Employee Stock Ownership Program

58

1. Employee Stock Ownership Program

The Employee Stock Ownership Program 59 CAPITAL MARKET SUPPORTING PROFESSIONAL Capital Market Supporting Professional Address Service Assignment Period External Auditor KAP Purwantono, Sungkoro Surja a member firm of Ernst Young Global Limited Gedung Bursa Efek Jakarta Tower 2, 7 th Floor Jl. Jend. Sudirman Kav. 52- 53 Jakarta - 12100 Conducted Integrated Audit of PT Telkom Indonesia Persero Tbk 60 CAPITAL MARKET TRADING MECHANISM AND TELKOM ADS Our common stock is listed and traded on the IDX. Our ADSs are also listed and traded on the NYSE and the LSE as ADSs, where one ADS represents 200 shares of Common Stock. The Indonesian Stock Market Indonesia 61 When conducting share transactions on the IDX, each exchange member is required to pay a transaction cost for transactions on the regular market and cash market of 0.03, guarantee fund of 0.01 of the transaction value and VAT and other tax obligation. For the negotiated market, a transaction cost of 0.03 or an amount as stipulated by the IDX is applicable. A minimum monthly transaction fee of Rp2 million is applied as a contribution for the provision of exchange facilities and continues in effect for members who are suspended or whose Exchange Member Approval revoked. Since the global financial crisis in the last quarter of 2008 that caused a typical share price movements, the IDX has applied a policy of auto rejection, a mechanism whereby share trading can be halted automatically in order to maintain orderly, fair and efficient trading. Following changes made by the IDX in October 2008 and January 2009 the auto rejection trigger levels are 35 above or below the reference price for stocks in the Rp50 to Rp200 price range, 25 for stocks in the Rp200 to Rp5,000 price range, and 20 for stocks priced more than Rp5,000. The auto rejection level in the case of an initial public offering is determined at a level which is twice as high as for normal trading. Auto rejection also arises when selling offer or buying request volume reaches of over 5 billion shares or 5 of total shares listed, whichever is smaller. ADS Trading On The NYSE Bank of New York Mellon Corporation previously 62 ADDRESS OF TELKOM INDONESIA No Company Address Telephone Facsimile 1 Corporate Office Graha Merah Putih, 1 st Floor Jl. Japati 1 st Bandung 40133 022-4521108 022-4240313 2 Corporate Secretary Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 021-5203322 3 Internal Auditor Graha Merah Putih, 5 th Floor Jl. Japati 1 st Bandung 40133 022-4525227 022-7206870 4 Sekretariat of President Director Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 ext. 114112 021-5202702 5 Director of Human Capital Management Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 ext. 106 021-5209632 6 Director of Consumer Service Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 ext. 108 021-5209637 7 Directorate of Wholesale International Business Service Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 ext. 117 021-5205072 8 Director of Innovations Strategic Portfolio Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 ext. 104 021-52963102 9 Director of Network IT Solution Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 ext. 121 021-5209835 10 Director of Enterprise Business Service Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 ext. 102 021-5213834 11 Director of Finance Graha Merah Putih, 1 st Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52922007 ext. 110118 021-5220900 12 Finance Billing Collection Center Graha Merah Putih, 3 rd Floor Jl. Japati 1 st Bandung 40133 022-4523371 022-4523377 13 Human Capital Business Partner Center Graha Merah Putih, 5 th Floor Jl. Japati 1 st Bandung 40133 022-4525121 022-7206986 14 Telkom Corporate University Center Jl. Gegerkalong Hilir No. 47 Bandung 40152 022-2014343 022-2014429 022-2013238 15 Supply Center Graha Merah Putih, 6 th Floor Jl. Japati 1 st Bandung 40133 022-4526170 022-4526327 022-7206583 022-4526431 16 Digital Service Division Jl. Gegerkalong Hilir No. 47 Bandung 40152 022-4574784 022-2014669 022-2013505 022-2014669 17 Community Development Center CDC Graha Merah Putih, 8 th Floor Jl. Japati 1 st Bandung 40133 022-4528219 022-4528206 18 Assessment Center Indonesia Jl. Kapten Tendean No. 1 Bandung 40141 022-2035269 022-2035287 022-2035259 022-2034201 19 Information System Center ISC Graha Merah Putih, 4 th Floor Jl. Japati 1 st Bandung 40133 022-4524228 022-7201890 20 Enterprise Service Division Gedung Menara Multimedia 19 th Floor Jl. Kebon Sirih No. 12 Central Jakarta 10110 021-23515000 21 Business Service Division Jl. S. Parman Kav. 8 West Jakarta 11440 021-5656500 021-5651700 021-5652600 021-5656000 22 Government Service Division Gedung Menara Multimedia 7 