SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued j. Intangible assets continued

PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED continued SEPTEMBER 30, 2007 AND 2008, AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2007 AND 2008 Figures in tables are presented in millions of Rupiah, unless otherwise stated 24

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

n. KSO Revenues from KSO include amortization of unearned initial investor payments, Minimum Telkom Revenues “MTR” and the Companys share of Distributable KSO Revenues “DKSOR”. Unearned initial investor payments received are recorded net of all direct costs incurred in connection with the KSO agreement and amortized using the straight-line method over the KSO period of 15 years starting from January 1, 1996. MTR are recognized on a monthly basis, based on the contracted MTR amount for the current year. The Companys share of DKSOR is recognized on the basis of the Companys percentage share of the KSO revenues, net of MTR and operational expenses of the KSO Units, as provided in the KSO agreements. Under PSAK 39, “Accounting for Joint Operation Schemes”, which supercedes paragraph 14 of PSAK 35, “Accounting for Telecommunications Services Revenue”, the assets built by the KSO partners under the KSO were recorded in the books of the KSO partners which operate the assets and would be transferred to the Company at the end of the KSO period or upon termination of the KSO agreement. As of December 31, 2006, the Company has obtained full control over all of the KSO operations through acquisition of interest of KSO partners and the Company has accelerated the amortization of KSO deferred compensation income per September 30, 2008. o. Deferred charges for land rights Costs incurred to process and extend land rights are deferred and amortized using the straight- line method over the term of the land rights. p. Foreign currency translation The functional currency of the Company and its subsidiaries is the Indonesian Rupiah and the books of accounts of the Company and its subsidiaries are maintained in Indonesian Rupiah. Transactions in foreign currencies are translated into Indonesian Rupiah at the rates of exchange prevailing at transaction date. At the consolidated balance sheet date, monetary assets and monetary liabilities balances denominated in foreign currencies are translated into Indonesian Rupiah based on the buy and sell rates quoted by Reuters prevailing at the consolidated balance sheet date as follows: The Company and its subsidiaries 2007 2008 Buy Sell Buy Sell United States Dollars “US” 1 9,145 9,150 9,425 9,435 Euro1 12,966 12,975 13,546 13,561 Yen1 79.20 79.26 89.91 90.02 PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED continued SEPTEMBER 30, 2007 AND 2008, AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2007 AND 2008 Figures in tables are presented in millions of Rupiah, unless otherwise stated 25

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued p. Foreign currency translation continued