- 71 - Personal Segment
Our personal segment revenues increased by Rp5,362 billion, or 10.5, from Rp50,913 billion in 2011 to Rp56,275 billion in 2012, primarily due to an increase in cellular revenues of Rp4,957 billion, or 15.0, and an increase in interconnection revenue by Rp444
billion, or 14.1, compared to 2011. The increase in cellular revenues was primarily due to an increase in data and internet revenue by Rp2,553 billion in 2012 as compared to 2011, or 49.1, and an increase in long distance cellular revenue by Rp1,397 billion in
2012 as compared to 2011, or 20.6. The increase in interconnection revenue was primarily due to an increase in local cellular revenue.
Our personal segment expenses increased by Rp1,693 billion, or 4.9, from Rp34,679 billion in 2011 to Rp36,372 billion in 2012, primarily due to an increase in interconnection expenses of Rp196 billion, or 4.2 and an increase in operation and maintenance
expenses of Rp1,025 billion, or 7.6. The increase in operation and maintenance expense was primarily due to an increase in transport expense and an increase in radio frequency expenses. On the other hand, depreciation expenses decreased by Rp1,066
billion, or 9.9, due to the changes in the estimated useful lives of towers and certain equipment.
Other Segment Our other segment revenues increased by Rp345 billion, or 82.1, from Rp420 billion in 2011 to Rp765 billion in 2012, due to the
increase in Telkom Property’s other telecommunication services of Rp273 billion, or 368, resulting from the increase in management project of Rp57 billion, or 102.8, and security services of Rp206 billion, or 100. In addition, lease revenues also
increase by Rp71 billion, or 20.5, due to the increase in building lease of Rp24 billion, or 48.7, and building maintenance of Rp46 billion, or 15.6.
Our other segment expenses increased by Rp343 billion, or 100.3, from Rp342 billion in 2011 to Rp685 billion in 2012, primarily due to an increase in operating and maintenance expenses of Rp154 billion, or 37.4, primarily resulting from an increase in project
management expenses, expenses relating to the operation of buildings and land and electricity, gas and water expenses.
LIQUIDITY Liquidity Sources
The main source of our corporate liquidity is cash provided by operating activities and long-term debt through the capital markets as well as long-term and short-term loans through bank facilities. We divide our liquidity sources into internal and external liquidity.
A. Internal Liquidity Sources
To fulfill our obligations, we rely primarily on our internal liquidity. As of December 31, 2013, we had Rp14,696 billion in cash and cash equivalents available. In 2013, cash and cash equivalents increased by Rp1,578 billion. In 2013, the increase of cash
flow provided by operating activities primarily arise from cash receipts from customers of Rp77,013 billion.
We made net repayments of current indebtedness for borrowed money of Rp7,967 billion in 2011, Rp5,843 billion in 2012 and Rp6,239 billion in 2013. Cash outflows in 2013 reflected payments for short-term loans and other borrowings of Rp407 billion
and long-term loans and other borrowings of Rp5,832 billion.
Our internal liquidity strength reflected in our current ratio, which we calculate as current assets divided by current liabilities, increased from 116.0 as of December 31, 2012 to 116.3 as of December 31, 2013.
B. External Liquidity Sources
Our primary external sources of liquidity are short and long-term bank loans, two-step loans, bonds and notes payable. During the year 2013 we used external liquidity bank loans of Rp3,538 billion.
C. Outstanding Liquidity Sources
We had undrawn loan facilities which include the following sources of unused liquidity:
Bank CIMB Niaga loan facility in the amount of Rp1,077 billion;
Japan Bank for International Cooperation loan facility in the amount of US31,350,000;
BNI loan facility in the amount of Rp531 billion;
UOB loan facility in the amount of Rp70 billion;
BRI loan facility in the amount of Rp49 billion;
Bank Bukopin loan facility in the amount of Rp9 billion;
BRI Syariah loan facility in the amount of Rp1.4 billion;
Bank Syariah Mandiri loan facility in the amount of Rp1.3 billion; and
Syndicated loan facility of BNI, BRI and Bank Mandiri in the amount of Rp749 billion.
- 72 -
The following table sets out information concerning our consolidated cash flows, as set out in and prepared on the same basis as our Consolidated Financial Statements:
Years ended December 31, 2011
2012 2013
Rp billion Rp billion
Rp billion US million
Net cash flows: provided by operating activities
30,462 27,941
36,574 3,004
used in investing activities 14,414
11,311 22,702
1,865 used in financing activities
15,539 13,314
13,327 1,095
Net increase in cash and cash equivalents 509
3,316 545
44 Effect of exchange rate changes on cash and cash
equivalents 5
168 1,039
85 Cash and cash equivalents at beginning of year
9,120 9,634
13,118 1,078
Ending balance of disposed subsidiary -
- 6 0
Cash and cash equivalents at end of year 9,634
13,118 14,696
1,207
Year ended December 31, 2013 compared to year ended December 31, 2012
Cash Flows from Operating Activities Net cash provided by operating activities in 2013 was Rp36,574 billion US3,004 million compared to Rp27,941 billion in 2012.
