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RELATED PARTY TRANSACTIONS | 12 Months Ended
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Dec. 31, 2018
RELATED PARTY TRANSACTIONS |
RELATED PARTY TRANSACTIONS | 33. RELATED PARTY TRANSACTIONS a. Nature of relationships and accounts/transactions with related parties Details of the nature of relationships and accounts/transactions with significant related parties are as follows:
Related parties |  | Nature of relationships with related parties |  | Nature of accounts/transactions |
The Government – Ministry of Finance |  | Majority stockholder |  | Internet and data service revenues, other telecommunication service revenues, operation and maintenance expense, finance income, finance costs and investment in financial instruments |
Government agencies |  | Entities under common control |  | Network service revenues, internet and data service revenues and other telecommunication revenues |
MoCI |  | Entity under common control |  | Concession fees, radio frequency usage charges, USO charges, telecommunication service revenues and operation and maintenance expenses |
Indosat |  | Entity under common control |  | Interconnection revenues, network service revenues, interconnection expenses, leased line expenses, operation and maintenance expenses |
PT Perusahaan Listrik Negara (Persero) (“PLN”) |  | Entity under common control |  | Electricity expenses, finance income, finance costs and investment in financial instrument |
PT Pertamina (Persero) (“Pertamina”) |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues |
PT Pegadaian (Persero) (“Pegadaian”) |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues |
PT Garuda Indonesia (Persero) Tbk (“Garuda”) |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues |
PT Asuransi Jasa Indonesia (Persero) (“Jasindo”) |  | Entity under common control |  | Satellite insurance expenses and vehicle insurance expenses |
Perum Peruri (“Peruri”) |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues |
PT Angkasa Pura (“Angkasa Pura”) |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues |
PT Balai Pustaka (“Balai Pustaka”) |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues |
PT Kereta Api Indonesia (“KAI”) |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues |
INTI |  | Entity under common control |  | Purchase of property and equipment and construction service |
State-owned banks |  | Entities under common control |  | Finance income and finance costs |
BNI |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues, finance income and finance costs |
Bank Mandiri |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues, finance income and finance costs |
Details of the nature of relationships and accounts/transactions with significant related parties are as follows:
Related parties |  | Nature of relationships with related parties |  | Nature of accounts/transactions |
BRI |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues, finance income and finance costs |
BJB |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues, finance income and finance costs |
PT Mandiri Manajemen Investasi |  | Entity under common control |  | Available-for-sale financial assets |
BTN |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues, finance income and finance costs |
Bahana TCW |  | Entity under common control |  | Available-for-sale financial assets, bonds and notes |
PT Sarana Multi Infrastruktur (“SMI”) |  | Entity under common control |  | Finance costs |
Indonusa |  | Associated company |  | Network service revenues and data communication expenses |
