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RELATED PARTY TRANSACTIONS | 12 Months Ended
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Dec. 31, 2019
RELATED PARTY TRANSACTIONS |
RELATED PARTY TRANSACTIONS | 32. 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 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, leased lines revenues, satellite transponder usage revenues, interconnection expenses, telecommunication facilities usage expenses, operating and maintenance expenses, and usage of data communication network system expenses
PT Pertamina (Persero) (“Pertamina”) |  | Entity under common control |  | Internet and data service revenues, and other telecommunication service revenues
State-owned banks |  | Entities under common control |  | 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
BNI |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues, finance income and finance costs
BRI |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues, finance income and finance costs
BTN |  | Entity under common control |  | Internet and data service revenues, other telecommunication service revenues, and finance income
PT Kereta Api Indonesia (“KAI”) |  | Entity under common control |  | Internet and data service revenues, and other telecommunication service revenues
PT Pegadaian (“Pegadaian”) |  | Entity under common control |  | Internet and data service revenues, and other telecommunication service revenues
PT Garuda Indonesia Tbk. (“Garuda Indonesia”) |  | Entity under common control |  | Internet and data service revenues, and other telecommunication service revenues
PT Kimia Farma (“Kimia Farma”) |  | Entity under common control |  | Internet and data service revenues, and other telecommunication service revenues
PT Pos Indonesia (“Pos Indonesia”) |  | Entity under common control |  | Internet and data service revenues, and other telecommunication service revenues
Perum Peruri (“Peruri”) |  | Entity under common control |  | Internet and data service revenues, and other telecommunication service revenues
PT Taspen (“Taspen”) |  | Entity under common control |  | Internet and data service revenues, and other telecommunication service revenues
PT Asuransi Jasa Indonesia (“Jasindo”) |  | Entity under common control |  | Fixed assets insurance expenses
PT Perusahaan Listrik Negara (“PLN”) |  | Entity under common control |  | Electricity expenses
Details of the nature of relationships and accounts/transactions with significant related parties are as follows:
Related parties |  | Nature of relationships parties |  | Nature of accounts/ transactions
PT Mandiri Manajemen Investasi |  | Entity under common control |  | Available-for-sale financial assets
Bahana TCW |  | Entity under common control |  | Available-for-sale financial assets, bonds and notes
PT Sarana Multi Infrastruktur |  | Entity under common control |  | Finance costs
Tiphone |  | Associated company |  | Distribution of SIM cards and pulse reload voucher
Indonusa |  | Associated company |  | Pay TV expenses
Teltranet |  | Associated company |  | CPE expenses
PT Poin Multi Media Nusantara (“POIN”) |  | Other related entity |  | Purchase of handset
PT Perdana Mulia Makmur (“PMM”) |  | Other related entity |  | Purchase of handset
Yakes Telkom |  | Other related entity |  | Health expenses
Koperasi Pegawai Telkom (“Kopegtel”) |  | Other related entity |  | Purchase of property and equipment, construction and installation services, leases of buildings expenses, lease of vehicles expenses, purchases of vehicles, purchases of materials and construction service, maintenance and cleaning service expenses, and RSA revenues
