Financial Risks We are exposed to interest rate risk
7. Risks Related to Development of New Businesses
We believe that efforts to develop new businesses other than the telecommunication business as well as international expansion are necessary to ensure continuing business growth. This is undertaken through the activities of our subsidiaries, primarily Metra and Telin. Risks related to new business development include competition from established players, suitability of business model, the need to acquire new expertise in the new areas of operation, and risks related to online media which include intellectual property, consumer protectionand confidentiality of customer data. Focusing on international expansion is one of our strategic business intiatives. In particular, we have started expansion into seven countries, namely Hong Kong-Macau, Timor Leste, Australia, Myanmar, Malaysia, Taiwan, and the United States of America. Expanding our operations internationally exposes us to a number of risks associated with operating in new jurisdictions for example, our international operations could be adversely affected by political or social instability and unrest, by regulatory changes, such as an increase in taxes applicable to our operations, macroeconomic instability, limitations on or controls on the foreign exchange trade, competition from local operators, difference in consumer preferences and a lack of expertise in the local markets in which we will be in operation. Any of these factors could cause our expected returns from our expansion to be limited and could have a material and adverse effect on our business, results of operations and financial condition.C. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are exposed to market risks that arise from changes in exchange rates, interest rates, credit risk and liquidity risk, each of which will have an impact on us. We do not generally hedge our long-term liabilities in foreign currencies but hedge our obligations for the current year. As of December 31, 2014, assets in foreign currencies reached 83 against our liabilities denominated in foreign currencies. Our exposure to interest rate risk is managed through a mix of fixed and variable rate liabilities and assets, including short-term fixed rate assets. Our exposure to such market risks fluctuated during 2012, 2013 and 2014 as the Indonesian economy was affected by changes in the US Dollar-Rupiah exchange rate and interest rates themselves. We are not able to predict whether such conditions will continue during 2014 or thereafter. 254 2014 Annual Report PT Telkom Indonesia Tbk Persero FINANCIAL AND PERF ORMANCE HIGHLIGHT MANA GEMENT REPOR T PREF A GENERAL INF ORMA TION OF TELK OM INDONE SIA MANA GEMENT’S DISCUSSION AND ANAL Y SIS CORPORA TE GO VERNANCE SOCIAL AND ENVIRONMENT AL RE SPONSIBILITY APPENDICE S 1. Exchange Rate Information The following table shows the exchange rate of Indonesia Rupiah to US Dollar based on the middle exchange rate which is calculated based on the Bank Indonesia buying and selling rates for the periods indicated. Calendar Year at Period End Average Low High RpUS1 2010 1 8,991 9,078 9,365 8,924 2011 1 9,068 8,773 9,170 8,508 2012 1 9,670 9,419 9,670 9,000 2013 1 12,189 10,563 12,189 9,667 2014 1 12,440 11,880 12,440 11,404 September 2 12,212 11,891 12,212 11,710 October 2 12,082 12,145 12,241 11,993 November 2 12,196 12,156 12,206 12,092 December 2 12,440 12,438 12,900 12,264 2015 1 12,932 12,807 12,932 12,625 January 2 12,625 12,578 12,732 12,444 February 2 12,863 12,750 12,887 12,609 March 25 2 12,932 13,069 13,237 12,932 Source: Bank Indonesia Under the current exchange rate system, the exchange rate of the Indonesian rupiah is determined by the market, reflecting the interaction of supply and demand in the market. However, Bank Indonesia may take measures to maintain a stable exchange rate. For the year 2014, the average rate of Rupiah to the US Dollar was Rp11,880, with the lowest and highest rates being Rp12,440 and Rp 11,404, respectively. The exchange rates used for conversion of monetary assets and liabilities denominated in foreign currencies are the buy and sell rates published by Reuters in 2012, 2013 and 2014. The Reuters buy and sell rates, applied respectively to monetary assets and liabilities, were, Rp9,630 and Rp9,645 to US1.00 as of December 31, 2012, Rp12,160 and Rp12,180 to US1.00 as of December 31, 2013 and Rp12,380 and Rp12,390 to US1.00 as of December 31, 2014. The Consolidated Financial Statements are stated in Rupiah. The conversion of Rupiah amounts into US Dollar are included solely for the convenience of the readers and have been made using the average of the market buy and sell rates of Rp12,385 to US1.00 published by Reuters on December 31, 2014. On March 25, 2015, the Reuters bid and ask rates were Rp12,982 and Rp12,990 to US1.00.2. Foreign Exchange Controls Indonesia operates a liberal foreign exchange system
