particularly in areas prone
to criminal activity and regular upgrades of our data

247

2014 Annual Report PT Telkom Indonesia Tbk (Persero)security measures. However, there is no assurance that
our physical and cyber security measures will be successful.
Damage to our network, equipment or data and the
need to repair such damage resulting from a physical
or cyber attack may materially and adversely affect our
business, financial condition and operating results. Our
networks face potential security threats, such as theft
or vandalism, which could adversely affect our operating
results.

We face a number of risks relating to our internet-related
services

In addition to cyber security threats, because we provide
connections to the internet and host websites for
customers and develop internet content and applications,
we may be perceived as being associated with the
content carried over our network or displayed on websites
that we host. We cannot and do not screen all of this
content and may face litigation claims due to a perceived
association with this content. These types of claims can
be costly to defend, divert management resources and
attention, and may damage our reputation.

A revenue leakage might occur due to internal weaknesses
or external factors and if this happened, it could have
an adverse effect on our operating results

A revenue leakage is a generic risk for all telecommunications
operators. We may face revenue leakage problems or
problems with collecting all the revenues to which we
may be entitled, due to the possibility of weaknesses at
the transactional level, delay in transaction processing,
dishonest customers or other factors.

face increasing competition due to technologies currently
under development or which may be developed in the
future. Future development or application of new or
alternative technologies, services or standards could
require significant changes to our business model, the
development of new products, the provision of additional
services and substantial new investments by us. New
products and services may be expensive to develop and
may result in the introduction of additional competitors
into the marketplace. We cannot accurately predict how
emerging and future technological changes will affect
our operations or the competitiveness of our services.
Furthermore, we cannot guarantee that we will be able
to effectively integrate new technologies into our existing
business model.

For example, due to competition and the increasing
popularity of mobile cellular platforms, our fixed wireless
revenues and ARPU has been declining in recent years.
Our fixed wireless business was transferred to our
subsidiary Telkomsel, and the business transferred to
Telkomsel with effect from October 1, 2014. On June 27,
2014, we entered into a Conditional Business Transfer
Agreement with Telkomsel to transfer the Flexi business
and migrated Flexi subscribers to Telkomsel. We plan
to continue to operate the Flexi service until the end of
2015 or until our remaining Flexi customers have migrated
to Telkomsel, if earlier. In the meantime, we continue to
encourage our fixed wireless customers to enter into
plans operated by Telkomsel. We cannot assure you that
we will be successful in migrate our fixed wireless
subscribers onto Telkomsel's mobile cellular platform,
as competition from other mobile cellular providers is
intense.

We have taken some preventive measures against the
possibility of revenue leakage by increasing control
functions in all of our existing business process,
implementing revenue assurance methods, employing
adequate policies and procedures as well as implementing
information systems applications to minimize revenue
leakages. Nonetheless, there is no assurance that in the
future there will be no significant revenue leakages or
that any such leakages will not have a material adverse
affect on our operating results.

New technologies may adversely affect our ability to
remain competitive

The telecommunications industry is characterized by
rapid and significant changes in technology. We may

As part of our continuing development of our TIMES
business, we continue to seek to develop businesses
through which we also provide content to our
telecommunications subscribers. We do not yet have
substantial experience as a content provider therefore
we cannot assure you that we will be able to effectively
manage the growth of this business.

We cannot assure you that our technologies will not
become obsolete, or be subjected to competition from
new technologies in the future, or that we will be able
to acquire new technologies necessary to compete in
changed circumstances on commercially acceptable
terms. Our failure to react to rapid technological changes
could adversely affect our business, financial condition,
results of operations and prospects.

248

Our Telkom-1 and Telkom-2 satellites have a limited
operational life, currently estimated to end approximately
in 2015 and 2020, respectively. A number of factors
affect the operational lives of satellites, including the
quality of their construction, the durability of their
systems, subsystems and component parts, on-board
fuel reserves, accuracy of their launch into orbit, exposure
to micrometeorite storms, or other natural events in
space, collision with orbital debris, or the manner in
which the satellite is monitored and operated. We
currently use satellite transponder capacity on our
satellites in connection with many aspects of our business,
including direct leasing of such capacity and routing for
our international long-distance and cellular services.

Moreover, International Telecommunication Union (“ITU”)
regulations specify that a designated satellite slot has
been allocated for Indonesia and the Government has
the right to determine which party is licensed to use
such slot. While we currently hold a license to use the
designated satellite slot, in the event our Telkom-1 and
Telkom-2 satellites experience technical problems or
failure, the Government may determine that we have
failed to optimize the existing slot under our license,
which may result in the Government withdrawing our
license. We cannot assure you that we will be able to
maintain use of the designated satellite slot in a manner
deemed satisfactory by the Government.

In anticipation of the growth in demand for satellite
services and to support our business strategy with regard
to providing TIME services, we signed a contract in 2009
for the procurement of the Telkom-3 Satellite System.
However, due to a launch failure in August 2012, the
Telkom-3 satellite ended up in an unusable orbit. Although
we had fully insured the cost of the satellite, the loss of
the Telkom-3 satellite will require us to lease transponder
capacity from a thirdparty provider to fulfill our
commitments to our satellite operations customers, with
likely lower margins than we would have received from
the use of Telkom-3 had it been successfully launched.
We are currently in the initial phases for the procurement
of a replacement satellite, the Telkom-3S, which is

currently planned for launch in late 2016. Although the
Telkom-1 satellite may still be operational for several
years after the end of its currently estimated operational
lifespan in 2015, if there is any delay in the development
and launch of the Telkom-3S, or if the operational life of
the Telkom-1 satellite ends before the Telkom-3S is
successfully launched, or damage or failure renders our
existing satellites unfit for use, we would need to lease
additional transponder capacity from a third party, which
would likely increase our costs of operations. Failure to
lease adequate satellite capacity from a thirdparty
provider may also result in service interruptions and/or
a cessation of our satellite operations. The termination
of our satellite business could increase expenses associated
with our provision of other telecommunications services,
particularly in the eastern parts of Indonesia which
currently rely largely on satellite coverage for
telecommunications services and could adversely affect
our business, financial condition and results of operations.

2. Financial Risks
We are exposed to interest rate risk

Our debt includes bank borrowings to finance our
operations. Where appropriate, we seek to minimize our
interest rate risk exposure by entering into interest rate
swap contracts to swap floating interest rates for fixed
interest rates over the duration of certain borrowings.
However, our hedging policy may not adequately cover
our exposure to interest rate fluctuations and this may
result in a large interest expense and an adverse effect
on our business, financial condition and results of
operations.

Changes in the economic situation in the United States,
including improvement or expectations of improvement
in the U.S. economy, may also have an impact on Southeast
Asia and Indonesia. Expectations of the United States
Federal Reserve tapering its bond buying program on
an improving economy resulted in, among other things,
the weakening of equity and bond markets around the
world and a number of Asian currencies including the
Rupiah since May 2013. In part, in an effort to support
the Rupiah, in June 2013, Bank Indonesia began raising
its benchmark reference rate from a record low of 5.75%
which was set in February 2012. The benchmark reference
rate has risen six times between June 2013 and November
2014 to 7.75% before decreasing to 7.50% on February
2015. The increases of Bank Indonesia reference rate in
2013 and 2014were followed by increases in the JIBOR
and Bank Indonesia Certificate (“SBI”) interest rates.

249

2014 Annual Report PT Telkom Indonesia Tbk (Persero)There can be no assurance that the Bank Indonesia
reference rate, JIBOR or SBI rate will not rise again in
the future.

We may not be able to successfully manage our foreign
currency exchange risk

Changes in exchange rates have affected and may
continue to affect our financial condition and results of
operations. Most of our debt obligations are denominated
in Indonesian Rupiah and a majority of our capital
expenditures are denominated in US Dollars. Most of
our revenues are denominated in Indonesian Rupiah and
a portion is denominated in US Dollars (for example
from international services). We may also incur additional
long-term indebtedness in currencies other than the
Indonesian Rupiah, including the US Dollars, to finance
further capital expenditures.

