PT TELEKOMUNIKASI INDONESIA

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13 a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May , 20 08

Perusahaan Perseroan (Persero)
PT TELEKOMUNIKASI INDONESIA

(Translation of registrant’s name into English)

Jalan Japati No. 1 Bandung-40133 INDONESIA

(Address of principal executive office)

[Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.]

Form 20-F þ Form 40-F o

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934]

Yes o No þ

[If “yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ]

PERUSAHAAN PERSEROAN (PERSERO)
P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 2007 AND 2008
(Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)


		2007		2008
	Notes	Rp.		Rp.		US$ (Note 3)

ASSETS

CURRENT ASSETS
Cash and cash equivalents	2c,2e,5,44		7,363,462		9,830,473		1,066,790
Temporary investments	2c,2f,44		85,846		186,708		20,261
Trade receivables	2c,2g,6,37,44
Related parties — net of allowance for doubtful accounts of Rp.91,803 million in 2007 and Rp.130,703 million in 2008			535,544		399,786		43,384
Third parties — net of allowance for doubtful accounts of Rp.691,513 million in 2007 and Rp.1,161,958 million in 2008			2,961,961		2,658,133		288,457
Other receivables — net of allowance for doubtful accounts of Rp.1,591 million in 2007 and Rp.10,719 million in 2008	2c,2g,44		149,412		122,953		13,343
Inventories — net of allowance for obsolescence of Rp.49,629 million in 2007 and Rp.56,868 million in 2008	2h,7,37		207,166		253,898		27,553
Prepaid expenses	2c,2i,8,44		1,728,970		1,226,795		133,130
Claim for tax refund	38		359,582		420,550		45,638
Prepaid taxes	38		26,896		58,827		6,384
Restricted time deposits	2c,9,44		4,623		75,686		8,213


Total Current Assets			13,423,462		15,233,809		1,653,153


NON-CURRENT ASSETS
Long-term investments — net	2f,10		92,174		140,261		15,221
Property, plant and equipment — net of accumulated depreciation of Rp.47,390,018 million in 2007 and Rp.56,935,191 million in 2008	2k,2l,4,11, 19,20,23		56,368,870		60,770,640		6,594,752
Property, plant and equipment under Revenue- Sharing Arrangements — net of accumulated depreciation of Rp.534,746 million in 2007 and Rp.524,688 million in 2008	2m,12,34,47		924,267		664,787		72,142
Prepaid pension benefit cost	2i,2r,41		103		557		60
Advances and other non-current assets	2c,2o,13,29,44,49		721,029		1,624,082		176,243
Goodwill and other intangible assets — net of accumulated amortization of Rp.3,971,474 million in 2007 and Rp.5,033,144 million in 2008	2d,2j,4,14,37		4,173,722		3,365,431		365,212
Escrow accounts	2c,15,44		1,387		1,285		140


Total Non-current Assets			62,281,552		66,567,043		7,223,770


TOTAL ASSETS			75,705,014		81,800,852		8,876,923

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements.

PERUSAHAAN PERSEROAN (PERSERO)
P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS UNAUDITED (Continued)
MARCH 31, 2007 AND 2008
(Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)


		2007			2008
	Notes	Rp.			Rp.			US$ (Note 3)
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Trade payables	2c,16,44
Related parties			874,351			577,569			62,677
Third parties			6,335,820			4,845,103			525,784
Other payables			33,932			50,509			5,482
Taxes payable	2s,38		1,507,519			1,554,280			168,668
Accrued expenses	2c,17,35,41,44		2,578,363			3,069,501			333,098
Unearned income	18		2,154,127			2,477,559			268,862
Advances from customers and suppliers			236,942			174,824			18,972
Short-term bank loans	2c,19,44		357,133			215,814			23,420
Current maturities of long-term liabilities	2c,20,44		4,714,280			4,567,427			495,651


Total Current Liabilities			18,792,467			17,532,586			1,902,614


NON-CURRENT LIABILITIES
Deferred tax liabilities — net	2s,38		2,708,336			3,023,781			328,137
Unearned income on Revenue-Sharing Arrangements	2m,12,47		749,254			443,013			48,075
Accrued long service award	2c,2r,42,44		453,535			76,806			8,335
Accrued post-retirement health care benefits	2c,2r,43,44		2,826,770			2,894,582			314,116
Accrued pension and other post-retirement benefits costs	2r,41		1,159,778			1,324,308			143,712
Long-term liabilities — net of current maturities
Obligations under capital leases	2l,11,20		208,000			209,515			22,736
Two-step loans — related party	2c,20,21,44		3,879,111			3,688,710			400,294
Bank loans	2c,20,23,44		2,018,614			3,830,987			415,734
Deferred consideration for business combinations	20,24		3,256,028			2,117,166			229,752

Total Non-current Liabilities			17,259,426			17,608,868			1,910,891


MINORITY INTEREST	25		9,230,848			10,556,996			1,145,632


STOCKHOLDERS’ EQUITY
Capital stock — Rp.250 par value per Series A
Dwiwarna share and Series B share
Authorized — 1 Series A Dwiwarna share and 79,999,999,999 Series B shares
Issued and fully paid — 1 Series A Dwiwarna share and 20,159,999,279 Series B shares	1c,26		5,040,000			5,040,000			546,934
Additional paid-in capital	27		1,073,333			1,073,333			116,477
Treasury stock — 191,915,500 shares in 2007 and 337,293,000 shares in 2008	2u,28		(1,641,680	)		(3,030,368	)		(328,852	)
Difference in value arising from restructuring transactions and other transactions between entities under common control	2d,29		180,000			270,000			29,300
Difference due to change of equity in associated companies	2f		385,595			385,595			41,844
Unrealized holding gain from available-for-sale securities	2f		9,708			12,586			1,366
Translation adjustment	2f		227,669			228,914			24,841
Retained earnings
Appropriated			1,803,397			6,700,879			727,171
Unappropriated			23,344,251			25,421,463			2,758,705


Total Stockholders’ Equity			30,422,273			36,102,402			3,917,786


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			75,705,014			81,800,852			8,876,923

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements.

PERUSAHAAN PERSEROAN (PERSERO)
P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008
(Figures in tables are presented in millions of Rupiah and thousands of United States Dollars, except per share and per ADS data)


		2007			2008
	Notes	Rp.			Rp.			US$ (Note 3)

OPERATING REVENUES
Telephone	2q,30
Fixed lines			2,867,576			2,540,438			275,685
Cellular			5,579,802			5,966,083			647,432
Interconnection	2q,31,44
Revenues			2,790,382			3,041,324			330,041
Expenses			(661,467	)		(781,585	)		(84,817	)

Net			2,128,915			2,259,739			245,224
Data and Internet	2q,32		2,921,030			3,917,418			425,113
Network	2q,33,44		208,754			223,816			24,288
Revenue-Sharing Arrangements	2m,12,34,47		132,672			97,936			10,628
Other telecommunications services			8,984			26,173			2,840


Total Operating Revenues			13,847,733			15,031,603			1,631,210


OPERATING EXPENSES
Depreciation	2k,2l,2m,11,12,13		2,364,489			2,534,473			275,038
Personnel	2r,17,35,41,42,43		2,054,655			2,246,902			243,831
Operations, maintenance and telecommunication services	2q,36,44		2,149,251			2,506,173			271,967
General and administrative	2g,2q,6,7,14,37		827,934			824,586			89,483
Marketing	2q		280,644			376,981			40,909


Total Operating Expenses			7,676,973			8,489,115			921,228


OPERATING INCOME			6,170,760			6,542,488			709,982


OTHER INCOME (EXPENSES)
Interest income	44		144,899			174,205			18,905
Equity in net income (loss) of associated companies	2f,10		2,977			(874	)		(95	)
Interest expense	44		(384,259	)		(263,146	)		(28,556	)
Loss (gain) on foreign exchange — net	2p		(86,422	)		(45,655	)		(4,954	)
Others — net			86,991			102,916			11,168


Other (expenses) income — net			(235,814	)		(32,554	)		(3,532	)


INCOME BEFORE TAX			5,934,946			6,509,934			706,450

TAX (EXPENSE) BENEFIT	2s,38
Current tax			(1,810,967	)		(2,058,376	)		(223,372	)
Deferred tax			(42,939	)		5,363			582


			(1,853,906	)		(2,053,013	)		(222,790	)


INCOME BEFORE MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES			4,081,040			4,456,921			483,660

MINORITY INTEREST IN NET INCOME OF SUBSIDIARIES — net	25		(1,038,830	)		(1,249,587	)		(135,604	)


NET INCOME			3,042,210			3,207,334			348,056


BASIC EARNINGS PER SHARE	2w,39
Net income per share			152.03			161.50			0.02
Net income per ADS
(40 Series B shares per ADS)			6,081.20			6,460.00			0.80

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements.

PERUSAHAAN PERSEROAN (PERSERO)
P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008
(Figures in tables are presented in millions of Rupiah )


										Difference in
										value of
										restructuring		Difference
										transactions		due to change		Unrealized
					Additional					between entities		of equity		holding gain (loss)
			Capital		paid-in					under common		in associated		on available-for-sale		Translation		Retained earnings				stockholders’
Description	Notes		stock		capital		Treasury stock			control		companies		securities		adjustment		Appropriated		Unappropriated		equity
			Rp.		Rp.		Rp.			Rp.		Rp.		Rp.		Rp.		Rp.		Rp.		Rp.

Balance, January 1, 2007				5,040,000		1,073,333		(952,211	)		180,000		385,595		8,865		227,669		1,803,397		20,302,041		28,068,689

Unrealized holding gain on available-for-sale securities		2f		—		—		—			—		—		843		—		—		—		843

Treasury stock acquired — at cost		2u,28		—				(689,469	)		—		—		—		—		—		—		(689,469	)

Net income for the year				—		—		—			—		—		—		—		—		3,042,210		3,042,210


Balance, March 31, 2007				5,040,000		1,073,333		(1,641,680	)		180,000		385,595		9,708		227,669		1,803,397		23,344,251		30,422,273

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements

PERUSAHAAN PERSEROAN (PERSERO)
P. T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) (Continued)
THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008
(Figures in tables are presented in millions of Rupiah )


										Difference in
										value of
										restructuring		Difference
										transactions		due to change		Unrealized
					Additional					between entities		of equity		holding gain (loss)
			Capital		paid-in					under common		in associated		on available-for-sale		Translation			Retained earnings				stockholders’
Description	Notes		stock		capital		Treasury stock			control		companies		securities		adjustment			Appropriated		Unappropriated		equity
			Rp.		Rp.		Rp.			Rp.		Rp.		Rp.		Rp.			Rp.		Rp.		Rp.

Balance, January 1, 2008				5,040,000		1,073,333		(2,176,611	)		270,000		385,595		11,237		230,017			6,700,879		22,214,129		33,748,579

Unrealized holding gain (loss) on available-for-sale securities		2f		—		—		—			—		—		1,349		—			—		—		1,349

Foreign currency translation of associated companies		2f,10		—		—		—			—		—		—		(1,103	)		—		—		(1,103	)

Treasury stock acquired — at cost		2u,28		—		—		(853,757	)		—		—		—		—			—		—		(853,757	)

Net income for the year				—		—		—			—		—		—		—			—		3,207,334		3,207,334


Balance, March 31, 2008				5,040,000		1,073,333		(3,030,368	)		270,000		385,595		12,586		228,914			6,700,879		25,421,463		36,102,402


				—		—		—			—		—		—		—			—		—		—

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

THE THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008
(Figures in tables are presented in millions of Rupiah and thousands of United States Dollars)


	2007			2008
	Rp.			Rp.			US$ (Note 3)

CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from operating revenues
Telephone
Fixed lines		2,787,553			2,503,591			271,686
Cellular		5,643,370			6,045,820			656,085
Interconnection — net		2,304,773			2,376,289			257,872
Joint operation schemes		(15,092	)		—			—
Data and internet		2,863,295			3,937,349			427,276
Other services		323,254			352,792			38,285

Total cash receipts from operating revenues		13,907,153			15,215,841			1,651,204
Cash payments for operating expenses		(6,911,684	)		(5,820,282	)		(631,610	)
Cash receipt from customers		81,251			33,328			3,617


Cash generated from operations		7,076,720			9,428,887			1,023,211


Interest received		155,172			174,829			18,972
Interest paid		(354,297	)		(236,489	)		(25,663	)
Income tax paid		(2,757,061	)		(3,208,328	)		(348,164	)


Net Cash Provided by Operating Activities		4,120,534			6,158,899			668,356


CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of temporary investments and maturity of time deposits		11,468			40,784			4,426
Purchase of temporary investments and placements in time deposits		(11,979	)		(21,548	)		(2,338	)
Proceeds from sale of property, plant and equipment		2,481			5,298			575
Acquisition of property, plant and equipment		(3,923,616	)		(3,600,112	)		(390,680	)
(Increase) decrease in advances for the purchase of property, plant and equipment		683,882			(169,857	)		(18,433	)
(Increase) decrease in advances and others		197,853			(33,885	)		(3,677	)
Business combinations, net of cash paid		—			(323,541	)		(35,110	)
Purchases of long-term investments		—			(28,249	)		(3,066	)
Cash dividends received		766			618			67
Acquisition of long-term investments		—			(674	)		(73	)


Net Cash Used in Investing Activities		(3,039,145	)		(4,131,166	)		(448,309	)


CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in escrow accounts		686			—			—
Proceeds from short-term borrowings		23,000			11,312			1,228
Repayments of short-term borrowings		(833,333	)		(371,763	)		(40,343	)
Repayments of long-term borrowings		(379,033	)		(993,484	)		(107,812	)
Payment for purchase of treasury stock		(689,468	)		(853,757	)		(92,649	)
Repayments of promissory notes		(99,165	)		(101,355	)		(10,999	)
Repayments of obligations under capital leases		—			(3,980	)		(432	)


Net Cash Used in Financing Activities		(1,977,313	)		(2,313,027	)		(251,007	)


NET DECREASE IN CASH AND CASH EQUIVALENTS		(895,924	)		(285,294	)		(30,960	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(56,450	)		(25,024	)		(2,716	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		8,315,836			10,140,791			1,100,466


CASH AND CASH EQUIVALENTS AT END OF PERIOD		7,363,462			9,830,473			1,066,790

See accompanying notes to consolidated financial statements, which form an integral part of the consolidated financial statements.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2008,
AND THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)

GENERAL

	a.		Establishment and general information

			Perusahaan Perseroan (Persero) P.T. Telekomunikasi Indonesia Tbk (the “Company”) was originally part of “Post en Telegraafdienst”, which was established in 1884 under the framework of Decree No. 7 dated March 27, 1884 of the Governor General of the Dutch Indies and was published in State Gazette No. 52 dated April 3, 1884.

			In 1991, the status of the Company was changed into a state-owned limited liability corporation (“Persero”) based on the Government Regulation No. 25/1991.

			The Company was established based on notarial deed No. 128 dated September 24, 1991 of Imas Fatimah, S.H.. The deed of establishment was approved by the Minister of Justice of the Republic of Indonesia in his Decision Letter No. C2-6870.HT.01.01.Th.1991 dated November 19, 1991, and was published in State Gazette No. 5 dated January 17, 1992, Supplement No. 210. The Articles of Association have been amended several times, the latest amendments were concerning among others, the change in terms of service of Board of Commissioners and Board of Directors based on notarial deed No. 8 and No. 9 dated September 7, 2007 of A. Partomuan Pohan, S.H., LLM. and notification of this amendment was received by the Minister of Justice and Human Rights of the Republic of Indonesia (“MoJHR”) as in his Letter No. W7-HT.01.10-12858 dated September 14, 2007.

			In accordance with Article 3 of the Company’s Articles of Association, the scope of its activities is to provide telecommunication and information facilities and services in accordance with prevailing regulations. To achieve this objective, the Company is involved in the following activities:

	i.		Planning, building, providing, developing, operating, marketing or selling, leasing and maintaining telecommunications and information networks in accordance with prevailing regulations.

	ii.		Planning, developing, providing, marketing or selling and improving telecommunications and information services in accordance with prevailing regulations.

	iii.		Performing activities and other undertakings in connection with the utilization and development of the Company’s resources and optimizing the utilization of the Company’s property, plant and equipment, information systems, education and training, and repairs and maintenance facilities.

			The Company’s head office is located at Jalan Japati No. 1, Bandung, West Java.

			Pursuant to Law No. 3/1989 on Telecommunications (effective on April 1, 1989), Indonesian legal entities are allowed to provide basic telecommunications services in cooperation with the Company as the domestic telecommunications organizing body (or “badan penyelenggara”). The Government Regulation No. 8/1993 relating to the provision of the telecommunications services regulates that cooperation to provide basic telecommunications services can be in the form of a joint venture, joint operation or contractual management and that the entities cooperating with the domestic telecommunications organizing body must use the organizing body’s telecommunications networks. If the telecommunications networks are not available, the Government Regulation requires that the cooperation be in the form of a joint venture that is capable of constructing the necessary networks. The Minister of Tourism, Post and Telecommunication of the Republic of Indonesia (“MTPT”) reaffirmed the status of the Company as the organizing body for the provision of domestic telecommunication services through two Decision Letters both dated August 14, 1995.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
MARCH 31, 2007 AND 2008,
AND THREE MONTHS PERIOD ENDED MARCH 31, 2007 AND 2008
(Figures in tables are presented in millions of Rupiah, unless otherwise stated)

1. GENERAL (continued)

	a.		Establishment and general information (continued)

			The provision of domestic telecommunications services of the Company, includes telephone, telex, telegram, satellite, leased lines, electronic mail, mobile communication and cellular services. Pursuant to this, in 1995, the Company entered into agreements with investors to develop, manage and operate telecommunications facilities in five of the Company’s seven regional divisions (“Divre”) under Joint Operation Schemes (known as “Kerja Sama Operasi” or “KSO”), in order to:

	(1)		accelerate the construction of telecommunication facilities,

	(2)		make the Company a world-class operator, and

	(3)		increase the technology as well as knowledge and skills of its employees.

			Historically, the Company had exclusive right to provide local wireline and fixed wireless services for a minimum period of 15 years and the exclusive right to provide domestic long-distance (“Sambungan Langsung Jarak Jauh” or “SLJJ”) telecommunications services for a minimum period of 10 years, effective January 1, 1996. Such exclusive rights also applied to telecommunications services provided for and on behalf of the Company through a KSO. This grant of rights did not affect the Company’s right to provide other domestic telecommunications services.

			In 1999, the Government of the Republic of Indonesia (the “Government”) passed Telecommunications Law No. 36, which took effect in September 2000. This Law states that the telecommunication activities cover:

	(1)		Telecommunications networks,

	(2)		Telecommunications services, and

	(3)		Special telecommunications.

			National state-owned companies (“Badan Usaha Milik Negara” or “BUMN”), regional state-owned companies, privately-owned companies and cooperatives are allowed to provide telecommunications networks and services. Special telecommunications can be provided by individuals, Government Agencies and legal entities other than telecommunications networks and service providers. The Telecommunications Law prohibits activities that result in monopolistic practices and unfair competition, and expects to pave the way for market liberalization. In connection with this law, Government Regulation No. 52/2000 was issued, which provides that interconnection fees shall be charged to originating telecommunications network operators where telecommunications service is provided by two or more telecommunications network operators.

			On press release No. 05/HMS/JP/VIII/2000 dated August 1, 2000 of the Directorate General of Post and Telecommunications (“DGPT”), as corrected by No. 1718/UM/VIII/2000 dated August 2, 2000, the period for exclusive rights granted to the Company to provide local and SLJJ fixed-line telecommunications services, were shortened from the expiration period of December 2010 to August 2002 and from December 2005 to August 2003. In return, the Government was required to pay compensation to the Company (Notes 13 and 29). Further, on press release of the Coordinating Minister of Economics of the Republic of Indonesia dated July 31, 2002, the Government terminated the Company’s exclusive right as a network provider for local and SLJJ services effective August 1, 2002. On August 1, 2002, PT Indonesian Satellite Corporation Tbk (“Indosat”) was granted a license to provide local and SLJJ telecommunications services.

			The Company has a commercial license to provide International Direct Dialing (“IDD”) services based on the Minister of Communications of the Republic of Indonesia (“MoC”) Decree No. KP. 162/2004 dated May 13, 2004.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

GENERAL (continued)

Company’s officers and employees

	1.		Officers

			Based on resolutions made at (i) the Annual General Meeting (“AGM”) of Stockholders dated June 24, 2005 as covered by notarial deed No. 36 of A. Partomuan Pohan, S. H., LLM. and (ii) the Extraordinary General Meetings (“EGM”) of Stockholders dated February 28, 2007 as covered by notarial deed No. 16 of the same notary, as amended through the AGM of Stockholders dated June 29, 2007 as covered by notarial deed No. 58 of the same notary, the composition of the Company’s Board of Commissioners and Directors as of March 31, 2007 and 2008, respectively, were as follows:


	2007	2008
President Commissioner	Tanri Abeng	Tanri Abeng
Commissioner	Anggito Abimanyu	Anggito Abimanyu
Commissioner	Gatot Trihargo	Mahmuddin Yasin
Independent Commissioner	Arif Arryman	Arif Arryman
Independent Commissioner	Petrus Sartono	Petrus Sartono
President Director	Rinaldi Firmansyah	Rinaldi Firmansyah
Director of Finance	Sudiro Asno	Sudiro Asno
Director of Network and Solution	I Nyoman Gede Wiryanata	Ermady Dahlan
Director of Enterprise and Wholesale	Arief Yahya	Arief Yahya
Director of Consumer	Ermady Dahlan	I Nyoman Gede Wiryanata
Director of Compliance and Risk Management	Prasetio	Prasetio
Chief Information Technology Officer	Indra Utoyo	Indra Utoyo
Human Resources Director/ Human Capital and General Affairs	Faisal Syam	Faisal Syam

			Based on AGM of Stockholders dated June 29, 2007, the Company’s stockholders agreed to replace Gatot Trihargo as the Company’s Commissioner to Mahmuddin Yasin.

			Based on Board of Commissioners’ Decision Letter dated February 15, 2008, the Board of Commissioners agreed to appoint Ermady Dahlan as Director of Network and Solution and I Nyoman Gede Wiryanata as Director of Consumer effective from March 1, 2008.

	2.		Employees

			As of March 31, 2007 and 2008, the Company and its subsidiaries had 34,389 and 33,438 employees, respectively.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

GENERAL (continued)

	c.		Public offering of shares of the Company

			The Company’s shares prior to its Initial Public Offering (“IPO”) totaled 8,400,000,000, consisting of 8,399,999,999 Series B shares and 1 Series A Dwiwarna share, and were 100%-owned by the Government. On November 14, 1995, 933,333,000 new Series B shares and 233,334,000 Series B shares owned by the Government were offered to public through IPO at the Indonesia Stock Exchange (“IDX”) (previously the Jakarta Stock Exchange and the Surabaya Stock Exchange) and 700,000,000 Series B shares owned by the Government were offered to the public and listed on the New York Stock Exchange (“NYSE”) and the London Stock Exchange (“LSE”), in the form of American Depositary Shares (“ADS”). There are 35,000,000 ADS and each ADS represents 20 Series B shares at that time.

			In December 1996, the Government had a block sale of its 388,000,000 Series B shares, and in 1997, had distributed 2,670,300 Series B shares as incentive to stockholders who did not sell their shares within one year from the date of the IPO. In May 1999, the Government further sold 898,000,000 Series B shares.

			To comply with Law No. 1/1995 of the Limited Liability Companies, at the AGM of Stockholders on April 16, 1999, the stockholders resolved to increase the Company’s issued share capital through distribution of 746,666,640 bonus shares, to be taken from its additional paid-in capital, which were distributed to stockholders in August 1999.

			On August 16, 2007, the Law No. 1/1995 of the Limited Liability Companies has been amended by the issuing of Law No. 40/2007 of the Limited Liability Companies which become effective at the same date. The Law No. 40/2007 has no effect to the public offering of shares of the Company. The Company has complied with Law No. 40/2007.

			In December 2001, the Government had another block sale of 1,200,000,000 shares or 11.9% of the total outstanding Series B shares. In July 2002, the Government had sold 312,000,000 shares or 3.1% of the total outstanding Series B shares.

			At the AGM of stockholders on July 30, 2004, as notarized by deed No. 26 of A. Partomuan Pohan, S.H., LLM., the stockholders approved the Company’s 2-for-1 stock split for Series A Dwiwarna and Series B. For series A Dwiwarna share with par value of Rp.500, the split was into 1 Series A Dwiwarna share with par value of Rp.250 per share and 1 Series B share with par value of Rp.250 per share. The stock split resulted to an increase of the Company’s authorized capital stock from 1 Series A Dwiwarna share and 39,999,999,999 Series B shares into 1 Series A Dwiwarna Share and 79,999,999,999 Series B shares, and the issued capital stock from 1 Series A Dwiwarna share and 10,079,999,639 Series B shares into 1 Series A Dwiwarna share and 20,159,999,279 Series B shares. After the stock split, each ADS represented 40 Series B shares.

			At the EGM on December 21, 2005, the stockholders approved the phase I plan to repurchase up to a maximum of 5% of the Company’s issued Series B shares for a maximum repurchase amount of Rp.5,250,000 million which had expired on June 20, 2007. At the AGM on June 29, 2007, the stockholders approved the phase II plan to repurchase up to 215,000,000 Series B shares for Rp.2,000,000 million which will be expired on December 28, 2008. As of May 19, 2008, the Company had repurchased 399,671,000 shares equivalent to 1.98% of the issued and outstanding Series B shares, for a repurchase price of Rp.3,585,971 million, including broker and custodian fees (Note 28).

			As of March 31, 2008, all of the Company’s Series B shares were listed on the IDX and 44,552,876 ADS shares were listed on the NYSE and LSE.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

GENERAL (continued)

	d.		Subsidiaries

			As of March 31, 2007 and 2008, the Company has consolidated the following direct or indirectly owned subsidiaries which it controls as a result of majority ownership (Note 2d):

	*(i)*		*Direct subsidiaries:*


	Nature of business/			Percentage of
	date of incorporation	Date of		effective				Total assets
Subsidiary/place of	or acquisition by	commercial		ownership interest				before elimination
incorporation	the Company	operation		2007		2008		2007		2008

PT Pramindo Ikat Nusantara (“Pramindo”), Medan, Indonesia	Telecommunication construction and services/ August 15, 2002		1995		100		100		1,370,377		1,222,583

PT Telekomunikasi Indonesia International (“TII”) (formerly PT Aria West International (“AWI”)), Jakarta, Indonesia	Telecommunication/ July 31, 2003		1995		100		100		775,386		626,059

PT Multimedia Nusantara (“Metra”), Jakarta, Indonesia	Multimedia telecommunication services/ May 9, 2003		1998		100		100		90,290		649,451

PT Graha Sarana Duta (“GSD”), Jakarta, Indonesia	Leasing of offices and providing building management and maintenance services, civil consultant and developer/April 25, 2001		1982		99.99		99.99		153,714		153,866

PT Dayamitra Telekomunikasi (“Dayamitra”), Jakarta, Indonesia	Telecommunication/May 17, 2001		1995		100		100		471,708		437,253

PT Indonusa Telemedia (“Indonusa”), Jakarta, Indonesia	Pay television and content services/May 7, 1997		1997		96		98.75		57,205		135,220

PT Telekomunikasi Selular (“Telkomsel”), Jakarta, Indonesia	Telecomunication — provides telecommunication facilities and mobile cellular services using Mobile Global System for Communication (“GSM”) technology/ May 26, 1995		1995		65		65		40,204,901		43,133,467

PT Napsindo Primatel Internasional (“Napsindo”), Jakarta, Indonesia	Telecommunication - provides Network Access Point (NAP), Voice Over Data (VOD) and other related services/ December 29, 1998	1999; ceased operation on January 13, 2006			60		60		4,536		4,910

PT Infomedia Nusantara (“Infomedia”), Jakarta, Indonesia	Data and information service — provides telecommunication information services and other information services in the form of print and electronic media, and call center services/September 22,1999		1984		51		51		448,606		500,645

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

GENERAL (continued)

Subsidiaries (continued)

(ii)

Indirect subsidiaries:

Nature of business/

Percentage of

date of incorporation

Date of

effective

Total assets

Subsidiary/place of

or acquisition by

commercial

ownership interest

before elimination

incorporation

subsidiary

operation

2007

2008

2007

2008

Aria West International Finance B.V. (“AWI BV”) The Netherlands

Established to engaged in rendering services in the field of trade and finance services/
June 3, 1996

1996; ceased operation on July 31, 2003

100 (through
100%
ownership by
TII)

100 (through 100% ownership by TII)

1,745

1,848

Telekomunikasi Selular
Finance Limited
(“TSFL”), Mauritius

Finance — establish to raise funds for the development of Telkomsel ’s business through the issuance of debenture stock, bonds, mortgages or any other securities/
April 22, 2002

2002

65 (through
100%
ownership by
Telkomsel)

65 (through 100% ownership by Telkomsel)

PT Balebat Dedikasi Prima
(“Balebat”), Bogor,
Indonesia

Printing/October 1, 2003

2000

33.15 (through 65% ownership by Infomedia)

47,026

50,168

Telkomsel Finance B.V., (“TFBV”), Amsterdam The Netherlands

Finance — establish in 2005 for the purpose of borrowing, lending and raising funds including issuance of bonds, promissory notes or debts/February 7, 2005

2005

65 (through
100%
ownership by
Telkomsel)

65 (through 100% ownership by Telkomsel)

8,240

8,489

PT Finnet Indonesia
(“Finnet”), Jakarta,
Indonesia

Banking data and communication/
October 31, 2005

2006

60
(through
60%
ownership
by Metra)

60 (through 60% ownership by Metra)

13,366

18,764

PT Telkom Indonesia International Pte. Ltd. Singapura

Finance/

2007

—

100 (through 100% ownership by TII)

—

PT Sigma Cipta Caraka
(“Sigma”), Jakarta,
Indonesia

Banking data and communication/

1988

—

80

(through
80%
ownership
by Metra)

—

266,613

	(a)		TII

			On March 6, 2007, based on notarial deed No. 3 of Titien Suwartini, S.H., and as approved by the MoJHR in its Decision Letter No. W8-00573.HT.01.04-TH.2007 and the Capital Investment Coordinating Board in its Decision Letter No. 20/III/PMDN/2007 dated March 1, 2007, PT Aria West International has changed its name to PT Telekomunikasi Indonesia International and its business operation has been expanded to include international businesses.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

GENERAL (continued)

Subsidiaries (continued)

	(b)		Metra

			Based on Circular Meeting of Metra’s stockholders on December 13, 2007, the stockholders agreed as follows: (1) increase its authorized capital from Rp.200,000 million to Rp.1,000,000 million with a par value of Rp.10,000 per share; (2) increase its issued and fully paid capital from Rp.62,250 million to Rp.412,250 million by issuing 35,000,000 new shares; (3) to limit the maximum additions to issued capital for funding acquisition of Sigma amounting to Rp.335,000 million, and for the acquisition cost as well as Metra’s business development amounting to a maximum of Rp.15,000 million; (4) approve a total of 35,000,000 new shares to be issued and fully paid by the Company; and (5) approval on acquisition of a maximum 80% ownership interest in Sigma, a company engaged in providing information system services.

