CASH AND CASH EQUIVALENTS continued

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 39

5. TRADE RECEIVABLES continued

d. Movements in the provision for impairment of receivables 2016 2015 Beginning balance 3,048 3,096 Provision recognized during the year Note 25 743 1,010 Receivables written off 801 1,058 Ending balance 2,990 3,048 The receivables written off relate to both related party and third party trade receivables. Management believes that the provision for impairment of trade receivables is adequate to cover losses on uncollectible trade receivables. As of December 31, 2016, certain trade receivables of the subsidiaries amounting to Rp4,550 billion have been pledged as collateral under lending agreements Notes 15, 16b and 16c. Refer to Note 31 for details of related party transactions.

6. INVENTORIES 2016

2015 Components 299 342 SIM cards, set top boxes, and blank prepaid vouchers 168 131 Others 164 96 Total 631 569 Provision for obsolescence Components 18 14 SIM cards, set top boxes and blank prepaid vouchers 29 27 Others Total 47 41 Net 584 528 Movements in the provision for obsolescence are as follows: 2016 2015 Beginning balance 41 43 Provision recognized during the year 11 2 Inventory written off 5 4 Ending balance 47 41 The inventories recognized as expense and included in operations, maintenance, and telecommunication service expenses as of December 31, 2016 and 2015 amounted to Rp2,105 billion and Rp1,937 billion, respectively Note 24. Management believes that the provision is adequate to cover losses from declines in inventory value due to obsolescence. Certain inventories of the subsidiaries amounting to Rp256 billion have been pledged as collateral under lending agreements Notes 15, 16b and 16c. As of December 31, 2016 and 2015, modules and components held by the Group with book value amounting to Rp199 billion and Rp219 billion, respectively, have been insured against fire, theft, and other specific risks. Modules are recorded as part of property and equipment. Total sum insured as of December 31, 2016 and 2015 amounted to Rp220 billion and Rp291 billion, respectively. Management believes that the insurance coverage is adequate to cover potential losses of inventories arising from the insured risks. 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 40

7. ADVANCES AND PREPAID EXPENSES 2016

2015 Frequency license Notes 34c.i and 34c.ii 3,056 2,935 Prepaid rental 1,234 1,055 Advances 394 729 Salaries 229 347 Advance to employee 32 28 Others 301 745 Total 5,246 5,839 Refer to Note 31 for details of related party transactions.

8. LONG-TERM INVESTMENTS

2016 Percentage of ownership Beginning balance Additions Deductions Share of net profit loss of associated company Dividend Share of other comprehensive income of associated company Ending balance Long-term investments in associated companies: Tiphone a 24.43 1,404 - 108 23 1 1,488 Indonusa b 20.00 221 - - - - 221 Teltranet c 51.00 71 - 33 - - 38 PT Melon Indonesia “Melon” d 51.00 50 67 17 - - - PT Integrasi Logistik Cipta Solusi “ILCS” e 49.00 40 - 2 - - 42 Telin Malaysia f 49.00 6 - 6 - - CSM g 25.00 - - - - - - Sub-total 1,792 67 88 23 1 1,789 Other long-term investments 15 43 - - - 58 Total Long-term investments 1,807 24 88 23 1 1,847 Summarized financial information of the Group’s investments accounted under the equity method for 2016: Tiphone Indonusa Teltranet ILCS Telin Malaysia CSM Statements of financial position Current assets 7,709 170 66 131 9 161 Non-current assets 743 444 88 29 10 761 Current liabilities 1,248 532 78 73 35 594 Non-current liabilities 3,762 405 2 1 6 1,206 Equity deficit 3,442 323 74 86 22 878 Statements of profit or loss and other comprehensive income Revenues 27,310 605 66 116 8 131 Operating expenses 26,445 583 149 112 43 221 Other income expenses including finance costs - net 231 17 3 - 88 Profit loss before tax 634 5 86 4 35 178 Income tax expense 166 33 21 - - Profit loss for the year 468 28 65 4 35 178 Other comprehensive income loss 5 7 - - Total comprehensive income for the year 463 21 65 4 35 178