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
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. As of December 31, 2019, the Group recorded impairment of receivables from related parties of (Rp188) billion. Impairment assessment is undertaken each financial year through examining the current status of existing receivables and historical collection experience. b. Significant transactions with related parties The following are significant transactions with related parties:
|  | 2017 |  | 2018 |  | 2019
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | revenues |  | Amount |  | revenues |  | Amount |  | revenues
Revenue |  |  |  |  |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |  |  |  |  |
Ministry of Finance |  | 280 |  | 0.22 |  | 258 |  | 0.20 |  | 101 |  | 0.07
Entities under common control |  |  |  |  |  |  |  |  |  |  |  |
Government Agencies |  | 2,568 |  | 2.00 |  | 3,720 |  | 2.84 |  | 3,894 |  | 2.87
Indosat |  | 1,789 |  | 1.39 |  | 1,002 |  | 0.77 |  | 860 |  | 0.63
BRI |  | 237 |  | 0.18 |  | 397 |  | 0.30 |  | 619 |  | 0.46
BNI |  | 105 |  | 0.08 |  | 188 |  | 0.14 |  | 578 |  | 0.43
Taspen |  | — |  | — |  | 7 |  | 0.01 |  | 298 |  | 0.22
BTN |  | 129 |  | 0.10 |  | 179 |  | 0.14 |  | 258 |  | 0.19
Pegadaian |  | 115 |  | 0.09 |  | 228 |  | 0.17 |  | 229 |  | 0.17
Pos Indonesia |  | 47 |  | 0.04 |  | 50 |  | 0.04 |  | 216 |  | 0.16
Bank Mandiri |  | 157 |  | 0.12 |  | 173 |  | 0.13 |  | 204 |  | 0.15
Pertamina |  | 94 |  | 0.07 |  | 183 |  | 0.14 |  | 196 |  | 0.14
Peruri |  | — |  | — |  | 120 |  | 0.09 |  | 164 |  | 0.12
Kimia Farma |  | 36 |  | 0.03 |  | 72 |  | 0.06 |  | 161 |  | 0.12
KAI |  | 18 |  | 0.01 |  | 83 |  | 0.06 |  | 144 |  | 0.11
Garuda Indonesia |  | 55 |  | 0.04 |  | 105 |  | 0.08 |  | 112 |  | 0.08
Others |  | 637 |  | 0.50 |  | 762 |  | 0.57 |  | 824 |  | 0.61
Sub-total |  | 5,987 |  | 4.65 |  | 7,269 |  | 5.54 |  | 8,757 |  | 6.46
Associated companies |  | 178 |  | 0.15 |  | 55 |  | 0.04 |  | 75 |  | 0.06
Other related entities |  | 315 |  | 0.25 |  | 73 |  | 0.06 |  | 104 |  | 0.08
Total |  | 6,760 |  | 5.27 |  | 7,655 |  | 5.84 |  | 9,037 |  | 6.67
|  | 2017 |  | 2018 |  | 2019
|  |  |  | % 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 |  | 6,533 |  | 7.77 |  | 8,109 |  | 8.68 |  | 8,767 |  | 9.49
PLN |  | 2,269 |  | 2.70 |  | 2,596 |  | 2.78 |  | 2,434 |  | 2.64
Indosat |  | 890 |  | 1.06 |  | 933 |  | 1.00 |  | 676 |  | 0.73
Jasindo |  | 168 |  | 0.20 |  | 349 |  | 0.37 |  | 267 |  | 0.29
Others |  | 114 |  | 0.14 |  | 511 |  | 0.55 |  | 301 |  | 0.33
Sub-total |  | 9,974 |  | 11.87 |  | 12,498 |  | 13.38 |  | 12,445 |  | 13.48
Associated companies |  |  |  |  |  |  |  |  |  |  |  |
Indonusa |  | 264 |  | 0.31 |  | 306 |  | 0.33 |  | 437 |  | 0.47
Teltranet |  | 123 |  | 0.15 |  | 181 |  | 0.19 |  | 173 |  | 0.19
Others |  | 34 |  | 0.04 |  | 11 |  | 0.01 |  | 79 |  | 0.09
Sub-total |  | 421 |  | 0.50 |  | 498 |  | 0.53 |  | 689 |  | 0.75
Other related entities |  |  |  |  |  |  |  |  |  |  |  |
Kopegtel |  | 713 |  | 0.85 |  | 836 |  | 0.90 |  | 1,049 |  | 1.14
Kisel |  | 813 |  | 0.97 |  | 916 |  | 0.98 |  | 818 |  | 0.89
PMM |  | 404 |  | 0.48 |  | 850 |  | 0.91 |  | 587 |  | 0.64
POIN |  | 405 |  | 0.48 |  | 850 |  | 0.91 |  | 547 |  | 0.59
Yakes Telkom |  | 139 |  | 0.17 |  | 128 |  | 0.14 |  | 133 |  | 0.14