			On December 18, 2007, Metra entered into a Conditional Sales and Purchase Agreement (“CSPA”) with Sigma’s stockholders for the acquisition.

			On January 21, 2008, the Company paid Rp.350,000 million for additional capital to Metra pursuant to circular meeting of the Metra’s stockholders on December 13, 2007. The acquisition of Sigma transaction was completed through the signing of an Amendment to the CSPA of Shares on February 21, 2008 which became effective from February 22, 2008.

	(c)		Indonusa

			At Indonusa’s EGM on May 9, 2007, the stockholders revolved to: (1) stock split of Indonusa’s shares par value from Rp.10,000 to Rp.500 per share; (2) increase its issued capital from Rp.200,000 million consists of 20,000,000 shares to Rp.700,000 million consists of 1,400,000,000 shares, as amended by the Decision of Circular Meeting of Indonusa’s stockholders on December 28, 2007. The change increased Company’s paid-in capital from Rp.66,500 million to Rp.237,713 million through payment and debt to equity swap, as follows:

	•		The Company had paid for the increase in share capital phase I to Indonusa on June 5, 2007 and August 13, 2007 amounting to Rp.21,624 million and Rp.976.3 million, respectively. Also, a payment for the increase in share capital for phase II was made on November 26, 2007 amounting to Rp.65,986 million.

	•		On December 19, 2007, Indonusa’s debt to the Company amounting to Rp.82,627 million was converted into ownership on shares of stock of Indonusa.

Pursuant to the payment for the additional share capital and debt swap to equity, the Company’s ownership in Indonusa has increased from 95.68% to 98.75%.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

GENERAL (continued)

Subsidiaries (continued)

	(d)		Telkomsel

			On February 14, 2006, Telkomsel was granted the International Mobile Telecommunications-2000 (“IMT-2000” or “3G”) license in the 2.1 Gigahertz (“GHz”) frequency bandwidth for a 10 year period by the Minister of Communication and Information Technology of the Republic of Indonesia (“MoCI”), based on its Decision Letter No. 19/KEP/M.KOMINFO/2/2006. The license is extendable subject to evaluation (Notes 14 and 49d.ii). Telkomsel started its commercial services for 3G in September 2006.

			On October 11, 2006, Telkomsel’s operating licenses were updated by MoCI based on Decision Letter No. 101/KEP/M.KOMINFO/10/2006, granting Telkomsel the rights to provide: (i) Mobile telecommunication services with radio frequency bandwidth in the 900 Megahertz (“MHz”) and 1800 MHz bands; (ii) Mobile telecommunication services IMT-2000 with radio frequency bandwidth in the 2.1 GHz bands (3G); and (iii) Basic telecommunication services.

	(e)		Balebat

			On July 1, 2006, Infomedia purchased 14% of Balebat’s shares from other stockholders, thereby increasing Infomedia’s ownership interest from 51% to 65%.

	e.		Authorization of the financial statements

			The consolidated financial statements were authorized for issue by the Board of Directors on May 22, 2008.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

2.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

		The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in Indonesia (“Indonesian GAAP”).

	a.		Basis of preparation of financial statements

			The consolidated financial statements, except for the consolidated statements of cash flows, are prepared on the accrual basis of accounting. The measurement basis used is historical cost, except for certain accounts recorded on the basis described in the related accounting policies.

			The consolidated statements of cash flows are prepared using the direct method and present the changes in cash and cash equivalents from operating, investing and financing activities.

			Figures in the consolidated financial statements are rounded to and presented in millions of Indonesian Rupiah (“Rp.”), unless otherwise stated.

	b.		Principles of consolidation

			The consolidated financial statements include the financial statements of the Company and its subsidiaries in which the Company directly or indirectly has ownership of more than 50%, or the Company has the ability to control the entity, even though the ownership is less than or equal to 50%. Subsidiaries are consolidated from the date on which every effective control is obtained and are no longer consolidated from the date of disposal.

			All significant inter-company balances and transactions have been eliminated on the consolidated financial statements.

	c.		Transactions with related parties

			The Company and its subsidiaries have transactions with related parties. The definition of related parties used is in accordance with Indonesian Statement of Financial Accounting Standards (“PSAK”) 7, “Related Party Disclosures”.

	d.		Acquisitions of subsidiaries

			The acquisition of a subsidiary from a third party is accounted for using the purchase method of accounting. The cost of an acquisition is allocated to the identifiable assets and liabilities recognized using as reference, their fair values at the date of the transaction. The excess of the acquisition cost over the Company’s interest in the fair value of identifiable assets acquired and liabilities assumed is recorded as goodwill and amortized using the straight-line method over a period of not more than five years.

			The Company continually assesses whether events or changes in circumstances have occurred that would require revision of the remaining estimated useful life of intangible assets and goodwill, or whether there is any indication of impairment. If any indication of impairment exists, the recoverable amount of intangible assets and goodwill is estimated based on the expected future cash flows which are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	d.		Acquisitions of subsidiaries (continued)

			In July 2004, the Indonesian Financial Accounting Standard Board (“Dewan Standar Akuntansi Keuangan di Indonesia” or “DSAK”) issued PSAK 38 (Revised 2004), “Accounting for Restructuring Transactions between Entities under Common Control”, (“PSAK 38R”). Under PSAK 38R, the acquisition transaction with entities under common control is accounted for using book value, in a manner similar to that in pooling of interests accounting (carryover basis). The difference between the consideration paid or received and the related historical carrying amount, after considering income tax effects, is recognized directly in equity and reported as “Difference in value arising from restructuring transactions and other transactions between entities under common control” in the stockholders’ equity section.

			The balance of “Difference in value arising from restructuring transactions and other transactions between entities under common control” is charged to retained earnings when the common control relationship has ceased.

	e.		Cash and cash equivalents

			Cash and cash equivalents consist of cash on hand and in banks and all unrestricted time deposits with maturities of not more than three months from the date of placement.

	f.		Investments

	i.		Time deposits

			Time deposits with maturities of more than three months but not more than one year, are presented as temporary investments.

	ii.		Investments in securities

			Investments in available-for-sale securities are stated at fair value. Unrealized holding gains or losses on available-for-sale securities are excluded from income of the current year and are reported as a separate component in the stockholders’ equity section until realized. Realized gains or losses from the sale of available-for-sale securities are recognized in the consolidated statements of income, and are determined on a specific-identification basis. A decline in the fair value of any available-for-sale securities below cost that is deemed to be other-than-temporary is charged to the consolidated statements of income.

	iii.		Investments in associated companies

			Investments in companies where the Company has 20% to 50% of the voting rights, and through which the Company exerts significant influence, but not control, over the financial and operating policies are accounted for using the equity method. Under this method, the Company recognizes the Company’s proportionate share in the income or loss of the associated company from the date that significant influence commences until the date that significant influence ceases. When the Company’s share of loss exceeds the carrying amount of the associated company, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Company has guaranteed obligations of the associated company or committed to provide further financial support to the associated company.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments (continued)

	iii.		Investments in associated companies (continued)

			On a continuous basis, but no less frequently than at the end of each year, the Company and its subsidiaries evaluate the carrying amount of their ownership interests in associated companies for possible impairment. Factors considered in assessing whether an indication of other-than-temporary impairment exists include the achievement of business plan objectives and milestones including cash flow projections and the results of planned financing activities, the financial condition and prospects of each associated company, the fair value of the ownership interest relative to the carrying amount of the investment, the period of time the fair value of the ownership interest has been below the carrying amount of the investment and other relevant factors. Impairment to be recognized is measured based on the amount by which the carrying amount of the investment exceeds the fair value of the investment. Fair value is determined based on quoted market prices (if any) and projected discounted cash flows, whichever is lower or other valuation techniques as appropriate.

			Changes in the value of investments due to changes in the equity of associated companies arising from capital transactions of such associated companies with other parties are recognized directly in equity and are reported as “Difference due to change of equity in associated companies” in the stockholders’ equity section. Differences previously credited directly to equity as a result of equity transactions in associated companies are released to the consolidated statements of income upon the sale of an interest in the associate in proportion to percentage of the interests sold.

			The functional currency of PT Pasifik Satelit Nusantara (“PSN”) and PT Citra Sari Makmur (“CSM”) is the United States Dollars (“U.S. Dollars”). For the purpose of reporting these investments using the equity method, the assets and liabilities of these companies as of the balance sheet date are translated into Indonesian Rupiah using the rates of exchange prevailing at that date, while revenues and expenses are translated into Indonesian Rupiah at the average rates of exchange for the year. The resulting translation adjustments are reported as part of “Translation adjustment” in the stockholders’ equity section.

	iv.		Other investments

			Investments in companies where ownership interests of less than 20% that do not have readily determinable fair values and are held for long-term are carried at cost and are adjusted only for other-than-temporary decline in the value of individual investments. Any write-down is charged directly to income of the current year.

	g.		Trade and other accounts receivable

			Trade and other accounts receivable are recorded net of allowance for doubtful accounts, based upon a review of the collectibility of the outstanding amounts. Accounts are written-off against the allowance during the period in which they are determined to be not collectible.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	g.		Trade and other accounts receivable (continued)

			The allowance for doubtful accounts is the Company and its subsidiaries’ best estimate of the probable credit losses in the accounts receivable. The amount of the allowance is recognized in the consolidated statement of income within operating expenses — general and administrative. The Company and its subsidiaries determine the allowance based on historical write-off experience. The Company and its subsidiaries review the allowance for doubtful accounts every month. Past due balances over 90 days for retail customers are fully provided, and past due balance for non-retail customers over a specified amount are reviewed individually for collectibility. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

	h.		Inventories

			Inventories consist of components and modules which are expensed or transferred to property, plant and equipment upon use. Inventories also include Subscriber Identification Module (“SIM”) cards, Removable User Identity Module (“RUIM”) cards and prepaid voucher blanks, which are expensed upon sale. Inventories are stated at the lower of costs or net realizable value.

			Cost is determined using the weighted average method for components, SIM card, RUIM card and prepaid voucher blanks, and the specific-identification method for modules.

			Allowance for obsolescence is primarily based on the estimated forecast of future usage of these items.

	i.		Prepaid expenses

			Prepaid expenses are amortized over their future beneficial periods using the straight-line method.

	j.		Intangible assets

			Intangible assets comprised of intangible assets from subsidiaries and business acquisition and licenses. Intangible assets shall be recognized if it is probable that the expected future economic benefits that are attributable to each asset will flow to the Company and its subsidiaries and the cost of the asset can be reliably measured.

			Intangible assets are stated at cost less accumulated amortization and impairment, if any. Intangible assets are amortized over their useful lives. The Company and its subsidiaries shall estimate the recoverable value of their intangible asset. When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is written down to its estimated recoverable amount.

			In 2006, Telkomsel was granted the right to operate the 3G license. Telkomsel is required to pay an up-front fee and annual rights of usage (“Biaya Hak Penggunaan” or “BHP”) fee for the next ten years. The up-front fee is recorded as intangible asset and amortized using the straight-line method over the term of the right to operate the 3G license (10 years). Amortization commenced in 2006 when the assets attributable to the provision of the related services became available for use.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	j.		Intangible assets (continued)

			Based on Telkomsel’s management interpretation of the license conditions and the written confirmation from the DGPT, the license may be returned at any time without any financial obligation to pay the remaining outstanding annual BHP fees. Accordingly, Telkomsel recognizes the annual BHP fees as expense when incurred.

			Telkomsel’s management evaluates its plan to continue to use the license on an annual basis.

	k.		Property, plant and equipment — direct acquisitions

			Property, plant and equipment directly acquired are stated at cost, less accumulated depreciation and impairment losses.

			Property, plant and equipment, except land, are depreciated using the straight-line method, based on the estimated useful lives of the assets as follows:


		Years

Buildings		20
Switching equipment		5-15
Telegraph, telex and data communication equipment		5-15
Transmission installation and equipment		5-20
Satellite, earth station and equipment		3-15
Cable network		5-15
Power supply		3-10
Data processing equipment		3-10
Other telecommunications peripherals		5
Office equipment		2-5
Vehicles		5-8
Other equipment		5

		The Company and its subsidiaries evaluate their property, plant and equipment whenever events and circumstances indicate that the carrying amount of the assets may not be recoverable.

		When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is written down to its estimated recoverable amount, which is determined based upon the greater of its net selling price or value in use.

		The cost of maintenance and repairs is expensed as incurred. Expenditures, which extend the useful life of the asset or result in increased future economic benefits such as increase in capacity or improvement in the quality of output or standard of performance are capitalized.

		When assets are retired or otherwise disposed of, their carrying values and the related accumulated depreciation are eliminated from the consolidated financial statements, and the resulting gains or losses on the disposal or sale of property, plant and equipment are recognized in the consolidated statement of income.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	k.		Property, plant and equipment — direct acquisitions (continued)

			Computer software used for data processing is included in the value of the associated hardware.

			Property under construction is stated at cost until construction is completed, at which time it is reclassified to the specific property, plant and equipment account to which it relates. During the construction period, borrowing costs, which include interest expense and foreign currency exchange differences incurred to finance the construction of the asset, are capitalized in proportion to the average amount of accumulated expenditures during the year. Capitalization of borrowing cost ceases when the construction has been completed and the asset is ready for its intended use.

			Equipment temporarily unused are reclassified into equipment not used in operation and depreciated over their estimated useful life using straight-line method.

	l.		Property, plant and equipment under capital leases

			Property, plant and equipment acquired under capital leases are stated at the present value of minimum lease payments and the residual values (option price) paid by the Company and its subsidiaries at the end of lease period. At inception of the lease, a corresponding liability, which equals to the present value of minimum lease payments, is also recorded and subsequently reduced by the principal component of each minimum lease payment. The interest component of each minimum lease payment is recognized in the consolidated statement of income of the current year.

			Since January 1, 2008, the Company and its subsidiaries has applied PSAK 30 (Revised 2007), “Lease” prospectively. Based on PSAK 30 (Revised 2007), property, plant and equipment under capital lease is recognized if the lease transfers substantially all the risks and rewards incidental to ownership. A lease is classified into capital lease or operating lease based on the substance not the form of the contract.

			Leased assets are depreciated using the same method over the shorter of the lease term and its economic useful life.

			Leased assets are depreciated using the same method and over the same estimated useful lives used for directly acquired property, plant and equipment.

	m.		Revenue-Sharing Arrangements (“RSA”)

			Revenues from RSA are recognized based on Company’s share as agreed upon in the contracts.

			The Company records assets under RSA as “Property, plant and equipment under RSA” (with a corresponding initial credit to “Unearned income on RSA” presented in the liabilities section of the consolidated balance sheet) based on the costs incurred by the investors as agreed upon in the contracts entered into between the Company and the investors. Property, plant and equipment are depreciated over their estimated useful lives using the straight-line method (Note 2k).

			Unearned income related to the acquisition of the property, plant and equipment under RSA is amortized over the revenue-sharing period using the straight-line method.

			At the end of the revenue-sharing period, the property, plant and equipment under RSA is reclassified to the “Property, plant and equipment” account.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	n.		KSO

			Revenues from KSO include amortization of unearned initial investor payments, Minimum Telkom Revenues (“MTR”) and the Company’s share of Distributable KSO Revenues (“DKSOR”).

			Unearned initial investor payments received are recorded net of all direct costs incurred in connection with the KSO agreement and amortized using the straight-line method over the KSO period of 15 years starting from January 1, 1996.

			MTR are recognized on a monthly basis, based on the contracted MTR amount for the current year.

			The Company’s share of DKSOR is recognized on the basis of the Company’s percentage share of the KSO revenues, net of MTR and operational expenses of the KSO Units, as provided in the KSO agreements.

			Under PSAK 39, “Accounting for Joint Operation Schemes”, which supercedes paragraph 14 of PSAK 35, “Accounting for Telecommunications Services Revenue”, the assets built by the KSO partners under the KSO were recorded in the books of the KSO partners which operate the assets and would be transferred to the Company at the end of the KSO period or upon termination of the KSO agreement.

			As of December 31, 2006, the Company has obtained full control over all of the KSO operations through acquisition of interest of KSO investors and the Company has accelerated the amortization the amortization of KSO deferred compensation income per March 31, 2008.

	o.		Deferred charges for land rights

			Costs incurred to process and extend land rights are deferred and amortized using the straight-line method over the term of the land rights.

	p.		Foreign currency translation

			The functional currency of the Company and its subsidiaries is the Indonesian Rupiah and the books of accounts of the Company and its subsidiaries are maintained in Indonesian Rupiah. Transactions in foreign currencies are translated into Indonesian Rupiah at the rates of exchange prevailing at transaction date. At the consolidated balance sheet date, monetary assets and monetary liabilities balances denominated in foreign currencies are translated into Indonesian Rupiah based on the buy and sell rates quoted by Reuters prevailing at the consolidated balance sheet date as follows:


	The Company and its subsidiaries
	2007				2008
	Buy		Sell		Buy		Sell

United States Dollars (“US$”) 1		9,123		9,127		9,210		9,220
Euro1		12,146		12,154		14,549		14,567
Yen1		77.25		77.31		92.68		92.80

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	p.		Foreign currency translation (continued)

			The resulting foreign exchange gains or losses, realized and unrealized, are credited or charged to income of the current year, except for foreign exchange differences incurred on borrowings during the construction of qualifying assets which are capitalized to the extent that the borrowings can be attributed to the construction of those qualifying assets (Note 2k).

	q.		Revenue and expense recognition

	i.		Fixed line telephone revenues

			Revenues from fixed line installations are recognized at the time the installations are placed in service and ready for use. Revenues from usage charges are recognized as customers incur the charges.

	ii.		Cellular and fixed wireless telephone revenues

			Revenues from postpaid service, which consist of connection fee as well as usage and monthly charges, are recognized as follows:

	•		Connection fees for service connection are recognized as revenues at the time the connection occurs.

	•		Airtime and charges for value added services are recognized based on usage by subscribers.

	•		Monthly subscription charges are recognized as revenues when incurred by subscribers.

Revenues from prepaid card subscribers, which consist of the sale of starter packs (also known as SIM cards in the case of cellular and RUIM in the case of fixed wireless telephone and start-up load vouchers) and pulse reload vouchers, are recognized as follows:

	•		Sale of SIM and RUIM card is recognized as revenue upon delivery of the starter packs to distributors, dealers or directly to customers.

	•		Sale of pulse reload vouchers (either bundled in starter packs or sold as separate items) is recognized initially as unearned income and recognized proportionately as usage revenue based on duration of successful calls made and the value added services by the subscribers or the expiration of the unused stored value of the voucher.

	iii.		Interconnection revenues

			Revenues from network interconnection with other domestic and international telecommunications carriers are recognized as earned in accordance with agreement and are presented net of interconnection expenses.

	iv.		Data and internet revenues

			Revenues from installations (set-up) of internet, data communication and e-Business are recognized upon the completion of installations. Revenues from data communication and internet are recognized based on usage.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue and expense recognition (continued)

	v.		Revenues from network

			Revenues from network consist of revenues from leased lines and satellite transponder leases. Revenues are recognized based on subscription fees as specified in the agreements.

	vi.		Expenses

			Expenses are recognized on accrual basis. Unutilized promotional credits are netted against unearned income.

Employee benefits

	i.		Pension and post-retirement health care benefit plans

			The net obligations in respect of the defined pension benefit and post-retirement health care benefit plans are calculated at the present value of estimated future benefits that the employees have earned in return for their service in the current and prior periods, less fair value of plan assets and as adjusted for unrecognized actuarial gains or losses and unrecognized past service cost. The calculation is performed by an independent actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using government bond interest rates that have terms to maturity approximating the terms of the related liability.

			Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions, when exceeding the greater of 10% of present value defined benefit obligation or 10% of fair value of plan assets, are charged or credited to the consolidated statements of income over the average remaining service lives of the relevant employees. Prior service cost is recognized immediately if vested or amortized over the vesting period.

			For defined contribution plans, the regular contributions constitute net periodic costs for the year in which they are due and as such are included in staff costs.

	ii.		Long Service Awards (“LSA”)

			Employees are entitled to receive certain cash awards based on length of service requirements. The benefits are either paid at the time the employees reach certain anniversary dates during employment, or at the time of termination.

			Actuarial gains or losses arising from experience and changes in actuarial assumptions are charged immediately to the consolidated statements of income.

			The obligation with respect to LSA is calculated by an independent actuary using the projected unit credit method.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Employee benefits (continued)

	iii.		Early retirement benefits

			Early retirement benefits are accrued at the time the Company makes a commitment to provide early retirement benefits as a result of an offer made in order to encourage voluntary redundancy. A commitment to a termination arises when, and only when a detailed formal plan for the early retirement cannot be withdrawn.

	iv.		Pre-retirement benefits

			Employees of the Company are entitled to a benefit during a pre-retirement period in which they are inactive for 6 months prior to their normal retirement age of 56 years. During the pre-retirement period, the employees still receive benefits provided to active employees, which include, but are not limited to regular salary, health care, annual leave, bonus and other benefits. Benefits provided to employees which enter pre-retirement period are calculated by an independent actuary using the projected unit credit method.

	v.		Other post-retirement benefits

			Employees are entitled to home leave passage benefits and final housing facility benefits to their retirement age of 56 years. Those benefits are calculated by an independent actuary using the projected unit credit method.

			Gains or losses on curtailment are recognized when there is a commitment to make a material reduction in the number of employees covered by a plan or when there is an amendment of a defined benefit plan terms such as that a material element of future services to be provided by current employees will no longer qualify for benefits, or will qualify only for reduced benefits.

			Gains or losses on settlement are recognized when there is a transaction that eliminates all further legal or constructive obligation for part or all of the benefits provided under a defined benefit plan.

	s.		Income tax

			The Company and its subsidiaries recognize deferred tax assets and liabilities for temporary differences between the financial and tax bases of assets and liabilities at each reporting date. The Company and its subsidiaries also recognize deferred tax assets resulting from the recognition of future tax benefits, such as the benefit of tax loss carry forwards, to the extent their future realization is probable. Deferred tax assets and liabilities are measured using enacted tax rates at each reporting date which are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

			Income tax is charged or credited to the consolidated statement of income, except to the extent that it relates to items recognized directly in equity, such as the difference in value arising from restructuring transactions and other transactions between entities under common control (Note 29) and the effect of foreign currency translation adjustment for certain investments in associated companies, in which case income tax is also charged or credited directly to equity.

			Amendment to taxation obligations are recorded when an assessment is received or if appealed against, when the results of the appeal are determined.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	t.		Derivative instruments

			Derivative transactions are accounted for in accordance with PSAK 55, “Accounting for Derivative Instruments and Hedging Activities” which requires that all derivative instruments be recognized in the financial statements at fair value. To qualify for hedge accounting, PSAK 55 requires certain criteria to be met, including formal documentations at the inception of the hedge.

			Changes in the fair values of derivative instruments that do not qualify for hedge accounting are recognized in the consolidated statements of income. If a derivative instrument is designated and qualifies for hedge accounting the assets or liabilities shall be adjusted. The changes in fair values of derivative instruments are recognized in the consolidated statements of income or consolidated statement of changes in stockholder’s equity depending on the type and effectiveness of hedge transaction.

	u.		Treasury Stock

			Reacquired Company’s stock is accounted for at its reacquisition cost and classified as “Treasury Stock” and presented as deduction in stockholders’ equity. The cost of treasury stock sold is accounted for using the weighted average method. The difference resulting from the cost and the proceeds from the sale of treasury stock is credited to “Paid-in Capital”.

	v.		Dividends

			Dividend distribution to the Company’s stockholders is recognized as liability in the Company’s consolidated financial statements in the period in which the dividends are approved by the Company’s stockholders. For interim dividends, the Company recognized it as liability based on the Board of Director’s decision with the approval from the Board of Commissioners.

	w.		Earnings per share and earnings per ADS

			Basic earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the year. Net income per ADS is computed by multiplying basic earnings per share by 40, the number of shares represented by each ADS.

	x.		Segment information

			The Company and its subsidiaries’ segment information is presented based upon identified business segments. A business segment is a distinguishable unit that provides different products and services and is managed separately. Business segment information is consistent with operating information routinely reported to the Company’s chief operating decision maker.

	y.		Use of estimates

			The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the carrying amount of property, plant and equipment and intangible assets, the valuation allowance for receivables and obligations related to employee benefits. Actual results could differ from those estimates.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

3.		TRANSLATION OF RUPIAH INTO UNITED STATES DOLLARS

		The consolidated financial statements are stated in Indonesian Rupiah (“Rupiah”). The translations of Indonesian Rupiah amounts into U.S. Dollars are included solely for the convenience of the readers and have been made using the average of the market buy and sell rates of Rp.9,215 to US$1 as published by Reuters on March 31, 2008. The convenience translations should not be construed as representations that the Indonesian Rupiah amounts have been, could have been, or could in the future be, converted into United States Dollars at this or any other rate of exchange.

4.		AMENDMENT AND RESTATEMENT OF THE JOINT OPERATION SCHEME IN REGIONAL DIVISION VII (“KSO VII”) AND ACQUISITIONS OF SIGMA

	a.		KSO VII

			On October 19, 2006, the Company and PT Bukaka Singtel International (“BSI”), the investor in KSO VII, entered into an agreement to amend and restate their joint operation agreement (“KSO agreement”), to cover an amendment and restatement of the following principal provisions in the original KSO agreement:

	•		The rights to operate fixed-line telecommunications services have been transferred to the Company, where KSO VII is operated under the management, supervision, control and responsibility of the Company.

	•		The responsibilities for funding construction of new telecommunications facilities and payments of operating expenses incurred in KSO VII have been assigned to the Company.

	•		The risk of loss from damages or destructions of assets operated by KSO VII will be transferred to the Company.

	•		At the end of the KSO period (December 31, 2010), all rights, titles and interests of BSI in existing property, plant and equipment (including new additional installations) and inventories will be transferred to the Company at no cost.

	•		The Company’s rights to receive MTR and a share in DKSOR under the original KSO agreement were amended so that BSI receives fixed monthly payments (“Fixed Investor Revenues”) amounting to Rp.55,637 million beginning in October 2006 through June 2007 and amounting to Rp.44,250 million in July 2007 through December 2010. The Company is entitled to the balance of KSO revenues net of operating expenses and payments to BSI for Fixed Investor Revenues. In addition, payments for Fixed Investor Revenues must be made to BSI before any payments could be made to the Company.

	•		In the event that funds in KSO VII are insufficient to pay Fixed Investor Revenues to BSI, the Company is required to pay the shortfall to BSI.

As a result of the amendment and restatement of the KSO agreement, the Company obtained the legal right to control the financial and operating decisions of KSO VII. Accordingly, the Company has accounted for this transaction as a business combination using the purchase method of accounting. As a condition precedent to the coming into effect of the amended KSO agreement, the Company has entered into assignment agreement with BSI and its business partners whereby BSI assigned its RSA with its business partners to the Company. The Company has accounted for these transactions in accordance with the accounting treatment for RSA.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

AMENDMENT AND RESTATEMENT OF THE JOINT OPERATION SCHEME IN REGIONAL DIVISION VII (“KSO VII”) AND ACQUISITIONS OF SIGMA (continued)

	a.		KSO VII (continued)

			The purchase price for this transaction was approximately Rp.1,770,925 million which represents the present value of fixed monthly payments (totaling Rp.2,359,230 million) to be paid to BSI beginning in October 2006 through December 2010 using a discount rate of 15% plus the direct cost of the business combination. The allocation of the acquisition cost was as follows:


	Rp.
Purchase consideration — at present value		1,770,925


Fair value of net assets acquired:
- Cash and cash equivalents		143,648
- Receivables		266,337
- Other current assets		69,960
- Property, plant and equipment		1,288,888
- Deferred tax assets		6,993
- Property, plant and equipment under RSA		452,205
- Intangible assets		451,736
- Current liabilities		(456,637	)
- Unearned income on RSA		(452,205	)

Fair value of net assets as at October 19, 2006		1,770,925

			The fair values of the property, plant and equipment and property, plant and equipment under RSA were determined by an independent appraisal, while the fair values of other assets and liabilities were determined by management. The intangible assets represent right to operate the business in the KSO VII area and are amortized over the remaining term of the KSO agreement of 4.3 years (Note 14). There was no goodwill arising from this acquisition.

			The Company’s consolidated results of operations have included the operating results of KSO VII since October 1, 2006 being the nearest convenient consolidated balance sheet date.