The increase was primarily due to an increase of Rp5,103 billion, or 7.1, in cash receipts from customers and from other telecommunications operators of Rp528 billion, or 13.2, due to the increase in our operating revenue, and decrease of Rp6,211
billion, or 18.5, of cash payments for expenses. This was partially offset by an increase of Rp1,809 billion, or 32.4, in payment for income taxes and cash payments to employees of Rp1,721 billion, or 21.1.
Cash Flows from Investing Activities Net cash flows used in investing activities in 2013 was Rp22,702 billion US1,865 million compared to Rp11,311 billion in 2012.
This increase was primarily due to an increase of Rp11,423 billion, or 139.0 in acquisition of property and equipment mainly relating to property under construction, transmission installation and equipment and cable network.
Cash Flows from Financing Activities Net cash flows used in financing activities totaled Rp13,327 billion US1,095 million in 2013 compared to Rp13,314 billion in
2012. This increase was primarily due to an increase of Rp4,112 billion, or 235.8, in proceed from sale of treasury stock. This was partially offset by an increase of Rp1,227 billion, or 17.2, in cash dividends paid to our stockholders due to the increase of our
operating profit and a decrease of Rp1,349 billion, or 27.6, in proceed from loan and other borrowings.
Year ended December 31, 2012 compared to year ended December 31, 2011
Cash Flows from Operating Activities Net cash provided by operating activities in 2012 was Rp27,941 billion US2,898 million compared to Rp30,462 billion in 2011.
The decrease was primarily due to an increase of Rp8,144 billion, or 31.9, in cash payments for expenses. This was partially offset by an increase of Rp4,441 billion, or 6.6, in cash receipts from customers due to the increase of our revenues.
Cash Flows from Investing Activities Net cash flows used in investing activities in 2012 was Rp11,311 billion US1,173 million compared to Rp14,414 billion in 2011.
This decrease was primarily due to an increase of Rp3,975 billion, or 12,045.5 in placement in time deposits and a decrease of Rp4,884 billion, or 37.3, in cash payments for the acquisition of property and equipment. This was partially offset by an increase of
Rp1,862 billion, or 14,323.1 in proceeds from insurance claims relating to unsuccessful launch of the Telkom-3 satellite.
Apart from cash on hand and cash in banks, we invest the majority of our excess cash from time to time in time deposits. Since May 14, 2004, we also have been investing a part of our excess cash in Rupiah-based mutual funds and other marketable securities. As of
- 73 - December 31, 2012, other current financial assets totaling Rp4,338 billion US450 million in mutual funds and other marketable
Cash Flows from Financing Activities Net cash flows used in financing activities totaled Rp13,314 billion US1,381 million in 2012 compared to Rp15,539 billion in
2011. This decrease by Rp2,225 billion, or 14.3, was primarily due to a decrease of Rp3,075 billion, or 41.9, in repayment of two- step loans and bank loans and a decrease of Rp315 billion, or 15.3 in payments for treasury stock. This was partially offset by an
increase of Rp1,058 billion, or 17.4, in cash dividends paid to our stockholders.
Current Assets
As of December 31, 2013, our current assets were Rp33,075 billion US2,718 million compared to Rp27,973 billion as of December 31, 2012. The increase in current assets was mainly due to the increase of Rp2,534 billion, or 58.4, in other current financial assets,
an increase in cash and cash equivalents of Rp1,578 billion, or 12.0, and an increase in trade and other receivables of Rp1,012 billion, or 18.7.
This increase was partially offset by a decrease of Rp279 billion, or 36.9 in prepaid other taxes.
Current Liabilities
Current liabilities were Rp28,437 billion US2,336 million as of December 31, 2013 and Rp24,108 billion as of December 31, 2012. This increase was primarily due to an increase of Rp4,531 billion, or 60.8 in trade and other payables and an increase of Rp761
billion, or 27.9 in unearned income.
This increase was partially offset by a decrease of Rp899 million, or 14.6 in accrued expenses.
Working Capital
Net working capital, calculated as the difference between current assets and current liabilities, amounted to Rp3,865 billion as of December 31, 2012 and Rp4,638 billion US382 million as of December 31, 2013. The increase in net working capital was
primarily due to:
A substantial increase of Rp2,534 billion in other current financial assets mainly from time deposit;
An increase of Rp1,578 billion in cash and cash equivalents; and
An increase of Rp1,012 billion in trade and other receivables. This was partially offset by:
An increase of Rp4,531 billion in trade and other payables;
A decrease of Rp899 billion in accrued expense; and
An increase of Rp761 billion in unearned income.
We believe that our working capital is sufficient for our present requirements. We expect that our working capital will continue to be addressed by various funding sources, including cash from operating activities and bank loans.
