Commitments on Capital expenditures

TELKOM Annual Report 2005 cable system between Batam-Jakarta and a submarine cable system between Puger and Denpasar. Substantial investment will also be made in expanding access infrastructure, which includes fiber optic cable fixed line, copper wire fixed line and CDMA wireless access networks. • Planned Investments in Commercial Services TELKOM also plans to spend Rp 1,916.4 billion in 2006 for capital investments in commercial services, including: - capital investments in fixed line commercial services including fixed wireless services, which include additional capacity, service enhancements and upgrades, including to its value added services and software and mechanical and electrical systems; - enhancing TELKOM’s multimedia network including core network of IP transport, HFC and CATV services, which includes increases in the number of VoIP access points, Internet multiplexing IMUX systems for Internet and data access, Internet value added services such as B2B e-commerce, broadband access xDsl, and improving TELKOM’s HFC and CATV systems; and - investing in service-net, including the establishment of fixed wireless services, e-commerce, internet connectivity and value added services. • Planned Investments in Supporting Services TELKOM plans to spend Rp 754.6 billion in 2006 for capital investments in supporting facilities including: investments in BTS stations to expand network coverage, transmission receiver TRX and microcells to improve its quality; switching equipment; equipment used for prepaid products; fiber optic transmission for large cities in Java; additional radio network capacity; 3G roll out plan; and supporting facilities consisting of buildings, RD and office facilities b. Other Financing Techniques In common with many Indonesian state-owned enterprises, TELKOM has historically relied on two-step loans financed by the Government and revenue sharing with co-investors to fund investment in property, plant and equipment. In recent years, however, TELKOM has funded its capital investments largely through internally generated cash flows from operating activities and direct borrowing from commercial banks. In addition, TELKOM has in recent years accessed the debt capital markets for a portion of its financing needs. On July 16, 2002, TELKOM issued a fixed rate IDR Bond in the amount of Rp 1,000 billion with maturity of five years with fixed interest rate of 17 per annum. On December 15, 2004, TELKOM issued unsecured medium- term notes “MTN” in the principal amount of Rp 1.125 trillion in four series with interest rates ranging from 7.7 to 9.4 per annum. TELKOM is presently in the process of exploring alternative sources of financing for capital investment, including vendor-procured and other bank financing, as well as other potential sources of borrowed funds. • Revenue Sharing Until recently, TELKOM made use of revenue-sharing arrangements to develop fixed line networks in heavily populated urban areas of Indonesia, public card-phone booths and its analog mobile cellular networks. Under these revenue-sharing arrangements, investors finance the costs incurred in procuring and installing equipment, while TELKOM manages and operates the equipment, and bears the cost of repairs and maintenance, after installation and until the end of the revenue-sharing period. The investors legally retain rights to the equipment during the revenue-sharing period but transfer ownership to TELKOM at the end of such period. TELKOM did not fund any capital investments other than capital investments in fixed line telephone services and broadband Internet services through revenue- sharing arrangements in 2003, 2004 or 2005 and does not intend to fund any such capital investments through such arrangements in the future. Since 2004, TELKOM has been trying to replace existing revenue-sharing agreements with new partnership schemes on more favorable terms.

