LONG-TERM INVESTMENTS continued AR TELKOM 2015 ENG.

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 56

10. PROPERTY AND EQUIPMENT continued

a. Gain on disposal or sale of property and equipment 2015 2014 Proceeds from sale of property and equipment 733 501 Net book value 8 64 Gain on disposal or sale of property and equipment 725 437 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 PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2015 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 57

10. PROPERTY AND EQUIPMENT continued

c. Others i Interest capitalized to property under construction amounted to Rp328 billion and Rp127 billion for the years ended December 31, 2015 and 2014, respectively. The capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranges from 6.84 to 11.00 and from 10.14 to 18.31 for the years ended December 31, 2015 and 2014, respectively. ii No foreign exchange loss was capitalized as part of property under construction for the years ended December 31, 2015 and 2014. iii In 2015 and 2014, the Group received proceeds from the insurance claim on the lost and broken property and equipment, with a total value of Rp119 billion and Rp212 billion, respectively and recorded as part of