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SIGNIFICANT COMMITMENTS AND AGREEMENTS | 12 Months Ended
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Dec. 31, 2019
SIGNIFICANT COMMITMENTS AND AGREEMENTS |
SIGNIFICANT COMMITMENTS AND AGREEMENTS | 34. SIGNIFICANT COMMITMENTS AND AGREEMENTS a. Capital expenditures As of December 31, 2019, capital expenditures committed under the contractual arrangements, principally relating to procurement and installation of data, internet and information technology, cellular, transmission equipment, and cable network are as follows:
|  | Amounts in |  |
|  | foreign |  |
|  | currencies |  | Equivalent in
Currencies |  | (in millions) |  | Rupiah
Rupiah |  | — |  | 9,412
U.S. dollar |  | 87.78 |  | 1,219
Euro |  | 1.06 |  | 16
HKD |  | 0.77 |  | 1
Total |  |  |  | 10,648
The above balance includes the following significant agreements: (i) The Company
Contracting parties |  | Initial date of agreement |  | Significant provisions of the agreement |
The Company, TII and NEC Corporation |  | May 12, 2016 |  | Procurement and Installation Agreement Sistem Komunikasi Kabel Laut (“SKKL”) Indonesia Global Gateway |
The Company and PT Datacomm Diangraha |  | November 19, 2018 |  | Procurement and Installation Agreement Metro Ethernet Platform Nokia-ALU expansion |
The Company and PT NEC Indonesia |  | March 26, 2019 |  | Procurement and Installation Agreement Radio IP Backhaul Node-B Telkomsel Platform NEC |
The Company and PT Lintas Teknologi Indonesia |  | April 6, 2019 |  | Procurement and Installation Agreement Dual Wavelength Division Multiplexing ("DWDM") Platform Nokia 2018 |
The Company and PT Huawei Tech Investment |  | September 18, 2019 |  | Procurement and Installation Agreement OTN VCN Platform Huawei Phase II |
The Company and PT ZTE Indonesia |  | October 10, 2019 |  | Procurement and Installation Agreement OLT Platform ZTE |
The Company and PT ZTE Indonesia |  | December 16, 2019 |  | Procurement and Installation Agreement DWDM dan OTN Platform ZTE |
The Company and PT Pembangunan Deltamas |  | December 19, 2019 |  | Land Purchase Agreement in Greenland International Industrial Center (“GIIC”) - Kota Deltamas |
The Company and PT Huawei Tech Investment |  | December 23, 2019 |  | Procurement and Installation Agreement DWDM Platform Huawei |
The Company and PT ZTE Indonesia |  | December 27, 2019 |  | Procurement and Installation Agreement VIMS Platform ZTE |
The Company and PT NEC Indonesia |  | December 31, 2019 |  | Procurement and Installation Agreement ISP SKKL Platform NEC Transport PoP Expansion Phase-2 |
(ii) Telkomsel
Contracting parties |  | Initial date of agreement |  | Significant provisions of the agreement |
Telkomsel, PT Ericsson Indonesia, Ericsson AB, PT Nokia Siemens Networks, NSN Oy, and Nokia Siemens Network GmbH & Co, KG |  | April 17, 2008 |  | The combined 2G and 3G CS Core Network Rollout Agreement |
Telkomsel, PT Ericsson Indonesia, and PT Nokia Siemens Networks |  | April 17, 2008 |  | Technical Service Agreement (“TSA”) for combined 2G and 3G CS Core Network |
Telkomsel, Amdocs Software Solutions Limited Liability Company, and PT Application Solutions |  | February 8, 2010 |  | Online Charging System ("OCS") and Service Control Points ("SCP") System Solution Development Agreement |
Telkomsel and PT Application Solutions |  | February 8, 2010 |  | Technical Support Agreement to provide technical support services for the OCS and SCP |
Telkomsel and PT Huawei Tech Investment |  | March 25, 2013 |  | Technical Support Agreement for the procurement of Gateway GPRS Support Node (“GGSN”) Service Complex |
Telkomsel and Wipro Limited and PT WT Indonesia |  | April 23, 2013 |  | Development and Procurement of OSDSS Solution Agreement |