C. Commitments on Capital expenditures

As of December 31, 2005, the amount of capital expenditures committed under contractual arrangements, principally relating to procurement and installation of switching equipment, transmission equipment and cable network, are as follows: Amounts in Foreign Currencies in millions Equivalent in Rupiah Currencies Indonesian Rupiah - 2,601,352 U.S. Dollar 265 2,602,313 EURO 119 1,386,487 Japanese Yen 52 4,355 Total - 6,594,507 TELKOM Annual Report 2005 Corporate Data Products and Services Senior Management Subsidiaries and Associated Companies TELKOM Operations Map Company Addresses TELKOM Annual Report 2005 Business transformation, apart from corporate restructuring, can also be carried out by other means, one of which is through innovative business development that specifically accommodates the needs of the customer while, at the same time, reap vast opportunities. TELKOM, in its position as an integrated telecommunications operator, embarked on a number of business developments that covers fixed wireline, fixed wireless, cellular, data internet, and network interconnection and are aimed at fulfilling the needs of all types of customers ranging from the retail consumer, the corporate customer, and even other licensed operators. The success of its business allows the Company to optimally synergize its entire potential at its disposal so as to position itself as the total solutions provider to customers as well as strengthen the Company’s position in the face of increased competition. For this purpose, TELKOM Group had carried out a number of synergies in relation to its marketing and sales promotion. TELKOM Group’s products and services comprise of over 150 products and services, and are categorized based on its portfolio business. The Company’s products and services are classified into the following: fixed wireline, fixed wireless, cellular, data internet, and network interconnection. The following details the products and services that are TELKOM’s major contributors of revenues. Fixed wireline TelkOmlokal. TELKOMLokal or specifically identifies with calls between subscribers within a range of less than 30 km or within one local boundary. The caller number of the person called and the caller number of the caller are within the same area code. The tariff rate used for local telephone calls is Rp 250 per pulse rate. TelkOmslJJ. TELKOMSLJJ or commonly referred to SLJJ Sambungan Langsung Jarak Jauh or Long Distance Direct Dialing is a long-distance telephone service within Indonesia. The caller and the receiver utilize different area codes. The charges are dependent on the distance, time, and date of the call. TelkOmsli-007. Previously, this product service named TELKOM International Call TIC 007 as it launched on June 2004. On May 2006 TELKOM changed its name to TELKOMSLI-007. TELKOM Sambungan Langsung International SLI 007 The Real Connection is international direct dialing by means of the 007 access code. This service is also provides operator-assisted call by dialing 107. TELKOMSLI- 007 provides a promotional campaign with seven ‘real’ benefits in the form of: real expert, real time price, real simple, real value, real care, real sound, and real lifestyle. TelkOmspeedy. Speedy Broadband Access is a broadband service that uses the ADSL Asymmetric Digital Subscriber Line technology for high-speed internet access with a speed of up to 512 kbps. Speedy provides data services, multimedia, and telephonefax simultaneously by means of an existing telephone cable line. To subscribe for the service customers need only to contact TELKOM via 147 or Plasa TELKOM, and are not required to utilize other internet service providers. Access fees and internet charges are combined within one billing statement while as customer service is accessible under one gateway, 147 or Plasa TELKOM. The service provides dedicated connection, that is highly reliable and secure, through a modem which allows one line to be utilized simultaneously by a number of users. PRODUCTS AND SERVICES TELKOM Annual Report 2005 Fixed wireless TelkOmFlexi. TELKOMFlexi is a voice and data telecommunications service that is based on wireless CDMA Code Division Multiple Access 2000-1x technology and the charges are based on the tariff rates for residential telephones PSTN TELKOM. The scope of TELKOMFlexi’s services are limited to a particular area code limited mobility, as it