			As of March 31, 2007 and 2008, the remaining monthly payments to be made to BSI, before unamortized discount, amounted to Rp.2,060,867 million and Rp.1,488,475 million, respectively, and is presented as “Deferred consideration for business combinations” (Note 24).

	b.		Sigma

			Effective on February 21, 2008, Metra acquired 80% of the outstanding common stock of Sigma for Rp.330,264. The acquisition of Metra has been accounted for using purchase method of accounting. The following table summarizes the purchase price allocation of the acquired assets and assumed liabilities at the closing date:


	Rp.
Current assets		111,467
Fixed assets		50,806
Intangible assets		232,335
Other assets		20,056

Current liabilities		(56,444	)
Long-term liabilities		(27,956	)

Acquisition cost		330,264

The Company’s consolidated result of operations had included the operating of Sigma since the date of acquisition.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CASH AND CASH EQUIVALENTS


	2007		2008
Cash on hand		32,354		35,959

Cash in banks
Related parties
Rupiah
PT Bank Mandiri (Persero) Tbk (“Bank Mandiri”)		109,565		190,446
PT Bank Negara Indonesia (Persero) Tbk (“BNI”)		114,039		128,390
PT Bank Rakyat Indonesia (Persero) Tbk (“BRI”)		115,139		12,780
PT Bank Pos Nusantara		514		240
PT Bank Tabungan Negara (Persero) Tbk (“BTN”)		—		19

		339,257		331,875

Foreign currencies
Bank Mandiri		35,170		64,621
BNI		11,980		27,839
BRI		618		663
Bank Syariah Mandiri		—		165

		47,768		93,288

Sub-total		387,025		425,163

Third parties
Rupiah
ABN AMRO Bank (“AAB”)		118,847		92,499
Deutsche Bank AG (“DB”)		3,251		28,451
PT Bank Central Asia Tbk (“BCA”)		11,950		17,718
PT Bank Bukopin Tbk (“Bank Bukopin”)		7,209		5,593
PT Bank Lippo Tbk (“Bank Lippo”)		1,611		2,124
PT Bank Ekonomi Raharja Tbk (“Bank Ekonomi”)		—		1,815
PT Bank Niaga Tbk (“Bank Niaga”)		1,652		1,513
Citibank, N.A. (“Citibank”)		8,082		851
Bank Sorong		2,719		—
Others (each below Rp.1 billion)		1,765		2,503

		157,086		153,067


Foreign currencies
DB		1,929		10,021
Citibank		8,653		8,673
Bank Ekonomi		—		3,603
AAB		163		185
Others (each below Rp.1 billion)		177		1,049

		10,922		23,531

Sub-total		168,008		176,598

Total cash in banks		555,033		601,761

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CASH AND CASH EQUIVALENTS (continued)


	2007		2008
Time deposits
Related parties
Rupiah
BRI		196,675		1,425,300
BNI		2,034,905		792,449
BTN		239,890		250,725
Bank Mandiri		352,542		245,818

		2,824,012		2,714,292

Foreign currencies
BNI		97		382,287
Bank Mandiri		842,490		69,870

		842,587		452,157

Sub-total		3,666,599		3,166,449

Third parties
Rupiah
DB		6,000		1,696,035
Standard Chartered Bank (“SCB”)		554,400		575,000
PT Bank Pembangunan Daerah Jawa Barat dan Banten (“Bank Jabar”)		237,030		354,400
Bank Bukopin		67,415		329,510
Bank Niaga		114,170		313,063
PT Bank Danamon Indonesia Tbk (“Bank Danamon”)		55,965		199,315
PT Bank Internasional Indonesia Tbk		27,190		191,500
PT Bank Mega Tbk (“Bank Mega”)		95,690		127,945
PT Bank Victoria International Tbk		—		70,000
PT Bank Century Tbk		—		45,000
PT Bank Bumiputera Indonesia Tbk (“Bank Bumiputera”)		—		35,000
PT Pan Indonesia Bank Tbk		—		35,000
PT Bank Tabungan Pensiunan Nasional Tbk		57,125		32,053
PT Bank Muamalat Indonesia (“Bank Muamalat”)		56,740		28,000
Bank Ekonomi		—		19,250
PT Bank Yudha Bhakti		3,945		14,250
Bank Artha Graha Internasional Tbk		—		10,000
Bank Lippo		—		3,000
PT Bank Nusantara Parahyangan Tbk		1,000		1,000
PT Bank Syariah Mega Indonesia (“Bank Syariah Mega”)		8,000		—
PT Bank NISP Tbk		47,065		—
PT Bank Permata Tbk		102		—
Citibank		137,300		—

		1,469,137		4,079,321

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

CASH AND CASH EQUIVALENTS (continued)


	2007		2008
Time deposits (continued)
Third parties (continued)
Foreign currencies
DB		1,322,937		1,168,582
SCB		136,770		493,340
Bank Muamalat		—		147,360
The Hongkong and Shanghai Banking Corporation Ltd.		—		112,831
Bank Jabar		—		18,420
Bank Bukopin		3,650		4,607
Bank Mega		1,825		1,843
Citibank		175,157		—

		1,640,339		1,946,983

Sub-total		3,109,476		6,026,304

Total time deposits		6,776,075		9,192,753

Grand Total		7,363,462		9,830,473


Interest rates per annum on time deposits are as follows:


	2007			2008
Rupiah		3.25%—9.75	%		2.25%—10.00	%
Foreign currencies		3.25%—3.75	%		1.00%—4.80	%

			The related parties which the Company and its subsidiaries place their funds are Government-owned banks. The Company and its subsidiaries placed a majority of their cash and cash equivalents in these banks because they have the most extensive branch network in Indonesia and are considered to be financially sound banks as they are owned by the Government.

			Refer to Note 44 for details of related party transactions.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

6.		TRADE RECEIVABLES

		Trade receivables arose from services provided to both retail and non-retail customers, with details as follows:

By debtor

(i)

Related parties


	2007			2008
Government Agencies		528,471			451,114
CSM		41,235			52,084
PT Patra Telekomunikasi Indonesia (“Patrakom”)		12,129			17,623
PT Aplikanusa Lintasarta (“Lintasarta”)		3,454			4,237
Koperasi Pegawai Telkom (“Kopegtel”)		4,094			966
PSN		718			—
Others		37,246			4,465

Total		627,347			530,489
Allowance for doubtful accounts		(91,803	)		(130,703	)

Net		535,544			399,786

			Trade receivables from certain related parties are presented net of the Company and its subsidiaries’ liabilities to such parties due to legal right of offset in accordance with agreements with those parties.

	(ii)		Third parties


	2007			2008
Residential and business subscribers		3,406,380			3,559,353
Overseas international carriers		247,094			260,738

Total		3,653,474			3,820,091
Allowance for doubtful accounts		(691,513	)		(1,161,958	)

Net		2,961,961			2,658,133

By age

(i)

Related parties


	2007			2008
Up to 6 months		421,949			486,997
7 to 12 months		47,223			19,902
13 to 24 months		36,203			12,813
More than 24 months		121,972			10,777

Total		627,347			530,489
Allowance for doubtful accounts		(91,803	)		(130,703	)

Net		535,544			399,786

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

TRADE RECEIVABLES (continued)

By age (continued)

(ii)

Third parties


	2007			2008
Up to 3 months		2,929,738			2,133,065
More than 3 months		723,736			1,687,026

Total		3,653,474			3,820,091
Allowance for doubtful accounts		(691,513	)		(1,161,958	)

Net		2,961,961			2,658,133

By currency

(i)

Related parties


	2007			2008
Rupiah		615,472			459,961
U.S. Dollars		11,875			70,528

Total		627,347			530,489
Allowance for doubtful accounts		(91,803	)		(130,703	)

Net		535,544			399,786

(ii)

Third parties


	2007			2008
Rupiah		3,343,819			3,512,594
U.S. Dollars		309,655			307,497

Total		3,653,474			3,820,091
Allowance for doubtful accounts		(691,513	)		(1,161,958	)

Net		2,961,961			2,658,133

Movements in the allowance for doubtful accounts


	2007			2008
Beginning balance		784,789			1,100,456
Additions (Note 37)		122,179			192,651
Bad debts write-off		(123,652	)		(446	)

Ending balance		783,316			1,292,661

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

TRADE RECEIVABLES (continued)

	d.		Movements in the allowance for doubtful accounts (continued)

			Management believes that the allowance for doubtful accounts is adequate to cover probable losses on non-collection of the accounts receivable.

			Except for the amounts receivable from the Government Agencies, management believes that there were no significant concentrations of credit risk on these receivables. The Company and its subsidiaries do not have any off-balance sheet credit exposures related to their customers.

			Refer to Note 44 for details of related party transactions.

INVENTORIES


	2007			2008
Modules		113,086			132,620
SIM cards, RUIM cards and prepaid voucher blanks		84,050			122,019
Components		59,659			56,127

Total		256,795			310,766

Allowance for obsolescence
Modules		(45,003	)		(50,557	)
Components		(4,436	)		(5,942	)
SIM cards, RUIM cards and prepaid voucher blanks		(190	)		(369	)

Total		(49,629	)		(56,868	)

Net		207,166			253,898

Movements in the allowance for obsolescence are as follows:


	2007			2008
Beginning balance		48,098			54,701
Additions (Note 37)		1,807			2,645
Inventories write-off		(276	)		(478	)

Ending balance		49,629			56,868

Components and modules represent telephone terminals, cables, transmission installation spare parts and other spare parts.

Management believes that the allowance is adequate to cover probable losses from decline in inventory value due to obsolescence.

As of March 31, 2008, certain inventories held by the Company has been insured against fire, theft and other specific risks. Total sum insured as of March 31, 2008 amounted Rp.88,968 million (Note 44d.vii). Management believes that the insurance coverage is adequate.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

PREPAID EXPENSES


	2007		2008
Rental		1,255,803		746,379
Salaries		352,473		342,694
Insurance		42,450		83,583
Telephone directory issuance costs		47,330		31,273
Others		30,914		22,866

Total		1,728,970		1,226,795

		Refer to Note 44 for details of related party transactions.

9.		RESTRICTED TIME DEPOSITS

		This account consists of the Company’s time deposits of US$0.02 million (equivalent to Rp.155 million) and Rp.2,737 million as of March 31, 2007 and US$0.916 million (equivalent to Rp.8,440 million) and Rp.64,021 million as of March 31, 2008, and Infomedia’s time deposit of Rp.1,731 million as of March 31, 2007 and Rp.3,225 million as of March 31, 2008 which were pledged as collateral for bank guarantees to Bank Mandiri (Note 44).

10.		LONG-TERM INVESTMENTS


	2007
	Percentage
	of		Beginning		Share of		Translation		Ending
	ownership		balance		net income		adjustment		balance
Equity method:
CSM		25.00		53,114		—		—		53,114
Patrakom		40.00		26,007		2,977		—		28,984
PSN		22.38		—		—		—		—

				79,121		2,977		—		82,098

Cost method:
Bridge Mobile Pte. Ltd. (“BMPL”)		12.50		9,290		—		—		9,290
PT Batam Bintan Telekomunikasi (“BBT”)		5.00		587		—		—		587
PT Pembangunan Telekomunikasi Indonesia (“Bangtelindo”)		3.18		199		—		—		199

				10,076		—		—		10,076

				89,197		2,977		—		92,174

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

10. LONG-TERM INVESTMENTS (continued)


	2008
	Percentage						Share of
	of		Beginning				net income			Translation			Ending
	ownership		balance		Addition		(loss)			adjustment			balance
Equity method:
CSM		25.00		57,240		—		(2,021	)		(1,103	)		54,116
Patrakom		40.00		32,892		—		1,146			—			34,038
PSN		22.38		—		—		—			—			—

				90,132		—		(875	)		(1,103	)		88,154

Cost method:
BMPL		10.00		20,360		—		—			—			20,360
BBT		5.00		587		—		—			—			587
Bangtelindo		3.18		199		—		—			—			199
Scicom (MSC) Berhad (“Scicom”)		9.85		2,712		28,249		—			—			30,961

				23,858		28,249		—			—			52,107

				113,990		28,249		(875	)		(1,103	)		140,261

	a.		CSM

			CSM is engaged in providing Very Small Aperture Terminal (“VSAT”), network application services and consulting services on telecommunications technology and related facilities.

			As of March 31, 2007 and 2008, the carrying amount of the investment in CSM was equal to the Company’s share in the net assets of CSM.

	b.		Patrakom

			Patrakom is engaged in providing satellite communication system services, related services and facilities to companies in the petroleum industry.

			The increase of ownership in Patrakom in 2007 represents an adjustment arising from the difference between the book value and the initial investment was made in 2005.

			As of March 31, 2007 and 2008, the carrying amount of investment in Patrakom was approximate to the Company’s share in the net assets of Patrakom.

	c.		PSN

			PSN is engaged in providing satellite transponder leasing and satellite-based communication services in the Asia Pacific region. The Company’s share in losses in PSN has exceeded the carrying amount of its investment since 2001, accordingly, the investment value has been reduced to Rp.nil.

			On January 20, 2006, PSN’s stockholders agreed to issue new shares to a new stockholder. The issuance of new shares resulted in dilution of the Company’s interest in PSN to 22.38%.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

10.

LONG-TERM INVESTMENTS (continued)

	d.		BMPL

			BMPL (Singapore), an associated entity of Telkomsel, is engaged in providing regional mobile services in the Asia Pacific region.

			Subsequently, on March 7, 2007, it was resolved that each of the stockholders shall subscribe for 1,500,000 additional shares of BMPL, subject to the accession of SK Telecom Co., Ltd as a stockholder of BMPL. However, the additional subscription of 300,000 shares shall be cancelled if SK Telecom Co., Ltd becomes a stockholder of BMPL.

			Based on the Accession Agreement dated June 18, 2007, the stockholders of BMPL agreed to admit SK Telecom Co, Ltd as a stockholder of BMPL. Consequently, the additional subscription of 300,000 shares was cancelled. On the same date, the stockholders of BMPL also agreed to admit Advanced Info Service Public Company Limited as a stockholder of BMPL.

			In 2007, Telkomsel has paid additional subscriptions of US$1,200,000 (equivalent to Rp.11,069 million).

	e.		BBT

			BBT is engaged in providing fixed line telecommunication services at Batamindo Industrial Park in Muka Kuning, Batam Island and at Bintan Beach International Resort and Bintan Industrial Estate in Bintan Island.

	f.		Bangtelindo

			Bangtelindo is primarily engaged in providing consultancy services on the installation and maintenance of telecommunications facilities.

	g.		Scicom

			Scicom is engaged in providing call center services in Malaysia. As of March 31, 2008, TII has purchased 2,600,000 shares which represent 9.85% of Scicom outstanding shares.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

11.

PROPERTY, PLANT AND EQUIPMENT


	January 1,										March 31,
	2007		Additions		Deductions			Reclassifications			2007
At cost:
Direct acquisitions
Land		399,338		2,175		(50	)		13,854			415,317
Buildings		2,758,673		22,877		—			53,511			2,835,061
Switching equipment		21,335,512		2,692		—			471,168			21,809,372
Telegraph, telex and data communication equipment		189,701		—		—			—			189,701
Transmission installation and equipment		34,621,302		111		—			2,997,378			37,618,791
Satellite, earth station and equipment		5,568,809		62,456		—			—			5,631,265
Cable network		19,515,317		11,560		—			9,406			19,536,283
Power supply		3,269,686		2,641		—			245,664			3,517,991
Data processing equipment		5,332,847		45,259		—			413,202			5,791,308
Other telecommunications peripherals		626,631		—		—			(3,226	)		623,405
Office equipment		759,959		11,004		—			4,758			775,721
Vehicles		171,778		61		—			(219	)		171,620
Other equipment		113,093		351		—			—			113,444
Property under construction:
Buildings		35,105		59,151		—			(70,604	)		23,652
Switching equipment		1,334,956		453,157		—			(471,158	)		1,316,955
Transmission installation and equipment		2,987,094		2,797,965		—			(2,927,699	)		2,857,360
Cable network		7,159		1,785		—			(2,829	)		6,115
Power supply		17,644		485,334		—			(258,863	)		244,115
Data processing equipment		16		415,483		—			(410,372	)		5,127
Other telecommunications peripherals		—		10,465		—			—			10,465
Leased assets
Transmission installation and equipment		265,820		—		—			—			265,820

Total		99,310,440		4,384,527		(50	)		63,971			103,758,888

Accumulated depreciation and impairment:
Direct acquisitions
Buildings		1,290,020		44,253		—			(99	)		1,334,174
Switching equipment		11,195,005		537,025		—			—			11,732,030
Telegraph, telex and data communication equipment		185,736		106		—			—			185,842
Transmission installation and equipment		12,163,943		995,171		—			27,661			13,186,775
Satellite, earth station and equipment		1,947,875		108,194		—			—			2,056,069
Cable network		11,495,878		350,723		—			(1,611	)		11,844,990
Power supply		1,500,435		81,737		—			(5	)		1,582,167
Data processing equipment		3,688,200		179,408		—			(9,656	)		3,857,952
Other telecommunications peripherals		587,545		3,705		—			6,490			597,740
Office equipment		593,038		12,335		—			901			606,274
Vehicles		161,018		1,053		—			(167	)		161,904
Other equipment		101,211		1,118		—			—			102,329
Leased assets
Transmission installation and equipment		133,476		8,296		—			—			141,772

Total		45,043,380		2,323,124		—			23,514			47,390,018

Net Book Value		54,267,060										56,368,870

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

11.

PROPERTY, PLANT AND EQUIPMENT (continued)


	January 1,		Acquisitions										March 31,
	2008		of Sigma		Additions		Deductions			Reclassifications			2008
At cost:
Direct acquisitions
Land		561,348		—		11,274		—			—			572,622
Buildings		2,961,302		—		18,868		—			39,677			3,019,847
Switching equipment		24,293,139		—		13,350		—			136,161			24,442,650
Telegraph, telex and data communication equipment		156,036		—		—		—			(2,403	)		153,633
Transmission installation and equipment		44,758,386		—		210,443		—			1,965,505			46,934,334
Satellite, earth station and equipment		5,979,626		—		33,557		—			2,799			6,015,982
Cable network		20,669,529		—		129,041		—			(1,133	)		20,797,437
Power supply		4,416,077		—		5,910		—			257,781			4,679,768
Data processing equipment		6,527,841		14,523		36,322		—			137,919			6,716,605
Other telecommunications peripherals		637,020		2,186		4,307		—			—			643,513
Office equipment		706,484		1,345		6,767		—			(40	)		714,556
Vehicles		156,192		1,161		—		(466	)		(5,980	)		150,907
Other equipment		109,784		—		224		—			—			110,008
Property under construction:
Buildings		86		—		48,725		—			(39,823	)		8,988
Switching equipment		83,740		—		121,520		—			(137,579	)		67,681
Transmission installation and equipment		2,525,030		—		1,687,204		—			(1,977,647	)		2,234,587
Satellite, earth station and equipment		3,557		—		—		—			(525	)		3,032
Cable network		381		—		34,364		—			—			34,745
Power supply		37,979		—		245,630		—			(259,016	)		24,593
Data processing equipment		31,351		27,544		152,471		—			(137,937	)		73,429
Leased assets
Vehicles		—		2,227		20,874		—			—			23,101
Transmission installation and equipment		283,813		—		—		—			—			283,813

Total		114,898,701		48,986		2,780,851		(466	)		(22,241	)		117,705,831

Accumulated depreciation and impairment:
Direct acquisitions
Buildings		1,465,078		—		47,459		—			(50	)		1,512,487
Switching equipment		13,562,557		—		584,204		—			(504	)		14,146,257
Telegraph, telex and data communication equipment		152,427		—		99		—			(2,403	)		150,123
Transmission installation and equipment		16,178,965		—		1,064,359		—			(5,947	)		17,237,377
Satellite, earth station and equipment		2,373,355		—		130,045		—			8,642			2,512,042
Cable network		12,917,430		—		331,685		—			598			13,249,713
Power supply		1,864,747		—		108,636		—			(276	)		1,973,107
Data processing equipment		4,324,279		—		217,880		—			15			4,542,174
Other telecommunications peripherals		575,458		—		3,014		—			38			578,510
Office equipment		584,927		—		11,399		—			570			596,896
Vehicles		147,055		—		965		(466	)		(5,933	)		141,621
Other equipment		100,437		—		749		—			—			101,186
Leased assets
Vehicles		—		—		863		—			—			863
Transmission installation and equipment		188,094		—		4,932					(191	)		192,835

Total		54,434,809		—		2,506,289		(466	)		(5,441	)		56,935,191

Net Book Value		60,463,892												60,770,640

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

11.

PROPERTY, PLANT AND EQUIPMENT (continued)

Gain on disposal or exchange of assets


			2007		2008
(i	)	Proceeds from sale of property, plant and equipment		2,481		5,298
		Net book value		—		—

		Gain on disposal		2,481		5,298

(ii)

In 2006, Telkomsel exchanged certain equipment with a net book value of Rp.440,355 million for new equipment with a value of Rp.440,357 million. The resulting gain of Rp.2 million was charged to the 2006 consolidated statement of income. The net carrying value of certain equipment, Rp.309,860 million was reclassified under equipment not used in operations (Note 13).

KSO assets ownership arrangements

	(i)		In accordance with the amended and restated KSO VII agreement with BSI (Note 4), the ownership rights to the acquired property, plant and equipment in KSO VII are legally retained by BSI until the end of the KSO period which is on December 31, 2010. As of March 31, 2007 and 2008, the net book value of these property, plant and equipment was Rp.1,130,845 million and Rp.1,010,385 million, respectively.

	(ii)		In accordance with the amended and restated KSO IV agreement with PT Mitra Global Telekomunikasi Indonesia (“MGTI”), the ownership rights to the acquired property, plant and equipment in KSO IV are legally retained by MGTI until the end of the KSO period which is on December 31, 2010. As of March 31, 2007 and 2008, the net book value of these property, plant and equipment was Rp.1,047,795 million and Rp.741,409 million, respectively.

Assets impairment and related claims

	(i)		In the first quarter of 2005, the Government issued a series of regulations in its efforts to rearrange the frequency spectra utilized by the telecommunications industry. This action has resulted in the Company not being able to utilize certain frequency spectra it had used to support its fixed wireline cable network by the end of 2006. As a result of these regulations, certain of the Company’s cable network facilities within the fixed wireline segment, which comprised primarily of Wireless Local Loop (“WLL”) and Approach Link equipment operating in the affected frequency spectra, could no longer be used by the end of 2006. Hence, the Company had shortened the remaining useful lives for WLL and Approach Link equipment in the first quarter in 2005 and depreciated the remaining net book value of these assets through December 31, 2006.

	(ii)		Further, on August 31, 2005, MoCI issued a press release which announced that in order to conform with the international standards and as recommended by the International Telecommunications Union — Radiocommunication Sector (“ITU-R”), the 1900 MHz frequency spectrum would only be used for IMT-2000 or 3G network. In its press release, the MoCI also announced that the Code Division Multiple Access (“CDMA”)-based technology network which the Company used for its fixed wireless services could only operate in the 800 MHz frequency spectrum. The Company utilizes the 1900 MHz frequency spectrum for its fixed wireless network in Jakarta and West Java areas while for other areas, the Company utilizes the 800 MHz frequency spectrum.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

11.

PROPERTY, PLANT AND EQUIPMENT (continued)

Assets impairment and related claims (continued)

	(ii)		(continued)

			On January 13, 2006, the MoCI issued MoCI Regulation No. 01/Per/M.KOMINFO/1/2006 which reaffirmed the Government’s decision that the Company’s fixed wireless network could only operate in the 800 MHz frequency spectrum and that the 1900 MHz will be allocated for 3G network. Following the preceding Government’s decisions, the Company reviewed the recoverable amount of cash-generating unit to which the affected fixed wireless asset belongs and in 2005, the Company had written-down Rp.616,768 million for transmission installation and equipment of fixed wireless assets. The recoverable amount was estimated using value in use which represented the present value of estimated future cash flows from cash-generating unit using a pretax discount rate of 16.89%, representing the Company’s weighted average cost of capital as of December 31, 2005. In determining cash-generating unit to which an asset belongs, assets were grouped at the lowest level that included the assets and generated cash inflows that were largely independent of the cash inflows from other assets or group of assets. In addition, the Company recognized a loss relating to non-cancelable contracts for procurement of the 1900 MHz transmission installation and equipment in Jakarta and West Java areas amounting to Rp.79,359 million.

			As a result of this Government’s decision, the Company’s Base Station System (“BSS”) equipment in Jakarta and West Java areas which are part of transmission installation and equipment for fixed wireless network could no longer be used by the end of 2007 with total acquisition cost amounted to Rp.1,330,818 million. The BSS equipment has been completely replaced with BSS equipment operating in 800 MHz by the end of December 2007. In June 2007, the Company has been fully depreciated the assets.

	(iii)		As of March 31, 2007 and 2008, the Company operated two satellites, Telkom-1 and Telkom-2 primarily providing backbone transmission links for its network and earth station satellite up-linking and down-linking services to domestic and international users. As of March 31, 2008, there were no events or changes in circumstances that would indicate that the carrying amount of the Company’s satellites may not be recoverable.

	(iv)		On February 2, 2007, Jakarta and its surrounding, area of Divre II Jakarta were covered by flood where an insurance claim for the replacement of the assets has been agreed. Buildings and other equipments affected by the flood have been re-operated gradually and with full completion expected to be on July 30, 2008.

	(v)		On March 6, 2007, Padang within Divre I Sumatera experienced an earthquake where an insurance claim for the replacement of the assets has been made. The facilities have been re-operated gradually since September 2007.

	(vi)		On September 12, 2007, South and West Sumatera within Divre I Sumatera experienced an earthquake where an insurance claim for the replacement of the assets has been made. The facilities have been re-operated gradually since September 2007.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

11.

PROPERTY, PLANT AND EQUIPMENT (continued)

Others

	(i)		Interest capitalized to property under construction amounted to Rp.nil for the three months period ended March 31, 2007 and 2008, respectively.

	(ii)		Foreign exchange loss capitalized as part of property under construction amounted to Rp.nil for the three months period ended March 31, 2007 and 2008, respectively.

	(iii)		In 2007, Telkomsel capitalized Rp.938,296 million of its property, plant and equipment which was subject to price adjustment (Note 49a.ii). Part of the capitalized amount of Rp.307,603 million has been depreciated with total depreciation charged to the consolidated statement of income amounting to Rp.10,210 million. As of the date of the consolidated financial statements, the new agreements are still under negotiation; it is therefore not possible to determine adjustment, if any, to the property, plant and equipment as of March 31, 2008 and its related depreciation.

	(iv)		The Company and its subsidiaries own several pieces of land located throughout Indonesia with Building Use Rights (“Hak Guna Bangunan” or “HGB”) for a period of 20-30 years, which will expire between 2008 and 2038. Management believes that there will be no difficulty in obtaining the extension of the land rights when they expire.

	(v)		The Company was granted the right to use certain parcels of land by the Ministry of Communications and Information Technology of the Republic of Indonesia (formerly Ministry of Tourism, Post and Telecommunications) where they are still under the name of the Ministry of Tourism, Post and Telecommunications and the Ministry of Transportation of the Republic of Indonesia. The transfer to the Company of the legal title of ownership on those parcels of land is still in progress.

	(vi)		As of March 31, 2008, the Company’s and its subsidiaries’ property, plant and equipment, except for land, were insured with PT Asuransi Jasa Indonesia (“Jasindo”), PT Asuransi Ramayana, PT Asuransi Wahana Tata and PT Asuransi Export Indonesia against fire, theft and other specified risks. Total cost of assets being insured amounted to Rp.33,169,394 million and US$490.21 million, which was covered by sum insured basis with a maximum loss claim of Rp.1,181,046 million and on first loss basis of US$378.86 million and Rp.824,000 million including business recovery of Rp.324,000 million with Automatic Reinstatement of Loss Clause. In addition, the Telkom-1 and Telkom-2 were insured separately for US$34.04 million and US$51.26 million respectively. Management believes that the insurance coverage is adequate.

	(vii)		As of March 31, 2008, the completion of assets under construction was around 65% of the total contract value with estimated dates of completion to be between April 2008 up to March 2009. Management believes that there is no impediment to the completion of the construction in progress.

	(viii)		Certain property, plant and equipment of the Company’s subsidiaries have been pledged as collateral for lending agreements (Notes 19 and 23).

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

11.

PROPERTY, PLANT AND EQUIPMENT (continued)

Others (continued)

(ix)

The Company has lease commitments for entitled vehicle, certain transmission installation and equipment, with the option to purchase the leased assets at the end of the lease terms. Future minimum lease payments for the assets under capital leases as of March 31, 2007 and 2008 are as follows:


Year	2007			2008
2007		53,903			—
2008		78,161			84,142
2009		78,161			84,756
2010		78,161			84,756
2011		78,161			77,489
2012		24,470			51,307
Later		—			15,224

Total minimum lease payments		391,017			397,674
Interest		(161,351	)		(152,581	)

Net present value of minimum lease payments		229,666			245,093
Current maturities (Note 20a)		(21,666	)		(35,578	)

Long-term portion (Note 20b)		208,000			209,515

12.

PROPERTY, PLANT AND EQUIPMENT UNDER REVENUE-SHARING ARRANGEMENTS (“RSA”)


	January 1,								March 31,
	2007		Additions		Deduction		Reclassifications		2007
At cost:
Land		4,646		—		—		—		4,646
Buildings		5,110		—		—		—		5,110
Switching equipment		365,293		—		—		—		365,293
Transmission installation and equipment		296,365		—		—		—		296,365
Cable network		618,845		—		—		—		618,845
Other telecommunications peripherals		168,754		—		—		—		168,754

Total		1,459,013		—		—		—		1,459,013

Accumulated depreciation:
Land		2,703		58		—		—		2,761
Buildings		2,926		64		—		—		2,990
Switching equipment		172,341		8,678		—		—		181,019
Transmission installation and equipment		103,253		9,380		—		—		112,633
Cable network		124,740		16,972		—		—		141,712
Other telecommunications peripherals		87,418		6,213		—		—		93,631

Total		493,381		41,365		—		—		534,746

Net Book Value		965,632								924,267

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

12.

PROPERTY, PLANT AND EQUIPMENT UNDER RSA (continued)


	January 1,									March 31,
	2008		Additions		Deduction		Reclassifications			2008
At cost:
Land		4,646		—		—		—			4,646
Buildings		3,982		—		—		—			3,982
Switching equipment		286,688		—		—		—			286,688
Transmission installation and equipment		179,785		—		—		(18,179	)		161,606
Cable network		583,353		—		—		—			583,353
Other telecommunications peripherals		149,200		—		—		—			149,200

Total		1,207,654		—		—		(18,179	)		1,189,475

Accumulated depreciation:
Land		2,935		58		—		—			2,993
Buildings		2,435		50		—		—			2,485
Switching equipment		169,663		6,137		—		—			175,800
Transmission installation and equipment		90,141		3,808		—		(6,059	)		87,890
Cable network		144,603		12,059		—		—			156,662
Other telecommunications peripherals		92,786		6,072		—		—			98,858

Total		502,563		28,184		—		(6,059	)		524,688

Net Book Value		705,091									664,787

		In accordance with RSA, the ownership rights to the property, plant and equipment under RSA are legally retained by the investors until the end of the revenue-sharing periods.

		The balances of unearned income on RSA as of March 31, 2007 and 2008, are as follows:


	2007			2008
Gross amount		1,459,013			1,189,474

Accumulated amortization:
Beginning balance		(641,839	)		(704,269	)
Additions (Note 34)		(67,920	)		(60,372	)
Deductions		—			18,180

Ending balance		(709,759	)		(746,461	)

Net		749,254			443,013

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

13.		ADVANCES AND OTHER NON-CURRENT ASSETS

		Advances and other non-current assets as of March 31, 2007 and 2008 consist of:


	2007		2008
Advances for purchase of property, plant and equipment		292,542		1,133,990
Deferred land rights charges		85,729		94,619
Restricted cash		91,738		91,618
Equipment not used in operations — net		—		65,258
Security deposits		32,691		48,719
Others		218,329		189,878

Total		721,029		1,624,082

		Deferred land rights charges represent costs to extend the contractual life of the land rights which have been deferred and amortized over the contractual life.

