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A. Current Liabilities
Our ability to pay our current liabilities is indicated by the ratios on the table below:
Rasio 2015
2014 Restated 2013
Current ratio 1353
106.1 116.0
Quick ratio 133.8
104.6 114.2
Cash ratio 87.4
63.3 74.3
B. Non-Current Liabilities
Our ability to pay our debt is indicated by the ratios on the table below Rasio
2015 2014 Restated
2013 debt to equity ratio
37.0 27.3
26.4 debt to EBITDA
67.3 51.4
48.5 times interest earned ratio
20.7 25.2
27.8
We have made provision for impairment of trade receivables based on the collective assessment of
historical impairment rates and individual assessment of its customers’ credit history, amounted to Rp3,048 billion
in 2015 and Rp3,096 billion in 2014.
The Group does not apply a distinction between related party and third party receivables in assessing amounts
past due. As of December 31, 2015 and 2014, the carrying amount of our receivables considered past due but not
impaired amounted to Rp3,430 billion and Rp3,529 billion, respectively. Management believes that receivables
past due but not impaired, along with trade receivables that are neither past due nor impaired, are due from
customers with good credit history and are expected to be recoverable.
For detail discussion about our receivable, see Note 6 to our Consolidated Financial Statements.
For detail discussion about our debt, see Notes 16-20 to our Consolidated Financial Statements.
Receivable Collectibility
Our receivable collectability, indicated by the ratios average collection period that show an average of days
that we take to collect our receivable and receivable turnover that show how many times in average the funds
invested in receivable are turned in one year. Our average collection period were 26.8 days in 2015 and 28.5 days in
2014. Our receivable turnover for 2015 and 2014 were 13.6 and 12.8.
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Capital Structure
Our capital structure as of December 31, 2015 is described as follows:
We take a qualitative approach towards our capital structure and debt levels. Periodically, the Company
conducts debt valuation to assess possibilities of reinancing existing debts with new ones which have
more eicient cost that will lead to more optimized cost- of-debt. the Company also maintains its capital structure
at the level it believes will not risk its credit rating and which is comparable with its competitors.
The Company is required to maintain a certain debt-to- equity ratio and debt service coverage ratio by the lenders.
In 2015, our debt to equity ratio was 0.37 and our debt service coverage ratio was 3.9 times, indicating our strong
ability to meet our debt obligations. During the years ended December 31, 2015, the Company has complied
with the externally imposed capital requirements.
For detail discussion about management policy on capital structure, see Note 43 to our Consolidated Financial Statements.
Capital Expenditures
In 2015, we incurred capital expenditures of Rp26,401 billion US1,915 million. Our capital expenditures are
grouped into the following categories for planning purposes:
• Broadband services, which consist of broadband, IT, application and content and service node;
• Network infrastructure, which consists of core transmission network, metro-ethernet and Regional
Metro Junction “RMJ”, IP backbone and satellite; • Optimizing legacy, for ixed lines; and
• Capex supports. Of our Rp26,401 billion capital expenditure in 2015,
Telkom, as parent company, incurred capital expenditures of Rp9,641 billion US699 million, Telkomsel incurred
capital expenditures of Rp11,321 billion US821 million and our other subsidiaries incurred capital expenditures
of Rp5,439 billion US395 million as follows: Amount
Rp billion Portion
Short Term 602
0.5 Long Term
34,010 31.0
Debt 34,612
31.5 Equity
75,136 68.5
Total Invested Capital 109,748
100.0
Table of Realization of Our Capital Expenditure
Years Ended December 31, 2015
2014 2013
Rp billion US million
Rp billion Rp billion
Telkom parent company 9,641
699 8,099
5,313 Subsidiaries
Telkomsel 11,321
821 13,002
15,662 Others
5,439 395
3,560 3,923
Subtotal for subsidiaries 16,760
1,216 16,562
19,585 Total for Telkom Group
26,401 1,915
24,661 24,898
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The realization of the future capital expenditures may difer from the amounts indicated above due to various
factors, including but not limited to the Indonesian and global economy environments, the RupiahUS Dollar,
Yen or other applicable foreign exchange rates, the availability of supply or vendor or other inancing on
terms acceptable to us, and also any technical or other problems in the implementation.