does not possess roaming facilities unlike cellular operators. TELKOMFlexi possesses a sound quality that is very clear and emits low radiation. There are a wide range of terminals that subscribers can choose to use ranging from mobile to fixed terminal. Mobile handset CDMA users can either opt for a postpaid Flexi FLEXIClassy and a pre-paid FLEXITrendy service, while as fixed users can utilize FLEXIHome which is accessible by Fixed Wireless Terminal FWT and is based on the ESN Non SIM Card system. Subscribers can also choose to use FLEXICombo which allows subscribers the possibility of having two to three Flexi numbers in one card. FLEXICombo is a service innovation derived from FLEXIClassy and Trendy that is specifically designed to provide its users with inter-city mobility or users that frequently use roaming services. Cellular Telkomsel. Telkomsel is a provider of cellular telecommunications services that utilizes GSM technology. Through its product lines: kartuHALO, simPATI, and kartuAs, Telkomsel offers one postpaid service and two prepaid card services. Users of Telkomsel are entitled to various features, applications, and value added services, including SMS, WAP, GPRS, MMS, Wi-Fi, International Roaming, mobile banking, CSD, and EDGE. These features are backed by a wide network coverage and offers competitive tariff rates that are specifically designed to serve the needs and requirements of communication and multimedia. kartuHalO Initially introduced in 1995, kartuHALO is the most widely used postpaid service, which ended the year 2005 with 14.7 million customers. With around 60 share of postpaid market, kartuHALO remains the leader in this segment. Value added services were introduced this year in the form of the HALObebas suite of optional packages, which included free domestic roaming throughout Indonesia, and a community package offering low rates for voice and SMS to specified numbers. simPaTi This product is the first and the most popular prepaid service card in Asia and is Telkomsel’s most successful product. The difference between this prepaid service from those of other operators is that simPATI provides international roaming services and free nationaldomestic roaming. Another competitive advantage of simPATI is its security features it cannot be bugged or duplicated, accessibility, and affordable price. Users of simPATI will get maximum value from a wide range of uninterrupted services from one card. kartuas Launched in 2004, kartuAs is an affordable and inexpensive prepaid service. kartuAs can be used throughout Indonesia with a competitive talk time since it has 2 types of charges to choose from, namely: Tarif Murah or Cheap Tariff, a flat charge accorded from a kartuAs user to a kartuHALO and simPATI user and Tarif Super Murah or Super Cheap Tariff a flat between users of kartuAs. TELKOM Annual Report 2005 2 data internet TelkOmglobal-017. TELKOMGlobal-017 is a premium VoIP international calling service that allows international calls to be made through the internet by inputting the access code of 017 for calls to over 253 country code destinations. The charges applied for this service is 60 of the IDD charges to all countries and does not utilize a timeband. Legal and easy to use TELKOMGlobal-017, does not require additional equipment to access and simply uses a one stage dialling method. TelkOmsave. TELKOMSave is a standard VoIP international calling service that is similar to TELKOMGlobal-017 however it utilizes a two-stage dialling method. In order to place international calls, the customer must initially dial the access code, input the pin number, and subsequently dial the desired phone number. The tariff applied for the service is 40 of the IDD. Post-paid and pre-paid customers can avail of this service. TelkOmnet instan. TELKOMNet Instan provides dial-up internet access without having the need to be a subscriber and is specifically designed to meet the demands of accessibility and ease of use. To access this service, the customer only needs to access the internet connection configuration on the computer and input dial number 0809 8 9999, configuration DNS and proxy server is left blank. In order to log in, the customer is required to complete the following user name: telkomnetinstan, and password: telkom. The cost will be based on the amount of time the line is used which will then be reflected in the phone bill. plasa.com