		As of March 31, 2007 and 2008, restricted cash represented cash received from the Government relating to compensation for early termination of exclusive rights to be used for the construction of certain infrastructures (Notes 1a and 29) and time deposits with original maturities of more than one year pledged as collateral for bank guarantees.

		As of March 31, 2008, equipment not used in operations represents Base Transceiver Station (BTS) and other equipment of the Company and Telkomsel temporarily taken out from operations but planned to be reinstalled. Telkomsel’s depreciation charged to the consolidated statement of income for three months period ended March 31, 2007 and 2008 amounted to Rp.8,363 million and Rp.3,091 million, respectively.

		In 2007 certain Telkomsel’s equipment with a net carrying amount of Rp.119,773 million was re-installed and subsequently reclassified to property, plant and equipment (Note 11).

		Refer to Note 44 for details of related party transactions.

14.		GOODWILL AND OTHER INTANGIBLE ASSETS

(i)

The changes in the carrying amount of goodwill and other intangible assets for the three months period ended March 31, 2007 and 2008 are as follows:


				Other
				intangible
	Goodwill			assets			License			Total
Gross carrying amount:
Balance, December 31, 2006		106,348			7,602,848			436,000			8,145,196

Balance, March 31, 2007		106,348			7,602,848			436,000			8,145,196

Accumulated amortization:
Balance, December 31, 2006		(106,348	)		(3,590,563	)		(11,679	)		(3,708,590	)
Amortization expense for three months period (Note 37)		—			(251,205	)		(11,679	)		(262,884	)

Balance, March 31, 2007		(106,348	)		(3,841,768	)		(23,358	)		(3,971,474	)

Net Book Value		—			3,761,080			412,642			4,173,722

Weighted-average amortization period	5 years			7.58 years			9.5 years

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

14.

GOODWILL AND OTHER INTANGIBLE ASSETS (continued)


				Other
				intangible
	Goodwill			assets			License			Total
Gross carrying amount:
Balance, December 31, 2007		106,348			7,602,848			436,000			8,145,196
Additions — Sigma’s Software License		—			—			21,044			21,044
Additions — Metra’s Goodwill		232,335			—			—			232,335

Balance, March 31, 2008		338,683			7,602,848			457,044			8,398,575

Accumulated amortization:
Balance, December 31, 2007		(106,348	)		(4,593,326	)		(58,393	)		(4,758,067	)
Accumulated — Sigma’s Software License		—			—			(12,605	)		(12,605	)
Amortization expense for three months period (Note 37)		—			(250,793	)		(11,679	)		(262,472	)

Balance, March 31, 2008		(106,348	)		(4,844,119	)		(82,677	)		(5,033,144	)

Net Book Value		232,335			2,758,729			374,367			3,365,431

Weighted-average amortization period	5 years			7.58 years			9.5 years

	(ii)		Other intangible assets resulted from the acquisitions of Dayamitra, Pramindo, AWI, KSO IV and KSO VII (Note 4), and represented the rights to operate the business in the KSO areas. Goodwill resulted from the acquisition of GSD in 2001.

	(iii)		The estimated annual amortization expense relating to other intangible assets for each of the next three years beginning from January 1, 2008 would be approximately Rp.1,049,477 million per year.

	(iv)		In 2006, Telkomsel was granted the right to operate the 3G license. Telkomsel is required to pay an up-front fee and annual BHP fee for the next ten years. The up-front fee is recorded as intangible asset and amortized using the straight-line method over the term of the right to operate the 3G license (10 years) which is extendable subject to evaluation. Amortization commenced in 2006 when the assets attributable to the provision of the related services became available for use.

			The up-front fee paid by Telkomsel in February 2006 for the 3G license amounting to Rp.436,000 million was recognized as intangible asset and is amortized over the term of the 3G license.

			Based on Telkomsel’s management interpretation of the license conditions and written confirmation from the DGPT, the 3G license may be returned at any time without any financial obligation to pay the remaining outstanding annual BHP fees. Accordingly, the annual BHP fees relating to 3G license are expensed when incurred. Telkomsel’s management assesses its plan to continue to use the license on an annual basis.

	(v)		As of March 31, 2008, management believes that there was no indication of impairment.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

15.		ESCROW ACCOUNTS

		Escrow accounts as of March 31, 2007 and 2008 consist of the following:


	2007		2008
Bank Danamon		1,162		1,177
Others (each below Rp.1 billion)		225		108

		1,387		1,285

		The escrow accounts with Bank Danamon were established in relation with the RSA in telecommunications equipment in Divre VII East Indonesia.

16.		TRADE PAYABLES


	2007		2008
Related parties
Concession fees		662,818		280,931
Purchases of equipment, materials and services		113,891		229,537
Payables to other telecommunications providers		97,642		67,101

Sub-total		874,351		577,569

Third parties
Purchases of equipment, materials and services		6,083,457		4,647,468
Payables related to RSA		203,236		92,033
Payables to other telecommunications providers		49,127		105,602

Sub-total		6,335,820		4,845,103

Total		7,210,171		5,422,672

Trade payables by currency are as follows:


	2007		2008
Rupiah		6,690,521		5,194,977
U.S. Dollars		427,093		187,698
Euro		46,937		34,592
Singapore Dollars		45,596		4,916
Japanese Yen		24		47
Others		—		442

Total		7,210,171		5,422,672

Refer to Note 44 for details of related party transactions.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

17.

ACCRUED EXPENSES


	2007		2008
General, administrative and marketing		419,523		1,557,623
Salaries and benefits		1,309,258		1,347,508
Interest and bank charges		199,394		164,370
Operations, maintenance and telecommunications services		650,188		—

Total		2,578,363		3,069,501

18.

UNEARNED INCOME


	2007		2008
Prepaid pulse reload vouchers		2,052,562		2,298,523
Other telecommunications services		4,338		51,518
Others		97,227		127,518

Total		2,154,127		2,477,559

19.

SHORT-TERM BANK LOANS


	2007		2008
BNI		100,000		166,667
Bank Niaga		15,800		29,800
Bank Syariah Mega		—		19,347
BCA		116,667		—
Bank Mandiri		116,666		—
Bank Bumiputera		8,000		—

Total		357,133		215,814

	a.		BNI

			On August 15, 2006, Telkomsel signed a Rp.300,000 million short-term facility agreement with BNI, payable in 3 equal quarterly installments commencing after 3 months from the end of the availability period. The loan bore a floating interest rate of three-month Certificate of Bank Indonesia (“Sertifikat Bank Indonesia” or “SBI”) plus 1.5% per annum (12.86% per annum as of March 31, 2007) which becomes due quarterly in arrears and was unsecured. The principal outstanding as of March 31, 2007, amounted to Rp.100,000 million and on June 28, 2007 the loan was fully repaid.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

19. SHORT-TERM BANK LOANS (continued)

	a.		BNI (continued)

			On June 15, 2007, Telkomsel signed a Rp.300,000 million short-term facility agreement with BNI, payable in 3 equal quarterly installments commencing after 3 months from the end of the availability period. The loan bears a floating interest rate of three-month Jakarta Interbank Offered Rate (“JIBOR”) plus 1.25% per annum (9.40% per annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. On July 24, 2007, the loan agreement was amended for additional facilities of Rp.200,000 million. The principal outstanding as of March 31, 2008, amounted to Rp.166,667 million.

	b.		Bank Niaga

			On April 25, 2005, Balebat entered into a Rp.800 million, 12% per annum fixed rate revolving credit facility and Rp.1,600 million investment credit facility agreement with Bank Niaga. These credit facilities are secured by Balebat’s property located in West Java up to a maximum of Rp.3,350 million (Note 11). The applicable fixed interest rate and maturity date of the revolving credit facility was amended on July 26, 2005 from 12% per annum to 12.5% per annum and May 30, 2006, respectively and subsequently on June 13, 2006 to 16.5% per annum and May 30, 2007, respectively. Based on the latest amendment, the revolving credit facility amounting to Rp.800 million was combined with the short-term fixed credit facility of Rp.4,000 million (Note 23h). Additionally, Balebat obtained a credit facility of Rp.500 million with a fixed interest rate of 16.75% per annum, maturing on May 30, 2007. On May 23, 2007, the loan agreement was amended (4^th amendment agreement) to increase the maximum facility amount and interest rate to Rp.15,000 million and 13% per annum respectively, for the period up to May 29, 2008. As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.800 million and Rp.14,800 million, respectively.

			On October 18, 2005, GSD entered into a short-term loan agreement with Bank Niaga for an original facility of Rp.3,000 million for a one-year term. On November 3, 2006, the agreement was amended to change the interest rate from 16.25% per annum to 15.5% per annum and the maturity period to October 18, 2007. On November 23, 2007, the loan agreement was amended to change the total facility to Rp.15,000 million with an interest rate of 11% per annum and the maturity period to October 18, 2008. This credit facility is secured by GSD’s property, plant and equipment located in Jakarta (Note 11). As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.8,000 million and Rp.15,000 million, respectively.

			In October 2005, GSD entered into a short-term facility agreement with Bank Niaga for an original facility of Rp.12,000 million, as amended on June 7, 2006 to Rp.7,000 million, and maturing on October 18, 2006. The loan agreement was amended twice, the latest on November 3, 2006, to change the interest rate from 16.25% per annum to 15.5% per annum for the period October 18, 2006 to October 18, 2007. The principal outstanding as of March 31, 2007 and 2008 was Rp.7,000 million and Rp.nil respectively.

	c.		Bank Syariah Mega

			On December 11, 2007, Infomedia entered into a Rp.10,535 million loan agreement with Bank Syariah Mega for working capital purpose. The facility is obtained through sharia principles with the estimated rates on borrowing at 14% per annum, and is secured by the receivables from contact center. The loan is payable within 3 months from the signing date. On March 27, 2008, the loan agreement was amended to extend the maturity period to June 14, 2008. The principal outstanding as of March 31, 2008 amounted to Rp.10,535 million.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

19. SHORT-TERM BANK LOANS (continued)

	c.		Bank Syariah Mega (continued)

			On March 31, 2008, Infomedia entered into Rp.8,812 million loan agreement with Bank Syariah Mega for working capital purpose. The facility is obtained through sharia principles with the estimated rates on borrowing at 14% per annum, and is secured by the receivables from contact center. The loan is payable within 3 months from the signing date which become due on June 2008. The principal outstanding as of March 31, 2008 amounted to Rp.8,812 million.

	d.		BCA

			On August 15, 2006, Telkomsel signed a Rp.350,000 million short-term facility agreement with BCA, payable in 3 equal quarterly installments commencing after 3 months from the end of the availability period. The loan bore a floating interest rate of three-month SBI plus 1.5% per annum (12.86% per annum as of March 31, 2007) which becomes due quarterly in arrears and was unsecured. The principal outstanding as of March 31, 2007, amounted to Rp.116,667 million and on June 28, 2007, the loan was fully repaid.

			On June 15, 2007, Telkomsel signed a Rp.300,000 million short-term facility agreement with BCA, payable in 3 equal quarterly installments commencing after 3 months from the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.25% per annum (9.38% per annum as of March 31, 2008) which becomes due quarterly in arrears and was unsecured. On March 28, 2008, the loan was fully repaid.

	e.		Bank Mandiri

			On August 15, 2006, Telkomsel signed a Rp.350,000 million short-term facility agreement with Bank Mandiri, payable in 3 equal quarterly installments commencing after 3 months from the end of the availability period. The loan bore a floating interest rate of three-month SBI plus 1.5% per annum (12.86% per annum as of March 31, 2007) which becomes due quarterly in arrears and was unsecured. The principal outstanding as of March 31, 2007, amounted to Rp.116,666 million and on June 28, 2007, the loan was fully repaid.

			On June 15, 2007, Telkomsel signed a Rp.300,000 million short-term facility agreement with Bank Mandiri, payable in 3 equal quarterly installments commencing 3 months from the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.25% per annum (9.38% per annum as of March 31, 2008) which becomes due quarterly in arrears and was unsecured. On March 28, 2008, the loan was fully repaid.

	f.		Bank Bumiputera

			On February 15, 2006, GSD entered into a Rp.8,000 million loan agreement with Bank Bumiputera with an interest rate of 17% per annum, unsecured and repayable by monthly installment within 12 months from the signing date to February 15, 2007. On February 27, 2007, the loan agreement was amended to extend the maturity period to February 27, 2008. As of December 31, 2006, the loan was fully drawn-down. The loan was fully paid on November 23, 2007.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

20. MATURITIES OF LONG-TERM LIABILITIES

Current maturities


	Notes		2007		2008
Bank loans		23		1,655,205		2,924,835
Deferred consideration for business combinations		24		1,055,668		1,154,537
Two-step loans		21		518,365		452,477
Obligations under capital leases		11		21,666		35,578
Notes and bonds		22		1,463,376		—

Total				4,714,280		4,567,427

Long-term portion


	(In billions of Rupiah)
	Notes		Total		2009		2010		2011		2012		Later
Bank loans		23		3,830.9		2,126.1		1,266.1		417.6		10.2		10.9
Two-step loans		21		3,688.7		308.8		413.2		385.7		387.8		2,193.2
Deferred consideration for business combinations		24		2,117.2		805.6		1,204.9		106.7		—		—
Obligations under capital leases		11		209.5		41.8		52.2		57.7		43.7		14.1

Total				9,846.3		3,282.3		2,936.4		967.7		441.7		2,218.2

21. TWO-STEP LOANS

	a.		Two-step loans are unsecured loans obtained by the Government from overseas banks and consortium of contractors, which are then re-loaned to the Company. The loans entered into up to July 1994 were recorded and payable in Rupiah based on the exchange rate at the date of drawdown. Loans entered into after July 1994 are payable in their original currencies and any resulting foreign exchange gain or loss is borne by the Company.

			The details of the two-step loans are as follows:


	Interest rate						Outstanding
Creditors	2007			2008			2007			2008
Overseas banks		3.10% — 11.64	%		3.10% — 11.64	%		4,353,987			4,123,786
Consortium of contractors		3.20	%		3.20	%		43,489			17,401

Total								4,397,476			4,141,187
Current maturities (Note 20a)								(518,365	)		(452,477	)

Long-term portion (Note 20b)								3,879,111			3,688,710

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

21. TWO-STEP LOANS (continued)

The details of two-step loans obtained from overseas banks as of March 31, 2007 and 2008 are as follows:


	Interest rate						Outstanding
Currencies	2007			2008			2007		2008
US Dollars		4.00% - 7.39	%		4.00% - 6.67	%		1,733,746		1,548,663
Rupiah		8.54% - 11.43	%		8.97% - 12.14	%		1,551,650		1,363,688
Japanese Yen		3.10	%		3.10% - 3.20	%		1,068,591		1,211,435

Total								4,353,987		4,123,786

			The loans are intended for the development of telecommunications infrastructure and supporting equipment. The loans are repayable in semi-annual installments and are due on various dates through 2024.

			The two-step loans which are payable in Rupiah bear either fixed interest rates and floating rates based upon the average interest rate on three-month SBI during the six-months preceding the installment due date plus 1% per annum, and floating interest rate offered by the lenders plus 5.25% per annum. Two-step loans which are payable in foreign currencies bear either fixed rate interests and the floating interest rate offered by the lenders, plus 0.5% per annum.

	c.		The two-step loans obtained from a consortium of contractors as of March 31, 2007 and 2008 consisted of loans in Japanese Yen with an interest rate of 3.20% and 3.10% per annum, respectively.

			The consortium of contractors consists of Sumitomo Corporation, PT NEC Nusantara Communications and PT Humpuss Elektronika (SNH Consortium). The loans were obtained to finance the second digital telephone exchange project. The loans are repayable in semi-annual installments and are due on various dates through June 15, 2008.

As of March 31, 2008, the Company has used all facilities under the two-step loans program and the drawdown period for the two-step loans has expired.

The Company is required to maintain financial ratios as follows:

	a.		Projected net revenue to projected debt service ratio should exceed 1.5:1 and 1.2:1 for the two-step loans originating from the World Bank and Asian Development Bank (“ADB”), respectively.

	b.		Internal financing (earnings before depreciation and interest expense) should exceed 50% and 20% compared to annual average capital expenditures for loans originating from World Bank and ADB, respectively.

As of March 31, 2008, the Company complied with the above mentioned ratios.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

22. NOTES AND BONDS


	2007			2008
Bonds
Principal		1,000,000			—
Bond issuance costs		(1,542	)		—

Net		998,458			—

Medium-term Notes
Principal		465,000			—
Debt issuance costs		(82	)		—

Net		464,918			—

Total		1,463,376			—
Current maturities (Note 20a)		(1,463,376	)		—

Long-term portion		—			—

	a.		Bonds

			On July 16, 2002, the Company issued a five-year bonds amounting to Rp.1,000,000 million, at par value. The bonds bore interest at a fixed rate of 17% per annum, payable quarterly beginning October 16, 2002 and secured with all assets owned by the Company. The bonds are traded on the Surabaya Stock Exchange and matured on July 16, 2007. The trustee of the bonds is BRI (effective from January 17, 2006 replacing BNI) and the custodian is PT Kustodian Sentral Efek Indonesia.

			Under the provisions of the bond, the Company is required to comply with all covenants or restrictions including maintaining certain consolidated financial ratios. The Company was also restricted from making any loans to or for the benefit of any person which in aggregate exceed Rp.500,000 million, in which the Company was not able to comply with in 2006. However, the Company has obtained a written waiver from BRI, the trustee of the bonds. The bonds were fully repaid on July 16, 2007.

	b.		Medium-term Notes (the “Notes”)

			On December 13, 2004, the Company entered into an agreement with PT ABN AMRO Asia Securities Indonesia, PT Bahana Securities, PT BNI Securities and PT Mandiri Sekuritas (collectively referred as “Initial Purchasers”) to issue Notes for a total principal amount of Rp.1,125,000 million. Proceeds from issuance of the Notes were used to finance the payment of the remaining balance of the borrowings assumed in connection with the TII acquisition amounting to US$123.0 million.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

22.

NOTES AND BONDS (continued)

	b.		Medium-term Notes (the “Notes”) (continued)

			The Notes consist of four Series with the following maturities and interest rates:


Series	Principal		Maturity	Interest rate
A		290,000	June 15, 2005		7.70	%
B		225,000	December 15, 2005		7.95	%
C		145,000	June 15, 2006		8.20	%
D		465,000	June 15, 2007		9.40	%
Total		1,125,000

			Interest on the Notes is payable semi-annually beginning June 15, 2005 through June 15, 2007. The Notes were unsecured and at all times ranked pari passu with other unsecured debts of the Company. The Company may, at any time, before the maturity dates of the Notes, repurchase the Notes in whole or in part.

			On June 15, 2005, December 15, 2005, June 15, 2006 and June 15, 2007, the Company repaid the Series A, Series B, Series C, and series D Notes, respectively.

23.		BANK LOANS

		The details of long-term bank loans as of March 31, 2007 and 2008 are as follows:


				2007					2008
		2008		Outstanding					Outstanding
				Original					Original
		Total facility		currency		Rupiah			currency		Rupiah
Lenders	Currency	(in millions)		(in millions)		equivalent			(in millions)		equivalent
The Export-Import Bank of Korea	US$		124		105.8		965,751			82		758,793
Bank Mandiri	Rp.		2,400,000		—		760,000			—		1,690,000
BCA	Rp.		1,423,000		—		614,349			—		700,000
Citibank	US$		113		39.2		356,780			16		144,994
	Euro		73		22.0		268,173			7		106,811
	Rp.		1,000,000		—		400,000			—		200,000
BNI	Rp.		1,550,000		—		240,000			—		1,270,000
Consortium of banks	Rp.		150,000		—		22,035			—		—
Bank Lippo	Rp.		18,500		—		16,561			—		9,201
Bank Niaga	Rp.		39,300		—		26,190			—		29,859
Bank Bukopin	Rp.		5,300		—		3,980			—		2,964
BRI	Rp.		2,400,000		—		—			—		1,820,000
Bank Ekonomi	Rp.		27,000		—		—			—		23,200

Total							3,673,819					6,755,822
Current maturities of bank loans
(Note 20a)							(1,655,205	)				(2,924,835	)

Long-term portion (Note 20b)							2,018,614					3,830,987

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

23.

BANK LOANS (continued)

	a.		The Export-Import Bank of Korea

			On August 27, 2003, the Company entered into a loan agreement with The Export-Import Bank of Korea for a loan facility of US$124 million, to finance the CDMA procurement from the Samsung Consortium. The facility bears interest, commitment and other fees totaling 5.68% per annum. The loan is unsecured and payable in 10 semi-annual installments on June 30 and December 30 of each year beginning in December 2006. The principal outstanding as of March 31, 2007 and 2008 amounted to US$105.8 million (equivalent to Rp.965,751 million) and US$82 million (equivalent to Rp.758,793 million), respectively.

Bank Mandiri

	(i)		On March 20, 2006, Telkomsel signed a loan agreement with Bank Mandiri for a facility of Rp.600,000 million, payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month SBI plus 1.75% per annum (11.25% per annum and 9.85% per annum as of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to Rp.480,000 million and Rp.240,000 million, respectively.

	(ii)		On August 15, 2006, Telkomsel signed a medium-term facility loan agreement with Bank Mandiri for Rp.350,000 million, payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month SBI plus 1.5% per annum (11% per annum and 9.60% per annum as of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to Rp.280,000 million and Rp.140,000 million, respectively.

	(iii)		On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with Bank Mandiri of Rp.500,000 million. This facility is payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1,25% per annum (9.38% per annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. On July 24, 2007, the loan agreement has been amended with addition of total facilities provided amounted to Rp.200,000 million. The principal outstanding as of March 31, 2008 amounted to Rp.560,000 million.

	(iv)		On October 24, 2007, Telkomsel signed a medium-term facility loan agreement with Bank Mandiri of Rp.750,000 million. This facility is payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.17% per annum (9.26% as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2008 amounted to Rp.750,000 million.

BCA

(i)

On April 10, 2002, the Company entered into a Term Loan Agreement HP Backbone Sumatra Project with BCA for a total facility of Rp.173,000 million, to finance the Rupiah portion of the high performance backbone network in Sumatra pursuant to the Partnership Agreement dated November 30, 2001 with PT Pirelli Cables Indonesia (“Pirelli Cables”) and PT Siemens Indonesia (“Siemens Indonesia”).

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

23.

BANK LOANS (continued)

BCA (continued)

	(i)		(continued)

			The amounts drawn from the facility bear interest rate of 4.35% per annum plus the three-month time deposit rate (12.27% per annum as of March 31, 2007) and were unsecured. The loans were payable in twelve unequal quarterly installments beginning in July 2004 and mature in April 2007.

			Total principal outstanding as of March 31, 2007 was Rp.14,349 million.

			Based on the loan agreement, the Company is required to comply with all covenants or restrictions including maintaining financial ratios. In 2006, the Company breached a covenant in the loan agreement which stipulates that the Company will not make any loans to or for the benefit of any person which in aggregate exceed Rp.500,000 million. The Company obtained a written waiver from BCA with regard to providing loans to certain subsidiaries which in aggregate exceed Rp.500,000 million. The loan was fully repaid on April 10, 2007.

	(ii)		On March 16, 2006, Telkomsel signed a loan agreement with BCA for a facility of Rp.400,000 million, payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month SBI plus 1.75% per annum (11.25% per annum and 9.85% per annum as of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to Rp.320,000 million and Rp.160,000 million, respectively.

	(iii)		On August 15, 2006, Telkomsel signed a medium-term facility loan agreement with BCA for Rp.350,000 million, payable for 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month SBI plus 1.5% per annum (11% per annum and 9.60% per annum as of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to Rp.280,000 million and Rp.140,000 million, respectively.

	(iv)		On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with BCA of Rp.500,000 million, payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.25% per annum (9.38% per annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2008 amounted to Rp.400,000 million.

Citibank

	1.		Hermes Export Facility

			On December 2, 2002, pursuant to the partnership agreement with Siemens Aktiengesellschaft (“AG”) (Note 49a.ii), Telkomsel entered into the Hermes Export Facility Agreement (“Facility”) with Citibank International plc (as “Original Lender” and “Agent”) and Citibank, Jakarta branch (“Arranger”) covering a total facility of Euro76.2 million divided into several tranches. The agreement was subsequently amended on October 15, 2003, amending the Facility amount to Euro73.4 million and the payment dates.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

23.

BANK LOANS (continued)

Citibank (continued)

	1.		Hermes Export Facility (continued)

			The Facility bears interest rate based on the Euro Interbank Offered Rate (EURIBOR) plus 0.75% per annum (4.48% per annum and 4.99% per annum as of March 31, 2007 and 2008, respectively) and is unsecured. Interest is payable semi-annually, starting on the utilization date of the Facility (May 29, 2003). As of March 31, 2007 and 2008, the outstanding balance was Euro22.0 million (equivalent to Rp.268,173 million) and Euro7.3 million (equivalent to Rp.106,811 million), respectively. This loan will due on October 7, 2008.

			In addition to interest, Telkomsel was also charged an insurance premium for the guarantee given by Hermes in favor of Telkomsel for each loan utilization, 15% of which was paid in cash. The remaining balance was settled through utilization of the facility.

High Performance Backbone (“HP Backbone”) Loans

	a.		On April 10, 2002, the Company entered into a loan agreement with Citibank (“Arranger”) and Citibank International plc (“Agent”), which was supported by an export credit guarantee of Hermes Kreditversicherungs AG (“Lender” and “Guarantor”), providing a total facility of US$23.4 million. The facility which was unsecured, was obtained to finance up to 85% of the cost of supplies and services sourced in Germany relating to the design, manufacture, construction, installation and testing of high performance backbone networks in Sumatra pursuant to the “Partnership Agreement” dated November 30, 2001, with Pirelli Cables and Siemens Indonesia for the construction and provision of a high performance backbone in Sumatra. The lender required a fee of 8.4% of the total facility, 15% of which was paid in cash and 85% was included in the loan balance.

			As of March 31, 2007 and 2008, the outstanding loan was US$8.4 million (equivalent to Rp.76,509 million) and US$4.2 million (equivalent to Rp.38,644 million), respectively. The loan is payable in 10 semi-annual installments beginning in April 2004 with interest at a rate equal to the six-month London Interbank Offered Rate (LIBOR) plus 0.75% per annum (6.11% per annum and 5.93% per annum as of March 31, 2007 and 2008, respectively).

	b.		On April 10, 2002, the Company entered into a loan agreement with Citibank (“Arranger”) and Citibank International plc (“Agent”), which was supported by an export credit guarantee obtained from Servizi Assicurativi del Commercio Estero (“SACE Italy”) providing a total maximum facility to US$21.0 million. The facility which was unsecured, was used to finance up to 85% of material and services procured in Italy in connection with the design, manufacture, development, installation and testing of Sub-System VI, as part of HP Backbone network.

			The loan bears a fixed interest rate of 4.14% per annum payable in 10 semi-annual installments beginning in December 2003. Total principal outstanding as of March 31, 2007 and 2008 was US$5.6 million (equivalent to Rp.50,812 million) and US$1.9 million (equivalent to Rp.17,110 million), respectively.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

23.

BANK LOANS (continued)

Citibank (continued)

	2.		High Performance Backbone (“HP Backbone”) Loans (continued)

			As stated in the agreements, the Company is required to comply with all covenants or restrictions including maintaining financial ratios as follows, in which the Company has complied with as of March 31, 2007 and 2008 as follows:

	1.		Debt service coverage ratio should exceed 1.5:1.

	2.		Debt to equity ratio should not exceed:

	a.		3:1 for the period April 10, 2002 to January 1, 2003,

	b.		2.75:1 for the period January 2, 2003 to January 1, 2004,

	c.		2.5:1 for the period January 2, 2004 to January 1, 2005, and

	d.		2:1 for the period January 2, 2005 to the full repayment date of the loans.

Debt to EBITDA ratio should not exceed:

	a.		3.5:1 for the period April 10, 2002 to January 1, 2004, and

	b.		3:1 for the period January 2, 2004 to the full repayment date of the loans.

			In 2005, the Company has breached a covenant in the loan agreements which stipulate that the Company will not make any loans or grant any credit to or for the benefit of any person which in aggregate exceed 3% of stockholders’ equity. On May 12, 2006, the Company obtained a written waiver from Citibank International plc with regard to providing loans to certain subsidiaries which in aggregate exceed 3% of stockholders’ equity. In 2006, the Company has complied with the above covenant.

			As of June 21, 2007, the Company obtained a waiver letter from Citibank International plc with regard to providing loans facility. The waiver letter is intended to be valid until the loans facility have been fully repaid. In 2007, the Company has complied with the above covenant.

	3.		EKN-Backed Facility

			On December 2, 2002, pursuant to the partnership agreement with PT Ericsson Indonesia (“Ericsson Indonesia”) (Note 49a.ii), Telkomsel entered into the EKN-Backed Facility agreement (“Facility”) with Citibank International plc (“Original Lender” and “Agent”) and Citibank, Jakarta branch (“Arranger”) covering a total Facility of US$70.5 million, divided into several tranches. The agreement was subsequently amended on December 17, 2004, to reduce the total Facility to US$68.9 million.

			The interest rate per annum on the Facility is determined based on Commercial Interest Reference Rate (CIRR) of 3.52% plus 0.5% per annum (4.02% as of March 31, 2007 and 2008, respectively) and is unsecured. Interest is payable semi-annually, starting on the utilization date of the Facility (July 31, 2003).

			In addition to interest, Telkomsel was also charged an insurance premium for the guarantee given by EKN in favor of Telkomsel for each loan utilization, 15% of which was paid in cash. The remaining balance was settled through utilization of the facility.

			No amounts were drawdown from the Facility in 2007 and 2008. As of March 31, 2007 and 2008, the outstanding balance was US$25.2 million (equivalent to Rp.229,459 million) and US$9.7 million (equivalent to Rp.89,240 million), respectively. This loan will due on December 30, 2008.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

23.

BANK LOANS (continued)

Citibank (continued)

Medium term loan

	a.		On March 21, 2006, Telkomsel signed a medium term loan agreement with Citibank, Jakarta Branch for a facility of Rp.500,000 million, repayable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month SBI plus 1.75% per annum (11.25% per annum and 9.85% per annum as of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to Rp.400,000 million and Rp.200,000 million, respectively.

	b.		On October 24, 2007, Telkomsel signed a medium-term facility loan agreement with Citibank, Jakarta Branch of Rp.500,000 million. This facility is in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.09% per annum which becomes due quarterly in arrears and is unsecured. As of March 31, 2008, the facility has not been drawn-down.

