15568642-Report-Financial-XL-Q1-2009

PT EXCELCOMINDO PRATAMA TbkAND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

31 DECEMBER 2006, 2007 AND 2008; AND31 MARCH 2008 AND 2009

PT EXCELCOMINDO PRATAMA Tbk AND SUBSIDIARIES

The accompanying notes form an integral part of these consolidated financial statements.

Page 1

CONSOLIDATED BALANCE SHEETSAS AT 31 DECEMBER 2006, 2007 AND 2008;AND AS AT 31 MARCH 2008 AND 2009(Expressed in millions of Rupiah, except par value per share)

Notes 31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

CURRENT ASSETSCash and cash equivalents 2a,2c,3,22b 587,176 805,769 1,170,203 610,327 591,842Trade receivables - net of

allowance for doubtful accounts 2e- Third parties 4 187,396 256,997 835,468 366,977 347,638- Related parties 2c,22c 16,902 51,404 68,292 65,213 83,001

Other receivables- Third parties 3,767 2,153 13,450 3,008 2,502- Related parties 2c,22d 6 - 21,368 - 2

Inventories 2f 35,378 58,961 127,633 94,277 105,594Prepaid taxes 2n,21a 185,535 283,891 754,860 374,244 816,627Advances and prepayments 2c,5,22j 167,095 219,905 378,260 368,431 674,798Derivative receivables 2l,24 - - 333,324 67,405 121,489Other assets 2g,6 148 230 16,705 276 80,279

Total current assets 1,183,403 1,679,310 3,719,563 1,950,158 2,823,772

NON-CURRENT ASSETSFixed assets - net of accumulated

depreciation 2h,2m,7 10,462,010 15,810,223 23,179,767 17,458,147 24,062,337Derivative receivables 2l,24 - 125,723 625,678 147,666 591,968Other assets 2c,2i, 2g,6,22j 991,162 1,185,299 1,386,705 1,222,551 1,733,576

Total non-current assets 11,453,172 17,121,245 25,192,150 18,828,364 26,387,881

TOTAL ASSETS 12,636,575 18,800,555 28,911,713 20,778,522 29,211,653

CURRENT LIABILITIESTrade payables:

- Third parties 8 1,664,884 2,674,050 3,250,610 3,243,412 2,919,508- Related parties 2c,22e 6,621 3,628 28,253 8,179 38,421

Taxes payable 2n,21b 46,220 96,035 100,887 75,501 12,462Other payables and accruals

- Third parties 9 325,695 511,968 428,601 355,711 337,069- Related parties 2c,22f - 4 - - -

Deferred revenue 2d 256,787 410,418 1,110,180 579,695 959,238Derivative payables 2l,24 - - - - 3,011Short-term loans 2j,10 - - 547,500 1,921,700 -Current maturity of long-term loans 2j,11 - 40,000 730,548 400,000 1,528,783Current maturity of long-term bonds 2k,12 - 3,283,434 - - -

Total current liabilities 2,300,207 7,019,537 6,196,579 6,584,198 5,798,492

NON-CURRENT LIABILITIESTrade payables - third parties 8 282,170 295,803 296,944 232,049 413,152Long-term loans 2j,11 - 2,526,370 14,563,676 4,619,910 15,434,405Deferred tax liabilities 2n,21d 347,153 613,729 553,629 695,756 454,545Long-term bonds 2k,12 5,345,185 3,814,082 2,879,248 3,765,662 2,960,317Derivative payables 2l,24 42,155 - 36,828 23,992 65,497Provision for employee benefits 2o,13a 38,511 66,228 76,912 72,232 83,416

Total non-current liabilities 6,055,174 7,316,212 18,407,237 9,409,601 19,411,332

EQUITYShare capital - authorised capital

22,650,000,000 ordinary shares,issued and fully paid capital7,090,000,000 ordinary shares,with par value of Rp 100 per share 14 709,000 709,000 709,000 709,000 709,000

Capital surplus 2k,14 2,691,684 2,691,684 2,691,684 2,691,684 2,691,684Retained earnings

- Appropriated 16 - 100 200 100 200- Unappropriated 880,510 1,064,022 907,013 1,383,939 600,945

Total equity 4,281,194 4,464,806 4,307,897 4,784,723 4,001,829

TOTAL LIABILITIES AND EQUITY 12,636,575 18,800,555 28,911,713 20,778,522 29,211,653



Page 2

CONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008;AND THREE-MONTH PERIODS ENDED 31 MARCH 2008 AND 2009(Expressed in millions of Rupiah, except earning/(loss) per share)

2006 2007 2008 2008 2009Notes (1 year) (1 year) (1 year) (3 months) (3 months)

REVENUE

Gross revenue 6,466,057 8,364,711 12,155,991 2,654,485 2,925,867Discount (688,400) (375,192) (94,784) (31,517) (23,664)Interconnection and

telecommunications servicecharges (1,095,982) (1,529,749) (2,296,381) (554,336) (498,347)

Revenue net of interconnectionand telecommunications service 2c,2d,18charges 22g,22h,22i 4,681,675 6,459,770 9,764,826 2,068,632 2,403,856

OPERATING EXPENSES 2dDepreciation expenses 2h,7 1,508,020 1,705,410 3,335,287 626,678 878,251Infrastructure expenses 19 613,351 1,076,676 1,988,575 361,463 739,935Sales commission and marketing

expenses 20, 22k 653,707 896,049 1,352,689 291,890 231,115Salaries and employee 2c,2o,13

benefits 22l 494,408 573,907 722,515 163,831 178,149Supplies and overhead expenses 2c,22j 366,682 403,915 569,527 117,511 141,232Others 2i 17,646 44,031 43,244 10,811 9,895

3,653,814 4,699,988 8,011,837 1,572,184 2,178,577

OPERATING INCOME 1,027,861 1,759,782 1,752,989 496,448 225,279

OTHER (EXPENSES)/INCOMEInterest expenses (416,203) (694,388) (1,122,294) (204,092) (383,115)Interest income 51,668 50,749 27,649 7,766 16,820Foreign exchange gain/(loss) - net 2l,2m 344,794 (204,362) (332,151) 208,569 (643,498)Gain on finance lease transaction 2g, 6 - - - - 333,149Others 21e (5,698) (393,749) (401,402) (42,999) 46,623

(25,439) (1,241,750) (1,828,198) (30,756) (630,021)

INCOME/(LOSS) BEFOREINCOME TAX 1,002,422 518,032 (75,209) 465,692 (404,742)

INCOME TAX (EXPENSE)/BENEFIT

- Current 2n,21c (2,031) (675) - (63,748) (410)- Deferred 2n,21c (348,508) (266,576) 60,100 (82,027) 99,084

(350,539) (267,251) 60,100 (145,775) 98,674

NET INCOME/(LOSS) 651,883 250,781 (15,109) 319,917 (306,068)

EARNING/(LOSS) PER SHARE:

BASIC 2p,17 92 35 (2) 45 (43)

DILUTED 2p,17 92 35 (2) 45 (43)



Page 3

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYFOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008;AND THREE-MONTH PERIODS ENDED 31 MARCH 2008 AND 2009(Expressed in millions of Rupiah)

Retained Earnings

BALANCE AS AT 31 DECEMBER 2006,2007 AND 2008

Balance as at 1 January 2006 709,000 2,691,684 - 228,627 3,629,311

Net income for the year - - - 651,883 651,883

Balance as at 31 December 2006 709,000 2,691,684 - 880,510 4,281,194

Net income for the year - - - 250,781 250,781

Dividends 2q,15 - - - (67,169) (67,169)

Appropriation to statutory reserve 16 - - 100 (100) -

Balance as at 31 December 2007 709,000 2,691,684 100 1,064,022 4,464,806

Net loss for the year - - - (15,109) (15,109)

Dividends 2q,15 - - - (141,800) (141,800)

Appropriation to statutory reserve 16 - - 100 (100) -

Balance as at 31 December 2008 709,000 2,691,684 200 907,013 4,307,897

BALANCE AS AT 31 MARCH 2008 AND2009

Balance as at 31 December 2007 709,000 2,691,684 100 1,064,022 4,464,806

Net income for the period - - - 319,917 319,917

Balance as at 31 March 2008 709,000 2,691,684 100 1,383,939 4,784,723

Balance as at 31 December 2008 709,000 2,691,684 200 907,013 4,307,897

Net loss for the period - - - (306,068) (306,068)

Balance as at 31 March 2009 709,000 2,691,684 200 600,945 4,001,829

Notes Share capital Capital surplus Appropriated Unappropriated Total



Page 4

CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008;AND THREE-MONTH PERIODS ENDED 31 MARCH 2008 AND 2009(Expressed in millions of Rupiah)

2006 2007 2008 2008 2009Notes (1 year) (1 year) (1 year) (3 months) (3 months)

CASH FLOWS FROMOPERATING ACTIVITIES

Receipts from operating revenues 5,902,480 8,039,046 12,165,611 2,668,456 3,224,381Payments for suppliers and

operating expenses (2,710,191) (3,602,846) (6,619,752) (1,646,070) (1,683,818)Payments to employees (389,621) (460,158) (650,825) (201,460) (232,136)

Cash generated from operations 2,802,668 3,976,042 4,895,034 820,926 1,308,427Interest income received 51,589 51,180 26,304 8,292 18,537Refunds/(payments) of corporate

income tax - net 6,316 (41,149) (211,837) (50,577) (30,293)

Net cash flows provided byoperating activities 2,860,573 3,986,073 4,709,501 778,641 1,296,671

CASH FLOWS FROMINVESTING ACTIVITIES

Acquisition of fixed assets (4,027,420) (6,868,396) (11,381,712) (1,782,499) (2,172,503)Additions of other assets (493,098) (290,686) (233,217) (21,262) (47,210)Proceeds from sale of fixed assets

and insurance claims 7 2,616 5,094 100,898 3,842 4,775

Net cash flows used ininvesting activities (4,517,902) (7,153,988) (11,514,031) (1,799,919) (2,214,938)

CASH FLOWS FROMFINANCING ACTIVITIES

Payment of short-term loan interest (4,187) - (65,461) - (11,957)Cash dividends paid 15 - (67,169) (141,800) - -Repayment of long-term loans - - (400,000) - (167,339)Payment of bond interest (351,180) (494,116) (444,513) (249,382) (85,063)Payment of long-term loan interest - (51,425) (649,051) (67,812) (310,757)Repayment of short-term loans (688,100) - (1,000,000) - (547,500)Repayment of Excelcom bonds - - (4,459,970) (3,296,650) -Proceeds from short-term loans - - 1,470,950 1,941,900 -Proceeds from long-term loans - 2,503,455 12,953,122 2,500,000 1,463,976Proceeds from long-term bonds 2,440,863 1,500,000 - - -Bond issue costs 2k (30,598) (7,865) - - -

Net cash flows provided byfinancing activities 1,366,798 3,382,880 7,263,277 828,056 341,360

Net (decrease)/increase in cashand cash equivalents (290,531) 214,965 458,747 (193,222) (576,907)

Cash and cash equivalentsat beginning of year/period 880,485 587,176 805,769 805,769 1,170,203

Effect of exchange rate changeson cash and cash equivalents (2,778) 3,628 (94,313) (2,220) (1,454)

Cash and cash equivalentsat end of year/period 3 587,176 805,769 1,170,203 610,327 591,842

Consisting of:- Cash on hand 1,270 1,463 1,583 1,467 1,468- Cash in bank 233,646 105,669 65,712 72,107 390,374- Time deposits, mature within

three months 352,260 698,637 1,102,908 536,753 200,000

587,176 805,769 1,170,203 610,327 591,842

Non-cash transaction :Transfer of assets under finance leases - - - - 363,195


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS31 DECEMBER 2006, 2007 AND 2008; AND 31 MARCH 2008 AND 2009(Expressed in millions of Rupiah, unless otherwise stated)

Page 5

1. GENERAL

a. Establishment

PT Excelcomindo Pratama Tbk (“the Company”) was previously established under the namePT Grahametropolitan Lestari and has its legal domicile in Jakarta. The Company is a limitedliability company under the laws of the Republic of Indonesia and was established underDeed of Establishment No. 55, dated 6 October 1989, as amended by Deed No. 79, dated17 January 1991. The preparation of both deeds was overseen by Rachmat Santoso, SH,Notary in Jakarta. The deeds were approved by the Minister of Justice of the Republic ofIndonesia in the Ministry’s Decision Letter No. C2-515.HT.01.01.TH.91, dated 19 February1991, registered in the District Court of South Jakarta under No.670/Not/1991/PN.JKT.SELand No.671/Not/1991/PN.JKT.SEL, dated 21 August 1991, and published in the StateGazette of the Republic of Indonesia No. 90, Supplement No. 4070, dated 8 November 1991.

The Company’s Articles of Association have been amended for several times. Based on theShareholders’ Resolution dated 19 July 2005, as stated in Deed No. 127, dated 19 July 2005,in relation to the Initial Public Offering of the Company, all of the Company’s Articles ofAssociation were entirely amended by Deed No. 8, dated 2 August 2005 and prepared beforeAulia Taufani, SH, substitute for Sutjipto, SH, Notary in Jakarta. This amendment wasaccepted and approved by the Minister of Law and Human Rights of the Republic ofIndonesia as stated in his Letter No. C-21651.HT.01.04.TH.2005, dated 4 August 2005, andNo. C-21974.HT.01.04.TH.2005, dated 8 August 2005, registered by the Company Registrarof the District of South Jakarta under registration No. 947/RUB.09.03/VIII/2005, dated16 August 2005, and published in the State Gazette of the Republic of Indonesia No. 70,dated 1 September 2005, Supplement No. 9425 Year 2005.

The latest amendment to the Company’s Article of Association, as stated on Deed No. 229dated 29 July 2008, was to comply with the Indonesian Company Law No. 40 year 2007,made before Sutjipto, SH, Notary in Jakarta. This amendment has been accepted andapproved by the Minister of Law and Human Rights of the Republic of Indonesia in his LetterNo. AHU. 83359.AH.01.02 year 2008, dated 10 November 2008.

b. Company’s public offerings

On 23 October 2003, the Company issued a bond known as Obligasi Excelcom I Year 2003(the “Excelcom Bond”) with a nominal value of Rp 1.25 trillion (full amount) over a five-yearperiod and the bond was listed on the Indonesia Stock Exchange (formerly Surabaya StockExchange). The bond was bought back on 21 July 2005.

On 27 January 2004, Excelcomindo Finance Company B.V., the Company’s wholly ownedsubsidiary domiciled in Amsterdam, issued USD 350 million’s worth of five-year notes, whichare listed on Singapore Exchange Securities Trading, Ltd. The bond was bought back on25 January 2008 (refer to Note 12a).

On 16 September 2005, the Company acquired an effective statement from the IndonesianCapital Market Supervisory Agency (Bapepam) No. S-2531/PM/2005 in order to perform aninitial public stock offering of 1,427,500,000 of its shares with a par value of Rp 100 (fullamount) per share.



Page 6

1. GENERAL (continued)

b. Company’s public offerings (continued)

All of the Company’s issued shares were listed on the Indonesia Stock Exchange (formerlythe Jakarta Stock Exchange) on 29 September 2005 at the offering price of Rp 2,000 (fullamount) per share.

On 18 January 2006, Excelcomindo Finance Company B.V. issued a second USD bondamounting to USD 250 million’s worth of seven-year notes which are listed on SingaporeExchange Securities Trading, Ltd. On 30 June 2008, the Company bought back the Notesamounting to USD 122,298,000 (refer to Note 12a).

On 26 April 2007, the Company issued a second IDR bond with a nominal amount ofRp 1.5 trillion (full amount) for a five-year period and it was listed on the Indonesia StockExchange (formerly the Surabaya Stock Exchange) (refer to Note 12b).

c. Investment licence

In accordance with its Articles of Association, the Company’s objective is to engage intelecommunications services and/or telecommunications networks and/or multimediaservices. The Company commenced its commercial operations in 1996.

The Company obtained permission, or Ijin Usaha Tetap (“IUT”), to provide basic telephonyservices based on Decree Letter No. 437/T/PERHUBUNGAN/2003 from the InvestmentCoordination Board (“BKPM”), dated 20 November 2003. The licence is valid for 30 yearsstarting from October 1995.

The Company obtained approval from BKPM for the expansion of its investment into facilitiessupply and the operation of telecommunications networks based on approval letterNo. 243/11/PMA/2003, dated 20 November 2003. BKPM approved the extension of theproject’s completion period in letter No. 1531/III/PMA/2005, dated 29 December 2005.

On 7 December 2004, the Company obtained approval from BKPM regarding the changes toservices and to the Company’s production area under approval letter No. 933/B.1/A.6/2004.The changes were made in accordance with the rules on service area modification asprovided by Law No. 36 of 1999 on Telecommunications Services.

Furthermore, the Company obtained approval regarding the expansion of a foreign capitalinvestment based on an approval letter from BKPM No.948/T/TELEKOMUNIKASI/2006,dated 1 December 2006 jo. No.06/P-IUT/2007 dated 26 January 2007 jo.No. 1001/T/TELEKOMUNIKASI/2008 dated 26 September 2008. The expansion licence isvalid starting from the date the expansion project began commercial operation in June 2008throughout the Company’s operational period.



Page 7


d. Operating licence

The Company is principally involved in the provision of basic telecommunications services,internet access services (“ISP”), leased lines, Voice over Internet Protocol (“VoIP”) andinternet interconnection services (“NAP”).

The Company was granted several telecommunications licences by the IndonesianGovernment. These licences are valid for an unlimited period as long as the Companycomplies with prevailing laws and telecommunications regulations and fulfills the obligationsstated in those permits. For the ISP licence, an evaluation is performed yearly and an overallevaluation is performed every 5 (five) years, while for the Licence to Operate a Cellular MobileNetwork, the overall evaluation is performed at every year end. For the Licence to Operate aFixed Closed Network, ITKP/VoIP, NAP overall evaluation is performed every 5 (five) yearsthrough annual and quarterly ITKP/VoIP reports submitted to the Indonesian DirectorateGeneral of Post and Telecommunications. The reports comprise factors such as operationalperformance, revenue, universal service contribution and coverage areas.

Details of these licences are as follows:

Licence Licence No. Type of services Grant date/latestrenewal date

Licence to Operate CellularMobile Network

100/KEP/M.KOMINFO/10/2006

GSM 900/DCS1800i.e. 2G, IMT-2000/3G andbasic telephony services

11 October 2006

Licence to Operate InternetAccess Services (“ISP”)

197/Dirjen/2006 Internet access services(Internet Service Provider)

24 May 2006

Licence to Operatea Fixed Closed Network

KP.159 Year 2003 Fixed closed network 7 May 2003

Licence to Operate InternetTelephony Services for Public

Interest (“ITKP”)207/Dirjen/2004

Internet TelephonyServices for Public

Interest (“ITKP”)/VoIP29 June 2004

Licence to operate InternetInterconnection Services (“NAP”) 17/Dirjen/2005

Internet interconnectionservices 16 February 2005

Based on Decree No. 19/KEP/M.KOMINFO/2/2006 of the Minister of Communication andInformation, dated 14 February 2006, on the Determination of Successful Applicant for IMT-2000 Cellular Mobile Network on 2.1 GHz Radio Frequency Band (KM.19 Year 2006), theCompany has been chosen as one of the winners of the 3G licence tender for the 2x5 MHzblock as stipulated in Decree No. 100/KEP/M.KOMINFO/10/2006 of the Minister ofCommunication and Information, dated 11 October 2006, regarding its Operating Licence fora Cellular Mobile Network.



Page 8


d. Operating licence (continued)

In accordance with KM.19 Year 2006 and Decree No.07/PER/M.KOMINFO/2/2006 of theMinister of Communication and Information, the Company was obliged to pay an upfront feeequalling twice the bid price, amounting to Rp 376 billion (full amount), not later than30 (thirty) working days after the settlement date. The Company was also obliged to set up aPerformance Bond in the amount of Rp 20 billion (full amount) as well as paying the followingannual Spectrum Frequency Band Usage Fee:

Year of Payment BI Rate(%)

Multiplying Index Annual BHP Frequency

Year 1 20% x HL

Year 2 R1 I1 = (1+R1) 40% x I1 x HL

Year 3 R2 I2 = I1(1+R2) 60% x I2 x HL

Year 4 R3 I3 = I2(1+R3) 100% x I3 x HL

Year 5 R4 I4 = I3(1+R4) 130% x I4 x HL

Year 6 R5 I5 = I4(1+R5) 130% x I5 x HL

Year 7 R6 I6 = I5(1+R6) 130% x I6 x HL

Year 8 R7 I7 = I6(1+R7) 130% x I7 x HL

Year 9 R8 I8 = I7(1+R8) 130% x I8 x HL

Year 10 R9 I9 = I8(1+R9) 130% x I9 x HL

Notes:a. HL = Tender result per 2x5 MHz block (referring to the lowest winner bid price of

Rp 160 billion, full amount).b. Ri = Average BI Rate for the preceding year.c. Multiplying Index is the index which is utilised to conduct an adjustment of the Bid Price

every year.