www.plasa.com. plasa.com is TELKOM’s web portal service that provides information services as well as an Indonesian-speaking internet community with specific emphasis on the national educational community. plasa.com is expected to become the most comprehensive information portal and internet community that is backed up with high speed internet access. plasa.com currently has a number of portal services which include: Komunitas Sekolah Indonesia-KSI Indonesian School Community, Mailing List Indonesia, Net Kuis, Desa Multimedia Indonesia, Online access to Information on Phone Charges, and an Indonesian Directory. Hosting services are also provided that groups hosting information within similar communities. TELKOM also has a similar service, albeit in a smaller scale, in the form of JATIMMAL and RisTIShop. i-vas Card. To support internet users, TELKOM has issued the i-VAS Internet Value Added Service Card which uses a prepaid payment micropayment system to access various contents and internet services. The internet currently offers a wide array of services ranging from downloading a ring tone, applications, e- mail, games, and others. The variety of content and services provided through the internet, in line with the growing popularity and application of the internet in Indonesia, continues to grow. This growth has spurred forth the demand for a dependable and secure online payment system to facilitate payment transactions with a nominal value that is not too significant. For this specific purpose, credit cards may not be the right means for payment as the price for the amount purchased may not be applicable or significant. TELKOM seeks to provide a viable solution to this by launching the i-VAS card with its trademark “One Card Multi Internet Services” Satu Kartu Multi Layanan Internet and is a form of payment for a variety of content or internet services that utilize micropayment, with a transaction value of under Rp 100,000. TELKOM Annual Report 2005 ventus. Ventus is a value-added service and convergence of electronic mail services e-mail and mobile system or more commonly referred to as mobile push e-mail that is made possible by means of relaying the e-mail that is usually communicated via desktop and laptop to a smartphone or a PDA phone. Through Ventus, the e-mail account holder can receive and send electronic messages, and not just merely via Short Messaging Services SMS, through mobile phone terminals or PDA. Ventus is categorized as a multimedia service for Application Service Provider ASP, whereby TELKOM functions as a relay system from various mail system owned by customers or managed by TELKOM for its end-users. As an ASP, customers will pay a rental fee towards the use of the Ventus application on a monthly basis to TELKOM in addition to the kilobyte charges incurred with the use of GPRS or PDN services provided by mobilewireless operators. Ventus can also be used by Companies that operate its own e-mail system as a vital and collaborative application used to support business activities. network interconnection TelkOmintercarrier. TELKOMIntercarrier is an interconnection service for service providers and other licensed operators. TELKOMIntercarrier provides line interconnection services, interconnection services, and leased line. TelkOmvision. TELKOMVision is the brand name of PT Indonusa Telemedia, a subsidiary of TELKOM, that operates a pay TV service. The service provided by TELKOMVision include Cable TV, fast internet, and satellite TV. Cable TV utilizes HFC Hybrid Fiber Coaxial, a technology that combines 2 physical access comprised of fiber optic with coaxial cable. Premium TV channels such as HBO, Cinemax, and Star Movie are provided within one basic package, without additional fees required. Subscribers of TELKOMVision can utilize a high-speed broadband internet service at 30 Mbps downstream and 512 Kbps upstream, with no time limits and no additional phone pulse charges. By means of a broadband cable modem docsis 1.0, subscribers can avail of services provided by the TELKOMNet network through the Multimedia Division of TELKOM. In addition to the cable network, TELKOMVision also has a Satellite TV DTH-Direct to Home service that utilizes infrastructure provided by TELKOM’s satellites, in the form of TELKOM-1 and TELKOM-2, with extended C-band technology and require additional equipment such as a mini satellite dish and a decoder. PRODUCTS AND SERVICES