Witel of West Borneo

The following management’s discussion and analysis on the performance of this company is based on Consolidated Financial Statements for the years ended on December 31, 2012, 2013, and 2014 which is also attached in this Annual Report. The presentation of Consolidated Financial Statements complies with FAS applied in Indonesia, which in several terms differ with IFRS. Our principal business is providing local, domestic and international telecommunication service in Indonesia. Through our 65 of ownership in Telkomsel, we become the biggest mobile cellular service provider. Our consolidated revenues increased by 8.1 to Rp89,696 billion. We successfully maintain a high level of profitability with EBITDA margin of 51.1, an increase from the previous year by 50.4. While the net profit margin recorded at 16.3 slightly lower than the previous year by 17.1. As of December 31, 2014 we had 140.6 million cellular phone subscribers through Telkomsel, 9.7 million subscribers on fixed wireline networks, 4.4 million subscribers on fixed wireless networks. Our broadband subscribers consisted of 31.2 million Telkomsel Flash users, 5.8 million Blackberry users and 3.4 million fixed broadband subsribers. We also provide wide range of communication services, including multimedia, data and internet communication-related services, satellite transponder leasing, leased line, interconnection, cable television and VoIP services, as well as multimedia business such as contents and applications. We also operate Multimedia businesses such as content and applications. The growth of Indonesian economy in 2014, measured by Gross Domestic Product GDP at current prices, grew by 5.1, with be supported by strong domestic consumption. The rupiah against the US dollar exchange rate determined based upon by Bank Indonesia exchange rate reached Rp 12,440 or depreciated 2.1 at the close of December 31, 2014, a better from depreciation rate in the previous year at 25.8. Such global economic condition provided less significant impact to our business thus the foreign exchange rate encouraged certain risks on sales, purchase and financing transaction primarily denominated in foreign currencies. Our revenues over 2012 to 2014 period reflected a progressive growth in revenues. The growth was largely driven by increase in revenues from data, internet and information technology service, which increased by 15.7. This growth was primarily driven by increasing of data usage and mobile broadband subscriptions. Moreover, revenues growth was also driven by increasing in cellular voice revenue at 6.7. On the other hand, operating income for 2012 to 2014 period also reflected increase in expenses which was triggered by operating, maintenance and telecommunication service expenses which were primarily as the result of network capacity expansion required to support our services to the customers, especially for data and internet services, as well as in fixed line and cellular subscribers. Continuing a solid performance 100 2014 Annual Report PT Telkom Indonesia Tbk Persero FINANCIAL AND PERF ORMANCE HIGHLIGHT MANA GEMENT REPOR T PREF A GENERAL INF ORMA TION OF TELK OM INDONE SIA MANA GEMENT’S DISCUSSION AND ANAL Y SIS CORPORA TE GO VERNANCE SOCIAL AND ENVIRONMENT AL RE SPONSIBILITY APPENDICE S