th Floor Jl. Kebon Sirih No. 12 Jakarta Pusat 10110 021-25555500 63 No Company Address Telephone Facsimile 23 Wholesale Service Division Graha Merah Putih, 8 th Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52917007 021-52892080 24 Planning Deployment Division Graha Merah Putih, 7 th Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-52903482 021-5221300 25 Service Solution Division Jl. Kebon Sirih No. 36 Central Jakarta 10110 021-3447070 021-3440707 26 Operation Service Division Graha Merah Putih, 9 th Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-5221500 021-5221400 021-5229600 27 Regional I Division of Sumatera Jl. Prof HM Yamin SH No. 2, Medan 20111 061-4151747 061-4150747 28 Telkom Area Western North Sumatera Jl. Prof HM Yamin SH Medan 20111 061-4530011 29 Telkom Area Bangka Belitung Jl. Rustam Effendi No. 03, Pangkalpinang 33128 0717-421861 30 Telkom Area Riau Islands Jl. Jaksa Agung R Suprapto, Sekupang, Batam 0778-322000 0778-322720 31 Telkom Area Lampung Jl. Majapahit No. 14, Lampung 35118 0721-266525 0721-263699 32 Telkom Area Eastern North Sumatera Asahan Jl. Km. 4.5, Pematangsiantar 0622-7550300 0622-7554082 33 Telkom Area South Sumatera Jl. Jend. Sudirman No. 459 Km. 3,5 Palembang 30129 0711-360360 0711-310444 34 Telkom Area West Sumatera Jl. KH Ahmad Dahlan No. 17, Padang 25138 0751-7050000 0751-7050001 35 Telkom Area Riau Land Jl. Jend. Sudirman 199, Pekanbaru 28111 0761-31000 0761-40404 36 Telkom Area Nanggroe Aceh Darussalam Jl. S. A Mahmudsyah No.10, Banda Aceh 0651-32500 0651-21818 37 Telkom Area Jambi Jl. Sumantri Brojonegoro No. 54, Jambi 0741-60000 0741-64000 38 Telkom Area Bengkulu Jl. Soeprapto No. 132, Bengkulu 38221 0736-28000 0736-20000 39 Regional Division II Jakarta Graha Merah Putih, 10 th Floor Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710 021-5215100 021-5202733 40 Telkom Area West Banten Serang Jl. Raya Jakarta Km. 9,5 Ciruas Serang 0254-282001 41 Telkom Area East Banten Tangerang Graha Telkom BSD Jl. Pahlawan Seribu, Serpong, Tangerang 021-5380000 021-5371500 42 Telkom Area West Jakarta Jl. S Parman Kav. 8 West Jakarta 021-56969100 021-5655100 43 Telkom Area Central Jakarta Jl. Kebon Sirih No. 36 Jakarta Pusat 021-3447070 44 Telkom Area South Jakarta Jl. Sisingamangaraja Kav 4 - 6 Kebayoran Baru South Jakarta 021-7257171 021-7228400 45 Telkom Area North Jakarta Jl. Yos Sudarso Kav. 23 - 24 North Jakarta 021-4366000 021-43921550 46 Telkom Area East Jakarta Jl. DI Panjaitan Kav. 42 North Jakarta 13350 021-8560000 021-8560196 47 Telkom Area West Java of Northern Jl. Rawa Tembaga No. 4 Bekasi 17141 021-8890000 021-8894100 48 Telkom Area Western West Java Jl. Padjadjaran No. 37 Bogor 0251-8301107 0251-8329999 49 Regional Division III West Java Jl. WR. Supratman No. 66A Bandung 022-4532225 022-4532134 50 Telkom Area Northern West Java Jl. Tuparev No. 24 Karawang 0267-404444 0267-410002 51 Telkom Area Southern West Java Jl. Mesjid No. 17 Sukabumi 0266-212710 0266-225765 52 Telkom Area Central West Java Jl. Lembong No.11 Bandung 022-4540362 53 Telkom Area Eastern West Java Jl. Papagongan No. 11 Cirebon 0231-255001 0231-201800 54 Telkom Area West Java of Eastern South Jl. Merdeka No. 23 Tasikmalaya 0265-322400 55 Regional Division IV Central Java DI Yogyakarta Jl. Pahlawan No. 10, Semarang 024-8303306 56 Telkom Area Central Java of Western North Jl. Merak No. 2, Pekalongan 0285-421000 0285-459118 0285-424355 64 No Company Address Telephone Facsimile 57 Telkom Area Central Java of Wester South Jl. Merdeka No. 26, Purwokerto 0281-645122 0281-645201 58 Telkom Area Northern Central Java Jl. Pahlawan No. 10, Semarang 024-8303627 024-8303628 59 Telkom Area Central Java of Eastern North Jl. Jend. Sudirman No. 66 - 68 Kudus 0291-4250293 60 Telkom Area Southern Central Java Jl. Yos Sudarso No. 2, Magelang 0293-364755 0293-362757 61 Telkom Area Yogyakarta Jl. Yos Sudarso No. 9, Yogyakarta 0274- 577200 0274-577227 62 Telkom Area Central Java of Eastern South Jl. Mayor Kusmanto No. 1, Solo 57113 0271-634400 0271-678253 63 Regional Division V East Java Jl. Ketintang No. 156 Surabaya 60231 031-8297100 031-8286080 64 Telkom Area Central West Java Hayam Wuruk Jl. No. 45 - 47 Kediri 64122 0354-680942 65 Telkom Area Western East Java Jl. D.I Panjaitan No. 19 Madiun 0351-493900 0351-494104 66 Telkom Area Southern East Java Jl. A Yani No. 11 Malang 65125 0341-489100 0341-499111 67 Telkom Area Northern East Java Jl. Wachid Hasyim No. 11 Gresik 61444 031-3977000 031-3971000 68 Telkom Area East Java Suramadu Jl. Ketintang No. 156 Surabaya 60231 031-8298837 031-8299350 69 Telkom Area East Java of Central East Jl. Sultan Agung No. 48 Sidoarjo 61211 031-8941000 031-8962500 70 Telkom Area Eastern East Java Jl. Gajah Mada No. 182-184 Jember 0331 65 No Company Address Telephone Facsimile 95 