Telkom Indonesia Annual Report 2018

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FY2018 Annual Report · Telkom Indonesia

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2018

Annual Report

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PT Telekomunikasi Indonesia (Persero) Tbk | Laporan Tahunan 2018

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportTHEME

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2018

Annual Report

Stronger, for Your Digital Experience

The digital era has given rise to various innovations aimed at producing quality
digital solutions, accompanied by best customer experience for customers.
The increasing dependence of customers on digital services to support
their activities has driven digital adoption across all customer segments
to rise as well. As a result of this phenomenon, customers are increasingly
abandoning the legacy business, which has traditionally been the main focus
for telecommunication operators. Telecommunication operators who still
depend on the legacy business are becoming increasingly irrelevant to the
activities and businesses of their customers.

We realize that the only way to stay strong and still relevant to customers is
by delivering quality digital solutions and best customer experience. We are
certain that only with strong digital capabilities we can become good partners
for our customers in supporting their activities and business operations.

To do so, during 2018 we demonstrated our commitment by consistently improving our digital capabilities in terms
of services, infrastructure as well as customer experience. We continued to strengthen and develop digital services
that deliver increased convenience, and also assisted customers with digitizing their business processes in order
to increase the quality and competitiveness of their businesses. This was shown by the significant growth of our
digital business, which has successfully compensated the decline of legacy business. We also strengthened our
digital backbone network infrastructure, our fiber optic-based access and high speed cellular, and improved our IT
capabilities and capacity from front-end to back-end as well as developing various platforms and applications as
enablers. In addition, we have developed digital touch points and leveraged big data analytics and customer insights
to ensure that customers are able to enjoy a digital experience.

We believe that our actions and achievements throughout 2018, have strengthened our capabilities as a digital
telecommunication operator. We dedicate all of this to our customers by delivering high quality services with best
customer experience.

DISCLAIMER
While preparing this Report, Telkom selected and presented material information and data for the investors, the
goverment and other stakeholders. The materials that are used to prepare this Report are derived from reliable
documents and sources. Other than historical information and data, this Report also contains Telkom’s forward-
looking statement such as targets, expectations, estimations, prospects and projections of Telkom’s operating
performance and business condition in the future. Even after careful consideration and and a reasonable presentation
of the facts in this report, Telkom realizes that there are risks and uncertainties which may be affected by many
factors among other things the economic, social, and political situation in. Therefore, in order to implement good
corporate governance, Telkom cannot guarantee that all forward-looking statements made in this Report are entirely
correct and accurate and can be fully achieved.

This report is available to download at www.telkom.co.id. Furthermore, Telkom invites all readers to submit questions
and suggestions regarding to this Report to: http://www.telkom.co.id

Investor Relations Unit
Andi Setiawan

PT Telkom Indonesia (Persero) Tbk

Telkom Landmark Tower 39th floor

The Telkom Hub

Jl. Jend. Gatot Subroto Kav.52

Jakarta 12710, Indonesia

Tel. +62-21-5215 109

Fax. +62-21-5220 500

E-mail

: investor@telkom.co.id

Facebook : TelkomIndonesia

Instagram : telkomindonesia

Twitter

: @telkomindonesia

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Report of the Board of
Commissioners and
Directors

Telkom Highlights

Management Discussion
and Analysis

About Telkom

218

Corporate Social
Responsibility

230

Partnership
and
Community
Development
Program

148

Corporate Governance

270

Consolidated Financial
Statements

238

Appendices

1
1
2

4
6
10
14
16
17
18
21

24
30
40

42
44
46

Theme
Disclaimer
Table of Contents

TELKOM HIGHLIGHTS
Kaleidoscope 2018
Profile of Telkom and Its Subsidiaries
Infrastructure
Products and Customers
Financial Data Overview
Stock Information
Bond, Sukuk or Convertible Bonds
and Medium Term Notes (MTN)
Information

REPORT OF BOARD OF
COMMISSIONERS AND DIRECTORS
Report of the Board of Commissioners
Report of the Board of Directors
Statement Letter of Responsibility
for 2018 Annual Report

ABOUT TELKOM
Vision, Mission, and Strategy
Telkom Milestone

48
50
56
58
66
74
78
80

87
89

94
114
120
134
135
136
137

Business Activities
Awards and Certifications
Telkom Organizational Structure
Profile of the Board of Commissioners
Profile of the Board of Directors
Telkom Employees
Shareholders Composition
Subsidiaries, Associated Companies,
and Joint Ventures
Chronology of Stocks Registration
Chronology of Other Securities
Registration
Name and Address of Institutions and/
or Supporting Capital Market Profession

MANAGEMENT DISCUSSION AND
ANALYSIS
Operational Overview by Segment
Marketing Overview
Comprehensive Financial Performance
Solvency
Capital Structure
Capital Expenditure
Material Commitment for Capital
Expenditure

TABLE OF CONTENTS

READING THE REPORT CONTENT
For the ease of stakeholders, Telkom devided this report in two main parts. The first part, from the front page of the Report to the
“Management Report” and “Statement Letter”, is dedicated to readers who want to understand Telkom briefly. Investors and other
stakeholders who want to understand more detail about Telkom may continue to read this Report from the first part to second part, namely
the “About Telkom” section and so forth until the end of this report.

218

220
222
225
228

230

232

238
240

242

243

244

248
252
255

270

CORPORATE SOCIAL
RESPONSIBILITY
Goods and Services Responsibility
Employment, Health, and Safety
Community Social Development
Environmental Responsibility

PARTNERSHIP AND COMMUNITY
DEVELOPMENT PROGRAM
Partnership and Community
Development Program
(PKBL) Report

APPENDICES
Appendix 1: Board of Commisioners’
Agenda and Attendance at Internal
Meetings
Appendix 2: Board of Commisioners’
Agenda and Attendance at Joint
Meeting
Appendix 3: Board of Directors’
Agenda and Attendance at Joint
Meeting
Appendix 4: Board of Directors’
Agenda and Attendance at Internal
Meetings
Appendix 5: Glossary
Appendix 6: List of Abbreviations
Appendix 7: Circular Letter
to Financial Services Authority
No.30/SEOJK.04/2016
Cross Reference

CONSOLIDATED FINANCIAL
STATEMENTS
Audited Consolidated Financial
Statements 2018
Audited PKBL Financial Statements
2018

FEEDBACK FORM

139
139

140
141

143

144

145

145
146
146

147
147

148
150

156
156
157

169
176
181

185

189
195
198
201
203
209
211

211
212
212

213

214
215

Receivables Collectability
Material Information and Fact After
Accountant Reporting Date
Macroeconomy
Indonesia Telecommunication
Industry
Business Prospects and
Sustainability of the Company
Comparison of Initial Year Target
and Realization
Target or Projections For the
Following Year
Dividend
Realization of Public Offering Fund
Material Transaction Information
Containing Conflict of Interest,
Transaction with Affiliated Parties,
Investment, Divestment and
Acquisition
Changes in Regulation
Changes in Accounting Policy

CORPORATE GOVERNANCE
Corporate Governance Principle and
Platform
Corporate Governance Structure
Corporate Governance Assessment
General Meeting of Shareholders
(GMS)
Board of Commissioners
Audit Committee
Committee for Nomination and
Remuneration
Committee for Planning and Risk
Evaluation and Monitoring
Board of Directors
Corporate Secretary
Internal Audit Unit
Internal Control System
Risk Management System
Whistleblowing System
Board of Directors’ and
Commissioners’ Share Ownership
Policy Implementation
Employee Stock Ownership Program
Significant Legal Disputes
Informations Regarding
Administrative Sanctions
Information Access and Company’s
Public Data
Corporate Code of Conduct
Corporate Culture Information

TELKOM
HIGHLIGHTS

6
10
14
16
17
18
21

Kaleidoscope 2018
Profile of Telkom and Its Subsidiaries
Infrastructure
Products and Customers
Financial Data Overview
Stock Information
Bond, Sukuk or Convertible Bonds and Medium
Term Notes (MTN) Information

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
As a way to contribute to the nation, Telkom has
introduced Telkom Digital eXperience (TDX), an
interactive medium for the application of future
digital technology.

January - Inauguration of the Telkom Integrated
Operation Center (TIOC), which
integrated
control center for network and service management
for customers which operates on a 24/7 basis.

is an

February - Telkom
in collaboration with Telstra
Corporation Ltd (Telstra) formed the Global Delivery
Center (GDC) in Indonesia to realize a commitment to
improve global exposure to Indonesian ICT talents.

April - Telkomsel has successfully registered Prepaid
SIM Cards with a success rate of over 80% by the end
of the registration period. This opens opportunities for
Telkomsel to improve its service quality to be more in line
with customer needs.

April - Telin as a Telkom’s subsidiary re-held the Bali Annual Telkom International Conference (“BATIC”) 2018 with the theme
of Unlocking Opportunities in the Borderless Digital World. BATIC 2018 was an event for sharing innovations, obtaining
business opportunities, and collaboration by presenting delegations from various global telecommunications communities.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportLICENSED IPTV BROADCASTER

April - Telin Hong Kong inaugurated the neuCentrIX
Data Center which is equipped with world-class
facilities and is seamlessly connected to global
infrastructure in order to support customers’
needs for safety and high-quality data center
services.

June - IndiHome as the Licensed IPTV Broadcasters of the
2018 FIFA World Cup held an event Nonton Sama-sama
(Nosa) which was held in several Telecommunications
Regional Offices (Witel) throughout Indonesia. This event
was intended for anyone who wanted to watch World
Cup matches.

August - The launch of the Merah Putih Satellite
important
at Cape Canaveral, Florida played an
role
in areas
in delivering service connectivity
that cannot be reached by fiber optic networks or
other infrastructures, especially in the foremost,
outermost, and lagging regions.

August - With the spirit of
‘Win Today, Nation
Advance’, Telkomsel successfully presented a trial
of 5G revolutionary technology at the Telkomsel 5G
Experience Center in the 2018 Asian Games event.

August - Telkom was successful as the Official Prestige
Telco Partner Asian Games 2018 in Jakarta-Palembang
through the provision of high-quality Information and
Communication Technology (ICT) infrastructure.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

August - Telkom successfully became a trusted partner by providing high-quality Information and Communication Technology
(ICT) services at the IMF-WB Group 2018 in Bali.

August - Telkom and Pertamina signed a Cooperation Agreement to
work together to build a digital system for Public Fuel Filling Stations
(SPBU). SPBU Digitizing is a step to increase transparency and accuracy
of supply data and fuel consumption.

September - In order to commemorate
Hari Pelanggan Nasional
(HPN),
Consumer Director Siti Choiriana visits
directly to the customer’s home.

September - Telkom has recovered the telecommunications
network quickly in a number of disaster locations such as
Lombok, Palu and Banten.

October - Telkom also supported the smoothness of
the application of technology and information services
at the Asian Para Games 2018 event 6-13 October 2018.

October - Telkom held the E-sports Millennials Games Day 2018
Competition. This event is aimed at developing digital gaming
innovation in order to encourage the development of the gaming
industry in Indonesia.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNovember - The Telkom Hub Inauguration was done by the President of
Indonesia Joko Widodo. The Telkom Hub is a TelkomGroup office area and a
center of excellence and a source of inspiration in order to build Digital Indonesia.

Inauguration of taxation data
November -
integration on a host to host basis was completed
between the Tax Directorate General of the Ministry
of Finance and Telkom.

December - Indonesia Global Gateway (IGG) Operation,
which connects international gateways to the west through
SEA-ME-WE 5 and east through SEA-US, was an important
milestone for Telkom towards becoming a Global Digital Hub.

December - Achieving more than 5 Million IndiHome
Customers by the end of 2018 was a manifestation of
Indonesian society’s trust in IndiHome which is now serving
as the Company’s new growth engine.

December - Telkomsel was getting stronger as
the cellular market leader with 189,081 BTS at
the end 2018, 73% of which are 3G and 4G BTS
covering 90% of the population.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

PROFILE OF TELKOM AND ITS SUBSIDIARIES

PROFILE OF TELKOM

Company’s Name
PT Telkom Indonesia (Persero) Tbk

Commercial Name
Telkom

Business Fields, Type of Products and Services
Organizing
information
telecommunication
networks and services, as well as the optimization of
the usage of the resources owned by the Company.

and

Corporate Status
Public Company, State-Owned Enterprise

Ownership
52.09% The Government of the Republic
of Indonesia
47.91% Public

Legality
NPWP 01.000.013.1-093.000
TDP 101116407740
SIUP 0029/IUP-UB/X/2017/DPMPTSP

Date of Establishment
November 19, 1991

Address and Contact of Corporate Office
Graha Merah Putih
Jl. Japati No. 1, Bandung
Jawa Barat, Indonesia - 40133
Phone
Fax
Website
E-mail

: +62-22-4521404
: +62-22-7206757
: www.telkom.co.id
: corporate_comm@telkom.co.id
investor@telkom.co.id

Social Media
Facebook
Instagram
Twitter

: TelkomIndonesia
: telkomindonesia
: @telkomindonesia

Legal Basis of Establishment

Pursuant to the Government Regulation No.25 of 1991, the Company’s status was changed to a state-
owned limited liability company (“Company”) based on Notarial Deed of Imas Fatimah, S.H., No.128, dated
September 24, 1991 which was approved by the Minister of Justice of the Republic of Indonesia through
the Decree No.C2 6870.HT.01.01.Year.1991 dated November 19, 1991, and announced in the State Gazette of
the Republic of Indonesia No.5 of January 17, 1992 Supplement to the State Gazette No.210.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Stock Listing
The Company was listed at the Indonesia Stock
Exchange (IDX) and New York Stock Exchange
(NYSE) on November 14, 1995

Stock Symbol
Indonesia Stock Exchange: TLKM
New York Stock Exchange: TLK

Stock Type
Series A Dwiwarna shares and series B shares

Authorized Capital
1 series A Dwiwarna share
399,999,999,999 series B shares

Issued and Fully Paid Capital
1 series A Dwiwarna share
99,062,216,599 series B shares

Rating
International : Baa1 (stable) from Moody’s

BBB (stable) from Fitch

Domestic : idAAA from Pefindo

Telkom is the largest telecommunications company in Indonesia with:

7
61
422
11

Regional Telkom Offices

Telecommunications areas

Plasa Telkom Outlets

Mobile GraPARI units

761
1,142 Mobile IndiHome units
11

Direct subsidiaries,

Global offices in overseas (Singapore,

Hong Kong, Timor Leste, Australia,

Malaysia, Macau, Taiwan, USA, Myanmar,

Saudi Arabia and New Zealand)

actively operate

Direct subsidiary,

not actively operate

Indirect subsidiaries

GraPARI International in Saudi Arabia,

429

Singapore, Hong Kong, Macau, Taiwan

and Malaysia
GraPARI in Indonesia, including 7 GraPARI
TelkomGroup in Bandung, Surabaya,
Tangerang, Medan and those which are

managed by third parties

PROFILE OF SUBSIDIARIES

www.telkomsel.com

www.metra.co.id

www.telkomsat.co.id

Telekomunikasi

Seluler
PT
(Telkomsel)
is a cellular operator
with the widest network that can
reach around 99% of
Indonesia’s
population, with the core business
telecommunications
of
services and the operation of cellular
telecommunications networks.

cellular

PT Multimedia Nusantara (Telkom
Metra) is an investment company
and sub-holding and has expanded
to various basic digital services and
ICT industries through acquisition,
partnership and building a strong
business ecosystem.

Satelit

Indonesia
PT Telkom
(Telkomsat) is a company engaged
in the satellite telecommunications
network
infrastructure which
has a core business of providing
satellite network services for date
and the internet.

www.pins.co.id

www.telkomakses.co.id

PT PINS Indonesia (PINS) is involved
integrating
the business of
in
devices,
systems,
networks,
processes and the Internet of Things
(IoT). Its core business is providing
various technological,
information
and communication equipment and
IoT facilities.

PT
Jalin Pembayaran Nusantara
(Jalin) is a company which provides
switching and system management
for ATM, EDC and Electronic Money
services
for National Payment
Gateways.

network

PT Telkom Akses
(Telkom Akses)
is engaged in the deployment and
of fixed-broadband
management
infrastructure
access
services, with the core business of fixed
broadband access network deployment
construction services, managed service
& operation maintenance, and fixed
broadband access networks.

www.telin.co.id

www.mitratel.co.id

www.telkominfra.co.id

(Telin)

Telekomunikasi

PT
Indonesia
International
a global
that
telecommunications
provides telecommunication & IT service
solutions overseas. Currently, Telin has 7
subsidiaries which are all overseas.

operator

is
for

Dayamitra

PT
Telekomunikasi
(Mitratel)
an
infrastructure
telecommunication
provider
towers (tower provider) and its core
business includes tower construction
and
tower management services
(collocation & resellers).

Infra)

(Telkom

Infrastruktur Telekomunikasi
PT
Indonesia
is a
company that provides management
services in telecommunication and
infrastructure solutions both for
the domestic and
international
market. The core business of
Telkom Infra is telecommunication
infrastructure
and
submarine cable management.

services

www.metranet.co.id

(Metranet)

is an
PT Metranet
integrated media and digital content
provider whose core business
is
online media, digital content and
digital billing.

(Telkom
PT Graha Sarana Duta
Property)
is a property service
company that focuses on leverage
Telkom’s idle assets. Its core business
is property management, property
lease and
development, property
property facilities.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Reportr
a
s
i
t
h
k
I

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a
D
n
a
g
n
a
u
e
K

l
a
n
o
s
a
r
e
p
O

Merah Putih
(1080BT)

Telkom-3S
(1180BT)

Telkom-2
(1570BT)

SHM

EIG

DUB

MAN
LON

LUX

AMS

PRS

MRS

FRA
SWI

MDR

LSB

MLN

PAL

MOS

WRS

KIV

VNA

SOF

ALG

CAI

IST

RYD

DUB

DJI

IMEWE

BBG

SEA-ME-WE 5

SHA

MAC

HKG

RGN

BKK
HAN

SHI

TWN

BSW

DUM

BTM

SEO

TYO

APCN-2

SJC

DVO

MDO

C2C

SMPCS

SEA-ME-WE 4

JHB

JKT

IGG

SBY

DPS

DIL

Digital

Platform

id-Ring

Indonesia Digital Ring

Fiber Optic
Backbone
Network

Point of
Presence (PoP)

Satellite

Big Data &
Analytics,
API Factory
& Internet of
Things

161,652 km
including:

• 96,952 km of

Domestic fiber
optic

• 64,700 km of
International
fiber optic

• 46 PoP in
domestic
network
• 72 PoP in

International
network

3 satellites with
total capacity
133 TPE which
consist of:
• Merah Putih
Satellite (60
TPE)

• Telkom 3S (49

TPE)

• Telkom-2 (24

TPE)

id-Con

Indonesia
Digital Convergence

Data Center

22 data centers
which consist:
• 5 data centers
(overseas)

• 14 data centers
neuCentrIX
(domestic)
• 3 data centers
tier 3 and 4
(domestic)

CHG

TOR

NYX

ASH

FASTER

TNG-IA

AAG

HWI

SLO

LAX

JUS

UNITY

GUA

SEA-US

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportMOS

SHM

MAN

LON

LUX

AMS

DUB

EIG

PRS

MRS

MDR

LSB

MLN

PAL

WRS

KIV

FRA

SWI

VNA

SOF

IST

RYD

ALG

CAI

SHA

MAC

HKG

SHI

TWN

RGN

BKK

HAN

BSW

DUM

BTM

SEO

TYO

APCN-2

SJC

DVO

MDO

C2C

SMPCS

JKT

IGG

SBY

DPS

DIL

DUB

DJI

IMEWE

BBG

SEA-ME-WE 5

SEA-ME-WE 4

JHB

INFRASTRUCTURE

The mission of the Telkom network infrastructure and development
program is to develop and maintain an agile and resilient network and IT
infrastructure to support the innovation of its digital services.

TOR

CHG

NYX

ASH

SLO

LAX

AAG

HWI

FASTER

TNG-IA

JUS

UNITY

GUA

SEA-US

Point of Presence (POP)
Sambungan Langsung Internasional (SLI)
Submarine Fiber Optic (SEA-ME-WE 4)

Submarine Fiber Optic (SEA-ME-WE 5)

Submarine Fiber Optic APCN-2

Submarine Fiber Optic EIG

Submarine Fiber Optic SEA - US

Submarine Fiber Optic IGG

Submarine Fiber Optic SMPCS

Telekomunikasi Indonesia Internasional (TELIN)

id-Access
Indonesia Digital Access

Mobile

Network

Fiber Optic

Access Network

Wi-Fi

• 268 Telkom

Cloud

• 30 million
Homes
Passed
• 9.1 million

Optical Port

382,361 Access
Points:

• 136,110

Managed
Access Point

• 246,251

Homespot

189,081 BTS:
• 50,310 BTS 2G

• 82,118 BTS 3G

• 56,653 BTS 4G

30,485 towers:
• 18,000 Telkomsel

towers

• 12,485 Mitratel

towers

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

PRODUCTS AND CUSTOMERS

Telkom has four main operating segments that are aligned with its parenting strategy and financial reports which
are based on dividing customers into segments.

MOBILE
Providing mobile voice, SMS,
mobile broadband, and digital
services for cellular customers.

Cellular
Subscribers
163 million

Postpaid Subscribers
5.4 million
Prepaid Subscribers
157.6 million

Mobile Broadband Customers
107 million

ENTERPRISE
Providing end to end ICT solutions
for corporate customers, small
to medium sized businesses, and
the government.

Corporate
Customers

Small and
Medium Scaled
Business
Customers

Government
Institution
Customers

1,900

300,416

979

CONSUMER
Providing fixed phone, pay TV
and internet services for retail
customers (homes, apartments
and premium clusters).

Fixed Wireline
Subscribers

Fixed
Broadband
Subscribers

IndiHome
Subscribers

11.1 million

7.3 million

5.1 million

WHOLESALE &
INTERNATIONAL
BUSINESS
Providing
interconnection
services, a leased line, satellites,
tower & infrastructure services
and
international business
for other licensed operators
and
international customers
(organic or aggregator).

Other Licensed
Operator (OLO)
Customers

Transponder & Closed
User Group Customers

Internet Service
Provider Customers

Global Partner
Customers

132

186

OTHERS
Providing digital services for
various customers.

BLANJA.com
3.2 million
subscribers

MelOn
34.7 million
active users

Note:
The data presented on this page is data up to December 31, 2018.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportFINANCIAL DATA OVERVIEW

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

Years ended on December 31,

2018

2017

2016

2015

2014

Total revenues

Total expenses

EBITDA

Operating profit

Profit for the year

Profit for the year attributable to:

Owners of the parent company

Non-controlling interest

Total comprehensive profit for the year

Total comprehensive profit for the year attributable to:

Owners of the parent company

Non-controlling interest

Net income per share

Net income per ADS (1 ADS : 100 common stock)

Consolidated Statement of Financial Position
(in billions of Rupiah)

Assets

Liabilities

Equity attributable to owner of the parent company

Net working capital (current asset - current liabilities)

Investment in associate entities

Capital Expenditure
(in billions of Rupiah)

Telkom

Telkomsel

Others Subsidiaries

Total

130,784

128,256

116,333

102,470

93,691

59,181

38,845

26,979

18,032

8,947

31,921

22,844

9,077

182.03

18,203

85,362

64,609

43,933

32,701

22,145

10,556

30,369

19,952

10,417

223.55

22,355

77,888

59,498

39,195

29,172

19,352

9,820

27,073

17,331

9,742

196.19

19,619

71,552

51,415

32,418

23,317

15,489

7,828

23,948

16,130

7,818

157.77

15,777

89,696

61,564

45,673

29,206

21,274

14,471

6,803

22,041

15,296

6,745

148.13

14,813

Years ended on December 31,

2018

2017

2016

2015

2014

206,196

198,484

88,893

98,910

(2,993)

2,472

86,354

92,713

2,185

2,148

179,611

74,067

84,384

7,939

1,847

166,173

141,822

72,745

75,136

12,499

1,807

55,830

67,721

1,976

1,767

Years ended on December 31,

2018

2017

2016

2015

2014

13,186

13,885

6,549

33,620

11,572

15,080

6,504

33,156

10,309

12,564

6,326

29,199

9,641

11,321

5,439

8,099

13,002

3,560

26,401

24,661

Consolidated Financial and Operation Ratios

Years ended on December 31,

2018

2017

2016

2015

2014

Return on Assets (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)

Debt to Equity Ratio(x)(7)

Debt to EBITDA Ratio(x)(8)

EBITDA to Interest Expense (x)(9)

13.1

23.0

29.7

93.5

75.8

43.1

0.38

0.74

16.9

16.5

29.2

34.3

16.2

27.6

33.7

14.0

25.0

31.6

104.8

120.0

135.3

77.0

43.5

0.32

0.55

23.3

70.2

41.2

0.30

0.53

21.2

77.9

43.8

0.37

0.67

20.7

Remarks:
(1) ROA is calculated as profit for the year divided by total assets at year end December 31.
(2) ROE is calculated as profit for the year divided by total equity 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 at year end December 31.
(6) Liablities to total assets ratio is calculated as total liabilities divided by total assets at year end December 31.
(7) Debt to equity ratio is calculated as debt (included finance lease) divided by total equity.
(8) Debt to EBITDA ratio is calculated as debt (included finance lease) divided by EBITDA.
(9) EBITDA to interest ratio is calculated as EBITDA divided by cost of fund.

15.0

24.7

32.6

106.1

64.9

39.4

0.27

0.51

25.2

STOCK INFORMATION
TELKOM’S STOCK INFORMATION AT THE IDX

The following is the report of the highest, lowest and closing share prices, trading volumes, number of shares outstanding and
market capitalization of the stock which were recorded at the Indonesia Stock Exchange (IDX) for the periods indicated:

Calendar Year

Highest

Lowest

Closing

Price Per Share

(in rupiah)

Volume
(shares)

Outstanding
Shares
Excluding
Treasury Stock

Market
Capitalization
(Rp billion)

2014

2015

2016

2017

2018

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

Third quarter

Fourth quarter

September

October

November

December

3,010

3,170

4,570

3,510

4,010

4,570

4,400

4,840

4,190

4,670

4,840

4,710

4,460

3,890

4,110

3,670

3,910

4,110

3,840

2,060

2,485

3,045

3,305

3,950

3,640

3,780

4,010

4,500

3,910

3,250

3,520

3,250

3,460

3,250

3,460

3,680

3,610

2,865

24,035,761,600

98,175,853,600

3,105

18,742,850,400

98,198,216,600

3,980

23,017,915,300

99,062,216,600

3,325

5,852,647,000

98,198,216,600

3,980

5,808,895,400

99,062,216,600

288,792

312,984

401,184

335,160

401,184

4,310

5,821,745,500

99,062,216,600

434,448

3,980

5,534,627,400

99,062,216,600

4,440

21,225,443,500

99,062,216,600

4,130

4,560,626,200

99,062,216,600

4,520

4,954,694,500

99,062,216,600

4,680

4,320,051,800

99,062,216,600

4,440

7,390,071,000

99,062,216,600

3,750

24,436,003,500

99,062,216,600

3,600

3,750

3,640

3,750

3,640

3,850

3,680

3,750

6,414,771,900

99,062,216,600

6,052,816,300

99,062,216,600

6,605,907,500

99,062,216,600

5,362,507,800

99,062,216,600

1,766,607,400

99,062,216,600

1,995,151,900

99,062,216,600

1,810,267,200

99,062,216,600

1,557,088,700

99,062,216,600

401,184

447,552

416,304

455,616

471,744

447,552

371,483

362,880

378,000

360,586

371,483

360,586

381,390

364,549

371,483

Telkom’s stock price on the last trading day which was December 28, 2018 for the IDX closed at Rp3,750. At that price, Telkom’s
market capitalization reached IDR371.5 trillion or 5.3% of the total capitalization of the Indonesia Stock Exchange (IDX).

TELKOM’S STOCK INFORMATION AT THE IDX
(Indonesia Stock Exchange)

Volume (in Billion Share)

Price (Rp)

5,000

4,000

3,000

2,000

1,000

1st Quarter
2017

2nd Quarter
2017

3rd Quarter
2017

4th Quarter
2017

1st Quarter
2018

2nd Quarter
2018

3rd Quarter
2018

4th Quarter
2018

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportTELKOM’S AMERICAN DEPOSITORY SHARES (ADS) INFORMATION AT THE NYSE

On the last trading day of the NYSE for 2018, which was December 31, the closing for 1 Telkom ADS was US$26.21. The following is
the report on the highest, lowest, closing and trading volume of Telkom’s ADS which were listed on the New York Stock Exchange
(NYSE ) for the period stated:

Calendar Year

Price Per ADS

Highest

Lowest

Closing

(in US$)

Volume
(ADS)

2014

2015

2016

2017

2018

First quarter

Second quarter

Third quarter

Fourth quarter

First quarter

Second quarter

Third quarter

Fourth quarter

September

October

November

December

24.38

23.54

34.65

36.19

31.34

34.45

36.19

34.55

32.51

28.31

28.41

27.70

24.65

25.71

27.70

27.11

16.95

17.05

21.22

28.10

30.26

33.50

29.15

21.75

25.96

23.66

21.75

23.11

21.75

23.11

25.43

24.74

22.62

22.20

29.16

32.22

31.17

33.67

34.30

32.22

26.21

26.42

26.01

24.48

26.21

24.48

25.20

25.90

26.21

104,501,896

87,438,232

110,532,172

76,122,383

23,813,869

16,694,062

14,436,754

21,177,698

98,313,215

23,643,043

33,909,842

22,674,248

18,086,082

5,432,992

5,616,490

4,416,682

8,052,910

Effective October 26, 2016, Telkom changed the Depositary Receipt (DR) from 1 Depositary Shares (DS) representing 200 shares to
1 DS represents 100 shares. The presentation on the table above has accommodated the ratio change.

TELKOM’S STOCK INFORMATION AT THE NYSE
(New York Stock Exchange)

Volume (in Billion Share)

Price (US$)

3.5

2.5

1.5

0.5

1st Quarter
2017

2nd Quarter
2017

3rd Quarter
2017

4th Quarter
2017

1st Quarter
2018

2nd Quarter
2018

3rd Quarter
2018

4th Quarter
2018

Based on the resolution of the AGMS dated April 27, 2018, Telkom’s shareholders approved the transfer of the treasury shares

totaling 1,737,779,800 shares at a cost of Rp2,541 billion which was provided by reducing the issued and fully paid capital from

100,799,966,400 shares to 99,062,216,600 shares.

Annual General Meeting of Shareholders, April 27, 2018

Telkom 2018 Public Expose

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportBONDS, SUKUK OR CONVERTIBLE BONDS AND MEDIUM
TERM NOTES (MTN) INFORMATION

Rating
(Pefindo)

idAAA

Bond

Outstanding
(Rp million)

Date of
Issue

Maturity
Date

Term
(Year)

Interest
Rate per
Annum
(%)

Underwriter

Trustee

PT Bank
Tabungan
Negara
(Persero)
Tbk

PT Bank
Permata
Tbk

PT Bahana
Sekuritas;
PT Danareksa
Sekuritas;
PT Mandiri
Sekuritas

PT Bahana
Sekuritas;
PT Danareksa
Sekuritas;
PT Mandiri
Sekuritas;
PT Trimegah
Sekuritas Tbk

Telkom Bond II
2010 serie B

Telkom Shelf
Registered
Bond I 2015
serie A

Telkom Shelf
Registered
Bond I 2015
serie B

Telkom Shelf
Registered
Bond I 2015
serie C

Telkom Shelf
Registered
Bond I 2015
serie D

1,995,000 June 25, 2010

July 6, 2020

10.20

2,200,000 June 23, 2015

June 23, 2022

9.93

2,100,000 June 23, 2015

June 23, 2025

10.25

1,200,000 June 23, 2015

June 23, 2030

10.60

1,500,000 June 23, 2015

June 23, 2045

11.00

Medium
Term Notes

Currency
Principal
(Rp
million)

Issuance Date

Maturity Date

Term
(Year)

Interest
Rate per
Annum
(%) /
Annual
Return
Payment
(Rp
million)

Arranger

Monitoring
Agent

Rating
(Pefindo)

MTN I Telkom
Year 2018
seri A

MTN I Telkom
Year 2018
Series B

MTN I Telkom
Year 2018
Series C

MTN Syariah
Ijarah I
Telkom Year
2018 Series A

MTN Syariah
Ijarah I
Telkom Year
2018 Series B

MTN Syariah
Ijarah I
Telkom Year
2018 Series C

262,000 September 4, 2018 September 14, 2019

200,000 September 4, 2018 September 4, 2020

296,000 September 4, 2018 September 4, 2021

8.00%

7.25% PT Bahana
Sekuritas,
PT BNI
Sekuritas,
PT CGS-
CIMB
Sekuritas
Indonesia,
PT
Danareksa
Sekuritas
and PT
Mandiri
Sekuritas

8.35%

264,000 September 4, 2018 September 14, 2019

Rp19,000

296,000 September 4, 2018 September 4, 2020

Rp24,000

182,000 September 4, 2018 September 4, 2021

Rp15,000

PT Bahana
Sekuritas,
PT BNI
Sekuritas,
PT CGS-
CIMB
Sekuritas
Indonesia,
PT
Danareksa
Sekuritas
and PT
Mandiri
Sekuritas

idAAA

PT Bank
Tabungan
Negara
(Persero)
Tbk

idAAA Sy

PT Bank
Tabungan
Negara
(Persero)
Tbk

REPORT OF
THE BOARD OF
COMMISSIONERS
AND DIRECTORS

24
30
40

Report of the Board of Commissioners
Report of the Board of Directors
Statement Letter of Responsibility for 2018 Annual Report

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportMerah Putih Satellite Launching
Photo: courtesy by Space-X

Hendri Saparini | President Commissioner

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report“Overall, we assess that throughout 2018, the Board of Directors
carried out its duties, functions and roles well in the midst of a
challenging industry situation, especially with regard to cellular.”

GENERAL OVERVIEW OF THE MACROECONOMY
AND INDUSTRY

Overall, we assess that throughout 2018, the Board of Directors

carried out its duties, functions and roles well, in the midst

of a challenging industry situation, especially with regard to

Amidst the many challenges of the global economy stemming

cellular. The Board of Directors demonstrated good ability and

from the trade war between the United States and China

capability in establishing and executing strategies with regard

as well as the economic slowdown of several regions,

to both operational and financial aspects, setting priorities and

the Indonesian economy was still able record fairly good

adjusting strategies in accordance with the characteristics of

growth of 5.17%, better than 5.07% in the previous year. The

the highly dynamic telecommunications industry.

government also managed to keep inflation under control

at 3.13%, which relatively maintaining consumer purchasing

The success of the operational aspect was demonstrated

power. This relatively good economic growth rate was driven

by the excellent results achieved by the prepaid SIM card

by strong household, corporate and government spending,

registration program that our subsidiary company, Telkomsel,

which was catalyzed among others by massive infrastructure

carried out.

The number of IndiHome fixed broadband

development in various fields. The right balance of fiscal

subscribers increased by 72.2% to 5.1 million by the end

and monetary policies, as well as various economic stimulus

of 2018. In addition, the infrastructure network within the

packages over the past few years, also supported the

Company’s framework was continuously improved to provide

achievement of decent economic growth.

the best digital experience for customers. During 2018, more

than 28,000 new 4G LTE BTS were built, the Indonesia Global

The telecommunications industry in Indonesia, in particular

Gateway (IGG) submarine cable system was completed, and

cellular, also faced heavy pressure from the continuous decline

the Merah Putih Satellite was launched. These achievements

in the legacy business, namely voice and SMS services, which is

were critical in maintaining the momentum of new growth

happening all over the world as smartphone adoption continues

sources that have great future potential.

to change people’s communication patterns. In addition, the

Government also enacted a prepaid SIM card registration

With regards to the financial aspect, the Board of Directors

program from October 2017 to April 2018 which had a short

successfully encouraged our subsidiaries, Telkomsel, to execute

term impact on the increasingly fierce industrial competition,

their strategies well, and so revenue from Telkomsel decreased

though in the long term it will deliver large benefits, not only for

by only 4.3%, better than the 7.4% decline experienced by the

operators and the cellular industry, but also for the country and

industry as reflected in the revenue of the 3 main cellular

society as a whole.

SUPERVISION AND ASSESSMENT OF THE
PERFORMANCE OF THE BOARD OF DIRECTORS
DURING 2018

operators in Indonesia. On the other hand, the Board of Directors

was able to maintain excellent growth performance in the fixed

line business, thus ensuring that the Company’s consolidated

revenue continued to record positive growth amounting to 2%.

Although EBITDA and Net Profit, which amounted to Rp59.2

trillion and Rp18.0 trillion respectively, decreased compared to

The Board of Commissioners supervised the performance of

last year’s achievement, the Company performed better than

the Board of Directors, to ensure that the steps and strategies

other telecommunications operators. This demonstrates that

taken were aligned with the vision, mission, strategic objectives

the Board of Directors was able to change its strategy and take

and pre-determined work programs.

the necessary initiatives in response to unfavorable situations.

In the Consumer segment, IndiHome is expected to be the main

Board of Commissioners assesses that the Board of Directors

driver of growth as demand for high-quality fixed broadband

has systematically carried out various initiatives in order to

services is still very high and growth opportunities are still wide

improve the Company’s digital capabilities, towards achieve

open, given the relatively low penetration of fixed broadband

the Company’s strategic objective to become a digital telco

services in Indonesia at around 12%.

company. These initiatives include strengthening the fiber

optic network infrastructure with regard to both backbone

In the Enterprise segment, there is a rising trend among

and access, strengthening the organization which was

corporations, government institutions, and Small and Medium

transformed based on customer segments into Customer

Business (SMB) of adopting integrated ICT solution services in

Facing Units (CFU) so as to be more agile and responsive in

order to increase efficiency, which will provide opportunities

serving customers, as well as fostering a culture of innovation

for the Company to keep growing this segment.

and conducting inorganic activities to further strengthen the

Company’s digital capabilities.

Meanwhile

in the Wholesale &

International Business

segment, the Company’s success in completing the Indonesia

The Board of Commissioners appreciates the strong

Global Gateway (IGG) marine cable strategic project that

performance of the Board of Directors throughout 2018. We

connects the SEA-ME-WE5 submarine cable with the SEA-

continuously support efforts to support Telkom’s continued

US submarine cable system, as well as the successful launch

growth in the midst of challenging conditions towards

of the Merah Putih satellite, will create larger business

becoming more resilient and providing the best experience

opportunities for the Company.

for customers.

In 2018, the Board of Commissioners established several new

supported the Board of Directors in actively exploring inorganic

policies to strengthen its oversight role in order to ensure that

initiatives that can deliver added value and create synergies for

the Company is able to continue expanding, but in a prudent

the Company.

Besides organic growth, the Board of Commissioners also

manner based on the principle of prudence to protect and

safeguard the interests of Shareholders.

OPINION ON BUSINESS PROSPECTS

ASSESSMENT
PERFORMANCE
OF COMMITTEES UNDER THE BOARD OF
COMMISSIONERS

THE

In general, the Board of Commissioners is of the view that

In carrying out

its supervisory function, the Board of

the Company still has good business prospects, with many

Commissioners is assisted by 3 (three) committees, namely

opportunities that will enable the Company to continue to grow

the Audit Committee, Nomination and Remuneration

in the future. Equipped with the largest fiber optic infrastructure

Committee (KNR) and the Planning and Risk Evaluation and

network and a variety of supporting facilities, the Company is

Monitoring Committee (KEMPR). Throughout 2018, the Board

in a leading position to provide the data connectivity services

of Commissioners assessed that these three Committees had

and content that have become an essential need in society, for

worked well in providing recommendations to the Board of

which demand continues to increase. In addition, we are also

Commissioners, so that the oversight mechanisms for the

strongly positioned to service the trend of business processes

Board of Directors could run well.

digitalization among both large and small enterprises as they

strive to increase efficiency or grow their businesses.

During 2018, the Nomination and Remuneration Committee

(KNR) held 44 meetings and produced various important

In the Mobile segment, digital business services, including

recommendations regarding changes and remuneration of the

digital service & solutions, will be the main drivers of growth

Telkom Board of Directors. Meanwhile, the Audit Committee

in line with expanding smartphone usage. In addition, we hope

(KA) conducted 26 meetings in 2018, with its main activities

that the cellular industry will fare better in 2019, with the

consisting among others of supervising Integrated Audits for

successful prepaid SIM card registration program encouraging
healthier competition.

the 2018 fiscal year, as well as the plans and implementation

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
of the Internal Audit Unit work programs. The Audit Committee

is also our assessment that the

implementation and

also monitored the audit process of the Partnership and

management of Whistleblowing Systems (WBS) in Telkom are

Community Development Program (PKBL) carried out by

running well. The WBS plays a role in helping us supervise

the Community Development Center (CDC) unit for the 2018

potential fraud and policy irregularities as well as violations

fiscal year. In addition, the Audit Committee carried out its

of internal regulations, including in subsidiaries. The Board of

responsibilities to review complaints received through the

Commissioners actively monitors and makes policy decisions in

Whistleblowing System (WBS).

the cases reported through the WBS.

The Planning and Risk Evaluation and Monitoring Committee

During 2018, we received 24 complaints of which 5 complaints

(KEMPR) held 10 committee meetings, 15 technical meetings to

were assessed as being worthy of further investigation.

evaluate the Company’s 2018-2022 Long Term Plan (RJPP) and

compile the 2019-2023 RJPP as well as evaluate any actions of

the Board of Directors that require approval from the Board of

Commissioners. In addition, the KEMPR assisted the Board of

CHANGES IN THE COMPOSITION OF THE BOARD OF
COMMISSIONERS

Commissioners in reviewing the Board of Directors’ strategic

In 2018, there was a change in the composition of the Company’s

plans throughout 2018. KEMPR also monitored the Company’s

Board of Commissioners. The 2017 Annual GMS resolved

Work Plan and Budget (RAKP) and capital expenditure in 2018

to honourably discharge Mr. Hadiyanto, and confirmed the

and prepared the RAKP for 2019. In terms of risk management,

dismissal of Mrs. Devi W Suradji who, since December 22, 2017,

KEMPR has supervised Telkom’s risk management activities

is no longer serving as a Commissioner of the Company after

including the aspects of risk mitigation, risk control

being appointed to the PT Angkasa Pura 1 Board of Directors.

effectiveness, and risk management monitoring.

Besides that, Mr. Dolfie Othniel Fredric Palit is no longer serving

We encourage all members of the Committees to continuously

legislative candidate on September 20, 2018.

improve their abilities and broaden their horizons in the

telecommunications industry and finance, so that they can

The following is the composition of the Company’s Board of

better assist the Board of Commissioners in carrying out its

Commissioners as of December 31, 2018:

as a Commissioner after being appointed as a permanent

supervisory function of the Board of Directors.

APPLICATION
GOVERNANCE IN TELKOM

SUPERIOR

CORPORATE

We uphold the values of good corporate governance (GCG), and

view the application of best practices as critical to supporting

the achievement of long-term, sustainable performance for the

Company. Therefore, this aspect is one of the areas that the

Board of Commissioners focuses on supervising.

Best practices in risk management are greatly needed in order

to be able to identify potential risks that may arise. The Board

of Commissioners always plays an active role in monitoring

and giving suggestions on the risks faced by the Company.

The Board of Commissioners judges that throughout 2018 the

Board of Directors has implemented GCG practices effectively

and consistently with high standards, by upholding the values

of transparency, accountability, responsibility, independence

and fairness.

Hendri Saparini

: President Commissioner

Rinaldi Firmansyah

: Commissioner

Edwin Hidayat Abdullah

: Commissioner

Isa Rachmatarwata

: Commissioner

Margiyono Darsasumarja

: Independent Commissioner

Pamijati Pamela Johanna
Waluyo

: Independent Commissioner

Cahyana Ahmadjayadi

: Independent Commissioner

Cahyana Ahmadjayadi (Independent Commissioner), Pamijati Pamela Johanna Waluyo (Independent Commissioner),

Margiyono Darsasumarja (Independent Commissioner), Rinaldi Firmansyah (Commissioner).

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportAPPRECIATION TO STAKEHOLDERS AND CLOSING

In closing, the Board of Commissioners conveys its highest

gratitude and appreciation to the Board of Directors,

management and all employees for their support and

cooperation during 2018. Hopefully the cooperation and synergy

that has been established can be continuously improved so as

to achieve better performance in future.

We also express the same gratitude and appreciation to

all shareholders, customers, business partners, and other

stakeholders for the support given to Telkom throughout 2018.

We hope that the collaboration and synergy with all

stakeholders can be sustained in the future, so that Telkom can

continuously improve its performance in the future.

Jakarta, April 30, 2019

Hendri Saparini
President Commissioner

Alex Janangkih Sinaga | President Director

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report“Stronger, for Your Digital Experience”

The increasingly concrete influence of the digital era has

believe

that

our

actions

and

achievements

been marked by the emergence of many innovations that are

throughout 2018, which we will described

in further

aimed at producing a variety of quality digital solutions for

detail, have strengthened Telkom’s capability as a Digital

society, accompanied by best customer experience for users.

Telecommunication Company to meet customer demand and

These conditions have driven rising digital adoption across all

provide the best digital experience.

customer segments when carrying out their activities, resulting

in the irrelevance and abandonment of the legacy services that

COMPANY PERFORMANCE IN 2018

are the main source of income for telecommunication operators.

This is a serious threat but at the same time, also poses an

In 2018, the Company recorded consolidated revenue for 2018

opportunity for telecommunication operators to accelerate

amounting to Rp130.8 trillion with positive growth of 2.0%,

their transformation into becoming Digital Telecommunication

lower than revenue growth in 2017. This was mainly due to a

Companies by focusing on providing high-speed connectivity

21.1% decline in the legacy business. However, the Company’s

and digital services.

digital business

revenues, which

include broadband

connectivity and digital services, grew significantly by 23.1%.

In response, Telkom has continued to strengthen its digital

With these results, the contribution of digital business in

capabilities with regard toits services, infrastructure and

2018 increased to 63.0% from 52.1% in 2017. This encouraging

digital customer experience. In terms of services, Telkom is

digital business revenue growth enabled the Company to

strengthening and developing digital services in accordance

compensate on a consolidated basis for the decline in legacy

with customer demand, while also

increasing business

business revenue during 2018. These achievements also show

competitiveness. Telkom fully understands that customers,

that the Company is on the right track to become a Digital

especially in the Mobile and Consumer segments, need a

Telecommunication Company, one that is strongly committed

variety of quality digital services so that they can carry out

to continuously strengthening its digital business capabilities

various activities easily, comfortably and pleasantly. As for

to serve customers’ various digital service needs.

the Enterprise segment, Telkom provides various services

to digitize their business processes so that they can be more

In 2018, the Company’s Earnings before

Interest, Tax,

efficient, more competitive and create high value. To support

Depreciation and Amortization (EBITDA) decreased by 8.4%

these services, Telkom continues to strengthen its digital

to Rp59.2 trillion, which was due among others to a 12.5%

infrastructure which includes broadband backbone networks,

increase in operating expenses to Rp71.6 trillion, in line

fiberoptic-based access networks, launching the Merah Putih

with investment in both mobile and fixed line broadband

satellite, expanding 4G LTE cellular networks in urban and rural

infrastructure development.

Infrastructure development,

areas, increasing IT capability and capacity from front-end to

especially broadband infrastructure, is very important in order

back-end, and developing various platforms and applications

for the Company to effectively anticipate the decline of the

as enablers of digital solutions and services. As for customers’

legacy business while accelerating higher contribution from the

digital experience, Telkom continues to develop digital touch

digital business and ensuring best digital customer experience.

points, personalize services through the utilization of customer

insights and analytical data, and simplify processes to provide

the best digital experience for all customers.

To improve its digital capabilities, besides developing digital

2018 fell by 18.6% to Rp. 18.0 trillion, or by 13.7% if excluding the

services such as music, games, video and financial technology,

positive impact of asset revaluation on Net Profit in 2017.

Telkomsel also continueds to strengthen

its broadband

infrastructure by building 28,376 new BTS all of which were

In the Mobile segment, the 3 (three) main operators experienced

based on 4G LTE technology, so that by the end of 2018 4G

an increasingly drastic decline in the legacy business of around

LTE coveraged reached more than 90% of the population. As

21%. On the other hand, mobile data services saw fierce

a result, data traffic grew sharply by 101.7% to 4.3PetaBytes

competition which was triggered by intense price wars during

and Average Revenue Per User (ARPU) for mobile data services

the prepaid SIM card registration period. Both these factors

increased by 15.9%.

caused the total revenue of the 3 (three) major operators to

decrease by 7.4%. Telkomsel has taken the initiative to prevent

The Enterprise segment which

includes large corporate

industrial conditions from becoming increasingly unhealthy

customers, Small and Medium Businesses (SMBs) and

by encouraging reasonable and affordable pricing of mobile

government institutions, provides end-to-end ICT solutions

broadband data packages, in order to provide optimal value

that include connectivity, IT services, data centers & cloud,

for both operators and customers. In addition, Telkomsel also

business process outsourcing, digital solutions and other

made efforts to push back against the decline of the legacy

support services. In 2018, the Enterprise segment recorded

business caused by OTT services, including by offering voice

revenue growth of 10.1% to Rp21.1 trillion. The main driver of

packages and SMS package programs. As a result of these

revenue growth was IT Services, which grew by 48.2%, in line

efforts, Telkomsel managed to hold its revenue decline to only

with growing customer demand in the Enterprise segment to

4.3%, better than the 7.4% decline in the total income of the 3

digitize their business processes so that corporate customers

(three) main operators.

become more competitive and SMBs can develop furthur,

while government institutions at both central and regional can

The prepaid SIM card registration program limits the number

improve their public services.

of prepaid SIM cards for each customer and so that by the end

of 2018, the number of Telkomsel customers had decreased

In the Consumer segment, IndiHome, which is an integrated

by 17% to 163.0 million customers. In the short term this

fiber-optic network service package that

includes home

prepaid SIM card registration program has had a negative

telephone services, high-speed

internet, and

interactive

impact on the cellular industry, but we believe that in the

television services with IPTV technology, recorded excellent

long term this program will greatly benefit the country, the

performance. The number of IndiHome customers grew by

telecommunications industry and customers. This program

72.2% to 5.1 million customers at the end of 2018 from 2.96

will assist the government in supporting national security by

million customers at the end of 2017. This achievement further

providing more complete and better validated citizen identity

strengthened IndiHome as the market leader in fixed broadband

data. As for the telecommunications industry, in particular

business in Indonesia, with a market share of around 80%.

cellular, it is hoped that this will encourage healthier and more

As a result, IndiHome recorded revenue growth of 66.9% and

efficient competition as it focuses on sales of refill packages

contributed 82.9% to the Consumer segment, up from 62.2%

rather than the sale of starter cards. In addition, by knowing

in the previous year, which in turn drove Consumer segment

its customer profiles more accurately, operators can more

revenue to increase by 25.1% to Rp13.9 trillion.

creatively offer the right service packages in accordance with

customer profiles and needs.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportThe Wholesale and

International Business segment,

STRATEGIC WORK PROGRAM

which

includes

telecommunications operators,

internet

service providers and both domestic and global digital

In 2018 the Company established 3 (three) strategic programs,

players, provides a variety of services consisting of carrier

namely: first, Delivering Best Customer Experience; second,

services, telecommunications tower services and managed

Expanding Digital Business; and third, Intensifying Smart

telecommunications services. This segment recorded revenues

Inorganic Initiatives.

of Rp10.1 trillion with a growth of 35.6%, up from Rp7.4 trillion

in 2017. The contribution of the digital business tp this segment

Delivering Best Customer Experience

increased to 57% in 2018 from 53% in 2017.

In the midst of the intense competition in the telecommunications

Total capital expenditure in 2018 amounted to Rp 33.6 trillion

industry, delivering best customer experience

is a non-

or 25.7% of revenue. Capital expenditure is mainly used to

negotiable requirement. The ability to deliver best customer

expand digital capabilities by continuing to build broadband

experience, such as understanding customer needs early on

infrastructure including 4G LTE BTS, fiber optic access networks

and providing services that exceed customer expectations,

to homes, submarine and terrestrial fiber optic backbone

will enhance customer engagement and open up new business

networks, the Merah Putih Satellite and Data Center & Cloud.

opportunities. To that end, the Company continuously strives

At the end of 2018, Telkom had a total of 189,081 BTS units

to deliver incredible digital experience in every customer

including 138,771 3G and 4G units, and a 161,652 km-long fiber

journey. The Company provides digital touch points that

optic backbone network.

facilitate interaction, buy products and services, and support

various other facilities from submitting complaints and service

In 2018, we built fiber optic backbone networks to connect

upgrades to make payments. For each customer journey, the

13 district capitals and capital cities, so that as of the end

Company measures the customer experience using the Net

of 2018, Telkom had successfully connected a total of 458

Promoter Score (NPS) as a global standard. The NPS information

district capitals with the fiber optic backbone network, which

is then used to improve customer experience when using

is expected to increase broadband access and stimulate ICT

services and improve the quality of products and services.

services in all areas of Indonesia. Meanwhile, with the launch

of the Merah Putih Satellite in August 2018, Telkom operates 3

Simultaneously,

the Company also

intensively applies

satellites with a total capacity of 133 transponder equivalent

analytical data to develop unique products and services that

(TPE) to meet demand for transmission from various

are aligned with customer needs, and strengthen business

customers in the banking, media electronics, transportation

processes towards demand fulfillment and resolving customer

and mining sectors, especially in areas with no fiber optic

complaints. We have also developed a new Customer

coverage. We have carried out this continuous investment in

Relationship Management (CRM) application, which we call

order to strengthen the Company’s capability in accelerating

New Customer Experience (NCX), which enables Telkom to

the growth of the digital business and providing the best

obtain and integrate information such as historical data and

digital experience for customers.

customer preferences to deliver best customer experience.

Intensifying Smart Inorganic Initiatives

segment based organizations or Customer Facing Units (CFU)

as its go-to-market strategy to ensure engagement with

Inorganic activities are an important part of strengthening the

customers. Agile organization and work patterns continue

Company’s digital capabilities. Inorganic strategies are carried

to be developed in order to increase work efficiency and

out both through acquisitions and through collaborations

effectiveness and accommodate the spirit of innovation and

or partnership with other parties who have superior digital

collaboration as part of the digital culture to ensure best digital

capabilities. Inorganic initiatives aim to create added value

customer experience as an important focus of the Company.

by enhancing digital capabilities, strengthening the digital

service ecosystem and other businesses that can deliver value

Expanding Digital Business

synergies in the group.

In the midst of the continuously declining legacy business, the

In January 2018, through its subsidiary PT Metranet, the Company

Company’s strategy is to strengthen and enhance its digital

acquired 30.4% of Cellum Global Zrt’s shares, in order to improve

business, including the digital connectivity and services that

digital capabilities, especially in the digital payment field. The

are increasingly needed by customers. Therefore, the Company

presence of Cellum Global Zrt is expected to strengthen the

continues to expand and accelerate its digital business by

back-end of the Company’s digital payment platform.

strengthening its digital capabilities. Various initiatives have

been carried out to accelerate the growth of digital business,

In April 2018, through its subsidiary PT Multimedia Nusantara,

in line with the expansion of backbone network infrastructure

the Company acquired a 51% stake in PT Swadharma Sarana

and broadband network access throughout Indonesia.

Informatika, which engages in the business of managed

service for ATMs. Subsequently in December 2018, through

In the Mobile segment, Telkom has developed digital

its subsidiary PT Sigma Cipta Caraka, the Company acquired

advertising, mobile banking, internet of things (IoT) and mobile

70% of the shares of PT Collega Inti Pratama which provides

financial services, in addition to digital lifestyle services that

ICT solutions for banks and financial

institutions. These

focus on providing cellular technology-based entertainment

two acquisitions are expected to strengthen the Company’s

experiences such as music, video streaming, games, and other

digital payment businesses ecosystem and improve its ICT

value added services (VAS) mobile service platforms. In the

competencies in the banking and insurance financial sector.

Enterprise segment, we provide end to end digital solutions for

corporate customers, Small and Medium Business (SMB) and

In September 2018, the Company through its subsidiary PT

government institutions including connectivity, IT Service, data

Metranet collaborated with Oona, a digital company based

center & cloud, business process outsourcing, digital solutions

in Hong Kong, to launch a advertising-based mobile video

and other support services.

In the Consumer segment,

streaming service which

is expected to strengthen the

IndiHome has been further enriched through more high-speed

Company’s video service capabilities.

package package choices, more of TV / Video channels, games,

a variety of attractive minipack choices, and the monetization

BUILDING A DIGITAL CULTURE

of digital inventory for digital advertising. Subsequently in the

Wholesale and International Business segment, we provide

As part of the company’s transformation, the Company has

digital connectivity including data centers for service providers

developed its human resources with a digital culture that

and digital players, both domestically and globally. In addition,

refers to The Telkom Way as belief system which contains

we have also developed a variety of other digital services such

the Philosophy to Be the Best, Principles To Be the Star and

as e-commerce and digital lifestyle that can be used by all other

Practices To Be The Winner.

customer segments.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportSit
Alex Janangkih Sinaga (President Director)

From Left to Right
Zulhelfi Abidin (Director of Network & IT Solution), David Bangun (Director of Digital & Strategic Portfolio),

Harry Mozarta Zen (Director of Finance), Abdus Somad Arief (Director of Wholesale & International Service),

Dian Rachmawan (Director of Enterprise & Business Service), Siti Choiriana (Director of Consumer Service),

Herdy Rosadi Harman (Director of Human Capital Management)

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

In order to build a digital culture, Telkom has made fundamental

Telkom has implemented a digital culture through the Digital

changes regarding its organization and work culture. The

Workstyle and Open Space concepts. Digital Workstyle

functional, hierarchical organization was transformed to

refers to new working methods that are paperless, wireless,

become flat and flexible. In this organization, new working

seamless and riskless while Open Spaces stand are associated

models and methods have been implemented that differ from

with unassigned desks, collaborative spaces and warm

the previous work methods, which resembled a supply chain

ambience so as to increase work effectiveness and efficiency

and was therefore less responsive to rapid change. The new

while maintaining worklife

integration. The digital work

work model and method has been implemented in the form of

environment is also equipped with tools to support more

“tribe” and “squad” organizations, which are cross-functional

agile work methods, among them Diarium which is a human

and cross-expertise teams that work together using agile

capital administrative process platform, Esperantum as a work

methods to develop products by involving users in every

collaboration platform, and Cognitium which supports the

product development decision. With this new model and way

employee competency development.

of working, every innovation and change needed to meet users’

needs can be quickly carried out. This startup model and work

ASSET LEVERAGE PROGRAM

method is relevant to building digital products, which are highly

uncertain. However, this change also requires the Company to

Telkom’s digital transformation, among others through the

provide digital talents with superb abilities in developing digital

modernization of production device technology, has reduced

digital product innovations.

the need for space, and therefore Telkom has implemented the

Asset Leverage Program to optimalize the unused space. The

The Company provides the Digital Amoeba Program and the

Asset Leverage program focuses on increasing cost efficiency

Indigo Program to accommodate digital product innovation

and increasing additional contributions to the Company’s

activities as well as talent development. Digital Amoeba is an

revenue. These assets were utilized among others for “Carrier-

employee innovation program, while the Indigo Program is an

Neutral Data Center”, as office space for subsidiaries that were

innovation development program that involves innovators

renting from third parties, and commercial collaborations,

from outside the company and also comprises Telkom’s

whether with subsidiaries or other entities. The increase in

contribution to developing Indonesian digital startups and

talents. In the Digital Amoeba Program, every employee is

encouraged to contribute his or her best ideas for digitalization

efficiency is evident in the utilization from 2016 until the end of
2018 of 113,885m2 in property assets by various Telkom Group
entities which had previously leased from third parties. In 2018,

and digital product development. Every employee whose

Company succeeded in recording revenues of Rp324 billion

idea is chosen is given the opportunity to realize it using the

from commercial utilization of these assets with other parties.

best innovation methods, namely design sprint, lean and

agile methodology and growth hack cability to accelerate the

IMPLEMENTATION OF IFRS 9 AND IFRS 15

innovation process. Equipped as such, employees are selected

to work collaboratively in squads and tribes. To support the

Telkom, as the only company in Indonesia listed on the New

development of digital talent or digital startup outside the

York Stock Exchange, has fully applied International Financial

Company, Telkom holds Indigo Programs twice a year in order

Reporting Standards (IFRS) accounting standards since

to give opportunities for talent to convey their best digital

2011. In line with developments in accounting standards, the

ideas. The Company provides opportunities to selected talents

Company has fully implemented IFRS 9 and IFRS 15 IFRS to its

and startups, and supports them in realizing their ideas. The

financial statements for the 2018 Fiscal Year by developing

startups will also be directed to collaborate with the related

and strengthening its IT Systems and improvingits business

Digital Amoeba tribes to accelerating innovation.

processes in accordance with the Sarbane Oxley Act. At present

the Company is also preparing for the application of IFRS 16

which goes into effect starting in the 2019 Fiscal Year.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportSOCIAL AND ENVIRONMENTAL RESPONSIBILITIES
AS WELL ASPARTNERSHIP AND COMMUNITY
DEVELOPMENT PROGRAMS

In 2018, the Indonesian Institute for Corporate Directorship

(IICD) assessed 200

issuers with the

largest market

capitalization on the Indonesia Stock Exchange, using the

Corporate Governance Scorecard from the Organization for

As an entity that is inseparable from society, we always

Economic Co-operation and Development Principle. In this

strive to realize social responsibility towards society and the

assessment, Telkom successfully won “The Best State Owned

environment. “Telkom Indonesia for Indonesia” as the theme of

Enterprise” in the Big Capitalization category. This shows

implementing social responsibility The Company has 3 (three)

that Telkom has carried out good corporate governance

pillars covering the Digital Environment, namely the provision

transparently, with adequate accountability.

of digital facilities to support and connect various community

activities, Digital Society to empower communities through

DESCRIPTION OF BUSINESS PROSPECTS

education on using digital services to facilitate everyday

activities, and the Digital Economy, which offers support for

The Company believes that there are still highly promising

micro, small and medium enterprises. especially in the creative

opportunies for growth in the future . Connectivity and digital

industry, in the form of training to “go digital”, “ go online”, “go

services have now become basic needs, both in small towns

global” and organize exhibitions of SME products.

and rural areas. Whereas for businesses and government

institutions, digital services have become an

important

As a State-Owned Enterprise (BUMN), the Company also

requirement in maintaining and developing their businesses, as

conducts the Partnership and Community Development

well as improving service to the public. With all its infrastructure

Program (PKBL) in the form of programs to improve the welfare

and facilities, the Company is in a leading position to realize

and social life of the community and is guided by the Regulation

these opportunities towards ensuring sustainable growth in

of the Minister of SOEs of the Republic of Indonesia. Since 2018,

the future.

the Partnership Program has channeled funds amounting

to Rp279.98 billion to 7,498 Development Partners in the

In the Mobile segment, there are 3 (three) focused areas

industrial, trade, agriculture, livestock, plantation, fisheries

on business opportunies,they are

increasingthe growth

and services sectors as well as other sector. Meanwhile,

potential of High Value Customers, mobile solution services

the Community Development Program realized IDR 105.88

for enterprise, and developing various digital services such

billion covering 7 fields, namely natural disaster assistance

as mobile financial services, games and videos. At present,

to victims, educational assistance, health

improvement

High Value Customers contribute significantly to Telkomsel’s

assistance, infrastructure development facilities, assistance

revenues. To provide the best experience towards maintaining

for religious facilities, assistance for nature conservation, and

loyalty and simultaneously increase the number of High Value

communitysocial assistance to eradicate poverty.

DEVELOPMENT OF CORPORATE GOVERNANCE
IMPLEMENTATION

The implementation of good corporate governance (GCG) is the

foundation for Telkom’s efforts to maintain stakeholder trust

and develop its business. Telkom has therefore implemented

sustainable risk management by carrying out the five main

principles of governanceand the eight principles of corporate

management in accordance with Publically Listed Companies

Governance

Implementation Guidance from the Financial

Service Authority (FSA).

Customers, we use big data analytics to conduct profiling in

order to provide a variety of quality services in line with High

Value Customer needs. We also continued to develop services-

as-a-solutionfor the Enterprise segment including Mobile

Security, NB-IoT and other digital cellular solutions that utilize

the Telkomsel myBusiness product portfolio. Meanwhile in

terms ofdigitallifestyle services, we are focused on providing

lifestyle experiences such as digital music, video, and games. In

May 2018, we launched the MAXstream platform and became

a one-stop video portal by combining OTT Video apps, linear

channels and VOD content. We also offer a complete digital

game ecosystem and released our first game, “Shellfire”, in
October 2018 under the Dunia Games brand.

has reached 66% of Telkomsel customers, will drive data

consumption for digital services and solutions. The average

data consumption of Telkomsel’s customer

is around 4

East Asia – United States (SEA-US) submarine cable system and
the South East Asia – Middle East – Western Europe5 (SEA-ME-
WE5) submarine cable system, and simultaneously integrating
SEA-US and SEA-ME-WE5 with a fiber optic domestic backbone

Gigabytes per month, still lower than the data consumption of

that covers almost all of the district capitals in Indonesia, thus

various operators in other countries such as Malaysia, Thailand

positioning Telkom as a Global Digital Hub offering alternate

and India where data consumption has reached more than 10

direct broadband connectivity between Europe, Asia and the

Gigabytes per month.

Americas quickly and efficiently. As a Global Digital Hub, the

Company will also develop data centers, cloud, content and

In the Enterprise segment, opportunities to increase business

platforms that target the Carrier, Internet Service Provider,

growth are still wide open. We believe that the trend of

Digital Players and Enterprise segments in both the domestic

business process digitization will continue to strengthen in

and international markets.

the corporate segment, as well for government institutions

at both central and regional level. In addition, the penetration

PERFORMANCE TARGETS IN 2019

of ICT services in Small and Medium Businesses (SMBs) is still

relatively low. We believe that as a provider of ICT services,

In 2019, the Company is committed to continue striving to

our presence can support business development in the SME

achieve healthy growth and good profitability. Therefore, the

segment and simultaneous create market opportunities for us

to grow together. We are also actively exploring opportunities

to enhance our digital capabilities through inorganic activities

so as to strengthen our integrated digital services.

Company has formulated 3 main programs in 2019, namely:
1. First, Embracing Best

in Class Digital Customer
Experience,which is transforming best customer experience
by optimizing business processes through strengthening

the systems, process and people.

In the Consumer segment, the opportunity to continue to grow

is still wide open. At the end of 2018, the penetration of fixed

2. Second, Intensifying Digital Business, namely expanding
broadband connectivity and encouraging digital services

broadband services in Indonesia is still relatively low at around

and solutions to maintain market dominance, and

12%, whereas the number of middle class households is still

growing. In addition, the level of competition is also relatively

3. Third, Driving Smart Initiatives on Cost Effectiveness, which
is to optimize costs by emphasizing organizations, systems

low because fixed broadband service providers require

and business processes that are more streamlined and draw

relatively high capital expenditure.

on the capabilities of the group to improve profitability.

In the Wholesale & International Business segment, the

With good execution of these programs, we believe that in 2019

Company has successfully completed the construction of the

the Company will be able to grow above the industry average.

Indonesia Global Gateway (IGG) submarine cable project which
stretches for approximately 5,400 km, connecting the South

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCHANGES IN THE BOARD OF DIRECTORS DURING
2018

We also express our highest appreciation to the management

and all employees for their dedication and hard work in these

challenging times. Going forward, we invite all management

In 2018, the composition of the Board of Directors and Board of

and employees to work harder and smarter to achieve better

Commissioners changed. On April 20, 2018 Mr. Mas’ud Khamid,

performance in the future.

Director of Consumer Service, was appointed as Director at

Pertamina. At the Annual General Meeting of Shareholders

Our Company performance and achievements throughout

(AGMS) for 2017 Financial Year dated April 27, 2018, Ms. Siti

2018 are comprehensively conveyed in this Annual Report

Choiriana was appointed as Director of Consumer Service

book including the Consolidated Financial Statements and

replacing Mr. Mas’ud Khamid.

the Financial Statements for the Partnership Program and

Community Development Management Center for 2018 Fiscal

With the abovementioned changes, the composition of the

Year which have been audited by the Public Accounting Firm

Board of Directors of the Company as of December 31, 2018 is

Purwantono, Sungkoro & Surja (member firm of Ernst & Young

therefore as follows:

Global Limited) with an unqualified opinion for the Consolidated

Financial Statements in all material respects.

Jakarta, April 30, 2019

Alex Janangkih Sinaga
President Director

Alex Janangkih Sinaga

: President Director

Harry Mozarta Zen

: Director of Finance

David Bangun

: Director of Digital and Strategic

Portfolio

Dian Rachmawan

: Director of Enterprise and

Business Service

Abdus Somad Arief

: Director of Wholesale and

International Service

Herdy Rosadi Harman

: Director of Human Capital

Management

Zulhelfi Abidin

: Director of Network and IT

Solution

Siti Choiriana

: Director of Consumer Service

We express our deepest gratitude and highest appreciation to

the members of the Board of Directors who have ended their

term of service in the Company for all their contributions.

May they be able to carry out their best mandates in their

new positions. At this opportunity, on behalf of the Board

of Directors, we also express our highest gratitude and

appreciation to shareholders, the Board of Commissioners,

loyal customers, business partners and other stakeholders, for

the support provided to the Company throughout 2018.

We the undersigned hereby declare that all the information in the PT Telkom Indonesia (Persero) Tbk
2018 Annual Report has been presented in its entirety and that we assume full responsibility for the
accuracy of the content of the Company’s Annual Report.
This statement is made in all truthfulness.
Jakarta, April 30, 2019

Board of Commissioners

Hendri Saparini
President Commissioner

Edwin Hidayat Abdullah
Commissioner

Rinaldi Firmansyah
Commissioner

Isa Rachmatarwata
Commissioner

Margiyono Darsasumarja
Independent Commissioner

Pamijati Pamela Johanna Waluyo
Independent Commissioner

Cahyana Ahmadjayadi
Independent Commissioner

Hadiyanto
Commissioner
(served until April 27, 2018)

Dolfie Othniel Fredric Palit
Independent Commissioner
(served until September 20, 2018)

STATEMENT OF THE MEMBER OF BOARD OF DIRECTORS
REGARDING WITH RESPONSIBILITY FOR
PT TELKOM INDONESIA (PERSERO) TBK 2018 ANNUAL REPORT

Board of Directors

Alex Janangkih Sinaga
President Director

Harry Mozarta Zen
Director of Finance

David Bangun
Director of Digital & Strategic Portfolio

Dian Rachmawan
Director of Enterprise
and Business Service

Abdus Somad Arief
Director of Wholesale &
International Service

Zulhelfi Abidin
Director of Network & IT
Solution

Herdy Rosadi Harman
Director of Human Capital
Management

Siti Choiriana
Director of Consumer
Service

Mas’ud Khamid
Director of Consumer Service
(served until April 20, 2018)

ABOUT
TELKOM

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Vision, Mission, and Strategy
Telkom Milestone
Business Activities
Awards and Certifications
Telkom Organizational Structure
Profile of the Board of Commissioners
Profile of the Board of Directors
Telkom Employees
Shareholders Composition
Subsidiaries, Associated Companies, and Joint Ventures
Chronology of Stocks Registration
Chronology of Other Securities Registration
Name and Address of Institutions and/or Supporting
Capital Market Profession

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

The Telkom Hub, is a TelkomGroup office area as a
Center of Excellence and Source of Inspiration to
Build Digital Indonesia.

Transform and Digitize

VISION

“Be the King of Digital in the Region”

“Be the King of Digital in the Region” is Telkom’s vision with the aim of becoming one of the 10
(ten) Asia Pacific companies with the largest market capitalization in the telecommunications
industry in 2020. To realize this vision, there are 3 main programs implemented during 2018,
namely Delivering Best Customer Experience, Expanding Digital Business and Intensifying
Smart Inorganic. Telkom transformed towards a digital telecommunication company
with a paradigm of increasing customer experience, strengthening broadband and digital
businesses and implementing lean operations. Increased customer experience is done by
formulating experience in each customer journey to understand customer needs earlier
and deliver services beyond their expectations. The increase in broadband and digital
business is done by presenting reliable and high-quality broadband services, supported
by innovative digital services in accordance with lifestyle developments and customer
expectations. While lean operations are implemented to streamline digital processes
supported by organizations and leadership that have an effective, agile and collaborative
digital culture.

MISSION

“Lead Indonesian Digital Innovation and Globalization”

Telkom’s mission is “Lead Indonesian Digital Innovation and Globalization”, where Telkom is
a pioneer of innovation in Indonesia to become a leading global player. Telkom was active
in developing digital ecosystems that encourage various innovations and enhance the
competitiveness of the digital industry in Indonesia.

STRATEGIC OBJECTIVE
Top 10 Market Capitalization Telco in Asia Pacific
by 2020 and maintain its stronghold position

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportIn realizing this vision and mission, Telkom carries out a competitive growth strategy
through innovation in business models, value chains and digital technology. Telkom is
engaged in a TIMES portfolio focusing on the customer value of all customer segments.
To realize this strategy, 10 strategic initiatives have been formulated with the acronym
“Digital Now”.

Defend
legacy and
lay digital
foundation

Grow adjacent
digital
portfolio

Expand
Internationally

Transform
operating model
and realize
synergies

Defend and sustain the leading
mobile position

Ignite Indonesia into a broadband nation

Grow Enterprise business through
digital ecosystem

Invest in smart platform & intensify
digital services expansion

Transform into a global ‘hub’ for
world wide digital ecosystem

Acquire capabilities and
maximize value through digital
and telecom A&A

Localize technology businesses
through innovation and investment

Navigate major operating and
organizational model transformation

Optimize synergies across
the TelkomGroup and SOE

10 W

World-class people and culture

Telkom was established in 1965 when the Government separated postal and telecommunications services by dividing the Postel PN

into the State Pos Giro Company (PN Pos & Giro) and the State Telecommunications Company (PN Telekomunikasi). In its journey,

the company underwent several changes until in 1995, Telkom became a public company listed on Indonesia Stock Exchange (IDX)

and New York Stock Exchange (NYSE).

Throughout the 2000s, along with the development of Over the Top Application (OTT) or internet-based digital applications, Telkom

started its transformation journey to face digital disruption through various approaches, including changing product portfolios to

build customer centric organizations and developing infrastructure networks that support digital businesses.

Furthermore, Telkom expanded its business to find new sources of growth. The current transformation and expansion shows

Telkom’s commitment in facing disruptive competitive growth and becoming one of the largest digital telecommunication

companies in the Asia Pacific.

2018

On August 7, 2018, Merah Putih Satellite was launched
from Cape Canaveral Air Force Station, Orlando,
Florida, United States. The Merah Putih Satellite
carries 60 transponders that reach Southeast Asia
and South Asia.

Inauguration of The Telkom Hub in November 2018,
as the Center of Excellent and Source of Inspiration
to Build Digital Indonesia.

completed

the
In December 2018, Telkom
Indonesia Global Gateway
construction of the
(IGG) submarine cable, which connects two major
submarine cable systems, namely South East Asia-
Middle East-Western Europe 5 (SEA-ME-WE 5) and
Southeast Asia-United States (SEA-US) Submarine
Cable Systems. IGG is also planned to connect 12
major cities in Indonesia among others between
Batam, Jakarta, Surabaya and Manado.

The number of IndiHome customers has reached 5.1
million subscribers as of December 31, 2018.

2017

2016

2015

• The Telkom 3S satellite was launched.

Completed

the contruction of

the

Telkom launched IndiHome packages

• Completed the submarine fiber optic

cable of Southeast Asia-United States

submarine cable systems Southeast

consisting of broadband internet, fixed

Asia-Middle East-Western Europe 5

wireline phone and

interactive TV

(SEA-US).

• Telkomsel obtained additional 30

MHz spectrum at 2.3 GHz frequency.

(SEA-ME-WE-5).

services.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
2014

2011

2010

Telkom became the first operator in

The

reformation

our

Telkom completed

the

JaKaLaDeMa

Indonesia to commercially launch 4G/

telecommunications

infrastructure

submarine fiber optic cable project.

LTE services.

through the completion of the Telkom

Nusantara Super Highway project, as

well as the True Broadband Access

project to provide internet access with

a capacity of 20 Mbps to 100 Mbps to

customers throughout Indonesia.

1991-1995

1999

2005

Government Regulation No. 25 of

Telkom launched the Telkom-1 satellite.

Telkom launched the Telkom-2 satellite.

1991 stipulates that as a state-owned

enterprise (SOE) became Persero.

On May 26, 2018, Telkom build subsidiaries,

Telkomsel, as a cellular operator.

Telkom made its initial public offering

on November 14, 1995, on the Jakarta

Stock Exchange and the Surabaya Stock

Exchange (which has since become an

Indonesia Stock Exchange). Telkom also

registered shares on the NYSE and LSE,

and openly offered shares without listing

on the Tokyo Stock Exchange.

1974

1965

PN Telekomunikasi was turned

into Perusahaan Umum

The

Government

separated

postal

and

Telekomunikasi

Indonesia

(Perumtel), which provided

telecommunications services by dividing PN Postel into

domestic and international telecommunications services, and

Perusahaan Negara Pos dan Giro and Perusahaan Negara

subsequently spun-off PT Industri Telekomunikasi Indonesia,

Telekomunikasi (PN Telekomunikasi).

which manufactured telecommunications equipment, into an

independent company.

BUSINESS ACTIVITIES BASED ON TELKOM’S ARTICLES OF ASSOCIATION

The last version of the Articles of Association of PT Telkom Indonesia (Persero) Tbk No.35 dated May 15, 2018, stipulates the purpose

and objective of Telkom, which is to conduct business in the telecommunication network and service, informatics and optimization

the utilization of Company’s resources to produce high quality goods and/or services with strong competitiveness to gain/pursue

profits to increase value The Company applies the principle of Limited Company. In correlation with the purpose and objective,

Telkom’s business activities include:

Main Businesses

Supporting Businesses

1. Planning, building, providing, developing, operating, marketing/

1. Providing payment transaction and money transfering

selling/leasing and maintaining telecommunication and

services through telecommunication and informatics networks.

informatics networks to the widest extent in accordance with

prevailing laws and regulations.

2. Performing and other activities and undertaking inconnection

with the optimization of resources owned which, among

2. Planning, developing, providing, marketing/selling and

other things, the utilization of properties and equipments and

improving telecommunication and informatics services

moveable assets, information system facilities, education

to the widest extent in accordance with prevailing laws

and training facilities, maintenance and repair facilities.

and regulations.

3. Investing, including equity capital, in other companies whose

communication or

technology

resources owned by

businesses align with, and in order to achieve, our purposes

other parties as a service provider in the information,

and objectives.

communication and technology industry, in order to realize

3. Collaborating with other parties to optimize the information,

purposes and objectives.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportPORTFOLIO, PRODUCT AND/OR SERVICE

In general, Telkom’s business activities are in line with the articles of association, that is the provision of telecommunications,

informatics and network services. Telkom has divided these activities into various business segments in accordance with the

strategy of digital transformation and the development of the telecommunications industry. Currently, Telkom has portfolio

products as follows:

Portfolio

Products and Services

Fixed

Mobile

• Fixed Voice

• Fixed Broadband

• Mobile Legacy (voice & SMS)

• Mobile Broadband

• Digital Service

Network Infrastructure

• Satellite

• Tower

• Infrastructure and Network Management

Wholesale and International

• Wholesale Telecommunications Services

• International Services

Enterprise Digital

Digital Life and Smart Platform

• Enterprise Connectivity

• Device and Hardware

• Data Center and Cloud

• IT Service

• Business Process Outsourcing (BPO) Service

• Professional and Advanced Service

• Digital Advertising

• Financial Services

• Video/TV

• E-Commerce

• Digital Life & Life Content

• Big Data & Smart Platform

Technological developments have caused Telkom’s production equipment to no longer require large space. The smaller space of

these devices results in idle assets and space that can be utilized to provide maximum benefits for the TelkomGroup. In 2018

Telkom focused and intensively initiated the leverage asset program. Telkom divides leverage asset into two categories based on

cooperation partners, namely Synergy Group (Internal group customer) where this utilization is to produce cost efficiency and the

Strategic & Retail Partnership (external group customer) aims to obtain revenue from idle assets, Telkom offers services such as

property development, property rental, property facilities, and property management managed by a subsidiary, PT Graha Sarana

Duta (Telkom Property).

FEBRUARY

February 20
Top Brand Award
IndiHome received Top Brand in category of Internet

Service Provider Fixed in the Top Brand Award

By: Frontier & “Marketing” Magazine

February 23
Indonesia CSR Award II
Telkom received award in Platinum category with a score

of 99.25 as a Public Company Implementing the Principles

of CSR

By: Economic Review, Indonesia Asia Institute

February 24
The 13th SRA 2017
Telkom won 1st place in the Infrastructure category
By: NCSR+ SWA

MARCH

March 02
Indonesia Corporate Secretary & Corcomm
Award 2018
With a score of 95.00, Telkom won 1st place in category of
Public Listed Company and received a Platinum Award

By: Economic Review

March 22
Best CEO Obsession Award
Alex Janangkih Sinaga as a President Director of Telkom

received award as Best Achiever in CEO SOE dan Telkom as

Best Achiever

By: Obsession Media Group

March 23
Most Innovative Business Award
Telkom received award as the best company for Product

Innovation and Marketing in the Telecommunications Sector

By: “Warta Ekonomi” Magazine

March 29
PR Indonesia Award
Telkom received award in category of most popular in Media,
Corporate and Marketing PR

By: PR Indonesia Magazine

02
22

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report12

April 25
Info Bank 7th Digital Brand Awards
Telkom received 3rd place in SOE Category
By: Info Bank Magazine

APRIL
April 12
Asia’s Best Companies 2018 - Indonesia
Telkom received award in 6 categories that is Best Managed
Companies (2nd place), Best CEO (2nd place), Best CFO (2nd
place), Best Investor Relation (2nd place), Best Corporate
Social Responsibility (2nd place) and Best Commitment to
Corporate Governance (3rd place)
By: Finance Asia

April 25
Revolusi Mental BUMN Track Award
Telkom received several awards including Best of the Best

SOE, receive Gold in category “Indonesia Melayani Terbaik”

and received Silver in category “Indonesia Bersih Terbaik”

By: BUMN Track Magazine

MAY

May 04
HR Asia
Telkom received the predicate of Best Company to Work for

in Asia 2018 in Business Media Internasional

By: HR Asia Magazine

May 31
Indonesia Top 100 Most Valuable Award
Telkom received the 1st place on the Most Valuable Indonesian
Brands 2018 with US$5,168 Million Brand Value & AAA Brand

Rating

By: Brand Finance & SWA Magazine

May 03
Selular Award 2018
Telkom received award as the Best Social Contribution

Program and Best Home Internet

By: selular.id

JUNE
June 01
Asia Pacific Stevie Award 2018
Telkom was crowned as the Organization of the Year by

winning 56 Awards including 14 Gold, 30 Silver and 12 Bronze

By: Stevie International

June 08
Asia Excellence Award
Telkom received award as Asia’s Best CEO, Asia’s Best CFO

and Best Investor Relation Company (Indonesia)

By: Corporate Governance Asia

JULY
July 11
Sri Kehati Appreciation 2018
Telkom received appreciation as #20 Kehati Appreciation

By: SWA & Kehati

July 11
The Special Achievement in GIS (SAG) Award
Ceremony
Telkom received award as Special Achievement in GIS

By: ESRI User Conference

AUGUST
August 15
Asia Pacific ICT Award
Telkom crowned as Telecom Service Provider of the Year and

Telecom CEO of the Year

By: Frost and Sullivan

06
August 06
Tempo Country Contributor Award
Telkom is ranked in the Top 3 in the Infrastructure,

Utility and Transportation Sector

By: “Tempo” Magazine

August 15
Indonesia Original Brand Award 2018
Telkom received award as 007 Product Category SLI

IndiHome received award in category of Product Fixed Broadband

By: Bussiness Digest and SWA

SEPTEMBER

September 25
Social Media Award
Telkom received award in category of Internet Service

Provider Fixed

By: Marketing Magz + Media Wave

September 26
9th BUMN Awards
Telkom received a Special Award as the Largest Tax Payer

and a very good predicate SOE for five consecutive years

By: Info Bank Magazine

04
September 04
Asia Pacific HRM Congress Awards 2018
Abdus Somad Arief as a Director of Wholesale and
International Service received award as Exemplary Leader
By: TIMES Ascent

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report24

November 13
Economic Challenges Award 2018
Telkom won Infrastructure category

By: Metro TV

OCTOBER

October 19
IPRA Golden World Awards for Excellence 2018
Music Campaign for Indonesia received the IPRA Golden

World Award in category of Inhouse Social Media

By: International Public Relations Association

October 24
Indonesia Best Brand Award
Telkom received award as Indonesia Best Brand

By: CMO Asia

NOVEMBER
November 14
ASEAN Engineering Award
1. Director of Digital and Strategic Portfolio received award

“Honorary Member” from the ASEAN Federation of

Engineering Organisations 2018

2. Director of Wholesale and International Service received

award “Honorary Fellow” from the ASEAN Federation of

Engineering Organisations 2018

3. Telkom

received award as ASEAN Outstanding

Engineering Achievement Award 2018 for its success in

completing the Merah Putih satellite project to provide

high-speed Broadband and Links in reaching out of

internet users in regions especially East Indonesia

4. Telkom

received award as ASEAN Outstanding

Engineering Achievement Award 2018 in providing

high-speed Broadband and Links using the Under

Water FO Cable System along the island of Sulawesi,

Maluku, to Papua

By: Persatuan Insinyur Indonesia (PII)

November 23
Apresiasi Indonesia Untuk BUMN
Telkom won 4 awards

including Palu and Donggala

Saviors: Quick Emergency Response in Telecommunication

Infrastructure Recovery, SOE Disaster Rescue, Popular SOE

in the Information and Telecommunications Sector and Top

5 SOE in Innovation

By: Warta Ekonomi

December 06
Top IT & Telco Award
IndiHome received Top Fixed Internet Provider 2018

By: “itWorks” Magazine

December 10
The 10th IICD Award 2018
Telkom received the Best SOE and Top 50 Big Capitalization

Public Listed Company

By: IICD and Kontan

December 13
Digital Inclusion Award 2018
Telkom received award in category of Established Company

By: Mastel

December 19
Investor Award
(Tokoh Finansial Indonesia)
Telkom received appreciation as the best SOE 2018 in the Non-

Financial of Telecommunications & Broadcasting Sector

By: “Investor” Magazine

December 03
IDX Appreciation 2018
Telkom as a Public Company listed the Best Shares in the

category of Market Capitalization Above Rp10 Billion

By: IDX, KPEI, KSEI

December 06
Mobile DNA Awards 2018
IndiHome won the Gold Winner in category of Provider

Internet Broadband.

By: Markplus INC

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCERTIFICATIONS

Telkom has various certifications as a form of commitment to provide the best services for customers and implement international

standards. Following is the list of Telkom’s certifications and ISO:

Certificate

Institution

Validity Period

SNI ISO/IEC 27001:2013

ISO 9001:2015 QMS

ISO 27001:2013 ISMS

ISO 22301:2012 BCMS

TUV Rheinland

ISO 20000-1:2011 ITSMS

TUV Rheinland

ISO 17025:2008

Komite Akreditasi Nasional

2016

ISO 17025:2008

Komite Akreditasi Nasional

Year

2018

2016

2013

2014

2015

2016

2018

2016

2017

2014

2016

2017

2018

2016

2018

2016

Recipient

Telkom

Laboratorium Penguji (Digital
Service Division)

Laboratorium Kalibrasi
(Digital Service Division)

Telkomsel

Telkom Infra

TelkomMetra

Metrasat

AdMedika

MD Media

10.

11.

12.

Infomedia

Finnet

Telkomsigma

13.

Telin

14.

Telin Singapore

15.

16.

Graha Sarana Duta

Telkomsat

17.

Telkom Akses

18.

PINS

19.

SSI

Note:
*) Update process every year.

ISO/IEC 27001:2013

Bureau Veritas Certification

ISO 9001:2008

TUV-NORD

URS International

TUV Rheinland

Guardian Independent
Certification (GIC)

ISO/IEC 27001:2013

British Standards Institution (BSI)

IT IL Foundation Certificate in IT
Service Management

IT IL Foundation

ISO 27001:2013

ISO/IEC 27001:2005

EMS ISO 14001

TUV NORD Indonesia

TUV Rheinland

British Standard
Institution (BSI)

Oracle Platinum Partner

Oracle

Health & Safety Certification

British Standards Institution (BSI)

Integrated Management System
Certification PAS 99:2012

British Standards Institution (BSI)

ISO 27001

British Standards Institution (BSI)

Payment Card Industry Data
Security

TUV Rheinland

ISO 27001:2013

ISO 20000-1:2011

ISO 27000-1:2013

ISO 20000-1:2011

Bureau Veritas Indonesia

PT SGS

Intertek

Tier III Data Center Certification

Uptime Institute

Tier IV Data Center Certification

Uptime Institute

ISO 9001:2015

ISO 9001:2008

2017

OHSAS 18001:2007

LLOYD Register

TUV Rheinland Cert GmbH Am
Grauen Stein – 51105 KoIn

2017

2016

2018

2017

ISO9001:2015

British Standards Institution (BSI)

OHSAS 18001:2007

British Standards Institution (BSI)

CIQS 2000:2009

ISO 9001:2015

TPCC

URS Services Indonesia

Renewal Gold Certified Partner

CISCO

ISO 9001 : 2015

Lioyd’s Register LRQA

2021

2019

2018

2019

2020

2019

2021

2019

2021

2018

2019

2018

2020

2019

2020

Telkom’s organizational structure as of December 31, 2018.

President Director
(Alex Janangkih Sinaga)

Director of Enterprise &
Business Service (COO)
(Dian Rachmawan)

Director of Consumer
Service (CRO)
(Siti Choiriana)

Director of Wholesale &
International Service
(Abdus Somad Arief)

Director of Network,
IT & Solution
(Zulhelfi Abidin)

Director of Digital &
Strategic Portfolio
(David Bangun)

AVP Secretary of
Directorate EBIS

AVP Secretary of
Directorate CONS

AVP Secretary of
Directorate WINS

AVP Secretary of
Directorate NITS

VP Enterprise
Planning Strategy
(Yusron Hariyadi)

VP Planning &
Resource Mgt
(Suarjaya Alit Mandala)

VP Strategy &
Planing
(Mohamad Ramzy)

VP Infrastructure
Strategy & Governance
(Era Kamali Nasution)

VP Enterprise
Business Development
(Dudy Effendi)

VP Marketing
Management
(Aulia E. Marinto)

VP Traffic
Production & Solution
(Tri Nugroho BW)

VP IT Strategy &
Governance
(Rizal Akbar)

VP Enterprise
Parenting Operation
(Bagyo Nugroho)

VP Enterprise
Performance
Integration
(Joni Heri)

OVP Consumer
Fulfillment
(Sujito)

OVP Consumer
Assurance
(Agus Winarno)

VP Network
Infastructure
Production & Solution
(Bastian Sembiring)

VP Infrastructure &
Service Performance
(Admiral Dasrin)

VP Infrastructure
Management
(Moh. Riza Sutjipto)

EGM TV Video Division
(Anak Agung Gede
Mayun Wirayuda)

EVP Wholesale
Service Division
(Priyono)

EVP Enterprise
Service Division
(Judi Achmadi)

EVP Business
Service Division
(Tri Gunadi)

EVP Government
Service Division
(Mohammad Salsabil)

EGM Service
Operation Division
(Revolin Simulsyah)

EGM Service
Solution Division
(Abdi Mulyanta Ginting)

EGM Planning
& Deployment Division
(M. Amperandus
Simanjuntak)

EGM Information
Technology
(Alip Priyono)

AVP Secretary of
Directorate DSP

VP Corporate Strategic
Planning
(Torkis Ropinda
Sihombing)

SVP Portfolio & Synergy
(Pramasaleh Hario
Utomo)

VP Integrated
Portfolio Management
(Saiful Hidajat)

VP Synergy
(Kukuh Pribadijanto)

EVP Strategic
Investment
(Setyanto Hantoro)

VP Strategic
Investment Digital Telco
(Yusuf Wibisono)

VP Strategic
Investment ICT
& Services
(Bhimo Aryanto)

SVP Media & digital
Business
(Joddy Hernady)

VP Media & Digital
Strategy & Development
(Ign. Wiseto Prasetyo
Agung)

VP Media & Digital
Parenting & Performance
(Asli Brahmana)

EGM Digital
Service Division

Head of CX
Transformation Project
(Sri Safitri)

EVP Telkom Regional I
(Stanislaus Susatyo)

EVP Telkom
Regional II
(Teuku Muda Nanta)

EVP Telkom
Regional III
(I Ketut Budi Utama)

EVP Telkom
Regional IV
(Joko Raharjo)

EVP Telkom
Regional V
(Suparwiyanto)

C
O
R
P
O
R
A
T
E
O
F
F
I
C
E

B
U
S
I
N
E
S
S
U
N
I
T

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportDirector of Finance
(Harry Mozarta Zen)

Director of Human
Capital Management
(Herdy Rosadi Harman)

SVP Corporate
Secretary
(Afriwandi)

SVP Internal Audit
(Harry Suseno
Hadisoebroto)

SVP Program
Management Office
(Ikhsan)

AVP Secretary of
Directorate KEU

AVP Secretary of
Directorate HCM

VP HC Strategic
Management
(Dharma Syahputra)

VP HC
Development
(Dwi Heriyanto B.)

VP HC Organizational
Effectiveness
(Danang Baskoro
Dwinugroho)

VP Telkom
Smart Office
(Ardi Purwanto)

SVP
Group Financial Planning
Analysis & Control
(Edi Witjara)

VP Financial
Controller CFU Consumer,
WIB & Digital Service
(Irphan Wijaya)

VP Financial
Controller CFU
Enterprise
(Devindra Kamal)

VP Corporate Finance
(Siti Rakhmawati)

VP Financial Policy &
Process Management
(Muchamad Noor Hidayat)

VP
Investor Relation
(Andi Setiawan)

SGM SSO Finance Center
(Fajar Wibawa)

SGM SSO
Procurement & Sourcing
(Weriza)

SGM Asset Management
Center
(Heru Kurniawan)

Project Director
Proyek T-ISCM
(I Ketut Dody Wirawan)

Head of SSO
TelkomGroup Project
(Devi Alzy)

Head of IFRS Project
(Martinus Wisnu Adji)

SGM Assesment Center
Indonesia
(Teuku Zilmahram)

SGM Community
Development Center
(Sindhu Aryanto)

SGM HC Business Partner
(Djonet Hartono)

SGM Telkom Corporate
University
(Rina Djunita Pasaribu)

EVP Telkom
Regional VI
(Edwin Aristiawan)

EVP Telkom
Regional VII
(Aris Dwi Tjahjanto)

VP Corporate
Communication
(Arif Prabowo)

VP Regulatory
Management
(Henry Christiadi)

VP Corporate
Office Support
(Hardi Purwanto)

VP Legal &
Compliance
(Junian Sidharta)

VP Planning &
Development Audit
(Imam Santoso)

VP Infrastructure &
Operation Audit
(Purwadi Siswana)

VP Information
Technology Audit
(Rahadian Krishna
Sundara)

VP Integrated &
Financial Audit
(Agus Widjajanto)

PMO Controller
Team

AVP PMO Planning
& Design

AVP Monitoring
& Reporting

AVP Communications
& Supporting

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

PROFILE OF THE BOARD OF COMMISSIONERS

MEMBER OF THE BOARD OF COMMISSIONERS AS OF DECEMBER 31, 2018

Born
Age
Citizenship
Domicile

Educations
1988
1997

1999

: Kebumen, June 16, 1964
: 54 years old
: Indonesian
: Jakarta

Bachelor degree in Economics from Gadjah Mada University.
Master in International Development Policy from University of Tsukuba,
Japan.
Doctoral degree in International Political Economy from University of
Tsukuba, Japan.

Basis of Appointment
Extraordinary General Meeting of Shareholder (EGMS) of Telkom on December 19, 2014.

Career Experiences
2016 – now
2015 – now
2014 – now
2009 – now
2013 – 2016

Member of National Economic and Industry Committee (KEIN).
Chair of the SOE policy committee.
Member of the OJK sharia financial services development committee.
Guest Lecturer at LAN, Lemhanas and various Government Institutions.
Founder and Executive Director, CORE Indonesia.

Born
Age
Citizenship
Domicile

Educations
1985
1988

2014

: Tanjung Pinang, June 10, 1960
: 58 years old
: Indonesian
: Jakarta

Bachelor degree in engineering from Bandung Institute of Technology.
Master of Business Administration from Indonesian Institute of
Management Development (IPMI) Jakarta.
Doctoral degree in Management from Padjadjaran University,
Bandung.

Basis of Appointment
Annual General Meeting of Shareholder (AGMS) of Telkom on April 17, 2015.

Career Experiences
2016 – now
2014 – now
2015
2013 – 2016
2013 – 2016
2007 – 2012
2004 – 2007

Advisory Board Member, Daestrum Capital.
Commissioner, PT Elnusa Tbk.
Commissioner, PT Indosat Tbk.
Commissioner, PT Bluebird Tbk.
President Commissioner, PT PLN Batam.
CEO, Telkom.
CFO, Telkom.

Hendri Saparini
President Commissioner

Rinaldi Firmansyah
Commissioner

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Edwin Hidayat Abdullah
Commissioner

Born
Age
Citizenship
Domicile

Educations
1995

2005

: Jakarta, April 28, 1971
: 47 years old
: Indonesian
: Jakarta

Bachelor degree in Economic from Gadjah Mada University,
Yogyakarta.
Master of Public Management from Lee Kuan Yew School of
Public Policy, NUS (in Cooperation with Kennedy School of
Government), Harvard University in Singapore and United States.

Basis of Appointment
Annual General Meeting of Shareholders (AGMS) of Telkom on April 27, 2018.

Career Experiences
2018 – now
2016 – now
2016 – 2018
2015 – 2016
2004 – 2015

President Commissioner, PT Icon+.
Deputy for Energy, Logistics, Regions and Tourism Business.
Commissioner, PT Pertamina.
Commissioner, PT Telkomsel.
Independent Commissioner, PT Bumi Serpong Damai Tbk.

Isa Rachmatarwata
Commissioner

Born
Age
Citizenship
Domicile

Educations
1990

1994

: Jombang, December 30, 1966
: 52 years old
: Indonesian
: Jakarta

Bachelor degree in Mathematics and Natural Sciences from
Bandung Institute of Technology.
Master of Mathematic Actuarial Science,
University of Waterloo, Canada.

Basis of Appointment
Annual General Meeting of Shareholders (AGMS) of Telkom on April 27, 2018.

Career Experiences
2017 – now

2013 – 2017

2013
2006 – 2012

Director General of State Assets Management, Ministry of
Finance.
Assistant of Minister for Financial Services and Capital Market
Policy and Regulation.
High Official at the Fiscal Policy Agency, Ministry of Finance.
Head of Insurance Bureau, Indonesian Capital Market and
Financial Institution Supervisory Agency (BPPMLK),
Ministry of Finance.

Margiyono Darsasumarja
Independent Commissioner

Born
Age
Citizenship
Domicile

Educations
2008
2012

: Klaten, September 14, 1976
: 42 years old
: Indonesian
: Jakarta

Bachelor degree in Law from University of Indonesia.
Master degree in Cyber Law from the School of Law University of Leeds.

Basis of Appointment
Annual General Meeting of Shareholder (AGMS) of Telkom on April 17, 2015.

Career Experiences
2012 – 2015

2012 – 2014
2001 – 2011

Coordinator of Advocacy and Partnership for Government Reform of the
Bureaucracy reform Project.
Lecturer in Law and Media Ethics, Bakrie University.
Media Development Manager at Voice of Human Rights (VHR) Media.

Cahyana Ahmadjayadi
Independent Commissioner

Born
Age
Citizenship
Domicile

Educations
1980

2004

2010

: Garut, July 12, 1955
: 63 years old
: Indonesian
: Bandung

Bachelor degree in industrial engineering from Bandung Institute
of Technology.
Master degree in Law of Technology/Business from University of
Padjajaran, Bandung.
Doctoral degree in Cyber Law from University of Padjajaran, Bandung.

Basis of Appointment
Annual General Meeting of Shareholder (AGMS) of Telkom on April 21, 2017.

Career Experiences
2010 – 2013
2011
2006
2005

2002

1993

Commissioner, PT Bank Mandiri (Persero) Tbk.
Expert staff, Ministry of Communication and Informatics.
Founder Pengelola Nama Domain Internet Indonesia (PANDI).
Director General of Telematics Application,
Ministry of Communication and Informatics.
Deputy for Communication & Infrormation Network,
Ministry of Communication and Informatics.
Head of Telkom Regional V Division, West Java.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Pamijati Pamela Johanna
Waluyo
Independent Commissioner

Born
Age
Citizenship
Domicile

Educations
1983

: Jakarta, June 20, 1958
: 60 years old
: Indonesian
: Tangerang

Master degree from the University of Tech. Delft, Netherlands.

Basis of Appointment
Annual General Meeting of Shareholder (AGMS) of Telkom on April 17, 2015.

Career Experiences
2014 – 2015
2006 – 2014
2000 – 2006

Director of Corporate Marketing, Obession Media Group.
Assistant Director of Sales and Marketing, Metro TV.
Corporate Public Relations, Metro TV & Media Group.

MEMBER OF THE BOARD OF COMMISSIONERS ENDED IN 2018

Born
Age
Citizenship
Domicile

Educations
1986
1993
2012

: Ciamis, October 10, 1962
: 56 years old
: Indonesian
: Bogor

Bachelor degree in Law from Padjadjaran University, Bandung.
Master of Law (LLM) from Harvard University Law School, USA.
Doctoral degree in Law from Padjadjaran University, Bandung.

Basis of Appointment
Annual General Meeting of Shareholder (AGMS) of Telkom on May 11, 2012.

Career Experiences
2006 – 2016
2007 – 2012
2007 – 2009
2005 – 2006
2003 – 2005

Director General of State Asset of the Ministry of Finance.
President Commissioner, PT Garuda Indonesia Tbk.
President Commissioner, PT Bank Export Indonesia.
Head of the Legal of Secretariat General of the Ministry of Finance.
Alternative Executive Director, World Bank.

Born

Age
Citizenship
Domicile

Educations
1995

: Kijang, Kepulauan Riau, October 27, 1968

: 50 years old
: Indonesian
: Jakarta

Bachelor degree from Bandung Institute of Technology.

Basis of Appointment
Extraordinary General Meeting of Shareholder (EGMS) of Telkom on December 19, 2014.

Career Experiences
2012 – 2014
2009 – 2014
2011

2010

2004 – 2009

2001 – 2003

Member of Budget Committee, Indonesian House of Representative.
Member, Indonesian House of Representative.
Special Committee of the Law, the Healthcare and Social Security
Agency (BPJS).
Member, Special Committee for the Prevention and Combating
Money Laundering.
Executive Director, Strategic Consultacy Institute for Research on
Policy and Regional Autonomy (REKODE).
Executive Director, Bumi Indonesia Hijau Foundation.