Expenses related to the Company’s operations, i.e. the Telecommunications Service Fee, theUniversal Service Obligations, the Spectrum Frequency Usage Band Fee and the AnnualSpectrum Frequency Usage Fee for 3G Band for the years ended 31 December 2006, 2007and 2008; and for the three-month periods ended 31 March 2008 and 2009, amounted to Rp286,079; Rp 593,721; Rp 845,497; Rp 210,156 and Rp 307,543, respectively.

The Company has to comply with the regulations stipulated in the Decree of the Minister ofCommunication and Information No. 100/KEP/M.KOMINFO/10/2006, dated 11 October 2006,in applying for the Operating Licence for a Cellular Mobile Network.



Page 9


e. Board of Directors, Commissioners and Audit Committee

The composition of the Company’s Board of Directors and Board of Commissioners as at31 March 2009 was based on the resolution of the Annual General Meeting of Shareholdersand Extraordinary General Meeting of Shareholders held on 19 March 2009, as stated in theDeed of Resolution No 76, dated 19 March 2009, and prepared before Aulia Taufani, SH,Notary in Jakarta as replacement of Sutjipto, SH, Notary in Jakarta. The composition of theCompany’s Board of Directors and Board of Commissioners as at 31 December 2006, 2007and 2008 and 31 March 2008 and 2009 is as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009Board of Directors

PresidentDirector: Hasnul Suhaimi Hasnul Suhaimi Hasnul Suhaimi Hasnul Suhaimi Hasnul Suhaimi

Directors: Joris de Fretes Joris de Fretes Joris de Fretes Joris de Fretes Joris de Fretes

Md. NasirAhmad

Md. Nasir Ahmad P. Nicanor V.Santiago III

Md. Nasir Ahmad P. Nicanor V.Santiago III

P. Nicanor V.Santiago III

P. Nicanor V.Santiago III

Joy Wahjudi P. Nicanor V.Santiago III

Joy Wahjudi

Joy Wahjudi Joy Wahjudi Willem LucasTimmermans

Joy Wahjudi Willem LucasTimmermans

Willem LucasTimmermans

Willem LucasTimmermans

Dian Siswarini Willem LucasTimmermans

Dian Siswarini

Hilmi bin MohdYunus

Dian Siswarini Dian Siswarini

Board of Commissioners

PresidentCommissioner: YBhg Tan Sri

Dato’Ir.MuhammadRadzi bin HajiMansor

YBhg Tan SriDato’Ir.MuhammadRadzi bin HajiMansor



YBhg Tan SriDato’Ir,MuhammadRadzi bin HajiMansor

Commissioners:YBhg Dato’Yusof Annuarbin Yaacob

YBhg Dato’Yusof Annuarbin Yaacob

YBhg Dato’Jamaludinbin Ibrahim


YBhg Dato’Jamaludin binIbrahim

YB Datuk NurJazlan bin TanSri Mohamed





Rosli bin Man Rosli bin Man Abdul Farid binAlias

Rosli bin Man AhmadAbdulkarimMohd Julfar

YBhg DatukBazlan binOsman


AhmadAbdulkarimMohd Julfar


Gita IrawanWirjawan

Peter J. Chambers Peter J. Chambers Gita IrawanWirjawan

Peter J. Chambers

Abdul Farid binAlias





Page 10


e. Board of Directors, Commissioners and Audit Committee (continued)

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

IndependentCommissioners:Jend. (Purn)

WismoyoArismunandar

Jend. (Purn)WismoyoArismunandar

Peter J. Chambers Jend. (Purn)WismoyoArismunandar

Peter J. Chambers

Ir. TjahjonoSoerjodibroto,MBA


Dr. Ir. Giri SusenoHadihardjono


Dr. Ir. Giri SusenoHadihardjono

YBhg Dato’MohamadNorza bin HajiZakaria


ElisaLumbantoruan


ElisaLumbantoruan

The Company’s Board of Audit Committee was established on 28 February 2005. Thecomposition of the Board of Audit Committee as of 31 December 2006, 2007; and 31 March2008 was as follows:

Chairman : Ir. Tjahjono Soerjodibroto, MBAMembers : Dr. Djoko Susanto, M.S.A

Heru PrasetyoYBhg Dato’ Mohamad Norza bin Haji Zakaria

The composition of the Board of Audit Committee as at 31 December 2008 and 31 March2009 is as follows:

Chairman : Peter J. ChambersMembers : Dr. Djoko Susanto, M.S.A

Heru PrasetyoElisa Lumbantoruan

The Company’s head office is located at grhaXL, Jalan Mega Kuningan Lot. E4-7 No.1Kawasan Mega Kuningan, Jakarta 12950, Indonesia.

f. Subsidiaries

The Company has direct investments in subsidiaries as follows:

Percentage ofownership

Country ofdomicile Business activities

Year ofparticipations

Excel Phoneloan 818 B.V. 100% Netherlands Financing company 1997GSM One (L) Ltd. 100% Malaysia Financing company 1996GSM Two (L) Ltd. 100% Malaysia Financing company 1997Excelcomindo Finance Company B.V. 100% Netherlands Financing company 2003

The subsidiaries’ total assets before elimination are as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Excel Phoneloan 818 B.V. 20,384 13,102 14,916 12,821 15,767GSM One (L) Ltd. - - - - -GSM Two (L) Ltd. - - - - -Excelcomindo Finance

Company B.V. 5,580,743 5,850,947 1,478,696 2,354,581 1,539,098



Page 11

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of PT Excelcomindo Pratama Tbk and its subsidiaries(together, “the Group”) were prepared by the Board of Directors and completed on 11 May 2009.

Presented below are the significant accounting policies adopted for the preparation of theconsolidated financial statements of the Group, which conform to the accounting principles generallyaccepted in Indonesia and the regulations imposed by the Indonesian Capital Market SupervisoryAgency and Financial Institution No. VIII.G.7 regarding Guidelines for the Preparation of FinancialStatements and No. SE-02/PM/2002 regarding Guidelines for the Preparation of Financial Statementsfor Capital or Public Telecommunications Companies.

a. Basis for preparation of the consolidated financial statements

The consolidated financial statements, except for the consolidated statements of cash flows,have been prepared on the historical cost concept and accrual basis, except for derivativeinstruments (refer to Note 2l) which are stated at fair value.

The consolidated statements of cash flows present the sources and uses of cash and cashequivalents according to operating, investing and financing activities. Short-term time depositswith original maturities of three months or less are considered as cash equivalents. Theconsolidated statements of cash flows are prepared using the direct method.

Figures in the consolidated financial statements are rounded to and stated in millions ofRupiah unless we specify otherwise.

b. Principles of consolidation

The consolidated financial statements include the financial statements of subsidiariescontrolled by the Company and for which the Company directly or indirectly has ownership ofmore than 50% of the voting rights or if there is an indication of control.

The subsidiaries are consolidated from the date on which effective control was transferred tothe Company and are no longer consolidated when the Company ceases to have effectivecontrol.

The effects of all significant transactions and balances between companies within the Grouphave been eliminated when preparing the consolidated financial statements.

The financial statements of subsidiaries domiciled outside Indonesia are translated intoRupiah currency on the following basis:

- Monetary accounts are translated using the prevailing Bank of Indonesia middle rate as atthe balance sheet date as mentioned in Note 2m. Non-monetary accounts are translatedusing the historical rate as at the transaction date.



Page 12

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

b. Principles of consolidation (continued)

- Statements of income accounts are translated using the average rate during the year/periodas follows (full amount):

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

United States Dollar (USD) 9,208.75 9,130.42 9,629.17 9,253.67 11,428.33Euro (EUR) 11,512.00 12,472.76 14,205.35 13,762.66 15,106.61Singapore Dollar (SGD) 5,776.07 6,050.74 6,819.98 6,516.59 7,637.31

Differences arising from the translation of balance sheets and statements of income ofsubsidiaries are recognised in the current year’s/period’s consolidated statement of income onthe basis that the operations of the foreign subsidiaries formed an integral part of theoperations of the Company and, as a result, the transactions of the foreign subsidiaries havebeen considered as if they had been carried out by the Company .

c. Related party transactions

The Company and its subsidiaries have transactions with related parties. The definition ofrelated parties used is in accordance with SFAS 7 “Related Party Disclosures”.

d. Recognition of revenues and expenses

Revenue from prepaid services is derived from the sale of starter pack and vouchers. Starterpacks consist of a SIM (Subscriber Identity Module) card and voucher. The revenue of SIMcard sales and any discount granted is recognised upon delivery to distributors or directly tocustomers, excluding value-added taxes.

Revenue from sales of vouchers for prepaid services is not recognised at the time of sale.When a voucher is sold, the full amount of airtime sold is credited, without deduction of anycommission, to the “Deferred Revenue” account.

When prepaid customers use the prepaid airtime or upon expiration of the voucher, theamount used or expired is recognised as cellular telecommunications revenue in theconsolidated income statement.

Revenue for the use of the Company’s network by GSM customers, including charges forairtime, local interconnection, domestic long-distance, international long-distance andinternational roaming, is recognised based on applicable tariffs and the duration of successfulcalls made through the network. Revenue is recognised at the time the service is renderedbased on the actual call duration and applicable tariffs.

For postpaid customers, non-voice revenue, such as monthly service charges and value-added services, is recognised on a monthly basis upon billing.

Revenue from interconnection with other operators is recognised on the basis of actualrecorded call traffic.



Page 13


d. Recognition of revenues and expenses (continued)

Inbound roaming revenue from overseas telecommunications providers for calls made andreceived by customers on the Company’s network is recognised at the time the call isrendered based upon applicable tariffs.

Revenue from leased lines and rental of telecommunications tower and internet serviceprovider revenue is recognised on a monthly basis upon billing based on prices agreed withcustomers. When unearned revenue is received, the amounts received are recorded asdeferred revenue and recognised as revenue when the services are provided.

Revenue from ITKP/VoIP services is recognised at the time when the service is renderedbased upon applicable tariffs.

Expenses are recognised on an accrual basis.

e. Trade receivables

Trade receivables are presented at their estimated recoverable amount after an allowance fordoubtful accounts. This allowance for doubtful accounts is made based on the management’sevaluation of the collectibility of outstanding amounts as at each balance sheet date. Accountsare written off in the period during which they are determined to be uncollectable.

f. Inventories

Inventories, mainly comprising vouchers and SIM cards, are valued at the lower of cost or netrealisable value. Cost is calculated using the moving-average method.

A provision for obsolete and slow-moving inventory is determined on the basis of theestimated future sales of individual inventory items.

g. Leases

In 2007, the Indonesian Financial Accounting Standards Board issued SFAS 30 (Revised2007), “Leases”, which constituted a change in accounting policy. The SFAS is effective forthe preparation of financial statements covering periods beginning on or after 1 January 2008.

The application of SFAS 30 (Revised 2007) changes the guidance used to classify leases intooperating leases and capital leases. Under SFAS 30 (Revised 2007), the classification ofleases is based on the extent to which risks and rewards incidental to ownership of a leasedasset lie with the lessor or the lessee. Retrospective application of this standard isencouraged but not required.



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g. Leases (continued)

In 2008, the Indonesian Financial Accounting Standards Board issued an Interpretation ofStatement of Financial Accounting Standard (ISFAS) 8, “Determining whether anArrangement contains a Lease and Further Explanation about Transitional Provisions ofSFAS 30 (Revised 2007)”. The interpretation provides guidance for determining whether anarrangement is, or contains, a lease that should be accounted for in accordance with SFAS30 (Revised 2007). In addition, the interpretation clarifies that, if SFAS 30 (Revised 2007) isnot applied retrospectively, the balance of any pre-existing finance lease is deemed to havebeen properly determined by the lessor. With respect to the pre-existing operating leases,companies are required to evaluate such leases in order to determine whether they should beclassified as finance lease under SFAS 30 (Revised 2007). If any pre-existing operating leaseis a finance lease under SFAS 30 (Revised 2007), companies may apply SFAS 30 (Revised2007) retrospectively or prospectively. Lessees that elect to apply it retrospectively shallapply SFAS 30 (Revised 2007) as if it had always been applied to all arrangements at theinception of those arrangements. Meanwhile, lessees that elect to apply prospectively shallapply SFAS 30 (Revised 2007) as of the beginning of the earliest period presented to allarrangements existing at the beginning of the earliest period presented.

Application of SFAS 30 (Revised 2007) and ISFAS 8 by the Company does not have animpact upon previously reported financial statement amounts.

1. Lessee

Leases in which a significant portion of the risks and rewards of ownership are retained bythe lessor are classified as operating leases. Payments made under operating leases arecharged to the consolidated income statement on a straight-line basis over the period ofthe lease.

Leases of fixed assets whereby the Company has substantially all the risks and rewardsof ownership are classified as finance leases. Finance leases are capitalised at the lease’scommencement at the lower of the fair value of the leased property and the present valueof the minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as toachieve a constant rate on the finance balance outstanding. The corresponding rentalobligations, net of finance charges, are included in other long-term payables. The interestelement of the finance cost is charged to the consolidated income statement over thelease period so as to produce a constant periodic rate of interest on the remaining balanceof the liability for each period. The fixed asset acquired under finance leases isdepreciated over the shorter of the useful life of the asset and the lease term.

2. Lessor

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment,or series of payments, the right to use an asset for an agreed period of time.

When assets are leased out under a finance lease, the present value of the leasepayments is recognised as a receivable. The difference between the gross receivable andthe present value of the receivable is recognised as unearned finance income. Leaseincome is recognised over the term of the lease using the net investment method, whichreflects a constant periodic rate of return.



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g. Leases (continued)

2. Lessor (continued)

When assets are leased out under an operating lease, the asset is included in the balancesheet based on the nature of the asset. Lease income is recognised over the term of thelease on a straight-line basis.

h. Fixed assets and depreciation

Fixed assets are stated at acquisition cost, which includes any applicable import taxes,customs duties, freight costs, handling costs, storage costs, site preparation costs, installationcosts, internal labour costs, the initial estimate of the costs of dismantling and removing theitem and restoring the site on which it is located, less accumulated depreciation. Depreciationis applied from the date the assets are put into service or when the assets are ready forservice, using the straight-line method over their estimated useful lives and results in thefollowing annual percentages of cost:

Buildings : 5%, 12.5%Network equipment- GSM tower : 6.25%- Fibre optic : 10%, 12.5%- Other network equipments : 10%, 12.5%, 20%, 25%, 50%Leasehold improvements : 25%Machinery and equipment : 25%Furniture and fixtures : 25%Support systems : 25%Motor vehicles : 25%

Land is stated at cost and is not depreciated.

The Company evaluates its fixed assets for impairment whenever events and circumstancesindicate that the carrying amount of the assets may not be recoverable. When the carryingamount of an asset exceeds its estimated recoverable amount, the asset is written down to itsestimated recoverable amount, which is determined based upon the greater of its net sellingprice or value in use.

The accumulated costs of network equipment are initially capitalised as Assets UnderConstruction. These costs are subsequently reclassified as fixed-asset accounts when theassets are put into service.

Subsequent costs are included in the asset’s carrying amount and recognised as a separateasset, as appropriate, only when it is probable that future economic benefits associated withthe item will flow to the Company and the cost of the item can be measured reliably. Thecarrying amount of replaced parts is written-off. The cost of upgrading software is capitalisedand the previously recorded balance is written off at the time the software upgrade isperformed.

All other repairs and maintenance are charged to the income statement during the financialperiod in which they are incurred.

When assets are retired or otherwise disposed of, their carrying values and the relatedaccumulated depreciation are eliminated from the consolidated financial statements, and theresulting gains and losses on the disposal of fixed assets are recognised in the respectiveperiod’s statement of income.



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h. Fixed assets and depreciation (continued)

In 2007, the Indonesian Financial Accounting Standards Board issued SFAS 16 (Revised2007), “Fixed Assets”. The SFAS is effective for the preparation of financial statementscovering periods beginning on or after 1 January 2008. Under SFAS 16 (Revised 2007),companies have to choose the cost model or revaluation model as their accounting policy inmeasuring costs of acquisition. The Company has chosen the cost model. According to SFAS16 (Revised 2007), the initial estimate of the costs of dismantling, removing a fixed asset andrestoring the site on which it is located shall be capitalised as acquisition cost. In 2008, theCompany recorded the estimated dismantlement and restoration costs of Base TransceiverStations (BTS) as part of acquisition cost. The amount of the provision is determined basedon the lease contracts; however, where contracts do not specify the amount of the obligation,the Company uses its best estimate. The management conducts a regular review of theestimation used.

Change in economic useful lives estimation

In order to better reflect the economic useful lives of certain assets, commencing on1 January 2007, the Company changed the estimated useful lives of certain components offibre optics and other network equipment from eight years (12.5%) to ten years (10%); thisequipment will be depreciated over the remaining period of its new useful life. Commencingon 1 January 2008, the Company changed the estimated useful lives of certain components ofnetwork equipment from ten and eight years (10% and 12.5%) to four and five years (25%and 20%); this equipment will be depreciated over the remaining period of its new useful life.

Management is of the opinion that the calculation on the effect of changing the estimateduseful lives on the current and future periods is not practical, therefore the calculation is notpresented in these consolidated financial statements.

i. Intangible assets

The 3G spectrum licence is recorded at historical cost (refer to note 1d). It has a finite usefullife and is carried at cost less accumulated amortisation. Amortisation is calculated using thestraight-line method over the estimated useful life of the asset (ten years). The amortisationcommences from the date when the assets are available for use and amortisation costs arecharged to operating expenses.

The accounting principles generally accepted in Indonesia do not provide clear and explicitguidance on whether the commitment to pay annual fees over ten years as a consequence ofobtaining the 3G spectrum licence is a liability and whether the ten-year annual fees (biayahak penggunaan or BHP) are to be considered as part of the acquisition costs of the licence.The management assesses that continuation of payment of annual fees will no longer berequired if the Company no longer uses the licence. The management considers the annualpayment as a usage fee based on its own interpretation of the licence conditions and writtenconfirmation from the Directorate General of Post and Telecommunications. These annualfees are therefore not considered as part of the acquisition cost for obtaining the licence.

If in future, the regulations and conditions with regard to payment of the annual fees arechanged with the consequence that payment of remaining outstanding annual fees cannot beavoided upon the Company returning the licence, the Company will recognise the fair value ofannual fees as an intangible asset and the corresponding liability at the present value of theremaining annual fees at that point in time.



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j. Loans

Loans are initially recognised at the amount of proceeds received, net of transaction costsincurred. Loans are subsequently stated at any difference between proceeds received (net oftransaction costs incurred) and the redemption value. Transaction costs incurred as the resultof the loans issuance stated as amortised cost using effective interest method over the periodof borrowings.

k. Bond and share issue costs

Bond issue costs are directly deducted from the issue proceeds in the consolidated balancesheets as a discount and are amortised using the straight-line method over the period of thebonds.

Share issue costs are directly deducted from the capital surplus on the consolidated financialstatements.

l. Derivative financial instruments

In implementing its risk management policies, the Company periodically enters into derivativecontracts with external counterparties.

In order to qualify for hedge accounting, SFAS 55 “Accounting for Derivative Instruments andHedging Activities” sets out certain criteria, such as the documentation that should be createdat the inception of the hedge, and that the hedge should be effective.

Derivative instruments are measured at fair value and recognised as either assets or liabilitieson the balance sheet. Changes in the fair value of derivatives are recognised in earnings or aspart of equity, depending on the designated purpose of the derivatives and whether theyqualify for hedge accounting.

m. Foreign currency translation

Transactions denominated in foreign currencies are translated into Rupiah at the ratesprevailing as at the date of the transaction.

As at the balance sheet date, monetary assets and monetary liabilities denominated in foreigncurrencies are translated into Rupiah using the Bank of Indonesia middle rate prevailing as atthat date. The exchange rates of the major foreign currencies used are as follows (fullamount):

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

United States Dollar (USD) 9,020.00 9,419.00 10,950.00 9,217.00 11,575.00Euro (EUR) 11,858.15 13,759.76 15,432.40 14,558.72 15,327.06Singapore Dollar (SGD) 5,878.73 6,502.38 7,607.36 6,683.36 7,617.41Swiss Franc (CHF) 7,381.65 8,260.48 10,348.76 9,241.04 10,093.75Australian Dollar (AUD) 7,133.48 8,228.92 7,555.51 8,450.15 7,949.14

Realised and unrealised foreign exchange gains or losses arising from transactions in foreigncurrency and from the translation of foreign currency monetary assets and liabilities arerecognised in the current year/period consolidated statements of income.



Page 18


m. Foreign currency translation (continued)

In 1997 and 1998, as permitted under the Interpretation of Statement of Financial AccountingStandard (ISFAS) No. 4 “Interpretation of Paragraph 20 of Statement of Financial AccountingStandard 10 on the Allowed Alternative Treatment for Exchange Difference”, certain foreignexchange losses were capitalised into the cost of fixed assets in recognition of the severedepreciation in the value of the Rupiah against the US Dollar. Since 1 January 1999, theconditions for “unusual depreciation” are no longer met and all foreign exchange differences in1999 and subsequent years have been charged/(credited) to the consolidated statements ofincome.

n. Taxation

Deferred income tax is determined using tax rates (and laws) that have been enacted orsubstantially enacted by the balance sheet date and are expected to apply when the relateddeferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets relating to the carrying forward of unused tax losses are recognised to theextent that it is probable that future taxable profit will be available against which the unusedtax losses can be utilised.