PT Dayamitra Telekomunikasi Mitratel www.mitratel.co.id Gedung Graha Pratama 5 th Floor Jl. MT Haryono kav. 15 Jakarta 12810 021-83709593 021-83709591 96 PT Infomedia Nusantara Jl. Fatmawati No. 77 - 81 South Jakarta 12510 021-7201221 021-720126 021-7258116 97 PT Metra Digital Media MD Media www.mdmedia.co.id Jl. Fatmawati 77-81, South Jakarta 12510 021-7997488 021-7997469 021-7258116 98 PT Sigma Cipta Caraka Sigma www.telkomsigma.co.id Menara DEA 8 th Floor, Mega Kuningan District, Mega Kuningan Barat IX Jl. Kav. E.4.3 South Jakarta 021-5762150 021-5762155 99 PT Metra-Net Plasa MSN www.plasamsn.com Mulia Business Park Building J Jl. MT Haryono Kav 58 - 60 Pancoran Jakarta 12780 021-79187250 021-79187252 100 PT Administrasi Medika AdMedika www.admedika.co.id STO Gambir Gedung C Jl. Medan Merdeka Selatan No.12 Central Jakarta 021-34831100 021-34830101 101 PT PINS Indonesia PINS www.pins.co.id Plasa Kuningan, Gd. Anex 7 th Floor Kav.C 11 - 14 Jl. HR Rasuna Said South Jakarta 12940, Mulia Business Park Building J, MT Haryono Kav 56 - 60, South Jakarta 12780, 021-79187250, 021-5202560 021-79187252, 021-52920156 102 PT Finnet Indonesia Finnet www.finnet-indonesia.com Menara Bidakara 2 th Floor Jend. Gatot Subroto Kav. 71 - Jl. 73 Pancoran Jakarta 12780 021-8299999 021-8281999 103 PT Melon Indonesia MelOn www.melon.co.id Gd. PT Telkom 7 th Floor Jl. Sisingamangaraja Kav. 4 66 TELKOM OVERSEAS ADDRESS No Nama Kantor Alamat No. Telp No. Fax 1 Telin Singapore www.telin.sg 1Maritime Square, 09-63 Harbour Front Center, Singapore -099253 +65 6278 81819 +65 6273 1169 2 Telin Hong Kong www.telin.hk Suite 905, 9F, Ocean Centre, 5 Canton Road Tsim Sha Tsui, Kowloon, Hong Kong +852 3102 3309 +852 3102 3306 3 Telin Timor-Leste www.telkomcel.tl Timor Plaza Lantai 4, Rua Presidente Nicolao Lobato, Comoro, Dili +670 737373 +670 747474 4 Telkom Australia www.telkom.com.au Level 19 Suite 1930, 180 Lonsdale St, Melbourne VIC 3000, Australia 1300 TELKOM 835566 5 Telin Malaysia Suite 23 A-1, 23 A Floor, Wisma UOA II, Number 21, Pinang Street, 50450 Kuala Lumpur, Malaysia +60 3233 20680 +60 3216 12276 6 Telkom Macau Avenida Comercial de Macau, Finance IT Centre Macau, 5 Andar A, Suite 31, Macau +853 82964858 7 Telkom Taiwan 7F-1, No. 77 Zhouzi St, Neihu District, Taipei City, Taiwan 114 +886 2 87525071 8 Telkom USA www.telkom-usa.net The Bloc Executive Suites 700 S. Flower Street, 11th floor, Office no: 36, 37A-B, Los Angeles, CA 90017 +1 213 232 1126 9 Telin Branch Office in Myanmar 411,412,415, Level-4, Strand Square 53 Strand Road, Pabedan Township, Yangon, The Republic of the Union of Myanmar. +95 9 420238594 +95 9 972460406 10 Telin Kingdom Saudi Arabia Grapari Makkah: Abraj Al-Bait, Lt P3 Food Court area +966 59 8881945 Riyadh +966 58 1781945 Jeddah 67 MANAGEMENT DISCUSSION AND ANALYSIS OF TELKOM INDONESIA PERFORMANCE Maintaining favorable profitability level The following management 68 THE INDONESIAN MACRO ECONOMY In 2015, Indonesia 69 The shifting trend from legacy services voice and SMS to data services is still rapidly advancing, driven by cheaper prices of smartphones as well as the rapidly growing youth segment. Data traffic has grown very rapidly, while SMS service traffic has decreased. We expected that this trend will continue, given that the smartphone penetration in Indonesia is still relatively low with relatively low data consumption by smartphone users, and the growth of the telecommunications industry will be driven by the growth of data services. One of the main challenges faced by the industry is the increasing use of over the top OTT services that has become a substitute for voice and SMS services, in line with the growing number of smartphone users. This has happened not only in Indonesia, but also in developed countries where smartphone penetration is high. Therefore, telecommunication operators must have an appropriate business model, which may include collaboration with OTT players, in order to properly manage the impact. For the fixed network segment fixed line, fixed broadband services have been on the rise throughout 2015, especially in the large cities, marked by the emergence of several new players. The Indonesian public has begun to realize the importance of high-quality internet connectivity to houses. Currently, the penetration of fixed broadband services in Indonesia is still very low and relatively lower than in some neighboring countries such as Singapore and Malaysia. Therefore, we expect that the fixed broadband segment will experience rapid growth in the future, in line with the growth of the middle class in Indonesia. In recent years, data consumption in the mobile segment has increased several-fold, and it is expected that the consumption level per user will continue to grow rapidly from the current