Hadiyanto
Commissioner

Dolfie Othniel F. Palit
Independent Commissioner

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

EDUCATION, TRAINING, SEMINAR, AND CONGRESS

To improve the competence of the members of the Board of Commissioners, Telkom provides an opportunity for members of the

Board of Commissioners to attend education and training throughout 2018.

Commissioner Name

Education/Training/Seminar/Congress

Time

Place

Hendri Saparini

Mobile World Congress 2018

February 26 – March 2, 2018

Barcelona, Spain

Strategic Discussion on Global Telco
Industry

Meeting with Softbank and NEC

Socialization of Integrated Talent
Management System (Ministry of SOE)

July 4, 2018

Jakarta, Indonesia

July 17-21, 2018

August 1, 2018

Japan

Jakarta, Indonesia

EduTech Asia 2018

October 8-10, 2018

Singapore

Rinaldi Firmansyah

Mobile World Congress 2018

February 26 – March 2, 2018

Barcelona, Spain

Asia Pacific Risk Symposium

Strategic Discussion on Global Telco
Industry

June 6, 2018

July 4, 2018

Singapore

Jakarta, Indonesia

Meeting with Softbank and NEC

July 17-21, 2018

ICT, Consumer’s Integration and Industry 4.0 September 14, 2018

Japan

Singapore

Association for Financial Professional

November 4-7, 2018

Chicago, USA

Edwin Hidayat Abdullah

Isa Rachmatarwata

Strategic Discussion on Global Telco
Industry

July 4, 2018

Jakarta, Indonesia

July 4, 2018

Jakarta, Indonesia

Factory and Research Visit

September 9-11,2018

Shenzhen, China

Margiyono Darsasumarja

Bali Annual Telkom Conference (BATIC) 2018 April 3-6, 2018

Asia Pacific Risk Symposium

Strategic Discussion on Global Telco
Industry

June 6, 2018

July 4, 2018

Bali, Indonesia

Singapore

Jakarta, Indonesia

Factory and Research Visit

September 9-11, 2018

Shenzhen, China

RIMS Cyber Risk Annual Conference

September 22-25, 2018

San Diego, USA

Cahyana Ahmadjayadi

Mobile World Congress 2018

February 26 – March 2, 2018

Barcelona, Spain

Pamijati Pamela Johanna
Waluyo

Strategic Discussion on Global Telco
Industry

July 4, 2018

Jakarta, Indonesia

Meeting with Softbank and NEC

July 17-21, 2018

Japan

The IRES - 506th International Conference
on E-Education, E-Business, E-Management
and E-Learning

The discussion of knowledge update on the
development of fixed broadband service in
Europe

Strategic Discussion on Global Telco
Industry

December 9-10, 2018

Kyoto, Japan

February 21-24, 2018

Athena, Greece

July 4, 2018

Jakarta, Indonesia

EduTech Asia 2018

October 8-10, 2018

Singapore

In accordance with the principle of transparency in the implementation of good corporate governance or GCG, Telkom discloses

the affiliation of members of the Board of Commissioners with fellow Commissioners, Directors and major and controlling

shareholders, including the names of affiliated parties.

Financial Relationship with

Family Relationship with

Board of Commissioners
(BOC)

BOC

BOD

Controlling
Shareholder(1)

BOC

BOD

Controlling
Shareholder(1)

Yes

Hendri Saparini

Rinaldi Firmansyah

Edwin Hidayat Abdullah

Isa Rachmatarwata

Margiyono Darsasumarja

Cahyana Ahmadjayadi

Pamijati Pamela Johanna
Waluyo

Hadiyanto*

Dolfie Othniel Fredric
Palit **

√

Remarks:
(1) The controlling shareholder in this matter is the Government of Indonesia represented by the Minister of SOE as a primary shareholder.
* No longer in position since April 27, 2018.
** No longer in position since September 20, 2018.

STATEMENT OF INDEPENDENCE

Telkom requires Independent Commissioners to sign a Statement of Independence for Independent Commissioner when

Independent Commissioner has served for more than 2 (two) periods. Until now, the drafting of this report, Telkom’s Independent
Commissioners have served since 2015 and 2016 so as not to serve more than 2 (two) periods.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Reportg
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o
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The coherency of IndiHome technicians is part of the
broadband connections distribution in Indonesia.

THE DIRECTORS AS OF DECEMBER 31, 2018

Alex Janangkih Sinaga
President Director

Harry Mozarta Zen
Director of Finance

Born
Age
Citizenship
Domicile

Educations
1986

1994

: Pematang Siantar, September 27, 1961
: 57 years old
: Indonesian
: Jakarta

Bachelor degree in Electrical Engineering from Bandung Institute of
Technology.
Master degree in Telematics from the University of Surrey,
Guildford-England.

Basis of Appointment
Extraordinary General Meeting of Shareholders (EGMS) of Telkom on December 19, 2014.

Career Experiences
2012 – 2014
2007 – 2012
2005 – 2007
2002 – 2005
2002
2000 – 2002
1998 – 1999
1997 – 1998

President Director, Telkomsel.
President Director, Multimedia Nusantara.
Executive General Manager, Enterprise Service Division.
Executive General Manager, Fixed Wireless Network Division.
Senior Manager Business Performance Telkom’s Regional Division II Jakarta.
General Manager Telkom West Jakarta.
General Manager Telkom West Surabaya.
General Manager Telkom Malang.

Born
Age
Citizenship
Domicile

Educations
1993

1996

: Tanjung Pinang, January 9, 1969
: 49 years old
: Indonesian
: Jakarta

Bachelor degree in Metallurgy of Faculty of Engineering,
University of Indonesia.
MBA in Corporate Finance and Financial Institutions & Market
from the State University of New York, Buffalo.

Basis of Appointment
Annual General Meeting of Shareholders (AGMS) of Telkom on April 22, 2016.

Career Experiences
2008 – 2015
2007 – 2008
2001 – 2007
1996 – 2001
1993 – 1994

President Director, PT Credit Suisse Securities Indonesia.
Director, Barclays Capital.
Co-Head Investment Banking, PT Bahana Sekuritas.
Assistant Vice President Global Corporate Banking, Citibank.
Official Assistant Global Consumer Banking, Citibank.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

David Bangun
Director of Digital &
Strategic Portfolio

Born
Age
Citizenship
Domicile

Educations
1989

1999

: Bandung, September 5, 1965
: 53 years old
: Indonesian
: Bandung

Bachelor degree in Engineering from the Bandung Institute of
Technology.
Master of Engineering in Electrical Engineering from Cornell
University New York, USA

Basis of Appointment
Annual General Meeting of Shareholders (AGMS) of Telkom on April 21, 2017.

Career Experiences
2014 – 2017
2013 – 2014
2011 – 2014
2011 – 2013
2009 – 2011
2007 – 2009

President Director, PT Dayamitra Telekomunikasi (Mitratel).
Executive General Manager Network of Broadband.
Commissioner, PT Telekomunikasi Indonesia International (Telin).
Executive General Manager, Infratel.
Vice President Infrastructure & Service Planning.
Assistant Vice President Investment Analysis.

Dian Rachmawan
Director of Enterprise &
Business Service

Born
Age
Citizenship
Domicile

Educations
1987

1994

: Surabaya, May 14, 1964
: 54 years old
: Indonesian
: Bogor

Bachelor degree in Electro and Telecommunication Engineering
from Surabaya Institute of Technology.
Master degree in Communication and Real Time System,
Telecommunication Engineering from University of Bradford, England.

Basis of Appointment
Annual General Meeting of Shareholders (AGMS) of Telkom on April 21, 2017.

Career Experiences
2014 – 2017
2011 – 2014
2007 – 2011

2005 – 2007

2004 – 2005
2001 – 2004

2000 – 2001

Director of Consumer Service, Telkom.
CEO, PT Telekomunikasi Indonesia International (Hong Kong) Limited.
Director of Network Operation & Engineering Business & Partnership
Development, Telin.
Executive General Manager Division of Fixed Wireless Network,
Telkom.
General Manager, Telkom South Jakarta.
General Manager for Interconnection & Partnership,
Telkom’s Regional Division II Jakarta.
AVP Interconnection Planning, Head Quarter of Telkom

Born
Age
Citizenship
Domicile

Educations
1988

2000

: Sidoarjo, September 25, 1963
: 55 years old
: Indonesian
: Jakarta

Bachelor degree in Electrical Engineering from Bandung Institute
of Technology.
Master degree in Information and Technology Systems from
Bandung Institute of Technology.

Basis of Appointment
Annual General Meeting of Shareholders (AGMS) of Telkom on April 21, 2017.

Career Experiences
2018 – now
2017 – now
2015 – 2017

2015 – 2017
2014 – 2017
2015
2015
2012 – 2014
2012 – 2014
2011 – 2012
2009 – 2012
2010 – 2011
2008 – 2009
2007 – 2008

Born
Age
Citizenship
Domicile

Educations
1986
1993

1998

President Commisioner, PT Telkom Satelit Indonesia (Telkomsat).
President Commisioner, PT Telkom Indonesia International (Telin).
President Commisioner, PT Infrastruktur Telekomunikasi Indonesia
(Telkom Infratel).
President Commisioner, PT Teltranet Aplikasi Solusi (Telkom Telstra).
Director of Network & IT Solution, Telkom.
Commissioner, PT Sigma Cipta Caraka (Telkom Sigma).
Commissioner, PT Telekomunikasi Selular (Telkomsel).
Director of Network, Telkomsel.
Commissioner, PT Daya Mitra Telekomunikasi (Mitratel).
President Commisioner, PT Pramindo Ikat Nusantara.
Executive General Manager of Enterprise Service Division, Telkom.
Commissioner, PT Infomedia Nusantara.
Vice President of Business Development, Telkom.
Deputy Executive General Manager Enterprise Service Division,
Telkom.

: Bandung, June 28, 1963
: 55 years old
: Indonesian
: Jakarta

Bachelor degree in Law from Padjajaran University, Bandung.
MBA degree from the Asian Institute Management Philippines -
Institute Management Telkom University.
Master of Law (LLM) from American University, Washington DC,
United States.

Basis of Appointment
Extraordinary General Meeting of Shareholders (EGMS) of Telkom
on December 19, 2014.

Career Experiences
2012 – 2014
2007 – 2012
2006 – 2007
2004 – 2006

Director of Human Capital Management, Telkomsel.
VP Regulatory Management, Telkom.
VP Legal & Compliance, Telkom.
General Manager Management Support, Telkom.

Abdus Somad Arief
Director of Wholesale &
International Service

Herdy Rosadi Harman
Director of Human Capital
Management

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Zulhelfi Abidin
Director of Network & IT Solution

Born
Age
Citizenship
Domicile

Educations
1987

1996

: Bukittinggi, January 1, 1962
: 56 years old
: Indonesian
: Jakarta

Bachelor degree in Informatics Engineering from Bandung
Institute of Technology.
Master degree in Computer Science from University of
Wollongong, Australia.

Basis of Appointment
Annual General Meeting of Shareholders (AGMS) of Telkom on April 21, 2017.

Career Experiences
2017 – 2018
2015 – 2017
2014 – 2015
2012 – 2015
2007 – 2014

President Commisioner, PT Infrastruktur Telekomunikasi Indonesia.
Director, BRI.
Senior Executive Vice President, BRI.
Commissioner, Bank BRI Syariah.
Head of Information Systems Technology Division, BRI.

Siti Choiriana
Director of Consumer Service

Born
Age
Citizenship
Domicile

Educations
1993

2005

: Magetan, May 28, 1970
: 48 years old
: Indonesian
: Jakarta

Bachelor degree in Electrical Engineering from Surabaya
Institute of Technology.
Master degree in Management from Surabaya Institute of
Technology.

Basis of Appointment
Annual General Meeting of Shareholders (AGMS) of Telkom on April 27, 2018.

Career Experiences
2017 – 2018
2013 – 2018
2016 – 2017
2016 – 2016
2013 – 2015
2012 – 2013

2009 – 2012

2007 – 2009

Commissioner, Telkom Sigma.
Executive Vice President of Enterprise Service Division, Telkom.
Chief of Commissioner, Patrakom.
Commissioner, AdMedika.
Commissioner, Finnet.
Deputy Executive Vice President of Enterprise Service Division,
Telkom.
General Manager Enterprise Finance & Banking of Enterprise
Service Division, Telkom.
General Manager Enterprise, Telkom’s Regional Division V
Surabaya.

MEMBER OF THE BOARD OF DIRECTOR ENDED IN 2018

Mas’ud Khamid
Director of Consumer Service

Born

Age

Citizenship

Domicile

Educations

1989

: Gresik, December 12, 1964

: 54 years old

: Indonesian

: Surabaya

Bachelor degree in Physics Engineering from Sepuluh November

Institute of Technology.

Basis of Appointment

Annual General Meeting of Shareholders (AGMS) of Telkom on April 21, 2017.

Career Experiences

2015 – 2017

2012 – 2017

2012 – 2014
2011 – 2012
2011 – 2012
2010 – 2011

2008 – 2010

2007 – 2008

Chief of Commissioner, Telkom Sigma.

Director of Sales, Telkomsel.

Commissioner, PT PINS Indonesia.
Executive General Manager, Telkom Flexi.
Commissioner, PT Metra Digital Media.
Executive General Manager Telkom West Area, Telkom.
Executive General Manager Telkom’s Regional Division II Jakarta.
Executive General Manager Telkom’s Regional Division V East Java.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

EDUCATION, TRAINING, SEMINAR, AND CONGRESS

To improve the competence of the Board of Directors, Telkom provides an opportunity for each member of the Board of Directors to

attend education and training throughout the 2018 financial year.

Director Name

Education/Training/Seminar/Congress

Time

Place

Alex Janangkih
Sinaga

World Economic Forum 2018 and Indonesia Investment
Day with Ministry of SOE

January 23-26, 2018

Davos, Switzerland

Speaker at SOE Coordination Meeting with Ministry of SOE March 12, 2018

Speaker at SOE Coordination Meeting with Ministry of SOE

April 25, 2018

Bogor

Solo

Keynote speech at Bandung ICT Expo 2018

September 27, 2018

Bandung

Speaker at SOE Coordination Meeting with Ministry of SOE

October 28, 2018

Bontang

Harry Mozarta
Zen

Speaker at 19th Malaysia-Indonesia International
Conference on Economics, Management and Accounting

October 17-18, 2018

Pontianak

Speaker at panel discussion: Contemporary Issues of
SAK Full IFRS at the XIII Congress of the Indonesian
Accountants Association

December 11, 2018

Jakarta

David Bangun

Executive Training of Strategic Merger & Acquisition

June 10-15, 2018

Wharton University,
USA

Privat Discussion McKinsey “The Digital Archipelago: How
Online Commerce is Driving Indonesia’s Economic”

August 29, 2018

Jakarta

Focus Group Discussion KADIN “Kebijakan Implementasi
E-Logistik Menuju era 4.0”

October 17, 2018

Jakarta

The Conference of Asean Federation of Engineering
Organization (CAFEO)

Round Table Forum Kementrian Kominfo “Outlook Industri
Telekomunikasi Indonesia 2019: Peluang dan Tantangan
serta Kebijakan Regulasinya”

November 14, 2018

Singapore

December 12, 2018

Jakarta

Dian Rachmawan

Panel Discussion HKI : “Digital Transformation To Support
Indonesia’s Fourth Industrial Revolution”.

July 26, 2018

Legian – Bali

Leadership Talk “Hidup di Era Digital Mulai 2020”

October 25, 2018

Workshop “Inovasi & Transformasi Digital”

October 31, 2018

National Seminar HKI “Mengintegrasikan Pembangunan
Infrastruktur dalam Konsep Pengembangan Kawasan
Industri Modern”

Applied Technology Innovation National Seminar of
Balikpapan National Polytechnic “Peningkatan Inovasi
Teknologi Terapan dengan Strategi Bisnis Menuju
Kemandirian dan Daya Saing”

CX Summit 2018 : Delivering the WOW Customer
Experience through Digital Transformation.

Leadership Development Program Pejabat Pimpinan
Tinggi Pratama, Ministry of Health.

November 1, 2018

December 12, 2018

December 13, 2019

Congress of SOE IT Forum: “Tata Kelola TI dan
Transformasi Digital dalam memperkuat Sinergi BUMN”.

December 19, 2019

November 3, 2018

Swiss-Bel Balikpapan

Auditorium Microsoft
Indonesia, Indonesia
Stock Exchange, Tower
2,18F

BPPT Building II 2nd
floor

Hall A, Conference
Room 3 JIEXPO
Kemayoran

The Ritz Carlton Mega
Kuningan Jakarta.

The Park Lane Hotel,
South Jakarta

Rafles Hotel, Mega
Kuningan, Jakarta

Education/Training/Seminar/Congress

Time

Place

Abdus Somad
Arief

Pacific Telecomunication Council

IT Infrastucture Summit 2018

January 2018

March 2018

Bali Annual Telkom International Conference (BATIC) 2018

April 2018

Asia Pacific Satellite Conference (APSAT) 2018

July 2018

Herdy Rosadi
Harman

Keynote Speaker in Rakortas Directorate of HR and Law
of PT Pegadaian, “Pengelolaan Human Capital pada era
Transformasi”.

February 7, 2018

Hawaii

Jakarta

Bali

Jakarta

Gresik

Keynote Speaker in the 14th Plenary Meeting of AFEBI
(Asosiasi Fakultas Ekonomi dan Bisnis Indonesia),
“Mempersiapkan Fakultas Ekonomi dan Bisnis dalam
menghadapi Tantangan Revolusi Industri 4.0”.

Keynote Speaker in Technical Coordination Meeting of the
BPK-RI HR Manager, “Tantangan Pengelola SDM di Era
Digital”

Keynote Speaker in Ministry of Defense, “Sharing
Pengelolaan SDM”

April 18-20, 2018

Pekanbaru

May 2, 2018

Padang

May 23, 2018

Jakarta

Keynote Speaker in KPK, “Sharing Pengelolaan SDM”

June 4, 2018

July 4, 2018

Jakarta

Bangkalan

Keynote Speaker in Nasional Seminar of Faculty of
Economy and Business, Trunojoyo Madura University,
“Tantangan dan peluang Fakultas Ekonomi dan Bisnis
menghadapi era Digital”

Keynote Speaker in Ikatan Internal Auditor (IIA) Seminar,
“Managing Risk in Talent Management”

Keynote Speaker in the Indonesia Compentency National
Congress, “Transformasi peran praktisi SDM dalam
menghadapi Revolusi Industri 4.0”

Keynote Speaker in Ministry of Finance of RI’s Culture
Festival, “Transformation Story: Transformasi Mindset dan
Produktivitas di Era Digital”

August 29, 2018

Bali

November 21, 2018

Jakarta

December 4, 2018

Jakarta

Zulhelfi Abidin

Bali Annual Telkom International Conference (BATIC) 2018

April 2018

Bali

Workshop Leading 5G Innovations by ZTE

April 2, 2018

Workshop Security Awarness

April 19, 2018

Strategic Discussion on Global Telco Industry Update

July 4, 2018

Four Season Hotel
Jakarta

The Westin Hotel
Jakarta

Telkom Landmark
Tower, Jakarta

Sharing and Open Discussion in the Context of Hari
Kebangkitan Nasional with theme “Pemberdayaan Anak
Muda di BUMN Digital”

Inspiring Talk at MMT Graduation ITS with theme “How
Millennials are Changing the Rule of Business”

Speaker at KOWANI (Kongres Wanita Indonesia)
with theme “Transforming Society Through Women
Empowerment”

Speaker at SOE Coordination Meeting with theme “SOE
Digital Transformation”

May 23, 2018

Jakarta

August 24, 2018

Surabaya

September 13, 2018

Yogyakarta

October 28, 2018

Bontang

Speaker at ITS Business Management Seminar with theme
“Big Data Analytics & Artificial Intelligent in Business”

November 3, 2018

Surabaya

Siti Choiriana

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportDIRECTORS AFFILIATIONS AND RELATIONSHIPS

In accordance with the principle of transparency in the implementation of good corporate governance or GCG, Telkom discloses

the affiliation of members of the Board of Directors with fellow Directors, Commissioners and major and controlling shareholders,

including the names of affiliated parties.

Financial Relationship with

Family Relationship with

Directors (BOD)

BOC

BOD

Controlling
Shareholder(1)

BOC

BOD

Controlling
Shareholder(1)

Yes

Alex Janangkih Sinaga

Harry Mozarta Zen

David Bangun

Dian Rachmawan

Abdus Somad Arief

Herdy Rosadi Harman

Zulhelfi Abidin

Siti Choiriana*

Mas’ud Khamid**

√

Remarks:
(1) Controlling Shareholder in this matter is the Indonesian government represented by the Ministry of State Owned Enterprises as the primary

shareholder.
*
In position since April 27, 2018.
** In position until April 20, 2018.

For Telkom, employees are the most important business partners. Currently, Telkom employees work professionally throughout

2018 achieving its target and vision to transform into Digital Telecommunication Company. Telkom continues to build employee

digital competence and culture.

EMPLOYEE PROFILE

47.0%

Total Employees

Telkom Employees

Subsidiaries Employees

53.0%

12.4%

Education

Post Graduates (Master and Doctorate)

University Graduates

Diploma Graduates

Pre University
Preuniversity

56.5%

23.0%

Age

< 30 years

30-45 years

> 45 years

Gender

Male

Female

35.4%

74.9%

15.1%

16.0%

41.6%

25.1%

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportAt the end of 2018, TelkomGroup has 24,071 employees consisting of 12,765 employees of the parent company and 11,306 employees

of subsidiaries. Continuing efforts to revitalize and improve HR efficiency in previous years, total employess in parent company

employees in 2018 was 8.5% lower than in 2017.

Telkom Employees

Subsidiaries employees

Total

Total Employees in 2016-2018

2018

2017

2016

12,765

11,306

24,071

13,956

10,109

24,065

14,933

8,943

23,876

TOTAL EMPLOYEES BASED ON EDUCATION LEVEL AND AGE DISTRIBUTION

In 2018, Telkom has 8,027 employees or 62.9% with undergraduate and postgraduate background. Meanwhile most of subsidiaries

have bachelor and postgraduate background with 8,563 employees or 75.7%.

In terms of age, most of TelkomGroup’s employees are dominated by employees under the age of 45 which are equal to 58.4% or

14,062 employees. The composition shows that TelkomGroup has good age and education employee composition background and

is sufficient for internal regeneration processes.

Total Employees Based on Education in 2016-2018

2018

2017

2016

Telkom Subsidiaries

Total

Preuniversity

Diploma

Undergraduate

Postgraduate
(Master and Doctorate)

2,484

2,254

5,943

2,084

1,146

1,597

3,630

3,851

7,666

13,609

897

2,981

15.1

16.0

56.5

12.4

4,077

4,228

13,017

2,743

16.9

17.6

54.1

11.4

4,523

4,478

12,324

2,551

18.9

18.8

51.6

10.7

Total

12,765

11,306

24,071

100.0

24,065

100.0

23,876

100.0

Total Employees Based on Age in 2016-2018

2018

2017

2016

Telkom Subsidiaries

Total

Below 30
Between 30-45

Above 45

Total

1,942

2,261

8,562

3,606

6,253

5,548

8,514

1,447

10,009

23.0

35.4

41.6

4,572

8,490

11,003

19.0

35.3

45.7

3,512

8,514

11,850

14.7

35.7

49.6

12,765

11,306

24,071

100.0

24,065

100.0

23,876

100.0

TelkomGroup has several levels of position, they are senior management, middle management, supervisors, and other levels.

In Telkom, the largest composition in 2018 is in the supervisor level with 55.3% or 7,063 employees. In subsidiaries, the largest

composition is in other level, that is equal to 45.9% or 11,050 employees.

In terms of gender, total male employees are 18,021 employees higher than female employees of 6,050 employees. Telkom does not

differentiate between male and female employees in terms of employment opportunities, but male interest is greater than women

to work at Telkom, especially for types of field work.

Total Employees Based on Position in 2016-2018

2018

2017

2016

Telkom Subsidiaries

Total

Senior Management

Middle Management

Supervisor

Others

Total

211

4,092

7,060

1,402

192

2,001

3,990

5,123

403

6,093

11,050

6,525

1.7

25.3

45.9

27.1

655

5,585

11,547

6,278

2.7

23.2

48.0

26.1

620

5,290

12,044

5,922

2.6

22.2

50.4

24.8

12,765

11,306

24,071

100.0

24,065

100.0

23,876

100.0

Total Employees Based on Gender in 2016-2018

2018

2017

2016

Telkom

Subsidiaries

Total

Male

Female

Total

9,786

2,979

8,235

3,071

18,021

6,050

74.9

25.1

18,231

5,834

75.8

24.2

18,311

5,565

76.7

23.3

12,765

11,306

24,071

100.0

24,065

100.0

23,876

100.0

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportEQUAL OPPORTUNITIES IN THE COMPETENCY DEVELOPMENT

TelkomGroup continuously develops employee competencies, especially the ability to innovate and to develop creativity in order

maximize their contribution for Telkom’s business. In general, Telkom is committed to providing equal opportunities for every

employee to have a competency development program.

In 2018, Telkom has spent a total of Rp130.6 billion in competency development program, an increase of Rp109.6 billion or 19.2%

compared to 2017. The amount does not include education scholarship funds.

Type of Competency
Development Program

Training

Certification

Educational Scholarship

2018

2017

2016

Telkom Subsidiaries

Total

5,509

9,773

15,282

91.6

23,034

96.7

26,381

98.5

717

623

1,340

8.0

0.4

657

133

2.8

0.5

286

118

1.1

0.4

Total

6,298

10,396

16,694

100.0

23,824

100.0

26,785

100.0

Great People Trainee Program

Telkom’s share structure consists of 1 Series A Dwiwarna share, and 99,062,216,599 Series B shares (common stock) with total

issued and fully paid-up capital of 99,062,216,600 shares. A share of Series A Dwiwarna shares belongs to the Government of the

Republic of Indonesia.

Composition of Shareholders Telkom on December 31, 2018

Series A Dwiwarna

Series B (Common Stock)

Indonesian Government

Public

Total

51,602,353,560

47,459,863,039

99,062,216,599

52.09

47.91

100.0

Telkom’s shareholder composition as of December 31, 2018 as follows:

1. Shareholders with more than 5% Ownership (Major Shareholder/Controller)

Type of Share

Individual or Group Identity

Total Shares

Percentage Owned

Seri A

Seri B

Government

51,602,353,560

52.09

2. Ownership of Shares by Directors and Commissioners

On December 31, 2018 there was no Commissioner or Director which has more than 1.0% of Telkom shares.

BOD and BOC

Total Shares

Percentage Owned

Commissioners

Directors

Total

Hendri Saparini

Rinaldi Firmansyah

Alex Janangkih Sinaga

Harry Mozarta Zen

Dian Rachmawan

Abdus Somad Arief

Herdy Rosadi Harman

David Bangun

Siti Choiriana

654,505

454,113

1,683,359

689,492

1,575,562

1,515,022

1,514,720

1,000

540

8,088,313

<0.01

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report3. Shareholders with Less than 5% Ownership
Telkom Shareholders with Individual Ownership Less than 5%, on December 31, 2018.

Group

Common Stocks Owned

Ownership Percentage of
Outstanding Common Stock
(%)

Foreign

Business/Institution

Individual

Local

Business/Institution

Limited liability

Mutual fund

Insurance company

Pension funds

Others

Individual

Total

4. Percentage of Shares Owned Domestic and Foreign

36,389,952,660

21,534,800

2,795,328,652

2,542,271,749

3,170,313,097

1,564,740,600

109,623,249

866,098,232

47,459,863,039

36.73

0.02

2.82

2.56

3.20

1.58

0.11

0.87

47.91

On December 31, 2018, a total of 70,803 shareholders, including the Government, registered as holders of common stock, including
36,411,487,460 common stock owned 2,157 foreign shareholders. Thus 36.76 % of Telkom’s shares were owned by foreign

shareholders and the rest was controlled by domestic shareholders. There were 83 ADS shareholders owning 68,824,067 ADS (1

ADS equivalent to 100 common stock).

5. List of 20 Largest Public Shareholders

Here is a list of the 20 largest public shareholders until December 31, 2018.

Institution

Percentage

10.

11.

12.

13.

14.

15.

16.

17.

BPJS Ketenagakerjaan

GIC

Lazard Asset Mgt

BlackRock Investment Mgt - Index

Vanguard Group

Vontobel Asset Mgt

Employees Provident Fund Board

Eastspring Investments

Matthews International Capital Mgt

Norges Bank Investment Mgt

Taspen

American Depositary Receipts

AIA Indonesia

Schroder Investment Mgt

Comgest

Abu Dhabi Investment Authority (ADIA)

JPMorgan Asset Mgt (JF Asset Mgt)

18. Mandiri Investasi

19.

State Street Global Advisors

20. Monetary Authority of Singapore

3.03

2.28

2.10

1.99

1.69

1.38

1.24

1.18

0.80

0.78

0.75

0.74

0.73

0.62

0.61

0.57

0.56

0.53

0.52

0.46

Government of Indonesia
52.09%

Public
47.91%

100%

65%

100%

30.95%

0.01%

99.9%

51%

49%

60%

51%

49%

60%

51%

0.01%

30.4%

52%

48%

99.9%

60%

99.9%

PT. Satelit
Multimedia
Indonesia

Notes:

Direct Subsidiaries (consolidated)

Indirect Subsidiaries (consolidated)

Unconsolidated

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report100%

100%

24%

100%

51%

100%

55%

100%

USA

70%

MALAYSIA

70%

15.67%

25%

4.33%

SUBSIDIARIES WITH DIRECT OWNERSHIP

Company

Share Ownership

Business Field

Operational
Status

PT Telekomunikasi

65%

Telecommunication

Operating

Total Asset
(Rp billion)

82,650

Selular

Jakarta, Indonesia

PT Dayamitra

Telekomunikasi

Jakarta, Indonesia

PT Multimedia

Nusantara

Jakarta, Indonesia

- provides

telecommunication

facilities and mobile

celluler services

using Global

Systems for Mobile

Communication (GSM)

100%

Telecommunication

Operating

13,053

100%

Network

Operating

16,524

telecommunication

services and

multimedia

PT Telekomunikasi

100%

Telecommunication

Operating

10,408

Indonesia

International

Jakarta, Indonesia

PT Telkom Akses

Jakarta, Indonesia

100%

Construction, service

Operating

4,244

and trade in the field

telecommunication

Address

Telkom Landmark
Tower 1st -20th floor,
The Telkom Hub.

Jl. Jend Gatot

Subroto Kav. 52

Jakarta, 12710,

Indonesia

Telkom Landmark
Tower 25th-27th floor,
The Telkom Hub.

Jl. Jend Gatot

Subroto Kav. 52

Jakarta, 12710,

Indonesia

Telkom Landmark
Tower 41st floor,
The Telkom Hub.

Jl. Jend Gatot

Subroto Kav. 52

Jakarta, 12710,

Indonesia

Telkom Landmark
Tower 16th-17th floor,
The Telkom Hub.

Jl. Jend Gatot

Subroto Kav. 52

Jakarta, 12710,

Indonesia

Telkom Building,

West Jakarta. Jl.

S. Parman Kav.

8 West Jakarta,

11440, Indonesia

PT Graha Sarana

100%

Leasing of offices and

Operating

5,805

Multimedia Tower.

Duta

Jakarta, Indonesia

providing building

management and

maintenance services,

civil consultant and

developer

Jl. Kebon Sirih No.

10, Central Jakarta,

10110, Indonesia

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCompany

Share Ownership

Business Field

Operational
Status

PT PINS Indonesia

Jakarta, Indonesia

100%

Telecommunication

Operating

construction and

services

Total Asset
(Rp billion)

4,004

PT Infrastruktur

Telekomunikasi

Indonesia

Jakarta, Indonesia

PT Telkom

Indonesia Satelit

Jakarta, Indonesia

PT Metranet

Jakarta, Indonesia

PT Jalin

Pembayaran

Nusantara

Jakarta, Indonesia

PT Napsindo

Primatel

Internasional

Jakarta, Indonesia

Address

Telkom Landmark
Tower 42nd floor,
The Telkom Hub.

Jl. Jend Gatot

Subroto Kav. 52

Jakarta, 12710,

Indonesia

Telkom Landmark
Tower 19th floor,
The Telkom Hub.

Jl. Jend Gatot

Subroto Kav. 52

Jakarta, 12710,

Indonesia

Telkom Landmark
Tower 21st floor,
The Telkom Hub.

Jl. Jend Gatot

Subroto Kav. 52

Jakarta, 12710,

Indonesia

100%

Construction,

Operating

3,351

service and trade

in the field of

telecommunications

100%

Telecommunication

Operating

3,192

- provides satellite

communication

system, services and

facilities

100%

Multimedia portal

Operating

782

Mulia Business

service

100%

Payment services -

Operating

298

principal, switching,

clearing and

settlement activities

Park, J Building. Jl.

Letjen MT Haryono

Kav. 58 – 60

Pancoran, Jakarta,

12780, Indonesia

Dea Tower, 1st
Tower, 8th floor. Jl.
Mega Kuningan

Barat IX Kav. E.4.3

No. 1 Jakarta,

12950, Indonesia

60%

Telecommunication

Ceased Operations

– provides Network

on January 13,

Access oint (NAP),

2006

Voice Over Data (VOD)

and other related

services

Company

Share
Ownership

Business Field

Operational
Status

Total Asset
(Rp/billion)

Description

PT Sigma Cipta

100%

Information technology

Operating

7,785

Caraka

Tangerang,

Indonesia

service - system

implementation and

integration service,

outsourcing and

software license

maintenance

Telkom Landmark Tower
23rd floor, The Telkom Hub.
Jl. Jend Gatot Subroto

Kav. 52 Jakarta, 12710,

Indonesia

Telekomunikasi

100%

Telecommunication

Operating

3,413

Maritime Square, #09-

Indonesia

International Pte.

Ltd.,

Singapore

PT Infomedia

Nusantara

Jakarta, Indonesia

100%

Data and information

Operating

2,389

PT Infomedia Nusantara

63 Harbour Front Center,

Singapore - 099253

services - provides

telecommunication

information services

and other information

services in the form

of print and electronic

media and call center

services

Head Office. Jl. RS.

Fatmawati 77-81 Jakarta,

12150, Indonesia

PT Telkom

55%

Service for property

Operating

2,128

Telkom Landmark Tower,

Landmark Tower

Jakarta, Indonesia

development and

management

PT Metra Digital

100%

Directory information

Operating

1,339

Media

Jakarta, Indonesia

services

PT Finnet Indonesia

60%

Information technology

Operating

1,011

Jakarta, Indonesia

services

The Telkom Hub.

Jl. Jend Gatot Subroto

Kav. 52 Jakarta, 12710,

Indonesia

Telkom Landmark Tower
18th floor, The Telkom Hub.
Jl. Jend Gatot Subroto

Kav. 52 Jakarta, 12710,

Indonesia

Bidakara Tower 1, 12th
floor. Jl. Jend. Gatot

Subroto Kav. 71-

73, South Jakarta, 12870

Indonesia

TS Global Network

70%

Satellite service

Operating

832

Teknorat ½ street,

Sdn. Bhd

Petaling Jaya,

Malaysia

Cyber 3, 6300 Cyberjaya,

Selangor Darul Ehsan,

Malaysia

Telekomunikasi

100%

Telecommunication

Operating

1,185

Suite 905, 9/F, Ocean

Indonesia

International Ltd.,

Hong Kong

PT Metra Digital
Investama

Jakarta, Indonesia

Operating

979

100%

Trading and/or providing
service related to

information and

technology, multimedia,

entertainment and

investment

Centre, 5 Canton Road,

Tsim Sha Tsui, Kowloon,

Hong Kong

Telkom Landmark Tower,
The Telkom Hub.
21st floor. Jl. Jend Gatot
Subroto Kav. 52 Jakarta,

12710, Indonesia

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCompany

Share
Ownership

Business Field

Operational
Status

Total Asset
(Rp/billion)

Description

Telekomunikasi

100%

Telecommunication

Operating

677

Indonesia

International S.A.,

Dili, Timor Leste

PT Nusantara

100%

Service and trading

Operating

290

Sukses Investasi

Jakarta, Indonesia

PT Administrasi

100%

Health insurance

Operating

346

Medika

Jakarta, Indonesia

administration services

PT Melon

100%

Digital content exchange

Operating

457

Jakarta, Indonesia

hub services

Timor Plaza 4th Floor,
Rua Presidente Nicolao

Lobato, Comoro, Dili

Timor Leste

Multimedia Tower,
Annex Building 2nd
floor. Jl. Kebon Sirih No.

10-12, Central Jakarta,

Indonesia

STO Telkom Gambir
C Building 3rd floor. Jl.
Medan Merdeka Selatan

No. 12, Central Jakarta,

10110, Indonesia

Telkom Landmark Tower
45th floor, The Telkom Hub.
Jl. Jend Gatot Subroto

Kav. 52 Jakarta, 12710,

Indonesia

PT Metraplasa

60%

Network and

Operating

168

Mulia Business Park, J

Jakarta, Indonesia

e-commerce services

Building. Jl. Letjen MT

Haryono Kav. 58 – 60

Pancoran, Jakarta 12780,

Indonesia

PT Graha Yasa

51%

Tourism service

Operating

250

Jl. Cimanuk No. 33

Selaras

Jakarta, Indonesia

Bandung

Telekomunikasi

100%

Telecommunication

Operating

115

Level 4, 241

Indonesia

International

Australia Pty. Ltd.,

Sydney, Australia

Commonwealth Street

Surry Hills NSW 2010,

Australia

PT Nutech Integrasi

60%

System integrator

Operating

Jl. Tanjung Barat Raya,

Jakarta, Indonesia

No. 17, Pasar Minggu,

South Jakarta, 12510,

Indonesia

Telekomunikasi

100%

Telecommunication

Operating

800 Wilshire Boulevard,

Indonesia

International Inc.,

Los Angeles, USA

PT Satelit

Multimedia

Indonesia

Jakarta, Indonesia

100%

Satellite service

Operating

Suite 620 Los Angeles,

California 90017

Telkom Landmark Tower
41st floor, The Telkom Hub.
Jl. Jend Gatot Subroto

Kav. 52 Jakarta, 12710,
Indonesia

Share
Ownership

Business Field

Operational
Status

Total Asset
(Rp/billion)

Description

Telekomunikasi

70%

Telecommunication

Operating

Suite 7-3, Level 7, Wisma

Indonesia

International

(Malaysia) Sdn.

Bhd.

Kuala Lumpur,

Malaysia

UOA II No. 21, Jalan

Pinang, KLCC, 50450,

Kuala Lumpur, Malaysia.

PT Swadharma

51%

System Integrator

Operating

460

St Arteri JORR, No. 70,

Sarana Informatika

Jakarta, Indonesia

Services

Jati Melati, Pondok

Melati, Bekasi,

Indonesia.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
CHRONOLOGY OF STOCKS REGISTRATION

Since November 14, 1995, Telkom shares have been listed and traded in Indonesia Stock Exchange (IDX) and New York Stock

Exchange (NYSE) with tickers of TLKM and TLK, respectively.

Date

Corporate Actions

Composition of Share Ownership

Government of
Republic of Indonesia

Public

13/11/1995

Pre Initial Public Offering

8,400,000,000

Sale of Shares Held By

Government

Telkom Right Issue

Composition of Share Ownership

11/12/1996

Government Shares Block Sale

Composition of Share Ownership

15/05/1997

Government Distributes Incentive

Shares to All Public Shareholders

Composition of Share Ownership

7/5/1999

Government Shares Block Sale

Composition of Share Ownership

2/8/1999

Distribution of Shares Bonus

(933,334,000)

933,334,000

7,466,666,000

(388,000,000)

7,078,666,000

933,333,000

1,866,667,000

388,000,000

2,254,667,000

(2,670,300)

2,670,300

7,075,995,700

(898,000,000)

6,177,995,700

2,257,337,300

898,000,000

3,155,337,300

20.0

24.2

33.8

(Issuance) (Each 50 Shares Gets 4

494,239,656

252,426,984

Shares)

Composition of Share Ownership

7/12/2001

Government Shares Block Sale

Composition of Share Ownership

16/07/2002

Government Shares Block Sale

Composition of Share Ownership

1/10/2004

Stock Split with Ratio 1:2

21/12/2005

Shares Buy Back Program (I)(1)

6,672,235,356

(1,200,000,000)

5,472,235,356

(312,000,000)

5,160,235,356

10,320,470,712

Composition of Share Ownership

10,320,470,712

29/06/2007

Shares Buy Back Program (II)(2)

Composition of Share Ownership

10,320,470,712

20/06/2008

Shares Buy Back Program (III)(3)

Composition of Share Ownership

10,320,470,712

19/05/2011

Shares Buy Back Program (IV)(4)

Composition of Share Ownership

10,320,470,712

14/06/2013

Transfer of Shares Buy Back

3,407,764,284

1,200,000,000

4,607,764,284

312,000,000

4,919,764,284

9,839,528,568

(211,290,500)

9,628,238,068

(215,000,000)

9,413,238,068

(64,284,000)

9,348,954,068

(520,355,960)

8,828,598,108

33.8

45.7

48.8

48.3

47.7

47.5

46.1

Program III to Employees through

59,811,400

0.3

ESOP Program

Composition of Share Ownership

10,320,470,712

8,888,409,508

46.3

Date

Corporate Actions

30/07/2013

Transfer of Shares Buy Back

Program I through Private

Placement

Composition of Share Ownership

2/9/2013

Stock Split with Ratio 1:5

13/06/2014

Transfer of Shares Buy Back

Program II through Private

Placement

Composition of Share Ownership

Government of
Republic of Indonesia

Public

211,290,500

10,320,470,712

51,602,353,560

9,099,700,008

45,498,500,040

46.9

1,075,000,000

Composition of Share Ownership

51,602,353,560

46,573,500,040

47.4

21/12/2015

Transfer of Remaining Shares Buy

Back Program III through Private

22,363,000

Placement

Composition of Share Ownership

51,602,353,560

46,595,863,040

47.5

29/06/2016

Transfer of Remaining Shares Buy

Back Program IV through Private

864,000,000

Placement

Composition of Share Ownership

51,602,353,560

47,459,863,040

2017

No corporate action

Composition of Share Ownership

51,602,353,560

47,459,863,040

47.9

02/07/2018

Transfer of Treasury Stock

throught Withdrawal by way of

Capital Reduction

Composition of Share Ownership

1,737,779,800

51,602,353,560

47,459,863,040

47.9

Remarks:
(1)

First shares buy back program began on December 21, 2005 (simultaneously with the EGMS when the program was approved) and ended in
June 2007.

(2) Second shares buy back program began on June 29, 2007 (simultaneously with the EGMS when the program was approved) and ended in

June 2008.

(3) Third shares buy back program began on June 20, 2008 (simultaneously with the EGMS when the program was approved) and ended in

December 2009.

(4) Fourth shares buy back program began on May 19, 2011 (simultaneously with the AGMS when the program was approved) and ended in

November 2012.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
CHRONOLOGY OF OTHER SECURITIES REGISTRATION

On July 16, 2002, Telkom issued bonds for the first time with a nominal value of Rp1,000 billion with a term of 5 (five) years and

traded on Surabaya Stock Exchange. Five years later, on July 16, 2007, Telkom paid all of the bonds payable. Telkom issued a second

bond on June 25, 2010, with a value of Rp1,005 billion for Series A with a period of 5 (five) years and Rp1,995 billion for Series B with

a term of 10 (ten) years. These bonds were listed on the Indonesia Stock Exchange (IDX). The Company has repaid the Series A Bonds

that due on July 6, 2015.

On June 16, 2015, Telkom issued Telkom Shelf Registered Bond I Trance I with each amounting to Rp2,200 billion for Series A

with a term of 7 (seven) years, Rp2,100 billion for Series B with a term of 10 (ten) years, Rp1,200 billion for Series C with a term

of 15 (fifteen) years, and Rp1,500 billion for Series D with a term of 30 (thirty) years. These bonds were listed on Indonesia

Stock Exchange (IDX). On September 26, 2018, the Bondholders General Meeting (Telkom Bond II 2010 ), approved the Trustee

replacement from PT Bank CIMB Niaga Tbk to PT Bank Tabungan Negara (Persero) Tbk.

Amount
(Rp million)

Issuance
Date

Maturity
Date

Period
(year)

Interest
Rate

Underwriter

Trustee

1,000,000

July 16, 2002

July 16, 2007

1,005,000 June 25, 2010

July 6, 2015

17.0% PT Danareksa

Sekuritas

9.60% PT Bahana

1,995,000 June 25, 2010

July 6, 2020

2,200,000 June 23, 2015

June 23, 2022

2,100,000 June 23, 2015

June 23, 2025

Sekuritas;
PT Danareksa
Sekuritas;
PT Mandiri
Sekuritas

10.20% PT Bahana
Sekuritas;
PT Danareksa
Sekuritas;
PT Mandiri
Sekuritas

9.93% PT Bahana
Sekuritas;
PT Danareksa
Sekuritas;
PT Mandiri
Sekuritas;
PT Trimegah
Sekuritas

10.25%

PT BNI Tbk,
PT BRI Tbk

PT Bank
CIMB
Niaga Tbk

PT Bank
Tabungan
Negara
(Persero)
Tbk

PT Bank
Permata
Tbk

Settlement
Date

July 16, 2007

July 6, 2015

1,200,000 June 23, 2015

June 23, 2030

10.60%

1,500,000 June 23, 2015

June 23, 2045

11.00%

Bond Name

Telkom Bond I
2002

Telkom Bond
II 2010 Series
A

Telkom Bond
II 2010 Series
B

Telkom Shelf
Registered
Bond I 2015
Series A

Telkom Shelf
Registered
Bond I 2015
Series B

Telkom Shelf
Registered
Bond I 2015
Series C

Telkom Shelf
Registered
Bond I 2015
Series D

Remark:

(1) Telkom Shelf Registered Bond 1 Telkom 2015 Series A was issued June 16, 2015 but the official sale transaction was on June 23, 2015

hundred fifty eight billion Rupiah) and Medium Term Notes Sharia Ijarah I Telkom Year 2018 with Ijarah of Rp742,000,000,000 (seven

hundred forty two billion Rupiah). Both MTN are issued on 3 series. The Monitoring Agent for the MTN issuance is PT Bank Tabungan

Negara (Persero) Tbk.

Notes

Currency
Principal
(Rp million)

Issuance
Date

Maturity
Date

Term
(Year)

MTN I Telkom

262,000 September 4,

September 14,

Year 2018

seri A

2018

2019

MTN I Telkom

200,000 September 4,

September 4,

Year 2018

Series B

2018

2020

MTN I Telkom

296,000 September 4,

September 4,

Year 2018

Series C

2018

2021

Interest
Rate per
Annum
(%) /
Installment
Payment
per Year
(Rp million)

Arranger

Monitoring
Agent

Settlement
Date

7.25%

PT Bahana

PT Bank

Sekuritas,

Tabungan

PT BNI

Negara

8.00%

Sekuritas,

(Persero)

PT CGS-CIMB

Tbk

8.35%

Sekuritas
Indonesia,

PT Danareksa

Sekuritas and

PT Mandiri

Sekuritas

MTN Syariah

264,000 September 4,

September 14,

Rp19,000

PT Bahana

PT Bank

Ijarah I

Telkom Year

2018 Series A

2018

2019

MTN Syariah

296,000 September 4,

September 4,

Rp24,000

Ijarah I

Telkom Year

2018 Series B

2018

2020

MTN Syariah

182,000 September 4,

September 4,

Rp15,000

Ijarah I

Telkom Year

2018 Series C

2018

2021

Sekuritas,

Tabungan

PT BNI

Negara

Sekuritas,

(Persero)

PT CGS-CIMB

Tbk

Sekuritas

Indonesia,

PT Danareksa

Sekuritas and

PT Mandiri

Sekuritas

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNAME AND ADDRESS OF INSTITUTIONS AND/OR
SUPPORTING CAPITAL MARKET PROFESSION

Address

Service

External
Auditor/
Public
Acountant

Supporting Capital

Market Profession

KAP Purwantono,
Sungkoro & Surja
(a member of Ernst
& Young Global
Limited)

Efek

Bursa
Indonesia
Building, 2nd Tower, 7th floor
Jl. Jend. Sudirman Kav. 52-
53 Jakarta - 12190

Securities
Administration
Bureau

PT Datindo
Entrycom

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

Trustee

PT Bank Tabungan
Negara (Persero)
Tbk

PT Bank Permata
Tbk.

Menara Bank BTN Jl. Gajah
Mada No. 1 Jakarta 10130

WTC II Building 28th floor
Jl. Jend Sudirman Kav. 29-
31 Jakarta 12920

Conducting Integrated Audit
of PT Telkom
Indonesia
(Persero) Tbk (Telkom) and
the General Audit of financial
statements of subsidiaries.
Publishing Consent Letter.

Acting as a depository
(Custodian) of
institution
stock
Telkom’s
traded on the
Indonesia
Stock Exchange.

common

Representing the interests
of bond holders with the
Company for Bond II Telkom.

Representing the interests
of Bond holders with the
Company for Telkom Shelf
Registered Bond I.

2018 Fee

Rp54,555
million

Assignment

Period

Since 2012

Rp136
million

Since 1995

Since
September
2018

Rp75 million

Since 2015

PT Bank CIMB Niaga
Tbk

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

Representing the interests
of Bond holders with the
Company for Telkom II.

Rp75 million

Until
September
2018

Central
Custodian

PT Kustodian
Sentral Efek
Indonesia

Rating Agency

PT Pemeringkat
Efek Indonesia

Moody’s

Fitch

ADS Custodian
Bank

The Bank of New
York Mellon
Corporation

Official Service
Agency in The
United State

Puglisi and
Associates

Legal Counsel

Hadiputranto,
Hadinoto &
Partners

Notary

Notaris/PPAT
Ashoya Ratam, SH,
MKn

Indonesia

Bursa
Efek
Building, Tower 1, 5th floor
Jl. Jend. Sudirman
Kav. 5253
Jakarta - 12190

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

Moody’s Investors Service
Singapore Pte. Ltd, 50
Raffles Place #23-06,
Singapore Land Tower,
Singapura - 048623

Fitch (Hong Kong) Limited
19/F Man Yee Building 68
Des Voeux Road Central,
Hong Kong + 852 2263 9963

Corporate Headquarters
240 Greenwich Street
New York, NY 10286
United States
+1 212 495 1784

850 Library Ave # 204,
Newark
United States - 19711

Pacific
Place,
Century
Level 35 Sudirman Central
Business District Lot. 10
Jl. Jend. Sudirman Kav. 52-
53 Jakarta 12190, Indonesia

Jl. Suryo No. 54, Kebayoran
Baru, Jakarta 12180

Rp10 million

Since 1995

- Providing

central
depository and settlement
of stock transactions on
the Stock Exchange.
services

and
settlement of securities
transactions, distribution
of corporate action results.

- Storage

Providing rating on credit
risk of Telkom bond issuance.

Rp150
million

Since 2012

Provides ratings on Telkom
credit risk.

US$70,000

Since 2018

Provides ratings on Telkom
credit risk.

US$65,000

Since 2018

Acting as a depository
institution
(Custodian) of
ADS shares traded on the
NYSE.

Acting as an authorized
representative
in the US
with regard to securities in
accordance with the law and
regulations.

Since 1995

US$500

Since 2012

Acting as capital market
legal counsel

Rp225
million

Since 1995

Acting as notary

Rp25 million

Since 2012

MANAGEMENT
DISCUSSION AND
ANALYSIS

94
114
120
134
135
136
137
139
139

Operational Overview by Segment
Marketing Overview
Comprehensive Financial Performance
Solvency
Capital Structure
Capital Expenditure
Material Commitment for Capital Expenditure
Receivables Collectability
Material Information and Fact After Accountant
Reporting Date
140 Macroeconomy
141
143
144
145
145
146
146

Indonesia Telecommunication Industry
Business Prospects and Sustainability of the Company
Comparison of Initial Year Target and the Realization
Target or Projections For the Following Year
Dividend
Realization of Public Offering Fund
Material Transaction Information Containing Conflict
of Interest, Transaction with Affiliated Parties,
Investment, Divestment and Acquisition
Changes in Regulation
Changes in Accounting Policy

147
147

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Telkom Integrated Operation Center, focus on
delivering quality network, service performance,
and customer experience for all Telkom customers.

E
L
I
B
O
M

E
S
I
R
P
R
E
T
N
E

R
E
M
U
S
N
O
C

&
E
L
A
S
E
L
O
H
W

S
S
E
N
I
S
U
B
L
A
N
O
T
A
N
R
E
T
N

S
R
E
H
T
O

• Offers mobile voice, SMS, broadband

services and digital services.

• Nationwide coverage with more

than 189,000 BTS.

• The

largest

cellular network

operator in Indonesia.

• Offers

end-to-end

integrated

ICT and Smart Enabler solutions

to corporate and

institutional

customers.

• Market leader serving customers

of 1,900 corporates, 300,416 SMBs

and 979 government institutions.

• Offers high-speed internet, fixed

line, and IPTV services through the

IndiHome brand with 5.1 million

subscribers.

• Dominates the largest market share

in Indonesia of fixed broadband and

IPTV in Indonesia.

• Offering

telecommunication

services, tower,

infrastructure,

data centre, cloud and digital

platform

for

domestic

international carrier and provider.

• Offers

various digital

lifestyle

services such as music, video,

e-payment,

and

e-commerce

platform.

• Focused on creating unique and

different digital experiences.

• Building management,

property,

and company’s asset optimalization

service.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

21,054
16%

85,338
65%

Revenue
(Rp Billion)

Beban ( Rp Milliar )Expenses

(Rp Billion)

14,624
17%

1,042
1%

11,739
13%

40,041
45%

21,717
24%

10,084
8%

13,891
11%

130
0%

Capital Expenditure
(Rp Billion)

5,325
16%

6,321
19%

18
0%

6,958
21%

14,373
44%

Mobile

WIB
WIB

Enterprise
Enterprise

Lain-lain

Consumer

The following table shows an overview of the performance of each of the business segments of TelkomGroup from 2016 to 2018.

Telkom’s Results of Operation By
Segment

Growth
2018-2017
(%)

Years ended December 31,

2018

2017

2016

(Rp billion)

(US$ million)

(Rp billion)

(5.3)

25.7

(4.2)

1.5

7.1

3.0

(14.1)

(3.4)

50.5

25.1

697.9

42.0

13.3

142.6

30.3

222.4

7.8

13.8

10.1

7.1

8.7

5.2

7.2

6.0

382.5

(0.4)

(2.1)

85,338

3,880

89,218

(40,041)

(15,408)

(55,449)

33,769

(13,095)

5,934

270

6,204

(2,784)

(1,071)

(3,856)

2,348

(911)

90,073

3,086

93,159

(39,452)

(14,382)

(53,834)

39,325

(13,560)

83,998

2,724

86,722

(37,814)

(12,547)

(50,361)

36,361

(12,808)

(438)

(30)

(291)

(221)

13,891

2,290

16,181

(11,739)

(3,792)

(15,531)

650

(3,060)

(438)

21,054

17,995

39,049

(21,717)

(16,116)

(37,833)

1,216

(2,128)

(764)

966

159

1,125

(816)

(264)

(1,080)

(213)

(30)

1,464

1,251

2,715

(1,510)

(1,121)

(2,631)

(148)

(53)

11,105

287

11,392

(10,360)

(1,563)

(11,923)

(531)

(2,839)

10,410

1,877

12,287

(11,024)

(2,793)

(13,817)

(1,530)

(2,881)

(385)

(392)

19,130

16,801

35,931

(20,653)

(15,027)

(35,680)

252

(2,136)

(668)

15,816

12,877

28,693

(17,813)

(9,647)

(27,460)

1,233

(1,386)

119

Mobile

Revenues

External revenues

Inter-segment revenues

Total segment revenues

External expenses

Inter-segment expenses

Total segment expenses

Segment results

Depreciation and amortization

Provision recognized in current
period

Consumer

Revenues

External revenues

Inter-segment revenues

Total segment revenues

External expenses

Inter-segment expenses

Total segment expenses

Segment results

Depreciation and amortization

Provision recognized in current
period

Enterprise

Revenues

External revenues

Inter-segment revenues

Total segment revenues

External expenses

Inter-segment expenses

Total segment expenses

Segment results

Depreciation and amortization

Provision recognized in current
period

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportTelkom’s Results of Operation By
Segment

Growth
2018-2017
(%)

Years ended December 31,

2018

2017

2016

(Rp billion)

(US$ million)

(Rp billion)

WIB

Revenues

External revenues

Inter-segment revenues

Total segment revenues

External expenses

Inter-segment expenses

Total segment expenses

Segment results

Depreciation and amortization

Provision recognized in current
period

Other

Revenues

External revenues

Inter-segment revenues

Total segment revenues

External expenses

Inter-segment expenses

Total segment expenses

Segment results

Depreciation and amortization

Provision recognized in current
period

35.6

9.0

17.7

18.6

7.1

15.0

27.7

32.1

10,084

16,678

26,762

(14,624)

(6,010)

(20,634)

6,128

(3,146)

(44.1)

(71)

3.2

47.2

39.6

6.4

(55.7)

2.3

82.2

(4.5)

150.0

130

886

1,016

(1,042)

(31)

(1,073)

(57)

(21)

(5)

701

1,160

1,861

(1,017)

(418)

(1,435)

426

(219)

(5)

(72)

(2)

(74)

(4)

(1)

(0)

7,439

15,305

22,744

(12,333)

(5,611)

(17,944)

4,800

(2,382)

(127)

126

602

728

(979)

(70)

(1,049)

(321)

(22)

(2)

5,866

14,451

20,317

(10,451)

(4,805)

(15,256)

5,061

(1,715)

(238)

209

228

(417)

(12)

(429)

(201)

(19)

(1)

SUBSCRIBERS

Cellular Subsribers

Postpaid (kartuHalo)

Prepaid (simPATI, Kartu As, Loop)

Broadband Subsribers

Fixed broadband 1)

IndiHome

Mobile broadband 2)

Fixed Line Subsribers

Fixed wireline (POTS)

INFRASTRUCTURE

Satellite Capacity

Point of Presence

Domestic

International

BTS

BTS 2G

BTS 3G

BTS 4G

Tower

Fiber Optic Backbone Network

Domestic

International

Wi-Fi Services

CUSTOMER SERVICE

PlasaTelkom 3)

GraPARI TelkomGroup

Plasa Telkom Digital

GraPARI

International

Domestic

GraPARI Mobile

IndiHome Mobile

EMPLOYEES

Unit

Year Ended on December 31,

2018

2017

2016

(000) subscribers

TPE

PoP

unit

access point

location

unit

People

162,987

5,400

157,587

113,813

7,260

5,104

106,553

11,111

133

118

189,081

50,310

82,118

56,653

30,485

161,652

96,952

64,700

382,361

422

440

429

761

196,322

4,739

191,583

111,074

5,266

2,965

105,808

10,957

173,920

4,180

169,740

89,058

4,329

1,624

84,729

10,663

160,705

129,033

50,324

82,228

28,153

29,061

155,524

90,854

64,670

352,642

535

442

432

761

50,344

72,327

6,362

25,558

106,000

85,770

20,230

362,200

566

423

416

487

23,876

1,142

24,071

1,142

24,065

Remarks:
1) Fixed broadband subscriber consists of IndiHome and high speed internet (HIS) subscriber.
2) Mobile broadband includes Flash user, Blackberry user, and PAYU.
3) Plasa Telkom outlet is a face-to-face customer service points consists of GraPARI TelkomGroup, Plasa Telkom Digital and other Plasa across Indonesia.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Family interaction becomes more definite with video call service
on IndiHome TV screen.

Outdoor Micro BTS is one solution to expand cellular coverage and
increase the capacity in strategic location and central business district.

Telkom performed its mobile segment business through its
subsidiary Telkomsel, a leading cellular operator in Indonesia,
with its 163 million subscriber and dominated more than 59.1%
cellular market share. Telkomsel has been strengthening its
broadband infrastructure by building new 4G LTE technology
based 28,376 BTS, made its 4G LTE coverage more than 90%
population. With this new BTS, Telkomsel has the widest
network coverage of 189 thousand total BTS. Telkomsel
commits giving the best experience for subscriber and
presents the lastest telecommunication service which would
be a future trend of telecommunication technology.

Throughout 2018,
Indonesia cellular telecommunications
industry experienced a very dynamic change and a decline,
triggered by the accelerated transformation from legacy
services to digital business, intense price war competition
in data services and the implementation of prepaid SIM card
registration policies.

Digital Business remained the growth stimulus and made
revenue growth of 19.8% which substantially increased digital
business contribution to total revenue into 53.0% from 42.3%
in the previous year. This was supported by the growth in
customer data to 106.6 million, an ARPU data increase, and a
data usage growth of 101.7% into 4,373,077 TB.

100

“SIM card registration
was the starting point
for Telkomsel to re-map
its costumers to provide
the suitable customized
program.”

Data traffic increased by 101.7%

to 4,373,077 TB

More than 23 million

TCASH registered users

BTS
(Unit)

250,000

200,000

150,000

6,362

56,653

28,153

100,000

50,000

72,327
958.733

82,228

82,118

50,344

50,324

50,310

FY 2016

FY 2017

FY 2018

Although in 2018 there was intense competition on mobile
broadband services, especially during the prepaid SIM card
registration process, the Mobile segment through Telkomsel
efforts to push the data price level to a reasonable level and
stifle the decline in legacy businesses, including offering
programs such as voice and SMS package, succeeded
quite well, then Telkomsel only recorded a decrease of
4.3%, and after consolidation, the Mobile segment only
recorded a decrease
in revenue of 5.3% compared to
2017. It was better than the decline in revenue of the main
three operators of 7.4%

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportThe dynamics of the Indonesian telecommunications industry
was also marked by intense competition in data services
triggered by a price war especially during the implementation
of prepaid SIM card registration, caused unhealthy cellular
industry. Telkomsel takes the initiative to increase the price
of data services while maintaining an ideal premium level
and expects all operators would respond in the similar
manner, to
industrial conditions and provide
improve
growing opportunities.

that include built-in technology with the internet, so it would
be an “intelligence” asset that could interact with the external
environment. TCASH, is an electronic money service for
financial transactions that supports the government’s goal
to expand financial inclusion and become cashless society.
Telkom big data business delivers consumer insights to the
market and API business which provides a great opportunity
for application developers, SMB and corporation to improve
their services in line with the online market growth.

In addition, the prepaid SIM card registration program
conducted by the Government has a significant reduction in all
cellular operators customer, but in the long-term it will provide
positive benefits. Telkomsel complies with this Government
policy and believes that the registration of prepaid SIM cards
would form a balance new business competition with more
official and accurate customer data, so it could provide more
appropriate customized programs for customers. In addition,
this would lead to cost efficiency due to reduced SIM card
production and distribution costs, the sales business model
would be more oriented to the credit top-up packages sale
than starter packs so that it is expected to provide a healthier
revenue structure. Telkomsel started focussing to increase
the High Value Customer (HVC). Nowadays, HVC contributed
significantly toward Telkomsel revenue. To increase HVC and
maintain their loyality, Telkomsel made profiling so that it
could deliver more focused and high quality service.

Telkom has several products to serve various customer
segments. The market brand for postpaid customers is
kartuHalo, while prepaid customers is simPATI, Kartu As
and Loop. Mobile broadband services are marketed under
Telkomsel Flash and are supported by LTE/HSDPA/3G/EDGE/
GPRS technology.

Digital lifestyle continues to focus on providing prime mobile
entertainment experiences for customers. Telkomsel aims
to become the leading mobile entertainment provider in
Indonesia through video, games, music and other VAS mobile
service platforms by targeting various segments through
various services. The innovation and digital solution product
development for enterprise segment are mobile security,
NB-IoT and other celular soulution that use myBusiness—a
Telkomsel product portfolio. On May 2018, Telkomel launched
MAXstream as a platform and one-stop video platform with
the joint of OTT video apps, linear channel, and VOD content.
Telkomsel also provide a whole digital game ecosystem and
released the first game “Shellfire” on October 2018 under
“Dunia Games” brand.

Telkomsel is committed to providing the best experience for
customers and presenting the latest telecommunications
services, in the 2018 Asian Games, Telkomsel conducted a
5G trial presenting the “Telkomsel 5G Experience Center” at
Gelora Bung Karno, Jakarta. Visitors could get to know and
experienced the implementation of revolutionary technology
directly through various devices equipped with 5G technology
such as Live Streaming, Football 2020, Future Driving, Cycling
Everywhere, and Autonomous Bus.

Several investments and initiatives have also been made to
accelerate the digital services growth, in line with the access
support of digital services in Indonesia and the Telkomsel
mission to create Indonesia as a digital nation with digital
services portfolio consisting of digital advertising, mobile
banking, Internet of Things (IoT), mobile financial services,
big data and API (Application Programming
Interface)
and digital lifestyle.

Digital advertising and mobile banking business includes
several service categories such as digital advertising, mobile
coupon and mobile banking as Telkom efforts to constantly
improve its products and services as well as develop more
channels. Telkomsel IoT (Internet of Things) is an enterprise
customer service that connects devices, machines and objects

Data Traffic
(TB)

4,373,077

2,168,245

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

958,733

FY 2016

FY 2017

FY 2018

101

The mobile segment is the largest contributor to revenue in 2018, which is 65.4% of Telkom total revenue. Below is the table of
mobile segment performance over the last three years:

Mobile Segment

Revenues

Expenses

Results

2018-2017

2018

2017

2016

(%)

(Rp billion)

(US$ million)

(Rp billion)

(5.3)

1.5

(10.5)

85,338

(40,041)

45,297

5,934

(2,784)

3,150

90,073

(39,452)

50,621

83,998

(37,814)

46,184

Although there was a severe competition in mobile broadband service in 2018, particularly during the prepaid SIM card
registration process, Telkom efforts adjusting data price to the fair level and maintaining the legacy business decrease was
quite succsessful, by offering voice and SMS package. Mobile segment only recorded the revenue decrease by 5.3% than 2017. It
was better than the decrease of the 3 main operators of 7.4%.

Throughout 2018, the revenue of the mobile segment was recorded at Rp85,338 billion (US$5,934 million), decreased by Rp4,735
billion or 5.3% from the previous year revenue. This decrease was mainly due to the decrease in voice revenues of Rp6,815
billion or 18.3% and SMS revenue of Rp4,007 billion or 30.4% from the previous year. However, the voice and SMS decrease was
compensated by an increase in cellular data and internet revenues of Rp7,193 billion or grew by 18.9% from the previous year
encouraged by mobile data traffic growth of 101.7%. Meanwhile, the expense for the mobile segment in 2018 increased by 1.5%
into Rp40,041 billion compared to 2017, which was mainly due to increase of the operational and maintenance expense in line
with new BTS construction in 2018. This increase was compensated by the decrease of depreciation and marketing expense due
to selective marketing program. Mobile segment made profit of Rp45,297 billion in the 2018.

In the 2016-2017, the mobile segment recorded revenue of Rp90,073 billion, increased by Rp6,075 billion or 7.2% compared to
Rp83,998 billion in 2016. This revenue increase was encouraged by the data and internet cellular revenue growth due to the
increased mobile data consumption. Segment expenses in 2017 also increased by Rp1,638 billion or 4.3% to Rp39,452 billion
in line with the construction of network infrastructure and the higher business volume. Compared to the 2016 revenue, Mobile
segment result was increased by Rp4,437 billion or 9.6%, into Rp50,621 billion.

102

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report103

1,900 corporate customers
300,416 SMB customers
979 government institution customers

60 TPE Merah Putih Satellite
49 TPE Telkom-3S Satellite
24 TPE Telkom-2 Satellite

3 Data Centers
with a specification of tier 3 and 4

(domestic)

Telkom made acquisition of PT Collega Inti Pratama through
PT Sigma Cipta Caraka (Telkom Sigma) and PT Swadharma
Sarana Informatika (SSI) through PT Multimedia Nusantara
(Telkom Metra) to strengthen its capability in finance and
banking industry.

ENTERPRISE SEGMENT

Enterprise segment serves end to end solution and ecosystem
to corporates, SMB, and government institutions for digital
connectivity, data center and cloud, IT service, digital service,
Business Process Outsourcing (BPO), device and adjacent
service. Beside exploiting its existing products, Telkom actively
explores business partnerships with various global players,
including in the fields of Internet of Thing, Big Data Analytics,
Financial Service, Smart City and others.

In enterprise service, the highest revenue in this segment
was from connectivity service, a basic service for customers,
contributed 47.3% of the revenue supported by IT service, data
center and cloud, grew by 48.2% in enterprise segment. This
high growth was in line with the high demand of digitalization
from corporate, SMB and government institution.

As of December 31, 2018, enterprise customers reach 303,295
customers, including 1,900 corporate, 300,416 SMB, and 979
government institution. Telkom believes that the enterprise
segment still has good growth opportunities, in line with the
increasing of integrated ICT services importance and needs to
improve the work efficiency.

Telkom position in enterprise segment is solid. Beside supported
by the widest fiber optic-based
infrastructure network
providing high-quality connectivity services, the provision of
end-to-end solutions to Telkom customers is also carried out
together with several direct and indirect subsidiaries with its
business variety providing a total solution.

104

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportRevenue Composition of Enterprise Segment
(Rp Billion)

3,325

2,243

2,808

2,722

1,959

1,802

646

674

930

772

1,579

778

12,000

10,000

9,971

9,945

8,000

6,000

4,000

2,000

Connectivity

DC & Cloud

IT Services

BPO

Digital Services

Device

Adjacent Services

2017

2018

In the future, Telkom will strives looking for more recurring
new growth engines, by exploring opportunities to be a digital
business provider. Telkom will strengthen the business model
by encouraging business diversification to various industries
offering digital business-based services.

Telkom also notices the ICT services penetration in Small and
Medium Business (SMBs) is still relatively low. Telkom expects
its ICT services presence would help business development
among SMBs, considering the generated benefits, and also as
the market opportunity for Telkom to grow with customers.

Enterprise Segmen Financial Performance 2016–2018

The revenue contribution of the enterprise segment on Telkom revenues is 16.1% of total revenue in 2018. Here is the table of
enterprise segment performance over the last three years:

Enterprise Segment

2018-2017

2018

2017

2016

(%)

(Rp billion)

(US$ million)

(Rp billion)

Revenues

Expenses

Results

10.1

5.2

56.5

21,054

(21,717)

(663)

1,464

(1,510)

(46)

19,130

(20,653)

(1,523)

15,816

(17,813)

(1,997)

The enterprise segment revenue in 2018 was recorded at Rp21,054 billion, increased by Rp1,924 billion or 10.1% from the
previous year. This increase was from internet, data communication and information technology services revenue of Rp1,233
billion and e-business revenue of Rp251 billion. The main growth revenue booster was the IT service, grew by 48.2%. The higher
growth is in line with the increasing companies need in digitizing their business processes to more competitive, and also for
central and regional government institution to give better service for society, as well as to support SMB development. In the
other hand, the enterprise segment expense in 2018 increased by 5.2% into Rp21,717 billion compared to 2017. The expenses
increase was in line with the business volume increase. Based the calculation of intersegment expense allocation, Enterprise
segment made loss result, but it was a lower loss result of Rp663 billion, decreased by Rp860 billion or 56.5% compared to
last year the loss.

In the 2016-2017, enterprise segment revenues increased by Rp3,314 billion or 21.0%, to Rp19,130 billion compared to Rp15,816
billion in the previous year. This is mainly due to the increasing digitalization requirement, especially in corporate, SMB and
government institutions customers. The enterprise segment expenses also increased to Rp20,653 billion, increased by Rp2,840
billion or 15.9% compared to Rp17,813 billion in 2016. Based the calculation of intersegment expense allocation, Enterprise
segment made loss result in 2017 of Rp1,523 billion, but it was a lower loss result than 2016 of Rp1,997 billion, as the revenue
increase was higher than the expense increase.

105

5.1 Million

IndiHome subscribers increased

9.1 Million

Optical Ports
(fiber optic based broadband access)

CONSUMER SEGMENT

IndiHome provides optical fiber-based fixed broadband
services including high-speed fixed internet, (fixed wireline)
phone and interactive TV with IPTV tecnology, to satisfy retail
housing, apartment and premium cluster needs. In 2018,
IndiHome subscribers grew from 2.9 million subscribers in
2017 to 5.1 million subscribers in 2018.

The customer growth is inseparable from the marketing
strategy of More For Less programs, a bundling services
providing programs that has more suitable needs and
affordable price. Telkom uses the momentum of celebration
days such as Chinese New Year, Ramadhan, Indonesian
Independence Day, Christmas and New Year as a promotional
period for IndiHome. At the same time, IndiHome also used the
moment of the FIFA World Cup 2018 by becoming the official
live broadcaster of all FIFA 2018 World Cup matches.

Besides special events promotions, Telkom continues to add
beneficial services and features to IndiHome to increase its
attractiveness for prospective customers. One of them is by
enriching TV channel through a variety of attractive minipacks.
In 2018, IndiHome customers were served by 18 minipack
options, compared to 11 minipack in 2017. Minipack demand
has been increasing with the 4.4 million add on minipack
transactions grew 243% compared to 2017.

106

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportOn the other hand, a large community of gamers in Indonesia
is one of the potential markets for IndiHome. With IndiHome
gamer packages, customers would get in-game benefits
(game points) that could be exchanged for attractive features.
To enhance customer experience, Telkom also offers internet
speed upgrade, all GSM operators call packages promotion,
and Over-The-Top content such as UseeTV Go, iflix, HOOQ,
and CATCHPLAY.

STOs in 2018. From these 719 STOs, 268 STOs have been
transformed into T-Cloud. Telkom plans in 2020, all 1,234
STOs will be shutted down and transformed into T-Cloud in
2021. The T-Cloud is the STO resulted from the modernization
process into 100% optical fiber access Node. With the
increase in network quality and capacity as a result of the
modernization of STO, the quality of services to customers is
expected to increase.

It cannot be denied that fixed broadband services are highly
dependent on the infrastructure reliability and technicians
supports. Network modernization has been carried out by
replacing copper networks into fiber optic networks, managed
by the subsidiariy, Telkom Akses. Strengthening the skills of
technicians has increased the percentage of new installments
period (Mean Time To Install or MTTI) to below 3 days to 97%
in 2018 from 87% in 2017. In addition, the percentage of under
one day disturbances refinement completion increased to
82% in 2018 from 42% in 2017, with a significant reduction in
the disturbances refinement or MTTR from 23.4 hours in 2017
to 9.8 hours in 2018. These efforts are in order to improve
customer experience.

Those service improvement and capacity made Telkom as the
market leader with a estimated market share of 84.5%. We
believe that the growth opportunity of the fixed broadband
business in Indonesia is widely open as the middle-class
household population growth and the penetration of high-
speed internet services are estimated to be around 12%. It
was lower than Malaysia, Vietnam and Thailand which have
reached around 34%, 43% and 44%. Telkom emphasizes the
retail market as a market positioning by performing expansion
across Indonesia. To ensure the availability of IndiHome
services across Indonesia, Telkom has built the optical fiber-
based broadband access network with a total of 9.1 million
optical ports.

To
improve network quality and capacity, network
modernization is carried out by shutting down STOs and
transforming them into T-Cloud. Along with technological
developments, Telkom has shut down 719 STOs of 1,234

Consumer Segment Financial Performance 2016–2018

Consumer segment contributes revenue of 10.6% of Telkom total revenues in 2018. Here is the consumer segment performance
tables over the last three years:

Consumer Segment

2018-2017

2018

2017

2016

(%)

(Rp billion)

(US$ million)

(Rp billion)

Revenues

Expenses

Results

25.1

13.3

188.9

13,891

(11,739)

2,152

966

(816)

150

11,105

(10,360)

745

10,410

(11,024)

(614)

Consumer segment financial performance in 2018 was very good, with the revenue reached Rp13,891 billion, increased by Rp2,786
billion or 25.1% higher than 2017. It was in line with the increase of IndiHome subscriber by 72.2% into 5.1 billion subscribers, the
increase of minipack subscriber and up-sell service such as internet speed upgrade. In 2018, IndiHome revenue grew by 66.9%
into RpRp11,520 billion, and contributed approximately 82.9% towards total consumer segment revenue, increased from 62.2%
in the previous year. Meanwhile, the expense of 2018 for the consumer segment was Rp11,739 billion, increased 13.3% compared
to the previous year, in line with the IndiHome business expansion. However, the increase of Consumer segment expense was
lower than the increase of the revenue, which indicated the cost control effectivity. With intersegment expense allocation,
Consumer segment result in 2018 was quite high by 188.9% into Rp2,152 billion.

In the 2016-2017 period, revenue in the consumer segment was Rp11,105 billion, increased by Rp695 billion or 6.7% compared
to Rp10,410 billion in 2016, in accordance with the increased of IndiHome subscriber. Meanwhile the expense in 2017 decreased
by Rp664 billion or 6.0% from Rp11,024 billion in 2016 to Rp10,360 billion. This prompted consumer segment to record its profit
Rp745 billion, better than the previous year which recorded loss of Rp614 billion, in other words, the growth of the results of the
consumer segment from 2016-2017 increased by 221.3%.

107

Wholesale and
International Business segment serves
domestic or global other operators, service provider and digital
player for product and solution that could be differentiated
into several business lines i.e. carrier service (network and
traffic), tower, infrastructure and non-carrier international.
The WIB business segment grew by 35.5% in 2018 driven by
voice traffic products, digital enabler, infrastructure managed
service and tower.

Carrier service grew by 29.1% due to marketing strategies
targeting and the global transit market niche by carried traffic
among countries. The digital enabler business also grew
significantly by 112.6% driven by growth in the data center and
digital platform business.

Telkom has optical fiber-based backbone network with a
length of 161,652 km including domestic network of 96,952 km.
Throughout 2018, Telkom deployed several submarine cable
systems to strengthen its optic fiber network such as the SLM
(Sabang-Lhokseumawe-Medan), the PATARA (Papua Utara)
connecting Sentani and Sarmi, and MATANUSA. These three
submarine cable systems are expected to be ready for service
in the first half of 2019. With this connected domestic network,
equal communication
it could give positive impact for
access and broadband
information with similar quality
across Indonesia. Telkom currently owns interests in global
submarine cable infrastructure that connects the continents
of Europe, Asia and America. Telkom succeeded completing

108

“With the Indonesia Global
Gateway, Telkom is able to
provide direct broadband
alternative connection
across Europe, Asia and
America.”

161,652 km
Backbone Fiber Optic Network
96,952 km (domestic)
64,700 km (international)

Point of Presences (PoP)
72 Overseas PoPs
46 Domestic PoPs

5 Data Centres (overseas)
14 neuCentrIX Data Centres (domestic)

12,485 towers

Indonesia Global Gateway cable system with an approximate
length of 5,400 km
in 2018 that connected two main
submarine cable system of SEA-US and SEA-ME-WE 5. With
this connected cable system, Telkom could provide alternative
direct broadband connection across Europe, Asia, and America.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportTelkom has 14 neutral data centers in 10 cities in Indonesia.
Telkom subsidiary, Telin, has 5 overseas data centers consisting
of 3 locations in Singapore (Telin-1, Telin-2 and Telin-3),
1 location in Timor Leste and 1 location in Hong Kong. All data
centers are given the commercial name neuCentrIX, a neutral
data center for domestic and global telecommunications
operators and service providers. Currently, Telkom is planning
to build a large data center in Indonesia that will function as the
main hub for all neuCentrIX data centers. The entire domestic
and global data centers will be seamlessly connected, which
is expected to be meeting point for digital business people,
internet service providers, enterprise customers and others
to support the realization of Telkom as a hub or center of the
digital ecosystem.

Telkom also operated Content Delivery Networks (CDN) so
customers could access content that require large bandwidth
and prime quality in connection speed and visual quality.

In 2018, Telkom added 4 domestic PoP (Point of Presence) so
it has 46 PoP dosmestic. Meanwhile, Telkom added 25 global
PoP so it has 72 global PoP in major cities in 33 countries.
With these PoP, it is expected to improve convenience in
providing services and interconnecting.

With the growing strength of Telkom’s infrastructure both
domestically and globally, it is expected to turn Indonesia
become a Global Digital Hub.

Telkom international business is operated by its subsidiary,
Telin, which has been present in 11 global offices located

in Singapore, Hong Kong, Macau, Timor Leste, Australia,
Myanmar, Malaysia, Taiwan, the United States of America,
Saudi Arabia and New Zealand, who performs the wholesale
network business, wholesale voice, data center, MVNO,
MNO and BPO. To strengthen international business, Telkom
carried out several corporate actions through Telin. Telkom
made several corporate actions through its subsidiary to
intensify international business, Telin. On April 18 and 25, 2018,
Telin increased its share ownership of Telin Malaysia and
TSGN into 70%. These two corporate actions aim to give the
flexibility and majority control in encouraging Telin Malaysia
business strategy,
including developing new business
initiatives and synergizing the capabilities of TelkomGroup.

Telkom manages the Tower business through its subsidiary
Mitratel, leasing space to other operators to place their
telecommunications equipment on these towers. In 2018,
Mitratel aggressively made offers for the operator to reseller
and/or collocation its tower, which made growth of 6.6% and
controled 27.5% tower market shares. Mitratel has 12,485
units towers with 15,712 tenants. From reseller business
Mitratel had 6,494 tenants.

including

Telkom also manages the telecommunications infrastructure
the energy solution, construction
business
solution, managed services and submarine cables through
its subsidiary, Telkom Infra. Telkom Infra business experienced
significant growth of 113.0% which was supported by
the energy solution project which was Telkom effort
in monetizing the capability of building and managing
telecommunications infrastructure.

Indonesia Global Gateway
Cable System

SEA-ME-WE-5

SINGAPORE

DUMAI

BATAM

TARAKAN

BALIKPAPAN

MANADO

SEA-US

IGG

JAKARTA

MADURA

MAKASSAR

DENPASAR

109

The Wholesale and International Business segment contributes revenue of 7.7% of Telkom total revenues in 2018. The following
table shows the performance of the Wholesale and International Business segment over the last three years:

WIB Segment

Revenues

Expenses

Results

2018-2017

2018

2017

2016

(%)

(Rp billion)

(US$ million)

(Rp billion)

35.6

18.6

7.2

10,084

(14,624)

(4,540)

701

(1,017)

(316)

7,439

(12,333)

(4,894)

5,866

(10,451)

(4,585)

WIB segment in 2018 recorded its revenue of Rp10,084 billion, increased significantly by Rp2,645 billion or 35.6% from Rp7,439
billion in 2017. The digital business contribution of this segment for 2018 was 57% higher than 53% in 2017. This achievment
was due to the increase of international interconnection revenue from voice traffic service managed by Telin of Rp1,241 billion.
Other revenue was also contributed by the managed service solution from Telkom Infra of Rp996 billion and network revenue of
lease line and transponder of Rp319 billion. In the other hand, the WIB segment expense was Rp14,624 billion in 2018, increased
by Rp2,291 billion or 18.6% compared to 2017. The increase was mainly due to strengthening of Telkom domestic and global
infrastructure, such as the construction of optic-fiber based submarine cable and telecommunication tower. WIB main role
in Group was supporting infrastructure and managed service provision, mainly for Mobile segment. It resulted that the WIB
segment recorded its result toward intersegment expense allocation, resulted of Rp4,540 billion which better than last year
recorded by Rp4,894 billion.

In the 2016-2017 period, the wholesale and international business segment made revenue of Rp7,439 billion in 2017, increased
by Rp1,573 billion or 26.8% compared to Rp5,866 billion in 2016. The increase in revenue was in line with the increased of
Telkom infrastructure capacity, which is able to provide wider coverage services to customers both domestically and abroad.
The expenditure in 2017 increased by Rp1,882 billion or 18.0% into Rp12,333 billion compared to Rp10,451 billion in 2016, which
mainly due to expenditure on infrastructure development. The expenses increase was greater than the revenue increase, caused
a loss of Rp4,894 billion in 2017, increased by Rp309 billion or 6.7%, compared to the previous year loss of Rp4,585 billion.

Indonesia Global Gateway Submarine Cabel Construction

110

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportOTHERS SEGMENT

“The sustainable
product innovation
and digital ecosystem
formation would
increase the customer
satisfaction and
convenience in adopting
digital lifestyle.”

In other segments, Telkom offers digital advertising services,
financial services, TV/video, e-Commerce, digital content and
lifestyle, big data and smart platforms. Telkom also operates
a venture capital fund through the subsidiary, PT Metra Digital
Innovation which is also known as MDI Ventures, to invest in
digital startups.

In digital advertising, Telkom delivers services including a
digital advertising agency, integrated digital media, and big
data analytics. Telkom also operates an ad exchange platform
that brings publishers, advertisers, and agencies together to
be able to carry out digital advertising activities effectively
and efficiently by linking the buyers and sellers together in
one advertisement marketplace.

E-Commerce services
through BLANJA.com, an online
marketplace that facilitates the sale of consumers-to-
consumers and business-to-consumer. BLANJA.com also
develops B2B commerce service targetting the TelkomGroup
internal market, SOE, the Government, and corpoartion.
BLANJA.com currently has approximately 3.2 million users
with 130.1 thousand transactions and value of Rp102.9 billion.
To increase its User Interface (UI) and User Experience (UX),

3.2 million
BLANJA.com
registered users

34.7 million
MelOn active users

BLANJA.com developed B2B commerce service for particular
category such as education and migrant worker. BLANJA.com
also increased its mobile apps, made one-stop account
integration with LinkAja, launched seller apps, intensified QR
code use and leveraged its big data analytic use.

MelOn is a digital content provider for music database and
digital music content online application with 34.7 million active
users. In 2018, MelOn user transaction reached 3,4 million.
In September 2018, Telkom through its subsidiary Metranet,
has launched an advertising based mobile video streaming
collaborated with OONA, a Hong Kong digital company. This
cooperation is expected Telkom capability in video service.

111

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportConsolidated Financial StatementsAppendicesPartnership andCommunity Development ProgramCorporate Social ResponsibilityCorporateGovernanceAnalysis andDiscussionAboutTelkomReport of The Boardof Commissionersand DirectorsTelkom Highlights123456789Telkom held Digital Amoeba and Indigo Creative Nation
program to enhance its capability in digital sector. Digital
Amoeba is a Corporate Innovation Lab program that aimed to
accommodate and accelerate Telkom employee innovation. In
order to accomodate and accelerate innovation from Telkom
employees, there have been 52 teams validate their new
product and process in the end of 2018, 14 of them is ready
to further acceleration into a potential business portfolio.
Indigo Creative Nation is a Telkom open innovation program
collaborate with digital startup for developing new digital
business, as well as the Telkom initiative program contributing

in Indonesia digital creative industry development. Several
startups made synergy with Telkom providing the digital
product and solution such as PrivyID, Kofera, Run System,
Nodeflux, Bahaso, Qiscus, and Opsigo. Moreover, on January
2018, Metranet acquired 30.4% share ownership of Cellum
Global Zrt (Cellum), a provider of
international cellular
transaction solutions. This acquisition was supposed to
strengthen Telkom technological capabilities through the
development of mobile wallets as well as to get exclusive B2B
partners with Cellum for future operations.

Other Segment Financial Performance 2016–2018

The contribution of other segments to Telkom revenue in 2018 is 0.1%. Here are the other segment performance tables over the
last three years:

Other Segment

Revenues

Expenses

Results

2018-2017

2018

2017

2016

(%)

(Rp billion)

(US$ million)

(Rp billion)

3.2

6.4

(6.9)

130

(1,042)

(912)

(72)

(63)

126

(979)

(853)

(417)

(398)

Other segment revenue was Rp130 billion throughout 2018, increased by 3.2% than the previous year. This revenue occurred
due to increased transactions on BLANJA.com and Melon. Other segment expenses in 2018 was Rp1,042 billion, increased by
6.4% compared to 2017 due to the increase of digital business investments. These various situations caused the loss for other
segments in 2018 into Rp912 billion, increased by 6.9% compared to last year loss.

In the 2016-2017, revenues in other segments recorded Rp126 billion, increased Rp107 billion or 563.2% compared to Rp19 billion
in 2016. Meanwhile the increase in expenses in 2017 was Rp562 billion or 134.8%, into Rp979 billion. This resulted in an operating
loss that increased by Rp455 billion or 114.3%, into Rp853 billion compared to Rp398 billion in 2016.

112

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportLEVERAGE ASSET PROGRAM

Telkom has very large fixed properties of more than 3,000 land and buildings spreading from Sabang to Merauke. In line with the
technological development, the smaller telecommunications equipment used today requires smaller space. Due this condition, it
resulted idle assets and space that could be utilized to provide maximum benefits for the TelkomGroup.

In 2018 Telkom focused and initiated intensively the asset leveraging program. Telkom divides asset leveraging into two categories
based on cooperation partners, such as Synergy Group and Strategic & Retail Partnership.Synergy Group (SG) is the utilization
of fixed assets specifically for TelkomGroup internal needs, including offices, warehouses, service centers (Plasa Telkom Digital,
GraPARI TelkomGroup), and call centers.

Telkom Landmark Tower (TLT) and Telkomsel Smart Office (TSO), whose construction was completed in 2017 and 2016, became one
of the master pieces of asset utilization that aims to create better synergy within the TelkomGroup entity. The formerly far-flung
offices of TelkomGroup and its subsidiaries are now in the environment of The Telkom Hub (including Grha Merah Putih, Telkom
Landmark Tower, Telkomsel Smart Office), that previously rented at outside of the TelkomGroup assets, its extensive Semi Gross
Area (SGA) decreased by 113,885 m2.

Until 2018 the total SGA that has been utilized for the synergy group is 272,368 m2 (an additional area of 23,953 m2 in 2018),
spreading in more than 493 locations across Indonesia (an additional 106 locations in 2018).

In addition to support the operations and expansion of the TelkomGroup, Synergy Group also aims to create cost efficiency derived
from decreasing base rent. This efficiency was resulted from the changes that previously leased land and buildings outside of
Telkom assets, then utilized Telkom assets.

The Synergy Group project has been operated and utilized by TelkomGroup entities, such as Telkomsel, Telkom Akses, Telkomedika,
PINS, Mitratel, Telkom Sigma, Infomedia, Telkomsat. Some of these projects include Graha Merah Putih Sorong, Balai Merah Putih
Pematang Siantar, Telkomsel branch offices (Central Jakarta, Bengkulu, Pangkalpinang, and Bandung), Telkomsel Pontianak
warehouses and Infomedia call center Bogor.

Grha Merah Putih TelkomGroup, Sorong - West Papua

Balai Merah Putih, Pematang Siantar - North Sumatera

The Strategic and Retail Partnership (SRP) is the utilization of fixed assets specifically for the external TelkomGroup. In 2018 we
recorded revenues of Rp324 billion. The revenues obtained from various sectors include food and beverage, hospitality, consumer
goods, education, collaboration space, and other retail. The cooperation offer are rent, business cooperation, build-operate-
transfer (BOT).

Until 2018, Telkom has cooperated with local and global players in more than 40 locations, such as McDonald’s, Mercure (Accor
Hotels), Alfamart, Indomaret, Pertamina Retail, Starbucks, The Coffee Bean and Maxx Coffee. This asset utilization activity
collaborates on asset utilization and is enriched by the TelkomGroup digital ecosystem.

McDonald’s, Pekanbaru - Riau

Alfamart, Jimbaran - Bali

Mercure Nexa Hotel, Bandung - West Java

113

MARKET SHARE

Telkom has a dominant market share in almost all business
segments.

For the mobile segment, Telkom market share based on
the number of subsciber until the end of 2018 was 59.1%.
The Telkomsel cellular subscibers at the end of 2018 was
163 million, with 107 million subscribers were mobile
broadband subsciber. This market share position increased
from the previous year of 54.5%. This increase in the cellular
market share could not be separated from Telkom success
in implementing prepaid SIM card registration and the
effectiveness of the marketing programs.

Regarding the enterprise segment, there are several
indicators that could describe Telkom market share
position. In terms of bandwidth service, Telkom estimated
its market share position in 2018 was approximately 73%.
Through Telkom Sigma, Telkom estimated controlling
the integration of the system market share of 55.4%. For
business process outsourcing (BPO), Telkom estimated
dominating the market of 41% through its subsidiary
Infomedia. As for the satellite business, Telkom estimated
controlling the market approximately of 37% market share.

Cellular Market Share

System Integration Market Share

150.0%

100.0%

50.0%

0.0%

43.2%

45.5%

40.9%

56.8%

54.5%

59.1%

FY 2016

FY 2017

FY 2018

Telkomsel

Competitors

120.0%

100.0%

80.0%

60.0%

42.0%

59.0%

55.4%

40.0%

20.0%

0.0%

58.0%

41.0%

44.6%

FY 2016

FY 2017

FY 2018

Telkom Sigma

Competitors

In the consumer segment, Telkom succeeded significantly
in increasing Telkom market share in fixed broadband
services. The number of IndiHome subscibers at the end of
2018 increased into 5.1 million subscribers from 2.9 million
in the previous year. With this increase, IndiHome controled
84.5% of the fixed broadband market share in Indonesia.
This market share position was stronger than 2017 of
81.1% market share. The success of increasing market
share includes the results of strengthening access and
IT infrastructure that have a good impact impact on service
quality, technician productivity, and marketing strategy.

For the WIB segment, in the tower business, Telkom
estimated the market share of 27.5% through the subsidiary
Mitratel. Compared to the previous year, Mitratel market
share was higher from 26.6% due to the addition of tenants.

Tower Market Share

120.0%

100.0%

80.0%

Fixed Broadband Market Share

60.0%

75.7%

73.4%

72.5%

40.0%

20.0%

0.0%

24.3%

26.6%

27.5%

FY 2016

FY 2017

FY 2018

Mitratel

Competitors

150.0%

100.0%

18.7%

18.8%

15.5%

50.0%

81.3%

81.1%

84.5%

0.0%

FY 2016

FY 2017

FY 2018

IndiHome

Competitors

114

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportMARKETING STRATEGY

Telkom has implemented a comprehensive marketing
and promotional strategy to boost Telkom brand and
sales,
including through marketing communication
activities and product and service distribution channel
increase sales, Telkom also uses
development. To
above and below the line marketing (ATL and BTL)
channels to promote Telkom services to certain parties
and communities. Telkom also continues to place the
advertisement in printed and electronic media as well
as implement marketing methods such as point of sales
broadcasting as well as promotion and sponsorship
events. Marketing strategies are customized based on
the characteristics of Telkom targeted business and
customer segments to be more effective and efficient.

Consumer

IndiHome was still the leading product for the consumer
customer market. Not only targeting the residential
segment as the main market segment in 2018 but
Telkom also maximizes penetration into apartments
and premium clusters. Telkom marketing strategies
are: (i) giving promotion price and costumer value,
(ii) consistently offer products with attractive values
through various sales channels especially digital
channels, (iii) and held campaigns and year-round
promotions such as Chinese New Year, Ramadhan,
Indonesia
Independence Day, Christmas and New
Year Promo.

In 2018, Telkom had sales strategy focused on dynamic
pricing
implementation allowing prices to project
different conditions in areas of Indonesia while providing
superior bundled products with faster and better service
for customers. Telkom also introduced a points program
for the salesperson to incentivize greater sales activity
on weekends and holidays in order to provide more
convenience for Telkom customers.

Telkom intensified operating activities to provide tailored
service for customers by using their profiles created
through the data compilation in order to personalize
service and product which might be attractive to
customers. Telkom has also developed an end-to-end
traceable customer relationship management process,
allowing to identify and rectify problems as they happen,
rather than waiting for customers alert us to such issues,
so Telkom could proactively solve problems avoiding
customers inconvenienced.

Mobile

For mobile segment, Telkom focused on improving
profitability and increasing ARPU through healthier
pricing. For instance, in 2018, Telkom introduced “More
for More” which would give customers more value-added
with higher ARPU. Telkom also continued promotion of
mobile package options in order to encourage existing
mobile broadband customers to increase their services
use. In addition, Telkom continued promoting data
package options which targeted the youth segment
under Loop brand. Telkom efforts to increase ARPU
included providing digital lifestyle and payment services
as mobile-based digital life services.

In 2018, Telkom continued to introduce new products
and to revamp mobile package options in order to appeal
to various groups of customers. For example, Telkom
introduced MAXstream, a video platform offering free
and paid content, as well Shellfire, a gaming platform
which offers
in-app purchase opportunities and
Langitmusik, a streaming music service. Telkom increased
opportunities for customers to use TCASH, including

115

Enterprise

For enterprise customers, Telkom applied a marketing
strategy
in winning the competition at high-end
market customers using strategic managing accounts
with the aim of improving relationship quality better
than competitors through more focused services and
customized to customer needs. Telkom also applied a
marketing strategy under the “Disruptive Digitize Nation”
program, which comprises:
•

Ignite
Initiatives;
which aims to become the Government partner
for
and
provision,
communications service (ICT) by collaborating with
the government on strategic ICT mega-deals that
focus on the digital customer experience;

Government

information

DISRUPTIVE

technology

• Lead End to End Enterprise DIGITIZED Ecosystem;
which markets end-to-end digital ICT solutions to
the enterprise customers providing customized
specific and segmented solutions based on market
and industry diversification; and

ICT solutions

• Build NATION’s Digital-Driven SMB which markets
basic
connectivity service
in
and solution packages massively for SMB by
providing proper digital platform to encourage
the SMB business.

In 2018, Telkom had sales strategies comprises: (i) Provide
Account Manager for corporation segment, it acted
as the point of contact for interaction to the customer
for end-to-end service, from initiation to after-sales
service, (ii) Provide Government Relationship Officer for
government customers to manage a close relationship
with customers for the whole year as courtship for next
year contract renewal and current service deliverable,
and (iii) Provide Business Account Manager for medium
SMB segment, Tele Account Management (TAM) served
small SMB segment, and for micro SMB segment served
with Value-Added Reseller method.

During 2018, Telkom has customer care management
or after sales service through several ways, including
call and contact center for handling customer request,
complaints as well as delivering information of several
products and services.

116

Wholesale and International
Business

international data center or

Wholesale and
international business customers
are mainly domestic Other License Operators (OLO),
service providers, global wholesaler and carrier, and
enterprises that related to Telkom product or services
such as
international
connectivity (IPLC) besides retail customers in Telkom
international operation of MNO and MVNO. However, for
both Telkom wholesale and international business and
network infrastructure portfolio, Telkom focuses on the
implementation of:
• Attractive pricing, which

is a creative and
innovative business scheme in traffic (voice) and
network service to satisfy customer need and
business target; and

• Services improvement for international data center,
MNO, MVNO, and BPO customers in order to maintain
strong relationships with Telkom customers.

In 2018, Telkom had different sales channel in every
business lines which acted as the sales and distribution
channel for any sales perform by any entity. Telkom
has customer care management for wholesale and
international business customers such as Account
Manager, OLO care center, wholesale digital touch point
Apps (covering domestic & international customers),
and World Hub Operation Command Center (WHOCC)
which supporting for 24 hours every day.

Other and Digital Services

For digital service customers, Telkom implements a
marketing strategy which focuss on strengthening and
improving digital innovation, including by:
• Enriching digital content;
• Creating digital services with unique features;
•

Improving brand, platform, operational, and
customer experiences;

• Building digital business models in order to support

Indonesia digital economics;

• Leveraging assets and

to obtain
increasing insight into digital services and customer
experience; and

inventory

• Growing the portfolio of digital business through
investment in digital startups in order to be a part of
Indonesia digital ecosystem.

Telkom has a tailor sales strategy for each particular
digital business and the needs of their customers. Telkom
offers customer care and channel management, including
through contact centers, dedicated account management
for corporation, websites, and social media.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportDISTRIBUTION CHANNEL

Digital Touch Point

Digital touch point is a web-based and mobile-based service provided for IndiHome and corporate customers. Telkom provides
MyIndiHome as a mobile-based self-care service for IndiHome customers. Through the application, customers could make
subscription requests, billing and payment management, reporting and monitoring network issues, and accessing video on
demand and customer reward programs. Telkomsel also offers myTelkomsel, a self-care mobile application-based service
for Telkomsel subscribers, which provides information on services, allows the purchase of packages and products as well as
account management. For customer journey, Telkom measures experience with the global standard Net Promoter Score (NPS).
NPS information is used to improve customer experience in using services and improving the quality of products and services.

myTelkomsel

myIndiHome

myCarrier

Authorized Dealers, Retail Outlets and
Modern Channel

This distribution network provides Telkomsel products such
as starter packs, prepaid SIM cards, and top-up vouchers.
Telkom operates an authorized dealers and retail outlets
network across which is non-exclusive with a discount on all
marketable products.

Partnership Stores

This scheme is an extension of Telkom distribution channels
through cooperation with various third-party marketing
outlets, such as a computer or electronic stores, banks through
ATM networks and other business networks.

Contact Center

Serving as call centers, Telkom has contact centers that help
customers access products and services including billing
inquiries, submitting complaints and accessing to certain
promotional information and service features. Telkom operates
a 24-hour contact center facility in Jakarta, Semarang, Bandung,
Surabaya and Malang.

Account Management Team

Managing relationship and portfolio specifically for corporate,
SMB, government institution and wholesale customers.

Sales Specialist

Sale Specialist is a person who has advanced technical
knowledge about product and service for the corporate
customer and cooperates with the account manager.

Channel Partner

For enterprise customers, Telkom cooperates with VAR (Value
Added Reseller) who carry out sales and marketing activities
to meet specific enterprise customer demands and for retail
customers to offer retail packages. Telkom also works with
third parties to conduct sales activities through certain events.

117

Telkom has Plasa Telkom, GraPARI Telkomsel and GraPARI TelkomGroup as walk-in customer service points to access all Telkom
and Telkomsel product and service. It includes billing, payments, subscription cancellation, promotion and complaint handling.

As of December 31, 2018, Telkom has 422 Plasa Telkom outlet and 429 GraPARI center in Indonesia, as well 11 overseas GraPARI
(Saudi Arabia, singapore, Hong Kong, Macau, Taiwan and Malaysia) and 7 GraPARI TelkomGroup. Telkom also operated 761 unit
mobile GraPARI and 1,142 unit mobile IndiHome.

GraPARI TelkomGroup (GTG) deliver services for Telkom and Telkomsel customers with special concept based on customers journey experience in wider space to

make officer help customers more active and persuasive and create customer intimacy. Customers also could have Digital Customer Experience through various

sophisticated and unique facilities that relevant to people digital lifestyle.

Website

TCASH Wallet

A digital wallet application which allows customers to
purchase data, voice package, and pay bills or other product
with TCASH.

Telkom operates www.telkom.co.id, www.telkomsel.com and
www.indihome.co.id in order to facilitate customers to access
products and services. Some features of available services
are e-billing, registration, collective billing information, and
filing complaints.

Social Media

In line with the growing digital lifestyle, Telkom uses social
media such as Facebook, Instagram, and Twitter, to provide
information, and communicate with customers about Telkom
products and services.

