PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and for the Year Then Ended
Figures in tables are expressed in billions of rupiah, unless otherwise stated
37
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued aa. Critical Accounting Estimates and Judgements continued
i. Retirement benefits continued
If there is an improvement in the ratings of such government bonds or a decrease in interest rates as a result of improving economic conditions, there could be a material impact on the
discount rate used in determining the post-employment benefits obligations.
Other key assumptions for retirement benefit obligations are based in part on current market conditions. Additional information is disclosed in Notes 34, 35 and 36.
ii. Estimating useful lives of property and equipment and intangible assets
The Company and subsidiaries estimate the useful lives of their property and equipment and intangible assets based on expected asset utilization, considering strategic business plans,
expected future technological developments and market behavior.The estimates of useful lives of property and equipment are based on the Company and subsidiaries’ collective
assessment of industry practice, internal technical evaluation and experience with similar assets.
The Company and subsidiaries review estimates of useful lives at least each financial year end and are updated if expectations differ from previous estimates due to physical wear and
tear, technical or commercial obsolescence and legal or other limitations on the use of the assets. The amounts and timing of recorded expenses for any year will be affected by
changes in these factors and circumstances. A change in the estimated useful lives of the property and equipment is a change in accounting estimates and is applied prospectively in
profit or loss in the period of the change and future periods.
Details of the nature and carrying amount of property and equipment are disclosed in Note 11 and intangible assets in Note 13.
iii. Provision for impairment of receivables
The Company and subsidiaries assess whether there is objective evidence that trade receivables have been impaired at the end of each reporting period. Provision for impairment
of receivables is calculated based on a review of the current status of existing receivables and historical collection experience. Such provision is adjusted periodically to reflect the actual
and anticipated experience. Details of the nature and carrying amount of provision for impairment of receivables are disclosed in Note 6.
iv. Income taxes
Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The
Company and subsidiaries recognize liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the year in which such
determination is made. Details of the nature and carrying amount of income tax are disclosed in Note 31.
v. Impairment of non-financial assets
The Company and subsidiaries annually assess whether goodwill is impaired. Other non- financial assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset or a cash-generating unit “CGU” is determined based on the
higher of its fair value less costs to sell and its value in use, calculated on the basis of management’s assumptions and estimations.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and for the Year Then Ended
Figures in tables are expressed in billions of rupiah, unless otherwise stated
38
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued aa. Critical Accounting Estimates and Judgements continued
v. Impairment of non-financial assets continued
In determining value in use, the Company and subsidiaries apply management judgement in establishing forecasts of future operating performance, as well as the selection of growth rates
and discount rates. These judgements are applied based on our understanding of historical information and expectations of future performance. Changing the key assumptions, including
the discount rates or the growth rate assumptions in the cash flow projections, could materially affect the value in use calculations.
For the years ended December 31, 2013 and 2012, the Company recognized Rp596 billion and Rp247 billion, respectively, of impairment loss on property and equipment pertaining to
the fixed wireless services. A 1 increase in the discount rate used would result in an increase in impairment loss of approximately Rp703 billion and Rp458 billion in 2013 and
2012, respectively. However, the recoverable amount of the fixed wireless CGU is most sensitive to whether management will be able to implement its plans, including the cost
efficiency plan, such that it generates positive cash flows and returns to profitability as projected. 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 Note 11b.
vi. Fair value of put option and investment in PT Indonusa Telemedia In determining the fair value, the Company uses management’s judgment to determine future
projected operational performance, growth rate and discount rate. These considerations are applied on the basis of management’s understanding of historical information and expectation
of future operational performance. Detail of the nature and recorded amount of Put Option and investment in Indonusa is disclosed in Notes 3,5 and 10.
3. BUSINESS COMBINATIONS a. Acquisitions
Acquisition of PT German Center Indonesia On January 17, 2013, Sigma signed a sales and purchase of shares agreement and transfer of
debt with Landeskreditbank Baden-Wurttemberg-Forderbank “L-Bank” and Step Stuttgarter Engineering Park Gmbh “STEP” as the shareholders of PT German Centre Indonesia “GCI”.
Based on the agreement, on April 30, 2013, Sigma has bought shares owned by L-Bank and STEP in GCI. Through the acquisition, Sigma enlarged its data center capacity that can be offered
its customers.
Acquisition of Patrakom On September 25, 2013, based on notarial deed No. 22 of Ashoya Ratam, S.H. ,M.Kn, the
Company entered into a Sales and Purchase Agreement SPA with PT ELNUSA Tbk for the Company’s acquisition of the 40 ownership in PT Patra Telekomunikasi Indonesia “Patrakom”
for Rp45.6 billion. This SPA results in the Company’s ownership in Patrakom to increase from 40 to 80 Note 10.
Subsequently, on November 29, 2013, based on notarial deed No. 54 of Ashoya Ratam, S.H., M.Kn., dated November 29, 2013 the Company has signed a SPA with PT Tanjung Mustika Tbk
for the Company’s acquisition of the remaining of 20 ownership in Patrakom for Rp24.8 billion.
