NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2012 UNAUDITED AND DECEMBER 31, 2011 AUDITED
AND SIX MONTHS PERIOD ENDED JUNE 30, 2012 AND 2011 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated
42
9. PROPERTY, PLANT AND EQUIPMENT continued
January 1, December 31,
2011 Additions Impairments Deductions Reclassifications
2011 Accumulated depreciation and
impairment: Direct acquisitions assets
Buildings 1,576
104 2
66 55
1,671 Leasehold improvements
443 64
- 5
- 502
Switching equipment 20,912
2,695 -
5,324 871
17,412 Telegraph, telex and data
communication equipment 17
- -
17 Transmission installation
and equipment 30,191
6,717 320
511 1,548
35,169 Satellite, earth station and
equipment 3,621
486 176
148 4,135
Cable network 15,529
1,075 39
698 1,007
16,952 Power supply
3,855 1,252
12 144
59 4,916
Data processing equipment 5,819
1,079 13
479 243
6,189 Other telecommunications
peripherals 367
13 1
3 25
353 Office equipment
509 63
- 59
10 523
Vehicles 100
6 -
3 29
74 Other equipment
93 6
- 1
98
Leased assets
Transmission installation and equipment
251 23
- -
4 270
Data processing equipment 171
55 -
- 9
217 Office equipment
4 5
- -
9 Vehicles
39 12
- 4
- 47
CPE assets 7
2 -
- -
9
RSA assets:
Land 1
- -
- 1
- Switching equipment
30 6
- -
3 33
Transmission installation and equipment
22 4
- -
8 18
Cable network 154
35 -
- 14
175 Other telecommunications
peripherals 3
- -
2 1
Total 83,714
13,702 563
7,297 1,892
88,790
Net Book Value 75,832
74,897
a. Gains on disposal or sale of property, plant and equipment
2012 2011
Proceeds from sale of property, plant and equipment 15
14 Net book value
1 9
Exchange of property, plant and equipment - net 78
-
Gains on disposal or sale of property, plant and equipment
92 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2012 UNAUDITED AND DECEMBER 31, 2011 AUDITED
AND SIX MONTHS PERIOD ENDED JUNE 30, 2012 AND 2011 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated
43
9. PROPERTY, PLANT AND EQUIPMENT continued
b. KSO assets ownership arrangements i In accordance with the amended and restated KSO VII agreement with PT Bukaka Singtel
International “BSI”, the ownership rights to the acquired property, plant and equipment in KSO VII were legally retained by BSI until the end of the KSO period which was on
December 31, 2010. As of December 31, 2010, the net book value of these property, plant and equipment was Rp.710 billion. As at January 1, 2011, the legal rights on these property,
plant and equipment was transferred to the Company, and the property, plant and equipment now reflected in the balances above.
ii In accordance with the amended and restated KSO IV agreement with PT Mitra Global Telekomunikasi Indonesia “MGTI”, the ownership rights to the acquired property, plant and
equipment in KSO IV were legally retained by MGTI until the end of the KSO period which was on December 31, 2010. As of December 31, 2010, the net book value of this property,
plant and equipment was Rp.161 billion. As at January 1, 2011, the legal rights on these property, plant and equipment was transferred to the Company, and the property, plant and
equipment now reflected in the balances above.
c. Assets impairment i
As of December 31, 2011, the CGUs that generate cash inflows independently were fixed wireline, fixed wireless, cellular and others. There were indications of impairment in the fixed
wireless business segment, including reporting a segment loss of Rp.1,433 billion for the year ended December 31, 2011, which was mainly due to increased competition in the fixed
wireless market and that has resulted in lower average tariffs, declining active customers and declining average revenue per user ARPU. The Company assessed the recoverable
value of the assets in the cash generating unit CGU and determined that assets for the fixed wireless CGU were impaired at 31 December 2011 resulting in an impairment charge
of Rp.563 billion being recognized in the consolidated statement of comprehensive income under ‘Depreciation and Amortisation’. The recoverable amount has been determined based
on value-in-use VIU calculations. These calculations used pre-tax cash flow projections approved by management covering a five-year period and with cash flows beyond the five-
year period extrapolated using a perpetuity growth rate. The cash flow projections reflect management’s expectations of revenue, EBITDA growth and operating cash flows on the
basis that the fixed wireless CGU generates positive net cash flows from 2013 and returns to profitability in 2016. Management’s cash flow projection also incorporates management’s
reasonable expectations for developments in macro economic conditions and market expectations for the Indonesian telecommunications industry. The projection assumes that
management will receive appropriate licenses and effectively implement a full mobility initiative that will remove limitations in the existing service which can only be used by
customers within a particular area code. Management applied a pre-tax discount rate of 11.4, derived from the Company’s post-tax weighted average cost of capital and
benchmarked to externally available data. The perpetuity growth rate used of 0 assumes that while subscriber numbers may continue to increase after five years, average revenue
per user may decline such that only neglegible long term growth will be achieved in a competitive market.
If the performance of the fixed wireless CGU continues to decline or if management’s initiatives are not performing as expected in the next financial year, analysis will be required
to assess whether there will be further impairment next year.
ii As of December 31, 2011, there were no events or changes in circumstances that would indicate that the carrying amounts of the Company’s fixed wireline business, cellular
business and others may not be recoverable.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2012 UNAUDITED AND DECEMBER 31, 2011 AUDITED
AND SIX MONTHS PERIOD ENDED JUNE 30, 2012 AND 2011 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated
44
9. PROPERTY, PLANT AND EQUIPMENT continued