118

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

Telkom made the enhancement of IT-based Customer Relationship Management (CRM) to improve customer experience by NCX
(New Customer Experience) application. With tis application, Telkom could obtain and integrated information such as historical
data and customer preference that helps the customer approaching, acquisition, agreement composition, and order submitting
process, so that the customers would get high quality service. NCX has been operated gradually for enterprise as well as
wholesale and international business segment in 2018, meanwhile it will be operated in 2019 for consumer segment.

OUR CUSTOMERS DIGITAL EXPERIENCE

119

FINANCIAL POSITION OVERVIEW

At the end of 2018, the Telkom recorded Total Assets of Rp206,196 billion, up 3.9% from the position at the end of the previous year.
The increase in Total Assets was mainly due to the increase in Fixed Assets in line with infrastructure development.

Whereas the Telkom’s total liabilities at the end of 2018 were recorded at Rp88,893 billion, up by 2.9%, which was mainly due to
the increase in debt in order to support funding in infrastructure development as well as to optimize the capital structure.

These tables show financial position of Telkom for three years, from 2016 to 2018.

Consolidated statements of financial
position table

Growth
2018-2017
(%)

Years ended December 31,

2018

2017

2016

(Rp billion)

(US$ million)

(Rp billion)

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

Financial Position Comparison

(9.0)

8.0

3.9

2.0

4.0

2.9

6.7

43,268

162,928

206,196

46,261

42,632

88,893

98,910

3,009

11,330

14,339

3,217

2,965

6,182

6,878

47,561

150,923

198,484

45,376

40,978

86,354

47,701

131,910

179,611

39,762

34,305

74,067

92,713

84,384

Composition of Assets and Liability during 2018, 2017 and 2016 can be seen in the following graphic.

Assets Composition 2016-2018

2018

2017

2016

43,268
21,0%

162,928
79.0%

47,561
24.0%

150,923
76.0%

Non Current Assets

Current Assets

Liability Composition 2016-2018

2018

2017

2016

42,632
48.0%

46,261
52.0%

40,978
47.5%

45,376
52.5%

Current Liabilities

Non Current Liabilities

47,701
26.6%

131,910
73.4%

34,305
46.3%

39,762
54.7%

120

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Comparison of Financial Position as of December 31, 2018 Compared to as of December 31, 2017

1. Assets
As of December 31, 2018, Telkom have total assets of
Rp206,196 billion (US$14,339 million), an increase 3.9% from
Rp198,484 billion in 2017.

a. Current Assets

Current assets position reached Rp43,268 billion
(US$3,009 million) as of December 31, 2018, decrease by
Rp4,293 million atau 9.0% from Rp47,561 billion as at 31
December 2017. The decrease in Telkom current assets is
mainly due to:
• Decrease in cash and cash equivalent by Rp7,706
billion or 30.6% due to dividen payment, capital
expenditure and bank loan payment;

• Decrease in other current financial assets by Rp869
billion or 40.0% due to the decrease available for sale
financial assets; and

• Decrease in claim for tax refund by Rp312 billion

or 34.4%.

These decrease were compensated by:
•

Increase
in trade receivables by Rp2,192 billion
or 23.8% due to third parties trade receivables of
Rp1,611 billion;
Increase in prepaid taxes by Rp802 billion or 41.2%
due to the increase of prepaid cash payments for
value added taxes;
Increase other current assets by Rp799 billion
or 11.1%;
Increase
or 112.6%; and
Increase in assets held for sale by Rp330 billion
or 3,300.0%.

in other receivables by Rp385 billion

•

b. Non Current Assets
As of December 31, 2018, non-current assets reached
Rp162,928 billion (US$11,330 million), increase Rp12,005
billion or 8.0% compared to Rp150,923 billion in 2017.
Increase in non-current assets is mainly caused by:
•

Increase in property and equipment by Rp13,077
billion or 10.0% with the increase in infrastructure
construction;
Increase in intangible asset by Rp1,502 billion or 42.5%
due to the goodwill increase from the acquisition of
Swadharma Sarana Informatika, Collega Inti Pratama
and Telin Malaysia; and
Increase in long-term investment by Rp324 billion or
15.1% due to the acquisition Cellum and other long-
term investment.

•

These increase were compensated by:
• Decrease other non-current assets by Rp2,598
billion or 21.2% due to the decrease in advances for
purchases of property; and

• Decrease in deferred tax assets by Rp300 billion

or 10.7%.

2. Liabilities
As of December 31, 2018 Telkom liabilities amount to Rp88,893
billion (US$6,182 million), increase 2.9% from Rp86,354 billion
in 2017.

a. Current Liabilities
As of December 31, 2018, Telkom current liabilities
position reached Rp46,261 billion (US$3,217 million),
increase 2.0% compared to Rp45,376 billion as at 31
December 2017. Telkom current liabilities increase is
mainly due to:
•

Increase in short-term bank loans by Rp1,754 billion or
76.6% due to the increase of third parties short-term
bank loans such as DBS and MUFG Bank for Telkom
and subsidiaries working capital. This acquired bank
loan facilities was spent for working capital;
Increase in current maturities of long term borrowings
by Rp1,087 billion or 20.9% due to matured bonds and
notes in a year for Rp525 billion; and
Increase in advances from customers by Rp329 billion
or 26.5%.

•

The increase is compensated by:
• A decrease

in taxes payable by Rp1,610 billion
or 57.7% due to the decrease of the subsidiaries
value-added tax;

• A decrease

in trade payables by Rp808 billion
or 5.2% due to the decrease in third parties payable
by Rp905 billion; and

• A decrease in unearned income by Rp237 billion

or 4.4%.

b. Non Current Liabilities
As of December 31, 2018, Telkom non current liabilities
reached Rp42,632 billion (US$2,965 million), increase
by Rp1,654 billion or 4.0% from Rp40,978 billion as
of December 31, 2017. Telkom increase in non current
liabilities due to:
•

Increase in long-term borrowings by Rp5,574 billion or
20.6% due to increase in bank loans by Rp4,859 billion,
bond and notes by Rp974 billion and other borrowings
by Rp754 billion. The increase is compensated by
decrease in obligation under finance leases by Rp672
billion and two step loans by Rp141 billion; and
Increase in deferred tax liabilities by Rp319 billion
or 34.2%.

•

The increase is compensated by decrease in pension
benefits and other post-employment benefits obligation
by Rp4,640 billion or 45.5% due to the decrease of pension
benefits by Rp2,405 billion and post-employment health
care benefits by Rp2,224 billion.

3. Equity

Telkom recorded total equity increase by Rp5,173 billion
or 4.6% from Rp112,130 billion as at December 31, 2017 to
Rp117,303 billion (US$8,157 million) as of December 31, 2018.
The increase is mainly due to total retained earning increase
by Rp6,099 billion or 7.2% due to the increase in total
comprehensive income for the year attibutable to owners
of the parent company is Rp22,844 billion. The increase
is compensated by decrease in non controlling interest by
Rp1,024 billion.

121

Comparison of Financial Position as of December 31, 2017 Compared to as of December 31, 2016

The current liabilities increase is mainly due to:
•

Increase in trade payables by Rp2,056 billion or
15.2% due to an increase in third party trade payables
of Rp2,707 billion;
Increase in short-term bank loans by Rp1,378 billion
or 151.3%;
Increase in accrued expenses by Rp1,347 billion
or 11.9% due to operational, maintenance and
telecommunication service expense;
Increase in current maturities of long term borrowings
by Rp688 billion or 15.2%; and
Increase in advances from customers and suppliers
by Rp400 billion or 47.6%.

•

The increase is compensated by:
• A decrease
or 5.6%; and

in taxes payable by Rp164 miliar

• A decrease in unearned income by Rp136 billion

or 2.4%.

b. Non Current Liabilities
As of December 31, 2017, the non current liabilities
reached Rp40,978 billion, increase by 6,673 billion or
19.5% from Rp34,305 billion as of December 31, 2016. The
increase in non current liabilities due to:
•

Increase
in pension benefits and other post-
employment benefits obligation by Rp4,069 billion
or 66,4%;
Increase in long-term borrowings by Rp1,607 billion or
6.1% due to increase in bank loans by Rp1,965 billion
and other borrowings by Rp499 billion. The increase is
compensated by decrease in obligation under finance
leases by Rp342 billion, bonds and notes by Rp340
billion and two step loans by Rp175 billion;
Increase
or 1,948.3%;
Increase in deferred tax liabilities by Rp188 billion
or 25.2%; and
Increase in long service award provision Rp145 billion
or 23.7%.

liabilities by Rp565 billion

in other

•

3. Equity

Telkom recorded total equity increase by Rp6,586 billion
or 6.2% from Rp105,544 billion as at December 31, 2016 to
Rp112,130 billion as of December 31, 2017. The increase is
mainly due to total retained earning increase by Rp8,281
billion or 10.8% to Rp19,952 billion due to increase in total
comprehensive income for the year attibutable to owners
of the parent company. The increase is compensated by

decrease in non controlling interest by Rp1,743 billion.

1. Assets
As of December 31, 2017, Telkom have total assets of
Rp198,484 billion, an increase 10.5% from Rp179,611 billion
in 2016.

a. Current Assets

Current assets position reached Rp47,561 billion as of
December 31, 2017, decrease by Rp140 billion or 0.3% from
Rp47,701 billion as at 31 December 2016. The decrease in
Telkom current assets is mainly due to:
• Decrease in cash and cash equivalent by Rp4,622
billion or 15.5% due to dividen payment and capital
expenditure;

• Decrease

in other receivables by Rp195 billion

or 36.3%; and

• Decrease in prepaid tax Rp191 billion or 8.9%.

These decrease were offset by:
•

Increase in other current asset by Rp1,937 billion or
36.9% due to radio frequency licensing;
Increase in trade receivables by Rp1,859 billion or
25.2% due to increase in third party receivables by
Rp1,208 billion;
Increase in other current financial asset by Rp702
billion or 47.7%; and
Increase in claim for tax refund by Rp316 billion
or 53.4%.

b. Non Current Assets
As of December 31, 2017, non-current assets reached
Rp150,923 billion,
increase by Rp19,013 billion
or 14.4% compared to Rp131,910 billion in 2016. Increase
in non-current assets is mainly caused by:
•

Increase in property and equipment by Rp15,673 billion
or 13.7% due to increase in transmission network;
Increase in deferred tax asset by Rp2,035 billion or
264.6% due to asset revaluation;
Increase in other non-current asset by Rp762 billion
or 6.6%;
Increase in intangible asset by Rp441 billion or
14.3%; and
Increase in long-term investment by Rp301 billion
atau 16.3%.

These increase were offset by decrease in prepaid
pension benefit cost by Rp199 miliar.

2. Liabilities
As of December 31, 2017 Telkom liabilities amount to
Rp86,354 billion, increase 16.6% from Rp74,067 billion
in 2016.

a. Current Liabilities
As of December 31, 2017, the current liabilities position
reached Rp45,376 billion, increase 14.1% compared to
Rp39,762 billion as at 31 December 2016.

122

•

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

PROFIT AND LOSS OVERVIEW

In 2018, Telkom recorded a consolidated income of Rp130.8 trillion, a positive growth of 2.0%. Telkom’s digital business revenue,
which includes broadband connectivity and digital services, experienced a significant growth of 23.1%, which was able to
compensate for the decline in the legacy business by 21.1%. The results of this performance show that the contribution of digital
business in 2018 increased significantly to 63.0% from 52.1% in 2017. The achievement also shows that Telkom is on the right
track to become the Digital Telecommunication Company by continuing to strengthen the capabilities of digital business, while
demonstrating an increasingly solid commitment to serve various digital needs of customers.

Operating expenses grew by 12.5% to Rp71.6 trillion, in line with investment in infrastructure development both mobile and
fixed line. Sustainable infrastructure development, especially broadband infrastructure is very important to ensure the best
customer digital experience. While the total burden in 2018 was recorded at Rp93.96 trillion, or an increase of 9.8% compared
to the previous year.

In 2018, Telkom profit before interest, tax, depreciation and amortization (EBITDA) decreased by 8.4% into Rp59.2 trillion, along
with the development of a sustainable broadband infrastructure.

Telkom net profit also decreased by 18.6% into Rp18.0 trillion or 13.7% if not considered income as the impact of asset
revaluation in 2017.

The following table shows Telkom Comprehensive Profit for three years from 2016 to 2018, with each percentage representing
a comparison of total revenues or expenses.

Table of
Comprehensive Income

Growth
2018-2017
(%)

(Rp billion)

2018

(US$
million)

Years ended December 31,

2017

2016

(Rp billion)

2.0

130,784

9,095

100.0

128,256

100.0

116,333

100.0

(17.3)

(18.3)

(11.7)

36,319

30,431

5,888

5.6

5,463

2,526

2,116

409

380

27.8

23.3

4.5

4.2

43,911

37,246

6,665

34.2

29.0

5.2

46,039

38,497

7,542

39.6

33.1

6.5

5,175

4.0

4,151

3.6

12.6

77,153

5,365

59.0

68,535

53.4

58,971

50.6

18.9

45,154

3,140

34.5

37,961

29.6

28,308

24.3

(30.4)

9,185

639

7.0

13,192

10.3

15,980

13.7

29.0

19,454

1,353

14.9

15,085

11.8

13,073

11.2

29.0

141.4

(8.0)

2,508

852

1,723

15.6

10,126

Sales of peripherals

(19.2)

Telecommunication
tower leases

Call center service

E-payment

E-health

CPE and terminal

Others

14.2

(8.5)

(11.1)

19.8

170.5

20.6

1,851

909

1,052

449

563

1,450

3,852

174

120

704

129

101

268

1.9

0.7

1.3

7.7

1.4

0.7

0.8

0.3

0.4

1.1

2.9

1,944

353

1,873

1.5

0.3

1.5

1,546

1,444

1.3

0.1

1.2

8,762

6.8

5,728

4.9

2,292

796

970

505

470

536

3,193

1.8

0.6

0.8

0.4

2.5

1,490

733

678

424

415

192

1,796

1.3

0.6

0.4

0.2

1.5

123

Revenues

Telephone Revenus

Cellular

Fixed Line

Interconnection
Revenues

Data, Internet and
Information Technology
Revenues

Celluler internet and
data

Short Messaging
Service (SMS)

Internet, data
communication
and information
technology services

Pay TV

Others

Network Revenues

Other
Telecommunications
Revenues

Growth
2018-2017
(%)

(Rp billion)

2018

(US$
million)

Years ended December 31,

2017

2016

(Rp billion)

Expenses

Depreciation and
Amortization Expenses

Operations,
Maintenance and
Telecommunication
Services Expenses

Operations and
Maintenance

Radio frequency
usage charges

Leased lines and CPE

Concession fees and
USO charges

Cost of sales of
handset

Electricity, gas and
water

Cost of SIM cards and
vouchers

Vehicles rental and
supporting facilities

Tower leases

Assurance

Others

Personnel Expenses

Salaries and related
benefits

Vacation pay,
incentives and other
benefits

Early Retirement
Program

Long Service Award
(LSA) Expense

Net periodic post
employment health
care benefits cost

Other employee
benefit cost

Other post-
employment benefit
cost

Others

Interconnection
Expenses

9.8

4.7

93,691

6,515

100.0

85,362

100.0

77,888

100.0

21,406

1,489

22.8

20,446

24.0

18,532

23.8

19.6

43,791

3,045

46.7

36,603

42.9

31,263

40.1

11.7

25,214

1,753

26.9

22,577

26.4

18,610

23.9

28.0

5,473

96.6

2.1

5,125

2,297

20.5

1,860

1.4

1,051

(16.3)

37.2

1.7

(34.4)

177.1

(2.6)

765

413

480

193

920

13,178

3.3

8,077

381

356

160

129

916

562

(1.4)

3,292

229

(36.9)

161

5.8

5.5

2.5

2.0

1.1

0.8

0.4

0.5

0.2

1.0

14.1

8.6

3.5

1.2

0.0

0.2

4,276

2,607

2,249

1,544

1,037

914

301

472

294

332

5.0

3.1

2.6

1.8

1.2

1.1

0.4

0.6

0.3

0.4

3,687

2,578

2,217

1,481

960

4.7

3.3

2.8

1.9

1.2

624

0.8

367

322

256

161

0.5

0.4

0.3

0.2

17.5

9.6

13,529

15.8

13,612

7,821

9.2

7,476

3,339

3.9

3,865

5.0

1,700

2.0

1,068

628

1.4

0.8

255

0.3

237

0.3

21.4

335

0.4

276

0.3

163

0.1

82.3

(23.8)

41.2

43.4

113

4,283

298

293

0.1

0.0

0.1

4.6

4.5

0.1

2,987

5,268

0.0

3.5

6.2

3,218

4,132

0.1

4.1

5.3

Pension benefit cost

(34.1)

1,120

Marketing Expenses

(20.0)

4,214

124

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportTable of
Comprehensive Income

Growth
2018-2017
(%)

(Rp billion)

2018

(US$
million)

Years ended December 31,

2017

2016

(Rp billion)

General and
Administrative
Expenses

16.7

6,137

General Expenses

23.7

1,792

Provision for
impairment of
receivables

Training, education
and recruitment

Collection expenses

Travelling

Professional fees

Meeting

Social contribution

Others

Other expenses

Gain / loss on foreign
exchange-net

Other expenses

Other Income

Operating Profit

Finance Income

Finance Costs

Share of profit of
associated companies

Profit Before Income
Tax

Income Tax (Expense)
Benefit

Other comprehensive
income (expenses) - net

Net comprehensive
income for the year

Profit for the year
attributable to owners
of the parent company

Profit for the year
attributable to non-
controlling interest

Net comprehensive
income attributable to
owner of the parent
company

Net comprehensive
income for the year
attributable to non-
controlling interest

6.6

1.9

1.8

0.5

0.2

0.4

0.9

0.2

0.4

0.7

(0.1)

0.8

427

125

120

(5)

122

2,701

(244)

15.4

1,724

(12.8)

16.3

(12.6)

65.3

(3.3)

(8.1)

45.4

(46.3)

33.3

(43.2)

68.6

(11.6)

(29.3)

26.7

(13.1)

463

157

415

823

233

181

349

682

(68)

750

1,752

38,845

1,014

(3,507)

5,260

6.2

4,610

5.9

2.1

1.0

0.5

0.2

0.6

0.8

0.3

0.2

0.4

3.2

0.1

3.2

1,449

1,494

531

135

475

498

241

197

240

1,269

1.7

1.8

0.6

0.2

0.6

0.3

0.2

0.3

1.5

(51)

(0.1)

1.5

1,320

1,039

43,933

1,434

(2,769)

42,659

(9,958)

32,701

(2,332)

30,369

1,626

743

399

152

436

594

207

134

319

2,521

2,469

750

39,195

1,716

(2,810)

38,189

(9,017)

29,172

(2,099)

27,073

18,032

1,254

22,145

19,352

8,947

622

10,556

9,820

22,844

1,589

19,952

17,331

9,077

631

10,417

9,742

125

Profit for the Year

(17.5)

26,979

(14.7)

36,405

2,532

(5.3)

(9,426)

311.9

4,942

(655)

1,876

344

5.1

31,921

2,220

Profit and Loss Comparison

Composition of Revenues and Expenses during 2016 until 2018 can be seen in the following diagram.

Revenues Composition 2016-2018

2018

2017

2016

10,126
7.7%

36,319
27.8%

77,153
59.0%

5,463
4.2%

1,723
1.3%

8,762
6.8%

43,911
34.2%

68,535
53.4%

5,728
4.9%

5,175
4.0%

1,873
1.5%

46,039
39.6%

58,971
50.7%

4,151
3.6%

1,444
1.2%

Telephone

Interconnection

Data, Internet and Information Technology

Network

Other Telecommunications

Expenses Composition 2016-2018

2018

2017

2016

4.214
4,5%

13.178
14,1%

21.406
22,8%

5,268
6.2%

13,529
15.8%

20,446
24.0%

6.137
6,6%

4.283
4,6%

682
0.7%

43.791
46,7%

4,132
5.3%

13,612
17.5%

18,532
23.8%

5,260
6.2%
2,987
3.5%

1,269
1.5%

36,603
42.9%

4,610
5.9%

3,218
4.1%

2,521
3.2%

31,263
40.1%

Depreciation and Amortization

Operations, Maintenance and Telecommunication Services

Personnel

Interconnection

Marketing

General and Administrative

Other

126

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportComparison of Profit and Loss for The Year Ended December 31, 2018 Compared to Year Ended
December 31, 2017

1. Revenues

Telkom recorded an increase in revenues by Rp2,528
billion or 2.0%, from Rp128,256 billion in 2017 to Rp130,784
billion (US$9,095 million) in 2018. This increase is mainly
due to the data, internet and information technology
services revenue.

a. Cellular Telephone Revenues

Cellular voice revenues contributed for 23.3% of 2018
consolidated revenue of Telkom 2018 consolidated
revenues. The cellular revenues decrease by Rp6,815
billion, or 18.3%, from Rp37,246 billion in 2017 to
Rp30,431 billion (US$2.116 million). The decrease is due
to subscriber prefer to use Over the Top (OTT) service
as a substitution of cellular service due to cellular
service cannibalization.

b. Fixed Lines Revenues

Fixed line revenues decreased by Rp777 billion or
11.7%, from Rp6,655 billion in 2017 to Rp5,888 billion
(US$409 million) in 2018. due to the decrease of voice
service usage.

c. Data, Internet and Information Technology Services

Revenues
In 2018 Telkom derived data, internet and information
technology services revenues of Rp77,153 billion
(US$5,365 million),
increase by Rp8,618 billion or
12.6% from Rp68,535 billion in 2017. Revenue from this
business activity accounted for 59.0% of consolidated
revenue in the year ended December 31, 2018. Increase
in data revenues, internet and information technology
services is mainly due to:
• The increase of internet and data cellular revenue
Rp7,193 billion or 18.9% due to the growth in data
usage by 101.7% to 4,373,077 TB;

• An increase in internet, data communications and
information technology services revenue increased
by Rp4,369 billion or 29.0% in line with growing fixed
broadband subscribers from 5.3 million to 7.2 million,
which include IndiHome subscribers;

• Pay TV revenues increased by Rp564 billion or
29.0% in line with the increase in add on minipack
transactions by IndiHome customers to 4.4 million in
2018, grew 243% compared to 2017; and
Increase in other revenue by Rp499 billion or 141.4%.

•

The increase was compensated by decrease in SMS
revenue by Rp4,007 billion or 30.4% due to customers
preference transformation to Over the Top (OTT) service.

d. Interconnection Revenues
interconnection

consist

revenues

interconnection

Interconnection revenues
incoming calls from

Telkom
of
interconnection revenues from Telkom’s fixed line
from Telkomsel
and
include
cellular network.
international direct
IDD 007
services. Interconnection revenues in 2018 increased
by Rp288 billion or 5.6% from Rp5,175 billion in 2017
to Rp5,463 billion (US$380 million) in 2018, due to
increased in voice traffic that targeted and considered
the niche of the global transit market by flowing traffic
between countries.

e. Network Revenues

Telkom network revenues increased by Rp150 billion
or 8.0%, from Rp1,873 billion in 2017 to Rp1,723 billion
(US$120 million) in 2018.

f. Other Telecommunication Services Revenues
Other telecommunications services revenue increased
by Rp1,364 billion or 15.6%, from Rp8,762 billion in
2017 to Rp10,126 billion (US$704 million) in 2018. The
increased was mainly due to:
•

Increase in CPE and terminal revenue by Rp914 billion
or 170.5% from Enterprise customer for ICT solution
service; and
Increase in other revenues by Rp441 billion or 19.2%.

•

These increases were compensated by the decrease
of sales of peripherals by Rp441 billion or 19.2%.

g. Other Revenues
Other revenues increased by Rp713 billion or 68.6%,
from Rp1,039 billion in 2017 to Rp1,752 billion (US$122
million) in 2018.

2. Expense

Total expenses increased by Rp8,329 billion, or 9.8%,
increased from Rp85,362 billion in 2017 to Rp93,691 billion
(US$6,515 million) in 2018.

a. Operation, Maintenance and Telecommunication

Service Expense

Operations, maintenance and

telecommunication
the
service expenses contributed 46.7%
expenses. Operations, maintenance and
total of
telecommunication service expenses
increased by
Rp7,188 billion, or 19.6%, from Rp36,603 billion in 2017
to Rp43,791 billion (US$3,045 million) in 2018.

from

127

This increase was primarily attributable to the following:
• An increase in operations and maintenance expenses
by Rp2,637 billion, or 11.7%, due to an increase of
network maintenance for broadband, cellular or fixed
network improvement;

• The increase in leased lines and CPE expenses by
Rp2,518 billion or 96.6%, along with the increase in the
Enterprise segment revenue in providing end-to-end
IT Solutions;

• An

increase

in radio frequency usage charges
expense by Rp1,197 billion or 28.0% due to the
annual performance bond payment of Rp20 billion
and Rp1,030 each for 2.1 GHz and 2.3 GHz frequency
by Telkomsel;

• The increase of other expense was Rp588 billion

or 177.1%; and

• An increase in cost of sales of handset by Rp316 billion

or 20.5%.

This increase was compensated by the decrease in cost
of SIM card and vouchers sales by Rp149 billion or 16.3%
due to the decrease of production and distribution
cost. It occurred due to the SIM Card registration that
changed business orientation into top-up phone credit
package than starter pack sales.

This increase primarily due to:

• An increase in general expenses by Rp343 billion

or 23.4%;

• An increase in professional fees expenses by Rp325

billion, or 65.3%; and

• An increase in provision for impairment of receivables

by Rp230 billion or 15.4%.

g. Gain (Loss) on Foreign Exchange-net
Gain on foreign exchange – net amounted to Rp68 billion
(US$5 million) in 2018, compared to Rp51 billion in 2017.
indicated the relatively low impact of foreign currency
rate fluctuation toward Telkom.

h. Other Expense
Other expenses decreased by Rp570 billion or 43.2%,
from Rp1,320 billion in 2017 to Rp750 billion (US$52
million) in 2018.

3. Operating Profit and Operating Profit Margin
With the various increases and decreases of transactions,
operating profit decreased by Rp5,088 billion, or 11.6%,
from Rp43,933 billion in 2017 to Rp38,845 billion (US$2,701
million) in 2018. Operating profit margin decreased from
34.3% in 2017 to 29.7% in 2018.

b. Depreciation and Amortization Expense
Depreciation and amortization expenses increased by
Rp960 billion, or 4.7%, from Rp20,446 billion in 2017 to
Rp21,406 billion (US$1,489 million) in 2018 in line with
the increase in fixed assets value.

4. Profit Before Income Tax and Pre-Tax Margin

The profit before income tax decreased by Rp6,254 billion,
or 14.7%, from Rp42,659 billion in 2017 to Rp36,405 billion
(US$2,532 million) in 2018. Pre-tax margin decreased from
33.3% in 2017 to 27.8% in 2018.

c. Personnel Expense

Personnel expenses contributed 14.1% from Telkom total
expenses. This expense decreases by Rp351 billion or
2.6%, from Rp13,529 billion in 2017 to Rp13,178 billion
(US$916 million) in 2018. This decrease was consisted
of the decrease pension benefit cost of Rp580 billion or
34.1% due to past service cost as the previous year. This
decrease was compensated by the increase of salaries
and related benefit expenses by Rp256 billion or 3.3%.

d. Interconnection Expense

Interconnection expense increased by Rp1,296 billion,
or 43.4%, from 2,987 billion in 2017 to Rp4,283 billion
(US$298 million) in 2018. This increase was in line with
the efforts in interconnection revenue increase.

e. Marketing Expense
Marketing expenses decreased by Rp1,054 billion or
20.0%, from Rp5,268 billion in 2017 to Rp4,214 billion
(US$293 million) in 2018 due to the marketing program
strategy which is effective and efficient, especially in
cellular services as the sales business model will be
more oriented to the sale of credit top-up packages than
the sale of starter packs.

f. General and Administrative Expense
General and administrative expenses

increased
by Rp877 billion or 16.7%, from Rp5,260 billion in
in 2018.
2017 to Rp6,137 billion (US$427 million)

5. Income Tax Expense

Income tax expense decreased by Rp532 billion or 5.3%, from
Rp9,958 billion in 2017 to Rp9,426 billion (US$655 million) in
2018, inline with the decrease in profit before income tax.

6. Other Comprehensive Income

In 2018, other comprehensive income was Rp4,942 billion
(US$344 million). In 2017, other Telkom comprehensive
income was to Rp2,332 billion.

7. Profit for The Year Attributable to Owners of The Parent

Company
Profit for the year attributable to owners of the parent
company decreased by Rp4,113 billion or 18.6%, from
Rp22,145 billion in 2017 to Rp18,176 billion (US$1,254 million)
in 2018.

8. Profit for The Year Attributable to Non-Controlling

Interest
Profit for the year attributable to non-controlling interest
decreased by Rp1,609 billion, or 15.2%, from Rp10,556 billion
in 2017 to Rp8,947 billion (US$622 million) in 2018.

9. Net Comprehensive Income for The Year
Net Comprehensive income for the year increased by Rp1,552
billion, or 5.1%, from Rp30,369 billion in 2017 to Rp31,921
billion (US$2,220 million) in 2018.

10. Net Income per Share
Net income per share decreased by Rp41.52 or 18.6%, from

Rp223.55 in 2017 to Rp182.03 in 2018.

128

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Comparison of Profit and Loss for The Year Ended December 31, 2017 Compared to Year Ended
December 31, 2016

1. Revenues

e. Network Revenues

Telkom recorded an increase in revenues by Rp11,923 billion
or 10.2%, from Rp116,333 billion in 2016 to Rp128,256 billion
in 2017. This increase is mainly due to the data, internet and
information technology services revenue.

a. Cellular Telephone Revenues

Telkom cellular revenues accounted for 29.0% of Telkom
2017 consolidated revenues. Telkom cellular revenues
decrease by Rp1,251 billion, or 3.2%, from Rp38,497
billion in 2016 to Rp37,246 billion. The decrease is due to
a decrease in usage charges revenue by Rp1,062 billion
or 2.8%.

b. Fixed Lines Revenues

Fixed line revenues decreased by Rp877 billion or 11.6%,
from Rp7,542 billion in 2016 to Rp6,665 billion in 2017.
The decrease in fixed line revenues occurred due to a
decrease in usage charges by Rp815 billion or 21.2%.

Telkom network revenues increased by Rp429 Billion or
29.7%, from Rp1,444 billion in 2016 to Rp1,873 in 2017.

f. Other Telecommunication Services Revenues
Other telecommunication services increased by Rp3,034
billion or 53.0%, from Rp5,728 billion in 2016 to Rp8,762
billion in 2017. The increased was mainly due to:
•
•

Increase in other revenue by Rp1,397 billion or 77.8%;
Increase in sales of peripheral by Rp802 billion
or 53.8%;
Increase in CPE and terminal revenue by Rp344
billion or 179.2%; and
Increase in call center service revenue by Rp292
billion or 43.1%.

•

g. Other Income
Other income increased by Rp289 billion or 38.5%, from

Rp750 billion in 2016 to Rp1,039 miliar in 2017.

c. Data, Internet and Information Technology Services

2. Expense

internet and

Revenues
Telkom derived data,
information
technology services revenues of Rp68,535 billion,
increase by Rp9,564 billion or 16.2% from Rp58,971
billion in 2016. Revenue from this business activity
accounted for 53.4% of consolidated revenue in the year
ended December 31, 2017. Increase in data revenues,
internet and information technology services is mainly
due to:
• An increase in celuller internet and data by Rp9,653
billion or 34.1% due to the growth
in mobile
broadband usage from 84.7 million subscribers in
2016 to 105.8 million subscribers in 2017;

• An increase in internet, data communications and
information technology services revenue increased
by Rp2,012 billion or 15.4% in line with growing
fixed broadband subscribers from 4.3 million to 5.3
million, which include IndiHome subscribers;
Increased Pay TV revenue by Rp398 billion or 25.7%
as IndiHome subscribers;
Increase
451.6%; and

in other revenue by Rp289 billion or

•

• This increase was compensated by a decrease in
SMS revenues of Rp2,788 billion or 17.4% due to over
the top (OTT) services.

d. Interconnection Revenue
interconnection

consist

revenues

interconnection

of
Telkom
interconnection revenues from Telkom’s fixed line
from Telkomsel’s
and
include
cellular network.
international direct
IDD 007
services. Interconnection revenues in 2017 increased
by Rp1,024 billion or 24.7% from Rp4,151 billion in 2016
to Rp5,175 billion in 2017, due to increased in domestic
interconnection revenue.

Interconnection revenues
incoming calls from

Total expenses increased by Rp7,474 billion, or 9.6%,
increased from Rp77,888 billion in 2016 to Rp85,362 billion
in 2017.
a. Operations, Maintenance Telecommunication Service

Expense

Operations, maintenance and

telecommunication
service expenses contributed 42.9% from the total of
Company’s expenses. Operations, maintenance and
telecommunication service expenses
increased by
Rp5,340 billion, or 17.1%, from Rp31,263 billion in 2016
to Rp36,603 billion in 2017. This increase was primarily
attributable to the following:
• An increase in operations and maintenance expenses
by Rp3,967 billion, or 21.3%, due to an increase of
network maintenance;

• An

increase

in radio frequency usage charges
expense by Rp589 billion or 16.0% due to additional
radio frequency by Telkomsel;

• An increase in cost of SIM card and vouchers by

Rp290 billion or 46.5%;

• An increase in others expense by Rp171 billion

or 106.2%; and

• An increase in tower leases expense by Rp150 billion

or 46.6%.

b. Depreciation and Amortization Expense
Depreciation and amortization expenses increased by
Rp1,914 billion, or 10.3%, from Rp18,532 billion in 2016 to
Rp20,446 billion in 2017 due to Telkomsel’s acceleration
of transmission depreciation.

129

c. Personnel Expense

Personnel expenses contributed 15.8% from Telkom
total expenses. This expense increases by Rp83 billion
or 0.6%, from Rp13,612 billion in 2016 to Rp13,529 billion
in 2017. This increase was driven by:
• A decrease in vacation pay, incentives and other
benefits expenses by Rp526 billion, or 13.6%; and
• A decrease in early retirement program by Rp628

billion due to no programs in 2017.

The decrease was offset by:
• An increase in pension benefit cost by Rp632 billion,
or 59.2% in line with increase in pensions obligation;
• An increase in salaries and related benefits expenses

by Rp345 billion, or 4.6%; and

• An increase in net periodic post-employment health

care benefit cost by Rp113 billion, or 69.3%.

3. Operating Profit and Operating Profit Margin
As a result of the foregoing, operating profit increased by
Rp4,738 billion, or 12.1%, from Rp39,195 billion in 2016 to
Rp43,933 billion in 2017. Operating profit margin increased
from 33.7% in 2016 to 34.3% in 2017.

4. Profit Before Income Tax and Pre-Tax Margin

Telkom profit before income tax increased by Rp4,470
billion, or 11.7%, from Rp38,189 billion in 2016 to Rp42,659
billion in 2017. Pre-tax margin increased from 32.8% in
2016 to 33.3% in 2017.

5. Income Tax Expense

Income tax expense increased by Rp941 billion, or 10.4%,
from Rp9,017 billion in 2016 to Rp9,958 billion in 2017, inline
with the increase in profit before income tax.

d. Interconnection Expense

Interconnection expense decreased by Rp231 billion, or
7.2%, from Rp3,218 billion in 2016 to Rp2,987 billion in
2017 in line with decrease in usage charges revenues.

In 2017, other comprehensive income amounted to Rp2,332
billion due to an actuarial losses by Rp2,375 billion. In
the previous year, Telkom’s other comprehensive income
amounted to Rp2,099 billion.

6. Other Comprehensive Income

e. Marketing Expense
Marketing expenses increased by Rp1,136 billion, or
27.5%, from Rp4,132 billion in 2016 to Rp5,268 billion in
2017. This increase was primarily due to an increased
promotion by Telkomsel.

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 Rp2,793 billion, or 14.4%, from
Rp19,352 billion in 2016 to Rp22,145 billion in 2017.

f. General and Administration Expense
General and administrative expenses

increased by
Rp650 billion, or 14.1%, from Rp4,610 billion in 2016 to
Rp5,260 billion in 2017. This increase primarily due to:
• An increase in provision for impairment of receivables
by Rp751 billion, or 101.1% due to more prudent
estimation methods undertaken by management; and
• An increase in training, education and recruitment

expenses by Rp132 billion, or 33.1%.

This increase was offset by a decrease in general
expenses by Rp177 billion or 10.9%.

g. Gain on Foreign Exchange-net
Gain on foreign exchange – net amounted to Rp51
billion, while in 2016 loss on foreign exchange net by
Rp52 billion.

h. Other Expense
Other expenses decreased by Rp1,149 billion or 46.5%,
from Rp2,469 billion in 2016 to Rp1,320 billion in 2017.

8. Profit for The Year Attributable to Non-Controlling

Interest
Profit for the year attributable to non-controlling interest
increased by Rp736 billion, or 7.5%, from Rp9,820 billion in
2016 to Rp10,556 billion in 2017.

9. Net Comprehensive Income fo The Year
Net Comprehensive income for the year increased by
Rp3,296 billion, or 12.2%, from Rp27,073 billion in 2016 to
Rp30,369 billion in 2017.

10. Net Income per Share
Net income per share increased by Rp27.36 or 13.9%, from

Rp196.19 in 2016 to Rp223.55 in 2017.

130

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

CASHFLOW OVERVIEW

The following tables presents the information about Telkom consolidated cash flow, such as on Telkom Consolidated Financial
Report from 2016 to 2018.

Cash Flow Table

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

Cash and cash equivalents at beginning of
year

Growth
2018-2017
(%)

Years ended December 31,

2018

2017

2016

(Rp billion)

(US$ million)

(Rp billion)

(7.6)

6.3

(12.3)

69.3

45,671

(35,090)

(18,458)

(7,877)

3,176

49,405

47,231

(2,440)

(33,007)

(27,557)

(1,284)

(21,052)

(17,905)

(548)

(4,654)

434.4

171

1,769

(119)

Cash and cash equivalents at end of year

(30.6)

17,439

(15.5)

25,145

1,749

1,213

29,767

28,117

25,145

29,767

Cashflow Comparison

Composition of Cash Receipt and Cash Disbursement from 2016 to 2018 on graphic below.

Cash Receipt Composition 2016-2018

2018

2017

2016

131,469
78.3%

962
0.6%

35,398
21.1%

127,669
90.3%

1,550
1.1%

12,219
8.6%

2018

85,798
48.8%

36,052
20.5%

53,856
30.7%

Cash Disbursement 2016-2018
2017

78,264
53.6%

34,557
23.7%

33,271
22.8%

2016

Operation

Investment

Financing

118,326
89.5%

3,007
2.3%

10,921
8.3%

71,095
54.5%

30,564
23.4%

28,826
22.1%

131

Comparison of Cash Flow for Year Ended December 31, 2018 Compared to Year Ended
December 31, 2017

Telkom total cash and cash equivalents as of December 31, 2018
amounted to Rp17,439 billion (US$1,213 million), decreased
by Rp7,706 billion or 30.6% compared to Rp25,145 billion
2017. The largest cash receipts by Rp131,469 or 78.3% came
from operations activities, followed by receipts from funding
activities by Rp35,398 billion or 21.1% and from investment
activities by Rp962 billion or 0.6%.

Cash receipts is mostly used for operating activities by Rp85,798
billion or 48.8%, investment activity by Rp53,856 billion or
30.7% and funding activities by Rp36,052 billion or 20.5%.

1. Cash Flows from Operating Activities

In 2018, Telkom recorded net cash provided by operating
activities were Rp45,671 billion (US$3,176 million) compared
to Rp49,405 billion in 2017. Cash receipts from operating
increased by
activities amounted to Rp131.469 billion,
Rp3,800 billion, or 3.0% compared to 2017. The cash receipts
came from:
• Cash receipts from customers and other operators of

Rp127,855 billion;
Interest income received of Rp1,036 billion; and

•
• Receipt for tax refund of Rp2,578 billion;

Cash disbursements from operating activities amounted
to Rp85,798 billion (US$5,966 million) in 2018, increased
by Rp7,534 billion, or 9.6% compared to 2017. The cash
disbursements were used for:
• Cash for expenses of Rp54,099 billion;
• Cash to employees of Rp12,657 billion;
• Cash

for corporate and final

taxes of

income

The cash receipts came from:
• Proceeds from sale of property and equipment of

Rp629 billion;

• Placement

in time deposits and available-for-sale

financial assets of Rp171 billion;

• Proceeds from insurance claims of Rp153 billion; and
• Dividen

from associated companies of

received

Rp9 billion.

Cash disbursements from investing activities was Rp36,052
billion, increased by Rp1,495 billion, or 4.3% compared to
Rp34,557 billion in 2017. Cash disbursements were used for:
• Purchases of property and equipment of Rp31,562 billion;
• Purchases of intangible assets of Rp2,972 billion;
•
• Acquisition of businesses - net of acquired cash of

Increase of other assets of Rp461 billion;

Rp420 billion;

• Additional contribution on long-term investments of

Rp337 billion; and

• Advances for purchases of property and equipment of

Rp300 billion.

3. Cash Flows from Financing Activities
Net cash flows used in financing activities in 2018 was
Rp18,458 billion (US$1,284 million) compared to with
Rp21,052 billion in 2017. Cash receipts from financing
activities amounted to Rp35,398 billion, which increased by
Rp23,179 billion or 189.7% from Rp12,219 billion in 2017. The
cash receipts came from:
• Proceeds from bank loans and other borrowings of

Rp35,364 billion; and

Rp10,375 billion;

• Capital contribution of non-controlling

interests

• Cash for interest cost of Rp3,735 billion;
• Cash for value added taxes-net after of Rp3,434

subsidiaries of Rp34 billion.

In 2018, Telkom made cash disbursement for financing
activities of Rp53,856 billion. Compared to Rp33,271 billion in
2017, the amount increased by Rp20,585 billion or 61.9%. The
cash disbursements were used for:
• Cash dividends paid to the company stockholders and
to non-controlling interest of subsidiaries of Rp16,609
billion, and Rp10,134 billion; and
of
of Rp27,113 billion.

• Repayment

borrowings

loans

other

and

billion; and

• Other cash (payments) receipts – net of Rp1,498 billion.

2. Cash Flows from Investing Activities

In 2018, net cash flows used in investing activities was
increase than
Rp35,090 billion (US$2,440 million) an
Rp33,007 billion in 2017. Cash receipts from investing
activities amounted to Rp962 billion in 2018 compared to
Rp1,550 billion in 2017. It was decreased by Rp588 billion
or 37.9%.

132

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Comparison of Cash Flow for Year Ended December 31, 2017 Compared to Year Ended
December 31, 2016

Telkom total cash and cash equivalents as of December 31, 2017
amounted to Rp25,145 billion, decreased by Rp4,622 billion
or 15.5% compared to Rp29,767 billion 2016. The largest cash
receipts by Rp127,669 or 90.3% came from operations activities,
followed by receipts from financing activities by Rp12,219
billion or 8.6% and from investment activities by Rp1,550 billion
or 1.1%.

Cash received is mostly used for operating activities by
Rp78,264 billion or 53.5%, investment activity by Rp34,557
billion or 23.7% and financing activities by Rp33,271 billion
or 22.8%.

The cash receipts came from:

• Proceeds from sale of property and equipment of

Rp1,367 billion;

• Proceeds from insurance claims of Rp155 billion; and
• Dividends received from associated companies of

Rp28 billion.

Cash disbursements from investing activities amounted
to Rp34,557 billion, increased by Rp3,993 billion, or 13.1%
compared to Rp30,564 billion in 2016.Cash disbursements
were used for:
• Purchases of property and equipment of Rp32,294 billion;
in time deposits and available-for-sale
• Placement

1. Cash Flow from Operating Activities

financial assets of Rp676 billion

In 2017, Telkom recorded net cash provided by operating
activities at Rp49,405 billion compared to Rp47,231 billion
in 2016. Cash receipts from operating activities amounted
to Rp127,669 billion, increased by Rp9,343 billion, or 7.9%
compared to 2016. The cash receipts came from:
• Cash receipts from customers and other operator of

Rp125,111 billion;
Interest income received of Rp1,431 billion;

•
• Other cash receipts of Rp542 billion; and
• Tax refund receipts of Rp585 billion.

Cash disbursements from operating activities amounted
to Rp78,264 billion, increased by Rp7,169 billion, or 10.1%
compared to 2016. The cash disbursements were used for:
• Cash payments for expenses of Rp49,604 billion;
• Payment for corporate and final

income taxes of

• Purchases of intangible assets of Rp508 billion;
•

Increases advances for purchases of property and
equipment of Rp490 billion;

• Additional contribution on long-term investments of

Rp269 billion;

• Business acquisition, net of acquired cash of

Rp243 billion; and

• Purchases of other assets of Rp77 billion.

3. Cash Flows from Financing Activities
Net cash flows used in financing activities in 2017 were
Rp21,052 billion compared to with Rp17,905 billion in 2016.
Cash receipts from financing activities amounted to Rp12,219
billion, which increased by Rp1,298 billion, or 11.9% from
Rp10,921 billion in 2016. The cash receipts came from:
• Proceeds from bank loans and other borrowings of

Rp11,846 billion;

Rp12,169 billion; and

• Cash payments to employees of Rp11,739 billion;
• Payments for interest cost of Rp3,133 billion; and
• Payment for value added taxes after of Rp1,942 billion.

2. Cash Flow form Investing Activities

In 2017, net cash flows used in investing activities were
Rp33,007 billion an increase of Rp27,557 billion in 2016.
Cash receipts from investing activities amounted to Rp1,550
billion in 2017, compared to Rp3,007 billion recorded in
2016, The amount is decreased by Rp1,457 billion, or 48.5%.

• Capital contribution of non-controlling

interests

subsdiaries of Rp50 billion.

In 2017, Telkom had cash disbursement for financing
activities of Rp33,271 billion. Compared to cash disbursment
of Rp28,826 billion in 2016, the amount increased by Rp4,445
billion or 15.4%. The cash disbursements were used for:
• Cash devidends paid to the Company’s stockholders
interest of subsidiaries of

and to non-controlling
Rp11,627 billion, and Rp12,355 billion; and

• Repayment of
Rp9,289 billion.

loans and other borrowings of

133

SOLVENCY

The indicator of Telkom’s liquidity in 2018 is quite good. This shows that Telkom and its subsidiaries have a good ability to pay their
debts, both short-term and long-term debt. The liquidity source of Telkom and its subsidiary is mainly from operating cashflow,
financing, and investment. Please refer Note 15 and 16 to the Consolidated Financial Statements.

SHORT-TERM LIABILITIES

Telkom and its subsidiaries maintain the liquidity position at a good level to ensure well operations and fulfillment of matured
obligations. This liquidity positions management is carried out in an efficient manner to avoid inefficiencies in the resources use.

Telkom and its subsidiaries oversee liquidity ratios to maintain the favorable liquidity position, especially the current ratio, so that
they are always at an adequate level and to avoid excessive inefficiencies.

The short-term liquidity ratios of Telkom and its subsidiaries are presented in current ratio, quick ratio and cash ratio in the
following table.

Ratio

Current Ratio

Quick Ratio

Cash Ratio

2018

2017

2016

93.5%

66.8%

40.5%

104.8%

81.3%

60.2%

120.0%

98.4%

78.6%

With current ration of 93.5% above the industry average, it indicates that Telkom has a good level of liquidity and ability to meet
matured obligations.To maintain company liquidity, Telkom made the following efforts:
• Maintain a current ratio above the industry current ratio; and
• Maintain the loan availability that can be withdrawn if needed. At the end of 2018, the total loan that have not been drawn were

Rp8,507 billion.

LONG-TERM LIABILITIES

The long-term liquidity ratios serve as the measuring instrument for Telkom and its subsidiaries to analyze their ability to pay long-
term liabilities. Three ratios are used, which are debt-to-equity ratio, debt-to-EBITDA and EBITDA-to-interest-expense as shown
in the following table.

Ratio

Debt To Equity Ratio

Debt To EBITDA

EBITDA to interest expense

2018

2017

2016

0.38X

0.74X

16.9X

0.32X

0.55X

23.3X

0.30X

0.53X

21.2X

The debt to equity ratio is 0.38 times, the debt to EBITDA ratio is 0.74 times and the EBITDA ratio of interest expense is 16.9 times,
indicating a controlled long-term liability management and a very low risk of default.

Nowadays, the financial condition indicators are quite strong, however in order to increase the effectiveness of funding management
and working capital, it is necessary to conduct a debt for reprofiling strategy, such as improve the debt profile by changing most
portion of the floating interest debt into fixed interest. The main purpose of this debt reprofiling is saving interest expense. Some
of the strategies that have been carried out are as follows:
• Optimizing the use of internal funding sources to satisfy the corporate funding requirement;
• Renegotiating with banking partners related to the reduction in loan interest with floating interest rates;
• Renegotiating with banking partners regarding the type of interest loan, from loan with floating interest to a fixed rate loan; and
•

Issue fixed interest debt instruments through Medium Term Notes (MTN).

134

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

CAPITAL STRUCTURE

Telkom funding resources are from short-term debt, long-term debt and equity with the largest composition of the capital
structure coming from equity. The following are tables and diagrams which illustrate Telkom capital structure and composition
during the last three years.

2018

2017

2016

40,044
28.0%

4,043
2.8%

98,910
69.2%

33,183
25.9%

2,289
1.8%

92,713
72.3%

30,888
26.6%

911
0.8%

84,384
72.6%

Short Term

Long Term

Equity

Capital Structure

Short Term

Long Term

Debt

Equity

Total Invested Capital

2018

2017

2016

(Rp billion)

(US$ million)

(Rp billion)

4,043

40,044

44,087

98,910

142,997

281

2,785

3,066

6,878

9,944

2,289

33,183

35,472

92,713

128,185

911

30,888

31,799

84,384

116,183

MANAGEMENT POLICY ON CAPITAL STRUCTURE

Periodically, Telkom reviewed the position of the capital structure, leverage level, and debt payment performance to add or pay
the debt. This result was the basis for management policy on capital structure by taking qualitative and quantitative approaches.
Telkom then determined optimal funding composition from equity and debt and took decision whether it is addition or payments of
short-term or long-term debt. If possible, the funding scheme could be renewed with a more efficient one.

Telkom had concern maintaining credit rate and capital structure. It included maintaining them at least equivalent to competitor
value. Moreover, Telkom optimized wighted average cost of capital and tax benefit. In maintaining the balance of capital structure,
Telkom uses several financial ratios.

In 2018, Telkom debt-to-equity ratio (DER) was 0.38 times and the debt service coverage ratio was 1.9 times. It showed that Telkom
had high ability to repay the debt. For information of management policy on capital management, see Note 37 to the Consolidated
Financial Statements.

135

Telkom capital expenditure was done as short-term, medium-term and long-term necessity in line with Telkom strategy for
developing a digital business portfolio. Telkom understands that to be digital telecommunication company, it should accelerate
capital expenditure to respond to the dynamic technology changes which is aligned with Telkom’s strategy of developing a portfolio
of digital businesses.

PURPOSE OF CAPITAL EXPENDITURE

Telkom capital expenditure is aimed to strengthen digital infrastructure in order to maintain competitive and sustainable
long-term growth. It is to anticipate the telco industry changes in the digital era by expanding the connectivity business portfolio
and digital service.

TYPES OF CAPITAL EXPENDITURE

Capital expenditure carried out by Telkom can be categorized as follows:
• Broadband services, comprising of broadband access, IT, application and content, as well as service node;
• Network infrastructure, comprising of transmission network, metro ethernet and Regional Metro Junction (RMJ), and IP backbone

as well as satellite;

• Optimizing legacy, comprises of fixed wireline telephone; and
• Other supporting capital expenditures.

AMOUNT OF CAPITAL EXPENDITURE

Telkom capital expenditure in 2018 was Rp33,620 billion (US$2,338 million) or around 25,7% of revenue, increased Rp464 billion
or 1.4% compared to the previous year. This includes the capital expenditure investment from Telkom and subsidiary.

Years ended December 31,

2018

2017

2016 (Restated)

(Rp billion)

(US$ million)

(Rp billion)

Telkom (parent company)

13,186

917

11,572

Subsidiaries

Telkomsel

Others

Subtotal for subsidiaries

Total for TelkomGroup

13,885

6,549

20,434

33,620

966

455

1,421

2,338

15,080

6,504

21,584

33,156

10,309

12,564

6,326

18,890

29,199

Telkomsel invested the highest capital expenditure of Rp13,885 billion meanwhile Telkom invested Rp13,186 billion. Other
subsidiary capital expenditure investment was Rp6,549 billion.

Capital Expenditure Composition of TelkomGroup Year in 2016-2018

2018

13,885
41.3%

6.549
19.5%

13,186
39.2%

2017

15,080
45.5%

6,504
19.6%

11,572
34.9%

2016

12,564
43.0%

6,326
21.7%

10,309
35.3%

Telkom

Telkomsel

Others Subsidiaries

The following are some of Telkom’s capital expenditure and its subsidiaries:
• Built 28,376 BTS units. Total BTS by the end of 2018 was 189,081 BTS, grew 18% from the previous year. Total BTS in the end of

2018 was 189,081 BTS with 138,771 3G and 4G BTS;

• The construction of optic fiber-based network cable in 13 thousand district capitals., Telkom succeeded connecting accumulated

458 district capitals with fiber optic backbone. Telkom has total fiber optic backbone network of 161,652 km;

• Built the Indonesian Global Gateway (IGG) submarine cable project;
• Built and launched Satellite Merah Putih; and
• Built data centers.

136

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

MATERIAL COMMITMENT FOR CAPITAL EXPENDITURE

OBJECTIVES OF MATERIAL CONTRACTS FOR CAPITAL EXPENDITURE

Telkom have several material contracts for capital expenditure by holding companies and its subsidiaries. Material contract
is mainly for the procurement and installation of transmission equipment and cable network. The following table presents a
material contract for capital expenditure, including project-related agreements by Telkom and its subsidiaries.

Telkom

Contracting Parties

Initial Date of Agreement

Significant Provisions of the Agreement

September 13, 2018

Procurement agreement for ONT Platform ZTE

TII and NEC Corporation

May 12, 2016

Consortium Bisnis Submarine Cable

November 10, 2017

PT Sisindokom Lintas Buana

November 15, 2017

PT Sisindokom Lintas Buana

April 26, 2018

PT ZTE Indonesia

May 31, 2018

October 30, 2018

PT Huawei Tech Investment

November 23, 2018

PT Lintas Teknologi Indonesia

December 13, 2018

NEC Corporation

December 13, 2018

PT Datacomm Diangraha

December 14, 2018

PT Huawei Tech Investment

December 17, 2018

PT Master System Infotama

December 31, 2018

PT Lancs Arche Consumma

December 31, 2018

Telkomsel

installation agreement of
Procurement and
Sistem Komunikasi Kabel Laut (SKKL) Indonesia
Global Gateway

Procurement and installation agreement of SKKL
Sabang-Lhoksemawe-Medan

Procurement and installation for PE-VPNCISCO
expans

Procurement and installation of OLT and ONT
Platform ZTE

Procurement agreement for Set Top Box (STB)
Platform ZTE phase-2

Procurement and
Platform Huawei

installation

for DWDM

Procurement and
Platform Nokia NARU 2018

installation

for DWDM

Procurement and installation agreement of ISP
SKKL Platform NEC expansion and reengineering
transport

Procurement and Installation for Metro Ethernet
Platform Nokia-ALU expansion

Procurement and
installation agreement of
Methor Ethernet, BRAS, PCEF and PE Transit
Platform Huawei

Procurement and installation for IP Backbone
Platform CISCO expansion

Procurement and
Platform Coriant Naru 2018

installation

for DWDM

Contracting Parties

Initial Date of Agreement

Significant Provisions of the Agreement

PT NSN, NSN Oy and Nokia Siemens
Network GmbH & Co.KG

April 17, 2008

PT Ericsson Indonesia and PT Ericsson AB

April 17, 2008

PT Datacraft Indonesia, PT Dimension
Data Indonesia and PT Huawei

February 3, 2010

Amdocs Software Solutions Limited
Liability Company and PT Application Solutions

February 8, 2010

PT Application Solutions

February 8, 2010

The combined 2G and 3G CS Core Network
Rollout Agreement

Technical Service Agreement (TSA) for combined
2G and 3G CS Core Network

Next Generation Convergence Core Transport
Rollout and Technical Support agreement

Online Charging System (OCS) and Service Control
Points (SCP) System Solution Development
Agreements

Technical Support agreement
technical support services for the OCS and SCP

to provide

137

Initial Date of Agreement

Significant Provisions of the Agreement

Amdocs Software Solutions Limited Liability
Company and PT Application Solutions

July 5, 2011

Development and Rollout agreement
Customer Relationship Management
Contact Center Solutions

for
and

PT Huawei

March 25, 2013

Support

Technical
the
procurement of Gateway GPRS Support Node
(GGSN) Service Complex

agreement

for

Wipro Limited, Wipro Singapore Pte. Ltd. And
PT WT Indonesia

April 23, 2013

PT Ericsson Indonesia

October 22, 2013

Development and procurement of Operational
and Strategic Decision Support System (OSDSS)
Solution Agreement

Procurement of GGSN Service Complex Rollout
agreement

PT Ericsson Indonesia, PT NSNI, NSN Oy, PT
Huawei and PT ZTE Indonesia

February 1, 2018

Ultimate Radio Network Infrastructure ROA and
SA agreement

SOURCES OF FUNDS OF MATERIAL
CONTRACTS FOR CAPITAL EXPENDITURE

In 2018, Telkom allocated capital expenditure according to
the business scheme with internal or external source fund.
Telkom has good leverage ratios and is able to fund capital
expenditures thus far. The detail information shall be referred
in the discussion of “Capital Expenditure.”

DENOMINATED
OF
MATERIAL CONTRACTS FOR CAPITAL
EXPENDITURE

CURRENCIES

Telkom use the Rupiah and foreign currencies such as US
Dollar, Euro and HKD, to conduct transactions related to
material contracts for capital expenditure. The composition of
the value of material contracts for capital expenditure as of
December 31, 2018 dominated by Rupiah as follows:

Table of Material
Commitment based
on Currencies

Amounts in
Foreign
Currencies
(In Million)

Equivalent in
Rupiah
(In Billion)

FOREIGN CURRENCY RISK MITIGATION
OF MATERIAL CONTRACTS FOR CAPITAL
EXPENDITURE

Telkom understands that there
is an uncertain foreign
exchange rate risk when committed to the payment of capital
expenditure with foreign currency. On the other hand, Telkom
also has the opportunity to gain foreign exchange gains from
exchange rates on time deposits and receivables denominated
in foreign currency, which set at least 25% of short-term
liabilities in foreign currency payable.

Under these conditions, Telkom minimize the exchange
rate risk by “offsetting” a trade-off between the exchange
rate losses from material contracts for capital expenditure
and exchange rate gain from time deposits and accounts
receivable. In general, it lowers the exposure of foreign
currency exchange risk to immaterial.

For more detail discussion of the material contracts for capital
expenditure and the risk of foreign exchange rate can be seen
in Notes 34 significant contracts and agreements and Notes
36 financial risk management in the Consolidated Financial
Statements of 2018.

Rupiah

US Dollar

Euro

HKD

Total

—

1.23

0.79

—

7,988

1,349

9,358

138

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

RECEIVABLES COLLECTABILITY

Telkom has a receivables rate in 2018 of 31.9 days with a receivable turnover ratio of 11.5%. Telkom created provision for impairment
of receivables based on the collective assessment of historical impairment rates and individual assessment of its customers credit
history in the amount to anticipate the uncollected parts of trade receivables throughout 2018.

Telkom did not distinguish trade receivables of an affiliated party or third parties in calculating and presenting the due receivables
amount. The carrying amount of trade receivables considered past due but not impaired per December 31, 2018 and 2017 are of
Rp4,296 billion and Rp3,354 billion respecteively. It means the receivables past due but not impaired, are due from costumer with
good credit rating history and expected to be recoverable. For further details on Telkom receivables, please see Note 5 in the
Consolidated Financial Statement.

Ratio

Average collection ratio (days)

Receivables turnover ratio (%)

Average Collection Duration Ratio (%)

2018

2017

2016

31.9

11.5

26.2

13.9

23.1

15.8

MATERIAL INFORMATION AND FACT AFTER
ACCOUNTANT REPORTING DATE

In line with the principle of transparency and accountability in good corporate governance, Telkom present material information
and facts that occurred after the accountant reporting date, as follows:
1. Based on notarial deed of Bonardo Nasution, S. H. No. 12 dated January 12, 2019 and No. 13 dated January 21, 2018, Telkomsel
established a subsidiaries, PT Telkomsel Mitra Inovasi (PT TMI) and PT Fintek Karya Nusantara (PT Finarya) with full ownership
by Telkomsel.

2. On January 25, 2019, and on January 14, 2019, Telkomsel fully paid the loan with MUFG and BNI amounting to Rp750 billion and

Rp1000 billion, respectively.

3. Based on notarial deed of Jimmy Tanal, S. H., M. Kn., N0. 22 dated March 6, 2019 regarding Shareholder’s Resolution of
PT Persada Sokka Tama (PST), approving transfer of right over shares of PST to Dayamitra from Mrs. Rahina Dewayani and
Mrs. Rahayu amounting to 2,559,000 and 6,000 shares, respectively, therefore Dayamitra has 2,565,000 shares or 95%
ownership of PST.

4. In January, February and March 2019, the Company received the SC’s verdicts as the result of the tax audit for tax period
January to April and September 2007. Based on the verdict, SC rejected the Tax Authorities’s Judical review and strengthen the
Tax Court’s verdict.

On March 11, 2019, Tax authorities issued Decision letter on Company’s objection, wherein the Tax Authorities has granted all

the Company’s objection and addition the overpayment amount for the tax period January to April 2016.

5. On February 18, 2019, Telkomsel received SP2PK from the Tax Authorities regarding the 2010 fiscal year VAT amounting to
Rp290 billion. On March 25, 2019, the Company received SP2PK payment from the Tax Authorities regarding the 2010 fiscal
year VAT amounting to Rp290 billion.

139

GLOBAL AND INDONESIA ECONOMY IN 2018

In 2018, global economy grew around 3% or more stable than
the previous year. Developing countries (Emerging Market
and Developing Economies/EMDE) is still the main booster for
global economy recovery, with the economic growth of 4.2%.
Developing countries in East Asia, Pacific, Southeast Asia
and South Asia made better growth than other developing
countries. Meanwhile, developed countries
(advanced
economies) made economic growth of 2.2% throughout 2018.

Several main global economic challenges in 2018 were trade
war of United States (US) and China, the aggressive increase
of Federal Fund Rate interest rate and the uncomplete issue
of Brexit. In general, those challenges have given impact to
global economy including Indonesia.

Badan Pusat Statistik (BPS) or Central Bureau of Statistic
showed that Indonesia economy grew 5.17% throughout 2018
or better than the previous year of 5.07%. The Government
also succeeded controlling
inflation rate which was
relatively lower of 3.13% than the previous year of 3.61%.
This controlled inflation rate could maintain consumer
purchasing power, which domestic consumption is still the
main role to encourage economic growth contributing more
than half of Indonesia GDP.

The dynamics of global economy was the increase of Federal
Fund Rate interest rate for 4 times throughout 2018, which
responded prudently by Bank Indonesia (BI) with the increase
of reference interest rate or BI 7-day reverse repo rate for 6
times. From May to December 2018, BI reference interest rate
increases by 175 bps from 4.5% into 6.0%. This reference rate
was able to overcome the Rupiah value fluctuation so only
depreciated by 6.9% though Rupiah had been weakend on
October. The prudent implementation of fiscal and moneter
policy as well as the high of foreign exchange reserves have
strengthen Indonesia resistance and capacity to encounter
external fluctuation.

The sturdy Indonesia economy resulted the ranking increase
of Sovereign Credit Rating (SCR) from international rating
institution Moody’s
Investor Service from Baa3/Outlook
Positive into Baa2/Outlook Stable on April 13, 2018. With this
improvement, now Indonesia has been recognized by four
international rating institutions at one level higher than the
previous Investment Grade level.

140

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportINDONESIA TELECOMMUNICATIONS INDUSTRY

industry encountered varied
Indonesia telecommunication
industry encountered quite severe
situation. Cellular
challenge in 2018. The decreasing voice and SMS service
(legacy business) is due to Over The Top (OTT) service. The OTT
service offers communication convenience of data, voice, and
video so it decrease conventional communication usage. The
Government also determined pre-paid SIM card registration
policy conforming with Miniterial Regulation of Ministry
of Communication and
Indonesia
(KOMINFO) No. 14 Year 2017 which had been applied from
October 2017 to April 2018. This policy caused price war of data
service in particular, as one of the operator strategy to preserve
their customer or attract the new one. However, cellular
industry had better condition in the second half of 2018 than
the previous half after Telkomsel made initiative to increase its
data service price started from July by incouraging the mobile
broadband service package price to the reasonable price level.

Information Technology

For long-term period, SIM card registration is expected to give
a great advantage for the country, telecommunication industry
and society. It helped The Government to support national
cyber security with the more complete and valid citizen identity.
Meanwhile, there would be a healthier and balance new
competition for telecommunication industry especially cellular
industry. Operators would make a more precise marketing
programs with this accurate costumer profile that could be
adjusted to their demands and needs. It also encouraged cost
efficiency as the sales business model would more focuse on
credit top-up package than starter pack sales, so it decreased
card production and distribution cost. It could be said like pulling
back arrow for a while, then cellular industry would accelerate
forward faster and sustainably for long-term purpose.

internet has been growing and nowadays

The fiber optic-based fixed broadband service demand with
high-speed
it
turn out to be the domestic need for information access and
entertainment. The high quality fixed broadband also offers
other value added service which is growing like home security.

Its penetration in domestic purpose is still low, estimated
around 12% of all household in Indonesia. Besides, its
competitiveness level is healthier. With its growth in middle
class resident, it is estimated to have a good demand in
the future.

In ICT solution service industry that used to be only for
corporate customer, the business process digitalization is more
important to enhance a competitiveness and efficiency for
large company or SMB. Its estimated penetration for corporate
customer in general is low, so the opportunity in this business
is still quite good.

Indonesia

In the other hand, The Government also encourages,
industry revolution
the Government encouraged digital
and stimulated the digitalization of economic growth in
Indonesia. Ministry of Communication and
Information
technology
through Telecommunication and
Information Accessibillity Agency (BAKTI), continue striving
internet
telecommunication access equity and building
infrastructure used by the outermost, underdeveloped,
foremost region and Indonesia border. BAKTI targeted there are
minimum one BTS in each rural area and expected to connect
to internet in 2020. The Government also initiate constructing
fiber optic based backbone network in those areas such as
Palapa Ring. Palapa Ring had been started in 2016 and for
its west segment was completed and can be used by the
telecommunication operator.Its central and east segment are
expected operating and used by the operator in 2019. It is also
expected to support the acceleration of broadband services
penetration and equality across Indonesia.

COMPETITION IN THE
TELECOMMUNICATIONS INDUSTRY

Telkom has a comprehensive range of products and services
covering cellular, fixed broadband and fixed voice, enterprise,
interconnection and satellite services with an overview of the
competition as follow below.

Mobile Business

Basic cellular services i.e. voice and SMS, continue showing
decrease trend in line with the increase of Over The Top (OTT)
use. It is major challenge for Telkomsel, Telkom subsidiaries,
as well as another cellular operator such as Indosat and XL.
Telkomsel is still the market leader with the widest coverage,
while XL and Indosat are still competing with each other for a
more affordable price.

is dominant outside Java

Telkomsel
island, meanwhile
competition in Java island is very tight for cellular operators in
Indonesia. The rivalry occurred mainly in Java with all operators
focusing on developing their network, meanwhile Telkomsel
is relatively dominant which supported by wide coverage
infrastructure. The regulation of SIM card registration that
started on October 2017, increased the rivalry because operator
price competition by offering package to attract customers
to register in their network. The prepaid SIM card registration
program limits the number of prepaid SIM cards for each
customer so that by the end of 2018, the number of Telkomsel
customers has decreased by 17% to 163.0 million customers.

141

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportConsolidated Financial StatementsAppendicesPartnership andCommunity Development ProgramCorporate Social ResponsibilityCorporateGovernanceAnalysis andDiscussionAboutTelkomReport of The Boardof Commissionersand DirectorsTelkom Highlights123456789The three operators also experienced a drastic decline in legacy
business, which was around 21%. On the other hand there
was very tight competition in mobile data services triggered
by a price war that intensified during the prepaid SIM card
registration period. Both of these resulted in a decrease in
revenue of 3 main operators by 7.4%. Telkomsel has taken the
initiative to prevent increasingly unhealthy industrial conditions
by encouraging the price of mobile broadband service packages
to reach a reasonable price level in order to provide optimal
value for both operators and customers. In addition, Telkomsel
also seeks to restrain the decline of the legacy business as a
result of the use of OTT services, including by offering programs
such as voice packages and SMS packages. As a result of the
above efforts, Telkomsel managed to grow better than the
industry, and only recorded a decrease in revenue of 4.3%.

Enterprise Business

Through this business line, Telkom delivered digital solution
and integrated ICT. In operating enterprise business, Telkom is
supported by partners and subsidiaries such as Telkom Sigma
in developing platform solution and data center requirement;
Infomedia in fulfilling requirement of call center and BPO;
Telkomsat in providing satellite transponder; or PINS to provide
supporting telecommunication equipment.

In general, the competitors in enterprise was spread out but
there is no single player that delivers completed or integrated
solutions. Its potential is higher in line with the trend of business
process digitalization for corporate, government institution
and SMB. It aims to make the business process more efficient.

In 2018, there was dynamics of additional frequency spectrum
used by domestic operators which secured by auction in October
2017, such as 30 MHz block on 2,300 MHz frequency and two
other operators—Indosat and Tri on 2,100 MHz frequency. It will
strengthen the operator position to maximize 4G LTE network
quality, particularly in dense capacity data service area. This
additional frequency spectrum enables the operator to provide
higher capacity and speed for better digital lifestyle experience
to Indonesia cellular customers.

To overcome the rivalry in 2018, Telkom made acquisitions
and organizational changes as well as expanded its cross-
sector digitalization service as a leveraging core capabilities.
Nowadays, Telkom is serving the banking sector, especially the
management of ATM communication network and retail for the
digitalization of distribution channel.

International Traffic and Interconnection
Business

Fixed Voice & Broadband Business (Fixed
Business)

Fixed broadband service equipped with content as IPTV,
is increasingly in demand. IndiHome customers increased
to 5.1 million in 2018, it showed the high potential in this
business line. The competitors are LinkNet, Bisznet, MNC Play,
and MyRepublic.

The competition in fixed voice and fixed broadband, emphasized
at minipack offering or bundling, as well as educational,
information, and entertainment programs. During 2018,
IndiHome has been developing innovation of package programs
such as Gamer package and minipacks.

In addition, IndiHome also continue developing extended
product and service such as IndiHome Smart (smart home) so
customers might monitor and control remotely, IndiHome Cloud
and Movin so customer might use fixed phone with customer
gadget (smartphone). IndiHome Digital touch point is increasing
in various digital products and transactions. For smart home
product and service, IndiHome compete with MNC Play that had
launched MNC Play Smart Home since the end of 2016.

Telkom is still dominating in the fixed broadband market in
2018. Though fixed broadband penetration in Indonesia is
still low, several operators are still widening their coverage
area aggressively, focusing in high income areas, besides
applying bundling service strategy or delivering various
content collaborating with OTT player, especially video
streaming platform.

The current operators of traditional international traffic IDD
(non-VoIP) in Indonesia are only Telkom and Indosat. But the
rivalry in this business line is the presence of OTT or digital
communication service such as Skype, Line, and WhatsApp, or
other VoIP service providers that open international access. Its
contribution to Telkom revenue lessened continuedly by the
presence of OTT.

To overcome this competition, Telkom prefered to provide OTT
service platform than confront it directly. Telkom emphasized
revenue and profit of broadband use through digital hub and
Content Delivery Network (CDN).

Network and Satellite Infrastructure
Business

In infrastructure business especially tower, Telkom competes
with other companies such as Tower Bersama Infrastructure,
Sarana Menara Nusantara (Protelindo), and Solusi Tunas
Pratama, as well as other telecommunication operators such
as Indosat and XL. Its operating activities were managed by
Telkom subsidiary Mitratel and Telkomsel. Its strategy was
building a new tower or co-location by leaasing the existing
tower to cellular operators. Telkom also delivers traffic carrier
service as the operator that has backbone network.

In satellite business management, Telkom competed with
other overseas satellite operators in South East Asia. Capacity
limitation is the factor which restricted the capacity of
domestic satellite operator to compete. Currently, satellite
transponder demand is higher than the domestic transponder
availability. It occurred due to the demand of satellite service
in Indonesia’s archipelago is very high, particularly in the
regions which are not yet connected to the submarine cable
and optic fiber.

142

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportBUSINESS PROSPECTS AND SUSTAINABILITY
OF THE COMPANY
NATIONAL POLITICAL AND ECONOMIC
PROJECTION

In 2019, Indonesia will have a Presidential Election. Telkom
consider this opportunity as ‘wait and see’ strategy for
industry players that might decrease the
intensity of
operating activity. On the other hand, the election would
increase communication activity particularly broadband use
for voice, video, data and information exchange that relates to
preparation, implementation and supervision of the campaign
and election.

On the macro scale, The Government targets Indonesia
economy would grow around 5.3% in 2019. Indonesia economy
was fundamentally solid with growth of 5.17% in 2018 which
better than the previous year of 5.07%. The consumption
level and consumer purchasing power is expected to favour
quite well in the future, supported by a controlled inflation
rate. More infrastructure such as highway, airport, power
plant, seaport, and others might enhance long term economic
activities for short-term or long-term period. Nevertheless,
Telkom notices the global economic fluctuation i.e. the increase
potential of US reference interest rate could influence Rupiah
exchange rate and domestic interest rates and also Indonesia
companies in general.

OVERVIEW OF BUSINESS PROSPECTS

Telkom believes that the opportunity to continue to grow
in the future is still very promising. The connectivity of data
and digital services has now become a basic need of the
community, and even its use has penetrated in small towns
and rural areas. Whereas for institutions and businesses,
digital services have become the main requirement for
improving services and in maintaining and developing their
businesses. Telkom, with all its infrastructure and facilities,
is in the leading position to take up these opportunities and
continue to grow in the future.

For the Mobile segment, there are business potentials in
three focus areas, namely increasing growth potential in
the High Value Customer, mobile solution services for the
Enterprise segment, and developing various digital services
such as mobile financial services, games and videos. At
present, High Value Customers contribute significantly to
Telkomsel’s revenues. To provide the best experience in order
to maintain loyalty while increasing the number of High Value
Customers, we conduct profiling of High Value Customers and
take advantage of big data analytics so that they can offer
diverse and quality services according to their personal needs.
Telkom also continues to develop innovative products and
digital solutions for the enterprise segment including Mobile

Security, NB-IoT and other cellular solutions that utilize the
Telkomel myBusiness product portfolio. Meanwhile on Digital
services, we focus on providing lifestyle experiences such as
video, games and music. In May 2018, we launched MAXstream
as a platform and became a one-stop video portal by
combining OTT Video apps, linear channels and VOD content.
Telkom also provides a complete digital game ecosystem and
releases the first game “Shellfire” in October 2018 under the
Dunia Games brand.

Along with the increasing use of smartphones. At the end of
2018 from the total Mobile segment customers in Telkomsel
subsidiaries, 66% of our customers have used smartphones,
and are expected to continue to grow. The wider use of
smartphones will also encourage the growth of digital
service & solutions where Telkomsel has prepared platforms,
applications and content to anticipate these customer needs.
The average consumption of Telkomsel’s customer data is
around 4 Gigabytes per month, which is still lower than the
data consumption of several operators in other countries such
as Malaysia, Thailand and India which have reached more than
10 Gigabytes per month.

In the Enterprise segment, opportunities to increase business
growth are still wide open. we always strive to find new
growth engines that are recurring. We also believe that the
trend of digitizing business processes in corporations will
continue to strengthen, as well as institutions and government
institutions, both central and regional.
In addition, the
penetration of ICT services in Small and Medium Enterprises
(SMBs) is still relatively low. We hope that our presence with
the provision of ICT services can help business development
among SMEs given the magnitude of the benefits generated,
and at the same time constitute a market opportunity for us
to grow together. We also actively explore opportunities for
enhancing digital capabilities through inorganic activities to
strengthen integrated digital services.

In the Consumer segment, the opportunity to continue to grow
is still wide open, until the end of 2018 the penetration of fixed
broadband services in Indonesia is still relatively low, which
is around 12%, while the number of middle class households
continues to grow, so the potential demand for fixed
broadband services is still very large . In addition, the level of
competition is also relatively low because fixed broadband
service providers require relatively high capital expenditure
needs, which is one of the barrier to entry for new entrants or
for existing operators to expand. to various regions. In terms
of products and services, Telkom always provides additional
choices for customers by offering more varied services and
products so they can reach a wider market niche according to
customer needs.

143

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportConsolidated Financial StatementsAppendicesPartnership andCommunity Development ProgramCorporate Social ResponsibilityCorporateGovernanceAnalysis andDiscussionAboutTelkomReport of The Boardof Commissionersand DirectorsTelkom Highlights123456789For the Wholesale and International Business segment, with the success of Telkom completing the construction of the
Indonesia Global Gateway (IGG) cable project, Telkom has adequate network capacity and quality to develop domestic and
global market. IGG has a length approximately 5,400 km, connecting the SEA-US submarine cable system (South East Asia
- United States) and submarine cable systems SEA-ME-WE5 (South East Asia - Middle East - Western Europe 5), while
integrating SEA-US and SEA-ME-WE5 with a network of domestic backbone infrastructure that covers almost all of the
district capital in Indonesia.

By connecting SEA-ME-WE5 with SEA-US through IGG, Telkom is getting closer to becoming a Global Digital Hub that allows Telkom
to provide alternative direct broadband connections between the European, Asian and American regions. The transformation
towards the Global Digital Hub is also carried out by developing infrastructure and connectivity, data center, cloud, content and
platform services that target the Carriers, Internet Service Provider, Digital Player, Enterprise and other segments in both the
domestic and international markets.

COMPARISON OF
REALIZATION

INITIAL YEAR TARGET AND THE

In the challenging dynamics of the digital telecommunication industry throughout 2018, Telkom revenue growth was 2.0%. Telkom
profit in 2018 was Rp18,032 billion, with EBITDA margin and net income margin of 45.3% and 13.8%. For capital expenditure, Telkom
spent 25.7% of revenues in 2018, especially for digital business infrastructure development.

Realization in 2018

Targets in Early 2018

Revenue growth outperform the industry
average revenue.

Revenue growth expected to outperform
the industry average revenue

EBITDA margin and net income margin
decreased into 45.3% and 13.8% The
decrease of EBITDA margin was mainly
due to the decrease of legacy business
that has higher EBITDA margin than
other businesses. This decline has not
been compensated by the increase in
digital business volume.

IndiHome

Digital business contribution towards
EBITDA margin,
growth
acceleration and other businesses.
Broadband expansion
in mobile or
fixed line, would always operate and
is expected to decrease EBITDA and
net income margin.

realization

The
expenditure was 25.7%
in
focusing
infrastructure investment.

of
capital
of revenue,
the digital business

amounted

expenditure

Capital
to
24%-27% of revenue per year with
a focus on building digital business
infrastructure.

Indicator

Revenue growth

EBITDA Margin

Capital expenditure

144

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
TARGETS OR PROJECTIONS FOR THE FOLLOWING YEAR

Telkom business activities aim to achieve sustainable growth. In 2019, Telkom will establish three main programs to emphasize
customer satisfaction and loyalty, digital business development, and acquisition or partnership.
1. Embracing Best in Class Digital Customer Experience, transforming customer experience by optimizing business process with

system, process and people improvement.

2. Intensifying Digital Business, expanding the broadband connectivity and encouraging digital service and solution to maintain

the market domination.

3. Driving Smart Initiatives on Cost Effectiveness, optimizing cost by emphasizing the streamlined business organization, system,

and process and use its Telkom capability to improve the profit.

In 2019, Telkom targets revenue to be above the industry projection by increasing IndiHome contribution. In addition, Telkom still
maintains dominance in the cellular market, and aggressively develops its digital business. In the coming year, along with Telkom
role in the digitalization era, revenue from voice and sms services will decrease while revenues from digital business will increase.
The contribution of digital business is expected to be even greater against the EBITDA margin and net income.

The allocation of capital expenditure is set to around 25-30% of revenue for building broadband infrastructure in both the cellular
and fixed-line segments. In general, Telkom target for 2019 can be set out below:

Indicators

Revenue growth

EBITDA margin

Expenditure capital

DIVIDEND

2019 Targets

Revenue growth is expected to be better than industry average revenue and other
digital business revenue continues to increase.

EBITDA and net income margin are projected to decline slightly in line with the
development of mobile and cellular broadband infrastructure, along with an increase
in the portion of revenue from digital business.

Capital expenditure around 25%-30% of revenue, with a focus on investment in
digital business infrastructure.

Telkom have a dividend pay out policy with the approval of the Annual General Meeting of Shareholders (AGMS). Every year, we
distribute cash dividends to shareholders with a payout ratio ranging from 60% to 75%. Then, for performance in 2018, we will
set the payment ratio, dividend amount, and total final dividend at the AGMS to be held in 2019. Here are dividend payment data
and information for the last five years from 2014 to 2018.

Dividend
Year

Dividend Policy

Date of Dividend
Payment in Cash
and/or Date of
Dividend
Distribution in
Non-Cash

Payment Ratio
/ Payout ratio
(%) 1

Dividend
Amount paid
per year
(Million Rp)

Dividend
Amount per
Share (cash
and/or non-
cash) after Stock
Split (Rp)

2013

2014

2015

2016

2017

AGMS, April 4, 2014

May 19, 2014

AGMS, April 17, 2015

May 21, 2015

AGMS, April 22, 2016

May 26, 2016

AGMS, April 21, 2017

May 26, 2017

AGMS, April 27, 2018

May 31, 2018

9,943,2942

8,782,8123

9,293,1844

13,546,4115

16,608,7516

102.40

89.46

94.64

136.75

167.66

Remarks:
1. The payment ratio shall be the profit percentage attributable to the owner of holding entity paid to the shareholders as dividends.
2. Consists of cash dividend in the amount of Rp7,812,588 million and special cash dividend in the amount of Rp2,130,706 million.
3. Consists of cash dividend in the amount of Rp7,319,010 million and special cash dividend in the amount of Rp1,463,802 million.
4. Consists of cash dividend in the amount of Rp7,744,304 million and special cash dividend in the amount of Rp1,548,880 million.
5. Consists of cash dividend in the amount of Rp11,611,211 million and special cash dividend in the amount of Rp1,935,200 million.
6. Consists of cash dividend in the amount of Rp13.286.997 million and special cash dividend in the amount of Rp3,321,754 million.

145

REALIZATION OF PUBLIC OFFERING FUND

As of December 31, 2018, Telkom have several outstanding bonds held by investors as follows:

Name of the Bond

Amount
(Rp million)

Date of
Issue

Maturity
Date

Bond II Telkom 2010 series B

1,995,000 June 25, 2010

July 6, 2020

Telkom Shelf Registered Bonds I 2015 series A

2,200,000 June 23, 2015

June 23, 2022

Telkom Shelf Registered Bonds I 2015 series B

2,100,000 June 23, 2015

June 23, 2025

Telkom Shelf Registered Bonds I 2015 series C

1,200,000 June 23, 2015

June 23, 2030

Telkom Shelf Registered Bonds I 2015 series D

1,500,000 June 23, 2015

June 23, 2045

Time
Periode
(year)

The rating of the bonds is AAA of Pefindo and secured by all of the Issuer Company assets, tradable or non-tradable, either
existing or those that will exist in the future. The underwriters of the bonds are PT Bahana Sekuritas (Bahana), PT Danareksa
Sekuritas, PT Mandiri Sekuritas and PT Trimegah Sekuritas, with PT Bank Permata Tbk and PT Bank Tabungan Negara Tbk as the
appointed Trustee.

In 2018, all public offering funds had been realized in accordance with the plan to use the proceeds from the public offering,
by recording the remaining balance is nil. For more details related to information about Bonds please see Note 16 to the
Consolidated Financial Statements.

MATERIAL TRANSACTION INFORMATION CONTAINING
CONFLICT OF INTEREST, TRANSACTION WITH AFFILIATED
PARTIES, INVESTMENT, DIVESTMENT AND ACQUISITION

To comply with POJK No.31/POJK.04/2015, Telkom disclosed material transaction information that may affect stock prices or
investment decisions. Through this report Telkom declared to have identified and disclosed material transactions containing
conflict of interest, transactions with affiliates, and investment, divestment and acquisition transactions throughout 2018,
as follows:
1. On January 30, 2018, the Company entered into a conditional new shareholding agreement with Cellum Global Zrt. (Cellum)
through two stages. In the first stage, Metranet will include new shares worth USD4,000,000 equivalent to 20.4% ownership
and in the second stage valued at USD2,000,000 so that Metranet’s ownership becomes 30.4%. Cellum is a provider solution
for mobile payment and commerce services. This new equity participation is expected to strengthen the Company business
portfolio, specifically strengthening the TelkomGroup Fin-Tech business ecosystem.

2. On March 31, 2018, Metra signed a Sales Purchase Agreement with shareholders of PT Swadharma Sarana Informatika
(Swadharma) in share ownership and the purchase of new shares totaling Rp397 billion. Metra has a 51% interest in Swadharma.
Swadharma is engaged in managing computer technology facilities, especially in the banking sector. This new investment is
expected to strengthen the Company business portfolio.

3. On April 18, 2018, TII acquired a 21% shareholding owned by Compudyne Telecommunication Systems Sdn, Bhd. at Telin Malaysia
at a acquisition cost of MYR8,764,798 (equivalent to Rp31 billion), so TII ownership in Telin Malaysia became 70% and became a
consolidated entity.

4. On April 25, 2018, TII increased its share ownership in TSGN to 70% with total acquisition price of MYR42,350,000 (equivalent to

Rp150 billion).

5. On December 28, 2018, a Sales and Purchase Agreement involving Telkom Sigma, PT Upperco Usaha Maxima and PT Abdi Anugrah
Persada regarding with shares of PT Collega Inti Pratama. In this transaction, Telkom Sigma will become majority shareholder of
PT Collega Inti Pratama, reaches 70%. PT College Inti Pratama is ICT solution provider for banking and financial institution. This
acquisition will enhance TelkomGroup in providing ICT solution for banking, integrated with other ICT services.

146

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
CHANGES IN REGULATION

Good Corporate Governance (GCG) practice encourages Telkom to obey Indonesia regulations. Therefore, Telkom monitored
regulation changes throughout 2018 and analysed its impacts. It resulted in no regulation change that affected business process
and/or Telkom management strategies including financial or non-financial reports.

Laws and Regulations Having Significant Effect

Impact on Financial Statement

N/A

CHANGES IN ACCOUNTING POLICY

The Consolidated Financial Statements of Telkom and its subsidiary under Financial Accounting Standard (SAK) in Indonesia which
covers the Statement of Financial Accounting Standard (PSAK) and Interpretation of Financial Accounting Standard (ISAK) in
Indonesia, issued by the Board of Financial Accounting Standard – Indonesian Accountant Association. Telkom also comply with
Regulation of Capital Market and Financial Institution Supervisory Body (Bapepam-LK) No.VIII.G.7 regarding “the Financial Report
Presentation and Disclosure of Issuer or Public Company”, as attached in the letter KEP 347/BL/2012. Accounting standard and
interpretation that have been certified by the Board of Financial Accounting Standard (DSAK), but have not been taken into effect
for the ongoing financial report are disclosed in Note 2 Consolidated Financial Report.

Telkom as the only company in Indonesia listed on the New York Stock Exchange, has fully implemented the accounting standards
of International Financial Reporting Standard (IFRS) since 2011 for financial statements submitted to the Securities and Exchange
Commission (SEC). In 2018, Telkom began fully implementing IFRS 9 Financial Instrument and IFRS 15 Revenue from Contracts with
Costumers and simultaneously preparing for the implementation of IFRS 16 Leases which became effective on January 1, 2019. The
three standards will be adopted as new accounting standards (PSAK71 Financial Instruments, PSAK72 Revenue from Contracts
with Customers and PSAK73 Leases), which have been issued by DSAK and will be effective in Indonesia starting January 1, 2020.

In line with the development of applicable regulations, Telkom has implemented IFRS 9 and IFRS 15 in full for IFRS financial reports
in 2018, where Telkom develops and strengthens IT systems and improves business processes in accordance with the Sarbanes
Oxley Act, and simultaneously prepares for IFRS 16 implementation which will take effect on January 1, 2019.

Telkom has also carried out process changes in business units, data preparation, and systems and HR readiness for the adoption
of the new IFRS accounting standards which require complex processes and a long time in preparing financial reports and the
audit process, especially in the first year of implementation. Based on observations in global companies, it will take at least 2-3
years to prepare for implementing the three new IFRS accounting standards (IFRS 9, 15 and 16). Telkom has reformed and fully
complied with adjusting its financial statements to meet these international standards in a timely manner.

147

CORPORATE
GOVERNANCE

150
156
156
157
169
176
181
185

Corporate Governance Principle and Platform
Corporate Governance Structure
Corporate Governance Assessment
General Meeting of Shareholders (GMS)
Board of Commissioners
Audit Committee
Committee for Nomination and Remuneration
Committee for Planning and Risk Evaluation
and Monitoring
Board of Directors
Corporate Secretary
Internal Audit Unit
Internal Control System
Risk Management System

189
195
198
201
203
209 Whistleblowing System
211

Board of Directors’ and Commissioners’ Share Ownership
Policy Implementation
Employee Stock Ownership Program
Significant Legal Disputes
Informations Regarding Administrative Sanctions
Information Access and Company’s Public Data
Corporate Code of Conduct
Corporate Culture

211
212
212
213
214
215

148

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Annual General Meeting of Shareholder, April, 27 2018.

149

The Telkom is continuously striving to apply the principles of
Good Corporate Governance (GCG) at throughout organization’s
levels. The goal
improve
performance, and meet the expectations of stakeholders.

is to maintain accountability,

Telkom’s commitment in implementing GCG can be seen
from Resolution of Board of Directors related to Group GCG
Guidelines No.602/2011. This Resolution of Board of Directors
contains several systems for implementing GCG that guarantee
the implementation of GCG for ethical and comply wih the
Good Corporate Governance practices internal and external
transactions. In line with this, the GCG support system policies
and infrastructure continue to be evaluated and improved
by the Telkom to strengthen the implementation quality of
governance practices.

IMPLEMENTATION OF
PRINCIPLES

GCG

BASIC

Telkom has implemented all the basic principles of GCG since
it first listed its shares at IDX more than 23 years ago, the five
basic principles of GCG are:

3. Principle of Responsibility

Telkom ensures compliance with applicable
laws
and regulations also applies principles of a healthy
corporation. These include laws and/or tax regulations,
fair competition,
relations, occupational
health and safety, payroll standards and other relevant
regulations. In addition, Telkom has the function of VP
Legal and Compliance which is tasked to ensure the
fulfillment of all regulations and legislation’s.

industrial

4. Principle of Independence

Telkom professionally works without conflict of interest
and free from other parties’ pressure that are against
regulation with regulations and contrary to the principles
of healthy corporation. Telkom explicitly states corporate
in the board charter
decision-making rules/authority
and the Company’s Articles of Association. In addition,
TelkomGroup has additional policies in the Corporate
Governance Guidelines, such as conflict of
interest
transaction policy, prohibitions on political party donations
and prohibitions on affiliate relations.

1. Principle of Transparency

5. Principle of Equality and Equity

Telkom regularly publishes financial reports and annual
reports also other material information such as the
decision-making process as a means for investors to easily
access important information. The access information is
provided in the form of the Company’s website, print media
and press releases, face-to-face meetings with investors,
public expose, and press gatherings.

2. Principle of Accountability

is carried out

Telkom applies the principle of equality and equity in
fulfilling the rights of stakeholders that arise based
on agreements and applicable laws and regulations.
Implementation
in various operational
aspects, susch as respecting the rights of minority
shareholders, prohibiting insider trading, implementing
performance management based on
the balanced
scorecard, conducting open auctions in the procurement of
goods/services and implementing e-procurement.

accountabilities

Telkom ensures the availability of charter, guidance or
manual that contain clarity of functions, implementations,
and
of
Commissioners, Board of Directors, committees, and
Corporate Secretary. This will create check and balances
mechanism on authority and roles in the management of
the Company. In addition, clear criteria for Key Performance
Indicators (KPI) and operational targets are also stipulated.

shareholders, Board

150

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

IMPLEMENTATION OF GCG MANAGEMENT PRINCIPAL - FINANCIAL SERVICES
AUTHORITY

Telkom has also implemented the 8 (eight) principles of Company management according to the guidelines of Listed company
governance from Financial Services Authority, as follows:

Principle

Principle 1

Recommendation

Implementation

Status

Improving The Value

1. Technical methods or procedures

Telkom already has technical procedures

Comply

of General Meeting

for open and closed voting that

Shareholders (GMS).

prioritize

independence

and

for voting set out in the procedures for
the General Meeting of Shareholders.

interest of the shareholders.

2. Members of Board of Directors

All of the members of Board of Directors

Comply

and Board of Commissioners

and Board of Commissioners attended

attend the Annual GMS.

the GMS.

3. A summary of minutes of GMS is
available at the Website at least

Telkom provided a Summary of Minutes
of GMS at the Company’s Website under

Comply

1 year.

Investor Relations.

Principle 2

Improving The Public

1. To

have

policy

Telkom has a policy on communications

Comply

Listed Company

communications between Public

Communication Quality

Company

and

shareholders

with Shareholders or

and investors.

Investors.

with

Investors

through Non Deal

Roadshow, One on One Meeting,

Earnings Call, Public Expose, Conference

and Investor Summit.

2. Posted

the

communications

Telkom has made available materials

Comply

policy of a Public Company at

of each Earnings Call, Conference and

the Website.

materials of presentation to investors

at the Company’s website to provide

equality for Shareholders and Investors

regarding
implementation
Communications with the Company.

the

Principle 3

Strengthening The

Membership and

1. Determination of the numbers
of board of commissioners

Telkom has complied with the provision

Comply

applicable to the Company as Public

Composition of Board of

should consider the company

Company as set out

in Article 20

Commissioners.

condition members

should

of Regulation of Financial Services

take

into

account

the

Authority No.33/POJK.04/2014

that

Company’s Conditions.

the number of members of Board of

Commissioners must be more than 2

(two) persons.

2. Determination

the

Shareholders’

discretion,

Comply

composition of members of

members of Board of Commissioners

Board of Commissioners takes

have been appointed by taking into

into

account

the

required

account a variety of skills, knowledge,

variety of skills, knowledge

and experience.

experiences and Telkom’s business
conditions and complexity.

151

Principle 4

Recommendation

Implementation

Status

Improving The

1. Board of Commissioners has

Basically,

the assessment of

the

Explain

Quality of Duty and

a policy to self-assess the

Responsibility of Board of

performance

Board

Commissioners.

performance of Board of Commissioners

is carried out by Class A Dwiwarna

Shareholders through the mechanism of

a General Meeting of Shareholders.

2. The self-assessment policy is
reported in an Annual Report.

Telkom does not has any self-

Explain

assessment policy yet, therefore there

is no self-assessment policy reported in

the Annual Report.

3. Board of Commissioners has
a policy of resignation in the

In accordance with Telkom’s Articles of

Comply

Association, jo. Regulation of Financial

event of

involvement

in any

Services Authority No. 33/POJK.04/2014

financial crimes.

any member of Board of Commissioners

who does not meet any requirements to

be a member of Board of Commissioners

as set out in the Articles of Association

and Regulation of Financial Services

Authority No. 33/POJK.04/2014 including

any involvement in any financial crimes,

consequently his/her position will be

null and void.

In the event that the member of Board

of Commissioners resigns, it will be

resolved at a GMS.

4. Board of Commissioners or
the KNR sets out a provision of

The Committee for Nomination and

Comply

Remuneration sets out in the Committee

succession

in the Nomination

for Nomination and Remuneration

Process of a member of

Charter that among its duties is to

Board of Directors.

give recommendations to Board of

Commissioners which will inform the

Class A Dwiwarna Shareholders about

the Planning of Succession of Members

of Board of Directors.

In addition, as an SOE, the provision

of succession of Board of Directors

refers to Regulation of Minister of

SOE

No.PER-03/MBU/02/2015

the requirements, procedures for the

appointment and dismissal of a member

of Board of Directors of an SOE.

152

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportPrinciple

Principle 5

Strengthening

Membership and

Recommendation

Implementation

Status

1. Determination of the number of

Determination of the number of members

Comply

members of Board of Directors

of Board of Directors of the Company

Compositions of Board of

takes into account the Company’s

refers to the Article 2 paragraph (1) and

Directors.

conditions and effectiveness in

paragraph (2) Regulation of Financial

decision-making.

Services Authority No.33/POJK.04/2014

regarding Board of Directors and Board

of Commisioner of listed Company which

provides that Board of Directors of

Listed Companies or Public Companies

must consist of at

least 2 (two)

members which 1 (one) of them have to

be appointed as the President Director.

2. Determination

the

At the Shareholders’ discretion, members

Comply

Composition of members of

Board of Directors takes into

account a variety of skills,

knowledges and experiences

as required.

of Board of Directors of the Company

have been appointed by taking

into

account a variety of skills, knowledges,

experiences,

and

the

Company’s

conditions and business complexity.

3. Members of Board of Directors in
charge of accounting and finance

The member of Board of Directors in

Comply

charge of accounting and finance in the

have skills and/or knowledge

Company is the Finance Director who

in accounting.

has sufficient accounting and financial

knowledge and experience as can be

seen

in the position and education

history of Board of Directors under the
section of Profiles of Board of Directors.

Principle 6

Improving The Quality

of Task execution and

Responsibility of Board of

1. Board of Directors has a policy
to self-assess the performance
of Board of Directors.

Directors.

2. The self-assessment policy is
reported in an Annual Report.

3. Board of Directors has a
in the
in any

policy of resignation
involvement
event of
financial crimes.

Board of Directors has a Self-Assessment

Comply

policy as set out

in the section of

Performance Assessment of Board of

Commissioners and Board of Directors.

Results of the Self-Assessment of

Comply

Board of Directors are reported in the

Company’s Annual Report under the
section of Corporate Governance.

In accordance with our Articles of

Comply

Association jo. Regulation of Financial

Services Authority No. 33/POJK.04/2014,

any member of Board of Directors who

does not meet any requirements to be a

member of Board of Directors as set out

in the Articles of Association including

any involvement in any financial crimes,

consequently his/her position will be

null and void.

In the event that the member of Board

of Directors resigns, it will be resolved

at a GMS.

153

Principle 7

Recommendation

Implementation

Status

Improving Corporate

1. To have a Policy to prevent

Governance Aspect

Insider Trading.

accordance with

Regulation

Comply

Human

Capital Management

Through Stakeholders

Participation.

Director No.PR

209.05.r.00/PS800/

COP-A4000000/2017 on Employees’

Compliance Ethics, the provision to

prevent Insider Trading is as set out

in Article 7 on Gross Violations, which

includes Abuse of Authority or Position.

2. To have a Policy of Anti

Telkom always committed to preventing

Comply

Corruption and Anti Fraud.

3. To have a Policy on the Selection

Corruption

in our Company. This

realized

through

the existence

integrity pact completed by all

employees of Telkom and the existence

of a separate website as an integrity

portal for all employees of Telkom,
called myintegrity.telkom.co.id.
Telkom selects our vendors and

and

Capacity

Building

suppliers

in accordance with our

Suppliers and Vendors.

4. To have a Policy on the fulfillment

of Creditors’ Rights.

internal procurement policy managed

through the Share Service Operation

Procurement

Department

and

implemented by reference to Regulation

of Finance Director No.PR.301.08/r.01/

COP-A00110000/2016 on Procurement
Implementation Guidelines.
Telkom has a policy to fulfill the rights

of our creditors through the Corporate

Finance Unit that sets out and manages

the rights of Telkom’s creditors.

Comply

154

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportPrinciple

Recommendation

Implementation

Status

5. To

have

Policy

Pursuant to Decision of Board of

Comply

whistleblowing system.

Commissioners

No.08/KEP/DK/2016

dated June 8, 2016 on the Provision

of Complaint Handling Procedures

(Whistleblowers)

Telkom

Indonesia, Tbk and

its consolidated

Subsidiaries which then ratified by Board

of Directors through Regulation of Board

of Directors No. PD.618.00/r.00/HK200/

COP-C0000000/2016 dated December

21, 2016, Telkom guarantees and

ensures the protection of identity of the

whistleblowers, whether the employees

or third parties filing any complaints or
reports of alleged violations.

6. To have a Policy on the granting
of long-term incentives to Board

In determining the

incentives to be

Comply

earned by Board of Directors, Telkom

of Directors and Employees.

guided by Regulation of Minister of

SOE No.PER-04/MBU/2014 on

the

Setup Guidelines on Income Allocation

Guidance for Board of Directors, Board of

Commissioners, and Board of Trustees

of State Owned Enterprises, as for the

incentives for employees, it is set out in

the Collective Labor Agreement Chapter

VI on compensations and benefits. In

addition, Telkom also provide long-term

incentives in the form of Employee Stock

Option Plan (ESOP), which was last done

in 2013.

Principle 8

Improving The

Implementation of

1. To use information technology
than a

more widely other

Telkom also active in various social

Comply

media as medium

for

information

Information Disclosure.

Website as a medium of

disclosure and product promotion. In

information disclosure.

addition, Telkom also use the mailing

list system as medium for information

disclosure

and

communication

with investors.

2. The Annual Reports of Public

Telkom discloses the most current

Comply

Companies disclose the most

beneficial owners of the Company’s

current beneficial owners of

ownership with 5% or more in our

the

Company’s

ownership,

Annual Report under

the section

at least 5% other than Major

Shareholders’

Composition

Shareholders and Controllers.

and Ownership.

155

Telkom’s governance structure consisting of Main and Supporting Organs, is in accordance to the Law of the Republic of Indonesia
No.40/2007 regarding Limited Liability Companies and the prevailing regulations in the capital market. The Main Organs of the
Company consist of the General Meeting of Shareholders (GMS), the Board of Commissioners and the Board of Directors. The
Supporting Organs consist of the Audit Committee, the Committee for Nomination and Remuneration, the Committee for Planning
and Risk Evaluation and Monitoring, the Corporate Secretary and the Internal Auditor.

BOARD OF DIRECTORS

First Unit

GENERAL MEETING OF
SHAREHOLDERS
(GMS)

BOARD OF COMMISSIONERS

Corporate Secretary

Audit Committee

Supporting Unit

Internal Auditor

Committee for Nomination &
Remuneration

Committee for Planning and
Risk Evaluation & Monitoring

CORPORATE GOVERNANCE ASSESSMENT

Assessment of Telkom’s Disclosure of governance practices is done using the Corporate Governance Scorecard Methodology,
which reviews all of our publicly available information, including all the information included in the annual report, website,
announcement, and circular letter made by Telkom. The information used in the assessment is presented in English.

