Risks Related to Our Business
5. Risks Related to Our Fixed Telecommunication Business
We may further lose wireline telephone subscribers and revenues derived from our wireline voice services may continue to decline, which may materially adversely affect our results of operations, financial condition and prospects Revenues derived from our wireline voiceservices have declined during the past several years mainly due to the increasing popularity of mobile voice services and other alternative means of communication, such as VoIP. Tariffs for mobile services have declined in recent years which has further accelerated substitution of mobile for wireline voice services. While the number of our fixed wireline subscribers increased by 4.5 in 2013 and increased by 3.7 at the end of 2014, revenues from our wireline voice services decreased by 8.3 in 2013 and by 2.2 in 2014. The percentage of revenues derived from our wireline voice services out of our total revenues continued to decrease from 10.4 in 2013 to 9.4 in 2014. We have been taking various measures in order to stabilize our revenues from wireline voice services. However, we cannot assure you that we will be successful in mitigating the adverse impact of the substitution of mobile voice services and other alternative means of communication for wireline voice services or in reducing the rate of decline in our revenues generated from wireline voice services. Migration from wireline voice services to mobile services and other alternative means of communication may further intensify in the future, which may affect the financial performance of our wireline voice services and thus materially and adversely affect our results of operations, financial condition and prospects as a whole. Our data and internet services are facing increasing competition, and we may experience declining margins from such services as such competition intensifies Our data and internet services are facing increase competition from other data and internet operators as well as mobile operators. The number of mobile broadband subscribers have increased with the increasing popularity of smart phones in Indonesia, which adversely affects our market share and revenues from our fixed line data and internet services. In 2013, the regulator permitted the Wi-Max operators to deploy the long term evolution “LTE” technology which will further intensify competition in the broadband internet space. We have been taking various measures in order to mitigate the impact of intense competition in our data and internet businesses. However, we cannot assure you that we will be successful in mitigating such adverse impact. Competition may further intensify in the future, which may affect the financial performance of our data and internet services and thus materially and adversely affect our results of operations, financial condition and prospects as a whole.6. Competition Risks Related to Our Cellular Business Telkomsel
Competition from existing service providers and new market entrants may adversely affect our cellular services business The Indonesian cellular services business is highly competitive. Competition among cellular services providers in Indonesia is based on various factors, including pricing, network quality and coverage, the range of services, features offered and customer service. Our cellular services business, operated through our majority-owned subsidiary, Telkomsel, competes primarily against Indosat and XL. Several other smaller GSM and CDMA operators also provide cellular services in Indonesia, including PT Hutchison CP Telecommunications “Hutchison”, Smart Telecom and Bakrie Telecom. In addition to current cellular service providers, the MoCI may license additional cellular service providers in the future, and such new entrants may compete with us. A number of consolidations among Indonesian operators have taken place in recent years. In March 2010, Smart Telecom and Mobile-8 announced the signing of a cooperation agreement to use the same logo and brand under the brand name smartfren. On January 18, 2011, Mobile-8 acquired a significant number of shares in Smart Telecom, and on April 12, 2011 PT Mobile-8 Telecom Tbk. changed its name to PT Smartfren Telecom Tbk. XL-Axiata completed the acquisition of a majority interest 253 2014 Annual Report PT Telkom Indonesia Tbk PerseroParts
» Telkomsel Double Digit Revenue Growth Indonesia Digital Network IDN 2015 International Expansion
» Parenting Strategy : Strategic guidance
» Shareholders with Ownership More Than 5 MainControlling Shareholder