that permits the free flow of foreign exchange. Capital transactions, including remittances of capital, profits, dividends and interest, are free of exchange controls. A number of regulations, however, have an impact on the exchange system. For example, only banks are authorized to deal in foreign exchange and execute exchange transactions related to the import and export of goods. In addition, Indonesian banks including branches of foreign banks in Indonesia are required to report to Bank Indonesia any fund transfers exceeding US10,000. As a State-Owned Company, and based on the decree of the Head of Pinjaman Komersial Luar Negeri PKLN, we are required to obtain an approval from PKLN prior to acquiring foreign commercial loans and must submit periodical reports to PKLN during the term of the loans. 1 Determined based upon the last day middle exchange rate of each month announced by Bank Indonesia applicable for the period. 2 Determined based upon the daily middle exchange rate announced by Bank Indonesia during the applicable period. 255 2014 Annual Report PT Telkom Indonesia Tbk PerseroParts
» Telkomsel Double Digit Revenue Growth Indonesia Digital Network IDN 2015 International Expansion
» Parenting Strategy : Strategic guidance
» Shareholders with Ownership More Than 5 MainControlling Shareholder
» Ownership of Stocks by Directors and Commissioners
» Shareholders with Less than 5 Ownership
» Proportion of Common Stock Held in Indonesia and Abroad List of the 20 Biggest Public Shareholders
» Employee Stock Ownership Program
» Chronology of Bonds Purchases of Equity Securities by The Issuer and Affiliated Purchasers
» Sekretariat of President AR TELKOM 2014 ENG
» Director Human Capital AR TELKOM 2014 ENG
» Director of Consumer Service
» Directorate of Wholesale International Business Service
» Director of Innovations AR TELKOM 2014 ENG
» Direktur Enterprise Business AR TELKOM 2014 ENG
» Director of Finance AR TELKOM 2014 ENG
» Department of Corporate AR TELKOM 2014 ENG
» Internal Auditor AR TELKOM 2014 ENG
» Department of Project AR TELKOM 2014 ENG
» Finance Billing Collection Center FBCC
» Human Capital Center AR TELKOM 2014 ENG
» Telkom Corporate University Center
» Supply Center AR TELKOM 2014 ENG
» Innovation Design Center IDeC
» Community Development Center CDC
» Human Resource Assessment Service Assesment Center
» ITSS Division AR TELKOM 2014 ENG
» Enterprise Service Division AR TELKOM 2014 ENG
» Business Service Division AR TELKOM 2014 ENG
» Wholesale Service Division AR TELKOM 2014 ENG
» Broadband Division AR TELKOM 2014 ENG
» Wireless Broadband Division AR TELKOM 2014 ENG
» Network of Broadband Division
» Witel of Central Java of Eastern North
» Witel of Southern Central Java
» Witel Yogyakarta AR TELKOM 2014 ENG
» Witel of Central Java of Eastern South
» Regional Division V East Java
» Witel of East Java of Central East
» Witel of East Java of Southern East
» Witel of Central East Borneo
» Witel of Northern East Borneo
» Witel of Southern East Borneo
» Regional Division VII Eastern Indonesia Area
» Witel of SouthSulawesi AR TELKOM 2014 ENG
» Witel of Western South Sulawesi
» Witel of North Sulawesi North Maluku
» Witel of Maluku AR TELKOM 2014 ENG
» Witel of Papua AR TELKOM 2014 ENG
» PT Telekomunikasi Selular Telkomsel
» PT Telekomunikasi Indonesia Internasional Telin
» Telin Singapore AR TELKOM 2014 ENG
» Telin Hong Kong AR TELKOM 2014 ENG
» Telin Timor-Leste AR TELKOM 2014 ENG
» Telkom Australia AR TELKOM 2014 ENG
» Telkom Macau AR TELKOM 2014 ENG
» Telkom Taiwan AR TELKOM 2014 ENG
» Telin Malaysia AR TELKOM 2014 ENG
» Telkom USA AR TELKOM 2014 ENG
» Telin Branch Office in Myanmar
» PT Multimedia Nusantara Metra
» PT Infrastruktur Telekomunikasi Indonesia
» PT Dayamitra Telekomunikasi Mitratel
» PT Infomedia Nusantara AR TELKOM 2014 ENG
» PT MD Media AR TELKOM 2014 ENG
» PT Sigma Cipta Caraka Telkom Sigma
» PT Administrasi Medika AdMedika
» PT Finnet Indonesia AR TELKOM 2014 ENG
» PT Melon Indonesia AR TELKOM 2014 ENG
» Telkom Property PT Graha Sarana Duta
» PT Telkom Akses AR TELKOM 2014 ENG
» Fixed Wireline Services AR TELKOM 2014 ENG
» Fixed Broadband AR TELKOM 2014 ENG
» Cellular Services AR TELKOM 2014 ENG
» Fixed Wireless Services AR TELKOM 2014 ENG
» Interconnection Services AR TELKOM 2014 ENG
» Network Services AR TELKOM 2014 ENG
» Satellite AR TELKOM 2014 ENG
» Platform Services, which includes Managed
» Digital Advertising is a commercial service for the
» Contact centers AR TELKOM 2014 ENG
» Partnership Stores AR TELKOM 2014 ENG
» Authorized dealers and retail outlets
» Account Management Teams AR TELKOM 2014 ENG
» Telkom Solution Houses AR TELKOM 2014 ENG
» SME Centers AR TELKOM 2014 ENG
» Social Media AR TELKOM 2014 ENG
» Liabilities dan Equity a. Current Liabilities
» Revenues Total revenues increased by Rp6,729 billion, or 8.1, from
» Expenses Total expenses increased by Rp3,693 billion, or 6.4,
» Net Income per Share Net income per share increased by Rp2,4, or 1.6, from