In 2018, the Indonesian Institute for Corporate Directorship (IICD) underwent an assessment to the top 200 companies listed in the
Indonesia Stock Exchange ranked by market capitalization. The assessment (supported by 10 assessors and four reviewers) was
divided into 2 groups, with 100 companies listed in the Big Market Capitalization Group (Big Capitalization), and the rest the Mid
Market Capitalization Group (Mid Capitalization). The OECD Scorecard for Economic Co-operation and Development (OECD) was
used to assess the top 200 companies. The OECD Principles consist of:
1. Shareholder rights;
2. Fair Shareholder treatment;
3. Stakeholder roles;
4. Disclosure and transparency;
5. Board Responsibility.

The IICD has been doing corporate governance assessments to hundred listed companies since 2005, using the international
standards of the Corporate Governance principles of the OECD’s Corporate Governance Scorecard. This has been implemented
previously in some ASEAN Countries including Indonesia. In the future, the IICD will list anti corruption and financial performance
as defining factors in the Corporate Governance performance assessment.

In this assessment, Telkom, with 2 other listed companies, achieved the title of “The Best State Owned Enterprise” apart of the
Big Capitalization Category. Telkom was considered as an SOE that had implemented Good Corporate Governance properly and
transparently, and could explain and give responsibility to the public regarding public decisions.

156

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportGENERAL MEETING OF SHAREHOLDERS (GMS)

Telkom as the highest governance organ is a General Meeting of Shareholders (GMS), which facilitates shareholders to make
important and strategic decisions. In accordance with the provisions of Telkom’s Articles of Association and statutory regulations,
the Annual GMS (AGMS) is held once a year with the following routine discussion agenda:
1. Approval of the Company’s Annual Report, including Board of Commissioners Supervisory Task Report.
2. Ratification of the Company’s Financial Statement and the Annual Partnership and Community Development Program Report,

as well as the Exemption of Liabilities of the members of Board of Directors and Commissioners.

3. Determination of the Company’s Net Income, including dividend payment in the financial year.
4. The determination of remuneration for the members of Board of Directors and Commissioners.
5. The appointment of a Public Accounting Firm to Audit the Company’s Financial Statements, including Audit of Internal Control
over Financial Reporting and Appointment of a Public Accounting Firm to Audit the Financial Statements of Partnership and
Community Development Programs.

6. Any other agenda proposed by one or more Shareholder thata represent 1/20 or more of all shares that have a voting right.

157

Telkom conducted the AGMS on April 21, 2017 for the performance of the 2016 financial year with details of the agenda and
realization of the 2016 fiscal year AGMS decisions as follows:

Agenda

AGMS Resolution

Status of the AGMS Resolution

To approve the Annual Report of the Company

including the Board of

Resolution effective immediately.

Commissioners’ Supervision Duty Report for the Financial Year 2016, namely

regarding the condition and operation and supervisory of the Company as

substantially have been presented in the Meeting by the Board of Directors and

the Board of Commissioners.

1. To ratify

Resolution effective immediately.

a. The Company’s Consolidated Financial Statements for the Financial Year
2016 which has been audited by the Public Accountant Firm Purwantono,
Sungkoro & Surja (a member firm of Ernst & Young Global Limited)
according to its report number RPC 3036/PSS/2017 dated March 2, 2017
stated with opinion “the acCompanying consolidated financial statements
report present fairly, in all material respects, the consolidated financial
position of Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia
Tbk and its subsidiaries ended as of December 31, 2016 and the financial
performance and consolidated casf flow for the year ended on such date
in accordance with Indonesian Financial Accounting Standards;

b. Partnership and Community Development Annual Report for the
Financial Year 2016 which compiled pursuant to Minister of State Owned
Enterprise’s Regulation which is a comprehensive accounting basis in
addition to Indonesian Financial Accounting Principle that generally
accepted in Indonesia and have been audited by the Public Accountant Firm
Purwantono, Sungkoro & Surja (a member firm of Ernst & Young Global
Limited) according to its report RPC-2925/PSS/2017 dated January 25, 2017
stated with opinion “the acCompanying financial statements present fairly,
in all material respects, financial position of Center for the Management
of Partnership and Community Development Program of Perusahaan
Perseroan (Persero) PT Telekomunikasi Indonesia Tbk dated December 31,
2016 and financial performance and cash flow for the year ended on such
date in accordance with the Non Publicly Accountable Entities Financial
Accounting Standards;

2. Then, by the approval of the Company’s Annual Report for the Financial Year
2016 including Supervisory Task of the Board of Commissioner Report and
the ratification of Financial Statement for the Financial Year 2016 and Annual
Report on Partnership and Community Development Program for the Financial
Year 2016, the Meeting hereby grant a full acquittal and discharge (volledig
acquit et decharge) to members of the Board of Directors and the Board of
Commissioners who serves in the Financial Year 2016 consecutively for the
managerial and supervisory actions of the Company as long as those actions
are not criminal act and those actions are reflected in the Company’s Annual
Report, Financial Statements (Consolidated) for Financial Year 2016 and
Annual Report of Partnership and Community Development for the Financial
Year 2016.

158

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportAgenda

AGMS Resolution

Status of the AGMS Resolution

• Dividend distribution was

conducted on May 26, 2017.

• The decision on reserve
effective immediately.

1. To Approve and determine the appropriation of the Company’s net profit
for the Financial Year ended on the December 31, 2016 in the amount of
Rp19,352,026,828,926,- (nineteen trillion three hundred fifty two billion
twenty six million eight hundred twenty eigh thousand and nine hundred and
twenty six Rupiah) which will be allocated to:
a. Dividend amounting to 60% of the net profit or in the amount of
Rp11,611,211,188,567.60 (eleven trillion six hundred eleven billion two
hundred eleven million one hundred eighty eight thousand five hundred
sixty seven point six zero Rupiah) including amount of Interim Dividend
which had been distributed to shareholders on the December 27, 2016 based
on the Board of Directors Meeting which had been approved by the Board of
Commissioners on the December 6, 2016 in amount Rp1,919,726,695,491.40
(one trillion nine hundred ninety billion seven hundred twenty six million
six hundred ninety five thousand and four hundred ninety one point four
zero Rupiah), therefore the amount of cash dividend will be distributed
to shareholders in amount of Rp9,691,484,493,076.18 (nine trillion six
hundred ninety one billion four hundred eighty four million four hundred
ninety three thousand seventy six point one eight Rupiah) and added
special dividend of 10% or amount of Rp1,935,200,213,724.32 (one trillion
nine hundred thirty five billion two hundred million two hundred thirteen
thousand seven hundred twenty four point three two Rupiah) distributed
as cash dividend, therefore dividend (either cash dividend and special
dividend) to shareholders per shares of Rp117.3675 (one hundred and
seventeen point three six seven five Rupiah) and specifically dividen
for Government/Republic of Indonesia will be paid in accordance with
prevailling laws, with notes:

• State of Rp6,056,439,231,453.30 (six trillion fifty six billion four hundred
thirty nine million two hundred thirty one thousand four hundred fifty
three point three zero Rupiah).

• Public of Rp5,570,245,475,347.20 (five trillion five hundred seventy
billion two hundred forty five million four hundred seventy five thousand
three hundred forty seven point two zero Rupiah).

b. 30% of Net Profit of the Company or amount of Rp5,805,615,426,634.10
(five trillion eight hundred five billion six hundred fifteen million four
hundred twenty six thousand six hundred thirty four point one zero Rupiah)
determined as Retairned Earning.

2. To Approve the distribution of Cash Dividend and Special Dividend for the

Financial Year 2016 will be conducted with the following conditions:
a. Those who are entitled to receive Cash Dividend and Special Dividend are
shareholders whose names are recorded in the Company’s Shareholders
on May 5, 2017 up to 16:15 Western Indonesia Standard Time;

b. Cash Dividend and Special Dividend shall be paid all at once on

May 26, 2017.

3. To the Board of Directors granted the authorization to regulate further
the procedure of dividend distribution and to announce the same with due
observance of the prevailing laws and regulations in the stock exchange
where the Company’s share are listed.

159

AGMS Resolution

Status of the AGMS Resolution

Has been implemented.

The PAF’s approval is effective

immediately.

1. To grant authority and authorize to series A Dwiwarna shareholder to
determine the amount of tantiem for financial year 2016 and to determine
honorarium allowance, facility and other incentive to members of the Board
of Commissioners for financial year 2017.

2. To grant authority and authorize to the Board of Commissioners by first
obtaining written approval of series A Dwiwarna Shareholders to determine
the amount of tantiem for financial year 2016 and to determine salary,
allowance, facility and other incentive to members of the Board of Directors
for financial year 2017.

1. Reappointment of Public Accounting Firm Purwantono, Sungkoro & Surja
(a member firm of Ernst & Young Global Limited) to conduct an integrated
audit of the Company for the Financial Year 2017 which include the audit of
the Consolidated Financial Statements of the Company, and the audit of the
Internal Control Audit on Financial Reporting for the Financial Year 2017 and to
audit the Financial Statements of Partnership and Community Development
Program for the Financial Year 2017.

2. Reappointment of Public Accounting Firm Purwantono, Sungkoro & Surja
(a member firm of Ernst & Young Global Limited) to audit the appropriation
of funds for the Partnership and Community Development Program for the
Financial Year 2017.

3. To grant authority to the Boards of Commissioners to:

a. To appoint an alternate Public Accounting Firm and determine the terms
and conditions of its appointment; in the event the appointed Public
Accounting Firm can not perform or continue its duty for any reason
including the reason of prevailling law and the agreement on the amount
for audit fee is unattainable.

b. Tetermine the amount of audit fee and other terms and conditions of

appointment of the relevant Public Accounting Firm.

To approve the ratification of Minister of State Owned Enterprise’s Regulation

Has been followed-up.

number PER-03/MBU/12/2016 regarding amendment of Minister of State Owned

Enterprise’s Regulation number PER-09/MBU/07/2015 regarding State Owned

Enterprise’s Partnership Program and Community Development Program.

160

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportAgenda

AGMS Resolution

Status of the AGMS Resolution

Resolution effective
immediately.

In the First Part:
The meeting with the majority vote 79,071,727,019 (98.770%) of the total
votes issued in the Meeting resolved to approve amandment of the Articles of
Association related with the right of serie A Shareholder.
In the Second Part:
The meeting with the majority vote 79,071,727,020 (98.770%) of the total
votes issued in the Meeting resolved to approve amandment of the Articles of
Association which is not related with the right of serie A Shareholder.
Therefore in the seventh Agenda of the Meeting resolved:
1. To approve amendment and/or adjustment standarization of the Articles of
Association of public State Owned Enterprise related with the change of right
share of series A Dwiwarna by recompile all of the Articles of Association,
in accordance with Letter Minister of State Owned Enterprise as proxy of
shareholder seri A Dwiwarna.

2. To grant authority to shareholder seri A Dwiwarna to amend and revise to
the provisions of the Articles of Association of the Company as referred to in
the event of any amendment and/or revision to the provisions issued by the
competent authority including the institutions relating to the public Company
and/or shareholder series A Dwiwarna as necessary in the framework of
submission of reporting and/or approval of amendment of the Articles of
Association to the authorized institution.

3. To grant authority to the Board of Directors of the Company with rights of
substitution to restate amendment and/or adjusment of the Articles of
Association of the Company into a notarial deed and further submit application
approval and/or notify amendment of Articles of Association of the Company
to the Minister of Law and Human Rights of the Republic of Indonesia and/or
authorized institution pursuant to the prevailing laws and regulations.

161

Resolution effective immediately.

Agenda

AGMS Resolution

1. Confirmation Honorably dismissal from their offices the following names:
a. Mr. MUHAMMAD AWALUDDIN as Director as of September 9th 2016;
b. Mr. INDRA UTOYO as Director as of March 15th 2017; and
c. Mr. HONESTI BASYIR as Director as of April 20th 2017.

With appreciation for contribution of dedication and thoughts during their

term as the member of the Board of Directors of the Company.

2. Honorably dismissal Mr. HADIYANTO and Mr. PONTAS TAMBUNAN respectively
as Commissioner with appreciation for contribution of dedicaation and
thoughts during their term as member of the Board of Commissioner of
the Company.

3. Changing of the nomenclature of the Board of Directors as follow:

a. President Director to become President Director;
b. Director to become Finance Director;
c. Director to become Consumer Service Director;
d. Director to become Human Capital Management Director;
e. Director to become Network & IT Solution Director;
f. Director to become Digital & Strategic Portfolio Director;
g. Director to become Wholesale & International Service Director; and
h. Director to become Enterprise & Business Service Director.

4. Divert task:

a. Mr. HARRY M ZEN formerly as Director to become Finance Director;
b. Mr. DIAN RACHMAWAN formerly as Director to become Enterprise &

Business Service Director;

c. Mr. HERDY ROSADI HARMAN formerly as Director to become Human Capital

Management Director; and

d. Mr. ABDUS SOMAD ARIEF formerly as Director to become Wholesale &

International Service Director.

5. To appoint the following names:

a. Mr. HADIYANTO as Commissioner;
b. Ms. DEVY W SURADJI as Commissioner;
c. Mr. CAHYANA AHMADJAYADI as Independent Commissioner;
d. Mr. MAS’UD KHAMID as Consumer Service Director;
e. Mr. ZULHELFI ABIDIN as Network & IT Solution Director; and
f. Mr. DAVID BANGUN as Digital & Strategic Portfolio Director.

With the term of office effective as of the close of the Meeting and ended at the
closing of the fitfth Annual General Meeting of Shareholders without prejudice
to the rights of General Meeting of Shareholders to dismiss at anytime.

162

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportAgenda

AGMS Resolution

Status of the AGMS Resolution

6. For the members of the Board of Directors and the Board of Commissioners
who are appointed as reffered in number 5 above who still serve in other
positions that are prohibited under the prevailing regulation to hold multiple
offices with the position as member of the Board of Commissioner and the
Board of Directors of State Owned Enterprises, then the concerned must
resign from his position.

7. By the dismissal, assignment and appointment as stated in number 1 and 2, 4
and 5 above mentionded, then composition of the member of the Board of the
Company are becomes as follows:
a. Board of Directors:

• Mr. ALEX JANANGKIH SINAGA as President Director;
• Mr. HARRY MOZARTA ZEN as Finance Director;
• Mr. MAS’UD KHAMID as Consumer Service Director;
• Mr. HERDY ROSADI HARMAN as Human Capital Management Director;
• Mr. ZULHELFI ABIDIN as Network & IT Solution Director;
• Mr. DAVID BANGUN as Digital & Strategic Portfolio Director;
• Mr. ABDUS SOMAD ARIEF as Wholesale & International Service Director;

and

• Mr. DIAN RACHMAWAN as Enterprise & Business Service Director.

b. Board of Commissioners:

• Mrs. HENDRI SAPARINI as President Commissioner;
• Mr. DOLFIE OTHNIEL FREDRIC PALIT as Independent Commissioner;
• Mr. HADIYANTO as Commissioner;
• Ms. DEVY W. SURADJI as Commissioner;
• Mr. RINALDI FIRMANSYAH as Commissioner;
• Mr. MARGIYONO DARSASUMARJA as Independent Commissioner;
• Mrs. PAMIJATI PAMELA

JOHANNA WALUYO as

Independent

Commissioner; and

• Mr. CAHYANA AHMADJAYADI as Independent Commissioner.

To authorize with the right of substitution to the Board of Directors to state
resolution adopted in the Meeting into notarial deed and to appear before
Notary or authorized official and to make any adjustments or corrections which
are necessary when required by the competent authority for the purposes of
implementation of the resolutions of the Meeting.

Note: All of the above AGMS resolutions are in line with the adopted agenda and is reflected in the AGMS invitation

163

In addition, Telkom has conducted the AGMS in April 27, 2018 for the performance of the 2017 financial year with details of the
agenda and realization of the 2017 fiscal year AGMS decisions as follows:

Agenda

AGMS Resolution

To approve the Annual Report of the Company
including the Board of
Commissioners’ Supervision Duty Report for the Financial Year 2017, namely
regarding the condition and operation and supervisory of the Company as
substantially have been presented in the Meeting by the Board of Directors and
the Board of Commissioners.

Status of the AGMS Resolution

Resolution effective immediately.

To ratify

Resolution effective immediately.

a. The Company’s Consolidated Financial Statements for the Financial
Year 2017 which has been audited by the Public Accounting Firm
Purwantono, Sungkoro & Surja (a member firm of Ernst & Young Global
Limited) according to its report number RPC-5841/PSS/2018 dated
March 12, 2018 stated with opinion “the accompanying consolidated
financial statements report present fairly, in all material respects, the
consolidated financial position of Perusahaan Perseroan (Persero) PT
Telekomunikasi Indonesia Tbk and its subsidiaries as of December 31,
2017 and the financial performance and consolidated cash flow for
the year ended on such date in accordance with Indonesian Financial
Accounting Standards”;

b. Partnership and Community Development Annual Report for the
Financial Year 2017 which compiled pursuant to Minister of State Owned
Enterprise’s Regulation which is a comprehensive accounting basis
in addition to Indonesian Financial Accounting Principle that generally
accepted in Indonesia and have been audited by the Public Accounting
Firm Purwantono, Sungkoro & Surja (a member firm of Ernst & Young
Global Limited) according to its report RPC-5580/PSS/2018 dated January
24, 2018 stated with opinion “the accompanying financial statements
present fairly, in all material respects, financial position of Center for the
Management of Partnership and Community Development Program of
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk dated
December 31, 2017 and financial performance and cash flow for the year
ended on such date in accordance with the Non Publicly Accountable
Entities Financial Accounting Standards.

Then, by the approval of the Company’s Annual Report for the Financial Year
2017 including Supervisory Task of the Board of Commissioners’ Report
and the ratification of Financial Statement for the Financial Year 2017 and
Annual Report on Partnership and Community Development Program for the
Financial Year 2017, the Meeting hereby grant a full acquittal and discharge
(volledig acquit et de charge) to members of the Board of Directors dan the
Board of Commissioners who serves in the Financial Year 2017 consecutively
for the managerial and supervisory actions of the Company as long as those
actions are not criminal act and those actions are reflected in the Company’s
Annual Report, Financial Statements (Consolidated) for Financial Year 2017
and Annual Report of Partnership and Community Development for the
Financial Year 2017.

Authorize to the Board of Commissioners with the first by obtaining
written approval from the Series A Dwiwarna Shareholder in relation to the
authority of the General Meeting of Shareholders as provided in Regulation
of the Minister of State Owned Enterprise Number PER-09/MBU/07/2015
as amended the latest by the Regulation of the Minister of State Owned
Enterprise Number PER-02/MBU/ 7/2017 and its amendments.

•

164

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportStatus of the AGMS Resolution

• Dividend distribution was

conducted on May 31, 2018.

• The decision on reserve
effective immediately.

Agenda

AGMS Resolution

To Approve and determine the appropriation of the Company’s net profit
for the Financial Year ended on the December 31, 2017 in the amount of
Rp22,144,990,327,956 (twenty two trillion one hundred forty four billion nine
hundred ninety million three hundred twenty seven thousand nine hundred
fifty six Rupiah) as follow:

Cash Dividend amounting to 60% of the net profit or in the amount
of Rp13,286,997,175,681.50 (thirteen trillion two hundred eighty six
billion nine hundred ninety seven million one hundred seventy five
thousand six hundred eighty one point five zero Rupiah) or amounting
to Rp134.1278 (one hundred thirty four point one two seven eight rupiah)
per share, based on shares have been issued (excluding shares have
been repurchased by the Company) on the date of the Meeting, namely
amountly 99,062,216,600 (ninety nine billion sixty two million two
hundred sixteen thousand six hundred) of shares;

b. Special Dividend amounting to 15% of the net profit or in the amount of
Rp3,321,754,247,031.20 (three trillion three hundred twenty one billion
seven hundred fifty four million two hundred forty seven thousand
thirty one point two zero Rupiah) or amounting to Rp33.5320 (thirty
three point five three two zero rupiah) per shares based on shares have
been issued (excluding shares have been repurchased by the Company)
on the date of the Meeting, amounting to 99,062,216,600 (ninety nine
billion sixty two million two hundred sixteen thousand six hundred)
of shares;

25% of Net Profit of the Company or amount of Rp5,536,238,905,243.30
(five trillion five hundred thirty six billion two hundred thirty eight million
nine hundred five thousand two hundred forty three point three zero
Rupiah) determined as Retained Earning which will be used to finance
the development of the Company’s business;

To Approve the distribution of Cash Dividend and Special Dividend for the
Financial Year 2017 will be conducted with the following conditions:

a. Those who are entitled to receive Cash Dividend and Special Dividend are
shareholders whose names are recorded in the Company’s Shareholders
on May 11, 2018 up to 16.15 Western Indonesia Standard Time;

b. Cash Dividend and Special Dividend shall be paid all at the lattest on

May 31, 2018.

To the Board of Directors granted the authorization with the right of
substitution to regulate further the procedure of dividend distribution and to
announce the same with due regard to the prevailing laws and regulations in
the stock exchange where the Company’s share are listed.

To grant authority and authorize to serie A Dwiwarna shareholder to
determine the amount of tantieme for financial year 2017 and to determine
honorarium allowance, facility and other incentive to members of the Board
of Commissioners for financial year 2018.

Has been implemented.

To grant authority and authorize to the Board of Commissioners by first
obtaining written approval of serie A Dwiwarna Sahreholders to determine
the amount of tantieme for financial year 2017 and to determine salary,
allowance, facility and other incentive to members of the Board of Directors
for financial year 2018.

165

AGMS Resolution

Appointment of Public Accounting Firm Purwantono, Sungkoro & Surja
(a member firm of Ernst & Young Global Limited) to conduct an integrated
audit of the Company which include the audit of the Consolidated Financial
Statements of the Company, including the audit of the Internal Control over
Financial Reporting for the Financial Year 2018 and to audit the Financial
Statements of Partnership and Community Development Program for the
Financial Year 2018.

Status of the AGMS Resolution

The PAF’s approval is effective
immediately.

The decision is effective from
the amendment to the Articles
of Association approved by the
Minister of Law and Human
Rights on July 2, 2018.

The amendment to the Articles
of Association was approved by
the Minister of Law and Human
Rights on July 2, 2018.

To grant authority to the Boards of Commissioners to:

b. Determine the amount of audit fee and other terms and conditions of

appointment of the relevant Public Accounting Firm.

To approve the transfer of Treasury stock through withdrawal of 1,737,779,800
(one billion seven hundred thirty seven million seven hundred seventy
nine thousand eight hundred) shares which are all shares which have been
repurchased by the Company, by way of reduction of issued and paid up capital
from Rp5,039,999,820,000,- (five trillion thirty nine billion nine hundred ninety
nine million eight hundred twenty thousand rupiah) to Rp4,953,110,830,000,-
(four trillion nine hundred fifty three billion one hundred ten million eight hundred
thirty thousands Rupiah). Therefore, to comply with the provisions of Article
33 of Law No. 40 of 2007 regarding Limited Liability Company, approved the
reduction of the authorized capital of the Company from Rp20,000,000,000,000,-
(twenty trillion Rupiah) to Rp19,500,000,000,000,- (nineteen trillion five hundred
billion Rupiah).

To approve amendment article 4 paragraph (1), (2) and (3) of the Articles of
Association regarding issued and paid up capital and authorized capital.

To approve amendment of other Articles of Association of the Company.

To approve to recompile of all the provisions of the Articles of Association
in relation with the changes as referred to in point 1 (one) and 2 (two) of the
above mentioned resolutions.

To approve to the Board of Directors of the Company with rights of
substitution to do all necessary actions in relation with the resolutions of
the agenda of this Meeting, including to compile and restate of all Articles
of Association in a Notarial Deed and to submit to the competent authority
to obtain the approval and/or receipt of notification of the amendment of
the Articles of Association, to do everything deemed necessary and useful
for such purposes with no exceptions, including to add and/or to change
the amendments of the Articles of Association if they are required by the
competent authority.

To approve, in the case of reduction of issued and paid-up capital of the
Company does not obtain approval from and the Ministry of Law and Human
Rights of the Republic of Indonesia, the Sixth Agenda’s resolution related
with the approval of the transfer of the Treasury stock through withdrawal
by way of reduction of capital to be automatically null and void without
approval of the General Meeting of Shareholders (AGM) and therefore
Article 4 paragraph (1) of the Articles of Association of the Company has
not changed, therefore the Authorized Capital of the Company is remains
as before.

166

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportAgenda

AGMS Resolution

To approve the ratification of Ministry of State Owned Enterprise’s Regulation
Number PER-03/MBU/08/2017 about State Owned Enterprise Partnership
Guidance and Number PER-04/MBU/09/2017 about amendment of Ministry of
State Owned Enterprise’s Regulation Number PER-03/MBU/08/2017 including
its amendments.

Status of the AGMS Resolution

Resolution effective immediately.

Confirmation the dismissal the following names:

Resolution effective immediately.

1) Miss DEVY WILDASARI as Commissioner of the Company, as of her
appointment as Marketing and Service Director of PT ANGKASA PURA
I (Persero) based on Minister of State Owned Enterprise’s Decision No.
SK-289/MBU/12/2017 on December 22, 2017;

2) Mister HADIYANTO, related to his appointment as Commissioner of PT

Bank BRI (Persero) Tbk;

3) Mister MAS’UD KHAMID as Consumer Service Director of the Company,
as of his appointment as Retail Marketing Director of PT PERTAMINA
(Persero) based on Minister of State Owned Enterprise’s Decision No.
SK-97/MBU/04/2018, on April 20, 2018;

With appreciation for contribution of dedication and thoughts during their
term as Commissioner and the Board of Directors of the Company.

To appoint the following names as members of the Board of Directors and
member of the Board of Commissioners of the Company:

1) Mistress SITI CHOIRIANA as Consumer Service Director;

2) Mister EDWIN HIDAYAT ABDULLAH as Commissioner; and

3) Mister ISA RACHMATARWATA as Commissioner.

Term of office member of the Board of Directors and member of the Board of
Commissioners in accordance with provision of the Articles of Association,
with due regard to regulation of Capital Market and without prejudice to the
rights of General Meeting of Shareholders to dismiss at anytime.

For the members of the Board of Directors and the Board of Commissioners
who are appointed as reffered in number 2 above who still serve in other
positions that are prohibited under the prevailing regulation to hold
multiple offices with the position of the Board of Directors and the Board of
Commissioner of State Owned Enterprises, then the concerned must resign
from his position or dismissed from his/her position.

By the dismissal and appointment the member of the Board Directors and
the Board of Commissioners as stated in number 1 and 2, then composition
of the member of the Board Directors and the Board of Commissioners of the
Company are becomes as follows:

167

AGMS Resolution

A. Board of Directors:

Status of the AGMS Resolution

1) Mister ALEX JANANGKIH SINAGA as President Director.

2) Mister HARRY MOZARTA ZEN as Finance Director.

3) Mister DAVID BANGUN as Digital & Strategic Portfolio Director.

4) Mister DIAN RACHMAWAN as Enterprise & Business Service Director.

5) Mister ABDUS SOMAD ARIEF as Wholesale & International

Service Director.

6) Mister HERDY ROSADI HARMAN as Human Capital Management Director.

7) Mister ZULHELFI ABIDIN as Network & Information Technology

Solution Director.

8) Mistress SITI CHOIRIANA as Consumer Service Director.

B. Board of Commissioners:

1) Mistress HENDRI SAPARINI as President Commissioner.

2) Mister MARGIYONO DARSA SUMARJA as Independent Commissioner.

3) Mister DOLFIE OTHNIEL FREDRIC PALIT as Independent Commissioner.

4) Mistress PAMIJATI PAMELA JOHANNA W. as Independent Commissioner.

5) Mister CAHYANA AHMADJAYADI as Independent Commissioner.

6) Mister EDWIN HIDAYAT ABDULLAN as Commissioner.

7) Mister RINALDI FIRMANSYAH as Commissioner.

8) Mister ISA RACHMATARWATA as Commissioner.

To authorize with the right of substitution to the Board of Directors of
the Company to perform all necessary actions related with this agenda
resolution in accordance with the prevailing laws and regulations, including
to state in a notarial deed and to notify the composition of the Board of
Commissioners and the Board of Directors to the Ministry of Law and
Human Rights.

Note: All of the above AGMS resolutions are in line with the adopted agenda and is reflected in the AGMS invitation

168

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportBOARD OF COMMISSIONERS

Telkom’s Board of Commissioner collectively work and responsible to supervise the Board of Directors in performing its duties and
responsibilities, In addition, the Board of Commissioners give advice to the Board of Directors regarding Telkom’s Business and the
implementation of Good Corporate Governance (GCG) Principle.

BOARD OF COMMISSIONERS’ COMPOSITION

In accordance with the results of the Annual General Meeting of Shareholders (AGMS) on April 27, 2018, Telkom changed
the composition of the Board of Commissioners. The 2018 AGMS has decided to appoint Edwin Hidayat Abdullah and Isa
Rachmatarwata as Commissioners, with a term of service until the AGMS in 2023. However, on March 22, 2018 Hadiyanto was
appointed as Commissioner of PT Bank Rakyat Indonesia (Persero) Tbk based on the results of PT Bank Rakyat Indonesia (Persero)
Tbk’s AGMS. In addition, on September 20, 2018, Dolfie Othniel Fredric Palit was named in The House of Representatives’ Final
Candidates List for The 2019 General Election, meaning his term of office as an Independent Commissioner has ended due to his
naming in the Final Candidate List.

Board of Commissioners’ Composition per December 31, 2017

No.

Name

Position

Appointment

Discharge Date

Hendri Saparini

Rinaldi Firmansyah

Hadiyanto

President Commissioner

Commissioner

Dolfie Othniel Fredric Palit

Independent Commissioner

Margiyono Darsasumarja

Independent Commissioner

Pamijati Pamela Johanna Waluyo

Independent Commissioner

Cahyana Ahmadjayadi

Independent Commissioner

2014

2015

2017

2014

2015

2017

AGMS 2019

AGMS 2020

AGMS 2022

AGMS 2019

AGMS 2020

AGMS 2022

Board of Commissioners’ Composition per December 31, 2018

No.

Name

Position

Appointment

Discharge Date

Hendri Saparini

Rinaldi Firmansyah

Edwin Hidayat Abdullah

Isa Rachmatarwata

President Commissioner

Commissioner

Margiyono Darsasumarja

Independent Commissioner

Cahyana Ahmadjayadi

Independent Commissioner

Pamijati Pamela Johanna Waluyo

Independent Commissioner

2014

2015

2018

2015

2017

2015

AGMS 2019

AGMS 2020

AGMS 2023

AGMS 2020

AGMS 2022

AGMS 2020

169

To fulfill the fairness principle in implementing GCG and Law
No.39 of 1999 regarding Human Rights, Telkom guarantees
non-discrimination in the workplace. The principle of non-
discrimination also includes the selection and appointment
of members of the Board of Commissioners. Although Telkom
does not yet have a written policy regarding the diversity of the
Board of Commissioners, Telkom guarantees that members of
the Board of Commissioners are selected and appointed based
on their respective expertise, skills and integrity.

Both men and women who have met the conditions and
requirements have equal opportunities to be appointed as
members of the Board of Commissioners. As of December
31, 2018, Telkom has male and female members of the Board
including
of Commissioners with various skills needed,
economics, public policy, media,
telecommunications,
marketing and public relations.

Board of Commisioners’ Diversity per December 31, 2018

No.

Name

Position

Gender

Background of Expertise & Skill

Level of
Education

Hendri Saparini

President
Commissioner

Female

Economics, Development Policy

Doctor

Rinaldi Firmansyah

Commissioner

Male

Edwin Hidayat Abdullah

Isa Rachmatarwata

Margiyono Darsasumarja

Cahyana Ahmadjayadi

Commissioner

Independent
Commissioner

Male

Engineering, Telecommunications,
Business and Finance

Doctor

Public policy

Mathematics, Risk Assessment in
Insurance, Finance and Industry

Master

Media, Media and Internet Law

Master

Engineering, Telecommunications,
Law and Content Application

Doctor

Pamijati Pamela Johanna Waluyo Independent

Female

Sales, Marketing, Public Relations Master

Commissioner

Board of Commisioners’ Gender
Composition Diversity

Board of Commisioners’
Position Composition Diversity

29%

Female

43%

Independent

71%

Male

57%

Non Independent

Board of Commisioners’ Education
Level Composition Diversity

43%

Doctor

57%

Master

170

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
BOARD OF COMMISSIONERS’ DOUBLE POSITION

Some members of Telkom’s Board of Commissioners hold more than one position as committee members. Complete information
regarding the double position of Telkom’s Board of Commissioners may be seen in the following table:

Board of Commissioners’ Double Position

Telkom

Position

Other Position

President Commissioner

None

Commissioner

No. Name

Hendri Saparini

Rinaldi Firmansyah

Edwin Hidayat Abdullah

Commissioner

Isa Rachmatarwata

Commissioner

Margiyono Darsasumarja

Cahyana Ahmadjayadi

Pamijati Pamela Johanna Waluyo

Independent
Commissioner

1.
2.

1.
2.
3.

1.
2.

Member of Audit Committee
Member of KNR

Chairman of KEMPR
Member of KNR

Member of KEMPR
Member of KNR

Chairman of Audit Committee
Member of KNR
Member of KEMPR*

Chairman of Audit Committee
Member of KNR
Member of KEMPR

Chairwoman of KNR
Member of KEMPR*

Subsidiary

None

Remarks:
KEMPR
KNR

: (Committee for Planning and Risk Evaluation and Monitoring)
: (Committee for Nomination and Remuneration)

: start from May 9, 2018 until October 25, 2018

BOARD OF COMMISSIONERS’ REMUNERATION

The structure of the remuneration for Telkom’s Board of Commissioners is based on the Regulation of SOE’s State Minister
No.PER-04/MBU/2014 regarding Guidelines for the Determination of Income for Directors, Board of Commissioners and Board of
Trustees of SOE’s along with their changes.

Based on the said regulation, the income component for members of Board of Commissioners consists of:
1. Salaries;
2. Allowances;
3. Facilities; and
4. Bonus/Incentive.

Board of Commissioners Remuneration Mechanism and Procedure

KNR* by the instruction from
Board of Commissioners create
remuneration draft. The result
will be decide in AGMS

AGMS

KNR ask Independent Party
for Suggestion

Independent Party give the
suggestion to KNR

*KNR : Committee for Nomination and Remuneration

171

Telkom determines the remuneration of the Board of
Commissioners through the following procedures:
1. The Board of Commissioners requests the KNR to draft a
remuneration proposal for the Board of Commissioners.
2. The Committee for Nomination and Remuneration requests
an independent party to draw up a framework on the
remuneration of Board of Commissioner.

3. The Committee for Nomination and Remuneration proposes

the remuneration to Board of Commissioners.

4. The Board of Commissioners proposes remuneration for

Board of Commissioner the GMS.

5. The GMS delegates authority and power to the Board
of Commissioners, with the prior approval of Series A
Shareholders to determine the remuneration for

Board of Commissioner.

During 2018, the total remuneration paid to the entire Board of Commissioners was Rp 102,8 billion. Taxes from remuneration borne
by Telkom amounted to Rp 30,2 billion. The next table below sets forth the remuneration that Telkom’s Commissioners received
in 2018:

Board of Commissioners’ Recapitulation of Remuneration

No.

Board of Commissioners

Hendri Saparini

Rinaldi Firmansyah

Edwin Hidayat Abdullah (2)

Isa Rachmatarwata (2)

Margiyono Darsasumarja

Cahyana Ahmadjayadi

Pamijati Pamela Johanna Waluyo

Hadiyanto (3)

Dolfie Othniel Fredric Palit (4)

Honorarium

Tantiem & THR (1)

Total

(Rp millions)

2,908

2,821

2,011

2,009

2,804

2,823

2,804

1,137

1,779

13,393

12,033

12,054

8,011

12,054

11,936

12,033

16,301

14,854

2,108

2,106

14,858

10,833

14,858

13,073

13,812

Remarks:
(1) “THR” refers to Tunjangan Hari Raya or religious holiday allowance
(2) Since the AGMS on April 27, 2018
(3) Until AGMS on April 27, 2018

(4) Until September 28, 2018

PARTICIPATION IN BPJS

Telkom always support Government Program which one of them is the National Healtg Insurance Program. This is proven by
Telkom’s commitment to include all the Board of Directors and Board of Commissioner and their family into BPJS.

INDEPENDENCE STATEMENT

In order to do their duties and responsibilities, Independent Commissioners need to maintain their independence. That explains,
Telkoms requirement for Independent Commissioner to sign an integrity pact when first appointed. This integrity pact is renewed
every year. In 2017, all Independent Commissioners of Telkom declared their independence commitment in writing.

Independent Commissioners’ Independence Statement

No. Name

Position

Date of Signing

Margiyono Darsasumarja

Independent Commissioner

April 21, 2017

Cahyana Ahmadjayadi

Independent Commissioner

April 21, 2017

Pamijati Pamela Johanna Waluyo

Independent Commissioner

April 21, 2017

Status

Renewal

First Time

Renewal

172

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportBOARD OF COMMISSIONERS’ BOARD
CHARTER

Based on the Resolution Letter of Board of Commissioners
No. 16/KEP/DK/2013 dated December 17, 2013, Telkom’s Board
of Commissioners adopted a Board Charter to guide them in
performing their duties to be in line with GCG practices. The
Charter of the Board of Commissioners contains the code
of conduct, authority, duties, responsibilities, obligations,
division of tasks, meetings, provisions on conflict of interest,
shareholding, and the relationship of Board of Commissioners
to Board of Directors and the GMS. In addition, the Company’s
Articles of Association and joint decrees between Board of
Commissioners and Directors are also used as guidelines.

BOARD
OF
AUTHORIT IE S,
RESPONS IBI LI TI ES

COM M IS S ION E RS ’
AN D

DU T IE S ,

Based on the Article of Association of Telkom, Board of
Commissioners have this following obligations:
1. Provide advices to the Board of Directors in performing the

management of the Company;

2. Provide opinion and give approval over the Annual Work Plan
and Budget of the Company as well as other work plans which
have been prepared by the Board of Directors, in accordance
with the provisions of this Articles of Association;

3. Keep up with the progress of activities of the Company,
provide opinions and advices to the GMS with regard to
every issue considered important for the management of
the Company;

4. Report to the holder of Dwiwarna A Series share if there is
any indication of decreasing performance of the Company;
5. Propose to the GMS for the appointment of Public
Accountant who will perform the audit over the books of
the Company;

6. Review and analyze the periodic reports and the Annual
Report prepared by the Board of Directors as well as
execute the Annual Report;

7. Provide explanation, opinion and advice to the GMS with

regard to the Annual Report, if requested;

8. Draw up the minutes of meeting of the Board of

Commissioners and keep their copies;

9. Report to the Company with regard to their and/or their
families share ownership in the Company aforesaid and in
other companies;

10. Provide report regarding the supervisory duties which
have been performed during the recently passed financial
year to the GMS;

11. Provide explanation regarding any matters inquired about
or requested by the holder of Dwiwarna A Series share with
due observance of- the statutory regulations, particularly
those prevailing in the Capital Market sector;

12. Perform other obligations in the framework of supervisory
duties and advice provision, to the extent it does not
contradict to the statutory- regulations, the Articles of
Association and/or the resolutions of the GMS.

Other than the duties and responsibilities previously explained,
the Board of Commissioners also have the following authority:
1. Examine books, letters, as well as other documents,
examine cash position for verification purposes and other
securities and examine the assets of the Company;

2. Enter the yards, buildings, and offices used by the Company;
3. Demand explanation from the Board of Directors- and/or
other officials with regard to any issues concerning the
management of the Company;

4. Be informed of any policy and actions which have been and

which will be taken by the Board of Directors;

5. Demand the Board of Directors and/or other officials under
the level of the Board of Directors, with the knowledge of
the Board of Directors, to attend the meeting of the Board
of Commissioners;

6. Appoint and dismiss a Secretary of the Board of Commissioners;
7. Suspend the members of the Board of Directors in accordance

with the provisions of this Articles of Association;

8. Form the Audit Committee, the Remuneration and-
Nomination Committee, the Risk Monitoring Committee
and other committees, if considered necessary, with due
observance of the capability of the company;

9. Utilize experts for certain matters and within a certain
period of time on the account of the Company,
if
considered necessary;

10. Perform the management actions over the Company in
certain conditions for a certain period of time in accordance
with the provisions of this- Articles of Association;

11. Approve the appointment and dismissal of the Corporate
Secretary and/or the Head of Internal Supervisory Unit;
12. Attend the Meeting of the Board of Directors and give

viewpoint towards the matters being discussed;

13. Perform other supervisory authorities to the extent they do
not contradict with the statutory regulations, the Articles
of Association and/or the resolutions of the GMS.

Jointly, the Board of Commissioners are responsible for the
Company’s losses caused by errors or omissions of members
of Board of Commissioners in carrying out their duties. Board
of Commissioners cannot be responsible for the Company’s
losses if they can prove that:
1. Such loss is not caused by their mistake or negligence;
2. They have performed in good faith with full responsibility
and prudentially for the interest and based on the purpose
and objective of the Company;

3. They do not have any conflict of interest either directly
or indirectly with the management activities causing the
loss; and

4. The have taken the action to prevent the occurrence or

continuation of such loss.

173

Based on the Regulation of Financial Services Authority No.33/POJK.04/2014 Article 31, the Board of Commissioners shall be
obliged to conduct the meeting for at least 1 (one) time within 2 (two) months or at any time as deemed necessary. The quorum for
all of Board of Commissioners’ meeting shall be inthe presence of more than half of total members of Board of Commissioners. In
addition, the Board of Commissioners shall also be obliged to organize meeting with the Board of Directors, at least 1 (one) time
within 4 (four) months and it may also be held at any time as deemed necessary. Joint meeting by Board of Directors and Board of
Commissioners within the Company shall also be referred to as the Joint Meeting.

Decision making at Board of Commissioners meeting is based on discussion to reach consensus. If a consensus cannot be
reached, then the resolution shall be made based on the majority votes from members of Board of Commissioners that are
present or represented in the meeting. If the votes are equal, then the resolution shall be made based on the opinion of the
Chairman of Meeting.

Throughout 2018, Board of Commissioners held 28 internal meetings and 13 Joint Meetings with the Board of Directors. Some
important themes or agendas discussed at Board of Commissioners’ meetings and joint meetings during 2018 can be seen in the
appendix 1 - 3. The following tables describe attendance frequency of the Board of Commissioners meetings and joint Meetings:

Board of Commissioners’ Attendance at Internal Meetings

No. Name

Total Meetings

Total Attendances

Percentage of Attendance (%)

Hendri Saparini

Rinaldi Firmansyah

Edwin Hidayat Abdullah (1)

Isa Rachmatarwata (1)

Margiyono Darsasumarja

Cahyana Ahmadjayadi

Pamijati Pamela Johanna Waluyo

Hadiyanto (2)

Dolfie Othniel Fredric Palit (3)

Remarks:
(1) Since the AGMS on April 27, 2018
(2) Until AGMS on April 27, 2018

(3) Until September 28, 2018

100

Board of Commissioners’ Attendance at Joint Meetings

No. Name

Total Meetings

Total Attendances

Percentage of Attendance (%)

100

Hendri Saparini

Rinaldi Firmansyah

Edwin Hidayat Abdullah (1)

Isa Rachmatarwata (1)

Margiyono Darsasumarja

Cahyana Ahmadjayadi

Pamijati Pamela Johanna Waluyo

Hadiyanto (2)

Dolfie Othniel Fredric Palit (3)

Remarks:
(1) Since the AGMS on April 27, 2018
(2) Until AGMS on April 27, 2018

(3) Until September 28, 2018

174

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
No. Name

Total Meetings

Total Attendances

Percentage of Attendance (%)

Board of Directors’ Attendance at Joint Meetings

Alex Janangkih Sinaga

Harry Mozarta Zen

David Bangun

Dian Rachmawan

Abdus Somad Arief

Herdy Rosadi Harman

Zulhelfi Abidin

Siti Choiriana (1)

Mas'ud Khamid (2)

Remarks:
(1) Since the AGMS on April 27, 2018

(2) Up to April 20, 2018

100

BOARD
OF
PERFORMANCE ASSESSMENT

COMMISSIONERS’

BOARD OF DIRECTORS’ ASSESSMENT
PERFORMANCE

Telkom uses the balance scorecard in the implementation of
the assessment of the performance of Board of Directors by
measuring four main aspects, namely financial, customer,
internal business process, and learning and growth. Both
the Board of Commissioners and the GMS also assess
the performance of the Board of Directors based on the
achievement of the Key Performance
in
accordance with the Articles of Association of the Company, as
well as the realization of the RKAP.

Indicator (KPI)

There are three KPI criteria used by Telkom, namely shared KPI,
Common KPI, and specific KPI. Shared KPI is the KPI with the
same naming, target, realization and achievement for all Board
of Directors. Common KPI is KPI with the same naming and
targets, but different realization and achievements for each
Board of Directors. Specific KPI is a different KPI for each Board
of Directors and is a specific program which is the main task
and priority of each Director and Directorate he leads.

The assessment of the performance of Board of Directors
begins with filling in the realization of an online Management
Contract (KM) and then following up with a face-to-face
meeting to clarify and determine the final performance value
that will be submitted to the Performance Committee and
Managing Director for final determination, then submitted to
Board of Commissioners.

The performance of the Board of Commissioners is evaluated
through the mechanism of the Company’s AGMS. Shareholders
assess the achievement of the Board of Commissioners based on
their Performance Implementation Report which is accounted
at the Annual GMS of the Company to the Shareholders for the
current financial year. The evaluation criteria used includes the
level of participation of members of Board of Commissioners
in meetings and activities of the Company, as well as the
achievement of targets and work targets, both in carrying out
their functions as members of Board of Commissioners and as
committee members.

COMMITTEE UNDER BOARD OF
COMMISSIONERS’ ASSESSMENT

The Board of Commissioners have been assisted by a number
of committees, including the Audit Committee, the Committee
for Nomination and Remuneration, and the Committee for
Planning and Risk Evaluation and Monitoring. In 2018, the Audit
Committee assisted Board of Commissioners in overseeing the
audit process conducted by independent auditors. In addition,
the Audit Committee also helps to evaluate and provide
recommendations on the results of internal and external audit
very well.

The Committee for Nomination and Remuneration (KNR) has
assisted Board of Commissioners to give consideration to Board
of Directors in making strategic decisions. This committee did a
good job in carrying out their responsibility, especially in terms
of proposals for candidates and the remuneration of Board of
Directors and top management.

Meanwhile, the Committee for Planning and Risk Evaluation
and Monitoring (KEMPR) assisted the Board of Commissioners
in business planning and risk management. With the assistance
of the Committee, theBoard of Commissioners could give
recommendations to Board of Directors on Telkom’s long-term
business continuity, including the Company’s decisions on
Merger & Acquisition (M&A).

175

In order to comply with Regulation of Financial Services Authority No.55/POJK.04/2015 dated December 23, 2015, the provisions of the
US SEC Exchange Act 10A-3, the principles of Good Corporate Governance (GCG), and other related regulations, Telkom has an Audit
Committee. Throughout 2018, the Audit Committee assisted the Board of Commissioners in carrying out their supervisory functions in
accordance with the Audit Committee Charter which was determined in the same year through Resolution of Board of Commissioners
No.10/KEP/DK/2018 regarding the Audit Committee Charter of Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk.

AUDIT COMMITTEE’S COMPOSITION

The Audit Committee consists of at least three members, one of them being an Independent Commissioner who also acts as the
chairman. The two other members of the Audit Committee must be independent parties. The composition of the audit committee
members refers to the Regulations of Financial Services Authority and US Regulations of SEC.

The Resolution of 2018 Annual GMS dated April 27, 2018, decided to change the composition of Board of Commissioners due to one
of the Members of Board of Commissioners’ terms of service is ending as a result of a prohibited double position. As a result of
this, Telkom adjusted the composition of the Audit Committee under Resolution of Board of Commissioners No.07/KEP/DK/2018
dated September 28, 2018 regarding Composition of the Audit Committee of Perusahaan Perseroan (Persero) PT Telekomunikasi
Indonesia Tbk, as follows:

Audit Committee’s Composition per December 31, 2018

Name and Double Position Status

Term of Service

Basis of Appointment

Position

Chairman

Margiyono Darsasumarja*
Independent Commissioner

2017-Now

Secretary

Tjatur Purwadi
Independent Member

2014-Now

Member

Rinaldi Firmansyah*
Commissioner (non Voting Member)

2017-Now

Cahyana Ahamdjayadi*
Independent Commissioner

2017-Now

Sarimin Mietra Sardi
Independent Member

2016-Now

Resolution of Board of Commissioners
No.05/KEP/DK/2017 dated April 28, 2017,
and lastly stipulated by Resolution of Board
of
Commissioners No.07/KEP/DK/2018
dated September 28, 2018.

Resolution of Board of Commissioners
No.05/KEP/DK/2014 dated March 25,
2014and lastly stipulated by Resolution
of Board of Commissioners No.07/KEP/
DK/2018 dated September 28, 2018.

Resolution of Board of Commissioners
No.05/KEP/DK/2017 dated April 28, 2017,
and lastly stipulated by Resolution of Board
Commissioners No.07/KEP/DK/2018
of
dated September 28, 2018.

Resolution of Board of Commissioners
No.04/KEP/DK/2016 dated March 31, 2016
and lastly stipulated by Resolution of Board
Commissioners No.07/KEP/DK/2018
of
dated September 28, 2018.

Remark:

* Profile of Audit Committee’s Member can be seen on Profile of The Board of Commissioners

Audit Committee’s Previous Composition

Position

Chairman

Secretary

Member

Name

Margiyono Darsasumarja*

Tjatur Purwadi

Rinaldi Firmansyah*

Dolfie Othniel Fredric Palit*

Cahyana Ahmadjayadi*

Sarimin Mietra Sardi

Duplicate Position Status

Independent Commissioner

Member Independent

Commissioner/Non Voting Member

Independent Commissioner

Independent Member

Remark:
* Profile of Audit Committee’s Member can be seen on Profile of The Board of Commissioners

176

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportAUDIT COMMITTEE MEMBER’S PROFILE WHO ARE NOT BOARD OF COMMISSIONERS’
DOUBLE POSITION

Tjatur Purwadi
Secretary and Independent Member

Born
Age
Citizenship
Domicile

: Surabaya, January 28, 1956
: 62 years old
: Indonesian
: Bandung

Sarimin Mietra Sardi
Independent Member

Born
Age
Citizenship
Domicile

: Ujung Pandang, September 17, 1958
: 60 years old
: Indonesian
: Bandung

Educations
1990 Bachelor degree in Accounting, University of Gadjah

Mada, Yogyakarta, Indonesia.

2000 Master degree of Management in Finance, University

of Padjajaran, Bandung, Indonesia.

Educations
1993

Bachelor degree in Accounting, Sekolah Tinggi Akuntansi
Negara (STAN), Jakarta, Indonesia.

2008 Master degree of Management, Universitas Pendidikan

Indonesia (UPI), Jakarta, Indonesia.

Basis of Appointment
Resolution of Board of Commissioners No.05/KEP/DK/2014
dated March 25, 2014 and lastly stipulated by Resolution
of Board of Commissioners No.07/KEP/DK/2018 dated
September 28, 2018. Aside from being the Secretary of the
Audit Committee, there is currently no other position held by
Tjatur Purwadi in the Company.

Term of Service
2014 up to present.

Career Experiences
2014 - Present

Basis of Appointment
Resolution of Board of Commissioners No.04/KEP/DK/2016
dated March 31, 2016 and lastly stipulated by Resolution
of Board of Commissioners No.07/KEP/DK/2018 dated
September 28, 2018.

Term of Service
March 1, 2016 up to the present.

Career Experiences
2016 - Now

for

the

Member

supervising

Independent
Audit Committee.
(Responsible
and
monitoring the integrated audit process,
financial statement consolidation process,
effectivity of internal control of financial
reporting. In accordance with Resolution
of Board of Commissioners No. 07/KEP/
DK/2018, he was appointed as member of
the Audit Committee).
PT Telkom Indonesia (Persero) Tbk.
(Holding a number of strategic offices
including Deputy SGM Finance Operation
and Director of Finance & HR of Telkom
Pension Fund).

1982 - 2014

the

Audit

independent auditors.

Secretary/Member
Committee.
(Responsible to facilitate the Audit
Committeee members’ performance,
conducting correspondence, preparing
documentation, making
reports of
the Audit Committee
to
changes
Charter, and coordinating the selection
process of
In
accordance with Resolution of Board of
Commissioners
No.09/KEP/DK/2016,
he was appointed as Secretary and
financial expert concurrently for the
Audit Committee).
Director
Tanudiredja, Wibisana & Rekan/PwC.
PT Telkom Indonesia (Persero) Tbk.
(Holding
strategic
a number
offices including Vice President (VP) -
Financial & Logistic Policy and Head of
Internal Audit).

- Assurance Team KAP

2012 - 2014

1979 - 2012

177

In order to monitor and analyze compliance with laws and
the effectiveness of the Risk Management as mentioned by
number 10 and 11 above, based on the Resolution of Board of
Commissioners No. 04/KEP/DK/2011 dated March 24, 2011,
regarding Committee For Planning And Risk Evaluation And
Monitoring Charter of PT Telekomunikasii Indonesia, Tbk, the
task of Audit Committee and Committee for Planning and Risk
Evaluation and Monitoring is divided, as follow:
1. Audit Committee analyze and monitor The Company’s
compliance to the Capital Market Regulation where The
Company’s stock is listed, especially related to the financial
reporting risk.

2. KEMPR analyze ad monitor The Company’s compliance to
laws and regulation related to the business of The Company.

AUDIT COMMITTEE’S PERFORMANCE
AND IMPLEMENTATION ACTIVITIES

Based on the Audit Committee Activity Report during 2018, the
Audit Committee has implemented its functions, among others,
as follows:
1. To conduct the supervision of the Integrated Audit process

for the 2018 financial year
The Audit Committee has conducted the discussion with
the internal and independent auditor Ernst & Young (EY)
in relation to the quality and acceptability of financial
accounting standard implemented by the Company. Also
the discussion regarding the properness of significant
accounting estimate and judgements and the adequacy
of disclosure in the consolidated financial report as well
as the internal control conducted by the Management.
Therefore the quality of the financial report released by
Management can be presented properly and there is no
material misstatement.

The Audit Committee has also reviewed and discussed the
audited consolidated financial report and the notes upon
the consolidated financial report in the Annual Report
(Form 20F) with Company’s management. With regard to
the Company’s risk management, the Audit Committee
also supervised and monitored the frauds and risks on the
financial reporting that may have a material impact on the
presentation of the financial report.

independent auditors

In addition, the Audit Committee also reviews and discusses
with
the management’s
compliance with the implementation of capital market
regulations and other regulations relating to the Company’s
business in accordance with the PSA 62 standard that began
auditing in 2017 financial year.

(EY)

AUDIT COMMITTEE’ INDEPENDENCE

Telkom require all members of the Audit Committee to sign a
statement of integrity and independence as a commitment
to uphold GCG principles ensuring they show integrity at all
times and be independent in performing their duties and
responsibilities. Accordingly, Telkom convinced that the
decisions made through the Audit Committee will be free of
pressure from any other parties.

AUDIT COMMITTEE’S SCOPE, DUTIES,
AND RESPONSIBILITIES

its duties and

The Audit Committee shall perform
responsibilities as follows:
1. To assist the Board of Commissioners in the process of
selecting independent auditors to conduct the integrated
audit for the Company and its consolidated subsidiaries
based on independency, scope of work and service fee.

2. To oversee the integrated audit process for the Company
and the audit process of the subsidiaries of which the
financial statements are consolidated into the Company’s
consolidated financial statements.
independent opinions

in the event of any
different opinion between the management and the
independent auditors.

3. To give

4. To give pre-approval of non-audit services to be assigned to

the independent auditors.

5. To review any financial information to be published by the
Company, such as financial statements, projections, and any
other financial information.

6. To monitor the adequacy of the management’s efforts to
build and operate effective internal control, in particular the
internal control of financial reporting.

7. To analyze inspection done by the Internal Auditor.
8. Supervise

Auditors’

findings

Internal

follow-up

by management.

9. Providing facilities to receive, study and follow-up complaint
(whistleblower) which includes The Company, Subsidiaries
and Affiliate (Affiliate definition based on the Article 1
Number 1 Law No. 8 in 1995 regarding Capital Market).

10. To monitor the compliance of the Company with the laws
and regulations on capital market and any other laws and
regulations in relation to the Company’s business.

11. To analyze Risk Management policies and implementation

made and run by management.

12. Analyzing and giving advise to the Board of Commissioners
regarding potential conflict of interest inside The Company.
13. Maintain confidentiality of The Company and its consolidated

Subsidiaries’s document, data and information.

14. To do other tasks given by the Board of Commissioners.

178

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

and Community Development program in 2018, the audit
process for the financial report in the financial year of 2018
as well as the Agreed Upon Procedure/AUP.

4. To conduct the review of the information on the incoming
complaints through the Whistleblower (WBS) program
for the 2018 financial year
To provide opportunities and convenience to all parties
in submitting complaints either from the TelkomGroup
employees or from outside the TelkomGroup (third parties),
the Audit Committee has prepared a Whistleblower
application system that can be accessed easily from
anywhere through the Internet.

2. To conduct the supervision and review of the plan and
implementation of the work program of Internal Auditor
Unit for the 2018 financial year
The Audit Committee has conducted the review and
discussion regarding the proposal of Internal Audit Unit’s
working program for 2018 in relation to the risks that may
occur in 2018 before such work program is determined by
the Management.

The Audit Committee conducted a quarterly discussion
on the findings and recommendation of the result of
audit process and internal consultation made by Internal
Audit Unit, including the monitoring of the follow-up act
completed by the Management.

3. To conduct the supervision upon the audit process of
Partnership and Community Development Program
(PKBL) conducted by the Community Development Center
(CDC) Unit for the 2018 financial year
The Audit Committee has conducted the discussion with
the Management of CDC and independent auditor Ernst &
Young (EY) in relation to the implementation of Partnership

AUDIT COMMITTEE’S MEETING

Regulation of Financial Services Authority No.55/POJK.04/2015 dated December 23, 2015 regarding Establishment and Guidelines
of Implementation of the Works of Audit Committee, in particular Article 13, states that the Audit Committee shall hold regular
meetings at least once in three months. However, the Audit Committee Charter sets out that the Audit Committee shall hold
meetings once every month.

Pursuant to the above provisions, the Audit Committee held 26 meetings throughout 2018. The meetings were held in accordance
with the requirements of the Audit Committee Charter and aimed to facilitate the performance of duties and responsibilities of
each member of the Audit Committee.

No. Name

Total Meetings

Total Attendances

Percentage of Attendance (%)

Audit Committee’s Meeting Attendances

Margiyono Darsasumarja

Tjatur Purwadi

Rinaldi Firmansyah

Cahyana Ahamdjayadi

Sarimin Mietra Sardi

Dolfie Othniel Fredric Palit*

Remark:

* Profile of members of Audit Committee can be seen on the Board of Commissioners’ profile

100

179

EDUCATION AND TRAINING

Telkom includes members of the Audit Committee in various activity programs to competency development throughout 2018 in
order to improve the skill of Audit Committee members to perform their duties and responsibilities, as follows:

Audit Committee’s Education and Training

No. Nama

Program Pelatihan

Tanggal

Lokasi

1. Margiyono

Darsasumarja

Conference Security of things Worlds 2018 by
We, Connect Global Leader

September 16-18, 2018

San Diego, USA

Tjatur Purwadi

The latest PSAK Workshop according to
IFRS convergence on January 1, 2018 by
Ikatan Akuntan Indonesia

July 24-27, 2018

Denpasar, Indonesia

2. COMiMS Finance World Congress 2018 by

November 27-29, 2018

London, UK

TMT Finance

Rinaldi Firmansyah

Association for Finance Professional 2018 by
AFP Financial Institute

November 4-7, 2018

Chicago, USA

Cahyana Ahmadjayadi The IRES – 506th International Conference on

December 9-10, 2018

Kyoto, Japan

E-Education, E-Business, E-Management, and
E-Learning (IC4E) by The IRES

Sarimin Mietra Sardi

The latest PSAK Workshop according to
IFRS convergence on January 1, 2018 by
Ikatan Akuntan Indonesia

July 24-27, 2018

Denpasar, Indonesia

2. COMiMS Finance World Congress 2018 by

November 27-29, 2018

London, UK

TMT Finance

180

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCOMMITTEE FOR NOMINATION AND REMUNERATION

The Committee for Nomination and Remuneration (KNR) plays an important role in ensuring the selection process and remuneration
policy making are based on professional and independent considerations without any pressure from other parties. Telkom has a
Committee for Nomination and Remuneration in charge of assisting Board of Commissioners to supervise the determination of
qualifications and nomination process, as well as the remuneration of Board of Commissioners, Directors and executive officers.
This committee works based on Regulation of Financial Services Authority No.34/POJK.04/2015 regarding the Committee for
Nomination and Remuneration of Issuers or Public Companies. Telkom also has a Committee for Nomination and Remuneration
Charter established through the Resolution Letter of Board of Commissioners No.13/KEP/DK/2018 dated 31 December 2018
concerning the Nomination and Remuneration Work Guidelines (Charter) of Perusahaan Perseroan (Persero) PT Telekomunikasi
Indonesia, Tbk.

KNR’S COMPOSITION

Committee for Nomination and Remuneration stipulates that the Committee for Nomination and Remuneration shall consist of at
least three members, one of whom is an Independent Commissioner who also serves as Chairman of the Committee for Nomination
and Remuneration. The remaining two members may be appointed from any members of Board of Commissioners, external parties,
or management under Board of Directors. The composition of this member is in accordance with Regulation of Financial Services
Authority No.34/POJK.04/2015. Until now, the KNR does not have any members from external parties.

Pursuant to such regulation, the Board of Commissioners issued Resolution of Board of Commissioners No.08/KEP/DK/2018
dated October 25, 2018 regarding the composition of the Committee for Nomination and Remuneration of Perusahaan Perseroan
(Persero) PT Telekomunikasi Indonesia Tbk, which stipulating that the Committee for Nomination and Remuneration Members are
as follows:

Committee for Nomination and Remuneration’s Composition

Position

Chairman

Name and Double Position Status

Duties of Each Member

Pamijati Pamela Johanna Waluyo*
Independent Commissioner

To be responsible to give the directions and
coordination of the implementation of duty.

To be responsible to give and manage
the administration and documentation of
the Committee.

To be responsible to coordinate the inputs
coming from the parties that has relationship
with the controlling shareholders in relation
to the issue of nomination and remuneration.

Secretary/Member

Ario Guntoro
Secretary of Board of Commissioners

Member

Rinaldi Firmansyah*
Commissioners

Edwin Hidayat Abdullah*
Commissioners

Isa Rachmatarwata*
Commissioners

Margiyono Darsasumarja*
Independent Commissioners

Cahyana Ahmadjayadi*
Independent Commissioners

Remark:

* Profile of KNR’s Member can be seen on Profile of The Board of Commissioners

181

KNR’S
SCOPE,
RESPONSIBILITIES

DUTIES,

AND

Duties and responsibilities of the Committee for Nomination
and Remuneration are as follows:
1. To prepare the policy, criteria and selection needed for
the strategic titles within the Company namely the one
title below the Director and Executive (member of Board
of Directors and member of Board of Commissioners)
consolidated subsidiaries that refer to the principles of good
corporate Governance.

2. To assist the Board of Commissioners together with or
through the consultation with Board of Directors to select
the candidate for strategic titles within the Company
(member of Board of Directors and member of Board of
Commissioners) consolidated subsidiaries.

3. To give recommendations to the Board of Commissioners
to be conveyed to the holder of series A Dwiwarna shares
regarding:
a. The composition of title of member of Board of Directors.
b. The succession planning of members of Board of Directors.
c. Assessment based on the parameter that has been
prepared as the evaluation material for the capability
development of Board of Directors’ members.

4. Provide recommendations to the Board of Commissioners to
be submitted to the General Meeting of Shareholders through
the shareholders of the A Dwiwarna Series concerning the
policies, amount and/or structures for the remuneration of
Board of Directors and Board of Commissioners.

5. Remuneration of the Board of Directors and Board of
Commissioners
in the form of salary or honorarium,
allowances and facilities that are fixed and incentives that
are variable.

6. Review the employment contract and/or performance

statement of each member of Board of Directors.

In general, the Chairman of the Committee for Nomination
and Remuneration has a role to directing and coordinating the
performance of the Committee’s duties. The Secretary of the
Committee shall assist the Chairman in preparing and managing
the administration and documentation of the Committee’s
activities. The members of the Committee shall coordinate the
inputs of the parties relating to the controlling shareholders
related to the nomination and remuneration.

Ario Guntoro
Secretary

Education
1993 Bachelor degree in Economics, University of Gadjah Mada,

Yogyakarta, Indonesia.

Basis of Appointment
Resolution of Board of Commissioners No.08/KEP/DK/2018

dated October 25, 2018.

Term of Service
Year 2013 up to present.

Career Experiences
2008 - 2013

Secretary of the Committee for Planning

and Risk Evaluation and Monitoring

(KEMPR) of PT Telkom

Indonesia

(Persero) Tbk.

2004 - 2008

Member of Committee for Planning

And Risk Evaluation and Monitoring

(KEMPR)

Telkom

Indonesia

(Persero) Tbk.

2004

Serving

special

advisor

1999 - 2004

Working at

the

Indonesian Bank

PT PPA (Persero).

Restructuring Agency

(BPPN), with

the last position as Assistant Vice

President of HIPA Division.

1994 - 1999

Working at private banks, holding a

range of offices from Corporate Officer

to Branch Manager.

KNR’S INDEPENDENCE

To ensure that each member of the Committee for Nomination
and Remuneration
is upholding the GCG principles and
committing to maintaining integrity and independence in
performing their duties and responsibilities, Telkom requires
that each member of the Committee for Nomination and
Remuneration sign a statement of integrity and independence.
This is important to each member to make professional
decisions without pressure from any other parties.

182

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportKNR’S PERFORMANCE AND IMPLEMENTATION ACTIVITIES

Throughout 2018, the Committee for Nomination and Remuneration assisted Board of Commissioners in making strategic
decisions, including:

No.

Letter

Date

Letter of Board of Commissioners No.020/SRT/DK/2018

regarding Prospective

January 25, 2018

President Director of PT Dayamitra Telekomunikasi.

Letter of Board of Commissioners No.33/SRT/DK/2018/RHS regarding Application for

February 15, 2018

Approval of Proposal of Company Representative of PT Telkom Indonesia (Persero) Tbk in

PT Dayamitra Telekomunikasi.

Letter of Board of Commissioners No.039/SRT/DK/2018/RHS regarding Your Appointment

March 2, 2018

Mr. S. Mietra Sardi as Member of the Audit Committee.

Letter of Board of Commissioners No.055/SRT/DK/2018/RHS regarding Submission of Proposal

March 20, 2018

Documents of Telkom Representatives as Mitratel’s Managing Director.

Letter of Board of Commissioners No.056/SRT/DK/2018/RHS regarding Approval of

March 21, 2018

Representative of Telkom as Commissioner of PT Telkom Metra and Mitratel.

Letter

Commissioners No.062/SRT/DK/2018/RHS

regarding Appointment

April 3, 2018

Sri Hartati Rahayu as KEMPR Member.

Letter of Board of Commissioners No.065/SRT/DK/2018/RHS regarding Proposals for

April 9, 2018

Prospective Directors of PT Telekomunikasi Indonesia Tbk.

Letter of Board of Commissioners No.070/SRT/DK/2018/RHS regarding Submission of 3

April 10, 2018

Proposals of Company Representatives at PT Mitratel.

Letter of Board of Commissioners No.080/SRT/DK/2018/RHS regarding Proposal for Prospective

April 20, 2018

Directors of PT Telkom Indonesia.

10.

Letter of Board of Commissioners No.084/SRT/DK/2018/RHS regarding Acting Managing

April 24, 2018

Director of Consumer Director PT Telkom Indonesia, Tbk.

11.

No.086/SRT/DK/2018/RHS Letter of Board of Commissioners regarding Application for 2017

April 30, 2018

Financial Year Tantiem and Board of Directors & Board of Commissioners Remuneration for 2018

Book Year.

12.

13.

Letter of Board of Commissioners No.119/SRT/DK/2018 regarding Commissioner of PT Telkomsel.

June 26, 2018

Letter of Board of Commissioners No.129/SRT/DK/2018 regarding Approval of Reappointment
of SVP Internal Audit PT Telkom Indonesia, Tbk.

July 3, 2018

14.

Letter of Board of Commissioners No.168/SRT/DK/2018/RHS Regarding Approval of

August 20, 2018

Representative of Telkom as President Director of PT Dayamitra Telekomunikasi (Mitratel).

15.

Letter of Board of Commissioners No.169/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Mr. Ario Guntoro.

16.

Letter of Board of Commissioners No.170/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Mr. Tjatur Purwadi.

17.

Letter of Board of Commissioners No.171/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Mr. S. Mietra Sardi.

18.

Letter of Board of Commissioners No.172/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Ms.Sri Hartati Rahayu.

183

Letter

Date

19.

Letter of Board of Commissioners No.173/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Ms. Widuri Meintari Kusumawati.

Letter of Board of Commissioners No.174/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Ms. Diyah Santi Indrawati.

21.

Letter of Board of Commissioners No.175/SRT/DK/2018/RHS regarding New Honoraium Notice

August 21, 2018

Mr. Adam Wirahadi.

22.

Letter of Board of Commissioners No.176/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Mr. Juminta.

23.

Letter of Board of Commissioners No.177/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Mr. Fahmi Khaudzi.

24.

Letter of Board of Commissioners No.178/SRT/Dk/2018/RHS regarding New Honorarium

August 21, 2018

Notification Ms. Dyah Swasti.

25.

Letter of Board of Commissioners No.179/SRT/DK/2018/RHS regarding New Honorarium

August 21, 2018

Notification Mr. Farkhan Al-Fathoni.

26.

Letter of Commissioners No.218/SRT/DK/2018/RHS regarding Consultants of Remuneration
Survey of Company Management in 2018.

October 12, 2018

27.

Letter of Board of Commissioners No.223/SRT/DK/2018/RHS regarding Appointment of

October 16, 2018

Ms. Widia Praptiwi as a Member of KEMPR PT Telkom Indonesia, Tbk.

28.

Letter of Board of Commissioners No.246/SRT/DK/2018/RHS regarding the Appointment of

November 13, 2018

Mr. Adam Wirahadi as KEMPR Staff.

29.

Letter of Board of Commissioners No.247/SRT/DK/2018/RHS regarding Vehicle Facilities of

November 13, 2018

the Board of Directors.

KNR’S MEETINGS

Regulation of Financial Services Authority No.34/POJK.04/2014 regarding the Committee for Nomination and Remuneration of
Issuers or Public Companies requires that the Committee for Nomination and Remuneration shall hold meetings at least once every
four months. In 2018, the Committee for Nomination and Remuneration helds 44 meetings, including 29 meetings by circulation.

Committee for Nomination and Remuneration’s Meeting Attendance in 2018

No.

Name

Total Meetings

Total Attendances

Percentage of
Attendance (%)

Pamijati Pamela Johanna Waluyo

Ario Guntoro

Edwin Hidayat Abdullah

Rinaldi Firmansyah

Isa Rachmatarwata

Margiyono Darsasumarja

Cahyana Ahmadjayadi

Hadiyanto

Dolfie Othniel Fredric Palit

KNR’S EDUCATION AND TRAINING

100

In the 2018 financial year, education and training activities in order to improve the competence of the members of the Committee
for Nomination and Remuneration are were not yet required. The policy was taken because ofdue to the activities of the
Committee for Nomination and Remuneration, specifically the remuneration proposal process, supported by independent and
professional consultants.

184

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
COMMITTEE FOR PLANNING AND RISK EVALUATION AND
MONITORING

Telkom has a Committee for Planning and Risk Evaluation and Monitoring (KEMPR) which assist Board of Commissioners in the
fields of planning, management and risk evaluation. This is in line with Telkom’s commitment to implement good governance,
especially in relation to evaluation, monitoring and planning of various risks.

Committee for Planning and Risk Evaluation and Monitoring’s duties and responsibilities are stipulated by the Committee for
Planning and Risk Evaluation and Monitoring Charter, under Resolution Letter of Board of Commissioners No.04/KEP/DK/2011
dated March 24, 2011, regarding Charter of the Committee for Planning and Risk Evaluation and Monitoring of Perusahaan Perseroan
(Persero) PT Telekomunikasi Indonesia Tbk. The decision stipulates, among other things, as follows:
1. The establishment and the appointment of its members;
2. The structure and requirements of membership, duties, responsibilities, and authority; and
3. The scope of works, meetings, reporting, term of office, and funding.

KEMPR’S COMPOSITION

Resolution of Board of Commissioners No.09/KEP/DK/2018 dated October 25, 2018, regarding Composition of the Committee for
Planning and Risk Evaluation and Monitoring of Telkom is as follows:

Committee for Planning and Risk Evaluation and Monitoring’s Composition

Position

Name and Double Position Status

Term of Service

Duties of Each Member

Chairman Edwin Hidayat Abdullah*

Starting from Mei 9,

To give the direction, to coordinate and monitor

Commissioners

2018

the implementation of duties of all Members of

Committee.

Member

Isa Rachmatarwata*

Starting from Mei 9,

Supervise and monitor the

implementation of

Commissioner

2018

RJPP / CSS, RKAP and enterprise risk management,

Cahyana Ahmadjayadi*

Starting from Mei 8,

implement non-organic business growth initiatives,

Independent Commissioners

2017

Widia Praptiwi

Starting from October

Independent Member

25, 2018

as well as certain actions of the Board of Directors

that require Board of Commissioners approval.

Remark:

* Profile of KEMPR’s Member can be seen on Profile of The Board of Commissioners

185

KEMPR’S
PERFORMANCE
IMPLEMENTATION ACTIVITIES

AND

Widia Praptiwi
Independent Member

Born

Age

Citizenship

Domicile

: July 7, 1974

: 44 years old

: Indonesian

: Jakarta

Education
1992 - 1997 Bachelor degree in Accounting, University of

Indonesia, Indonesia.

2001 - 2004 Master of Science in Accounting, University of

Indonesia, Indonesia.

Basis of Appointment
Resolution of Board of Commissioners No.09/KEP/DK/2018

dated October 25, 2018, regarding Membership Composition

of Committee for Planning and Risk Evaluation and Monitoring

of Perusahaan Perseroan

(Persero) PT Telekomunikasi

Indonesia, Tbk.

Term of Service
October 25, 2018 up to present.

Career Experiences
2015 - Present

Lecturer in Universitas Krisnadwipayana

Jakarta.

2015 - 2018

Member of Hotel Indonesia Natour’s Audit

2002 - 2008

PT Bina Prima Perdana.

Committee.

KEMPR’S INDEPENDENCE

The Committee for Planning and Risk Evaluation and Monitoring
is not regulated by any regulator. However, Telkom still require
the Committee to have good integrity and to maintain its
independence as mentioned in the KEMPR Charter Chapter 4
point 4.b.

KEMPR’S
RESPONSIBILITIES

SCOPE,

DUTIES,

AND

Committee for Planning and Risk Evaluation and Monitoring
has the following duties and responsibilities:
1. To conduct a comprehensive evaluation upon the proposal of
the Company’s Long Term Plan (RJPP) or CSS and Company’s
Budget Activity Plan as submitted by Board of Directors;
2. To conduct the evaluation of the implementation of RJPP
and RKAP to assess whether the implantation is in line with
the target of RJPP and RKAP which has been ratified by the
Board of Commissioners; and

3. To conduct the monitoring towards the implementation of

enterprise risk management within the Company.

186

Throughout 2018, the Committee for Planning and Risk
Evaluation and Monitoring did
its activities based on
Committee Guidelines/Charter and Resolution Board of
Commissioners No.10/KEP/DK/2017 dated October 27,
2017, regarding the Arrangement of the Certain Actions of
Directors who Must Obtain the Written Approval of Board
of Commissioners and/or Holders of Series A Dwiwarna
Share which have been updated by the Resolution of Board
of Commissioners No. 11/KEP/DK/2018 dated November 15,
2018, as well as Resolution of Board of Commissioners No.02/
KEP/DK/2017 dated February 24, 2017, regarding Standard
Operating Procedures (SOP) on the Process of Giving Board of
Commissioners’ Approval. It consists of:
1. Company’s Long Term Plan (RJPP)
a. Evaluation of RJPP 2018-2022

Evaluation of the implementation of RJPP 2018-2022
increasingly difficult challenge for the
shows an
Company to achieve the target market capitalization
and at the same time realize its vision of becoming the
King of Digital in the Region. To face this challenge, the
Company maximized growth in three portfolios, namely
IT & services, media, and edutainment.

transformation

towards digital

In addition, on the internal side, the Company accelerated
the
telco, both
through digitization and digitalization. Digital maturity
measurements are conducted periodically, especially
related to strategy & business aspects, customer
experience, technology, and operation; also people,
culture, and organization.

In addition to strengthening on the side of organic
initiatives, achieving
the Company’s vision also
requires sharpening on the side of inorganic initiatives.
Sharpening on the side of strategic initiatives includes
determining the focus of inorganic investment (business
portfolio, area, and
investment size (expansion of
inorganic strategies - not only on acquisitions but also
on initiatives that are able to unlock the current business
value of the Company, and monitor post-implementation
business inorganic initiatives.

b. Preparation of RJPP 2019-2023

The focus of KEMPR in the preparation of the RJPP 2019-
2023, among others:
• Harmonization of strategic initiatives between CFU,
especially on initiatives related to the development of
business portfolios;

• Sharpening

inorganic

initiatives, especially those

related to business unlocking;

• Efforts to optimize the value of capital expenditure
invested by the Company, including maintaining the
level of efficiency and effectiveness of the capital
expenditure; and

• The need for refinement of several roadmaps
related to changes in the direction of business
portfolios, including satellite, e-commerce, and
financial services.

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

2. Company’s Work and Budget Plan as well as Capital

Expenditure
a. Monitoring focus of RKAP and Capital Expenditure of

2018
In the implementation of the 2018 RKAP, the monitoring
focus of KEMPR including the implementation of efforts
to maintain the growth of CFU Mobile - especially in
the legacy component;
improving the performance
of fixed broadband products through a value added
service solution developed on broadband services,
evaluating the impact of changes in exchange rates
and interest rates on the performance of the Company
and its subsidiaries, and monitoring the performance
of subsidiaries - especially those acting as vehicles
for international business, and business development
information, media, and edutainment.

On the capital expenditure side, monitoring of the
absorption of capital expenditure is primarily directed
at the realization of the development of the Company’s
strategic projects, achievement of healthiness &
effectiveness CAPEX
indicators, and optimizing the
absorption of capital expenditure for CFU Consumer.

b. Evaluation to the Proposal of RKAP and Capital

Expenditure of 2019
Evaluation of the proposed RKAP and capital expenditure
in 2019 will focus on 3 (three) things as follows:
• Control of growth expenses on revenue growth

In line with the direction of transformation towards
digital business, controlling the growth of the expense
on revenue growth needs to be a control so that the
Company’s margins are maintained. This is also in line
with investor recommendations and also benchmarks
for similar telecommunications companies at the
regional level.

•

suppress

Increased
loyalty
customer
withdrawals and increase revenue
The increase in the number of cellular, broadband
and corporate customers also SMB needs to be
accompanied by efforts to increase customer loyalty.
Customer loyalty needs to be grown by providing
integrated end to end services; providing products,
services, and solutions as needed; and creating
superior customer experience
for customers.
These efforts are expected to reduce the rate of
revocation, while increasing customer engagement
with the Company.

3. Enterprise Risk Management
Based on monitoring of the Company’s risk profile, there are

three things that need attention, namely:
a. Mitigation

strategic,

of
operational risks;

compliance

and

b. Effectiveness of ERM management organizations in the

Company; and

c. Implementation of ERM online monitoring.

Mitigation of strategic, compliance and operational risks
related to the Company’s activities in digital business, the
need to anticipate the development of regulations and
improvement of internal control, as well as the management
of international traffic business. In the past few years,
these three things are still the main agenda in managing
the Company’s risk profile. The biggest challenge lies
in anticipating the development of digital business that
suppresses the Company’s margins, and at the same time
challenges the Company to create new businesses and/or
digital service distribution lines according to the needs of
the community.

Changes to the risk management organization structure and
implementation of ERM online monitoring are expected to
provide added value in the Company’s risk management.
Strengthening the risk management organization needs
to be done considering the Company’s expanding business
including developments in its subsidiaries. Therefore, as
part of the efforts to monitor the ERM management of
the Company, it is necessary to evaluate in 2019 regarding
the effectiveness of changes in organizational structure
and implementation of the tools used in monitoring the
Company’s risk.

4. Certain Action from Board of Directors that Requires the

Approval from Board of Commissioners
In 2018, KEMPR has assisted Board of Commissioners in
reviewing the proposal of strategic plans as submitted by
Board of Directors, among others:
a. Strategic fit and final approval of equity participation in

PT Telkom Satelit Indonesia (Telkomsat);

b. Inorganic project strategic fit related to digital business,
telecommunications

B2B, financial services, and
infrastructure;

c. Proposal for write-off of receivables in 2018; and
d. Approval of the release of phase II capital expenditures
- after the Phase I approval that is carried out in
conjunction with the approval of the 2018 RKAP.

• The need for increased orchestration between CFU

in developing business initiatives
The Company has 4 main CFUs as the spearhead of
services to customers, namely Mobile, Enterprise
& Business Service, Consumer, and Wholesale &
International Business. Orchestration between CFUs
is needed to ensure the allocation of the Company’s
resources for each business initiative at each CFU,
there is no overlap of services and products, and
minimize investment duplication.

187

KEMPR’S MEETING

In 2018, KEMPR conducted 10 Committee meetings attended by the members who are members of Board of Commissioners and
non-members of Board of Commissioners, with the following detail of attendance:

Committee for Planning and Risk Evaluation and Monitoring’s Meeting Attendance 2018

No. Name

Total Attendances

Percentage of Attendance (%)

Hadiyanto (1)

Dolfie Othniel F.P (2)

Margiyono D.S (2)

Pamijati Pamela Johanna Waluyo (2)

Cahyana Ahmadjayadi

Sri Hartati Rahayu (2)

Edwin Hidayat Abdullah (3)

Isa Rachmatarwata (3)

Widia Praptiwi (4)

Remarks:
(1) until April 19, 2018
(2) until October 24, 2018
(3) start May 9, 2018
(4) start October 25, 2018
* Carry out state duties on the middle of October - November 8, 2018

KEMPR’S EDUCATION AND TRAINING

100

25*

100

Telkom includes KEMPR members in various training and education activities to improve competency during 2018,as follows:

Date

Name of Training

Organizer

Remarks

February 26, - March 2, 2018

Mobile World Congress 2018

GSMA

Barcelona, Spain

July 4, 2018

Strategic discussion on Global Telco Industry

Internal

Jakarta, Indonesia

September 9-11, 2018

Factory and Research Visit

July 17-12, 2018

Pertemuan dengan Softbank dan NEC

December 9-10, 2018

The IRES – 506th International Conference on
e-education, e-business, e-management, and

e-learning

Internal

IRES

Shenzhen, PR China

Japan

188

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportBOARD OF DIRECTORS

Directors at Telkom collectively have the duty and responsibility to manage the Company in accordance with the provisions of the
Company’s Articles of Association. In carrying out its duties, members of Board of Directors act and decide a policy in accordance
with the duties and authority of each member.

BOARD OF DIRECTORS’ COMPOSITION

During 2018, there was a change in the composition of Board of Directors. On April 20, 2018, Mas’ud Khamid was appointed as
director at PT Pertamina (Persero). Related to this, through the Annual General Meeting of Shareholders (AGMS) on April 27, 2018,
Telkom made a decision regarding the changes in the Company’s Management as follows:
1. Mas’ud Khamid was honorably dismissed from his position as a Board of Directors because of his assignment in another place.
2. Siti Choiriana was appointed Director of Consumer Service.

The composition of Board of Directors differences at the end 2018 and at the end of the year before can be seen in these
following table:

Board of Directors’ Composition per December 31, 2017

No. Name

Title

Appointment

Discharge Date

Alex Janangkih Sinaga

Harry Mozarta Zen

Mas’ud Khamid

Herdy Rosadi Harman

Zulhelfi Abidin

David Bangun

Abdus Somad Arief

Dian Rachmawan

President Director

Director of KEU

Director of CONS

Director of HCM

Director of NITS

Director of DSP

Director of WINS

Director of EBIS

2014

2016

2017

2014

2017

2014

AGMS 2019

AGMS 2021

AGMS 2022

AGMS 2019

AGMS 2022

AGMS 2019

Remarks:
KEU (Finance), CONS (Consumer Service), HCM (Human Capital Management), NITS (Network, IT, & Solution), DSP (Digital & Strategic Portfolio),

WINS (Wholesale and International Service), and EBIS (Enterprise & Business Service)

Board of Directors’ Composition per December 31, 2018

No. Name

Title

Appointment

Discharge Date

Alex Janangkih Sinaga

President Director

Harry Mozarta Zen

David Bangun

Dian Rachmawan

Abdus Somad Arief

Herdy Rosadi Harman

Zulhelfi Abidin

Siti Choiriana

Director of KEU

Director of DSP

Director of EBIS

Director of WINS

Director of HCM

Director of NITS

Director of CONS

2014

2016

2017

2014

2017

AGMS 2019

AGMS 2021

AGMS 2022

AGMS 2019

AGMS 2022

AGMS 2023

Remarks:
KEU (Finance), DSP (Digital & Strategic Portfolio), EBIS (Enterprise & Business Service), WINS (Wholesale and International Service),

HCM (Human Capital Management), NITS (Network, IT, & Solution), dan CONS (Consumer Service).

189

As a form of compliance with Law No. 39 of 1999 concerning Human Rights, Telkom guarantees that there is no discrimination
in the selection and appointment of Directors. At present there is no written policy that specifically regulates the diversity of
Board of Directors, but Telkom guarantees that members of Board of Directors are elected and appointed based on their respective
expertise, skills and integrity.

Based on the results of the 2018 AGMS, the composition of the Telkom Directors consists of seven men and a woman.
The low number of female directors in Telkom is based on the results of the selection and is not an attempt to discriminate women
for the position of Directors.

Board of Directors’ Diversity per December 31, 2018

No.

Name

Position

Gender

Background of Expertise
& Skill

Level of Education

Alex Janangkih Sinaga

President

Director

Male

Telecommunication and

Master

Telematics Engineering

Harry M Zen

Director of KEU

Male

Administration, Business

Master

and Finance

David Bangun

Director of DSP Male

Telecommunication and

Master

Electrical Engineering

Dian Rachmawan

Director of EBIS Male

Telecommunications

Master

Engineering

Abdus Somad Arief

Director of WINS Male

Technology and Information

Master

Herdy Rosadi Harman

Director of HCM Male

Systems

Law, Business

Administration

Master

Zulhelfi Abidin

Siti Choiriana

Director of NITS Male

Information and Technology Master

Director of CONS Female

Electrical Engineering and

Master

Technology Management

Remarks:
KEU (Finance), DSP (Digital & Strategic Portfolio), EBIS (Enterprise & Business Service), WINS (Wholesale and International Service),
HCM (Human Capital Management), NITS (Network, IT, & Solution), dan CONS (Consumer Service).

Board of Directors’ Gender
Composition Diversity

Board of Directors’ Education
Level Composition Diversity

12,5% Female

Doctor

87,5%

Male

100%

Master

190

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportBOARD OF DIRECTORS’ DOUBLE POSITION

Some of Telkom’s Directors have dual positions, either in Telkom as the holding Company or subsidiaries. Information on the double
positions of Directors can be seen in the following table:

Board of Directors’ Double Position per December 31, 2018

No. Name

Telkom

Position

Other Position

Subsidiary

Alex Janangkih Sinaga

President Director

Harry Mozarta Zen

Director of KEU

None

President Commissioner of Telkomsel.

Commissioner of Telkomsel and

President Commissioner of GSD.

David Bangun

Director of DSP

None

Commissioner of Metra and

President Commissioner of Metranet.

Dian Rachmawan

Director of EBIS

None

President Commissioner of Metra and

President Commissioner of Teltranet.

Abdus Somad Arief

Director of WINS

None

President Commissioner of Telin and

Herdy Rosadi Harman

Director of HCM

Zulhelfi Abidin

Siti Choiriana

Director of NITS

Director of CONS

None

President Commissioner of Telkomsat.

President Commissioner of Infomedia.

President Commissioner of Sigma.

President Commissioner of Telkom Akses.

BOARD OF DIRECTORS’ REMUNERATION

The structure of the remuneration of the Directors is based on
the provisions of State Minister of SOE’s Regulation No.PER-04/
MBU/2014 Number jo: PER-02/MBU/06/2016 Number jo: PER-
01/MBU/06/2017 Number jo: PER-06/MBU/06/2018 regarding
Guidelines for the Determination of Income for Directors, Board
of Commissioner and Board of Trustees of SOE’s.

Based on such regulation, the income component for members
of the Directors consists of:
1. Salaries;
2. Allowances;
3. Facilities; and
4. Bonus/Incentive.

Telkom determines the remuneration of Board of Commissioners
through the following procedures:
1. Board of Commissioners requests Committee for Nomination
and Remuneration to draft a remuneration proposal for
Board of Directors.

2. The Committee for Nomination and Remuneration requests
an independent party to draw up a framework on the
remuneration of Board of Directors.

3. The Committee for Nomination and Remuneration proposes

the remuneration to Board of Commissioners.

4. Board of Commissioner proposes remuneration for Board of

Directors the GMS.

5. The GMS delegates authority and power to Board of
Commissioners with the prior approval of Series A Shareholders
to determine the remuneration for Board of Directors.

191

Board of Directors Remuneration Mechanism and Procedure

KNR* by the instruction from
Board of Commissioners create
remuneration draft. The Result
will be decide in AGMS.

AGMS

KNR ask independent Party
for Suggestion

Independent Party give its
suggestion to KNR

*KNR : Committee for Nomination and Remuneration

In 2018, the total remuneration of the entire Board of Directors was Rp160.5 billion. Taxes from remuneration borne by our Company
amounted to Rp5.9 billion. The table below sets forth the remunerations that Telkom’s Directors received in 2018:

No. Board of Directors

Alex Janangkih Sinaga

Harry Mozarta Zen

David Bangun

Dian Rachmawan

Abdus Somad Arief

Herdy Rosadi Harman

Zulhelfi Abidin

Siti Choiriana (2)

Mas'ud Khamid (3)

Board of Directors’ Recapitulation of Remuneration

Honorarium

Tantiem and THR (1)

Allowance

Total

(Rp millions)

3,530

2,989

2,021

986

20,870

18,783

12,526

18,783

12,526

216

12,310

300

203

100

24,700

22,072

15,815

22,072

15,815

2,440

13,396

Remarks:
(1) “THR” refers to Tunjangan Hari Raya or religious holiday allowance
(2) Since AGMS on April 27, 2018

(3) Up to April 20, 2018

PARTICIPATION IN BPJS

Telkom always support Government Program which one of them is the National Health Insurance Program. This is proven by
Telkom’s commitment to include all the Board of Directors and Board of Commissioner and their family into BPJS.

BOARD OF DIRECTORS’ BOARD CHARTER

In performing its duties, responsibilities, and authority, Board of Directors shall be guided by the Charter of Board of Directors
established by Resolution of Board of Directors No.PD.604.00/r.00/HK000/C00-D0030000/2011 dated July 11, 2011. The Charter
of Board of Directors contains the code of conduct, authority, duties, responsibilities, obligations, division of tasks, meetings,
provisions on conflict of interest, shareholding, provisions on the mechanisms and division of authorities among members of
Board of Directors which are not set out by the Company’s Articles of Association and the applicable laws and regulations. This
is intended to improve the performance of the Directors and more coordinated and make Board of Directors’ working time more
effective in managing the Company.

192

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
BOARD OF DIRECTORS’ AUTHORITIES, DUTIES, AND RESPONSIBILITIES

Based on the Article of Association of Telkom, Board of Directors have this following obligations:
1. Work for and ensure the performance of businesses and activities of the Company in accordance with its purposes and objectives as

well as business activities;

2. Prepare in a timely manner, the Long Term Plan of the Company, the Annual Work Plan and Budget of the Company and other work
plans as well as their changes to be submitted to the Board of Commissioners and to obtain approval of the Board of Commissioners;
3. Prepare the Register of Shareholders, the Special Register, the Minutes of the GMS, and the Minutes of Meeting of the Board

of Directors;

4 . Prepare the Annual Report which, among others, contains the financial statement, as the materialization of the accountability
report on the management of the Company, as well as the financial documents of the Company, as referred to in the Law
regarding Corporate Documents;

5. Compose the financial statement in number 4 above based on the Financial Accounting Standards and submit it to the Public

Accountant for audit;

6. Submit the Annual Report after having been reviewed by the Board of Commissioners within a period of at the latest 5 (five) months

after the financial year of the Company has ended to the GMS for approval and ratification;

7. Provide explanation to the GMS with regard to the Annual Report;
8. Submit the Balance Sheet and the Profit and Loss Statement which have been ratified by the GMS to the Minister in the Law Sector in

accordance with the provisions of the statutory regulations;

9. Compose other reports which are obliged by the provisions of the statutory regulations;
10. Maintain the Register of Shareholders, the Special Register, the Minutes of GMS, the Minutes of Meeting of the Board of Commissioners
and the Minutes of Meeting of the Board of Directors, the Annual Report and the financial documents of the Company as referred- to
in letter b.4 and letter b.5 above, and other documents of the company;

11. Maintain at the place of domicile of the Company: the Register of Shareholders, the Special Register, the Minutes of GMS, the Minutes
of Meeting of the Board of Commissioners and the Minutes of Meeting of the Board of Directors, the Annual Report and the financial
documents of the Company as well as other documents of the company;

12. Maintain and keep the bookkeeping and administration of the Company in accordance with the common practices for a company;
13. Compose an accounting system in accordance with the Financial Accounting Standards and based on the internal control principles,

particularly the management, registration, retention, and supervisory functions;

14. Provide periodic report according to the method and at the time in accordance with the provisions, as well as other reports, once
requested by the Board of Commissioners and/or- the holder of Dwiwarna A Series share, with due observance of the statutory
regulations, particularly the regulations in the Capital Market sector;

15. Prepare the organizational structure of the Company, complete with its breakdown and their- duties;
16. Provide explanation with regard to any matters to be inquired about or requested by the members of the Board of Commissioners
and the holder of Dwiwarna A Series share, with due observance of statutory regulations, particularly the regulations in the Capital
Market sector;

17. Perform other obligations in accordance with the provisions stipulated in this Articles of Association and which are stipulated by the

GMS by continue observing the statutory regulations.

In addition to having obligations as mentioned above, the Board of Directors also have this following authority:
1. To determine the policies considered appropriate in the management of the Company;
2. To arrange the delegation of authorities of the Board of Directors to represent the Company, inside and outside the Court to one
or several individuals specifically appointed for such purposes, including the employees of the Company, both individually and
collectively and/or other entities;

3. To stipulate the provisions regarding the employees of the Company, including the stipulation of salary, pension or old age insurance

and other income for the employees of the Company based on the statutory regulations;

4. To appoint and dismiss the employees of the Company based on the manpower regulations of the Company and the

statutory regulations;

5. To appoint and dismiss the Corporate Secretary and/or the Head of Internal Supervisory Unit with the approval of the

Board of Commissioners;

6. To write-off non-performing loans with the provisions as stipulated in this Articles of Association and which furthermore will be

reported to the Board of Commissioners to be further reported and accounted in the Annual Report;

7. Not to further collect interest receivables, penalties, costs and other receivables outside the principal debts which is carried out in
the framework of restructuring and/or receivables settlement as well as other actions in the framework of Company’s receivables
settlement with the obligation to report it to the Board of Commissioners, the provisions and reporting- procedures of which are
stipulated by the Board of Commissioners;

8. To take any actions and other deeds with regard to the management and ownership of the Company’s assets, to bind the Company to
other parties and/or other parties to the Company, as well as to represent the Company inside and outside the Court with regard to
any matters and in any events, with the restrictions as stipulated in the statutory regulations, this Articles of Association and/or the
Resolutions- of the General Meeting of Shareholders.

193

objective of the Company;

3. They do not have any conflict of interest either directly or indirectly for the management activities causing the loss; and
4. They have taken the action to prevent the occurrence or continuation of such loss.

BOARD OF DIRECTORS’ MEETING

Board of Directors shall hold an internal meeting periodically at least 1 (one) time in each month and may also be held at any time
as necessary. In addition, Board of Directors shall also hold a meeting with Board of Commissioners at least once in 4 (four) months
and may also be held at any time as necessary. The joint meetings of Board of Directors and Board of Commissioners within the
Company are referred to as the Joint Meeting.

The meeting quorum shall be reached if more than half of members of Board of Directors are present or legally represented in such
meeting. Any member of Board of Directors that present shall have a casting vote (and one vote for any other Director that is being
represented). The decision-making mechanism at Board of Directors meeting is based on deliberations to reach consensus. If the
consensus cannot be reached, then the resolution shall be made based on the majority votes from members of Board of Directors
that are present.

Throughout 2018, Board of Directors’ meetings were held as many as 59 times. Some important themes or agendas discussed in
Board of Directors meeting are more detailed in the Appendix 4. The following table shows Directors’ attendance frequency of in
internal meetings:

Board of Directors’ Attendances at Internal Meeting

No.

Name

Total Attendances

Total Meetings

Percentage of Attendance (%)

Alex Janangkih Sinaga

Harry Mozarta Zen

David Bangun

Dian Rachmawan

Abdus Somad Arief

Herdy Rosadi Harman

Zulhelfi Abidin

Siti Choiriana (1)

Mas’ud Khamid (2)

Remarks:
(1) Since AGMS on April 27, 2018
(2) Up to April 20, 2018

194

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCORPORATE SECRETARY

Corporate Secretary in Telkom has a significant role in facilitating the Company’s internal communication, connect the Company
and its shareholders, The Financial Services Authority, and other stakeholders. In addition, the Corporate Secretary also ensures
the Company’s compliance with capital market regulations.

CORPORATE SECRETARY’S PROFILE

Andi Setiawan

Education
2002

Bachelor degree in Financial Management,
University of Indonesia, Indonesia.

Basis of Appointment
Decision Letter of Board of Directors.

Term of Service
March 4, 2015 up to present.

Born
Age
Nationality
Domicile

: June 6, 1978
: 40 years old
: Indonesian
: Jakarta

CORPORATE SECRETARY’S FUNCTIONS

According to Telkom’s Guidelines on GCG, the functions of the
Corporate Secretary are:
1. To prepare and communicate accurate, complete, and
information regarding the performance and

timely
prospect of the Company to stakeholders.

2. To synergize with related units, including the subsidiaries,
implementation, monitoring and

for
reviewing of GCG, and its implementation.

socialization,

3. To assist Board of Directors

in various activities,

information, and documentation, among others:
a. Preparing the Register Book of Shareholders;
b. Attending Board of Directors’ meetings and preparing

its minutes of meetings; and
c. Preparing and organizing GMS.

4. To publish the Company’s information in tactical, strategic

and timely manner.

Career Experiences
2014-2015

2010-2014

2007-2010

2004-2007

PT Telekomunikasi Seluler as GM of
Investor Relations.
PT Summarecon Agung Tbk as a
Manager of Investor Relations.
PT Bakrieland Development Tbk as a
Manager of Corporate Secretary.
PT Pemeringkat Efek Indonesia as a
Corporate Rating Analyst.

CORPORATE SECRETARY’S TASKS AND
DUTIES

1. Preparing and organizing GMS, including the material,

particularly the Annual Report;

2. Attending the Board of Directors’ meetings and joint meetings
between Board of Commissioners and Board of Directors;
3. Managing and maintaining documents related to the
Company’s activities, including the GMS’s documents,
Board of Directors’ minutes of meetings, the minutes of
joint meetings between Board of Directors and Board of
Commissioners, and other important documents of the
Company; and

4. Determining criteria regarding types and contents of
information that can be presented to the stakeholders,
can be published as
including
public documents.

information

that

195

CORPORATE SECRETARY’S IMPLEMENTATION TASKS

Throughout the 2018 financial year, the Corporate Secretary has performed its tasks in accordance with the tasks and duties under
the applicable laws and regulations. During the 2018 financial year, activities carried out by the Investor Relations/Corporate
Secretary including:

Date

Name of Activities

Organize by

January 10, 2018

Non-Deal Roadshow

Investor Relations Telkom

January 11, 2018

DBS Vickers Securities Pulse

DBS Vickers Securities

of Asia

February 6 and 8-9, 2018 Mandiri Investment Forum

Mandiri Sekuritas

May 3-4, 2018

May 7, 2018

May 10-11, 2018

May 14-15, 2018

Citi-Indonesia

Conference

Non-Deal Roadshow

Investor

Citi Group

Investor Relations Telkom

HSBC

dbAccess Asia Conference

Deutsche Bank

May 24-25, 2018

Non-Deal Roadshow

Bahana Sekuritas

July 11-12, 2018

CGS-CIMB 12th Annual Indonesia
Conference

CGS-CIMB

Location

Singapore

Jakarta

Singapore

Hong Kong

Singapore

Jakarta

Denpasar

August 1, 2018

Non-Deal Roadshow

Investor Relations Telkom

Singapore

August 9-10, 2018

Non-Deal Roadshow

Macquarie

Melbourne and Sydney,

August 15-16, 2018

Credit

Suisse

3rd

Annual

Credit Suisse

Indonesia Conference

August 27-28, 2018

Macquarie ASEAN Conference

Macquarie

2018

Australia

Singapore

September 3-7, 2018

Non-Deal Roadshow

Deutsche Bank

Paris, Frankfurt, and London

September 12-14, 2018

25th CLSA Investor's Forum

CLSA

Hong Kong

November 5-9, 2018

Non-Deal Roadshow

J. P. Morgan

Toronto, Boston, New York,

and San Fransisco

November 13-14, 2018

dbAccess Indonesia Conference

Deutsche Bank

Jakarta

2018

November 29-30, 2018

Seventeenth Annual Asia Pacific

Morgan Stanley

Singapore

Summit

December 6, 2018

Citi ASEAN Top Picks 2018

Citi Group

December 11-12,2018

Non-Deal Roadshow

Deutsche Bank

Malaysia

Hong Kong

196

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCORPORATE SECRETARY’S TRAINING AND EDUCATION

In order to improve the competence of Corporate Secretary/Investor Relations, the Company has held trainings designated to the
Investor Relations unit as follows:

Date

Name of Activities

Organizer

January 15-19, 2018

Disclosure Management Report

Merrill Corporation

Location

Hong Kong

March 5-7, 2018

Business Valuation for Startup Company

Telkom Corporate University

Bandung

March 16, 2018

Sertifikasi Pengadaan Barang dan Jasa

Telkom Corporate University

Bandung

Pemerintah

March 21-22, 2018

Executive Leadership Program-Business

Telkom Corporate University

Surabaya

Simulation Expedition

April 4, 2018

Investment in Indonesia

Euromoney

Jakarta

April 19-20, 2018

Infographic for Creative Presentation

Telkom Corporate University

Bandung

May 8-9, 2018

June 4-6, 2018

August 2, 2018

August 20-21, 2018

Sustainability Report

Telkom Corporate University

Bogor

Advance Excel for Professionals

Telkom Corporate University

IR BUMN Gathering

Sosialisasi Update Knowledge: Macro Economy
2019 dan Finance Regulatory Update

Investor Relations BNI

Telkom Corporate University

Jakarta

August, 27-29, 2018

Essential Financial Analysis and

Indonesia Investor Relations

Bandung

Reporting Writing

Institute

September 3-6, 2018

Certified Investor Relations

Indonesia Investor Relations

Jakarta

Institute

September 27, 2018

Seminar POJK Nomor 9/POJK.04/2018 dan

Bursa Efek Indonesia, Asosiasi

Jakarta

POJK Nomor 11/POJK.04/2018

Emiten

Indonesia,

Indonesian

Corporate Secretary Association

October 18, 2018

Seminar IPO untuk Perusahaan Tercatat dan

Bursa Efek Indonesia

Jakarta

Entitas Anak

December 6, 2018

Sosialisasi Pengenalan E-Proxy

Bursa Efek Indonesia

Sekolah Pasar Modal Batch 1

Bursa Efek Indonesia

December 18, 2018

Sekolah Pasar Modal Batch 2

Bursa Efek Indonesia

Jakarta

197

INTERNAL AUDIT UNIT

Telkom has an Internal Audit Unit or Internal Audit (IA) who provides independent and objective views on the conditions of our
internal controls, risk management and corporate Governance processes in business activities. The purpose of this function to
become a catalyst, through the submission of recommendations for Telkom in improving its business operations.

