Interconnection AR TELKOM 2014 ENG
PROPERTY, PLANT EQUIPMENT
Our property and equipment is used for telecommunication operations, which mainly consist of transmission installation
and equipment, cable network and switching equipment. A description of these is contained elsewhere in Note
11 to our Consolidated Financial Statements.
Except for ownership rights granted to individuals in Indonesia, reversionary rights to land rests with the
Republic of Indonesia, pursuant to Agrarian Law No.51960. Land title is designated through land rights, including
Right to Build Hak Guna Bangunan or HGB and Right of Use Hak Guna Usaha or HGU. Land title holders
enjoy full use of the land for a specified period, subject to renewal and extensions. In most instances, land rights
are freely tradable and may be pledged as security under loan agreements.
We own several pieces of land located throughout Indonesia with the right to build and use for a period of
10 to 45 years, which will expire between 2015 and 2053. We believe that there will be no difficulty in obtaining
the extension of the land rights when they expire.
We hold registered rights to build and use for most of our properties. Pursuant to Government Regulation
No.401996, the maximum initial period for the right to build is 30 years and is renewable for an additional 20
years. We are not aware of any environmental issues that could affect the utilization of our property and
equipment.
All assets owned by the Company have been pledged as collateral for bonds Notes 20a. Certain property
and equipment of the Company’s subsidiaries have been pledged as collateral under lending agreements Notes
17 and 21.
As of December 31, 2014 the cost of fully depreciated property and equipment of Company that are still used
in operations amounted to Rp47,910 billion. We are currently performing modernization of network assets
to replace the fully depreciated property and equipment.
INSURANCE
As of December 31, 2014, our property and equipment except land rights, with net carrying amount of Rp85,352
billion were insured against fire, theft, earthquake and other specified risks, with a maximum loss claim of
Rp15,244 billion, US119 million, EURO133 thousand, SGD29 million and HKD19 million. Management believes
that the insurance coverage is adequate to cover potential losses from the insured risks.
OPERATIONAL OVERVIEW
NETWORK INFRASTRUCTURE DEVELOPMENT
Our network infrastructure can be categorized into national and international network infrastructure. National
network infrastructure was held to realize one of our major programs, namely Indonesia Digital Network
IDN.
International Networks
We operate international gateways in Batam, Jakarta, and Surabaya to route outgoing and incoming calls on
our IDD service “007”.
After the Batam Singapore Cable System BSCS, Asia America Gateway AAG, and Singapore Japan Cable
System SJC on March 7, 2014, our subsidiary TII or Telin, in cooperation with other 17 global telecommunication
providers signed MoU of submarine cable development project, South East Asia – Middle East -Western Europe
5 SEA-ME-WE 5 in Kuala Lumpur, Malaysia. SEA-ME- WE5 is a submarine cable system with a length of
approximatelly 20.000 km stretching from Dumai, Indonesia to several countries in Southeast Asia, France
and Italy with direct connection from Indonesia to Europe, SEA-ME-WE 5.
Development of submarine cable system infrastructure was also carried out by signing MoU of Southeast Asia
– United States SEA – USA Cable System, where Telin is also joined as member on a consortium with other 6
global telecommunication companies. SEA – US connects Manado Indonesia, Davao Philippines, Piti Guam,
Oahu Hawaii, United States, and Los Angeles California, United States. In line with SEA-ME-WE5, the submarine
cable system has a capacity to accommodate data and internet requirement from Indonesia directly to the owner
of the majority of the world internet content, silicon valley.
To support the international services both voice and data, Telin operates 16 points of presence “POP” in
various parts of the world, including in Asia Dubai, Singapore, Hong Kong, Malaysia and Tokyo, Europe
London , Frankfurt and Amsterdam and the USA Ashburn, New York, Los Angeles, San Jose and Palo
Alto.
National Network
In the master plan and IDN infrastructure, our target was
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FINANCIAL AND PERF
ORMANCE HIGHLIGHT
MANA GEMENT
REPOR T
PREF A
GENERAL INF
ORMA TION OF
TELK OM INDONE
SIA
MANA GEMENT’S DISCUSSION
AND ANAL Y
SIS
CORPORA TE GO
VERNANCE
SOCIAL AND ENVIRONMENT
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RE SPONSIBILITY
APPENDICE S
to modernize legacy network into a network that used a broadband access infrastructure. We have 13.3 million homepass of broadband access while Telkomsel digital network was strengthened by 85,420 base stations.
We continue to pursue development of our network infrastructure to offer a more efficient and cost-competitive service as part of the Government’s Master Plan for the Acceleration and Expansion of Indonesias Economic
Development “MP3EI” in line with our transformation into a TIMES provider under our Indonesia Digital Network IDN program. In the framework of developing high-quality, efficient and competitive infrastructure in terms of
the costs in delivery services, we continue to pursue the development and improvement of the network infrastructure, known as Telkom One Network, which was built and operated by Telkom Group.
Our IDN program involves the following three program developments: 1. id-Convergence “id-Con”: convergence of the node service network infrastructure into a multi-service and
multi-screen integrated NGN. 2. id-Ring: development of our transport network infrastructure into an IP-based and optical backbone network.
3. id-Access: development of our customer access network infrastructure into a high speed broadband access through fiber optic and Wi-Fi networks.
Fixed Wireline Network
As of December 31, 2014, we managed 9.7 million fixed wireline connections. In the master plan and IDN infrastructure, our target was to modernize legacy network into a network that used a broadband access infrastructure.
Operating Statistics
As and for the year ended December 31, 2014
2013 2012
2011 2010
Exchange capacity 13,946,801
13,918,369 13,908,003
12,180,214 11,237,229
Installed lines 10,341,807
10,650,652 11,109,156 11,005,208
10,510,048 Lines in service
9,698,255 9,350,806
9,034,010 8,688,526
8,302,818
Lines in service are subscriber lines and public telephone lines, including the lines in service that we operate under revenue-sharing arrangements.
Fixed Wireless Network
Our fixed wireless infrastructure consists primarily of mobile switching centers “MSC” and base station sub systems “BSS”, which consists of a base station controller “BSC” and a base transceiver station “BTS”. According to the
Decree of the Minister of Communication and Information of the Republic of Indonesia No. 934, dated September 26, 2014, approval has been given for the allocation of radio frequency 8 MHz in the range of 880-887.5 MHz paired
with 925-932.5 MHz from our Company to Telkomsel. On June 27, 2014, we entered into a Conditional Business Transfer Agreement with Telkomsel to transfer parts of our fixed wireless business and migrated subscribers to
Telkomsel. However, we plan to continue to operate the Flexi service till the end of 2015 or until our remaining Flexi customers have migrated to Telkomsel, if earlier.
Cellular Network
Our cellular services, which are operated by our subsidiary, Telkomsel, have the most extensive network coverage of any cellular operators in Indonesia. Telkomsel currently operates on the GSMDCS, GPRS, EDGE,3.5G and 4G
networks. The GSMDCS network consists of 7.5 MHz of bandwidth on the 900 MHz frequency and 22.5 MHz of bandwidth on the 1.8 GHz frequency. Telkomsel’s 3G network uses 15 MHz of bandwidth on the 2.1 GHz frequency.
The range of cellular services on the GSM network provided by Telkomsel extends to all cities and districts in Indonesia. In 2014, Telkomsel has added 15,556 unit of BTS. As of December 31, 2014, Telkomsel’s digital network was supported
by 85,420 BTS.
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