Material Commitment For Capital Expenditures
We had material commitments for capital expenditure under certain contractual arrangements. The contracts
particular with regard to the procurement and installation of central telephone equipment, transmission equipment
and cable networks. Material commitment includes the following signiicant agreements related The Group and
subsidiaries as follows:
Composition of Capital Expenditure Telkom
• Procurement and installation agreement for the modernization of copper cable network through
optimalization of asset copper cable network Trade In Trade Of method.
• Procurement and installation agreement for the modernization of copper cable network through
optimalization of asset copper cable network Trade In Trade Of method.
• Procurement and Installation Agreement of Outside Plant Fiber To The Home OSP FTTH.
• Procurement and Installation Agreement of the Sulawesi Maluku Papua Cable System Project SMPCS.
• Procurement and Installation Agreement of SMPCS Package-2.
• Procurement and Installation Agreement of CISCO WIFI.
• Procurement and Installation of IP Radio Equipment Agreement for Backhaul Node-B Telkomsel Package-3
Platform NEC. • Procurement and Installation of IP Radio Equipment
Agreement for Backhaul Node-B Telkomsel Package-2 Platform Huawei.
• Procurement and Installation of IP Radio Equipment Agreement for Backhaul Node-B Telkomsel Package-1
Platform Ericsson.. • Procurement Agreement of Telkom-3 Substitution
T3S Satellite System. • Procurement and Installation Agreement of Indonesia
WIFI Platform Huawei Access Points. • Procurement and Installation Agreement of the
Southeast Asia-Middle East-Western Europe 5 Cable System SEA-ME-WE5.
• Procurement and Installation Agreement MSAN Modernization for Acceleration of the Disposal of
Cooper Wire - Platform Huawei. • Procurement and Installation Agreement MSAN
modernization for Acceleration of the Disposal of Cooper Wire - Platform ZTE.
• Procurement and Installation Agreement for DWDM Platform Alcatel – Lucent ALU.
• Procurement and Installation Agreement for Metro Ethernet Platform ALU.
• Procurement and Installation Agreement for PE-VPN CISCO.
• Procurement and Installation Agreement for Metro Ethernet Platform Huawei.
• Procurement and Installation Agreement for IP Backbone System Expansion.
• Procurement and Installation Agreement for IPTV Platform ZTE Capacity Expansion.
• The Procurement and Installation of the Sea Cable Communications System “SKKL” of Sibolga-Nias,
Batam-Tanjung Balai Karimun, Larantuka-Kabalahi- Atambua.
Telkomsel Telkom
Others
42.9
36.5
2 .6
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Telkomsel • The Combined 2G and 3G CS Core Network Rollout Agreements.
• Technical Service Agreement TSA for combined 2G and 3G CS Core Network. • 2G BSS and 3G UTRAN Rollout Agreement for the provision of 2G GSM BSS and 3G UMTS Radio Access Network.
• Maintenance and Procurement of Equipment and Related Service Agreement for Next Generation Convergence IP
RAN Rollout and Technical Support. • Maintenance and Procurement of Equipment and Related Service Agreement for Next Generation Convergence
Core Transport Rollout and Technical Support. • Online Charging System “OCS” and Service Control Points “SCP” System Solution Development Agreement.
• Technical Support Agreement to Provide Technical Support Services for the OCS and SCP. • Development and Rollout Agreement for Customer Relationship Management and Contact Center Solutions.
• Technical Support Agreement for the Procurement of Gateway GPRS Support Node “GGSN” Service Complex. • Development and Procurement of OSDSS Solution Agreement.
• Procurement of GGSN Service Complex Rollout Agreement.
We expect to fund the above commitment with our internal and external source of funds. Historically, we have good level of leverage and able to inance capital expenditure In the year of 2015, we allocate capital expenditure adjusted
for the company’s business plan. See explanation on “Capital Expenditure
Material commitment for capital expenditure conducted by Company use several currencies. Following details of material commitment by currency as of December 31, 2015:
Beside using rupiah currency, the value of the material commitment is denominated in foreign currencies, especially in U.S. Dollars and Japanese Yen. The Company faces the risk of foreign currency exchange rates. In general, the risk
exposure of foreign currency exchange rate the Company is not material. Increasing risks of foreign currency exchange rates on our obligations are expected to be ofset by the time deposits and receivables in foreign currencies that are
equal to at least 25 of outstanding current liabilities.