SVP INTERNAL AUDIT UNIT’S PROFILE

Harry Suseno Hadisoebroto

Education
1990

1999

Master’s degree in Civil Engineering (Ir.), Bandung
Institute of Technology, Bandung, Indonesia.
Doctoral degree in Engineering – Project Management
(MSc.), University of Manchester, Institute of Science
and Technology, Manchester, United Kingdom.

Born
Age
Nationality
Domicile

: Bandung, June 24, 1966
: 52 years old
: Indonesian
: Bandung

Basis of Appointment
Board of Directors Resolution No. 1905/PS720/HCC-10/2015
dated June 9, 2015 which effectively prevail from July 1, 2015..

Term of Office
July 1, 2015 up to present.

Carreer Experiences
May 1, 2014 - June 30, 2015

SVP Internal Audit, PT
Telekomunikasi Seluler.

April 1, 2011 - April 30, 2014 VP Infrastructure & Supply

January 1, 2010 -
March 31, 2011

November 1, 2007 -
December 31, 2009

Management Audit, PT Telkom
Indonesia (Persero) Tbk.

AVP Infrastructure Audit, PT
Telkom Indonesia (Persero) Tbk.

Deputy General Manager Kandatel
Malang, PT Telkom Indonesia
(Persero) Tbk.

INTERNAL AUDIT UNIT’S STRUCTURE AND POSITION

Internal Audit Telkom is a unit that is directly responsible to the President Director and an independent unit to other work units. This
is in line with applicable capital market regulations. The following is a chart of IA Telkom’s organizational structure.

President Director

Board of Commissioners

SVP Internal Audit
Harry S. Hadisoebroto

VP Infrastruncture &
Operation Audit
Purwadi Siswana

VP Integrated &
Financial Audit
Agus Widjajanto

VP Planning &
Development Audit
Imam Santoso

VP Information &
Technology Audit
Rahardian Krishna Sundara

Auditor utama
Achmad Aliyadin

198

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

The Internal Audit Unit is led by a Head of Internal Audit Unit called the Head of Internal Audit (Senior Vice President of Internal
Audit) who is appointed and dismissed by the President Director with the approval of the Board of Commissioners. The President
Director can dismiss the Head of Internal Audit, after obtaining approval from the Board of Commissioners, if the Head of Internal
Audit does not meet the requirements as an auditor for the Internal Audit Unit as stipulated in the Regulation of Financial Services
Authority No.56/POJK.04/2015 regarding “Establishment and Guidelines for Preparation of the Internal Audit Unit Charter” and/or
fail or are incapable of carrying out their duties. The term of office of the Head of Internal Audit is a maximum of 3 (three) years and
can be reappointed for one subsequent period. Until the end of 2018, the Head of Internal Audit assisted by 88 members and each
Auditor who sits in the Internal Audit Unit is responsible in stages to the Head of Internal Audit.

INTERNAL AUDIT CHARTER

Telkom’s Internal Audit Unit is equipped with an Internal Audit Charter as a Company’s formal document, comprising of description
of vision, mission, structure, status, duties and responsibilities of IA, including IA’s Auditor requirements. The drafting of Internal
Audit Charter guided by the international standards for IA profession practices, issued by the Institute of Internal Auditor (IIA),
and has been approved by the President Director as well as the Audit Committee based on the Resolution of Board of Directors
No.Tel.09/PW000/UTA/COP-C0000000/2015 regarding Internal Audit Charter.

INTERNAL AUDIT UNIT’S DUTIES AND RESPONSIBILITIES

Based on Internal Audit Charter, duties and responsibilities of the Internal Audit are:
1. To compose Annual Internal Audit plan;
2. To execute the Annual Internal Audit Plan that has been consulted by the Audit Committee or has been reviewed by Audit Committee;
3. To examine and evaluate the adequacy of internal control and risk management system based on the Company’s Policy;
4. To examine and assess the efficiency and effectivity in the field of finance, accounting, operational, human capital, marketing,

IT, and other activity;

5. To review and/or audit the Company’s financial statement periodically;
6. To inspect the compliance to the related regulation ;
7. To identify the alternative improvement and efficiency and to increase efficiency and effectivity of the utility of sources

and fund;

8. Create audit report and to deliver that report to the President Director and Board of Commissioner c.q. Head of Audit Committee;
9. To monitor, analyze and report the implementation of the improvement that has been recommended;
10. Give objective improvement recommendation and information about the activity that has been inspected to all management

level of the Company and the afiliation of the Company;

11. To provide consultation needed by the Company’s management and its affilation Company which the coverage of the assignment

has been agreed before;

12. To carry out task number 2 - 10 for the Company’s afiliation upon request by the President Director of the Company

(management instruction);

13. To collaborate with the Audit Committee, including monitor the follow up of the recommendation by the result of the inspection

that have a significant impact and deliver the report to the Audit Committee;

14. To compose the evaluation methodology and progam to increase the quality of internal audit activity cooperating/coordinating

with Audit Committee;

15. To review and/or deep inspection the audit committee request in order to follow up whistleblower and/or allegations of fraud
(fraud) on the Company or its affiliated Company, and deliver the results of the investigation to the President Director and the
Audit Committee; and

16. To conduct the preliminary inspection with a particular purposes.

INTERNAL AUDIT UNIT’S TASK IMPLEMENTATION

In accordance with the Annual Internal Audit Work Plan, in the year 2018, Unit IA implemented 69 assignments consisting of audit,
consultation, evaluation and review activities, as follows:

Sub Department

Audit

Consultancy

Review

Evaluation

Total

Infrastructure & Operation Audit (IOA)

Integrated & Financial Audit (IFA)

Information & Technology Audit (ITA)

Total

199

To ensure the quality of internal controls works well, our internal audit unit members possess various certifications that relevant
and necessary in carrying out their work. Here are the details of certification held by Internal Audit members.

Certification Type

Number of Certification

Certification in Risk Management Assurance (CRMA)

Certified Accountant (CA)

Certified Banking Internal Audit (CBIA)

Certified Behaviour Consultan (CBC)

Certified Business Analysis Professional (CBAP)

Certified Data Center Specialist (CDCS)

Certified Data CenterProsessional (CDCP)

Certified Data Security Specialist (CDSS)

Certified Ethical Hacker (CEH)

Certified Fraud Examiner (CFE)

Certified Information Systems Auditor (CISA)

Certified Internal Auditor (CIA)

Certified IT Infrastructure Library

Certified Management Accountant (CMA)

Certified Professional Accountant of Indonesia (CPAI)

Certified Public Accountant (CPA)

Chartered of Accountant (CA)

Chartered Risk Manager Professional (CRMP)

Computer Hacking Forensic Investigator (CHFI)

ISO (9001, 14001, 18001, 20000, 22301, 27001)

Manajemen Umum Dana Pensiun (MUDP)

Organization Learning Technology (OLT)

Qualified Internal Audit (QIA)

Total

INTERNAL AUDIT’S TRAINING AND EDUCATION

During 2018, to improve quality, Telkom’s internal auditors attended the trainingas follows:

Number of Participants

Number of Days

176

101

424

110

275

116

603

Programs

Culture

Leadership

Business

Technical

Certification

Sharing Knowledge

Total

200

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportINTERNAL CONTROL SYSTEM

The provisions of SOX Section 404 require Telkom to build, maintain, test and disclose the effectiveness of internal controls over
financial reporting. To fulfill this, Telkom has an Internal Control System (SPI) which designed by/or under the supervision of the
President Director and the Director of Finance and run by Board of Directors, management and other personnel. The purpose
of implementing the SPI is to gain public confidence regarding the effectiveness of financial reporting and the preparation of
consolidated financial statements in accordance with the Financial Accounting Standards of the Indonesian Institute of Accountants.

INTERNAL CONTROL FRAMEWORK

In practice, Telkom uses the Internal Control-Integrated Framework 2013 as a reference from The Committee of Sponsoring
Organizations of the Treadway Commission (COSO). COSO’s internal controls contain five mutually tied components that have
applied at all levels and business units of the Company, including:

1. Control Environment

a. Demonstrates commitment to integrity and ethical values.
b. Exercises oversight responsibility.
c. Establishes structure, authority and responsibility.
d. Demonstrates commitment to competence.
e. Enforces accountability.

2. Risk Assessment

a. Specifies relevant objectives.
b. Identifies and analyzes risk.
c. Assesses fraud risk.
d. Identifies and analyzes significant change.

3. Control Activities

a. Selects and develops control activities.
b. Selects and develops general controls over technology.
c. Deploys through policies and procedures.

4. Information and Communication
a. Uses relevant information.
b. Communicates internally.
c. Communicates externally.

5. Monitoring Activity

a. Conducts ongoing and/or separate evaluations.
b. Evaluates and communicates deficiencies.

201

These five components have been applied to Telkom’s policies, such as:

INTERNAL CONTROL IMPLEMENTATION IN TELKOM

Control Environment
• Telkom builds corporate culture as a guide for key role holders in building leadership patterns and strengthening
organizational synergies and enhancing sustainability competitive growth based on the values that have been
formulated in The Telkom Way. It is continuously reinforced and sustained which includes four dimensions, namely
the spiritual dimension, the emotional dimension, the intellectual dimension and the physical dimension as well as
the great spirit of core values namely 3S: Solid, Speed, Smart.

• Telkom ensures the effectiveness of implemented Internal Audit activities by implementing the SOA 302/404
prerequisites and managed with a risk based audit approach. Telkom also ensures that effective coordination and
co-operation with internal and external parties and business risks to all business activities are adequately managed
with internal control systems.

• Telkom has a Competency Directory that defines the Company’s competency needs. One of them is Stream Finance
which includes the competence of Corporate Finance with the sub area of Capital Structure competency and Working
Capital Management (Treasury Management). Then, Accounting with sub area competence of Financial Accounting,
Management Accounting and Corporate Tax. The competency development policy is aimed at creating superior, global
quality and highly competitive employees.

Risk Assessment
• Telkom has several considerations in developing accounting policies such as Statements of Financial Accounting
Standards (PSAK), Interpretation of Statements of Financial Accounting Standards (ISAK), International Accounting
Standards (IAS), Related Laws, and changes in impacted internal environments.

• Telkom has a principle of financial assertion in ICOFR planning that is well respected by all relevant employees.
• Telkom manages internal and external corporate risk with established mechanisms.
• Telkom also implements an anti fraud policy control system and have potential fraud prevention.

Control Activities
• Telkom sets up a Business Process Owner (BPO) and AO (Application Owner) that have duties and responsibilities

related to ICOFR.

• Risk determination rules and internal controls refer to the ICOFR policy consisting of segregation of duties, risk

determination and determination of internal controls.

• Telkom has guidelines for the implementation of information systems security that are aligned with Company needs

and can be implemented on an ongoing basis.

Information and Communication
• Telkom has accounting policies implemented under IFRS, outlined in accordance with accounting principles and
implementation, including information or data related to the process and disclosure of financial reporting, and
regulates the components of the consolidated financial statements.

• Telkom has an information technology policy that provides a frame of reference for each process or unit associated
with the organization’s IT operations in the preparation and implementation of guidelines and procedures. The scope
of IT regulations in our Company covers aspects of Governance of IT Governance and IT management.

Monitoring Activity
• Telkom has an Internal Audit Charter that includes the auditor’s requirements in the Internal Audit unit, which has
professional integrity and behavior, knowledge of risks and important controls in the field of information technology,
knowledge of capital market laws and regulations.

• CEO Telkom always increases awareness from management regarding audit and change management in the form of

CEO Notes and establishes Integrated Audit and forms Probis IFRS.

As of December 31, 2018, Telkom assessed the effectiveness of internal controls over the company’s financial reporting with
the results of the report being effective. The result shows that the implementation of the five components also in line with the
Regulation of Minister of SOE Article 26 paragraph 2 in 2011 regarding Internal Control System. The effectiveness assessment has
also been audited by KAP Purwantono, Sungkoro & Surja, an independent and registered public accounting firm.

Other than the COSO framework as our refference, Telkom also committed to ensure that our policies, compliance and all business
activities are conducted in accordance with applicable internal and external laws and regulations such as legal advisory, legal
opinion, legal review and litigation. The unit responsible for compliance with legislation is the Legal & Compliance Unit under the
Corporate Secretary Department.

202

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

RISK MANAGEMENT SYSTEM

Risk management is important for Telkom to protect assets and business activities and create value for stakeholders. The risk
management also constitutes compliance towards the prevailing regulations. The role and function of risk management supports
the telecommunications business that has a wide scope of business areas, requires very large investments, has a high level of
competition, rapid technological development, regulated business and changes in the way of communication.

GENERAL ILLUSTRATION REGARDING THE RISK MANAGEMENT SYSTEM

Regulation of Minister of SOE No. 1 in 2011 requires SOE, including Telkom, to implement risk management. In addition, the
implementation of risk management is also Telkom’s obligation as a Company listed on the New York Stock Exchange (NYSE) to
fulfill the Sarbanes-Oxley Act, specifically article 302 and 404.

Risk Management System (Framework) and Policy

Telkom’s Risk Management Policies is regulated through the Regulation of Board of Directors No.PD.614.00/r.00/HK.200/
COP-D0030000/2015 dated September 30, 2015 regarding Telkom Enterprise Risk Management and Regulation of Director of Finance
No.PR.614.01/r.00/HK200/COP-D0030000/2016 regarding the implementing guideline for Telkom Enterprise Risk Management.

The main framework of Risk Management in Telkom refers to the framework of COSO (COSO ERM Framework), which includes three
main components:
1. The implementation of Company’s risk management must be able to support the Company’s objective from the aspects of

strategic, operational, reporting and compliance.

2. Company’s risk management is applied at all levels of the organization, namely Enterprise level, Division, Business Unit, and

Subsidiary, in the Company.

3. The implementation of Company’s risk management shall consist of 8 components of process namely:

a. Internal development.
b. Objective setting.
c. Event identification.
d. Risk assessment.
e. Risk response.
f. Control activities.
g. Information/communication.
h. Monitoring.

References and other guidelines relevant to the implementation of risk management at Telkom, among others:

1. ISO 31000

Enterprise Risk Management as comparison and implementation complementary.

2. ISO 27001

Information Security Management System (ISMS) as a reference in the development of risk management

to ensure Information Security in terms of Confidentiality, Integrity and Availability.

3. ISO 22301

Business Continuity Management System (BCMS) as a reference

in the effort to ensure

4. ISO 20000

Information Technology Service Management (ITSM) as a reference to ensure IT service.

business continuity.

Risk Management’s Organizational Structure

According to the Regulation of Board of Directors and the Regulation of Director of Human Capital Management in 2018, Telkom’s
risk management function is implemented by Sub-Directorate of Risk & Process Management in the Directorate of Finance with
following structure:

SVP Group Financial,
Planning Analysis & Control

VP Financial Controller
CFU Consumer, WIB & Digital
Service

VP Financial Controller
CFU Enterprise

AVP Management
Reporting, Analysis &
Support

AVP Group Strategic
Budgeting &
Investment

AVP Group Coasting
Management

AVP Risk
Managemenent

203

TYPES OF RISK AND MANAGEMENT METHOD

The risk management system helps Telkom to identify significant risks for business sustainability. Telkom has specifically identified
risks in Indonesia, which cover social and political risks, macroeconomics, disasters, and other risks. Then for business risks, Telkom has
identified operational, financial, legal, and compliance risks, regulations, inherent risks of the fixed and cellular telecommunications
business. In addition to these risks, Telkom also conducts quantitative and qualitative disclosures on market risks.

Type of Risk

Risks That Is Faced

The Impact to Telkom

Mitigation/Risk Management

a. Risks Related to Indonesia

Political and Social

The disruption of political

Have negative impact to the

1. Monitoring of the influence

stability and social instability

business, operation, financial

of social political instability

to specific issues.

condition, business proceeds

the

disruption

and prospect as well as market

operational/service.

price for securities.

2. The maintenance

awareness

through

the

improvement of safety &

Security functions.

Macro Economy

The

change

global,

1. Have the

impact on the

1. Monitoring of the influence

regional,

Indonesian

business,

financial

of macro economy to the

economic activities.

condition, business result

change to

increase the

The fluctuation of Rupiah

or business prospect.

expense

through

Cost

Exchange rate.

The

increase

loan

interest rate.

The decrease of Government

or Company’s credit rating.

2. Have a material adverse
the business,

effect

financial

condition,

Leadership program.

2. To look for the opportunity
to increase the spending

business

proceeds

of APBN pursuant

business prospect.

the

government

focus

(Maritime, Tourism, Energy,

Transportation, etc).

1. Transfer of risk by using
insurance of assets

the

Risk of Disaster

Flood,

thunder,

storm,

Disrupting

its

business

earthquake, tsunami, volcano

operations and give negative

eruption,

epidemic,

fire,

impact

the

financial

to anticipate the natural

drought, power shut down

performance

and

profit,

disaster and fire.

and other event beyond

business prospect as well as

Telkom’s control.

market price of securities.

2. Coordination with ASKALSI
Cable

(Indonesian

Sea

Association) to secure SKKL.

3. Preventive & Corrective
Action by preparing the

Disaster Recovery Plan and

Crisis Management Team.

Other Risks

Indonesian

corporate

Disrupting

its

business

The use of a competent legal

information disclosure standard

operation and giving

the

consultant that has experience

is significantly different than

negative impact to the financial

with the issues on corporate law

what is implemented in other

performance

and

profit,

in other countries particularly

countries including the United

business prospect as well as

the United States of America.

States of America.

market price of securities.

The difference in the regulation

of dividend determination.

The issue on the legal certainty

in Indonesia and United States
the
of America

including

implementation of law.

The possibility on the difference

in the interest of controlling

shareholders with the interest

from other shareholders.

204

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Type of Risk

Risks That Is Faced

The Impact to Telkom

Mitigation/Risk Management

b. Business Related Risks

Operational Risk

The failure in the sustainability

Has the negative impact to the

1. Implementation of BCM,

network

operation,

business, financial condition,

BCP, and DRP.

main system, gateway on

proceeds from the operation

2. Certification of Integrated

Telkom’s network or other

and business prospect.

Management

System

operator’s network.

(IMS)

for

infrastructure

management.

Threat of physical and cyber

Has

the negative

impact

1. The upgrade of Preventive

security,

such

theft,

the business, financial

Action

the

form of

destruction, or other action.

condition, result

from

the

Vulnerability Assessment

operation materially.

and

Penetration

Test

periodically.

2. Monitor and Identificate all

types of attack in the real

time as well as to choose

and conduct a necessary

action immediately.

3. Preparing

the

recommendation to handle

Cyber Attack based on the

historical incident analysis.
4. Intensive coordination with
relevant parties to handle

the Cyber Attack.

Risk regarding internet service. May

face a

lawsuit and

To be more prudent in the

damage the reputation.

preparation of contract with

content provider partner.

Leak of revenue due to the

Has a negative

impact to

1. Acceleration

leak

internal capability weakness

Telkom’s business result.

detection time and revenue

or external factor.

indicated as an external

fraud in real time.

2. Monitoring

the

critical

point of the leak of revenue

especially on the rejected

billing call.

New technology.

Has an

impact on

the

1. The

preparation

competitive power.

Technology Roadmap by

taking into account future

technologies

and

the

possible implementation of

competitor’s technologies.

2. Acceleration

IDN

(Indonesia Digital Network)

program

support

future services.

205

Type of Risk

Risks That Is Faced

The Impact to Telkom

Mitigation/Risk Management

The limit of operation period,

Can create loss to financial

1. The planning to change

damage or ruin, delay or failure

condition, operation result and

to launch, or the revocation of

capability to give services.

Satellite license.

the Satellite of which
operation period will be
immediately expired.

2. The insurance of Satellite

operation

during

the

active period.

3. Insurance

Manufacturing

for

and

Launching of new Satellite.

4. Developing

understanding

the

with

Regulator

in relation to

the

Satellite

operation

by Telkom.

Financial Risk

Interest Rate Risk.

Has an adverse effect to the
business, financial condition
and result from the operation.

Interest rate swap contract
from the float interest rate to

become the fix interest rate

upon certain loan term.

Foreign exchange rate risk.

Has negative impact on the

Placement of time deposit

financial condition or result

and

hedging

cover

from the operation.

the

fluctuation

risk

foreign exchange.

The

limit

fund capital

Has a material adverse effect

Maintaining and

improving

expenditure.

the business, financial

the Company’s performance

condition,

operational

to obtain

the

trust

from

performance and business

National

or Global

fund

prospect.

institution/source.

Legal and Compliance Risk

Penalty/fine by KPPU

Reducing Telkom’s

revenue

Strengthening Legal Review

relation to the price fixing and

and has negative

impact

towards corporate action plan

the occurrence of class action.

to the business, reputation

or certain contract.

and profit.

Regulation Risk

The change of Indonesian or

Has

the

impact

the

International Regulation.

business, financial condition,

1. Analysis on the impact of
the regulation plan towards

operational performance and

the industry in general and

business prospect.

Telkom in particular.

2. Giving inputs so that the

regulation

that will be

stipulated will give positive

impact to the Company

and industry.

Risk in relation to Fix and

Losing

the

cable phone

Has a material adverse effect

1. Improving QoS – Quality

Mobile Telecommunication

customers and revenue from

on the result from operation,

Service

for

cable

Business

the service of cable phone

financial

condition

and

phone customers.

voice call.

Telkom’s business prospect.

2. Giving Value Added Service.

206

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Type of Risk

Risks That Is Faced

The Impact to Telkom

Mitigation/Risk Management

Competition on the internet

Has a negative impact on the

1. Strengthening

the

service (fixed Broadband).

business, financial condition

perception and quality of

operational performance and

IndiHome as New Digital

business prospect.

Life Style.

2. Acceleration

launching

the

infrastructure

for fixed

broadband service.

The

competition

Has a negative impact on the

1. Acceleration of the launch

mobile service.

business, financial condition

of the infrastructure for 4G

operational performance and

service.

business prospect.

2. Improving QoS – Quality

of Service.

RISK MANAGEMENT SYSTEM’S REVIEW
ON THE EFFECTIVENESS

Throughout 2018, Telkom’s risk management system has been
effective in supporting every business policy and process in
Telkom and subsidiaries. Assessment of the effectiveness of
Risk Management Implementation is carried out through an
evaluation process, namely:
1. One-on-one Evaluation/discussion with business unit

as necessary.

2. Workshop for sharing the implementation and development

of ERM with the subsidiaries as necessary.

3. Audit Program on Risk Management

Implementation

as necessary.

4. Evaluation with the Risk Committee, Compliance and
Revenue Assurance in Board of Directors level as necessary.
5. Evaluation with Committee for Planning and Risk Evaluation

and Monitoring (KEMPR) as necessary.

Telkom using application (tools)/ risk management information
system as an infrastructure to support risk management
system effectivity, such as:
1. Generic Tools Enterprise Risk Management Online
(ERM Online) which is used by all units to manage
Risk Assessment.

2. Specific Tools for the purpose of certain risk management

such as:
a. Fraud Management System (FRAMES) application is
used as an early detection system for the possibility of
Customer Fraud.

b. i-Library application managed by the Service Operation
Division and to be used to manage documentation
system of Integrated Management System.

c. SMK 3 Online application managed by Security & Safety
Unit for Health and Safety documentation management.
d. Telkomcare application for the coordinate with Crisis

Management Team.

207

In 2018, the implementation of Telkom’s risk management system is in accordance with certification standards from external
parties, namely:

External Institution

Type of Award

PT. TUV Rheinland Indonesia

Integrated Management System for infrastructure management includes:

• The certificate of ISO 20000-1:2011 - IT Service Management

• The certificate of ISO 22301:2012 - Business Continuity Management System

• The certificate of ISO 27001:2013 - Information Security Management System

• The certificate of ISO 9001:2015 - Quality Management System

In order to maintain and improve the quality of risk management, Telkom developed risk management competencies through
training. In addition, Telkom conducts socialization and workshops related to risk management in the division office and subsidiaries
so that individuals in Telkom have a common understanding of risk management.

No.

Type of Training

Risk Management Training in 2018

Risk Register Management

Time

February 2018

Responding to Our VUCA World “with Effective Risk Management with The New ISO

May 2018

31000:2018 Risk Management Guidelines”

Risk Control Self Assessment

Cyber Risk Management

Asia Pacific Risk Symposium 2018

Nurturing Agile Internal Auditors in Distruptives Times

Financial Risk Management

Business Continuity Management: Business Disruptions

May 2018

June 2018

August 2018

September 2018

The giving of the cake as a symbolic expression of gratitude and happiness at
Telkom’s birthday celebration was carried out by the President Director to the
youngest employees and the President Commissioner to Mr. Setyanto P. Santosa
as Chairperson of the Telkom Retired Association (P2Tel).

208

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportWHISTLEBLOWING SYSTEM

Telkom has a violation reporting system or known as a Whistleblowing System (WBS) since 2006. Through the WBS, all individuals
within Telkom and third parties can report violations, fraud or other forms of ethical violations that occur. The WBS is managed
by the Audit Committee through the decisions of Board of Commissioners and ratified by the Resolution of Board of Directors.
Telkom has socialized the WBS to employees so the existing system can be used properly and effectively. The application of WBS
in Telkom’s environment is an effort to uphold business ethics and work ethics.

THE VIOLATION REPORT

All individuals at all of our Telkom staffing levels, including Board of Directors, Board of Commissioners and members of the
committees under Board of Commissioner, are entitled to use the WBS. Reports can be submitted via email, fax, or letter with
an address:

Audit Committee
PT Telkom Indonesia (Persero) Tbk
Telkom Landmark Tower 40th Floor, The Telkom Hub
Jl. Jend. Gatot Subroto Kav. 52, Jakarta, 12710

Email: whistleblower@telkom.co.id; ka301@telkom.co.id

Fax: +6221 80863540

Website: www.telkom.co.id

The Complaint must fulfil the following requirements:
1.
2. Complaints submitted related to the issue on internal control, accounting, auditing, breach of regulation, allegation on the fraud

It is submitted through the website, email, fax or letter.

and/or allegation of corruption, and the breach of code of ethics.

3. The information that is reported must be supported with sufficient evidence and those are reliable to be used as the initial data

to conduct further investigation.

PROTECTION TO THE COMPLAINANT

Telkom guarantees protection of the identity of the reporter through Resolution of Board of Commissioners No.08/KEP/DK/2016
dated June 8, 2016 regarding the Complaints Handling Procedure (Whistleblowing) Policy of PT Telkom Indonesia (Persero) Tbk
and its subsidiaries which followed up by Standard Operating Procedure (SOP) which the last one that released through the
Resolution of Board of Commissioners No. 01/KEP/DK/2018 regarding Standard Operating Procedure of Whistleblowing System
on Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk. and its consolidated subsidiaries. The Resolution of Board
of Commissioners regarding whistleblowing system were later ratified by the Resolution of Board of Directors No.PD.618.00/r.00/
HK200/COP-C0000000/2016 dated December 21, 2016. Furthermore, the implementation of the WBS always prioritizes
confidentiality and the principle of presumption of innocence in following up on any complaints or reports submitted. This is stated
in the standard procedures for handling the WBS with the aim of encouraging safe reporting of violations without fear or worry
about their safety.

THE COMPLAINT HANDLING

The Whistleblowing System is the responsibility of the Audit Committee based on Regulation of Financial Services Authority No.55/
POJK.04/2015 and Sarbanes-Oxley Act 2002 Section 301 regarding the Public Company Audit Committee. On the other hand, the
requirements for complaints are also needed to ensure that the reporter submits the complaint responsibly and is not a slander
against someone.

In general, complaint reports submitted by internal or third parties handled by the audit committee covers the following topics:
1. Accounting and Auditing.
2. Violation of Regulation.
3. Fraud and/or The Allegation of Corruption.
4. Code of Conduct.

THE COMPLAINT HANDLING MECHANISM

Telkom encourages reporters to ensure the correctness and accuracy of information and provide sufficient supporting data so that
reports can be followed up immediately. In practice, some WBS cases cannot be processed because the data and information are
inaccurate and unreliable.

209

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s

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

THE PARTY THAT MANAGES THE
COMPLAINT

The Whistleblower Protection Officer (WPO) is a member of the
Audit Committee whose task is handle complaints by doing the
following things:
1. Receiving the complaint.
2. Administering the complaint.
3. Conducting the initial verification whether the complaint is

in line with the criteria.

4. Monitoring the follow up of the complaint.

The Audit Committee through the meeting shall determine:
1. To give approvals to follow up of complaints received.
2. To give approvals on whether a complaint is to be followed

up by an internal or external party.

3. To give an assessment on whether the follow up of a

complaint is already sufficient or not.

The Internal Auditor has the role in:
1. Conducting the

initial assessment on the complaint

received by the Audit Committee.

2. Preparing

initial assessment reports and submitting
the reports to the President Director to be copied to the
Audit Committee.

BOARD OF DIRECTORS’
AND COMMISSIONERS’
SHARE OWNERSHIP POLICY
IMPLEMENTATION

The obligation of each member of Board of Directors and
Commissioners of Telkom to report any changes in share
ownership directly or indirectly is regulated in the Regulation
of Financial Services Authority No.11/POJK.04/2017 regarding
Ownership Reports or Any Change
in Public Company
Share Ownership.

In line with these regulations, in this report Telkom provides
information about share ownership by members of Board of
Directors and Board of Commissioners and changes throughout
2018. The information referred to is found at the beginning of
this annual report.

EMPLOYEE STOCK
OWNERSHIP PROGRAM

The Investigation Committee has its role in:
1. Conducting further investigation upon the complaint that

has been initially assessed by the Internal Auditor.

2. Preparing reports on the result of further investigation
and submitting the reports to the President Director to be
copied to the Audit Committee.

Telkom had opened opportunity for employees to participate
in employee ownership programs and/or management, or
also called Employee Stock Ownership Programs (ESOP). On
November 14, 1995, during the Initial Public Offering (IPO), on
November 14, 1995, 43,218 employees owned 116,666,475
Telkom shares.

THE RESULT OF COMPLAINT HANDLING

In 2018, there were 24 (twenty four) whistleblowing
complaints submitted in WBS, but after the Audit Committee
reviewed the complaints, there were only 5 (five) complaints
that qualified as WBS category, while the remaining qualified
as service/product complaints.

Description

Total

Remarks

Total Complaint

Fulfil the

requirements

Received complaints

Complaints proper to

be followed up

Then on June 14, 2013, Telkom transferred a portion of the
buyback shares in the form of employee share ownership as
part of the annual work incentive for financial year 2012. A total
of 59,811,400 of buyback shares (equivalent to 299,057,000
shares after the stock split) transferred to 24,993 employees
with an overall fair value of Rp661 billion.

In 2018, Telkom has not entered into an ESOP program in
2018, thus returning, so that there is no information on the
number of shares and/or options, implementation period,
eligible employee and/or management requirements, and
implementation prices displayed in this Report.

211

During 2018, none of Telkom’s board of commissioners’ and directors’ members, either those who remain in office and whose terms
of office have expired, had any legal disputes or faced any civil or criminal cases. As a business entity, Telkom faces 52 legal cases
consisting of 14 criminal law cases and 38 civil law cases.

Recapitulation of Lawsuits Cases in 2016-2018

Legal Issues

Status

In process

Final and binding (inkracht)

Sub Total

Total

2018

2017

2016

Criminal

Civil

Criminal

Civil

Criminal

Civil

101

Significant legal issues faced by the Telkom during the period of January to December 2018 can be seen in the table as follows.

Key Case Faced in 2018

Object of Dispute

Type of Court

Status of Dispute

Financial Implications

Telkom became the Appeallee
in the DKI Jakarta High Court
with allegations of malafides in
stopping transponder services to
PT Citra Sari Makmur (PT CSM).

High Court

The High Court of DKI
Jakarta has issued an Appeal
Decision whose core concern
is to state that this case is
the absolute authority of the
Tax Court.

INFORMATIONS REGARDING ADMINISTRATIVE SANCTIONS

In 2018 financial year, Telkom received several administrative sanctions from capital market authorities. Details of sanctions
as follows:

Administrative Sanctions 2018

No.

Administrative Sanctions

Institution

Financial Implications (Rp)

Administrative Sanctions

for Delays

in Submitting Reports and

OJK

2,000,000

Announcements Information or Material Facts for the Acquisition of Shares

in PT Bosnet Distribution Indonesia.

Administrative Sanctions

for Delays

in Submitting Reports and

OJK

3,000,000

Announcements Information or Material Facts on Acquisition of PT Nutech

Integrasi Shares.

dministrative Sanctions for Delays in Submitting Reports and Announcements

OJK

5,000,000

of Information or Material Facts related to Appointment of Ms. Devy W Suradji

as Director of the Company (Company) of PT Angkasa Pura I.

212

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
INFORMATION ACCESS AND COMPANY‘S PUBLIC DATA

Telkom provides access to company’s information and data
on a regular basis through various approaches and lines
of communication. This is done to fulfill the principles of
transparency and accountability in the implementation of
good corporate governance (GCG). In addition, Telkom also
establishes communication with stakeholders and participates
in fulfilling the information disclosure of the capital market
environment regulated in the Regulation of Financial Services
Authority No.31/POJK.04/2015 regarding Disclosure of Material
Information and Facts by
Issuers or Public Companies.
Approaches and lines of communication applied includes:

3. Media
During 2018, Telkom made a news release and sent it to the
mass media in order to spread the company’s information
transparency to stakeholders.

4. Meeting with Analysts and Investors

Telkom meets with analysts and investors to provide
information about performance and prospects of the
Company and provide up-to-date information about the
telecommunications industry in general.

1. General Meeting Of Shareholders (GMS)

Through the GMS,
information related to company’s
performance is delivered to shareholders. The GMS is also
a rool for shareholders to participate in decision making,
especially regarding decisions of strategic matters.

Telkom is open to communicate with stakeholders through
e-mail. For communication facilities, the customercare@
telkom.co.id e-mail address can be used by stakeholders
who are Telkom customers, while the e-mail address of
investor@telkom.co.id is intended for investors.

5. Contact Via E-Mail

the www.telkom.co.id website,

2. Website
Through
latest
information about Telkom can be accessed by stakeholders.
Information that can be accessed
includes profiles,
corporate governance, CSR programs, careers, reports
including annual reports and financial reports, and products
from Telkom.

the

6. Internal Media

Intra Telkom is a media managed by Telkom as a tool of
information, education and socialization for Telkom to all
internal employees of the company.

7. Social Media

Telkom uses a variety of social media to communicate with
stakeholders, including the younger generation, who are
very familiar with digital media and social media.

Social Media

Account

Twitter

Facebook

Instagram

Youtube

@TelkomIndonesia

Telkom Indonesia

@telkomindonesia

Telkom Indonesia Official

Followers/Subscribers/Fans

109,596 Followers

292,394 Fans

140,243 Followers

6,620 Subscribers

213

CORPORATE CODE OF CONDUCT

CODE OF CONDUCT’S IMPLEMENTATION FOR BOARD OF DIRECTORS, BOARD OF
COMMISSIONERS AND EMPLOYEES

In accordance with Circular Letter of Financial Services Authority No.32/SEOJK.04/2015 regarding Corporate Governance Guidelines
and Sarbanes-Oxley Act (SOA) 2002 section 406, Telkom owns and runs a code of ethics that applies to all levels of the organization.
This Telkom specified by the Regulation of Board of Directors No.PD. 201.01/2014 regarding Business Ethics in TelkomGroup and the
Regulation of Director of the Human Capital Management No.PR.209.05/r.00/PS800/COP-A4000000/2017 regarding Employees’
Ethics and Compliance. The decision explained about the business ethics devoted to the external environment and the work ethic
of employees devoted to internal Telkom. Telkom’s business ethics applies to members of Board of Directors, Member of Board
of Commissioners and a large family of Telkom employees in dealing with customers, suppliers, contractors and other external
parties who have a relationship with the Company. Employee work ethic applies to fellow employees during work in TelkomGroup.

In addition, Telkom Directors through Regulation of Board of Directors No.PD.604.00/r.00/HK000/C00-D0030000/2011 dated July
11, 2011 which contains a Board of Directors Charter which is not only contains duties and responsibilities but also contains the Code
of Ethics which prevail for all Directors. As for the Board of Commissioners through the Board of Commissioners Charter as outlined
in the Resolution of Board of Commissioners No.16/KEP/DK/2013, it also has a Code of Ethics that applies to the entire Board of
Commissioners, both Commissioners and Independent Commissioners.

Besides the Code of Ethics, Telkom through Resolution of Board of Directors Number KD.36/HK290/COP-D0053000/2009 regarding
the Integrity Pact also requires employees and Directors to sign the Integrity Pact which contains the commitment of Employees
and Directors not to violate the integrity codes described in the regulation. Likewise with the Board of Commissioners who signed
the Integrity Pact as a manifestation of the Board of Commissioners’ commitment not to violate the existing Code of Ethics.

CODE OF CONDUCT’S PRINCIPLES

The Telkom Code of Ethics that is applied includes arranging the main matters regarding:

1. Employee Ethics
Which is the system of values or norms that are used by all employees and leaders in the daily work.

2. Business Ethics
Which is a system of values or norms that is upheld by the Company as guidelines for the Company, Management, and its

Employees to interact with the surrounding business environment.

CODE OF CONDUCT’S SOCIALIZATION AND EFFORTS TO ENFORCE THEM

Telkom sends out the socialization materials to employees about GCG understanding, business ethics, integrity pacts, fraud, risk
management, internal control (SOA), whistleblowing, ban of gratification, IT Governance, maintain information security and other
matters related to corporate governance practices. This form of socialization is carried out so that employees can continue to
maintain and apply the code of ethics as long as they are part of the Telkom family.

Telkom also organizes e-learning on business ethics and employee’s ethics and compliance with the population of all employees
through the media portal/intranet. Through this e-learning, employees are expected to extend their understanding of the code
of ethics in carrying out daily activities. In addition each employee also required to make a statement in the form of integrity pact
signed and observed by all employees for being employees of the Telkom.

214

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCORPORATE CULTURE

THE TELKOM WAY

Telkom has “The Telkom Way” which was established on June 10, 2013 as a Company culture or values. The determination was made
through Resolution Letter of Telkom’s Board of Directors No.PD.201.00/r.00/HK250/COP-B0020000/2013 regarding Architectural
Leadership and Corporate Culture. The above corporate culture determination refers to the Telkom management concept which
is based on 8S elements, namely Spirituality, Style, Shared Values, Strategy, Staff, Skill, System, and Structure. The complete
Corporate Culture is formulated as follows:

1. Philosophy to be the Best: Integrity, Enthusiasm, Totality.

2. Principles to be the Star: Solid, Speed, Smart.

3. Practices to be the Winner : Imagine - Focus - Action.

Furthermore, guidelines for the implementation of Corporate Culture in the TelkomGroup are stipulated in Regulation of the Director

of Human Capital Management Number: PR.201.01/r.01/HK250/COP-B0400000/2018 regarding Telkom Corporate Culture. In this

Regulation, it is regulated in detail regarding Corporate Culture, one of which is the description of Do’s and Dont’s of the values of

The Telkom Way facilitating Employees to understand the values of Corporate Culture.

CORPORATE CULTURE’S IMPLEMENTATION IN 2018

The measurement of corporate culture’s implementation in Telkom is done by measuring the Cultural Health Index through the
Corporate Culture Entropy Survey. Until now, the TelkomGroup has succeeded in maintaining the Corporate Culture Health Index at
the PRIME or HEALTHY level.

215

Our corporate culture is internalized from top to down, CEO of TelkomGroup is a role model of Corporate Culture and assigns
all Unit Leaders to be Role Models. Role Models are also obliged to select and assign Culture Agents in charge of organizing
cultural activation initiatives in the relevant units and motivating all employees to participate in the initiatives to allow smooth
internalization process of The Telkom Way. To date the TelkomGroup has assigned 1,659 Culture Agents (consisting of 445 Culture
Agents of Telkom, 582 Culture Agents of Subsidiaries and 632 Culture Booster) who prior to carrying out their duties as Culture
Agents were engaged in the Culture Agent on Boarding program to provide skills and knowledge as well as common perception to
be Culture Agents.

To accelerate the implementation of corporate cultural activities at the unit level, all Unit Leaders are instructed to establish a
Cultural Activation Provocation Community (Komunitas Provokasi Aktivasi Budaya/KIPAS Budaya) in their respective units. A total
of 123 units of KIPAS Budaya were recorded until December 2018. Each unit has discretion to name their KIPAS Budaya according to
their respective goal and awesome. The theme of KIPAS Budaya activities is tailored to the Company’s business strategy. In 2018,
the theme was set nationally as “Dealing with real problem N the work place with the right TTW Attitude (DNA)”. As a reference for
unit cultural activation activities, a Calendar of Event Program was published with an approach of National Days.

CALENDAR OF EVENT

Calendar of Events (COE) is one of media to communicating culture activation program every month and as a refference to the
TelkomGroup’s Unit in constructing and do their culture activation in its own unit the values of The Telkom Way in order to instill
corporate culture to the daily attitude of employees.

216

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportBUILDING DIGITAL CULTURE

As part of the company’s transformation, the Company builds human resources with a digital culture while still referring to The
Telkom Way as a system value formulated as the Philosophy To Be The Best, Principles To Be The Star and Practices To Be The
Winner. This system value provides the spirit for every Telkom employee to always give the best, mobilize their abilities in total,
enthusiastic and with integrity. Every Telkom employee is also encouraged to build synergy towards a common goal, have initiative
in serving and looking for new ways to solve various problems. Internalization of the values of The Telkom Way is always carried
out through various culture activation activities, especially in daily works so that the behavior and characteristics of the winner are
embedded in every Telkom Employee.

In order to build digital competency, The Company gives trainings to strengthen digital culture that has been built at the top of 4
development pillars. The first pillars are character development by referring to values of The Telkom Way. The second pillars are
leadership development, by referring to 8 main competency of Digital Leader which expected to have a good character with business
capabilities and a strong leadership, have a national insight and global orientation. The third pillars are professional development
including soft skill aspect needed to become manager & Leader like decision making, people development, teamwork, organization
awareness, analytical & conceptual thinking and many others related skill. The last one is the development of technical skill, such
as the development of job family, job function and job role that are relevant with its role in the organization, for example for the ICT
& Digital we develop trainings like digital business, user interface (UI) & user experience (UX), data analytics, digital marketing and
many other related trainings. The Company also equipped employee with digital tools for daily operation namely corporate portal,
which includes e-office, e-budgeting, filesharing, collaboration (Diarium), career & succession management (Ingenium), learning &
knowledge management (Cognitium), and many other digital applications.

The Company encourage its employees to develop digital based innovation culture which expected to produce digital product and
services, improve service given to the customer and solve operational problems. In order to build the innovation culture mentioned
before, the shape of our organization and method of work need to be changed into an agile one by expanding “team based” method
of work. Telkom made a breakthrough in terms of how the organizations work through tribe and squad scheme which allows a
group of employees with certain competency move faster and more agile in order to serve certain customer. Telkom also made a
breakthrough by providing media for our employee that have certain competency and expertise to participate in a project outside
its working unit, among them are that the company encourage its employee to develop digital based innovation culture through
program Digital Amoeba which is expected to produce digital product and services.

Employee ideas are also possible to be channeled more easily through the hackaton model known as HackIdea which is carried out
routinely and massively throughout the Telkom organization and region. Ideas that are considered to have value for the organization
are exposed regularly through innovation festivals and developed structurally through the Digital Amoeba innovation program.

217

CORPORATE
SOCIAL
RESPONSIBILITY
(CSR)

220
222
225
228

Goods and Services Responsibility
Employment, Health, and Safety
Community Social Development
Environmental Responsibility

218

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportTower Maintenance is caried out to maintain
the quality of mobile service.

219

PRODUCT INFORMATION

Telkom constantly ensures customers to obtain accurate and current information product could be satisfied so the customer
would not incur losses. Telkom provided product information in various ways such as in starter pack mobile packaging, website,
promotion occasion and intensive marketing communication.

CONSUMER HEALTH AND SAFETY

Telkom has several activities to ensure costumers would not incur losses in health and safety such as Telkom Integrated Quality
Assurance (TIQA) program, after-sales warranty, and customer service policy implementation. For customer service, Telkom
policy emphasized on service delivery, service assurance and quality service measurement

CUSTOMER SATISFACTION

High customer satisfaction is one indicator of Telkom service quality. Customer satisfaction measurements are conducted
annually through the Customer Satisfaction Index (CSI), Customer Dissatisfaction Index (CDI), and Customer Loyalty Index (CLI).
The following table shows the results of the CSI, CDI and CLI surveys in the last three years.

2018

87.71

82.84

2.17

Year

2017

86.56

82.01

2.78

2016

85.26

78.31

2.50

Moreover, the corporate customer complaints may be
submitted through:
•

1500250 and e-mail tele-am@telkom.co.id and social media
@Smart_Bisnis (Twitter) and Smartbisnis (Facebook) for
SMB customers.

• 08001 Telkom or 08001035566 and e-mail: c4@telkom.
co.id, and social media @TelkomSolution (Twitter) and
TelkomSolutionID (Facebook) for corporate customers and
Government Institutions.

Description

Customer Satisfaction Index (CSI)*

Customer Loyalty Index (CLI)*

Customer Dissatisfaction Index (CDI)*

*IndiHome & Wifi.id customers

CUSTOMER COMPLAINTS

In response to customer complaints, Telkom provides different
approaches for
individual and corporate customers. For
individual customers, the complaints may be submitted to
the customer service center called Plasa Telkom. In addition,
individual customer complaints can also be submitted through
complaint media:
• Plasa Telkom
• Call Center: 147
• Social Media: @telkomcare (twitter), telkomcare (FB).
• Apps: myIndiHome.
• Complaint via web chat at www.indihome.co.id.

Specifically for the celular’s customers, Telkom provides
“Caroline” call center, which is an abbreviation for customer
care online. The contact numbers of Caroline are as follows:
•
•
• 0807-1811811 (PSTN local rate tariff) for national scale.

133 for Kartu Halo.
188 (24 hours, paid) for simPATI and Kartu As.

220

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

In 2018, there was a percentage increase of direct settlement of complaints compared to that of the previous year. The following
table shows the duration of customer complaint settlement for the past three years:

Customer’s complaint

Internet

Directly solved

1-3 days

> 3 days

Telephone

Directly solved

1-3 days

> 3 days

2018

2017

2016

44.3

52.6

3.1

100.0

44.0

52.5

3.5

100.0

37.0

59.8

3.2

22.1

60.5

17.4

100.0

30.0

65.6

4.4

23.7

60.9

15.4

100.0

221

EMPLOYMENT, HEALTH, AND SAFETY PRACTICES

GENDER EQUALITY AND EMPLOYMENT OPPORTUNITIES

Telkom has employment practices in accordance with international regulations and business ethics. Telkom high concern about
gender equality and employment opportunities. In Telkom, every gender could hold the position at the various level according to
their competency.

In 2018, Telkom recruited 349 men and 212 women. The number of male and female employees at the end of 2018 was 18,042 and
5,961 people. The proportion of male employees to women in Telkom was not due to discrimination. However, there was more
men were compared to women who were interested in working in the telecommunications industry, especially for the types of
outdoor work.

Telkom Employee Recruitment Based on Gender for 2016-2018

Description

Entry Level

a. Age Range 18-25 Years Old

b. Age Range 26-30 Years Old

2018

2017

2016

Men

Women

Men

Women

Men

Women

244

105

349

141

212

232

253

147

160

200

220

202

226

Total

561

413

446

Employees by Managerial and Gender Position per 31 December 2016-2018

Description

Band I

Band II

Band III

Total

2018

2017

2016

Men

Women

Men

Women

Men

Women

144

607

2.010

2,761

355

419

111

498

2.027

2,636

319

371

110

420

1.661

2,191

212

260

3,180

3,007

2,451

222

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

EDUCATION AND/OR TRAINING

Telkom is committed to providing the best education and training for the employee because improving employee competencies
will impact on the performance. Telkom always strives for a quantitative and qualitative improvement for employee education
and training. In 2018, Telkom provided opportunities for education and training for 12,897 men and 2,385 women. It was lower
than the previous year in general due to the change of learning method into self-led learning so Telkom provided knowledge
repository for business requirement.

Description

Certification

Leadership Development Program

Regular Training

a. Operational

b. Management

2018

2017

2016

Men

Women

Men

Women

Men

Women

1,140

1,048

10,709

10,054

655

193

426

1,766

1,668

850

822

321

262

308

446

14,719

6,060

19,849

9,367

5,352

4,299

12,385

1,761

7,464

12,897

2,385

16,391

6,643

20,603

118

5,598

3,493

2,105

5,778

Total

15,282

23,034

26,381

EMPLOYEE TURNOVER RATE

Our employee turnover rate in 2018 reached 0.16% compared to 0.19% in 2017. Most of the employees who left the Company were
on their own request.

Description

2018

2017

2016

Total number of Telkom Employees

12,765

13,956

14,933

Employee turnover rate

By own request/voluntary

Becoming a political party official

Becoming an SOE director/government
official

Disciplinary misconduct

Marry another Telkom employee

Retired

Died

Turn Over percentage

0.16%

0.19%

0.07%

223

In terms of remuneration, Telkom conform with provincial minimum wage regulations. Telkom set the lowest salary above the
provincial minimum wage. The following table shows that the salary conditions apply to all Telkom employees at various levels.

Description

Senior Management

Middle Management

Supervisor

Other

2018

2017

2016

Men

Women

Men

Women

Men

Women

100%

Complaints of labor issues may be submitted through:
• HR helpdesk is a complaint mechanism through the web-
in service, mail-in service HR_helpdesk@telkom.co.id, and
phone-in service number 1500305.

• HR Wiki is a search engine service used by the employees to

obtain information about employment in Telkom.

• Employee aspiration is an adaptation of the employee
suggestion system (ESS) which may be utilized by the
employees to convey their suggestions and aspirations.
• Employee reference is a catalog of human capital or
employment policy of Telkom available to the employees,
including regulations and explanations.

Telkom accepted 348 employment complaints and solved
307 complaints or 95%. Most of the complaints are about
remuneration, administration, service, and career management.
Telkom did refinement such as:
• Remuneration

increasing housing
allowance basic rate in 2018 followed by the adjustment for
employee who took 5-year housing allowance option.

improvement by

• Administration service improvement by providing help
to update employee and family data, healthcare facilities
information and allowance for social security of employment
and health program.

• Career management improvement by providing Ingenium
application that could be accessed online to choose their
desired career path, talent management with compatible
job function, and assessment in promotion and mutation.

FACILITY AND WORK SAFETY

In terms of workplace safety and health, Telkom has an internal
policy on occupational safety in the Directors Decree No.37 of
2010 concerning the Establishment of a Company Safety and
Security Management Policy dated October 26, 2010. Telkom also
maintains a reputation for safe working hours and zero fatality
in the last few years and implemented a workplace safety and
health management system (SMK3). The socialization of the
implementation of SMK3 was carried out online through Safety
Care Online and the SAS Portal application was in accordance
with Government Regulation No. 50 of 2012. The consistency
of the SMK3 implementation was online through application in
SAS Portal in accordance with Government Regulation No. 50 of
2012. In 2018, the SMK3 certification program was implemented
in 19 Telkom office locations throughout Indonesia. This
program has an impact on improving employees work safety
readiness in accordance with applied regulations and policies.

RATE OF OCCUPATIONAL ACCIDENTS

Telkom has maintained zero accident for three years since
2016. This is a good achievement of various efforts to handle
employee safety and health.

COMPLAINTS HANDLING MECHANISM OF
LABOR ISSUES

Telkom understands the importance of manpower as one of the
most crucial components in conducting business activities and
achieving performance targets as effectively and efficiently as
possible. Therefore, Telkom makes our best efforts to minimize
the negative impacts of existing labor issues. One of Telkom’s
effort is provide a number of employee complaint mechanisms
for the early detection and settlement of problems.

224

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportCOMMUNITY SOCIAL DEVELOPMENT

LOCAL WORKERS

Telkom noticed to the socio-economic impacts of the operating activities such as the absorption of local labor. It was done directly
by the recruitment of Telkom and its subsidiaries, as well as indirectly by the recruitment of Telkom partner contractors.

ANTI-CORRUPTION MECHANISM AND PROCEDURAL POLICIY

Telkom has an internal policy related to Anti-Corruption through Directors Decree No.43 of 2008 concerning Anti-Fraud Policies in
Telkom on December 2, 2008. Each employee is required to sign the Integrity Pact. Telkom also has anti-corruption portal called
myintegrity.telkom.co.id. In order for employees to have good capacity to prevent corruption, Telkom holds anti-corruption training
for employees. One of Telkom efforts in preventing corruption is the supplier selection process that needs to take several stages
such as name registration through the application of supply management and logistic enhancement (SMILE), supplier selection,
and determination of suppliers entitled to bid.

In addition, Telkom also complies with regulations that regulate the Obligations of State Administrators to report assets. The
obligation refers to:
1. Law No. 28 of 1999 concerning State Administrators that Are Clean and Free of Corruption, Collusion and Nepotism
2. Law Number 30 of 2002 concerning the Corruption Eradication Commission
3. Corruption Eradication Commission Regulation Number: 07 of 2016 concerning Procedures for Registration, Announcement and

Examination of State Assets Assets

As an implementation of these regulations, Telkom requires all echelon I and II officials to report their assets according to
applicable procedures.

EMPOWERMENT OF OUR COMMUNITIES

Telkom’s CSR program includes the Partnership and Community Development Program (PKBL) and CSR-PR. In 2018, Telkom’s CSR
program, BUMN, was present for the country, taking the theme of Telkom Indonesia for Indonesia. The main programs are: Planet -
Digital Environment, People - Digital Society, and Profit - Digital Economy.

Planet

People

Profit

Digital Environment

Digital Society

Digital Economy

Wifi Corner

Disability Care

TelkomCraft Indonesia

Broadband Learning Center
& Pustaka Digital

Digital Lounge
Creative Camp

Telkom Culture Care

BUMN Goes to Campus

UMKM Go Digital

Village Economic Center

Indonesia Digital Learning

Veteran Home Renovation

Natural Disaster Donation

Marketing Online
Workshop

BUMN Creative House
Digital SMB Village

BUMDes Partnership

Village Economic Center
(Balkondes)

225

Description

Partnership & Community Development

Program

Partnership Program

Community Development Program

CSR-PR

Total

2018

2017

Rp (Billion)

2016

385.86

279.98

105.88

39.80

425.66

389.58

307.61

81.97

28.50

418.08

442.89

360.92

81.97

19.30

462.19

UPGRADING OF SOCIAL FACILITIES AND INFRASTRUCTURE

Telkom held several activities such as rehabilitation of the education facilities, orphanage, sanitation and environment, maintenance
of the public road, and facilities recovery in disaster affected area. Telkom conducted social facilities and infrastructure improvement
in several Indonesia area throughout 2018 below.

Minister of SOE Rini M. Soemarno accompanied by East Nusa Tenggara Governor Frans
Lebu Raya dan Telkom President Director Alex Janangkih Sinaga presented Telkom
CSR such as clean water facilities for residents in Adonara, East Nusa Tenggara. In
the activity series of BUMN Hadir untuk Negeri at NTT, Telkom gave help renovating
St. Martinus Hinga Church, Nur Sa’adah Puhu Mosque and Jabal Nur Great Mosque in
East Adonara District, as well as constructed artesian well in Wotan Ulu Mado District
to overcome scarcity of freshwater, and built Broadband Learning Center facilities at
MTs Nurul Iman, Kupang; and provided iChat application Weri States SLB, Larantuka.

Telkom provided Broadband Learning Centre and renovated Utsmaniyah Al-Musri
Boarding School that had a fire in Garut, West Java.

Telkom HCM Director Herdy Harman simbolicly delivered help for Al Andalusia
Orphanage, Jakarta.

226

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Telkom Consumer Service Director Siti Choiriana delivered Telkom CSR for national
border posts. Telkom and other BUMNs worked together to improve the quality of
public and social facilities for the society in Oebela Village, Rote Barat Laut District,
Rote Ndao District, East Nusa Tenggara.

Telkomsel President Director Ririek Adriansyah inaugurated public toilet and clean
water facilities in Cilincing, North Jakarta at BUMN Hadir Untuk Negeri 2018 Program.

Telkom Finance Director Harry M. Zen, as the advisor for the improvement and
provision of school infrastructure for the BUMN Hadir untuk Negeri 2018, visited
schools in the Marunda, Cilincing, North Jakarta to see the progress of school facilities
and the BLC (Broadband Learning Center) room. On that occasion, he also gave
volleyball and basketball to Al Rahmah and Al Aminiyah Elementary School.

Telkom President Director Alex Janangkih Sinaga presented 1000 simPATI simcard to
IT Head Division of Central Sulawesi Police AKBP M. Haritsuddin, witnessed by Ministry
of SOE Rini M. Soemarno and Telkomsel Network Director Bob Apriawan at Integrated
Operation Center (IOC) Telkom Regional Office in Palu, Central Sulawesi. It was
supposed to help the communication of police officer and volunteer in disaster area.

President Joko Widodo was accompanied by Minister of SOE Rini M. Soemarno, Telkom
President Director Alex Janangkih Sinaga, PLN President Director Sofyan Basir, and
West Java Governor Ridwan Kamil observed “Sambungan Listrik Gratis” (Free Electrical
Connection) program in Cibatu, Garut, West Java. This program was part of BUMN
Hadir untuk Negeri 2018 program when Telkom, PLN and other SOEs participated
increasing electrification ratio and compliance of basic electricity needs for resident
in south region West Java and Banten to enhance their productivity.

Director of WINS Abdus Somad Arief accompanied by Director of Consumer Siti
Choiriana helped resident that affected by tsunami disaster in Banten, Jawa Barat.

227

RECYCLABLE AND ENVIRONMENT-FRIENDLY MATERIAL AND ENERGY USE

Telkom made various efforts to reduce the bad impact on the environment. Since 2010, Telkom has used inverter AC and LED
lighting. Telkom data center also uses cooling system management, making it more energy efficient. To save energy use of the office
building, Telkom uses reflective glass with a thickness of 6 mm, thereby reducing the incoming heat. From the various initiatives,
Telkom succeeded in saving electricity consumption as reflected in the following table.

Electricity Consumption

Fixed Network (STO)

Operational (Building)

Total

2018

2017

Kwh

2016

327,744,883

338,902,852

71,226,285

69,556,971

345,016,112

70,412,205

398,971,168

408,459,823

415,428,317

Telkom provides vehicles Employee Shuttle Bus (EMSHUB) which contribute decreasing in the level of congestion in the city of
Jakarta. The presence of EMSHUB is supported by Satellite Office facilities in Bogor, Tangerang, and Bekasi that allow employees to
continue working while in high traffic. EMSHUB also have a meeting room and collaboration room equipped with video conference
and high-speed internet so that it could work mobile comfortably and productive. In addition, Telkom also provides operational
vehicles that can be used by employees alternately, by ordering through the online application Trends Online.

Regarding the use of environment-friendly energy, Telkom utilizes solar panels to generate electricity in electricity scarcity
areas where electricity supply which difficult for BTS resource, so it can save fuel oil.

WASTE TREATMENT SYSTEM

In the case of waste management, Telkom submits both the solid waste of hazardous and toxic materials or B3 waste, and non-B3
waste, to the Government official mechanism through the local Sanitary Agency.

ENVIRONMENTAL COMPLAINT HANDLING MECHANISMS

Telkom business characteristics in the telecommunication and digital industry cause relatively low impacts on the environment.
Therefore, there was no complaint from the citizens or other stakeholders about environmental issues so far. Should there be any
violation of environmental regulations, Telkom welcome any complaints to the mechanism of Whistle Blowing System (WBS) or
complaints may be submitted directly to the Corporate Secretary.

ENVIRONMENTAL AWARD

In line with concern for the environment, Telkom received the Subroto 2018 Award in the category of Energy Management in
Industry and Building from Ministry of Energy and Mineral Resources (ESDM).

228

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportWith eco green concept, Vertical Garden located between Telkom Landmark
Tower and Telkomsel Smart Office equipped with giant screen and high
speed Wifi network.

PARTNERSHIP
AND COMMUNITY
DEVELOPMENT
PROGRAM

232

Partnership and Community Development Program Report

230

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportTelkom actively participates in plogging activities,
fitness activities accompanied
including doing
by picking up trash found on Jalan Sehat 7.300m
BUMN Hadir Untuk Negeri route to create a clean and
healthy environment.

231

For Telkom, the Partnership and Community Development
Program is an effort to manage the impact of operational
policies and activities on society and the natural environment.
The Partnership Program is the government’s mandate to
distributed loan funds to Micro and Small Business (MSB) and
increases the capacity of Foster Partners, while the Community
Development Program is a social empowerment program
consisting of seven objects of assistance, namely:
1. Natural disaster victims donation
2. Education donation
3. Healthcare improvement donation
4. Improvement for infrastructure and/or public facility donation
5. Places of worship donation
6. Nature conservation donation
7. Civil sociaety in order for poverty alleviation donation

LEGAL BASIS AND GENERAL POLICY

The legal basis for the implementation of PKBL activities has
been regulated through Law No. 19 of June 19, 2003 regarding
SOE, as well as a series of Regulation of Minister of SOE which
has undergone several changes. The last change is Regulation
of Minister of SOE No.PER-02/MBU/7/2017 dated July 5, 2017
regarding the Second Amendment to Regulation of Minister
of SOE No.PER-09/MBU/07/2015 regarding the Partnership
Program and the Agency for Community Development Programs
of SOE. Another legal basis is Letter of Minister of SOE No.S 513/

MBU/08/2016 dated August 30, 2016 regarding the Submission
of Aspirations of Shareholders/Capital Owners for Preparation
of Company Work Plans and Budgets for 2017.
To carry out this obligation, the company has formulated
policy and operational guidelines, namely Regulation of
Directors
PR.202.60/r.00/HK200/COP-A2000000/2017
dated August 8, 2017, regarding the Community Development
Center Organization.

SUCCESS PARAMETER

CSR (PKBL) Index

In 2018, the Company conducted a measurement of CSR (PKBL)
Index with the achievement of 72.14%. The achievement shows
that the Company’s CSR activities brought an impact at the rate
of 72.14% on customer satisfaction and corporate reputation.

Net Promoter Score – NPS

In measuring the success of social responsibility, especially
for customers, Telkom measures the Net Promoter Score (NPS)
which indicates the motivation of the community to advocate
or promote Telkom products and services. The results of the
NPS measurement in 2018 show a positive value from the
point of view of the community in recommending the use of
Telkom products.

NPS Measurement Results in 2017-2018

Criteria

Promoters

Passive

Detractor

2018

2017

46.75%

40.50%

12.75%

42.88%

35.32%

21.80%

232

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report
The Effectiveness of Partnership Program Fund Disbursement
In 2018, Telkom targets the effectiveness of distributing the Partnership Program funds by 80% of available funds. The realization
of the distribution of the Partnership Program funds reached 95.27% and a score of 3.

Effectiveness of Program Fund Disbursement in 2016-2018

Partnership Program

Total Funds Disbursed (Rp billion)

Total Funds Allocated (Rp billion)

Fund Disbursement Effectiveness Rate (%)

Fund Disbursement Effectiveness Score

2018

2017

2016

279.98

293.87

95.27

307.61

328.21

93.72

360.92

366.54

98.47

The Collectability of Partnership Program Funds
Telkom sets a target for 2018 collectability of 80%. Realization in 2018 recorded collectability of 88.85% with the achievement
of a score of 3.

Collectability Rate of Partnership Program Funds in 2016-2018

Collectability

Collectability Rate (%)

Score

2018

2017

2016

88.85

85.17

88.54

The Effectiveness of Community Development Program Fund Disbursement
In setting the target for 2018, Telkom is expected to be able to distribute as 80% of Community Development funds from the
allocation of funds of Rp105 billion. The fund realization of the Community Development Program is Rp105.88 billion or 100.84%
of the fund allocation in 2018.

Effectiveness of Community Development Program Fund Disbursement in 2016-2018

Community Development Program

2018

2017

2016

Total Funds Disbursed (Rp billion)

Total Funds Allocated (Rp billion)

Fund Disbursement Effectiveness Rate (%)

PKBL BUDGET ALLOCATION

105.88

105.00

100.84

81.97

82.00

99.97

81.97

82.00

99.97

In accordance with the regulations of Minister of SOE, the Partnership Program budget allocation sources from profit provision,
while the Community Development Program sources from the Telkom budget. In 2018, the PKBL budget increase from Rp404.00
billion in 2017 to Rp405.00 billion in 2018.

Budget Allocation of Partnership Program and Community Development in 2017-2018

Type of Program

Partnership Program

Community Development Program

Total

2018

2017

Change

Rp (billion)

300.00

105.00

405.00

322.00

82.00

404.00

(6.83)

28.05

0.25

233

PKBL Program in 2018 consists of The Partnership Program and The Community Development Program.

Partnership Program
The Partnership Program is a community economic empowerment program to increase income through micro and small scale
business activities carried out by providing loan funds with a low administration fee. By focusing on digitizing the management
of partnership programs, digital training for fostered partners and including fostered partners at national and international
scale exhibitions.

For 2018, the Partnership Program funds that have been distributed by Telkom are Rp279.98 billion to 7,498 Foster Partners
consisting of industry, trading, agriculture, farming, plantation, fishery, service, and other sectors. The following are data on the
realization of the number of Foster Partners and fund disbursements per business sector from 2016 to 2018.

No Business Sector

Industry

Trading

Agriculture

Farming

Plantation

Fishery

Service

Others

Sub Total

Fostering Partnership Fund

Total

CAGR (%)

Number of Foster Partners

Total Disbursements
(Rp billion)

2018

2017

2016

2018

2017

2016

1,699

1,683

1,784

53.86

53.92

60.92

4,028

4,592

6,371

134.39

144.56

203.48

125

216

146

120

237

121

199

200

351

201

276

4.17

8.20

2.71

4.78

4.37

8.56

3.46

6.48

7.18

13.29

5.40

7.97

1,184

1,404

1,751

43.06

47.80

61.52

0.77

0.43

1.16

7,498

8,367

10,956

251.99

269.58

360.92

27.99

38.03

279.98

307.61

360.92

(10.40)

(23.63)

(8.56)

(8.98)

(14.77)

4.02

The number of recipients of the Partnership Program funds in 2018 decreased by 10.4% compared to 2017, while the amount of
funds distributed in 2018 has a decrease of 8.98%. This is because there is no additional agreement on budget allocations from the
Ministry of BUMN.

Foster Partners Capacity Building
In 2018, Telkom increased the capacity of fostered partners with three main activities, namely digitizing the management of
partnership programs, digital training for fostered partners and involving fostered partners at national and international
scale exhibitions.

Partnership Program Management Digitalization
Telkom has used digital technology to manage Partnership Program fostered partners’ data by implementing PKBL management
information system (SIM) since 2007. Then, in 2016 Telkom implemented a Partnership Program fund loan submission service
through the SmartBisnis web, installment payments through a bank virtual account, Mandiri Bank and BNI Bank.

In 2017, the installment payment through virtual accounts was expanded in collaboration with its subsidiary, PT Finnet Indonesia
as a non-bank payment point aggregator, as well as PT Pos Indonesia, PT Pegadaian, Alfamart, and Indomaret, in order to
facilitate the Foster Partners in making installment payments. Furthermore, Telkom also innovates on Smart Survey and SMS
Reminder in 2018.

234

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Micro and Small Enterprises (MSE) Digitalization Training
Since 2015, Telkom has provided training and digital seminars to Foster Partners to promote and market their products by
utilizing the facilities of the BLANJA.com website. In 2018, these training were given to 1,038 MSB.

National and International Exhibitions
Telkom consistently encourages Foster Partners to take part in national and international exhibitions. This is also one of
Telkom’s strategies to increase the capacity of the Foster Partners. In 2018, The exhibition that followed, among others
Telkom Craft Indonesia, was a part of Rumah Kreatif BUMN. This exhibition was participated by 400 Leading Foster Partners
and it was Telkom’s improvement to improve the capacity of Foster Partners. Furthermore, the other exhibitions were
Adiwastra Exhibition, Kriyanusa Exhibition, and international scale exhibition namely Indonesia Creative Product Festival
(ICPF) in Malaysia. The exhibitions were participated by 5 leading fostered partners. The other activities were followed such
as Exhibition Trade Expo Indonesia (TEI), Indonesia Pavillion at the World Bank Event in Bali, and the MSB exhibition event
organized by the Local Government.

Telkom Craft Indonesia 2018 at Jakarta Convention Center.

235

The Community Development Program includes seven Donation Type, such as natural disaster victims donation, education
donation, healthcare improvement donation, improvement for infrastructure and/or public facility donation, places of worship
donation, nature conservation donation, and civil society in order for poverty alleviation donation. The donation is part of the BUMN
Hadir Untuk Negeri Program.

In 2018, the actual distribution of funds for the Community Development Program amounted to Rp105.88 billion or 100.84% of
fund disbursement commitment of Rp105.00 billion. The following table shows the distribution of funds for the Community
Development Program per donation type from 2016 until 2018.

No Donation Type

Natural disaster victims donation

Education donation

Healthcare improvement donation

Improvement for infrastructure and/or public
facility donation

Places of worship donation

Nature conservation donation

Civil society in order for poverty alleviation
donation

Capacity improvement donation to foster
partners

Total

CAGR (%)

Total Donation Objects

Total Disbursements
(Rp billion)

2018

2017

2016

2018

2017

2016

346

125

328

408

101

392

113

311

395

492

154

4.69

0.69

0.94

31.50

25.08

35.68

6.16

4.78

10.42

221

22.47

11.85

13.37

382

15.93

10.21

10.62

115

0.29

1.10

24.84

28.26

0.91

1.64

8.39

1,365

1,335

1,436

105.88

81.97

0.70

(7.03)

64.11

29.17

13.20

Natural Disaster Victims Donation
In 2018, Telkom provides disaster assistance such as donation
for of earthquake natural disasters in Lombok and Palu and
tsunami in Banten.

Healthcare Improvement Donation
Public health is Telkom’s concern in 2018, including through
the Disability Care program that has been ongoing since 2016.
The implementation of the Disability Care program in 2018 is
The Gantari Award Program which collaboration with Kick Andy
Foundation, donated to people with disabilities consist of 1,000
artificial eyes, 188 artificial legs, and hearing aids.

Education Donation
As a form of commitment to the nation’s children, Telkom
is active in improving the quality of education, particularly
related to the development of Indonesian digital technology
competencies, which are packaged in the Indonesia Digital
Learning program, including providing Digital Library (PaDi) and
My Teacher My Hero Programs. As of 2018, Telkom has provided
as many as 5,843 PaDi, holding digital training for teachers in
the My Teacher My Hero Program as many as 1,027 teachers.

In addition, Telkom also maintains local wisdom and national
cultural values towards the young generation through the
Telkom Cultural Care program held in Jakarta.

236

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportProviding Assistance to Disabilities in the 2018 Gantari
Award Program.

Improvement for Infrastructure and/or Public
Facility Donation
The goal of implementing this program is to improve services
to the community in facilities and infrastructure. This program
is expected to be able to increase community accessibility in
activities, facilitating activities that can be carried out with
build 28 suspension bridges in difficult access areas, making
drill wells in Wotan Ulu Mado District, Cash for Work Program
in the form of road casting in Gunung Kidul Regency.

Places of Worship Donation
Telkom
improves the quality of public services to the
community, especially in terms of increasing public access to
utilize public facilities and infrastructure. The activities carried
out throughout 2018 were construction, renovation, assistance
with facilities for houses of worship including the construction
of the mosque, church and other places of worship.

Nature Conservation Donation
The donation program for Nature Conservation is part of
the Telkom’s commitment to the environment. The Nature
Conservation Program includes mangrove cultivation in Banten
and Rhino Conservation in Lampung and West Kalimantan.

Poverty Alleviation Donation
Through Civil Society in Order for Poverty Alleviation Donation,
Telkom hopes to improve the lives of pauper society both in
urban and rural areas. The Civil Society in Order for Poverty
Alleviation Donation provided in 2018 included retirement and
community home renovation that reach 164 beneficiaries and
installation of electricity for poor people in Bantarjati Bogor,
West Java.

Employee Volunteer Program (EVP)
The Employee Volunteer Program (EVP) is part of the main
program Work-Life Integration which serves as a forum to
facilitate social activities
initiated by Insan TelkomGroup
(Telkomers) in the scope of individuals, business units, and
employee communities within the TelkomGroup. In 2018, as
many as 3,887 Telkom employees have participated in EVP.

237

APPENDICES

240

242

Appendix 1: Board of Commisioners’ Agenda and
Attendance Internal Meetings
Appendix 2: Board of Commisioners’ Agenda and
Attendance at Joint Meeting

243

Appendix 3: Board of Directors’ Agenda and Attendance

at Joint Meeting

244

Appendix 4: Board of Directors’ Agenda and Attendance

Internal Meetings

248
252
255

Appendix 5: Glossary
Appendix 6: List of Abbreviations
Appendix 7: Circular Letter to Financial Services Authority
No.30/SEOJK.04/2016 Cross Reference

238

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report

Telkom develops the Smart Mosque at Al-Istiqamah Mosque which
is equipped with various digital technology facilities such as
interactive online media sharing through video conferencing, live
streaming da’wah, Digital Library and cashless infaq facilities.

239

2. Extention for Mr. S. Mietra Sardi (Komite

√

N/A N/A

√

Audit Member)

3. PT Telkomsel Business Development

Commissioners’ Attendance

EHA
(1)

IR
(1)

MGD

PJW HD
(2)

DOFP
(3)

√

N/A N/A

√

N/A N/A

√

N/A N/A

√

N/A N/A

√

N/A N/A

√

N/A N/A

√

Date

Agenda

January 24, 2018

Proper Test and Feasibility of Prospective
Candidates for the Main Director of a
Subsidiary

February 3, 2018

1. Discussion of Candidate Submissions to

Series A Dwiwarna Shareholders

2. Strategic Update Project

February 7, 2018

1. Strategic Project Discussion
2. Strategic

Final Project Agreement

Discussion

February 21, 2018

1. BPJS Ketenagakerjaan for Board of

Commissioners

5. March 13, 2018

1. Strategic Fit Agrement Discussion
2. Extention for Ms. Sri Hartati Rahayu

(KEMPR’s meeting)

3. Miscellaneous

6. March 26, 2018

1. Article of Association PT Telkom

Indonesia, Tbk Amendnt

2. Proposed KBM Facilities for Directors

April 11, 2018

1. Article of Association PT Telkom

Indonesia, Tbk Amendement

April 18, 2018

2. Proposals
Directors

1. Proposals
Directors

for Prospective Telkom’s

2. Proposal for Management Remuneration

2018 (by Hay Group Consultant)

3. Determination of the Chairperson of the

2018 GMS

April 24, 2018

1. Acting Proposal Director of the Consumer

Service

2. Update on Proposal to Telkom’s Articles

of Association Amendment

10. May 2, 2018

1. Proposed Amendment to the Committee

Membership Arrangement

2. Remuneration proposal

1. Strategic Project Submission
2. Discussion of the Threshold Proposal
on Article 12 Paragraph 7 of Telkom’s
Articles of Association

1. Vehicle Facilities Board of Directors
2. Proposed Addition of Secretariat Staff

and KEMPR Members

1. Strategic Strategic Fit Project Discussion
2. Discussion of Capex Phase 2 Release

√

N/A N/A

√

N/A

√

N/A

√

N/A

√

N/A

Agreement

√

3. Submission of Draft Board Manual
4. Others: Commissioner Telkomsel

1. Strategic Fit Approval and Final Approval
to
of Telkom’s Equity Participation
Telkomsat

2. Strategic Fit Changes in Equity Injection

Allocation for Subsidiaries

3. Capex Phase 2 Release Agreement and

Additional Capex Discussion

4. Remuneration

√

N/A

11. May 7, 2018

12. May 30, 2018

13.

June 8, 2018

14.

July 3, 2018

240

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNo

Date

Agenda

15.

July 16, 2018

1. Submission of Local Capital Market

Commissioners’ Attendance

EHA
(1)

IR
(1)

MGD

PJW HD
(2)

DOFP
(3)

Instrument

2. Discussion of the Initial CSS Draft 2019-

2023

√

3. Remuneration
4. Others: Resignation of Mr. Dolfie OFP

from Independent Commissioner

16.

17.

18.

19.

July 30, 2018

Discussion of the CSS Final Draft 2019-2023

August 10, 2018

Agreement on Principles for Issuance of
MTN

August 27, 2018

Validation of CSS 2019-2023

September 6,
2018

Follow up on Amendments to Articles of
Association of TelkomGroup Subsidiary

20.

October 4, 2018

Application for Strategic Fit Project Strategic
Approval

21.

October 16, 2018

1. Application for Strategic Fit Project

Strategic Approval

2. Remuneration

22. November 1, 2018

Request for Final Approval of Strategic

Projects

23. November 9, 2018 1. Application for Strategic Fit Project

Strategic Approval

2. Vehicle Facilities Board of Directors

24. November 15,

1. Request for Final Approval of Strategic

2018

Projects

2. Approval of Proposal for Write-Off of

Uncollectible Receivables in 2018

3. Discussion on the Preliminary Draft of

the Proposed RKAP in 2019

√

N/A

√

N/A

25. November 19,

1. Strategic Discussion of Fit Release of

2018

Subsidiary’s shares

2. Discussion of Initial Draft Proposal for

2019 RKAP

26. November 29,

Strategic Strategic Fit Project Final Approval

2018

27.

December 5, 2018

1. Request for Approval of the 2019 RKAP

Proposal

2. Request for Strategic Approval Fit for the
majority of the Company’s Subsidiary
Sales

√

28.

December 20,
2018

1. Request

for Approval of Capital

Participation of TelkomGroup Subsidiary

√

2. Miscellaneous

Total Attendances

Total Meetings

Board of Commissioners’Attendance Level (%)

√

N/A

√

N/A

√

N/A

100

Remarks:
HS (Hendri Saparini), RF (Rinaldi Firmansyah), EHA (Edwin Hidayat Abdullah), IR (Isa Rachmatarwata), MGD (Margiyono
Darsasumarja), CA (Cahyana Ahmadjayadi, PJW (Pamiyati Pamela Johanna Waluyo), HD (Hadiyanto), dan DOFP (Dolfie Othniel
Fredric Palit).
(1) Since the AGMS on April 27, 2018
(2) Until AGMS on April 27, 2018
(3) Until AGMS on September 28, 2018

241

No.

Date

Agenda

EHA
(1)

IR
(1)

MGD

PJW HD
(2)

DOFP
(3)

Commissioners’ Attendance

January 30, 2018

Company Performance in December
2017

February 21, 2018

March 21, 2018

√

N/A N/A

√

N/A N/A

√

2. 2017 Key Performance Indicator

√

N/A N/A

√

Company Performance in January
2018

Company’s performance in
February 2018

2. 2017 Annual Integrated Audit

Completion Report

3. Report on GMS Preparation for

2018

Company Performance Month
March 2018

(KPI)

3. Others: AGMS Agenda

Company Performance Month April
2018

Company Performance Month
May 2018

2. Explanation of the Additional
Capital to TelkomGroup
Subsidiary

Company Performance Month
June 2018

2. Submission of Final CSS Draft

2019-2023

Company Performance Month July
2018

Company Performance Month
August 2018

Company Performance Month
September 2018

April 25, 2018

May 30, 2018

June 28, 2018

July 30, 2018

August 23, 2018

September 25, 2018

10.

October 25, 2018

11.

November 21, 2018

Company Performance Month
October 2018

12.

December 7, 2018

2. Annual RKAP proposal 2019

Company Performance Month
October 2018

13.

December 20, 2018

Annual RKAP proposal 2019

√

N/A

√

N/A

√

N/A

√

N/A

√

Total Attendances

Total Meetings

Board of Commissioners’ Level Attendances (%)

100

242

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportAPPENDIX 3:
BOARD OF DIRECTORS’ AGENDA AND ATTENDANCE AT
JOINT MEETINGS

Directors’ Attendance

AJS

KEU

HMZ

DSP

EBIS WINS HCM NITS

CONS

ASA

HRH

SC(1) MK(2)

No.

Date

Agenda

January 30,
2018

Company Performance in
December 2017

February 21,
2018

Company Performance in
January 2018

March 21,
2018

1. Company’s performance

in February 2018

2. 2017 Annual Integrated
Audit Completion Report

3. Report on GMS

Preparation for 2018

April 25, 2018

1. Company Performance

Month March 2018

2. 2017 Key Performance

Indicator (KPI)

3. Others: AGMS Agenda

May 30, 2018

Company Performance
Month April 2018

June 28, 2018

1. Company Performance

Month May 2018

2. Explanation of the

Additional Capital to
TelkomGroup Subsidiary

July 30, 2018

1. Company Performance

Month June 2018

2. Submission of Final CSS

Draft 2019-2023

10.

11.

12.

13.

August 23,
2018

Company Performance
Month July 2018

September 25,
2018

Company Performance
Month August 2018

October 25,
2018

Company Performance
Month September 2018

November 21,
2018

1. Company Performance
Month October 2018

2. Annual RKAP proposal

2019

December 7,
2018

Company Performance
Month October 2018

December 20,
2018

Annual RKAP proposal 2019

√

N/A

√

N/A

√

√**

N/A

√

100

Total Attendances

Total Meetings

Board of Directors’ Attendance Level (%)

100

Remarks:
PD (President Director), KEU (Finance), DSP (Digital & Strategic Portfolio), EBIS (Enterprise & Business Service), WINS (Wholesale
and International Service), HCM (Human Capital Management), CONS (Consumer Service), dan NITS (Network, IT, & Solution).
AJS (Alex Janangkih Sinaga), HMZ (Harry Mozarta Zen), DB (David Bangun), DR (Dian Rachmawan), ASA (Abdus Somad Arief),
HRH (Herdy Rosadi Harman), ZA (Zulhelfi Abidin), SC (Siti Choiriana), dan MK (Mas’ud Khamid).
** The position of Director of Consumer Service was temporarily held by the Director of WINS (ASA)
(1) Up to April 20, 2018
(2) Since AGMS on April 27, 2018

243

No.

Date

Agenda

PD KEU DSP EBIS WINS HCM NITS

CONS

AJS HMZ DB

ASA

HRH

SC(1) MK(2)

Directors’ Attendance

January 3,
2018

January 9,
2018

Operational & Revenue MtD December 2017 Performance
Report

1. Operational & Revenue YtD December 2017 Performance

Report

January 16,
2018

January 22,
2018

January 23,
2018

January 30,
2018

February 6,
2018

February 9,
2018

February 13,
2018

10.

11.

February 16,
2018

February 20,
2018

12.

February 27,
2018

2. NARU 2017/2018 Implementation Report

3. Telkom Click 2018 Preparation Report

4. Limited Agenda Report

1. Operational & Revenue MtD January 2018 Performance

Report

2. Limited Agenda Report

Limited Agenda Report

1. Operational & Revenue MtD January 2018 Performance

Report

2. Limited Agenda Report

1. Operational & Revenue MtD January 2018 Performance

Report

2. FU HCM Report

3. Limited Agenda Report

1. Operational & Revenue MtD January 2018 Performance

Report

2. Limited Agenda Report

Limited Agenda Report

1. Operational & Revenue MtD February 2018 Performance

Report

2. SMPCS Handling Disorders Progress Report

3. Limited Agenda Report

Limited Agenda Report

1. Operational & Revenue MtD February 2018 Performance

Report

2. 2018 Customer Experience Report

3. Limited Agenda Report

1. Operational & Revenue MtD February 2018 Performance

Report

2. FU HCM Report

3. Limited Agenda Report

13.

March 6, 2018

1. Operational & Revenue YtD February 2018 Performance

14.

15.

16.

17.

March 13,
2018

March 15,
2018

March 20,
2018

March 27,
2018

Report

2. Limited Agenda Report

Limited Agenda Report

1. Operational & Revenue MtD March 2018 Performance

Report

2. TelkomCraft Indonesia Preparation Report

3. Limited Agenda Report

1. Operational & Revenue MtD March 2018 Performance

Report

2. Limited Agenda Report

1. Operational & Revenue MtD March 2018 Performance

Report

2. Limited Agenda Report

18.

April 3, 2018

1. Operational & Revenue MtD March 2018 Performance

Report

2. Limited Agenda Report

19.

April 10, 2018

1. Operational & Revenue YtD March 2018 & MtD April 2018

Performance Report

2. Limited Agenda Report

244

√

N/A

√

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNo.

Date

Agenda

PD KEU DSP EBIS WINS HCM NITS

CONS

AJS HMZ DB

ASA

HRH

SC(1) MK(2)

Directors’ Attendance

20.

April 17, 2018

1. Operational & Revenue MtD April 2018 Performance

Report

2. FU HCM Report

3. Updated RAPIM TelkomGroup I in 2018 Implementation

21.

22.

Plan

4. Limited Agenda Report

April 20, 2018

Limited Agenda Report

April 24, 2018

1. Operational & Revenue MtD April 2018 Performance

Report

2. Limited Agenda Report

23.

May 2, 2018

1. Operational & Revenue MtD April 2018 Performance

√

N/A

√

N/A

Report

2. Launching
Update

Indonesia Digital Learning Preparation

√

N/A

3. RAPIM TelkomGroup I 2018 Theme Update

4. Limited Agenda Report

24.

May 15, 2018

1. Operational & Revenue YtD April 2018 & MtD Mei 2018

Performance Report

2. TelkomGroup Siaga RaFi 2018 & HUT Telkom – 53

√

Rundown Event Update

3. Limited Agenda Report

25.

May 22, 2018

1. Operational & Revenue MtD May 2018 Performance

Report

2. Limited Agenda Report

26.

May 30, 2018

1. Operational & Revenue MtD May 2018 Performance

Report

2. Limited Agenda Report

√

27.

June 5, 2018

1. Operational & Revenue YtD May 2018 Performance

Report

2. Mudik Bareng BUMN, Halal Bi Halal TelkomGroup, HUT

√

Telkom ke-53 Update

3. Limited Agenda Report

28.

June 26, 2018

1. Operational & Revenue MtD June 2018 Performance

Report

√

N/A

2. Halal Bi Halal TelkomGroup 2018 Event Update

√

N/A

√

N/A

3. Limited Agenda Report

29.

July 3, 2018

1. Operational & Revenue MtD June 2018 Performance

Report

2. HUT Telkom ke-53 Rundown Event Update and Merah

Putih Satellite Launching

3. FU HCM Report

4. Limited Agenda Report

30.

July 10, 2018

1. Operational & Revenue YtD June & MtD July 2018

Performance Report

2. RAPIM TelkomGroup II 2018 Scenario Update

3. Portfolio Evaluation Q1Y18 Update

4. Limited Agenda Report

31.

32.

July 17, 2018

Limited Agenda Report

July 18, 2018

Launch Preparation of Merah Putih Satellite Program
Update

33.

July 24, 2018

1. Operational & Revenue MtD July 2018 Performance

Report

2. BUMN Hadir Untuk Negeri Program Update

√

3. Experience Center Progress Update

√

4. Project Telkom Update for SOE Investment Forum

5. Limited Agenda Report

√

N/A

√

N/A

245

Date

Agenda

PD KEU DSP EBIS WINS HCM NITS

CONS

AJS HMZ DB

ASA

HRH

SC(1) MK(2)

Directors’ Attendance

34.

July 31, 2018

1. Operational & Revenue MtD July 2018 Performance

Report

2. Digital Grapari TelkomGroup GMP Building Update

3. Experience Center Progress Report

4. Limited Agenda Report

35.

August 7,
2018

1. Update Live Streaming Events Launch of Telkom Merah

Putih Satellite

√

N/A

2. Operational & Revenue YtD July 2018 Performance

√

N/A

Report

3. Limited Agenda Report

36.

August 14,
2018

1. Operational & Revenue YtD July & MtD August 2018

Performance Report

√

N/A

√

2. BUMN Hadir Untuk Negeri Progress Report and ASIAN

Games 2018 Implementation Readiness

3. Telkom Digital Experience Progress Update

4. Limited Agenda Report

1. Operational & Revenue MtD August 2018 Performance

Report

2. FU HCM Report

3. Limited Agenda Report

1. Launching TLT Progress Report

37.

August 21,
2018

38.

August 23,
2018

2. Material Update Joint Meeting: Company Performance

July 2018

3. Limited Agenda Report

√

39.

August 28,
2018

1. Operational & Revenue MtD August 2018 Performance

Report

2. Q2 2018 Company Performance Report

3. Limited Agenda Report

1. Operational & Revenue MtD August 2018 Performance

√

40.

September 4,
2018

√

N/A

√

N/A

√

N/A

√

Report

2. TDX Progress Report

3. FU HCM Report

4. Limited Agenda Report

√

N/A

√

41.

September
12, 2018

1. Operational & Revenue YtD Agustus & MtD September

2018 Performance Report

2. The Telkom Hub Launching Readiness Progress Report

√

N/A

√

42.

September
18, 2018

3. Limited Agenda Report

1. Operational & Revenue MtD September 2018

Performance Report

2. Limited Agenda Report

3. The Telkom Hub Launching Readiness Progress Report

43.

September
25, 2018

1. Operational & Revenue MtD September 2018

Performance Report

2. IBD Expo 2018 Readiness Report FU HCM Report

3. Telkom Supported in IMF-WB Annual Summit 2018

Readiness Report

4. The Telkom Hub Grand Launching Readiness Report

5. CAM 2019 Update and RAPIM TelkomGroup III-2018

Theme

6. Limited Agenda Report

Limited Agenda Report

44.

October 5,
2018

246

√

N/A

√

N/A

√

N/A

√

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNo.

Date

Agenda

PD KEU DSP EBIS WINS HCM NITS

CONS

AJS HMZ DB

ASA

HRH

SC(1) MK(2)

Directors’ Attendance

45.

46.

47.

48.

49.

October 10,
2018

October 16,
2018

October 22,
2018

October 24,
2018

October 30,
2018

50.

November 6,
2018

51.

52.

53.

54.

55.

56.

57.

November 13,
2018

November 14,
2018

November 19,
2018

November 21,
2018

November 27,
2018

December 4,
2018

December 11,
2018

1. Operational & Revenue YtD September and MtD October

2018 Performance Report

2. Limited Agenda Report

1. Operational & Revenue YtD September and MtD October

2018 Performance Report

2. The Telkom Hub Grand Launching Readiness Report

3. Limited Agenda Report

Limited Agenda Report

√

1. Operational & Revenue MtD October 2018 Performance

Report

2. FU HCM Report

3. The Telkom Hub Grand Launching Readiness Report

√

4. Limited Agenda Report

1. Operational & Revenue YtD October 2018 Performance

Report

2. FU HCM Report

3. Limited Agenda Report

1. Operational & Revenue MtD November 2018

Performance Report

2. Limited Agenda Report

Limited Agenda Report

1. Operational & Revenue MtD November 2018

Performance Report

2. FU HCM Report

3. Limited Agenda Report

1. Operational & Revenue MtD November 2018

Performance Report

2. Limited Agenda Report

1. Operational & Revenue YtD November 2018 Performance

Report

2. Limited Agenda Report

1. Operational & Revenue MtD December 2018 Performance

Report

2. Limited Agenda Report

√

N/A

√

N/A

√

N/A

√

N/A

√

58.

December 18,
2018

1. Operational & Revenue MtD December 2018 Performance

Report

2. TelkomClick 2019, TelkomGroup 2019 Logo & Corporate

Theme Readiness Report

3. FU HCM Report

4. Limited Agenda Report

59.

December 27,
2018

Operational & Revenue MtD December 2018 Performance
Report

Total Attendances

Total Meetings

Board of Directors’ Attendance Level (%)

√

N/A

√

N/A

√

Remarks:
PD (President Director), KEU (Finance), DSP (Digital & Strategic Portfolio), EBIS (Enterprise & Business Service), WINS (Wholesale
and International Service), HCM (Human Capital Management), CONS (Consumer Service), dan NITS (Network, IT, & Solution).
AJS (Alex Janangkih Sinaga), HMZ (Harry Mozarta Zen), DB (David Bangun), DR (Dian Rachmawan), ASA (Abdus Somad Arief),
HRH (Herdy Rosadi Harman), ZA (Zulhelfi Abidin), SC (Siti Choiriana), dan MK (Mas’ud Khamid).
(1) Since AGMS on April 27, 2018
(2) Up to April 20, 2018

247

Bapepam-LK
Badan Pengawas Pasar Modal dan Lembaga Keuangan,
or the Indonesian Capital Market and Financial Institution
Supervisory Agency, the predecessor to the OJK.

Broadband
A signaling method that includes or handles a relatively wide
range (or band) of frequencies.

BSS
Base Station Subsystem, the section of a cellular telephone
network responsible for handling traffic and signaling between
a mobile phone and the network switching subsystem. A BSS
is composed of two parts: the BTS and the BSC.

BTS
transmits
Base Transceiver Station, equipment
and receives radio telephony signals to and from other
telecommunication systems.

that

C-Band
is a frequency allocation for communications
C-Band
satellites. C-Band uses 3.7-4.2GHz for downlink and 5.925-
6.425Ghz for uplink. The lower frequencies that C Band uses
perform better under adverse weather conditions than the Ku
band or Ka band frequencies.

Consortium
Co-financing a project or enterprise undertaken by two or
more banks or financial institutions.

CPE
Customer Premises Equipment, any handset, receiver, set-top
box or other equipment used by the consumer of wireless,
fixed line or broadband services, which is the property of the
network operator and located on the customer premises.

Cyber Attack
A cyber attack is deliberate of exploitation of computer
systems, technology-dependent enterprises, and networks.
Cyber attacks use malicious code to alter computer code,
logic or data, resulting in disruptive consequences that
can compromise data and lead to cyber crimes, such as
information and identity theft.

APPENDIX 5:
GLOSSARY

2G
The abbreviation for second generation: relating to or using a
technology that gave mobile phone users improved features
and allowed people to send text messages (SMS).

for

term

generic

3G
generation mobile
The
telecommunications technology. 3G offers high speed
connections to cellular phones and other mobile devices,
enabling video conference and other applications requiring
broadband connectivity to the internet.

third

4G/LTE
A fourth generation super fast internet network technology
based on Internet Protocol (IP) that makes the process of data
transfer much faster and stable.

ADS
American Depositary Share (also known as an American
Depositary Receipt, or an “ADR”), a certificate traded on a
U.S. securities market (such as New York Stock Exchange)
representing a number of foreign shares. Each of our ADS
represents 200 of our Series B shares having a par value of
Rp50 per share (“common stock”).

ARPU
Average Revenue per User, a measure used primarily by
telecommunications and networking companies which states
how much money we make from the average user. It is defined
as the total revenue from specified services divided by the
number of consumers for those services.

Backbone
The main telecommunications network consists of transmission
and switching facilities that connect multiple network access
nodes. The transmission network between node and switching
facilities includes microwaves, submarine cables, satellites,
optical fibers, and other transmission technologies.

Balanced Scorecard
One of the tools used by managers to measure the
performance of a business seen from four perspectives. The
four perspectives consist of a financial perspective, a customer
perspective, an internal business process perspective, and a
growth and learning perspective.

248

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Reporte-Commerce
Electronic Commerce, the buying and selling of products or
services over electronic systems such as the internet and
other computer networks.

GMS
General Meeting of Shareholders, which may be an Annual
General Meeting of Shareholders (“AGMS”) or an Extraordinary
General Meeting of Shareholders (“EGMS”).

EBITDA
Adjusted EBITDA is defined as earnings before interest, tax,
depreciation and amortization. Adjusted EBITDA and other
related ratios in this Annual Report serve as additional
indicators on our performance and liquidity, which is a non-
GAAP financial measure.

GPRS
General Packet Radio Service, a data packet switching
technology that allows information to be sent and received
across a mobile network and only utilizes the network when
there is data to be sent.

Edutainment
Education and Entertainment.

e-Procurement
electronic procurement, the process of procuring goods and
services carried out online.

Fiber Optic
Cables using optical fiber and laser technology through which
modulating light beams representing data are transmitted
through thin filaments of glass.

Fixed Line
Fixed wireline and fixed wireless.

Fixed Wireline
A fixed wire or cable path linking a subscriber at a fixed location
to a local exchange, usually with an individual phone number.

Gateway
A peripheral that bridges a packet based network (IP) and a
circuit based network (PSTN).

GraPARI
Telkomsel service network.

GSM
Global System for Mobile Telecommunication, a European
standard for digital cellular telephone.

Home passed
A connection with access to fixed line voice, IPTV and
broadband services.

ICT Platform
An abbreviation of
information and communications
ICT platform services consist of
technology platform.
enterprise connectivity, IT services, data center and cloud
services, business process outsourcing, device & hardware
sales and services.

Insider Trading
The trading of a public company’s stock or other securities
(such as bonds or stock options) by individuals with access
to nonpublic information about the company. In various
countries, some kinds of trading based on insider information
is illegal.

Gbps
Gigabyte per second, the average number of bits, characters,
or blocks per unit time passing between equipment in a data
transmission system. This is typically measured in multiples
of the unit bit per second or byte per second.

Intranet
A computer network based on TCP / IP protocols such as the
internet, however the usage is restricted or closed and only certain
people or users who can log on and use the intranet network.

249

MHz
Megahertz, a unit of measure of frequency equal to one million
cycles per second.

IP
Internet Protocol, the method or protocol by which data is
sent from one computer to another on the internet.

Mobile Broadband
The marketing term for wireless internet access through a
portable modem, mobile phone, USB Wireless Modem or other
mobile devices.

IPO
Initial Public Offering, the first sale of stock by a Company to
the public.

IPTV
Internet Protocol Television, a system through which television
services are delivered using the Internet Protocol suite over
a packet-switched network such as the internet, instead of
being delivered through traditional terrestrial, satellite signal,
and cable television formats.

ISP
Internet Services Provider, an organization that provides
access to the internet.

Ku-Band
The Kurtz-under band (Ku band) is a frequency range or
segment of the radio spectrum 11-17GHz. This range is often
used for satellite communications, including VSAT, and some
types of satellite antennas.

Network Access Point
A public network exchange facility where ISPs connected with
one another in peering arrangements.

OJK
Otoritas Jasa Keuangan, or the Financial Services Authority,
the successor of Bapepam-LK, is an independent institution
with authority to regulate and supervise financial services
activities in the banking sector, capital market sector as well
as non-bank financial industry sector.

PSA 62
Audit Standard Statement No. 62 (PSA 62) is a statement
issued by the
Indonesian Accounting Association which
states that in conducting audits of financial statements
of government entities or other recipients of government
financial assistance which conducts stock offers through the
capital market, auditors must comply with the provisions of
the Capital Market Law.

Market Cap
Market cap (market capitalization) is the market value of a
publicly traded company’s outstanding shares.

PSTN
Public Switched Telephone Network, a telephone network
operated and maintained by us and the KSO Units for us and
on our behalf.

Mbps
Megabyte per second, a measure of speed for digital signal
transmission expressed in millions of bits per second.

Reverse Stock
The compression of shares to become smaller amount of
shares using higher value per share.

Metro Ethernet
Bridge or relationship between locations that are apart
geographically, this network connects LAN customers at
several different locations.

RMJ
Regional Metro
Junction, an
installation service in one regional (region/province).

inter-city cable network

250

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportSatellite Transponder
Radio relay equipment embedded in a satellite that receives
signals from earth and amplifies and transmits the signal back
to the earth.

Stock split
Splitting the number of shares becoming more shares using
lower value per share.

SCCS
Submarine Communications Cable System, a cable laid
on the sea bed between land-based stations to carry
telecommunication signals across stretches of ocean.

Switching
A mechanical, electrical or electronic device that opens
or closes circuits, completes or breaks an electrical path,
or selects paths or circuits, used to route traffic in a
telecommunications network.

SIM cards
Subscriber Identity Module card is a stamp-sized smart
card placed on a mobile phone that holds the key to the
telecommunication service.

TIMES
Telecommunication,
and Service.

Information, Media,

Edutainment

SMS
Short Messaging Service, a technology allowing the exchange
of text messages between mobile phones and between fixed
wireless phones.

TPE
A normalized way to refer to transponder bandwidth it
simple means how many transponders would be used if
the same total bandwidths used only 36 Mt transponder
(1 TPE = 36 MHz).

SOA
Sarbanes-Oxley Act, effective from July 30, 2002, also
known as Public Company Accounting Reform and Investor
Protection Act and Corporate and Auditing Accountability and
Responsibility Act.

SOE
State-Owned Enterprise (Badan Usaha Milik Negara/BUMN)
is a government-owned company, state-owned company,
state-owned entity, state-owned company, public-owned
company, or parastatal which is a legal entity formed by the
Government to conduct commercial activities on behalf of the
Government as the owner.

SOX Section 404
SOX Section 404 (Sarbanes-Oxley Act Section 404) mandates
that all publicly-traded companies must establish internal
controls and procedures for financial reporting and must
document, test and maintain those controls and procedures
to ensure their effectiveness.

Treasury Stock
Company’s share that has been buy back from the outstanding
share temporarily.

UMTS
Universal Mobile Telephone System, one of the 3G mobile
systems being developed within the ITU’s IMT2000 framework.

VSAT
Very Small Aperture Terminal, a relatively small antenna,
typically 1.5 to 3.0 meters in diameter, placed in the user’s
premises and used for two-way communications by satellite.

Whistleblower
The term for employees, former employees or workers,
members of institutions or organizations who report actions
that are considered to violate the regulation to the authorities.

