Proit before Income Tax and Pre-Tax Margin

PT Telkom Indonesia, Tbk. 2011 Annual Report Moving Forward Beyond Telecommunications and amortization expenses, interconnection expenses and decrease gain loss on foreign exchange-net, primarily ofset by decreases in personnel expenses and general and administrative expenses. These expenses are further explained below: 1. Operations, Maintenance and Telecommunications Services Expenses Operations, maintenance and telecommunications services expenses increased by Rp1,497 billion, or 10.3, from Rp14,549 billion in 2009 to Rp16,046 billion in 2010. The increase in operations, maintenance and telecommunications services expenses was primarily attributable to an increase in operations and maintenance expenses by Rp1,389 billion, or 18.7, due to increased expenses associated with the expanded capacity of Telkomsel’s transmitting and receiving stations and switching and intelligent network equipment, and an increase in outsourcing expenses. The other increase in operations, maintenance and telecommunications services expenses was primarily attributable to the following: • Electricity, gas and water expenses also increased by Rp117 billion, or 16.2, from Rp724 billion in 2009 to Rp841 billion in 2010, primarily due to the increase in the number of cellular and ixed wireless BTSs and increase in electricity tarifs; • Radio frequency usage expenses increased by Rp107 billion, or 3.8, from Rp2,785 billion in 2009 to Rp2,892 billion in 2010, due to an increase in the number of our and Telkomsel’s BTSs. The number of our BTS grew by 1.8 from 5,543 units in 2009 to 5,641 in 2010, while Telkomsel’s BTS’s grew by 18.0 from 30,992 units in 2009 to 36,557 units in 2010; • Insurance expenses increased by Rp72 billion, or 23.1, from Rp312 billion in 2009 to Rp384 billion in 2010; and • Vehicles rental and supporting facilities expenses increased by Rp17 billion, or 6.4. The above increases were ofset by a decrease in leased lines and CPE expenses by Rp259 billion, or 54.7 and the cost of handset phone, SIM and RUIM cards by Rp75 billion, or 6.6. 2. depreciation and Amortization Expense depreciation and amortization expense increased by Rp637 billion, or 4.6, from Rp13,975 billion in 2009 to Rp14,612 billion in 2010, which was primarily due to increased depreciation expense of Rp519 billion, or 4.1. The increase in depreciation expense was due to increases in the depreciation of supporting facilities BTS and transport, ofset by decreases in the depreciation of cable networks, switching facilities and capital leases. Amortization expense also increased by Rp118 billion, or 8.4, due to increases in goodwill following a number of acquisitions and intangible assets. 3. Personnel Expenses Personnel expenses decreased by Rp1,039 billion or 12.4, from Rp8,371 billion in 2009 to Rp7,332 billion in 2010. The decrease in personnel expenses was primarily due to the absence of early retirement program expenses, which amounted to Rp1,044 billion in 2009, as no employees were ofered early retirement in 2010. In addition, expenses for salaries and related beneits decreased by Rp270 billion, or 8.9, consistent with the decrease in the number of our employees in 2010. Further: • Net periodic pension costs decreased by Rp121 billion, or 19.3, from Rp626 billion in 2009 to Rp505 billion in 2010 due to a decrease in pension costs of Telkom of Rp140 billion ofset in part by an increase in pension costs of Telkomsel. The decrease in pension costs in 2010 for Telkom was driven primarily by a higher return on plan assets; • Net periodic post-retirement health care beneit costs decreased by Rp93 billion, or 28.1, from Rp331 billion in 2009 to Rp238 billion in 2010 primarily due to a higher return on plan assets based on actuarial calculations; and • Cost for long service awards decreased by Rp39 billion, or 33.3 from Rp117 billion in 2009 to Rp78 billion in 2010. This decrease was partially ofset by increases primarily in the following: • Vacation pay, incentives and other beneits expenses increased by Rp360 billion, or 16.3, from Rp2,214 billion in 2009 to Rp2,574 billion in 2010 due to an increase in incentives for Telkom staf in 2010 amounting to Rp236 billion and also an annual salary increase; and