Teltranet |  | Associated company |  | Network service revenue, leased line and CPE expenses and operation and maintenance expenses |
Tiphone |  | Associated company |  | Distribution of SIM cards and pulse reload voucher |
Koperasi Pegawai Telkom (“Kopegtel”) |  | Other related entity |  | Installation services, leases of buildings expenses, lease of vehicles expenses, purchases of vehicles, and purchases of property and equipment and construction service, maintenance and cleaning service expenses, and Revenue Sharing Agreement (“RSA”) revenues |
Yakes |  | Other related entity |  | Medical expenses, internet and data service revenues and e-health revenues |
PT Poin Multi Media Nusantara (“POIN”) |  | Other related entity |  | Cost of sales of handset |
PT Perdana Mulia Makmur (“PMM”) |  | Other related entity |  | Cost of sales of handset |
Koperasi Pegawai Telkomsel (“Kisel”) |  | Other related entity |  | Internet and data service revenues, other telecommunication service revenues, leases of vehicles expenses, printing and distribution of customer bills expenses, collection fee, other services fee, distribution of SIM cards, and pulse reload voucher and purchase of property and equipment |
PT Graha Informatika Nusantara (“Gratika”) |  | Other related entity |  | Network service revenues, operation and maintenance expenses, purchase of property and equipment and construction services and distribution of SIM card and pulse reload voucher |
PT Pembangunan Telekomunikasi Indonesia (“Bangtelindo”) |  | Other related entity |  | Purchase of property and equipment and construction services |
Directors |  | Key management personnel |  | Honorarium and facilities |
Commissioners |  | Supervisory personnel |  | Honorarium and facilities |
The outstanding balances of trade receivables and payables at year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. In 2018, the Group recorded allowance for credit lossed of receivables from related parties of Rp486 billion. Impairment assessment is undertaken each financial year through examining the current status of existing receivables and historical collection experience. b. Transactions with related parties The following are significant transactions with related parties:
|  | 2016 |  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | revenues |  | Amount |  | revenues |  | Amount |  | revenues
REVENUES |  |  |  |  |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |  |  |  |  |
Ministry of Finance |  | 207 |  | 0.18 |  | 280 |  | 0.22 |  | 258 |  | 0.20
Entities under common control |  |  |  |  |  |  |  |  |  |  |  |
Government agencies |  | 2,279 |  | 1.96 |  | 2,568 |  | 2.00 |  | 3,720 |  | 2.84
Indosat |  | 2,167 |  | 1.86 |  | 1,789 |  | 1.39 |  | 1,002 |  | 0.77
BRI |  | 181 |  | 0.16 |  | 237 |  | 0.18 |  | 397 |  | 0.30
Pegadaian |  | 93 |  | 0.08 |  | 115 |  | 0.09 |  | 228 |  | 0.17
BNI |  | 136 |  | 0.12 |  | 105 |  | 0.08 |  | 188 |  | 0.14
Pertamina |  | 64 |  | 0.06 |  | 94 |  | 0.07 |  | 183 |  | 0.14
BTN |  | 107 |  | 0.09 |  | 129 |  | 0.10 |  | 179 |  | 0.14
Bank Mandiri |  | 161 |  | 0.14 |  | 157 |  | 0.12 |  | 173 |  | 0.13
Peruri |  | — |  | — |  | — |  | — |  | 120 |  | 0.09
Angkasa Pura |  | — |  | — |  | — |  | — |  | 114 |  | 0.09
Garuda |  | 75 |  | 0.06 |  | 55 |  | 0.04 |  | 105 |  | 0.08
KAI |  | 68 |  | 0.06 |  | 18 |  | 0.01 |  | 83 |  | 0.06
Balai Pustaka |  | — |  | — |  | — |  | — |  | 81 |  | 0.06
Others |  | 893 |  | 0.78 |  | 720 |  | 0.57 |  | 696 |  | 0.53
Sub-total |  | 6,224 |  | 5.37 |  | 5,987 |  | 4.65 |  | 7,269 |  | 5.54
Associated companies |  | 198 |  | 0.17 |  | 178 |  | 0.15 |  | 55 |  | 0.04
Other related entities |  | 253 |  | 0.22 |  | 315 |  | 0.25 |  | 73 |  | 0.06