251

Keyword

Descripstions

Keyword

Descripstions

CONS

CORE

COSO

CPO

CSI

CSR

CSS

DER

DMCS

DRP

DSAK

DSP

DWDM

EBIS

Consumer Service

Center of Reformation

Committee of Sponsoring
Organizations of the Treadway
Commission

Crude Palm Oil

Customer Satisfaction Index

Corporate Social Responsibility

Corporate Strategic Scenario

Debt-To-Equity Ratio

Dumai-Malacca Cable System

Deposite Receipt

Disaster Recovery Plan

Depositary Shares

Dewan Standar Akuntansi Keuangan
or Board of Financial Accounting
Standard

Digital & Strategic Portfolio

Dense Wavelength Division
Multiplexing

Enterprise & Business Service

Edutainment

Education and Entertainment

EDGE

Enhanced Data Rates for GSM
Evolution

EMSHUB

Employee Shuttle Bus

ERM

ESOP

EVP

Enterprise Risk Management

Employee Stock Ownership Program

Employee Volunteer Program

Ernst & Young

FRAMES

Fraud Management System

GCG

GGSN

GHz

GSD

GTG

GTT

Harbolnas

HCM

HIS

HKI

Fiber Optic

Functional Unit

Good Corporate Governance

Gateway GPRS Support Node

Gigahertz

Graha Sarana Duta

GraPARI TelkomGroup

Go-Jek, Tokopedia, and Traveloka

Hari Belanja Online Nasional or
Nation Online Shopping Day

Human Capital Management

High Speed Internet

Hak Kekayaan Intelektual or
Intellectual Property Rights

A&A

AAG

APJI

APSAT

ASEAN

ATL

ATM

AUP

B2B

BAKTI

BATIC

BCM

BCP

Alliance & Acqusition

Asia-America Gateway

Air Conditioner

Application Owner

Asosiasi Penyelenggara Jasa
Internet or Internet Service Provider
Association

Asia Pasific Satellite System

Association of Southeast Asian
Nations

Above The Line

Anjungan Tunai Mandiri

Agreed Upon Procedure

Bussiness to Bussiness

Bahan Berbahaya dan Beracun or
Hazardous and Toxic Substances

Badan Aksesibilitas Telekomunikasi
dan Informasi or Telecommunication
and Information Accessibility Agency

Bali Annual Telkom International
Conferences

Business Continuity Management

Business Continuity Plan

BEI / IDX

Bursa Efek Indonesia atau Indonesia
Stock Exchange

Board of Commisioners

Board of Directors

Badan Penyelenggara Jaminan Sosial
or Social Insurance Administration
Organization

Business Process Outsourcing

Biro Pusat Statistik

Batam-Singapore Cable System

Below The Line

Compound Annual Growth Rate

Capital Expenditure

Community Development Center

Customer Dissatisfaction Index

Content Delivery Networks

Chief Executive Officer

Chief Financial Officer

Customer Facing Unit

Customer Loyalty Index

Calendar of Event

BOC

BOD

BPJS

BPO

BPS

BSCS

BTL

CAGR

CAPEX

CDC

CDI

CDN

CEO

CFO

CFU

CLI

COE

252

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportKeyword

Descripstions

Keyword

Descripstions

HRM

HSDPA

IAS

ICOFR

ICPF

IDN

IFRS

IGG

IICD

IMS

IoT

IPLC

ISAK

ISO

Human Research

Human Resource Management

High Speed Downlink Packet Access

Internal Audit

International Accounting Standards

Internal Control Over Financial
Reporting

Indonesia Creative Product Fetival

Indonesian Digital Network

International Financial Reporting
Standard

Indonesia Global Gateway

Indonesian Institute for Corporate
Directorship

Integrated Management System

Internet of Things

International Data Center or
International Connectivity

Interpretasi Standar Akuntansi
Keuangan or Interpretation of
Statements of Financial Accounting
Standards

International Organization for
Standardization

Information Technology

JaKaLaDeMa

Jawa Kalimantan Sulawesi Denpasar
Mataram

Jo.

KAP

KEMPR

KEU

KIPAS

KNR

KOWANI

KPEI

Juncto

Kantor Akuntan Publik or Public
Accountant Firm

Komite Evaluasi dan Monitoring
Perencanaan dan Risiko or
Committee for Planning and Risk
Evaluation and Monitoring

Keuangan or Finance

Komunitas Provokasi Aktivasi
or Comunity Cultural Activation
Provocation

Kontrak Manajemen or Contract
Management

Komite Nominasi dan Remunerasi
or Committee for Nomination and
Remuneration

Kongress Wanita Indonesia or
Indonesian Woman Congress

Kliring Penjaminan Efek Indonesia
or The Indonesian Clearing and
Guarantee

KPI

KPKU

KPPU

KSEI

Kwh

LED

Key Performance Indicator

Kriteria Penilaian Kinerja Unggul or
Criteria for Superior Performance
Appraisal

Komisi Pengawasan Persaingan
Usaha or Commission for the
Supervision of Business Competition

Kustodian Sentral Efek Indonesia
or The Indonesia Central Securities
Depository

Kilo Watt Hour

Light Emitting Diode

LSA Expenses

Long Service Award Expenses

LSE

M&A

M2M

MDI

MNO

MSE

MTN

MVNO

NAP

NITS

NPS

NPWP

NYSE

OCS

OECD

OLO

ONT

OSDSS

OSP-FO

OTT

PaDi

PANDI

PAYU

PE-VPN

PII

London Stock Exchange

Merger & Acquisition

Machine to Machine

Metra Digital Investama

Mobile Network Operator

Micro and Small Enterprices

Medium Term Notes

Mobile Virtual Network Operator

Network Access Point

Network, IT & Solution

Net Promotor Score

Nomor Pokok Wajib Pajak or Tax
Identification Number

New York Stock Exchange

Online Charging System

Organization for Economic Co-
operation and Development

Other Licensed Operator

Optical Network Termination

Operational and Strategic Decision
Support Systems

Outside Plan Fiber Optic

Over The Top

Pustaka Digital or Digital Library

Pengelola Nama Domain Internet
Indonesia or Indonesian Internet
Domain Name Registry

Pay As You Use

Provider Edge Virtual Private Network

Persatuan Insiyur Indonesia

253

Sulawesi Maluku Papua Cable System

Standard Operating Procedures

Sarbanes Oxley Act

Sistem Pengendalian Internal or
Internal Control System

Sustainability Reporting Award

Set Top Box

Sentral Telepon Otomat or Private
Automatic Branch Exchange

Tele Account Management

Tanda Daftar Perusahaan or
Company Registration Certificate

Trade Expo Indonesia

Tunjangan Hari Raya or Religious
Festivity Allowance

Telkom Indonesia International

Telkom Integrated Quality Assurance

Thailand-Indonesia-Singapore

Kode Saham Telkom di New York
Stock Exchange

Kode Saham Telkom di Bursa Efek
Indonesia

Telkom Landmark Tower

Technical Support Agreement

Universal Service Obligation

UMTS Terrestrial Radio Access
Network

Voice Over Data

Voice over Internet Protocol

Vice President

Virtual Private Network

Whistleblowing System

World Hub Operation Command
Center

Wholesale and International Business

Wholesale and International Service

Whistleblower Protection Officer

Keyword

SMPCS

SOP

SOX

SPI

SRA

STB

STO / PABX

TAM

TDP

TEI

THR

TII

TIQA

TIS

TLK

TLKM

TLT

TSA

USO

UTRAN

VOD

VoIP

VPN

WBS

WHOCC

WIB

WINS

WPO

Descripstions

Program Kemitraan Bina Lingkungan
or Partnership and Community
Development Program

Perusahaan Negara or State
Company

Peraturan Otoritas Jasa Keuangan
or Regulation of Indonesia Financial
Services Authority

Point of Presence

Plain Old Telephone Service

Pernyataan Standar Akuntansi
Keuangan or Statements of Financial
Accounting Standards

Quality Management System

Quality of Service

Radio Access Network

Rencana Jangka Panjang Perusahaan
or Company’s Long Term Plan

Rencana Kerja Anggaran dan
Pendapatan or Budgeting and
Revenue Work Plan

Return on Asset

Return on Equity

Standar Akuntansi Keuangan or
Financial Accounting Standard

Security and Safety

Service Control Points

Sumber Daya Manusia

South East Asia – Middle East –
Western Europe 5

South East Asia-United States

Securities and Exchange Commission

Surat Edaran Otoritas Jasa Keuangan
or Circular Letter of Indonesia
Financial Service Authority

Surat Izin Usaha Perdagangan or
Business Permit

South East Asia Japan

Sambungan Langsung Internasional
or International Direct Dialing

Small Medium Business

Supply Management and Logistic
Enhancement

Sistem Manajemen Keselamatan dan
Kesehatan Kerja atau Occupational
Health and Safety Assessment
System

Keyword

PKBL

POJK

PoP

POTS

PSAK

QMS

QoS

RAN

RJPP

RKAP

ROA

ROE

SAK

SAS

SCP

SDM

SEA-ME-WE-5

SEA-US

SEC

SEOJK

SIUP

SJC

SLI

SMB

SMILE

SMK3 / OHSAS

254

PT Telkom Indonesia (Persero) Tbk | 2018 Annual Report APPENDIX 7:
CIRCULAR LETTER TO FINANCIAL SERVICES AUTHORITY
NO.30/SEOJK.04/2016 CROSS REFERENCE

No.

Criteria

Explaination

Pages

Form of Annual Report

Annual Report should be able to be reproduced in printed document copy and electronic
document copy

Annual Report presented as printed document should be printed on light-colored, good
quality, A4 sized paper, bound and possible to be reproduced in good quality

Annual Report presented as electronic document copy is the Annual Report converted to pdf
format

√

Content of Annual Report

General Requirements

Annual Report
should at
least contain
information about:

1) Key financial data highlight;

2) Share information (if any);

3) Directors’ report;

4) Board of commissioners’ report;

5) Issuer or public company’s profile;

6) Management discussion and analysis;

7) Issuer or public company’s governance;

8) Issuer or public company social and environmental responsibility;

9) Audited annual financial report; and

18-19

30-39

24-29

10-12

92-145

146-215

216-227

268

10) Statement of directors and board of commissioners on the

40-41

responsibility for the annual report.

Annual Report may present information in the form of images, graphs, tables, and/or
diagrams by including clear title and/or description to be easily read and understood.

Description of The Contents of Annual Report

Key Financial Data
Highlight

Highlights of Key Financial Data presents information in comparative
form over a period of 3 (three) financial years or since the commencement
of business if the Issuer or Public Company has been running for less
than 3 (three) years, and should at least contain:

√

1) Revenue;

2) Gross profit;

3) Profit (loss);

4) Profit (loss) attributable to parent and non-controlling interests;

5) Comprehensive profit (loss);

6) Comprehensive profit (loss) attributable to parent and non-

controlling;

7) Net profit (loss) per share;

8) Total assets;

9) Total liabilities;

10) Total equity;

255

Criteria

Explaination

Pages

Share Information

11) Profit (loss) to total asset ratio;

12) Profit (loss) to equity ratio;

13) Profit (loss) to revenue ratio;

14) Current ratio;

15) Liabilities to equity ratio;

16) Liabilities to total asset ratio; and

17) Other financial information and ratios relevant to issuer or public

company and their industry type.

Information of share (if any) at least contains:
1) Shares issued for three months period (if any) presented in
comparative form in the last 2 (two) financial years at least contain:
a) Outstanding shares;
b) Market capitalization by the price in the stock exchange where

the share is listed;

c) Highest, lowest, and closing share price by the price in the stock

exchange where the share is listed; and

d) Traded volume in the stock exchange where the share is listed.

2) In the event of corporate actions such as stock split, reverse stock,
stock dividend, bonus share, and par value decrease, share price
information referred to in point 1) should then include explanation
concerning at least:
a) Date of corporate actions;
b) Ratio of stock split, reverse stock, stock dividend, bonus share,

and par value decrease;

c) Amount of outstanding shares before and after corporate

actions; and

d) Share price before and after corporate actions.

18-19

3) In the event that the company’s share trade is suspended and/or
delisted during the year reported, Issuer or Public Company should
explain the reason for such suspension and/or delisting; and

4) In the event that such suspension and/or delisting referred to in
point 3) still goes on until the final period of Annual Report, the
Issuer or Public Company should explain the action carried out by
the company in solving the matter.

Tidak ada
suspension/
delisting

256

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNo.

Criteria

Director’s Report

Pages

30-39

Explaination

Report from the Directors at least contain:
1) Brief description about the performance of issuer or public company,

that at least include:
a) Strategies and strategic policies of issuer or public company;
b) Comparison between achievement of results and targets; and
c) Constraints experienced by issuer or public company;

2) Description of business prospects;

3) Implementation of issuer or public company’s governance; and

4) Changes in the composition of the board of directors and reasons

for such changes (if any).

Board of
Commissioners’
Report

Report from Board of Commissioners’ at least contains:
1) Assessment on the performance of the directors in managing the

24-29

issuer or public;

2) Supervision of implementation of issuer or public company’s

strategies;

3) Views on the business prospects of issuer or public company

established by the Board of Directors;

4) Views on the implementation of issuer or public company’s

governance;

5) Changes in the composition of board of commissioners and reasons

for such changes; and

6) Frequency and method of advising the member of directors.

Profile of Issuer or
Public Company

The Issuer or Public Company’s Profile at least contains:
1) Name of issuer or public company, including, if any, changes in
names, reasons for such changes, and the effective date of name;

2) Access to

issuer or public company,

including branch or
representative offices that enables people to obtain the information
of:
a) Address;
b) Telephone number;
c) Facsimile number;
d) E-mail address; and
e) Web site address;

3) Brief history of the issuer or public company;

4) Vision and mission of issuer or public company;

5) Business activities under the latest articles of association, business
activities conducted during the financial year, and type of goods
and/or services offered;

6) Organizational structure of issuer or piblic company in a form of
chart, of at least to 1 (one) structural level under the directors, with
name and position included;

10-12

10-11

46-47

44-45

48-49

56-57

257

Criteria

Explaination

7) Profile of the directors, consisting of at least:

a) Name and position that corresponds to the duties and

Pages

66-73

responsibilities;
b) Latest photograph;
c) Age;
d) Nationality;
e) Educational background;
f) Employment record, consisting of:

1. Legal basis of Board of Directors members appointment for

the first time at the related issuer or public company;

2. Double position, either as member of directors,
commissioners, and/or committee as well as other positions
(if any); and

3. Work experience and the time period both inside and outside

the issuer or public company;

g) Education and/or trainings participated by member of directors
in enhancing the competencies within a financial year (if any);
and

h) Affiliation with other member of directors, commissioners, and
major shareholders (if any), consisting of the names of affiliated
parties;

8) Profile of Board of Commissioners, consisting of:

58-64

a) Name;
b) Latest photograph;
c) Age;
d) Nationality;
e) Educational background;
f) Employment record, consisting of:

1. Legal basis of non-Independent Board of Commissioners
members appointment at the related Issuer or Public
Company;

2. Legal basis of Independent Board of Commissioners members

appointment at the related Issuer or Public Company;

3. Double position, either as member of Board of Commissioners,
Directors, and/or Committee, as well as other positions (if
any); and

4. Work experience and the time period both inside and outside

the Issuer or Public Company;

g) Education and/or trainings participated by member of Board of
Commissioners in enhancing the competencies within a financial
year (if any);

h) Affiliation with other member of Board of Commissioners and
Major Shareholders (if any), consisting of the names of affiliated
parties; and
Independence Commissioners’ disclosure of independency in
terms of the board has served more than 2 period (if any); and
j) Education and/or trainings participated by member of Board of
Commissioners in enhancing the competencies within a financial
year (if any);

258

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNo.

Criteria

Explaination

9) In the event of a change in the composition of the Board of
Commissioners and/or Directors taking place after the fiscal year
until the deadline of Annual Report submission, management
composition stated in the Annual Report is then the composition of
the Board of Commissioners and/or Directors both the latest and
the previous one;

Pages

58-73

10) Number of employees and description of the range of educational

74-77

background and ages in a financial year;

11) Name of Shareholders and ownership percentage at the end of

78-79

financial year. Information includes among others:
a) Shareholders having 5% (five percent) or more shares of Issuer

or Public Company;

b) Member of Directors and Board of Commissioners owning

shares of Issuer or Public Company; and

c) Group of public shareholders each having less than 5% (five

percent) share ownership of Issuer or Public Company;

12) Number of shareholders and ownership percentage at the end of

78-79

financial year presented in the following classifications:
a) Local institution ownership;
b) Foreign institution ownership;
c) Local individual ownership; and
d) Foreign individual ownership;

13) Information concerning major and controlling shareholder of Issuer
or Public Company, both direct and indirect, until the individual
owner, presented in the form of scheme or diagram;

14) Names of subsidiaries, associated companies, joint ventures in
which Issuer or Public Company owns control with the entities,
along with the percentage of share ownership, line of business,
total asset, and operating status of such companies (if any); For
subsidiaries, information of company’s address should be added;

15) Chronology of shares listing, number of shares, share value, and
offering price from the beginning of listing up to the end of the
financial year and name of Stock Exchange where Issuer or Public
Company’s shares are listed (if any);

16) Chronology of other securities listing other than the securities
reffered to in point 15) that contains the least securities’ name, year
of issuance, maturity date, offering value, and rating (if any);

17) Names and addresses of
supporting professionals;

institutions and/or capital market

18) In the event that capital market supporting professionals provides
services periodically to the Issuer or Public Company, there should
be information on services provided, fees and period of assignment;
and

80-81

80-86

87-88

89-90

259

Criteria

Explaination

Management
Discussion and
Analysis

19) Award and certification received by the Issuer or Public Company,
both national and international scale during the fiscal year (if any),
that includes:
a) Name of Award and/or certification;
b) Rewarding body or institution; and
c) Validity period of the award and/or certification (if any).

Annual Report must contain discussion and analysis of Financial
Report and other significant information by emphasizing material
changes taking place during the year under review. It should at least
contain:
1) Operational review by business segment in accordance with the

industry of Issuer or Public Company, consisting of at least:
a) Production, which

includes process, capacity and

its

development;
b) Revenue; and
c) Profitability.

2) Comprehensive financial performance including a comparison
between the financial performance of the last two financial years,
explanation on the causes of such changes and their impact, which
among others includes:
a) Current assets, non-current assets, and total assets;
b) Short-term liabilities, long-term liabilities, and total liabilities;
c) Equity;
d) Revenue, expenses and profit (loss), other comprehensive

revenue and comprehensive income (loss); and

e) Cash flow;

Pages

50-55

94-111

118-131

3) Capability to pay debts by presenting relevant ratio;

4) Collectable accounts of Issuer or Public Company receivable by

presenting relevant ratio;

5) Capital structure and Management’s policies on the capital

structure, as well as basis of the policy making;

132

137

133

6) Discussion on material commitment for the investment of capital

135-136

goods with explanation concerning:
a) Purpose of such commitment;
b) Sources of funds expected to fulfill to the commitment;
c) Currency of denomination;
d) Steps taken by the Issuer or Public Company to protect the

position of related foreign currency against risks;

7) Discussion on capital goods investments realized within the last

134

Financial year, that at least contains:
a) Type of capital goods investments;
b) Purpose of capital goods investments;
c) Value of capital goods investments issued.

8) Material

information and facts occurring after the date of

accountant’s report (if any);

9) Business prospects of Issuer or Public Company in relation to
the industry, economy in general, and international market, and
accompanied with the supporting quantitative data from reliable
Data resource;

137

141

260

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNo.

Criteria

Explaination

10) Comparison between target/projection at the beginning of financial

year and the realization, that includes:
a) Revenue;
b) Profit (loss);
c) Capital structure; or
d) Other information deemed necessary by the Issuer or Public

Company.

Pages

142

11) Target/projection of the Issuer or Public Company within 1 (one)

142

year, that includes:
a) Revenue;
b) Profit (loss);
c) Capital structure;
d) Dividend policy; or
e) Other information deemed necessary by the Issuer or Public

Company.

12) Marketing aspects of the goods and/or services of Issuer or Public
Company, including among others marketing strategies and market
Share;

112-117

13) Description of dividend during the past 2 (two) financial years (if

143

any), includes at least:
a) Dividend policy;
b) Date of cash dividend payment and/or date of non-cash dividend

Distribution;

c) Amount of dividend per share (cash and/or non-cash); and
d) Amount of dividend paid per year;

14) Realization of the use of proceeds from Public Offering is under the

143

Following conditions:
a) In the event that during the financial year reported, the Issuer is
Obliged to submit Report on Realization of Use of Proceeds, then
Annual Report should disclose accumulated realization of use of
Proceeds until the end of the financial year; and

b) In the event that there is a change in the use of proceeds as
stipulated in Financial Services Authority Regulation on Report
on Realization of Use of Proceeds, the Issuer should then explain
such change;

144

acquisition,

divestment, merge,

15) Material information (if any) concerning, among others investment,
expansion,
debt/capital
restructuring, affiliated transaction, and transaction with conflict of
interests, taking place during the financial year (if any). Information
includes:
a) Date, value and object of transaction;
b) Name of transacting parties;
c) Nature of affiliated relation (if any);
d) Explanation of fairness of transaction; and
e) Compliance with related rules and regulations.

16) Description of changes in regulation which have a significant effect
on the Issuer or Public Company and its impacts on the financial
report (if any); and

144

17) Changes in the accounting policy, rationale and impacts on the

148

financial statement (if any);

261

Criteria

Explaination

Governance of
Issuer or Public
Company

Governance of Issuer or Public Company at least contains brief
description of:
1) Directors, consisting of among others:

Pages

189-194

a) Scope of work and responsibility of each member of the

Directors;

b) Disclosure that the Directors have Directors’ Charter;
c) Disclosure of procedures, basis of decision, and amount of
remuneration for members of Directors, along with the relation
between remuneration and the performance of Issuer or Public
Company;

d) Disclosure of company policies and the implementation on
frequency of Directors meetings, including joint meetings with
the Board of Commissioners and attendance of members of
Directors in such meetings;

e) Disclosure of resolutions of GMS of 1 (one) previous year and the
realization during the fiscal year, along with reasons in the event
that there is a resolution not yet realized:
1. Resolutions of GMS realized in one financial year; and
2. Reasons in the event that there is a resolution not yet

realized.

f) Disclosure of resolutions of GMS during financial year, that

includes:
1. Resolutions of GMS realized in one financial year; and
2. Reasons in the event that there is a resolution not yet

realized; and

g) Disclosure of company policies on performance assessment of

members of Directors;

2) Board of Commissioners, consisting of among others:

169-175

a) Description of responsibility of the Board of Commissioners;
b) Disclosure that the Board of Commissioners has Board of

Commissioners’ charter;

c) Disclosure of procedures, basis of decision, and amount of

remuneration for members of Board of Commissioners;

d) Disclosure of company policies and the implementation on
frequency of Board of Commissioners meetings, including joint
meetings with the Directors, and attendance of members of
Board of Commissioners in such meetings;

e) Disclosure of

Issuer or Public Company’s policies on
performance assessment of members of Directors and Board
of Commissioners and its implementation, including among
others:
1) Procedure of performance assessment implementation;
2) Criteria of assessment; and
3) Parties conducting the assessment.

f) Disclosure of performance assessment of committee supporting

the duties of Board of Commissioners; and

g) In the event that the Board of Commissioners did not establish
least

Committee of Nomination and Remuneration, the
information to disclose includes:
1) Reasons for not establishing a committee; and
2) Procedure of nomination and remuneration implemented

during financial year;

262

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNo.

Criteria

Explaination

3) Syariah Supervisory Board, for Issuer or Public Company running
business under the principles of Syariah as expressed in the Articles
of Association, contains at least:
a) Name;
b) Tasks and responsibilities of Syariah Supervisory Board; and
c) Frequency and method of advising and supervisory on the
compliance of Syariah Principles in Capital Market toward the
Issuer or Public Company;

4) Audit Committee, consisting of among others:
a) Name and position in the committee;
b) Age;
c) Nationality;
d) Educational background;
e) Employment record, consisting of:

1. Legal basis of appointment as member of committee;
2. Double position, either as member of Board of Commissioners,
directors, and/or committee and other positions (if any); and
3. Work experience and the time period, both inside and outside

the Issuer or Public Company;

f) Period of service of Audit Committee members;
g) Disclosure of independence of Audit Committee;
h) Disclosure of company policies and the implementation on
frequency of Audit Committee meetings and the attendance of
Audit Committee members in such meetings;

i) Education and/or trainings participated within a financial year

(if any); and

j) Brief description activities carried out by Audit Committee during
the financial year based on what is stated in Audit Committee
Charter;

Pages

Tidak relevan

176-180

263

176-184

No.

Criteria

Explaination

5) Other committees the Issuer or Public Company has in order
to support the function and tasks of Directors and/or Board of
Commissioners, such as Nomination and Remuneration Committee,
consisting of among others:
a) Name and position in the committee;
b) Age;
c) Nationality;
d) Educational background;
e) Employement record, consisting of:

1. Legas basis of appointment as committee member;
2. Double position, either as member of Board of Commissioners,
Directors and/or committee and the other positions (if any);
and

3. Work experience and the time period both inside and outside

the Issuer or Public Company;
f) Period of service of committee members;
g) Description of the tasks and responsibilities;
h) Disclosure that the committee has charter of committee;
i) Disclosure of independence of committee members;
j) Disclosure of company policies and the implementation on
frequency of committee meetings and the attendance of
committee members in such meetings;

k) Education and/or trainings participated within a financial year

(if any); and

l) Brief description activities carried out by committee during the

financial year;

6) Corporate Secretary, consisting among others:

195-197

a) Name;
b) Domicile;
c) Employment record, consisting of:

1. Legal basis of appointment as Corporate Secretary; and
2. Work experience and the time period both inside and outside

the Issuer or Public Company;

d) Educational background;
e) Education and/or trainings participated within a financial

year; and

f) Brief description activities carried out by Corporate Secretary

during the financial year;

264

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportPages

198-201

No.

Criteria

Explaination

7) Internal Auditing Unit, consisting among others:

a) Name of Internal Auditing Unit’s chief;
b) Employment record, consisting of:

1. Legal basis of appointment as Internal Auditing Unit’s chief;

and

2. Work experience and the time period both inside and outside

the Issuer or Public Company;

c) Qualification/certification as an Internal Audit (if any);
d) Education and/or trainings participated within a financial year;
e) Structure and position of Internal Auditing Unit;
f) Description of tasks and responsibilities of Internal Auditing

Unit;

g) Disclosure that the the unit has charter Internal Auditing Unit;

and

h) Brief description of tasks implementation of Internal Auditing

Unit during the financial year;

8) Description of internal control system implemented by Issuer or

201-202

Public Company, consisting of at least:
a) Operational and financial control, along with compliance with

other prevailing rules and regulations; and

b) Review on effectiveness of internal control system;

9) Risk management system implemented by Issuer or Public Company,

203-208

consisting of at least:
a) General description of risk management system of Issuer or

Public Company;

b) Types of risks and efforts to manage such risks; and
c) Review on effectiveness of the risk management system of

Issuer or Public Company;

10) Material litigation faced by the

Issuer or Public Company,
subsidiaries, present members of the Board of Commissioners and
Directors (if any), including among others:
a) Material of the case/claim;
b) Status of settlement of case/claim; and
c)

Impacts on the financial condition of the Issuer or Public
Company;

11) Information on administrative sanctions to

Issuer or Public
Company, members of the Board of Commissioners and Directors,
by capital market authority and other authorities during the fiscal
year (if any);

212

12) Information on code of conducts and culture of Issuer or Public

214

Company (if any) consisting of:
a) Main points of code of conducts;
b) Form of socialization of code of conducts and efforts to enforce

it; and

c) Disclosure of that code of conducts is applicable to member of
Directors, Board of Commissioners, and employers of Issuer or
Public Company;

265

Criteria

Explaination

13) Information on corporate culture or corporate values (if any);

14) Explanation on employees and/or Management share ownership
program carried out by Issuer or Public Company, including among
others amount, period of time, requirements for eligible employees
and/or Management, and exercise price (if any):
a) Amount of share and/or options;
b) Time period of exercise;
c) Requirements for eligible employees and/or Management; and
d) Exercise price;

15) Explanation on Whistleblowing System at the Issuer or Public
Company to report misconducts causing potential loss to the
company or the stakeholders (if any), consisting of among others:
a) Procedure to submit whistleblowing report;
b) Protection for whistleblower;
c) Handling of whistleblowing;
d) Party managing whistleblowing; and
e) Results of whistleblowing handling, consisting of at least:

1. Number of whistleblowing registered and processed in

financial year; and

2. Follow up of whistleblowing;

Pages

215-217

211

209-210

16) Implementation of Public Company Governance Guidelines for
Issuer that issues Equity Securities or Public Company, consisting
of:
a) Disclosure of implemented recommendations; and/or
b) Explanation concerning unimplemented

recommendation,

including reasons for such conditions and alternatives (if any);

150-156

266

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportNo.

Criteria

Explaination

Social and
Environmental
Responsibility of
Issuer or Public
Company

Information on Issuer or Public Company’s social and environmental
responsibility consisting of policies, types of programs, and cost, in
relation of the aspects of among others:
a) Environment, among others:

1. Use of environmentally friendly and recyclable material and

Pages

228

energy;
Issuer or Public Company’s waste management system;

2.
3. Mechanisms of complaints on environmental concern;
4. Certification in the field of environment;

b) Labor practices, occupational health and safety, among others:

222-223

1. Equality in gender and work opportunity;
2. Work facility and safety;
3. Employees turnover;
4. Level of work accident;
5. Eduation and/or training.
6. Remuneration; and
7. Mechanisms of complaints on Employment concern;

c) Social and community development, among others:

1. Use of local work force;
2. Empowerment of the Issuer or Public Company’s surrounding
community, among others by the use of raw materials
produced by the community or provision of education to the
community;
Improvement of social facilities and infrastructure;

3.
4.Other forms of donations; and
5. Communication on anti corruption policy and procedure
in the Issue or Public Company, as well as training on anti
corruption(if any).

225-227

d) Product and/or services responsibility, among others:

220-221

1. Consumers’ health and safety;
2. Product and/or services information; and
3. Facilities for customers’ complaints, number of complaints

and complaints handling.

267

Criteria

Explaination

Pages

2) Issuer or Public Company may disclose information referred to
in point 1) as part of the Annual Report or in a separate report,
such as submitted at the same time as Sustainability Report or
Corporate Social Responsibility Report, and therefore the Issuer or
Public Company is excluded to disclose information on social and
environmental responsibility in the Annual Report; and

3) The report referred to in point 2) is submitted to Financial Services

Authority at the same time as the Annual Report submission.

in accordance with Financial Accounting Standard

The Financial Report contained in the Annual Report should be
presented
in
Indonesia and has been audited by Accountant. The Financial Report
should contain statement regarding responsibility on the Financial
Report in compliance with Regulations in Capital Market sector on
the Directors’ responsibility to the Financial Report or Regulations in
Capital Market sector on periodical report of Securities Companies in
the event that the Issuer is a Securities Company; and

Statement of members of Directors and Board of Commissioners on
the Responsibility for the Annual Report is composed in accordance
to the format of Statement of members of Directors and Board of
Commissioners on the Responsibility for the Annual Report as attached
in the Appendix as an inseparable part of the Circular Letter of FSA.

272

40-41

Audited Financial
Report

Statement of
members Board
of Directors
and Board of
Commissioners on
the Responsibility
for the Annual
Report

268

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportThis page intentionally left blank

269

CONSOLIDATED
FINANCIAL
STATEMENTS

Audited Consolidates Financial Statements 2018
Audited PKBL Financial Statements 2018

270

PT Telkom Indonesia (Persero) Tbk | 2018 Annual ReportPreparation ceremony of TelkomGroup operational task force
for the 2018 IMF-WB Annual Meeting Event.

271

Consolidated financial statements
as of December 31, 2018 and for the year then ended
with independent auditor’s report

PERUSAHAAN PESEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2018 AND FOR THE YEAR THEN ENDED
WITH INDEPENDENT AUDITOR’S REPORT

TABLE OF CONTENTS

Consolidated Statement of Financial Position

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Page

3-4

6-128

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of December 31, 2018
(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

Notes

2018

2017

ASSETS
CURRENT ASSETS
Cash and cash equivalents
Other current financial assets
Trade receivables - net provision for

impairment of receivables
Related parties
Third parties

Other receivables - net of provision for

impairment of receivables

Inventories - net provision for obsolescence
Assets held for sale
Prepaid taxes
Claim for tax refund
Other current assets
Total Current Assets

2c,2e,2u,3,31,36
2c,2e,2u,4,31,36

2g,2u,2ac,5,36
2c,31

2g,2u,36
2h,6
2j,9
2t,26
2t,26
2c,2i,2m,7,31

NON-CURRENT ASSETS
Long-term investments
Property and equipment - net of accumulated depreciation
Intangible assets - net of accumulated amortization
Deferred tax assets - net
Other non-current assets
Total Non-current Assets
TOTAL ASSETS

2f,2u,8
2l,2m,2ab,2ac,9,34
2d,2k,2n,2ab,11
2t,26
2c,2g,2i,2n,2t,2u,10,26,31,36

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade payables

Related parties
Third parties
Other payables
Taxes payable
Accrued expenses
Unearned income
Advances from customers
Short-term bank loans
Current maturities of long-term borrowings
Total Current Liabilities

NON-CURRENT LIABILITIES
Deferred tax liabilities - net
Unearned income
Long service award provisions
Pension benefits and other post-employment

benefits obligations

Long-term borrowings - net of current maturities
Other liabilities
Total Non-current Liabilites
TOTAL LIABILITIES

EQUITY
Capital stock
Additional paid-in capital
Treasury stock
Other equity
Retained earnings
Appropriated
Unappropriated

Net equity attributable to:

Owners of the parent company
Non-controlling interest

TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY

2o,2u,12,36
2c,31

2u,36
2t,26
2c,2u,13,31,36
2r,14
2c,31
2c,2p,2u,15a,31,36
2c,2m,2p,2u,2v,15b,31,36

2t,26
2r,14
2s,30

2s,29
2c,2m,2p,2u,2v,16,31,36
2u,2o,2aa

1c,18
2w,19
2w,20
2f,2u,21

2b,17

17,439
1,304

2,126
9,288

727
717
340
2,749
596
7,982
43,268

2,472
143,248
5,032
2,504
9,672
162,928
206,196

993
13,773
448
1,180
12,769
5,190
1,569
4,043
6,296
46,261

1,252
652
852

5,555
33,748
573
42,632
88,893

4,953
2,455
-
507

15,337
75,658

98,910
18,393
117,303
206,196

25,145
2,173

1,545
7,677

342
631
10
1,947
908
7,183
47,561

2,148
130,171
3,530
2,804
12,270
150,923
198,484

896
14,678
217
2,790
12,630
5,427
1,240
2,289
5,209
45,376

933
524
758

10,195
27,974
594
40,978
86,354

5,040
4,931
(2,541)
387

15,337
69,559

92,713
19,417
112,130
198,484

The accompanying notes form an integral part of these consolidated financial statements.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2018
(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

Notes
2c,2r,22,31

2018

2017

130,784

128,256

REVENUES

Operation, maintenance and telecommunication

service expenses

Depreciation and amortization expenses
Personnel expenses
Interconnection expenses
General and administrative expenses
Marketing expenses
Gain on foreign exchange - net
Other income
Other expenses

OPERATING PROFIT

Finance income
Finance cost
Share of profit of associated companies

PROFIT BEFORE INCOME TAX

2c,2r,24,31
2k,2l,2m,9,11
2c,2r,2s,23,31
2c,2r,31
2c,2r,25,31
2c,2r,31
2q
2l,2r,9c
2r, 9c

2c,31
2c,2p,2r,31
2f,8

INCOME TAX (EXPENSE) BENEFIT

2t,26

Current
Deferred

PROFIT FOR THE YEAR

OTHER COMPREHENSIVE INCOME
Other comprehensive income to be reclassified to profit

or loss in subsequent periods:

Foreign currency translation
Change in fair value of available-for-sale financial assets
Share of other comprehensive income of associated companies
Other comprehensive income not to be reclassified to profit

or loss in subsequent periods:

Defined benefit actuarial gain (loss) - net
Other comprehensive income - net

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Profit for the year attributable to:
Owners of the parent company
Non-controlling interests

Total comprehensive income for the year attributable to:

Owners of the parent company
Non-controlling interests

BASIC EARNING PER SHARE

(in full amount)
Net income per share
Net income per ADS (100 Series B shares per ADS)

2f,2q,21
2u,21
2f,8

2s,29

2b,17

2x,27

(43,791)
(21,406)
(13,178)
(4,283)
(6,137)
(4,214)
68
1,752
(750)

(36,603)
(20,446)
(13,529)
(2,987)
(5,260)
(5,268)
51
1,039
(1,320)

38,845

43,933

1,014
(3,507)
53

1,434
(2,769)
61

36,405

42,659

(9,432)
6
(9,426)

(11,357)
1,399
(9,958)

26,979

32,701

146
(10)
(14)

4,820
4,942

31,921

18,032
8,947
26,979

22,844
9,077
31,921

24
20
(1)

(2,375)
(2,332)

30,369

22,145
10,556
32,701

19,952
10,417
30,369

182.03
18,202.70

223.55
22,354.64

The accompanying notes form an integral part of these consolidated financial statements.

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These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2018
(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

Notes

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES

Total cash receipts from customers and other operators
(Payment) receipts for tax refund
Interest income received
Cash payments for expenses
Cash payments to employees
Cash payments for corporate and final income taxes
Payment for interest costs
Cash payments for value added taxes - net
Other cash (payments) receipts - net

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment
Receipts (placement) in time deposits and available-for-sale

financial assets

Proceeds from insurance claims
Dividen received from associated companies
Purchase of property and equipment
Purchase of intangible assets
Additional contribution on long-term investments
Increase in advances for purchases of property and equipment
Acquisition of businesses - net of acquired cash
Purchase in other assets

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans and other borrowings
Capital contribution of non-controling interests in subsidiaries
Repayments of loan and other borrowings
Cash dividends paid to the Company's stockholder subsidiaries
Cash dividends paid to non-controlling interests of subsidiaries

Net cash used in financing activities

NET INCREASE IN CASH AND CASH EQUIVALENTS

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND

CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS AT END OF YEAR

9
8
9, 38
11, 38
8

15, 16

127,855
2,578
1,036
(54,099)
(12,657)
(10,375)
(3,735)
(3,434)
(1,498)
45,671

629

171
153
9
(31,562)
(2,972)
(337)
(300)
(420)
(461)
(35,090)

35,364
34
(27,113)
(16,609)
(10,134)
(18,458)

(7,877)

171

25,145

17,439

125,111
585
1,431
(49,604)
(11,739)
(11,846)
(3,133)
(1,942)
542
49,405

1,367

(676)
155
28
(32,294)
(508)
(269)
(490)
(243)
(77)
(33,007)

12,169
50
(9,289)
(11,627)
(12,355)
(21,052)

(4,654)

29,767

25,145

The accompanying notes form an integral part of these consolidated financial statements.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)
PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2018 and For the Year Then Ended
(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL

a. Establishment and general information

Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (the “Company”) was
originally part of “Post en Telegraafdienst”, which was established and operated commercially in
1884 under the framework of Decree No. 7 dated March 27, 1884 of the Governor General of the
Dutch Indies. Decree No. 7 was published in State Gazette No. 52 dated April 3, 1884.

In 1991, the status of the Company was changed into a state-owned limited liability corporation
(“Persero”) based on Government Regulation No. 25/1991. The ultimate parent of the Company is
the Government of the Republic of Indonesia (the “Government”) (Notes 1c and 18).

Indonesia

The Company was established based on notarial deed No. 128 dated September 24, 1991 of
Imas Fatimah, S.H. Its deed of establishment was approved by the Ministry of Justice of the
its Decision Letter No. C2-6870.HT.01.01.Th.1991 dated
Republic of
November 19, 1991 and was published in State Gazette No. 5 dated January 17, 1992, Supplement
No. 210. The Articles of Association has been amended several times, the latest amendments of
which were about increase the flexibility and independency of Commissioners in approving the
Directors’ actions at a certain threshold and changes in authorized and issued capital stocks due to
the transfer of total shares of cancelation treasury stocks by deducting from equity as stated in
notarial deed No. 34 and No. 35 dated May 15, 2018 of Ashoya Ratam, S.H., MKn. The latest
amendments were accepted and approved by the Ministry of Law and Human Rights of the Republic
of Indonesia (“MoLHR”) in its Letter No. AHU-AH.01.03-0214555 dated June 8, 2018 and MoLHR
decision’s No. AHU-0013328.AH.01.02 year 2018 dated July 2, 2018.
In accordance with Article 3 of the Company’s Articles of Association, the scope of its activities is
to provide telecommunication network and telecommunication and information services, and to
optimize the Company’s resources to provide high quality and competitive goods and/or services to
gain/pursue profit in order to increase the value of the Company with applied the Limited Company
principle. In regard to achieving its objectives, the Company is involved in the following activities:

a. Main business:

i. Planning, building, providing, developing, operating, marketing or selling or leasing, and
maintaining telecommunications and information networks in a broad sense in accordance
with prevailing regulations.

ii. Planning, developing, providing, marketing or selling, and improving telecommunications

and information services in a broad sense in accordance with prevailing regulations.

iii. Investing including equity capital in other companies in line with achieving the purposes and

objectives of the Company.

b. Supporting business:

i. Providing

payment

transactions

and money

transferring

services

through

telecommunications and information networks.

ii. Performing activities and other undertakings in connection with the optimization of the
Company's resources, which among others, include the utilization of the Company's
property and equipment and moving assets, information systems, education and training,
repairs and maintenance facilities.

iii. Collaborating with other parties in order to optimize the information, communication or
technology resources owned by other parties as service provider in information,
communication and technology industry as to achieve the purposes and objectives of the
Company.

The Company’s head office is located at Jalan Japati No. 1, Bandung, West Java.

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

a. Establishment and general information (continued)

The Company was granted several networks and/or services licenses by the Government
which are valid for an unlimited period of time as long as the Company complies with prevailing laws
and fulfills the obligation stated in those licenses. For every license issued by the Ministry of
Communication and Information (“MoCI”), an evaluation is performed annually and an overall
evaluation is performed every 5 (five) years. The Company is obliged to submit reports of networks
and/or services annually to the Indonesian Directorate General of Post and Informatics (“DGPI”),
which replaced the previous Indonesian Directorate General of Post and Telecommunications
(“DGPT”).

The reports comprise information such as network development progress, service quality
standard achievement, numbers of customers, license payment and universal service contribution,
while for internet telephone services for public purpose, internet interconnection service, and internet
access service, there is additional information required such as operational performance, customer
segmentation, traffic, and gross revenue.

Details of these licenses are as follows:

License

License No.

Type of services

Grant date/latest
renewal date

License of electronic

money issuer)
License of money

remittance

License to operate internet
telephone services for
public purpose

License to operate fixed
domestic long distance
network

Bank Indonesia License
No. 11/432/DASP
Bank Indonesia License
No. 11/23/bd/8
127/KEP/DJPPI/
KOMINFO/3/2016

839/KEP/
M.KOMINFO/05/2016

License to operate fixed

closed network

License to operate fixed
international network

844/KEP/
M.KOMINFO/05/2016
846/KEP/
M.KOMINFO/05/2016

License to operate circuit
switched based local
fixed line network

License to operate data
communication system
services

948/KEP/
M.KOMINFO/05/2016

191/KEP/DJPPI/
KOMINFO/10/2016

Electronic money

July 3, 2009

Money remittance
service
Internet telephone
services for public
purpose
Fixed domestic long
distance and basic
telephone services
network
Fixed closed
network
Fixed international
and basic telephone
services network
Circuit switched
based local fixed line
network
Data communication
system services

August 5, 2009

March 30, 2016

May 16, 2016

May 31, 2016

October 31, 2016

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

a. Establishment and general information (continued)

License

License No.

Type of services

License to operate internet

service provider

License to operate content

service provider

License for the

Implementation of
Internet Interconnection
Services

2176/KEP/
M.KOMINFO/12/2016
1040/KEP/
M.KOMINFO/16/2017
1004/KEP/
M.KOMINFO/2018

Grant date/latest
renewal date

December 30, 2016

Internet service
provider

Content service

May 16, 2017

provider
Interconnection
Services

December 26, 2018

b. Company’s Board of Commissioners, Directors, Audit Committee, Corporate Secretary,

Internal Audit, and Employees

1. Board of Commissioners and Directors

Based on resolutions made at the Annual General Meeting (“AGM”) of Stockholders of the
Company as covered by notarial deed No. 54 and No. 28 of Ashoya Ratam., S.H., M.Kn., dated
April 27, 2018 and April 21, 2017, the composition of the Company’s Boards of Commissioners
and Directors as of December 31, 2018 and 2017, respectively, were as follows:

President Commissioner
Commisioner
Commisioner
Commisioner
Independent Commissioner
Independent Commissioner*
Independent Commissioner
Independent Commissioner
President Director
Director of Finance
Director of Digital and Strategic

2017
Hendri Saparini
Rinaldi Firmansyah
Hadiyanto

2018
Hendri Saparini
Edwin Hidayat Abdullah
Rinaldi Firmansyah
Isa Rachmatarwata
Margiyono Darsasumarja
Margiyono Darsasumarja
-
Dolfie Othniel Fredric Palit
Pamijati Pamela Johanna Pamijati Pamela Johanna
Cahyana Ahmadjayadi
Alex Janangkih Sinaga
Harry Mozarta Zen

Cahyana Ahmadjayadi
Alex Janangkih Sinaga
Harry Mozarta Zen

Portfolio

David Bangun

Director of Enterprise and Business

Service

Director of Wholesale and
International Services
Director of Human Capital

Management

Director of Network, Information

Technology and Solution
Director of Consumer Service

Dian Rachmawan

Abdus Somad Arief

Herdy Rosadi Harman

Zulhelfi Abidin
Siti Choiriana

Zulhelfi Abidin
Mas'ud Khamid

* Dolfie Othniel Fredric Palit has been appointed as a permanent candidate for the House Representatives of the Republic of Indonesia

starting from September 20, 2018, hence his position as Commissioner of the Company was ended by law.

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

b. Company’s Board of Commissioners, Directors, Audit Committee, Corporate Secretary ,

Audit Internal and Employees (continued)

2. Audit Committee, Corporate Secretary, and Internal Audit

The composition of the Company’s Audit Committee, Corporate Secretary, and Internal Audit
as of December 31, 2018 and 2017, were as follows:

Chairman
Secretary
Member
Member
Member
Member
Corporate Secretary
Internal Audit

2018

Margiyono Darsasumarja
Tjatur Purwadi
Rinaldi Firmansyah
-
Sarimin Mietra Sardi
Cahyana Ahmadjayadi
Andi Setiawan
Harry Suseno Hadisoebroto

2017

Margiyono Darsasumarja
Tjatur Purwadi
Rinaldi Firmansyah
Dolfie Othniel Fredric Palit
Sarimin Mietra Sardi
Cahyana Ahmadjayadi
Andi Setiawan
Harry Suseno Hadisoebroto

3. Employees

As of December 31, 2018 and 2017, the Company and subsidiaries (“Group”) had 24,064
employees and 24,071 employees (unaudited), respectively.

c. Public offering of securities of the Company

The Company’s shares prior to its Initial Public Offering (“IPO”) totalled 8,400,000,000, consisting of
8,399,999,999 Series B shares and 1 Series A Dwiwarna share, and were wholly-owned by the
Government. On November 14, 1995, 933,333,000 new Series B shares and 233,334,000 Series B
shares owned by the Government were offered to the public through an IPO and listed on the
Indonesia Stock Exchange (“IDX”) and 700,000,000 Series B shares owned by the Government
were offered to the public and listed on the New York Stock Exchange (“NYSE”) and the London
Stock Exchange (“LSE”), in the form of American Depositary Shares (“ADS”). There were
35,000,000 ADS and each ADS represented 20 Series B shares at that time.

In December 1996, the Government had a block sale of its 388,000,000 Series B shares, and
in 1997, distributed 2,670,300 Series B shares as incentive to the Company’s stockholders who
did not sell their shares within one year from the date of the IPO. In May 1999, the Government
further sold 898,000,000 Series B shares.

To comply with Law No. 1/1995 on Limited Liability Companies, at the AGM of Stockholders of
the Company on April 16, 1999, the Company’s stockholders resolved to increase the Company’s
issued share capital by the distribution of 746,666,640 bonus shares through the capitalization of
certain additional paid-in capital, which was made to the Company’s stockholders in August 1999.
On August 16, 2007, Law No. 1/1995 on Limited Liability Companies was amended by the
issuance of Law No. 40/2007 on Limited Liability Companies which became effective on the same
date. Law No. 40/2007 has no effect on the public offering of shares of the Company. The Company
has complied with Law No. 40/2007.

In December 2001, the Government had another block sale of 1,200,000,000 shares or
11.9% of the total outstanding Series B shares. In July 2002, the Government further sold a block
of 312,000,000 shares or 3.1% of the total outstanding Series B shares.

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

c. Public offering of securities of the Company (continued)

At the AGM of Stockholders of the Company held on July 30, 2004, the minutes of which are
covered by notarial deed No. 26 of A. Partomuan Pohan, S.H., LLM., the Company’s stockholders
approved the Company’s 2-for-1 stock split for Series A Dwiwarna and Series B share. The Series
A Dwiwarna share with par value of Rp500 per share was split into 1 Series A Dwiwarna share with
par value of Rp250 per share and 1 Series B share with par value of Rp250 per share. The stock
split resulted in an increase of the Company’s authorized capital stock from 1 Series A Dwiwarna
share and 39,999,999,999 Series B
share and
79,999,999,999 Series B shares, and the issued capital stock from 1 Series A Dwiwarna share and
10,079,999,639 Series B shares to 1 Series A Dwiwarna share and 20,159,999,279 Series B
shares. After the stock split, each ADS represented 40 Series B shares.

to 1 Series A Dwiwarna

During the Extraodinary General Meeting (“EGM”) held on December 21, 2005 and the AGMs held
on June 29, 2007, June 20, 2008 and May 19, 2011, the Company’s stockholders approved phase
I, II, III and IV plan, respectively, of the Company’s program to repurchase its issued Series B shares
(Note 20).

During the period December 21, 2005 to June 20, 2007, the Company had bought back
211,290,500 shares from the public (stock repurchase program phase I). On July 30, 2013, the
Company has sold all such shares (Note 20).

At the AGM held on April 19, 2013 as covered by notarial deed No. 38 dated April 19, 2013 of
Ashoya Ratam, S.H., M.Kn., the stockholders approved the changes to the Company’s plan on the
treasury stock acquired under phase III (Note 20).

At the AGM held on April 19, 2013, the minutes of which were covered by notarial deed No. 38 of
Ashoya Ratam, S.H., M.Kn., the stockholders approved the Company’s 5-for-1 stock split for
Series A Dwiwarna and Series B shares. Series A Dwiwarna share with par value of Rp250 per
share was split into 1 Series A Dwiwarna share with par value of Rp50 per share and 4 Series B
shares with par value of Rp50 per share. The stock split resulted in an increase of the Company’s
authorized capital stock from 1 Series A Dwiwarna and 79,999,999,999 Series B shares to 1 Series
A Dwiwarna and 399,999,999,999 Series B shares. The issued capital stock increase from 1 Series
A Dwiwarna and 20,159,999,279 Series B shares to 1 Series A Dwiwarna and 100,799,996,399
Series B shares. After the stock split, each ADS represented 200 Series B shares. Effective from
October 26, 2016, the Company change the ratio of Depositary Receipt from 1 ADS representing
200 series B shares to become 1 ADS representing 100 series B shares (Note 18). Profit per ADS
information have been retrospectively adjusted to reflect the changes in the ratio of ADS.

On May 16 and June 5, 2014, the Company deregistered from Tokyo Stock Exchange (“TSE”)
and delisted from the LSE, respectively.

As of December 31, 2018, all of the Company’s Series B shares are listed on the IDX and 68,824,067
ADS shares are listed on the NYSE (Note 18).

On June 25, 2010 the Company issued the second rupiah bonds with a nominal amount of
Rp1,005 billion for Series A, a five-year period and Rp1,995 billion for Series B, a ten-year period,
respectively, are listed on the IDX (Note 16b).

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

c. Public offering of securities of the Company (continued)

On June 16, 2015, the Company issued Continuous Bonds I Telkom Phase I 2015, with a nominal
amount Rp2,200 billion for Series A, a seven-year period, Rp2,100 billion for Series B, a ten-year
period, Rp1,200 billion for Series C, a fifteen-year period and Rp1,500 billion for Series D,
a thirty-year period, respectively which are listed on the IDX (Note 16b).

On December 21, 2015, the Company sold the remaining shares of treasury shares phase III
(Note 20).

On June 29, 2016, the Company sold the treasury shares phase IV (Note 20).

At the AGM held on April 27, 2018, which were covered by notarial deed No. 54 of Ashoya Ratam,
S.H., M.Kn., the stockholders approved for cancellation 1,737,779,800 shares of treasury stock by
reduced the Company’s capital stock (Note 20).

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

d. Subsidiaries

As of December 31, 2018 and 2017, the Company has consolidated the following directly or
indirectly owned subsidiaries (Notes 2b and 2d):

(i) Direct subsidiaries:

Subsidiary/place of
incorporation

Nature of business/date of Year of start Percentage of ownership
Incorporation or acquisition of commercial

interest

Total assets before
elimination

by the Company

operations

2018

2017

2018
82,650

2017

85,748

PT Telekomunikasi Selular Telecommunication - provides

1995

("Telkomsel"),
Jakarta, Indonesia

telecommunication facilities
and mobile celuller
services using Global
Systems for Mobile
Communication ("GSM")
technology/
May 26, 1995

PT Multimedia Nusantara Network telecommunication
services and multimedia/
May 9, 2003

("Metra"),
Jakarta, Indonesia

1998

100

16,524

13,275

Telecommunication/
May 17, 2001

1995

100

13,053

13,606

PT Dayamitra

Telekomunikasi
("Dayamitra")
Jakarta, Indonesia

PT Telekomunikasi

Indonesia International
(“TII”),
Jakarta, Indonesia

Telecommunication/
July 31, 2003

1995

100

10,408

9,125

PT Graha Sarana Duta

Leasing of offices and

1982

100

5,805

5,641

("GSD")
Jakarta, Indonesia

providing building
management and
maintenance services, civil
consultant and developer/
April 25, 2001

PT Telkom Akses

(“Telkom Akses”),
Jakarta, Indonesia

Construction, service and
trade in the field of
telecommunication/
November 26, 2012

2013

100

4,244

5,716

PT PINS Indonesia

Telecommunication

1995

100

4,004

3,473

(“PINS”),
Jakarta, Indonesia

construction and services/
August 15, 2002

PT Infrastruktur

Construction, service and trade

2014

100

3,351

1,871

Telekomunikasi
Indonesia
(“Telkom Infratel”),
Jakarta, Indonesia

in the field of
telecommunication/
January 16, 2014

PT Telkom Satelit

Telecomunication - provides

1996

100

3,192

576

Indonesia*
(“Telkomsat”),
previously
PT Patra Telekomunikasi
Indonesia
Jakarta,Indonesia

satellite communication
system, services and
facilities/
September 28, 1995

PT Metra-net

Multimedia portal service/

2009

100

782

524

(“Metranet”),
Jakarta, Indonesia

April 17, 2009

PT Jalin Pembayaran

Payment services - principal,

2016

100

298

225

Nusantara
(“Jalin”),
Jakarta, Indonesia

swithcing, clearing and
settlement activities/
November 3, 2016

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

d. Subsidiaries (continued)

(i) Direct subsidiaries (continued):

Subsidiary/place of

Nature of business/date of
Incorporation or acquisition

Year of start Percentage of ownership
of commercial

interest

Total assets before
elimination

incorporation

by the Company

PT Napsindo Primatel

Telecommunication -

Internasional
(“Napsindo”),
Jakarta, Indonesia

provides Network Access
Point (NAP), Voice Over
Data (VOD) and other
related services/
December 29, 1998

operations
1999; ceased
operations on
January 13,

2006

(ii) Indirect subsidiaries:

2018

2017

2018

2017

Subsidiary/place of
incorporation
PT Sigma Cipta Caraka

(“Sigma”),
Tangerang, Indonesia

Nature of business/date of
Incorporation or acquisition
Nature of business

Year of start Percentage of ownership
of commercial
operations

interest

2017

2018

Information technology

1988

100

service - system
implementation and
integration service,
outsourcing and software
license maintenance/

Total assets before
elimination

2018
7,785

2017
6,064

May 1,1987

Telekomunikasi
Indonesia
International Pte. Ltd.,
Singapore

Telecommunication/
December 6, 2007

2008

100

3,413

3,048

PT Infomedia Nusantara Data and information

1984

100

2,389

2,122

(“Infomedia”),
Jakarta, Indonesia

service - provides
telecommunication
information services and
other information services
in the form of print and
electronic media and call
center services/
September 22,1999

PT Telkom Landmark

Tower
(“TLT”),
Jakarta, Indonesia

Service for property
development and

management/

February 1, 2012

PT Metra Digital Media Directory information

(“MD Media”),
Jakarta, Indonesia

services/
January 22, 2013

Telekomunikasi
Indonesia
International Ltd,
Hong Kong

Telecommunication/
December 8, 2010

2012

2,128

2,009

2013

100

1,339

1,106

2010

100

1,185

710

PT Finnet Indonesia

Information technology

2006

1,011

907

(“Finnet”),
Jakarta, Indonesia

services/
October 31, 2005

PT Metra Digital
Investama
(“MDI”),
Jakarta, Indonesia

Trading and/or providing
service related to
information and
tehnology, multimedia,
entertainment and
investment/
January 8, 2013

2013

100

979

658

TS Global Network

Satellite services/

1996

832

818

Sdn. Bhd.
(“TSGN”),
Petaling Jaya,
Malaysia

December 14, 2017

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

d. Subsidiaries (continued)

(ii) Indirect subsidiaries (continued):

Subsidiary/place of
incorporation

Nature of business/date of Year of start Percentage of ownership

Incorporation or acquisition of commercial

interest

Nature of business

operations

2018

2017

Total assets before
elimination

2018

2017

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

Telecommunication/

September 11, 2012

2012

100

677

639

PT Melon

Digital content exchange

2010

100

457

231

(“Melon”)
Jakarta, Indonesia

hub services/
November 14, 2016

PT Swadharma Sarana

System Integrator Services/

2001

460

Informatika
(“Swadharma”)
Jakarta, Indonesia

April 2, 2018

PT Administrasi

Health insurance

2002

100

346

273

Medika
(“Ad Medika”),
Jakarta, Indonesia

PT Nusantara Sukses

Investasi
(“NSI”),
Jakarta, Indonesia

PT Graha Yasa

Selaras
(”GYS”),
Jakarta, Indonesia

administration services/
February 25, 2010

Service and trading/
September 1, 2014

Tourism service/
April 27, 2012

2014

100

290

303

2012

250

178

PT Metraplasa

Network & e-commerce

2012

168

203

(“Metraplasa”),
Jakarta, Indonesia

services/
April 9, 2012

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

Telecommunication/
January 9, 2013

2013

100

115

123

PT Nutech Integrasi

System integrator/

2001

(“Nutech”),
Jakarta, Indonesia

Telekomunikasi
Indonesia
International Inc.,
(“Telkom USA”),
Los Angeles, USA

Telekomunikasi
Indonesia Intl
(Malaysia) Sdn. Bhd
(“Telin Malaysia”)
Malaysia

PT Satelit Multimedia

Indonesia
(“SMI”),
Jakarta, Indonesia

December 13, 2017

Telecommunication/

December 11, 2013

Telecommunication/

July 2, 2013

Satellite services/
March 25, 2013

2014

100

2013

100

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

d. Subsidiaries (continued)

(a) Metra

Based on notarial deed of Utiek Rochmuljati Abdurachman, S.H., M.LI, M.Kn., No. 10 and 11
dated December 13, 2017, Metra purchased 36,000 shares of Nutech (equivalent to 60%
ownership) amounting to Rp24 billion. This is larger than the ownership portion of net book value
amounting to Rp13 billion. As of December 31, 2017, the difference amounting to Rp11 billion
was recognized as goodwill (Note 11). In accordance to independent appraisal report, fair value
of net assets amounting to Rp18 billion. The difference between transaction price with the fair
value of net assets amounting to Rp6 billion was recognized as goodwill (Note 11).

Based on notarial deed Utiek Rochmuljati Abdurachman S.H., MLI., M.Kn, No. 3, 4, and 5 dated
April 2, 2018, Metra purchase 14,600 shares of PT Swadharma Sarana Informatika (SSI)
ownership interests from Yayasan Danar Dana Swadharma, PT Tri Handayani Utama, dan
Koperasi Swadharma or equivalent to 36.50 % ownership interests from SSI with purchase
consideration amounting Rp220 billion.

Based on notarial deed N.M. Dipo Nusantara Pua Upa, S.H., MKn, No. 4 dated April 9, 2018, the
Company as Metra's shareholders subscribing for 11,837 new shares issued by SSI with
purchase consideration amounting Rp178 billion. These transaction result in change composition
become 51% causing Company to have control over SSI as a subsidiary with total purchase
consideration amounting to Rp397 billion (consideration paid on acquisition of control net of cash
acquired is Rp210 billion). Acquisition cost of SSI which was higher than the ownership portion
of net book value, which amounting to Rp196 billion. As of December 31, 2018, the difference
recorded as provisional goodwill. As of the completion date of the consolidated financial
statements, purchase price allocation of the acquisition is in progress.

From the date of acquisition until December 31, 2018, the total revenue and profit before tax of
Swadharma included in the statements of profit or loss income and other comprehensive income
amounted to Rp630 billion and Rp101 billion, respectively. If acquisition occurred since the
beginning of the year, revenue and profit before tax recognized in consolidated profit and loss
and other comprehensive income was Rp 823 billion and Rp110 billion, respectively.

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

d. Subsidiaries (continued)

(b) Sigma

Based on notarial deed Utiek Rochmuljati Abdurachman S.H., MLI., M.Kn, No. 151 and 152,
dated Decemberl 28, 2018, Sigma purchase 2,493 (equal 67% ownership share’s) shares from
PT Upperco Usaha Maxima with purchase consideration paid amounting Rp208 billion and 111
share’s (equal 3% ownership share’s) from PT Abdi Anugerah Persada with purchase
consideration paid amounting Rp9 billion, hence Sigma own 2,604 shares (equal 70%
ownership shares) causing Company to have control over SCC as a subsidiary with total
purchase consideration amounting to Rp217 billion (consideration paid on acquisition of control
net of cash acquired is Rp188 billion).. Acquisition cost of CIP which was higher than the
ownership portion of net book value, which amounting to Rp165 billion. As of December 31,
2018, the difference recorded as provisional goodwill. As of the completion date of the
consolidated financial statements, purchase price allocation of the acquisition is in progress.

From the date of acquisition until December 31, 2018, the total revenue and profit before tax of
CIP included in the statements of profit or loss income and other comprehensive income
amounted to Rpnil. If acquisition occurred since the beginning of the year, revenue and profit
before tax recognized in consolidated profit and loss and other comprehensive income was Rp
166 billion and Rp24 billion, respectively.

On December 14, 2017, TII purchased TSGN equivalent to 49% ownership amounting to
MYR66,150,000 (equivalent to Rp220 billion). TSGN is engaged in providing ICT (information
and communication technologies) systems for satellite communication services, satellite
bandwith services and Very Small Aperture Terminal (“VSAT”) services. Non-controlling
interests of the acquiree are measured at fair value. Based on Sale and Subscription
Agreement, TII owns the control over TSGN through placing and replacing of 3 out of 5 key
managements that controls the overall business of TSGN. On April 25, 2018, TII purchased
21% of ownership shares obtained from issued new shares.

This acquisition will enhance synergy and utilization of assets and resources between
companies in order to provide more innovative services to customers.

These consolidated financial statements are originally issued in the Indonesian language.

1. GENERAL (continued)

d. Subsidiaries (continued)

The fair values of the identifiable assets and liabilities acquired at acquisition date were:

Assets
Cash and cash equivalents
Trade receivables
Other current assets
Property and Equipment (Note 9)
Other non-current assets
Liabilities
Current liabilities
Non-current liabilities

Fair value of identifiable net assets acquired
Fair value of non-controlling interest
Provisional goodwill (Note 11)
Fair value consideration transferred

Total

21
18
57
770
20

(422)
(155)

309
(157)
68
220

On July 2, 2013, Telin Malaysia was incorporated, with TII obtaining 49% direct ownership, and
on April 18, 2018 TII purchased 21% of Compudyne Telecommunication Systems Sdn, Bhd
shares in Telin Malaysia. The acquisition cost amounted to MYR8,764,789 or equivalent to
Rp31 billion (consideration paid on acquisition of control net of cash acquired is Rp16 billion).
In connection with the acquisition of Telin Malaysia’s shares, TII recognized goodwill amounting
to Rp61 billion (Note 11).

From the date of acquisition until December 31, 2018, the total revenue and profit before tax of
Telin Malaysia included in the statements of profit or loss and other comprehensive income
amounted to Rp23 billion and Rp20 billion, respectively. If acquisition occurred since the
beginning of the year, revenue and loss before tax recognized in consolidated profit and loss
and other comprehensive income was MYR13.323.065 (equivalent to Rp47 billion) and
MYR7.888.930 (equivalent to Rp28 miliar) respectively.

e. Completion and authorization for the issuance of the consolidated financial statements

The Company’s management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with Indonesian Financial Accounting Standards,
which have been completed and authorized for issuance by the Board of Directors of the Company
on April 29, 2019.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of the Company and subsidiaries (collectively referred to as “the
Group”) have been prepared in accordance with Financial Accounting Standards ("Standar Akuntansi
Keuangan” or “SAK") including Indonesian Statement of Financial Accounting Standards ("Pernyataan
Standar Akuntansi Keuangan" or “PSAK”) and interpretation of Financial Accounting Standards
("Interpretasi Standar Akuntansi Keuangan" or “ISAK”) in Indonesia published by the Financial
Accounting Standards Board of Institute of Indonesian Chartered Accountants and Regulation
No. VIII.G.7 of the Capital Market and Financial Institution Supervisory Agency (“Bapepam-LK”)
regarding the Presentation and Disclosure of Financial Statements of Issuers or Public Companies,
enclosed in the decision letter KEP-347/BL/2012.

a. Basis of preparation of financial statements

The consolidated financial statements, except for the consolidated statements of cash flows, are
prepared on the accrual basis. The measurement basis used is historical cost, except for certain
accounts which are measured using the basis mentioned in the relevant notes herein.

The consolidated statements of cash flows are prepared using the direct method and present the
changes in cash and cash equivalents from operating, investing and financing activities.

Figures in the consolidated financial statements are presented and rounded to billions of Indonesian
rupiah (“Rp”), unless otherwise stated.

Accounting Standards Issued but not yet Effective

Effective January 1, 2019
• Amendments to PSAK 22: Business Combination

The amendments clarifies that when a party in joint arrangement obtains control of a business
that is a joint operation (as defined in PSAK 66) and had rights to the assets and obligations for
the liabilities relating to that joint operation immediately before the acquisition date, the
transaction is a business combination achieved in stages. The acquirer shall therefore apply the
requirements for a business combination achieved in stages, including remeasuring its previously
held interest in the assets and liabilities of the joint operation at fair value.

• Amendments to PSAK 24: Plan Amendment, Curtailment or Settlement

The amendments provides guidance for entities in recognizing past service costs, gains and
losses, current service costs and net interest after amendments, curtailments, or settlement of
programs using the latest actuarial assumptions (previously using acturial assumptions at the
beginning of the annual reporting period). In addition, the amendments also clarifies how the
accounting requirements for amendments, curtailments, or settlement can affect the asset ceiling
requirements reflected in the surplus reduction which causes the impact of the asset ceiling to
change.

• Amendment to PSAK 26: Borrowing Costs Eligible for Capitalisation

The amendments clarifies that capitalisation rate shall be the weighted average of the borrowing
costs applicable to all borrowings of the entity that are outstanding during the period, but the
entity shall exclude from this calculation borrowing costs applicable to borrowings made
specifically for the purpose of obtaining a qualifying asset until substantially all the activities
necessary to prepare that asset for its intended use or sale are complete.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

a. Basis of preparation of financial statements (continued)

Effective January 1, 2019 (continued)

• Amendment to PSAK 46: Income Tax

The amendments clarifies that an entity shall recognise the income tax consequences of
dividends as defined in PSAK 71: Financial Instruments when it recognises a liability to pay a
dividend. An entity shall recognise the income tax consequences of dividends in profit or loss,
other comprehensive income or equity according to where the entity originally recognised those
past transactions or events.

• Amendment to PSAk 66: Joint Arrangements

The amendments clarifies that a party that participates in, but does not have joint control of,
a joint operation might obtain joint control of the joint operation in which the activity of the joint
operation constitutes a business (as defined in PSAK 22). In such cases, previously held interests
in the joint operation are not remeasured.

•

ISAK 33: Foreign Currency Transactions and Advance Consideration
ISAK 33 defines that the date on which an entity initially recognizes the non-monetary asset or
non-monetary liability arising from the payment or receipt of advance consideration is the date of
the transaction for the purpose of determining the exchange rate to use on initial recognition of
the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset
or non-monetary liability arising from the payment or receipt of advance consideration in a foreign
currency.

ISAK 34: Uncertainty over Income Tax Treatments
ISAK 34 clarifies how to apply the recognition and measurement requirements in PSAK 46
Income Taxes when there is uncertainty over income tax treatments. When there is uncertainty
over income tax treatments, ISAK 34 addresses:
• whether an entity considers uncertain tax treatments separately,
•

the assumptions an entity makes about the examination of tax treatments by taxation
authorities,

• how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax

credits and tax rates, and

• how an entity considers changes in facts and circumstances.

Effective January 1, 2020

• PSAK 71: Financial Instruments

PSAK 71 includes revised guidance on the classification and measurement of financial
instruments, including a new expected credit loss model for calculating impairment on financial
assets and the new general hedge accounting requirements. It also carries forward the guidance
on recognition and derecognition of financial instruments from PSAK 55: Financial Instruments:
Recognition and Measurement. PSAK 71 replaces the existing guidance in PSAK 55: Financial
Instruments: Recognition and Measurement.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

a. Basis of preparation of financial statements (continued)

Effective January 1, 2020 (continued)

• PSAK 72: Revenue from Contracts with Customers

PSAK 72 establishes a comprehensive framework to determine how, when and how much
revenue is to be recognized. The standard provides a single, principles-based five-step model
for the determination and recognition of revenue to be applied to all contracts with customers.
The standard also provides specific guidance requiring certain types of costs to obtain and/or
fulfil a contract to be capitalized and amortized on a systematic basis that is consistent with the
transfer to the customer of the goods or services to which the capitalized cost relates.

PSAK 72 replaces a number of existing revenue standards, including PSAK 23: Revenue, PSAK
34: Construction Contracts and ISAK 10: Customer Loyalty Programmes.

• PSAK 73: Leases

PSAK 73 sets out the principles for the recognition, measurement, presentation and disclosure
of leases and requires lessees to account for all leases under a single on-balance sheet model
similar to the accounting for finance leases under PSAK 30. PSAK 73 includes two recognition
exemptions for lessees – leases of ’low-value’ assets and leases with a lease term of 12 months
or less. At the commencement date of a lease, a lessee will recognize a liability to make lease
payments and an asset representing the right to use the underlying asset during the lease term.
Lessees will be required to separately recognize the interest expense on the lease liability and
the depreciation expense on the lease asset.

Lessor accounting under PSAK 73 is substantially unchanged from today’s accounting under
PSAK 30. Lessors will continue to classify all leases using the same classification principle as in
PSAK 30.

PSAK 73 replaces PSAK 30: Leases and ISAK 8: Determining whether an Arrangement contains
a Lease.

• Amendments to PSAK 15: Long-term Interests in Associates and Joint Ventures

These amendments require the entity to apply PSAK 71 to financial instruments in an associate
or joint venture to which the equity method is not applied. These include long-term interests that,
in substance, form part of the entity’s net investment in an associate or joint venture.

• Amendments to PSAK 71: Prepayment Features with Negative Compensation

These amendments provides that financial assets with prepayment features that may result in
negative compensation qualify as contractual cash flows that are solely payments of principal
and interest on the principal amount outstanding.

• Amendment to PSAK 62: Insurance Contract - Implementing PSAK 71: Financial Instruments
with PSAK 62: Insurance Contract will be effective January 1, 2022, but such amendments have
no impact on Group’s consolidated financial statements.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

b. Principles of consolidation

The consolidated financial statements consist of the financial statements of the Company and the
subsidiaries over which it has control. Control is achieved when the Group is exposed or has rights
to variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. Specifically, the Group controls an investee if and only if the
Group has the power over the investee, exposure or rights to variable returns from its involvement
with the investee and the ability to use its power over the investee to affect its returns.

The Group re-assesses whether it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control over
the subsidiary. Assets, liabilities, income and expenses, of a subsidiary acquired or disposed of
during the year are included in the consolidated financial statements from the date the Group gain
control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the
equity holders of the Company and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance.

Intercompany balances and transactions have been eliminated in the consolidated financial
statements.

In case of loss of control over a subsidiary, the Group:
• derecognizes the assets (including goodwill) and liabilities of the subsidiary at the carrying

amounts on the date when it loses control;

• derecognizes the carrying amounts of any non-controlling interests of its former subsidiary on the

date when it loses control;

• recognizes the fair value of the consideration received (if any) from the transaction, events, or

condition that caused the loss of control;

• recognizes the fair value of any investment retained in the subsidiary at fair value on the date of

loss of control;

• recognizes any surplus or deficit in profit or loss that is attributable to the Group.

c. Transactions with related parties

The Group has transactions with related parties. The definition of related parties used is in
accordance with the Bapepam-LK’s Regulation No. VIII.G.7 regarding the Presentations and
Disclosures of Financial Statements of Issuers or Public Companies, enclosed in the decision letter
No. KEP-347/BL/2012. The party which is considered as a related party is a person or entity that is
related to the entity that is preparing its financial statements.

Under the Regulation of Bapepam-LK No. VIII.G.7, a government-related entity is an entity that is
controlled, jointly controlled or significantly influenced by the government. Government in this
context is the Minister of Finance or the Local Government, as the shareholder of the entity.

Key management personnel are identified as the persons having authority and responsibility for
planning, directing and controlling the activities of the entity, directly or indirectly, including any
director (whether executive or otherwise) of the Group. The related party status extends to the key
management of the subsidiaries to the extent they direct the operations of subsidiaries with minimal
involvement from the Company’s management.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d. Business combinations

Business combination is accounted for using the acquisition method. The consideration
transferred is measured at fair value, which is the aggregate of the fair value of the assets
transferred, liabilities incurred or assumed and the equity instruments issued in exchange for control
of the acquiree. For each business combination, non-controlling interest is measured at fair value or
at the proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis
is made on a transaction-by-transaction basis. Acquisition-related costs are expensed as incurred.
The acquiree’s identifiable assets and liabilities are recognized at their fair values at the acquisition
date.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognized for non-controlling interests, and any previous interest
held, over the net identifiable assets acquired and liabilities assumed. If the fair value of net assets
acquired is in excess of the aggregate consideration transferred, the Group re-assess whether it has
correctly identified all of the assets acquired and all of the liabilities assumed, and reviews the
procedures used to measure the amounts to be recognized at the acquisition date. If the re-
assessment still results in an excess of the fair value of net assets acquired over the aggregate
consideration transferred, then the gain is recognized in profit and loss.

When the determination of consideration from a business combination includes contingent
consideration, it is measured at its fair value on acquisition date. Contingent consideration
is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognized in profit or loss when
adjustments are recorded outside the measurement period. Changes in the fair value of the
contingent consideration
that qualify as measurement-period adjustments are adjusted
retrospectively, with corresponding adjustments made against goodwill. Measurement-period
adjustments are adjustments that arise
the
measurement period, which cannot exceed one year from the acquisition date, about facts and
circumstances that existed at the acquisition date.

information obtained during

from additional

If the intial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Group shall report in its consolidated financial statements
provisional amounts for the items for which the accounting is incomplete. During the measurement
period, the Group shall retrospectively adjust the provisional amounts recognized at the acquisition
date to reflect new information obtained about facts and circumstances that existed as of the
acquisition date and, if known, would have affected the measurement of the amounts recognized as
of that date.

In a business combination achieved in stages, the acquirer remeasures its previously held equity
interest in the acquiree at its acquisition-date fair value and recognizes the resulting gain or loss, if
any, in profit or loss.

Based on PSAK 38 (Revised 2012), “Common Control Business Combination”, the transfer of
assets, liabilities, shares or other ownership instruments among the companies under common
control would not result in a gain or loss for the Company or individual entity in the same group.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d. Business combinations (continued)

Since the restructuring transaction between entities under common control does not result in a
change of the economic substance of the ownership of assets, liabilities, shares or other instruments
of ownership, which are exchanged, assets or liabilities transferred are recorded at book value using
the pooling-of-interests method. In applying the pooling-of-interests method, the components of the
financial statements for the period during the restructuring occurred must be presented in such a
manner as if the restructuring has occurred since the beginning of the earliest period presented. The
excess of consideration paid or received over the carrying value of interest acquired, net of income
tax, is directly recognized to equity and presented as “Additional Paid-in Capital” under the equity
section of the consolidated statement of financial position.

At the initial application of PSAK 38 (Revised 2012), all balances of the Difference In Value of
restructuring Transactions of Entities under Common Control was reclassified to “Additional Paid-in
Capital” in the consolidated statement of financial position.

e. Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, cash in banks and all unrestricted time
deposits with original maturities of three months or less at the time of placement.

Time deposits with maturities of more than three months but not more than one year are presented
as part of “Other Current Financial Assets” in the consolidated statements of financial position.

Investments in associated companies

An associate is an entity over which the Group (as investor) has significant influence.
Significant influence is the power to participate in the financial and operating policy decisions of the
investee, but does not include control or joint control over those operating policies. The
considerations made in determining significant influence are similar to those necessary to determine
control over subsidiaries.

The Group’s investments in its associates are accounted for using the equity method.

Under the equity method, the investment in an associate is initially recognized at cost. The carrying
amount of the investment is adjusted to recognize changes in the investor’s share of the net assets
of the associate since the acquisition date. On acquisition of the investment, any difference between
the cost of the investment and the entity's share of the net fair value of the investee's identifiable
assets and liabilities is accounted for as follows:
a. Goodwill relating to an associate or a joint venture is included in the carrying amount of the

investment and is neither amortized nor individually tested for impairment.

b. Any excess of the entity's share of the net fair value of the investee's identifiable assets and
liabilities over the cost of the investment is included as income in the determination of the entity's
share of the associate or joint venture's profit or loss in the period in which the investment is
acquired.

The consolidated statements of profit or loss and other comprehensive income reflect the Group’s
share of the results of operations of the associate. Any change in the other comprehensive income
of the associate is presented as part of other comprehensive income. In addition, when there has
been a change recognized directly in the equity of the associate, the Group recognizes it share of
the change in the consolidated statements of changes in equity. Unrealized gain and losses resulting
from transactions between the Group and the associate are eliminated to the extent of the interest
in the associate.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments in associated companies (continued)

The Group determines at each reporting date whether there is any objective evidence that the
investments in associated companies are impaired. If there is, the Group calculates and recognizes
the amount of impairment as the difference between the recoverable amount of the investments in
the associated companies and their carrying value.

These assets are included in “Long-term Investments” in the consolidated statements of financial
position.

The functional currency of Cellum Global Zrt. (“Cellum”) is Hungary Forint (“HUF”) and PT Citra Sari
Makmur (“CSM”) is the United States dollar (“U.S. dollars”). For the purpose of reporting these
investments using the equity method, the assets and liabilities of these companies as of the
statement of financial position date are translated into Indonesian rupiah using the rate of exchange
prevailing at that date, while revenues and expenses are translated into Indonesian rupiah at the
average rates of exchange for the year. The resulting translation adjustments are reported as part
of “translation adjustment” in the equity section of the consolidated statements of financial position.

g. Trade and other receivables

Trade and other receivables are recognized initially at fair value and subsequently measured at
amortized cost, less provision for impairment. This provision for impairment is made based on
management’s evaluation of the collectibility of the outstanding amounts. Receivables are written
off in the year they are determined to be uncollectible.

h. Inventories

Inventories consist of components, which are subsequently expensed upon use. Components
represent telephone terminals, cables, and other spare parts. Inventories also include Subscriber
Identification Module (“SIM”) cards, handsets, wireless broadband modems and blank prepaid
vouchers, which are expensed upon sale.

The costs of inventories consist of the purchase price, import duties, other taxes, transport, handling,
and other costs directly attributable to their acquisition. Inventories are recognized at the lower of
cost and net realizable value. Net realizable value is the estimate of selling price less the expected
costs to sell.

Cost is determined using the weighted average method.

The amounts of any write-down of inventories below cost to net realizable value and all losses
of inventories are recognized as expense in the period in which the write-down or loss occurs.
The amount of any reversal of any write-down of inventories, arising from an increase in net
realizable value, is recognized as a reduction in the amount of general and administrative expenses
in the year in which the reversal occurs.

Provision for obsolescence is primarily based on the estimated forecast of future usage of these
inventory items.

i. Prepaid expenses

Prepaid expenses are amortized over their future beneficial periods using the straight-line method.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

j. Assets held for sale

Assets (or disposal groups) are classified as held for sale when their carrying amount is to be
recovered principally through a sale transaction rather than through continuing use and a sale is
considered highly probable. They are stated at the lower of carrying amount and fair value less costs
to sell.

Assets that meet the criteria to be classified as held for sale are reclassified from property and
equipment and depreciation on such assets is ceased.

k. Intangible assets

Intangible assets mainly consist of software. Intangible assets are recognized if it is highly probable
that the expected future economic benefits that are attributable to each asset will flow to the Group,
and the cost of the asset can be reliably measured.

Intangible assets are stated at cost less accumulated amortization and impairment losses, if any.
Intangible assets are amortized over their estimated useful lives. The Group estimates the
recoverable value of its intangible assets. When the carrying amount of an intangible asset
exceeds its estimated recoverable amount, the asset is written down to its estimated recoverable
amount.

Intangible assets except goodwill are amortized using the straight-line method, based on the
estimated useful lives of the intangible assets as follows:

Software
License
Other intangible assets

Years
3-6
3-20
1-30

Intangible assets are derecognized on disposal, or when no further economic benefits are
expected, either from further use or from disposal. The difference between the carrying amount
and the net proceeds received from disposal is recognized in the consolidated statements of profit
or loss and other comprehensive income.

l. Property and equipment

Property and equipment are stated at cost less accumulated depreciation and impairment losses.

The cost of an item of property and equipment includes: (a) purchase price, (b) any costs directly
attributable to bringing the asset to its location and condition, and (c) the initial estimate of the costs
of dismantling and removing the item and restoring the site on which it is located. Each part of an
item of property and equipment with a cost that is significant in relation to the total cost of the item
is depreciated separately.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

l. Property and equipment (continued)

Property and equipment, except land rights, are depreciated using the straight-line method based
on the estimated useful lives of the assets as follows:

Buildings
Leasehold improvements
Switching equipment
Telegraph, telex and data communication equipment
Transmission installation and equipment
Satellite, earth station and equipment
Cable network
Power supply
Data processing equipment
Other telecommunication peripherals
Office equipment
Vehicles
Customer Premises Equipment (“CPE”) asset
Other equipment

Years
15-40
2-15
3-15
5-15
3-25
3-20
5-25
3-20
3-20
5
2-5
4-8
4-5
2-5

Significant expenditures related to leasehold improvements are capitalized and depreciated over the
lease term.

The depreciation method, useful life and residual value of an asset are reviewed at least at each
financial year-end and adjusted, if appropriate. The residual value of an asset is the estimated
amount that the Group would currently obtain from disposal of the asset, after deducting the
estimated costs of disposal, if the asset is already of the age and in the condition expected at the
end of its useful life.

Property and equipment acquired in exchange for a non-monetary asset or for a combination of
monetary and non-monetary assets are measured at fair value unless, (i) the exchange
transaction lacks commercial substance; or (ii) the fair value of neither the asset received nor the
asset given up is measured reliably.

Major spare parts and standby equipment that are expected to be used for more than 12 months
are recorded as part of property and equipment.

When assets are retired or otherwise disposed of, their cost and the related accumulated
depreciation are derecognized from the consolidated statement of financial position and the
resulting gains or losses on the disposal or sale of the property and equipment are recognized in
the consolidated statements of profit or loss and other comprehensive income.

Certain computer hardware can not be used without the availability of certain computer software.
In such circumstance, the computer software is recorded as part of the computer hardware. If the
computer software is independent from its computer hardware, it is recorded as part of intangible
assets.

The cost of maintenance and repairs are charged to the consolidated statements of profit or loss
and other comprehensive income as incurred. Significant renewals and betterments are capitalized.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

l. Property and equipment (continued)

Property under construction is stated at cost until the construction is completed, at which time
it is reclassified to the property and equipment account to which it relates. During the construction
period until the property is ready for its intended use or sale, borrowing costs, which include interest
expense and foreign currency exchange differences incurred on loans obtained to finance the
construction of the asset, as long as it meets the definition of a qualifying asset are, capitalized in
proportion to the average amount of accumulated expenditures during the period. Capitalization of
borrowing cost ceases when the construction is completed and the asset is ready for its intended
use.

m. Leases

In determining whether an arrangement is, or contains a lease, the Group performs an evaluation
over the substance of the arrangement. A lease is classified as a finance lease or operating lease
based on the substance, not the form of the contract. Finance lease is recognized if the lease
transfers substantially all the risks and rewards incidental to the ownership of the leased asset.

Assets and liabilities under a finance lease are recognized in the consolidated statements of
financial position at amounts equal to the fair value of the leased assets or, if lower, the present
value of the minimum lease payments. Any initial direct costs of the Group are added to the amount
recognized as assets.

Minimum lease payments are apportioned between the finance charge and the reduction of
the outstanding liability. The finance charge is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent
rents are charged as expenses in the year in which they are incurred.

Leased assets are depreciated using the same method and based on the useful lives as
estimated for directly acquired property and equipment. However, if there is no reasonable certainty
that the Group will obtain ownership by the end of the lease terms, the leased assets are fully
depreciated over the shorter of the lease terms and their economic useful lives.

Lease arrangements that do not meet the above criteria are accounted for as operating leases for
which payments are charged as an expense on the straight-line basis over the lease period.

n. Deferred charges - land rights

Costs incurred to process the initial legal land rights are recognized as part of the property and
equipment and are not amortized. Costs incurred to process the extension or renewal of legal land
rights are deferred and amortized using the straight-line method over the shorter of the legal term of
the land rights or the economic life of the land.

o. Trade payables

Trade payables are obligations to pay for goods or services that have been acquired from
suppliers in the ordinary course of business. Trade payables are classified as current liabilities if the
payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognized initially at fair value and subsequently measured at amortized cost
using the effective interest rate method.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

p. Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortized cost, any difference between the proceeds (net of transaction
costs) and the redemption value is recognized in the consolidated statements of profit or loss and
other comprehensive income over the period of the borrowings using the effective interest method.

Fees paid on obtaining loan facilities are recognized as transaction costs of the loan to the extent
that it is probable that some or all of the facilities will be drawn down. In this case, the fee is deferred
until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of
the facilities will be drawn down, the fee is capitalized as a prepayment for liquidity services and
amortized over the period of the facilities to which it relates.

q. Foreign currency translations

Indonesia

International Pte. Ltd., Singapore, Telekomunikasi

The functional currency and the recording currency of the Group are both the Indonesian rupiah,
except for the functional currency of Telekomunikasi Indonesia International Pte. Ltd., Hong Kong,
Indonesia
Telekomunikasi
International Inc., USA and Telekomunikasi Indonesia International S.A., Timor Leste whose
functional currency is maintained in U.S. dollars and Telekomunikasi Indonesia International, Pty.
Ltd., Australia whose functional currency is maintained in Australian dollars, TS Global Network Sdn.
Bhd. and Telekomunikasi Indonesia International Sdn. Bhd. whose functional currency is Malaysian
ringgit. Transactions in foreign currencies are translated into Indonesian rupiah at the rates of
exchange prevailing at transaction date. At the consolidated statements of financial position dates,
monetary assets and liabilities denominated in foreign currencies are translated into Indonesian
rupiah based on the buy and sell rates quoted by Reuters prevailing at the consolidated statements
of financial position dates, as follows (in full amount):

Dolar A.S. (“US$”) 1
Dolar Australia (“AU$”) 1
Euro 1
Yen Jepang 1
Ringgit Malaysia (“MYR”) 1

2018

2017

Buy

Sell

Buy

Sell

14,375
10,157
16,432
130.56
3,474

14,385
10,167
16,446
130.70
3,480

13,565
10,592
16,231
120.48
3,520

13,570
10,598
16,242
120.55
3,526

The resulting foreign exchange gains or losses, realized and unrealized, are credited or charged to
the consolidated statements of profit or loss and other comprehensive income of the current year,
except for foreign exchange differences incurred on borrowings during the construction of qualifying
assets which are capitalized to the extent that the borrowings can be attributed to the construction
of those qualifying assets (Note 2l).

r. Revenue and expense recognition

i. Cellular revenues

Revenues from postpaid service, which consist of usage and monthly charges, are recognized
as follows:
• Airtime and charges for value added services are recognized based on usage by subscribers.
• Monthly subscription charges are recognized as revenues when incurred by subscribers.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

r. Revenue and expense recognition (continued)

i. Cellular revenues (continued)

Revenues from prepaid service, which consist of the sale of starter packs (also known as SIM
cards and start-up load vouchers) and pulse reload vouchers, are recognized initially as unearned
income and recognized as revenue based on total of successful calls made and the value added
services used by the subscribers or the expiration of the unused stored value of the voucher.

ii. Fixed line telephone revenues

Revenues from usage charges are recognized as customers incur the charges. Monthly
subscription charges are recognized as revenues when incurred by subscribers.

Revenues from fixed line installations are deferred and recognized as revenue on the straight-
line basis over the expected term of the customer relationships. Based on reviews of historical
information and customer trends, the Company determined the term of the customer
relationships is 23 years.

iii. Interconnection revenues

from network

Revenues
international
telecommunications carriers are recognized monthly on the basis of the actual recorded traffic
for the month. Interconnection revenues consist of revenues derived from other operators’
subscriber calls to the Group’s subscribers (incoming) and calls between subscribers of other
operators through the Group’s network (transit).

interconnection with other domestic and

iv. Data, internet, and information technology service revenues

Revenues from data communication and internet are recognized based on service activity and
performance which are measured by the duration of internet usage or based on the fixed amount
of charges depending on the arrangements with customers.

Revenues from sales, installation and implementation of computer software and hardware,
computer data network installation service and installation are recognized when the goods are
delivered to customers or the installation takes place.

Revenue from computer software development service is recognized using the percentage-of-
completion method.

v. Network revenues

Revenues from network consist of revenues from leased lines and satellite transponder
leases which are recognized over the period in which the services are rendered.

vi. Other revenues

Revenues from sales of peripherals or other telecommunications equipments are recognized
when delivered to customers.

Revenues from telecommunication tower leases are recognized on straight-line basis over the
lease period in accordance with the agreement with the customers.

Revenues from other services are recognized when services are rendered to customers.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

r. Revenue and expense recognition (continued)

vii. Multiple-element arrangements

Where two or more revenue-generating activities or deliverables are sold under a single
arrangement, each deliverable that is considered to be a separate unit of accounting is accounted
for separately. The total revenue is allocated to each separately identifiable component based
on the relative fair value of each component and the appropriate revenue recognition criteria are
applied to each component as described above.

viii. Agency relationship

Revenues from an agency relationship are recorded based on the gross amount billed to the
customers when the Group acts as principal in the sale of goods and services. Revenues are
recorded based on the net amount retained (the amount paid by the customer less amount paid
to the suppliers) when, in substance, the Group has acted as agent and earned commission from
the suppliers of the goods and services sold.

ix. Customer loyalty programme

The Group operates a loyalty programme, which allows customers to accumulate points for every
certain multiple of the telecommunication services usage. The points can be redeemed in the
future for free or discounted products or services, provided other qualifying conditions are
achieved.

Consideration received is allocated between the telecommunication services and the points
issued, with the consideration allocated to the points equal to their fair value. Fair value of the
points is determined based on historical information about redemption rate of award points.
Fair value of the points issued is deferred and recognized as revenue when the points are
redeemed or expired.

x. Expenses

Expenses are recognized as they are incurred.

s. Employee benefits

i. Short-term employee benefits

All short-term employee benefits which consist of salaries and related benefits, vacation pay,
incentives and other short-term benefits are recognized as expense on undiscounted basis when
employees have rendered service to the Group.

ii. Post-employment benefit plans and other long-term employee benefits

Post-employment benefit plans consist of funded and unfunded defined benefit pension plans,
defined contribution pension plan, other post-employment benefits, post-employment health care
benefit plan, defined contribution health care benefit plan and obligations under the Labor Law.

Other long-term employee benefits consist of Long Service Awards (“LSA”), Long Service Leave
(“LSL”), and pre-retirement benefits.

The cost of providing benefits under post-employment benefit plans and other long-term
employee benefits calculation is performed by an independent actuary using the projected unit
credit method.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

s. Employee benefits (continued)

ii. Post-employment benefit plans and other long-term employee benefits (continued)

The net obligations in respect of the defined pension benefit plans and post-retirement health
care benefit plans are calculated at the present value of estimated future benefits that the
employees have earned in return for their service in the current and prior periods less the fair
value of plan assets. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of Government bonds that
are denominated in the currencies in which the benefits will be paid and that have terms to
maturity approximating the terms of the related retirement benefit obligation. Government bonds
are used as there are no deep markets for high quality corporate bonds.

Plan assets are assets owned by defined benefit pension plan and post-retirement health care
benefits plan as well as qualifying insurance policy. The assets are measured at fair value as
of reporting dates. The fair value of qualifying insurance policy is deemed to be the present
value of the related obligations (subject to any reduction required if the amounts receivable
under the insurance policies are not recoverable in full).

Remeasurement, comprising of actuarial gain and losses, the effect of the asset ceiling
(excluding amounts included in net interest on the net defined benefit liability (asset)) and the
return on plan assets (excluding amounts included in net interest on the net defined benefit
liability (asset)) are recognized immediately in the consolidated statements of financial position
with a corresponding debit or credit to retained earnings through OCI in the period in which they
occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognized immediately in profit or loss on the earlier of:
• The date of plan amendment or curtailment; and
• The date that the Group recognized restructuring-related costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or
assets.

Gains or losses on curtailment are recognized when there is a commitment to make a material
reduction in the number of employees covered by a plan or when there is an amendment of
defined benefit plan terms such as that a material element of future services to be provided by
current employees will no longer qualify for benefits, or will qualify only for reduced benefits.

Gains or losses on settlement are recognized when there is a transaction that eliminates all
further legal or constructive obligation for part or all of the benefits provided under a defined
benefit plan (other than the payment of benefit in accordance with the program and included in
the actuarial assumptions).

For defined contribution plans, the regular contributions constitute net periodic costs for the
period in which they are due and, as such are included in “Personnel Expenses” as they become
payable.

iii. Share-based payments

The Company operates an equity-settled, share-based compensation plan. The fair value of
the employees’ services rendered which are compensated with the Company’s shares is
recognized as an expense in the consolidated statements of profit or loss and other
comprehensive income and credited to additional paid-in capital at the grant date.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

s. Employee benefits (continued)

iv. Early retirement benefits

Early retirement benefits are accrued at the time the Group makes a commitment to provide
early retirement benefits as a result of an offer made in order to encourage voluntary
redundancy. A commitment to a termination arises when, and only when a detailed formal plan
for the early retirement cannot be withdrawn.

Income tax

Current and deferred income taxes are recognized as income or an expense and included in the
consolidated statements of profit or loss and other comprehensive income, except to the extent that
the tax arises from a transaction or event which is recognized directly in equity, in which case, the
tax is recognized directly in equity.

Current tax assets and liabilities are measured at the amounts expected to be recovered or paid
using the tax rates and tax laws that have been enacted at each reporting date. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. Where appropriate, management establishes provisions based
on the amounts expected to be paid to the Tax Authorities.

The Group recognizes deferred tax assets and liabilities for temporary differences between the
financial and tax bases of assets and liabilities at each reporting date. The Group also recognizes
deferred tax assets resulting from the recognition of future tax benefits, such as the benefit of tax
losses carried forward to the extent their future realization is probable. Deferred tax assets and
liabilities are measured using enacted or substantively enacted tax rates and tax laws at each
reporting date which are expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.

The carrying amount of deferred tax asset is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable income will be available to
allow the benefit of part or all of that deferred tax asset to be utilized. Tax deduction from the reversal
of deferred tax assets is excluded from the estimation of future taxable income.

Deferred tax assets and liabilities are offset in the consolidated statements of financial position,
except if these are for different legal entities, in the same manner the current tax assets and liabilities
are presented.

Amendment to taxation obligation is recorded when an assessment letter (“Surat Ketetapan Pajak”
or “SKP”) is received or, if appealed against, when the results of the appeal are determined. The
additional taxes and penalty imposed through an SKP are recognized in the current year profit or
loss, unless objection/appeal is taken. The additional taxes and penalty imposed through the SKP
are deferred as long as they meet the asset recognition criteria.

Indonesian tax regulations impose final tax on several types of transactions based on the gross
value of the transaction. Therefore, final tax which is charged based on the such transaction remains
subject to tax even though the tax payer incurred a loss on the transaction. Refer to PSAK No. 46
revised, final tax is not required in scope of PSAK No. 46.

Final income tax on construction services and lease is presented as part of “Other Expenses”.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

u. Financial instruments

The Group classifies financial instruments into financial assets and financial liabilities. Financial
assets and liabilities are recognized initially at fair value including transaction costs. These are
subsequently measured either at fair value or amortized cost using the effective interest method in
accordance with their classification.

Financial assets

The Group classifies its financial assets as (i) financial assets at fair value through profit or loss,
(ii) loans and receivables, (iii) held-to-maturity investment or (iv) available-for-sale financial
assets. The classification depends on the purpose for which the financial assets are acquired.
Management determines the classification of financial assets at initial recognition.

Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the marketplace (regular way trades) are recognized
on the trade date, i.e., the date that the Group commits to purchase or sell the assets.

The Group’s financial assets include cash and cash equivalents, other current financial assets,
trade receivables and other receivables, other non-current financial assets, and available-for-
sale investments.

a. Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets classified as held
for trading. A financial asset is classified as held for trading if it is acquired principally for the
purpose of selling or repurchasing it in the near term and for which there is evidence of a
recent actual pattern of short-term profit taking. Gains or losses arising from changes in fair
value of the trading securities are presented as other income/(expense) in consolidated
statements of profit or loss and other comprehensive income in the period in which they
arise.

No financial assets were classified as financial assets at fair value through profit or loss as
of December 31, 2018 and 2017.

b. Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market.

Loans and receivables consist of, among other, cash and cash equivalents, other current
financial assets, trade and other receivables, and other non-current assets (long-term trade
receivables and restricted cash).

These are initially recognized at fair value including transaction costs and subsequently
measured at amortized cost, using the effective interest method.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

u. Financial instruments (continued)

Financial assets (continued)

c. Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturities on which management has the positive intention and ability
to hold to maturity, other than:
a)

those that the Group, upon initial recognition, designates as at fair value through profit
or loss;
those that the Group designates as available-for-sale; and
those that meet the definition of loans and receivables.

b)
c)

financial assets were classified as held-to-maturity

No
December 31, 2018 and 2017.

investments as of

d. Available-for-sale financial assets

Available-for-sale investments are non-derivative financial assets that are intended to be
held for indefinite periods of time, which may be sold in response to needs for liquidity or
changes in interest rates, exchange rates or that are not classified as loans and receivables,
held-to-maturity investments or financial assets at fair value through profit or loss. Available-
for-sale investments primarily consist of mutual funds, corporate and government bonds and
capital stock, which are recorded as part of “Other Current Financial Assets” and “Long-term
Investsments” in the consolidated statements of financial position.

Available-for-sale investments are stated at fair value. Unrealized holding gains or losses
on available-for-sale investments are excluded from income of the current period and are
reported as a separate component in the equity section of the consolidated statements of
financial position until realized. Realized gains or losses from the sale of available-for-sale
investments are recognized in the consolidated statements of profit or loss and other
comprehensive income, and are determined on the specific identification basis.

ii. Financial liabilities

The Group classifies its financial liabilities as (i) financial liabilities at fair value through profit or
loss or (ii) financial liabilities measured at amortized cost.

The Group’s financial liabilities include trade and other payables, accrued expenses, and
interest-bearing loans, other borrowings and other liabilities. Interest-bearing loans consist of
short-term bank loans, two-step loans, bonds and notes, long-term bank loans and obligations
under finance leases.

a. Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are financial liabilities classified as held
for trading. A financial liability is classified as held for trading if it is incurred principally for
the purpose of selling or repurchasing it in the near term and for which there is evidence of
a recent actual pattern of short-term profit taking.

No financial liabilities were categorized as held for trading as of December 31, 2018 and
2017.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

u. Financial instruments (continued)

ii. Financial liabilities (continued)

b. Financial liabilities measured at amortized cost

Financial liabilities that are not classified as liabilities at fair value through profit or loss fall
into this category and are measured at amortized cost. Financial liabilities measured at
amortized cost are trade and other payables, accrued expenses, interest-bearing loans,
other borrowings, and other liabilities. Interest-bearing loans consist of short-term bank
loans, two-step loans, bonds and notes, long-term bank loans and obligations under finance
leases.

iii. Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the consolidated
statements of financial position when there is a legally enforceable right to offset the recognized
amounts and there is an intention to settle them on a net basis, or realize the assets and settle
the liabilities simultaneously. The right of set-off must not be contingent on a future event and
must be legally enforceable in all of the following circumstances:
a. the normal course of business;
b. the event of default; and
c. the event of insolvency or bankruptcy of the Group and all of the counterparties.

iv. Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged, or liability settled, in an arm’s
length transaction.

The fair value of financial instruments that are traded in active markets at each reporting date
is determined by reference to quoted market prices, without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using
appropriate valuation techniques. Such techniques may include using recent arm’s length
market transactions, reference to the current fair value of another instrument that is substantially
the same, a discounted cash flow analysis or other valuation models.

An analysis of fair values of financial instruments and further details as to how they are
measured are provided in Note 36.

Impairment of financial assets

The Group assesses the impairment of financial assets if there is objective evidence that a loss
event has a negative impact on the estimated future cash flows of the financial assets.
Impairment is recognized when the loss can be reliably estimated. Losses expected as a result
of future events, no matter how likely, are not recognized.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

u. Financial instruments (continued)

Impairment of financial assets (continued)

For financial assets carried at amortized cost, the Group first assesses whether impairment
exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the Group determines that no objective evidence
of impairment exists for an individually assessed financial asset, whether significant or not, it
includes the asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is, or continues to be, recognized are not included in the
collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future
expected credit losses that have not yet been incurred). The present value of the estimated
future cash flows is discounted at the financial asset’s original effective interest rate. The
carrying amount of the asset is reduced through the use of an allowance account and the loss
is recognized in profit or loss.