» Ownership of Stocks by Directors and Commissioners
» Shareholders with Less than 5 Ownership
» Proportion of Common Stock Held in Indonesia and Abroad List of the 20 Biggest Public Shareholders
» Employee Stock Ownership Program
» Chronology of Bonds Purchases of Equity Securities by The Issuer and Affiliated Purchasers
» Sekretariat of President AR TELKOM 2014 final
» Director Human Capital AR TELKOM 2014 final
» Director of Consumer Service
» Directorate of Wholesale International Business Service
» Director of Innovations AR TELKOM 2014 final
» Direktur Enterprise Business AR TELKOM 2014 final
» Director of Finance AR TELKOM 2014 final
» Department of Corporate AR TELKOM 2014 final
» Internal Auditor AR TELKOM 2014 final
» Department of Project AR TELKOM 2014 final
» Finance Billing Collection Center FBCC
» Human Capital Center AR TELKOM 2014 final
» Telkom Corporate University Center
» Supply Center AR TELKOM 2014 final
» Innovation Design Center IDeC
» Community Development Center CDC
» Human Resource Assessment Service Assesment Center
» ITSS Division AR TELKOM 2014 final
» Enterprise Service Division AR TELKOM 2014 final
» Business Service Division AR TELKOM 2014 final
» Wholesale Service Division AR TELKOM 2014 final
» Broadband Division AR TELKOM 2014 final
» Wireless Broadband Division AR TELKOM 2014 final
» Network of Broadband Division
» Witel of Central Java of Eastern North
» Witel of Southern Central Java
» Witel Yogyakarta AR TELKOM 2014 final
» Witel of Central Java of Eastern South
» Regional Division V East Java
» Witel of East Java of Central East
» Witel of East Java of Southern East
» Witel of Central East Borneo
» Witel of Northern East Borneo
» Witel of Southern East Borneo
» Regional Division VII Eastern Indonesia Area
» Witel of SouthSulawesi AR TELKOM 2014 final
» Witel of Western South Sulawesi
» Witel of North Sulawesi North Maluku
» Witel of Maluku AR TELKOM 2014 final
» Witel of Papua AR TELKOM 2014 final
» PT Telekomunikasi Selular Telkomsel
» PT Telekomunikasi Indonesia Internasional Telin
» Telin Singapore AR TELKOM 2014 final
» Telin Hong Kong AR TELKOM 2014 final
» Telin Timor-Leste AR TELKOM 2014 final
» Telkom Australia AR TELKOM 2014 final
» Telkom Macau AR TELKOM 2014 final
» Telkom Taiwan AR TELKOM 2014 final
» Telin Malaysia AR TELKOM 2014 final
» Telkom USA AR TELKOM 2014 final
» Telin Branch Office in Myanmar
» PT Multimedia Nusantara Metra
» PT Infrastruktur Telekomunikasi Indonesia
» PT Dayamitra Telekomunikasi Mitratel
» PT Infomedia Nusantara AR TELKOM 2014 final
» PT MD Media AR TELKOM 2014 final
» PT Sigma Cipta Caraka Telkom Sigma
» PT Administrasi Medika AdMedika
» PT Finnet Indonesia AR TELKOM 2014 final
» PT Melon Indonesia AR TELKOM 2014 final
» Telkom Property PT Graha Sarana Duta
» PT Telkom Akses AR TELKOM 2014 final
» Fixed Wireline Services AR TELKOM 2014 final
» Fixed Broadband AR TELKOM 2014 final
» Cellular Services AR TELKOM 2014 final
» Tower Platform Services, which includes Managed
» Big Data, which includes mobile subscriber pattern
» Ecosystem Solution, which includes services involving
» Digital Life refers to digital content services such
» Digital Home refers to a development of home media
» Digital Advertising is a commercial service for the
» Contact centers AR TELKOM 2014 final
» Partnership Stores AR TELKOM 2014 final
» Authorized dealers and retail outlets
» Account Management Teams AR TELKOM 2014 final
» Telkom Solution Houses AR TELKOM 2014 final
» SME Centers AR TELKOM 2014 final
» Website AR TELKOM 2014 final
» Social Media AR TELKOM 2014 final
» Liabilities dan Equity a. Current Liabilities
» Revenues Total revenues increased by Rp6,729 billion, or 8.1, from
» Expenses Total expenses increased by Rp3,693 billion, or 6.4,
» Income Tax Expense Income tax expense increased by Rp479 billion, or 7.0,
» Other Comprehensive Income Other comprehensive income decreased by Rp87 billion,
» Profit for the Year Attributable to Owners of the Parent Company
» Profit for the Year Attributable to Non-controlling Interest
» Comprehensive Income for the Year Comprehensive income for the year increased by Rp1,068
» Net Income per Share Net income per share increased by Rp2,4, or 1.6, from
» Revenues Total revenues increased by Rp5,824 billion, or 7.5,
» Expenses Total expenses increased by Rp3,695 billion, or 6.8,
» Income Tax Expense Income tax expense decreased by Rp993 billion, or
» Cash Flows from Operating Activities Net cash provided by operating activities in 2014 was
