Joint Operation Schemes “Kerja Sama Operasi” or “KSO”

PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED continued JUNE 30, 2009 AND 2010 SIX MONTHS PERIOD ENDED JUNE 30, 2009 AND 2010 Figures in tables are presented in millions of Rupiah, unless otherwise stated 27 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued q. Revenue and expense recognition continued ii. Cellular and fixed wireless telephone revenues Revenues from postpaid service, which consist of connection fee as well as usage and monthly charges, are recognized as follows: Connection fees for service connection are recognized as revenues at the time the connection occurs. Airtime and charges for value added services are recognized based on usage by subscribers. Monthly subscription charges are recognized as revenues when incurred by subscribers. Revenues from prepaid card subscribers, which consist of the sale of starter packs also known as SIM cards in the case of cellular and RUIM in the case of fixed wireless telephone and start-up load vouchers and pulse reload vouchers, are recognized as follows: Sale of SIM and RUIM cards are recognized as revenue upon delivery of the starter packs to distributors, dealers or directly to customers. Sale of pulse reload vouchers either bundled in starter packs or sold as separate items are recognized initially as unearned income and recognized proportionately as usage revenue based on duration and total of successful calls made and the value added services used by the subscribers or the expiration of the unused stored value of the voucher. Unutilized promotional credits are netted against unearned income. Revenues under Universal Service Obligation “USO“ arrangement are recognized when telecommunication access is ready and the services are rendered. iii. Interconnection revenues With abolition of the rules of interconnection revenue recognition in PSAK 35 notes 2q.viii then revenues from network interconnection with other domestic and international telecommunications carriers are recognized as earned in accordance with contractual agreements. Interconnection revenues consist of revenues derives from other operator’s subscriber call to the Company operator’s customer incoming and calls between subscriber of other operators through the Company’s network transit. iv. Data, internet and information technology services revenues Revenues from installations set-up of internet, data communication and e-Business are recognized upon the completion of installations. Revenues from data communication and internet are recognized based on usage . Revenues from sales, installation and implementation of computer software and hardware, computer data network installation service and installation are recognized when the goods rendered to customers or the installation take place. Revenue from computer software development service is recognized using the percentage of completion method. PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED continued JUNE 30, 2009 AND 2010 SIX MONTHS PERIOD ENDED JUNE 30, 2009 AND 2010 Figures in tables are presented in millions of Rupiah, unless otherwise stated 28 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued q. Revenue and expense recognition continued v. Revenues from network Revenues from network consist of revenues from leased lines and satellite transponder leases. Revenues are recognized based on subscription fees as specified in the agreements. vi. Other telecommunications services revenues Revenues from other telecommunications services consist of sales of other telecommunication services or goods. Revenues are recognized upon completion of services or delivery of goods to customers. vii. Expenses Expenses are recognized on an accruals basis. viii. Implementation of Statement of Financial Accounting Standard Abolition “Pernyataan Pencabutan Standar Akuntansi Keuangan” or “PPSAK” 1 In June 2009, the DSAK issued PPSAK 1, “Abolition of PSAK 32: Accounting for Forestry Industry, PSAK 35: Accounting for Telecommunications Services, and PSAK 37: Accounting for Toll Road Industry” that effective on January 1, 2010 and prospectively applied. To improve the comparability of financial statement, the Company made accounts reclassification of the financial statement of the periods ended before the reporting period Note 54. PPSAK 1 abolished the rules stated in PSAK 35 “Accounting for Telecommunication Services” which have the impact on several important things in financial statements, i.e. interconnection revenues is presented in a gross basis and Revenue-Sharing Arrangements RSA transaction is recorded refering to PSAK 30R “Leases” Note 2l.

r. Employee benefits

i. Pension and post-retirement health care benefit plans The net obligations in respect of the defined pension benefit and post-retirement health care benefit plans are calculated at the present value of estimated future benefits that the employees have earned in return for their service in the current and prior periods, less the fair value of plan assets and as adjusted for unrecognized actuarial gains or losses and unrecognized past service cost. The calculation is performed by an independent actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using government bond interest rates considering currently there is no deep market for high quality corporate bonds that have terms to maturity approximating the terms of the related liability. Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions, when exceeding the greater of 10 of present value defined benefit obligation or 10 of fair value of plan assets, are charged or credited to the consolidated statements of income over the average remaining service lives of the relevant employees. Prior service cost is recognized immediately if vested or amortized over the vesting period. For defined contribution plans, the regular contributions constitute net periodic costs for the year in which they are due and as such are included in staff costs.