Telkomsel and PT Ericsson Indonesia |  | October 22, 2013 |  | Procurement of GGSN Service Complex Rollout Agreement |
Telkomsel, PT Ericsson Indonesia, PT Nokia Siemens Networks Indonesia, NSN Oy, PT Huawei Tech Investment, and PT ZTE Indonesia |  | February 1, 2018 |  | Procurement agreement for Ultimate Radio Network Infrastructure ROA and TSA |
Telkomsel, PT Dimension Data Indonesia, and PT Huawei Tech Investment |  | April 1, 2018 |  | Agreement for Mobile Network Router Infrastructure |
Telkomsel, PT Sigma Solusi Integrasi, Oracle Corporation, and PT Phincon |  | July 5, 2019 |  | Development and Rollout Agreement (“DRA”) and Technical Support of Customer Relationship Management (“CRM”) solution System Integrator |
(iii) TII
Contracting parties |  | Initial date of agreement |  | Significant provisions of the agreement |
Telin Hong Kong and Measat Satellite System Sdn. Bhd. |  | December 1, 2015 |  | Procurement agreement on transponder leases services |
Telin Singapore and LSK Engineering (S) Pte Ltd |  | August 1, 2019 |  | Design and development for Singapore Data Center |
TII and HKT Global Singapore Pte. Ltd. |  | September 12, 2019 |  | Procurement agreement on Entitlement of PLCN Cable System |
b. Borrowings and other credit facilities (i) As of December 31, 2019, the Company has bank guarantee facilities for tender bond, performance bond, maintenance bond, deposit guarantee, and advance payment bond for various projects of the Company, as follows:
|  |  |  |  |  |  |  | Facility utilized
|  |  |  |  |  |  |  | Foreign currency |  | Rupiah
Lenders |  | Total facility |  | Maturity |  | Currency |  | (in million) |  | equivalent
BRI |  | 500 |  | March 14, 2020 |  | Rp |  | — |  | 291
BNI |  | 500 |  | March 31, 2020 |  | Rp |  | — |  | 386
Bank Mandiri |  | 500 |  | December 23, 2021 |  | Rp |  | — |  | 290
Total |  | 1,500 |  |  |  |  |  |  |  | 967
(ii) Telkomsel has a Rp1,000 billion bank guarantee facility with BRI. The facility will expire on September 25, 2022. Under this facility, as of December 31, 2019, Telkomsel has issued a bank guarantee amounting to Rp531 billion as payment commitment guarantee for annual right of usage fee valid until March 31, 2020 and Rp20 billion as frequency performance bond valid until May 31, 2020 (Note 34c.i). Telkomsel has a Rp150 billion bank guarantee facility with BCA. The facility will expire on April 15, 2020. As of December 31, 2019, Telkomsel has issued a bank guarantee of Rp2 billion as M2M performance bond. Telkomsel also has a Rp2,100 billion bank guarantee facility with BNI. The facility will expire on December 11, 2020. Telkomsel uses this facility for surety bond of 2.3 Ghz radio frequency amounting to Rp1,030 billion (Note 34c. ii) and Rp4 billion as M2M performance bond. (iii) TII has a US$15 million or equal to Rp202 billion bank guarantee from Bank Mandiri and has been renewed in accordance with the addendum VIII (eight) on December 18, 2019, with a maximum credit limit of US$25 million or equal to Rp353 billion. The facility will expire on December 23, 2020. As of December 31, 2019, TII has not used the facility. (iv) As of December 31, 2019, Sigma has unused facilities of bank guarantee from BNI amounting to Rp119 billion. c. Others (i) Radio frequency usage Based on Decree No. 80 dated November 2, 2015 of the Government of the Republic of Indonesia which replaced Decree No. 76 dated December 15, 2010, Telkomsel is required to pay the annual frequency usage fees for the 800 Megahertz (“MHz”), 900 MHz, and 1800 MHz bandwidths using the formula set out in the decree. As an implementation of the above decree, the Company and Telkomsel paid annual frequency usage fees since 2010. Based on Decision letter No. 1987 Year 2017 dated November 15, 2017, which amended Decree No. 42 Year 2014 