Overall, our financial risk management program aims to
minimize losses on the financial assets and financial
liabilities arising from fluctuation of foreign currency
exchange rates. We have a written policy for foreign
currency risk management, which mainly covers time
deposits placements and hedging to cover foreign
currency risk exposure for periods ranging from three
to twelve months.

The exchange rate of Indonesian Rupiah relatively
fluctuative to the US Dollar and in the future, we can
give no assurance that we will be able to manage our
exchange rate risk successfully or that our business,
financial condition or results of operations will not be
adversely affected by our exposure to exchange rate
risk.

We may be unable to fund the capital expenditures
needed for us to remain competitive in the
telecommunications industry in Indonesia

The delivery of telecommunications services is capital
intensive. In order to be competitive, we must continually
expand, modernize and update our telecommunications
infrastructure technology, which involves substantial
capital investment. For the years ended December 31,
2012, 2013 and 2014, our actual consolidated capital
expenditures totaled Rp17,272 billion, Rp24,898 billion,
and Rp24,661 billion (US$1,991 million), respectively. Our
ability to fund capital expenditures in the future will
depend on our future operating performance, which is
subject to prevailing economic conditions, levels of

250

interest rates and financial, business and other factors,
many of which are beyond our control, and upon our
ability to obtain additional external financing. We cannot
assure you that additional financing will be available to
us on commercially acceptable terms, or at all. In addition,
we can only incur additional financing in compliance
with the terms of our debt agreements. Accordingly, we
cannot assure you that we will have sufficient capital
resources to improve or expand our telecommunications
infrastructure technology or update our other technologies
to the extent necessary to remain competitive in the
Indonesian telecommunications market. Our failure to
do so could have a material adverse effect on our business,
financial condition, results of operations and prospects.

3. Legal and Compliance Risks
If we are found liable for price fixing by the Indonesian
Anti-Monopoly Committee and for class action allegations,
we may be subject to substantial liability which could
lead to a decrease in our revenue and affect our business,
reputation and profitability

On June 17, 2008, the Indonesian Supervising Committee
for Business Competition ("KPPU") determined that our
Company, Telkomsel, PT XL Axiata Tbk. (“XL”), PT Bakrie
Telecom Tbk. (“Bakrie Telecom”), PT Mobile-8 Telecom
Tbk. (“Mobile-8”) and PT Smart Telecom (“Smart Telecom”
now “Smartfren” had jointly breached Article 5 of Law
No.5/1999 and changed our Company and Telkomsel a
penalty amount Rp18 billions and Rp25 billions. We and
Telkomsel filled on appealed with the Bandung District
Court and the South Jakarta District Court, respectively.
On April 12, 2011, the Supreme Court appointed Central
Jakarta District Court to handle the appeals. Neither we
nor Telkomsel has received any notification from the
court with respect to the resolution of this case. as of
the date of approval and authorization for the issuance
of the consolidated financial statements, there has not
been any notification on the case from the court. Amount
of which will be subject to the discretion of the District
Court, which could have an adverse effect on our business,
reputation and profitability.

The Company is a defendant in a case filed in Makassar
District Court by Andi Jindar Pakki and his affiliates over
a land property at Jl. A.P. Pettarani. On May 8, 2013, the
court pronounced its verdict and ordered the Company
to pay fair compensation or to vacate and surrender the
disputed land to the plaintiffs. In the event the Company
loses the case, the Company will pay compensation to
the plaintiffs amounting to Rp57.6 billion.

On January 9, 2015, the Company received a Notice from
the Supreme Court of the Republic of Indonesia, on its
Decision Letter No. 226/Pdt.G/2012/PN.Mks and the
Supreme Court has rejected the Company’s appeal. On
February 5, 2015, the Company requested for a judicial
review of the case by the Supreme Court.

There can be no assurance that other subscribers, people,
or partners will not file similar cases in the future, or that
we would be subject to adverse verdicts which could
have an adverse effect on our business, reputation and
profitability.

Forward-looking statements may not be accurate

This Annual Report incorporates forward-looking
statements that include announcements regarding our
current goals and projections of our operational
performance and future business prospects. The words
“believe”, “expect”, “anticipate”, “estimate”, “project”
and similar words identify forward-looking statements.
In addition, all statements, other than statements that
contain historical facts, are forward-looking statements.
While we believe that the expectations contained in
these statements are reasonable, we cannot give an
assurance that they will be realized. These forward-
looking statements are subjected to a number of risks
and uncertainties, including changes in the economic,
social and political situation in Indonesia and other risks
described in "Risk Factors". All forward-looking statements,
written or verbal, made by us or by persons on behalf
of us are deemed to be subject to those risks.

4. Regulation Risks
We operate in a legal and regulatory environment that
is undergoing significant change. These changes may
result in increased competition, which may result in
reduced margins and operating revenue, among other
things. These changes may also directly reduce our
margins or reduce the costs of our competitors. These
adverse changes resulting from regulation may have a
material adverse effect on us.

Reformation in Indonesian telecommunications regulation
initiated by the Government in 1999 have, to a certain
extent, resulted in the industry’s liberalization, including
removal of barriers to entry and the promotion of
competition. However, in recent years, the volume and
complexity of regulatory changes has created an
environment of considerable regulatory uncertainty. In
addition, as the legal and regulatory environment of the
Indonesian telecommunications sector continue to
change, competitors, potentially with greater resources
than us, may enter the Indonesian telecommunications
sector and compete with us in providing telecommunications
services. Furthermore, it is impossible to anticipate the
regulatory policies that will be applied to new technologies.

We derive substantial revenue from interconnection
services because we have the largest network in Indonesia
and our competitors must pay tariffs to connect to our
network. As regulated by the MoCI, interconnection rates
have decreased in recent years. The current interconnection
rates, effective from April 24, 2015, rose rates from Rp23
to Rp24 compared to the previous rates effective in 2011.
There is no significant impact to our interconnection
business.

The termination of Telkomsel’s premium SMS services
from October 2011 as a result of MoCI Regulation No.1/
PER/M.KOMINFO/01/2009 resulted in a substantial
reduction in our revenues from these services. These
services were resumed by Telkomsel from August 6,
2013 as allowed under MoCI Regulation No.21 year of
2013 dated July 26, 2013, regarding the Operation of
Content Provider Services on Mobile Cellular Network
and Local Fixed Wireless Network with Limited Mobility,
as last amended by MoCI Regulation No.6 of 2015, which
replaced MoCI Regulation No.1/PER/M.KOMINFO/01/2009.
However, pursuant to the new decree, premium SMS
service providers are required to meet stricter requirements
that are more difficult to comply with. Accordingly we
do not expect revenues from premium SMS services to
return to levels seen prior to October 2011.

In the future, the Government may announce or implement
other regulatory changes which may adversely affect
our business or our existing licenses. We cannot assure
you that we will be able to compete successfully with
other domestic and foreign telecommunications operators,
that regulatory changes will not disproportionately
reduce our competitors’ costs or disproportionately
reduce our revenues, or that regulatory changes,

251

2014 Annual Report PT Telkom Indonesia Tbk (Persero)amendments or interpretations of current or future laws
and regulations promulgated by the Government will
not have a material adverse effect on our business and
operating results.

The entry of additional Indonesian telecommunications
operators as providers of international direct dialing
services could adversely affect our international
telecommunications services operating margins, market
share and results of operations

We obtained a license and entered the international
long-distance service market in 2004 and acquired a
significant market share for IDD services by the end of
2006. Indosat, one of our primary competitors, entered
this market prior to us and continues to maintain a
substantial market share for IDD services. Bakrie Telecom
was awarded an IDD license in 2009 to provide international
long distance service using the “009” access code. There
is a possibility that other operators will be granted IDD
licenses in the future. The operations of incumbents and
the entrance of new operators into the international
long-distance market, including the VoIP services provided
by such operators, continue to pose a significant
competitive threat to us. We cannot assure you that
such adverse effects will not continue or that such
increased competition will not continue to erode our
market share or adversely affect our fixed
telecommunications services operating margins and
results of operations.

