LONG-TERM INVESTMENTS continued PROPERTY AND EQUIPMENT

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 43

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a. Gain on disposal or sale of property and equipment 2016 2015 Proceeds from sale of property and equipment 735 313 Net book value 17 26 Gain on disposal or sale of property and equipment 718 287 b. Asset impairment As of December 31, 2015 and 2014, the CGUs that independently generate cash inflows were fixed wireline, fixed wireless, cellular and others. In 2014, the Group decided to cease its fixed wireless business no later than December 15, 2015. The Company assessed the recoverable amount to be Rp549 billion and determined that the assets for fixed wireless CGU were further impaired by Rp805 billion. The recoverable amount has been determined based on VIU calculation using the most recent cash flows projection approved by management. The cash flows projection included cash inflows from the continuing use of the assets during the remaining service period and projected net cash flows to be received for the disposal of the assets for fixed wireless CGU at the end of service period. Projected net cash flows to be received for the disposal of the assets was determined based on cost approach, adjusted for physical, technological and economic obsolescence. Management applied a pre-tax discount rate of 13.5 derived from the Company’s post-tax weighted average cost of capital and benchmarked to externally available data. In addition, management also applied technological and economic obsolescence rate of 30 based on the Company’s internal data, due to the lack of comparable market data because of the nature of the assets. The determination of VIU calculation is most sensitive to technological and economic obsolescence rate assumption. An increase in technological and economic obsolescence rate to 40 would result in a further impairment of Rp70 billion. Loss on impairment of assets was recognized within “Depreciation and Amortization” in the consolidated statement of profit or loss and other comprehensive income. In connection with the restructuring of fixed wireless business Note 35c.ii, the Company accelerated its depreciation of fixed wireless assets. As of December 31, 2015, all of the Company’s fixed wireless assets have been fully depreciated. Management believes that there is no indication of impairment in the assets of other CGUs as of December 31, 2015. c. Others i Interest capitalized to property under construction amounted to Rp423 billion and Rp302 billion for the nine-month periods ended September 30, 2016 and 2015, respectively. The capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranged from 7.42 to 11.00 and 9.74 to 18.31 for the nine-month periode ended September 30, 2016 and 2015, respectively. ii No foreign exchange loss was capitalized as part of property under construction for the nine- month periods ended September 30, 2016 and for the year ended December 31, 2015. 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 44

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