PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended
Figures in tables are expressed in billions of Rupiah, unless otherwise stated
104
34. SIGNIFICANT COMMITMENTS AND AGREEMENTS continued c. Others continued
i 3G license continued With
reference to
the Decision
Letters No.
07PERM.KOMINFO22006, No. 268KEPM.KOMINFO92009 and No. 191 year 2013 of the MoCI Note 2i, Telkomsel is
required, among other things, to continued: 4. Construct a 3G network which covers at least 14 provinces by the sixth year of holding the
3G license. 5. Issue a performance bond each year amounting to Rp20 billion or 5 of the annual fee to
be paid for the subsequent year, whichever is higher. ii Radio Frequency Usage
Based on the Decree No. 76 dated December 15, 2010 of the Government of the Republic of Indonesia, which amended Decree No. 7 dated January 16, 2009, the annual frequency usage
fees for bandwidths of 800 Megahertz “MHz”, 900 MHz and 1800 MHz are determined using a formula set forth in the Decree. The Decree is applicable for 5 years unless further amended.
As an implementation of the above Decree, the Company and Telkomsel paid the first to fifth year annual frequency usage fees in 2010 to 2014.
Based on Decision letter No. 983 issued in 2015, the MoCI determined that the sixth year Y6, 2015 annual frequency usage fee of Telkomsel was Rp 2,398 billion. The fee was paid in
December 2015.
On July 6, 2015, Telkomsel received Decision Letter No. 644 Year 2015 dated June 30, 2015, of the MoCI, which replaced Decision Letter No.42 Year 2014 dated January 29, 2014, whereby
the MoCI granted Telkomsel the rights to provide: i Mobile telecommunication services with radio frequency bandwidth in the 800 MHz,
900 MHz and 1800 MHz bands; ii Mobile telecommunication services IMT-2000 with radio frequency bandwidth in the
2.1 GHz bands 3G; and iii Basic telecommunication services.
Conditional Business Transfer Agreement “CBTA”
In order to maximize business opportunities within the group synergy, the Company restructured its fixed wireless business unit by transferring its fixed wireless business and
subscribers to Telkomsel. On June 27, 2014, the Company signed a CBTA with Telkomsel to transfer such business and subscribers to Telkomsel Notes 4, 9b, 31.
Based on Decision Letter No. 934 dated September 26, 2014, the MoCI approved the transfer of the Company’s frequency usage license on radio frequency spectrum of 800 MHz,
specifically on spectrum of 880-887.5 MHz paired with 925-932.5 MHz, to Telkomsel. Telkomsel can use the radio frequency spectrum since the Decision Letter was issued.
During the transition period, the Company is still able to use the radio frequency spectrum of 880 - 887.5 MHz paired with 925 - 932.5 MHz at the latest until December 14, 2014.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended
Figures in tables are expressed in billions of Rupiah, unless otherwise stated
105
34. SIGNIFICANT COMMITMENTS AND AGREEMENTS continued c. Others continued
ii Radio Frequency Usage continued Conditional
Business Transfer Agreement “CBTA” continued Based on MoCI Decision letter No. 807KOMINFOOJ-SOPI.4SP.03.03102016 dated
October 13, 2016 stated that frequency migration process of frequency spectrum of 800 MHz has finished and Telkomsel has been able to use frequencies 880 - 887.5 MHz paired with
925 - 932.5 MHz nationwide.
Regarding the case, the Company and Telkomsel agreed that all conditions as mentioned in CBTA have been met on September 30, 2016 and on October 21, 2016, the CBTA in 2016 has
been completed.
iii Future minimum lease payments under operating lease The Group entered into non-cancelable lease agreements with both third and related parties.
The lease agreements cover leased lines, telecommunication equipment and land and building with terms ranging from 1 to 10 years and with expiry dates between 2017 and 2026. Periods
may be extended based on the agreement by both parties.
Future minimum lease payments and receivables under the operating lease agreements as of December 31, 2016 are as follows:
Total Less than 1
year 1-5 years
More than 5 years
As lessee 29,617
3,814 14,479
11,324 As lessor
2,443 774
1,400 269
In connection with the restructuring of its fixed wireless business Note 34c.ii, the Company is undertaking a negotiation to early terminate its operating lease agreements, and has recorded
provisions for early termination amounting to Rp202 billion and Rp666 billion which are presented as “Other Expense” in 2015 and 2016, respectively. As of December 31, 2016,
outstanding payable balance of operating lease agreements due to early termination amounting to Rp300 billion.
The future minimum lease payments above include those related to lease agreements with telecommunication tower providers which were used for the fixed wireless business unit.
iv USO The MoCI issued Regulation No. 15PERM.KOMINFO92005 dated September 30, 2005,
which sets forth the basic policies underlying the USO program and requires telecommunications operators in Indonesia to contribute 0.75 of their gross revenues
with due consideration for bad debts and interconnection charges for USO development. Based o
n the Government’s Decree No. 7 year 2009 dated January 16, 2009 and Decree No. 05PERM.KOMINFO22007 dated February 28, 2007, the contribution was changed to
1.25 of gross revenues with due consideration for bad debts andor interconnection charges andor connection charges. Subsequently, in December 2012, Decree
No. 05PERM.KOMINFO22007 was replaced by Decree No. 45 year 2012 of the MoCi which was effective from January 22, 2013. The latest Decree stipulates, among other things, the
exclusion of certain revenues that are not considered as part of gross revenues as a basis to calculate the USO charged, and changed the payment period which was previously on a
quarterly basis to become quarterly or semi-annually.