Amendments to taxation obligations are recorded when an assessment is received or, ifappealed against, when the results of the appeal are determined.

The Company, in certain situations provides provision based on review of the nature oftransactions that probable to give rise to tax underpayment assessments based on taxassessments in previous periods.

o. Employee benefits

Short-term employee benefits

Short-term employee benefits are recognised when they accrue to the employees.

Long-term and post-employment benefits

Long-term and post-employment benefits such as retirement, severance, service paymentsand other benefits are calculated based on Labour Law No. 13/2003 (“Law 13/2003”).

In relation to pension benefits, in April 2002 the Company entered into a defined contributionspension plan organised by PT Asuransi Jiwa Manulife Indonesia. This programme is providedto all permanent employees who were under 50 years of age at the commencement of theprogramme in April 2002. Contributions to the plan are 10% of the net base salary, comprising7% from the Company and 3% from the employee. Employees are entitled to benefits fromthe pension plan, comprising pension fund contributions and accumulated interest, onretirement, disability or death.

The regular contributions constitute net periodic costs for the year in which they are due andas such are included in employee costs.

In accordance with Law 13/2003, the Company has further payment obligations if the benefitsprovided by the existing plan does not adequately cover the obligations under Law 13/2003.



Page 19


o. Employee benefits (continued)

Long-term and post-employment benefits (continued)

The liabilities recognised in the consolidated balance sheets are the present values of thedefined benefit obligations as at the balance sheet date in accordance with Law 13/2003 orthe Company’s regulations (whichever is higher), less the fair value of plan assets, togetherwith adjustments for unrecognised actuarial gains or losses and past service costs.

The defined benefit obligation is calculated by an independent actuary using the projected unitcredit method. In calculating the long-term and post-employment benefits, the independentactuary has considered the contribution made by the Company to PT Asuransi Jiwa ManulifeIndonesia.

The present value of the defined benefit obligation is determined by discounting the estimatedfuture cash outflows using the interest rates of government bonds (considering currently thereis no deep market for high-quality corporate bonds) that are denominated in Rupiah, in whichthe benefits will be paid, and that have terms to maturity approximating to the terms of therelated pension liability.

Actuarial gains and losses arising from experience adjustments, changes in actuarialassumptions and amendments to pension plans in excess of 10% of the fair value of planassets or 10% of the present value of the defined benefit obligations are charged or creditedto profit and loss over the employees’ expected average remaining service lives.

Past-service costs are recognised immediately in the consolidated statements of income,unless the changes to the pension plan are conditional on the employees remaining in servicefor a specified period of time (the vesting period). In this case, the past-service costs areamortised on a straight-line basis over the vesting period.

The current service cost is recorded as an expense in the prevailing period.

p. Earning/loss per share

Basic earning/loss per share is calculated by dividing net income/loss by the weightedaverage number of ordinary shares outstanding during the year.

Diluted earning/loss per share is calculated by dividing net income/loss by the weightedaverage number of ordinary shares outstanding during the year, adjusted to assumeconversion of all potential dilutive ordinary shares.

q. Dividends

Dividend distribution to the Company’s shareholders is recognised as a liability in theconsolidated financial statements in the period in which the dividends are approved by theCompany’s shareholders.

r. Use of estimates

The preparation of consolidated financial statements in conformity with accounting principlesgenerally accepted in Indonesia requires the use of estimates and assumptions that affect thereported amounts of assets and liabilities, the disclosure of contingent assets and liabilities asat the date of the consolidated financial statements, and the reported amounts of revenuesand expenses during the reporting period. Actual results could differ from those estimates.



Page 20

3. CASH AND CASH EQUIVALENTS

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Cash on hand 1,270 1,463 1,583 1,467 1,468

Cash in bankRupiah

- Deutsche Bank AG 5,150 5,038 3,177 167 224,034- PT Bank Permata Tbk 154 927 3,331 - 50,752- JPMorgan Chase Bank, N.A. 1,247 46,541 28,684 15,590 21,942- PT Bank Central Asia Tbk 193,403 28,979 18,837 20,110 13,710- PT Bank Bukopin Tbk 126 539 1,411 841 4,009- PT Bank Mandiri (Persero) Tbk 3,112 4,764 1,832 - 1,315- PT Bank Negara Indonesia (Persero) Tbk 4,279 4,853 1,603 - 616- PT Bank Danamon Indonesia Tbk 4,843 1,144 1,014 - 541- Others (individual amount less than

Rp 3,000) 10,496 5,372 2,716 8,745 3,058

US Dollar- JPMorgan Chase Bank, N.A. 10,021 7,458 3,033 26,592 70,344- Standard Chartered Bank 51 54 74 - 53- Deutsche Bank AG 764 - - - -- Others (individual amount less than

Rp 3,000) - - - 62 -

233,646 105,669 65,712 72,107 390,374

Time deposits (mature within three months)Rupiah

- PT Bank OCBC NISP Tbk (formerlyPT Bank NISP Tbk) 28,500 - - - 200,000

- PT Bank UOB Indonesia - 100,000 - 150,000 -- Deutsche Bank AG 1,300 67,000 53,000 113,800 -- PT Bank Permata Tbk - - - 100,000 -- PT Bank DBS Indonesia - 180,000 - 90,000 -- PT Bank Central Asia Tbk - - 113,908 - -- PT ANZ Panin Bank - - 60,000 - -- PT Bank CIMB Niaga Tbk (formerly

PT Bank Niaga Tbk) 75,000 90,000 - - -- PT Bank Mega Tbk - 45,000 - - -- PT Bank Internasional Indonesia Tbk 40,000 - - - -

US Dollar- PT Bank Mega Tbk - - 109,500 82,953 -- PT Bank Chinatrust Indonesia - - 219,000 - -- PT Bank CIMB Niaga Tbk (formerly

PT Bank Niaga Tbk) - - 109,500 - -- PT ANZ Panin Bank - - 109,500 - -- PT Bank Danamon Indonesia Tbk - - 109,500 - -- PT Bank Permata Tbk - - 109,500 - -- PT Bank DBS Indonesia - 122,447 54,750 - -- Standard Chartered Bank - - 54,750 - -- PT Bank OCBC NISP Tbk (formerly

PT Bank NISP Tbk) - 94,190 - - -- The Bank of Tokyo-Mitsubishi UFJ, Ltd. 126,280 - - - -- ABN AMRO Bank N.V. 45,100 - - - -- PT Bank Rabobank International

Indonesia 36,080 - - - -

352,260 698,637 1,102,908 536,753 200,000

587,176 805,769 1,170,203 610,327 591,842

The annual interest rates of the above time deposits are as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Rupiah deposit 3.00% - 15.00% 7.30% - 9.75% 7.00%-13.60% 8.00% - 8.25% 7.50%-13.25%US Dollar deposit 4.15% - 5.40% 5.15% - 5.60% 1.00%-7.00% 4.50% - 5.25% 1.00%-7.00%



Page 21

4. TRADE RECEIVABLES - THIRD PARTIES

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Domestic partners- PT Mora Telematika Indonesia 26,859 46,326 80,301 91,536 78,736- PT Bakrie Telecom Tbk 3,619 1,873 88,601 33,885 62,501- PT Sampoerna Telekomunikasi

Indonesia - 18 24,175 12,999 18,133- PT Telekomunikasi Indonesia Tbk 8,328 4,992 12,217 1,039 12,997- PT Natrindo Telepon Seluler 22 76 64,926 13,158 4,141- PT Nettocyber Indonesia 4,562 10,098 4,513 10,596 3,953- PT Indo Pratama Teleglobal 3,309 5,535 720 3,413 1,549- PT Hutchison CP Telecommunications - 101 366,659 39,011 1,402- PT Indosat Tbk 17,670 2,396 2,730 10,223 1,243- PT Insan Sarana Telematika - 35 3,085 - 881- PT Telekomunikasi Selular 3,184 - - - -- Others (individual amount less than

Rp 3,000, in USD and Rupiah) 182,197 268,079 258,564 223,300 247,207

249,750 339,529 906,491 439,160 432,743

International partners- Shinetown Telecommunications Ltd. 5,816 6,792 13,520 5,436 13,092- Digi Telecommunications Sdn Bhd 246 227 3,463 189 3,960- Telstra Corporation Ltd. - Australia 3,260 6,040 558 6,048 1,089- Unifone Pte. Ltd. 3,846 4,492 - - -- Others (individual amount less than

Rp 3,000) 9,294 18,922 14,618 51 12,342

22,462 36,473 32,159 11,724 30,483

272,212 376,002 938,650 450,884 463,226Allowance for doubtful accounts (84,816) (119,005) (103,182) (83,907) (115,588)

187,396 256,997 835,468 366,977 347,638

The ageing analysis of trade receivables is as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Current 151,553 152,246 695,206 211,828 126,238Overdue 1 - 30 days 39,209 56,867 50,198 63,990 54,353Overdue 31 - 60 days 8,401 23,317 46,340 41,230 32,055Overdue > 61 days 73,049 143,572 146,906 133,836 250,580

272,212 376,002 938,650 450,884 463,226

Changes in the amounts of the allowance for doubtful accounts are detailed as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Allowance for doubtful accounts- beginning 17,897 84,816 119,005 119,005 103,182

Bad debt expenses 68,037 58,862 59,376 17,264 12,469Doubtful debts written off (1,118) (24,673) (75,199) (52,362) (63)

Allowance for doubtful accounts - ending 84,816 119,005 103,182 83,907 115,588

Based on a review of the collectibility of the individual receivable accounts as at the balance sheetdate, management believes that the allowance for doubtful accounts is sufficient to cover possiblelosses from non-collection of these accounts.



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5. ADVANCES AND PREPAYMENTS

This account represents advances to employees, related parties and third parties for the payment ofthe Company’s operational expenses, such as utilities expenses, customs duties expenses andprepaid expenses for rental, insurance and maintenance.

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Prepayments - current portion 158,388 215,412 356,889 359,378 662,538Advances on operational expenses 8,707 4,493 21,371 9,053 12,260

167,095 219,905 378,260 368,431 674,798

For transactions with related parties please refer to Note 22.

6. OTHER ASSETS

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Prepayments - long-term portion 522,784 670,485 945,227 708,607 1,027,964Downpayment to suppliers 87,837 167,877 135,595 178,574 77,291Deferred charges 8,057 12,341 8,560 10,025 30,877Restricted bank deposits and cash in bank 244 856 17,386 1,033 18,484Others 9,581 10,742 12,993 11,255 13,011

628,503 862,301 1,119,761 909,494 1,167,627

Lease receivable - - - - 681,827Unearned finance lease income - - - - (309,353)

- - - - 372,474

Intangible assets - 3G licence:Acquisition cost 376,000 376,000 376,000 376,000 376,000Accumulated amortisation (13,193) (52,772) (92,351) (62,667) (102,246)

362,807 323,228 283,649 313,333 273,754

991,310 1,185,529 1,403,410 1,222,827 1,813,855Deduct:Restricted bank deposits and

cash in bank – current (148) (230) (16,705) (276) (17,785)Lease receivable – current - - - - (62,494)

(148) (230) (16,705) (276) (80,279)

Other assets - non-current 991,162 1,185,299 1,386,705 1,222,551 1,733,576

Lease receivables are related to the lease of fiber optics cables transactions to PT Hutchison CPTelecommunications and PT Mora Telematika Indonesia (refer to Note 27n). Details of the leasereceivables are as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Not later than 1 year - - - - 99,269Later than 1 year and not later

than 5 years - - - - 198,539More than 5 years - - - - 384,019

- - - - 681,827Unearned finance lease income - - - - (309,353)

Net investment in finance lease - - - - 372,474

As at respective balance sheet dates, management believes that there was no indication ofimpairment for intangible assets.




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7. FIXED ASSETS

31/12/200631/12/2005 Additions Disposals Transfers 31/12/2006

CostLand 101,083 15,690 - 253 117,026Buildings 31,266 9,956 - 7,076 48,298Network equipment 10,856,531 3,336,780 (340,437) 557,609 14,410,483Leasehold improvements 98,454 12,640 (85) (2,390) 108,619Machinery and equipment 210,040 41,657 (5,839) 8,463 254,321Furniture and fixtures 14,657 7,501 (151) 786 22,793Support systems 105,382 16,691 (19) 1,522 123,576Motor vehicles 33,868 4,808 (807) - 37,869

11,451,281 3,445,723 (347,338) 573,319 15,122,985Assets under construction 923,972 1,057,329 (1,505) (573,319) 1,406,477

12,375,253 4,503,052 (348,843) - 16,529,462

Accumulated depreciationBuildings (11,385) (3,530) - 1,328 (13,587)Network equipment (4,574,227) (1,431,109) 338,086 (624) (5,667,874)Leasehold improvements (63,037) (14,511) 86 (1,328) (78,790)Machinery and equipment (144,333) (35,523) 5,632 518 (173,706)Furniture and fixtures (8,614) (3,591) 151 139 (11,915)Support systems (75,044) (15,952) 14 (33) (91,015)Motor vehicles (27,555) (3,804) 794 - (30,565)

(4,904,195) (1,508,020) 344,763 - (6,067,452)

Net book value 7,471,058 10,462,010


CostLand 117,026 14,404 - 80 131,510Buildings 48,298 3,475 - 1,472 53,245Network equipment 14,410,483 4,440,405 (180,209) 736,899 19,407,578Leasehold improvements 108,619 488 (1,403) (178) 107,526Machinery and equipment 254,321 70,594 (7,698) 22,448 339,665Furniture and fixtures 22,793 7,974 (458) 2,994 33,303Support systems 123,576 52,444 - 22,733 198,753Motor vehicles 37,869 3,338 (388) 61 40,880

15,122,985 4,593,122 (190,156) 786,509 20,312,460Assets under construction 1,406,477 2,494,559 (10,043) (786,509) 3,104,484

16,529,462 7,087,681 (200,199) - 23,416,944

Accumulated depreciationBuildings (13,587) (4,939) - (746) (19,272)Network equipment (5,667,874) (1,602,462) 156,585 - (7,113,751)Leasehold improvements (78,790) (12,687) 1,205 710 (89,562)Machinery and equipment (173,706) (47,930) 7,556 123 (213,957)Furniture and fixtures (11,915) (5,898) 407 (77) (17,483)Support systems (91,015) (27,311) - (10) (118,336)Motor vehicles (30,565) (4,183) 388 - (34,360)

(6,067,452) (1,705,410) 166,141 - (7,606,721)

Net book value 10,462,010 15,810,223



Page 24

7. FIXED ASSETS (continued)


CostLand 131,510 6,937 - - 138,447Buildings 53,245 4,727 (169) 37,851 95,654Network equipment 19,407,578 9,001,586 (374,477) 1,850,718 29,885,405Leasehold improvements 107,526 5,142 (9,138) 4,488 108,018Machinery and equipment 339,665 111,553 (1,058) 78,384 528,544Furniture and fixtures 33,303 12,019 (1,687) 18,736 62,371Support systems 198,753 88,912 (25) 45,442 333,082Motor vehicles 40,880 68 (12,942) 3,320 31,326

20,312,460 9,230,944 (399,496) 2,038,939 31,182,847Assets under construction 3,104,484 1,613,999 (20,042) (2,038,939) 2,659,502

23,416,944 10,844,943 (419,538) - 33,842,349

Accumulated depreciationBuildings (19,272) (10,155) 169 (4,750) (34,008)Network equipment (7,113,751) (3,163,756) 255,165 8,584 (10,013,758)Leasehold improvements (89,562) (11,493) 8,734 4,750 (87,571)Machinery and equipment (213,957) (82,197) 1,045 (8,584) (303,693)Furniture and fixtures (17,483) (11,944) 1,505 - (27,922)Support systems (118,336) (52,052) 10 - (170,378)Motor vehicles (34,360) (3,690) 12,798 - (25,252)

(7,606,721) (3,335,287) 279,426 - (10,662,582)

Net book value 15,810,223 23,179,767


CostLand 131,510 458 - - 131,968Buildings 53,245 - - 31,480 84,725Network equipment 19,407,578 1,006,066 (56,280) 1,121,847 21,479,211Leasehold improvements 107,526 - (779) (3,311) 103,436Machinery and equipment 339,665 3,134 (46) 30,078 372,831Furniture and fixtures 33,303 4 (326) 7,755 40,736Support systems 198,753 990 - 8,652 208,395Motor vehicles 40,880 - (12,524) - 28,356

20,312,460 1,010,652 (69,955) 1,196,501 22,449,658Assets under construction 3,104,484 1,269,202 - (1,196,501) 3,177,185

23,416,944 2,279,854 (69,955) - 25,626,843

Accumulated depreciationBuildings (19,272) (2,994) - (4,750) (27,016)Network equipment (7,113,751) (593,121) 51,585 79 (7,655,208)Leasehold improvements (89,562) (2,623) 411 4,750 (87,024)Machinery and equipment (213,957) (16,364) 46 (79) (230,354)Furniture and fixtures (17,483) (2,455) 281 - (19,657)Support systems (118,336) (8,319) - - (126,655)Motor vehicles (34,360) (802) 12,380 - (22,782)

(7,606,721) (626,678) 64,703 - (8,168,696)

Net book value 15,810,223 17,458,147



Page 25



CostLand 138,447 3,058 - - 141,505Buildings 95,654 3,341 - 48,254 147,249Network equipment 29,885,405 281,185 (218,827) 1,526,482 31,474,245Leasehold improvements 108,018 702 (1,538) 6,387 113,569Machinery and equipment 528,544 36,706 (401) 48,997 613,846Furniture and fixtures 62,371 2,548 (175) 14,557 79,301Support systems 333,082 769 - 21,731 355,582Motor vehicles 31,326 - (15,486) 2,855 18,695

31,182,847 328,309 (236,427) 1,669,263 32,943,992Assets under construction 2,659,502 1,438,799 (1,496) (1,669,263) 2,427,542

33,842,349 1,767,108 (237,923) - 35,371,534

Accumulated depreciationBuildings (34,008) (3,912) - - (37,920)Network equipment (10,013,758) (816,501) 214,188 - (10,616,071)Leasehold improvements (87,571) (4,809) 1,405 - (90,975)Machinery and equipment (303,693) (29,482) 381 - (332,794)Furniture and fixtures (27,922) (5,060) 175 - (32,807)Support systems (170,378) (17,507) - - (187,885)Motor vehicles (25,252) (980) 15,487 - (10,745)

(10,662,582) (878,251) 231,636 - (11,309,197)

Net book value 23,179,767 24,062,337

The Company owns land located throughout Indonesia with Building Use Rights (Hak GunaBangunan or “HGB”) for periods of 20-30 years which will expire between 2012-2039.

As of 31 March 2009, there are 165 locations with a total book value of Rp 47,014 and for which HGBcertificates are in process.

The management believes that there will be no difficulty in renewing the land rights when they expire.

Assets under construction

Assets under construction consist of:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Network equipment 1,335,077 2,861,627 2,384,150 3,000,135 2,166,587Non-network equipment 71,400 242,857 275,352 177,050 260,955

1,406,477 3,104,484 2,659,502 3,177,185 2,427,542

Assets under construction mainly represent new BTS equipment and other equipment which is still tobe installed or is currently being installed. When the equipment units are finally installed, their carryingvalues are reclassified as fixed assets (network equipment).

The management believes that there are no significant obstacles to the completion of the assetsunder construction mentioned above.



Page 26


The calculation of the loss on sale and write-off of fixed assets is as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Cost 348,843 200,199 419,538 69,955 237,923Accumulated depreciation (344,763) (166,141) (279,426) (64,703) (231,636)

Net book value 4,080 34,058 140,112 5,252 6,287Proceeds from sale of fixed assets

and insurance claims (2,616) (5,094) (100,898) (3,842) (4,775)

Loss on sale and write-off of fixed assets 1,464 28,964 39,214 1,410 1,512

As at 31 March 2009, the fixed assets of the Company and its subsidiaries are insured by insurancepolicies covering “property, all risks and business interruption” for USD 2,457,000,000 from a thirdparty, PT MAA General Assurance, which the management believes is adequate to cover possiblelosses.

In 1997 and 1998, the Company capitalised foreign exchange losses into the cost of fixed assetsamounting to Rp 147,949 and Rp 492,751 respectively (refer to Note 2m). Included in the net bookvalue of the Company’s fixed assets as at 31 December 2006, 2007 and 2008; and 31 March 2008and 2009 are the remaining balances of foreign exchange losses capitalised, amounting to Rp 5,541,Rp 4,752 and Rp 4,010; Rp 4,555 and 3,825 respectively.

