Prepaid pension benefit costs

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 95 33. PENSION AND OTHER POST-EMPLOYMENT BENEFITS continued a. Prepaid pension benefit costs continued The movements of the prepaid pension benefit cost during for the years ended December 31, 2015 and 2014 are as follows: 2014 2015 As restated Prepaid pension benefit cost at beginning of year 1,170 949 Net periodic pension benefit cost 27 262 Actuarial losses gain recognized via the OCI 1,666 1,471 Asset ceiling recognized via the OCI 357 614 Return on plan assets excluding amount included in net interest expense 1,837 1,340 Prepaid pension benefit cost at end of year 1,329 1,170 The components of net periodic pension benefit cost are as follows: 2014 2015 As restated Service costs 218 188 Past service cost PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 96 33. PENSION AND OTHER POST-EMPLOYMENT BENEFITS continued a. Prepaid pension benefit costs continued The actuarial valuation for the defined benefit pension plan and the other post-employment benefits Notes 33b and 33c was performed based on the measurement date as of December 31, 2015 and 2014, with reports dated February 25, 2016 and February 24, 2015, respectively, by PT Towers Watson Purbajaga PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 97 33. PENSION AND OTHER POST-EMPLOYMENT BENEFITS continued b. Pension benefit costs provisions continued i The Company continued The following table presents the change in projected pension benefits obligation of MPS and MPP for the years ended December 31, 2015 and 2014: 2014 2015 As restated Changes in projected pension benefit obligations Unfunded projected pension benefit obligations at beginning of year 2,326 2,201 Service costs 60 80 Interest costs 191 194 Actuarial losses recognized in OCI 187 31 Benefits paid by employer 264 180 Unfunded projected pension benefit obligations at end of year 2,500 2,326 The components of total periodic pension benefit cost are as follows: 2014 2015 As restated Service costs 60 80 Net interest cost 191 194 Total periodic pension benefit cost 251 274 Amounts recognized in OCI amounted to Rp187 billion and Rp31 billion as of December 31, 2015 and 2014, respectively. The principal actuarial assumptions used by the independent actuary as of December 31, 2015 and 2014 are as follows: 2015 2014 Discount rate 9.00 8.50 Rate of compensation increases varies 8.00 Indonesian mortality table 2011 2011 PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 98 33. PENSION AND OTHER POST-EMPLOYMENT BENEFITS continued b. Pension benefit costs provisions continued ii Telkomsel Telkomsel provides a defined benefit pension plan to its employees. Under this plan, employees are entitled to pension benefits based on their latest basic salary or take-home pay and the number of years of their service. PT Asuransi Jiwasraya PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 99 33. PENSION AND OTHER POST-EMPLOYMENT BENEFITS continued b. Pension benefit costs provisions continued ii Telkomsel continued Movements of the provision for pension benefit cost for the years ended December 31, 2015 and 2014: 2014 2015 As restated Provision for pension benefit cost at beginning of year 812 583 Periodic pension benefit cost 168 126 Actuarial gain losses recognized via the OCI 64 234 Return on plan assets excluding amount included in net interest expense 79 33 Employer contributions 192 98 Provision for pension benefit cost at end of year 803 812 The components of the periodic pension benefit cost are as follows: 2014 2015 As restated Service costs 101 74 Net interest cost 67 52 Total periodic pension benefit cost 168 126 Amounts recognized in OCI are as follows: 2014 2015 As restated Actuarial losses gain recognized during the year 64 234 Return on plan assets excluding amount included in net interest expense 79 33 Total periodic pension benefit cost 15 201 The net periodic pension costs for the pension plan was calculated based on the measurement date as of December 31, 2015 and 2014, with reports dated February 12, 2016 and February 5, 2015, respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary based on the measurement date as of December 31, 2015 and 2014, are as follows: 2015 2014 Discount rate 9.25 8.25 Rate of compensation increases 8.00 6.50 Indonesian mortality table 2011 2011 PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 100 33. PENSION AND OTHER POST-EMPLOYMENT BENEFITS continued c. Other post-employment benefits provisions The Company provides other post-retirement benefits in the form of cash paid to employees on their retirement or termination. These benefits consist of final housing allowance PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 101 33. PENSION AND OTHER POST-EMPLOYMENT BENEFITS continued e. Maturity Profile of Defined Benefit Obligation “DBO” Weighted average duration of DBO for the Company and Telkomsel are 10.43 years and 11.86 years, respectively. The timing of benefits payments for 2015 is as follows in millions of Rupiah: Expected Benefits Payment Company Other post- employment Time Period Funded Unfunded Telkomsel benefits Within next 10 years 14,641 3,164 1,166 613 Within 10-20 years 19,912 235 5,183 148 Within 20-30 years 17,377 15 5,275 47 Within 30-40 years 11,453 1 730 4 Within 40-50 years 26,115 - - - Within 50-60 years 301 - - - Within 60-70 years 13 - - - Within 70-80 years - - -