Total |  | 6,882 |  | 5.94 |  | 6,760 |  | 5.27 |  | 7,655 |  | 5.84
|  | 2016 |  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | expenses |  | Amount |  | expenses |  | Amount |  | expenses
EXPENSES |  |  |  |  |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |  |  |  |  |
Ministry of Finance |  | — |  | — |  | 12 |  | 0.01 |  | — |  | —
Entities under common control |  |  |  |  |  |  |  |  |  |  |  |
MoCI |  | 5,911 |  | 7.84 |  | 6,533 |  | 7.77 |  | 8,109 |  | 8.68
PLN |  | 1,037 |  | 1.38 |  | 2,269 |  | 2.70 |  | 2,596 |  | 2.78
Indosat |  | 939 |  | 1.25 |  | 890 |  | 1.06 |  | 933 |  | 1.00
Jasindo |  | 267 |  | 0.35 |  | 168 |  | 0.20 |  | 349 |  | 0.37
Others |  | 128 |  | 0.16 |  | 114 |  | 0.14 |  | 511 |  | 0.55
Sub-total |  | 8,282 |  | 10.98 |  | 9,974 |  | 11.87 |  | 12,498 |  | 13.38
Associated companies |  |  |  |  |  |  |  |  |  |  |  |
Indonusa |  | 145 |  | 0.19 |  | 264 |  | 0.31 |  | 306 |  | 0.33
Teltranet |  | 49 |  | 0.06 |  | 123 |  | 0.15 |  | 181 |  | 0.19
Others |  | 38 |  | 0.05 |  | 34 |  | 0.04 |  | 11 |  | 0.01
Sub-total |  | 232 |  | 0.30 |  | 421 |  | 0.50 |  | 498 |  | 0.53
Other related entities |  |  |  |  |  |  |  |  |  |  |  |
Kisel |  | 771 |  | 1.02 |  | 813 |  | 0.97 |  | 916 |  | 0.98
POIN |  | 1,459 |  | 1.94 |  | 405 |  | 0.48 |  | 850 |  | 0.91
PMM |  | — |  | — |  | 404 |  | 0.48 |  | 850 |  | 0.91
Kopegtel |  | 533 |  | 0.71 |  | 713 |  | 0.85 |  | 836 |  | 0.90
Yakes |  | 192 |  | 0.25 |  | 139 |  | 0.17 |  | 128 |  | 0.14
Others |  | 188 |  | 0.25 |  | 83 |  | 0.10 |  | 190 |  | 0.20
Sub-total |  | 3,143 |  | 4.17 |  | 2,557 |  | 3.05 |  | 3,770 |  | 4.04
Total |  | 11,657 |  | 15.45 |  | 12,964 |  | 15.43 |  | 16,766 |  | 17.95
|  | 2016 |  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | finance income |  | Amount |  | finance income |  | Amount |  | finance income
FINANCE INCOME |  |  |  |  |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |  |  |  |  |
Ministry of Finance |  | 2 |  | 0.12 |  | 0 |  | 0.00 |  | — |  | —
Entities under common control |  |  |  |  |  |  |  |  |  |  |  |
State-owned banks |  | 895 |  | 52.16 |  | 863 |  | 60.18 |  | 596 |  | 58.78
Government agencies |  | 34 |  | 1.98 |  | 34 |  | 2.37 |  | 12 |  | 1.18
Others |  | 5 |  | 0.29 |  | 35 |  | 2.44 |  | 6 |  | 0.59
Total |  | 936 |  | 54.55 |  | 932 |  | 64.99 |  | 614 |  | 60.55
|  | 2016 |  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | finance cost |  | Amount |  | finance cost |  | Amount |  | finance cost
FINANCE COSTS |  |  |  |  |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |  |  |  |  |
Ministry of Finance |  | 64 |  | 2.28 |  | 54 |  | 1.95 |  | 41 |  | 1.16
Entities under common control |  |  |  |  |  |  |  |  |  |  |  |
State-owned banks |  | 1,228 |  | 43.70 |  | 820 |  | 29.61 |  | 1,140 |  | 32.36
SMI |  | — |  | — |  | 94 |  | 3.39 |  | 110 |  | 3.12
Total |  | 1,292 |  | 45.98 |  | 968 |  | 34.95 |  | 1,291 |  | 36.64
|  | 2016 |  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | revenues |  | Amount |  | revenue |  | Amount |  | revenues
DISTRIBUTION OF SIM CARD AND PULSE RELOAD VOUCHER |  |  |  |  |  |  |  |  |  |  |  |
Other related entities |  |  |  |  |  |  |  |  |  |  |  |
Tiphone |  | 3,441 |  | 2.96 |  | 3,888 |  | 3.03 |  | 4,390 |  | 3.36
Kisel |  | 4,600 |  | 3.95 |  | 4,181 |  | 3.26 |  | 4,221 |  | 3.23
Gratika |  | 408 |  | 0.35 |  | 408 |  | 0.32 |  | 474 |  | 0.36
Total |  | 8,449 |  | 7.26 |  | 8,477 |  | 6.61 |  | 9,085 |  | 6.95
|  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total
|  | Amount |  | property and equipment purchased |  | Amount |  | property and equipment purchased