The Company’s ownership of one parcel of land in Yogyakarta has been claimed by an individualsince January 2007. The claim has been through a series of legal proceedings and as of the issuedate of the consolidated financial statements, the parties involved were still waiting for the SupremeCourt to rule on the case. The case does not affect the Company’s operations in Yogyakarta.

In relation to the signing of a Contact Management Services agreement on 3 November 2008 withVADS Business Process Sdn. Bhd., a related party (refer to Note 22), certain fixed assets of theCompany related to a call centre activities will be sold to the same party through a purchaseagreement. Up to the issuance date of the consolidated financial statements, the due diligenceprocess is still on going and the purchase agreement has not been signed.



Page 27

8. TRADE PAYABLES - THIRD PARTIES

Trade payables mostly consist of payables for capital expenditure, payables for operationalexpenditure and payables for interconnection charges and international roaming services.

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

PT Ericsson Indonesia 101,704 105,963 577,963 147,008 566,617PT Huawei Tech Investment 46,315 99,651 242,120 131,077 353,797Amdocs Software Solution Kft., - 294,281 186,044 257,547 235,566PT Alita Praya Mitra 298,991 498,620 348,495 523,433 167,741PT Datacom Diangraha 9,857 31,726 125,611 40,347 163,804PT Alcatel Lucent Indonesia 21,562 81,581 98,886 127,510 155,782PT Alcatel Lucent Submarine Networks - - 115,834 - 122,446Ericsson AB (EAW) 120,339 3,251 42,454 5,992 77,386Eservglobal SAS France - - 118 1,548 51,517PT Graha Sumber Prima Elektronik 15,940 21,248 44,818 32,157 45,608PT Industri Telekomunikasi 50,723 48,548 64,429 38,157 44,035The Boston Consulting Group - 2,117 27,244 14,198 37,737Huawei Tech Investment Co. Ltd. 33,100 143,372 28,508 129,638 30,136Nokia Siemens Networks Gmbh & Co KG - 20,712 25,745 11,619 29,286PT Maxima Cipta Integrasi 6,645 3,122 24,936 6,486 25,506PT Inland Telematika International - - - - 25,465PT Dentsu Indonesia Interadmar - 18,729 41,061 17,307 24,046PT Telekomunikasi Indonesia Tbk - 9,085 3,083 - 23,742PT Nokia Siemens Networks 22,065 38,833 18,298 45,450 21,726PT Dunia Tehnik 11,611 8,240 21,872 13,408 19,250PT Sun Microsystem Indonesia 7,092 8,659 4,710 21,811 16,773PT MAC Sarana Djaya 17,511 9,082 18,382 19,710 15,359PT Alphine Cool Utama - 3,422 14,540 4,670 14,053PT Logica Information Technology 106 955 22,745 2,374 14,052PT Saptakrida Karyamas 1,214 1,569 10,781 3,710 13,357PT Datacraft Indonesia 4,234 2,279 11,468 5,615 11,630PT Communication Cable Systems - - - 1,274 11,350Bluefish Technologies Pte. Ltd. - - - 6,760 11,186PT Massada Telekomunikasi 2,993 3,569 13,145 8,516 10,950PT Kokoh Semesta 12,236 12,492 7,850 10,614 10,162PT QDC Technologies 18,086 4,106 11,348 4,456 9,773Sagem Orga (Singapore) Pte. Ltd. 4,988 - 22,454 9,954 9,484PT Fastel Sarana Indonesia 2,621 7,021 12,524 2,728 8,412PT Mostniaga Semesta - - 17,981 - 7,107Xpon Card International (Thailand) - - - 20,689 6,926PT Bukaka Teknik Utama 6,823 17,538 10,243 7,620 4,945PT Sas International - 20,481 5,020 6,054 4,914PT Indonusa Mora Prakarsa 3,045 10,454 5,065 9,167 4,449PT Ciptakomunindo Pradipta 4,510 13,413 5,223 8,494 3,959PT Indosat Tbk 4 502 1,576 12,997 3,656PT Citramasjaya Teknikmandiri 1,032 16,160 3,832 12,670 2,921PT Suryajaya Teknotama 10,360 61,970 6,400 23,611 1,147PT Dawamiba Engineering 9,958 14,438 490 4,068 1,133Siemens Network Gmbhn Co. KG.

(formerly Siemens AG) 72,925 1,363 1,120 958 1,112PT Silkar National Ltd. 11,150 559 216 658 553Comverse Network System Inc - - - 11,510 454PT Surya Reksakom Yasatama - 64 3,945 18,922 6PT Teletama Artha Mandiri - 5 12,142 2 2PT Metrodata E-Bisnis 19,947 - 504 27,274 -Oberthur Card Systems Asia Pte. Ltd. 6,393 3,391 - 23,275 -PT Alim Ampuhjaya Steel - - 550 10,853 -PT Sisindokom Lintasbuana 11,480 7,315 - 2,833 -PT Inpurema Konsultama 22,401 1,493 - 1,033 -Ericsson AB 348,249 378,172 224,347 560,532 -Vodafone - - - 14,123 -Others (individual amount less than

Rp 10,000, in USD and Rupiah) 608,844 940,302 1,061,434 1,053,044 911,642

1,947,054 2,969,853 3,547,554 3,475,461 3,332,660



Page 28

8. TRADE PAYABLES - THIRD PARTIES (continued)

Trade payables based on currency are as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Rupiah 669,638 735,569 1,065,767 1,101,641 964,270Foreign currencies 1,277,416 2,234,284 2,481,787 2,373,820 2,368,390

1,947,054 2,969,853 3,547,554 3,475,461 3,332,660Less: Current portion (1,664,884) (2,674,050) (3,250,610) (3,243,412) (2,919,508)

Non-current portion 282,170 295,803 296,944 232,049 413,152

9. OTHER PAYABLES AND ACCRUALS - THIRD PARTIES

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Interest payable 191,069 231,499 156,085 100,063 121,256Accrued salaries and employee benefits 57,972 75,333 126,266 38,438 63,863Accrued telecommunications service costs 61,928 147,565 46,177 170,387 58,686Customer deposits 10,073 13,810 20,251 22,932 16,070Others 4,653 43,761 79,822 23,891 77,194

325,695 511,968 428,601 355,711 337,069

10. SHORT-TERM LOANS

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Standard Chartered Bank - - - 1,000,000 -The Hongkong and Shanghai Banking

Corporation Ltd - - - 460,850 -ABN AMRO Bank N.V - - 547,500 460,850 -

- - 547,500 1,921,700 -

a. Standard Chartered Bank

On 22 January 2008, the Company made a drawdown on the credit facility from StandardChartered Bank amounting to Rp 1,000 billion (full amount), using the bridging loan facility whichwas part of the credit agreement with Standard Chartered Bank (refer to Note 11d). This loan wassettled on 20 June 2008.

b. The Hongkong and Shanghai Banking Corporation Ltd (HSBC)

On 18 January 2008, the Company signed a credit facility agreement with HSBC amounting toUSD 50,000,000. The loan facility was to mature 1 (one) year from the first drawdown date whichhas been amended since 8 August 2008 to 3 (three) years from the first drawdown date (refer toNote 11h).



Page 29

10. SHORT-TERM LOANS (continued)

c. ABN AMRO Bank N.V

On 21 January 2008, the Company signed a credit facility agreement with ABN AMRO Bank N.Vamounting to USD 50,000,000. The loan was to mature one year from the first drawdown date,which was then amended on 4 December 2008, to 22 July 2009. Interest was to be paid quarterlyat a floating rate of interest of three months’ London Interbank Offered Rate (LIBOR) plus a 1.20%margin. Based on the latest amendment dated 4 December 2008, the floating interest rate waschanged to three months’ LIBOR plus a 1.80% margin for the period 23 January 2009 to 22 July2009. The Company is required to comply with certain conditions, such as that the ownership ofAxiata Group Berhad (formerly Telekom Malaysia International Berhad) in the Company should notbe less than 51%.

The outstanding principal as of 31 December 2008 and 31 March 2008 amounted to USD50,000,000 (equivalent to Rp 547.5 billion (full amount)) and USD 50,000,000 (equivalent to Rp460.85 billion (full amount)), respectively. The credit facility was utilised for loan repayments andworking capital purposes. This loan was settled on 30 March 2009.

11. LONG-TERM LOANS

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

PT Bank Mandiri (Persero) Tbk - 400,000 3,600,000 1,000,000 3,600,000PT Bank Central Asia Tbk - - 3,000,000 1,200,000 3,000,000Exportkreditnämnden - - 2,342,747 - 3,730,004Standard Chartered Bank - 941,900 1,642,500 921,700 1,736,250Syndicated loan facility - - 1,533,000 - 1,620,500PT Bank DBS Indonesia - 470,950 700,000 1,160,850 700,000PT Bank Mizuho Indonesia - 470,950 547,500 460,850 578,750The Hongkong and Shanghai Banking

Corporation Ltd. - - 547,500 - 578,750DBS Bank Ltd. - - 547,500 - 578,750JPMorgan Chase Bank, N.A. - 282,570 328,500 276,510 347,250PT Bank Sumitomo Mitsui Indonesia - - 300,000 - 300,000PT ANZ Panin Bank - - 250,000 - 250,000

- 2,566,370 15,339,247 5,019,910 17,020,254Unamortised debt issuance cost - - (45,023) - (57,066)

- 2,566,370 15,294,224 5,019,910 16,963,188Less: current portion - (40,000) (730,548) (400,000) (1,528,783)

Long-term portion - 2,526,370 14,563,676 4,619,910 15,434,405

a. PT Bank Mandiri (Persero) Tbk

On 19 December 2007, the Company signed a Rp 4,000 billion (full amount) credit facilityagreement with PT Bank Mandiri (Persero) Tbk, 10% of which matures in four equal annualinstallments commencing on first birthday from the signing date of the agreement, while theremaining 60% matures on the fifth anniversary of the signing of the agreement. The loan bears afloating rate of one month’s Jakarta Interbank Offered Rate (JIBOR) plus a 1.50% margin perannum which becomes due monthly in arrears. On 25 September 2008, the credit facility was fullydrawn down.

Based on the loan agreement, the Company is required to comply with certain conditions, such asthe Company does not obtain new debt that will cause the Company’s Debt to EBITDA ratio toexceed 4.5 to 1.0. The outstanding principal as of 31 December 2007 and 2008; 31 March 2008and 2009 amounted to Rp 400 billion (full amount) and Rp 3,600 billion (full amount); Rp 1,000billion (full amount) and Rp 3,600 billion (full amount), respectively.



Page 30

11. LONG-TERM LOANS (continued)

b. PT Bank Central Asia Tbk

On 26 September 2007, the Company signed a credit facility agreement with PT Bank Central AsiaTbk amounting to Rp 1,000 billion (full amount). The maximum credit facility has been amendedseveral times. Based on the latest amendment dated 4 April 2008, the credit facility has beenincreased to Rp 3,000 billion (full amount). The loan will mature three years from the lastdrawdown date of each credit facility agreement. Based on the contract, the Company agreed topay a floating rate of interest at quarterly intervals of three months’ JIBOR plus 1.25% margin.

Based on the loan agreement, the Company is required to comply with certain conditions, such aslimitations on certain asset sales or transfers, the Company does not obtain new debt that willcause the Company’s Debt to EBITDA ratio to exceed 4.5 to 1.0 and majority ownership of theCompany’s shares directly or indirectly by Axiata Group Berhad (formerly Telekom MalaysiaInternational Berhad). The outstanding principal as of 31 December 2008; 31 March 2008 and2009 amounted to Rp 3,000 billion (full amount) and Rp 1,200 billion (full amount) and Rp 3,000billion (full amount), respectively.

c. Exportkreditnämnden (EKN)

On 12 December 2008, the Company signed a USD 213,949,508 credit facility agreement withEKN Buyer Credit Facility for payment of equipment supply from Ericsson, Swedia. ABN AMROBank N.V., Stockholm and Standard Chartered Bank act as arranger. This credit facility will matureperiodically amounting to USD 15,282,107.71 every six months on 15 January and 15 July eachyear until 15 July 2015.

Interest will be paid semi-annually at a floating rate of interest of six months’ LIBOR plus a 0.35%margin and SEK Funding Cost.

On 23 March 2009, the Company signed a second credit facility agreement with EKN Buyer CreditFacility amounting to USD 214,352,382 with ABN AMRO Bank N.V., Hongkong branch andStandard Chartered Bank act as arranger. This credit facility consists of two facilities as follow: Facility A amounted to USD 123,579,208, which will mature periodically amounting USD

8,827,086.29 every six months on 1 April and 1 October each year until 1 October 2015.Interest will be paid semi-annually at a floating rate of interest of six months’ LIBOR plus a0.35% margin and SEK Funding Cost.

Facility B amounted to USD 90,773,174, which will mature periodically amounting USD6,483,798.14 every six months on 15 January and 15 July each year until 15 July 2016.Interest will be paid semi-annually at a floating rate of Commercial Interest Reference Rate(CIRR) plus a 0.30% margin.

The Company is required to comply with certain conditions, such as hedging, limitations on certainasset sales or transfers, and the Company should maintain the Company’s Debt to EBITDA rationot to exceed 4.5 to 1.0 over the period of the borrowings.

The outstanding principal as of 31 December 2008 and 31 March 2009 amounted toUSD 213,949,508 (equivalent to Rp 2,342 billion (full amount)) and USD 322,246,608 (equivalentto Rp 3,730 billion (full amount)), respectively.



Page 31


d. Standard Chartered Bank

On 8 January 2007, the Company entered into a USD 50,000,000 credit agreement with StandardChartered Bank, maturing three years from the first drawdown date. The loan bears a floatinginterest rate of three months’ LIBOR plus 1.05% margin per annum, which becomes due quarterlyin arrears.

The agreement was amended several times in 2007 and 2008 and based on the latestamendments:

- The amount of the original credit facility was increased to USD 100,000,000, which will beavailable up to 31 December 2007 with a floating interest rate of three months’ SingaporeInterbank Offered Rate (SIBOR) plus 1.05% per annum. The loan will mature 3 (three) yearsfrom each drawdown date.

- A USD 110,000,000 or a maximum of Rp 1,000 billion (full amount) bridging loan facility wasadded. The loan will mature nine months from each drawdown date, but not later than31 December 2008 (refer to Note 10a), and bears a floating interest rate of monthly intervalsof Sertifikat Bank Indonesia (SBI) plus a 1.10% margin per annum.

- Another USD 50,000,000 credit facility was added. The loan will mature two years after thedrawdown date and bears a floating interest rate of three months’ SIBOR plus 2.00% perannum, which becomes due quarterly in arrears.

Notwithstanding the above, there is a clause applicable in the event of disruption in the interbankinterest rate or any currency, whereby Standard Chartered Bank is allowed to apply its cost offunds as a replacement for SIBOR. With effect from March 2009, the interest payment period ischanged gradually from quarterly to monthly.

Based on the loan agreement, the Company is required to comply with certain conditions, such asthat the Company must not obtain new debt that will cause the Company’s Debt to EBITDA ratio toexceed 4.5 to 1.0, and that the ownership of Axiata Group Berhad (formerly Telekom MalaysiaInternational Berhad) in the Company should not be less than 51%.

The outstanding principal as of 31 December 2007 and 2008; 31 March 2008 and 2009 amountedto USD 100,000,000 (equivalent to Rp 941.9 billion (full amount)) and USD 150,000,000(equivalent to Rp 1,642.5 billion (full amount)); USD 100,000,000 (equivalent to Rp 921.7 billion(full amount)) and USD 150,000,000 (equivalent to Rp 1,736.25 billion (full amount)), respectively.

e. Syndicated loan facility

On 6 November 2008, the Company signed a Syndicated Term Loan Facility Agreementamounting to USD 140,000,000 with DBS Bank Ltd., Export Development Canada, The Bank ofTokyo-Mitsubishi UFJ, Ltd. and Chinatrust Commercial Bank, Ltd., with PT Bank DBS Indonesiaacting as the Facility Agent. Based on this agreement, the Company agreed to pay a floating rateof interest at the SIBOR rate plus a certain margin. The loan will mature three years from theagreement date.

The Company is required to comply with certain conditions, such as that the Company shouldmaintain the Company’s Debt to EBITDA ratio not to exceed 4.5 to 1.0 and the EBITDA to netinterest expense ratio should not be less than 3.0 to 1.0.

The outstanding principal as of 31 December 2008 and 31 March 2009 amounted toUSD 140,000,000 (equivalent to Rp 1,533 billion (full amount)) and USD 140,000,000 (equivalentto Rp Rp 1,620.5 billion (full amount)).



Page 32


f. PT Bank DBS Indonesia and DBS Bank Ltd.

On 19 April 2007, the Company signed a USD 50,000,000 credit facility agreement with PT BankDBS Indonesia, maturing three years after the first drawdown date. The loan bears a floatinginterest rate of three months’ LIBOR plus 1.00% per annum, which becomes due quarterly inarrears. With effect from March 2009, the interest payment period is changed gradually fromquarterly to monthly.

In November and December 2007, the agreement was amended by adding another credit facilityamounting to Rp 700 billion (full amount). This additional loan bears a floating interest rate of SBIplus 1.10% per annum, which becomes due quarterly in arrears.

Based on the loan agreement, the Company is required to comply with certain conditions, such aslimitations on certain asset sales or transfers, the Company should not obtain new debt that willcause the Company’s Debt to EBITDA ratio to exceed 4.5 to 1.0 and the ownership of AxiataGroup Berhad (formerly Telekom Malaysia International Berhad) in the Company should not beless than 51%.

On 29 September 2008 and 27 October 2008, the Company signed Notice of Assignment with PTBank DBS Indonesia to assign and transfer the loan totalling to USD 50,000,000 to DBS Bank Ltd.,Singapore, with effect from 29 September 2008 and 27 October 2008.

The outstanding principal and due to PT Bank DBS Indonesia as of 31 December 2007 and 2008;31 March 2008 and 2009 amounted to USD 50,000,000 (equivalent to Rp 470.95 billion (fullamount)) and Rp 700 billion (full amount); Rp 700 billion (full amount) & USD 50,000,000(equivalent to Rp 460.85 billion (full amount)) and Rp 700 billion (full amount), respectively. Theoutstanding principal and due to DBS Bank Ltd., Singapore as of 31 December 2008 and 31 March2009 amounted to USD 50,000,000 (equivalent to Rp 547.5 billion (full amount)) and USD50,000,000 (equivalent to Rp 578.75 billion (full amount)).

g. PT Bank Mizuho Indonesia

On 15 January 2007, the Company entered into a credit agreement with PT Bank MizuhoIndonesia amounting to USD 50,000,000. The loan will mature on 29 January 2010. The Companyagreed to pay a floating rate of interest at quarterly intervals of three months’ LIBOR plus a 0.95%margin per annum. With effect from 31 October 2008, the interest payment period is changed fromquarterly to monthly.

The Company is required to comply with certain conditions which is the ownership of Axiata GroupBerhad (formerly Telekom Malaysia International Berhad) in the Company should not be less than51%.

The outstanding principal as of 31 December 2007 and 2008; 31 March 2008 and 2009 amountedto USD 50,000,000 (equivalent to Rp 470.95 billion (full amount)) and USD 50,000,000 (equivalentto Rp 547.5 billion (full amount)); USD 50,000,000 (equivalent to Rp Rp 460.85 billion (fullamount)) and USD 50,000,000 (equivalent to Rp Rp 578.75 billion (full amount)), respectively.

h. The Hongkong and Shanghai Banking Corporation Ltd. (HSBC)

On 18 January 2008, the Company signed a credit facility agreement with HSBC amounting toUSD 50,000,000. The loan facility was to mature 1 (one) year from the first drawdown date, whichhas been amended since 8 August 2008 to 3 (three) years from the first drawdown date (refer toNote 10b). Interest will be paid quarterly at a floating rate of interest of three months’ SIBOR plus a1.75% margin which was then amended to SIBOR plus a 2.25% margin.

The Company is required to comply with certain conditions, such as limitations on asset sales ortransfers. It should also avoid obtaining new debt if this causes the Debt to EBITDA ratio to exceed4.5 to 1.0, and the ownership of Axiata Group Berhad (formerly Telekom Malaysia InternationalBerhad) in the Company should not be less than 51%.



Page 33


h. The Hongkong and Shanghai Banking Corporation Ltd. (HSBC) (continued)

The outstanding principal as of 31 December 2008 and 31 March 2009 amounted to USD50,000,000 (equivalent to Rp 547.5 billion (full amount)) and USD 50,000,000 (equivalent to Rp578,75 billion (full amount)).

i. JPMorgan Chase Bank, N.A.

On 13 August 2007, the Company entered into a credit agreement with JPMorgan Chase Bank,N.A. amounting to USD 30,000,000. The loan agreement will mature three years from eachdrawdown date. Based on the agreement, the Company agreed to pay a floating rate of interest atquarterly intervals of three months’ LIBOR plus 1.00% margin per annum. With effect from Marchand April 2009, the interest payment period is changed gradually from quarterly to monthly.

The Company is required to comply with certain conditions, such as that the Company should notobtain new debt if this causes the Debt to EBITDA ratio to exceed 4.5 to 1.0 and that theownership of Axiata Group Berhad (formerly Telekom Malaysia International Berhad) in theCompany should not be less than 51%.