Others |  | 83 |  | 0.10 |  | 190 |  | 0.20 |  | 141 |  | 0.15
Sub-total |  | 2,557 |  | 3.05 |  | 3,770 |  | 4.04 |  | 3,275 |  | 3.55
Total |  | 12,964 |  | 15.43 |  | 16,766 |  | 17.95 |  | 16,409 |  | 17.78
|  | 2017 |  | 2018 |  | 2019
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | finance income |  | Amount |  | finance income |  | Amount |  | finance income
Finance income |  |  |  |  |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |  |  |  |  |
Ministry of Finance |  | 0 |  | 0.00 |  | — |  | — |  | — |  | —
Entities under common control |  |  |  |  |  |  |  |  |  |  |  |
State-owned banks |  | 863 |  | 60.18 |  | 596 |  | 58.78 |  | 743 |  | 67.85
Government agencies |  | 34 |  | 2.37 |  | 12 |  | 1.18 |  | 18 |  | 1.64
Others |  | 35 |  | 2.44 |  | 6 |  | 0.59 |  | 10 |  | 0.91
Total |  | 932 |  | 64.99 |  | 614 |  | 60.55 |  | 771 |  | 70.40
|  | 2017 |  | 2018 |  | 2019
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | finance cost |  | Amount |  | finance cost |  | Amount |  | finance cost
Finance costs |  |  |  |  |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |  |  |  |  |
Ministry of Finance |  | 54 |  | 1.95 |  | 41 |  | 1.16 |  | 33 |  | 0.61
Entities under common control |  |  |  |  |  |  |  |  |  |  |  |
State-owned banks |  | 820 |  | 29.61 |  | 1,140 |  | 32.36 |  | 1,332 |  | 24.43
Sarana Multi Infrastruktur |  | 94 |  | 3.39 |  | 110 |  | 3.12 |  | 263 |  | 4.82
Total |  | 968 |  | 34.95 |  | 1,291 |  | 36.64 |  | 1,628 |  | 29.86
|  | 2017 |  | 2018 |  | 2019
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total
|  | Amount |  | revenues |  | Amount |  | revenue |  | Amount |  | revenues
Distribution of SIM card and pulse reload voucher |  |  |  |  |  |  |  |  |  |  |  |
Other related entities |  |  |  |  |  |  |  |  |  |  |  |
Tiphone |  | 3,888 |  | 3.03 |  | 4,390 |  | 3.36 |  | 5,927 |  | 4.37
Kisel |  | 4,181 |  | 3.26 |  | 4,221 |  | 3.23 |  | 5,077 |  | 3.75
Gratika |  | 408 |  | 0.32 |  | 474 |  | 0.36 |  | 563 |  | 0.42
Total |  | 8,477 |  | 6.61 |  | 9,085 |  | 6.95 |  | 11,567 |  | 8.54
|  | 2018 |  | 2019
|  |  |  | % of total |  |  |  | % of total
|  | Amount |  | property and equipment purchased |  | Amount |  | property and equipment purchased
Purchase of property and equipment (Note 12) |  |  |  |  |  |  |  |
Entities under common control |  | 207 |  | 0.62 |  | 80 |  | 0.22
Other related entities |  |  |  |  |  |  |  |
Kopegtel |  | 144 |  | 0.43 |  | 158 |  | 0.43
Others |  | 328 |  | 0.97 |  | 115 |  | 0.31
Sub-total |  | 472 |  | 1.40 |  | 273 |  | 0.74
Total |  | 679 |  | 2.02 |  | 353 |  | 0.96
c. Balance of accounts with related parties
|  | 2018 |  | 2019
|  |  |  | % of total |  |  |  | % of total
|  | Amount |  | assets |  | Amount |  | assets
Cash and cash equivalents (Note 4) |  | 14,544 |  | 7.06 |  | 14,841 |  | 6.31
Other current financial assets (Note 5) |  | 470 |  | 0.23 |  | 71 |  | 0.03
Trade receivables - net (Note 6) |  | 2,014 |  | 0.98 |  | 1,741 |  | 0.74
Other current assets |  |  |  |  |  |  |  |
Entities under common control |  |  |  |  |  |  |  |
MoCI |  | 3,478 |  | 1.69 |  | 3,719 |  | 1.58
Others |  | 85 |  | 0.04 |  | 49 |  | 0.02
Sub-total |  | 3,563 |  | 1.73 |  | 3,768 |  | 1.60
Other related entities |  | 78 |  | 0.04 |  | 63 |  | 0.03
Total |  | 3,641 |  | 1.77 |  | 3,831 |  | 1.63
Other non-current assets |  |  |  |  |  |  |  |
Entities under common control |  |  |  |  |  |  |  |
MoCI |  | 1,743 |  | 0.85 |  | 1,488 |  | 0.63
Others |  | 28 |  | 0.01 |  | 22 |  | 0.01