For available-for-sale financial assets, the Group assesses at each reporting date whether there
is objective evidence that an investment or a group of investments is impaired. When a decline
in the fair value of an available-for-sale financial asset has been recognized in other
comprehensive income and there is objective evidence that the asset is impaired, the
cumulative loss that had been recognized in other comprehensive income is recognized in profit
or loss as an impairment loss. The amount of the cumulative loss is the difference between the
acquisition cost (net of any principal repayment and amortization) and current fair value, less
any impairment loss on that financial asset previously recognized.

vi. Derecognition of financial instrument

The Group derecognizes a financial asset when the contractual rights to the cash flows from
the financial asset expire, or when the Group transfers substantially all the risks and rewards of
ownership of the financial asset.

The Group derecognizes a financial liability when the obligation specified in the contract is
discharged or cancelled or has expired.

v. Sukuk Ijarah

Sukuk Ijarah issued by the Group is recognized at nominal value, adjusted to the premium or
discount and related transaction costs. The difference between the carrying amount and the nominal
value is amortized on a straight-line basis over the period of the sukuk and is recognized in the
income statement as the sukuk issuance expense.

Sukuk Ijarah, after adjusting for premium or discount and unamortized transaction costs, is
presented as part of liabilities.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

w. Treasury stock

Reacquired Company shares of stock are accounted for at their reacquisition cost and classified as
“Treasury Stock” and presented as a deduction in equity. The cost of treasury stock sold/transferred
is accounted for using the weighted average method. The portion of treasury stock transferred for
employee stock ownership program is accounted for at its fair value at grant date. The difference
between the cost and the proceeds from the sale/transfer of treasury stock is credited to “Additional
Paid-in Capital”.

x. Dividends

Dividend for distribution to the stockholders is recognized as a liability in the consolidated financial
statements in the year in which the dividend is approved by the stockholders. The interim dividend
is recognized as a liability based on the Board of Directors’ decision supported by the approval from
the Board of Commissioners.

y. Basic and diluted earnings per share and earnings per ADS

Basic earnings per share is computed by dividing profit for the year attributable to owners of the
parent company by the weighted average number of shares outstanding during the year. Income
per ADS is computed by multiplying the basic earnings per share by 100, the number of shares
represented by each ADS.

The Company does not have potentially dilutive financial investments.

z. Segment information

The Group's segment information is presented based upon identified operating segments. An
operating segment is a component of an entity: a) that engages in business activities from which it
may earn revenues and incur expenses (including revenues and expenses relating to transactions
with other components of the same entity); b) whose operating results are regularly reviewed by the
Group’s Chief Operating Decision Maker (“CODM”) i.e., the Directors, to make decisions about
resources to be allocated to the segment and assess its performance; and c) for which discrete
financial information is available.

aa. Provision

Provisions are recognized when the Group has present obligations (legal or constructive) arising
from past events and it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligations and the amount can be measured reliably.

Provisions for onerous contracts are recognized when the contract becomes onerous for the lower
of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfill the
contract.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ab. Impairment of non-financial assets

At the end of each reporting period, the Group assesses whether there is an indication that an
asset may be impaired. If such indication exists, the recoverable amount is estimated for the
individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the
Group determines the recoverable amount of the Cash-Generating Unit (“CGU”) to which the asset
belongs (“the asset’s CGU”).

The recoverable amount of an asset (either individual asset or CGU) is the higher of the asset’s
fair value less costs to sell and its value in use (“VIU”). Where the carrying amount of the asset
exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing the value in use, the estimated net future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.

In determining fair value less costs to sell, recent market transactions are taken into account, if
available. If no such transactions can be identified, the Group uses an appropriate valuation model
to determine the fair value of the asset. These calculations are corroborated by valuation multiples
or other available fair value indicators.

Impairment losses of continuing operations are recognized in profit or loss as part of “Depreciation
and Amortization” in the consolidated statements of profit or loss and other comprehensive income.

At the end of each reporting period, the Group assesses whether there is any indication that
previously recognized impairment losses for an asset, other than goodwill, may no longer exist or
may have decreased. If such indication exists, the recoverable amount is estimated. A previously
recognized impairment loss for an asset, other than goodwill, is reversed only if there has been a
change in the assumptions used to determine the asset’s recoverable amount since the last
impairment loss was recognized. The reversal is limited such that the carrying amount of the asset
does not exceed its recoverable amount, nor exceeds the carrying amount that would have been
determined, net of depreciation, had no impairment been recognized for the asset in prior periods.
Reversal of an impairment loss is recognized in profit or loss.

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value
may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of
each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the
CGU is less than its carrying amount, an impairment loss is recognized. Impairment loss relating
to goodwill can not be reversed in future periods.

ac. Critical accounting estimates and assumptions

Estimates and judgments are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are addressed below.

i. Retirement benefits

The present value of the retirement benefit obligations depends on a number of factors that are
determined on an actuarial basis using a number of assumptions. The assumptions used in
determining the net cost (income) for pensions include the discount rate and return on
investment (ROI). Any changes in these assumptions will impact the carrying amount of the
retirement benefit obligations.

These consolidated financial statements are originally issued in the Indonesian language.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ac. Critical accounting estimates and assumptions (continued)

i. Retirement benefits (continued)

The Group determines the appropriate discount rate at the end of each reporting period. This
is the interest rate that should be used to determine the present value of estimated future cash
outflows expected to be required to settle the obligations. In determining the appropriate
discount rate, the Group considers the interest rates of Government bonds that are
denominated in the currency in which the benefits will be paid and that have terms to maturity
approximating the terms of the related retirement benefit obligations.

If there is an improvement in the ratings of such Government bonds or a decrease in interest
rates as a result of improving economic conditions, there could be a material impact on the
discount rate used in determining the post-employment benefit obligations.

Other key assumptions for retirement benefit obligations are based in part on current market
conditions. Additional information is disclosed in Notes 29 and 30.

ii. Useful lives of property and equipment

The Group estimates the useful lives of its property and equipment based on expected asset
utilization, considering strategic business plans, expected future technological developments
and market behavior. The estimates of useful lives of property and equipment are based on the
Group’s collective assessment of industry practice, internal technical evaluation and experience
with similar assets.

The Group reviews its estimates of useful lives at least each financial year-end and such
estimates are updated if expectations differ from previous estimates due to changes in
expectation of physical wear and tear, technical or commercial obsolescence and legal or other
limitations on the continuing use of the assets. The amounts of recorded expenses for any year
will be affected by changes in these factors and circumstances. A change in the estimated
useful lives of the property and equipment is a change in accounting estimates and is applied
prospectively in profit or loss in the period of the change and future periods.

Details of the nature and carrying amounts of property and equipment are disclosed in Note 9.

iii. Provision for impairment of receivables

The Group assesses whether there is objective evidence that trade and other receivables have
been impaired at the end of each reporting period. Provision for impairment of receivables is
calculated based on a review of the current status of existing receivables and historical
collection experience. Such provisions are adjusted periodically to reflect the actual and
anticipated experience. Details of the nature and carrying amounts of provision for impairment
of receivables are disclosed in Note 5.

iv. Income taxes

Significant judgment is required in determining the provision for income taxes. There are many
transactions and calculations for which the ultimate tax determination is uncertain. The Group
recognizes liabilities for anticipated tax audit issues based on estimates of whether additional
taxes will be due. Where the final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the current and deferred income tax
assets and liabilities in the year in which such determination is made. Details of the nature and
carrying amounts of income tax are disclosed in Note 26.

These consolidated financial statements are originally issued in the Indonesian language.

3. CASH AND CASH EQUIVALENTS

Cash on hand
Cash in banks

Related parties

PT Bank Mandiri (Persero) Tbk (“Bank Mandiri”)

PT Bank Negara Indonesia (Persero) Tbk (“BNI”)

PT Bank Rakyat Indonesia (Persero) Tbk (“BRI”)

PT Bank Tabungan Negara (Persero) Tbk (“BTN”)
Others

Sub-total

Third parties

PT Bank Permata Tbk (“Bank Permata”)

PT Bank HSBC Indonesia ("HSBC")
The Hongkong and Shanghai Banking
Corporation Ltd. ("HSBC Hongkong")

Standard Chartered Bank (“SCB”)

PT Bank UOB Indonesia ("UOB")
United Overseas Bank Limited ("UOB Singapore")

Others (each below Rp75 billion)

Sub-total

Total cash in banks

Time deposits

Related parties

BNI

BTN

BRI

Bank Mandiri

Sub-total

Currency
Rp

Rp
US$
JPY
EUR
HKD
AUD
Rp
US$
EUR
SGD
Rp
US$
Rp
Rp
US$

Rp
US$
Rp

US$
HKD
Rp
US$
SGD
Rp
US$
SGD
MYR
Rp
US$
EUR
MYR
TWD
AUD
HKD
MOP

Rp
US$
Rp
US$
Rp
US$
Rp
US$

2018
Balance

2017
Balance

Original
currency
(in millions)

Rupiah
equivalent

Original
currency
(in millions)

Rupiah
equivalent

-
10
8
1
1
0
-
2
0
0
-
2
-
-
0

-
2
-

12
5
-
10
1
-
4
1
3
-
4
1
3
17
0
0
0

-
58
-
31
-
47
-
16

1,199
139
1
20
1
0
791
28
0
0
728
31
342
15
0
3,295

218
30
1

181
9
0
148
14
17
55
14
9
197
60
20
12
8
2
0
0
995

4,290

2,640
837
2,559
446
1,911
676
611
230
9,910

-
27
7
1
1
0
-
1
0
0
-
6
-
-
0

-
0
-

14
4
-
11
0
-
1
0
2
-
4
1
0
8
0
0
0

-
9
-
-
-
15
-
-

1,481
367
1
17
2
0
968
13
6
0
466
82
7
14
1
3,425

278
2
-

184
6
0
154
1
23
15
2
8
361
46
20
0
4
1
0
0
1,105

4,530

5,315
116
2,958
-
4,954
203
446
-
13,992

These consolidated financial statements are originally issued in the Indonesian language.

3. CASH AND CASH EQUIVALENTS (continued)

2018
Balance

2017
Balance

Currency

Original
currency
(in millions)

Rupiah
equivalent

Original
currency
(in millions)

Rupiah
equivalent

Time deposits (continued)

Third parties

PT Bank Pembangunan Daerah Jawa Barat

dan Banten Tbk (“BJB”)

PT Bank Tabungan Pensiunan Nasional Tbk

(“BTPN”)

UOB
PT Bank Mega Tbk (“Bank Mega”)
PT Bank Bukopin Tbk (“Bank Bukopin”)
PT Bank CIMB Niaga Tbk
(“Bank CIMB Niaga”)

PT Bank Muamalat Indonesia Tbk
PT Bank OCBC NISP Tbk (“OCBC NISP”)
SCB
PT Bank ANZ Indonesia (”ANZ”)

Others

Sub-total

Total time deposits

Total

Rp
US$
US$
Rp
Rp

Rp
US$
Rp
Rp
US$
Rp
US$
Rp
MYR

-
25
30
-
-

-
-
-
-
-
-
-
-
11

1,295

181
363
429
365
248

190
-
40
-
-
-
-
53
39
3,203

13,113

17,439

-
30
20
-
-

0
2
-
-
10
-
5
-
14

1,726

676
401
263
1,243
22

600
31
91
1,200
136
5
73
97
47
6,611

20,603

25,145

Interest rates per annum on time deposits are as follows:

Rupiah
Foreign currency

2018
2.50%-9.25%
0.50%-3.75%

2017
2.85%-8.50%
0.40%-1.75%

The related parties in which the Group places its funds are state-owned banks. The Group placed the
majority of its cash and cash equivalents in these banks because they have the most extensive branch
networks in Indonesia and are considered to be financially sound banks, as they are owned by the
State.

Refer to Note 31 for details of related parties transactions.

These consolidated financial statements are originally issued in the Indonesian language.

4. OTHER CURRENT FINANCIAL ASSETS

2018
Balance

2017
Balance

Original currency Rupiah

Currency

(in millions)

equivalent

(in millions)

equivalent

Time deposits

Related parties

BNI
BRI

Third parties

SCB
UOB
HSBC
Others

Total time deposits

Available-for-sale financial assets

Related parties

PT Mandiri Manajemen Investasi
PT Bahana TCW Investment Management

(“Bahana TCW”)

Others
Sub-total

Third parties

Total available-for-sale financial assets

Escrow accounts

Others

Total

Rp
Rp

US$
US$
US$
Rp

Rp
Rp

Rp
US$
MYR
Rp
US$
MYR
AUD

-
-

8
3
3
-

-
-

-
0
5
-
-
-
-

1
-

116
45
43
-
205

379

91
-
470

470

136
1
16
476
-
-
-
1,304

-
-

8
14
-
-

-
-

-
6
5
-
0
0
0

-
2

109
191
-
23
325

711

360
80
1,151

1,168

318
78
15
263
6
0
0
2,173

The time deposits have maturities of more than three months but not more than one year, with interest
rates as follows:

Rupiah
Foreign currency

2018
5.00%
1.35%-1.92%

2017
6.00%-7.00%
1.38%-1.64%

Refer to Note 31 for details of related parties transactions.

These consolidated financial statements are originally issued in the Indonesian language.

5. TRADE RECEIVABLES

Trade receivables arise from services provided to both retail and non-retail customers, with details as
follows:

a. By debtor

(i) Related parties

State-owned enterprises
Indonusa
PT Indosat Tbk ("Indosat")
Others
Total
Provision for impairment of receivables
Net

(ii) Third parties

Individual and business subscribers
Overseas international carriers
Total
Provision for impairment of receivables
Net

b. By age

(i) Related parties

Up to 3 months
3 to 6 months
More than 6 months
Total
Provision for impairment of receivables
Net

(ii) Third parties

Up to 3 months
3 to 6 months
More than 6 months
Total
Provision for impairment of receivables
Net

2018

2017

1,649
522
219
467
2,857
(731)
2,126

721
465
372
670
2,228
(683)
1,545

2018

2017

12,044
1,542
13,586
(4,298)
9,288

9,808
1,517
11,325
(3,648)
7,677

2018

2017

1,748
296
813
2,857
(731)
2,126

1,405
100
723
2,228
(683)
1,545

2018

2017

8,006
1,502
4,078
13,586
(4,298)
9,288

6,809
688
3,828
11,325
(3,648)
7,677

These consolidated financial statements are originally issued in the Indonesian language.

5. TRADE RECEIVABLES (continued)

b. By age (continued)

(iii) Aging of total trade receivables

Not past due
Past due up to 3 months
Past due more than 3 to 6 months
Past due more than 6 months
Total

7,512
2,244
1,797
4,890
16,443

394
281
329
4,025
5,029

2018
Provision for
impairment of
receivables

Gross

2017

Provision for
impairment of
receivables
920
281
258
2,872
4,331

6,788
1,426
788
4,551
13,553

The Group has made provision for impairment of trade receivables based on the collective
assessment of historical impairment rates and individual assessment of its customers’ credit
history. The Group does not apply a distinction between related party and third party receivables
in assessing amounts past due. As of December 31, 2018 and 2017, the carrying amounts of
trade receivables of the Group considered past due but not impaired amounted to Rp4,296 billion
and Rp3,354 billion, respectively. Management believes that receivables past due but not
impaired, along with trade receivables that are neither past due nor impaired, are due from
customers with good credit history and are expected to be recoverable.

c. By currency

(i) Related parties

Rupiah
U.S. dollar
Others
Total
Provision for impairment of receivables
Net

(ii) Third parties

Rupiah
U.S. dollar
Australian dollar
Others
Total
Provision for impairment of receivables
Net

2018

2017

2,850
7
0
2,857
(731)
2,126

2018

2017

11,348
2,118
19
101
13,586
(4,298)
9,288

2,187
41
0
2,228
(683)
1,545

10,300
968
19
38
11,325
(3,648)
7,677

These consolidated financial statements are originally issued in the Indonesian language.

5. TRADE RECEIVABLES (continued)

d. Movements in the provision for impairment of receivables

Beginning balance
Provision recognized during the year

(Note 25)

Receivables written off
Ending balance

2018

2017

4,331

1,724
(1,026)
5,029

2,990

1,494
(153)
4,331

The receivables written off relate to both related party and third party trade receivables.

Management believes that the provision for impairment of trade receivables is adequate to cover
losses on uncollectible trade receivables.

As of December 31, 2018, certain
Rp7,116 billion have been pledged as collateral under lending agreements (Notes 15 and 16c).

the subsidiaries amounting

trade receivables of

Refer to Note 31 for details of related parties transactions.

INVENTORIES

Components
SIM Cards and blank prepaid vouchers
Others
Total
Provision for obsolescence

Components
SIM Cards and blank prepaid vouchers
Others

Total
Net

2018

2017

429
137
218
784

(38)
(28)
(1)
(67)
717

Movements in the provision for obsolescence are as follows:

Beginning balance
Provision recognized during the year
Inventory written off
Ending balance

2018

2017

53
22
(8)
67

447
168
69
684

(24)
(29)
0
(53)
631

47
6
-
53

inventories

The
in operations, maintenance and
telecommunication service expenses as of December 31, 2018 and 2017 amounted to Rp2,625 billion
and Rp2,458 billion, respectively (Note 24).

recognized as expense and

included

These consolidated financial statements are originally issued in the Indonesian language.

INVENTORIES (continued)

Management believes that the provision is adequate to cover losses from decline in inventory value due
to obsolescence.

Certain inventories of the subsidiaries amounting to Rp235 billion have been pledged as collateral under
lending agreements (Notes 16c).

As of December 31, 2018 and 2017, modules and components held by the Group with book value
amounting to Rp125 billion and Rp143 billion, respectively, have been insured against fire, theft, and
other specific risks. Total sum insured as of December 31, 2018 and 2017 amounted to Rp176 biliion
and Rp256 billion, respectively.

Management believes that the insurance coverage is adequate to cover potential losses of inventories
arising from the insured risks.

7. OTHER CURRENT ASSETS

The breakdown of other current assets is as follows:

Frequency license (Note 34c.i)
Advances
Prepaid rental
Prepaid salaries
Advance to employee
Others
Total

2018

2017

3,636
1,803
1,382
200
30
931
7,982

Refer to Note 31 for details of related parties transactions.

8. LONG-TERM INVESTMENTS

The Group has investments in several entities as follows:

2018

Percentage of Beginning Additions

balance (deductions)

Dividend

Impairment

Share of
net profit
(loss)

Share of other
comprehensive
income

Long-term investments

in associated
companies:
Tiphonea
Indonusab
Teltranetc
PT Integrasi Logistik

ownership

24.00
20.00
51.00

Cipta Solusi (“ILCS”)d

49.00

45.00
30.40
25.00-32.00

PT Graha Sakura

Nusantara (“GSN”)e

Cellumf
Othersg
Sub-total

Other long-term
investments
Total long-term
investments

1,539
221
18

14
-
4
1,839

309

2,148

-
-
-

-
84
-
84

253

337

87
(11)
(19)

0
(5)
0
53

(9)
-
-

-
-
0
(9)

(9)

(15)
-
1

-
-
0
(14)

(14)

-
-
-
-
-
-
-
-
-
-

(43)

3,760
1,156
1,349
227
35
656
7,183

Ending
balance

1,602
210
0
-
44
-
14
79
4
1,953

519

2,472

These consolidated financial statements are originally issued in the Indonesian language.

8. LONG-TERM INVESTMENTS (continued)

Summarized financial information of the Group’s investments accounted under the equity method for
2018:

Tiphone Indonusa Teltranet

ILCS

GSN

Cellum

Others

269
116
(269)
(138)
(22)

132
47
(87)
(2)
90

184
-
154
-
338

Statements of financial position

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity (deficit)

Statements of profit or loss and other

comprehensive income
Revenues
Operating expenses
Other income (expenses) including

finance costs - net
Profit (loss) before tax
Income tax benefit (expense)
Profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)

for the year

7,615
892
(1,466)
(3,062)
3,979

29,228
(28,117)

(391)
720
(137)
583
(63)

449
310
(571)
(297)
(109)

824
(583)

(39)
202
(55)
147
(3)

520

144

Percentage of Beginning Additions

206
(264)

164
(162)

1
3
(1)
2
-

(13)
(71)
12
(59)
1

(58)

2017

22
43
(23)
(20)
22

22
(46)

(10)
(34)
-
(34)
-

201
601
(663)
(1,863)
(1,724)

95
(233)

(33)
(171)
(1)
(172)
-

5
(5)

1
1
(0)
1
-

(34)

(172)

balance (deductions)

Dividend

Share of
net profit
(loss)

Share of other
comprehensive Ending
balance

income

ownership

24.00
20.00
51.00
49.00
45.00
25.00-49.00

Long-term investments

in associated
companies:
Tiphonea
Indonusab
Teltranetc
ILCSd
GSNe
Othersg
Sub-total
Other long-term
investments
Total long-term
investments

1,488
221
38
42
-
-
1,789

1,847

-
-
-
-
14
4
18

251

269

80
-
(20)
1
0
(0)
61

(28)
-
-
-
-
-
(28)

(28)

(1)
-
-
-
-
(0)
(1)

1,539
221
18
43
14
4
1,839

309

(1)

2,148

These consolidated financial statements are originally issued in the Indonesian language.

8. LONG-TERM INVESTMENTS (continued)

Summarized financial information of the Group’s investments accounted under the equity method for
2017:

Tiphone Indonusa Teltranet

ILCS

GSN

Others

Statements of financial position

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity (deficit)

Statements of profit or loss and other
comprehensive income

Revenues
Operating expenses
Other income (expenses) including

finance costs - net
Profit (loss) before tax
Income tax benefit (expense)
Profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)

for the year

8,084
994
(2,107)
(3,255)
3,716

27,914
(27,217)

(246)

451
(116)
335
(3)

332

307
415
(877)
(177)
(332)

692
(333)

(364)

(5)
-
(5)
-

(5)

174
101
(149)
(90)
36

209
(255)

(5)

(51)
13
(38)
(0)

(38)

145
32
(87)
(2)
88

122
(116)

(4)

2
1
3
(0)

1
185
(27)
(129)
30

190
606
(724)
(1,882)
(1,810)

0
(0)

(0)

0
-
0
-

106
(287)

(19)

(200)
-
(200)
-

(200)

a Tiphone was established on June 25, 2008 as PT Tiphone Mobile Indonesia Tbk. Tiphone is engaged in the telecommunication
equipment business, such as celullar phone including spare parts, accessories, pulse reload vouchers, repair service and
content provider through its subsidiaries. On September 18, 2014, the Company through PINS acquired 25% ownership in
Tiphone for Rp1,395 billion.

As of December 31, 2018 and 2017,

to Rp1,649 billion and
Rp1,755 billion, respectively. The fair value was calculated by multiplying the number of shares by the published price quotation
as of December 31, 2018 and 2017 amounting to Rp940 and Rp1,000 per share, respectively.

investment amounted

fair value of

the

Reconciliation of

information
December 31, 2018 and 2017 is as follows:

financial

the carrying amount of

long-term

investment

in Tiphone as of

Assets
Liabilities
Net Assets
Group's proportionated share of net assets (24.00% in 2018 and 2017)
Goodwill
Carrying amount of long-term invesment

8,507
(4,528)
3,979
955
647
1,602

9,078
(5,362)
3,716
892
647
1,539

2018

2017

b Indonusa had been a subsidiary of the Company until 2013 when the Company disposed 80% of its interest in Indonusa.
On May 14, 2014, based on the Circular Resolution of the Stockholders of Indonusa as covered by notarial deed No. 57
dated April 23, 2014 of FX Budi Santoso
its Letter
No. AHU-02078.40.20.2014 dated April 29, 2014, Indonusa’s stockholders approved an increase in its issued and fully paid
capital by Rp80 billion. The Company waived its right to own the new shares issued and transferred it to Metra, as the result,
Metra’s ownership in Indonusa increased to 4.33% and the Company’s ownership become 15.67%.
c
Investment in Teltranet is accounted for under the equity method, which covered by an agreement between Metra and Telstra
Holding Singapore Pte. Ltd. dated August 29, 2014. Teltranet is engaged in communication system services. Metra does not
have control to determine the financial and operating policies of Teltranet. The unrecognized share of losses in Teltranet for the
year ended December 31, 2018 are Rp11 billion.

Isbandi, S.H., which was approved by

the MoLHR

d ILCS is engaged in providing E-trade logistic services and other related services.
e On August 31, 2017, NSI and third party established GSN which engaged in real estate, residential and apartment marketing

business.

f Investment in Cellum is accounted for under the equity method, which covered by a conditional shares subscription agreement
between Metranet and Cellum in January 30, 2018. Cellum is a company which engaged in mobile payment and commerce
services.

g The unrecognized share of losses in other investments cumulatively as of December 31, 2018 are Rp263 billion.

These consolidated financial statements are originally issued in the Indonesian language.

9. PROPERTY AND EQUIPMENT

January 1,
2018

Acquisition

Additions

Deductions

Reclassifications/
Translations

December 31,
2018

At cost:
Directly acquired assets

Land rights
Buildings
Leasehold improvements
Switching equipment
Telegraph, telex and data communication

equipment

Transmission installation and equipment
Satellite, earth station and equipment
Cable network
Power supply
Data processing equipment
Other telecommunication peripherals
Office equipment
Vehicles
Other equipment
Property under construction

Asset under finance lease

Transmission installation and equipment
Data processing equipment
Vehicles
Office equipment
CPE assets
Power supply
RSA assets
Total

1,519
9,802
1,257
18,463

1,583
133,797
9,300
47,155
16,279
13,294
1,659
1,557
439
97
4,415

5,582
83
401
80
22
215
252
267,251

46
43
-
-

-
-
-
-
13
23
-
46
6
-
2

-
-
-
-
-
-
-
179

39
67
23
818

3
3,266
2,414
5,887
484
140
1,765
471
203
18
17,821

21
-
176
4
-
-
-
33,620

-
(1)
(24)
(1,920)

-
(6,398)
(3)
(36)
(187)
(540)
-
(18)
(1)
-
(23)

-
(82)
-
(68)
-
(90)
-
(9,391)

22
1,922
119
(2,070)

-
10,743
261
(7,555)
1,275
1,348
(1)
86
(6)
(21)
(17,339)

-
-
1
-
-
-
-
(11,215)

1,626
11,833
1,375
15,291

1,586
141,408
11,972
45,451
17,864
14,265
3,423
2,142
641
94
4,876

5,603
1
578
16
22
125
252
280,444

January 1,
2018

Acquisition

Additions

Deductions

Reclassifications/
Translations

December 31,
2018

Accumulated depreciation and

impairment losses:
Directly acquired assets

Buildings
Leasehold improvements
Switching equipment
Telegraph, telex and data communication

equipment

Asset under finance lease

Transmission installation and equipment
Data processing equipment
Vehicles
Office equipment
CPE assets
Power supply
RSA assets
Total

Net book value

2,880
823
14,553

802
69,240
4,334
17,864
11,154
10,236
602
1,036
226
96

2,638
76
66
80
20
120
234
137,080
130,171

513
150
1,307

518
10,958
677
2,076
1,332
1,040
428
290
62
4

603
7
60
44
-
43
10
20,122

(1)
(24)
(1,920)

-
(5,579)
(3)
(36)
(177)
(519)
-
(18)
(1)
-

-
(82)
-
(54)
-
(90)
-
(8,504)

13
-
(3,390)

-
(372)
(3)
(7,719)
7
(10)
(1)
4
(6)
(25)

-
-
-
-
-
-
-
(11,502)

3,405
949
10,550

1,320
74,247
5,005
12,185
12,316
10,747
1,029
1,312
281
75

3,241
1
126
70
20
73
244
137,196
143,248

-
-
-

-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-

These consolidated financial statements are originally issued in the Indonesian language.

9. PROPERTY AND EQUIPMENT (continued)

At cost:
Directly acquired assets

Land rights
Buildings
Leasehold improvements
Switching equipment
Telegraph, telex and data communication

equipment

Asset under finance lease

Transmission installation and equipment
Data processing equipment
Vehicles
Office equipment
CPE assets
Power supply
RSA assets
Total

Accumulated depreciation and

impairment losses:
Directly acquired assets

Buildings
Leasehold improvements
Switching equipment
Telegraph, telex and data communication

equipment

Asset under finance lease

Transmission installation and equipment
Data processing equipment
Vehicles
Office equipment
CPE assets
Power supply
RSA assets
Total

Net book value

January 1,
2017

Acquisition

Additions

Deductions

Reclassifications/
Translations

December
31, 2017

1,417
7,837
1,116
20,490

1,586
121,552
8,445
44,791
15,022
12,515
700
1,453
387
100
4,550

5,354
84
135
76
22
215
252
248,099

40
39
-
69

-
-
573
-
-
-
-
11
-
-
-

-
-
-
-
-
-
-
732

62
211
34
556

-
2,420
1,233
5,715
222
715
966
327
65
-
20,110

228
-
290
-
-
-
-
33,154

-
(3)
(25)
(977)

-
(4,489)
(2,202)
(694)
(456)
(602)
(7)
-
(13)
-
(96)

-
(1)
(24)
(84)
-
-
-
(9,673)

-
1,718
132
(1,675)

(3)
14,314
1,251
(2,657)
1,491
666
-
(234)
-
(3)
(20,149)

-
-
-
88
-
-
-
(5,061)

1,519
9,802
1,257
18,463

1,583
133,797
9,300
47,155
16,279
13,294
1,659
1,557
439
97
4,415

5,582
83
401
80
22
215
252
267,251

January 1,
2017

Acquisition

Additions

Deductions

Reclassifications/
Translations

December
31, 2017

2,435
692
16,650

333
62,302
7,098
20,301
10,164
9,468
461
846
168
99

2,054
44
32
94
19
98
243
133,601
114,498

-
-
-

-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-

407
149
1,391

416
10,629
595
1,992
1,274
1,372
149
189
66
1

584
29
47
26
1
22
13
19,352

-
(23)
(977)

-
(3,642)
(2,202)
(693)
(286)
(581)
(7)
(9)
(8)
-

-
(1)
(13)
(56)
-
-
-
(8,498)

38
5
(2,511)

53
(49)
(1,157)
(3,736)
2
(23)
(1)
10
-
(4)

-
4
-
16
-
-
(22)
(7,375)

2,880
823
14,553

802
69,240
4,334
17,864
11,154
10,236
602
1,036
226
96

2,638
76
66
80
20
120
234
137,080
130,171

a. Gain on sale of property and equipment

Proceeds from sale of property and equipment
Net book value
Gain on sale of property and equipment

2018

2017

629
(1)
628

1,367
(1,009)
358

These consolidated financial statements are originally issued in the Indonesian language.

9. PROPERTY AND EQUIPMENT (continued)

b. Asset impairment

In 2014, the Group decided to cease its fixed wireless business, and accelerated the depreciation
of its fixed wireless assets in 2015.

In 2017, the Company derecognized the fixed wireless asset which fully depreciated with acquisition
cost of Rp3,193 billion.

As of December 31, 2018, the CGUs that independently generate cash inflows were fixed wireline,
cellular and others. Management believes that there is no indication of impairment in the assets as
of December 31, 2018.

c. Others

(i)

to property under construction amounted

Interest capitalized
to Rp271 billion and
Rp328 billion for the years ended December 31, 2018 and 2017, respectively. The capitalization
rate used to determine the amount of borrowing costs eligible for capitalization ranged from
9.68% to 11.00% and 8.15% to 11.00% for the years ended December 31, 2018 and 2017,
respectively.

(ii) No foreign exchange loss was capitalized as part of property under construction for the years

ended December 31, 2018 and 2017.

(iii) In 2018 and 2017, the Group obtained proceeds from the insurance claim on lost and broken
property and equipment, with a total value of Rp153 billion and Rp155 billion, respectively, and
were recorded as part of “Other Income” in the consolidated statements of profit or loss and
other comprehensive income. In 2018 and 2017, the net carrying amount of those assets of
Rp51 billion and Rp7 billion, respectively, were charged to the consolidated statements of profit
or loss and other comprehensive income.

(iv) In 2018 and 2017, Telkomsel decided to replace certain equipment units with net carrying
amount of Rp341 billion and Rp620 billion, respectively, as part of its modernization program
and accelerated the depreciation of such equipment units. The impact of accelerated
depreciation was an increase in the depreciation expense for the year ended December 31,
2018 amounting to Rp378 billion.

In 2014, the useful lives of Telkomsel’s buildings and transmissions were changed from
20 years to 40 years, and from 10 years to 15 and 20 years, respectively, to reflect the current
economic lives of the buildings and the transmissions. The change in useful lives increases
2018 profit before income tax amunting to Rp135 billion.

In 2018, the estimated useful lives of radio software license and data processing equipment
were changed from 7 to 10 years and from 3 to 5 years, respectively. The reduction in the
depreciation expense for the year ended December 31, 2018 amounting to Rp925 billion. The
change in useful lives will increase/(decrease) profit before income tax in future years as
follows:

Years
2019
2020
2021
2022

Increase (Decrease)

637
266
18
(106)

These consolidated financial statements are originally issued in the Indonesian language.

9. PROPERTY AND EQUIPMENT (continued)

c. Others (continued)

(v) Exchange of property and equipment

In 2012 and 2011, the Company entered into a Procurement and installation Agreement for the
Modernization of the Copper Cable Network through Optimalization of Asset Copper Cable
Network through Trade In/Trade Off method with PT Len Industri (“LEN”) and PT Industri
Telekomunikasi Indonesia (“INTI”), respectively.

In 2018 and 2017, the Company derecognized the copper cable network asset with net carrying
amount of Rp0 and Rp1 billion, respectively, and recorded the fiber optic network asset from
the exchange transaction of Rp0 and Rp506 billion, respectively.

In 2018 and 2017, Telkomsel’s certain equipment units with net carrying amount of
Rp777 billion and Rp816 billion, respectively, were exchanged with equipment from Ericsson
AB, PT Ericsson Indonesia, PT Huawei Tech Investment, PT Nokia Solutions and Network
Indonesia, and PT ZTE Indonesia. As of December 31, 2018, Telkomsel’s equipment units with
net carrying amount of Rp340 billion are going to be exchanged and, therefore, these
equipment were reclassified as “Assets held for sale” in the consolidated statements of financial
position.

(vi) The Group owns several pieces of land located throughout Indonesia with Building Use Rights
(“Hak Guna Bangunan” or “HGB”) for a period of 10-45 years which will expire between 2018
and 2053. Management believes that there will be no issue in obtaining the extension of the
land rights when they expire.

(vii) As of December 31, 2018, the Group’s property and equipment excluding land rights, with net
carrying amount of Rp134,586 billion were insured against fire, theft, earthquake and other
specified
totalling
Rp16,059 billion, US$47 million, HKD9 million, SGD225 million and MYR37 million and first loss
basis amounted to Rp2,760 billion. Management believes that the insurance coverage is
adequate to cover potential losses from the insured risks.

interruption, under blanket policies

including business

risks,

(viii) As of December 31, 2018, the percentage of completion of property under construction was
around 62.80% of the total contract value, with estimated dates of completion until September
2020. The balance of property under construction mainly consists of buildings, transmission
installation and equipment, cable network and power supply. Management believes that there
is no impediment to the completion of the construction in progress.

(ix) All assets owned by the Company have been pledged as collateral for bonds (Notes 16b.i).
Certain property and equipment of the Company’s subsidiaries with gross carrying value
amounting to Rp8,077 billion have been pledged as collateral under lending agreements
(Notes 15, 16c and 16d).

(x) As of December 31, 2018, the cost of fully depreciated property and equipment of the Group
that are still used in operations amounted to Rp50,633 billion. The Group is currently performing
modernization of network assets to replace the fully depreciated property and equipment.

These consolidated financial statements are originally issued in the Indonesian language.

9. PROPERTY AND EQUIPMENT (continued)

c. Others (continued)

(xi) In 2018, the total fair values of land rights and buildings of the Group, which are determined
based on the sale value of the tax object (“Nilai Jual Objek Pajak” or “NJOP”) of the related
land rights and buildings, amounted to Rp33,557 billion.

(xii) On August 25, 2017, Telkom-1 Satellite experienced technical problems which impacted to
customer service disruptions. Therefore, the Company was migrating customers services to
the Company’s other satellites (Telkom-3S and Telkom-2), as well as to several third party
satellites. This customers services migration process has been completed on
September 10, 2017, and the costs incurred on this migration process are recognized in these
consolidated statements of profit or loss and other comprehensive income. As of
December 31, 2017, the acquisition cost and accumulated depreciation of Telkom-1 Satellite
amounting to Rp1,165 billion is presented as part of disposal assets group and classified as
“Other Non-current Assets” in the consolidated statements of financial position.

(xiii) Telkomsel entered into several agreements with tower providers to lease spaces in
telecommunication towers (slot) and sites of the towers for a period of 10 years. Telkomsel
may extend the lease period based on mutual agreement with the relevant parties. In addition,
the Group also has lease commitments for transmission installation and equipment, data
processing
assets with
the option to purchase certain leased assets at the end of the lease terms.

and CPE

equipment,

vehicles

office

Future minimum lease payments required for assets under finance leases are as follows:

Years
2018
2019
2020
2021
2022
2023
Thereafter
Total minimum lease payments
Interest
Net present value of minimun lease payments
Current Maturities (Note 15b)
Long-term portion (Note 16)

2018

2017

-
1,049
945
781
605
254
130
3,764
(619)
3,145
(807)
2,338

1,083
969
866
778
605
254
130
4,685
(881)
3,804
(794)
3,010

The details of obligations under finance leases as of December 31, 2018 and 2017 are as

follows:

2018

2017

PT Tower Bersama Infrastructure Tbk
PT Profesional Telekomunikasi Indonesia
PT Mandiri Utama Finance
PT Solusi Tunas Pratama
PT Putra Arga Binangun
PT Mitsubishi UFJ Lease & Finance Indonesia
PT Bali Towerindo Sentra
Others (each below Rp75 billion)
Total

1,089
930
186
181
159
103
86
411
3,145

1,293
1,120
198
212
189
135
100
557
3,804

These consolidated financial statements are originally issued in the Indonesian language.

10. OTHER NON-CURRENT ASSETS

The breakdown of other non-current assets is as follows:

Prepaid rental - net of current portion (Note 7)
Claims for tax refund - net of current portion (Note 26)
Frequency license - net of current portion (Note 7)
Prepaid income taxes - net of current portion (Note 26)
Deferred charges
Advances for purchases of property and equipment
Convertible bonds
Restricted Cash
Security deposit
Others
Total

2018

2017

2,662
2,450
1,743
1,142
474
387
213
183
173
245
9,672

2,688
3,085
2,019
753
413
2,805
64
31
116
296
12,270

Prepaid rental covers rent of leased line, telecommunication equipment, land and building under lease
agreements of the Group with remaining rental periods ranging from 1 to 40 years.

As of December 31, 2018 and 2017, deferred charges represent deferred Indefeasible Right of
Use (“IRU”) Agreement charges. Total amortization of deferred charges for the year ended December
31, 2018 and 2017 amounted to Rp56 billion and Rp46 billion, respectively.

Refer to Note 31 for details of related parties transactions.

11.

INTANGIBLE ASSETS

The details of intangible assets are as follows:

Gross carrying amount:

Balance, January 1, 2018
Additions
Acquisition
Deductions
Reclassifications/translations
Balance, December 31, 2018

Accumulated amortization and impairment

losses:
Balance, January 1, 2018
Amortization
Deductions
Reclassifications/translations
Balance, December 31, 2018

Net book value

Gross carrying amount:

Balance, January 1, 2017
Additions
Acquisition
Deductions
Reclassifications/translations
Balance, December 31, 2017

Accumulated amortization and impairment

losses:
Balance, January 1, 2017
Amortization
Deductions
Reclassifications/translations
Balance, December 31, 2017

Net book value

Goodwill

Software

License

Other intangible
assets

Total

680
-
422
-
(36)
1,066

(29)
-
-
-
(29)
1,037

8,387
2,328
1
(51)
15
10,680

(5,714)
(1,226)
51
(7)
(6,896)
3,784

84
14
2
(11)
5
94

(71)
(9)
4
(5)
(81)
13

635
19
-
-
33
687

(442)
(49)
-
2
(489)
198

9,786
2,361
425
(62)
17
12,527

(6,256)
(1,284)
55
(10)
(7,495)
5,032

Goodwill

Software

License

Other intangible
assets

Total

449
-
232
(3)
2
680

(29)
-
-
-
(29)
651

7,222
1,289
4
(122)
(6)
8,387

(4,776)
(1,037)
95
4
(5,714)
2,673

75
3
-
-
6
84

(56)
(9)
-
(6)
(71)
13

607
21
-
(11)
18
635

(403)
(48)
11
(2)
(442)
193

8,353
1,313
236
(136)
20
9,786

(5,264)
(1,094)
106
(4)
(6,256)
3,530

These consolidated financial statements are originally issued in the Indonesian language.

11. INTANGIBLE ASSETS (continued)

(i) Goodwill resulted from the acquisition of Sigma (2008), Admedika (2010), data center BDM (2012),
Contact Centres Australia Pty. Ltd. (2014), MNDG (2015), Melon (2016), GSDm (2016), TSGN
(2017), Nutech (2017), Swadharma (2018), CIP (2018) and Telin Malaysia (2018) (Note 1d).

(ii) The amortization is presented as part of “Depreciation and Amortization” in the consolidated
statements of profit or loss and other comprehensive income. The remaining amortization periods
of software range from 1-5 years.

(iii) As of December 31, 2018, the cost of fully amortized intangible assets that are still used in

operations amounted to Rp4,463 billion.

12. TRADE PAYABLES

The breakdown of trade payables is as follows:

Related parties

Purchases of equipments, materials and services
Payables to other telecommunication providers

Sub-total

Third parties

Purchases of equipments, materials and services
Radio frequency usage charges, concession fees

and Universal Service Obligation (“USO”) charges

Payables to other telecommunication providers

Sub-total
Total

Trade payables by currency are as follows:

Rupiah
U.S. dollar
Others
Total

Refer to Note 31 for details of related parties transactions.

13. ACCRUED EXPENSES

2018

2017

804
189
993

10,874

1,471
1,428
13,773
14,766

574
322
896

11,662

1,561
1,455
14,678
15,574

2018

2017

11,726
2,978
62
14,766

13,344
2,167
63
15,574

The breakdown of accrued expenses is as follows:

Operation, maintenance and telecommunication services
General, administrative and marketing expenses
Salaries and benefits
Interest and bank charges
Total

8,013
2,299
2,219
238
12,769

7,093
2,684
2,664
189
12,630

2018

2017

Refer to Note 31 for details of related parties transactions.

These consolidated financial statements are originally issued in the Indonesian language.

14. UNEARNED INCOME

a. Current portion of unearned income

Prepaid pulse reload vouchers
Telecommunication tower leases
Other telecommunications services
Others
Total

b. Non-current portion of unearned income

Indefeasible Right of Use
Other telecommunications services
Total

2018

2017

4,374
356
284
176
5,190

2018

2017

258
394
652

4,800
300
148
179
5,427

205
319
524

15. SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS

a. Short-term bank loans

Lenders
Related parties

BNI
Bank Mandiri

Sub-total
Third parties

MUFG Bank, Ltd.
("MUFG Bank")
DBS

UOB
HSBC

SCB
Bank CIMB Niaga
PT Bank Sumitomo Mitsui Indonesia
("Sumitomo")
Others

Sub-total
Total

Currency

Rp
Rp

Rp
Rp
US$
Rp
Rp
US$
Rp
Rp

Rp
Rp

2018
Outstanding

Rupiah

2017
Outstanding

Original
currency
(in millions)

Rupiah
equivalent

-
-

-
-
-
-
-
-
-
-

-
-

1,252
45
1,297

-
408
-
400
18
-
-
83

80
3
992
2,289

equivalent

956
-
956

1,295
699
13
580
317
4
100
78

-
1
3,087
4,043

Original
currency
(in millions)

-
-

-
-
1
-
-
0
-
-

-
-

These consolidated financial statements are originally issued in the Indonesian language.

15. SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS

(continued)

a. Short-term bank loans

Other significant information relating to short-term bank loans as of December 31, 2018 is as follows:

Borrower

Currency

Total facility
(in billions)* Maturity date

BNI

2014 - 2017

GSDe,
Sigmaa

375 January 9, 2019 -
November 8,
2019

Interest
payment
period

Monthly

Interest rate per
annum

Security

9.00%

Trade
receivables
(Note 5) and
property and
equipment
(Note 9)
Trade
receivables
(Note 5)

None

None
Trade
receivables
(Note 5)

Trade
receivables
(Note 5)

Trade
receivables
(Note 5)
Trade
receivables
(Note 5)
None

2013 - 2018

MUFG Bank

2018

Telkom
Infratel,
Infomediaf,
MD Media,
Sigmae

Telkomsel,
Infomedia,
Metra,
TII

2018

2016
2016

Telkom
Infratel,
Infomedia
Nuteche
Sigmab,c

DBS

UOB

2,895

January 9, 2019 -
November 30,
2019

Monthly

1 month
JIBOR + 2.20% -
3.00%

2,350

March 27, 2019 -
September 27,
2019

Monthly,
Semi-annually

1 months
JIBOR + 0.70% -
0.95%.
6 months
JIBOR + 0.70%

600

February 26,
2019

Monthly

1 month
JIBOR + 0.70%

None

Rp
US$

17 October 13, 2019

Monthly

0.02

July 31, 2019 Semi-annually

10.50% - 11.00%
3.25% (US$),
10.75% (Rp)

2016 - 2018

MD Media,
Finnetd

800

April 6, 2019 -
December 20,
2020

Monthly

1 month
JIBOR + 2,00%

HSBC

2018

Sigma

600

July 15, 2019

Monthly

14.34%

2018

Sigma

US$

0.004

July 15, 2019

Monthly

13.12%

2018

PINS

300

June 28, 2019 Quarterly

3 months
JIBOR + 1,00%

SCB

2015
Bank CIMB Niaga
2013

GSDe

100 March 28, 2019

Monthly

10.50%

None

January 1, 2019

Monthly

10,90% - 11,50%

Trade
receivables
(Note 5) and
property and
equipment
(Note 9)

a Based on the latest amendment on December 21, 2017.
b Based on the latest amendment on December 5, 2018
c Facility in U.S. Dollar. Withdrawal can be executed in U.S. Dollar and Rupiah.
d Based on the latest amendment on June 5, 2018.
e Unsettled loan will be automatically extended.
f Based on the lates amendment on March 28, 2018 and July 6, 2018.

These consolidated financial statements are originally issued in the Indonesian language.

15. SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS

(continued)

a. Short-term bank loans (continued)

Other significant information relating to short-term bank loans as of December 31, 2018 is as follows
(continued):

On February 26, 2018, the Company, Telkom Infratel and Infomedia entered a credit agreements
with DBS amounting to Rp600 billion. As of December 31, 2018 the unused facilities was amounting
to Rp125 billion.

On March 21, 2018, the Company, TII, Infomedia and Metra entered a credit agreement with MUFG
Bank amounting to Rp500 billion. As of December 31, 2018 the unused facilities was amounting to
Rp80 billion.

The credit facilities were obtained by the Company’s subsidiaries for working capital purposes.

b. Current maturities of long-term borrowings

Two-step loans
Bonds and notes
Bank loans
Other borrowings
Obligation under finance leases

Total

Notes
16a
16b
16c
16d
9c.xiii

2018

2017

198
525
4,472
294
807

6,296

206
-
4,110
99
794

5,209

16. LONG-TERM LOANS AND OTHER BORROWINGS

Two-step loans
Bonds and notes
Bank loans
Other borrowings
Obligation under finance leases
Total

Notes
16a
16b
16c
16d
9c.xiii

2018

2017

751
9,956
18,753
1,950
2,338
33,748

892
8,982
13,894
1,196
3,010
27,974

Scheduled principal payments as of December 31, 2018 are as follows:

Two-step loans
Bonds and notes
Bank loans
Other borrowings
Obligation under
finance leases

Total

Notes
16a
16b
16c
16d

9c.xiii

a. Two-step loans

Total

2020

751
9,956
18,753
1,950

198
2,490
7,653
404

2,338
33,748

768
11,513

Year
2021

181
477
3,051
405

670
4,784

2022

2023

144
2,197
2,577
405

Thereafter
101
4,792
2,659
321

127
-
2,813
415

549
5,872

233
3,588

118
7,991

Two-step loans are unsecured loans obtained by the Government from overseas banks which are
then re-loaned to the Company. Loans obtained up to July 1994 are payable in rupiah based on the
exchange rate at the date of drawdown. Loans obtained after July 1994 are payable in their original
currencies and any resulting foreign exchange gain or loss is borne by the Company.

These consolidated financial statements are originally issued in the Indonesian language.

16. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

a. Two-step loans (continued)

2018
Outstanding

Original currency Rupiah

Currency

(in millions)

Yen
US$
Rp

Lenders
Overseas banks

Total
Current maturities (Note 15b)
Long-term portion

Lenders
Overseas banks

2017
Outstanding

Original currency
(in millions)

5,375
17
-

Rupiah
equivalent
648
237
213
1,098
(206)
892

4,607
13
-

equivalent
602
188
159
949
(198)
751

Currency
Yen
US$
Rp

Principal payment
schedule
Semi-annually
Semi-annually
Semi-annually

Interest payment period
Semi-annually
Semi-annually
Semi-annually

Interest rate per
annum

2.95%
3.85%
7.50%

The loans were intended for the development of telecommunications infrastructure and supporting
telecommunications equipment. The loans will be settled semi-annually and due on various dates
through 2024.
The Company had used all facilities under the two-step loans program since 2008.

Under the loan covenants, the Company is required to maintain financial ratios as follows:
a. Projected net revenue to projected debt service ratio should exceed 1.2:1 for the two-step loans

originating from Asian Development Bank (“ADB”).

b. Internal financing (earnings before depreciation and finance costs) should exceed 20% compared

to annual average capital expenditures for loans originating from the ADB.

As of December 31, 2018, the Company has complied with the above-mentioned ratios.

b. Bonds and notes

Bonds and notes

Currency

(in millions)

equivalent

(in millions)

equivalent

2018
Outstanding

2017
Outstanding

Original currency Rupiah

Bonds
2010

Series B

2015

Series A
Series B
Series C
Series D

Medium Term Notes ("MTN")

MTN I Telkom 2018

Series A
Series B
Series C

MTN Syariah Ijarah I Telkom 2018

Series A
Series B
Series C

Total
Unamortized debt issuance cost
Total
Current maturities (Note 15b)
Long-term portion

Rp
Rp
Rp
Rp

Rp
Rp
Rp

-
-
-
-

-
-
-

1,995

2,200
2,100
1,200
1,500

262
200
296

264
296
182
10,495
(14)
10,481
(525)
9,956

-
-
-
-

-
-
-

1,995

2,200
2,100
1,200
1,500

-
-
-

-
-
-
8,995
(13)
8,982
-
8,982

These consolidated financial statements are originally issued in the Indonesian language.

16. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

b. Bonds and notes (continued)

i. Bonds

2010
2010

Bonds
Series B

Principal

Issuer

1,995 The Company

Listed on
IDX

Issuance date

Maturity
date

Interest
payment period

June 25, 2010 July 6, 2020

Quartely

Interest
rate per
annum
10.20%

The bonds are not secured by specific security but by all of the Company’s assets, movable or
non-movable, either existing or in the future (Note 9c.ix). The underwriters of the bonds are
PT Bahana Securities (“Bahana”), PT Danareksa Sekuritas, and PT Mandiri Sekuritas and the
trustee
the General Meeting of Bondholders on
is Bank CIMB Niaga. Based on
September 26, 2018, the trustee was changed to BTN.

The Company received the proceeds from the issuance of bonds on July 6, 2010.

The funds received from the public offering of bonds net of issuance costs, were used to finance
capital expenditures which consisted of wave broadband (bandwidth, softswitching, datacom,
information technology and others) and infrastructure (backbone, metro network, regional metro
junction, internet protocol, and satellite system) and to optimize legacy and supporting facilities
(fixed wireline and wireless).

As of December 31, 2018, the rating of the bonds issued by PT Pemeringkat Efek Indonesia
(“Pefindo”) is idAAA (stable outlook).

Based on the indenture trusts agreement, the Company is required to comply with all covenants
or restrictions, including maintaining financial ratios as follows:
1. Debt to equity ratio should not exceed 2:1.
2. EBITDA to finance costs ratio should not be less than 5:1.
3. Debt service coverage is at least 125%.

As of December 31, 2018 the Company has complied with the above-mentioned ratios.

2015

Bonds
Series A
Series B
Series C
Series D
Total

Principal

Issuer

2,200 The Company
2,100 The Company
1,200 The Company
1,500 The Company
7,000

Issuance
date

Listed on
IDX
IDX
IDX
IDX

Maturity date
June 23, 2015 June 23, 2022
June 23, 2015 June 23, 2025
June 23, 2015 June 23, 2030
June 23, 2015 June 23, 2045

Interest
payment period
Quarterly
Quarterly
Quarterly
Quarterly

Interest rate
per annum
9.93%
10.25%
10.60%
11.00%

The bonds are not secured by specific security but by all of the Company’s assets, movable or
non-movable, either existing or in the future (Note 9c.ix). The underwriters of the bonds are
Bahana, PT Danareksa Sekuritas, PT Mandiri Sekuritas, and PT Trimegah Sekuritas Indonesia,
Tbk and the trustee is Bank Permata.

The Company received the proceeds from the issuance of bonds on June 23, 2015.

The funds received from the public offering of bonds net of issuance costs, were used to finance
capital expenditures which consisted of wave broadband, backbone, metro network, regional
metro junction, information technology application and support, and merger and acquisition of
some domestic and international entities.

As of December 31, 2018, the rating of the bonds issued by Pefindo is idAAA (stable outlook).

These consolidated financial statements are originally issued in the Indonesian language.

16. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

b. Bonds and notes (continued)

i. Bonds (continued)

As of December 31, 2018, the Company has complied with the above-mentioned ratios.

i. MTN

MTN I Telkom Year 2018

Notes Currency

Principal

Issuance
date

Maturity
date

Interest
payment

period

Series A
Series B
Series C

Rp
Rp
Rp

262 September 4, 2018 September 14, 2019 Quarterly
200 September 4, 2018 September 4, 2020 Quarterly
296 September 4, 2018 September 4, 2021 Quarterly
758

Interest rate
per annum Security
7.25% All assets
8.00% All assets
8.35% All assets

Based on Agreement of Issuance and Appointment of Monitoring Agents of Medium Term Notes
(MTN) I Telkom Year 2018 dated August 31, 2018 as covered by notarial deed No. 24 of Fathiah
Helmi, S.H., the Company issued MTN with the principal amount up to Rp758 billion in series.

Bahana, PT BNI Sekuritas, PT CGS-CIMB Sekuritas Indonesia, PT Danareksa Sekuritas and
PT Mandiri Sekuritas act as the Arranger, BTN as the Monitoring Agent and PT Kustodian
Sentral Efek Indonesia (“KSEI”) as the Custodian. The MTN are traded in private placement
programs. The funds obtained from MTN are used for investment projects.

As of December 31, 2018, the rating of the MTN issued by Pefindo is idAAA (Triple A).

Under to the agreement, the Company is required to comply with all covenants or restrictions
including maintaining financial ratios as follows:
1. Debt to equity ratio should not exceed 2:1
2. EBITDA to interest ratio should not be less than 4:1
3. Debt Service Coverage is at least 125%

As of December 31, 2018, 2018, the Company has complied with the above-mentioned ratios.

MTN Syariah Ijarah I Telkom Year 2018

Notes Currency Principal

Issuance
date

Maturity
date

return
period

Annual
return

payment

Series A

264 September 4, 2018 September 14, 2019 Quarterly

Series B

296 September 4, 2018 September 4, 2020 Quarterly

Series C

182 September 4, 2018 September 4, 2021 Quarterly

742

Security
The Right to
benefit of ijarah
objects
The Right to
benefit of ijarah
objects
The Right to
benefit of ijarah
objects

Based on Agreement of Issuance and Appointment of Monitoring Agents of Medium Term Notes
(MTN) Syariah Ijarah Telkom Year 2018 dated August 31, 2018 as covered by notarial deed
No. 26 of Fathiah Helmi, S.H., the Company issued MTN Syariah Ijarah with the principal
amount up to Rp742 billion in series.

These consolidated financial statements are originally issued in the Indonesian language.

16. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

b. Bonds and notes (continued)

ii. MTN (continued)

MTN Syariah Ijarah I Telkom Year 2018 (continued)

Bahana, PT BNI Sekuritas, PT CGS-CIMB Sekuritas Indonesia, PT Danareksa Sekuritas and
PT Mandiri Sekuritas act as the Arranger, BTN as the Monitoring Agent and KSEI as the
Custodian. The MTN Syariah Ijarah are traded in private placement programs. The funds
obtained from MTN Syariah Ijarah are used for investment projects. The object of MTN Syariah
Ijarah transaction is telecommunication network which is located in the special region of
Yogyakarta, its network telecommunication involves cable network, information technology
equipments, and other production tools of telecommunication services.

As of December 31, 2018, the rating of the MTN Syariah Ijarah issued by Pefindo is idAAA sy
(Triple A Syariah).

As of December 31, 2018, the Company has complied with the above-mentioned ratios.

c. Bank loans

Lenders
Related parties

BNI
Bank Mandiri
BRI
Sub-total
Third parties

MUFG Bank

Syndication of banks

Citibank
PT Bank Central Asia Tbk (“BCA”)
UOB Singapore
Sumitomo
Bank CIMB Niaga
ANZ
UOB
DBS
PT Bank ICBC Indonesia ("ICBC")
Exim Bank of Malaysia Berhad
Japan Bank for International

Cooperation ("JBIC")

Others

Sub-total
Total
Unamortized debt issuance cost

Current maturities (Note 15b)
Long-term portion

2018
Outstanding

2017
Outstanding

Currency

Original
currency
(in millions)

Rupiah
equivalent

Original
currency
(in millions)

Rupiah
equivalent

Rp
Rp
Rp

Rp
US$
Rp
US$
Rp
Rp
US$
Rp
Rp
Rp
Rp
Rp
Rp
MYR

US$
Rp
MYR

-
-
-

-
10
-
37
-
-
49
-
-
-
-
-
-
23

3
-
13

6,826
4,546
1,248
12,620

3,011
144
1,750
532
1,000
740
710
661
462
440
428
379
204
81

45
33
46
10,666
23,286
(61)
23,225
(4,472)
18,753

-
-
-

-
-
-
-
-
-
49
-
-
-
-
-
-
37

9
-
15

4,603
1,126
2,166
7,895

1,944
-
2,250
-
-
1,100
664
804
1,726
440
500
144
249
124

128
26
50
10,149
18,044
(40)
18,004
(4,110)
13,894

These consolidated financial statements are originally issued in the Indonesian language.

16. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

Other significant information relating to bank loans as of December 31, 2018 is as follows:

Total
facility
(in
billions)*

Current
period
payment
(in
billions)*

Borrower

Currency

Principal
payment
schedule

Interest
payment
period

Interest rate per
annum

Security

BNI

2018

2013 - 2018

Bank Mandiri
2016 - 2018

GSD

182

8 2018 - 2021

Monthly

8.75%

The Company,
Telkomsela, GSD,
TLT, Sigma,
Dayamitra,
Telkom Infratel,
Telkom Akses

The Company,
Telkomsela,c,
Balebat,
Telkomsat

9,892

1,671 2016 - 2033

Monthly,
Quarterly

1 month JIBOR
+ 1.50% -
3.00%;
3 months JIBOR
+ 1.85% - 2.50%

8,750

4,035 2017 - 2024

Monthly,
Quarterly

8.50%, 8.75%,
9.00%, 9.50%

2017

BRI

2013

GSD, TII,
Dayamitra

845

- 2019 - 2024

Quarterly 3 months JIBOR
+ 1.85%

GSD

103

17 2014 - 2021

Monthly

10.00%

Trade
receivables
(Note 5)
Trade
receivables
(Note 5),
Inventory
(Note 6) and
Property and
equipment
(Note 9)

Trade
receivables
(Note 5),
Inventory
(Note 6) and
Property and
equipment
(Note 9)
None

Trade
receivables
(Note 5),
Property and
equipment
(Note 9) and
lease
agreement
None

2017 - 2018

MUFG Bank
2015 - 2018

The Company,
Dayamitra

GSD, Metra,
Infomedia,
Dayamitra

1,200

- 2019 - 2025

3,950

194 2016 - 2025

2018

TII

US$

0.01

- 2019 - 2023

Quarterly 3 months JIBOR
+ 1.85%

Quarterly 3 months JIBOR
+ 1.43% - 2.25%

Quarterly 3 months LIBOR
+ 1,25%

Property and
equipment
(Note 9) and
lease
agreement
None

Syndication of

Banks
2015

2018

Citibank
2018

BCA

The Company,
GSD
TII

3,000

US$

0.09

500 2016 - 2022

Quarterly 3 months JIBOR
+ 2.00%
- 2020 - 2024 Semi-annually 6 months LIBOR
+ 1,25%

All Assets

None

The Company

1,000

- 2019 - 2020

Quarterly

8.50%

None

2017 - 2018

Metra, Dayamitra,
Telkom Infratel

870

21 2018 - 2025

UOB Singapore

2016

Sumitomo

2015 - 2017

TII

US$

0.06

- 2019 - 2024

GSD, Metra,
Infomedia,
Dayamitra

1,150

194 2016 - 2022

Quarterly 3 months JIBOR
+ 1.50% - 1.85%

Property and
equipment
(Note 9)

Monthly 1 months JIBOR
+ 1.25%

Quarterly 3 months JIBOR
+ 1.50% - 2.15%

None

These consolidated financial statements are originally issued in the Indonesian language.

16. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

Other significant information relating to bank loans as of December 31, 2018 is as follows (continued):

Total
facility (in
billions)*

Currency

Borrower

Current
period
payment
(in
billions)*

Principal
payment
schedule

Interest
payment
period

Interest rate per
annum

Security

Bank CIMB
Niaga
2011

GSD

8 2011 - 2021

Monthly

9.75%

2017

GSD, Metra

ANZ

2015 - 2017

GSD, PINS

495

28 2018 - 2023

750

- 2020 - 2022

UOB

2016

Dayamitra

500

71 2018 - 2024

Quarterly 3 months JIBOR
+ 1.50%

Quarterly 3 months JIBOR
+ 2.00%

Quarterly 3 months JIBOR
+ 2.20%

DBS

2016 - 2017

Nutech,
Telkomsat

136

17 2017 - 2022

Monthly,
Semi-annually

9.17%, 11.00%

2017

PINS, Dayamitra

400

38 2018 - 2022

ICBC

2017

GSD

272

45 2017 - 2023

Quarterly 3 months JIBOR
+ 1.50%

Quarterly 3 months JIBOR
+ 2.36%

Exim Bank of
Malaysia
Berhard
2016
JBICb
2013
2013

TIi

The Company
The Company

MYR

0.06

0.014 2017 - 2020

Monthly ECOF + 1.89%

US$
US$

0.03
0.03

0.004 2014 - 2019 Semi-annually
2.18%
0.003 2014 - 2019 Semi-annually 6 months LIBOR
+ 1.20%

Property and
equipment
(Note 9) and
lease
agreement
None

Property and
equipment
(Note 9)

Trade
receivables
(Note 5) and
Property and
equipment
(Note 9)
None

Trade
receivables
(Note 5) and
Property and
equipment
(Note 9)

None

None
None

Other significant information relating to bank loans as of December 31, 2018 is as follows (continued):

* In original currency
a Telkomsel has no collateral for its bank loans, or other credit facilities. The terms of the various agreements with Telkomsel’s lenders
and financiers require compliance with a number of covenants and negative covenants as well as financial and other covenants, which
include, among other things, certain restrictions on the amount of dividends and other profit distributions which could adversely affect
Telkomsel’s capacity to comply with its obligation under the facility. The terms of the relevant agreements also contain default and
cross default clauses. As of December 31, 2018 Telkomsel has complied with the above covenants.

b In connection with the agreement with NEC Corporation Consortium and TE SubCom, the Company entered into a loan agreement
with JBIC, for the procurement of goods and services from NEC Corporation Consortium and TE SubCom for the Southeast Asia
Japan Cable System project. The facilities consist of facilities A and B amounting to US$18.8 million and US$12.5 million, respectively.

c Based on the latest amendment on December 11, 2018.

These consolidated financial statements are originally issued in the Indonesian language.

16. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

c. Bank loans (continued)

As stated in the agreements, the Group is required to comply with all covenants or restrictions such
financial ratios. As of
as dividend distribution, obtaining new
December 31, 2018, the Group has complied with all covenants or restrictions, except for certain
loans. As of December 31, 2018, the Group obtained waiver from lenders to not demand the loan
payment as consequence of the breach of covenants.

loans, and maintaining

On March 13, 2015, the Company, GSD, Metra and Infomedia entered into several credit facilities
agreements with Sumitomo, MUFG Bank, ANZ and syndication of banks (BCA and BNI) amounting
to Rp750 billion, Rp750 billion, Rp500 billion, and Rp3,000 billion, respectively. Based on
amendment on August 2, 2016, Dayamitra and Telkom Akses are included as borrowers into
Sumitomo and MUFG Bank credit facilities agreement and excluded GSD from those agreement.
Based on the latest amendment on March 13, 2017, PINS is included as one of borrower into ANZ’s
credit facility agreement. In 2017, PINS drawn down the facility amounted to Rp200 billion. As of
December 31, 2018 the unused facilities for Sumitomo, MUFG Bank and ANZ amounted to
Rp82.5 billion, Rp82.5 billion and Rp60 billion, respectively.

On March, 24, 2017, the Company, Dayamitra, Sigma, GSD and TII entered several credit
agreements with BRI, BNI, and Bank Mandiri amounting to Rp1,000 billion, Rp2,005 billion and
Rp1,500 billion, respectively. As of December 31, 2018, the unused facilities for Bank Mandiri
amounted to Rp5 billion.

On March 30, 2017, The Company, GSD, Metra, Dayamitra, PINS, and Telkomsat entered into
several credit agreements with MUFG Bank, Sumitomo, DBS, Bank CIMB Niaga, and BCA
amounting to Rp400 billion, Rp400 billion, Rp850 billion, Rp495 billion and Rp850 billion,
respectively. Based on amendment on June 29, 2017, Telkom Infratel is included as one of borrower
into BCA’s credit facility agreement replaced PINS. As of December 31, 2018, the unused facilities
for MUFG Bank, Sumitomo, DBS, Bank CIMB Niaga, and BCA amounted to Rp79 billion,
Rp79 billion, Rp420 billion, Rp20 billion and Rp564 billion, respectively.

On March, 27, 2018, the Company, Dayamitra and TII entered into several credit agreements with
BNI, BRI, Bank Mandiri and MUFG Bank amounting to Rp825 billion, Rp700 billion, Rp775 billion
and Rp800 billion. As of December 31, 2018, the unused facilities for BNI, BRI, Bank Mandiri dan
MUFG Bank amounting to Rp825 billion, Rp500 billion, Rp775 billion, and RpNil, respectively.

The credit facilities were obtained by the Group for working capital purposes.

d. Other borrowing

Lenders
PT Sarana Multi Infrastruktur
Unamortized debt issuance cost
Total
Current maturities (Note 15b)
Long-term portion

Currency

Outstanding

Rupiah
2018

Rupiah
2017

2,250
(6)
2,244
(294)
1,950

1,300
(5)
1,295
(99)
1,196

These consolidated financial statements are originally issued in the Indonesian language.

16. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

d. Other borrowing (continued)

i. Dayamitra

Borrower

Currency

Total facility
(in billions)

Current period
payment
(in billions)

Principal
payment
schedule

Interest rate
per annum

Security

PT Sarana Multi
Infrastruktur
October 12, 2016

700

Dayamitra

March 29, 2017

Semi-
annually
(2018-2024)

Property
and
equipment
(Note 9)
Property
and
equipment
(Note 9)
Under the agreement, Dayamitra is required to comply with all covenants or restrictions, including
maintaining financial ratios as follows :
1. Debt to equity ratio should not exceed 5:1.
2. Net debt to EBITDA ratio should not exceed 4:1.
3. Minimal debt service coverage at least 100%.

Semi-
annually
(2018-2024)

3 months
JIBOR+1.85%

600

As of December 31, 2018, Dayamitra has complied with the above-mentioned ratios.

ii. The Company

Borrower

Currency

Total facility
(in billions)

Current period
payment
(in billions)

Principal
payment
schedule

Interest rate
per annum

Security

PT Sarana Multi
Infrastruktur
November 14, 2018 The Company

1,000

Semi-
annually
(2019-2023)

8.35%

None

Under the agreement, The Company is required to comply with all covenants or restrictions,
including maintaining financial ratios as follows :
1. Debt to equity ratio should not exceed 2:1.
2. EBITDA to interest ratio should not be less than 4:1.
3. Minimal debt service coverage at least 125%.

As of December 31, 2018, The Company has complied with the above-mentioned ratios.

These consolidated financial statements are originally issued in the Indonesian language.

17. NON-CONTROLLING INTERESTS

The details of non-controlling interests are as follows:

Non-controlling interests in net assets of subsidiaries:

Telkomsel
GSD
Metra
TII
Total

Non-controlling interests in net income (loss)

of subsidiaries:
Telkomsel
Metra
TII
GSD

Total

2018

2017

17,899
212
171
111
18,393

18,944
186
115
172
19,417

2018

2017

8,937
11
7
(8)
8,947

10,637
(82)
6
(5)
10,556

Material partly-owned subsidiary

As of December 31, 2018 and 2017, the non-controlling interest holds 35% ownership interest in
Telkomsel which is considered material to the company (Note 1d).

The summarized financial information of Telkomsel below is provided based on amounts before
elimination of inter-company balances and transactions.

Summarized statements of financial position

2018

2017

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total equity
Attributable to:

Equity holders of parent company
Non-controlling interest

16,836
65,814
(20,737)
(10,767)
51,146

33,247
17,899

21,098
64,650
(23,031)
(8,587)
54,130

35,186
18,944

These consolidated financial statements are originally issued in the Indonesian language.

17. NON-CONTROLLING INTERESTS (continued)

Summarized statements of profit or loss and other comprehensive income

Revenues
Operating expenses
Other income - net
Profit before income tax
Income tax expense - net
Profit for the year from continuing operations
Other comprehensive income - net
Net comprehensive income for the year

Attributable to non-controlling interest
Dividend paid to non-controlling interest

Summarized statements of cash flows

Operating activities
Investing activities
Financing activities
Net decrease in cash and cash equivalents

18. CAPITAL STOCK

2018

2017

89,246
(55,286)
124
34,084
(8,548)
25,536
356
25,892

8,937
10,105

93,217
(53,183)
380
40,414
(10,018)
30,396
(392)
30,004

10,637
12,334

2018

2017

36,848
(16,095)
(24,867)
(4,114)

39,564
(13,984)
(34,720)
(9,140)

Description
Series A Dwiwarna share

Government
Series B shares
Government
The Bank of New York Mellon Corporation*
Commissioners (Note 1b):

Hendri Saparini
Rinaldi Firmansyah

Directors (Note 1b):

Alex Janangkih Sinaga
Herdy Rosadi Harman
Abdus Somad Arief
Dian Rachmawan
Harry Mozarta Zen
David Bangun
Siti Choiriana

Public (individually less than 5%)

Total

Number of shares

2018
Percentage of
ownership

Total paid-in
capital

51,602,353,560
4,944,921,880

654,505
454,113

1,683,359
1,514,720
1,515,022
1,575,562
689,492
1,000
540
42,506,852,846
99,062,216,600

52.09
4.99

0
0

0
0
0
0
0
0
0
42.92
100.00

2,580
247

0
0

0
0
0
0
0
0
0
2,126
4,953

These consolidated financial statements are originally issued in the Indonesian language.

18. CAPITAL STOCK (continued)

Description
Series A Dwiwarna share

Government
Series B shares
Government
The Bank of New York Mellon Corporation*
Commissioners (Note 1b):

Hendri Saparini
Hadiyanto
Rinaldi Firmansyah

Directors (Note 1b):

Alex Janangkih Sinaga
Herdy Rosadi Harman
Abdus Somad Arief
Dian Rachmawan

Public (individually less than 5%)
Total
Treasury stock (Note 20)

Total

Number of shares

51,602,353,560
6,078,374,280

2017
Percentage of
ownership

Total paid-in
capital

52.09
6.14

2,580
304

414,157
875,297
147,100

0
0
0 0

0
0

920,349
828,012
828,314
888,854
41,376,586,676
99,062,216,600
1,737,779,800
100,799,996,400

0
0
0
0
41.77
100.00
-
100.00

0
0
0
0
2,069
4,953
87
5,040

* The Bank of New York Mellon Corporation serves as the Depositary of the registered ADS holders for the Company’s ADSs.

The Company issued only 1 Series A Dwiwarna share which is held by the Government and can not
be transferred to any party, and has a veto in the General Meeting of Stockholders of the Company
with respect to election and removal of the Boards of Commissioners and Directors, issuance of
new shares, and amendments of the Company’s Articles of Association.

19. ADDITIONAL PAID-IN CAPITAL

Proceeds from sale of 933,333,000 shares in excess of

par value through IPO in 1995

Excess of value over cost of selling 211,290,500 shares

under the treasury stock plan phase I (Note 20)

Excess of value over cost of selling 215,000,000 shares

under the treasury stock plan phase II (Note 20)

Difference in value arising from restructuring transactions

between entities under common control

Excess of value over cost of treasury stock transferred to

employee stock ownership program (Note 20)

Excess of value over cost of selling 22,363,000 shares

under the treasury stock plan phase III (Note 20)

Excess of value over cost of selling 864,000,000 shares

under the treasury stock plan phase IV (Note 20)

Capitalization into 746,666,640 Series B shares in 1999
Reduction additional paid in capital as a result of

cancellation treasury stock (Note 20)

Differences from acquisition of non-controlling interest
Net

2018

2017

1,446

544

576

478

228

1,996
(373)

(2,454)
(22)
2,455

544

576

478

228

1,996
(373)

-
-
4,931

Difference in value arising from restructuring and other transactions of entities under common control
amounting Rp478 billion arose from the early termination of the Company’s exclusive rights to provide
local and inter-local fixed line telecommunication services, for which the Company is required by the
the development of
Government
telecommunication infrastructure. As of December 31, 2018 and 2017, the accumulated development
of the related infrastructure amounting to Rp537 billion, respectively.

this compensation

funds received

to use

from

the

for

These consolidated financial statements are originally issued in the Indonesian language.

20. TREASURY STOCK

Phase
I
II
III
-
IV

Basis
EGM
AGM
AGM

BAPEPAM - LK

AGM

Period
December 21, 2005 - June 20, 2007
June 29, 2007 - December 28, 2008
June 20, 2008 - December 20, 2009
October 13, 2008 - January 12, 2009
May 19, 2011 - November 20, 2012

Maximum Purchase

Number of
shares

1,007,999,964
215,000,000
339,443,313
4,031,999,856
645,161,290

Amount

Rp5,250
Rp2,000
Rp3,000
Rp3,000
Rp5,000

Movements in treasury stock as a result of the repurchase of shares are as follows:

Beginning balance
Sale of treasury stock
Ending balance

2018

Number of

shares
1,737,779,800
(1,737,779,800)
-

%
1.72
(1.72)
-

2017

Number of

Rp
2,541 1,737,779,800
-
(2,541)
- 1,737,779,800

%
1.72
-
1.72

Rp
2,541
-
2,541

Pursuant to the AGM of Stockholders of the Company held on June 11, 2010, the stockholders
approved the change in the Company’s plan for treasury stock phases I, II, and III to become: (i) for
reissuance inside or outside stock exchange, (ii) for retirement of the stock by deducting from equity,
(iii) for equity stock conversion and (iv) for funding purposes.

Pursuant to the AGM of Stockholders of the Company held on May 19, 2011, the stockholders
approved to execute the repurchase plan for treasury stock phase IV.

In 2011, the Company bought back 283,085,460 shares (equivalent to 1,415,427,300 shares after
stock split) from the public (part of stock repurchase program phase IV).

In 2012, the Company bought back 237,270,500 shares (equivalent to 1,186,352,500 shares after
stock split) from the public (part of stock repurchase program phase IV) amounting to Rp1,744 billion.
Total shares of repurchase amounting to 2,601,779,800 shares.

In the AGM on April 19, 2013, the Company's stockholders approved the change to the plan for the
treasury stock phase III, which was decided to be used for the implementation of the Employee Stock
Ownership Program (“ESOP”) for the year 2013.

On July 30, 2013, the Company resold 211,290,500 shares (equivalent to 1,056,452,500 shares after
stock split) of treasury stock phase I with fair value amounting to Rp2,368 billion (net of related costs to
sell the shares). The excess amounting to Rp544 billion in value of the treasury shares sold over their
acquisition cost was recorded as additional paid-in capital (Note 19).

On June 13, 2014, the Company resold 215,000,000 shares (equivalent to 1,075,000,000 shares after
stock split) of treasury stock phase II with fair value amounting to Rp2,541 billion (net of related costs
to sell the shares). The excess amounting to Rp576 billion in value of the treasury stock sold over their
acquisition cost was recorded as additional paid-in capital (Note 19).

On December 21, 2015, the Company resold 4,472,600 shares (equivalent to 22,363,000 shares after
stock split) of treasury stock phase III with fair value amounting to Rp68 billion (net of related costs to
sell the shares). The excess amounting to Rp36 billion in value of the treasury stock sold over their
acquisition cost was recorded as additional paid-in capital (Note 19).

The Company diverted shares of repurchase program phase I in 2013, shares of repurchase program
phase II in 2014, and shares of repurchase program phase III in 2015.

On June 29, 2016, the Company resold 172,800,000 shares (equivalent to 864,000,000 shares after
stock split) of treasury stock phase IV with fair value of Rp3,259 billion (net of related costs to sell the
shares). The excess amounting to Rp1,996 billion in value of the treasury stock sold over their
acquisition cost was recorded as additional paid-in capital (Note 19).

These consolidated financial statements are originally issued in the Indonesian language.

20. TREASURY STOCK (continued)

At
the AGM held on April 27, 2018 which were covered by notarial deed No.54 of
Ashoya Ratam, S.H.,M.Kn., the stockholders approved for cancellation 1,737,779, 800 shares of
treasury stock with acquisition cost amounting to Rp2,541 billion by reduced the Company’s capital
stock from 100,799,996,400 shares to 99,062,216,600 shares (decrease amounting to Rp87 billion)
(Note 18).

21. OTHER EQUITY

Translation adjustment
Effect of change in equity of associated companies
Unrealized holding gain on available-for-sale securities
Difference due to acquisition of non controlling interests in
subsidiaries
Other equity components
Total

673
386
48

(637)
37
507

527
386
58

(637)
53
387

2018

2017

22. REVENUES

REVENUES

22.
Telephone revenues

Cellular
Fixed lines

Total telephone revenues
Interconnection revenues
Data, internet, and information technology service

revenues
Cellular internet and data
Internet, data communication, and information

technology services

Short Messaging Services (“SMS”)
Pay TV
Others

Total data, internet and information technology

service revenues
Network revenues
Other revenues

Sales of peripherals
CPE and terminal
Call center service
Telecommunication tower leases
E-health
E-payment
Others

Total other revenues
Total revenues

Note.2 2. 1.R ev enu es_ Eng

2018

2017

30,431
5,888
36,319
5,463

45,154

19,454
9,185
2,508
852

77,153
1,723

1,851
1,450
1,052
909
563
449
3,852
10,126
130,784

37,246
6,665
43,911
5,175

37,961

15,085
13,192
1,944
353

68,535
1,873

2,292
536
970
796
470
505
3,193
8,762
128,256

These consolidated financial statements are originally issued in the Indonesian language.

22. REVENUES (continued)

The detail of net revenues received by the Group from agency relationships for the years ended as
December 31, 2018 and 2017 are as follows:

Gross revenues
Compensation to value added service providers
Net revenues

Refer to Note 31 for details of related parties transactions.

23. PERSONNEL EXPENSES

The breakdown of personnel expenses is as follows:

Salaries and related benefits
Vacation pay, incentives and other benefits
Pension benefit cost (Note 29)
Net periodic post-employment health care

benefit cost (Note 29)
LSA expense (Note 30)
Other employee benefit cost (Note 29)
Other post-employment benefit cost (Note 29)
Others
Total

Refer to Note 31 for details of related parties transactions.

2018

2017

46,672
(1,518)
45,154

39,111
(1,150)
37,961

2018

2017

8,077
3,292
1,120

335
161
113
32
48
13,178

7,821
3,339
1,700

276
255
62
42
34
13,529

24. OPERATION, MAINTENANCE AND TELECOMMUNICATION SERVICE EXPENSES

The breakdown of operation, maintenance and telecommunication service expenses is as follows:

Operation and maintenance
Radio frequency usage charges (Note 34c.i)
Leased lines and CPE
Concession fees and USO charges
Cost of sales of handset (Note 6)
Electricity, gas and water
Cost of SIM cards and vouchers (Note 6)
Tower leases
Vehicles rental and supporting facilities
Insurance
Others
Total

Refer to Note 31 for details of related parties transactions.

2018

2017

25,214
5,473
5,125
2,297
1,860
1,051
765
480
413
193
920
43,791

19,929
4,276
5,255
2,249
1,544
1,037
914
472
301
294
332
36,603

These consolidated financial statements are originally issued in the Indonesian language.

25. GENERAL AND ADMINISTRATIVE EXPENSES

The breakdown of general and administrative expenses is as follows:

General expenses
Provision for impairment of receivables (Note 5d)
Professional fees
Training, education and recruitment
Travelling
Meeting
Social contribution
Collection expenses
Others
Total

Refer to Note 31 for details of related parties transactions.

2018

2017

1,792
1,724
823
463
415
233
181
157
349
6,137

1,449
1,494
498
531
475
241
197
135
240
5,260

26. TAXATION

a. Claims for tax refund

The Company:
Corporate income tax
Value Added Tax ("VAT")
Subsidiaries:
Corporate income tax
VAT
Total claims for tax refund
Current portion
Non-current portion (Note 10)

b. Prepaid taxes

The Company:
Income Tax

Article 22 - Witholding tax on goods delivery

and import

Article 23 - Witholding tax on service delivery

VAT
Subsidiaries:
Corporate Income Tax
Income Tax Article 23 - Witholding tax

on service delivery

VAT
Total prepaid taxes
Current portion
Non-current portion (Note 10)

2018

2017

494
1,119

406
1,027
3,046
(596)
2,450

610
1,338

174
1,871
3,993
(908)
3,085

2018

2017

-
63
1,048

1
2,765
3,891
(2,749)
1,142

1
44
629

17
2,008
2,700
(1,947)
753

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

c. Taxes payable

2018

2017

The Company:
Income taxes

Article 4 (2) - Final tax
Article 21 - Individual income tax

Article 22 - Withholding tax on goods delivery

and imports

Article 23 - Withholding tax on services
Article 25 - Installment of corporate income tax
Article 26 - Withholding tax on non-resident

income
VAT - Tax collector

Subsidiaries:
Income taxes

Article 4 (2) - Final tax
Article 21 - Individual income tax

Article 22 - Withholding tax on goods delivery

and imports

Article 23 - Withholding tax on services
Article 25 - Installment of corporate income tax
Article 26 - Withholding tax on non-resident

income

Article 29 - Corporate income tax

VAT

Total taxes payable

18
47

3
36
1

3
334
442

75
113

5
110
14

7
389
25
738
1,180

26
81

3
29
1

1
372
513

85
129

3
115
37

303
763
842
2,277
2,790

d. The components of income tax expense (benefit) are as follows:

Current

The Company
Subsidiaries

Deferred

The Company
Subsidiaries

Net income tax expense

2018

2017

236
9,196
9,432

(103)
97
(6)
9,426

586
10,771
11,357

(1,603)
204
(1,399)
9,958

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

d. The components of income tax expense (benefit) are as follows (continued):

The reconciliation between the income tax expense calculated by applying the applicable tax rate of
20% to the profit before income tax less income subject to final tax, and the net income tax expense
as shown in the consolidated statements of profit or loss and other comprehensive income is as
follows:

2018

2017

Profit before income tax
Less: income subject to final tax - net

Income tax expense calculated at the Company’s

applicable statutory tax rate of 20%

Difference in applicable statutory tax rate for

subsidiaries

Non-deductible expenses
Final income tax expense
Deferred tax assets that cannot be utilized - net
Deferred tax assets on fixed assets revaluation

for tax purpose

Others
Net income tax expense

36,405
(1,277)
35,128

7,026

1,753
398
60
(2)

-
191
9,426

42,659
(1,491)
41,168

8,234

2,046
761
591
(6)

(1,796)
128
9,958

The reconciliation between the profit before income tax and the estimated taxable income of the
Company for the years ended December 31, 2018 and 2017 are as follows:

2018

2017

Profit before income tax
Add back consolidation eliminations
Consolidated profit before income tax and eliminations
Less: profit before income tax of the subsidiaries
Profit before income tax attributable to the Company
Less: income subject to final tax

Temporary differences:
Provision for impairment and trade receivables

written-off

Net periodic pension and other post-retirement

benefits costs

Deferred installation fee
Provision for impairment of assets
Provision for personnel expenses
Depreciation and gain on sale of property

and equipment
Finance leases
Other provisions
Net temporary differences

36,405
25,933
62,338
(43,322)
19,016
(425)
18,591

193

133
92
-
(532)

(180)
(10)
349
45

42,659
21,445
64,104
(43,702)
20,402
(462)
19,940

1,030

985
(4)
(1,012)
188

(3,120)
(3)
(76)
(2,012)

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

d. The components of income tax expense (benefit) are as follows (continued):

The reconciliation between the profit before income tax and the estimated taxable income of the
Company for the years ended December 31, 2018 and 2017 are as follows (continued) :

2018

2017

Permanent differences:
Net periodic post-retirement healthcare benefit costs
Employee benefits
Donations
Gain on transfer business to under common

control entities

Equity in net income of associates and subsidiaries
Others
Net permanent differences
Compensation of fiscal loss
Taxable income of the Company
Current corporate income tax expense
Final income tax expense
Current income tax expense on tax assessment
Total current income tax expense of the Company
Current income tax expense of the subsidiaries
Total current income tax expense

335
215
123

-
(17,852)
(71)
(17,250)
(986)
400
80
57
99
236
9,196
9,432

276
264
194

86
(20,635)
1,026
(18,789)
-
(861)
-
586
-
586
10,771
11,357

implementing

Tax Law No. 36/2008 with
rules under Government Regulation
No.56/2015 stipulates a reduction of 5% from the top rate applicable to qualifying listed companies,
for those whose stocks are traded in the IDX which meet the prescribed criteria that the public owns
40% or more of the total fully paid and traded shares, and such shares are owned by at least 300
parties, with each party owning less than 5% of the total paid-up shares. These requirements must
be met by a company for a period of 183 days in one tax year. The Company has met all of the
required criteria; therefore, for the purpose of calculating income tax expense and liabilities for the
financial reporting the years ended December 31, 2018 and 2017, the Company has reduced the
applicable tax rate by 5%.

The Company applied the tax rate of 20% for the years ended December 31, 2018 and 2017.
The subsidiaries applied the tax rate of 25% for the years ended December 31, 2018 and 2017.

The Company will submit the above corporate income tax computation in its income tax return
(“Surat Pemberitahuan Tahunan” or Annual Tax Return) for fiscal year 2018 that will be reported to
the tax office based on prevailing regulations. The amount of corporate income tax for the year
ended December 31, 2017, is different with what was reported in the annual tax return due to
adjustment of fiscal correction from tax assessment for fiscal year 2016.

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

e. Tax assessment

(i) The Company

On November 15, 2013, the Company received tax underpayment assessment letters
(“SKPKBs”) for the underpayment of VAT for the period January to September and
November 2007 amounting to Rp142 billion. On January 20, 2014, the Company filed its
objection to the Tax Authorities, and in December 2014, Tax Authorities issued a decision which
rejected the objections. The Company accepted the assessment on the underpayment of VAT
amounting to Rp22 billion (including penalty of Rp10 billion). The accepted portion was charged
to the 2014 consolidated statement of profit or loss and other comprehensive income.
to
The portion of VAT
Rp120 billion (including penalty of Rp39 billion) is recognized as claim for tax refund.
On March 12, 2015, the Company has filed an appeal to the Tax Court on the rejection of its
objection to the assessment of VAT international incoming call interconnection.

interconnection amounting

incoming call

international

On August 1 and 2, 2017, the Tax Court issued a verdict regarding to VAT international incoming
call interconnection appeal process. The verdict stated that the international incoming call
interconnection is the taxable services and categorized as export service that subject to 0% VAT
and granted all the Company’s appeal. In September 2017, the Company received tax refund
amounting to Rp115 billion and for remaining balance amounting to Rp5 billion has been
compensated to tax collection letter (”STP”) for withholding tax article 21 and SKPKBs of VAT
on tax collected and self-assessed offshore VAT.

for

request

filed a

On October 26 and November 23, 2017, the Company received a notification from Tax Court
review. On November 23 and
that Tax Authorities
December 21, 2017, to response the judicial review from Tax Authorities, the Company sent
contra memorandum for judicial review to Supreme Court (“SC”). In September and
November 2018, the Company received the verdict from the SC as the result of the tax audit for
tax period June to August and November 2007. Based on the verdict, the SC rejected the Tax
Authorities’ judicial review and strengthen the Tax Court’s verdict. As of the date of approval
and authorization for the issuance of these consolidated financial statements, the judicial review
for tax period May 2007 is still in process.

judicial

In November 2014, the Company received SKPKBs from the Tax Authorities as the result of the
tax audit for fiscal year 2011. Based on the letters, the Company received VAT underpayment
assessment for the tax period January to December 2011 amounting to Rp182.5 billion
(including penalty of Rp60 billion) and corporate income tax underpayment amounting to
Rp2.8 billion (including penalty of Rp929 million). The accepted portion amounting to
Rp4.7 billion (including penalty of Rp2 billion) was charged to the 2014 consolidated financial
statement of profit or loss and other comprehensive income. The portion of VAT international
incoming call interconnection amounting to Rp178 billion (including penalty of Rp58 billion) is
recognized as claim for tax refund. On January 7, 2015, the Company filed an objection and on
October 20, 2015, Tax Authorities
this objection.
On January 20, 2016, the Company filed an appeal on the decision of its objection.

issued a

regarding

rejection

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

e. Tax assessment (continued)

(i) The Company (continued)

On April 4 and 5, 2017, the Tax Court issued a verdict regarding to VAT international incoming
call interconnection appeal process. The verdict stated that the international incoming call
interconnection is the taxable services and categorized as export service that subject to 0% VAT
and granted the Company’s appeal for the tax period January and September to
December 2011. Tax Court rejected the Company’s appeal for the tax period February to
August 2011, since the Company did not meet the administrative requirement. Regarding this
rejection, on June 19 and 21, 2017, the Company filed the request for judicial review.
On October 15, 2018, the Company received a notification from Tax Court that Tax Authorities
field a request for judicial review for the tax period January and September to December 2011.
On November 13, 2018, to response the judicial review from Tax Authorities, the Company sent
contra memorandum for judicial review to SC for the tax period January and September to
December 2011. In November 2018, the Company received a notification from Tax Court that
Tax Authorities field a contra memorandum for judicial review for the tax period February to
August 2011. As of the date of approval and authorization for the issuance of these consolidated
financial statements, the judicial review is still in process.

On May 3, 2016, the Tax Authorities issued Field Tax Audit Notification Letter for tax period
January to December 2012. On November 3, 2016, Tax Authorities issued SKPKBs for fiscal
year 2012, wherein the Company was liable for underpayment of corporate income tax
amounting to Rp991.6 billion (including penalty of Rp321.6 billion), VAT underpayment
amounting to Rp467 billion (including penalty of Rp153.5 billion), self-assessed offshore VAT
underpayment amounting to Rp1.2 billion (including penalty of Rp392 million), VAT on tax
collected underpayment amounting to Rp57 billion (including penalty of Rp18.5 billion). The
Company also received STP for VAT amounting to Rp37.5 billion, withholding tax article 21
underpayment amounting to Rp16.2 billion (including penalty of Rp5.3 billion), final withholding
tax article 21 underpayment amounting to Rp1.2 billion (including penalty of Rp407 million),
withholding tax article 23 underpayment amounting to Rp63.5 billion (including penalty of
Rp20.6 billion), withholding tax article 4(2) underpayment amounting to Rp25 billion (including
penalty of Rp8.1 billion) and withholding tax article 26 underpayment amounting to
Rp197.6 billion (including penalty of Rp64 billion). The Company has agreed to the recalculation
of input tax credit on international incoming call interconnection services amounting to
Rp35 billion, corporate income tax amounting to Rp613 million and withholding tax article 26
amounting to Rp311.5 million that have been charged in the 2016 consolidated statement of
profit or loss and other comprehensive income. The Company filed an objection regarding to the
remaining assessments on November 16, 2016.

On March 1, 2017 and May 9, 2017, the Company received the Decision Letter from Directorate
General of Taxes (“DGT”) for the underpayment of self-assessed offshore VAT amounting to
Rp1.8 million (including penalty of Rp0.6 million) and the underpayment of VAT on tax collected
amounting to Rp4.4 billion (including penalty of Rp1.4 billion). The Company decided to accept
the decision.

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

e. Tax assessment (continued)

(i) The Company (continued)

On October 19, 2017, the Tax Authorities issued Decision Letter on Company’s objections,
wherein the Tax Authorities has reduced Company’s underpayment. Based on Decision Letter,
the Company was liable for underpayment of withholding tax article 21 amounting to
Rp20.7 billion (including penalty of Rp6.7 billion), underpayment of final withholding tax article
21 amounting to Rp23.8 billion (including penalty of Rp7.7 billion), underpayment of withholding
tax article 23 amounting to Rp115.7 billion (including penalty of Rp37.5 billion), underpayment
of withholding tax article 4(2) amounting to Rp25 billion (including penalty of Rp8.1 billion),
underpayment of withholding tax article 26 amounting to Rp197.6 billion (including penalty of
Rp64.1 billion) and underpayment of corporate income tax amounting to Rp496.4 billion
(including penalty of Rp161 billion). On October 30 and 31, 2017, the Tax Authorities issued
Decision Letter on Company’s objection, wherein the Tax Authorities has reduced
Company’s underpayment for VAT from the tax period January to December 2012 totaling to
Rp429.3 billion (including penalty of Rp141.2 billion). On January, 17 and 26, 2018, the
Company filed an appeal on the rejection of its objection. As of the date of approval and
authorization for the issuance of these consolidated financial statements, the appeal is still in
process.

On August 23, 2016, the Tax Authorities issued Field Tax Audit Notification Letter for
tax period January to December 2015 regarding overpayment of corporate income
tax amounting to Rp414 billion. On April 25, 2017, the Tax Authorities issued Tax Overpayment
Assessment Letter (“SKPLB”) for overpayment of corporate income tax amounting to
to Rp13 billion
Rp147 billion, and SKPKBs
(including penalty of Rp4 billion), underpayment of VAT on tax collected amounting
to Rp6 billion (including penalty of Rp1.5 billion), underpayment of self-assessed offshore
VAT amounting to Rp55 billion (including penalty of Rp17 billion). The Company also
received STP for VAT amounting to Rp34 billion, VAT on tax collected amounting to
Rp7 billion and self-assessed offshore VAT amounting to Rp8 billion.

for underpayment of VAT amounting

The Company accepted tax audit decision amounting to Rp17 billion for corporate income tax,
to transfer deductible temporary differences related to provision for incentives to fixed wireless
(Flexi) subscribers’ migration amounting to Rp42 billion from Annual Tax Return of corporate
income tax fiscal year 2015 to Annual Tax Return of corporate income tax fiscal year 2016. The
Company also accepted underpayment of VAT, underpayment of VAT on tax collected and
STP for VAT on tax collected totaling to Rp26 billion. The accepted portion was charged to the
2017 consolidated financial statement of profit or loss and other comprehensive income.

On July 24, 2017, the Company filed Objection Letter to the Tax Authorities for corporate
income tax amounting to Rp210.5 billion and self-assessed offshore VAT amounting to
Rp55 billion. On May 3 and 22, 2018, the Tax Authorities issued Decision Letter on Company’s
objections for SKPLB of self-assessed offshore VAT amounting to Rp54 billion and granted all
the Company’s objection. On July 18, 2018, the Tax Authorities issued Decision Letter on
Company’s objections for SKPLB of corporate income tax, wherein the Tax Authorities has
granted the several Company’s objection and additional amount of overpayment which should
be received amounting to Rp76 billion. On October 10, 2018, the Company filed an appeal. As
of the date of approval and authorization for the issuance of these consolidated financial
statements, the appeal is still in process.

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

e. Tax assessment (continued)

(i) The Company (continued)

On August 25, 2017, the Tax Authorities issued Field Tax Audit Notification Letter for tax periods
January to December 2016 regarding overpayment of corporate income tax amounting to
Rp114.4 billion. On June 7, 2018, Tax Authorities issued SKPLB of corporate income tax
amounting to Rp15.3 billion, SKPKB of withholding tax article 26 amounting to Rp557 million
(including penalty of Rp180 million) and SKPLB of VAT amounting to Rp923 billion. The
Company accepted the assessment on the overpayment of corporate income tax amounting to
Rp15.3 billion and for the remaining balance amounting to Rp99.1 billion was charged as
current income tax expense on tax assesment, underpayment of withholding tax article 26 and
correction of VAT In totaling to Rp10.5 billion, STP for VAT on tax collected amounting to
Rp7.1 billion, VAT on free gifts amounting to Rp7.3 billion, VAT on transfer asset amounting to
Rp1.2 billion and STP for VAT amounting to Rp1.7 billion. The accepted portion was charged
to the consolidated financial statement of profit or loss and other comprehensive income. In
July 2018, the Company received tax refund amounting to Rp882.7 billion and for the remaining
balance amounting to Rp39.9 billion has been compensated to STP for VAT amounting to
Rp31.9 billion, VAT on tax collected amounting to Rp7.1 billion, withholding tax article 23
amounting to Rp556 million and withholding tax article 21 amounting to Rp300 million. On
August 31, 2018, the Company filed an objection to the Tax Authorities for VAT international
incoming call interconnection services amounting to Rp151 billion and STP for VAT amounting
to Rp30.3 billion. As of the date of approval and authorization for the issuance of these
consolidated financial statements, the objection is still in process.

On September 11, 2017 and January 9, 2018, the Tax Authorities issued Field Tax Audit
Notification Letter for tax period December and November 2014 regarding claim for tax refund
overpayment of VAT correction for tax period November and December 2014 amounting to
Rp129 billion and Rp86.7 billion, respectively. On July 25 and September 7, 2018, the Company
received SKPLB for tax period December and November 2014. On August 24, 2018, the
Company received tax refund amounting to Rp122.5 billion for December 2014 period.
In October 2018, the Company received tax refund amounting to Rp80.8 billion and for the
remaining balance amounting to Rp3.6 billion has been compensated to SKPKBs for self-
assessed offshore VAT for tax period March, April and June 2015, STP for VAT for tax period
November 2014, and other tax assessment letters.

On November 6, 2018, the Tax Authorities issued Field Tax Audit Notification Letter for
tax period 2017 for all taxes. As of the date of approval and authorization for the issuance of
these consolidated financial statements, the tax audit is still in process.

(ii) Telkomsel

In December 2013, the Tax Court accepted Telkomsel’s appeal on the 2006 VAT and
withholding taxes totaling Rp116 billion. In February 2014, Telkomsel received the refund.
On July 3, 2015, in response to Telkomsel’s letter claiming for interest income related to
favorable 2006 VAT and withholding tax verdicts, the Tax Authorities informed Telkomsel that
the claim cannot be granted since the Tax Authorities filed a request for judicial review to the
SC. On August 19, 2016, Telkomsel received a notification from the Tax Court that the Tax
Authorities filed a request for judicial review to SC for the VAT case amounting to
Rp108 billion. Telkomsel filed a contra memorandum for judicial review to the SC on
September 14, 2016. In April 2017, Tax Authorities has granted Telkomsel’s claim on interest
income will be compensate against corporate income tax installment for the period of April 2017.
In July 2018, Telkomsel received the official verdict from the SC which rejected the Tax
Authorities request.

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

e. Tax assessment (continued)

(ii) Telkomsel (continued)

On April 21, 2010, the Tax Authorities filed a request for judicial review to the SC for the Tax
Court’s acceptance of Telkomsel’s request to cancel the STP for the underpayment of
December 2008 income tax article 25 amounting to Rp429 billion (including a penalty of
Rp8.4 billion). In May 2010, Telkomsel filed a contra memorandum for judicial review to the SC.
On March 2, 2017, Telkomsel received the official verdict from the SC which accept the Tax
Authorities request. The penalty was paid in June 2017.

In May and June 2012, Telkomsel received the refund of the penalty on the 2010 income tax
article 25 underpayment amounting to Rp15.7 billion based on the Tax Court’s verdict.
On July 17, 2012, the Tax Authorities filed a request for judicial review to the SC on the Tax
Court’s Verdict. On September 14, 2012, Telkomsel filed a contra memorandum for judicial
review to the SC. In July 2016, conservatively, Telkomsel recognized the tax penalty of
Rp15.7 billion as expense based on its previous experience on a similar income tax case.

On May 24, 2012, Telkomsel filed an objection to the Tax Authorities for the 2010 underpayment
of VAT of Rp290.6 billion (including penalty of Rp67 billion) and recorded it as a claim
for tax refund. On May 9, 2017, Telkomsel received the official verdict from the SC
the underpayment on
which rejected Telkomsel’s request,
July 10, 2017. On July 19, 2017, Telkomsel filed the second judicial review to contest against
the SC’s verdict. On August 8, 2018, the SC accepted Telkomsel’s request. Telkomsel received
Surat Pelaksanaan Putusan Peninjauan Kembali (“SP2PK”).

therein Telkomsel paid

In July and October 2017, Telkomsel received notifications that the Tax Authorities had filed a
request for judicial reviews to the SC for cases relating to corporate income tax and VAT
amounting to Rp62 billion and Rp1.2 billion, respectively. Telkomsel submitted its contra
memorandum for judicial review in August and November 2017. As of the date of approval and
authorization for issuance of these financial statements, Telkomsel has received partial official
verdicts from the SC which rejected the Tax Authorities’s request for VAT case amounting to
Rp1.1 billion.

On July 28, 2016 and March 24, 2017, Telkomsel received the tax audit instruction letter for
compliance of fiscal year 2014 and 2015, respectively. As of the date of approval and
authorization for the issuance of these consolidated financial statements, the tax audit is still in
progress.