average data consumption per user. The growth of data consumption needs large capital expenditure in order to increase capacity and coverage. Nevertheless, some operators have financial limitations to establish networks due to low levels of profitability. The level of ARPU in Indonesia is also relatively low compared to the global or Asia Pacific average. The increasing penetration of smartphones and data consumption has fueled the growth of digital content and applications. With better mobile data connectivity, people have began consuming a variety of digital content and application services beyond social media, such as e-Commerce, digital payment and digital advertising, and it has also led to a variety of innovative applications such as Gojek services. This trend is expected to continue and content consumption is also expected to lead to game and video streaming consumption. For the fixed broadband segment, Telkom and First Media LinkNet control around 95 market share of fixed broadband. In other business segments, Telkom has been dominating connectivity services for corporations and small and medium enterprises SMEs, wholesale line rental and leasing of satellite transponders. In the field of Information and Communication Technology ICT, Telkom through Sigma has a market share which is around 5 for IT services and 10 for data center. Within the telecommunication tower business, Telkom Group has more than 24,000 towers, which around 6,800 towers operated by Mitratel and around 17,800 towers operated by Telkomsel has nmore than 17,000 towers, larger than the number of towers that are owned by PT Tower Bersama Infrastructure Tbk, PT Sarana Menara Nusantara Protelindo and PT Solusi Tunas Pratama. The government has completed the drafting of the Indonesia Broadband Plan 2014-2019, which was enacted through Presidential Decree Number 96 of 2014. In the Indonesia Broadband Plan 2014-2019, broadband is defined as internet access with guaranteed nonstop connectivity, guaranteed durability and information safety as well as triple-play capability with a minimum speed of 2 Mbps for fixed access and 1 Mbps for mobile access. In the next five years 2019, the development of national broadband is expected to provide fixed access in urban areas to 71 of households 20 Mbps and 30 of the population, as well as mobile access to the entire population 1 Mbps. For rural areas, access to fixed broadband infrastructure is expected to reach 49 of households 10 Mbps and 6 of the population, as well as mobile access to 52 of the population 1 Mbps. 70 COMPETITION Measures following the Telecommunications Law 71 Cellular We operate our cellular service business through our 65 majority-owned subsidiary, Telkomsel. By subscriber numbers, Indonesia 72 BUSINESS OVERVIEW STRATEGIC WORKING PROGRAMS OF 2015 In 2015, Telkom continues the Three Main Programs which have been determined since two years ago to maintain the sustainable growth. The said three programs are to maintain the double digit of Telkomsel, to push digital business through Indonesia Digital Network, as well as to develop and widen international business. The role of Telkomsel is very strategic considering its substantial contribution to total income of Telkom, so that it is very important for us to ensure that Telkomsel has a good performance. Indonesia Digital Network or IDN consists of id-Access which constitutes fiber optic based broadband access to houses, id-Ring which constitutes fiber-based broadband highway and has national scale as backbone network, and id-Convergence which constitutes high capacity data center that is integrated with Telkom network, which constitutes infrastructure foundation in order to support data service either through business unit cellphone or fixed line. Infrastructure of broadband network which excels in either coverage, capacity or capability will give the best experience to the customers of Telkom. Meanwhile, some initiatives are conducted by Telkom to strengthen its footprint regionally, by developing and widening its business in 10 countries, in various business models with measured risks and in line with the entire strategies of Telkom. BUSINESS PORTFOLIO Our Digital TIMES Portfolio is part of our effort in order to be more focused on customer value. Beginning January 1, 2016, we have reorganized our 15 previous portfolios consisting of nine product portfolios and six customer portfolios, into six product portfolios, mapped onto five CFUs, and are in the process of continuing to reorganize internally to reflect our revised product portfolio and CFU structure. Our six revised product portfolios are categorized into several lines of business as follows: Telecommunication Business Our product portfolios focused on Telecommunication are: - Mobile mobile legacy, i.e. mobile voice and SMS, and mobile broadband. - Fixed fixed voice, fixed broadband. - Interconnection and International Traffic wholesale telecommunication services 73 OPERATIONAL OVERVIEW BY SEGMENT As part of the Company 74 Telkoms Results of Operation By Segment Growth Years Ended December 31 2015-2014 2015 2014 Restated 2013 Rp billion US million Rp billion Rp billion Home Revenues External Revenues 9.5 7,319 531 6,682 6,669 Inter-segment revenues 63.2 4,352 316 2,667 2,794 Total segment revenues 24.8 11,671 847 9,349 9,463 Total segment expenses 27.4 11,411 828 8,960 8,885 Segmen Results 33.2 260 19 389 578 Depreciation and amortization 19.5 1,203 87 1,495 1,487 Provision for impairment of receiveables 36.4 297 22 467 390 Personal Revenues External Revenues 15.3 73,766 5,351 64,000 59,028 Inter-segment revenues 12.0 2,365 172 2,686 2,358 Total segment revenues 14.2 76,131 5,523 66,686 61,386 Total segment expenses 14.6 51,303 3,722 44,786 39,463 Segmen Results 13.4 24,828 1,801 21,900 21,923 Depreciation and amortization 20.4 14,531 1,054 12,071 11,234 Impairnment of fixed assets 100.0 - - 805 596 Provision for impairment of receiveables 11.3 148 11 133 202 Other Revenues External Revenues 24.7 313 23 251 229 Inter-segment revenues 19.1 1,943 141 1,632 909 Total segment revenues 19.8 2,256 164 1,883 1,138 Total segment expenses 18.7 2,040 148 1,718 1,008 Segmen Results 30.9 216 16 165 130 Depreciation and amortization 50.8 92 7 61 40 Provision for impairment of receiveables 100.0 5 - 3 Year ended December 31, 2015 compared to year ended December 31, 2014. Corporate Segment Our corporate segment revenues increase by Rp6,004 billion, or 20.4, from Rp29,415 billion in 2014 to Rp35,419 billion in 2015. The increase was primarily due to an increased in network revenues by Rp4,284 billion, or 101.2, as a result of increase in leased line revenues by Rp4,144 billion, or 309.9, transponder revenue increased by Rp252 billion or 10.1 and international leased line decreased by Rp119 billion or 85.1. Data and internet revenues increased by Rp939 billion, or 10.5, due to increased in data communication others revenues by Rp1,037 billion, or 318.4 and decreased in high speed internet by Rp86 billion or 8.6. Interconnection revenues increased by Rp565 billion, or 11.1, due to an increased in international IDD OLO revenues by Rp360 billion, or 35.5 and an increased in international IDD incoming revenues by Rp354 billion, or 16.0. The increased was offset by decreases of long distance cellular by Rp89 billion or 2.2 and other local by Rp68 billion or 29.9. Others telecommunications revenues increased by Rp418 billion, or 5.7, due to an increased in call center services revenues by Rp591 billion, or 40.4 and decreased in CPE and terminal by Rp225 billion or 24.3. The increased was offset by decreased in fixed wireline by Rp212 billion or 5.6 due to decreased on local usage by Rp117 billion or 24.5, long distance usage by Rp53 billion or 12.3 and IDD 007 usage by Rp22 billion or 16.9. 75 Our corporate segment expenses increased by Rp5,642 billion, or 24.9, from Rp22,663 billion in 2014 to Rp28,305 billion in 2015, primarily due to an increased in operation, maintenance and telecommunication services expenses by Rp3,467 billion, or 32.2 as a result of increased in operation and maintenance OM expenses by Rp1,210 billion, or 57.9, including increased cooperation expenses by Rp771 billion, or 27.2, leased lines and CPE expenses by Rp716 billion, or 61.7, cost of IT services by Rp525 billion, or 146.8, OM supporting facilities by Rp130 billion or 36.0, transportation by Rp65 billion or 7.3 and OM land and building by Rp46 billion or 14.4. Interconnection expenses increased by Rp779 billion, or 19.4, as a result of increased in international IDD007 interconnection expenses by Rp530 billion, or 28.1 and Telkom Global international interconnection expenses by Rp258 billion, or 95.8. Personnel expense increased by Rp534 billion, or 14.9, due to an increased in early retirement program expenses by Rp246 billion or 100.0, bonuses expenses increased by Rp179 billion, or 31.7 and personnel expense increased by Rp101 billion or 16.7. Others expenses increased by Rp886 billion, or 293.5, due to penalty and commitment charge by Rp460 billion or 100.0, income tax expenses by Rp117 billion, or 25,415.4, others non-operating expenses by Rp265 billion, or 127.3, and tax expense by Rp33 billion or 82.9. Marketing expense increased by Rp49 billion or 6.7 due to advertising and promotion by Rp43 billion or 10.2. Home Segment Our home segment revenues increase by Rp2,322 billion, or 24.8, from Rp9,349 billion in 2014 to Rp11,671 billion in 2015 mainly due to increased in data and internet revenues by Rp1,361 billion, or 