The outstanding principal as of 31 December 2007 and 2008; 31 March 2008 and 2009 amountedto USD 30,000,000 (equivalent to Rp 282.57 billion (full amount)) and USD 30,000,000 (equivalentto Rp 328.5 billion (full amount)); USD 30,000,000 (equivalent to Rp 276.51 billion (full amount))and USD 30,000,000 (equivalent to Rp 347.25 billion (full amount)), respectively.

j. PT Bank Sumitomo Mitsui Indonesia

On 28 July 2008, the Company signed a credit facility agreement with PT Bank Sumitomo MitsuiIndonesia amounting to Rp 300 billion (full amount). The loan will mature on 30 December 2011.Based on the contract, the Company agreed to pay a floating rate of interest at monthly intervals ofthe SBI rate plus 1.50% margin per annum.


The outstanding principal as of 31 December 2008 and 31 March 2009 amounted to Rp 300 billion(full amount) each.

k. PT ANZ Panin Bank

On 22 September 2008, the Company entered into a credit agreement with PT ANZ Panin Bankamounting to Rp 250 billion (full amount). The loan agreement will mature two years from thedrawdown date or not later than 3 December 2010. Based on the agreement, the Company agreedto pay a floating rate of interest on a monthly basis at SBI rate plus 2.15% margin per annum.


The outstanding principal as of 31 December 2008 and 31 March 2009 amounted to Rp 250 billion(full amount).

The above credit facilities were utilised for loan repayments, working capital, and acquisition of fixedassets. As of 31 March 2009, the Company was in compliance with the convenants of its long-termloans.



Page 34

12. LONG-TERM BONDS31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Excelcom Notes - USD 5,412,000 5,651,400 1,398,337 2,304,250 1,478,151Excelcom Notes - IDR - 1,500,000 1,500,000 1,500,000 1,500,000

5,412,000 7,151,400 2,898,337 3,804,250 2,978,151Unamortised discount (66,815) (53,884) (19,089) (38,588) (17,834)

5,345,185 7,097,516 2,879,248 3,765,662 2,960,317Less: current portion - (3,283,434) - - -

Long-term portion 5,345,185 3,814,082 2,879,248 3,765,662 2,960,317

a. Excelcom Notes – USD

USD 350 million Notes

On 27 January 2004, the Company’s wholly-owned subsidiary domiciled in Amsterdam,Excelcomindo Finance Company B.V., issued a bond amounting to USD 350,000,000 with anoffer price of 99.495% and a coupon of 8% valid for five year notes. These Notes are listed on theSingapore Exchange Securities Trading, Ltd. The difference between the nominal principal andthe issue price was deferred as a bond discount and is being amortised over five years.

Interest is payable semi-annually on 27 January and 27 July of each year, commencing on27 July 2004. Initially, the Notes will mature on 27 January 2009.

The Notes are unsecured senior obligations and are guaranteed by the Company on a seniorunsecured basis. The trustee for the Notes is the Bank of New York. On 1 December 2005 and 19May 2006, the Notes were rated BB- and Ba3 by Standard and Poor’s Ratings Services andMoody’s Investors Service, Inc., respectively. Since 18 October 2007, the Notes have been ratedBa2 by Moody’s Investors Service, Inc.

The Company is required to comply with certain conditions, such as limitations on asset salesand/or leaseback transactions, and the Consolidated Leverage Ratio not exceeding 3.5 to 1.0 onor prior to 27 January 2005, and 3.0 to 1.0 thereafter.

On 5 August 2005, the Company and Excelcomindo Finance Company B.V. declared theamendments of the Notes requirements as follows:

(a) Before the Company becomes a subsidiary of Telekom Malaysia Berhad, the ConsolidatedLeverage Ratio must not exceed 3.5 to 1.0 on or prior to 27 January 2006, and 3.0 to 1.0thereafter; and

(b) After the Company becomes a subsidiary of Telekom Malaysia Berhad, the ConsolidatedLeverage Ratio must not exceed 5.0 to 1.0 on or prior to 27 January 2007, and 4.5 to 1.0thereafter, but before 27 January 2008, and 4.0 to 1.0 thereafter.

On 25 January 2008, Excelcomindo Finance Company B.V. bought back the Notes at a price of100% of the nominal value.

USD 250 million Notes

On 18 January 2006, the Company’s subsidiary, Excelcomindo Finance Company B.V., issuedthe second bond, amounting to USD 250,000,000, with an offer price of 99.323% and a coupon of7.125% valid for seven years. These Notes are listed on the Singapore Exchange SecuritiesTrading, Ltd. The difference between the nominal principal and the issue price was deferred as abond discount and is being amortised over seven years.

Interest is payable semi-annually on 18 January and 18 July of each year, commencing on18 July 2006. The Notes will mature on 18 January 2013.



Page 35

12. LONG-TERM BONDS (continued)

a. Excelcom Notes – USD (continued)

USD 250 million Notes (continued)

The Notes are unsecured senior obligations and are guaranteed by the Company on a seniorunsecured basis. The trustee for the Notes is the Bank of New York.

On 19 May 2006, the notes were rated BB- and Ba3 by Standard and Poor’s Ratings Servicesand Moody’s Investors Service, Inc., respectively. Since 18 October 2007, the notes have beenrated Ba2 by Moody’s Investors Service, Inc.

The Company is required to comply with certain conditions, such as limitations on asset salesand/or leaseback transactions, and the Consolidated Leverage Ratio not exceeding 5.0 to 1.0 onor prior to 27 January 2007, and 4.5 to 1.0 thereafter.

On 2 June 2008, in connection with the planned sale and transfer of substantially all of thewireless communication towers and certain related assets of the Company, ExcelcomindoFinance Company B.V. and the Company announced that they were soliciting consent from theNotes holders to amend the indenture. In conjunction with the Consent Solicitation, ExcelcomindoFinance Company B.V. and the Company launched a tender offer to buy back for cash up to USD150,000,000 (“the maximum tender amount”) of the aggregate principal amount of the Notes (the“Offer”). In the event that the Offer is oversubscribed, tendered notes will be accepted on a pro-rata basis only up to the maximum tender amount.

The Consent Solicitation and the Offer commenced on 2 June 2008 and expired on 27 June2008. Notes holders who delivered consent but did not accept the Offer by 13 June 2008 areeligible for a consent payment of USD 10 per USD 1,000 of the principal amount of the Notes.Notes holders who delivered consent and accepted the Offer by 13 June 2008 are eligible for aconsent payment of USD 10 and consideration payment of USD 1,010 per USD 1,000 of theprincipal amount. Notes holders who accept after 13 June 2008 but on or before 27 June 2008are eligible to receive only the consideration payment.

As at the Offer expiration date, Notes holders of USD 122,298,000 have accepted the buybackoffer and Notes holders of USD 227,605,000 have delivered their consent. In relation to thebuyback, the outstanding Notes as at 31 March 2009 amounted to USD 127,702,000.

On 20 April 2009, the Company bought back part of the Notes amounted to USD 3,635,000 atprice of 88.24%-89.24% of the nominal value (refer to Note 31b).

b. Excelcom Notes – IDR

Rp 1.50 trillion Notes (full amount)

On 26 April 2007, the Company issued a second IDR bond with a nominal amount ofRp 1.5 trillion (full amount) and a coupon rate of 10.35%. The Excelcom Bond is valid for a fiveyear period and listed on the Indonesia Stock Exchange (formerly the Surabaya Stock Exchange).

The interest is payable quarterly commencing on 26 July 2007. The Excelcom Bond matures on26 April 2012. The Excelcom Bond is an unsecured senior obligation and is guaranteed by theCompany on a senior unsecured basis.

The Notes were rated idAA- by PT Pefindo and AA(idn) by FITCH Ratings when the ExcelcomBond was issued and changed to idA+ and AA-(idn) on 11 March 2009, respectively.



Page 36

12. LONG-TERM BONDS (continued)

b. Excelcom Notes – IDR (continued)

Rp 1.50 trillion Notes (full amount) (continued)

The Company is required to comply with certain conditions, such as limitations on asset sales orleaseback transactions, and the Company should not obtain new debt if this causes the debt toEBITDA ratio to exceed 4.5 to 1.0.

As of 31 March 2009, the Company was in compliance with the covenants of its IDR and USD Notes.

13. PROVISION FOR EMPLOYEE BENEFITS AND EMPLOYEE COSTS

a. Provision for employee benefits

The movements of the provision for employee benefits recognised in the consolidated balancesheets are as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Beginning balance 30,543 38,511 66,228 66,228 76,912Provision made during

the year/period 9,498 29,472 14,753 6,216 6,743Amounts paid during

the year/period (1,530) (1,755) (4,069) (212) (239)

Ending balance 38,511 66,228 76,912 72,232 83,416

The provision for employee benefits recognised in the consolidated balance sheets is asfollows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Present value of obligations 47,946 92,296 104,145 109,174 90,245Unrecognised actuarial losses (16,010) (32,062) (32,122) (42,791) (11,573)Unrecognised past service costs 6,575 5,994 4,889 5,849 4,744

Liability in the balance sheet 38,511 66,228 76,912 72,232 83,416

Estimations of actuarial obligations as at 31 December 2007 and 2008 ; 31 March 2008 and2009 were based on the latest actuarial valuation prepared by PT Mercer Indonesia, anindependent actuary, as stated in its reports dated 25 January 2008 and 28 January 2009; 15April 2009, respectively. Estimations of actuarial obligations as of 31 December 2006 werebased on the actuarial valuation prepared by PT Watson Wyatt Purbajaga, an independentactuary, as stated in its report dated 26 January 2007.

The provision for employee benefits expenses charged to the consolidated statements ofincome are as follows:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Current service costs 5,799 10,755 14,429 3,607 3,514Interest expenses 3,845 6,772 9,385 2,346 2,986Amortisation of unrecognised

actuarial loss 434 12,525 1,631 408 388Amortisation of unrecognised

past service costs (580) (580) (580) (145) (145)Curtailment - - (10,112) - -

Provision for employeebenefits expenses 9,498 29,472 14,753 6,216 6,743



Page 37

13. PROVISION FOR EMPLOYEE BENEFITS AND EMPLOYEE COSTS (continued)

a. Provision for employee benefits (continued)

The pension benefit obligation was determined using the “Projected Unit Credit” method withthe following assumptions:

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Discount rate(per annum)

10.5% 10.25% 12% 11.25% 13%

Salaryincrement rate(per annum)

9% 10% 11% 11% 11%

Rate ofmortality

IndonesianMortality Table1999 (TMI’99)





Rate ofdisability

10% of TMI ‘99 10% of TMI ‘99 10% of TMI ‘99 10% of TMI ‘99 10% of TMI ‘99

Rate ofresignation

10% per annumup to age 25 andreducing linearly

up to 1% perannum at age 46; 1% per annumfor 46 - 55 years









Retirementrate

100% at normalretirement age of

56 years


56 years


56 years


56 years


56 years

b. Employee numbers and costs

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Number of employees(permanent employees) 2,042 2,136 2,097 2,138 2,044

Total employee costs:- Salaries and allowances 508,794 561,434 706,479 156,589 170,343- Payment to defined contribution

pension plan 11,885 13,995 16,091 4,013 4,264- Provision for employee

benefits 9,498 29,472 14,753 6,216 6,743

Total employee costs 530,177 604,901 737,323 166,818 181,350

Internal labour cost capitalisedas part of the fixed assetscosts (35,769) (30,994) (14,808) (2,987) (3,201)

Salaries and employee benefits(including outsource) 494,408 573,907 722,515 163,831 178,149



Page 38

14. SHARE CAPITAL AND CAPITAL SURPLUS

Share Capital

The authorised share capital as at 31 December 2006, 2007 and 2008; and 31 March 2008 and 2009is 22,650,000,000 shares, with a par value of Rp 100 (full amount) per share. Issued and fully paidshare capital is 7,090,000,000 shares.

The composition of the Company’s shareholders as at 31 December 2006 was as follows:

Number ofshares Amount %

Indocel Holding Sdn. Bhd. (formerlyNynex Indocel Holding Sdn.) 4,227,901,400 422,790 59.63

Khazanah Nasional Berhad 1,191,553,500 119,155 16.81PT Rajawali Corpora (formerly

PT Telekomindo Primabhakti) 1,132,497,500 113,250 15.97AIF (Indonesia) Ltd. 523,532,100 52,353 7.38Public 14,515,500 1,452 0.21

7,090,000,000 709,000 100.00

As at 31 December 2006, the 14,515,500 shares owned by the public included those owned by thedirectors of the Company, who held 24,500 shares.




Khazanah Nasional Berhad 1,191,553,500 119,155 16.81Emirates Telecommunications

Corporation (Etisalat)International Indonesia Ltd. 1,132,497,500 113,250 15.97

Public 16,565,500 1,657 0.23

7,090,000,000 709,000 100.00





Emirates TelecommunicationsCorporation (Etisalat)International Indonesia Ltd. 1,132,497,500 113,250 15.97

Public 16,565,500 1,656 0.23

7,090,000,000 709,000 100.00



Page 39

14. SHARE CAPITAL AND CAPITAL SURPLUS (continued)

Share Capital (continued)


The composition of the Company’s shareholders as at 31 March 2008 was as follows:



Khazanah Nasional Berhad 1,191,553,500 119,155 16.81Emirates Telecommunications

Corporation (Etisalat)International Indonesia Ltd. 1,132,497,500 113,250 15.97

Public 16,565,500 1,657 0.23

7,090,000,000 709,000 100.00

As at 31 March 2008, the 16,565,500 shares owned by the public included those owned by thedirectors of the Company, who held 49,000 shares.

The composition of the Company’s shareholders as at 31 March 2009 is as follows:



Emirates TelecommunicationsCorporation (Etisalat)International Indonesia Ltd. 1,132,497,500 113,250 15.97

Public 16,565,500 1,656 0.23

7,090,000,000 709,000 100.00

As at 31 March 2009, the 16,565,500 shares owned by the public included those owned by directorsof the Company, who held 468,000 shares.

The chronology of changes in the Company’s shareholders from 1 January 2006 to 31 March 2009 isas follows:

a. In June 2006, AIF (Indonesia) Ltd. sold its 195,605,400 shares to Indocel Holding Sdn. Bhd.Accordingly, Indocel Holding Sdn. Bhd.’s ownership became 59.67% as at 30 June 2006.

b. Indocel Holding Sdn. Bhd. committed to increase the Company’s liquidity on the Indonesia StockExchange (formerly Jakarta Stock Exchange) by steadily releasing its shares to the public. As at31 December 2006 Indocel Holding Sdn. Bhd. owned 59.63%.

c. In May 2007, PT Rajawali Corpora sold its entire portion of Company shares, totalling1,132,497,500 ordinary shares, to Bella Sapphire Ventures Ltd. (an affiliated company of RajawaliGroup domiciled in Seychelles Islands). AIF (Indonesia) Ltd. also sold its entire portion ofCompany shares, totalling 523,532,100 ordinary shares to Indocel Holding Sdn. Bhd. Accordingly,Indocel Holding Sdn. Bhd.’s ownership increased to 67.01%.



Page 40

14. SHARE CAPITAL AND CAPITAL SURPLUS (continued)

Share Capital (continued)

d. During 2007, Indocel Holding Sdn. Bhd. steadily released some of its shares to the public. As at31 December 2007 Indocel Holding Sdn. Bhd. owned 66.99%.

e. In December 2007, Bella Sapphire Ventures Ltd. sold its entire portion of Company shares,totalling 1,132,497,500 ordinary shares, to Emirates Telecommunications Corporation (Etisalat)International Indonesia Ltd. As at 31 December 2007 Emirates Telecommunications Corporation(Etisalat) International Indonesia Ltd. owned 15.97%.

f. On 6 February 2008, Axiata Group Berhad (formerly Telekom Malaysia International Berhad) andIndocel Holding Sdn. Bhd. (“Indocel”) entered into a Shares Sale and Purchase Agreement withKhazanah Nasional Berhad (“Khazanah”) for the proposed acquisition by Indocel of all ofKhazanah’s equity interest in the Company.

g. On 25 April 2008, Khazanah Nasional Berhad sold its entire portion of Company shares, totalling1,191,553,500 ordinary shares, to Indocel Holding Sdn. Bhd. Accordingly Indocel Holding Sdn.Bhd.’s ownership increased to 83.80%.

h. On 25 April 2008, Telekom Malaysia Berhad and TM International Berhad completed thedemerger process in TM Group. Therefore Telekom Malaysia Berhad and TM InternationalBerhad become two separate entities.

The Company’s majority shareholder, Indocel Holding Sdn. Bhd., is a wholly owned subsidiary ofTM International (L) Ltd., which is a subsidiary of Axiata Group Berhad (formerly TM InternationalBerhad).

Capital Surplus

Capital surplus as at 31 December 2006, 2007 and 2008; and 31 March 2008 and 2009 is as follows:

Additional paid-in capital 2,712,250Share issuance costs (44,815)Exchange rate difference due to paid-in capital 24,249

2,691,684

Through the initial stock offering in September 2005, the Company received USD 278,213,143.70and Rp 18,617,000,000 (full amount) for the offering of 1,427,500,000 shares, with a nominal valueamounting to Rp 100 (full amount) per share. As stated in the prospectus, the value of the share wasconverted to Rupiah using the exchange rate USD 1.00 = Rp 10,195 (full amount).

The remaining Capital Surplus balance amounting to Rp 24,249 was the difference between theexchange rate of Rupiah/USD on the date on which payment was received for the shares purchase,and the exchange rate stated in the shareholders’ agreement and prospectus. Of the total amount, Rp12,519 was from the initial public offering in 2005.



Page 41

15. DIVIDENDS

At the Annual General Meeting of Shareholders held on 26 April 2007, the shareholders agreed todistribute a final cash dividend from the 2006 net income which amounted to Rp 67,169. The dividenddistributed amounted to Rp 9.47 (full amount) per share. The cash dividend was fully paid on 11 June2007.

At the Annual General Meeting of Shareholders held on 4 April 2008, the shareholders agreed todistribute a final cash dividend from the 2007 net income which amounted to Rp 141,800.The dividend distributed amounted to Rp 20 (full amount) per share. The cash dividend was fully paidon 16 May 2008.

16. APPROPRIATED RETAINED EARNINGS

Based on the Indonesian Company Law No. 1/1995, which has subsequently been superseeded bythe Indonesian Company Law No. 40/2007, the Company is required to set up a statutory reserveamounting to at least 20% of the Company’s issued and paid up capital.

At the Annual General Meeting of Shareholders held on 26 April 2007 and 4 April 2008, theshareholders approved an appropriation to the statutory reserve amounting to Rp 100 in each ofthose years.

17. EARNING/(LOSS) PER SHARE

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Net income/(loss)attributable to theshareholders 651,883 250,781 (15,109) 319,917 (306,068)

Weighted average number of ordinaryshares outstanding 7,090,000,000 7,090,000,000 7,090,000,000 7,090,000,000 7,090,000,000

Basic earning /(loss) per share(full amount) 92 35 (2) 45 (43)

Diluted earning /(loss) per share(full amount) 92 35 (2) 45 (43)

On 31 December 2006, 2007 and 2008; and 31 March 2008 and 2009, there were no dilutive potentialordinary shares that would give rise to a dilution of net income/(loss) per share of the Company.