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

f. Tax incentives

In December 2015, the Company took advantage of the Economic Policy Package V in the
form of tax incentives for fixed assets revaluation as stipulated in the Ministry of Finance Regulation
(“PMK”) No. 191/PMK.010/2015
juncto PMK
No. 29/PMK.03/2016. In accordance with the PMK, the Company is allowed to revalue its fixed
assets for tax purposes and will obtain lower income tax when the application of the revaluation is
submitted to DGT during the period between the effective date of PMK and December 31, 2016.
The final income tax is determined at a rate ranging from 3%-6% on the excess of the revalued
amount of fixed assets over its original net book value depending on the timing of submission of
application to the DGT.

juncto PMK No. 233/PMK.03/2015

On December 29, 2015, the Company filed an application for fixed assets revaluation using self-
assessed revaluation amount and has paid the related final income tax amounting to
Rp750 billion. Based on the PMK, the self-assessed revaluation amount should be evaluated by a
Public Independent Appraiser (“KJPP”) or valuation specialist, which is registered with the
Government before December 31, 2016. Upon verification of the completeness and accuracy of the
application, the DGT may issue approval letter within 30 days after the receipt of complete
application. The Company has appointed a KJPP to perform fixed assets revaluation of the
Company.

to DGT on
The Company submitted
September 29, 2016. On November 10, 2016, DGT issued approval regarding fixed assets
revaluation amounting to Rp7,078 billion with related final income tax amounting to Rp212 billion.

fixed asset revaluation documents phase 1

the

revaluation

increment of Rp8,961 billion with estimated

On December 15, 2016, the Company submitted its fixed assets revaluation application for
Phase 2 to DGT and expects to be eligible for 6% tax rate. In its application, the Company estimated
a
tax of
Rp538 billion. In 2017, the Company received fixed asset revaluation report from KJPP. Based on
the report, the value of fixed asset increased amounting to Rp8,982 billion with related final income
tax amounting to Rp540 billion. The Company has paid final income tax amounting to
Rp2 billion as addition on September 22, 2017 and November 15, 2017. On November 21, 2017,
DGT issued approval regarding fixed assets revaluation amounting to Rp8,982 billion with related
final income tax amounting to Rp540 billion.

income

final

A deductible temporary difference arose on this fixed assets revaluation for tax purposes since the
tax base of the fixed assets is higher than their carrying amount. The deductible temporary difference
results in a deferred tax asset since the economic benefits will flow to the Company in a form of
reduction of taxable income in the future periods when the assets are recovered.

In 2016 and 2017, the Company recognized deferred tax assets amounting to Rp1,415 billion and
Rp1,796 billion, respectively, on the phase 1 and phase 2 revaluation increment on fixed assets as
approved by the DGT.

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

g. Deferred tax assets and liabilities

The details of the Group's deferred tax assets and liabilities are as follows:

December 31,
2017

(Charged)
credited to profit
or loss

Charged to
other
comprehensive
income

Charged to
equity and
reclassification

December 31,

2018

663
632

420
215
92

79
9
-
2,110

(1)
(11)
(12)

2,098

406

641
270
911

(896)

(616)
(118)
(1,630)

(719)

(533)
(1,252)
2,504

The Company

Deferred tax assets:
Net periodic pension and other

post-employment benefit costs

Provision for impairment of receivables
Difference between accounting and tax

bases of property and equipment

Provision for employee benefits
Deferred installation fee
Accrued expenses and provision for

inventory obsolescence

Land rights, intangible assets and others
Fiscal loss
Total deferred tax assets
Deferred tax liabilities:
Finance leases
Valuation of long-term investment
Total deferred tax liabilities
Deferred tax assets

of the Company - net

Deferred tax assets

of the other subsidiaries - net

Telkomsel

Deferred tax assets:
Provision for employee benefits
Provision for impairment of receivables
Total deferred tax assets
Deferred tax liabilities:
Finance leases
Difference between accounting and tax

bases of property and equipment

License amortization
Total deferred tax liabilities
Deferred tax liabilities
of Telkomsel - net

Deferred tax liabilities of the other

subsidiaries - net

Deferred tax liabilities - net
Deferred tax assets - net

1,102
594

240
247
74

43
(1)
172
2,471

1
(11)
(10)

2,461

343

677
184
861

(561)

(552)
(225)
(1,338)

(477)

(456)
(933)
2,804

27
38

180
(32)
18

36
10
(172)
105

(2)
-
(2)

103

83
86
169

(335)

(64)
107
(292)

(123)

(50)
(173)
179

(466)
-

-
-
-

-
-
-
(466)

-
-
-

(466)

(8)

(119)
-
(119)

-
-
-

(119)

(5)
(124)
(474)

-
-

-
-
-

-
-
-
-

-
-
-

(5)

-
-
-

(22)
(22)
(5)

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

g. Deferred tax assets and liabilities (continued)

The details of the Group's deferred tax assets and liabilities are as follows (continued):

(Charged)

Credited to other credited to equity

December 31, credited to profit

2016

or loss

comprehensive
income

and
reclassification

December 31,
2017

(Charged)

The Company
Deferred tax assets:

Net periodic pension and other

post-employment benefit costs

Provision for impairment of receivables
Provision for employee benefits
Difference between accounting and tax bases

of property and equipment

Fiscal loss
Deferred installation fee
Accrued expenses and provision for inventory

obsolescence
Finance leases

Total deferred tax assets
Deferred tax liabilities:

Valuation of long-term investment
Land rights, intangible assets and others

Total deferred tax liabilities
Deferred tax assets of the Company - net
Deferred tax assets of the other

subsidiaries - net

Telkomsel
Deferred tax assets:

Provision for employee benefits
Provision for impairment of receivables

Total deferred tax assets
Deferred tax liabilities:

Finance leases
Difference between accounting and tax bases

of property and equipment

License amortization

Total deferred tax liabilities
Deferred tax liabilities of Telkomsel - net
Deferred tax liabilities of the other

subsidiaries - net

Total deferred tax liabilities - net
Total deferred tax assets - net

563
388
209

(772)
-
75

69
1
533

(11)
(11)
(22)
511

258

478
143
621

(549)

(482)
(48)
(1,079)
(458)

(287)
(745)
769

197
206
38

1,012
172
(1)

(26)
(0)
1,598

-
10
10
1,608

(20)

68
41
109

(12)

55
(177)
(134)
(25)

(164)
(189)
1,588

342
-
-

-
-
-

-
-
342

-
-
-
342

131
-
131

-
-
-
131

12
143
351

-
-
-

-
-
-
-

1,102
594
247

240
172
74

43
1
2,473

(11)
(1)
(12)
2,461

343

-
-
-

(125)
-
(125)
(125)

(17)
(142)
96

677
184
861

(561)

(552)
(225)
(1,338)
(477)

(456)
(933)
2,804

As of December 31, 2018 and 2017, the aggregate amounts of temporary differences associated
with investments in subsidiaries and associated companies, for which deferred tax liabilities have
not been recognized were Rp31,461 billion and Rp31,928 billion, respectively.

Realization of the deferred tax assets is dependent upon the Group’s capability in generating future
profitable operations. Although realization is not assured, the Group believes that it is probable that
these deferred tax assets will be realized through reduction of future taxable income when temporary
differences reverse. The amount of deferred tax assets is considered realizable; however, it can be
reduced if actual future taxable income is lower than estimates.

h. Administration

From 2008 to 2017, the Company has been consecutively entitled to income tax rate reduction of
5% for meeting the requirements in accordance with the Government Regulation No. 81/2007 as
amended by Government Regulation No. 77/2013 and the latest by Government Regulation
No. 56/2015 in conjunction with PMK No. 238/PMK.03/2008. On the basis of historical data, for the
year ended December 31, 2018, the Company calculates the deferred tax using the tax rate of 20%.

These consolidated financial statements are originally issued in the Indonesian language.

26. TAXATION (continued)

h. Administration (continued)

The taxation laws of Indonesia require that the Company and its local subsidiaries submit to
individual tax returns on the basis of self-assessment. Under prevailing regulations, the DGT may
assess or amend taxes within a certain period. For fiscal years 2007 and earlier, the period is within
ten years from the time the tax became due, but not later than 2013, while for fiscal years 2008 and
onwards, the period is within five years from the time the tax became due.

The Ministry of Finance of the Republic of Indonesia has issued Regulation No. 85/PMK.03/2012
dated June 6, 2012 as amended by PMK No. 136 - PMK.03/2012 dated August 16, 2012
concerning the appointment of State-Owned Enterprises ("SOEs") to withhold, deposit and report
VAT and Sales Tax on Luxury Goods ("PPnBM") according to the procedures outlined
in the Regulation which is effective from July 1, 2012. The Ministry of Finance of the Republic of
Indonesia also has issued Regulation No. 224/PMK.011/2012 dated December 26, 2012
concerning the appointment of SOEs to withhold income tax article 22 as amended by PMK
No. 16/PMK.010/2016 dated February 3, 2016. The Company has withheld, deposited, and reported
the VAT, PPnBM and also income tax article 22 in accordance with the Regulations.

27. BASIC EARNINGS PER SHARE

Basic earnings per share is computed by dividing profit for the year attributable to owners of the parent
company amounting to Rp18,032 billion and Rp22,145 billion by the weighted average number of
shares outstanding during the period totaling 99,062,216,600 shares for the years ended December 31,
2018 and 2017, respectively. The weighted average number of shares takes into account the weighted
average effect of changes in treasury stock transaction during the year.

Basic earnings per share amounting to Rp182.03 and Rp223.55 (in full amount) for the years ended
December 31, 2018 and 2017, respectively.

The Company does not have potentially dilutive financial investments for the years ended December
31, 2018 and 2017.

28. CASH DIVIDENDS AND GENERAL RESERVE

Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 28 dated
April 21, 2017 of Ashoya Ratam, S.H., M.Kn., the Company’s stockholders approved the distribution of
cash dividend and special cash dividend for 2016 amounting to Rp11,611 billion (Rp117.21 per share)
and Rp1,935 billion (Rp19.54 per share), respectively.

Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 54 dated
April 27, 2018 of Ashoya Ratam, S.H., M.Kn., the Company’s stockholders approved the distribution of
cash dividend and special cash dividend for 2017 amounting to Rp13,287 billion (Rp134.13 per share)
and Rp3,322 billion (Rp33.53 per share), respectively.

Under the Limited Liability Company Law, the Company is required to establish a statutory reserve
amounting to at least 20% of its issued and paid-up capital.

The balance of the appropriated retained earnings of the Company as of December 31, 2018 and 2017
amounting to Rp15,377 billion, respectively.

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS

The details of pension and other post-employment benefit liabilities are as follow:

Notes

2018

2017

Pension benefit and other post-employment

benefit obligations
Pension benefit

The Company - funded

Defined pension benefit obligation
Additional pension benefit obligation

The Company - unfunded
Telkomsel
Telkomsat
MD Media
Infomedia

29a.i.a
29a.i.a.i
29a.i.a.ii
29a.i.b
29a.ii

Projected pension benefit obligations
Net periodic post-employment health care

benefit

Other post-employment benefit
Obligation under the Labor Law

Total

29b
29c
29d

1,057
6
1,830
1,541
0
0
-
4,434

195
419
507
5,555

1,540
1,076
2,384
1,839
0
0
0
6,839

2,419
510
427
10,195

The details of net pension benefit expense recognized in the consolidated statements of profit or loss
and other comprehensive income is as follows:

Notes

2018

2017

Pension benefit cost

The Company - funded

Defined pension benefit obligation
Additional pension benefit obligation

The Company - unfunded
Telkomsel
MD Media
Infomedia
Telkomsat

Total pension benefit cost
Net periodic post-employment health care

benefit cost

Other post-employment benefit cost
Obligation under the Labor Law
Total

29a.i.a
29a.i.a.i
29a.i.a.ii
29a.i.b
29a.ii

23,29b
23,29c
23,29d

511
69
198
342
0
0
0
1,120

335
32
113
1,600

557
657
239
247
0
0
0
1,700

276
42
62
2,080

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

The details of the net pension benefit expense recognized in the consolidated statements of profit or
loss and other comprehensive income is as follows (continued):

Notes

2018

2017

Defined benefit plan actuarial gain (losses)

The Company - funded

Defined pension benefit obligation
Additional pension benefit obligation

The Company - unfunded
Telkomsel
MD Media
Infomedia
Telkomsat

29a.i.a
29a.i.a.i
29a.i.a.ii
29a.i.b
29a.ii

Post-employment health care benefit cost
Other post-employment benefit
Obligation under the Labor Law
Sub-total
Deferred tax effect at the applicable tax rates
Defined benefit plan acturial gain (losses) -

29b
29c
29d

26g

net of tax

a. Pension benefit cost

i. The Company

a. Funded pension plan

i. Defined pension benefit obligation

1,236
934
137
514
0
0
0
2,559
24
14
5,418
(598)

4,820

(1,154)
(419)
(100)
(530)
(2)
(1)
0
(551)
(40)
(72)
(2,869)
494

(2,375)

The Company sponsors a defined benefit pension plan for employees with permanent
status prior to July 1, 2002. The plan is governed by the pension laws in Indonesia and
managed by Telkom Pension Fund (“Dana Pensiun Telkom” or “Dapen”). The pension
benefits are paid based on the participating employees’ latest basic salary at retirement
and the number of years of their service. The participating employees contribute 18%
(before March 2003: 8.4%) of their basic salaries to the pension fund. The Company did
not make contributions to the pension fund for the years ended December 31, 2018 and
2017.

The following table presents the changes in projected pension benefit obligations,
changes in pension benefit plan assets, funded status of the pension plan and net
amount recognized in the consolidated statements of financial position as of December
31, 2018 and 2017, under the defined benefit pension plan:
2018

2017

Changes in projected pension benefit

obligations
Projected pension benefit obligations at

beginning of year

Charged to profit or loss:

Service costs
Past service cost - plan amendments
Interest costs

Pension plan participants’ contributions
Actuarial (gain) losses recognized in OCI
Pension benefits paid

Projected pension benefit obligations at

end of year

22,354

18,849

384
-
1,459
38
(2,691)
(1,423)

366
94
1,454
41
2,862
(1,312)

20,121

22,354

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

a. Pension benefit costs (continued)

i. The Company (continued)

a. Funded pension plan (continued)

i. Defined pension benefit obligation (continued)

Changes in pension benefit plan assets

Fair value of pension plan assets at

beginning of year
Interest income
Return on plan assets (excluding amount

included in net interest expense)

Pension plan participants’ contributions
Pension benefits paid
Provision of additional benefit
Plan administration cost
Fair value of pension plan assets at

end of year

Projected pension benefit obligations at

end of year

2018

2017

20,814
1,357

(1,455)
38
(1,423)
(205)
(62)

19,064

1,057

19,046
1,387

1,709
41
(1,312)
-
(57)

20,814

1,540

As of December 31, 2018 and 2017, plan assets consist of:

2018

Quoted in

active market Unquoted

2017

Quoted in
active market Unquoted

Cash and cash equivalents
Equity instruments:

Finance
Consumer goods
Infrastructure, utilities and

transportation

Construction, property and

real estate

Basic industry and chemical
Trading, service and

investment

Mining
Agriculture
Miscellaneous industries
Equity-based mutual fund
Fixed income instruments:

Corporate bonds
Government bonds
Mutual funds
Non-public equity:
Direct placement
Property
Others

Total

873

1,456
1,336

530

199
124

420
112
55
362
1,336

-
6,166
54

-
-
-
13,023

-
-

-
-
-
-
-

5,267
-
-

288
178
308
6,041

1,481

1,463
1,411

656

363
115

388
92
46
377
1,233

-
6,968
54

-
-
-
14,647

-
-

-
-
-
-
-

5,428
-
-

237
188
314
6,167

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

a. Pension benefit costs (continued)

i. The Company (continued)

a. Funded pension plan (continued)

i. Defined pension benefit obligation (continued)

Pension plan assets include Series B shares issued by the Company with fair values
totalling to Rp372 billion and Rp469 billion, representing 1.95% and 2.25% of total plan
assets as of December 31, 2018 and 2017, respectively, and bonds issued by the
Company with fair value totalling to Rp314 billion and Rp340 billion representing 1.65%
and 1.64% of total plan assets as of December 31, 2018 and 2017, respectively.

The expected return is determined based on market expectation for returns over the
entire life of the obligation by considering the portfolio mix of the plan assets. The actual
return on plan assets was Rp(158) billion and Rp3,039 billion for the years ended
December 31, 2018 and 2017, respectively. Based on the Company’s policy issued on
January 14, 2014 regarding Dapen’s Funding Policy, the Company will not contribute to
Dapen when Dapen’s Funding Sufficiency Ratio (FSR) is above 105%. Based on
Dapen’s financial statement as of December 31, 2018, Dapen’s FSR is below 105%.
Therefore, the Company will make contributions to the defined benefit pension plan in
2019.

Based on the Company's policy issued on June 7, 2017 regarding Pension Regulation
by Dapen, the Company provided other benefits in the form of additional benefit in 2017
amounted to Rp4.5 million to monthly pension beneficiaries who retired before end of
June 2002 and Rp2.25 million to monthly pension beneficiaries who retired starting from
the end of June 2002 until the end of April 2017.

The movement at the projected pension benefit obligations for the years ended
December 31, 2018 and 2017 are as follow:

Projected pension benefit obligations
(prepaid pension benefit cost) at
beginning of year

Net periodic pension benefit cost
Provision of additional benefit
Actuarial (gain) losses recognized in OCI
Return on plan assets (excluding amount

(included in net interest expense)

Projected pension benefit obligations at

end of year

2018

2017

1,540
548
205
(2,691)

1,455

1,057

(197)
583
-
2,862

(1,708)

1,540

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

a. Pension benefit costs (continued)

i. The Company (continued)

a. Funded pension plan (continued)

i. Defined pension benefit obligation (continued)

The components of net periodic pension benefit cost
December 31, 2018 and 2017 are as follow:

for

the years ended

2018

2017

Service costs
Past service cost - plan amendments
Plan administration cost
Net interest cost
Net periodic pension benefit cost
Amount charged to subsidiaries under

contractual agreements

Net periodic pension benefit cost less

cost charged to subsidiaries

384
-
62
102
548

(37)

511

366
94
57
66
583

(26)

557

Amounts recognized in OCI for the years ended December 31, 2018 and 2017 are as
follow:

Actuarial gain (losses) recognized during

the year due to:

Experience adjustments
Changes in financial assumptions
Return on plan assets (excluding amount

included in net interest expense)

Net

2018

2017

329
(3,020)

1,455
(1,236)

163
2,699

(1,708)
1,154

The actuarial valuation for the defined benefit pension plan was performed based on the
measurement date as of December 31, 2018 and 2017, with reports dated
April 1, 2019 and February 27, 2018, respectively, by PT Towers Watson Purbajaga
(“TWP”), an independent actuary in association with Willis Towers Watson (“WTW”)
(formerly Towers Watson). The principal actuarial assumptions used by the independent
actuary as of December 31, 2018 and 2017 are as follows:

Discount rate
Rate of compensation increases
Indonesian mortality table

2018

2017

8.25%
8.00%
2011

6.75%
8.00%
2011

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

a. Pension benefit costs (continued)

i. The Company (continued)

a. Funded pension plan (continued)

ii. Additional pension benefit obligation

Based on the Company’s policy issued on June 7, 2017 regarding Pension Regulation
by Dapen, the Company established additional benefit fund at maximum 10% of
surplus of defined benefit plan, when FSR is above 105% and return on investment is
above actuarial discount rate of pension fund.

2018

2017

Changes in projected pension benefit

obligations
Projected pension benefit obligations at

beginning of year
Charged to profit or loss:

Past service costs
Interest costs

Actuarial (gain) losses recognized in OCI
Pension benefits paid

Projected pension benefit obligations

at end of year

Changes in pension benefit plan assets

Fair value of pension plan assets at

beginning of year

Provision of additional benefit
Return of benefit plan assets
Pension benefits paid

Fair value of pension plan assets at

end of year

Projected pension benefit obligations

at end of year

1,076

-
69
(948)
(93)

104

-
205
(14)
(93)

657
-
419
-

1,076

-
-
-
-

1,076

As of December 31, 2018 there is no plan asset on additional pension benefit
obligation. Plan asset will be recognized in accordance with the reserve of additional
benefits funds determined by the board (pengurus) with the approval of the Supervisory
board (Dewan Pengawas)

Changes in additional pension benefit obligation for the years ended December 31,
2018 and 2017 are as follow:

2018

2017

Additional pension benefit obligation at

beginning of year

Past service cost
Interest costs
Provision of additional benefit
Actuarial loss (gain) recognized in OCI
Return on plan asset
Projected additional pension benefit

obligation at end of year

1,076
-
69
(205)
(948)
14

-
657
-
-
419
-

1,076

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

a. Pension benefit costs (continued)

i. The Company (continued)

a. Funded pension plan (continued)

ii. Additional pension benefit obligation (continued)

The components of additional pension benefit cost
December 31, 2018 and 2017 are as follows:

for

the years ended

Past service costs
Net interest costs
Pension benefit costs

2018

2017

-
69
69

657
-
657

Amounts recognized in OCI for the years ended December 31, 2018 and 2017 are as
follows :

2018

2017

Actuarial (gain) losses recognized during

the year due to:
Experience adjusment
Changes in financial assumption

Return on plan assets (excluding amount

included in net interest expense)

Total

(773)
(175)

14
(934)

-
419

The actuarial valuation for the additional pension benefit plan was performed based
on the measurement date as of December 31, 2018 and 2017, with report dated
April 1, 2019 and February 27, 2018, by TWP, an independent actuary in association with
WTW. The principal actuarial assumptions used by the independent actuary for the year
ended December 31, 2018 and 2017 is as follows:

Rate of return on investment
Discount rate
Actuarial discount rate of pension fund
Rate of compensation increases
Indonesian mortality table

b. Unfunded pension plan

2018

9.30%-10.00%
8.25%
9.25%-9.50%
8.00%
2011

2017

9.50%-10.25%
6.75%
9.25%-9.50%
8.00%
2011

The Company sponsors unfunded defined benefit pension plans and a defined contribution
pension plan for its employees.

The defined contribution pension plan is provided to employees with permanent status hired
on or after July 1, 2002. The plan is managed by Financial Institutions Pension Fund (Dana
Pensiun Lembaga Keuangan or “DPLK”). The Company’s contribution to DPLK is determined
based on a certain percentage of
to
Rp13 billion and Rp10 billion, respectively, for the years ended December 31, 2018 and 2017,
respectively.

the participants’ salaries and amounted

Since 2007, the Company has provided pension benefit based on uniformization for both
participants prior to and from April 20, 1992 effective for employees retiring beginning
February 1, 2009. In 2010, the Company replaced the uniformization with Manfaat Pensiun
Sekaligus (“MPS”). MPS is given to those employees reaching retirement age, upon death or
upon becoming disabled starting from February 1, 2009.

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

a. Pension benefit costs (continued)

i. The Company (continued)

b. Unfunded pension plan (continued)

The Company also provides benefits to employees during a pre-retirement period in which
they are inactive for 6 months prior to their normal retirement age of 56 years, known as
pre-retirement benefits (Masa Persiapan Pensiun or “MPP”). During the pre-retirement period,
the employees still receive benefits provided to active employees, which include, but are not
limited to, regular salary, health care, annual leave, bonus and other benefits. Since 2012, the
Company has issued a new requirement for MPP effective for employees retiring since April
1, 2012, whereby the employee is required to file a request for MPP and if the employee does
not file the request, such employee is required to work until the retirement date.

The following table presents the changes in the unfunded projected pension benefit
obligations for MPS and MPP for the years ended December 31, 2018 and 2017:

Unfunded projected pension benefit
obligations at beginning of year

Charged to profit or loss:

Service costs
Net Interest costs

Actuarial losses recognized in OCI
Benefits paid by employer
Unfunded projected pension benefit

obligations at end of year

2018

2017

2,384

2,507

54
144
(137)
(615)

51
188
100
(462)

1,830

2,384

The components of total periodic pension benefit cost the years ended December 31, 2018
and 2017 are as follow:

Service costs
Net interest costs
Total periodic pension benefit cost

Amounts recognized in OCI are as follow:

Actuarial (gain) losses recognized during

the year due to:
Experience adjusments
Changes in demographic assumptions
Changes in financial assumptions

Net

2018

2017

54
144
198

2018

2017

27
(21)
(143)
(137)

51
188
239

19
-
81
100

The actuarial valuation for the defined benefit pension plan was performed, based on the
measurement date as of December 31, 2017 and 2016, with
reports dated
April 1, 2019 and February 27, 2018, respectively, by TWP, an independent actuary in
association with WTW. The principal actuarial assumptions used by the independent actuary
for the year ended December 31, 2017 and 2016 are as follow:

Discount rate
Rate of compensation increases
Indonesian mortality table

2018

8.00%-8.25%
6.10%-8.00%
2011

2017

6.00%-6.75%
6.10%-8.00%
2011

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

a. Pension benefit costs (continued)

ii. Telkomsel

Telkomsel sponsors a defined benefit pension plan to its employees. Under this plan, employees
are entitled to pension benefits based on their latest basic salary or take-home pay (excluding
functional allowance) and number of years of their service. PT Asuransi Jiwasraya (“Jiwasraya”),
a state-owned life insurance company, manages the plan under an annuity insurance contract.
Until 2004, the employees contributed 5% of their monthly salaries to the plan and Telkomsel
contributed any remaining amount required to the plan. Starting 2005, the entire contributions
have been fully made by Telkomsel.

Telkomsel’s contributions to Jiwasraya amounted to Rp125 billion and Rp131 billion for the years
ended December 31, 2018 and 2017, respectively.

The following table presents the changes in projected pension benefit obligation, changes in
pension benefit plan assets, funded status of the pension plan and net amount recognized in the
consolidated statement of financial position for the years ended December 31, 2018 and 2017,
under Telkomsel’s defined benefit pension plan:

2018

2017

Changes in projected pension benefit

obligations
Projected pension benefit obligation at

beginning of year
Charged to profit or loss:

Service costs
Net interest costs

Actuarial (gain) losses recognized in OCI
Benefit paid

Projected pension benefit obligation at

end of year

Changes in pension benefit plan assets

Fair value of pension plan assets at

beginning of year

Interest income
Return on plan assets (excluding amount

included in net interest expense)

Employer’s contributions
Benefit paid
Fair value of pension plan assets at

end of year

Pension benefit obligation at

end of year

2,928

2,034

213
203
(583)
(27)

149
167
584
(6)

2,734

2,928

1,089
74

(68)
125
(27)

1,193

1,541

841
69

54
131
(6)

1,089

1,839

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

a. Pension benefit costs (continued)

ii. Telkomsel (continued)

Movements of the pension benefit obligation for the years ended December 31, 2018 and 2017:

Pension benefit obligation at beginning of year
Periodic pension benefit cost
Actuarial (gain) losses recognized in OCI
Return on plan assets (excluding amount included in

net interest expense)
Employer's contributions
Pension benefit obligation at end of year

2018

2017

1,839
342
(583)

68
(125)
1,541

1,193
247
584

(54)
(131)
1,839

The components of the periodic pension benefit cost for the years ended December 31, 2018
and 2017 are as follow:

Service costs
Net interest costs
Total

Amounts recognized in OCI are as follow:

Actuarial (gain) losses recognized during

the year due to:

Experience adjustments
Changes in financial assumptions
Return on plan assets (excluding amount

included in net interest expense)

Net

2018

2017

213
129
342

2018

2017

192
(774)

68
(514)

149
98
247

(77)
661

(54)
530

The actuarial valuation for the defined benefit pension plan was performed based on the
measurement date as of December 31, 2018 and 2017, with reports dated February 14, 2019
and February 8, 2018 respectively, by TWP, an independent actuary in association with WTW.
The principal actuarial assumptions used by the independent actuary as of December 31, 2018
and 2017, are as follow:

Discount rate
Rate of compensation increases
Indonesian mortality table

2018

2017

8.25%
8.00%
2011

7.00%
8.00%
2011

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

b. Post-employment health care benefit cost

The Company provides post-employment health care benefits to all of its employees hired before
November 1, 1995 who have worked for the Company for 20 years or more when they retire, and to
their eligible dependents. The requirement to work for 20 years does not apply to employees who
retired prior to June 3, 1995. The employees hired by the Company starting from November 1, 1995
are no longer entitled to this plan. The plan is managed by Yayasan Kesehatan Telkom (“Yakes”).

The defined contribution post-employment health care benefit plan is provided to employees with
permanent status hired on or after November 1, 1995 or employees with terms of service less than
20 years at the time of retirement. The Company did not make contributions to Yakes for the years
ended December 31, 2018 and 2017.

The following table presents the changes in projected post-employment health care benefit
provision, changes in post-employment health care benefit plan assets, funded status of the post-
employment health care benefit plan and net amount recognized in the Company’s consolidated
statement of financial position as of December 31, 2017 and 2018:

2018

2017

Changes in projected post-employment health care

benefit obligation
Projected post-employment health care benefit

obligation at beginning of year

Charged to profit or loss:

Interest costs

Actuarial (gain) losses recognized in OCI
Post-employment health care benefits paid

Projected post-employment health care benefit

obligation at end of year

Changes in post-employment health care benefit

plan assets
Fair value of plan assets at beginning of year
Interest income
Return on plan assets (excluding amount included in

net interest expense)

Post-employment health care benefits paid
Plan administration cost
Fair value of plan assets at end of year

Projected for post-employment health care benefit

obligation-net

15,448

13,357

1,102
(3,641)
(486)

1,115
1,460
(484)

12,423

15,448

13,029
927

(1,082)
(486)
(160)
12,228

195

11,765
979

909
(484)
(140)
13,029

2,419

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

b. Post-employment health care benefit cost (continued)

As of December 31, 2018 and 2017, plan assets consists of:

2018

Quoted in

active market Unquoted

Cash and cash equivalents
Equity instruments:

Manufacturing and consumer
Finance industries
Construction
Infrastructure and telecommunication
Wholesale
Mining

Other Industries:

Services
Agriculture
Biotechnology and pharma industry
Others

Equity-based mutual funds
Fixed income instruments:

Fixed income mutual funds

Unlisted shares:

Private placement

Total

1,115

799
799
190
332
177
77

60
32
85
3
1,204

7,020

-
11,893

2017

Quoted in
active market
1,354

Unquoted

835
840
254
350
137
65

38
35
68
1
1,113

7,642

-
-
-
-
-
-

-
-
-
-
-

-
-
-
-
-
-

-
-
-
-
-

335
335

-
12,732

297
297

Yakes plan assets also include Series B shares issued by the Company with fair value totalling
Rp249 billion and Rp265 billion, representing 2.03% and 2.04% of total plan assets as of
December 31, 2018 and 2017, respectively.

The expected return is determined based on market expectation for the returns over the entire life
of the obligation by considering the portfolio mix of the plan assets. The actual return on plan assets
was Rp(315) billion and Rp1,748 billion for the years ended December 31, 2018 and 2017,
respectively.

The movements of the projected post-employment health care benefit obligation for the years ended
December 31, 2018 and 2017 are as follow:

Projected post-employment health care benefit

obligation at beginning of year

Net periodic post-employment health care benefit costs
Actuarial (gain) losses recognized in OCI
Return on plan assets (excluding amount included in

net interest expense)

Projected post-employment health care benefit

obligation at end of year

2018

2017

2,419
335
(3,641)

1,082

195

1,592
276
1,460

(909)

2,419

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

b. Post-employment health care benefit cost (continued)

The components of net periodic post-employment health care benefit cost for the years ended
December 31, 2018 and 2017 are as follow:

Plan administration costs
Net interest costs
Periodic post-employment health care benefit cost

Amounts recognized in OCI are as follow:

Actuarial (gain) losses recognized during the year due to:
Experience adjustments
Changes in financial assumptions
Return on plan assets (excluding amount

included in net interest expense)

Net

2018

2017

160
175
335

141
135
276

2018

2017

(1,100)
(2,541)
1,082
(2,559)

(1,198)
2,658
(909)
551

The actuarial valuation for the post-employment health care benefits plan was performed based
on the measurement date as of December 31, 2018 and 2017, with reports dated
April 1, 2019 and February 27, 2018 respectively, by TWP, an independent actuary in association
with WTW. The principal actuarial assumptions used by the independent actuary as of December
31, 2018 and 2017 are as follow:

Discount rate
Health care costs trend rate assumed for next year
Ultimate health care costs trend rate
Year that the rate reaches the ultimate trend rate
Indonesian mortality table

c. Other post-employment benefits provisions

2018

2017

8.75%
7.00%
7.00%
2018
2011

7.25%
7.00%
7.00%
2018
2011

The Company provides other post-employment benefits in the form of cash paid to employees on
their retirement or termination. These benefits consist of final housing allowance (Biaya Fasilitas
Perumahan Terakhir or “BFPT”) and home passage leave (Biaya Perjalanan Pensiun dan
Purnabhakti or “BPP”).

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

c. Other post-employment benefits provisions (continued)

The movements of the unfunded projected other post-employment benefit obligations for the years
ended December 31, 2018 and 2017 are as follow:

2018

2017

Projected other post-employment

benefit obligations at beginning of year

Charged to profit or loss:

Service costs
Net interest costs

Actuarial (gain) losses recognized in OCI
Benefits paid by employer
Projected other post-employment benefits

obligations at end of year

510

6
26
(24)
(99)

419

502

6
36
40
(74)

510

The components of the projected other post-employment benefit cost for the years ended December
31, 2018 and 2017 are as follow:

Service costs
Net interest costs
Total

Amounts recognized in OCI are as follow:

Actuarial (gain) losses recognized during the year due to:

Experience adjusments
Changes in demographic assumptions
Changes in financial assumptions

Total

2018

2017

6
26
32

2018

2017

40
(34)
(30)
(24)

6
36
42

10
-
30
40

The actuarial valuation for the other post-employment benefits plan was performed based on
measurement date as of December 31, 2018 and 2017, with reports dated April 1, 2019 and
February 27, 2018 respectively, by TWP, an independent actuary in association with WTW.
The principal actuarial assumptions used by the independent actuary as of December 31, 2018 and
2017, are as follow:

Discount rate
Indonesian mortality table

d. Obligation under the Labor Law

2018

2017

8.00%
2011

5.75%
2011

Under Law No. 13 Year 2003, the Group is required to provide minimum pension benefits, if not
covered yet by the sponsored pension plans, to its employees upon retirement. Total obligation
recognized as of December 31, 2018 and 2017 amounted to Rp507 billion and Rp427 billion,
respectively. The related pension employee benefits cost charged to expense amounted to Rp113
billion and Rp62 billion for the years ended December 31, 2018 and 2017, respectively (Note 23).
The actuarial losses recognized in OCI amounted to Rp(14) billion and Rp72 billion for the years
ended December 31, 2018 and 2017, respectively.

These consolidated financial statements are originally issued in the Indonesian language.

29. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

e. Maturity Profile of Defined Benefit Obligation (“DBO”)

The timing of benefits payments and weighted average duration of DBO for 2018 are as follow:

Expected Benefits Payment

Time Period

obligation

Unfunded Telkomsel

Post-employment Other post-
employment
benefits

health care
benefits

The Company

Funded
Defined

Additional

pension benefit pension benefit

Within next 10 years
Within 10-20 years
Within 20-30 years
Within 30-40 years
Within 40-50 years
Within 50-60 years
Within 60-70 years
Within 70-80 years

Weighted average
duration of DBO

f. Sensitivity Analysis

16,370
20,349
16,207
9,400
3,383
644
62
2

-
-
20
38
30
50
101
-

948
160
29
9
-
-
-
-

2,498
7,880
6,680
1,580
-
-
-
-

5,620
6,913
6,217
3,193
661
22
0
-

485
91
39
3
-
-
-
-

9.11 years

3.97 years 10.58 years

17.41 years

3.13 years

1% change in discount rate and rate of compensation would have effect on DBO ,as follow :

Sensitivity
Funded;

Defined pension benefit obligation
Additional pension benefit obligation

Unfunded
Telkomsel
Post-employment health care benefits
Other post-employment benefits

Discount Rate

Rate of Compensation

1% Increase

1% Decrease

1% Increase

1% Decrease

Increase (decrease) in
amounts

(1,568)
(2)
(41)
(497)
(1,428)
(12)

1,832
(1)
38
562
1,815
13

275
-
42
294
1,783
-

(286)
-
(45)
(276)
(1,508)
-

The sensitivity analysis has been determined based on a method that extrapolates the impact on
DBO as a result of reasonable changes in key assumptions occurring at the end of the reporting
period.

The sensitivity results above determine the individual impact on the Plan’s DBO at the end of the
year. In reality, the Plan is subject to multiple external experience items which may move the DBO
in similar or opposite directions, and the Plan’s sensitivity to such changes can vary over time.

There are no changes in the methods and assumptions used in preparing the sensitivity analysis
from the previous period.

100

These consolidated financial statements are originally issued in the Indonesian language.

30. LSA PROVISIONS

Telkomsel and Telkomsat provide certain cash awards or certain number of days leave benefits to their
employees based on the employees’ length of service requirements, including LSA and LSL. LSA are
either paid at the time the employees reach certain years of employment, or at the time of termination.
LSL are either certain number of days leave benefit or cash, subject to approval by management,
provided to employees who meet the requisite number of years of service and reach a certain minimum
age.

The obligation with respect to these awards which was determined based on an actuarial valuation
using the Projected Unit Credit method, amounted to Rp852 billion and Rp758 billion as of
and December 31, 2018 and 2017, respectively. The related benefit costs charged to expense
amounted to Rp161 billion and Rp255 billion for the years ended December 31, 2018 and 2017,
respectively (Note 23).

31. RELATED PARTIES TRANSACTIONS

a. Nature of relationships and accounts/transactions with related parties

Details of the nature of relationships and accounts/transactions with significant related parties are
as follows:

Related parties

The Government

Ministry of Finance

Nature of relationships parties
Majority stockholder

Nature of accounts/transactions

Internet and data service revenues, other

telecommunication service revenues, finance income,
finance costs, and investment in financial instruments

State-owned enterprises

Entity under common control

Internet and data service revenues, other

Indosat

Entity under common control

telecommunication services revenues, operating expenses
and purchase of property and equipment

Interconnection revenues, leased lines revenues, satellite
transponder usage revenues, interconnection expenses,
telecommunication facilities usage expenses, operating and
maintenance expenses, usage of data communication
network system expenses

PT Perusahaan Listrik Negara

Entity under common control

Electricity expenses, finance income, finance costs, and

(“PLN”)

investment in financial instrument

PT Pertamina (Persero)

Entity under common control

Internet and data service revenues and other

(“Pertamina”)

INTI

Entity under common control

Internet and data service revenues, other

telecommunication service revenues

telecommunication service revenues, purchase of property
and equipment and construction services

State-owned banks
BNI

Entity under common control
Entity under common control

Finance income and finance costs
Internet and data service revenues, other

telecommunication service revenues, finance income, and
finance costs

Bank Mandiri

Entity under common control

Internet and data service revenues, other

BRI

BTN

telecommunication service revenues, finance income, and
finance costs

Entity under common control

Internet and data service revenues, other

telecommunication service revenues, finance income, and
finance costs

Entity under common control

Internet and data service revenues, other

telecommunication service revenues, finance income, and
finance costs

PT Pegadaian (“Pegadaian”)

Entity under common control

Internet and data service revenues and other

telecommunication service revenues

101

These consolidated financial statements are originally issued in the Indonesian language.

31. RELATED PARTIES TRANSACTIONS (continued)

a. Nature of relationships and accounts/transactions with related parties (continued)

Details of the nature of relationships and accounts/transactions with significant related parties are
as follows (continued):

Related parties

PT Balai Pustaka
(“Balai Pustaka”)
PT Garuda Indonesia
(“Garuda Indonesia”)

PT Angkasa Pura
(“Angkasa Pura”)

Perum Peruri
(“Peruri”)

Nature of relationships parties
Entity under common control

Nature of accounts/transactions

Internet and data service revenues and other

telecommunication service revenues

Entity under common control

Internet and data service revenues and other

Entity under common control

Internet and data service revenues and other

telecommunication service revenues

Entity under common control

Internet and data service revenues and other

telecommunication service revenues

PT Kereta Api Indonesia

Entity under common control

Internet and data service revenues and other

(“KAI”)

telecommunication service revenues

PT Asuransi Jasa Indonesia

Entity under common control

Fixed assets insurance expenses

(“Jasindo’)

PT Mandiri Manajemen Investasi Entity under common control
Entity under common control
Bahana TCW
Entity under common control
PT Sarana Multi Infrastruktur
Associated company
Indonusa
Associated company
Teltranet
Associated company
Tiphone
Other related entities
PT Poin Multi Media Nusantara

Available-for-sale financial assets
Available-for-sale financial assets, and bonds.
Finance costs
Pay TV expenses
CPE Expenses
Distribution of SIM cards and pulse reload voucher
Purchase of handset

(“POIN”)

PT Perdana Mulia Makmur

Other related entities

Purchase of handset

(“PMM”)

Yakes

Other related entities

Medical expenses

Koperasi Pegawai Telkom

Other related entities

Purchase of property and equipment, construction and

(“Kopegtel”)

installation services, leases of buildings expenses, lease of
vehicles expenses, purchases of vehicles, and purchases
of materials and construction service, maintenance and
cleaning service expenses, and RSA revenues

Koperasi Pegawai Telkomsel

Other related entities

Internet and data service revenues, other

(“Kisel”)

PT Graha Informatika Nusantara

Other related entities

(“Gratika”)

PT Pembangunan

Other related entities

Telekomunikasi Indonesia
(“Bangtelindo”)

Directors
Commissioners

telecommunication service revenues, leases of vehicles
expenses, printing and distribution of customer bills
expenses, collection fee, other services fee, distribution of
SIM cards and pulse reload voucher, and purchase of
property and equipment

Network service revenues, operation and maintenance
expenses, purchase of property and equipment and
construction services and distribution of SIM card and pulse
reload voucher

Purchase of property and equipment and construction

services

Key management personnel
Supervisory personnel

Honorarium and facilities
Honorarium and facilities

The outstanding balances of trade receivables and payables at year-end are unsecured and
interest free and settlement occurs in cash. There have been no guarantees provided or received
for any related party receivables or payables. As of December 31, 2018, the Group recorded
impairment of receivables from related parties of Rp(150) billion. Impairment assessment is
undertaken each financial year through examining the current status of existing receivables and
historical collection experience.

102

These consolidated financial statements are originally issued in the Indonesian language.

31. RELATED PARTIES TRANSACTIONS (continued)

b. Transactions with related parties

The following are significant transactions with related parties:

REVENUES

Majority Stockholder
Ministry of Finance

Entities under common control

Indosat
BRI
Pegadaian
BNI
Pertamina
BTN
Bank Mandiri
Peruri
Angkasa Pura
Garuda Indonesia
KAI
Balai Pustaka
Lain-lain

Sub-total
Other related entities
Associated companies

Total

EXPENSES

Entities under common control

PLN
Indosat
Jasindo
Others
Sub-total
Other related entities

Kisel
PMM
POIN
Kopegtel
Yakes
Others
Sub-total
Associated companies

Indonusa
Teltranet
Others
Sub-total

Total

2018

% of total
revenues

Amount

2017

% of total
revenues

Amount

258

1,002
397
228
188
183
179
173
120
114
105
83
81
696
3,807
73
55
3,935

0.20

0.77
0.30
0.17
0.14
0.14
0.14
0.13
0.09
0.09
0.08
0.06
0.06
0.53
2.70
0.06
0.04
3.00

280

1,789
237
115
105
94
129
157
-
-
55
18
-
682
3,818
31
65
4,084

0.22

1.39
0.18
0.09
0.08
0.07
0.10
0.12
-
-
0.04
0.01
-
0.54
1,89
0.02
0.05
3,17

2018

% of total
expenses

Amount

2017

Amount

% of total
expenses

2,596
933
349
189
4,067

916
850
850
836
128
190
3,770

306
181
11
498
8,335

2.79
1.00
0.38
0.20
4.37

0.98
0.91
0.91
0.90
0.14
0.20
4.04

0.33
0.19
0.01
0.53
8.94

2,269
890
168
68
3,395

813
404
405
713
139
81
2,555

264
123
38
425
6,375

2.69
1.06
0.20
0.08
4.03

0.96
0.48
0.48
0.85
0.16
0.10
3.03

0.31
0.15
0.04
0.50
7.56

103

These consolidated financial statements are originally issued in the Indonesian language.

31. RELATED PARTIES TRANSACTIONS (continued)

b. Transactions with related parties (continued)

The following are significant transactions with related parties (continued):

FINANCE INCOME

Entities under common control

State-owned banks

Others

Total

FINANCE COSTS

Majority stockholder
Ministry of Finance

Entities under common control

State-owned banks
Sarana Multi Infrastruktur

Total

PURCHASE OF PROPERTY
AND EQUIPMENTS (Note 9)
Entities under common control

INTI
Others
Sub-total
Other related entities

Kopegtel
Bangtelindo
Others
Sub-total

Total

DISTRIBUTION OF SIM
CARD AND VOUCHER
Other related entities

Tiphone
Kisel
Gratika

Total

2018

2017

Amount

% of total
finance income

Amount

% of total
finance income

596
6
602

2018

58.78
0.59
59.37

850
35
885

2017

59.27
2.44
61.71

Amount

% of total
finance costs

Amount

% of total
finance costs

1,140
110
1,291

1.17

32.51
3.14
36.82

819
94
967

1.95

29.58
3.39
34.92

2018

% of total
purchases

Amount

2017

% of total
purchases

Amount

137
41
178

144
135
193
472
650

0.43
0.13
0.56

0.46
0.43
0.61
1.50
2.06

203
93
296

130
64
189
359
655

0.79
0.33
1.12

0.41
0.20
0.64
1.25
2.37

2018

% of total
revenues

Amount

2017

% of total
revenue

Amount

4,390
4,221
474
9,085

3.36
3.23
0.36
6.95

3,888
4,181
408
8,477

3.03
3.26
0.32
6.61

104

These consolidated financial statements are originally issued in the Indonesian language.

31. RELATED PARTIES TRANSACTIONS (continued)

b. Transactions with related parties (continued)

Presented below are balances of accounts with related parties:

a. Cash and cash equivalents

(Note 3)

b. Other current financial

asset (Note 4)

c. Trade receivables - net

(Note 5)

d. Other current asset (Note 7)
e. Other non-current asset

(Note 10)

f. Trade payables (Note 12)

Majority stockholder
Ministry of Finance
Entities under common

control
Indosat
State-owned enterprises

Sub-total
Other related entities

Kopegtel
Others
Sub-total
Total

g. Accrued expenses

(Note 13)
Majority stockholder

Government

Entities under common

control
State-owned enterprises
State-owned banks

Sub-total

Other related entities
Kisel
Others
Total

h. Advances from

customers
Majority stockholder

Government

Entities under common

control
PLN
Total

2018

% of total
assets

Amount

2017

% of total
assets

Amount

13,205

471

2,126
159

6.40

0.23

1.03
0.08

0.02

17,417

1,153

1,545
126

8.78

0.58

0.78
0.06

0.03

2018

% of total
liabilities

Amount

2017

% of total
liabilities

Amount

0.00

0.14
0.33
0.47

0.31
0.33
0.64
1.11

0.01

0.10
0.07
0.17

0.21
0.01
0.40

0.02

0.01
0.03

225
102
327

209
329
538
869

113
36
149

235
1
394

11
30

0.03

0.26
0.12
0.38

0.24
0.38
0.62
1.00

0.01

0.13
0.04
0.17

0.27
0.00
0.46

0.02

0.01
0.03

122
294
416

279
296
575
993

86
61
147

183
13
350

12
31

105

These consolidated financial statements are originally issued in the Indonesian language.

31. RELATED PARTIES TRANSACTIONS (continued)

b. Transactions with related parties (continued)

Presented below are balances of accounts with related parties (continued):

i. Short-term bank loans

(Note 15)

j. Two-step loans (Note 16a)
k. Long-term bank loans

(Note 16c)

l. Other borrowings (Note 16d)

2018

% of total
liabilities

Amount

2017

% of total
liabilities

Amount

956
949

12,620
2,244

1.08
1.07

14.19
2.52

1,297
1,098

7,895
1,295

1.50
1.27

9.14
1.50

c. Significant agreements with related parties

The Government

The Company obtained two-step loans from the Government (Note 16a).

ii.

Indosat

The Company has an agreement with Indosat to provide international telecommunications
services to the public.

The Company has also entered into an interconnection agreement between the Company’s
fixed line network (Public Switched Telephone Network or “PSTN”) and Indosat’s GSM mobile
cellular telecommunications network in connection with the implementation of Indosat
Multimedia Mobile services and the settlement of related interconnection rights and obligations.

The Company also has an agreement with Indosat for the interconnection of Indosat's GSM
mobile cellular telecommunications network with the Company's PSTN, which enable each
party’s customers to make domestic calls between Indosat’s GSM mobile network and the
Company’s fixed line network, as well as allowing Indosat’s mobile customers to access the
Company’s IDD service by dialing “007”.

The Company has been handling customer billings and collections for Indosat. Indosat is
gradually taking over the activities and performing its own direct billing and collection. The
Company has received compensation from Indosat computed at 1% of the collections made by
the Company starting from January 1, 1995, as well as the billing process expenses which are
fixed at a certain amount per record. On December 11, 2008, the Company and Indosat agreed
to implement IDD service charge tariff which already took into account the compensation for
billing and collection. The agreement is valid and effective starting from January to December
2012, and can be applied until a new agreement becomes available.

On December 28, 2006, the Company and Indosat signed amendments to the interconnection
agreements for the fixed line networks (local, SLJJ and international) and mobile network for
the
the MoCI Regulation
No.8/Year 2006. These amendments took effect starting on January 1, 2007.

tariff obligations under

implementation of

the cost-based

Telkomsel also entered into an agreement with Indosat for the provision of international
telecommunications services to its GSM mobile cellular customers.

The Company provides leased lines to Indosat and its subsidiaries, namely PT Indosat Mega
Media and Lintasarta. The leased lines can be used by these companies for telephone,
telegraph, data, telex, facsimile or other telecommunication services.

106

These consolidated financial statements are originally issued in the Indonesian language.

31. RELATED PARTIES TRANSACTIONS (continued)

c. Significant agreements with related parties (continued)

iii. Others

Kisel is a co-operative that was established by Telkomsel’s employees to engage in car rental
services, printing and distribution of customer bills, collection and other services principally for
the benefit of Telkomsel. Telkomsel also has dealership agreements with Kisel for distribution
of SIM cards and pulse reload vouchers.

d. Remuneration of key management and supervisory personnel

Key management personnel consists of the Directors of the Company and supervisory personnel
consists of Board of Commissioners.

The Company provides remuneration in the form of salaries/honorarium and facilities to support the
governance and oversight duties of the Board of Commissioners and the leadership and
management duties of the Directors. The total of such remuneration is as follow:

2018

% of total
expenses

Amount

2017

% of total
expenses

Amount

Directors
Board of Commissioners

360
166

0.39%
0.18%

175
65

0.21%
0.08%

The amounts disclosed in the table are the amounts recognized as an expense during the reporting
periods.

32. OPERATING SEGMENT

In 2017, management rearranged the way it manages the Group's business portfolios from a customer-
centric approach to a Customer Facing Units (“CFU”) approach that allow the Group to focus on more
specific customer markets. This was followed by a change in the Group’s organizational structure to
accommodate decision making and assessing performance based on the CFU approach.

The Group has four primary reportable segments, namely mobile, consumer, enterprise and WIB. The
mobile segment provides mobile voice, SMS, value added services and mobile broadband. The
consumer segment provides fixed wireline telecommunications services, pay TV, data, internet and
other telecommunication services to home customers. The enterprise segment provides end-to-end
solution to corporate and institutions. The WIB segment provides interconnection services, leased lines,
satellite, VSAT, broadband access, information technology services, data and internet services to Other
Licensed Operator companies and institutions. Other segment represents Digital Service Operating
Segments that does not meet the disclosure requirements for a reportable segments. No Operating
Segments have been agregated to from the reportable segments.

Management monitors the operating results of the business units separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated
based on operating profit or loss and is measured consistently with operating profit or loss in the
consolidated financial statements. However, the financing activities and income taxes are managed on
a group basis and not separately monitored and allocated to operating segments.

107

These consolidated financial statements are originally issued in the Indonesian language.

32. OPERATING SEGMENT (continued)

Segment revenues dan expenses include transactions between operating segments and are accounted
at prices that management believes represent market prices.

Segment results
Revenues

External revenues
Inter-segment revenues
Total segment revenues

Expenses

External expenses
Inter-segment expenses

Total segment expenses
Segment results
Other information
Capital Expenditures
Depreciation and amortization
Provision recognized in

current period

Segment results
Revenues

External revenues
Inter-segment revenues
Total segment revenues

Expenses

External expenses
Inter-segment expenses

Total segment expenses
Segment results
Other information
Capital Expenditures
Depreciation and amortization
Provision recognized in

current period

Mobile

Consumer Enterprise

WIB

Others

Total
segment

Adjustment
and
elimination

Total
consolidated

2018

85,338
3,880
89,218

(40,041)
(15,408)
(55,449)
33,769

13,891
2,290
16,181

(11,739)
(3,792)
(15,531)
650

21,054
17,995
39,049

(21,717)
(16,116)
(37,833)
1,216

10,084
16,678
26,762

(14,624)
(6,010)
(20,634)
6,128

130
886
1,016

130,497
41,729
172,226

287
(41,729)
(41,442)

(1,042)
(31)
(1,073)
(57)

(89,163)
(41,357)
(130,520)
41,706

(2,776)
41,357
38,581
(2,861)

130,784
-
130,784

(91,939)
-
(91,939)
38,845

(14,373)
(13,095)

(6,958)
(3,060)

(5,325)
(2,128)

(6,321)
(3,146)

(18)
(21)

(32,995)
(21,450)

(625)
44

(33,620)
(21,406)

(438)

(764)

(71)

(5)

(1,716)

(8)

(1,724)

Mobile

Consumer Enterprise

WIB

Others

Total
segment

Adjustment
and
elimination

Total
consolidated

2017

90,073
3,086
93,159

11,105
287
11,392

(39,452)
(14,382)
(53,834)
39,325

(10,360)
(1,563)
(11,923)
(531)

19,130
16,801
35,931

(20,653)
(15,027)
(35,680)
252

7,439
15,305
22,744

(12,333)
(5,611)
(17,944)
4,800

126
602
728

127,873
36,081
163,954

383
(36,081)
(35,698)

(979)
(70)
(1,049)
(321)

(83,777)
(36,653)
(120,430)
43,525

(572)
36,653
36,081
382

128,256
-
128,256

(84,349)
-
(84,349)
43,907

(15,134)
(13,560)

(6,544)
(2,839)

(3,637)
(2,136)

(7,120)
(2,382)

(11)
(22)

(32,447)
(20,940)

(709)
494

(33,156)
(20,446)

(291)

(385)

(668)

(127)

(2)

(1,473)

(8)

(1,481)

Adjustment and elimination:

Segment result
Operating loss of operating business
Other elimination and adjustment
Consolidated operating income

2018

2017

41,706
(798)
(2,063)
38,845

43,525
(786)
1,168
43,907

108

These consolidated financial statements are originally issued in the Indonesian language.

32. OPERATING SEGMENT (continued)

Geographic information:

The revenue information below is based on the location of the customers.

External revenues

Indonesia
Foreign countries

Total

2018

2017

127,438
3,346
130,784

125,970
2,286
128,256

Non-current operating assets for this purpose consist of property and equipment and intangible assets.

Non-current operating assets

Indonesia
Foreign countries

Total

2018

2017

144,631
3,649
148,280

130,468
3,233
133,701

33. TELECOMMUNICATIONS SERVICE TARIFFS

Under Law No. 36 Year 1999 and Government Regulation No. 52 Year 2000, tariffs for operating
telecommunications network and/or services are determined by providers based on the tariff type,
structure and with respect to the price cap formula set by the Government.

a. Fixed line telephone tariffs

The Government has issued a new adjustment tariff formula which is stipulated in the Decree
No. 15/PER/M.KOMINFO/4/2008 dated April 30, 2008 of the MoCI concerning “Mechanism to
Determine Tariff of Basic Telephony Services Connected through Fixed Line Network”. This Decree
replaced the previous Decree No. 09/PER/M.KOMINFO/02/2006.

Under the Decree, tariff structure for basic telephony services connected through fixed line network
consists of the following:
• Activation fee
• Monthly subscription charges
• Usage charges
• Additional facilities fee.

b. Mobile cellular telephone tariffs

On April 7, 2008, the MoCI issued Decree No. 09/PER/M.KOMINFO/04/2008 regarding “Mechanism
to Determine Tariff of Telecommunication Services Connected through Mobile Cellular Network”
which provides guidelines to determine cellular tariffs with a formula consisting of network element
cost and
the previous Decree
No. 12/PER/M.KOMINFO/02/2006.

retail services activity cost. This Decree

replaced

109

These consolidated financial statements are originally issued in the Indonesian language.

33. TELECOMMUNICATIONS SERVICE TARIFFS (continued)

b. Mobile cellular telephone tariffs (continued)

Under MoCI Decree No. 09/PER/M.KOMINFO/04/2008 dated April 7, 2008, the cellular tariffs of
operating telecommunication services connected through mobile cellular network consist of the
following:
• Basic telephony services tariff
• Roaming tariff, and/or
• Multimedia services tariff
with the following traffic structure:
• Activation fee
• Monthly subscription charges
• Usage charges
• Additional facilities fee.

c. Interconnection tariffs

The Indonesian Telecommunication Regulatory Body (“ITRB”), in its letter No. 262/BRTI/XII/2011
dated December 12, 2011, decided to change the basis for SMS interconnection tariff to cost basis
with a maximum tariff of Rp23 per SMS effective from June 1, 2012, for all telecommunication
provider operators.

Based on letter No.118/KOMINFO/DJPPI/PI.02.04/01/2014 dated January 30, 2014 of the Director
General of Post and Informatics, the Director General of Post and Informatics decided to implement
new interconnection tariff effective from February 1, 2014 until December 31, 2016, subject to
evaluation on an annual basis. Pursuant to the Director General of Post and Informatics letter, the
Company and Telkomsel are required to submit the Reference Interconnection Offer (“RIO”)
proposal to ITRB to be evaluated.

ITRB

Subsequently,
letters No. 60/BRTI/III/2014 dated March 10, 2014 and
No. 125/BRTI/IV/2014 dated April 24, 2014 approved Telkomsel and the Company’s revision of RIO
regarding the interconnection tariff. Based on the letter, ITRB also approved the changes to the SMS
interconnection tariff to Rp24 per SMS.

its

On January 18, 2017, ITRB in its letters No. 20/BRTI/DPI/I/2017 and No. 21/BRTI/DPI/I/2017,
decided to use the interconnection tariff based on the Company and Telkomsel’s RIO in 2014 until
the new interconnection tariff is set.

d. Network lease tariffs

Through MoCI Decree No. 03/PER/M.KOMINFO/1/2007 dated January 26, 2007 concerning
“Network Lease”, the Government regulated the form, type, tariff structure, and tariff formula for
services of network lease. Pursuant to the MoCI Decree, the Director General of Post and
Telecommunication issued its Letter No. 115 Year 2008 dated March 24, 2008 which stated “The
Agreement on Network Lease Service Type Document, Network Lease Service Tariff, Available
Capacity of Network Lease Service, Quality of Network Lease Service, and Provision Procedure of
Network Lease Service in 2008 Owned by Dominant Network Lease Service Provider”, in conformity
with the Company’s proposal.

e. Tariff for other services

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

110

These consolidated financial statements are originally issued in the Indonesian language.

34. SIGNIFICANT COMMITMENTS AND AGREEMENTS

a. Capital expenditures

As of December 31, 2018, capital expenditures committed under the contractual arrangements,
principally relating to procurement and installation of data, internet and information technology,
cellular, transmission equipment and cable network are as follows:

Currencies

Amounts in foreign currencies
(in millions)

Equivalent in Rupiah

Rupiah
U.S. dollar
Euro
HKD
Total

-
94
1,23
0,79

7.988
1.349
20
1
9.358

The above balance includes the following significant agreements:

(i) The Company

installation

for PE-VPN

Significant provisions of the agreement
Procurement and installation agreement of
Sistem Komunikasi Kabel Laut
(“SKKL”)
Indonesia Global Gateway
Procurement and installation agreement of
SKKL Sabang-Lhoksemawe-Medan
Procurement and
CISCO expans
Procurement and
CISCO expans
Procurement and installation of OLT and ONT
Platform ZTE
Procurement agreement for ONT platform ZTE
Procurement agreement for Set Top Box
(“STB”) Platform ZTE phase-2
Procurement and
Platform Huawei
Procurement and
Platform Nokia NARU 2018
Procurement and installation agreement of ISP
SKKL Platform NEC
and
reengineering transport
Procurement and installation for Metro Ethernet
Platform Nokia-ALU expansion
Procurement and installation agreement of
Methor Ethernet, BRAS, PCEF and PE Transit
Platform Huawei
Procurement and installation for IP Backbone
Platform CISCO expansion
Procurement and
Platform Coriant Naru 2018

for DWDM

installation

expansion

Contracting parties

Initial date of agreement

The Company, TII and NEC Corporation

May 12, 2016

The Company and Consortium Bisnis
Submarine Cable
The Company and PT Sisindokom Lintas
Buana
The Company and PT Sisindokom Lintas
Buana

November 10, 2017

November 15, 2017

April 26, 2018

The Company and PT ZTE Indonesia

May 31, 2018

The Company and PT ZTE Indonesia

September 13, 2018

The Company and PT ZTE Indonesia

October 30, 2018

The Company and PT Huawei Tech
Investment
The Company and PT Lintas Teknologi
Indonesia

November 23, 2018

December 13, 2018

The Company and NEC Corporation

December 13, 2018

The Company and PT Datacomm Diangraha

December 14, 2018

The Company and PT Huawei Tech
Investment

December 17, 2018

The Company and PT Master System
Infotama
The Company and PT Lancs Arche
Consumma

December 31, 2018

111

These consolidated financial statements are originally issued in the Indonesian language.

34. SIGNIFICANT COMMITMENTS AND AGREEMENTS (continued)

a. Capital expenditures (continued)

(ii) Telkomsel

Contracting parties
Telkomsel, PT NSN, NSN Oy and Nokia
Siemens Networks GmbH & Co.KG
Telkomsel, PT Ericsson Indonesia dan PT
Ericsson AB
Telkomsel, PT Datacraft
Dimension Data Indonesia and PT Huawei
Telkomsel, Amdocs Software Solutions
Limited
dan PT
Application Solutions

Liability Company

Indonesia, PT

Telkomsel dan PT Application Solutions

Telkomsel, Amdocs Software Solutions
Limited
dan PT
Application Solutions

Liability Company

Telkomsel dan PT Huawei

Telkomsel dan Wipro Limited, Wipro
Singapore Pte. Ltd. dan PT WT Indonesia

Telkomsel dan PT Ericsson Indonesia

Telkomsel, PT Ericsson
Indonesia, PT
NSNI, NSN Oy, PT Huawei dan PT ZTE
Indonesia

Initial date of agreement
April 17, 2008

April 17, 2008

February 3, 2010

February 8, 2010

July 5, 2011

March 25, 2013

April 23, 2013

October 22, 2013

February 1, 2018

for

(“TSA”)

Significant provisions of the agreement
The combined 2G and 3G CS Core Network
Rollout Agreement
Technical Service Agreement
combined 2G and 3G CS Core Network
Next Generation Convergence Core Transport
Rollout and Technical Support agreement
Online Charging System ("OCS") and Service
Control Points
("SCP") System Solution
Development Agreements
Technical Support agreement to provide technical
support services for the OCS and SCP
Development and Rollout agreement for Customer
Relationship Management and Contact Center
Solutions
Technical Support agreement for the procurement
of Gateway GPRS Support Node (“GGSN”)
Service Complex
Development and procurement of Operational and
Strategic Decision Support System (“OSDSS”)
Solution Agreement
Procurement of GGSN Service Complex Rollout
agreement
Ultimate Radio Network Infrastructure ROA and
SA agreement

b. Borrowings and other credit facilities

(i) As of December 31, 2018, the Company has bank guarantee facilities for tender bond,
performance bond, maintenance bond, deposit guarantee and advance payment bond for
various projects of the Company, as follows:

Lenders
BRI
BNI
Bank Mandiri
Total

Total facility

Maturity
March 14, 2020
March 31, 2019

500
850
500 December 23, 2019

Currency
Rp
Rp
Rp

1,850

facility
utilized

280
261
361
902

112

These consolidated financial statements are originally issued in the Indonesian language.

34. SIGNIFICANT COMMITMENTS AND AGREEMENTS (continued)

b. Borrowings and other credit facilities (continued)

(ii) Telkomsel has US$3 million bond, bank guarantee and standby letter of credit facility with SCB,

Jakarta. The facilities will expire on July 31, 2019.

Telkomsel has a Rp1,000 billion bank guarantee facility with BRI. The facility will expire on
September 25, 2022. Under this facility, as of December 31, 2018, Telkomsel has issued a
bank guarantee amounting to Rp499 billion as payment commitment guarantee for annual right
of usage fee valid until March 31, 2019 and Rp20 billion as frequency performance bond valid
until May 31, 2019 (Note 34c.i).

Telkomsel has a Rp150 billion bank guarantee facility with BCA. The facility will expire
on April 15, 2019.

Telkomsel also has a Rp2,100 billion bank guarantee facility with BNI. The facility will expire on
December 11, 2019. Telkomsel uses this facility to replace the time deposits which were
pledged as collateral for bank guarantees required for the USO program amounting to
Rp52.2 billion (Note 34c.iii) and for surety bond of 2.3 Ghz radio frequency amounting to
Rp1,030 billion (Note 34c.i)

(iii) TII has a US$15 million equal to Rp210 billion bank guarantee from Bank Mandiri and has been
renewed in accordance with the addendum V (five) on December 18, 2017 with a maximum
credit limit of US$10 million equal to Rp135 billion. The facility will expire on December 18,
2018. As of December 31, 2018, TII has not used the facility.

(iv) As of December 31, 2018, Sigma has a Rp354 billion bank guarantee from BNI and HSBC. The

used facility on December 31, 2018 amounting to Rp156 billion.

c. Others

(i) Radio Frequency Usage

Based on Decree No. 8 dated November 2, 2015 of the Government of the Republic of
Indonesia which replaced Decree No. 76 dated December 15, 2010, Telkomsel is required to
pay the annual frequency usage fees for the 800 MHz, 900 MHz and 1800 MHz bandwidths
using the formula set out in the decree.

As an implementation of the above decree, the Company and Telkomsel paid annual frequency
usage fees since 2010.

Based on Decision letter No. 1987 Year 2017 dated November 15, 2017, which amended
Decree No. 42 Year 2014 dated January 29, 2014, whereby the MoCI granted Telkomsel the
rights to provide:
1. Mobile telecommunication services with radio frequency bandwidth in the 800 MHz, 900

MHz, 1800 MHz, 2.1 GHz and 2.3 GHz; and

2. Basic telecommunication services.

113

These consolidated financial statements are originally issued in the Indonesian language.

34. SIGNIFICANT COMMITMENTS AND AGREEMENTS (continued)

c. Others (continued)

(i) Radio Frequency Usage (continued)

With reference to Decision Letters No. 268/KEP/M.KOMINFO/9/2009, No. 191 Year 2013,
No. 509 Year 2016 and No. 1896 year 2017 of the MoCI, Telkomsel is required, among other
things, to:
1. Pay an annual right of usage Biaya Hak Penyelenggara (“BHP”) over the license term
(10 years) as set forth in the decision letters. The BHP is payable upon receipt of Surat
Pemberitahuan Pembayaran (notification letter) from the DGPI. The BHP fee is payable
annually up to the expiry period of the license.
Issue a performance bond each year amounting to Rp20 billion for spectrum 2.1 GHz and
a surety bond each year amounting Rp1.03 trillion for spectrum 2.3 GHz (Note 34b.ii).

(ii) Future minimum lease payments under operating lease

The Group entered into non-cancelable lease agreements with both third and related parties.
The lease agreements cover leased lines, telecommunication equipment and land and building
with terms ranging from 1 to 10 years and with expiry dates between 2019 and 2028. Periods
may be extended based on the agreement by both parties.

Future minimum
agreements as of December 31, 2018 are as follows :

lease payments/receivables under non-cancelable operating

lease

As lessee
As lessor

(iii) USO

Total
23,832
4,105

Less than 1
year

1-5 years
13,030
2,464

6,271
1,084

More than
5 years

4,531
557

The MoCI issued Regulation No. 17 year 2016 dated September 26, 2016 which replaced
Decree No. 45 year 2012 and other previous regulations regarding policies underlying the USO
program. The regulation requires telecommunications operators in Indonesia to contribute
1.25% of gross revenues (with due consideration for bad debts and/or interconnection charges
and/or connection charges and/or the exclusion of certain revenues that are not considered as
part of gross revenues as a basis to calculate the USO charged) for USO development.

Subsequently, Decree No. 17 year 2016 dated September 26, 2016 was replaced by Decree
No. 19 year 2016 which was effective from November 8, 2016. The latest Decree stipulates,
among other things, the USO charged was effective for fiscal year 2016 and thereafter.

Based on MoCI Regulation No. 25 year 2015 dated June 30, 2015, it is stipulated that, among
others, in providing telecommunication access and services in rural areas (USO Program), the
provider is determined through a selection process by Balai Penyedia dan Pengelola
replaced Balai
Pembiayaan Telekomunikasi dan
Telekomunikasi
Decree
No. 18/PER/M.KOMINFO/11/2010 dated November 19, 2010 of MoCI.

(“BPPPTI”). BPPPTI
based

Informatika

Pedesaan

(“BTIP”)

dan

114

These consolidated financial statements are originally issued in the Indonesian language.

34. SIGNIFICANT COMMITMENTS AND AGREEMENTS (continued)

c. Others (continued)

On December 27, 2011, Telkomsel (on behalf of Konsorsium Telkomsel, a consortium which
was established with Dayamitra on December 9, 2011) was selected by BPPPTI as a provider
of the USO Program in the border areas for all packages (package 1 - 13) with a total price of
Rp830 billion. On such date, Telkomsel was also selected by BPPPTI as a provider of the USO
Program (Upgrading) of “Desa Pinter” or “Desa Punya Internet” for packages 1, 2 and 3 with a
total price of Rp261 billion.

In 2015, the Program was ceased. In January 2016, Telkomsel filed an arbitration claim to BANI
for the settlement of the outstanding receivables of USO Programs.

22,

June

2017,

from BANI
On
No.792/1/ARB-BANI/2016 requesting BPPPTI to pay compensation to Telkomsel amounting to
Rp217 billion, and as of the date of the issuance of these consolidated financial statements,
Telkomsel has received the payment from BPPPTI amounting to Rp83 billion (before tax).

Telkomsel

received

decision

letter

As of December 31, 2018 and 2017, Telkomsel’s net carrying amount of trade receivables for
the USO programs which are measured at amortized cost using the effective interest method
amounted to Rp115 billion.

115

These consolidated financial statements are originally issued in the Indonesian language.

35. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

Assets and liabilities denominated in foreign currencies are as follows:

Assets
Cash and cash equivalents
Other current financial assets
Trade receivables
Related parties
Third parties
Other receivables
Other current assets
Other non-current assets
Total assets
Liabilities
Trade payables
Related parties
Third parties
Other payables
Accrued expenses
Short-term bank loan
Advances from customers
Current maturities of long-term borrowings
Other liabilities
Long-term borrowings - net of current maturities
Total liabilities
Assets (liabilities) - net

Assets
Cash and cash equivalents
Other current financial assets
Trade receivables
Related parties
Third parties
Other receivables
Other current assets
Other non-current assets
Total assets
Liabilities
Trade payables
Related parties
Third parties
Other payables
Accrued expenses
Advances from customers
Current maturities of long-term borrowings
Other liabilities
Long-term borrowings - net of current maturities
Total liabilities
Assets (liabilities) - net

U.S dollar
(in millions)

Japanese yen
(in millions)

Others*
(in millions)

Rupiah equivalent

(in billions)

2018

253.37
14.56

0.49
146.39
0.34
-
57.42
472.57

(0.21)
(206.20)
(3.63)
(47.10)
(1.15)
(0.76)
(18.77)
(19.63)
(93.41)
(390.86)
81.71

8.02
-

-
-
-
-
-
8.02

-
(33.39)
-
(15.64)
-
-
(767.90)
-
(3,839.49)
(4,656.42)
(4,648.40)

10.50
1.30

-
9.55
0.12
0.51
1.17
23.15

-
(4.99)
(4.44)
(2.51)
-
-
(4.07)
-
(4.71)
(20.72)
2.43

3,802
223

7
2,238
6
14
840
7,130

(3)
(3,037)
(111)
(709)
(17)
(11)
(430)
(284)
(1,917)
(6,519)
611

U.S dollar
(in millions)

Japanese yen
(in millions)

Others*
(in millions)

Rupiah equivalent

(in billions)

2017

154.07
28.34
-
3.02
71.38
0.15
0.10
4.27
317.22

(0.22)
(159.65)
(4.12)
(42.20)
(0.48)
(10.59)
(21.83)
(65.22)
(304.31)
12.81

7.47
-
-
-
-
-
-
-
7.47

-
(19.57)
-
(18.28)
-
(767.90)
-
(4,607.39)
(5,413.14)
(5,405.67)

8.37
1.14
-
-
4.24
0.01
72.33
0.06
87.09

-
(7.41)
(7.41)
(1.05)
-
-
-
-
(15.87)
71.22

2,201
399
-
41
1,025
2
18
59
3,745

(3)
(2,227)
(149)
(584)
(7)
(292)
(296)
(1,557)
(5,115)
(1,370)

*Assets and liabilities denominated in other foreign currencies are presented as U.S. dollar equivalents using the buy and sell rates quoted by Reuters prevailing at the end
of the reporting period.

The Group’s activities expose them to a variety of financial risks, including the effects of changes in
debt and equity market prices, foreign currency exchange rates, and interest rates.

If the Group reports monetary assets and liabilities in foreign currencies as of December 31, 2018 using
the exchange rates on April 29, 2019 the unrealized foreign exchange loss amounting to Rp17 billion.

116

These consolidated financial statements are originally issued in the Indonesian language.

36. FINANCIAL RISK MANAGEMENT

1. Fair value of financial assets and financial liabilities

a. Classification

i. Financial asset

Loans and receivables
Cash and cash equivalents
Other current financial assets
Trade and other receivables, net
Other non-current assets
Available-for-sale financial assets
Available-for-sale investments
Total financial assets

ii. Financial liabilities

Financial liabilities measured at amortized cost
Trade and other payables
Accrued expenses
Interest-bearing loans and other borrowings

Short-term bank loans
Two-step loans
Bonds and notes
Long-term bank loans
Obligation under finance leases
Other borrowings

Total financial liabilities

b. Fair values

2018

2017

17,439
834
12,141
460

1,204
32,078

25,145
1,005
9,564
183

1,541
37,438

2018

2017

15,214
12,769

4,043
949
10,481
23,225
3,145
2,244
72,070

15,791
12,630

2,289
1,098
8,982
18,004
3,804
1,295
63,893

2018
Financial assets measured at fair value
Available-for-sale investments
Financial liabilities for which
fair values are disclosed
Interest-bearing loans and other

borrowings:

Two-step loans
Bonds and notes
Long-term bank loans
Obligation under finance leases
Other borrowings

Other liabilities
Total

Fair value measurement at reporting date using
Quoted prices in
active markets

Significant

for identical
assets or
liabilities
(level 1)

other

observable

inputs
(level 2)

Significant
unobservable
inputs
(level 3)

Carrying
value

Fair value

1,204

470

734

949
10,481
23,225
3,145
2,244
261
41,509

898
10,894
22,878
3,145
2,154
261
41,434

-
9,380
-
-
-
-
9,850

-
-
-
-
-
-
-

898
1,514
22,878
3,145
2,154
261
31,584

117

These consolidated financial statements are originally issued in the Indonesian language.

36. FINANCIAL RISK MANAGEMENT (continued)

1. Fair value of financial assets and financial liabilities (continued)

b. Fair value (continued)

2017
Financial assets measured at fair value
Available-for-sale investments
Financial liabilities for which
fair values are disclosed

Interest-bearing loans and other borrowings

Two-step loans
Bonds
Long-term bank loans
Obligation under finance leases
Other borrowings

Other liabilities
Total

Fair value measurement at reporting date using
Quoted prices in
active markets
for identical
assets or
liabilities
(level 1)

Significant
unobservable
inputs
(level 3)

inputs
(level 2)

observable

Significant

other

Carrying
value

Fair value

1,541

1,151

373

1,098
8,982
18,004
3,804
1,295
296
35,020

1,116
10,038
18,108
3,804
1,370
296
36,273

-
10,038
-
-
-
-
11,189

-
-
-
-
-
-
17

1,116
-
18,108
3,804
1,370
296
25.067

Loss on fair value measurement recognized in consolidated statements of profit or loss and other
comprehensive income for 2018 amounting to Rp10 billion. There is no movement between fair
value hierarchy during 2018.

c. Fair value measurement

Fair value is the amount for which an asset could be exchanged, or a liability settled, between
parties in an arm's length transaction.

The fair values of short-term financial assets and financial liabilities with maturities of one year
or less (cash and cash equivalents, trade and other receivables, other current financial assets,
trade and other payables, accrued expenses, and short-term bank
loans) and
other non-current assets are considered to approximate their carrying amounts as the impact
of discounting is not significant.

The fair values of long-term financial assets and financial liabilities (other non-current assets
(long-term trade receivables and restricted cash) and liabilities) approximate their carrying
amounts as the impact of discounting is not significant.

The Group determined the fair value measurement for disclosure purposes of each class of
financial assets and financial liabilities based on the following methods and assumptions:
(i) available-for-sale investments primarily consist of stocks, mutual funds, corporate and
government bonds and convertible bonds. Stocks and mutual funds actively traded in an
established market are stated at fair value using quoted market price or, if unquoted,
determined using a valuation technique. The fair value of convertible bonds are determined
using valuation technique. Corporate and government bonds are stated at fair value by
reference to prices of similar securities at the reporting date;

(ii) the fair values of long-term financial liabilities are estimated by discounting the future
contractual cash flows of each liability at rates offered to the Group for similar liabilities of
comparable maturities by the bankers of the Group, except for bonds which are based on
market price.

118

These consolidated financial statements are originally issued in the Indonesian language.

36. FINANCIAL RISK MANAGEMENT (continued)

1. Fair value of financial assets and financial liabilities (continued)

c. Fair value measurement (continued)

The fair value estimates are inherently judgemental and involve various limitations, including:
a. fair values presented do not take into consideration the effect of future currency fluctuations.
b. estimated fair values are not necessarily indicative of the amounts that the Group would

record upon disposal/termination of the financial assets and liabilities.

2. Financial risk management

The Group’s activities expose it to a variety of financial risks such as market risks (including foreign
exchange risk, market price risk and interest rate risk), credit risk and liquidity risk. Overall, the
Group’s financial risk management program is intended to minimize losses on the financial assets
and financial liabilities arising from fluctuation of foreign currency exchange rates and the fluctuation
of interest rates. Management has a written policy on foreign currency risk management mainly on
time deposit placements and hedging to cover foreign currency risk exposures for periods ranging
from 3 up to 12 months.

Financial risk management is carried out by the Corporate Finance unit under policies approved by
the Board of Directors. The Corporate Finance unit identifies, evaluates and hedges financial risks.

a. Foreign exchange risk

The Group is exposed to foreign exchange risk on sales, purchases and borrowings that are
denominated in foreign currencies. The foreign currency denominated transactions are primarily
in U.S. dollars and Japanese yen. The Group’s exposures to other foreign exchange rates are
not material.

Increasing risks of foreign currency exchange rates on the obligations of the Group are
expected to be partly offset by the effects of the exchange rates on time deposits and
receivables in foreign currencies that are equal to at least 25% of the outstanding current foreign
currency liabilities.

The following table presents the Group’s financial assets and financial liabilities exposure to
foreign currency risk:

Financial assets
Financial liabilities
Net exposure

2018

2017

U.S. dollar
(in billions)

Japanese yen U.S. dollar
(in billions)

(in billions)

Japanese yen
(in billions)

0.47
(0.39)
0.08

0.01
(4.66)
(4.65)

0.26
(0.31)
(0.05)

0.01
(5.41)
(5.40)

119

These consolidated financial statements are originally issued in the Indonesian language.

36. FINANCIAL RISK MANAGEMENT (continued)

2. Financial risk management (continued)

a. Foreign exchange risk (continued)

Sensitivity analysis

A strengthening of the U.S. dollar and Japanese yen, as indicated below, against the Rupiah
at December 31, 2018 would have decreased equity and profit or loss by the amounts shown
below. This analysis is based on foreign currency exchange rate variances that the Group
considered to be reasonably possible at the reporting date. The analysis assumes that all other
variables, in particular interest rates, remain constant.

December 31, 2018
U.S. dollar (1% strengthening)
Japanese yen (5% strengthening)

Equity/profit
(loss)

12
(30)

A weakening of the U.S. dollar and Japanese yen against the rupiah at December 31, 2018
would have had an equal but opposite effect on the above currencies to the amounts shown
above, on the basis that all other variables remain constant.

b. Market price risk

The Group is exposed to changes in debt and equity market prices related to available-for-sale
investments carried at fair value. Gains and losses arising from changes in the fair value of
available-for-sale investments are recognized in the consolidated statements of profit or loss
and other comprehensive income.

The performance of the Group’s available-for-sale investments is monitored periodically,
together with a regular assessment of their relevance to the Group’s long-term strategic plans.

As of December 31, 2018, management considered the price risk for the Group’s available-for-
sale investments to be immaterial in terms of the possible impact on profit or loss and total
equity from a reasonably possible change in fair value.

Interest rate risk

Interest rate fluctuation is monitored to minimize any negative impact to financial performance.
Borrowings at variable interest rates expose the Group to interest rate risk (Notes 15 and 16).
To measure market risk pertaining to fluctuations in interest rates, the Group primarily uses
interest margin and maturity profile of the financial assets and liabilities based on changing
schedule of the interest rate.

At reporting date, the interest rate profile of the Group’s interest-bearing borrowings was as
follows:

Fixed rate borrowings
Variable rate borrowings

2018

2017

(21,260)
(22,827)

(14,204)
(21,267)

Sensitivity analysis for variable rate borrowings

As of December 31, 2018, a decrease (increase) by 25 basis points in interest rates of variable
rate borrowings would have increased (decreased) equity and profit or loss by Rp67 billion,
respectively. The analysis assumes that all other variables, in particular foreign
currency rates, remain constant.

120

These consolidated financial statements are originally issued in the Indonesian language.

36. FINANCIAL RISK MANAGEMENT (continued)

2. Financial risk management (continued)

d. Credit risk

The following table presents the maximum exposure to credit risk of the Group’s financial
assets:

Cash and cash equivalents
Other current financial assets
Trade and other receivable, net
Other non-current assets
Total

2018

2017

17,439
1,304
12,141
460
31,344

25,145
2,173
9,564
183
37,065

The Group is exposed to credit risk primarily from cash and cash equivalents and trade and
other receivables. The credit risk is controlled by continuous monitoring of outstanding balance
and collection.

Credit risk from balances with banks and financial institutions is managed by the Group’s
Corporate Finance and Financial Policy Unit in accordance with the Group’s written policy.
The Group placed the majority of its cash and cash equivalents in state-owned banks because
they have the most extensive branch networks in Indonesia and are considered to be financially
sound banks, as they are owned by the State. Therefore, it is intended to minimize financial
loss through banks and financial institutions’ potential failure to make payments.

The customer credit risk is managed by continuous monitoring of outstanding balances and
collection. Trade and other receivables do not have any major concentration of risk whereas no
customer receivable balance exceeds 4.30% of trade receivables as of December 31, 2018.

Management is confident in its ability to continue to control and sustain minimal exposure to
the customer credit risk given that the Group has recognized sufficient provision for impairment
of receivables to cover incurred loss arising from uncollectible receivables based on existing
historical data on credit losses.

e. Liquidity risk

Liquidity risk arises in situations where the Group has difficulties in fulfilling financial liabilities
when they become due.

Prudent liquidity risk management implies maintaining sufficient cash in order to meet the
Group’s financial obligations. The Group continuously performs an analysis to monitor financial
position ratios, such as liquidity ratios and debt-to-equity ratios, against debt covenant
requirements.

121

These consolidated financial statements are originally issued in the Indonesian language.

36. FINANCIAL RISK MANAGEMENT (continued)

2. Financial risk management (continued)

e. Liquidity risk (continued)

The following is the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments:

2018
Trade and other payables
Accrued expenses
Interest bearing loans and

other borrowings
Two-step loans
Bonds and notes
Bank loans
Other borrowings
Obligations under
finance leases

Other liabilities
Total

2017
Trade and other payables
Accrued expenses
Interest bearing loans and

other borrowings
Two-step loans
Bonds and notes
Bank loans
Other borrowings
Obligations under
finance leases

Other liabilities
Total

Carrying
amount

Contractual
cash flows

2019

2020

2021

2022

2023 and
thereafter

15,214
12,769

(15,214)
(12,769)

-
-

949
10,481
27,268
2,244

3,145
261
72,331

(1,075)
(19,050)
(33,363)
(2,905)

(3,764)
(306)
(88,446)

(242)
(1,562)
(10,434)
(490)

(1,049)
(16)
(41,776)

(232)
(3,436)
(9,160)
(570)

(945)
(36)
(14,379)

(205)
(1,231)
(3,991)
(533)

(781)
(36)
(6,777)

(159)
(2,817)
(3,219)
(495)

(605)
(109)
(7,404)

(237)
(10,004)
(6,559)
(817)

(384)
(109)
(18,110)

Carrying
amount

Contractual
cash flows

2018

2019

2020

2021

2022 and
thereafter

15,791
12,630

(15,791)
(12,630)

-
-

1,098
8,982
20,293
1,295

3,804
296
64,189

(1,243)
(18,278)
(24,378)
(1,759)

(250)
(929)
(7,655)
(220)

(4,685)
(355)
(79,119)

(1,083)
(17)
(38,575)

(222)
(929)
(5,078)
(303)

(969)
(34)
(7,535)

(214)
(2,873)
(4,006)
(285)

(866)
(34)
(8,278)

(189)
(726)
(2,660)
(266)

(778)
(135)
(4,754)

(368)
(12,821)
(4,979)
(685)

(989)
(135)
(19,977)

The difference between the carrying amount and the contractual cash flows is interest value.
The interest value of variable-rate borrowings are determined based on the interest rates
effective as of reporting date.

The changes in liabilities arising from financing activities is as follows:

Short-term bank loans
Two step loans
Bonds and notes payable
Long-term bank loans
Other borrowings
Obligations under finance leases
Total liabilities from
financing activities

Non-cash changes

January 1,
2018

Foreign
exchange
Cash flows Acquisition movement

2,289
1,098
8,982
18,004
1,295
3,804

1,757
(220)
1,497
5,046
947
(828)

-
-
-
58
-
-

(1)
72
-
90
-
-

New leases
-
-
-
-
-
168

Other

Changes

December 31,
2018

(2)
-
2
28
-
1

4,043
950
10,481
23,226
2,242
3,145

35,472

8,199

161

168

44,087

122

These consolidated financial statements are originally issued in the Indonesian language.

37. CAPITAL MANAGEMENT

The capital structure of the Group is as follows:

Short-term debts
Long-term debts
Total debts
Equity attributable to owners

of the parent company

Total

2018

2017

Amount

Portion

Amount

Portion

4,043
40,044
44,087

2.83%
28.00%
30.83%

2,289
33,183
35,472

1.78%
25.89%
27.67%

98,910
142,997

69.17%
100.00%

92,713
128,185

72.33%
100.00%

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for stockholders and benefits to other stakeholders and to
maintain an optimum capital structure to minimize the cost of capital.

Periodically, the Group conducts debt valuation to assess possibilities of refinancing existing debts
with new ones which have more efficient cost that will lead to more optimized cost-of-debt. In case of
idle cash with limited investment opportunities, the Group will consider buying back its shares of stock
or paying dividend to its stockholders.

In addition to complying with loan covenants, the Group also maintains its capital structure at the level
it believes will not risk its credit rating and which is comparable with its competitors.

Debt-to-equity ratio (comparing net interest-bearing debt to total equity) is a ratio which is monitored
by management to evaluate the Group’s capital structure and review the effectiveness of the Group’s
debts. The Group monitors its debt levels to ensure the debt-to-equity ratio complies with or is below
the ratio set out in its contractual borrowings arrangements and that such ratio is comparable or better
than that of regional area entities in the telecommunications industry.

The Group’s debt-to-equity ratio as of December 31, 2018 and 2017 are as follows:

Total interest-bearing debts
Less: cash and cash equivalents
Net debts
Total equity attributable to owners of the parent company
Net debt-to-equity ratio

2018

2017

44,087
(17,439)
26,648
98,910
26.94%

35,472
(25,145)
10,327
92,713
11.14%

As stated in Notes 16, the Group is required to maintain a certain debt-to-equity ratio and debt service
coverage ratio by the lenders. For the years ended December 31, 2018 and 2017, the Group has
complied with the externally imposed capital requirements.

123

These consolidated financial statements are originally issued in the Indonesian language.

38. SUPPLEMENTAL CASH FLOWS INFORMATION

The non-cash investing activities for the years ended December 31, 2018 and 2017 are as follows:

Acquisition of property and equipment:

Credited to trade payables
Credited to obligations under finance lease
Interest capitalization
Advance paid

Acquisition of intangible assets:

Credited to trade payables

2018

2017

4,275
201
270
2,837

235

5,525
328
816
-

846

124

These consolidated financial statements are originally issued in the Indonesian language.

39. SUBSEQUENT EVENT

1. Based on notarial deed of Bonardo Nasution, S. H. No. 12 dated January 12, 2018 and No. 13
dated January 21, 2018, Telkomsel established a subsidiaries, PT Telkomsel Mitra Inovasi (“PT
TMI”) and PT Fintek Karya Nusantara (“PT Finarya”) with full ownership by Telkomsel.

2. On January 25, 2019, and on January 14, 2019, Telkomsel fully paid the loan with MUFG and BNI

amounting to Rp750 billion and Rp1,000 billion, respectively.

3. Based on notarial deed of Jimmy Tanal, S. H., M. Kn., No. 22 dated March 6, 2019 regarding
Shareholder’s Resolution of PT Persada Sokka Tama (“PST”), approving transfers of right over
shares of PST to Dayamitra from Mrs. Rahina Dewayani and Mrs. Rahayu amounting to 2,559,000
and 6,000 shares, respectively, therefore Dayamitra has 2,565,000 shares or 95% ownership of
PST.
PST is a company engaged in managing tower rental. This new investment is expected to
strengthen the Company's business portfolio.

The fair values of the identifiable assets and liabilities acquired at acquisition date were:

Assets
Cash and cash equivalents
Trade receivables
Property and Equipment (Note 9)
Other assets
Liabilities
Current liabilities
Non-current liabilities
Other liabilities

Fair value of identifiable net assets acquired
Fair value of non-controlling interest
Provisional goodwill
Fair value consideration transferred

Total

5
121
1,107
113

(129)
(378)
(104)

735
(37)
415
1,113

As of the date of approval and authorization for the issuance of these consolidated financial
statement, purchase price allocation calculation is still in process.
In January, February and March 2019, the Company received the SC’s verdicts as the result of the
tax audit for tax period January to April and September 2007. Based on the verdict, SC rejected
the Tax Authorities’s Judicial review and strengthen the Tax Court’s verdict.
On March 11, 2019, Tax Authorities issued Decision letter on Company’s objection, wherein the
Tax Authorities has granted all the Company’s objection and addition the overpayment amount for
the tax period January to April 2016.

5. On February 18, 2019, Telkomsel received SP2PK from the Tax Authorities regarding the 2010
fiscal year VAT amounting to Rp290 billion. On March 25, 2019, the Company received SP2PK
payment from the Tax Authorities regarding the 2010 fiscal year VAT amounting to Rp290 billion.

125

These consolidated financial statements are originally issued in the Indonesian language.

40. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN PSAK AND

INTERNATIONAL

FINANCIAL REPORTING STANDARDS (“IFRS”)

These are summary of significant differences between PSAK and IFRS for the year 2018.

Impact of significant differences between PSAK and IFRS on consolidated statements of financial
position as of December 31, 2018 were as follows:

Reference

PSAK

Reconciliation

IFRS

17,439
1,304

2,126
9,288
-

727
-
7,982
43,268
2,472
143,248
2,504
-
9,672
162,928
206,196

993
13,773
5,190
-
46,261
1,252
652
-
33,748
42,632
88,893

2,455
507
90,995
98,910
18,393
117,303
206,196

(4)
10

17,435
1,314

(112)
(2,001)
1,560

2,014
7,287
1,560

(100)
924
(702)
(425)
190
(336)
(27)
320
(18)
129
(296)

627
924
7,280
42,843
2,662
142,912
2,477
320
9,654
163,057
205,900

1,496
(1,496)
(5,190)
5,252
62
(55)
(652)
652
(5)
(60)
2

2,489
12,277
-
5,252
46,323
1,197
-
652
33,743
42,572
88,895

(479)
(186)
493
(172)
(126)
(298)
(296)

1,976
321
91,488
98,738
18,267
117,005
205,900

ASSETS
Cash and cash equivalents
Other current financial assets
Trade receivables - net provision for

impairment of receivables
Related parties
Third parties
Contract asset
Other receivables - net of provision for

impairment of receivables

Contract expense
Other current assets
Total Current Assets
Long-term investments
Property and equipment - net of accumulated depreciation
Deferred tax assets - net
Contract expense
Other non-current assets
Total Non-current Assets
TOTAL ASSETS

LIABILITIES AND EQUITY
Trade payables

Related parties
Third parties
Unearned income
Contract liabilities
Total Current Liabilities
Deferred tax liabilities - net
Unearned income
Contract liabilities
Long-term borrowing
Total Non-current Liabilites
TOTAL LIABILITIES

EQUITY
Additional paid-in capital
Other equity
Retained earnings
Net equity attributable to owners of the parent company
Non-controlling interest
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY

d
d

d,b
d,b
c

d
c
d

d
a
c,d
c,d
a

b
b
c
c

c,d
c
c
b

126

These consolidated financial statements are originally issued in the Indonesian language.

40. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN PSAK AND INTERNATIONAL

FINANCIAL REPORTING STANDARDS (“IFRS”) (continued)

Impact of significant differences between PSAK and IFRS on consolidated statements of profit and loss
and other comprehensive income for the year ended December 31, 2018 were as follows:

Reference

PSAK

Reconciliation

IFRS

REVENUES
Operation, maintenance and telecommunication

service expenses

Depreciation and amortization expenses
Marketing expenses
General and administrative expenses
Gain on foreign exchange - net
Other income
Other expenses

OPERATING PROFIT

Finance cost

PROFIT BEFORE INCOME TAX

INCOME TAX (EXPENSE) BENEFIT

PROFIT FOR THE YEAR

OTHER COMPREHENSIVE INCOME
Other comprehensive income to be reclassified to profit

or loss in subsequent periods:

Foreign currency translation
Change in fair value of available-for-sale financial assets
Other comprehensive income - net

c
a
c
d
d
d
d

130,784
(43,791)

(21,406)
(4,214)
(6,137)
68
1,752
(750)

4
(102)

130,788
(43,893)

(36)
213
(457)
3
(7)
70

(21,442)
(4,001)
(6,594)
71
1,745
(680)

38,845

(312)

38,533

(3,507)

(16)

(3,523)

36,405

(328)

36,077

(9,426)

(9,366)

26,979

(268)

26,711

146
(10)
4,942

2
10
12

148
-
4,954

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

31,921

(256)

31,665

Profit for the year attributable to:
Owners of the parent company
Non-controlling interests

Total comprehensive income for the year attributable to:

Owners of the parent company
Non-controlling interests

BASIC EARNING PER SHARE

(in full amount)
Net income per share
Net income per ADS (100 Series B shares per ADS)

18,032
8,947
26,979

22,844
9,077
31,921

(230)
(38)
(268)

(216)
(40)
(256)

17,802
8,909
26,711

22,628
9,037
31,665

182.03
18,202.70

(2.32)

179.71
(232.18) 17,970.52

127

These consolidated financial statements are originally issued in the Indonesian language.

40. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN PSAK AND INTERNATIONAL

FINANCIAL REPORTING STANDARDS (“IFRS”) (continued)

a. 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.

b. Related party transactions

Under Bapepam-LK 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.

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.

c. Revenue and expense recognition

Under PSAK, for sale of goods, revenue is recognised when entity has transferred all risk of goods
to the customer and entity no longer has effective control over the goods. As for services, revenue
is recognised when the amount of revenue can be measured reliably and the level of completion of
a transaction at the end of the reporting period can be measured reliably. Expenses recognized as
incurred.

Under IFRS, revenue is recognised when control of a product or service is transferred to the
customer. Revenue is measured according to the value of the expected consideration in a contract
with a customer. In addition, whoever fulfill its obligation, the entity presents contracts in the
statement of financial position as contract asset or contract liabilities, depend on performance and
customer’s payment. Entity presents unconditional right to consideration deparately as receivables.

IFRS required recognition of incremental cost on contract acquisition and fulfillment as assets with
several conditions.

d. Financial instruments

Under PSAK, financial assets are classified based on management intention. Provision of
impairment on financial assets is recognised using the incurred loss method, which is its formed
when the quality of financial assets has decreased.

Under IFRS, financial assets are classified based on business model of entity and characteristic of
contractual cash flows from financial assets. Provision of impairment on financial assets is
recognised using the expected credit loss method, which is its formed as long as the financial assets
is owned by the Company and started from the financial assets is acquired.

128

2018 ANNUAL REPORT FEEDBACK FORM
PT TELKOM INDONESIA (PERSERO) TBK

Thank you for reading our 2018 Annual Report. To improve the quality of future Annual Report, we would like to ask your feedback by
completing the following form:

Question
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a. ………………………………………………………………………………………………………………………………………………………………………

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In your opinion, what information was missing or incomplete and should be included in future Annual Report?

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Investor Relations
Telkom Landmark Tower, 2nd Tower, 39th Floor
Jl. Jend. Gatot Subroto Kav. 52, Jakarta 12710
Tel : (6221) 521 5109
Fax : (6221) 522 0500
email : investor@telkom.co.id
www.telkom.co.id

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ANNUAL REPORT PRODUCTION TEAM

Doing a good job is not always about impressive innovation.
Sometimes
is only about doing something with plain
dedication.

Thank you for the dedications!

DATA CONTRIBUTORS

PRODUCTION TEAM

Setio Nuranto

Moh Ahmad

Agus Suprijanto

Hery Saepul Azis

Putri Irmawati Yuniasari

Hendri Purnaratman

Nurcholis Feri Ahmadi

Prakoso Imam Santoso

Novy Kartikayanti

Kurnia Rimadani

Dianti Mellisa

Junainah

I Gusti Agung Ayu Triana Dewi

Brahmandi Andria Sastra

Fadjrul Falah

Sudaryadi

Raden Riharso

Ferry Studiyono Purba

Rizki Ramadhan

Buddy Restiady

Yadi Ruslannurzaman

Mohamad Abdul M. S. Hono

Novangga

Leni Triwanti

Bambang Wahyu Samodra

Sang Kompiang Muliartawan

Ristianto

Arieyanto

Antonius Dwi Ananto

Rohmat Nugroho

M. Rosadi

Bagas Pradana

Yudha Bestari

Merry Arizona

Nova Yuanita

Andi Setiawan

Dewi

Erni Ambarsari

Hendra Priatna

Muhamad Patria Narotama Widjaja

Heti Triaswati

Nike Josephine

Rinaldi Nainggolan

Jarot Widyatmoko

Dessy Sandra

Era Azura

Liza Puspitasari

Ardi Desento

Chintia Febrianti Soepardi

Melani Muchlis Moechtar

Putriana Rahmatika

Mohammad Izzatullah

Uwes Qorni

Candri Yuniar Roisy

Fildatrya Winanda

Thalia Isavani

Viany Juliana Seran

Anisa Ayu Artati

Nur Azizah

Joko Susilo

Rizki Utami

Agustinus Budi Wibowo

Muhammad Nursalim

Ida Widayani

Adinda Syifaurrohmah

Anggia Permatasari

Maya Putri Arini

Tantang Yudha Santoso

Fikri Akhmadi

Ratri Natarini

Willy Arief Yudhistira

Bima Aryo Putro

Lara Soraya Rifana

Suhartono

Imam Rijanto

Ahmad Hidayat

Ida Bagus Putu Ariartha

Hepta Yuniarita

Endang Trisia

Retnoningsih

Yantito Simanjuntak

Prayudi Nugroho

Fiandis Susanto

Abbas Paul Ricardo Girsang

Sukma Nandini

Valian Kusumawardhana

Susilo Budi Utomo

Retno Dyah Arumsari

Uum Suryaman

Budi Cahyadinata

Yuli Purwanti

Fridh Zurriady Ridwan

Wahyudi Handriyanto

Pradipta Wismaya Albi

Ronny Rahmat Hidayat

Dinaryati Aminda

Sigit Trinarto

Dinoor Susatyo

Fauzan Feizal

Hazim Ahmadi

Muhammad Ramli

Githa Kharismawati

Wartono Purwanto

Muhamad Wahyudi

Jan Esson Saragih

Sonny Komara

Yoga Maharseto Iskandar

Didi Haryadi

Malikoeswari S

Didit Dwiantoro

Andri Herawan Sasoko

Sumarno

Anggoro Kurnianto Widiawan

Pujo Pramono

Mochamad Yazid Saktiono

Hendra Gunawan

Cholis Safrudin

Wuryanto

Anton Widaryanto

Elysabeth Damayanti

Dahrin Effendi

Ageng Kharisma

I Wayan Sukerata

Rani Siesaria

Handrianus Eddy Sunaryo

Donny Kertaputra Widjaja

Shera Aulia

Junike Laura

Desi Ariani

Indah Wahyuni

Wintoko M Pribadi

Mario Holasan Lubis

Achmad Sulkon

Syukri

Sinai Handayani

Umar Farouk

Ratri Taluningtias

Dwi Fitri Parmania

Kamal

Adiati Sutjipto

Yanti Lestari

Ananto Dwi Nugroho

Wibowo Sigit Sudjendro

Bonny S

Ario Guntoro

Santi Aswin

Fahmi Khaudzi

Damara Ryandi

Rustam Efendi Marpaung

Ni Ketut Sukantini

PHOTOGRAPHY

Mike Marcus

• Ery Punta H

•

• Suleksono

• Ryan Nugroho

• Andri MR

• Kenneth Li

• Sofyan

DESIGN

PT Desain Nindya Amarta (DNA Komunika)

www.dnakomunika.com

COPYWRITER

Matahati Insphira

PRINTING

PT Metra Digital Media

Onky Yudisetyawan Saputra

(MD MEDIA)

Vitry Junita

Ahmad Fitriadi

Hardi Purwanto

PHOTO LOCATION

GraPari TelkomGroup BSD

GraPari TelkomGroup Graha Merah Putih

Rooftop Graha Merah Putih

Telkom Akses Slipi

STO Cengkareng

Data Center Sentul

Pusat Pengendali Satelit Cibinong

TelkomGroup Integrated Operation Center (TIOC)

Telkom Digital Experience (TDX)

2018

Annual Report

PT Telkom Indonesia (Persero) Tbk
Investor Relations
Telkom Landmark Tower, 39th Floor
The Telkom Hub
Jl. Jend. Gatot Subroto Kav. 52
Jakarta 12710, Indonesia
T +62 21 521 5109
F +62 21 522 0500
e-mail: investor@telkom.co.id
www.telkom.co.id