Leases Consolidated Financial Statements Unaudited 1Q 2014

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2014 and for three months period then ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 26

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued r. Revenue and expense recognition

i. Fixed line telephone revenues Revenues from fixed line installations, including incremental costs, are deferred and recognized as revenue and costs over the expected term of the customer relationships. Based on reviews of historical information and customer trends, the Company determined the expected term of the customer relationships in 2014 and 2013 to be 18 years, respectively. Revenues from usage charges are recognized as customers incur the charges. Monthly subscription charges are recognized as revenues when incurred by subscribers. ii. Cellular and fixed wireless telephone revenues Revenues from postpaid service, which consist of usage and monthly charges, are recognized as follows: • Airtime and charges for value added services are recognized based on usage by subscribers. • Monthly subscription charges are recognized as revenues when incurred by subscribers. Revenues from prepaid card subscribers, which consist of the sale of starter packs also known as SIM cards in the case of cellular and RUIM in the case of fixed wireless telephone and start-up load vouchers and pulse reload vouchers, are recognized as follows: • Sales of SIM and RUIM cards are recognized as revenue upon delivery of the starter packs to distributors, dealers or directly to customers. • Sales of pulse reload vouchers either bundled in starter packs or sold as separate items are recognized initially as unearned income and recognized proportionately as usage revenue based on duration and total of successful calls made and the value added services used by the subscribers or the expiration of the unused stored value of the voucher. • Unutilized promotional credits are netted against unearned income. iii. Interconnection revenues The revenues from network interconnection with other domestic and international telecommunications carriers are recognized monthly on the basis of the actual recorded traffic for the month. Interconnection revenues consist of revenues derived from other operators’ subscriber calls to the Company and subsidiaries’subscribers incoming and calls between subscribers of other operators through the Company and subsidiaries’ network transit. iv. Data, internet and information technology service revenues Revenues from data communication and internet are recognized based on service activity and performance which are measured by the duration of internet usage or based on the fixed amount of charges depending on the arrangements with customers. Revenues from sales, installation and implementation of computer software and hardware, computer data network installation service and installation are recognized when the goods are delivered to customers or the installation takes place. Revenue from computer software development service is recognized using the percentage-of- completion method.