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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4. CHANGES IN METHODS OF ACCOUNTING continued
b. The changes of estimated useful life of WLL equipments In 2005, the Government of Indonesia, in its efforts to rearrange the frequency spectra utilized by
telecommunications industry, issued a series of regulations which caused the Company no longer be able to utilize certain frequency spectra it currently uses to support its fixed wireline cable
network by the end of 2006. As a result of these regulations, certain of the Company’s cable network facilities, which primarily comprise of Wireless Local Loop “WLL” and Approach Link
equipment, operating in the affected frequency spectra can no longer be used by the end of 2006. Following the Government’s decisions, at the end of 2005 the Company assess the useful life and
resulted to change the estimated remaining useful lives of WLL and Approach Link equipment included in cable network and the Jakarta and West Java BSS equipment included in transmission
installation and equipment to have been fully depreciated by December 31, 2006 and June 30, 2007, respectively. The change has resulted in an decrease to previously reported net income for
the six months period ended June 30, 2005 in the amount of Rp79,515 million, net of tax of Rp34,078 million.
c. Restructuring Transactions Between Entities Under Common Control In July 2004, the Indonesian Financial Accounting Standards Board issued PSAK No. 38 Revised
2004, “Accounting for Restructuring Transactions between Entities under Common Control,” “PSAK 38R”. PSAK 38R changes the Company’s method of accounting for previously recorded
restructuring transactions between entities under common control when certain conditions are met. The provisions of PSAK 38R were effective for the Company beginning January 1, 2005, the
initial application date. Pursuant to a ruling issued by the Indonesian Capital Market and Financial Institution Supervisory
Agency “BAPEPAM” regarding the initial application of PSAK 38R by public entities, the Company is required to reclassify the previously recorded difference in value of restructuring
transactions between entities under common control as a direct adjustment to retained earnings as of the initial application date when the common control relationship between the transacting
parties no longer exists as of January 1, 2005. As discussed in Note 30, the difference in value of restructuring transactions between entities
under common control as of January 1, 2005 amounting to Rp7,288,271 million arose from transactions between the Company and Indosat, which at the time of the transactions was also
controlled by the Government and therefore was an entity under common control with the Company. This common control relationship ceased to exist in December 2002 when the
Government sold its 41.94 ownership interest in Indosat to STT Communications Ltd. “STTC” and waived its special voting rights with respect to the Series A Dwiwarna share. In accordance
with the BAPEPAM ruling, the Company has reclassified the difference in value of restructuring transactions between entities under common control resulting from the cross-ownership
transactions and acquisition of Pramindo as a charge to retained earnings as of January 1, 2005. This reclassification has no effect on net consolidated stockholders’ equity.
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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4. CHANGES IN METHODS OF ACCOUNTING continued
