NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continued
DECEMBER 31, 2011 AND 2010, AND YEARS ENDED DECEMBER 31, 2011 AND 2010
Figures in tables are presented in billions of Rupiah, unless otherwise stated
45
10. PROPERTY, PLANT AND EQUIPMENT continued
January 1, Acquisitions
December 31, 2010
of Ad Medika Additions
Deductions Reclassifications
2010 Accumulated depreciation and
impairment: Direct acquisitions assets
Buildings 1,485
- 97
1 5
1,576 Leasehold improvements
382 -
61 -
- 443
Switching equipment 18,426
- 2,525
30 9
20,912 Telegraph, telex and data
communication equipment 17
- 1
1 -
17 Transmission installation
and equipment 24,795
- 6,322
812 114
30,191 Satellite, earth station and
equipment 3,137
- 476
- 8
3,621 Cable network
14,689 -
1,109 249
20 15,529
Power supply 2,931
- 938
12 2
3,855 Data processing equipment
5,094 -
1,316 615
24 5,819
Other telecommunications peripherals
352 -
15 -
367 Office equipment
465 -
43 8
9 509
Vehicles 95
6 1
100 Other equipment
87 -
5 -
1 93
Leased assets
Transmission installation and equipment
227 -
21 -
3 251
Data processing equipment 117
- 53
- 1
171 Office equipment
201 -
29 220
6 4
Vehicles 29
16 6
- 39
CPE assets 5
- 2
- -
7
RSA assets:
Land 1
- -
- 1
Switching equipment 30
- 7
- 7
30 Transmission installation
and equipment 26
- 6
- 10
22 Cable network
122 -
37 -
5 154
Other telecommunications peripherals
3 -
- 3
Total 72,716
- 13,085
1,955 132
83,714
Net Book Value 76,420
75,832
a. Gains on disposal or sale of property, plant and equipment
2011 2010
Proceeds from sale of property, plant and equipment 56
11 Net book value
18 7
Exchange of property, plant and equipment - net 24
-
Gains on disposal or sale of property, plant and equipment
62 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continued
DECEMBER 31, 2011 AND 2010, AND YEARS ENDED DECEMBER 31, 2011 AND 2010
Figures in tables are presented in billions of Rupiah, unless otherwise stated
46
10. PROPERTY, PLANT AND EQUIPMENT continued
b. KSO assets ownership arrangements
i In accordance with the amended and restated KSO VII agreement with PT Bukaka Singtel
International “BSI”, the ownership rights to the acquired property, plant and equipment in KSO VII were legally retained by BSI until the end of the KSO period which was on
December 31, 2010. As of December 31, 2010, the net book value of these property, plant and equipment was Rp.710 billion. As at January 1, 2011, the legal rights on these property,
plant and equipment was transferred to the Company, and the property, plant and equipment now reflected in the balances above.
ii In accordance with the amended and restated KSO IV agreement with PT Mitra Global Telekomunikasi Indonesia “MGTI”, the ownership rights to the acquired property, plant and
equipment in KSO IV were legally retained by MGTI until the end of the KSO period which was on December 31, 2010. As of December 31, 2010, the net book value of this property,
plant and equipment was Rp.161 billion. As at January 1, 2011, the legal rights on these property, plant and equipment was transferred to the Company, and the property, plant and
equipment now reflected in the balances above.
c. Assets impairment
i As of December 31, 2011, the CGUs that generate cash inflows independently were fixed
wireline, fixed wireless, cellular and others. There were indications of impairment in the fixed wireless business segment, including reporting a segment loss of Rp 1,433 billion for the
year ended December 31, 2011, which was mainly due to increased competition in the fixed wireless market and that has 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 cash generating unit CGU and determined that assets for the
fixed wireless CGU were impaired at 31 December 2011 resulting in an impairment charge of Rp.563 billion being recognized in the consolidated statement of comprehensive income
under ‘Depreciation and Amortisation’. 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, EBITDA growth and operating cash flows on the basis that the fixed wireless CGU generates positive net cash flows from 2013 and returns to
profitability in 2016. 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. The projection assumes that management will receive appropriate licenses and effectively implement a full mobility
initiative that will remove limitations in the existing service which can only be used by customers within a particular area code. Management applied a pre-tax discount rate of
11.4, derived from the Company’s post-tax weighted average cost of capital and benchmarked to externally available data.
The perpetuity growth rate used of 0 assumes that while subscriber numbers may continue to increase after five years, average revenue
per user may decline such that only neglegible long term growth will be achieved in a competitive market.
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
As of December 31, 2011 and 2010, there were no events or changes in circumstances that would indicate that the carrying amounts of the Company’s fixed wireline business, cellular
business and others may not be recoverable.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continued
DECEMBER 31, 2011 AND 2010, AND YEARS ENDED DECEMBER 31, 2011 AND 2010
Figures in tables are presented in billions of Rupiah, unless otherwise stated
47
10. PROPERTY, PLANT AND EQUIPMENT continued