» Cash Flows from Investing Activities Net cash flows used in investing activities in 2014 was
» Cash Flows from Financing Activities Net cash flows used in financing activities was Rp10,083
» Cash Flows from Operating Activities Net cash provided by operating activities in 2013 was
» Cash Flows from Investing Activities Net cash flows used in investing activities in 2013 was
» Internal Liquidity Sources To fulfill our obligations, we rely primarily on our internal
» External Liquidity Sources Our primary external sources of liquidity are short and
» Outstanding Liquidity Sources We had undrawn loan facilities which include the following
» Purpose of the Commitment As of December 31, 2014, we had material commitments
» Source of Funds We have historically funded our capital expenditures
» Denomination of Currency As of December 31, 2014, details of material commitment
» Planned Actions to Mitigate Foreign Exchange Risks
» Expansion - On January 16, 2014, we establish 100 ownership
» Acquisition - On September 25, 2014, Telkom Australia Telin through
» Employee benefits Under PSAK, the actuarial gains or losses are recognized
» Land rights Under PSAK, land rights are recorded as part of property
» Related party transactions Under Bapepam - LK OJK Regulation No. VIII.G.7
» Indonesian Taxation DebtCapital Restructure
» Dividends Dividends declared by us out of retained earnings and
» Capital Gains The sale or transfer of common stock through the IDX
» Stamp Duty Stock transactions in Indonesia are subject to stamp
» Threshold Passive Foreign Investment Company “PFIC” Classification Matters
» Dividends Any cash distributions paid by us out of earnings and
» PFIC Considerations If we were to be classified as a PFIC in any taxable year,
» Backup Withholding Tax and Information Reporting Requirements
» Telecommunications Law AR TELKOM 2014 final
» Telecommunications Regulators AR TELKOM 2014 final
» C l a ss i f i c at i o n a n d L i ce n s i n g o f Telecommunications Providers
» Introduction of Competition in the Indonesian Telecommunications Industry
» DLD Services AR TELKOM 2014 final
» IDD Services AR TELKOM 2014 final
» Limited Mobility Wireless Services
» Cellular Interconnection AR TELKOM 2014 final
» Satellite AR TELKOM 2014 final
» Consumer Protection AR TELKOM 2014 final
» Telecommunication Regulatory Charges AR TELKOM 2014 final
» Telecommunications Towers AR TELKOM 2014 final
» Telkom’s Shareholders AR TELKOM 2014 final
» Rights and Responsibilities of Shareholders at the General Meeting of
» Procedures for the Implementation of the Shareholders General Meeting
» Realization of General Meeting of Shareholders GMS
» President Director as CEO of Telkom Group
» Finance Director “KEU” AR TELKOM 2014 final
» Director of Innovation Strategic Portfolio “ISP”
» Director of Consumer Service “CONS”
» Director of Enterprise Business Service “EBIS”
» Director of Network, IT Solution “NITS”
» Director of Human Capital Management “HCM”
» Director of Wholesale International Service “WINS”
» Nomination and Remuneration Committee The composition of the Nomination and Remuneration
» Audit Committee The composition of the Audit Committee as determined
» The Planning and Risk Evaluation and Monitoring Committee “KEMPR”
» Report of the Nomination and Remuneration Committee in 2014
» Report of the Audit Committee in 2014
» Measures of Directors that require approval from the Board of Commissioners
» Work Meeting KEMPR In 2014 KEMPR held 10 committee meetings.
» Bayu Katon Management Report On Internal Control Over Financial Reporting
» Efforts to provide value added to the management of the company
» Enterprise Risk Management ERM Telkom realizes that risk management is an integral part
» Political and Social Risks Current political and social events in Indonesia may
» Macro Economic Risks AR TELKOM 2014 final
» Disaster Risks AR TELKOM 2014 final
» Risks Related to Our Business
» Operational Risks A material failure in the continuing operations of our
» Financial Risks We are exposed to interest rate risk
» Legal and Compliance Risks If we are found liable for price fixing by the Indonesian
» Regulation Risks We operate in a legal and regulatory environment that
» QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
» Foreign Exchange Controls Indonesia operates a liberal foreign exchange system
» Exchange Rate Risk We are exposed to foreign exchange risk on sales,
» Committees Interest Rate Risk Our exposure to interest rate fluctuations results primarily
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