We face risks related to the opening of new long distance
access codes

In an attempt to liberalize DLD services, the Government
issued regulations assigning each provider of DLD
services a three-digit access code to be dialed by
customers making DLD calls. In 2005, the MoCI announced
that a three-digit access code for DLD calls will be
implemented gradually within five years and that it would
assign us the “017” DLD access code for five major cities,
including Jakarta, and allow us to progressively extend
it to all other area codes. Indosat was assigned “011” as
its DLD access code. We were required to open DLD
access codes in all remaining areas on September 27,
2011, by which date our network was ready to be opened
up to the three-digit DLD access code in all coded areas
throughout Indonesia.

However, we believe that the cost for operators who
have not upgraded their network infrastructure to open
their networks to the three-digit access code to do so
is significant. To date, other than for Balikpapan, neither
of the OLOs have made a request to us to connect their
networks to enable their DLD access codes to be
accessible. As such, we believe that other than Balikpapan,
none of the DLD access codes for any of the licensed
operators are usable by customers of other operators .
However, if they do so in the future, the implementation
of any new DLD access codes can potentially increase
competition by offering our subscribers more options
for DLD services. In addition, the opening of new DLD
access codes is expected to result in increased competition
and less cooperation among industry incumbents, which
may result in reduced margins and revenues, among
other things, all of which may have a material adverse
effect on us.

Regulations for the configuration of BTS towers may
delay the set up of new BTS towers or changes in the
placement of existing towers, and may erode our leadership
position by requiring us to share our towers with our
competitors

In 2008 and 2009, the Government issued regulations
relating to the construction, utilization and sharing of
BTS towers. Pursuant to the regulations, the construction
of BTS towers requires permits from the local government.
The local government has a right to determine the
placement of the towers, the location in which the towers
can be constructed, and also to determine a license fees
to build tower infrastructure. These regulations also
oblige us to allow other telecommunication operators
to lease space and utilize our telecommunications towers
without any discrimination.

These regulations may adversely affect us in the allocation,
development or expansion plan of our new BTS towers
as setting up of our new towers will become more
complicated. They may also adversely affect our existing
BTS towers if local governments require any changes in
the placement of the existing towers.

The requirement that we share space on our
telecommunications towers may also disadvantage us
by requiring that we allow our competitors to expand
quickly, particularly in urban areas where new space for
additional towers may be difficult to obtain. Effective

252

5. Risks Related to Our Fixed Telecommunication

Business

We may further lose wireline telephone subscribers and
revenues derived from our wireline voice services may
continue to decline, which may materially adversely
affect our results of operations, financial condition and
prospects

Revenues derived from our wireline voiceservices have
declined during the past several years mainly due to the
increasing popularity of mobile voice services and other
alternative means of communication, such as VoIP. Tariffs
for mobile services have declined in recent years which
has further accelerated substitution of mobile for wireline
voice services. While the number of our fixed wireline
subscribers increased by 4.5% in 2013 and increased by
3.7% at the end of 2014, revenues from our wireline voice
services decreased by 8.3% in 2013 and by 2.2% in 2014.
The percentage of revenues derived from our wireline
voice services out of our total revenues continued to
decrease from 10.4% in 2013 to 9.4% in 2014.

We have been taking various measures in order to
stabilize our revenues from wireline voice services.
However, we cannot assure you that we will be successful
in mitigating the adverse impact of the substitution of
mobile voice services and other alternative means of
communication for wireline voice services or in reducing
the rate of decline in our revenues generated from
wireline voice services. Migration from wireline voice
services to mobile services and other alternative means
of communication may further intensify in the future,
which may affect the financial performance of our wireline
voice services and thus materially and adversely affect
our results of operations, financial condition and prospects
as a whole.

Our data and internet services are facing increasing
competition, and we may experience declining margins
from such services as such competition intensifies

Our data and internet services are facing increase
competition from other data and internet operators as
well as mobile operators. The number of mobile broadband

subscribers have increased with the increasing popularity
of smart phones in Indonesia, which adversely affects
our market share and revenues from our fixed line data
and internet services.

In 2013, the regulator permitted the Wi-Max operators
to deploy the long term evolution (“LTE”) technology
which will further intensify competition in the broadband
internet space.

We have been taking various measures in order to
mitigate the impact of intense competition in our data
and internet businesses. However, we cannot assure you
that we will be successful in mitigating such adverse
impact. Competition may further intensify in the future,
which may affect the financial performance of our data
and internet services and thus materially and adversely
affect our results of operations, financial condition and
prospects as a whole.

6. Competition Risks Related to Our Cellular Business

(Telkomsel)

Competition from existing service providers and new
market entrants may adversely affect our cellular services
business

The Indonesian cellular services business is highly
competitive. Competition among cellular services providers
in Indonesia is based on various factors, including pricing,
network quality and coverage, the range of services,
features offered and customer service. Our cellular
services business, operated through our majority-owned
subsidiary, Telkomsel, competes primarily against Indosat
and XL. Several other smaller GSM and CDMA operators
also provide cellular services in Indonesia, including
PT Hutchison CP Telecommunications (“Hutchison”),
Smart Telecom and Bakrie Telecom. In addition to current
cellular service providers, the MoCI may license additional
cellular service providers in the future, and such new
entrants may compete with us.

A number of consolidations among Indonesian operators
have taken place in recent years. In March 2010, Smart
Telecom and Mobile-8 announced the signing of a
cooperation agreement to use the same logo and brand
under the brand name "smartfren". On January 18, 2011,
Mobile-8 acquired a significant number of shares in
Smart Telecom, and on April 12, 2011 PT Mobile-8 Telecom
Tbk. changed its name to PT Smartfren Telecom Tbk.
XL-Axiata completed the acquisition of a majority interest

253

2014 Annual Report PT Telkom Indonesia Tbk (Persero)in PT Axis Telekom in March 2014 and merged in April
2014. The merger resulted in XL-Axiata becoming one
of the three largest operators and also acquiring additional
frequency allocations to facilitate its plans to implement
LTE (4G) technology. Further operator consolidation is
likely in order to ensure that each operator can remain
competitive, reduce operational costs and also to
“rebalance” the broadband mobile frequency spectrum
that require wider frequency bandwidth. The MoCI also
supports operator consolidation, as it has been reluctant
to issue new licenses for cellular players in recent years.
While operator consolidation may lead to improved
conditions in the cellular telecommunication industry, it
also present challenges for Telkomsel in maintaining its
market position.

7. Risks Related to Development of New Businesses

We believe that efforts to develop new businesses other
than the telecommunication business as well as
international expansion are necessary to ensure continuing
business growth. This is undertaken through the activities
of our subsidiaries, primarily Metra and Telin. Risks related
to new business development include competition from

established players, suitability of business model, the
need to acquire new expertise in the new areas of
operation, and risks related to online media which include
intellectual property, consumer protectionand
confidentiality of customer data.

Focusing on international expansion is one of our strategic
business intiatives. In particular, we have started expansion
into seven countries, namely Hong Kong-Macau, Timor
Leste, Australia, Myanmar, Malaysia, Taiwan, and the
United States of America. Expanding our operations
internationally exposes us to a number of risks associated
with operating in new jurisdictions for example, our
international operations could be adversely affected by
political or social instability and unrest, by regulatory
changes, such as an increase in taxes applicable to our
operations, macroeconomic instability, limitations on or
controls on the foreign exchange trade, competition
from local operators, difference in consumer preferences
and a lack of expertise in the local markets in which we
will be in operation. Any of these factors could cause
our expected returns from our expansion to be limited
and could have a material and adverse effect on our
business, results of operations and financial condition.

C. QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK

We are exposed to market risks that arise from changes
in exchange rates, interest rates, credit risk and liquidity
risk, each of which will have an impact on us. We do not
generally hedge our long-term liabilities in foreign
currencies but hedge our obligations for the current
year. As of December 31, 2014, assets in foreign currencies
reached 83% against our liabilities denominated in foreign
currencies. Our exposure to interest rate risk is managed

through a mix of fixed and variable rate liabilities and
assets, including short-term fixed rate assets. Our exposure
to such market risks fluctuated during 2012, 2013 and
2014 as the Indonesian economy was affected by changes
in the US Dollar-Rupiah exchange rate and interest rates
themselves. We are not able to predict whether such
conditions will continue during 2014 or thereafter.

254

Calendar Year

at Period End

Average

Low

High

(Rp/US$1)

2010 (1)

2011 (1)

2012 (1)

2013 (1)

2014 (1)

September(2)

October(2)

November(2)

December(2)

2015 (1)

January(2)

February(2)

March (25)(2)

Source: Bank Indonesia

8,991

9,068

9,670

12,189

12,440

12,212

12,082

12,196

12,440

12,932

12,625

12,863

12,932

9,078

8,773

9,419

10,563

11,880

11,891

12,145

12,156

12,438

12,807

12,578

12,750

13,069

9,365

9,170

9,670

12,189

12,440

12,212

12,241

12,206

12,900

12,932

12,732

12,887

13,237

8,924

8,508

9,000

9,667

11,404

11,710

11,993

12,092

12,264

12,625

12,444

12,609

12,932

(1) Determined based upon the last day middle exchange rate of each
month announced by Bank Indonesia applicable for the period.

(2) Determined based upon the daily middle exchange rate announced

by Bank Indonesia during the applicable period.

Under the current exchange rate system, the exchange
rate of the Indonesian rupiah is determined by the market,
reflecting the interaction of supply and demand in the
market. However, Bank Indonesia may take measures to
maintain a stable exchange rate. For the year 2014, the
average rate of Rupiah to the US Dollar was Rp11,880,
with the lowest and highest rates being Rp12,440 and
Rp 11,404, respectively.

The exchange rates used for conversion of monetary
assets and liabilities denominated in foreign currencies
are the buy and sell rates published by Reuters in 2012,
2013 and 2014. The Reuters buy and sell rates, applied
respectively to monetary assets and liabilities, were,
Rp9,630 and Rp9,645 to US$1.00 as of December 31,
2012, Rp12,160 and Rp12,180 to US$1.00 as of December
31, 2013 and Rp12,380 and Rp12,390 to US$1.00 as of
December 31, 2014.

The Consolidated Financial Statements are stated in
Rupiah. The conversion of Rupiah amounts into US Dollar
are included solely for the convenience of the readers
and have been made using the average of the market
buy and sell rates of Rp12,385 to US$1.00 published by
Reuters on December 31, 2014.

On March 25, 2015, the Reuters bid and ask rates were
Rp12,982 and Rp12,990 to US$1.00.

2. Foreign Exchange Controls
Indonesia operates a liberal foreign exchange system
that permits the free flow of foreign exchange. Capital
transactions, including remittances of capital, profits,
dividends and interest, are free of exchange controls. A
number of regulations, however, have an impact on the
exchange system. For example, only banks are authorized
to deal in foreign exchange and execute exchange
transactions related to the import and export of goods.
In addition, Indonesian banks (including branches of
foreign banks in Indonesia) are required to report to
Bank Indonesia any fund transfers exceeding US$10,000.
As a State-Owned Company, and based on the decree
of the Head of Pinjaman Komersial Luar Negeri ("PKLN"),
we are required to obtain an approval from PKLN prior
to acquiring foreign commercial loans and must submit
periodical reports to PKLN during the term of the loans.

255

2014 Annual Report PT Telkom Indonesia Tbk (Persero)3. Exchange Rate Risk
We are exposed to foreign exchange risk on sales,
purchases and borrowings that are denominated in
foreign currencies, primarily in U.S. dollar and Japanese
yen. Our exposures to other foreign exchange rates are
not material. Increasing risks of foreign currency exchange
rates on our obligations are expected to be offset by
time deposits and receivables in foreign currencies that
are equal to at least 25% of the outstanding current
liabilities.

The information presented in the following table is based
on assumptions of selling and buying rates in US Dollar
as well as other currencies, which were quoted by Reuters
on December 31, 2014 and applied respectively to
monetary assets and liabilities. The buying and selling
rates as of December 31, 2014 were Rp12,380 and Rp12,390
to US$1, respectively.

However, we believe these assumptions and the information
described in the following table may be influenced by
a number of factors, including a fluctuation and/or
depreciation of the Rupiah in the future.

Outstanding Balance
as of December 31,
2014

Foreign
Currency
(million)

Rp Equiv.
(Rp
million)

Expected Maturity Date

Fair value

2015

2016

2017

2018

2019

Thereafter

(Rp million)

ASSETS

Cash and cash Equivalents

US Dollar

364

4,526,838 4,526,838

Japanese Yen

875

Other(1)

193,242

Other Current Financial Assets

US Dollar

191,607

Trade Receivables

Related Parties

US Dollar

Third Parties

US Dollar

Other(1)

Other Receivables

US Dollar

Other(1)

25,442

903,403

35,384

4,876

1,381

Advances and Other Non-current Assets

50,535

49,654

881

610

US Dollar

Other(1)

LIABILITIES

Trade Payables

Related Parties

US Dollar

Other(1)

Third Parties

US Dollar

2,560

2,001

216

2,680,998 2,680,998

Japanese Yen

2,162

256

4,526,838

875

193,242

191,607

25,442

903,403

35,384

4,876

1,381

50,535

610

2,560

2,001

2,680,998

2,162

Foreign
Currency
(million)

Rp Equiv.
(Rp
million)

Expected Maturity Date

Fair value

2015

2016

2017

2018

2019

Thereafter

(Rp million)

Other(1)

Other Payables

US Dollar

Other(1)

Accrued Expenses

US Dollar

Japanese Yen

Other(1)

42,406

42,548

14,327

819,711

2,839

12,666

Advances from Customer and Suppliers

US Dollar

Other(1)

29,884

825

Short term bank loan

US Dollar

100

1,244,000

Current Maturities of Long-Term Liabilities

US Dollar

Japanese Yen

Promissory Notes

768

429,510

79,585

US Dollar

88,665

64,008

23,371

1,286

Long-term liabilites(2)

42,406

42,548

14,327

819,711

2,839

12,666

29,884

825

1,244,000

451,194

102,045

88,191

US Dollar

880,772

Japanese Yen

6,911

716,264

317,305

231,678

131,237

93,559

106,993

868,178

79,585

397,924

727,034

(1) Assets and liabilities denominated in other foreign currencies are presented as U.S. dollar equivalents using the Reuters buy and sell rates prevailing

at end of the reporting period.

(2) Long-term liabilities for the purpose of this table consist of loans denominated in foreign currencies from two-step loans, obligation under finance

leases and long-term bank loans.

4. Interest Rate Risk
Our exposure to interest rate fluctuations results primarily
from changes to the floating rate applied for long-term
debt. This risk relates to loans under the Government
on-lending program that has been used to finance our
capital expenditures. Interest rate fluctuation is monitored
to minimize any negative impact to financial position.
Borrowings at variable interest rates expose our Company
and our subsidiaries to interest rate risk. To measure
market risk fluctuations in interest rates, our Company
and our subsidiaries primarily use interest margin and
maturity profile of the financial assets and liabilities
based on changing schedule of the interest rate.

The actual cash flows from our debt are denominated
in Rupiah, US Dollar, and Japanese Yen, as appropriate
and as indicated in the table. The information presented
in the table has been determined based on the following
assumptions: (i) fixed interest rates on Rupiah time
deposits are based on average interest rates offered for
three month placements in effect as of December 31,
2014 by the banks where such deposits were located;
(ii) variable interest rates on Rupiah denominated long-
term liabilities are calculated as of December 31, 2014
and are based on contractual terms setting interest rates
based on average rates for the preceding six months on
three month certificates issued by Bank of Indonesia or

257

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
based on the average three month deposit rate offered by the lenders; (iii) fixed interest rates on US Dollar deposits
are based on average interest rates offered for three month placements by the various lending institutions where
such deposits are located as of December 31, 2014 and (iv) the value of marketable securities is based on the value
of such securities on December 31, 2014. However, these assumptions may change in the future. These assumptions
are different from the rates used in our Consolidated Financial Statements; accordingly, amounts shown in the table
may differ from the amounts shown in our Consolidated Financial Statements.