The following table summarizes the principal outstanding on the various long-term loans from Citibank as of March 31, 2007 and 2008:


		2007					2008
		Foreign					Foreign
		currencies		Rupiah			currencies		Rupiah
		(in millions)		equivalent			(in millions)		equivalent
Hermes Export Facility	Euro		22.0		268,173			7.3		106,811
HP Backbone loans	US$		14.0		127,321			6.0		55,754
EKN-Backed Facility	US$		25.2		229,459			9.7		89,240
Medium term loan	Rp.		—		400,000			—		200,000

Total					1,024,953					451,805
Current maturities					(592,089	)				(451,805	)

Long-term portion					432,864					—

BNI

	(i)		On August 15, 2006, Telkomsel signed a medium-term facility loan agreement with BNI for Rp.300,000 million, payable for 5 equal semi-annual installment commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month SBI plus 1.5% per annum (11% per annum and 9.60% per annum as of March 31, 2007 and 2008, respectively) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2007 and 2008 amounted to Rp.240,000 million and Rp.120,000 million, respectively.

	(ii)		On June 15, 2007, Telkomsel signed a medium-term facility loan agreement with BNI of Rp.500,000 million, payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.25% per annum (9.38% per annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2008 amounted to Rp.400,000 million.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

23.

BANK LOANS (continued)

BNI (continued)

(iii)

On October 24, 2007, Telkomsel signed a medium-term facility loan agreement with BNI of Rp.750,000 million. This facility is in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.17% per annum (9.26% per annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2008 amounted to Rp.750,000 million.

Consortium of banks

On June 21, 2002, the Company entered into a loan agreement with a consortium of banks for a facility of Rp.400,000 million, to finance the Divre V Junction Project. Bank Bukopin, acting as the facility agent, charged interest at the rate of 19% per annum for the first year from the signing date and at the rate of the highest average three-month deposit rate of each creditor plus 4% per annum for the remaining years. The drawdown period expires 19 months from the signing of the loan agreement and the principal is payable in 14 quarterly installments starting from April 2004. The loan facility is secured by project equipment, with a value of not less than Rp.500,000 million.

Based on an addendum to the loan agreement dated April 4, 2003, the loan facility was reduced to Rp.150,000 million, the drawdown period was amended to expire 18 months from the signing of the addendum, the repayment schedule was amended to 14 quarterly installments starting from May 21, 2004 and ending on June 21, 2007, and the value of the project equipment secured was reduced to Rp.187,500 million.

As of March 31, 2007, interest rate charged on the loan was 12.69% per annum and principal outstanding was Rp.22,035 million. As of June 22, 2007 the loan was fully repaid.

Bank Lippo

On May 29, 2006, Infomedia entered into a loan agreement with Bank Lippo for a facility of Rp.18,500 million, to finance its call center project with Telkomsel. The facility bears interest at 15.5% per annum and is secured by Infomedia’s receivables on the call center contract with Telkomsel amounted to Rp.23,125 million until the due date of the loan within 36 months from the withdrawal date. As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.16,561 million and Rp.9,201 million, respectively.

Bank Niaga

(i)

On December 28, 2004, Balebat entered into a loan agreement with Bank Niaga for a total facility of Rp.7,200 million comprising of Rp.5,000 million to finance the construction of plant (“Investment Facility”) with an interest rate of 13.5% per annum and Rp.2,200 million to finance certain purchases of machinery (“Specific Transaction Facility”) with an interest rate of 12% per annum. Through an amendment on December 1, 2005, the interest rate was subsequently increased to 17% per annum. The Investment Facility is repayable in 36 monthly installments commencing from March 31, 2005. The Specific Transaction Facility is repayable in 60 monthly installments commencing from June 29, 2005. These facilities are secured by Balebat’s property, plant and equipment with a total value of Rp.8,450 million (Note 11). As of March 31, 2007 and 2008, principal outstanding under these facilities amounted to Rp.2,968 million and Rp.990 million, respectively.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

23.

BANK LOANS (continued)

Bank Niaga (continued)

(i)

(continued)

On December 22, 2005, the loan agreement was amended to include a short-term credit facility of Rp.4,000 million with maturity date and interest rate of December 22, 2006 and 12.5% per annum, respectively. On June 13, 2006, the facility was combined with the revolving credit facility of Rp.800 million (Note 19d).

On June 13, 2006, Balebat also received an additional facility of Rp.2,500 million which consisted a facility of Rp.2,000 million to finance the purchase of a printing machine and Rp.500 million to finance the purchase of operational vehicles with an interest rate of 16.5% per annum. These facilities will be due on October 30, 2011 and November 28, 2009, respectively. Both facilities are secured by Balebat’s property located in West Java. As of March 31, 2007, the outstanding loans of the facilities were Rp.1,678 million and Rp.476 million, respectively, and as of March 31, 2008 was Rp.1,184 million and Rp.nil .

	(ii)		As discussed in Note 19d, on April 25, 2005, Balebat entered into a loan agreement with Bank Niaga for a total facility of Rp.2,400 million which includes an investment credit facility of Rp.1,600 million with maturity date of October 25, 2009. The investment credit facility loan is payable in 48 unequal monthly installments beginning in November 2005 through October 2009. The investment credit facility bears interest at a rate equal to market rate plus 2% per annum (17% per annum and 16.5% per annum as of March 31, 2007 and 2008, respectively). As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.1,067 million and Rp.667 million respectively.

	(iii)		In March 2007, GSD entered into a loan agreement (2^nd special transaction loan agreement) with Bank Niaga for a total facility of Rp.20,000 million with an interest rate of 13% per annum. The facility is secured by a parcel of land of GSD. The facility is payable in 8 years and the principal is payable in 33 quarterly installments and will be due in May 2015. As of March 31, 2008, the principal outstanding amounted to Rp.19,550 million.

	(iv)		On November 23, 2007, GSD entered into a loan agreement (3^rd special transaction loan agreement) with Bank Niaga for a total facility of Rp.8,000 million with an interest rate of 11% per annum. The facility is secured by a parcel of land of GSD. The facility is payable in 5 years and the principal is payable in 60 monthly installments and will be due on November 23, 2012. As of March 31, 2008, the principal outstanding amounted to Rp.7,468 million.

Bank Bukopin

On May 11, 2005, Infomedia entered into loan agreements with Bank Bukopin for various facilities in a maximum of Rp.5,300 million to finance the acquisition of a property. The loan is payable in 60 monthly installments and bears an interest rate of 15.75% per annum as of March 31, 2007 and 2008. A portion of the facilities of Rp.4,200 million will mature in June 2010 and the remainder of Rp.1,100 million will mature in December 2010. The facilities are secured by certain Infomedia’s property. As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.3,980 million and Rp.2,964 million, respectively.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

23.

BANK LOANS (continued)

BRI

	(i)		On June 15, 2007, Telkomsel entered into a medium-term loan agreement with BRI for a facility of Rp.400,000 million. The loan is payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.25% per annum (9.38% per annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2008 amounted to Rp.320,000 million.

	(ii)		On October 24, 2007, Telkomsel signed a medium-term facility loan agreement with BRI of Rp.2,000,000 million. The loan is payable in 5 equal semi-annual installments commencing 6 months after the end of the availability period. The loan bears a floating interest rate of three-month JIBOR plus 1.17% per annum (9.26% per annum as of March 31, 2008) which becomes due quarterly in arrears and is unsecured. The principal outstanding as of March 31, 2008 amounted to Rp.1,500,000 million.

Bank Ekonomi

On December 2006, Sigma signed into a facility loan agreement with Bank ekonomi of Rp.14,000 million. The loan is payable in 72 monthly installments starting from December 12, 2006 and ending on December 12, 2012. This credit facility is secured by a parcel of land os Sigma located in Surabaya (Note 11). As of March 31, 2007 and 2008, the principal outstanding amounted to Rp.13,188 million and Rp.12,849 million, respectively.

On March 9, 2007, Sigma received an additional facility of Rp.13,000 million. The facility bears interest at 12% per annum and is payable in 69 mothly installments starting from March 12, 2007 and ending on December 12, 2012. This credit facility is secured by a parcel of land of Sigma located in Surabaya (Note 11). As of March 31, 2008, the principal outstanding amounted to Rp 10,351 million.

24.

DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS

Deffered consideration represent the Company’s obligations to the Selling Stockholders of TII in respect of the Company’s acquisition of 100% of TII, MGTI in respect of the Company’s acquisition of KSO IV, and BSI in respect of the Company’s acquisition of KSO VII, with details as follows:


	2007			2008
TII transaction
PT Aria Infotek		209,091			105,611
The Asian Infrastructure Fund		49,784			25,145
MediaOne International I B.V.		139,394			70,407
Less discount on promissory notes		(21,206	)		(5,085	)

		377,063			196,078

KSO IV transaction
MGTI		2,744,659			2,080,863
Less discount		(394,025	)		(223,791	)

		2,350,634			1,857,072

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

24.

DEFERRED CONSIDERATION FOR BUSINESS COMBINATIONS (continued)


	2007			2008
KSO VII transaction (Note 4)
BSI		2,060,867			1,488,475
Less discount		(476,867	)		(269,922	)

		1,584,000			1,218,553

Total		4,311,697			3,271,703
Current maturity — net of discount (Note 20a)		(1,055,668	)		(1,154,537	)

Long-term portion — net of discount (Note 20b)		3,256,029			2,117,166

TII transaction

The outstanding balance relating to TII transaction represents non-interest bearing promissory notes which were included in the purchase consideration, and arose from the acquisition of the 100% outstanding common shares of TII (previously the Company’s KSO III partner) on July 31, 2003. These promissory notes have initial face value of US$109.1 million (equivalent to Rp.927,272 million) and a present value at a discount rate of 5.16% at the closing date of US$92.7 million (equivalent to Rp.788,322 million). The promissory notes are payable in 10 equal semi-annual installment beginning July 31, 2004.

As of March 31, 2007 and 2008, the outstanding promissory notes, before unamortized discount, amounted to US$54.5 million (equivalent to Rp.491,182 million) and US$21.8 million (equivalent to Rp.201,164 million), respectively.

KSO IV transaction

The outstanding balance relating to KSO IV arose from acquisition of KSO IV by the Company, based on amendment and restatement of KSO agreement entered into by the Company and MGTI on January 20, 2004. Based on the agreement, in consideration for the Company’s obtaining legal right to control the financial and operating decision of KSO IV, the Company has agreed to pay MGTI the total purchase price of approximately US$390.7 million (equivalent to Rp.3,285,362 million) which represents the present value of fixed monthly payments (totaling US$517.1 million), payable to MGTI beginning February 2004 through 2010 at a discount rate of 8.3%, plus the direct cost of the business combination.

As of March 31, 2007 and 2008, the remaining monthly payments to be made to MGTI, before unamortized discount, amounted to US$300.7 million (equivalent to Rp.2,744,659 million) and US$201 million (equivalent to Rp.1,857,073 million), respectively.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

25.

MINORITY INTEREST


	2007		2008
Minority interest in net assets of subsidiaries:
Telkomsel		9,123,375		10,423,163
Infomedia		104,851		102,816
Metra		2,622		31,017
GSD		—		—

Total		9,230,848		10,556,996


	2007			2008
Minority interest in net income (loss) of subsidiaries:
Telkomsel		1,048,779			1,257,064
Metra		122			1,562
GSD		(7	)		—
Infomedia		(10,064	)		(9,039	)

Total		1,038,830			1,249,587

26.

CAPITAL STOCK


	2007
	Number of		Percentage		Total
Description	shares		of ownership		paid-up capital
Series A Dwiwarna share
Government		1		0.00		0
Series B shares
Government		10,320,470,711		51.68		2,580,118
JPMCB US Resident (Norbax Inc.)		1,656,405,338		8.30		414,101
The Bank of New York		1,519,651,896		7.61		379,913
Directors (Note 1b):
Ermady Dahlan		17,604		0.00		4
Indra Utoyo		5,508		0.00		1
Public (individually less than 5%)		6,471,532,722		32.41		1,617,884

Total		19,968,083,780		100.00		4,992,021
Treasury stock (Note 28)		191,915,500		0.00		47,979

Total		20,159,999,280		100.00		5,040,000

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

26.

CAPITAL STOCK (continued)


	2008
	Number of		Percentage		Total
Description	Shares		of Ownership		Paid-up Capital
Series A Dwiwarna share
Government		1		0.00		0
Series B shares
Government		10,320,470,711		52.06		2,580,118
JPMCB US Resident (Norbax Inc.)		1,673,923,863		8.44		418,481
The Bank of New York		1,782,115,056		9.00		445,529
Directors (Note 1b):
Ermady Dahlan		17,604		0.00		4
Indra Utoyo		5,508		0.00		1
Public (individually less than 5%)		6,046,173,537		30.50		1,511,544

Total		19,822,706,280		100.00		4,955,677
Treasury stock (Note 28)		337,293,000		0.00		84,323

Total		20,159,999,280		100.00		5,040,000

		The Company only issued 1 Series A Dwiwarna Share which is held by the Government and cannot be transferred to any party, and has a veto in the General Meeting of the Stockholders with respect to election and removal of the Board of Commissioners and Directors and to amend the Company’s Articles of Association.

		Series B shares give the same and equal rights to all the Series B stockholders.

27.		ADDITIONAL PAID-IN CAPITAL


	2007			2008
Proceeds from sale of 933,333,000 shares in excess of par value through IPO in 1995		1,446,666			1,446,666
Capitalization into 746,666,640 Series B shares in 1999		(373,333	)		(373,333	)

Total		1,073,333			1,073,333

28.		TREASURY STOCK

		Based on the resolution on the EGM of Stockholders on December 21, 2005, the stockholders authorized the phase I plan to repurchase the Company’s issued and outstanding Series B shares. The proposals for a stock repurchase program are under the following terms and conditions: (i) maximum stock repurchase would be 5% of the Company’s issued Series B shares with total cost not to exceed Rp.5,250,000 million; and (ii) the period determined for the acquisition would not be longer than 18 months (December 21, 2005 to June 20, 2007).

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

28.		TREASURY STOCK (continued)

		Based on the resolution on the AGM on Stockholders on June 29, 2007, the stockholders authorized to discontinue the phase I plan to repurchase the Series B shares and authorized the phase II plan to repurchase the Company’s issued and outstanding Series B shares. The proposals to undertake a stock repurchase programs, under the following terms and conditions: (i) maximum stock repurchase would be 215,000,000 of the Company’s issued Series B shares with total cost not to exceed Rp.2,000,000 million; and (ii) the period determined for the acquisition would not be longer than 18 months (June 29, 2007 to December 28, 2008).

		As of March 31, 2007 and 2008, the Company has repurchased 191,915,500 and 337,293,000 shares, respectively, of the Company’s issued and outstanding Series B shares, representing 0.95% and 1.67%, respectively, for a total repurchased amount of Rp.1,641,680 million in 2007 and Rp.3,030,368 million in 2008 (including broker’s commissions and custodian fees).

		The Company has planned to retain, sell or use the treasury stock for other purposes in accordance with Badan Pengawas Pasar Modal dan Lembaga Keuangan Indonesia (“BAPEPAM”) Regulation No. XI.B.2 and under Law No. 40/2007 on Limited Liability Companies.

		The movement of shares held in treasury arising from the programs for repurchase of shares is as follows:

2007

2008

Number

of shares

Rp.

of shares

Rp.

Balance beginning

118,376,500

952,211

244,740,500

2,176,611

Number of shares acquired

73,539,000

689,469

92,552,500

853,757

Balance ending

191,915,500

1,641,680

337,293,000

3,030,368

Historical unit cost of repurchase of treasury shares:


	Rp.
	2008
Weighted average		8,984
Minimum		6,633
Maximum		11,200

The acquisition cost per share has included all the cost for the shares repurchase programs (i.e. broker’s commissions and custodian fees). Up to the consolidated balance sheet date, none of the shares acquired were sold.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

29.		DIFFERENCE IN VALUE ARISING FROM RESTRUCTURING TRANSACTIONS AND OTHER TRANSACTIONS BETWEEN ENTITIES UNDER COMMON CONTROL

		The balance of this account amounting to Rp.270,000 million arose from the early termination of the Company’s exclusive rights to provide local and domestic fixed line telecommunication services. As discussed in Note 1a, on December 15, 2005, the Company signed an Agreement on Implementation of Compensation for Termination of Exclusive Rights with the State MoCI — DGPT, which was amended on October 18, 2006. Pursuant to this agreement, the Government agreed to pay Rp.478,000 million, net of tax, to the Company over a five-year period where Rp.90,000 million shall be paid from the 2005 State budget, Rp.90,000 million from the 2006 State budget and the remaining Rp.298,000 million shall be paid gradually or in one lump-sum payment based on the State’s financial ability. In addition, the Company is required by the Government to use the funds received from this compensation for the development of telecommunications infrastructure.

		As of March 31, 2007 and 2008, the Company has received an aggregate of Rp.180,000 million and Rp.270,000 million, respectively, in relation to the compensation for the early termination of exclusivity rights, being Rp.90,000 million each paid on December 30, 2005, December 28, 2006 and December 13, 2007, respectively. The Company recorded these amounts in “Difference in value arising from restructuring transactions and other transactions between entities under common control” in the Stockholders’ Equity section. These amounts are recorded as a component of Stockholders’ Equity because the Government is the majority and controlling stockholder of the Company. The Company will record the remaining amount of Rp.208,000 million when received.

		As of March 31, 2007 and 2008, the development of the related infrastructures amounted to Rp.90,702 million and Rp.190,997 million, respectively.

30.

TELEPHONE REVENUES


	2007		2008

Fixed lines
Local and SLJJ		1,856,465		1,563,486
Monthly subscription charges		923,529		918,914
Installation charges		31,888		30,639
Phone cards		639		299
Others		55,055		27,100

Total		2,867,576		2,540,438

Cellular
Air time charges		5,430,504		5,683,839
Features		50,659		139,433
Monthly subscription charges		64,643		84,555
Connection fee charges		33,996		58,256

Total		5,579,802		5,966,083

Total Telephone Revenues		8,447,378		8,506,521

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

31.

INTERCONNECTION REVENUES


	2007			2008
Revenues		2,790,382			3,041,324
Expenses		(661,467	)		(781,585	)

Total — Net		2,128,915			2,259,739

		Based on the MoCI Regulation No. 08/Per/M.KOMINFO/02/2006, the implementation of cost-based interconnection tariff is applicable beginning January 1, 2007 (Note 48).

		Refer to Note 44 for details of related party transactions.

32.		DATA AND INTERNET REVENUES


	2007		2008
Short Messaging Services (SMS)		2,017,799		3,319,041
Internet		297,726		452,125
Data communication		549,851		102,584
Voice over Internet Protocol (“VoIP”)		46,866		37,462
e-Business		8,788		6,206

Total		2,921,030		3,917,418

33.

NETWORK REVENUES


	2007		2008
Satellite transponder lease		15,566		137,888
Leased lines		193,188		85,928

Total		208,754		223,816

		Refer to Note 44 for details of related party transactions.

34.		REVENUE-SHARING ARRANGEMENTS (“RSA”) REVENUES


	2007		2008
Amortization of unearned income (Note 12)		67,920		60,372
RSA revenues		64,752		37,564

Total		132,672		97,936

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

35.

PERSONNEL EXPENSES


	2007		2008
Vacation pay, incentives and other benefits		646,793		764,454
Salaries and related benefits		724,486		690,487
Employees’ income tax		217,080		233,307
Net periodic post-retirement health care benefits costs (Note 43)		181,042		225,659
Net periodic pension costs (Note 41a)		114,946		179,662
Housing		101,944		98,200
Other post-retirement cost (Note 41b)		21,871		20,894
Additional old saving allowance		—		15,271
LSA costs (Notes 42a,b)		20,002		4,978
Other employees’ benefits (Note 41c)		2,438		3,002
Medical		2,447		2,008
Others		21,606		8,980

Total		2,054,655		2,246,902

36.

OPERATIONS, MAINTENANCE AND TELECOMMUNICATION SERVICES EXPENSES


	2007		2008
Operations and maintenance		1,238,322		1,377,968
Radio frequency usage charges		224,893		341,263
Concession fees and Universal Service Obligation (“USO”) charges		240,829		261,740
Cost of phone, SIM and RUIM cards		159,288		166,794
Electricity, gas and water		112,105		113,201
Insurance		72,862		87,643
Leased lines		40,498		76,178
Vehicles rental and supporting facilities		48,559		54,454
Travelling		11,221		12,219
Others		674		14,713

Total		2,149,251		2,506,173

Refer to Note 44 for details of related party transactions.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

37.

GENERAL AND ADMINISTRATIVE EXPENSES


	2007		2008
Amortization of goodwill and other intangible assets (Note 14)		262,884		262,472
Provision for doubtful accounts and inventory obsolescence (Notes 6d and 7)		123,986		195,296
Collection expenses		156,412		116,020
Security and screening		53,895		64,745
Travelling		59,024		51,656
Training, education and recruitment		33,663		41,004
Vehicles rental		21,760		22,151
Meetings		17,244		19,300
Professional fees		22,961		15,697
General and social contribution		55,145		14,782
Stationery and printing		12,874		14,054
Research and development		1,099		923
Others		6,987		6,486

Total		827,934		824,586

38.

TAXATION

	a.		In 2007, Telkomsel recognized a claim for tax refund amounting to Rp.12.5 billion (Note 38g) as a result of its revision to the 2004 and 2005 tax returns and Rp.408 billion as a result of its objection to the 2007 tax assessment (Note 38f).

	b.		Prepaid taxes


	2007		2008
Subsidiaries
Corporate income tax		—		50,863
Value Added Tax (“VAT”)		—		3,247
Income tax Article 23 — Services Delivery		26,896		4,717

		26,896		58,827

Taxes payable


	2007		2008
The Company
Income taxes
Article 21 — Individual income tax		56,170		52,533
Article 22 — Withholding tax on goods delivery and import		1,696		2,289
Article 23 — Withholding tax on services delivery		26,815		10,519
Article 24		—		115
Article 25 — Installment of corporate income tax		6,629		5,948
Article 26 — Withholding tax on non-resident income tax		3,812		2,112
Article 29 — Underpayment of corporate income tax		355,145		283,527
VAT		317,780		273,539

		768,047		630,582

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

38.

TAXATION (continued)

Taxes payable (continued)


	2007		2008
Subsidiaries
Income taxes
Article 21 — Individual income tax		25,211		9,042
Article 22 — Withholding tax on goods delivery and import		845		—
Article 23 — Withholding tax on services delivery		67,231		25,567
Article 25 — Installment of corporate income tax		329,359		420,948
Article 26 — Withholding tax on non-resident income tax		27,107		5,283
Article 29 — Underpayment of corporate income tax		200,839		339,255
VAT		88,880		123,603

		739,472		923,698

		1,507,519		1,554,280

The components of income tax expense (benefit) are as follows:


	2007			2008
Current
The Company		616,734			568,140
Subsidiaries		1,194,233			1,490,236

		1,810,967			2,058,376

Deferred
The Company		(60,677	)		(87,532	)
Subsidiaries		103,616			82,169

		42,939			(5,363	)

		1,853,906			2,053,103

Corporate income tax is computed for each individual company as a separate legal entity (consolidated financial statements are not applicable for computing corporate income tax in Indonesia).

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

38.

TAXATION (continued)

	e.		(continued)

			The reconciliation between the consolidated income before tax and taxable income attributable to the Company and the consolidated income tax expense are as follows:


	2007			2008
Consolidated income before tax		5,934,946			6,509,934
Add back consolidation eliminations		1,985,914			2,295,998

Consolidated income before tax and eliminations		7,920,860			8,805,932
Less: income before tax of the subsidiaries		(4,322,593	)		(5,117,987	)

Income before tax attributable to the Company		3,598,267			3,687,945
Less: income subject to final tax		(162,833	)		(178,104	)

		3,435,434			3,509,841


Tax calculated at progressive rates		1,030,613			1,052,935
Non-taxable income		(596,667	)		(688,537	)
Non-deductible expenses		106,445			95,865
Deferred tax assets that cannot be utilized — net		(7,218	)		(762	)

Corporate income tax expense		533,173			459,501
Final income tax expense		22,884			21,109

Total income tax expense of the Company		556,057			480,610
Income tax expense of the subsidiaries		1,297,849			1,572,403

Total consolidated income tax expense		1,853,906			2,053,013

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

38.

TAXATION (continued)

	e.		(continued)

			The reconciliation between income before tax attributable to the Company and the estimated taxable income for the years ended March 31, 2007 and 2008, are as follows:


	2007			2008
Income before tax attributable to the Company		3,598,267			3,687,945
Less: income subject to final tax		(162,833	)		(178,104	)

		3,435,434			3,509,841

Temporary differences:
Amortization of intangible assets		251,205			250,793
Depreciation of property, plant and equipment		167,231			144,945
Allowance for doubtful accounts		94,101			163,918
Accrued employees’ benefits		81,209			115,622
Depreciation of property, plant and equipment under RSA		41,365			28,184
Capital leases		319			579
Foreign exchange (gain) loss on deferred consideration for business combinations		34,015			(45,838	)
Allowance for inventory obsolescence		1,829			2,201
Amortization of land rights		(1,173	)		(988	)
Gain on sale of property, plant and equipment		8			1,545
Amortization of unearned income RSA		(82,623	)		(51,239	)
Trade receivables written-off		(123,650	)		—
Net periodic pension costs and other-post retirement benefits costs		(70,895	)		(62,235	)
LSA		10,224			—
Payments of deferred consideration for business combinations		(223,886	)		(216,450	)
Accrued early retirement benefits		(1,082	)		—
Other provisions		—			(41,810	)

Total temporary differences		178,197			289,227

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

38.

TAXATION (continued)

(continued)


Permanent differences:
Net periodic post-retirement health care benefits costs	178,598		223,061
Amortization of discounts on promissory notes	7,623		3,689
Equity in net income of associates and subsidiaries	(1,988,890	)	(2,295,124	)
Others	168,595		92,800

Total permanent differences	(1,634,074	)	(1,975,574	)

Taxable income	1,979,557		1,823,494


Corporate income tax expense	593,850		547,031
Final income tax expense	22,884		21,109

Total current income tax expense of the Company	616,734		568,140
Current income tax expense of the subsidiaries	1,194,233		1,490,236

Total current income tax expense	1,810,967		2,058,376

Telkomsel’s tax assessment

	a.		In 2006, Telkomsel was assessed for underpayments of withholding taxes and VAT (self assessed) including penalty, covering the fiscal year 2002 totaling Rp.129 billion and overpayment of corporate income tax of Rp.5 billion. The net underpayment of Rp.124 billion was settled through the use of the payment of income tax in 2003 of Rp.24 billion and a cash payment of Rp.100 billion. Of the Rp.100 billion cash payment, Telkomsel has filed an objection for Rp.99 billion. Of the net underpayment of Rp.105 billion, Rp.83 billion was charged to expense in 2006 with the remaining amount of Rp.22 billion recorded as part of its claims for tax refund. In 2007, part the Telkomsel’s objection covering fiscal year 2002 of Rp.185 million was accepted by the Tax Authorities through a cash refund of Rp.176 million and through netting off against the Telkomsel’s tax underpayments during the previous periods amounting to Rp.9 million. The remaining balance was rejected by the Tax Authorities. On October 2, 2007 Telkomsel filed an appeal with the Tax Court for rejection of withholding taxes Article 23 and 26 of Rp.21 billion. Conservatively, the amount was charged to the consolidated statements of income.

	b.		In 2007, Telkomsel was assessed for underpayments of withholding taxes, VAT and corporate income tax including penalty covering the fiscal years 2004 and 2005 totaling Rp.478 billion. The underpayments were settled through netting off withholding tax paid in 2006 of Rp.25 billion and cash payments of Rp.453 billion. On January 3, 2008, Telkomsel filed an objection for underpayment of withholding taxes and VAT including a penalty totaling Rp.408 billion (Note 38a). Up to the issuance date of the consolidated financial statements, Telkomsel has not received the Tax Authorities’ decision on the objection. Telkomsel believes that such amount will be refundable, hence, recognized it as part of claim for tax refund. The Tax Authorities might raise similar issues for transactions occurred in subsequent fiscal years.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

38.

TAXATION (continued)

Tax assessment (continued)

Considering the uncertain result of Telkomsel’s filing for judicial review in the Indonesian Supreme Court for claim of Rp.27 billion covering fiscal year 2001, Telkomsel has conservatively charged the amount to the consolidated statements of income.

	g.		Deferred tax assets and liabilities

			The details of the Company and subsidiaries’ deferred tax assets and liabilities are as follows:


				(Charged)/
				credited to the
				consolidated
	December 31,			to statements			Prior year		March 31,
	2006			of income			overpayment		2007
The Company
Deferred tax assets:
Deferred consideration for business combinations		1,249,332			(58,010	)		—		1,191,322
Allowance for doubtful accounts		263,321			(2,523	)		—		260,798
Net periodic pension and other post-retirement benefits costs		361,839			(21,268	)		—		340,571
Accrued expenses		57,185			—			—		57,185
Accrued for employees’ benefits		529,662			24,039			—		553,701
Accrued LSA		117,440			3,067			—		120,507
Capital leases		12,408			95			—		12,503
Allowance for inventory obsolescence		14,099			470			—		14,569

Total deferred tax assets		2,605,286			(54,130	)		—		2,551,156


Deferred tax liabilities:
Difference between book and tax property, plant and equipment’s net book value		(1,947,349	)		47,828			—		(1,899,521	)
Land rights		(3,800	)		767			—		(3,033	)
RSA		(47,661	)		(9,150	)		—		(56,811	)
Intangible assets		(1,205,783	)		75,362			—		(1,130,421	)

Total deferred tax liabilities		(3,204,593	)		114,807			—		(3,089,786	)

Deferred tax liabilities of the Company — net		(599,307	)		60,677			—		(538,630	)
Deferred tax liabilities of the subsidiaries — net		(2,066,090	)		(103,616	)		—		(2,169,706	)

Total deferred tax liabilities — net		(2,665,397	)		(42,939	)		—		(2,708,336	)

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

38.

