TWO-STEP LOANS NOTES AND BONDS

PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued DECEMBER 31, 2004 AND 2005, AND FOR YEARS ENDED DECEMBER 31, 2004 AND 2005 Figures in tables are presented in millions of Rupiah, unless otherwise stated - 64

23. NOTES AND BONDS continued

a. Bonds continued As of December 31, 2005, the rating for the bonds issued by Pefindo is AAA and by Standard and Poor’s is BB+. As of December 31, 2004 and 2005, the outstanding principal amount of the bonds and the unamortized bond issuance costs are as follows: 2004 2005 Principal 1,000,000 1,000,000 Bond issuance costs 13,436 8,150 Net 986,564 991,850 During the period when the bonds are outstanding, the Company is required to comply with all covenants or restrictions including maintaining consolidated financial ratios as follows: 1. Debt service coverage ratio should exceed 1.5:1 2. Debt to equity ratio should not exceed: a. 3:1 for the period of January 1, 2002 to December 31, 2002 b. 2.5:1 for the period of January 1, 2003 to December 31, 2003 c. 2:1 for the period of January 1, 2004 to the redemption date of the bonds 3. Debt to EBITDA ratio should not exceed 3:1 The Company has breached a covenant in the bonds indenture which stipulated that during the period when the bonds are outstanding, the Company will not make any loans to or for the benefit of any person which in aggregate exceed Rp500,000 million. As of March 24, 2006, the Company has obtained a written waiver from PT Bank Rakyat Indonesia Tbk, the trustee of the bonds, with regard to providing loans to certain subsidiaries which in aggregate exceed Rp500,000 million. b. Medium-term Notes On December 13, 2004, the Company entered into an agreement with PT ABN AMRO Asia Securities Indonesia, PT Bahana Securities, PT BNI Securities and PT Mandiri Sekuritas collectively referred as “Initial Purchasers” to issue Medium-term Notes the “Notes” for a total principal amount of Rp1,125,000 million. Proceeds from issuance of the Notes were used to finance the payment of the remaining balance of the borrowings assumed in connection with the AWI acquisition amounting to US123.0 million. PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued DECEMBER 31, 2004 AND 2005, AND FOR YEARS ENDED DECEMBER 31, 2004 AND 2005 Figures in tables are presented in millions of Rupiah, unless otherwise stated - 65

23. NOTES AND BONDS continued