Capital Structure Our capital structure as of December 31, 2013 is described as follows:
Amount Rp billion
Portion
Short-term Debt 432
0.5 Long-term Debt
19,824 24.8
Total Debt 20,256
25.3 Equity attributable to owners
59,753 74.7
Total Invested Capital 80,009
100.0
We take a qualitative approach towards our capital structure and debt levels. Under our syndicated loan agreement with BNI, BRI and Bank Mandiri, we are required to maintain a debt to equity ratio of not more than 2.0 and debt service coverage ratio of more than
1.25. As of December 31, 2013, our debt to equity ratio was 0.34 and our debt service coverage ratio was 6.8, indicating our strong
- 74 - ability to meet our debt obligations. Our debt levels are primarily driven by our plans to develop our existing and new strategic
Indebtedness
Consolidated total indebtedness consisting of long-term liabilities, current maturities of long-term liabilities, short-term bank loans and deferred consideration for business combinations as of December 31, 2011, 2012 and 2013 were as follows:
As of December 31, 2011
2012 2013
2013 Rp billion
Rp billion Rp billion
US million
Indonesian Rupiah 14,142
16,192 17,543
1,441 US Dollar
1
2,561 2,052
1,734 142
Japanese Yen
2
1,168 1,031
979 80
Total 17,871
19,275 20,256
1,663
1 The amounts as of December 31, 2011, 2012 and 2013 translated into Rupiah at Rp9,075, Rp9,645 and Rp12,180 = US1,
respectively, being the Reuters sell rates for US Dollar at each of those dates. 2
The amounts as of December 31, 2011, 2012 and 2013 translated into Rupiah at Rp117.0, Rp111.8 and Rp115.9 = Yen 1, respectively, being the Reuters sell rates for Yen at each of those dates.
Of our total indebtedness, as of December 31, 2013, Rp20,256 billion, Rp5,525 billion, Rp6,465 billion, Rp2,853 billion, and Rp5,413 billion were scheduled for repayment in 2014, 2015 to 2016, 2017 to 2018 and thereafter, respectively.
For further information on our Company’s indebtedness, see Notes 18-19 to our Consolidated Financial Statements.
CAPITAL EXPENDITURES
In 2013, we incurred capital expenditures of Rp24,898 billion US2,046 million, which was in line with the realization of the plan to develop of network infrastructure, services node, applications and supporting system.
Our capital expenditures are grouped into four categories of development plan to characterize the network element and asset classification, as follows:
Broadband services, which consist of program development and capacity expansion of broadband access, service provision
servers, applications, content and IT system;
Network infrastructure, which consists of a network of national and regional backbone transmission Metro Junction, Metro Ethernet, IP backbone and satellite;
Optimizing legacy, for fixed wireline; and
Capex supports.
Of our Rp24,898 billion capital expenditure in 2013, Telkom as parent company incurred capital expenditures of Rp5,313 billion US437 million, Telkomsel incurred capital expenditures of Rp15,662 billion US1,287 million and our other subsidiaries incurred
capital expenditures of Rp3,923 billion US322 million as follows:
Table of realization of our capital expenditure
Years Ended December 31, 2011
2012 2013
Rp billion Rp billion
Rp billion
Telkom parent company Broadband service
1,875 1,662
3,286 Network infrastructure
1,979 2,060
1,674 Optimizing legacy
156 86
191 Support
192 232
162 Subtotal for Telkom
4,202 4,040
5,313 Subsidiaries
- 75 - Table of realization of our capital expenditure
Years Ended December 31, 2011
2012 2013
Rp billion Rp billion
Rp billion
Telkomsel 8,472
10,656 15,662
Others 1,929
2,576 3,923
Subtotal for subsidiaries 10,401
13,232 19,585
Total for Telkom Group 14,603
17,272 24,898
Material Commitments for Capital Expenditures
As of December 31, 2013, we had material commitments for capital expenditures under certain contractual arrangements of Rp18,461 billion, principally relating to procurement and installation of the broadband network, transmission equipment and fiber optic
cablesystem.
For a more detailed discussion regarding our material commitments for capital expenditures, see Note 38a to our Consolidated Financial Statements.
Source of Funds We have historically funded our capital expenditures primarily with cash generated from operations and additional fund raised from
external sources as well. In 2014, we expect that our capital expenditure to revenue ratio will be approximately in the range of 25- 30. We expect that of the total increase in amount of capital expenditure in 2014 over 2013, the most significant proportions will be
allocated for mobile and broadband services and with a portion of the increase will be synergistically functionalized to our subsidiaries. We expect to fund the above commitments with our internal and external source of funds.
The realization of the future capital expenditures may differ from the amounts indicated above due to various factors, including but not limited to the Indonesian and global economy environments, the RupiahUS Dollar or other applicable foreign exchange rates, the
availability of supply or vendor or other financing on terms acceptable to us, and also any technical or other problems in the implementation.
Critical Accounting Policies, Estimates and Judgments
For a complete discussion of our critical accounting policies, estimates and judgments, see Note 2ab to our Consolidated Financial Statements.
New Standards and Interpretations
See Note 44 to our Consolidated Financial Statements for a discussion of the new standards, amendments to standards and interpretations not yet effective for the year ended December 31, 2013 and have not been applied in preparing the Consolidated
Financial Statements.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