PURCHASE OF PROPERTY AND EQUIPMENTS |  |  |  |  |  |  |  |
Entities under common control |  |  |  |  |  |  |  |
INTI |  | 203 |  | 0.61 |  | 137 |  | 0.41
Others |  | 98 |  | 0.29 |  | 70 |  | 0.21
Sub-total |  | 301 |  | 0.90 |  | 207 |  | 0.62
Other related entities |  |  |  |  |  |  |  |
Kopegtel |  | 130 |  | 0.39 |  | 144 |  | 0.43
Bangtelindo |  | 64 |  | 0.19 |  | 135 |  | 0.40
Others |  | 188 |  | 0.57 |  | 193 |  | 0.57
Sub-total |  | 382 |  | 1.15 |  | 472 |  | 1.40
Total |  | 683 |  | 2.05 |  | 679 |  | 2.02
Presented below are balances of accounts with related parties:
|  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total
|  | Amount |  | assets |  | Amount |  | assets
a. Cash and cash equivalents (Note 4) |  | 19,236 |  | 9.71 |  | 14,544 |  | 7.06
b. Other current financial assets (Note 5) |  | 1,170 |  | 0.59 |  | 471 |  | 0.23
c. Trade receivables - net (Note 6) |  | 1,864 |  | 0.94 |  | 2,014 |  | 0.98
d. Other current assets |  |  |  |  |  |  |  |
Entities under common control |  |  |  |  |  |  |  |
MoCI |  | 3,485 |  | 1.76 |  | 3,478 |  | 1.69
Others |  | 60 |  | 0.03 |  | 85 |  | 0.04
Sub-total |  | 3,545 |  | 1.79 |  | 3,563 |  | 1.73
Other related entities |  | 68 |  | 0.03 |  | 78 |  | 0.04
Total |  | 3,613 |  | 1.82 |  | 3,641 |  | 1.77
e. Other non-current assets |  |  |  |  |  |  |  |
Entities under common control |  |  |  |  |  |  |  |
MoCI |  | 2,019 |  | 1.02 |  | 1,743 |  | 0.85
Others |  | 33 |  | 0.02 |  | 28 |  | 0.01
Sub-total |  | 2,052 |  | 1.04 |  | 1,771 |  | 0.86
Other related entities |  | 25 |  | 0.01 |  | 18 |  | 0.01
Total |  | 2,077 |  | 1.05 |  | 1,789 |  | 0.87
|  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total
|  | Amount |  | liabilities |  | Amount |  | liabilities
f. Trade payables (Note 15) |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |
Ministry of Finance |  | 29 |  | 0.03 |  | 2 |  | 0.00
Entities under common control |  |  |  |  |  |  |  |
MoCI |  | 1,561 |  | 1.81 |  | 1,477 |  | 1.66
Indosat |  | 225 |  | 0.26 |  | 122 |  | 0.14
Others |  | 108 |  | 0.12 |  | 313 |  | 0.35
Sub-total |  | 1,894 |  | 2.19 |  | 1,912 |  | 2.15
Other related entities |  |  |  |  |  |  |  |
Kopegtel |  | 206 |  | 0.24 |  | 279 |  | 0.31
Others |  | 284 |  | 0.32 |  | 259 |  | 0.29
Sub-total |  | 490 |  | 0.56 |  | 538 |  | 0.60
Associated companies |  | 47 |  | 0.05 |  | 37 |  | 0.04
Total |  | 2,460 |  | 2.83 |  | 2,489 |  | 2.79
|  | 2017 |  | 2018
|  |  |  | % of total |  |  |  | % of total
|  | Amount |  | liabilities |  | Amount |  | liabilities
g. Accrued expenses |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |
Ministry of Finance |  | 9 |  | 0.01 |  | 7 |  | 0.01
Entities under common control |  |  |  |  |  |  |  |
State-owned banks |  | 22 |  | 0.03 |  | 61 |  | 0.07
Others |  | 129 |  | 0.15 |  | 86 |  | 0.10
Sub-total |  | 151 |  | 0.18 |  | 147 |  | 0.17
Other related entities |  |  |  |  |  |  |  |
Kisel |  | 235 |  | 0.27 |  | 183 |  | 0.21
Others |  | — |  | — |  | 13 |  | 0.01
Sub-total |  | 235 |  | 0.27 |  | 196 |  | 0.22
Total |  | 395 |  | 0.46 |  | 350 |  | 0.40
h. Advances from customers |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |
Ministry of Finance |  | 19 |  | 0.02 |  | 19 |  | 0.02
Entity under common control |  |  |  |  |  |  |  |
PLN |  | 11 |  | 0.01 |  | 12 |  | 0.01
Total |  | 30 |  | 0.03 |  | 31 |  | 0.03
i. Short-term bank loans (Note 18) |  | 1,297 |  | 1.50 |  | 956 |  | 1.08
j. Two-step loans (Note 19a) |  | 1,098 |  | 1.27 |  | 949 |  | 1.07
k. Long-term bank loans (Note 19c) |  | 7,895 |  | 9.14 |  | 12,620 |  | 14.20
l. Other borrowings (Note 19d) |  | 1,295 |  | 1.50 |  | 2,244 |  | 2.52
