CONTINGENCIES continued ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2016 and For the Nine-Month Period Then Ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 109

38. FINANCIAL RISK MANAGEMENT continued

1. Fair value of financial assets and financial liabilities continued a. Classification continued ii. Financial liabilites September 30, 2016 December 31, 2015 Financial liabilities measured at amortised cost Trade payables and other payables 14,894 14,284 Accrued expenses 10,765 8,247 Loans and other borrowings Short-term bank loans 636 602 Two-step loans 1,455 1,520 Bonds and notes 9,500 9,548 Long-term bank loans 16,738 18,362 Obligation under finance lease 4,314 4,580 Total financial liabilities 58,302 57,143 b. Fair value Fair value measurement at reporting date using September 30, 2016 Carrying amount Fair Value Quoted prices in active markets for identical assets or liabilities level 1 Significant other observable inputs level 2 Significant unobservable inputs level 3 Financial assets Available-for-sale securities 1,169 1,169 1,070 99 - Fair value through profit or loss - - - - - Total 1,169 1,169 1,070 99 - Financial liabilities for which fair value are disclosed Liabilities Two-step loans 1,455 1,489 - - 1,489 Bonds and notes 9,500 10,305 9,771 - 534 Long-term bank loans 16,738 17,202 - - 17,202 Obligation under finance lease 4,314 4,314 - - 4,314 Total 32,007 33,310 9,771 - 23,539 PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2016 and For the Nine-Month Period Then Ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 110

38. FINANCIAL RISK MANAGEMENT continued

1. Fair value of financial assets and financial liabilities continued b. Fair value continued Fair value measurement at reporting date using December 31, 2015 Carrying amount Fair Value Quoted prices in active markets for identical assets or liabilities level 1 Significant other observable inputs level 2 Significant unobservable inputs level 3 Financial assets Available-for-sale securities 160 160 55 105 - Fair value through profit or loss 172 172 - - 172 Total 332 332 55 105 172 Financial liabilities for which fair value are disclosed Liabilities Two-step loans 1,520 1,538 - - 1,538 Bonds and notes 9,548 9,541 8,972 - 569 Long-term bank loans 18,362 18,314 - - 18,314 Obligation under finance lease 4,580 4,580 - - 4,580 Total 34,010 33,973 8,972 - 25,001 Available-for-sale financial assets primarily consist of mutual funds, and Corporate and Government bonds. Mutual funds actively traded in an established market are stated at Fair Value using quoted market price and classified within level 1. Corporate and Government bonds are stated at fair value by reference to prices of similar securities at the reporting date. As they are not actively traded in an established market, these securities are classified as level 2. Financial asset at fair value through profit or loss represents the Put Option on the 20 remaining ownership in Indonusa which was received as part of the divestment considerations. The valuation of put option requires significant management judgement due to the absence of quoted market prices and the lack of comparable instruments in the market. As the put option is subject to restrictions on redemption such as transfer restrictions and initial lock-up periods and observable activity for the investment is limited, this investment is therefore classified within level 3 of the fair value hierarchy. Reconciliations of the beginning and ending balances for items measured at fair value using significant unobservable inputs level 3 as of September 30, 2016 and 2015 are as follows: 2016 2015 Beginning balance 172 290 Unrealized loss - recognized in consolidated statement of profit or loss and other comprehensive income 172 - Ending balance - 290 As the put option is subject to restrictions on redemption such as transfer restrictions and initial lock-up periods and observable activity for the investment is limited, this investment is therefore classified within level 3 of the fair value hierarchy.