PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and for the Year Then Ended
Figures in tables are expressed in billions of rupiah, unless otherwise stated
51
11. PROPERTY AND EQUIPMENT continued
a. Gain on disposal or sale of property and equipment
2013 2012
Proceeds from sale of property and equipment 466
360 Net book value
53 282
Gain on disposal or sale of property and equipment
413 78
b. Assets impairment i
As of December 31, 2013 and 2012, the CGUs that independently generate cash inflows were fixed wireline, fixed wireless, cellular and others. As of December 31, 2013 and 2012,
there were indications of impairment in the fixed wireless CGU presented as part of personal segment, which were mainly due to increased competition in the fixed wireless market that
resulted in lower average tariffs, declining active customers and declining Average Revenue Per User “ARPU”. The Company assessed the recoverable value of the assets in the CGU
and determined that assets for the fixed wireless CGU were impaired by Rp596 billion and Rp247 billion as at December 31, 2013 and 2012, respectively, which are recognized in the
consolidated statement of comprehensive income under “Depreciation and amortization”. The recoverable amount has been determined based on value-in-use VIU calculations.
These calculations used pre-tax cash flow projections approved by management covering a five-year period and with cash flows beyond the five-year period extrapolated using a
perpetuity growth rate. The cash flow projections reflect management’s expectations of revenue, Earnings Before Interest, Tax, Depreciation and Amortization “EBITDA” growth
and operating cash flows on the basis that the fixed wireless CGU generates positive net cash flows starting from 2014. Management’s cash flow projection also incorporates
management’s reasonable expectations for developments in macro economic conditions and market expectations for the Indonesian telecommunications industry. As of December 31,
2013 and 2012, management applied a pre-tax discount rate of 13.5 and 12.3, respectively, derived from the Company’s post-tax weighted average cost of capital and
benchmarked to externally available data. As of December 31, 2013 and 2012, the perpetuity growth rate used of 0 and 0.5, respectively, assumes that subscriber numbers and
average revenue per user may continue to decrease after five years.
If the performance of the fixed wireless CGU continues to decline or if management’s initiatives are not performing as expected in the next financial year, analysis will be required
to assess whether there will be further impairment next year.
ii Management believes that there is no indication of impairment in the value of other CGUs as
of December 31, 2013 and 2012. c.
Others i
Interest capitalized to property under construction amounted to Rp100 billion and Rp44 billion for the years ended December 31, 2013 and 2012, respectively. The
capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranges from 9.75 to 13.07 and from 7.72 to 9.75 for the years ended December 31,
2013 and 2012, respectively.
ii No foreign exchange loss was capitalized as part of property under construction for the years
ended December 31, 2013 and 2012.
