Telecommunications Regulators AR TELKOM 2015 ENG.

171 PT Telkom Indonesia Persero Tbk Regulation No.17PERM.KOMINFO102010 regarding the Organization and Administration of Ministry of Communication and Information. Following the reforms, certain adjustments were made through MoCI Regulation No.15PERM.KOMINFO062011 dated June 20, 2011 regarding title adjustments in a number of Decrees andor MoCI regulations that regulate Special Materials in Post and Telecommunications andor in Decrees of the Director General of Posts and Telecommunications, which transfer all substances related to the postal and telecommunications sectors to the DGPIO including licensing, numbering, interconnection, universal service obligation and business competition. Meanwhile, matters related to radio frequency spectrum and standardization of telecommunications equipments were transferred to the DGRE. Following the enactment of the Telecommunications Law, the MoC established an independent regulatory body as stipulated in MoC Decree No.KM.312003 dated July 11, 2003 regarding the Establishment of the ITRA which was later revoked by MoC Regulation No.KM.36PERM. KOMINFO102008 dated October 31, 2008 and amended by MoCI Regulation No.1PERM.KOMINFO022011 dated February 7, 2011 “MoCI Regulation No.362008”. Pursuant to MoCI Regulation No.362008, the ITRA was assigned the authority to regulate the Indonesian telecommunication industry, including the provision of telecommunication networks and services. The ITRA which is chaired by the Director General of Post and Informatics Operations and comprises of nine members, including six members of the public, and three members selected from Government institutions DGRE and Director of DGPIO and a government representative appointed by the Minister of Communication and Information.

3. Classiication and licensing of telecommunications providers

The Telecommunications Law organized telecommunication services into following three categories: i provision of telecommunication networks, ii provision of telecommunication services, and iii provision of special telecommunications services. Licenses issued by MoCI are required for each category of telecommunications services. MoCI Regulation No.12010 and MoC Decree No.KM.212001 dated May 31, 2001 regarding the Operation of Telecommunications Services, as last amended by MoCI Regulation No.82015 regarding the Fourth Amendment of Decree of the Minister of Communication No.KM.212001 regarding the Provision of Telecommunications Service, are the principal implementing regulations governing licensing. MoCI Regulation No.12010 classiied network operations into ixed and mobile networks. MoC Decree No.KM.212001 categorized the provision of services into basic telephony services, value-added telephony services, and multimedia services.

4. introduction of Competition in the indonesian telecommunications industry

In 1995, we were granted a monopoly to provide local ixed line telecommunications services until December 31, 2010, and DLD services until December 31, 2005. Indosat and Satelindo which subsequently merged with Indosat were granted a duopoly for provision of basic international telecommunications services until 2004. As a consequence of the Telecommunications Law, the Government terminated our exclusive rights to provide domestic ixed line telephone and DLD services and Indosat’s and Satelindo’s duopoly rights to provide basic international telephone services. Instead, the Government adopted a duopoly policy to create competition between Indosat and us as comprehensive service and network providers.

5. DlD Services

To liberalize DLD services, the Government amended the National Telecommunications Technical Plan pursuant to MoCI Decree No.6PM.KOMINFO52005 dated May 17, 2005 “MoCI Decree No.62005” to assign each provider of DLD services a three-digit access code that would permit their customers to select an alternative DLD services provider by dialing the three-digit access number. MoCI Decree No.62005 did not provide for immediate implementation of the three-digit system for DLD calls, but as the irst DLD service provider, we were required to gradually open our network to the three-digit access codes in all coded areas throughout Indonesia by April 1, 2010. We were assigned the “017” DLD access code, while Indosat was assigned “011”. The MoCI thereafter amended the National Telecommunications Plan as provided in MoCI Decree No.43PM.KOMINFO122007 dated 172 PT Telkom Indonesia Persero Tbk December 3, 2007, “MoCI Decree No.432007”, which delayed the deadline for the implementation of three digit access code for DLD calls throughout all the area code in Indonesia until September 27, 2011. Pursuant to MoCI Decree No.432007, we opened our network to the “01X” three-digit DLD access service in Balikpapan by April 3, 2008. Since that date, our customers are able to make DLD calls from Balikpapan by irst dialing Indosat’s “011”. As stipulated in MoCI Regulation No.432007, we have provided a nation- wide network for three-digit access code for ixed and ixed wireless DLD with “01X” that can be used by Indosat or other licensed operator starting September 27, 2011. To date, no other licensed operators have submitted a request to us to connect their networks and enable DLD access. 6. IDD Services We received our IDD license in May 2004 and began ofering IDD ixed line services to customers in June 2004 using the “007” IDD access code. The Indosat IDD access code is “001”. Our December 2005 interconnection agreement with Indosat enables Indosat’s network customers to access our IDD services by dialing “007” and our network customers to access Indosat’s IDD services by dialing “001”.

7. Cellular

Cellular telephone service is provided in Indonesia on the radio frequency spectrum of 1.8 GHz DCS technology, 2.1 GHz UMTS technology and 900 MHz GSM and UMTS technology. The MoCI regulates the use and allocation of the radio frequency spectrum for mobile cellular networks. Telkomsel has obtained frequency allocation for cellular services on the 900 MHz, 1.8 GHz and 2.1 GHz frequency bands. The allocation of bandwidth in the 2.1 GHz frequency spectrum is regulated by: • MoCI Decree No.19KEPM.KOMINFO22006 dated February 14, 2006 regarding the Determination of Winner of IMT-2000 Mobile Cellular Operator Selection at 2.1 GHz Radio Frequency Band. • MoCI Decree No.268KEPM.KOMINFO92009 regarding the Determination of Additional Allocation of Radio Frequency Bandwidth Blocks, Tarifs, and Payment Scheme Radio Frequency Spectrum Right of Usage Fees for IMT-2000 Moble Cellular Operators at 2.1 GHz Radio Frequency Band. • MoCI Decree No.191 Year 2013 regarding the Determination of PT Telekomunikasi Selular as Winner in the Selection of Users of Additional Frequency Bandwidth at 2.1 GHz Radio Frequency Band for IMT- 2000 Moble Cellular Operators. The Minister of Communication and Information released his decree regarding the management of the 1,8 GHz radio frequency band on April 29, 2015, through Decree No.192015 on 1800 MHz Radio Frequency Bands Regulation for the Management of Cellular Mobile Networks, in which cellular mobile network providers on 1800 MHz radio frequency band must reallocate the use of radio frequency on 1800MHz radio frequency band by November 2015.

8. Interconnection

The Telecommunications Law expressly prohibits monopolistic and unfair business practices and requires network providers to allow users to access other users or obtain services from other networks by paying interconnection fees agreed upon by each network operator. Government Regulation No.522000 dated July 11, 2000 regarding Telecommunications Operations provides that interconnection charges between two or more network operators must be transparent, mutually agreed upon and fair. On February 8, 2006, the MoCI issued Regulation No.8 PERM.KOMINFO022006 on Interconnection “MoCI Regulation No.82006”, mandated a cost-based interconnection tarif scheme for all network and services operators replacing the previous revenue-sharing scheme. Under the new scheme, interconnection charges are determined by the network operator on which a call terminates based on a long-run incremental cost formula. MoCI Regulation No.82006 requires operators to submit to the ITRA annual RIO proposals containing proposed interconnection tarifs for the coming year. Operators are required to use the cost-based methodology in preparing RIO proposals, and the ITRA and MoCI are required to use the same methodology in evaluating the RIO proposals and approving interconnection tarifs.