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
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4. CHANGES IN METHODS OF ACCOUNTING continued
b. Restructuring Transactions Between Entities Under Common Control
In July 2004, the Indonesian Financial Accounting Standards Board issued PSAK No. 38 Revised 2004, “Accounting for Restructuring Transactions between Entities under Common Control,”
“PSAK 38R”. PSAK 38R changes the Company’s method of accounting for previously recorded restructuring transactions between entities under common control when certain conditions are met.
The provisions of PSAK 38R were effective for the Company beginning January 1, 2005, the initial application date.
Pursuant to a ruling issued by the Indonesian Capital Market and Financial Institution Supervisory Agency “BAPEPAM” regarding the initial application of PSAK 38R by public entities, the
Company is required to reclassify the previously recorded difference in value of restructuring transactions between entities under common control as a direct adjustment to retained earnings as
of the initial application date when the common control relationship between the transacting parties no longer exists as of January 1, 2005.
As discussed in Note 29, the difference in value of restructuring transactions between entities under common control as of January 1, 2005 amounting to Rp7,288,271 million arose from
transactions between the Company and Indosat, which at the time of the transactions was also controlled by the Government and therefore was an entity under common control with the
Company. This common control relationship ceased to exist in December 2002 when the Government sold its 41.94 ownership interest in Indosat to STT Communications Ltd. “STTC”
and waived its special voting rights with respect to the Series A Dwiwarna share. In accordance with the BAPEPAM ruling, the Company has reclassified the difference in value of restructuring
transactions between entities under common control resulting from the cross-ownership transactions and acquisition of Pramindo as a charge to retained earnings as of January 1, 2005.
This reclassification has no effect on net consolidated stockholders’ equity.
5. ACQUISITION OF KSO INVESTORS AND KSO IV
a. Dayamitra
In connection with the acquisition of 90.32 of the shares of Dayamitra on May 17, 2001, the Company also entered into the following agreements:
1. Option Agreement
The Company entered into an Option Agreement with TM Communications HK Ltd “TMC”, providing the Company with an option to acquire the remaining 9.68 equity interest
in Dayamitra, referred to as the Option Share. Under the agreement, TMC, the selling stockholder, granted the Company an exclusive option to purchase full and legal title to the
Option Share the “Call Option”, and the Company granted the selling stockholder an exclusive option to sell to the Company full legal title to those shares the “Put Option”.
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
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5. ACQUISITION OF KSO INVESTORS AND KSO IV continued
a. Dayamitra continued
1. Option Agreement continued In consideration for the grant of the options, the Company paid to the selling stockholder the
option purchase price of US6.3 million plus US1 million as payment for Dayamitras adjusted working capital, or a total of US7.3 million. The amount was payable in eight quarterly
installments of US0.9 million beginning on August 17, 2001 and ending on May 17, 2003. Payments were made through an escrow account established under the Escrow Agreement
discussed below. The Company was entitled to exercise the option any time after Dayamitra satisfied all of its
obligations under the JBIC formerly J-Exim loan beginning on May 17, 2003 and until five business days prior to March 26, 2006. The strike price payable by the Company to the selling
stockholder for the Option Shares upon exercise of the option was US16.2 million less certain amounts that are stipulated in the Option Agreement.
Dayamitra repaid the JBIC loan and the JBIC loan agreement was terminated on March 25, 2003.
On December 14, 2004, the Company exercised the option by entering into a Sale and Purchase Agreement to acquire TMC’s 9.68 outstanding shares in Dayamitra with the strike price of
US16.2 million which the payment will be due on March 26, 2006. Payment of the strike price will be made through an escrow account established under the Escrow Agreement discussed
below. The Company is required to deposit US12.6 million representing the strike price of US16.2 million less funds available in the escrow account on November 30, 2004 of US2.4
million and withholding tax of US1.2 million in sixteen monthly installments of US0.8 million beginning on December 26, 2004 through March 26, 2006.
The purchase price for 9.68 outstanding shares of Dayamitra was US22.1 million or equivalent to Rp203,028 million which represents the present value of the option strike price
US16.2 million using a discount rate of 7.5 at the acquisition date plus the option purchase price US6.3 million and payment for Dayamitra’s adjusted working capital US1 million.
This additional acquisition resulted in intangible assets of Rp231,477 million. The amount is being amortized over the then remaining term of the KSO agreement of 6 years Note 15.
There was no goodwill arising from this additional acquisition. Had this acquisition taken place on January 1 of the previous year, consolidated net income would not have been significantly
different from the reported amounts. As of December 31, 2004 and 2005, the remaining option strike price to be paid to TMC, before
unamortized discount, amounted to US15.0 million equivalent Rp139,752 million and US15.0 million equivalent Rp147,791 million and is presented as “Liabilities of business
acquisitions” Note 25. As of March 27, 2006, the option strike price has been fully repaid.