32.3, as a result of increased in data communication others by Rp722 billion, or 26.3, increased in Pay TV revenues by Rp341 billion, or 451.7, in line with the achievement of the IndiHome subscribers more than 1 million subscribers, while high speed internet revenues increased by Rp150 billion, or 4.0 and high speed internet monthly subscription increased by Rp52 billion or 408.7. Other telecommunication revenues increased by Rp1,118 billion, or 164.6, primarily due to increased in sale of handset. The increased was offset by a decreased in other revenue by Rp49 billion or 21.9 and fixed wireline revenue by Rp25 billion or 0.6. Our home segment expenses increased by Rp2,451 billion, or 27.4 from Rp8,860 billion in 2014 to Rp11,411 billion in 2015. This increase primarily due to an increased in operation, maintenance and telecommunication services expenses by Rp1,932 billion, or 79.2, due to an increased in terminalhandset expenses by Rp1,071 billion, or 258.4, increased in cooperation expenses by Rp552 billion, or 349.6, increased in leased lines and CPE expenses by Rp403 billion, or 322.2, offset by decreased in insurance expense by Rp40 billion or 33.4 and vehicle rent by Rp30 billion or 30.7. Personnel expenses increased by Rp508 billion, or 15.4, due to early retirement program expenses by Rp328 billion or 100.0, bonuses expenses increased by Rp231 billion, or 35.1, net periodic post-retirement healthcare benefits increased by Rp81 billion or 192.1 and offset by decrease in net periodic pension costs by Rp156 billion or 51.2. Other expense increased by Rp606 billion or 1,444.9 due to increased in penalty and commitment charge by Rp364 billion or 100.0 and others non-operating expense by Rp243 billion or 1,151.1.The increased was offset by decreased in general administrative expense by Rp291 billion or 19.7 due decreased in provision for impairment of receivables by Rp160 billion or 35.1 and training, education and recruitment by Rp119 billion or 46.4. While, depreciation and amortization expense decreased by Rp292 billion or 19.5. Personal Segment Our personal segment revenues increase by Rp9,445 billion, or 14.2 from Rp66,686 billion in 2014 to Rp76,131 billion in 2015, mainly due to an increased in data and internet revenues by Rp7,083 billion, or 25.7, due to increased in cellular data communication revenues by Rp6,015 billion, or 44.5, in line with the increase in Telkomsel Flash subscribers 40.3 from 31.2 million in 2014 to 43.8 million in 2015, payload data increased by 109.6 to 492,245 TB in 2015. Cellular SMS revenues increased by Rp1,195 billion, or 8.6 as a result of the successful in cluster based pricing implementation. The increased is offset by decrease on SMS fixed wireless by Rp100 billion or 97.0. Cellular revenues was increased by Rp3,088 billion, or 9.1, due to increased in cellular commitment revenues by Rp2,083 billion, or 28.3, in line with increased in cellular subscribers by 8.6 to 152.6 million in 2015, cellular long-distance usage by Rp658 billion, or 7.0, celullar feature revenues increased by Rp286 billion, or 37.5. 76 The increased was offset by decreasing in fixed wireless revenue by Rp437 billion or 82.5 because termination Flexi, decrease on local used by Rp119 billion or 71.9, long distance usage by Rp266 billion or 89.4 and monthly subscription by Rp49 billion or 78.1. The other revenues decrease by Rp110 billion or 50.0 due to decrease in others non operating income. Our personal segment expenses increased by Rp6,517 billion, or 14.6 from Rp44,786 billion in 2014 to Rp51,303 billion in 2015, primarily due to an increased in operation, maintenance and telecommunication services expenses by Rp4,540 billion, or 21.9, due to the increased in manage capacity service by Rp1,686 billion or 100.0, increased in OM power supply expense by Rp906 billion, or 43.8in line with growth in BTS Telkomsel by 20.9 to 103,289 thousands unit in 2015, and OM transport expenses by Rp749 billion, or 16.2, OM radio base station by Rp1,024 billion, or 24 and rental expense increased by Rp210 billion or 23.2. Depreciation and amortization expenses increased by Rp2,460 billion, or 20.4, mainly due to an increased in depreciation transmission installation and equipment by Rp1,771 billion, or 21.8 and amortization by Rp226 billion, or 67.3, increased in depreciation leased assets by Rp216 billion or 34.1, increased in depreciation of building by Rp20 billion or 76.6, depreciation cable network by Rp55 billion or 103.9, depreciation switching by Rp13 billion or 1.1, depreciation of lease hold by Rp17 billion or 34.5 and depreciation of vehicles by Rp3 billion or 11.4. Personnel expenses increased by Rp1,091 billion, or 39.9, primarily due to an increased in bonuses expenses by Rp497 billion, or 87.2, increased