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
44
9. PROPERTY AND EQUIPMENT continued
a. Gain on disposal or sale of property and equipment
2016 2015
Proceeds from sale of property and equipment 765
733 Net book value
152 8
Gain on disposal or sale of property and equipment 613
725
b. Asset impairment In 2014, the Group decided to cease its fixed wireless business no later than December 14, 2015.
The Company assessed the recoverable amount to be Rp549 billion and determined that the assets for fixed wireless CGU were further impaired by Rp805 billion. The recoverable amount has been
determined based on value in use 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 were 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, due to the lack of comparable market data because of the nature of the assets. The determination of value in use calculation is
most sensitive to the 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 is recognized as part of “Depreciation and Amortization” in the
consolidated statement of profit or loss and other comprehensive income. In connection with the restructuring of fixed wireless business Note 34c.ii, the Company
accelerated its depreciation of fixed wireless assets. As of December 31, 2015, all of the Company’s fixed wireless assets have been fully depreciated.
In 2016, the Company derecognized its fixed wireless assets with cost and accumulated depreciation amounting to Rp5,203 billion, respectively.
Management believes that there is no indication of impairment in the assets of other CGUs as of December 31, 2016.
c. Others i Interest capitalized to property under construction amounted to Rp444 billion and Rp328 billion
for the years ended December 31, 2016 and 2015, respectively. The capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranged from 10.20 to
11.00 and 6.84 to 11.00 for the years ended December 31, 2016 and 2015, respectively.
ii No foreign exchange loss was capitalized as part of property under construction for the years ended December 31, 2016 and 2015.
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
45
9. PROPERTY AND EQUIPMENT continued
c. Others continued
iii
In 2016 and 2015, the Group received proceeds from the insurance claim on lost and broken property and equipment, with a total value of Rp77 billion and Rp119 billion, respectively, and
were recorded as part of “Other Income” in the consolidated statements of profit or loss and
other comprehensive income. In 2016 dan 2015, the net carrying values of those assets of Rp19 billion and Rp35 billion, respectively, were charged to the consolidated statements of
profit or loss and other comprehensive income.
iv In 2016, Telkomsel decided to replace certain equipment units with net carrying amount of Rp528 billion, as part of its modernization program. Accordingly, Telkomsel accelerated the
depreciation of such equipment units. The impact of the change was an increase in the depreciation expense for the year ended December 31, 2016 amounting to Rp489 billion.
In 2015, Telkomsel decided to replace certain equipment units with a net carrying amount of Rp1,967 billion, as part of its modernization program. Accordingly, Telkomsel accelerated the
depreciation of such equipment units. The impact of the change was an increase in the depreciation expense for the year ended December 31, 2016 amounting to Rp274 billion.
This modernization program will decrease profit before income tax in 2017 amounting to Rp30 billion.
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, respectively, to reflect the current economic lives of the buildings and the transmissions. The impact of reduction in depreciation
expense for the year ended December 31, 2016 amounting to Rp244 billion. The impact of the changes in the estimated useful lives of the buildings and transmissions in future periods is an
increase in the profit before income tax as follows:
Years Amount
2017 198
2018 135
v Exchange of property and equipment In 2012 and 2011, the Company entered into a Procurement and Installation Agreement
for the Modernization of the Copper Cable Network through Optimalization of Asset Copper Cable Network through Trade InTrade Off method with PT Len
Industri “LEN” and PT Industri Telekomunikasi Indonesia “INTI”, respectively.
In 2016 and 2015, the Company derecognized the copper cable network asset with net carrying value of Rp3 billion and Rp2 billion, respectively, and recorded the fiber optic network
asset from the exchange transaction of Rp801 billion and Rp683 billion, respectively. In 2016 and 2015,
Telkomsel’s certain equipment units with net carrying amount of Rp636 billion and Rp5 billion, respectively, were exchanged with equipment from Ericsson AB
and PT Huawei Tech Investment “Huawei”. As of December 31, 2016, Telkomsel’s
equipment units with net carrying amount of Rp3 billion are going to be exchanged with equipment from Ericsson AB and Huawei and, therefore, these equipment units were
reclassified as assets held for sale in the consolidated statements of financial position.