18. REVENUE2006 2007 2008 2008 2009

(1 year) (1 year) (1 year) (3 months) (3 months)

Cellular Telecommunications serviceVoice 2,747,183 3,866,302 6,622,610 1,387,624 1,502,798Non-voice 2,239,392 2,632,500 3,140,732 722,132 780,291Monthly service charge 921 1,921 4,382 1,127 970

4,987,496 6,500,723 9,767,724 2,110,883 2,284,059

Cellular Interconnection serviceDomestic interconnection 866,260 886,995 1,036,861 252,758 225,263International roaming 306,912 465,305 483,468 117,212 142,811SMS interconnection 23,712 25,894 13,802 4,043 4,066Others 4,902 5,408 3,221 834 791

1,201,786 1,383,602 1,537,352 374,847 372,931



Page 42

18. REVENUE (continued)

2006 2007 2008 2008 2009(1 year) (1 year) (1 year) (3 months) (3 months)

Gross cellular revenue 6,189,282 7,884,325 11,305,076 2,485,730 2,656,990

Discount (688,088) (375,085) (94,781) (31,514) (23,664)

Gross cellular revenue net of discount 5,501,194 7,509,240 11,210,295 2,454,216 2,633,326

Interconnection charges (852,843) (1,120,307) (1,555,319) (407,192) (308,768)

Other cellular telecommunications charges (211,184) (338,828) (601,106) (123,797) (155,295)

Cellular revenue net of interconnectioncharges and other cellulartelecommunications charges 4,437,167 6,050,105 9,053,870 1,923,227 2,169,263

Revenue from other telecommunicationsservices

Leased towers - - 276,669 18,118 141,610Leased lines 238,688 408,710 478,473 127,774 106,546Internet service provider 28,747 58,779 63,910 15,738 13,164Others 9,340 12,897 31,863 7,125 7,557

Gross revenue from othertelecommunications services 276,775 480,386 850,915 168,755 268,877

Discount (312) (107) (3) (3) -

Gross revenue from othertelecommunications servicesnet of discount 276,463 480,279 850,912 168,752 268,877

Other telecommunications service costs (31,955) (70,614) (139,956) (23,347) (34,284)

Revenue from other telecommunicationsservices net of othertelecommunications service costs 244,508 409,665 710,956 145,405 234,593

Revenue net of interconnection andtelecommunications service charges 4,681,675 6,459,770 9,764,826 2,068,632 2,403,856


19. INFRASTRUCTURE EXPENSES


Licence fee 199,801 471,835 660,377 171,634 262,008Rental expense 133,183 187,886 519,121 90,293 206,837Utilities expense 112,184 182,453 388,311 61,402 137,735Repair and maintenance expense 168,183 234,502 302,488 35,500 124,385Others - - 118,278 2,634 8,970

613,351 1,076,676 1,988,575 361,463 739,935



Page 43

20. SALES COMMISSION AND MARKETING EXPENSES


Sales commission expense 321,424 463,027 697,489 155,709 135,525Advertising and promotion expense 332,283 433,022 655,200 136,181 95,590

653,707 896,049 1,352,689 291,890 231,115

21. TAXATION

a. Prepaid taxes

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Value Added Tax - net 39,271 135,056 393,469 224,898 424,680Refundable corporate income

taxes overpayment:- Article 22 41,432 80,276 181,479 79,151 186,694- Article 23/26 100,605 57,653 96,179 57,830 98,607- Article 25 4,227 10,906 83,733 12,365 106,646

185,535 283,891 754,860 374,244 816,627

b. Taxes payable

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Corporate income tax payable:- The Company - - - 14,497 -- The Subsidiaries 3,657 4,423 5,142 4,328 5,815Employee income tax (article 21) 3,609 3,571 4,660 10,632 3,822Withholding tax on rent and other

services (article 23/26) 38,954 88,041 91,085 46,044 2,825

46,220 96,035 100,887 75,501 12,462

c. Corporate income tax (expense)/benefit


Current (2,031) (675) - (63,748) (410)Deferred (348,508) (266,576) 60,100 (82,027) 99,084

(350,539) (267,251) 60,100 (145,775) 98,674

Consisting of:The Company:- Current - - - (63,748) -- Deferred (348,508) (266,576) 60,100 (82,027) 99,084The Subsidiaries:- Current (2,031) (675) - - (410)

(350,539) (267,251) 60,100 (145,775) 98,674

The reconciliation between the Company’s income tax (expense)/benefit and the theoretical taxamount on the Company’s income/(loss) before income tax for the years ended 31 December2006, 2007 and 2008; and three-month periods ended 31 March 2008 and 2009 is as follows:


Consolidated income/(loss) beforeincome tax 1,002,422 518,032 (75,209) 465,692 (404,742)

Less: net income/(loss) before tax- The Subsidiaries 5,512 3,175 (7,897) (8,784) 3,980



Page 44

21. TAXATION (continued)

c. Corporate income tax (expense)/benefit (continued)


Income/(loss) before income tax- The Company 996,910 514,857 (67,312) 474,476 (408,722)

(Expenses)/benefit tax calculated ateffective rates (299,073) (154,457) 20,194 (142,325) 114,442

Income subject to final tax - net 14,361 13,913 7,213 2,123 4,351Non-deductible expenses (42,164) (123,500) (76,318) (5,573) (10,577)Prior years’ tax adjustments (21,632) (2,532) (1,716) - 2,462Changes in tax rate - - 110,727 - (11,594)

Income tax (expense)/benefit:- The Company (348,508) (266,576) 60,100 (145,775) 99,084- The Subsidiaries (2,031) (675) - - (410)

(350,539) (267,251) 60,100 (145,775) 98,674

The reconciliation between the Company’s income/(loss) before income tax as shown in theconsolidated financial statements and the estimated taxable income/(loss) for the years ended31 December 2006, 2007 and 2008; and three-month periods ended 31 March 2008 and 2009 isas follows:


Income/(loss)before income tax 996,910 514,857 (67,312) 474,476 (408,722)

Temporary differences:- Difference between commercial

and fiscal depreciationand amortisation (514,608) (1,000,276) (646,440) (95,681) (638,879)

- Difference between commercialand fiscal (loss)/gainon disposal andwrite-off assets (44,535) 3,757 11,656 816 (32,658)

- Allowance for bad debt expense 66,918 34,190 (15,847) (35,099) 12,396- Provision for salaries and employee

benefits 7,969 87,983 52,233 (30,386) (56,684)

(484,256) (874,346) (598,398) (160,350) (715,825)

Permanent differences:- Non-deductible expenses 140,547 411,666 254,392 18,578 37,776- Income subject to final tax - net (47,871) (46,378) (24,043) (7,078) (15,539)

92,676 365,288 230,349 11,500 22,237

Tax income/(loss) 605,330 5,799 (435,361) 325,626 (1,102,310)

Accumulated tax losses (793,128) (127,316) (113,075) (113,075) (543,228)Tax loss adjustment 2004 32,220 - - - -Tax loss adjustment 2005 28,262 8,442 - - -Tax loss adjustment 2006 - - 5,208 - -

Taxable (loss)/income (127,316) (113,075) (543,228) 212,551 (1,645,538)

Current tax expense - The Company - - - 63,748 -

Less: Prepaid corporate tax (60,461) (85,494) (213,152) (48,074) (22,660)

(Over)/under payment ofcorporate income tax (60,461) (85,494) (213,152) 15,674 (22,660)



Page 45


c. Corporate income tax (expense)/benefit (continued)

In accordance with Indonesian Taxation Law, corporate income tax is calculated for the Companyand each of its subsidiaries in the understanding that they are separate legal entities(consolidated financial statements are not permitted for computing corporate income tax).

In September 2008, the Indonesian government issued a new income tax regulation which willbecome effective commencing 1 January 2009. With this regulation, the corporate income tax ratewill be reduced to a fixed rate of 28% in 2009 and 25% in 2010 onwards. On 31 December 2008and 31 March 2009 the Company adjusted the deferred tax assets and liabilities to align with thechanges in the corporate income tax rate.

In these consolidated financial statements, the amount of tax income for the three-month periodsended 31 March 2008 and 2009 is based on preliminary calculations. These amounts may differfrom tax (loss)/income reported in the corporate income tax returns. The amount of tax(loss)/income for the years ended 31 December 2006, 2007 and 2008 was as reported in theannual tax returns.

d. Deferred tax liabilities

31/12/2005

(Charged)/credited to

consolidatedstatement of

income

Prior yearadjustmentcredited to


income 31/12/2006

Difference between commercialand fiscal depreciation andamortisation (254,116) (167,743) (488) (422,347)

Employee stock allocation 3,000 - (3,000) -Allowance for bad debt expense 5,370 20,075 - 25,445Provision for salaries and

employee benefits 9,162 2,391 - 11,553Tax losses carried forward 237,939 (181,599) (18,144) 38,196

1,355 (326,876) (21,632) (347,153)

31/12/2006



income



income 31/12/2007

Difference between commercialand fiscal depreciation andamortisation (422,347) (298,956) - (721,303)

Allowance for bad debt expense 25,445 10,257 - 35,702Provision for salaries and

employee benefits 11,553 26,395 - 37,948Tax losses carried forward 38,196 (1,740) (2,532) 33,924

(347,153) (264,044) (2,532) (613,729)



Page 46


d. Deferred tax liabilities (continued)

31/12/2007



income



incomeChangesin tax rate 31/12/2008

Difference between commercialand fiscal depreciation andamortisation (721,303) (190,435) - 151,956 (759,782)

Allowance for bad debt expense 35,702 (4,754) - (5,158) 25,790Provision for salaries and

employee benefits 37,948 15,670 (152) (8,910) 44,556Tax losses carried-forward 33,924 130,608 (1,564) (27,161) 135,807

(613,729) (48,911) (1,716) 110,727 (553,629)

31/12/2007

(Charged)/creditedto consolidated

statement of income 31/03/2008

Difference between commercialand fiscal depreciation andamortisation (721,303) (28,457) (749,760)

Allowance for bad debt expense 35,702 (10,530) 25,172Provision for salaries and

employee benefits 37,948 (9,116) 28,832Tax losses carried forward 33,924 (33,924) -

(613,729) (82,027) (695,756)

31/12/2008



income



incomeChangesin tax rate 31/03/2009

Difference between commercialand fiscal depreciation andamortisation (759,782) (188,030) 2,462 20,146 (925,204)

Allowance for bad debt expense 25,790 3,471 - (372) 28,889Provision for salaries and

employee benefits 44,556 (15,872) - 1,701 30,385Tax losses carried-forward 135,807 308,647 - (33,069) 411,385

(553,629) 108,216 2,462 (11,594) (454,545)

As at 31 December 2006, 2007 and 2008; and 31 March 2009, the Company recognised deferredtax assets from tax losses on the basis that the deferred tax assets will be utilised againstsufficient taxable profits in the foreseeable future. Under the taxation laws of Indonesia, theaccumulated tax losses are available to be carried forward and utilised against future years'taxable profits for a period of up to five years.

The basis supporting recognition of the deferred tax assets is reviewed regularly by themanagement.



Page 47


e. Tax assessments

2001 fiscal year

a. On 26 May 2003, the Director General of Taxation (DGT) issued tax assessments forwithholding Income Tax Articles 21, 23/26, and final Income Tax Article 4(2), which resulted inunderpayments totalling Rp 24,804. The Company paid Rp 9,776 of these underpayments on25 June 2003 and 22 July 2003. The remaining balance was offset with the 2002 withholdingtax payments for article 23/26. Included in this tax assessment letter was an assessment forwithholding tax article 26 on international roaming amounting to Rp 855, which the Companybelieves should not be subject to Income Tax Article 26. On 12 August 2003, the Companysubmitted an objection letter to the DGT concerning this matter, which was rejected by the taxoffice on 21 April 2004.

On 20 July 2004, the Company submitted an appeal letter to the Tax Court, which wasgranted by the Tax Court in Decision Letter No. Put.05969/PP/M.VII/13/2005 dated 22 July2005, and recorded in the 2005 consolidated statement of income under “otherincome/(expense)”.

On 16 November 2005, the DGT submitted a reconsideration to the Supreme Court withrespect to the Tax Court’s Decision Letter No. Put.05969/PP/M.VII/13/2005,throughReconsideration Memorandum No. S-407/PJ-4/2005. Up to the date of this report, theCompany has not received a response from the Supreme Court regarding the reconsiderationsubmitted by the DGT.

b. On 26 January 2004, the Company submitted an objection letter to the DGT for thereconsideration of several tax assessment letters on VAT for the fiscal period January toDecember 2001 totalling Rp 4,576, which have been rejected by the DGT. On 27 December2004, 30 December 2004 and 17 January 2005, the Company submitted appeal letters to theTax Court and these were granted by the Tax Court through Decree No. 07165-07169/PP/M.VII/16/2005 and 07200-07204/PP/M.VII/16/2005, dated 21 and 23 December2005, respectively. The amount was recorded in the 2005 consolidated statement of incomeunder “other income/(expense)”.

On 8 June 2006, the DGT through the Tax Court submitted a reconsideration to the SupremeCourt with respect to the Tax Court’s Decision Letters No. Put.07166R/PP/M.VII/16/2006 andPut.07200R/PP/M.VII/16/2006 regarding the VAT appeal decision for October and April of the2001 fiscal year through Reconsideration Memorandum No. S-332/PJ-54/2006 and S-333/PJ-54/2006. Up to the date of this report, the Company has not received a responsefrom the Supreme Court regarding the reconsideration submitted by the DGT.

2002 fiscal year

On 31 May 2005, the DGT issued tax assessment letters for corporate income tax, VAT, IncomeTax Article 21, Income Tax Articles 23/26, Final Income Tax Article 4(2) and a tax underpaymentletter for VAT which resulted in underpayments totalling Rp 8,768. The Company settled theseunderpayments on 28 June 2005. On 30 August 2005, the Company submitted objection lettersfor tax assessments of VAT and Income Tax Article 26 amounting to Rp 2,429 and Rp 1,045respectively. Subsequently, on 2 February 2006, the DGT issued a Decision Letter to reject theobjection letters for these tax assessments of VAT and Income Tax Article 26.



Page 48


e. Tax assessments (continued)

2002 fiscal year (continued)

On 1 May 2006, the Company submitted appeal letters to the Tax Court for tax assessments ofVAT and Income Tax Article 26, which were granted by the Tax Court in Decision Letter No.Put.09329/PP/M.VII/16/2006, dated 8 November 2006, and No. Put.09608/PP/M.VII/13/2006,dated 20 December 2006. The compensated amount was recorded in the 2006 consolidatedstatement of income under “other (expense)/income”.

On 5 March 2007, the DGT, through the Tax Court, submitted a consideration letter to theSupreme Court with respect to the Tax Court’s Decision Letter No. Put.09329/PP/ M.VII/16/2006regarding the VAT appeal decision for January - December 2002 through ReconsiderationMemorandum No. S-505/PJ.074/2007. Up to the date of this report, the Company has notreceived a response from the Supreme Court regarding the reconsideration submitted by theDGT.

On 17 April 2007, the DGT through the Tax Court, submitted a reconsideration letter to theSupreme Court with respect to the Tax Court’s Decision Letter No. Put.09608/PP/ M.VII/13/2006regarding the withholding Income Tax Article 26 appeal decision for the 2002 fiscal year throughReconsideration Memorandum No. S-1171/PJ.07/2007. Up to the date of this report, theCompany has not received a response from the Supreme Court regarding the reconsiderationsubmitted by the DGT.

2003 fiscal year

The tax audit for the 2003 fiscal year has not been performed.

2004 fiscal year

On 26 June 2006, the DGT issued a tax assessment letter resulting in an overpayment ofcorporate income tax and underpayments of Income Tax Article 21, Income Tax Articles 23/26,Final Income Tax Article 4(2), and VAT. The DGT also issued a tax underpayment letter for VAT,Final Income Tax Article 4(2) and Income Tax Article 26. Based on the tax assessment and taxunderpayment letters, the Company received overpayment of corporate income tax amounting toRp 30,916, after compensating with existing withholding tax payable.

On 20 September 2006, the Company submitted an objection letter to the tax assessment letterfor Income Tax Article 26 and VAT. On 14 August 2007, the DGT partially approved theCompany’s objection to the VAT assessment letter. The DGT has decided to reduce theunderpayment of VAT by Rp 190.

On 27 August 2007, the DGT rejected the Company’s objection to the assessment for withholdingIncome Tax Article 26 and increased the underpayment of withholding income Tax Article 26amounting to Rp 34,251. The Company paid the tax underpayment on 14 August and 26September 2007 and this was recorded in the 2007 consolidated statement of income under“other (expense)/income”.

On 23 October 2007, the Company submitted an appeal letter to the Tax Court for taxassessment of Income Tax Article 26. Up to the date of this report, the Company has not receivedthe Decree from the Tax Court regarding this appeal letter.



Page 49


e. Tax assessments (continued)

2005 fiscal year

On 18 June 2007, the DGT issued tax assessments for overpayment of Corporate Income Taxand tax assessments for underpayment of Income Tax Articles 21, Income Tax Article 23/26, finalIncome Tax Article 4(2), and VAT. The DGT also issued a tax underpayment letter on withholdingIncome Tax Articles 26 and VAT. Total underpayment based on the tax assessments and taxunderpayment letters of Rp 88,812 was paid on 17 July 2007, after compensation for theoverpayment of Corporate Income Tax which amounted to Rp 44,341. On 3 and 14 September2007, the Company submitted objection letters to the tax assessment letter for underpayment ofIncome Tax Article 26 and VAT. On 26 February 2008, the DGT rejected the Company’s objectionletter for the assessment of withholding Tax Article 26. On 4 June 2008, the DGT partiallyapproved the Company’s objection to the VAT assessment letter. The DGT decided to reduce theunderpayment of VAT by Rp 63. On 14 May 2008, the Company submitted an appeal letteragainst the objection decision letter of the Income Tax Article 26 assessment. Up to the issuancedate of the consolidated financial statements, the Company has not received the Decree from theTax Court regarding this appeal letter.

To reduce future increases in tax penalties, especially on interest payments to ExcelcomindoFinance Company B.V., the Company paid the withholding tax article 26 for interest paymentswhich matured in July 2007 amounting to Rp 147,417, and those which matured in January andJuly 2008 amounting to Rp 76,665. The payment of the tax assessment letter for Income TaxArticle 26 above was recorded in the 2007 consolidated statement of income under “other(expense)/income”.

2006 fiscal year

On 26 June 2008, the DGT issued a tax assessment for overpayment of Corporate Income Taxamounting to Rp 60,461. On 24 July 2008, the Company received the refund for this overpaymentof Corporate Income Tax. On 17 September 2008, the Company submitted objection letters to theDGT to make a correction to the interest expense applied to the overpayment of CorporateIncome Tax. On 22 September 2008, the DGT issued tax assessments for underpayment ofIncome Tax Articles 21, Income Tax Article 23/26, final Income Tax Article 4(2), and VAT in theamount of Rp 139,741. The DGT also issued a tax underpayment letter for Income Tax Article 26and VAT for the amount of Rp 19,067. Later on 21 November 2008 the DGT issued a correctionto the underpayment of Income Tax Article 21, Income Tax Article 23, Income Tax Article 26, finalIncome Tax Article 4(2), and VAT, which reduced the underpayment by Rp 932. On 16 and 18December 2008 the Company submitted objection letters to the Tax Court for tax assessments onIncome Tax Article 23, Income Tax Article 26 and VAT. Up to the issuance date of theconsolidated financial statements, the Company has not received the Decree from the Tax Courtregarding these objection letters.

2007 fiscal year

The tax audit for the 2007 fiscal year is still being performed.

Under the taxation laws of Indonesia, the Company submits tax returns on the basis of self-assessment. The Tax Authorities may assess or amend taxes within the Statute of Limitations, underthe prevailing regulations up to 2007.

Based on a new tax Law No. 28/2007 dated 17 July 2007 concerning the General Provision andProcedure of Taxation effective as of 1 January 2008, the DGT may assess or amend tax liabilitywithin 5 (five) years of the time the tax becomes due. For tax liabilities from 2001 fiscal year up to2007 fiscal year which have not been settled, the tax assessment expires at the latest in the year2013.



Page 50

22. RELATED PARTY INFORMATION

a. Nature of transactions and relationships with related parties

The nature of transactions and relationships with related parties is as follows:

Nature of the relationshipsRelated parties with related parties Nature of transactions

Telekom Malaysia Berhad Entity under common control ITKP/VoIP revenue, leased line revenue,interconnection charges, othertelecommunications service costs andreimbursement of expenses

Telekom Malaysia - Hongkong Entity under common control ITKP/VoIP revenue and leased line revenue

Telekom Malaysia (S) Pte., Ltd. Entity under common control ITKP/VoIP revenue, interconnectioncharges and other telecommunicationsservice costs

Celcom (Malaysia) Berhad Entity under common control ITKP/VoIP revenue, internationalroaming revenue, interconnection chargesand reimbursement of expenses

Dialog Telekom Ltd. Entity under common control International roaming revenue and(formerly MTN Networks interconnection charges(Pvt.) Ltd.)

Telekom Malaysia International Entity under common control International roaming revenue and(Cambodia) Co. Ltd. interconnection charges(formerly Cambodia SamartCommunications Co. Ltd.)

TM International (Bangladesh) Entity under common control International roaming revenue andLtd. interconnection charges

PT Rajawali Corpora Shareholders (until May 2007), Reimbursement of expenses and(formerly PT Telekomindo one of PT Rajawali Corpora’s building rentalPrimabhakti) Directors is the Company’s

Commissioner

MobileOne Ltd. Entity under common control International roaming revenue andinterconnection charges

Spice Communications Ltd. Entity under common control International roaming revenue andinterconnection charges

Axiata Group Berhad Entity under common control Reimbursement of expenses(formerly TelekomMalaysia International Sdn.Bhd.)