Outstanding Balance
as of December 31, 2014

Original
Currency
(million)

Rp
Equiv.
(Rp
million)

Rate (%)

Expected Maturity Date

Fair
value

2015

2016

2017

2018

2019

Thereafter

(Rp million)

ASSETS

Fixed Rate

Cash and Cash Equivalents

Time deposit

Rupiah

11,531,450

4 - 11.5

11,531,450

U.S Dollar

279 3,460,434

0.03 - 3 3,460,434

Other Current Financial Assets

Time deposit

U.S Dollar

110,472

0.85 - 1.00

110,472

Available-for-sale-securities

Rupiah

120,360

6.88 - 7.25

120,360

U.S Dollar

82,135

10.40 - 11.8

82,135

LIABILITIES

Short-term Bank Loans

Variable Rate

Rupiah

Principal

480,983

Interest

U.S. Dollar

Principal

Interest

Fixed Rate

Rupiah

100

1,244,000

11,531,450

3,460,434

110,472

120,360

82,135

480,983

1,244,000

Principal

85,000

Interest

Long Term Liabilities(1)

Variable Rate

Rupiah

Principal

10,921,317

3,751,311 2,281,449

1,962,849

1,759,891 610,134

555,683

10,770,905

Interest

2,316,162

8 - 15

905,120

624,331 413,806

236,611 85,450

50,843

692,552

299,676

219,813

127,168

30,407

15,488

13,495

1.14 - 6

6,441

4,382

1,946

604

122

687,484

US Dollar

Principal

Interest

Fixed Rate

258

Outstanding Balance
as of December 31, 2014

Original
Currency
(million)

Rp
Equiv.
(Rp
million)

Rate (%)

Expected Maturity Date

Fair
value

2015

2016

2017

2018

2019

Thereafter

(Rp million)

Rupiah

Principal

3,789,068 3,789,068

1,026,059

44,034

44,225

43,678 261,042

2,370,030

3,836,942

Interest

1,821,871

5 - 11

357,768

282,238

277,654

273,217 268,862

362,132

US Dollar

Principal

Interest

Japanese Yen

Principal

Interest

Finance Leases

Rupiah

653,820

170,866

98,192

99,282

100,417

78,070

106,993

667,505

71,266

2 - 5

20,999

16,076

12,780

9,526

6,271

5,614

7,679

795,849

79,585

397,924

829,079

1,250

129,575

3.10

24,049

21,643

19,115

16,648

14,181

33,939

Principal

4,736,901 4,736,901

548,582

551,500 594,832

591,140 571,047

1,879,800

4,736,901

Interest

1,739,038

2.75 - 11.76

400,739

349,747 295,854 238,693

186,713

267,292

US Dollar

Principal

Interest

52,574

22,977

22,671

6,514

6,453

4 - 5.8

2,832

2,757

819

412

52,574

(1) Long-term liabilities consist of loans which are subject to interest; namely two-step loans, bonds and notes and long-term bank loans,

which in each case include their maturities.

259

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
LEGAL MATTERS
In the ordinary course of business, we continuously pay attention to compliance aspects with capital markets
regulations, as well as regulations that are relevant to the scope of our business. Nevertheless, there are certain
differences in the interpretation and implications in operations and our business and subsidiaries, especially on legal
issues relating to land disputes, monopolistic practices and unfair business competition and SMS cartel practices.
With regard to the legal proceedings described below, we do not believe that subsequent investigations or court
decisions regarding those cases will have a significant financial impact on us or our subsidiariesBased on management’s
estimate on the probable outcomes of these cases, we have made provisions of Rp25 billion at December 31, 2014.

The following described ceretain current significant legal proceedings involving us, our Board of Commissioners,
Board of Directors and subsidiaries.

Legal Matters Faced by the Board of Commissioners and Board of Directors
In 2014, there were no legal issues faced by the Members of the Board of Commissioners and Board of Directors.

Legal Proceedings that involve Members of Board of Commissioners and Board of Directors

Year

Name of Case

Status

2014

2013

2012

Nil

Case brief
Summary

Nil

Number of Suits

Impact of Company

Nil

Legal Matters Faced By the Company
Out of the legal issues faced by Company and subsidiaries in 2014, there were two(2) cases and one (1) case has
final judgement (in-kracht van gewijsde). Details are as below:

Telkom Legal Issues

Status

2012

2013

2014

Criminal Law Civil Law Criminal Law

Civil Law Criminal Law Civil Law

In Progress

Final Judgement (in-kracht van
gewijsde)

Sub Total

Total

260

Principal lawsuit

Type of Court

Suit Status

Financial Impact

We are the defendant with KPPU as plaintiff
in the case of allegation of violation of Article
5 of Law No.5 of 1999 on Prohibition of
Monopolistic and Unfair Business
Competition Practices.

The Commission for the
Supervision of Business
Competition (KPPU)

Rp18 billion

The Company is
currently waiting for a
call from the Central
Jakarta District Court in
relation to the
commencement of the
merged trial.

Telkom, the Provincial Government of South
Sulawesi, the Regional Government of Gowa
Regency, the National Land Agency
collectively as Defendants with Andi Jindar
Pakki et al. as Plaintiff in the land right
dispute at Telkom Makassar’s land

General Court

Judicial Review to the
Supreme Court

Rp57.6 billion

Legal Matters Faced By Subsidiary
There was only one legal issues faced by the subsidiaries in 2014.

Lawsuit

Type of Court

Suit Status

Financial Impact

Telkomsel and certain other operators were
were investigated by KPPU in relation to the
allegation of SMS cartel practices by the said
Operators. KPPU has issued a decision which
sentenced Telkomsel to pay a fine of Rp25
billion, for which Telkomsel has appealed to
the District Court.

Commission for the
Supervision of Business
Competition
(“KPPU”)

Rp25 million

Telkomsel is currently
waiting for the
notification from the
Central Jakarta District
Court regarding the
start of the Joint
Proceedings at the
court.

261

2014 Annual Report PT Telkom Indonesia Tbk (Persero)ACCESS AND TRANSPARENCY INFORMATION
We regularly disseminate material information about the activities and performance of the Company. Disclosure of
such information meets the provisions of the mandate and authority to financial institutions.

Telkom disseminated information throughout 2014 which included activities where the Company issued press
releases, published the Company’s performance and operating results regularly every quarter in the national mass
media and held a press conference.

Telkom also publishes the Annual Report which is distributed to shareholders and other stakeholders. Submission
of periodic reports and publication of information materials and the timeliness and accuracy of the financial statements,
and various other information disclosures have been our primary concern.