in employees income tax expenses by Rp200 billion, or 44.6, early retirement program expenses by Rp216 billion or 100 and long service award increased by Rp190 billion or 165.5. The increased was offset by decreased in interconnection expenses by Rp1,481 billion, or 31.3, due to decreased in Blackberry cooperation expenses by Rp1,078 billion, or 69.0, in line with decreased of Blackberry subscribers by 31.7 to 4.0 million subscribers in 2015 and decreased in cellular to IDD interconnection expense by Rp331 billion, or 54.1. General administration expense decreased by Rp66 billion or 4.1 due to decrease in collection expense by Rp270 billion or 38.3, offset by increased in profesional fees by Rp118 billion or 98.7, training, education and recruitment by Rp28 billion or 40.6, social contribution by Rp22 billion or 83.6 and provision for impairment of receivables by Rp15 billion or 11.3. Foreign exchange loss decreased by Rp55 billion or 53.5. Other Segment Our other segment revenues increase by Rp373 billion, or 19.8, from Rp1,883 billion in 2014 to Rp2,256 billion in 2015, mainly due to an increased in leased revenues by Rp225 billion, or 20.8, due to increased in building maintenance revenue by Rp193 billion, or 20.5 and building leased revenues by Rp28 billion, or 22.6. Other telecommunication increased by Rp148 billion or 18.4 due to others revenues increased by Rp72 billion, or 329.1, transport management service revenues increased by Rp50 billion, or 40.1, and security service revenues increased by Rp44 billion, or 13.6. The increased was offset by decreased on project management revenue by Rp30 billion or 13.7. Our other segment expenses increased by Rp322 billion, or 18.7, from Rp1,718 billion in 2014 to Rp2,040 billion in 2015 mainly due to an increased in operation, maintenance and telecommunication service expense by Rp246 billion, or 16.7, due to an increased in cooperation expenses Rp112 billion, or 71.7, vehicles rental and supporting facilitiesby Rp42 billion, or 43.9, electricity, gas and water expenses by Rp44 billion, or 6.8, and security operational expenses Rp44 billion, or 15.7. Depreciation expenses increased by Rp31 billion, or 50.8, mainly due to an increased in depreciation power supply, depreciation vehicles, and depreciation building. General and administration expense increased by Rp20 billion, or 53.6, was primarily due to increased in provision for impairment of receivables by Rp5 billion, or 2,793.9, meeting expenses by Rp4 billion, or 155.7, and professional fees expenses by Rp3 billion, or 224.0. Personnel expenses increased by Rp16 billion, or 12.9, due to increased in outsourcing expenses by Rp6 billion, or 11.9, bonuses expenses by Rp4 billion, or 61.9, pension assistance expense by Rp3 billion, or 158.9 and incentives expenses by Rp2 billion, or 20.8, meanwhile marketing expenses increased by Rp2 billion, or 19.7, due to increased in representation expenses. 77 Year ended December 31, 2014 compared to year ended December 31, 2013. Corporate Segment Our corporate segment revenues increased by Rp3,825 billion, or 14.9, from Rp25,590 billion in 2013 to Rp29,415 billion in 2014. The increase was mainly due to an increased in others telecommunications services by Rp1,855 billion, or 41.1, was reflect by an increased in tower lease revenue by Rp678 billion, or 34.1, in line with growth in BTS number by 31.2 and tower tenats by 31.4, Customer Premise Equipment 78 Depreciation expense increase Rp837 billion or 7.45 and Impairment of fixed assets increased Rp209 billion, or 35 due to the increased in depreciation of equipment and installation of transmission by Rp1,279 billion, or 18.6, were offset by a decreased in depreciation expense lease assets - equipment and installations transmission by Rp264 billion, or 29.5. Other Segment Our other segment revenues increase by Rp745 billion, or 65.5, from Rp1,138 billion in 2013 to Rp1,883 billion in 2014 mainly due to an increase in building management revenue by Rp499.3 billion, or 112.6, due to the addition of building management combine with energy management, and additional rental of completed buildings. Total area of the building being leased in 2014 increased by 5.5, transport management services revenue increased by Rp66.5 billion, or 116.8. Security services revenue increased by Rp55 billion, or 20.6, due to the addition of personnel and an increase in the UMR in 2014, and management projects revenue increased by Rp50 billion, or 29.6. Our other segment expenses increase by Rp710 billion, or 70.4, from Rp1,008 billion in 2013 to Rp1,718 billion in 2014 mainly due to an increased in operating and maintenance expense by Rp652 billion, or 79.0, due to the increased in electric by Rp494 billion, or 345.8, increased in security services