PT Bank CIMB Niaga, Tbk Entity under common control Leased line revenue, cash and(formerly PT Bank Niaga cash equivalentTbk and Lippo Bank)

Emirates Telecommunications Afiliate of shareholder International roaming revenue andCorporation interconnection charges

Etihad Etisalat Afilliate of shareholder International roaming revenue andinterconnection charges

Thuraya Satellite Afilliate of shareholder International roaming revenue andTelecommunications interconnection chargesCompany

VADS Business Process Entity under common control Outsource contact centre serviceProcess Sdn. Bhd. expense



Page 51

22. RELATED PARTY INFORMATION (continued)

b. Cash and cash equivalents31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

PT Bank CIMB Niaga, Tbk (formerlyPT Bank Niaga Tbk andLippo Bank) - 1,120 109,851 268 174

(As a percentage of total cash andcash equivalents) 0.00% 0.14% 9.39% 0.04% 0.03%

c. Trade receivables31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Telekom Malaysia Berhad 7,315 11,129 56,164 32,840 65,136Celcom (Malaysia) Berhad 9,162 27,311 4,471 22,718 6,733PT Bank CIMB Niaga, Tbk (formerly

PT Bank Niaga Tbk andLippo Bank - 10,972 3,079 6,910 5,555

MobileOne Ltd. - 1,555 1,633 1,345 3,785Etihad Etisalat - - 123 - 777Emirates Telecommunications

Corporation - 289 406 - 725Telekom Malaysia (S) Pte., Ltd. - - 2,173 1,096 105Telekom Malaysia - Hongkong 379 65 77 286 81Dialog Telekom Limited (formerly

MTN Networks (Pvt.) Ltd.) 46 26 91 18 66Thuraya Satellite Telecommunications

Company - 57 72 - 38TM International (Bangladesh) Ltd. - - 3 - -

16,902 51,404 68,292 65,213 83,001

(As a percentage of total tradereceivables - net) 8.27% 16.67% 7.56% 15.09% 18.90%

d. Other receivables31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Axiata Group Berhad(formerly TelekomMalaysia International Sdn.Bhd.) - - 21,368 - 2

Celcom (Malaysia) Berhad 6 - - - -

6 - 21,368 - 2

(As a percentage of total otherreceivable) 0.17% 0.00% 61.37% 0.00% 0.08%

e. Trade payables31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Telekom Malaysia Berhad 6,541 3,118 18,224 5,593 16,951VADS Business Process Sdn. Bhd. - - 4,895 - 11,644Celcom (Malaysia) Berhad - - 4,641 584 9,103Telekom Malaysia (S) Pte., Ltd. 68 232 452 1,900 682Telekom Malaysia International

(Cambodia)Co. Ltd.(formerly Cambodia SamartCommunications Co. Ltd.) 8 23 13 17 27

Spice Communications Ltd. - 54 28 85 14Etihad Etisalat - 200 - - -TM International (Bangladesh)

Ltd. 4 1 - - -

6,621 3,628 28,253 8,179 38,421

(As a percentage of total tradepayables) 0.34 % 0.12% 0.79% 0.25% 1.30%



Page 52


f. Other payables and accruals

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Axiata Group Berhad(formerly Telekom MalaysiaInternational Sdn. Bhd.) - 4 - - -

(As a percentage of total otherpayables and accruals) 0.00% 0.00% 0.00% 0.00% 0.00%

g. Revenue


Telekom Malaysia Berhad 13,205 25,232 127,759 11,841 34,311PT Bank CIMB Niaga, Tbk (formerly

PT Bank Niaga Tbk andLippo Bank) - 14,075 31,298 8,026 8,234

Celcom (Malaysia) Berhad 22,411 98,630 14,818 33,839 7,572MobileOne Ltd. - 17,038 21,520 4,790 5,325Emirates Telecommunications

Corporation - 134 3,227 456 826Telekom Malaysia (S) Pte., Ltd. 965 1,246 5,974 1,061 694Etihad Etisalat - 16 1,561 67 646Dialog Telekom Ltd. (formerly

MTN Networks (Pvt.) Ltd.) 124 108 173 24 39Spice Communications Ltd. - 137 85 29 26Thuraya Satellite Telecommunications

Company - 20 137 27 6TM International (Bangladesh)

Ltd. 13 3 13 1 2Telekom Malaysia International

(Cambodia) Co. Ltd. (formerlyCambodia SamartCommunications Co. Ltd.) 4 6 5 2 1

Telekom Malaysia - Hongkong 4,988 2,506 436 436 -

41,710 159,151 207,006 60,599 57,682(As a percentage of gross revenue

net of discount) 0.72% 1.99% 1.72% 2.31% 1.99%

h. Interconnection charges2006 2007 2008 2008 2009


Celcom (Malaysia) Berhad 1,695 2,026 11,430 1,111 7,999Telekom Malaysia Berhad 7,137 3,782 9,198 1,963 2,140MobileOne Ltd. - 3,680 5,822 1,187 1,666Telekom Malaysia (S) Pte., Ltd. 1,295 2,488 2,337 2,154 922Emirates Telecommunications

Corporation - 70 2,778 158 276Etihad Etisalat - 224 1,689 91 223Spice Communications Ltd. - 214 237 63 52Telekom Malaysia International

(Cambodia) Co. Ltd.(formerlyCambodia SamartCommunications Co. Ltd.) 39 77 97 21 28

Dialog Telekom Ltd. (formerlyMTN Networks (Pvt.) Ltd.) 26 25 38 10 12

TM International (Bangladesh) Ltd. 20 12 12 4 4

10,212 12,598 33,638 6,762 13,322

(As a percentage of interconnectioncharges) 1.20% 1.12% 2.16% 1.66% 4.31%



Page 53


i. Other telecommunications service costs2006 2007 2008 2008 2009


Telekom Malaysia Berhad 528 17,914 21,853 1,930 5,368Telekom Malaysia (S) Pte., Ltd. 34 - - - -

562 17,914 21,853 1,930 5,368(As a percentage of other

telecommunications service costs) 1.76% 25.37% 15.61% 8.27% 15.66%

j. Rental expense


PT Rajawali Corpora (formerlyPT Telekomindo Primabhakti) 5,930 4,618 4,618 1,155 1,155

(As a percentage of operatingexpenses) 0.16% 0.10% 0.06% 0.07% 0,05%

On 15 December 2006, the Company made a rental prepayment for the period 1 November 2006to 30 June 2012. As at 31 December 2006, 2007 and 2008; 31 March 2008 and 2009, thebalance of the rental prepayment amounted to Rp 25,401, Rp 20,783 and Rp 16,165; Rp 19,628and Rp 15,010, respectively, consists of Rp 4,618 current portion and Rp 20,783, Rp 16,165 andRp 11,547; Rp 15,010 and Rp 10,392 non-current portion.

k. Service expense


VADS Business Process Sdn. Bhd. - - 4,895 - 11,644

(As a percentage of operatingexpense) 0.00% 0.00% 0.06% 0.00% 0.53%

l. Salaries and allowances for Board of Directors and Commissioners


Salaries and allowances for Board ofDirectors and Commissioners 28,775 19,727 35,072 17,429 12,481

(As a percentage of total employeecosts) 5.43% 3.26% 4.76% 10.45% 6.88%

The transactions with related parties are made under terms and conditions as though the transactionswere made with third parties on an arm’s length basis.



Page 54

23. COMMITMENTS

a. Capital commitments

The Company has made various purchase commitments related to the expansion of the networkagainst which the Company has made downpayments, as follows:

31/03/2009

(In million USD) (Equivalent billion Rp)

Purchase commitments 156 1,807Downpayments (10) (115)

146 1,692

b. Operating lease commitments

In 1999 the Company entered into an office rental agreement denominated in Rupiah withPT Caraka Citra Sekar Lestari (third party) for a term of 10 (ten) years. On 23 March 2007, theCompany amended the office rental agreement until 31 October 2020, with a total commitment asfollows:

31/03/2009

Payable within 1 (one) year 11,088Payable within 2 (two) years and 5 (five) years 94,248Payable more than 5 (five) years 116,424

221,760

The rental expenses related to this commitment for the years ended 31 December 2006, 2007and 2008; and three-month periods ended 31 March 2008 and 2009 amounting to Rp 10,560, Rp10,956, Rp 11,088; Rp 2,772 and Rp 2,772, respectively.

On 6 September 2007, the Company entered into an office rental agreement denominated inRupiah with PT Wiratara Prima (third party) for a term of 6 (six) years, with a total commitment asfollows:

Year 1-3 = Rp 10,049 per yearYear 4-6 = based on a market value with a minimum increase of 10% and maximum 15%

from prior rent fee.

Rental expenses related to this commitment for the years ended 31 December 2007 and 2008;and the three-month periods ended 31 March 2008 and 2009 amounting to Rp 2,092 andRp 10,199; and Rp 2,512 and Rp 2,512, respectively.

c. 3G annual fees commitments

The Company has committed to pay annual fees within 10 (ten) years, as long as the Companyholds the 3G licence. The amount of the annual payment is based on the scheme of payment setout in Regulation No. 07/PER/M.KOMINFO/2/2006 of the Minister of Communication andInformation (refer to Note 1d). No penalty will be imposed in the event of the Company returningthe licence.



Page 55

24. DERIVATIVES

31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Derivative receivablesForward Foreign Currency Contracts - 105,584 758,286 201,158 486,245Cross Currency Swap Contracts - 20,139 200,716 13,913 227,212

- 125,723 959,002 215,071 713,457Less: current portion - - (333,324) (67,405) (121,489)

- 125,723 625,678 147,666 591,968

Derivative payablesForward Foreign Currency Contracts 42,155 - - - -Cross Currency Swap Contracts - - - 350 -Interest Rate Swap Contracts - - 36,828 23,642 68,508

42,155 - 36,828 23,992 68,508Less: current portion - - - - (3,011)

42,155 - 36,828 23,992 65,497

Below are details of forward foreign currency contracts the purpose of which is to hedge the paymentof long-term loans in USD:

Notional Derivative (payables)/receivablesamount

USD 31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Forward ForeignCurrency Contracts:

a. JPMorgan Securities(S.E.A.) Ltd. 25,000,000 (15,376) 3,007 76,243 21,836 88,230

b. Standard CharteredBank 25,000,000 (14,614) 3,873 83,259 22,680 90,770

c. JPMorgan Securities(S.E.A.) Ltd. 25,000,000 (6,804) 5,109 - - -

d. Standard CharteredBank 25,000,000 (5,361) 6,005 55,692 10,180 -

e. Standard CharteredBank 25,000,000 - 12,907 92,177 30,847 99,027

f. JPMorgan Securities(S.E.A.) Ltd. 25,000,000 - 6,850 55,425 10,506 -

g. Standard CharteredBank 25,000,000 - 14,521 87,097 32,306 98,724

h. Standard CharteredBank 25,000,000 - 9,129 55,692 11,717 -

i. JPMorgan Securities(S.E.A.) Ltd. 25,000,000 - 8,523 55,425 11,329 -

j. JPMorgan Securities(S.E.A.) Ltd. 12,500,000 - 4,064 27,712 5,567 -

k. Standard CharteredBank 12,500,000 - 4,234 27,846 5,696 -

l. The Hongkong andShanghai BankingCorporation Ltd. 12,500,000 - 5,602 27,685 5,920 -

m. JPMorgan ChaseBank 12,500,000 - 8,975 42,687 10,255 47,596

n. Standard CharteredBank 12,500,000 - 5,848 27,846 6,490 -

o. JPMorgan Securities(S.E.A.) Ltd. 12,500,000 - 6,937 43,500 15,829 49,090

p. The Royal Bank ofScotland 15,300,000 - - - - 5,738

q. Standard CharteredBank 15,300,000 - - - - 7,070

Derivative receivables - 105,584 758,286 201,158 486,245

Derivative payables (42,155) - - - -



Page 56

24. DERIVATIVES (continued)

Strike rate(full amount) Period

Premiumper

annumForward Foreign Currency

Contracts:a. JPMorgan Securities (S.E.A.)

Ltd. 1 USD = Rp 9,000 7 December 2006 - 16 January 2013 3.49%

b. Standard Chartered Bank 1 USD = Rp 9,000 7 December 2006 - 16 January 2013 3.49%c. JPMorgan Securities (S.E.A.)

Ltd. 1 USD = Rp 9,000 11 December 2006 - 23 January 2009 3.90%

d. Standard Chartered Bank 1 USD = Rp 9,000 11 December 2006 - 23 January 2009 3.90%

e. Standard Chartered Bank 1 USD = Rp 9,000 3 January 2007 - 16 January 2013 2.65%f. JPMorgan Securities (S.E.A.)

Ltd. 1 USD = Rp 9,000 3 January 2007 - 23 January 2009 3.15%

g. Standard Chartered Bank 1 USD = Rp 9,000 4 January 2007 - 16 January 2013 2.50%

h. Standard Chartered Bank 1 USD = Rp 9,000 4 January 2007 - 23 January 2009 2.555%i. JPMorgan Securities (S.E.A.)

Ltd. 1 USD = Rp 9,000 5 January 2007 - 23 January 2009 2.43%j. JPMorgan Securities (S.E.A.)

Ltd. 1 USD = Rp 9,000 8 May 2007 - 23 January 2009 2.60%

k. Standard Chartered Bank 1 USD = Rp 9,000 8 May 2007 - 23 January 2009 2.84%l. The Hongkong and Shanghai

Banking Corporation Ltd. 1 USD = Rp 9,000 8 May 2007 - 23 January 2009 2.59%

m. JPMorgan Chase Bank 1 USD = Rp 9,000 8 May 2007 - 16 January 2013 2.80%

n. Standard Chartered Bank 1 USD = Rp 9,000 9 May 2007 - 23 January 2009 1.45%o. JPMorgan Securities (S.E.A.)

Ltd. 1 USD = Rp 9,000 9 May 2007 - 16 January 2013 2.48%

p. The Royal Bank of Scotland 1 USD = Rp 11,505 9 January 2009 - 15 July 2009 -

q. Standard Chartered Bank 1 USD = Rp 12,129 9 January 2009 - 15 January 2010 -

The premium on the forward foreign currency contracts will be paid semi-annually.

On 6 April and 13 April 2009, the Company entered into a forward foreign currency contract with PTBank DBS Indonesia, The Royal Bank of Scotland and JPMorgan Chase Bank (refer to Note 31c &31e).

From 18 April to 10 May 2007 the Company entered into cross currency swap contracts to hedge thepayment of the principal and interest of long-term loans in USD, as follows:

Notional Derivative receivables/(payables)amount

USD 31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Cross CurrencySwap Contracts:

a. Standard CharteredBank 10,000,000 - 317 26,440 694 29,480

b. JPMorgan ChaseBank 25,000,000 - 3,834 59,537 (350) 68,548

c. Standard CharteredBank 15,000,000 - 1,216 40,455 1,780 45,581

d. PT Bank DBSIndonesia 15,000,000 - 8,432 38,712 5,479 43,469

e. Standard CharteredBank 12,500,000 - 6,340 35,572 5,960 40,134

Derivatives receivable - 20,139 200,716 13,913 227,212

Derivatives payable - - - (350) -



Page 57


a. On 18 April 2007, the Company entered into a cross currency swap contract with StandardChartered Bank. Based on the contract commencing on 18 April 2007, the Company would swap,at the final exchange date (termination date) of 16 April 2010, a total of Rp 90.88 billion (fullamount) for USD 10,000,000. The Company will make quarterly payments in Rupiah every 18January, 18 April, 18 July and 18 October up to the termination date, in the amount ofUSD 10,000,000 times the fixed interest rate of 9.65% per annum with a strike rate of Rp 9,088(full amount) per USD, and will receive payment in USD amounting to USD 10,000,000 times thefloating rate of interest at quarterly intervals of three months’ SIBOR plus 1.05%.

b. On 23 April 2007, the Company entered into a cross currency swap contract with JPMorganChase Bank. Based on the contract commencing on 23 April 2007, the Company would swap, atthe final exchange date (termination date) of 29 January 2010, a total of Rp 225 billion (fullamount) for USD 25,000,000. The Company will make quarterly payments in Rupiah every30 January, 30 April, 30 July and 30 October up to the termination date, amounting toUSD 25,000,000 times the fixed interest rate of 9.99% per annum with a strike rate of Rp 9,000(full amount) per USD, and will receive payment in USD amounting to USD 25,000,000 times thefloating rate of interest at quarterly intervals of three months’ LIBOR plus 0.95%.

c. On 26 April 2007, the Company entered into a cross currency swap contract with StandardChartered Bank. Based on the contract commencing on 26 April 2007, the Company would swap,at the final exchange date (termination date) of 26 April 2010, a total of Rp 135 billion (full amount)for USD 15,000,000. The Company will make quarterly payments in Rupiah every 26 January, 26April, 26 July and 26 October up to the termination date, amounting to USD 15,000,000 times thefixed interest rate of 9.825% per annum with a strike rate of Rp 9,000 (full amount) per USD, andwill receive payment in USD amounting to USD 15,000,000 times the floating rate of interest atquarterly intervals of three months’ LIBOR plus 1%.

d. On 9 May 2007, the Company entered into a cross currency swap contract with PT Bank DBSIndonesia. Based on the contract commencing on 9 May 2007, the Company would swap, at thefinal exchange date (termination date) of 26 April 2010, a total of Rp 135 billion (full amount) forUSD 15,000,000. The Company will make quarterly payments in Rupiah every 26 January,26 April, 26 July and 26 October up to the termination date, amounting to USD 15,000,000 timesthe fixed interest rate of 8.20% per annum with a strike rate of Rp 9,000 (full amount) per USD,and will receive payment in USD amounting to USD 15,000,000 times the floating rate of interestat quarterly intervals of 3 (three) months’ LIBOR plus 1%.

e. On 10 May 2007, the Company entered into a cross currency swap contract with StandardChartered Bank. Based on the contract commencing on 10 May 2007, the Company would swap,at the final exchange date (termination date) of 29 January 2010, a total of Rp 112.5 billion (fullamount) for USD 12,500,000. The Company will make quarterly payments in Rupiah every 28June, 28 September, 28 December and 28 March up to the termination date, in the amount ofUSD 12,500,000 times the fixed interest rate of 7.73% per annum with a strike rate of Rp 9,000(full amount) per USD, and will receive payment in USD amounting to USD 12,500,000 times thefloating rate of interest at quarterly intervals of three months’ LIBOR plus 0.95%.



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On 7 January 2008, the Company entered into interest rate swap contracts with Standard CharteredBank to hedge the payment of the quarterly interest of long-term loans in USD amounting toUSD 97,500,000. Based on the contracts commencing on 7 January 2008, the Company will payfixed interest as follows:

On 9 February 2009, the Company entered into interest rate swap contracts with Standard CharteredBank to hedge the payment of EKN interest in USD where the principal is installed every six months.Based on the contracts commencing on 11 February 2009, the Company will pay fixed interest asfollows:

Creditor Notional amountFixed interest

rateMaturity date ofloan principal

a. JPMorgan Chase Bank USD 15,000,000 4.675% 30 August 2010

b. Standard Chartered Bank USD 30,000,000 4.73% 26 July 2010

c. Standard Chartered Bank USD 10,000,000 4.73% 9 August 2010

d. Standard Chartered Bank USD 10,000,000 4.73% 16 August 2010

e. PT Bank DBS Indonesia USD 20,000,000 4.635% 26 April 2010

f. Bank Mizuho Indonesia USD 12,500,000 4.575% 29 January 2010

Creditor Notional amountFixed interest

rate Interest exchange periode

g. Standard Chartered Bank USD 198,667,400 2.575% 15 July 2009

Standard Chartered Bank USD 183,385,293 2.575% 15 January 2010

Standard Chartered Bank USD 168,103,185 2.575% 15 July 2010













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Below are the details of the interest rate swap contracts:

Notional Derivative payablesamount

USD 31/12/2006 31/12/2007 31/12/2008 31/03/2008 31/03/2009

Interest Rate SwapContracts:

a. JPMorgan ChaseBank 15,000,000 - - (6,341) (3,768) (6,416)

b. Standard CharteredBank 30,000,000 - - (11,655) (7,518) (13,067)

c. Standard CharteredBank 10,000,000 - - (4,131) (2,542) (4,287)

d. Standard CharteredBank 10,000,000 - - (4,236) (2,548) (4,308)

e. PT Bank DBSIndonesia 20,000,000 - - (6,885) (4,601) (6,147)

f. Bank MizuhoIndonesia 12,500,000 - - (3,580) (2,665) (3,011)

g. Standard CharteredIndonesia 198,667,400 - - - - (31,272)

Derivative payables - - (36,828) (23,642) (68,508)

On 6 April 2009, the Company entered into interest rate swap contracts with Standard CharteredBank (refer to Note 31d).

The fair values on forward foreign currency contracts, cross currency swap contracts, and interestrate swap contracts have been calculated using rates quoted by the Company’s bankers to terminatethe contracts at the balance sheet date.

25. CONTINGENCY

On 1 November and 14 December 2007, the Indonesia Business Competition SupervisoryCommission (“KPPU”) issued decisions regarding a preliminary and a second stage continuedinvestigation into the Company and seven other telecommunications companies based on allegationsof SMS price-fixing, which is a breach of Article 5 of the Anti-Monopoly Law (Law No.5/1999).

In the event that the Company is found liable for SMS price-fixing, the KPPU may order the Companyto pay fines up to Rp 25 billion (full amount) and require the Company to revise its SMS charges. Inthe event that the KPPU's decision stipulates that the alleged price fixing has caused consumer loss,the Company may also be exposed to consumer class action suits. Each of these decisions couldhave a material adverse effect on the Company’s business, reputation and profitability.

