LONG-TERM INVESTMENTS continued FS TLKM Q3 2014engl

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 54

11. PROPERTY AND EQUIPMENT continued

a. Gain on disposal or sale of property and equipment 2014 2013 Proceeds from sale of property and equipment 154 55 Net book value 51 19 Gain on disposal or sale of property and equipment 103 36 b. Assets impairment i As of December 31, 2013, the CGUs that independently generate cash inflows were fixed wireline, fixed wireless, cellular and others. As of December 31, 2013, there were indications of impairment in the fixed wireless CGU presented as part of personal segment, which were mainly due to increased competition in the fixed wireless market that resulted in lower average tariffs, declining active customers and declining Average Revenue Per User “ARPU”. The Company assessed the recoverable value of the assets in the CGU and determined that assets for the fixed wireless CGU were impaired by Rp596 billion as at December 31, 2013, and additional impairment by Rp190 billion as September 30, 2014 which is recognized in the consolidated statement of comprehensive income under “Depreciation and amortization”. The recoverable amount has been determined based on value-in-use VIU calculations. These calculations used pre-tax cash flow projections approved by management covering a five-year period and with cash flows beyond the five- year period extrapolated using a perpetuity growth rate. The cash flow projections reflect management’s expectations of revenue, Earnings Before Interest, Tax, Depreciation and Amortization “EBITDA” growth and operating cash flows on the basis that the fixed wireless CGU generates positive net cash flows starting from 2014. Management’s cash flow projection also incorporates management’s reasonable expectations for developments in macro economic conditions and market expectations for the Indonesian telecommunications industry. As of December 31, 2013, management applied a pre-tax discount rate of 13.5 derived from the Company’s post-tax weighted average cost of capital and benchmarked to externally available data. As of December 31, 2013, the perpetuity growth rate used of 0, assumes that subscriber numbers and average revenue per user may continue to decrease after five years. If the performance of the fixed wireless CGU continues to decline or if management’s initiatives are not performing as expected in the next financial year, analysis will be required to assess whether there will be further impairment next year. ii Management believes that there is no indication of impairment in the value of other CGUs as of December 31, 2013. c. Others i Interest capitalized to property under construction amounted Rp59 billion and Rp100 billion for nine months period ended September 30, 2014 and for the year ended December 31, 2013, respectively. The capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranges from 9.75 to 15.81 and from 9.75 to 13.07 for nine months period ended September 30, 2014 and for the year ended December 31, 2013, respectively. ii No foreign exchange loss was capitalized as part of property under construction for nine months period ended September 30, 2014 and for the year ended December 31, 2013. PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 55

11. PROPERTY AND EQUIPMENT continued