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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44. POST-RETIREMENT HEALTH CARE BENEFITS
The Company provides a post-retirement health care plan for 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 of working for over 20 or more years does not apply to employees who retired prior to June 3, 1995. However, the employees hired by the Company starting
from November 1, 1995 will no longer be entitled to this plan. The plan is managed by Yayasan Kesehatan Pegawai Telkom “YKPT”.
The components of net periodic post-retirement health care benefit cost are as follows:
2004 2005
As restated
Service cost 76,163
87,636 Interest cost
411,110 507,994
Expected return on plan assets 61,084
103,498 Recognized actuarial loss
- 8,081
Net periodic post-retirement benefit cost 426,189
500,213 Amounts charged to KSO Units under contractual
agreement 9,913
11,627 Total net periodic post-retirement benefit cost less
amounts charged to KSO Units Note 36 416,276
488,586
The actuarial valuations for the post-retirement health care benefits performed based on measurement date of December 31 for each of the years were prepared on March 15, 2005 and February 27, 2006,
respectively, by PT Watson Wyatt Purbajaga, an independent actuary in association with Watson Wyatt Worldwide.
The principal actuarial assumptions used by the independent actuary as of December 31, 2004 and 2005 are as follows:
2004 2005
Discount rate 11
11 Expected long-term return on plan assets
8 8
Health care cost trend rate assumed for next year 12
9 The ultimate trend rate
8 9
Year that the rate reaches the ultimate trend rate 2007
2006
The 2004 figures have been restated due to the adoption of PSAK 24R see Note 4a.
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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44. POST-RETIREMENT HEALTH CARE BENEFITS continued
The following table presents the change in projected benefit obligation, the change in plan assets, funded status of the plan and the net amount recognized in the Company’s balance sheets as of
December 31, 2004 and 2005:
2004 2005
As restated Change in projected benefit obligation
Projected benefit obligation at beginning of year 3,787,389
4,681,005 Service cost
76,163 87,636
Interest cost 411,110
507,994 Actuarial loss
529,618 423,833
Benefits paid 123,275
125,979 Projected benefit obligation at end of year
4,681,005 5,574,489
Change in plan assets Fair value of plan assets at beginning of year
505,340 1,138,768
Actual return on plan assets 32,173
45,209 Employer contributions
724,530 435,899
Benefits paid 123,275
125,979 Fair value of plan assets at end of year
1,138,768 1,493,897
Funded status 3,542,237
4,080,592 Unrecognized net actuarial loss
558,530 1,032,571
Accrued post-retirement health care benefit cost 2,983,707
3,048,021
As of December 31, 2004, plan assets include Medium-term Notes issued by the Company with fair value of Rp145,000 million. As of December 31, 2005, plan assets include bonds and Medium-term
Notes issued by the Company with total fair value of Rp232,394 million. The movement of the accrued post-retirement health care benefit cost during the years ended
December 31, 2004 and 2005 is as follows:
2004 2005
As restated
Accrued post-retirement health care benefit cost at beginning of year 3,282,048
2,983,707 Net periodic post-retirement health care benefit cost
416,276 488,586
less amounts charged to KSO Units Amounts charged to KSO Units under contractual agreement
9,913 11,627
Contributions 724,530
435,899 Accrued post-retirement health care benefit cost at end of year
2,983,707 3,048,021
The 2004 figures have been restated due to the adoption of PSAK 24R see Note 4a.
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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44. POST-RETIREMENT HEALTH CARE BENEFITS continued
A 1 increase in the cost trend rate would result in service cost and interest cost, and accumulated post-retirement health care benefit obligation as of December 31, 2004 and 2005 as follows:
2004 2005
Service cost and interest cost 723,941
872,159 Accumulated post-retirement health care benefit obligation
5,597,965 6,718,434
45. RELATED PARTY INFORMATION
In the normal course of business, the Company and its subsidiaries entered into transactions with related parties. It is the Companys policy that the pricing of these transactions be the same as those of
arms-length transactions.