Based on regulation of Bapepam-LK No.X.K.1 and regulations of BEI No IDX No. 1-E VI as well as to increase
transparency, Telkom is trying to ensure that material information is always published and reported to Bapepam-LK
and IDX. In line with the disclosure obligations set by the regulator, our information disclosure are as follow:

Development of Information Disclosure

Forms of Disclosure

Advertising Publication Announcements

Advertising Publications Quarterly Financial Statements

Annual Report

Exposure Telkom Performance

Press Release

Pers Conference

Media Visit

Media Gathering

2014

Advertising Announcements
In 2014, Telkom advertised nine (9) announcements in the print media. Belowis a list of advertising publications
through the mass media in 2014:

Telkom Advertising Publication in 2014

Description

Newspaper

Date of View

Notice Annual General Meeting of Shareholder 2014

Audited Financial Statements for Fiscal Year 2013

Invitation Annual General Meeting of Shareholder

Announcement Resolution of Annual General Meeting of
Shareholder and Schedules and Rulers for the Distribution of
2013 Financial Year Dividend

Investor Daily
Bisnis Indonesia
Jakarta Post

Investor Daily
Bisnis Indonesia

Investor Daily
Bisnis Indonesia
Jakarta Post

Consolidated Financial Statements (unaudited) Quarter II of
Fiscal Year 2014

Investor Daily
Bisnis Indonesia

March 5, 2014

March 7, 2014

March 20, 2014

April 8, 2014

July 23, 2014

Notice Extraordinary General Meeting of Shareholders

Investor Daily
Bisnis Indonesia
Jakarta Post

November 19, 2014

262

Description

Newspaper

Date of View

Invitation Extraordinary General Meeting of Shareholders

Announcement Resolution of Extraordinary General Meeting of
Shareholders 2014

Correction for Announcement of Resolution of Extraordinary
General Meeting of Shareholder

Investor Daily
Bisnis Indonesia
Jakarta Post

December 4, 2014

December 23, 2014

December 29, 2014

Press Release
As a form of disclosure, Telkom continues to provide nformation through the mass media, one of them through the
form of press releases. In 2014, Telkom published 87 press releases as a form of transparency to the public. Below
is a list of press releases submitted by Telkom to the media throughout 2014:

No Date

Title

List of Telkom Press Release 2014

6-Jan-14

Telkom Launches INDONESIA BISA, Realizing Modernization of Indonesian SMEs

10-Jan-14

Telkom Enhances ICT Services at the Halim Perdanakusuma

10-Jan-14

Speedy NBL Supports Basketball Performance, Telkom Speedy card present NBL Instant Edition

10-Jan-14

Builds Data Center, Telkom Cooperates with IBM

13-Jan-14

Telkom Generates Innovation and Entrepreneurial Spirit through SME Indonesia Bisa

16-Jan-14

Telkom Restores Telecommunications Services in Manado

17-Jan-14

Telkom To Monetize Tower Business in 2015

19-Jan-14

Telkom Speedy Card Instant Starts Selling Malaysia

21-Jan-14

Telkom Group Establishes Command Post for victims of Jakarta Flood Disaster

22-Jan-14

Prepare 11 Point of Command Center and Five Tankers Water

23-Jan-14

Telkom Succeeds Selection of Higher Education

29-Jan-14

UseeTV Presents Exclusive Concert Serving 40 Years Erros Djarot work

5-Feb-14

Strengthening International Business, Telkom International Shaping Capability Center

14-Feb-14

Concert Erros Djarot: UseeTV Delivers Outstanding Serving in the Special Day

6-Mar-14

Smart step in creating efficiencies through Smart Building Management System

11-Mar-14

Telin Builds Mega Project of Submarine Cable Network, Connecting Southeast Asia - Europe
through SEA-ME-WE 5Consortium

19-Mar-14

Ventura PBMT cooperation with PT. Finnet Indonesia Working on e-Payment

20-Mar-14

Telkom Generates Innovation and Entrepreneurial Spirit Through SMEs Indonesia Bisa

21-Mar-14

Telkom Participates to Succeed the SBMPTN 2014

26-Mar-14

Telkom Strengthens the Support To Digital Creative Industry

27-Mar-14

Telkom Smart Campus Announces Award Winners (TeSCA 2014)

1-Apr-14

Telkom Launching IndiHome Movie Mania Card

2-Apr-14

Telkom Achieves 3 Awards of Fortune Indonesia's Most Admired Companies 2014

4-Apr-14

Telkom shares the Rp9.9 Trillions Dividends Rose 19%

16-Apr-14

Telkom gets rank "idAAA" back for Company and Obligations

25-Apr-14

Telkom IndiHome Woman Award 2014

30-Apr-14

Indonesia Most Admired CEO dan Companies 2014

30-Apr-14

Telkom Successfully Achieved Kartini SOE Award 2014

8-May-14

Telkom Held Delima International and Domestic Remittance in Hong Kong, Pekalongan and Malang

11-May-14

Telkom Improving Speedy Instan Services

263

2014 Annual Report PT Telkom Indonesia Tbk (Persero)No Date

Title

List of Telkom Press Release 2014

14-May-14

IT Utilizations Successfully of Implementations, Telkom Group Achieves TOP IT & TOP Telco Award
2014

14-May-14

Capital Market Award 2014 Work Well, Telkom as The Best Share Emiten 2014

20-May-14

Telkom and Thamrin City Prepares Developments & Services Center of SMEs Based on Information
and Communication Technology

22-May-14

Telkom Indonesia Achives ICP International Technology Certification (Interroperability Compliance
Program)

23-May-14 World Cup on Your Hand with Speedy Instan and UseeTV

28-May-14

Indonesia Creative Digital of CSR Program

30-May-14

Telkom achieves "The grand Stevie Awards" on 1st Asia-Pacific Stevie Award in Seoul, South Korea

5-Jun-14

UseeTV presents Streaming Services of World Cup 2014 with Car Prize

5-Jun-14

Telkom achieves More Awards back

13-Jun-14

Director of Telkom, Arief Yahya, Earn Doctoral degree at the University of Padjadjaran

17-Jun-14

Telkom Announces the Winner of Telkom Smart Campus Award (TeSCA 2014)

20-Jun-14

Telkom Achieves International Awards back

2-Jul-14

Telkom cooparates with Bank Sumut on CO- Branding Elektronik Money of T-Money Services

14-Jul-14

Present World Cup, UseeTV get 1Million Active Users

14-Jul-14

Gas Explotions in Jalan Sudirman Culvert was not caused by Telkom’s Project

18-Jul-14

Telkom get into Indonesia's Top 100 Most Valuable Brands

23-Jul-14

Telkom Enters into Remittance Business in Taiwan

24-Jul-14

Telkom Performance First Quarter 2014 Records Positive Growth

3-Aug-14

Telkom Wins 4 International Award at the event CMO Asia Awards for Excellence in Branding &
Marketing 2014

13-Aug-14

Telkom expands to Silicon Valley: Accelerating Creative Digital Industry Growth with Silicon Valley
Partner

17-Aug-14

To Realize Golden Generation Indonesian Gold Generation, Telkom Held CSR "IndiLearning Bagimu
Guru Kupersembahkan”

17-Aug-14

Liven Independence Day of the Republic of Indonesia, Telkom Held WiFi.ID Corner One Day Free

28-Aug-14

Telkom Ready to Achieve "Indonesia Global Networks"

4-Sep-14

At the National Customer Day, Telkom Held One Day Service Fulfillment

30-Aug-14

Telkom and Telstra Australia join business on Network & Application Services

17-Sep-14

To Realize Golden Generation Indonesian Gold Generation, Telkom Held CSR "IndiLearning Bagimu
Guru Kupersembahkan”

17-Sep-14

Investor Summit 2014

20-Sep-14

Expansion to the United States of America, Telkom Open Telkom USA Office

24-Sep-14

Telkom Group achieved 8 Frost & Sullivan Indonesian Excellence Awards 2014

29-Sep-14

Telkom Increase Cooperation with Alfamart, Alfamidi, AND + AND

2-Oct-14

BUMN Synergy: Telkom and BTN are Ready develop Integrated Banking Services

8-Oct-14

Telkom Ready to Support Jatim Bumi Broadband through Digital Innovation Lounge (Dilo) ITS

13-Oct-14

Telkom Launches Kartu As 2in1 Macau

10-Oct-14

Telkom and Tower Bersama Deal on Strategic Partnership

22-Oct-14

Telkom Achieves International Business Award 2014 The International Stevies

26-Oct-14

Telkom Proud of Appointment Arief Yahya As Minister of Tourism

28-Oct-14

Telkom Performance Growth Positive on Third Quarter 2014

29-Oct-14

Indra Utoyo Appointed as Acting President Director of Telkom

31-Oct-14

Telkom Remittance Delima Services Now Available in Malaysia

3-Nov-14

Realizing 1 million SMEs Hebat, Telkom Launches ZAPA

264

Title

5-Nov-14

The Strategies to not left behind in the ASEAN Free Market

List of Telkom Press Release 2014

10-Nov-14

Supporting 1000 Kampung Nelayan Programs : Telkom Integrate Digital Ecosystems at Kampung
Nelayan Muara Angke

