PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2014 and for the Year Then Ended
Figures in tables are expressedin billions of Rupiah, unless otherwise stated
55
11. PROPERTY AND EQUIPMENT continued
c. Others i
Interest capitalized to property under construction amounted to Rp251 billion and Rp100 billion for the years ended December 31, 2014 and 2013, respectively. The
capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranges from 10.14 to 18.31 and from 9.75 to 13.07 for the years ended December
31, 2014 and 2013, respectively.
ii No foreign exchange loss was capitalized as part of property under construction for the years ended December 31, 2014 and 2013.
iii
In 2014 and 2013, the Group received the proceeds from the insurance claim on the lost and broken property and equipment, with a total value of Rp212 billion and Rp60 billion,
respectively. The proceeds were recorded as part of “Other Income” in the consolidated statement of comprehensive income. In 2014 and 2013, the net carrying value of those
assets of Rp50 billion and Rp17 billion, respectively, were charged to the consolidated statement of comprehensive income.
iv In 2012, Telkomsel decided to replace certain equipment units with net carrying amount of Rp1,037 billion, as part of a modernization program. Accordingly, Telkomsel changed the
estimated useful lives of such equipment. In 2014 and 2013, the effect of the change is the additional depreciation expense amounting to Rp84 billion and Rp131 billion, respectively.
In 2014, Telkomsel decided to replace certain equipment units with net carrying amount of Rp252 billion, as part of modernization program. Accordingly, Telkomsel changed the
estimated useful lives of such equipment. In 2014, the effect of the change is the additional depreciation expense amounting to Rp252 billion.
v In 2012, the useful lives of Telkomsel’s towers were changed from 10 years to 20 years to reflect their current economic useful lives. The impact is a reduction of depreciation expense
by Rp565 billion and Rp606 billion, respectively, for the years ended December 31, 2014 and 2013.
The impact of the change in the estimated useful lives of the towers in future periods is to increase the profit before income tax as follows:
Years Amount
2015 469
2016 301
2017 92
In 2014, the useful lives of Telkomsel’s buildings and transmissions were changed from 20 years to 40 years, and from 10 years to 15 and 20 years, to reflect their current economic
useful lives. The impact is a reduction of depreciation expense by Rp289 billion for the year ended December 31, 2014.
The impact of the change in the estimated useful lives of the buildings and transmissions in future periods is to increase the profit before income tax as follows:
Years Amount
2015 264
2016 244
2017 198
2018 135
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2014 and for the Year Then Ended
Figures in tables are expressedin billions of Rupiah, unless otherwise stated
56
11. PROPERTY AND EQUIPMENT continued
c. Others continued vi Exchange of property and equipment
• In 2012 and 2011, the Company entered into a Procurement and Installation Agreement
for the Modernization of the Copper Cable Network through Optimization of Asset Copper Cable Network through Trade InTrade Off method with PT Len Industri “LEN” and PT
Industri Telekomunikasi Indonesia “INTI”, respectively. In 2014 and 2013, the Company derecognized the copper cable network asset with net
carrying value of Rp1.8 billion and Rp1.6 billion, respectively, and recorded the fiber optic network asset from the exchange transaction of Rp435 billion and Rp203 billion.
• In 2014 and 2013, certain equipment units of Telkomsel with net carrying amount of
Rp37 billion and Rp268 billion, respectively, were exchanged with equipment from NSN Oy and PT Huawei. As of December 31, 2014 and 2013, Telkomsel’s equipment
with net carrying amount of Rp41 billion and Rp105 billion, respectively, are going to be exchanged with equipment from NSN Oy and PT Huawei, therefore, these equipment
units were reclassified as assets held for sale Note 9.
vii The Group own several pieces of land rights located throughout Indonesia with Building Use Rights “Hak Guna Bangunan” or “HGB” for a period of 10-45 years which will expire
between 2015 and 2053. Management believes that there will be no issue in obtaining the extension of the land rights when they expire.
viii As of December 31, 2014, the Group’s property and equipment except land rights, with net carrying amount of Rp85,352 billion were insured against fire, theft, earthquake and other
specified risks, including business interruption, under blanket policies totalling Rp15,244 billion, US119 million, EURO113 thousand, HKD19 million and SGD29 million.
Management believes that the insurance coverage is adequate to cover potential losses from the insured risks.
ix As of December 31, 2014, the percentage of completion of property under construction was around 34 of the total contract value, with estimated dates of completion between
January 2015 and November 2016. The balance of property under construction mainly consists of buildings, transmission installation and equipment, cable network and power
supply. Management believes that there is no impediment to the completion of the construction in progress.
x All assets owned by the Company have been pledged as collateral for bonds Note 20a. Certain property and equipment of the Company’s subsidiaries with gross carrying value
amounting to Rp6,962 billion have been pledged as collateral under lending agreements Notes 17 and 21.
xi As of December 31, 2014 the cost of fully depreciated property and equipment of the Group that are still used in operations amounted to Rp47,910 billion. The Group is currently
performing modernization of network assets to replace the fully depreciated property and equipment.
xii As of December 31, 2014, the total fair values of land rights and buildings of the Group, which are determined based on the sale value of the tax object “Nilai Jual Objek Pajak” or
“NJOP” of
the related
land rights
and buildings,
amounted to
Rp19,412 billion.
