SIGNIFICANT COMMITMENTS AND AGREEMENTS continued c. Others continued

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 2016 and For the Six Months Period Then Ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 109

35. SIGNIFICANT COMMITMENTS AND AGREEMENTS continued c. Others continued

iv USO continued Based on MoCI Decree No. 32PERM.KOMINFO102008 dated October 10, 2008 as amended by Decree No. 03PERM.KOMINFO22010 dated February 1, 2010 which replaced MoCI Decree No. 11PERM.KOMINFO042007 dated April 13, 2007 and MoCI Decree No. 38PERM.KOMINFO92007 dated September 20, 2007, it is stipulated that, among others, in providing telecommunication access and services in rural areas USO Program, the provider is determined through a selection process by Balai Telekomunikasi dan Informatika Pedesaan “BTIP” which was establ ished based on MoCI Decree No. 35PERM.KOMINFO112006 dated November 30, 2006. Subsequently, based on Decree No. 18PERM.KOMINFO112010 dated November 19, 2010 of MoCI, BTIP was changed to Balai Penyedia dan Pengelola Pembiayaan Telekomunikasi dan Informatika “BPPPTI”. a. The Company On March 12, 2010, the Company was selected in a tender by the Government through BTIP to provide internet access service centers for USO sub-districts for a total amount of Rp322 billion, covering Nanggroe Aceh Darussalam, North Sumatera, North Sulawesi, Gorontalo, Central Sulawesi, West Sulawesi, South Sulawesi and South East Sulawesi. On December 23, 2010, the Company was selected in a tender by the Government through BTIP to provide mobile internet access service centers for USO sub-districts for a total amount of Rp528 billion, covering Jambi, Riau, Kepulauan Riau, North Sulawesi, Central Sulawesi, Gorontalo, West Sulawesi, South East Sulawesi, Central Kalimantan, South Sulawesi, Papua and West Irian Jaya. In 2014, the program was ceased. On September 8, 2015, the Company filed an arbitration claim to the Indonesia National Board of Arbitration “BANI” for the settlement of the outstanding receivables of USO-PLIK and USO-MPLIK. As of the date of approval and authorization for the issuance of the consolidated financial statements, the arbitration claim is still in process. b. Telkomsel On January 16 and 23, 2009, Telkomsel was selected in a tender by the Government through BTIP to provide telecommunication access and services in rural areas USO Program for a total amount of Rp1.66 trillion, covering all Indonesian territories except Sulawesi, Maluku and Papua. Accordingly, Telkomsel obtain local fixed-line licenses and the right to use radio frequency in the 2,390 MHz - 2,400 MHz bandwith. Subsequently, in 2010 and 2011, the agreements with BTIP were amended, which amendments cover, among other things, changing the price to Rp1.76 trillion and changing the term of payment from quarterly to monthly or quarterly. In January 2010, the MoCI granted Telkomsel operating licenses to provide local fixed-line services under the USO program. On December 27, 2011, Telkomsel on behalf of Konsorsium Telkomsel, a consortium which was established with Dayamitra on December 9, 2011 was selected by BPPPTI as a provider of the USO Program in the border areas for all packages package 1 to package 13 with a total price of Rp830 billion. On such date, Telkomsel was also selected by BPPPTI as a provider of the USO Program upgrading of “Desa Pinter” or “Desa Punya Internet” for 1, 2 and 3 packages with a total price of Rp261 billion. PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 2016 and For the Six Months Period Then Ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 110

35. SIGNIFICANT COMMITMENTS AND AGREEMENTS continued

c. Others continued iv USO continued b. Telkomsel continued On March 31, 2014, the USO program for packages 1, 2, 3, 6 and 7 ceased. As of September 18, 2014, Telkomsel filed an arbitration claim to BANI for the settlement of the outstanding receivable from BPPPTI. On October 23, 2015, BANI decided that Telkomsel should pay the outstanding receivables from those USO program to BPPPTI amounting to Rp94.2 billion. Telkomsel accepted the decision and paid the balance in December 2015. On June 30, 2016 and December 31, 2015, the carrying value of the Companys receivables and related Telkomsel USO program that is amortized using the effective interest rate method are respectively Rp178 billion and Rp179 billion Note 5.

36. CONTINGENCIES

In the ordinary course of business, the Group has been named as defendants in various legal actions in relation with land disputes, monopolistic practice and unfair business competition and SMS cartel practices. Based on managements estimate of the probable outcomes of these matters, the Group has recognized provision for losses amounting to Rp43 billion as of June 30, 2016. a. The Company, Telkomsel and seven other local operators are being investigated by The Commission for the Supervision of Business Competition “ Komisi Pengawasan Persaingan Usaha ” or “KPPU” for allegations of SMS cartel practices. On June 18, 2008, in case No. 26KPPU-I2007, the Company, Telkomsel and seven other local operators was investigated. KPPU found that the Company, Telkomsel and certain other local operators had violated Law No. 5 year 1999 article 5 and charged the Company and Telkomsel in the amounts of Rp18 billion and Rp25 billion, respectively. Management believes that there are no such cartel practices that led to a breach of prevailing regulations. Accordingly, the Company and Telkomsel filed an appeal with the Bandung District Court and South Jakarta District Court on July 14, 2008 and July 11, 2008, respectively. Due to the filing of case by seven operators in various courts, the KPPU subsequently requested the Supreme Court SC to consolidate the cases into the Central Jakarta District Court. Based on the SC’s decision letter dated April 12, 2011, the SC appointed the Central Jakarta District Court to investigate and resolve the case. On May 27, 2015 Central Jakarta District Court decided to that the Company, Telkomsel and seven other local operators win this case. On July 23, 2015, KPPU filed an appeal to the SC regarding the case of SMS cartel practices. On February 29, 2016, the SC decided in case No.9 KPDT.SUS-KPPU2016 ruled that the KPPU win over this case. As of the date of approval and authorization for the issuance of the consolidated financial statements, the Company is considering to request for a judicial review of the case by the SC.