f. Sensitivity Analysis

1 change in discount rate and rate of salary would have effect on DBO, as follows: Discount Rate Rate of Compensation Sensitivity 1 Increase 1 Decrease 1 Increase 1 Decrease __ Funded 1,315 1,542 375 356 Unfunded 73 78 72 72 Telkomsel 76 82 82 77 Other post-employment benefits 16 18 - - The sensitivity analyses have been determined based on a method that extrapolates the impact on DBO as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity results above determine the individual impact on the Plan PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 102

35. POST-EMPLOYMENT HEALTH CARE BENEFITS PROVISIONS

The Company provides post-employment health care benefits to all of its employees hired before November 1, 1995 who have worked for the Company for 20 years or more when they retire, and to their eligible dependents. The requirement to work for 20 years does not apply to employees who retired prior to June 3, 1995. The employees hired by the Company starting from November 1, 1995 are no longer entitled to this plan. The plan is managed by Yakes. The defined contribution post-employment health care benefit plan is provided to employees hired with permanent status on or after November 1, 1995 or employees with terms of service less than 20 years at the time of retirement. The Company PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 103

35. POST-EMPLOYMENT HEALTH CARE BENEFITS PROVISIONS continued

As of December 31, 2015 and 2014, plan assets consisted of: 2015 2014 Quoted in Quoted in active market Unquoted active market Unquoted Cash and cash equivalent 811 - 794 - Listed shares: Manufacturing and consumer 571 - 516 - Finance industry 566 - 369 - Construction 301 - 271 - Infrastructure and telecommunication 211 - 202 - Wholesale 70 - 145 - Mining 12 - 69 - Other industries: Services 33 - 65 - Agriculture 23 - 23 - Biotech and Pharma Industry 6 - 9 - Others 3 - 38 - Equity-based mutual funds 1,129 - 1,767 - Fixed income-based securities: Fixed income mutual funds 6,837 - 6,589 - Unlisted shares: Private placement - 213 - 177 Others - 38 - 30 Total 10,573 251 10,857 207 Yakes plan assets also include Series B shares issued by the Company with fair value totalling Rp174 billion and Rp140 billion representing 1.61 and 1.27 of total assets as of December 31, 2015 and 2014, respectively. The expected return is determined based on market expectation for returns over the entire life of the obligation by considering the portfolio mix of the plan assets. The actual return on plan assets was Rp147 billion and Rp1,550 billion for the years ended December 31, 2015 and 2014, respectively. The movements of the provision for post-employment health care benefit for the years ended December 31, 2015 and 2014 are as follows: 2014 2015 As restated Changes in post-employment health care benefit provision Defined benefit liability at beginning of year 441 993 Net periodic pension cost 217 250 Employer contributions - 226 Actuarial losses gain recognized via the OCI 1,187 238 Return on plan assets excluding amount included in net interest expense 647 814 Provision for post-employment health care benefit 118 441 PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 104

35. POST-EMPLOYMENT HEALTH CARE BENEFITS PROVISIONS continued

The components of net periodic post-employment health care benefit cost for the years ended December 31, 2015 and 2014 are as follows: 2014 2015 As restated Service costs 49 45 Plan administration cost 131 126 Net interest cost 37 79 Net periodic post-employment health care benefit cost 217 250 Cost to subsidiaries by agreement 1 2 Periodic post-employment health care benefit cost Less cost to subsidiaries 216 248 Amounts recognized in OCI are as follows: 2014 2015 As restated Actuarial losses gain recognized during the year 1,187 238 Return on plan assets excluding amount included in net interest expense 647 814 Net 540 576 The actuarial valuation for the post-employment health care benefits was performed based on the measurement date as of December 31, 2015 and 2014, with reports dated February 25, 2016 and February 24, 2015, respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary as of December 31, 2015 and 2014 are as follows: December 31, December 31, 2015 2014 Discount rate 9.25 8.50 Health care costs trend rate assumed for next year 7.00 7.00 Ultimate health care costs trend rate 7.00 7.00 Year that the rate reaches the ultimate trend rate 2016 2015 Indonesian mortality table 2011 2011 The timing of benefits payments for 2015 is as follows in millions of rupiah: Time Period Post-Employment Health Care Benefits Within next 10 years 5,249 Within 10-20 years 6,738 Within 20-30 years 6,609 Within 30-40 years 4,939 Within 40-50 years 2,228 Within 50-60 years 211 Within 60-70 years 1 Within 70-80 years