TAXATION (continued)

Deferred tax assets and liabilities (continued)


	December 31,			(Charged)/ credited to the consolidated to statements			Acquisitions		March 31,
	2007			of income			of Sigma		2008
The Company
Deferred tax assets:
Deferred consideration for business combinations		1,010,035			(78,686	)		—		931,349
Allowance for doubtful accounts		306,329			48,971			—		355,300
Net periodic pension and other post-retirement benefits costs		375,994			(18,670	)		—		357,324
Accrued expenses		76,686			(12,866	)		—		63,820
Accrued for employees’ benefits		172,071			34,687			—		206,758
Accrued LSA		—			—			—		—
Capital leases		40,057			174			—		40,231
Allowance for inventory obsolescence		15,891			626			—		16,517

Total deferred tax assets		1,997,063			(25,764	)		—		1,971,299


Deferred tax liabilities:
Difference between book and tax property, plant and equipment’s net book value		(1,854,350	)		44,722			—		(1,809,628	)
Land rights		(4,592	)		(296	)		—		(4,888	)
RSA		(59,859	)		(6,368	)		—		(66,227	)
Intangible assets		(902,856	)		75,238			—		(827,618	)

Total deferred tax liabilities		(2,821,657	)		113,296			—		(2,708,361	)

Deferred tax liabilities of the Company — net		(824,594	)		87,532			—		(737,062	)
Deferred tax liabilities of the subsidiaries — net		(2,209,506	)		(82,169	)		4,956		(2,286,719	)

Total deferred tax liabilities — net		(3,034,100	)		5,363			4,956		(3,023,781	)

			Realization of the deferred tax assets is dependent upon profitable operations. Although realization is not assured, the Company and its subsidiaries believe that it is probable that these deferred tax assets will be realized through reduction of future taxable income. The amount of deferred tax assets is considered realizable, however, could be reduced if actual future taxable income is lower than their estimates.

			Telkomsel’s claims for overpayment of corporate income tax for fiscal years 2004 and 2005 due to recalculation of depreciation of property, plant and equipment in 2006 for tax purposes amounting to Rp.338 billion were rejected by the Tax Authorities, hence, it was reversed with a corresponding deduction to the deferred tax liability. The rejection of recalculation resulted to a recognition of overpayment of corporate income tax for 2006 of Rp.12.5 billion presented as part of claims for tax refund (Note 38a).

	h.		Administration

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

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

38.

TAXATION (continued)

	h.		Administration (continued)

			Based on a new tax Law No. 28/2007 concerning the General Provision and Procedure of Taxation effective as of January 1, 2008, the Director General of Tax (“DGT”) may assess or amend taxes within ten years of the time the tax becomes due, or until the end of 2013, whichever is earlier. There are new rules applicable to fiscal year 2008 and subsequent years stipulating that the DGT may assess or amend taxes within five years of the time the tax becomes due.

			The Company has been audited by the Tax Office up to the fiscal year of 2004, excluding fiscal year 2003, Telkomsel up to fiscal year 2005 excluding fiscal year 2003, GSD up to fiscal year 2002, and Infomedia up to fiscal year 2003. Currently, Telkomsel is being audited by the Tax Office for the fiscal year 2006.

39.		BASIC EARNINGS PER SHARE

		Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the year, totaling 20,010,678,488 and 19,860,250,480 for three months period ended March 31, 2007 and 2008, respectively.

		The Company does not have potentially dilutive ordinary shares.

40.		CASH DIVIDENDS AND GENERAL RESERVE

		Pursuant to the AGM of Stockholders as stated in notarial deed No. 68 dated June 30, 2006 of A. Partomuan Pohan, S.H., LLM., the stockholders approved the distribution of cash dividends for 2005 amounting to Rp.4,400,090 million or minimum of Rp.218.86 per share.

		Pursuant to the AGM of Stockholders as stated in notarial deed No. 58 dated June 29, 2007 of A. Partomuan Pohan, S.H., LLM., the stockholders approved the distribution of cash dividends for 2006 amounting to Rp.6,053,067 million or Rp.303.21 per share (of which Rp.971,017 million or Rp.48.41 per share was distributed as interim cash dividend in December 2006) and the appropriation of Rp.4,897,482 million for general reserves.

		On November 6, 2007 the Company decided to distribute the 2007 interim cash dividends of Rp.965,398 million or Rp.48.45 per share to the Company’s stockholders.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

41.

PENSION AND OTHER POST-RETIREMENT BENEFITS

Pension

	1.		The Company

			The Company sponsors a defined benefit pension plan and a defined contribution pension plan.

			The defined benefit pension plan is provided to employees hired with permanent status prior to July 1, 2002. The pension benefits are paid based on the participating employees’ latest basic salary at retirement and the number of years of their service. The plan is managed by Telkom Pension Fund (“Dana Pensiun Telkom” or “Dapen”). The participating employees contribute 18% (before March 2003: 8.4%) of their basic salaries to the plan. The Company’s contributions to the pension fund for the three months period ended March 31, 2007 and 2008 amounted to Rp.173,374 million and Rp.221,628 million, respectively.

			The defined contribution pension plan is provided to employees hired with permanent status on or after July 1, 2002. The plan is managed by financial institutions pension fund (“DPLK”). The Company’s contribution to DPLK is determined based on certain percentage of the participants’ salaries and amounted to Rp.463 million and Rp.578 million for the three months period ended March 31, 2007 and 2008, respectively.

			The following table presents the change in projected benefits obligation, change in plan assets, funded status of the plan and net amount recognized in the Company’s consolidated balance sheets for the three months period ended March 31, 2007 and 2008, for its defined benefit pension plan:


	2007			2008
Change in projected benefits obligation
Projected benefits obligation at beginning of year		8,121,381			10,727,812
Service costs		50,902			70,534
Interest costs		215,543			269,242
Plan participants’ contributions		11,002			21,317
Actuarial gains		71,683			195,173
Expected benefits paid		(86,545	)		(111,321	)

Projected benefits obligation at end of year		8,383,966			11,172,757

Change in plan assets
Fair value of plan assets at beginning of year		7,210,748			9,034,391
Expected return on plan assets		169,401			228,827
Employer’s contributions		173,375			221,628
Plan participants’ contributions		11,002			21,317
Actuarial gains		167,924			159,880
Expected benefits paid		(86,545	)		(102,952	)

Fair value of plan assets at end of year		7,645,905			9,563,091

Funded status		(738,061	)		(1,609,666	)
Unrecognized prior service costs		1,016,246			1,624,066
Unrecognized net actuarial gain		(1,206,299	)		(992,762	)

Accrued pension benefit cost		(928,114	)		(978,362	)

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

41.

PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

Pension (continued)

	1.		The Company (continued)

			The actual return on plan assets was Rp.247,513 million and Rp.228,936 million for the three months period ended March 31, 2007 and 2008, respectively.

			The movement of the accrued pension benefits costs during the three months period ended March 31, 2007 and 2008, is as follows:


	2007			2008
Accrued pension benefits costs at beginning of year		1,002,999			1,054,097
Net periodic pension cost less amounts charged to KSO Units		98,489			161,269
Employer’s contributions		(173,374	)		(221,628	)
Benefits to be paid by the Company		—			(15,376	)

Accrued pension benefits costs at end of year		928,114			978,362

The actuarial valuation for the defined benefit pension plan and the other prost-retirement benefits (Note 41b) was performed based on the measurement date as of December 31, 2006 and 2007, with reports dated April 24, 2007 and March 31, 2008, respectively, by PT Watson Wyatt Purbajaga (“WWP”), an independent actuary in association with Watson Wyatt Worldwide (“WWW”). The principal actuarial assumptions used by the independent actuary as of December 31, 2006 and 2007, are as follows:


	2006			2007
Discount rate		10.5	%		10.25	%
Expected long-term return on plan assets		10.5	%		10	%
Rate of compensation increases		8	%		8	%

The components of net periodic pension costs are as follows:


	2007			2008
Service costs		50,902			70,534
Interest costs		215,543			269,242
Expected return on plan assets		(194,569	)		(232,709	)
Amortization of prior service costs		34,755			55,330
Recognized actuarial gain		(8,142	)		(1,128	)

Total net periodic pension costs less amounts charged to KSO Units (Note 35)		98,489			161,269

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

41.

PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

Pension (continued)

	2.		Telkomsel

			Telkomsel provides a defined benefit pension plan to its employees. Under this plan, employees are entitled to pension benefits based on their latest basic salary or take-home pay and the number of years of their service. PT Asuransi Jiwasraya (“Jiwasraya”), a state-owned life insurance company, manages the plan under an annuity insurance contract. Until 2004, the employees contributed 5% of their monthly salaries to the plan and Telkomsel contributed any remaining amount required to fund the plan. Starting 2005, the entire contributions are fully made by Telkomsel.

			The following table reconciles the unfunded status of the plans with the amounts included in the consolidated balance sheets as of March 31, 2007 and 2008:


	2007			2008
Projected benefits obligation		(243,917	)		(308,316	)
Fair value of plan assets		29,969			107,480

Unfunded status		(213,948	)		(200,836	)
Unrecognized items in the consolidated balance sheet:
Unrecognized prior service costs		(892	)		(829	)
Unrecognized net actuarial losses		165,136			120,306
Unrecognized net obligation at the date of initial application of PSAK 24		1,962			1,784

Accrued pension benefits costs		(47,742	)		(79,575	)

The components of the net periodic pension costs are as follows:


	2007			2008
Service costs		8,138			9,324
Interest costs		6,038			7,643
Expected return on plan assets		(558	)		(2,817	)
Amortization of past service costs		(16	)		(16	)
Recognized actuarial losses		2,098			1,326
Amortization of net obligation at the date of initial application of PSAK 24		45			45

Net periodic pension costs (Note 35)		15,745			15,505

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

41.

PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

Pension (continued)

	2.		Telkomsel (continued)

			The net periodic pension cost for the pension plan was calculated based on measurement date as of December 31, 2006 and 2007, with reports dated February 16, 2007 and March 25, 2008, respectively, by WWP, an independent actuary in association with WWW. The principal actuarial assumptions used by the independent actuary based on measurement date of December 31, 2006 and 2007 for each of the year, are as follows:


	2006			2007
Discount rate		10.5	%		10.5	%
Expected long-term return on plan assets		7.5	%		10.5	%
Rate of compensation increases		8	%		8	%

	3.		Infomedia

			Infomedia provides a defined benefit pension plan to its employees. The reconciliation of the funded status of the plan with the net amount recognized in the consolidated balance sheets as of March 31, 2007 and 2008, are as follows:


	2007			2008
Projected benefits obligation		(6,188	)		(5,960	)
Fair value of plan assets		6,291			6,517

Funded status		103			557

Prepaid pension benefits costs		103			557

The net periodic pension costs of Infomedia amounted to Rp.712 million and Rp.2,288 million for the three months period ended March 31, 2007 and 2008, respectively (Note 35).

	b.		*Other post-retirement benefits*

			The Company provides other post-retirement benefits in the form of cash paid to employees on their retirement or termination. These benefits consist of last housing allowance (“Biaya Fasilitas Perumahan Terakhir” or “BFPT”) and home passage leave (“Biaya Perjalanan Pensiun dan Purnabhakti” or “BPP”). In 2005 and 2006, these benefits presented as part of LSA.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

41.

PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)

	b.		*Other post-retirement benefits* (continued)

			The movement of the other post-retirement benefits for the three months period ended March 31, 2007 and 2008, are as follows:


	2007			2008
Accrued other post-retirement benefits costs at beginning of year		198,596			195,061
Other post-retirement benefits costs		21,871			20,894
Other post-retirement benefits paid		(4,714	)		(6,556	)

Accrued other post-retirement benefits costs at end of year		215,753			209,399

Benefits to be paid for early retirement program		(67,279	)		—

Accrued other post-retirement benefits costs at end of year after early retirement benefits		148,474			209,399

The components of the net periodic other post-retirement benefits costs for the three months period ended March 31, 2007 and 2008, are as follows:


	2007		2008
Service costs		5,731		5,657
Interest costs		11,278		10,484
Amortization of past service costs		1,706		760
Recognized actuarial losses		3,156		3,993

Net periodic other post-retirement benefits costs		21,871		20,894

Amounts charged to KSO Units under contractual agreements		—		—

Total net periodic other post-retirement benefits costs less amounts charged to KSO Units (Note 35)		21,871		20,894

	c.		*Obligation under Labor Law*

			Under Law No. 13/2003 concerning labor regulation, the Company and its subsidiaries are required to provide a minimum pension benefits, if not covered yet by the sponsored pension plans, to their employees upon retirement. The total related obligation recognized as of March 31, 2007 and 2008 amounted to Rp.35,448 million and Rp.56,972 million, respectively. The related employees’ benefits cost charged to expense amounted to Rp.2,438 million and Rp.3,002 million for the three months period ended March 31, 2007 and 2008, respectively (Note 35).

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

42.

LONG SERVICE AWARDS (“LSA”)

	a.		*The Company*

			The Company provides certain cash awards to its employees based on length of service requirements. The benefits are either paid at the time the employees reach the anniversary dates during employment, or at the time of termination.

			The movements of the accrued LSA for the three months period ended March 31, 2007 and 2008, are as follows:


	2007			2008
Accrued LSA at beginning of year		391,467			—
LSA costs (see Note below and Note 35)		16,107			—
Amounts to be charged to KSO Units under contractual agreements					—
LSA paid		(22,937	)		—

Accrued LSA at end of year		384,637			—
Benefits to be paid for early retirement program		—			—

Accrued LSA — non current		384,637			—

			In 2007, in relation to the termination of LSA, the Company recorded an actuarial gain of Rp.391,467 million, resulting from LSA obligation as of December 31, 2006.

			The actuarial valuation for the LSA was performed based on the measurement date as of December 31, 2006, with reports dated April 24, 2007 respectively, by WWP, an independent actuary in association with WWW. The principal actuarial assumptions used by the independent actuary as of December 31, 2006 is as follows:


	2006
Discount rate		10.5	%
Rate of compensation increase		8	%

	b.		*Telkomsel*

			Telkomsel provides certain cash awards to its employees based on the employees’ length of service requirements. The benefits are either paid at the time the employees reach the anniversary dates during employment, or at the time of termination.

			The obligation with respect to these awards was determined based on the actuarial valuation using the Projected Unit Credit method, and amounted to Rp.68,898 million and Rp.76,806 million as of March 31, 2007 and 2008, respectively. The related benefits cost charged to expense amounted to Rp.3,895 million and Rp.4,978 million for the three months period ended March 31, 2007 and 2008, respectively (Note 35).

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

43.		POST-RETIREMENT HEALTH CARE BENEFITS

		The Company provides a post-retirement health care plan to all of its employees hired before November 1, 1995 who have worked for the Company for 20 years or more when they retire, and to their eligible dependents. The requirement of working for over 20 or more years does not apply to employees who retired prior to June 3, 1995. The employees hired by the Company starting from November 1, 1995 no longer be entitled to this plan. The plan is managed by Yayasan Kesehatan Pegawai Telkom (“Yakes”).

		The following table presents the change in the projected benefits obligation, change in plan assets, funded status of the plan and net amount recognized in the Company’s consolidated balance sheets as of March 31, 2007 and 2008:


	2007			2008
Change in projected benefits obligation
Projected benefits obligation at beginning of year		6,985,342			8,925,612
Service costs		28,293			35,995
Interest costs		181,009			225,875
Actuarial (losses) gains		149,031			(32,603	)
Expected post-retirement health care paid		(44,878	)		55,499
Effect of change in assumption		60,052			350,856

Projected benefits obligation at end of period		7,358,849			9,561,234


Change in plan assets
Fair value of plan assets at beginning of year		2,253,260			3,376,172
Expected return on plan assets		36,316			76,965
Employer’s contributions		300,080			100,000
Actuarial gains (losses)		(44,878	)		42,134
Expected post-retirement health care paid		9,453			55,499

Fair value of plan assets at end of period		2,554,231			3,650,770

Funded status		(4,804,618	)		(5,910,464	)
Unrecognized net actuarial losses		1,977,848			3,015,882

Accrued post-retirement health care benefits costs		(2,826,770	)		(2,894,582	)

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

43.		POST-RETIREMENT HEALTH CARE BENEFITS (continued)

		The components of net periodic post-retirement health care benefits cost are as follows:


	2007			2008
Service costs		28,293			35,995
Interest costs		181,009			225,875
Expected return on plan assets		(55,537	)		(85,842	)
Recognized actuarial losses		27,277			49,631

Net periodic post-retirement benefits costs		181,042			225,659
Amounts charged to KSO Units under contractual agreements		—			—

Total net periodic post-retirement health care benefits costs less amounts charged to KSO Units (Note 35)		181,042			225,659

The movements of the accrued post-retirement health care benefits costs for the three months period ended March 31, 2007 and 2008, are as follows:


	2007			2008
Accrued post-retirement health care benefits costs at beginning of year		2,945,728			2,768,923
Net periodic post-retirement health care benefits costs less amounts charged to KSO Units (Note 35)		181,042			225,659
Amounts charged to KSO Units under contractual agreements		—			—
Employer’s contributions		(300,000	)		(100,000	)

Accrued post-retirement health care benefits costs at end of year		2,826,770			2,894,582

The actuarial valuation for the post-retirement health care benefits was performed based on the measurement date as of December 31, 2006 and 2007, with reports dated April 24, 2007 and March 31, 2008, respectively, by WWP, an independent actuary in association with WWW. The principal actuarial assumptions used by the independent actuary as of December 31, 2006 and 2007, are as follows:


	2006			2007
Discount rate		10.5	%		10.25	%
Expected long-term return on plan assets		8.5	%		9	%
Health care costs trend rate assumed for next year		12	%		14	%
Ultimate health care costs trend rate		8	%		8	%
Year that the rate reaches the ultimate trend rate		2011			2011

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

44.		RELATED PARTY TRANSACTIONS

		In the normal course of business, the Company and its subsidiaries entered into transactions with related parties. It is the Company’s policy that the pricing of these transactions be the same as those of arms-length transactions.

		The following are significant agreements/transactions with related parties:

Government

	i.		The Company obtained two-step loans from the Government, the Company’s majority stockholder (Note 21).

			Interest expense for two-step loans amounted to Rp.83,050 million and Rp.58,463 million for the three months period ended March 31, 2007 and 2008, respectively. Interest expense for two-step loans represent 21.6% and 22.2% of the total interest expense for each period.

	ii.		The Company and its subsidiaries pay concession fees for telecommunications services provided and radio frequency usage charges to the Ministry of Communications and Information (formerly, Ministry of Tourism, Post and Telecommunications) of the Republic of Indonesia.

			Concession fees amounted to Rp.135,347 million and Rp.149,836 million for the three months period ended March 31, 2007 and 2008, respectively (Note 36), representing 1.6% and 1.8%, respectively, of the total operating expenses for each period. Radio frequency usage charges amounted to Rp.224,893 million and Rp.341,263 million for the three months period ended March 31, 2007 and 2008, respectively (Note 36), representing 2.7% and 4.0%, respectively, of the total operating expenses for each period.

			Telkomsel paid an up-front fee for the 3G license amounting to Rp.436,000 million and recognized as intangible asset (Note 14).

	iii.		Starting 2005, the Company and its subsidiaries pay USO charges to the Ministry of Communication and Information of the Republic of Indonesia pursuant to MoCI Regulation No.15/Per/M.KOMINFO/9/2005 of September 30, 2005.

			USO charges amounted to Rp.105,482 million and Rp.111,904 million for the three months period ended March 31, 2007 and 2008, respectively (Note 36), representing 1.3% of the total operating expenses for each period.

Commissioners and Directors remuneration

The Company and its subsidiaries provide honorarium and facilities to support the operational duties of their Board of Commissioners. The total of such benefits amounted to Rp.4,930 million and Rp.7,379 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.1% of total operating expenses for each period.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

44.

RELATED PARTY TRANSACTIONS (continued)

Commissioners and Directors remuneration (continued)

ii.

The Company and its subsidiaries provide salaries and facilities to support the operational duties of their Board of Directors. The total of such benefits amounted to Rp.13,967 million and Rp.18,495 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.2% of total operating expenses for each period.

	c.		Indosat

			The Company considers Indosat as a related party because the Government can exert significant influence over the financial and operating policies of Indosat by virtue of its right to appoint one Director and one Commissioner of Indosat.

			The Company has an agreement with Indosat for the provision of international telecommunications services to the public.

			The principal matters covered by the agreement are as follows:

	i.		The Company provides a local network for customers to make or receive international calls. Indosat provides the international network for the customers, except for certain border towns, as determined by the Director General of Post and Telecommunications of the Republic of Indonesia. The international telecommunications services include telephone, telex, telegram, Package Switched Data Network (PSDN), television, teleprinter, Alternate Voice/Data Telecommunications (AVD), hotline and teleconferencing.

	ii.		The Company and Indosat are responsible for their respective telecommunications facilities.

	iii.		Customer billing and collection, except for leased lines and public phones located at the international gateways, are handled by the Company.

	iv.		The Company receives compensation for the services provided in the first item above, based on the interconnection tariff determined by the MoC.

			The Company has also entered into an interconnection agreement between the Company’s fixed line network (Public Switched Telephone Network or “PSTN”) and Indosat’s cellular network in connection with implementation of Indosat Multimedia Mobile services and the settlement of the related interconnection rights and obligations.

			The Company also has an agreement with Indosat for the interconnection of Indosat’s GSM mobile cellular telecommunications network with the Company’s PSTN, enabling each party’s customers to make domestic calls between Indosat’s GSM mobile network and Telkom’s fixed line network and allowing Indosat’s mobile customers to access Telkom’s IDD service by dialing “007”.

			The Company has been handling customer billings and collections for Indosat. Indosat is gradually taking over the activities and performing its own direct billing and collection. The Company receives compensation from Indosat computed at 1% of the collections made by the Company beginning January 1, 1995, plus the billing process expenses which are fixed at a certain amount per record.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

44.

RELATED PARTY TRANSACTIONS (continued)

	c.		Indosat (continued)

			On December 28, 2006, the Company and Indosat signed amendments to the interconnection agreements for the fixed line networks (local, domestic long-distance and international) and mobile network for the implementation of the cost-based tariff obligations under the MoCI Regulations No. 8/2006 (Note 48). These amendments took effect on January 1, 2007.

			Telkomsel also entered into an agreement with Indosat for the provision of international telecommunications services to its GSM mobile cellular customers. The principal matters covered by the agreement are as follows:

	i.		Telkomsel’s GSM mobile cellular telecommunications network is interconnected with PT Indosat’s international gateway exchanges to facilitate outgoing and incoming international calls.

	ii.		Telkomsel’s and Indosat’s GSM mobile cellular telecommunications networks are interconnected to allow cross-network communications among their subscribers.

	iii.		In exchange for these interconnections, Indosat is entitled to a certain amount as compensation.

	iv.		Interconnection equipment installed by one of the parties in another party’s premises remain the property of the party installing such equipment. Expenses incurred in connection with the provision of equipment, installation and maintenance are borne by Telkomsel.

			The Company and its subsidiaries were charged net interconnection charges from Indosat of Rp.105,971 million and Rp.36,757 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.7% and 0.2% of the total operating revenues in each period.

			Telkomsel also has an agreement with Indosat on the usage of Indosat’s telecommunications facilities. The agreement, which was made in 1997 and is valid for eleven years, is subject to change based on annual review and mutual agreement by both parties. The charges for the usage of the facilities amounted to Rp.4,401 million and Rp.6,821 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.1% of the total operating expenses in each period.

			Other agreements between Telkomsel and Indosat are as follows:

	i.		Agreement on Construction and Maintenance for Jakarta-Surabaya Cable System (“J-S Cable System”)

			On October 10, 1996, Telkomsel, Lintasarta, Satelindo and Indosat (the “Parties”) entered into an agreement on the construction and maintenance of the J-S Cable System. The Parties have formed a management committee which consists of a chairman and one representative from each of the Parties to direct the construction and operation of the cable system. The construction of the cable system was completed in 1998. In accordance with the agreement, Telkomsel shared 19.325% of the total construction costs. Operating and maintenance costs are shared based on agreed formula.

			Telkomsel’s share in operating and maintenance costs amounted to Rp.273 million and Rp.92 million for the three months period ended March 31, 2007 and 2008, respectively.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

44.

RELATED PARTY TRANSACTIONS (continued)

Indosat (continued)

	ii.		Indefeasible Right of Use Agreement (“IRU”)

			On September 21, 2000, Telkomsel entered into agreement with Indosat on the use of SEA-ME-WE 3 and tail link in Jakarta and Medan. In accordance with the agreement, Telkomsel was granted an IRU for certain capacity of the link starting from September 21, 2000 until September 20, 2015 for an up-front payment of US$2.7 million. In addition to the up-front payment, Telkomsel is also charged annual operating and maintenance costs amounting to US$0.1 million.

			In 1994, the Company transferred to Satelindo the right to use a parcel of Company-owned land located in Jakarta which had been previously leased to Telekomindo. Based on the transfer agreement, Satelindo is given the right to use the land for 30 years and can apply for the right to build properties thereon. The ownership of the land is retained by the Company. Satelindo agreed to pay Rp.43,023 million to the Company for the 30 years right. Satelindo paid Rp.17,210 million in 1994 while the remaining balance Rp.25,813 million was not paid because the Utilization Right (“Hak Pengelolaan Lahan” or “HPL”) on the land could not be delivered as provided in the transfer agreement. In 2000, the Company and Satelindo agreed on an alternative solution resulting in the payment being treated as a lease expense up to 2006. In 2001, Satelindo paid an additional amount of Rp.59,860 million as lease expense up to 2024. As of March 31, 2007 and 2008, the prepaid portion is shown in the consolidated balance sheets as “Advances from customers and suppliers”.

			The Company provides leased lines to Indosat and its subsidiaries, namely Indosat Mega Media and Lintasarta. The leased lines can be used by these companies for telephone, telegraph, data, telex, facsimile or other telecommunication services. Revenues earned from these transactions amounted to Rp.41,419 million and Rp.44,121 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.3% of the total operating revenues for each period.

			Lintasarta utilizes the Company’s satellite transponders or frequency channels. Revenues earned from these transactions amounted to Rp.3,979 million and Rp.4,842 million for the three months period ended March 31, 2007 and 2008, respectively, representing less than 0.1% of total operating revenues for each period.

			Telkomsel has an agreement with Lintasarta (valid until October 31, 2010) and PT Artajasa Pembayaran Elektronis (“Artajasa”) (valid until May 2008) (a 39.8% owned subsidiary of Indosat) for the usage of data communication network system. The charges from Lintasarta and Artajasa for the services amounted to Rp.6,815 million and Rp.8,408 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.1% of the total operating expenses for each period.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

44.

RELATED PARTY TRANSACTIONS (continued)

	d.		Others

			Transactions with all BUMN are considered as related parties transactions:

	(i)		The Company provides telecommunication services to substantially all Government agencies in Indonesia which transactions are treated as that of third parties customers.

	(ii)		The Company has entered into agreements with Government Agencies and associated companies, namely CSM, Patrakom and KSO VII (for the period from January - September 2006), for the utilization of the Company’s satellite transponders or frequency channels. Revenues earned from these transactions amounted to Rp.29,150 million and Rp.25,448 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.2% of the total operating revenues for each period.

	(iii)		The Company provides leased lines to associated companies, namely CSM, Patrakom and PSN. The leased lines can be used by the associated companies for telephone, telegraph, data, telex, facsimile or other telecommunications services. Revenues earned from these transactions amounted to Rp.37,654 million and Rp.15,125 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.3% and 0.1% of the total operating revenues for each period.

	(iv)		The Company purchases property and equipment including construction and installation services from a number of related parties. These related parties include, among others, PT Industri Telekomunikasi Indonesia (“INTI”) and Kopegtel. Purchases made from these related parties amounted to Rp.9,000 million and Rp.76,434 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.3%, and 2.1% of the total fixed assets purchased in each period.

	(v)		INTI is also a major contractor and supplier of equipment, including construction and installation services of Telkomsel. Purchases from INTI for the three months period ended March 31, 2007 and 2008 amounted to Rp.11,182 million and Rp.10,143 million, respectively, representing 0.3% of the total fixed assets purchased in each period.

	(vi)		Telkomsel has an agreement with PSN for the lease of PSN’s transmission link. Based on the agreement, which was made on March 14, 2001, the minimum lease period is 2 years since the operation of the transmission link and is extendable subject to agreement by both parties. The agreement was extended until March 13, 2011. The lease charges amounted to Rp.38,643 million and Rp.33,359 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.5% and 0.4% of the total operating expenses for each period.

	(vii)		The Company and its subsidiaries insured their property, plant and equipment against property losses, inventories and employees’ social security from Jasindo, PT Asuransi Tenaga Kerja and Jiwasraya, state-owned insurance companies. Insurance premiums amounted to Rp.69,022 million and Rp.79,614 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.8% and 0.9% the total operating expenses for each period.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

44.

RELATED PARTY TRANSACTIONS (continued)

Others (continued)

	(viii)		The Company and its subsidiaries maintain current accounts and time deposits in several state-owned banks. In addition, some of these banks are appointed as collecting agents for the Company. Total placements in the form of current accounts, time deposits and mutual funds in state-owned banks amounted to Rp.4,058,400 million and Rp.3,938,915 million as of March 31, 2007 and 2008, respectively, representing 5.4% and 4.8% of the total assets as of March 31, 2007 and 2008, respectively. Interest income recognized for the three months period ended March 31, 2007 and 2008 amounted to Rp.88,812 million and Rp.60,945 million, representing 61% and 35%, respectively, of total interest income for each period.

	(ix)		The Company’s subsidiaries obtained loans from state-owned banks. Interest expense on these loans for the three months period ended March 31, 2007 and 2008 amounted to Rp.43,463 million and Rp.127,937 million, respectively, representing 11.3% and 48.6%, respectively, of the total interest expense for each period.

	(x)		The Company leases buildings, purchases materials and construction services, and utilizes maintenance and cleaning services of Kopegtel and PT Sandhy Putra Makmur (“SPM”), a subsidiary of Yayasan Sandikara Putra Telkom — a foundation managed by Dharma Wanita Telkom. Total charges from these transactions amounted to Rp.20,402 million and Rp.89,015 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.2% and 1.0%, respectively, of the total operating expenses for each period.

	(xi)		The Company and its subsidiaries earned interconnection revenues (expense) from PSN, with a total of Rp.492 million and Rp.(809) million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.003% and 0.005%, respectively, of the total operating revenues for each period.

	(xii)		The Company has RSA with Kopegtel. Kopegtel’s share in revenues from these arrangements amounted to Rp.4,580 million and Rp.3,194 million for three months period ended March 31 2007 and 2008, respectively, representing 0.03% and 0.02% of the total operating revenues for each period.

