PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2014 and for the Year Then Ended
Figures in tables are expressedin billions of Rupiah, unless otherwise stated
54
11. PROPERTY AND EQUIPMENT continued
a. Gain on disposal or sale of property and equipment
2014 2013
Proceeds from sale of property and equipment 501
466 Net book value
64 36
Gain on disposal or sale of property and equipment 437
430
b. Assets impairment As of December 31 2014 and 2013, the CGUs that independently generate cash inflows were
fixed wireline, fixed wireless, cellular and others. As of December 31 2013, there were indications of impairment in the fixed wireless CGU
presented as part of personal segment, which were mainly due to increased competition in the fixed wireless market that resulted in lower average tariffs, declining active customers and
declining average revenue per user. The Company assessed the recoverable value of the assets in the CGU and determined that assets for the fixed wireless CGU were impaired by Rp596 billion.
The recoverable amount has been determined based on value-in-use VIU calculations. This calculation used the most recent cash flows projection approved by management covering five-
year period and with cash flows beyond the five-year period extrapolated using perpetuity growth rate. Management’s cash flow projection also incorporates management’s reasonable
expectations for developments in macro economic conditions and market expectations for the Indonesian telecommunications industry. Management applied a pre-tax discount rate of 13.5
derived from the Company’s post-tax weighted average cost of capital and benchmarked to externally available data.
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 as of December 31, 2014
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’s post-tax weighted average
cost of capital and benchmarked to externally available data. In addition, management also applied technological and economic obsolescence rate of 30 based on the Company’s internal
data, as there is a lack of comparable market data because of the nature of the assets. The calculation of VIU calculation is most sensitive to technological and economic obsolescence rate
assumption. An increase in technological and economic obsolescence rate to 40 would result in a further impairment of Rp70 billion.
Loss on impairment of assets was recognized within “Depreciation and Amortization” in the consolidated statement of comprehensive income.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2014 and for the Year Then Ended
Figures in tables are expressedin billions of Rupiah, unless otherwise stated
55
11. PROPERTY AND EQUIPMENT continued
c. Others i
Interest capitalized to property under construction amounted to Rp251 billion and Rp100 billion for the years ended December 31, 2014 and 2013, respectively. The
capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranges from 10.14 to 18.31 and from 9.75 to 13.07 for the years ended December
31, 2014 and 2013, respectively.
ii No foreign exchange loss was capitalized as part of property under construction for the years ended December 31, 2014 and 2013.
iii
In 2014 and 2013, the Group received the proceeds from the insurance claim on the lost and broken property and equipment, with a total value of Rp212 billion and Rp60 billion,
respectively. The proceeds were recorded as part of “Other Income” in the consolidated statement of comprehensive income. In 2014 and 2013, the net carrying value of those
assets of Rp50 billion and Rp17 billion, respectively, were charged to the consolidated statement of comprehensive income.
iv In 2012, Telkomsel decided to replace certain equipment units with net carrying amount of Rp1,037 billion, as part of a modernization program. Accordingly, Telkomsel changed the
estimated useful lives of such equipment. In 2014 and 2013, the effect of the change is the additional depreciation expense amounting to Rp84 billion and Rp131 billion, respectively.
In 2014, Telkomsel decided to replace certain equipment units with net carrying amount of Rp252 billion, as part of modernization program. Accordingly, Telkomsel changed the
estimated useful lives of such equipment. In 2014, the effect of the change is the additional depreciation expense amounting to Rp252 billion.
v In 2012, the useful lives of Telkomsel’s towers were changed from 10 years to 20 years to reflect their current economic useful lives. The impact is a reduction of depreciation expense
by Rp565 billion and Rp606 billion, respectively, for the years ended December 31, 2014 and 2013.
The impact of the change in the estimated useful lives of the towers in future periods is to increase the profit before income tax as follows:
Years Amount
2015 469
2016 301
2017 92
In 2014, the useful lives of Telkomsel’s buildings and transmissions were changed from 20 years to 40 years, and from 10 years to 15 and 20 years, to reflect their current economic
useful lives. The impact is a reduction of depreciation expense by Rp289 billion for the year ended December 31, 2014.
The impact of the change in the estimated useful lives of the buildings and transmissions in future periods is to increase the profit before income tax as follows:
Years Amount
2015 264
2016 244
2017 198
2018 135