dated January 29, 2014, whereby the MoCI granted Telkomsel the rights to provide: 1. Mobile telecommunication services with radio frequency bandwidth in the 800 MHz, 900 MHz, 1800 MHz, 2.1 GHz, and 2.3 GHz; and 2. Basic telecommunication services. (ii) Frequency licence With reference to Decision Letters No. 268/KEP/M.KOMINFO/9/2009, No. 191 Year 2013, No. 509 Year 2016, No. 1896 year 2017, and No. 806 year 2019 of the MoCI, Telkomsel is required, among other things, to: 1. Pay an annual right of usage Biaya Hak Penyelenggara (“BHP”) over the license term (10 years) as set forth in the decision letters. The BHP is payable upon receipt of Surat Pemberitahuan Pembayaran (notification letter) from the DGPI. The BHP fee is payable annually up to the expiry period of the license. 2. Issue a performance bond each year amounting to Rp20 billion for spectrum 2.1 GHz and a surety bond each year amounting Rp1.03 trillion for spectrum 2.3 GHz (Note 34b.ii). (iii) Receivable under non-cancelable lease agreements Receivables under lease agreements as of December 31, 2019 are as follows:
|  |  |  | Less than |  |  |  | More than
|  | Total |  | 1 year |  | 1‑5 years |  | 5 years
As lessor |  | 8,526 |  | 1,722 |  | 4,446 |  | 2,358
(iv) USO The MoCI issued Regulation No. 17 year 2016 dated September 26, 2016 which replaced Decree No. 45 year 2012 and other previous regulations regarding policies underlying the USO program. The regulation requires telecommunications operators in Indonesia to contribute 1.25% of gross revenues (with due consideration for bad debts and/or interconnection charges and/or connection charges and/or the exclusion of certain revenues that are not considered as part of gross revenues as a basis to calculate the USO charged) for USO development. Subsequently, Decree No. 17 year 2016 dated September 26, 2016 was replaced by Decree No. 19 year 2016 which was effective from November 4, 2016. The latest Decree stipulates, among other things, the USO charged was effective for fiscal year 2016 and thereafter. Based on MoCI Regulation No. 25 year 2015 dated June 30, 2015, it is stipulated that, among others, in providing telecommunication access and services in rural areas (USO Program), the provider is determined through a selection process by Balai Penyedia dan Pengelola Pembiayaan Telekomunikasi dan Informatika (“BPPPTI”). BPPPTI replaced Balai Telekomunikasi dan Informatika Pedesaan (“BTIP”) based on Decree No. 18/PER/M.KOMINFO/11/2010 dated November 19, 2010 of MoCI. Based on Regulation No. 3 year 2018 of MOCI dated May 23, 2018, BPPPTI has been renamed as Badan Aksesibilitas Telekomunikasi dan Informasi (“BAKTI”). Subsequently, MOCI Regulation No. 25 year 2015 was replaced by MOCI Regulation No. 10 year 2018. On December 27, 2011, Telkomsel (on behalf of Telkomsel Consortium, a consortium which was established with Dayamitra on December 9, 2011) was selected by BPPPTI as a provider of the USO Program in the border areas for all packages (package 1‑13) with a total price of Rp830 billion. On such date, Telkomsel was also selected by BPPPTI as a provider of the USO Program (Upgrading) of “Desa Pinter” or “Desa Punya Internet” for packages 1, 2, and 3 with a total price of Rp261 billion. In 2015, the Program was ceased. In January 2016, Telkomsel filed an arbitration claim to BANI for the settlement of the outstanding receivables of USO Programs. On June 22, 2017, Telkomsel received a decision letter from BANI No.792/1/ARB-BANI/2016 requesting BPPPTI to pay compensation to Telkomsel amounting to Rp217 billion, and as of the date of the issuance of these consolidated financial statements, Telkomsel has received Rp91 billion (before tax) and no additional payment from BAKTI.

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