	(xiii)		Telkomsel has operating lease agreements with Patrakom and CSM for the use of their transmission link for 3 years, subject to extension. Lease charges amounted to Rp.55,157 million and Rp.36,953 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.7% and 0.4%, respectively, of the total operating expenses for each period.

	(xiv)		Koperasi Pegawai Telkomsel (“Kisel”) is a cooperative that was established by Telkomsel’s employees to engage in car rental services, printing and distribution of customer bills, collection and other services principally for the benefit of Telkomsel. For these services, Kisel charged Telkomsel Rp.80,636 million and Rp.106,359 million for the three months period ended March 31, 2007 and 2008, respectively. Telkomsel also has dealership agreements with Kisel for distribution of SIM cards and pulse reload vouchers. Total SIM cards and pulse reload vouchers which were sold to Kisel amounted to Rp.396,516 million and Rp.510,710 million for the three months period ended March 31, 2007 and 2008, respectively.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

44.

RELATED PARTY TRANSACTIONS (continued)

Others (continued)

	(xv)		The Company has seconded a number of its employees to related parties to assist them in operating their businesses. In addition, the Company provides to certain of its related parties, the right to use its buildings free of charge.

	(xvi)		Telkomsel has procurement agreements with PT Graha Informatika Nusantara (“Gratika”), a subsidiary of Dapen, for installation and maintenance of equipment. Total procurement for installations of equipment amounted to Rp.17,330 million and Rp.7,974million for the three months period ended March 31, 2007 and 2008, respectively; and for maintenance of equipment amounted to Rp.13,075 million and Rp.11,568 million for the three months period ended March 31, 2007 and 2008, respectively, representing 0.2% and 0.1%, respectively, of total operating expenses in each period.

Presented below are balances of accounts with related parties:

2007

2008

% to

Amount

total assets

Amount

total assets

Cash and cash equivalents (Note 5)

4,053,624

5.35

3,591,612

4.39

Temporary investments

85,846

0.11

186,708

0.23

Trade receivables — net (Note 6)

535,544

0.17

399,786

0.49

Other receivables

State-owned banks (interest)

8,961

0.01

21,619

0.03

Kopegtel

—

3,829

0.00

Patrakom

2,773

0.00

Government Agencies

1,122

0.00

2,065

0.00

Other

5,049

0.01

558

0.00

Total

15,132

0.02

30,844

0.03

Prepaid expenses (Note 8)

27,914

0.04

22,443

0.03

Restricted time deposits (Note 9)

2,892

0.00

75,686

0.09

Advances and other non-current assets (Note 13)

Bank Mandiri

1,738

0.00

91,618

0.11

Peruri

813

0.00

813

0.00

Total

2.551

0.00

92,431

0.11

Escrow accounts (Note 15)

145

0.00

—

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

44.

RELATED PARTY TRANSACTIONS (continued)


		2007				2008
				% to total				% to total
		Amount		liabilities		Amount		liabilities
i.	Trade payables (Note 16)
	Government Agencies		684,241		1.90		300,154		0.85
	Kopegtel		51,031		0.14		107,506		0.31
	Yakes		—		—		52,782		0.15
	Indosat		90,466		0.25		47,867		0.14
	INTI		6,441		0.02		23,921		0.07
	SPM		6,406		0.02		15,199		0.04
	PSN		24		0.00		4,407		0.01
	Gratika		13,331		0.04		69		0.00
	Others		22,411		0.06		25,664		0.07

	Total		874,351		2.43		577,569		1.64

j.	Accrued expenses (Note 17)
	Employees		1,312,123		3.64		1,347,508		3.83
	Government Agencies and state-owned banks		88,898		0.25		43,271		0.12
	Jasindo		—		—		93		0.00
	Others		4,678		0.01		—		—

	Total		1,405,699		3.90		1,390,872		3.95

k.	Short-term bank loans (Note 19)
	Bank Mandiri		116,666		0.32		—		—
	BNI		100,000		0.28		166,667		0.47

	Total		216,666		0.60		166,667		0.47

l.	Two-step loans (Note 21)		4,397,476		12.20		4,141,187		11.78

m.	Accrued LSA (Note 42)		453,535		1.26		76,806		0.22

n.	Accrued post-retirement health care benefits (Note 43)		2,826,770		7.84		2,894,582		8.24

o.	Long-term bank loans (Note 23)
	BRI		—		—		1,820,000		5.18
	Bank Mandiri		760,000		2.11		1,690,000		4.81
	BNI		240,000		0.67		1,270,000		3.61

	Total		1,000,000		2.78		4,780,000		13.60

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

45.		SEGMENT INFORMATION

		The Company and its subsidiaries have three main business segments operating in Indonesia namely: fixed wireline, fixed wireless and cellular. The fixed wireline segment provides local, SLJJ and international telephone services, and other telecommunications services (including among others, leased lines, telex, transponder, satellite and VSAT) as well as ancillary services. The fixed wireless segment provides CDMA-based telecommunication services which offers customers the ability to use a wireless handset with limited mobility (within a local code area). The cellular segment provides basic telecommunication services, particularly mobile cellular telecommunication services. Operating segments that do not individually represent more than 10% of the Company’s revenues are presented as “Others”, comprising of telephone directories and building management businesses.

		Segment revenues and expenses include transactions between business segments and are accounted for at prices that management believes represent market prices.


	2007
	Fixed			Fixed									Total before						Total
	wireline			wireless			Cellular			Others			elimination			Elimination			consolidated
Segment results
External operating revenues		4,065,455			782,731			8,944,219			55,328			13,847,733			—			13,847,733
Inter-segment operating revenues		1,263,578			(41,163	)		(755,347	)		26,837			493,905			(493,905	)		—

Total segment revenues		5,329,033			741,568			8,188,872			82,165			14,341,638			(493,905	)		13,847,733

External operating expenses		(3,825,397	)		(353,387	)		(3,399,663	)		(98,526	)		(7,676,973	)		—			(7,676,973	)
Inter-segment operating expenses		(63,770	)		—			(467,330	)		(232	)		(531,332	)		531,332			—

Segment expenses		(3,889,167	)		(353,387	)		(3,866,993	)		(98,758	)		(8,208,305	)		531,332			(7,676,973	)

Segment results		1,439,866			388,181			4,321,879			(16,593	)		6,133,333			37,427			6,170,760

Interest expense																				(384,259	)
Interest income																				144,899
Loss on foreign exchange — net																				(86,422	)
Other income — net																				86,991
Income tax expense																				(1,853,906	)
Equity in net income of associated companies																				2,977

Income before minority interest																				4,081,040
Unallocated minority interest																				(1,038,830	)

Net income																				3,042,210

Other information
Segment assets		33,077,927			3,967,810			40,084,749			602,320			77,732,806			(2,119,965	)		75,612,841
Investments in associates		82,883			—			9,290			—			92,173			—			92,173

Total consolidated assets																				75,705,014

Total consolidated liabilities		(22,130,508	)		(1,700,658	)		(14,024,602	)		(321,646	)		(38,177,414	)		2,125,521			(36,051,893	)
Minority Interest		(2,622	)		—			—			(7,530	)		(10,152	)		(9,220,696	)		(9,230,848	)
Capital expenditures		(343,867	)		(47,789	)		(3,969,628	)		(23,245	)		(4,384,529	)		—			(4,384,529	)

Depreciation and amortization		(920,871	)		(116,249	)		(1,323,235	)		(10,747	)		(2,371,102	)		2,479			(2,368,623	)

Amortization of goodwill and other intangible assets		(251,205	)		—			(11,679	)		—			(262,884	)		—			(262,884	)

Other non-cash expenses		(107,167	)		—			(16,680	)		(140	)		(123,987	)		—			(123,987	)

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

45.

SEGMENT INFORMATION (continued)


	2008
	Fixed			Fixed									Total before						Total
	wireline			wireless			Cellular			Others			elimination			Elimination			consolidated
Segment results
External operating revenues		4,832,852			799,072			9,392,850			6,829			15,031,603			—			15,031,603
Inter-segment operating revenues		316,169			(30,860	)		194,443			86,255			566,007			(566,007	)		—

Total segment revenues		5,149,021			768,212			9,587,293			93,084			15,597,610			(566,007	)		15,031,603

External operating expenses		(4,100,683	)		(404,270	)		(3,869,833	)		(114,329	)		(8,489,115	)		—			(8,489,115	)
Inter-segment operating expenses		(80,010	)		—			(510,189	)		(7,788	)		(597,987	)		597,987			—

Segment expenses		(4,180,693	)		(404,270	)		(4,380,022	)		(122,117	)		(9,087,102	)		597,987			(8,489,115	)

Segment results		968,328			363,942			5,207,271			(29,033	)		6,510,508			31,980			6,542,488

Interest expense																				(263,146	)
Interest income																				174,205
Loss on foreign exchange — net																				(45,655	)
Other income — net																				102,916
Income tax expense																				(2,053,013	)
Equity in net income of associated companies																				(874	)

Income before minority interest																				4,456,921
Unallocated minority interest																				(1,249,587	)

Net income																				3,207,334

Other information
Segment assets		29,481,326			7,115,618			46,776,830			657,686			84,031,460			(2,370,869	)		81,660,591
Investments in associates		119,902			—			20,359			—			140,261			—			140,261

Total consolidated assets																				81,800,852

Total consolidated liabilities		(18,477,244	)		(1,637,145	)		(17,025,929	)		(372,005	)		(37,512,323	)		2,370,869			(35,141,454	)
Minority Interest		3,214			—			—			(8,242	)		(5,028	)		(10,551,968	)		(10,556,996	)
Capital expenditures		(514,584	)		(20,630	)		(2,280,052	)		(2,331	)		(2,817,597	)		—			(2,817,597	)

Depreciation and amortization		(900,352	)		(94,204	)		(1,547,610	)		(13,062	)		(2,555,228	)		15,995			(2,539,233	)

Amortization of goodwill and other intangible assets		(250,793	)		—			(11,679	)		—			(262,472	)		—			(262, 472	)

Other non-cash expenses		(183,061	)		—			(12,475	)		240			(195,296	)		—			(195,296	)

46.		JOINT OPERATION SCHEMES (“KERJA SAMA OPERASI” OR “KSO”)

		In 1995, the Company and five investors (Pramindo, TII, MGTI, Dayamitra and BSI) entered into agreements for KSO and KSO construction agreements for the provision of telecommunication facilities and services for the Sixth Five-Year Development Plan (“Repelita VI”) of the Republic of Indonesia. The five investors undertook the development and operation of the basic fixed telecommunications facilities and services in five of the Company’s seven Divre.

		Following the Indonesian economics crisis that began in mid-1997, certain KSO partners experienced difficulties in fulfilling their commitment under the KSO agreements. As remedial measures instituted by both the Company and the KSO partners did not fully remedy this situation, the Company acquired and currently controls the related KSO through acquisition of its KSO partners or the businesses. Accordingly, the revenue-sharing percentage in those KSO is no longer relevant as the financial statements of the acquired KSO partners and the related KSO are consolidated into the Company’s consolidated financial statements since the date of acquisition (Notes 4 and 24).

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

47.		REVENUE-SHARING ARRANGEMENTS (“RSA”)

		The Company has entered into agreements with several investors under RSA to develop fixed lines, public card-phone booths (including their maintenance), data and internet network and related supporting telecommunications facilities.

		As of March 31, 2008, the Company has 52 RSA with 44 investors. The RSA are located mainly in Pekanbaru, Jakarta, East Java, Kalimantan, Makassar, Pare-pare, Manado, Denpasar, Mataram and Kupang, with concession periods ranging from 24 to 176 months.

		Under the RSA, the investors finance the costs incurred in developing the telecommunications facilities. Upon completion of the construction, the Company manages and operates the facilities and bears the cost of repairs and maintenance during the revenue-sharing periods. The investors legally retain the rights to the property, plant and equipment constructed by them during the RSA periods. At the end of each the RSA period, the investors transfer the ownership of the facilities to the Company at a nominal price.

		Generally, the revenues earned from the customers in the form of line installation charges are allocated in full to the investors. The revenues from outgoing telephone pulses and monthly subscription charges are shared between the investors and the Company based on certain agreed ratio.

		The net book value of the property, plant and equipment under RSA which have been transferred to property, plant and equipment of the Company amounted to Rp.nil and Rp.12,120 million as of March 31, 2007 and 2008, respectively (Note 12).

		The investors’ share of revenues amounted to Rp.71,865 million for the three months period ended March 31, 2008.

48.		TELECOMMUNICATIONS SERVICES TARIFFS

		Under Law No. 36/1999 and Government Regulation No. 52/2000, tariffs for the use of telecommunications network and telecommunication services are determined by providers based on the tariffs category, structure and with respect to fixed line telecommunications services, at price cap formula set by the Government.

	a.		Fixed line telephone tariffs

			Fixed line telephone tariffs are imposed for network access and usage. Access charges consist of a one-time installation charge and a monthly subscription charge. Usage charges are measured in pulses or minutes and classified as either local or SLJJ. The tariffs depend on call distance, call duration, time of call, day of the week and holidays.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

48.

TELECOMMUNICATIONS SERVICES TARIFFS (continued)

	a.		Fixed line telephone tariffs (continued)

			Tariffs for fixed line telephone are regulated under the MoC Decree No. KM.12/2002 dated January 29, 2002 concerning the addendum of the decree of MTPT No. 79 /1995, concerning the Method for Basic Tariff Adjustment on Domestic Fixed Line Telecommunication Services. Furthermore, the MoC issued Letter No. PK 304/1/3 PHB-2002 dated January 29, 2002 concerning increase in tariffs for fixed line telecommunications services. According to the Letter, tariffs for fixed line domestic calls would increase by 45.49% over three years. The average increase in 2002 was 15%. This increase was effective on February 1, 2002. The implementation of the planned increase in the tariff in 2003, however, was postponed by the MoC through Letter No. PR.304/1/1/PHB-2003 dated January 16, 2003.

			Based on the Announcement No. PM.2/2004 of the MoC dated March 30, 2004, the Company adjusted the tariffs effective April 1, 2004 as follows:

	•		Local charges increased by an average of 28%

	•		SLJJ charges decreased by an average of 10%

	•		Monthly subscription charges increased by an average of 12% to 25%, depending on customer’s segment.

			The Government has issued initial tariff formula and adjustment tariff which are stipulated in the MoCI Decree No. 09/Per/M.KOMINFO/02/2006 concerning Procedure for Initial Tariff Establishment and Tariff Change for Basic Telephone Service Through Fixed Line Network dated February 8, 2006, replacing the MoC Decree No. KM. 12 dated January 29, 2002 of the MTPT as stated above.

	b.		Mobile cellular telephone tariffs

			Tariffs for cellular providers are set on the basis of the MTPT Decree No. KM.27/PR.301/MPPT-98 dated February 23, 1998. Under the regulation, the cellular tariffs consist of activation fees, monthly charges and usage charges.

			The maximum tariff for the activation fee is Rp.200,000 per new subscriber number and Rp.65,000 for monthly charge. Usage charges consist of the following:

	*(i).*		*Airtime*

			The maximum basic airtime tariff charged to the originating cellular subscriber is Rp.325/minute. Charges to the originating cellular subscriber are calculated as follows:


1.	Cellular to cellular	:	2 times airtime rate
2.	Cellular to PSTN	:	1 time airtime rate
3.	PSTN to cellular	:	1 time airtime rate
4.	Card phone to cellular	:	1 time airtime rate plus 41% surcharge

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

48.

TELECOMMUNICATIONS SERVICES TARIFFS (continued)

Mobile cellular telephone tariffs (continued)

(ii).

Usage tariffs

	1.		The local usage tariffs are charged to cellular subscriber who makes a call to the PSTN. For the use of network, the tariffs per minute are computed at 50% of the prevailing local PSTN tariffs.

	2.		The long-distance usage tariffs between two different service areas charged to cellular subscriber are the same as the prevailing tariffs for domestic SLJJ applied to PSTN subscribers.

			Based on Decree No. KM. 79/1998 of the MoC, the maximum tariff for prepaid customers may not exceed 140% of the peak time tariffs for post-paid subscribers.

			Based on Announcement No. PM.2/2004 of the MoC dated March 30, 2004, Telkomsel adjusted its tariffs by eliminating the tariff subsidy from long-distance calls, resulting to a 9% tariff increase.

			Under Decree No. 12/Per/M.KOMINFO/02/2006 dated February 28, 2006 of the MoCI the cellular tariffs consist of the following:

	•		Connection fee

	•		Monthly charges

	•		Usage charges

	•		Additional facilities fee

			The tariffs are determined based on certain formula with a “floor price”. For usage charges, the floor price should be the originating fee plus termination fee (total interconnection fee) while for connection fee and monthly charges, the floor price depends on the cost structure of each cellular provider.

			The implementation of the new tariff for a dominant operator has to be approved by the Government. A dominant operator is an operator that has operating revenues equal to or more than 25% of total Industry revenue for a certain segment.

	c.		Interconnection tariffs

			The Government establishes the percentage of tariffs to be received by each operator in respect of calls that transit to multiple networks. The Telecommunications Law and Government Regulation No. 52/2000 provides for the implementation of a new policy to replace the current revenue-sharing policy. Under the new policy, the operator of the network on which calls terminate would determine the interconnection charge to be received by it based on a formula to be mandated by the Government, which would be intended to have the effect of requiring that operators charge for calls based on the costs of carrying such calls. The MoC issued Decree No. 32/2004, dated March 11, 2004 stated that cost-based interconnection fees shall be applicable beginning January 1, 2005, of which subsequently postponed until January 1, 2007 based on the MoCI Regulation No. 08/Per/M.KOMINFO/02/2006 dated February 8, 2006. On December 28, 2006, the Company and all network operators signed amendments to their interconnection agreements for fixed line networks (local, SLJJ and international) and mobile network for the implementation of the cost-based tariff obligations under the MoCI Regulations No. 08/Per/M.KOMINFO/02/2006. These amendments took effect on January 1, 2007.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

48.

TELECOMMUNICATIONS SERVICES TARIFFS (continued)

Interconnection tariffs (continued)

	*(i).*		*Interconnection with fixed line network*

			The Government’s National Fundamental Technical Plan set forth in Decree No. KM.4/2001, as amended by Decree No. KM.28/2004, sets out the technical requirements, routing plans and numbering plans for interconnection of the networks of various telecommunications operators among themselves and with the Company’s fixed line network. Under the National Fundamental Technical Plan, all operators are permitted to interconnect with the Company’s fixed line network for access thereto and to other networks, such as international gateways and the networks of other cellular operators. In addition, cellular operators may interconnect directly with other networks without connecting to the Company’s fixed line network. Currently, the fees for interconnection are set forth in Decree No. KU.506/1997, Decree No. KM.46/1998, Decree No. KM.37/1999 and Decree No. KM.30/2000.

			Fixed line Interconnection with Indosat. Currently, the fixed line interconnection between the Company and Indosat is generally based on their agreement signed in 2005. Pursuant to the agreement between the Company and Indosat, for interconnection of local and SLJJ calls, the operator of the network on which the calls terminate receives an agreed amount per minute.

			Other Fixed Wireline Interconnection. Since September 1, 1998, the Company has been receiving a share of the tariffs from Batam Bintan Telekomunikasi (“BBT”), which is a local operator with a special coverage area on Batam Island, for each successful call that transits or terminates on the Company’s fixed line network. Under the interconnection agreement, for local interconnection calls, revenues are shared on a “sender keeps all” basis. For local calls originating on BBT’s network terminating on a cellular network and vice versa which transit through the Company’s fixed line network, the Company receives an agreed percentage of the prevailing tariff for local calls. For interconnection of SLJJ calls, the operator of the network on which the calls terminate or transit receives an agreed percentage of the prevailing long-distance tariff. In addition, BBT is to receive a certain fixed amount for each minute of incoming and outgoing international calls, from and to BBT that transit through the Company’s fixed line network and use the Company’s IDD service and 50% of the prevailing interconnection tariff for incoming and outgoing international calls that transit through the Company’s fixed line network and use Indosat’s IDD service.

			Other Fixed Wireless Interconnection. Fixed wireless networks may interconnect with the Company’s fixed line network at the Company’s gateway. At present, other than the Company and Indosat, PT Bakrie Telecom (“BT”) also operates a fixed wireless network in Indonesia. The fixed wireless interconnection between the Company and BT is currently based on the most recent interconnection agreement signed in 2005. Pursuant to the agreement, for interconnection of local calls, the operator of the network on which the calls terminate receives an agreed amount per minute. For local calls originating on BT’s network terminating on a cellular network and vice versa which transit through the Company’s fixed line network, the Company receives an agreed percentage of the prevailing tariff for local calls. For SLJJ calls that originate on the Company’s fixed line network and terminate on BT’s network, BT receives an agreed amount per minute.

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

48.

TELECOMMUNICATIONS SERVICES TARIFFS (continued)

Interconnection tariffs (continued)

	*(i).*		*Interconnection with fixed line network* (continued)

			In the reverse situation and for transit long-distance calls through the Company’s fixed line network, the Company receives an agreed percentage of the prevailing long-distance tariff. In addition, BT is to receive a certain fixed amount for each minute of incoming and outgoing international calls to and from BT that transit through the Company’s fixed line network and use the Company’s IDD service and 25% of prevailing interconnection tariff of incoming and outgoing international calls that transit through the Company’s fixed line network and use Indosat’s IDD service.

	*(ii).*		*Cellular interconnection*

			In respect of local interconnection calls, including transit calls, between a cellular network and the Company’s fixed line network, the Company receives 50% of the prevailing fixed-line usage tariff for local pulse. For local calls from the Company’s fixed line network to a cellular network, the Company charges its subscribers the applicable local call tariff plus an airtime charge, and pays the cellular operator the airtime charge. For local calls between cellular telecommunications networks, the originating cellular operator pays the terminating cellular operator the airtime charges.

			The current Interconnection Decree, effective April 1, 1998, assumes that it is possible for long-distance calls to be carried by more than one network. Pursuant to the Interconnection Decree, for long-distance calls which originate on the Company’s fixed line network, the Company is entitled to retain a portion of the prevailing long-distance tariff, which ranges from 40% of the tariff in cases where the entire long-distance portion is carried by a cellular operator up to 85% of the tariff in cases where the entire long-distance portion is carried by the Company’s fixed line network. For long-distance calls that originate from a cellular subscriber, the Company and its subsidiaries are entitled to retain a portion of the prevailing long-distance tariff, which ranges from 25% of the tariff in cases where the call originates from a cellular subscriber, transits the Company’s fixed line network and terminates on another cellular subscriber with the entire long-distance portion carried by a cellular operator, up to 85% of the tariff in cases where the entire long-distance portion is carried by the Company’s fixed line network and terminates on the Company’s fixed line network.

	*(iii).*		*International interconnection*

			Interconnection on the Company’s domestic fixed line network for international calls consists of access charges and usage charges. The following table sets forth the current international interconnection tariff, effective as of December 1, 1998, for IDD calls which are routed through Indosat’s international gateways and which originate, transit or terminate on the Company’s domestic fixed line network and Telkomsel’s cellular network, pursuant to Ministerial Decree No. KM.37/1999:

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48.

TELECOMMUNICATIONS SERVICES TARIFFS (continued)

Interconnection tariffs (continued)

(iii).

International interconnection


Description		Tariff
Access charge		Rp850 / successful call
Usage charge		Rp550 / successful paid minute

In addition, since June 2004, the Company has provided IDD services. Currently, the Company’s IDD service can be accessed by subscribers of all telecommunication operators in Indonesia. Interconnection and access charges for originating calls using the Company’s IDD service or terminating incoming international calls routed through the Company’s international voice telecommunications gateway are negotiated with each respective domestic operator.

	*(iv).*		*Satellite phone interconnection*

			Since the fourth quarter of 2001, the Company has been receiving a share of revenues arising from interconnection transactions with PSN, a national satellite operator. Under the agreement, in respect of the interconnection calls between the Company and PSN, the Company receives Rp.800 per minute for network charges and an additional Rp.300 per minute origination fee if the call originates from the Company’s fixed line network.

			Based on Indonesian Telecommunications Regulatory Body (“Badan Regulasi Telekomunikasi Indonesia” or “BRTI”) Letters No. 273/BRTI/XII/2006 dated December 6, 2006 about Reference Interconnection Offer (“RIO”) of the Company and No. 297/BRTI/XII/2006 dated December 21, 2006 about Implementation of Cost Based Interconnection, the Director General of Posts and Telecommunications, as Head of BRTI, affirmed the implementation of RIO of the Company as approved in Director General of Posts and Telecommunications Decree No. 279/DIRJEN/2006 dated August 4, 2006.

			The implementation of the Company’s interconnection tariff starting January 1, 2007 based on Director General of Post and Telecommunications Decree No. 279/DIRJEN/2006 dated August 4, 2006. The new interconnection tariff is implemented based on 2008 Company’s RIO, shall be as follows:

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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

48.

TELECOMMUNICATIONS SERVICES TARIFFS (continued)

Interconnection tariffs (continued)

(a)

Fixed line

	1.		Local termination from fixed line (local call) service tariff is Rp.73/minute.

	2.		Local termination from fixed line (long distance call) service tariff is Rp.203/minute.

	3.		Long distance termination from fixed line service tariff is Rp.560/minute.

	4.		Local termination from cellular mobile network service tariff is Rp.203/minute.

	5.		Local termination from satellite mobile network service tariff is Rp.204/minute.

	6.		Long distance termination from cellular mobile network service tariff is Rp.626/minute.

	7.		Long distance termination from satellite mobile network service tariff is Rp.613/minute.

	8.		Domestic termination from international network service tariff is Rp.612/minute.

	9.		International origination from international network service tariff is Rp.612/minute.

	10.		Domestic origination from domestic network service tariff is Rp.203/minute

	11.		Local transit service tariff is Rp.69/minute.

	12.		Long distance transit service tariff is Rp.295/minute.

	13.		International transit service tariff is Rp.316/minute.

(b)

Cellular

	1.		Local termination from fixed line service tariff is Rp.361/minute.

	2.		Long distance termination from fixed line service tariff is Rp.471/minute.

	3.		Local termination from cellular mobile network service tariff is Rp.449/minute.

	4.		Long distance termination from cellular mobile network service tariff is Rp.622/minute.

	5.		Local termination from satellite mobile network service tariff is Rp.574/minute.

	6.		Long distance termination from satellite mobile network service tariff is Rp.851/minute.

	7.		Local termination from SLJJ service provider tariff is Rp.361/minute.

	8.		Long distance termination from SLJJ service provider tariff is Rp.471/minute.

	9.		International termination from IDD service provider tariff is Rp.510/minute.

	10.		Local origination to SLJJ service provider tariff is Rp.361/minute.

	11.		Long distance origination to SLJJ service provider tariff is Rp.471/minute.

	12.		International origination to IDD service provider tariff is Rp.510/minute.

	d.		VoIP interconnection tariff

			Previously, the MoC Decree No. KM.23/2002 provided that access charges and network lease charges for the provision of VoIP services were to be agreed between network operators and VoIP operators. On March 11, 2004, the MoC issued Decree No. 31/2004, which stated that interconnection charges for VoIP are to be fixed by the MoC. Currently, the MoCI has not yet determined what the new VoIP interconnection charges will be. Until such time as the new charges are fixed, the Company will continue to receive connection fees for calls that originate or terminate on the Company’s fixed line network at agreed fixed amount per minute.

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48.

TELECOMMUNICATIONS SERVICES TARIFFS (continued)

	e.		Network lease tariff

			The Government regulated the form, type, and tariff structure and tariff formula for services of network lease through MoCI Decree No. 03/Per/M.KOMINFO/1/2007 dated January 26, 2007. Pursuant to the MoCI Decree, the Government released DGPT Decision Letter No. 115/Dirjen/2008 dated March 24, 2008 which stated the agreement on Network Lease Service Type Document, Network Lease Service Tariff, Available Capacity of Network Lease Service, Quality of Network Lease Service, and Procurement Procedure of Network Lease Service in 2008 is in conformity with the Company’s proposal. The minimum tariff for activation fee is Rp.2,400,000. The tariff for monthly usage for local (under 25 km) vary starting from Rp.1,750,000 up to Rp.88,650,000, depending on the speed and the tariff for monthly usage for long distance (over 25 km) starting from Rp.5,600,000 up to Rp.3,893,100,000 depending on the speed.

	f.		Public Phone Kiosk (“warung telekomunikasi” or “wartel”) Tariff

			The MoC issued Decree No. KM. 46/2002 dated August 7, 2002 regarding the operation of phone kiosks as replaced by the MoCI Regulation No. PM.05/Per/M.KOMINFO/I/2006 dated January 30, 2006, which provided the Company the entitlement to retain a maximum of 70% of the phone kiosk basic tariffs for domestic calls and up to 92% of phone kiosk basic tariffs for international calls. It also provides that the airtime from the cellular operators shall generate at a minimum 10% of the kiosk phones’ revenues.

	g.		Tariff for other dervices

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

	h.		USO

			The MoCI issued Regulation No. 15/Per/M.KOMINFO/9/2005 dated September 30, 2005, which sets forth the basic policies underlying the USO program and requires telecommunications operators in Indonesia to contribute 0.75% of their gross revenues (with due consideration for bad debts and interconnection charges) for USO development.

			Based on MoCI Decree No. 11/Per/M.KOMINFO/04/2007 dated April 13, 2007 which has amended by MoCI Decree No. 38/Per/M.KOMINFO/9/2007 dated September 20, 2007, it stipulate that, among others, in providing telecommunication access and services in rural areas (USO Program), the provider is determined through a selection process by Balai Telekomunikasi dan Informatika Pedesaan which was established based on MoCI Decree No. 35/Per/M.KOMINFO/11/2006 dated November 30, 2006.

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49.