TELKOM Annual Report 2005 SENIOR MANAGEMENT Thomas widjanarto Head of Corporate Affair Rochiman sukarno Head of Corporate Communication martono Head of Internal Audit Prasetio EVP Risk Management, Legal Compliance adeng ahmad EVP IT Supply david Burke EVP Strategic Investment Corporate Planning Bambang setiawan VP Synergy BOD Office Administration Harry John VP Business Effectiveness santoso Rahardjo VP Business Performance Evaluation Harsya denny suryo VP Investor Relations Corporate Secretary muhammad awaludin VP Public Marketing Communication nana iriana VP Regulatory Management Zulheldi VP Network Solution Audit sofwani VP Delivery Channel Audit andarini darmono VP Enterprise Management Audit darwin danil VP Information System Audit Zainul arifin VP Post Audit laras siboro VP Infrastructure edy irianto VP Network Operation alex k. Palit VP Service Tariff eddy sarwono VP Product Management Pahala Putrantara Hariandja VP Marketing Customer Care Tri djatmiko VP Sales anie sulistiani VP Access marihot sibarani VP Business Development syailendra VP Enterprise Pudja sujitna VP Wholesale Bilal nasution VP Process Risk Management Bambang dewandaru VP System Risk Management Herdy Rosadi Harman VP Legal Compliance Tjatur Purwadi VP Financial Logistic Policy Teguh wahyono VP Management Accounting Ofan sofwan VP Treasury Tax Management Triwahyusari VP Financial Accounting Bambang subagijo VP Subsidiary Performance Pandji darmawan VP Human Resources Policy ali Rachman mursalin VP Industrial Relations djaka sundan VP Organization Development sutoto VP Procurement Supply Chain Partnership ahmad kordinal VP Asset Management Halim sulasmoyo VP IT Policy CIO Freddy Triany VP Corporate Strategic Planning Budhi santoso VP Strategic Business Development Taufik Hasan SGM RD Center mumu natapriatna SGM Maintenance Service Center ketut suwirya kardha SGM Construction Center sudiro asno SGM Financial Center Faisal syam SGM HR Center Tutut Bahtiar SGM Training Center djoko lies Boediono SGM Management Consulting Center erwien djuaini SGM Community Development Center leila Tjahjati moenggah SGM HR Assessment Service Center indra utoyo SGM Information System Center sarwoto atmosutarno EGM Long Distance dian Rahmawan EGM Fixed Wireless Network septika n. widyasrini EGM Multimedia angger Pramundito KKSO VII i nyoman g. wiryanata EGM Regional 1 ermady dahlan EGM Regional 2 mahmur suriadiredja EGM Regional 3 iwan mulyawan s. EGM Regional 4 nanang ismail kosim EGM Regional 5 abdul azis EGM Regional 6 syarifudin saguni EGM Regional 7 alex J. sinaga EGM Enterprise Service Center syarif syarial ahmad EGM Carrier Interconnection Service Center Rizkan Chandra Head Project of NGN Judi achmadi Head Project of OBC as of April 4, 2006 TELKOM Annual Report 2005 5 SUBSIDIARIES AND ASSOCIATED COMPANIES as of December 31, 2005 Company Legal Ownership Business Operation Fixed Phone: PT Pramindo Ikat Nusantara Pramindo 100.00 Fixed-phone KSO-I Sumatera PT AriaWest International AriaWest 100.00 Fixed-phone KSO-III West Java Banten PT Dayamitra Telekomunikasi Dayamitra 100.00 Fixed-phone KSO-VI Kalimantan Cellular: PT Telekomunikasi Selular Telkomsel 65.00 GSM cellular phone services Application, Content, Datacom: PT Multimedia Nusantara Metra 100.00 Multimedia pay TV, internet PT Infomedia Nusantara Infomedia 51.00 Telephone directory and other information services electronic based business, call center and data segment PT Indonusa Telemedia Indonusa 95.68 Interactive multimedia, special pay TV PT Napsindo Primatel Internasional Napsindo 60.00 Network Access Point Property Construction: PT Graha Sarana Duta GSD 100.00 Real estate, construction and services Where TELKOM owns between 20 to 50: PT Patra Telekomunikasi Indonesia Patrakom 40.00 VSAT services PT Citra Sari Makmur CSM 25.00 VSAT and other telecommunications services PT Pasifik Satelit Nusantara PSN 35.50 Satellite transponder communications TELKOM Annual Report 2005 TELKOM OPERATIONS MAP Regional Division I Sumatera Regional Division II Jakarta Regional Division III West Java and Banten Regional Division IV Central Java Regional Division V East Java Regional Division VI Kalimantan Regional Division VII Eastern Indonesia TELKOM Annual Report 2005 CORPORaTe OFFiCes RegiOnal Head Office GKP TELKOM Jl. Japati No. 1, Bandung 40133 Tel.: 62-22 452 1108, 452 7252 Fax.: 62-22 720 3247 Head of Corporate Communication Grha Citra Caraka Building 5th Fl. Jl. Jendral