Sub-total |  | 1,771 |  | 0.86 |  | 1,510 |  | 0.64
Other related entities |  | 18 |  | 0.01 |  | 12 |  | 0.01
Total |  | 1,789 |  | 0.87 |  | 1,522 |  | 0.65
|  | 2018 |  | 2019
|  |  |  | % of total |  |  |  | % of total
|  | Amount |  | liabilities |  | Amount |  | liabilities
Trade payables (Note 16) |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |
Ministry of Finance |  | 2 |  | 0.00 |  | 5 |  | 0.00
Entities under common control |  |  |  |  |  |  |  |
MoCI |  | 1,477 |  | 1.66 |  | 1,374 |  | 1.17
Indosat |  | 122 |  | 0.14 |  | 68 |  | 0.06
Others |  | 313 |  | 0.35 |  | 256 |  | 0.22
Sub-total |  | 1,912 |  | 2.15 |  | 1,698 |  | 1.45
Other related entities |  |  |  |  |  |  |  |
Kopegtel |  | 279 |  | 0.31 |  | 269 |  | 0.23
Others |  | 259 |  | 0.29 |  | 193 |  | 0.16
Sub-total |  | 538 |  | 0.60 |  | 462 |  | 0.39
Associated companies |  | 37 |  | 0.04 |  | 77 |  | 0.07
Total |  | 2,489 |  | 2.79 |  | 2,242 |  | 1.91
Accrued expenses |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |
Ministry of Finance |  | 7 |  | 0.01 |  | 6 |  | 0.01
Entities under common control |  |  |  |  |  |  |  |
State-owned banks |  | 61 |  | 0.07 |  | 75 |  | 0.06
Others |  | 86 |  | 0.10 |  | 88 |  | 0.07
Sub-total |  | 147 |  | 0.17 |  | 163 |  | 0.13
Other related entities |  |  |  |  |  |  |  |
Kisel |  | 183 |  | 0.21 |  | 188 |  | 0.16
Others |  | 13 |  | 0.01 |  | 15 |  | 0.01
Sub-total |  | 196 |  | 0.22 |  | 203 |  | 0.17
Total |  | 350 |  | 0.40 |  | 372 |  | 0.31
|  | 2018 |  | 2019
|  |  |  | % of total |  |  |  | % of total
|  | Amount |  | liabilities |  | Amount |  | liabilities
Advances from customers |  |  |  |  |  |  |  |
Majority stockholder |  |  |  |  |  |  |  |
Ministry of Finance |  | 19 |  | 0.02 |  | 19 |  | 0.02
Entity under common control |  |  |  |  |  |  |  |
PLN |  | 12 |  | 0.01 |  | 6 |  | 0.01
Others |  | — |  | 0.00 |  | 2 |  | 0.00
Sub-total |  | 12 |  | 0.01 |  | 8 |  | 0.01
Total |  | 31 |  | 0.03 |  | 27 |  | 0.03
Short-term bank loans (Note 19) |  | 956 |  | 1.08 |  | 3,655 |  | 3.10
Two-step loans (Note 20a) |  | 949 |  | 1.07 |  | 736 |  | 0.62
Long-term bank loans (Note 20c) |  | 12,620 |  | 14.20 |  | 15,319 |  | 13.00
Other borrowings (Note 20d) |  | 2,244 |  | 2.52 |  | 3,740 |  | 3.17
d. Significant agreements with related parties i. The Government The Company obtained two-step loans from the Government (Note 20a). 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 PT Aplikanusa Lintasarta ("Lintasarta"). The leased lines can be used by these companies for telephone, telegraph, data, telex, facsimile or other telecommunication services. Dayamitra signed a SPA with Indosat related to the purchase of Indosat's towers. In addition, Dayamitra and Indosat also signed MTLA, which stipulated that Indosat agreed to lease back telecommunication towers that were acquired (Note 1e). 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. e. 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:
|  | 2017 |  | 2018 |  | 2019 |
|  |  |  | % of total |  |  |  | % of total |  |  |  | % of total |
|  | Amount |  | expenses |  | Amount |  | expenses |  | Amount |  | expenses |
Board of Directors |  | 175 |  | 0.21 | % | 360 |  | 0.39 | % | 270 |  | 0.29 | %
Board of Commissioners |  | 65 |  | 0.08 | % | 166 |  | 0.18 | % | 123 |  | 0.13 | %
The amounts disclosed in the table are the amounts recognized as an expense during the reporting periods.

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