For detail discussion on material commitments for capital investment, exchange rate and interest rate see Notes 39 and 42 to our Consolidated Financial Statements.
Fixed Asset
Our property and equipment is used for telecommunication operations, which mainly consist of transmission installation and equipment, cable network and switching equipment. A description of these is contained elsewhere in Note 10 to
our Consolidated Financial Statements. Except for ownership rights granted to individuals in Indonesia, reversionary rights to land rests with the Republic of
Indonesia, pursuant to Agrarian Law No.51960. Land title is designated through land rights, including Right to Build Currencies
Amounts in Foreign Currencies in millions Equivalent in Rupiah in billions
Rupiah -
10,648 US Dollar
320 4,410
Euro 0.21
3 Total
- 15,061
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Hak Guna Bangunan or HGB and Right of Use Hak Guna Usaha or HGU. Land title holders enjoy full use of the land
for a speciied period, subject to renewal and extensions. In most instances, land rights are freely tradable and may
be pledged as security under loan agreements.
We own several pieces of land located throughout Indonesia with the right to build and use for a period of
10 to 45 years, which will expire between 2016 and 2053. We believe that there will be no diiculty in obtaining the
extension of the land rights when they expire.
We hold registered rights to build and use for most of our properties. Pursuant to Government Regulation
No.401996, the maximum initial period for the right to build is 30 years and is renewable for an additional 20
years. We are not aware of any environmental issues that could afect the utilization of our property and
equipment. See Note 16, 19 and 20 to our Consolidated Financial Statements.
As of December 31, 2015 the cost of fully depreciated property and equipment of the Company that are still
used in operations amounted to Rp54,168 billion. We are currently performing modernization of network assets to
replace the fully depreciated property and equipment. See Note 10 to our Consolidated Statements.
Insurance
As of December 31, 2015, property and equipment excluding land rights, with net carrying amount of
Rp93,460 billion were insured against ire, theft, earthquake and other speciied risks, including business
interuption, under blanket policies totalling of Rp10,980 billion, US99 million, HKD3 million and SGD34 million.
Management believes that the insurance coverage is adequate to cover potential losses from the insured risks.
TAXATION
The following is an overview of tax consequences in Indonesia and Federal taxes of the United States of
America “U.S.A” in relation with purchases, ownerships and sales of ADSs or common stocks. This summary is not
intended to describe all aspects of taxation which may be relevant to the decision regarding purchases, ownerships
or sales of ADSs or common stocks. Investors are expected to consult with their tax advisors regarding tax
consequences in Indonesia and in the U.S.A on purchases, ownerships and sales of ADSs or common stocks.
A. Taxation in Indonesia
The following is an overview of the basic principles of taxation in Indonesia over the ownership and disposition
of common stocks or ADSs for individual foreigners or foreign companies that have common stocks or ADSs
“Foreign Shareholders” who are Foreign Taxpayers “WPLN”. Under the taxation laws in Indonesia, WPLN is
an individual who does not reside in Indonesia, an individual who was in Indonesia for no longer than 183 one hundred
eighty three days within a period of 12 twelve months, and entities not established and domiciled in Indonesia,
which operatng business or engaged in activities in a form of permanent entities in Indonesia, or that may
receive or earn income from Indonesia by not operating business or engaged in activities in a form of permanent
entities in Indonesia, namely, earn income from the ownership or disposition of common stocks or ADSs. In
the case of WPLN domiciled in a country party to Double Taxation Avoidance Agreement “P3B” with Indonesian
Government, the determination of a resident, either an individual or entity, shall refers to the applicable provisions
in the P3B. If resident conlict is occurred with regard to transactions between Indonesian-American citizen, the tie
breaker rule as stipulated in the P3B between Government of Indonesia and the U.S.A shall be applied.