COMMITMENTS

	a.		Capital expenditures

			As of March 31, 2008, capital expenditures committed under the contractual arrangements, principally relating to procurement and installation of switching equipment, transmission equipment and cable network, are as follows:


	Amounts in
	foreign currencies		Equivalent
Currencies	(in millions)		in Rupiah
Rupiah		—		5,857,252
U.S. Dollars		492		4,530,271
Euro		129		1,873,192

Total				12,260,715

The above balance includes the following significant agreements:

(i)

Company


					Outstanding
					purchase
Contracting		Date of	Significant provisions of		commitment as of
parties		agreement	the agreement	Total contract value	March 31, 2008
Company and:			Procurement and installation agreement for Optical Access Network (“OAN”) for the following projects:

a.	Huawei Consortium (“Huawei”)	a. November 30, 2006	a. Project Batch III in Divre IV (Central Java and Daerah Istimewa Yogyakarta)	US$3.2 million and Rp.59,431 million	US$0.03 million and Rp.698 million

b.	Alcatel-Inti Consortium	b. December 18, 2006	b. Project Batch IV in Divre VI (Kalimantan)	US$3.9 million and Rp.62,633 million	US$0.9 million and Rp.5,962 million

Company and Opnet-Olexindo Consortium		December 29, 2006	Procurement and installation agreements Opnet-Olexindo for OAN Project Batch I in Divre I and III	US$3 million and Rp.59,310 million	US$1.50 million and Rp.14,237 million

Company and PT Lintas Teknologi Indonesia		November 16, 2006	Procurement and installation agreements for OAN Project Batch II in Divre II	Rp.77,977 million	Rp.49,484 miilion

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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

49.

COMMITMENTS (continued)

	a.		Capital expenditures (continued)

	(i)		Company (continued)


				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 2008
Company and Huawei		Procurement and installation agreements for NSS, BSS and PDN FWA CDMA System Expansion Project in:

	January 6, 2006	a. Divre I and IV, for a period of 3 years (2006-2008) with option to extend for another 2 years (2009-2010)	US$27.6 million and Rp.109,511 million (for the 3 years coverage) and US$12.3 million and Rp.39,972 million (for the 2 years extension)	US$30.3 million and Rp.103,851 million

		Service Level Agreement (“SLA”), whereby Huawei will provide service and maintenance support for 3 years (2006-2008) in relation to the construction above	Rp.10,450 million

	December 8, 2006	b. Divre II (Jakarta)	US$25.3 million and Rp.131,045 million	US$19.9 million and Rp.109,597 million

		SLA whereby Huawei will provide service and maintenance support for 3 years (2006-2008) in relation to the above agreement	Rp.11,509 million

	December 8, 2006	c. Divre III (West Java and Banten)	US$9.9 million and Rp.55,262 million	US$7.2 million and Rp.42,000 million

		SLA whereby Huawei will provide service and maintenance support for 3 years (2007-2009) in relation to the above agreement	Rp.4,217 million

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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

49.

COMMITMENTS (continued)

Capital expenditures (continued)

(i)

Company (continued)


				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 2008
Company and Samsung Consortium	October 13, 2006	Procurement and installation agreements for NSS, BSS and PDN FWA CDMA System Expansion Project in:

		a. Divre V (East Java)	US$59.9 million and Rp.94,759 million	US$54.4 million and Rp.115,604 million

		Samsung Consortium will provide service and maintenance support, pursuant to a SLA for period 3 years (2006-2008) in accordance with above agreement	Rp.29,998 million

	July 10, 2007	b. Divre VII (Bali-Nusa Tenggara)	US$11.9 million and Rp.34,352 million	US$11.9 million and Rp.42,124 million

		Samsung Consortium will provide service and maintenance support, pursuant to a SLA for period 3 years (2006-2008) in accordance with above agreement	Rp.7,772 million

Company and ZTE Consortium	November 28, 2006	Procurement and Installation agreement for Expansion of NSS, BSS and PDN System in Divre VI (Kalimantan)	US$22.5 million and Rp.57,168 million	US$22.5 million and Rp.66,093 million

		a. Divre VI (Kalimantan)	Rp.8,925 million

		SLA whereby ZTE will provide service and maintenance support for 3 years (2006-2008) in relation to the above agreement

	July 10, 2007	b. Divre VII (Sulawesi, Maluku and Papua)	US$19.6 million and Rp.28,030 million	US$19.6 million and Rp.40,526 million

		SLA whereby ZTE will provide service and maintenance support for 3 years (2009-2011) in relation to above agreement	Rp.12,495 million

106

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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

49.

COMMITMENTS (continued)

Capital expenditures (continued)

(i)

Company (continued)


				Outstanding
				purchase
Contracting	Date of	Significant provisions of		commitment as of
parties	agreement	the agreement	Total contract value	March 31, 2008
Company and PT Infonet Telekomindo	July 13, 2007	Procurement and installation agreement for Fiber Optic Communication System Metro Junction Regional Expansion Batch 2	Rp.67,312 million	Rp.54,840 million

Company and Industri Telekomunikasi Indonesia	July 17, 2007	Procurement and installation agreement for Fiber Optic Communication System Metro Junction Regional Expansion Batch 1	Rp.60,240 million	Rp.39,739 million

Company and ZTE Consortium	July 10, 2007	Procurement and installation agreement for Expansion of NSS, BSS and PDN System in Divre VII (Sulawesi, Maluku and Papua)	US$14 million and Rp.22,967 million (for 3 years coverage) and US$5.6 million and Rp.5,063 million (for the 2 years extension)	US$19.6 million and Rp.40,526 million

		SLA whereby ZTE will provide service and maintenance support for 3 years in relation to above agreement	Rp.12,495 million

Company and ZTE Consortium	September 16, 2005	Procurement and installation agreement for Speedy Access Batch 1	US$1.8 million and Rp. 237,255 million	US$0.9 million and Rp.235,965 million

Company and NEC Corporation	March 3, 2008	Procurement and installation agreement for Batam Singapore Cable System (BSCS) Project	US$13.1 million	US$13.1 million

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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

49.

COMMITMENTS (continued)

Capital expenditures (continued)

	(ii)		Telkomsel

			The Telkomsel’s agreements with Motorola, Inc. and PT Motorola Indonesia, Ericsson AB and Ericsson Indonesia, Nokia Corporation and PT Nokia Network (“Nokia Network”), and Siemens AG since August 2004, relate to the maintenance and procurement of equipment and related services, involving:

	•		Joint Planning and Process Agreement

	•		Equipment Supply Agreement (“ESA”)

	•		Technical Service Agreement (“TSA”)

	•		Site Acquisition and Civil, Mechanical and Engineering Agreement (“SITAC” and “CME”)

			The agreements contain list of charges to be used in determining the fees payable by Telkomsel for all equipment and related services to be procured during the rollout period upon the issue of Purchase Orders (“PO”).

			The agreements are valid and effective as of the execution date by the respective parties for a period of three years, provided that the suppliers are able to meet the requirements set out in each PO. In the event that the suppliers fail to meet those requirements, Telkomsel may terminate the agreements at its sole discretion with prior written notice.

			In accordance with the agreements, the parties also agreed that the charges specified in the price list would apply to equipment and services (ESA and TSA) and services (SITAC and CME) acquired from the suppliers between May 26, 2004 and the effective date, except for those acquired from Siemens under TSA relating to equipment and maintenance of Telkomsel’s Switching Sub System (“SSS”) and BSS that were acquired between July 1, 2004 and the effective date. Prices are subject to quarterly reviews.

			In August 2007, due to the expiration of the above agreements, based on letters from Ericsson AB and Ericsson Indonesia and Nokia Siemens Networks (which currently represents Nokia Corporation, Nokia Network and Siemens AG), those companies agreed to:

	•		extend the above agreements until new agreements were made between Telkomsel and these other companies (Note 52f), and

	•		prior to the effective date of new agreements, retroactively apply prices under the new agreements (retroactive price adjustment) to PO for the procurement of BSS equipment and services issued by Telkomsel after July 1, 2007 using the previous price list (Note 11d.iv).

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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

49.

COMMITMENTS (continued)

Capital expenditures (continued)

For the purpose of providing telecommunication services with 3rd Generation technology, in September and October 2006, Telkomsel entered into agreements with Nokia Corporation and Nokia Networks, Ericsson AB and Ericsson Indonesia, and Siemens Networks GmbH & Co.KG for network construction (Rollout Agreement) and Nokia Networks, Ericsson Indonesia and Siemens Networks GmbH & Co.KG for network operations and maintenance (Managed Operations Agreement and Technical Support Agreement). The agreements are valid and effective as of the execution date by the respective parties (the effective date) until the later of December 31, 2008 or the date on which the last PO terminates under the agreements or expires in respect of any PO issued prior to December 31, 2008, providing that the suppliers are able to meet the requirements set out in each PO.

Borrowings and other credit facilities

	(i)		The Company has a US$3 million bond and bank guarantee, standby letter of credit facility and foreign exchange facility with SCB, Jakarta. The facilities expire in July 2008. Under these facilities, as of March 31, 2008, the Company has issued bank guarantee of Rp.20,000 million (equivalent to US$2.17 million for a 3G performance bond (Note 49c.ii). Borrowings under the facilities bear interest at Singapore Interbank Offered Rate (“SIBOR”) plus 1% per annum (US$) except a borrowing under the import facility which bears interest at SIBOR plus 1.25% per annum (US$), and at a rate equal to the three-month SBI plus 1.25% per annum (Rupiah); for other currencies the interest rate is based on the Bank’s cost of funds plus 2%. As of March 2007 and 2008, there were no outstanding loans under these facilities.

	(ii)		Telkomsel has not provided any collateral for its bank borrowings, or other credit facilities. The terms of the various agreements with Telkomsel’s lenders and financiers require compliance with a number of pledges and negative pledges as well as financial and other covenants, which include inter alia, certain restrictions on the amount of dividends and other profit distributions which could adversely affect Telkomsel’s capacity to comply with its obligation under the facilities. The terms of the relevant agreements also contain default and cross default clauses. Telkomsel’s management is not aware of any breaches of the terms of these agreements and does not foresee any such breaches occurring in the future.

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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

49.

COMMITMENTS (continued)

Others

	(i)		Employee benefits

			On March 24, 2006, Telkomsel and its Labour Union (Serikat Pekerja Telkomsel) signed a collective labour agreement (“Perjanjian Kerja Bersama” or “PKB”) which is valid until March 23, 2008. Based on the agreement, Telkomsel shall provide long service leave and post retirement insurance to its employees. These benefits are subject to further agreement between Telkomsel and Labour Union which has not been made until the date the consolidated financial statements. Therefore, it is not possible to determine the amount of the benefits as of March 31, 2008. As the date of the consolidated financial statements, Telkomsel is still in extension process of new PKB, accordingly the current PKB is valid up to the originally stated date.

	(ii)		3G license

			With reference to the Decision Letter No. 07/Per/M.KOMINFO/2/2006 of the MoCI, as one of the successful bidders, Telkomsel amongst other commitments, is required to:

Pay annual BHP fee which is determined based on a certain formula over license term (10 years). The BHP for the first and second year were paid in March 2006 and 2007, respectively. The commitments as of March 31, 2008 arising from the BHP up to the expiry period of the license using the formula set forth in the Decision Letter are as follows:


			Radio Frequency
Year	BI Rates (%)	Index (multiplier)	Usage Tariff

1	—	—	20% x HL
2	R1	I1 = (1 + R1)	40% x I1 x HL
3	R2	I2 = I1(1 + R2)	60% x I2 x HL
4	R3	I3 = I2(1 + R3)	100% x I3 x HL
5	R4	I4 = I3(1 + R4)	130% x I4 x HL
6	R5	I5 = I4(1 + R5)	130% x I5 x HL
7	R6	I6 = I5(1 + R6)	130% x I6 x HL
8	R7	I7 = I6(1 + R7)	130% x I7 x HL
9	R8	I8 = I7(1 + R8)	130% x I8 x HL
10	R9	I9 = I8(1 + R9)	130% x I9 x HL


Notes :

Ri		= average Bank Indonesia rate from previous year

HL (auction price)		= Rp.160,000 million

Index		= adjustment to the bidding price for respective year

The BHP is payable upon receipt of “Surat Pemberitahuan Pembayaran” (notification letter) from the DGPT.

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49.

COMMITMENTS (continued)

Others (continued)

(ii)

3G license (continued)

	2.		Provide roaming access for the existing 3G operators.

	3.		Contribute to USO development.

	4.		Construct a 3G network which covers at least the following provinces:


		Minimum number
Year		of provinces

1		2
2		5
3		8
4		10
5		12
6		14

Issue a performance bond each year amounting to Rp.20,000 million or 5% of the annual fee to be paid for the subsequent year, whichever is higher. This performance bond shall be redeemed by the Government if Telkomsel is not able to meet the requirements set out in the above mentioned Decision Letter or upon cancellation/termination of the license, or if Telkomsel decides to return the license voluntarily.

	(iii)		Asia-America Gateway Consortium (“AAG”)

			On April 27, 2007, the Company became a member of AAG consortium, an undersea cable consortium with 19 companies, by signing a Construction and Maintenance Agreement (“C&MA”) and an AAG Cable Network Supply Contract and paid US$40 million. Through the AAG Consortium, the Company will acquire 40 Gbps international bandwith at the end of 2008 in the AAG configuration that will be laid from Malaysia to the United States. As of March 31, 2008, the Company has paid US$11.36 million (equivalent to Rp.104,350 million) and recorded as advances for the purchase of property, plant and equipment (Note 13).

	(iv)		Palapa Ring Consortium

			On November 10, 2007, the Company entered into a C&MA with five other companies for Palapa Ring Consortium. This consortium was formed to build optical fiber network in 32 cities in Eastern Indonesia with total investment of Rp.2,070,336 million. The Company will obtain 4 lambda bandwidth of total capacity of 8.44 lambdas from this consortium.

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P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

50.

CONTINGENCIES

	a.		In the ordinary course of business, the Company and its subsidiaries have been named as defendant in various legal actions in relation with land disputes, other disputes involving premium call billings and telecommunication billings. Based on management’s estimate of the probable outcomes of these matters, the Company has accrued Rp.30,479 million as of March 31, 2008.

	b.		In December 2005, the West Java Police Department initiated investigations related to an alleged violation of Anti-Corruption Law, in particular the provision of interconnection services to Napsindo, the Company’s subsidiary, and Globalcom, a Malaysian company, at an incorrect tariff for the Company’s network for the provision of illegal VoIP services, and misuse of authority in procuring telecommunication equipment. It is also understood that one of the investigations related to the Company’s guarantee of a bank loan obtained by Napsindo. During the investigation, former Directors and employees of the Company were held in custody by the West Java Police Department for further investigation. On May 10, 2006, such individuals were released from police custody after the expiration of the maximum period of 120 days allowed for police custody of suspect for investigation purposes. As of March 31, 2007 and 2008, the police have not found sufficient evidence to properly transfer the case to the High Attorney Office for indictment.

	c.		A former Director of Human Resources and an employee of the Company were indicted under the Anti-Corruption Law in Bandung District Court relating to allegations of misuse of authority in procuring consultancy services resulting to a loss of Rp.789 million. On May 2, 2007, the Bandung District Court found the defendants guilty and sentenced each defendant to a one-year prison term and gave Rp.50 million penalty. The defendants have filed and appeal to the West Java High Court, objecting to the District Court ruling. On October 3, 2007, West Java High Court found the defendants not guilty. The Attorney has filed an appeal to Indonesian Supreme Court objecting to the High Court’s ruling. As of the issuance date of the consolidated financial statements, no decision has been reach on the appeal.

	d.		On January 2, 2006, the Office of the Attorney General launched an investigation into allegations of misuse of telecommunications facilities in connection with the provision of VoIP services, whereby one of Company’s former employees and four of the Company’s employees in KSO VII were named suspects. As a result of the investigations, one of Company’s former employees and two of the Company’s employees were indicted in the Makassar District Court, and two other employees were indicted in the Denpasar District Court for their alleged corruption in KSO VII. On January 29, 2008, the Makassar District Court found the defendant not guilty. The Attorney has filed an appeal to Indonesian Supreme Court objecting the District Court ruling. On March 3, 2008, Denpasar District Court fount the defendants guilty and sentenced each defendant to a one-year six-month prison term and a one year prison term and gave Rp.50 million penalty. The defendants have filed an appeal to the Bali High Court objecting to the District Court ruling. As of the issuance date of the consolidated financial statements, no decision has been reach on the appeal.

112

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

50.

CONTINGENCIES (continued)

The Commission for the Supervision of Business Competition (“Komisi Pengawasan Persaingan Usaha” or “KPPU”) on its letter dated December 5, 2007, notified Telkomsel that based on its investigation of case No. 07/KPPU-L/2007 dated November 19, 2007, according to the applied provisions regarding allegation of violating Law No. 5/1999, “Prohibition of Monopolistic Practice and Unfair Business Competition” (the “Law”), related to a cross-ownership by Temasek Holdings and monopoly practices by Telkomsel, it had decided that, among others things :

	•		Telkomsel had violated article 17.1 of the Law

	•		Telkomsel had not been proven to violate article No. 25.1 of the Law

	•		Temasek Holdings and certain affiliated companies were instructed to release their ownership either in Indosat or Telkomsel with the following conditions:

	§		Maximum 5% of total shares for each buyer,

	§		The buyer is not associated with Temasek Holdings

•

Telkomsel was to be charged a penalty of Rp25,000 million and instructed Telkomsel to discontinue the imposition of high tariffs and reduce its tariffs by at least 15%.

			The Company and Telkomsel’s management believe that Telkomsel has complied with prevailing regulations or laws, accordingly, on December 19, 2007, Telkomsel’s management filed an objection with the District Court (Note 52g).

	f.		Certain subscribers of Telkomsel and Indosat which are domiciled in Bekasi and Tangerang and subscribers of PT Excelcomindo Pratama (“Excelcomindo”) which are domiciled in Tangerang, represented by the law firms, have filed class-action lawsuits with the courts against Telkomsel, the Company, Indosat, the Government, Temasek Holdings and certain of its affiliated companies (“Parties”). The Parties are alleged to have had excessive price practices that potentially could have adversely affected those subscribers (Note 52h).

			As of the issuance date of the consolidated financial statements, the lawsuits are still being processed by the courts. The Telkomsel’s management believes that Telkomsel has applied tariffs in accordance with prevailing regulations, accordingly, such allegation has no strong basis.

	g.		The Company, Telkomsel and seven other local operators are being investigated by the KPPU for allegation of SMS cartel practices. Management is in the process of defending this case.

For the matters and cases stated above, the Company and its subsidiaries do not believe that any subsequent investigation or court decision will have significant financial impact to the Company and its subsidiaries.

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PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

51.		ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

		The balances of monetary assets and liabilities denominated in foreign currencies are as follows:


	2007				2008
	Foreign				Foreign
	currencies		Rupiah		currencies		Rupiah
	(in millions)		equivalent		(in millions)		equivalent
Assets
Cash and cash equivalents
U.S. Dollars		176.64		1,618,114		157.50		1,450,556
Euro		75.79		923,351		73.20		1,064,958
Japanese Yen		1.95		151		4.45		412
Singapore Dollars		—		—		0.01		33
Temporary investments
U.S. Dollars		—		—		7.95		73,189
Trade receivables
Related parties
U.S. Dollars		1.30		11,875		7.83		70,528
Third parties
U.S. Dollars		33.94		309,655		33.38		307,497
Other receivables
U.S. Dollars		0.03		306		0.15		1,367
Euro		0.02		264		0.01		93
Great Britain Pound sterling		—		—		0.01		225
Other current assets
U.S. Dollars		0.02		155		4.61		42,465
Euro		—		—		0.05		740
Advances and other non-current assets
U.S. Dollars		2.47		22,535		20.77		191,256

Total assets				2,886,406				3,203,319

114

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

51.

ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)


	2007					2008
	Foreign					Foreign
	currencies		Rupiah			currencies		Rupiah
	(in millions)		equivalent			(in millions)		equivalent

Liabilities
Trade payables
Related parties
U.S. Dollars		0.27		2,452			0.54		4,968
Singapore Dollars		—		21			0.00		22
Third parties
U.S. Dollars		46.53		424,641			19.82		182,730
Euro		3.86		46,937			2.51		34,592
Japanese Yen		0.32		24			0.51		47
Singapore Dollars		7.57		45,575			0.73		4,894
Swiss Franc		—		—			0.05		442
Other payables
U.S. Dollars		0.07		683			0.80		7,418
Great Britain Pound sterling		—		—			0.00		2
Singapore Dollars		—		10			0.00		11
Accrued expenses
U.S. Dollars		227.80		2,079,104			160.03		1,475,487
Euro		136.94		1,664,434			88.61		1,290,719
Japanese Yen		160.24		12,388			149.23		13,849
Singapore Dollars		0.33		1,975			0.53		3,531
Great Britain Pound sterling		—		—			0.05		832
Advances from customers and suppliers
U.S. Dollars		—		—			1.00		9,241
Current maturities of long-term liabilities
U.S. Dollars		144.19		1,315,997			143.51		1,318,446
Euro		14.71		178,782			7.34		106,811
Japanese Yen		1,714.37		132,538			955.40		88,662
Long-term liabilities
U.S. Dollars		489.53		4,467,969			345.68		3,187,155
Euro		7.35		89,391			—		—
Japanese Yen		12,670.31		979,542			12,286.36		1,140,174

Total liabilities				11,442,463					8,870,033

Net liabilities				(8,556,057	)				(5,666,714	)

115

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

51.		ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (continued)

		The Company and its subsidiaries’ activities expose them to a variety of financial risks, including the effects of changes in debt and equity market prices, foreign currency exchange rates and interest rates.

		The Company and its subsidiaries’ overall risk management programs focus on the unpredictability of financial markets and seek to minimize potential adverse effects on the financial performance of the Company and its subsidiaries. Management provides written policy for foreign currency risk management mainly through time deposits placements and hedging to cover foreign currency risk exposures for the time range of 3 up to 12 months.

52.		SUBSEQUENT EVENTS

	a.		On April 1, 2008, Telkomsel reduced its tariffs through implementing new interconnection and cellular (retail) tariffs effective on April 1, 2008. The reductions range from 2% to 55% for interconnection and from 5% to 72% for cellular (retail).

	b.		On April 3, 2008, the Company entered into a SLJJ access code (“Kode Akses SLJJ“ or “KAS”) agreement with Indosat for Balikpapan City which cover 140,000 customers.

	c.		On April 7, 2008, the Company implemented new tariffs for SLJJ charges which decreased by an average range from 0.4% to 46.2% from the prevailing tariffs for SLJJ charges, effective on April 8, 2008.

	d.		On April 7, 2008, the MoCI issued Decree No. 09/PER/M.KOMINFO/04/2008 “Mechanism to Determine Tariff of Telecommunication Services which Connected through Mobile Cellular Network” which provides guidelines to determine cellular tariffs with a formula consisting of network element cost and retail services activity cost. This Decree replaced the previous Decree of No. 12/PER/M.KOMINFO/02/2006.

	e.		On April 11, 2008, the new interconnection tariff has been implemented based on Director General of Post and Telecommunications Decree No. 205/2008 dated April 11, 2008 about Agreement to RIO of the telecommunication network operator with operating revenue of 25% or more from the total revenue of all telecommunication operators in the service segmentation.

	f.		On April 17, 2008, Telkomsel, Ericsson Indonesia, Ericsson AB, PT Nokia Siemens Networks, Nokia Siemens Network Oy and Nokia Siemens Network Gmbh & Co. KG signed Combined 2G and 3G CS Core Network Rollout Agreements (Note 49a.ii). The Agreements are valid until the later of:

	•		three years after the effective date (April 17, 2008, except for certain POs issued in August 2007 which commenced on August 15, 2007), or

	•		the date on which the last PO under this agreement terminates or expires in respect of any PO issued prior to the expiry of the three year period.

116

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

52.

SUBSEQUENT EVENTS (continued)

Pursuant to the Telkomsel’s filing of its objection (Note 50e) on decision of KPPU, on May 9, 2008 the court has pronounced its verdict and concluded among other things:

	•		Telkomsel had violated article 17.1 of the Law

	•		Telkomsel had not been proven to violate article 25.1.b of the Law

	•		Temasek Holdings and certain affiliated companies were instructed to release their ownership in either Indosat or Telkomsel or to decrease its ownership by 50% in each of those companies within twelve months from the date of the decision become final and legally binding at the following conditions:

	—		Maximum 10% of total shares for each buyer

	—		The buyer is not associated with Temasek Holdings

	•		Telkomsel was charged a penalty of Rp 15 billion

	•		The court revoked the decision of KPPU on the instruction to reduce the tariffs because KPPU did not have the authority to determine the tariffs.

			On May 22, 2008, management is in the process of legal remedy to Indonesian Supreme Court.

	h.		On May 12, 2008, Telkomsel was ordered by the court to stand before a trial under another similar class action lawsuit filed by other subscribers of Telkomsel, Indosat and Excelcomindo domiciled in various locations against the Parties (Note 50f).

	i.		As of May 19, 2008, TII has purchased additional 26,000,000 Scicom shares or equivalent to 9.81% of TII’s total ownership with transaction value amounted to US$3.42 million (equivalent to Rp.31,891 million).

53.		RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA

		The recent accounting pronouncement in Indonesia that relevant to the Company and its subsidiaries are as follow:

	(i)		PSAK 50 (Revised 2006), “Financial Instruments: Presentation and Disclosures”

			In December 2006, the DSAK issued PSAK 50 (Revised 2006), “Financial Instruments: Presentation and Disclosures” which amends PSAK 50, “Accounting for Investments in Certain Securities”. PSAK 50 (Revised 2006) provides guidance on how to disclose and present financial instruments in the financial statements and whether a financial instrument is a financial liability or an equity instrument. This standard applies to the classification of financial instruments, from the perspective of the issuer, into financial assets, financial liabilities and equity instruments; the classification of related interest, dividends, losses and gains; and the circumstances in which financial assets and financial liabilities should be offset. PSAK 50 (Revised 2006) complements the principles for recognizing and measuring financial assets and financial liabilities in PSAK 55 (Revised 2006). PSAK 50 (Revised 2006) shall be effective after January 1, 2009. The Company and its subsidiaries are currently assessing the impact of the application of PSAK 50 (Revised 2006) on the consolidated financial statements.

117

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

53.

RECENT ACCOUNTING PRONOUNCEMENTS IN INDONESIA (continued)

	(ii)		PSAK 55 (Revised 2006), “Financial Instruments: Recognition and Measurement”

			In December 2006, the DSAK issued PSAK 55 (Revised 2006), “Financial Instruments: Recognition and Measurement” which amends PSAK 55 (Revised 1999), “Accounting for Derivative Instruments and Hedging Activities”. PSAK 55 (Revised 2006) provides guidance on how to recognize, measure and derecognize financial asset and liability including derivative instruments. It also provides guidance on the recognition and measurement of sales and purchase contracts of non-financial items. PSAK 55 (Revised 2006) shall be effective after January 1, 2009. The Company and its subsidiaries are currently assessing the impact of the application of PSAK 55 (Revised 2006) on the consolidated financial statements.

	(iii)		PSAK 13 (Revised 2007), “Investment Property”

			In May 2007, the DSAK issued PSAK 13 (Revised 2007), “Investment Property” which replaces PSAK 13, “Accounting for Investment”. PSAK 13 (Revised 2007) provides guidance on recognition, measurement at recognition, measurement after recognition, transfer, disposal and financial statement disclosures regarding investment property. PSAK 13 (Revised 2007) provides two measurement alternatives, the cost model and fair value model which shall be consistently applied. PSAK 13 (Revised 2007) shall be effective after January 1, 2008. The Company and its subsidiaries have decided to use cost model to measure investment property.

	(iv)		PSAK 16 (Revised 2007), “Property, Plant and Equipment”

			In May 2007, the DSAK issued PSAK 16 (Revised 2007), “Property, Plant and Equipment” which replaces PSAK 16, “Fixed Assets and Other Assets”. PSAK 16 (Revised 2007) provides guidance on recognition, measurement at recognition, measurement after recognition, derecognition and financial statement disclosures requirements. PSAK 16 (Revised 2007) provides two measurement alternatives, the cost model and revaluation model which shall be consistently applied. PSAK 16 (Revised 2007) shall be effective after January 1, 2008. The Company and its subsidiaries have decided to use cost model to measure property, plant and equipment (Note 2k).

	(v)		PSAK 30 (Revised 2007), “Leases”

			In June 2007, the DSAK issued PSAK 30 (Revised 2007), “Leases” which replaces PSAK 30, “Accounting for Leases”. PSAK 30 (Revised 2007) provides guidance on how to classify leases into operating lease and capital lease. PSAK 30 (Revised 2007) also provides guidance on how to record and disclose operating and capital lease transactions in the financial statements of lessors and lessees. PSAK 30 (Revised 2007) shall be effective after January 1, 2008. The Company and its subsidiaries have decided to apply PSAK 30 (Revised 2007) prospectively. The application of PSAK 30 (Revised 2007) change the guidance used to classify lease into operating lease and capital lease. Due to prospective application of PSAK 30 (Revised 2007), the balance of any pre-existing capital lease is deemed to have been properly determined by the Company and its subsidiaries. In relation with the prospective implementation of PSAK 30 (Revised 2007), since January 1, 2008, lease transaction that meets the requirement stated in PSAK 30 (Revised 2007) paragraph 10 and 44, will be treated as capital lease by recognizing assets and corresponding liabilities. The Company and its subsidiaries are currently assessing the impact of the application of PSAK 30 (Revised 2007) on the consolidated financial statements. The Company and its subsidiaries are currently assessing the impact of the application of PSAK 30 (Revised 2007) on the consolidated financial statements.

118

PERUSAHAAN PERSEROAN (PERSERO)
P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES

54.		ACCOUNTS RECLASSIFICATION

		Certain accounts in the consolidated financial statement for the three months period ended March 31, 2007 has been reclassified to conform with the presentation of accounts of the consolidated financial statement for the three months period ended March 31, 2008, as follows:


	Before						After
	reclassification			Reclassification			reclassification

Consolidated balance sheet:
Accrued long service awards		602,009			(148,474	)		453,535
Accrued pension and other post-retirement benefits costs		1,011,304			148,474			1,159,778

Consolidated income statement:
Interconnection revenues		2,790,382			(661,467	)		2,128,915
Interconnection expenses		(661,467	)		661,467			—

119


			Perusahaan Perseroan (Persero) PT TELEKOMUNIKASI INDONESIA
			(Registrant)


Date	May 23, 2008		By	/s/ Harsya Denny Suryo
				(Signature)

			Harsya Denny Suryo
		Vice President Investor Relation & Corporate Secretary


	Page

Consolidated Balance Sheets		1-2

Consolidated Statements of Income		3

Consolidated Statements of Changes in Stockholders’ Equity		4-5

Consolidated Statements of Cash Flows		6-7

Notes to Consolidated Financial Statements		8-63


	2007		2008
	Rp.		Rp.		US$ (Note 3)

SUPPLEMENTAL CASH FLOW INFORMATION

Noncash investing and financing activities:
Acquisition of property, plant and equipment through incurence of payables		5,208,815		4,263,679		462,689
Acquisition of property, plant and equipment through capital leases		—		19,829		2,152