10-Nov-14

Kick Off Broadband Port and Launching Inaportnet Digital Lounge, Telkom Support Indonesian
Maritime Sector

10-Nov-14

Telkom and Telstra Earn IDC Telecom Service Provider Innovation (TSPI) Award 2014 on Innovative
Partnership Category

19-Nov-14

Telkom Penetrating Remittance Services in Japan

25-Nov-14

Developing Creative Industries, Telkom Launches Jakarta Digital Valley

29-Nov-14

Telkom Indonesian Held Event BestAppsID As The Largest Hackathon Event in Indonesian

29-Nov-14

Synergy Between Telkom and Indonesian Navy within Preparing Telecomunication Facilities in the
Outer Island

1-Dec-14

Telkom Support Jokowi E-blusukan with TKIs in 8 countries

1-Dec-14

Hundreds Apps "Made in Indonesian" Ready to Launched After Indigo BestAppsID Event

12-Dec-14

Speedy Instan 2nd Anniversary: Telkom Launching The New Products of Speedy Instan

12-Dec-14

"New Digital Experience with Speedy Instan Exciting Features"

16-Dec-14

Launching SHOPBOX, Telkom Simplify SME Develop Business

17-Dec-14

Telkom Launch 10 Fisherman Villages

19-Dec-14

Telkom Announces the Nomenclature of Board of Directors

29-Dec-14

Telkom Group Support the Media Center and Search Command Center of Air Asia QZ 8501 Aircraft

29-Dec-14

"Dream Team" The New Board Directors and Commissioners of Telkomsel

265

2014 Annual Report PT Telkom Indonesia Tbk (Persero)Website
Telkom continuously ensures compliance with the provisions of disclosure of information to external audiences. This
is especially in the delivery of a number of reports and other important information that are published on the
company’s website. Telkom manages a website with the address: www.telkom.co.id

The reports and other information that must be submitted on the website, are as follows:
1. Quarterly Financial Report
2. Annual Financial Report
3. Annual Report
4. Report on Corporate Governance
5. Publication of products and services

Telkom continues to develop and to add features on our website. Providing updated information is a priority for
Telkom’s website. Telkom also has sufficient intranet network so that it is able to communicate more actively.

The number of visitors to the website of Telkom in 2014 are as follow:

Month

January

February

March

April

May

June

July

August

September

October

November

December

Total

Average/month

Unique Visitor

Number of Visit

619,356

567,791

614,100

581,038

576,553

566,876

476,345

518,051

486,610

470,527

463,078

442,793

6,383,118

531,927

1,281,987

1,165,441

1,251,366

1,194,118

1,172,908

1,135,310

939,510

994,132

911,115

878,140

884,849

844,674

12,653,550

1,054,463

Hits

1,613,031

1,494,906

1,628,448

1,562,995

1,534,853

1,467,090

1,217,752

1,321,653

1,221,654

1,186,413

1,187,448

1,147,389

16,583,632

1,381,969

Telkom Social Media
Along with the development of communication technology through social networking media, Telkom has also
penetrated the media like Facebook and Twitter. Telkom expects to improve two-way communication to the customers
and the public in general.

Since 6 October 2009, Telkom has a twitter account @TelkomIndonesia with 39,700 followers and has launched a
Facebook account Telkom Indonesia since 20 August 2014 with 48 friends and 81,250 likes.

Telkom views the media as not only a campaign media, but also an opportunity to obtain feedback and suggestions
from consumers both for the development of product features and services needed by Telkom customers and the
community at large as well as to improve the quality of Telkom’s service to customers.

Exposure of Telkom Performance
As a form of disclosure, particularly regarding financial performance and other important performance, as well as
the latest information, Telkom continuously deliver performance report to regulators, government agencies, as well
as to its stakeholders, as well as others to those who want to do a comparative study against Telkom.

266

Subjects of Performance Exposure

Date

Institution

Performance exposure in 2013

March 14

Analysts, Investor, Media

Performance exposure Quarter I 2014

Performance exposure Quarter II 2014

April 29

July 24

Analyst, Investor, Media

Investor Summit 2014

September 17

Bursa Efek Indonesia, Analyst, Investor, Media

Performance exposure Quarter III 2014

October 28

Analyst, Investor, Media

In addition to routinely delivering performance exposure, we also present our material performance in conference
and non-deal road shows as many as eight times and four times respectively throughout2014 as seen in the table
below.

No Conference

Date

Location

Institution

5th Annual Hong Kong Investor Summit

March 14

Hong Kong

Morgan Stanley

Asia Telecom Conference

5th Annual DB Access Conference

Macquarie Asean Conference

April 29

July 24

August 28

Hong Kong

UBS

Singapore

Deutsche Bank

Macquarie

Indonesia / London Corporate Day

September 2

London

Mandiri Sekuritas & Barclays

New York Corporate Day

September 4-5

New York

Mandiri Sekuritas & Barclays

Real Indonesia Conference

November 10-11

Makassar

Macquarie

DB Access Indonesia Conference 2014

November 19

Jakarta

Deutsche Bank

No Non Deal Roadshow

Date

Non Deal Roadshow with BAML

August 24

Location

Singapore

Institution

Bank of America Merril Lynch

Non Deal Roadshow with BAML

September 1

London

Bank of America Merril Lynch

Non Deal Roadshow with Deutsche Bank

July 24

Boston & Chicago Deutsche Bank

Non Deal Roadshow with BNY Mellon

October 28

San Francisco

Bank of New York Mellon

Disclosure in Internal Communications
In order to create a conducive climate for internal communications to support the achievement of greater performance,
Telkom continuously create a two-way communication through a variety of communication media, which are as
follows: portal.telkom.co.id and Kampiun.

Management face to face meeting with employees
To develop a positive communication climate between management and employees, a number of face to face
activities between the management and employees are implemented through various visits to the office by the
Division Directors and Regional Telecommunications on various occasions internal events.

267

2014 Annual Report PT Telkom Indonesia Tbk (Persero)
RELATIONSHIP WITH STAKEHOLDERS

Comprehending and understanding the needs and expectations of stakeholders are important parts of the GCG
management.

Through our corporate culture of “The Telkom Way”, the management strives to foster the Company’s values and
culture by leading all employees to a shared understanding of values that should always be informed to all stakeholdres
to ensure such values including inherent norms and principles of governance are at the center of their inspiration.

The following are some of the identified stakeholders’ values:

Stakeholders Interest

Stakeholders Value

Costumer

Accuracy and transparency of billing and operations

Satisfaction levels of products and services

Guarantee continuity of products and services

Continuously provide dividends to shareholders

The trend of stock prices continue to rise

Always adapt to the new environment

Shareholders

Win the market and are ready to compete

Employees

Government

Competitor

Investor & Financial Community

Public

Continuous growth of financial performance

Guarantee of business governance expansion

World-class management practices

Employee Welfare

Good career place

Compliance with government regulations

Transparency and tax compliance

An example for SOEs

Participate and increase GDP

Fair business competition

Build mutual business partnership

Sharing of resources to reduce costs

Transparency Reporting Company

Company's financial statements are reliable

Community Employment

Economic Multiplier effect

A positive impact on society at large

268

We continuously adhere to morals and ethics which are
the Company’s foundation for the implementation of
GCG. Over time in managing GCG, we learn that the
implementation of GCG implementation has nourished
law awareness and has produced employees who have
a sense of social responsibility to the community and
win customers love.

of Commissioners, Directors and other key officers and
employees that can be found on our website: http: //
www.telkom .co.id/ hubungan-investor/tata-kelola-
perusahaan/kode-etik/

We will inform any changes in the code of ethics and
waiver towards our ethic code via our website.

Code of Conduct
As a Code of Conduct for the entire Company, we have
published the Decision Direction No. KD.201.01/2014
concerning Business Ethics within the scope of the
Telkom Group.