Gatot Subroto No. 52, Jakarta 12710 Tel.: 021 5215109 Fax.: 021 5220500 Regional i division - sumatera Jl. Prof. H.M. Yamin, SH No. 2, Medan 20111 Tel.: 061 4151747 Fax.: 061 4150747 Regional ii division - Jakarta Grha Citra Caraka Building Jl. Jendral Gatot Subroto No. 52, Jakarta 12710 Tel. : 021 5202277, 5215100 Fax.: 021 5202733 Regional iii division - west Java and Banten Jl. W.R. Supratman No. 66A, Bandung 40122 Tel.: 022 4521839 Fax.: 022 4532134 Regional iv division - Central Java and yogyakarta Jl. Pahlawan No. 10, Semarang 50241 Tel.: 024 8302312 Fax.: 024 8302313 Regional v division - east Java Jl. Ketintang No. 156, Surabaya 60231 Tel.: 031 8286000 Fax.: 031 8286080 Regional vi division - kalimantan Jl. M.T. Haryono No. 169, Balikpapan 76114 Tel.: 0542 556666, 556777 Fax.: 0542 872104 Regional vii division - eastern indonesia Jl. A.P. Pettarani No. 2, Makassar 90221 Tel.: 0411 889977, 867777 Fax.: 0411 889909 Long Distance Division Jl. Jendral Gatot Subroto No. 55, M Fl., Jakarta 12710 Tel.: 021 5221500 Fax.: 021 5229600 Fixed-wireless network division Wisma Antara Jl. Merdeka Selatan No. 17, 9-10th Fl., Jakarta Tel.: 021 3447070 Fax.: 021 3440707 multimedia division Menara Multimedia 17th Fl. Jl. Kebon Sirih No. 12, Jakarta 10110 Tel.: 021 3860500 Fax.: 021 3860300 Carrier and interconnection services division Menara Jamsostek 10th Fl. Jl. Jend. Gatot Subroto Kav. 38, Jakarta 12710 Tel.: 021 52917007 Fax.: 021 52892080 enterprise services division Menara Multimedia 19th Fl. Jl. Kebon Sirih No. 12, Jakarta 10110 Tel.: 021 3866600, 3860068 Fax.: 021 3868400 Research and development Center Jl. Gegerkalong Hilir No. 47, Bandung 40152 Tel.: 022 4571118 Fax.: 022 4571105 Training Center Jl. Gegerkalong Hilir No. 47, Bandung 40152 Tel.: 022 2013930, 2014481 Fax.: 022 2014429 maintenance service Center Jl. Japati No. 1, 4th Fl., Bandung 40133 Tel.: 022 7206520 Fax.: 022 4524125 information system Center Jl. Japati No. 1, 4th Fl., Bandung 40133 Tel.: 022 4524227 Fax.: 022 7201890 COMPANY ADDRESSES TelkOm Construction Center Jl. Japati No. 1, 6th Fl., Bandung 40133 Tel.: 022 4526417 Fax.: 022 7206530 TelkOm Community development Center Jl. Japati No. 1, 8th Fl., Bandung 40133 Tel.: 022 4528219 Fax.: 022 4528206 management Consulting Center Jl. Cisanggarung No. 2, Bandung 40115 Tel.: 022 4521620 Fax.: 022 4521549 assessment service Center Jl. Japati No. 1, 3rd Fl., Bandung 40133 Tel.: 022 4523359, 4523360 Fax.: 022 4523344 suBsidiaRies PT Pramindo ikat nusantara Jl. Putri Hijau No. 1, Medan, Sumatera Utara Tel.: 061 4566100 Fax.: 061 4566101 PT ariawest international Jl. Cimandiri No. 30-B, Bandung, Tel.: 022 4224991, 4224992, 4224993 Fax.: 022 7274617 PT dayamitra Telekomunikasi Gedung TELKOM Divre VI Kalimantan Jl. M.T. Haryono Ring Road No. 169, Balikpapan 76114 Tel.: 0542 872461 Fax.: 0542 872104 PT Telekomunikasi selular Wisma Mulia, Jl. Jend. Gatot Subroto Kav. 42, Jakarta 12710 Tel.: 021 5240811 Fax.: 021 52906123 PT multimedia nusantara Gedung ASPAC Kuningan, 11th Fl. Jl. H.R. Rasuna Said Kav. X-2 No. 4, Jakarta Selatan 12950 Tel.: 021 5210123 Fax.: 021 5210124 PT infomedia nusantara Jl. R.S. Fatmawati No. 77-81, Jakarta Selatan 12510 Tel.: 021 7201221 Fax.: 021 7201226 PT indonusa Telemedia Gedung PUSYANTEL, 3rd Fl. Jl. Prof. Dr. Supomo No. 139, Tebet, Jakarta Selatan Tel.: 021 8298800 Fax.: 8310100 PT napsindo Primatel international Gedung Cyber, 6th Fl. Jl. Kuningan Barat No. 8, Jakarta 12710 Tel.: 021 5209202 Fax.: 021 5209305 PT graha sarana duta Jl. Kebon Sirih No. 10, Jakarta Pusat Tel.: 021 3800900 Fax.: 021 34830653 assOCiaTed COmPanies PT Patra Telekomunikasi indonesia Gedung Kwarnas, 17th Fl. Jl. Medan Merdeka Timur No. 6, Jakarta 10110 Tel.: 021 8454040 PT Citra sari makmur Chase Plaza, 16th Fl. Jl. Jend. Sudirman Kav. 21, No. 70-71, Jakarta 12920 Tel.: 021 5208311 Fax.: 021 5704656 PT Pasifik satelit nusantara Kawasan Karya Deka Pancamurni, Kav. 3 Blok A.4. Jl. Gemalapik Pasirsari, Lemah Abang, Bekasi 17550 Tel.: 021 89908111 Fax.: 021 89908110, 89909330 TELKOM Annual Report 2005 Management FOR ANNUAL REPORT 2005 Annual Report Perusahaan Perseroan Persero PT Telekomunikasi Indonesia, Tbk. was authoritatively signed by the Board of Commissioners and the Board of Directors Board of Commissioners Tanri abeng President Commissioner anggito abimanyu Commissioner gatot Trihargo Commissioner arif arryman Independent Commissioner

P. sartono