expenses by Rp40 billion, or 17.2, due to the addition of personnel and salary increased as a result of the minimum wage property expense Rp71.3 billion, or 22.2 because of property sale. The increased was also due to an increased in the personnel expenses by Rp27 billion, or 28.7, due to an increase in outsourcing expense. MARKETING STRATEGY We have implement a comprehensive marketing strategy to bolster our brand and to boost sales as well, including through marketing communication activities and product and service distribution channel development. We implement a 79 In the consumer segment business portfolio which includes consumer home services and consumer personal services, in 2015, we introduce the new IndiHome service, which bundles in all in one packages at a competitive price services consisting primarily of broadband Internet, fixed line residential phone, and interactive TV services. The IndiHome package includes high speed internet services of up to 100 Mbps, and domestic calls which may include, depending on the specific package, a limited amount of free domestic calls. The interactive TV service, which is supported with IPTV internet protocol television technology, provides customers with a new flexible way to watch television that allows customers to pause, rewind and replay content, and also to select and watch re-runs of TV programs which has aired up to 7 days before. The IndiHome package also includes free unlimited music streaming from MelOn digital music service and three-months free antivirus protection. In addition, we have also developed additional or add-on services to provide more benefits to the customers, such as IndiHome Telephone Mania, an unlimited voice call plan from a home phone to any Telkomsel phone numbers, IndiHome Global Call, an international call plan with special prices to selected favourite destination countries, and Seamless wifi.id, an add-on service for IndiHome customers to enjoy unlimited internet access at all Indonesia wifi access points in Indonesia. To provide the best experience to our customers, we have also focused on the latest infrastructure technology based on a fiber optic network, which provides more reliable, stable and robust connectivity, that is deployed as part of the Indonesia Digital Network. The IndiHome service was developed based on the 80 PRODUCT OVERVIEW The following is a brief overview of each of our six product portfolios. Telecommunication Business 1. Mobile Services Our mobile products portfolio comprises mobile voice, SMS and value-added services, as well as mobile broadband. We provide mobile or cellular communications services with GSM technology through our subsidiary, Telkomsel. Mobile services including mobile data services remained the largest contributor to our consolidated revenues in 2015. Our postpaid mobile services are marketed under the brand kartuHalo and our prepaid services, which comprise almost 98 of our mobile subscribers, are marketed under the brands simPATI, Kartu As and Loop. – kartuHALO is a postpaid mobile telecommunications service for the premium, professional and corporate market segment. kartuHalo offers two package options for customers, namely, HaloFit My Plan and HaloFit Hybrid. – simPATI is a prepaid service that targets the needs of the middle class market segment to provide a high quality telecommunication service, through the purchase of starter packs and top up vouchers. simPATI offers simPATI Discovery and simPATI Social Max packages, which have various promotional packages from time to time. – Kartu As is a prepaid service targeting the lower middle class market segment, and offers a more attractive price compared to simPATI. – Loop is a prepaid service targeting the youth segment through the provision of attractive data packages. Our mobile broadband services, which are marketed under the Telkomsel Flash name, is supported by LTEHSDPA3GEDGEGPRS technology. As of December 31, 2015, we had 43.8 million Telkomsel Flash subscribers, compared to 31.2 million subscribers as of December 31, 2014. We launched 4G services in December 2014, with initial coverage in Jakarta and Bali, and were the first operator in Indonesia to launch 4G services commercially. In 2015, we continued to deploy 4GLTE services in more cities, with 2.2 million 4GLTE subscribers and covering 14 cities with 17,869 BTS as of December 31, 2015. Our total mobile cellular subscriber base increased from 140.6 million subscribers, comprising 2.9 million postpaid subscribers and 137.7 million prepaid subscribers, as of December 31, 2014 to 152.6 million subscribers, comprising 3.5 million postpaid subscribers and 3.5 million prepaid subscribers, as of December 31, 2015, an increase of 8.6 or 12.1 million subscribers.

2. Fixed Services