We own tools of business ethic, which concerns the
standard of employees behavior in dealing with customers,
suppliers, contractors, co-workers and other parties that
relate to the Company.

Implementation of the Code of Ethic For the Board of
Commissioners, Directors and Employees
According to section 406 of the Sarbanes Oxley Act
(“SOA”) 2002, we implement the code of ethics which
is applicable to all levels of the organization, the Board

Socialization And Business Ethics Enforcement Efforts
Enabling employees to understand and remember the
values and ethics of business are done through the
dissemination of material and an assessment every year.
The materials relate to the understanding of corporate
governance, business ethics, integrity pact, fraud, risk
management, internal control (“SOA”), whistleblowing,
banning gratuities, IT governance, ensuring the security
of information and other matters relating to the Company’s
integrated governance practices. The efforts are done
through a survey of the business ethics program involving
all employees. The survey was conducted online, through
the media portal/ intranet, which concluded with a
question on the willingness of employees to run the
business ethics. The understanding and application of
business ethics together with the results of the survey

269

2014 Annual Report PT Telkom Indonesia Tbk (Persero)annually audited internally and externally through the
SOA 404 audit process is associated with the application
of appropriate control environment COSO internal control
framework at the level of the entity’s internal control
audit.

Corporate Culture
The Company has continued developing systems and
culture in accordance with the demands and changes
in the business to realize our aspirations tocontinue
developing, be loved by customers, be competitive in
this industry and be a role model for the Company. Since
2009, a new cultural transformation company called
“The New Telkom Way”. Further cultural development,
conducted in 2013 with the enactment of Architecture
Leadership and Corporate Culture (“AKBP”) Telkom
Group.

A complete Corporate Culture is described as follows:

Philosophy to be the Best: Always The Best
‘Always the Best’ is the basic belief to always provide
the best in every job. ‘Always the Best’ conceptualizes
the essence of “Ihsan” which can be translated into “the
best”. Employees who embody this Ihsan essence will
always deliver better work than normal until a charitable
attitude will be automatically guided by a sincere heart,
and when each activity is conducted as a form of worship
to God Almighty.

Philosophy to Be the Best: Integrity, Enthusiasm, Totality
‘Always the Best’ requires every member of Telkom to
have integrity, enthusiasm, and totality.

Principles to be the Star: Solid, Speed, Smart
The ‘Principles to be the Star’ from The Telkom Way is
3S, namely Solid, Speed, Smart which also became our
core values or great spirits.

Practices to be the Winner: Imagine - Focus - Action
The practices to be the Winner of The New Telkom Way
is IFA, namely ‘Imagine, Focus, Action’ as well as the Key
Behaviors. Explanation from ‘Imagine, Focus and Action’
can be described as follow.

Evaluation of Business Ethics and Corporate Culture
Implementation
Every year we conduct an internal survey to determine
the effectiveness of our corporate culture and business
ethics. We label this survey the Family Business Ethics
Survey. Some of the questions addressed to employees
were conducted online so that the survey can reach all
employees quickly including: GCG, Business Ethics, Value
of The New Telkom Way, anti-fraud, internal controls,
integrity pact, whistleblowing systems, and others. The
results of the survey in 2011, 2012, 2013 and 2014 is 74.87
points, 79.07 points, 75.80 and 89.35 points out of a
scale of 100 points. The results of the survey for 2014
increased 13.55 points from the previous year. This
illustrates that the level of understanding of employees
concerning business ethics is increasing from year to year.

270

Since 2006, as part of the entity level controls, we have
implemented a whistleblowing program that is designed
to receive, review and follow up on complaints from
Telkom Group employees and from third parties. The
application of whistleblower program which is managed
by the Audit Committee is established by the decision
of the Board of Commissioners and ratified by the Decree
of the Board of Directors.

Submission and Violations Reporting
Telkom Group employees or third parties may submit
complaints regarding accounting and auditing issues,
policy violations, suspected fraud and / or corruption,
and violations of the code of conduct directly to the
President Commissioner or to the Chairman of the Audit
Committee of Telkom by email, fax or mail to the address:

Fax

ka301@telkom.co.id

(62-21) 527 1800

Website : www.whistleblower.telkom.co.id

Surat

: Audit Committee

PT Telkom Indonesia Tbk (Persero)
Graha Merah Putih, 5th floor,
Jl. Jend. Gatot Subroto Kav. 52,
Jakarta 12710

To get immediate response, complaints must meet the
following requirements:
1. Delivered via website, email, fax or letter.
2. Provide information on issues of internal control,
accounting, auditing, regulatory violations, suspected
fraud and/ or corruption, and violations of the code
of ethics.

3. The information reported must be supported by
sufficient and reliable evidence as a baseline for
further examination.

Protection for Reporter
We stipulate in Decree No.KD.48/2009 to ensure the
confidentiality of the complaint, whether they are
employees or third parties who submit complaints or
reports of alleged violations.

Whistleblower Protection Officer
Whistleblower Protection Officer (WPO) is a member
of the Audit Committee who received an assignment to
handle complaints by:

a. Receiving complaints
b. Administering complaints
c. Verifying whether the complaint is in accordance

with the criteria

d. Monitoring the follow up of the complaints

Through meetings, the Audit Committee makes
determination by:
a. providing approval on whether the incoming complaint

will be followed up.

b. providing approval on whether the complaint will be

brought to the Internal or External parties.

c. providing a follow-up assessment on whether the

complaint is sufficient

The Internal Auditor plays a role in:
a. performing preliminary investigation upon receiving

the complaints.

b. making Preliminary Examination Report and submit
it to the President Director and the Audit Committee.

An investigation committee is instrumental in:
-

conducting an investigation of the complaints that
have been received
creating reports of the results of investigation and
delivering it to the President Director and to the
Audit Committee.

Number of Violations Complaints and Follow-up
In 2014, the Audit Committee has followed up on eight
(8) complaints that were received and met the requirements
to be included in the category of complaints relating to
accounting, internal control, regulatory violations,
suspected fraud and violations of the code of ethics.

The use and results of the whistleblowing system:

Description

Total Description

Number of Complaint

Qualified Complaint

Category of Complaint

Progress of Complaint

Complaints that
were received

Complaints which
qualified to be
followed up

Other Complaints

Complaints after
being followed up

In the process of
following up

271

2014 Annual Report PT Telkom Indonesia Tbk (Persero) Complaint Handling
The process of handling complaints to meet the
requirements of the OJK Rules No.IX.1.5 and Sarbanes-
Oxley Act of 2002 Section 301 of the Public Company
Audit Committees are undertaken within the framework
of improving our corporate governance. Therefore, the
requirements for a complaint is designed to ensure that
the complainant filed his/ her complaints responsibly
and does not defame someone’s reputation.

The Audit Committee will follow up on complaints of
third parties including and especially those from Telkom
Group employees that relates to:

a. Accounting and Auditing
Issues of accounting and internal control over financial
reporting which could potentially result in material
misstatements in the financial statements and audit
issues, especially those concerning the independence
of Public Accountants.

b. Regulation Violation
Violation of capital market regulation and legislation
related to Companyoperations as well as violations of
internal rules that potentially result in losses.

c. Cheating and/or allegations of corruption
Cheating and/or allegations of corruption by officials
and/or our employees.

d. Code of Conduct
The behavior of the Board of Directors and Management
which are not commendable and could potentially tarnish
the reputation of Telkom or result in losses for the
Company. Examples of the behavior of the Board of
Directors and Management which are not commendable
include, among others, dishonesty, conflict of interest
with Telkom, or providing misleading information to the
public.

We have also built a working mechanism between the
Internal Audit and Committee Audit and Investigation
Committee, including its Subsidiaries to follow up on
complaints that were received. In addition, the
whistleblower program has also been disseminated and
understood by our employees.

TELKOM SUBSIDIARIES WHISTLEBLOWING SYSTEM AND PROCEDURES

INVESTIGATION PROCESS W

HISTLEBLOWING AND FOLLOW UP

Subtance
Evaluation