» Revenues Total revenues increased by Rp5,824 billion, or 7.5,
» Expenses Total expenses increased by Rp3,695 billion, or 6.8,
» Income Tax Expense Income tax expense decreased by Rp993 billion, or
» Profit for the Year Attributable to Owners of the Parent Company
» Cash Flows from Operating Activities Net cash provided by operating activities in 2014 was
» Cash Flows from Investing Activities Net cash flows used in investing activities in 2014 was
» Cash Flows from Financing Activities Net cash flows used in financing activities was Rp10,083
» Cash Flows from Operating Activities Net cash provided by operating activities in 2013 was
» Cash Flows from Investing Activities Net cash flows used in investing activities in 2013 was
» Internal Liquidity Sources To fulfill our obligations, we rely primarily on our internal
» External Liquidity Sources Our primary external sources of liquidity are short and
» Outstanding Liquidity Sources We had undrawn loan facilities which include the following
» Purpose of the Commitment As of December 31, 2014, we had material commitments
» Source of Funds We have historically funded our capital expenditures
» Denomination of Currency As of December 31, 2014, details of material commitment
» Planned Actions to Mitigate Foreign Exchange Risks
» Expansion - On January 16, 2014, we establish 100 ownership
» Acquisition - On September 25, 2014, Telkom Australia Telin through
» Employee benefits Under PSAK, the actuarial gains or losses are recognized
» Land rights Under PSAK, land rights are recorded as part of property
» Related party transactions Under Bapepam - LK OJK Regulation No. VIII.G.7
» Indonesian Taxation DebtCapital Restructure
» Dividends Dividends declared by us out of retained earnings and
» Capital Gains The sale or transfer of common stock through the IDX
» Stamp Duty Stock transactions in Indonesia are subject to stamp
» Threshold Passive Foreign Investment Company “PFIC” Classification Matters
» Dividends Any cash distributions paid by us out of earnings and
» PFIC Considerations If we were to be classified as a PFIC in any taxable year,
» Backup Withholding Tax and Information Reporting Requirements
» Telecommunications Law AR TELKOM 2014 ENG
» Telecommunications Regulators AR TELKOM 2014 ENG
» C l a ss i f i c at i o n a n d L i ce n s i n g o f Telecommunications Providers
» Introduction of Competition in the Indonesian Telecommunications Industry
» DLD Services AR TELKOM 2014 ENG
» IDD Services AR TELKOM 2014 ENG
» Limited Mobility Wireless Services
» Interconnection AR TELKOM 2014 ENG
» Consumer Protection AR TELKOM 2014 ENG
» Telecommunication Regulatory Charges AR TELKOM 2014 ENG
» Telecommunications Towers AR TELKOM 2014 ENG
» Telkom’s Shareholders AR TELKOM 2014 ENG
» Realization of General Meeting of Shareholders GMS
» President Director as CEO of Telkom Group
» Director of Network, IT Solution “NITS”
» Director of Human Capital Management “HCM”
» Director of Wholesale International Service “WINS”
» Nomination and Remuneration Committee The composition of the Nomination and Remuneration
» Audit Committee The composition of the Audit Committee as determined
» The Planning and Risk Evaluation and Monitoring Committee “KEMPR”
» Nomination and Remuneration Committee Duties and responsibilities of the Nomination and
» The Audit Committee Based on the Audit Committee Charter, in general, the
» Report of the Nomination and Remuneration Committee in 2014
» Report of the Audit Committee in 2014
» Corporate Strategic Scenario “CSS” KEMPR has monitored the implementation of RJPP CSS
» Annual Business Budget Plan In carrying RKAP 2014, the Board of Commissioners has
» Enterprise Risk Management “Enterprise Risk Management”
» Measures of Directors that require approval from the Board of Commissioners
» Work Meeting KEMPR In 2014 KEMPR held 10 committee meetings.
» Bayu Katon Management Report On Internal Control Over Financial Reporting
» Efforts to provide value added to the management of the company
» Enterprise Risk Management ERM Telkom realizes that risk management is an integral part
» Political and Social Risks Current political and social events in Indonesia may
» Macro Economic Risks AR TELKOM 2014 ENG
» Disaster Risks AR TELKOM 2014 ENG
» Risks Related to Our Business
» Operational Risks A material failure in the continuing operations of our
» Financial Risks We are exposed to interest rate risk
» Legal and Compliance Risks If we are found liable for price fixing by the Indonesian
» Regulation Risks We operate in a legal and regulatory environment that
» Risks Related to Our Fixed Telecommunication Business
» Competition Risks Related to Our Cellular Business Telkomsel
» QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
» Foreign Exchange Controls Indonesia operates a liberal foreign exchange system
» Exchange Rate Risk We are exposed to foreign exchange risk on sales,
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