The following are significant agreementstransactions with related parties:
a. Government of the Republic of Indonesia
i. The Company obtained “two-step loans” from the Government of the Republic of Indonesia,
the Companys majority stockholder. Interest expense for two-step loans amounted to Rp489,220 million and Rp324,652 million
in 2004 and 2005, respectively. Interest expense for two-step loan reflected 38.5 and 27.6 of total interest expense in 2004 and 2005, respectively.
ii. The Company and its subsidiaries pay concession fees for telecommunications services provided and radio frequency usage charges to the Ministry of Communications formerly,
Ministry of Tourism, Post and Telecommunications of the Republic of Indonesia. Concession fees amounted to Rp314,741 million and Rp558,485 million in 2004 and 2005,
respectively. Concession fees reflected 1.6 and 2.3 of total operating expenses in 2004 and 2005, respectively. Radio frequency usage charges amounted to Rp492,568 million and
Rp548,186 million in 2004 and 2005, respectively. Radio frequency usage charges reflected 2.5 and 2.2 of total operating expenses in 2004 and 2005, respectively.
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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45. RELATED PARTY INFORMATION continued
a. Government of the Republic of Indonesia continued
iii. Beginning in 2005, the Company and its subsidiaries pay Universal Service Obligation
“USO” charges to the Ministry of Communications and Information “MoCI” of the Republic of Indonesia pursuant to the MoCI Regulation No.15PERM.KOMINFO92005
of September 30, 2005.
USO charges amounted to Rp307,705 million in 2005, which reflected 1.2 of total operating expenses in 2005.
b. Commissioners and Directors Remuneration
i. The Company and its subsidiaries provide honorarium and facilities to support the operational duties of the Board of Commissioners. The total of such benefits amounted to
Rp22,700 million and Rp19,707 million in 2004 and 2005, respectively, which reflected 0.1 and 0.1 of total operating expenses in 2004 and 2005, respectively.
ii. The Company and its subsidiaries provide salaries and facilities to support the operational
duties of the Board of Directors. The total of such benefits amounted to Rp50,327 million and Rp52,147 million in 2004 and 2005, respectively, which reflected 0.3 and 0.2 of
total operating expenses in 2004 and 2005, respectively.
c. Indosat
Through December 19, 2002, the Government was the majority and controlling shareholder of Indosat and therefore, Indosat was under the same common control as the Company. Following
the sale of the Government’s 41.94 ownership interest in Indosat on December 20, 2002 Note 29, the Government’s ownership interest in Indosat was reduced to approximately 15. The
Company still considers Indosat as a related party because the Government can exert significant influence over the financial and operating policies of Indosat by virtue of its right to appoint one
director and one commissioner of Indosat.
Following the merger of Indosat, PT Indosat Multimedia Mobile “IM3”, Satelindo and PT Bimagraha Telekomindo on November 20, 2003, all rights and obligations arising from the
agreements entered by the Company with IM3 and Satelindo were transferred to Indosat.
The Company has an agreement with Indosat for the provision of international telecommunications services to the public.
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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45. RELATED PARTY INFORMATION continued
c. Indosat continued
The principal matters covered by the agreement are as follows: i.
The Company provides a local network for customers to make or receive international calls. Indosat provides the international network for the customers, except for certain border
towns, as determined by the Director General of Post and Telecommunications of the Republic of Indonesia. The international telecommunications services include telephone,
telex, telegram, package switched data network, television, teleprinter, Alternate VoiceData Telecommunications “AVD”, hotline and teleconferencing.
ii. The Company and Indosat are responsible for their respective telecommunications facilities. iii. Customer billing and collection, except for leased lines and public phones located at the
international gateways, are handled by the Company. iv. The Company receives compensation for the services provided in the first item above, based
on the interconnection tariff determined by the Minister of Communications of the Republic of Indonesia.
The Company has also entered into an interconnection agreement between the Companys fixed- line network and Indosats cellular network in connection with the implementation of Indosat
Multimedia Mobile services and the settlement of the related interconnection rights and obligations.
The Company also has an agreement with Indosat for the interconnection of Indosats GSM mobile cellular telecommunications network with the Companys PSTN, enabling the Companys
customers to make outgoing calls to or receive incoming calls from Indosats customers. The Companys compensation relating to leased lineschannel services, such as International
Broadcasting System “IBS”, AVD and bill printing is calculated at 15 of Indosats revenues from such services. Through year-end 2003, Indosat leased circuits from the Company to link
Jakarta, Medan and Surabaya. In 2004 and 2005, Indosat did not use this service. The Company has been handling customer billings and collections for Indosat. Indosat is
gradually taking over the activities and performing its own direct billing and collection. The Company receives compensation from Indosat computed at 1 of the collections made by the
Company beginning January 1, 1995, plus the billing process expenses which are fixed at a certain amount per record.
