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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51. COMMITMENTS continued
b. Agreements on Derivative Transactions Telkomsel is exposed to market risks, primarily changes in foreign exchange rates, and uses
derivative instruments in hedging such risk. None of the derivative transactions entered into by Telkomsel during 2005 and 2006 met the PSAK 55 criteria for hedge accounting. Therefore,
changes in the fair value of the derivative financial instruments were recognized in the consolidated statements of income.
Telkomsel purchases equipment from several overseas suppliers and, as a result, is exposed to fluctuations in foreign currency exchange rates. In 2005 and 2006, Telkomsel entered into
forward foreign exchange contracts with Deutsche Bank, Standard Chartered Bank, The Hongkong and Shanghai Banking Corporation and Citibank Jakarta to mitigate the foreign
exchange risks relating to its purchases. The primary purpose of Telkomsel’s foreign currency hedging activities is to protect against the volatility associated with foreign currency purchases
of equipment and other assets in the normal course of business.
As of June 30, 2006, all of the forward contracts had been closed.
c. Borrowings and other credit facilities
i Telkomsel has a combined US20 million facility with Standard Chartered Bank, Jakarta
for import LC, bank guarantee, standby LC and foreign exchange. The facility expires in December 2006. Borrowings under the facility bear interest at SIBOR plus 2 per annum
for drawing in US Dollar, at a rate equal to the three-month Certificate of Bank Indonesia plus 2 per annum for drawing in Rupiah, and at the Bank’s cost of fund plus 2 for
drawing in other currencies. Under the facility, Telkomsel has an outstanding bank guarantee of Rp120 billion US12.9 million as of June 30, 2006. There were no
outstanding borrowings related to the facility as of June 30, 2005 and 2006.
ii Telkomsel has a US40 million facility with Citibank N.A., Jakarta for LC and Trust
Receipt Loan, which expires on July 31, 2006. Borrowings under this facility bear interest at the Bank’s cost of fund plus 2 per annum. There were no outstanding borrowings
under this facility as of June 30, 2005 and 2006.
iii Telkomsel has not collateralized any of its assets for its bank borrowings or other credit
facilities. The terms of the various agreements between Telkomsel and its lenders and financiers require compliance with a number of pledges and negative pledges as well as
financial and other covenants, inter alia, certain restriction on the amount of dividends and other profit distributions which could adversely affect Telkomsel’s capacity to
comply with the terms of the agreements. The terms of the relevant agreement also contain default and cross default clauses. Management is not aware of any breaches of the
terms of these agreements and does not foresee any such breaches occurring in the future.
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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52. CONTINGENCIES