c. Significant agreements with related parties i. The Government The Company obtained two-step loans from the Government (Note 19a). ii. Indosat The Company has an agreement with Indosat to provide international telecommunications services to the public. The Company has also entered into an interconnection agreement between the Company’s fixed line network (Public Switched Telephone Network or “PSTN”) and Indosat’s Global System for Mobile ("GSM”) cellular telecommunications network in connection with the implementation of Indosat Multimedia Mobile services and the settlement of related interconnection rights and obligations. The Company also has an agreement with Indosat for the interconnection of Indosat’s GSM mobile cellular telecommunications network with the Company’s PSTN, which enable each party’s customers to make domestic calls between Indosat’s GSM mobile network and the Company’s fixed line network, as well as allowing Indosat’s mobile customers to access the Company’s IDD service by dialing “007”. The Company has been handling customer billings and collections for Indosat. Indosat is gradually taking over the activities and performing its own direct billing and collection. The Company has received compensation from Indosat computed at 1% of the collections made by the Company starting from January 1, 1995, as well as the billing process expenses which are fixed at a certain amount per record. On December 11, 2008, the Company and Indosat agreed to implement IDD service charge tariff which already took into account the compensation for billing and collection. The agreement is valid and effective starting from January to December 2012, and can be applied until a new agreement becomes available. On December 28, 2006, the Company and Indosat signed amendments to the interconnection agreements for the fixed line networks (local, SLJJ and international) and mobile network for the implementation of the cost-based tariff obligations under the MoCI Regulation No.8/Year 2006. These amendments took effect starting 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 Company provides leased lines to Indosat and its subsidiaries, namely PT Indosat Mega Media and Lintasarta. The leased lines can be used by these companies for telephone, telegraph, data, telex, facsimile or other telecommunication services. iii. Others Kisel is a co-operative that was established by Telkomsel’s employees to engage in car rental services, printing and distribution of customer bills, collection and other services principally for the benefit of Telkomsel. Telkomsel also has dealership agreements with Kisel for distribution of SIM cards and pulse reload vouchers. d. Remuneration of key management and supervisory personnel Key management personnel consists of the Directors of the Company and supervisory personnel consists of Board of Commissioners. The Company provides remuneration in the form of salaries/honorarium and facilities to support the governance and oversight duties of the Board of Commissioners and the leadership and management duties of the Directors. The total of such remuneration is as follows:
|  | 2016 |  | 2017 |  | 2018 |
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total |
|  | Amount |  | expenses |  | Amount |  | expenses |  | Amount |  | expenses |
Directors |  | 427 |  | 0.57 | % | 175 |  | 0.21 | % | 360 |  | 0.39 | %
Board of Commissioners |  | 121 |  | 0.16 | % | 65 |  | 0.08 | % | 166 |  | 0.18 | %
The amounts disclosed in the table are the amounts recognised as an expense during the reporting periods.

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