1. Dividend Dividen yang kami umumkan untuk dibagikan dari
laba Dividend that we announced for distribution of retained earnings and paid to the Shareholders with
WPLN status in respect to common stocks or ADSs are subject to income tax in Indonesia, which at the date of
publication of this Annual Report the rate is 20 of the paid amount in terms of cash dividends payment or
the shareholder ownership portion of the distributed amount. A lower rate speciied in P3B between the
Government of the Republic of Indonesia and the country where WPLN is domiciled can be applied, if the
dividend recipient meets the following requirements: i the recipient is the owner who gains beneit from
dividends, ii the recipient must be able to present a
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Certiicate of Domicile of Non Resident For Indonesia Tax Withholding form DGT-1 Form or DGT-2 Form as
determined by the Indonesian Tax Authorities, which completely and correctly illed out and authorized by
the competent authorities in the country where WPLN is domiciled, iii the recipient does not misuse P3B in
accordance with the provisions on misuse prevention of P3B. The Indonesian government is engaged the
P3B with a number of countries, including Australia, Belgium, Canada, France, Germany, Japan, Malaysia,
the Netherlands, Singapore, Sweden, Switzerland, the U.K. and the U.S.A. According to P3B between the
Indonesian Government and the U.S.A Government, the income tax rate on dividends paid to WPLN is
10 portfolio or 25 minimum share ownership substantial holding of 25.
2. Capital Gains
Sale or transfer of common stocks traded on Indonesia Stock Exchange Bursa Efek Indonesia”BEI” is
subject to inal income tax at the rate of 0.1 of the transaction value. The income tax collection is
conducted by withholding tax mechanism made by the stock organizer through stock brokers. In addition
to inal income tax of 0.1, the founding shareholders at the time of initial public ofering IPO was also
imposed an additional inal income tax at the rate of 0.5 of the current value of the shares at the initial
public ofering which is to be deposited itself into state treasury by the issuer at no later than 1 one month
after such shares are listed on BEI.
Sale or transfer of common stocks that are not listed on BEI or ADS non-public companies’ shares in
Indonesia, executed by Foreign Taxpayers other than Permanent Entities, is subject to inal income tax in
Indonesia at the rate of 5 of the sale price. Mechanism of income tax imposition on the sale or transfer of
common stocks that are not listed on BEI or ADS is withholding tax mechanism made by the Purchaser in
the case of the Buyer is a Domestic Taxpayer, or made by the Non-Public Company which shares are traded in
the case of the Buyer is a Foreign Taxpayer.
Sale or transfer of common stocks, both listed traded on BEI and common stocks of Non-Public
Companies, executed by Foreign Taxpayers may be exempted from withholding tax or lower rate
depends on the provisions of the applicable P3B between the Government of the Republic
of Indonesia and the country where the Foreign Taxpayers are domiciled. In order to gain benefits
from the applicable P3B, Foreign Taxpayers shall submit Certificate of Domicile of the Non Resident
For Indonesia Tax Withholding DGT-1 Form andor DGT-2 Form, which completely and correctly filled
out by the Foreign Taxpayers and authorized by the competent tax authorities in their country.
3. Stamp Duty Stock transactions in Indonesia is subject to stamp
duty. Based on Government Regulation No.24 of 2000 regarding Amendment on Stamp Duty Rates
and the Limit Amount of Nominal Price imposed with Stamp Duty, stamp duty in the amount of Rp3,000
shall be charged for any transaction value up to Rp1,000,000 and any transaction value of more than
Rp1,000,000 shall be imposed by stamp duty in the amount of Rp6,000.
B. Certain Consideration regarding Federal Income Tax in the U.S.A
Based on requirements of Internal Revenue Service “IRS” which generally applied, tax information in this
report including its attachments are not intended to be used and cannot be used for the purpose of i avoiding
any ines imposed by the U.S.A’s Internal Revenue Code, or ii promoting, marketing, or recommends to other
person any matter related to taxes. The following is a summary of some of the consequences of federal income
tax in the U.S.A in relation to the acquisition of ownership and transfer of ADSs or common stocks by American
Shareholders who own ADSs or common stocks as capital assets generally, they use their property for investment
under section 1221 of U.S.A Internal Revenue Code the “Tax Code”. This summary is based on the U.S.A Federal
laws of applicable income taxes, which can be interpreted diferently or may change, possibly with retroactive efect.
This summary does not address all aspects of the U.S.A federal income taxation that may be important for certain
investors in accordance with each of investment situation, including investors who are subject to special tax for
instance, inancial institutions, insurance companies, broker-dealers, partnerships and their partners, and tax-
exempted organizations including private foundations, shareholders who are the U.S.A. Holder sic, investors
who will own ADSs or common stocks as part of straddle, hedging, conversion, constructive sales, or other
integrated transactions with the U.S.A federal income taxes
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