PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2005 AND 2006, AND FOR THE SIX MONTHS PERIOD ENDED
JUNE 30, 2005 AND 2006 Figures in tables are presented in millions of Rupiah, unless otherwise stated
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5. ACQUISITION OF KSO INVESTORS AND KSO IV continued b. AWI continued
The outstanding promissory notes issued for the acquisition of AWI are presented as “Liabilities of business acquisitions” in the consolidated balance sheets as of June 30, 2005 and 2006 Note 25.
As of June 30, 2005 and 2006, the outstanding promissory notes, before unamortized discount, amounted to US87.2 million Rp851,782 million and US62.2 million Rp567,288 million,
respectively.
The allocation of the acquisition cost described above was based on an independent appraisal of fair values.
c. Amendment of the Joint Operation Scheme in Regional Division IV “KSO IV” On January 20, 2004, the Company and PT Mitra Global Telekomunikasi Indonesia “MGTI”, the
investor in KSO IV, entered into an agreement to amend and restate their joint operation agreement “KSO agreement”. The principal provisions in the original KSO agreement that have been
amended are: • The rights to operate fixed-line telecommunications services are transferred to the Company,
where KSO IV is operated under the management, supervision, control and responsibility of the Company.
• Responsibilities for funding construction of new telecommunication facilities and payments of operating expenses incurred in KSO IV are assigned to the Company.
• Risk of loss from damages or destruction of assets operated by KSO IV is transferred to the Company.
• At the end of the KSO period December 31, 2010, all rights, title and interest of MGTI in existing property, plant and equipment including new additional installations and inventories
shall be transferred to the Company at no cost. • The Company’s rights to receive Minimum Telkom Revenues “MTR” and share in
Distributable KSO Revenues “DKSOR” under the original KSO agreement were amended so that MGTI receives fixed monthly payments “Fixed Investor Revenues” beginning in
February 2004 through December 2010 totaling US517.1 million and the Company is entitled to the balance of KSO revenues net of operating expenses and payments to MGTI for Fixed
Investor Revenues. In addition, payments for Fixed Investor Revenues must be made to MGTI before any payments can be made to the Company.
• In the event funds in KSO IV are insufficient to pay Fixed Investor Revenues to MGTI, the Company is required to pay the shortfall to MGTI.
As a result of the amendment of the KSO agreement, the Company obtained the legal right to control financial and operating decisions of KSO IV. Accordingly, the Company has accounted for
this transaction as a business combination using the purchase method of accounting.
PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2005 AND 2006, AND FOR THE SIX MONTHS PERIOD ENDED
JUNE 30, 2005 AND 2006 Figures in tables are presented in millions of Rupiah, unless otherwise stated
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5. ACQUISITION OF KSO INVESTORS AND KSO IV continued c. Amendment of the Joint Operation Scheme in Regional Division IV “KSO IV” continued
The purchase price for this transaction was approximately US390.7 million or equivalent to Rp3,285,362 million which represents the present value of fixed monthly payments totaling
US517.1 million to be paid to MGTI beginning in February 2004 through December 2010 using a discount rate of 8.3 plus direct cost of the business combination. The allocation of the
acquisition cost was as follows:
Rp
Property, plant and equipment 2,377,134
Intangible assets 908,228
Total purchase consideration 3,285,362
The allocation of the acquisition cost described above was based on an independent appraisal of fair values. Intangible assets identified from this acquisition represent right to operate the business
in the KSO area and the amount is being amortized over the remaining term of the KSO agreement of 6.9 years Note 15. There was no goodwill arising from this acquisition.
The Company’s consolidated results of operations include the operating results of KSO IV since February 1, 2004 being the nearest convenient balance date.
As of June 30, 2005 and 2006, the remaining monthly payments to be made to MGTI, before unamortized discount, amounted to US428.3 million Rp4,180,533 million and US357.3
million Rp3,311,022 million and is presented as “Liabilities of business acquisitions” Note 25.
PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2005 AND 2006, AND FOR THE SIX MONTHS PERIOD ENDED
JUNE 30, 2005 AND 2006 Figures in tables are presented in millions of Rupiah, unless otherwise stated
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6. CASH AND CASH EQUIVALENTS