On 18 June 2008, KPPU in one of its decisions assessed a penalty amounting to Rp 25 billion (fullamount) to the Company. On 9 July 2008, the Company submitted an appeal letter on the penaltyassessment to the South Jakarta District Court. Up to the issuance date of the consolidated financialstatements, the Company has not received any response from the South Jakarta District Courtregarding the submitted appeal letter

26. TARIFF SYSTEM

In January 2007, the government implemented Decree No.08/PER/M.KOMINFO/02/2006 of theMinister of Communication and Information Technology regarding Interconnection. By this Decree, atariff system was implemented based on KM No. 09/PER/M.KOMINFO/04/2008 regarding Terms andConditions for Rate Determination of the Cellular Mobile Network Telecommunications Service, whichapplies to all operators since 7 April 2008.



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26. TARIFF SYSTEM (continued)

Based on KM No. 09/PER/M.KOMINFO/04/2008 the tariff structure is as follows:

Activation fees Monthly charges Usage charges Value added service charges

The calculation tariff formula for a postpaid and prepaid subscriber is based on the decree using thefolowing formula:

Retail tariff = Network Element Cost + Retail Activation Cost + Profit Margin

Notes:

a. Network element cost is calculated using the Long Run Incremental Cost (LRIC) Bottom Upmethod as stated in Decree No.08/PER/M.KOMINFO/02/2006 of the Minister of Communicationand Information Technology regarding Interconnection.

b. Activation cost is calculated using retail activation cost. The cost is distributed to all subscriberswith the following formula:

Activation cost = Total activation costProjected subscribers number

Note:Total activation cost = Total activation cost of basic telephony service

c. Profit margin is income used by the Company to calculate the tariff.

Interconnection Tariff

The Company entered into several bilateral agreements with other domestic telecommunicationsoperators regarding interconnection tariff sharing for each interconnection call. These agreements arein accordance with the prevailing regulations.

Based on Decree No. 8/PER/M.KOMINFO/02/2006 of the Minister of Communication and InformationTechnology dated 8 February 2006, the interconnection tariff will be charged based on cost, which isoffered in the Documents of Interconnection Offer from each operator and effective from the date theDecree was signed. All operators have to apply a cost allocation principle in calculating theinterconnection cost as soon as this is approved by the government. During the transition period,bilateral interconnection agreements are technically still valid as long as they are approved by bothparties and aligned with this Decree. Since 1 January 2007, the Regulation has applied to alloperators.

On 5 February 2008, Badan Regulasi Telekomunikasi Indonesia (BRTI) announced that the newinterconnection tariff must be implemented by 1 April 2008 at the latest.



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27. SIGNIFICANT AGREEMENTS WITH THIRD PARTIES

The Company entered into several significant contract agreements with third parties as follows:

a. General purchase agreement with Ericsson AB

On 11 July 2007, the Company signed a general purchase agreement with Ericsson AB for thesupply of network equipment and various network-related services. This agreement is valid until31 December 2010 or earlier if terminated by either party in accordance with the agreement. Thiscontract sets out terms and conditions for the purchase of various products and services whichmay be supplied by Ericsson AB from time to time, following the issue of one or more purchaseorders by the Company. This agreement replaces all other agreements signed previously.

Purchase orders issued for the year ended 31 December 2007 and 2008; and three-monthperiods ended 31 March 2008 and 2009 amounted to USD 233,127,721 and USD 316,078,057;USD 85,744,114; and USD 16,015,343, respectively.

b. General purchase and maintenance agreements with Siemens Network Gmbhn Co. KG.(formerly Siemens AG)

On 28 October 1998, the Company signed a general purchase agreement and a maintenanceagreement with Siemens Network Gmbhn Co. KG. for the supply of network equipment andvarious network-related services. The agreement has been amended several times and has beenextended until 31 December 2009. The contract sets out terms and conditions for the purchase ofvarious products and services which may be supplied by Siemens Network Gmbhn Co. KG. fromtime to time, following the issue of one or more purchase orders by the Company. If payment ofany due sum is delayed, Siemens Network Gmbhn Co. KG. shall be entitled to receive interest atthe rate of LIBOR plus 3% of the amount unpaid during the period of the delay.

Purchase orders issued for the years ended 31 December 2006, 2007 and 2008; and three-monthperiods ended 31 March 2008 and 2009 amounted to EUR 8,161,469; EUR 516,000; nil; EUR33,672; and nil, respectively.

c. Maintenance agreement and installation agreement with PT Ericsson Indonesia

On 11 July 2007, the Company signed an installation agreement with PT Ericsson Indonesia forthe installation of the Company’s telecommunications network equipment. This agreement is validuntil the last purchase order or the date on which the agreement is terminated by notice by eitherparty in accordance with the terms of the agreement. This agreement replaces all otheragreements signed previously.

On 27 September 2007, the Company signed a maintenance agreement with PT EricssonIndonesia for the supply of maintenance services for the Company’s telecommunications network.This agreement is valid until the last purchase order or the date on which the agreement isterminated by notice by either party in accordance with the terms of the agreement. Thisagreement replaces all other agreements signed previously.

Purchase orders issued for the years ended 31 December 2006, 2007 and 2008; and three-monthperiods ended 31 March 2008 and 2009 amounted to Rp 51,933; Rp 173,121 andUSD 28,011,842; and Rp 262,562 and USD 44,048,064; Rp 71,673 and USD 18,204,419;Rp 20,183 and USD 1,397,307, respectively.



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27. SIGNIFICANT AGREEMENTS WITH THIRD PARTIES (continued)

d. System implementation and integration agreement with AMDOCS

On 1 July 2005, the Company signed a Professional Services Agreement with AMDOCS forservices related to the currently installed AMDOCS system. This agreement commences witheffect from the agreement signing date, and, unless extended, ends on 31 December 2010 orearlier if terminated by either party in accordance with the agreement.

On 1 January 2007, the Company signed a Software Licence and Maintenance Agreement withAMDOCS, which grants the Company a licence to use the AMDOCS software and themaintenance service. This agreement commences with effect from the agreement signing date forfive years unless terminated by the mutual written consent of both parties or terminated otherwiseas provided in this agreement.

e. Supply, installation and maintenance agreement with PT Huawei Tech Investment (“HTI”)

On 8 June 2006, the Company signed a supply and installation agreement with HTI for the supplyand installation of 3G, to provide and support a mobile telecommunications system throughoutIndonesia. The agreement is valid from 8 June 2006 to 8 June 2011, unless terminated earlier byeither party.

On 27 December 2007, the Company signed a maintenance agreement with HTI. The agreementsets out terms and conditions for the maintenance of various products and services which may besupplied by HTI from time to time, following the issue of one or more purchase orders by theCompany. This agreement is valid from 1 January 2008 until the last purchase order or the dateon which the agreement is terminated by notice by either party.

On 4 September 2008, the Company signed an installation agreement with HTI. The agreementsets out terms and conditions for the installation of various products and services which may besupplied by HTI from time to time, following the issue of one or more purchase orders by theCompany. This agreement is valid from 4 September 2008 until the last purchase order or thedate on which the agreement is terminated by notice by either party.

On 4 September 2008, the Company signed a purchase agreement with HTI. The agreement setsout terms and conditions for the purchase of various products and services which may besupplied by HTI from time to time, following the issue of one or more purchase orders by theCompany. This agreement is valid from 15 September 2008 until the last purchase order or thedate on which the agreement is terminated by notice by either party.

Purchase orders issued for the years ended 31 December 2006 and 2007; and 2008; and three-month periods ended 31 March 2008 and 2009 amounted to USD 2,656,948; USD 22,638,492;and Rp 80,253 and USD 71,376,311; Rp 18,798 and USD 12,412,798; and Rp 3,391 and USD7,828,121, respectively.

f. Cable installation agreement with NSW Submarine Cable System Sdn. Bhd. (“NSWMalaysia”)

On 12 April 2004, the Company signed a cable installation agreement with NSW Malaysia toestablish a submarine fibre optic cable system, to provide services between Lombok (Senggigi)and Bali (Sanur), Bali (Jimbaran) and East Java (Puger), West Java (Ancol) and Belitung(Tanjung Kiras), and by a variation of the order from the Company, an additional link betweenBelitung (Tanjung Kiras) and Bangka (Tempilang). This agreement is valid from 12 April 2004until the end of the warranty period, which is five years after the date of final acceptance of thesystem, unless terminated earlier by either party.



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g. Equipment supply, maintenance and installation agreement with PT Alita Praya Mitra(“APM”)

On 26 March 2008, the Company signed a maintenance agreement with APM. The agreementsets out terms and conditions for the maintenance for various products and services which maybe supplied by APM from time to time, following the issue of one or more purchase orders by theCompany. This agreement is valid from 1 January 2008 until the last purchase order or the dateon which the agreement is terminated by notice by either party.

On 1 May 2008, the Company signed a general purchase agreement with APM for the supply ofnetwork equipment. This agreement is valid until 31 December 2010 unless terminated earlier byeither party. The agreement sets out terms and conditions for the purchase of various productsand services which may be supplied by APM from time to time, following the issue of one or morepurchase orders by the Company. This agreement replaces all other agreements signedpreviously.

On 13 August 2008, the Company signed an installation agreement with APM for the installationof the Company’s network equipment. This agreement is valid until the latest purchase orderissued by the Company or until the agreement is terminated earlier by either party. Theagreement sets out terms and conditions for the installation of various products which may besupplied by APM from time to time, following the issuance of one or more purchase orders by theCompany. This agreement replaces all other agreements signed previously.

Purchase orders issued for the years ended 31 December 2006, 2007 and 2008; and for thethree-month periods ended 31 March 2008 and 2009 amounted to Rp 36,945 and USD37,203,495; Rp 61,876 and USD 42,314,044; Rp 48,027 and USD 29,418,551; Rp, 7,160 andUSD 3,184,685 and Rp 5,918 dan USD 1,859,897, respectively.

h. Fibre optic cable installation along the railroad in Java island agreement with PT KeretaApi (Persero) (“PT KAI”)

On 20 December 1996, the Company signed an agreement with PT KAI to install a fibre opticcable along the railroad in Java island, in Agreement No. Perumka 342/HK/TEK/96, orNo. Excelcomindo PKS.18/XL/XII/96. This Agreement is effective from 20 December 1996 with aone-year grace period for the project’s development stage, and ends on 19 December 2017 atwhich time payment of rent is to be executed in two phases.

This agreement can be extended with both parties’ approval. To ensure the validity of such anextension of the agreement, the Company should submit a written proposal at least three monthsprior to the expiry date of the agreement. If the Company fails to pay the rent on the due date, PTKAI shall reserve the right to claim a late payment charge at 1‰ (one per mile) per day of the dueamount, and these late payment charges are capped at a maximum of 5%.

On 15 September 2006, the Company signed a contract amendment related to the second phasepayment (according to Agreement No. Perumka 342/HK/TEK/96, or No. ExcelcomindoPKS.18/XL/XII/96) to determine the rental extension period, which , according to AgreementNo. Perumka 342/HK/TEK/96, or No. Excelcomindo PKS.18/XL/XII/96, was to expire on19 December 2017. This agreement was extended until 19 December 2022.



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h. Fibre optic cable installation along the railroad in Java island agreement with PT KeretaApi (Persero) (“PT KAI”) (continued)

On 24 February 1997, the Company also signed land lease agreement No. Perumka39/HK/TEK/1997, or No. Excelcomindo PKS.20/Excel/II/1997 to build the Company’stelecommunications tower and building. The agreement is valid for 20 years with a one-yeargrace period; thus, the agreement should be valid until 19 December 2017. The agreement hasbeen further extended until 19 December 2022.

i. Interconnection agreements

Interconnection agreements concern the sharing of facilities with PT Telekomunikasi IndonesiaTbk (“Telkom”), PT Telekomunikasi Selular (“Telkomsel”), PT Indosat Tbk and others. Theseagreements outline the tariffs, rights and obligations of the parties, settlements, reconciliation ofbilling, and penalties.

j. International roaming agreements

The Company has entered into International roaming agreements with several internationalroaming partners (approximately 354 partners as of 31 March 2009). These agreements outlinecharges and tariffs, billing and accounting, services provided for roaming subscribers, liability ofparties, and settlement procedures. The international roaming revenue calculation is based onGSM International Roaming Agreements (AA14).

k. Leased line agreements

Leased line agreements exist with PT Mora Telematika Indonesia, PT Bank CIMB Niaga Tbk(formerly PT Bank Niaga Tbk and Lippo Bank), PT Bakrie Telecom Tbk, PT Nettocyber Indonesia,PT Bank Commonwealth and others. These agreements outline lease costs and terms ofpayment, rights and obligations of the parties, penalties, restitution and termination procedures.

l. Consortium agreement, Palapa Ring Construction and Maintenance

On 10 November 2007, the Company signed a Construction and Maintenance Agreement with PTBakrie Telecom Tbk, PT Indosat Tbk, PT Infokom Elektrindo, PT Powertek Utama Internusa andPT Telekomunikasi Indonesia Tbk. In this agreement, all parties agreed to participate in theconstruction of the Palapa Ring East Indonesia Project. This agreement shall have an initial termof 15 years from the signing date, and can be extended for the next five years.

On 1 September 2008 and 31 October 2008 the Consortium accepted the resignation ofPT Infokom Elektrindo and PT Powertek Utama Internusa effective from 14 July 2008 and22 October 2008. Until the date of this report, the amendment of the agreement is still in process.

m. Memorandum of Understanding (“MoU”) and Master Tower Lease Agreement

Following the signing of MoU and Side Letter in December 2007, February and April 2008, theCompany signed Master Tower Lease Agreements with PT Hutchison CP Telecommunications,PT Sampoerna Telekomunikasi Indonesia, PT Bakrie Telecom Tbk, PT Natrindo Telepon Seluler,PT Mobile-8 Telecom Tbk and PT Telekomunikasi Indonesia Tbk in April, May, July, August 2008and February 2009. The agreements are valid for 10-12 years and can be extended for following5-6 years. Based on these agreements, the Company leases parts of its telecommunicationstowers and its sites to other telecommunications operators for regular lease payments andmaintenance fees throughout the lease period. The Master Tower Lease Agreements set out therights and obligations of the Company and the lessee.



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n. Fiber optics lease agreement

The Company entered into agreements with PT Hutchison CP Telecommunications and PT MoraTelematika Indonesia for a period of 15 years and 10 years, respectively in relation to the lease ofthe Company’s fiber optics network. Rights to use the network commenced in January 2009. TheCompany entitles to lease payments, which is paid in advance every year as set in theagreements. In addition, these agreements also set out the rights and obligation of the Companyand the lessees.

28. MONETARY ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

31/12/2006Foreign currencies Equivalent to

(full amount) million Rupiah

AssetsCash and cash equivalents USD 24,201,314 218,296Trade receivables USD 6,378,078 57,530

Total Assets 275,826

LiabilitiesTrade payables USD 132,421,494 1,194,442

EUR 7,494,784 88,874SGD 112,563 662CHF 8,062 59

Other payables USD 21,182,764 191,069

Long-term bonds - principal USD 600,000,000 5,412,000

Total Liabilities 6,887,106

Net Liabilities 6,611,280






EUR 2,321,155 31,939AUD 40,000 329SGD 117,556 764CHF 9,221 76


Current portion of long-term bonds - principal USD 350,000,000 3,296,650

Long-term loans - principal USD 230,000,000 2,166,370






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28. MONETARY ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)



AssetsCash and cash equivalents USD 80,283,749 879,107Trade receivables USD 10,196,642 111,653Other assets USD 1,521,841 16,664

Total Assets 1,007,424


EUR 2,104,628 32,479AUD 5,000 38SGD 250,896 1,909CHF 24,161 250


Short-term loans USD 50,000,000 547,500

Current maturity of long-term loans –principal USD 30,564,215 334,678










EUR 2,643,003 38,479SGD 248,677 1,662CHF 5,166 48AUD 3,488 29


Short-term loans USD 100,000,000 921,700




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28. MONETARY ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)



Liabilities (continued)






AssetsCash and cash equivalents USD 6,081,814 70,397Trade receivables USD 11,913,049 137,894Other assets USD 49,605,317 574,181

Total Assets 782.472


EUR 894,745 13,714SGD 212,302 1,617CHF 21,230 214GBP 1,260 21


Current maturity of long-term loans –principal USD 98,218,388 1,136,878





Since the Company’s revenues are mainly denominated in Rupiah and the Company’s liabilities aremainly denominated in US Dollars, the Company is exposed to fluctuations in foreign exchange ratesresulting mainly from its debt denominated in US Dollars. Most of the liabilities denominated inUS Dollars are long-term and management is continually evaluating feasible long-term hedgingstructures.

29. SEGMENT INFORMATION

The Group operates and manages the business under one segment which provides GSM mobile andtelecommunications network services to its customers. The management allocates resources andassesses performance at the Group level.



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30. THE PLAN TO SELL TELECOMMUNICATIONS TOWERS AND TO PROVIDE ASSISTANCE TOMAJORITY SHAREHOLDERS

In the Extraordinary General Meeting of Shareholders on 3 September 2008, the shareholdersapproved the plan to execute the sale of the Company's assets, i.e. a maximum of 7,000telecommunications towers along with infrastructures and facilities related to such towers, and furthersales of a maximum of 3,000 telecommunications towers.

The shareholders also approved the Company's plan to provide assistance to Indocel Holding Sdn.Bhd. ("Indocel"), the Company's majority shareholder and a subsidiary of Axiata Group Berhad(formerly Telekom Malaysia International Berhad), in relation to the plan of Axiata Group Berhad andIndocel to sell down some of the Company's shares owned by Indocel.

As at the date of these financial statements, the plan to sell the Company's telecommunicationstowers had not been executed. The Company had provided Indocel with assistance. However,Indocel's plan to sell its shares in the Company had not been executed as at the date of thesefinancial statements.

31. SUBSEQUENT EVENTS

a. The Company’s monetary assets and liabilities on 31 March 2009 were reported in Rupiah usingthe rates 1 USD = Rp 11,575.00 (full amount), 1 EUR = Rp 15,327.06 (full amount) and 1 SGD =Rp 7,617.41 (full amount). Those rates were changed to 1 USD = Rp 10,415.00 (full amount), 1EUR = Rp 13,906.64 (full amount) and 1 SGD = Rp 7,077.11 (full amount) on 8 May 2009. If theCompany reports monetary assets and liabilities in foreign currency as at 31 March 2009 usingthese rates, unrealised foreign exchange loss will decrease in the amount of Rp 1,235,314. In thefuture, the rates might fluctuate, and Rupiah might depreciate or appreciate significantlycompared to other currencies.

b. On 20 April 2009, the Company bought back part of the USD 250 million Notes amounted to USD3,635,000 at price of 88.24%-89.24% of the nominal value. In relation to the buyback, theoutstanding Notes after 20 April 2009 amounted to USD 124,067,000 (refer to Note 12a).

c. On 6 April 2009, the Company entered into a forward foreign currency contract with PT Bank DBSIndonesia, The Royal Bank of Scotland and JPMorgan Chase Bank to hedge the payment of along term loan in USD. Based on the contract commencing on 8 April 2009, the Company wouldswap, at the final exchange date (termination date) of 2 October 2009, a total of Rp 104.25 billion(full amount) for USD 8,800,000 (refer to Note 24).

d. On 6 April 2009, the Company entered into interest rate swap contracts with Standard CharteredBank to hedge the payment of EKN interest in USD where the principal is installed every sixmonths. Based on the contracts commencing on 6 April 2009, the Company will pay fixed interestof 2.3225% on each interest exchange period (refer to Note 24).

e. On 13 April 2009, the Company entered into a forward foreign currency contract with PT BankDBS Indonesia and The Royal Bank of Scotland to hedge the payment of a long term loan inUSD. Based on the contract commencing on 14 and 15 April 2009, the Company would swap, atthe final exchange date (termination date) of 1 April 2010, a total of Rp 107,996 billion (fullamount) for USD 8,800,000 (refer to Note 24).



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32. ECONOMIC CONDITIONS

The ongoing global liquidity crisis has resulted in, among other things, lower level of capital marketfunding, tight liquidity across the banking sector, and, at times, higher interest rates and highvolatility in stock and currency markets in many countries, including Indonesia. The full extent of theimpact of the ongoing financial crisis is proving to be difficult to anticipate or completely guard against.Management’s plans in anticipation of current economic conditions included, among others, tomaximize utilization of the existing network coverage, increase the market penetration throughstrategic branding activities, diversify services range and improve the operational efficiency throughvarious cost reduction programs.

33. NEW ACCOUNTING STANDARDS

The Indonesian Financial Accounting Standard Board has issued the following revised accountingstandards which may affect the Company’s financial statements:

- SFAS 26 (Revised 2008) – “Borrowing Costs” (applicable for financial statements coveringperiods beginning on or after January 1, 2010)

- SFAS 50 (Revised 2006) – “Financial Instruments: Presentation and Disclosures” (applicable forfinancial statements covering periods beginning on or after January 1, 2010)

- SFAS 55 (Revised 2006) – “Financial Instruments: Recognition and Measurement” (applicable forfinancial statements covering periods beginning on or after January 1, 2010)

The Company is still evaluating the possible impact of these standards on the financial statements.

15568642-Report-Financial-XL-Q1-2009

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