And
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 20-F
☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the fiscal year ended December 31, 2019 |
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| Date of event requiring this shell company report |
Commission file number 1-14406
Perusahaan Perseroan (Persero)
PT Telekomunikasi Indonesia Tbk
(Exact name of Registrant as specified in its charter)
Telecommunications Indonesia
(a state-owned public limited liability company)
(Translation of Registrant's name into English)
Republic of Indonesia
(Jurisdiction of incorporation or organization)
Jl. Japati No. 1, Bandung 40133, Indonesia
(Address of principal executive offices)
Investor Relations Unit
Telkom Landmark Tower, Jl. Jend. Gatot Subroto No. 52, 39th Floor, Jakarta 12710, Indonesia
(62) (22) 452-7101
(62) (21) 521-5109
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of Each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
American Depositary Share representing 100 Series B Shares, par value 50 Rupiah per share |
| TLK |
| New York Stock Exchange |
Series B Shares, par value 50 Rupiah per share |
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| New York Stock Exchange* |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the Annual Report:
Series A Dwiwarna Share, par value 50 Rupiah per share | 1 |
Series B Shares, par value 50 Rupiah per share | 99,062,216,599 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☑ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ☑ | Accelerated filer | Non-accelerated filer Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act.
The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012
Indicate by checkmark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ◻ International Financial Reporting Standards as issued by the International Accounting Standards Board ☑ Other ◻
If "Other" has been checked in response to the previous question, indicate by checkmark which financial statement item the registrant has elected to follow.
Item 17 Item 18
If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No ☑
*The Series B Shares were registered in connection with the registration of American Depositary Shares ("ADSs"). The Series B Shares are not listed for trading on the New York Stock Exchange
RELIANCE ON SEC ORDER
As we previously reported in our current report on Form 6-K as filed with the U.S. Securities and Exchange Commission (the "SEC") on April 29, 2020, the filing of this Annual Report for the period ended December 31, 2019 was delayed due to circumstances related to COVID-19 and we are relying on the SEC Order (as defined below).
On March 4, 2020, the SEC issued an order under Section 36 (Release No. 34-88318) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), granting exemptions from specified provisions of the Exchange Act and certain rules thereunder. On March 25, 2020, the order was modified and superseded by a new SEC order (Release No. 34-88465) which provides conditional relief to public companies that are unable to timely comply with their filing obligations as a result of the novel coronavirus ("COVID-19") outbreak (the "SEC Order").
Since March 31, 2020, the central government and regional governments of Indonesia have taken containment measures described at Item 5 "Operating and Financial Review and Prospects — Trend Information" and in compliance with these initiatives, we also implemented protocols for safeguarding the health of its employees, preventing contagion and supporting our business continuity. These measures resulted in limited access to our head office and other significant regional offices from where we operate and store our records. All such offices were thinly staffed, and our accounting personnel, who have been generally working remotely, have only had limited access to our financial and other records. Consequently, our finance team could not carry out their work as previously scheduled and were therefore unable to complete the preparation of our consolidated financial statements as of and for the year ended December 31, 2019, and this annual report in time to meet the SEC's original deadline of April 30, 2020. This situation has also affected the auditors' overall on-site audit schedules which has slowed down the overall audit process.
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MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 161 | |
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PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 165 | |
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EXHIBIT 1.1 | Articles of Association (as amended on June 21, 2019) |
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EXHIBIT 2.1 | Description of securities |
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EXHIBIT 12.1 | CEO Certification pursuant to section 302 |
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EXHIBIT 12.2 | CFO Certification pursuant to section 302 |
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EXHIBIT 13.1 | CEO Certification pursuant to section 906 |
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EXHIBIT 13.2 | CFO Certification pursuant to section 906 |
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3G
The generic term for third generation mobile telecommunications technology. 3G offers high speed connections to cellular phones and other mobile devices, enabling video conference and other applications requiring broadband connectivity to the internet.
3.5G
A grouping of disparate mobile telephony and data technologies designed to provide better performance than 3G systems, as an interim step towards deployment of full 4G/LTE capability.
4G/LTE
A fourth generation super fast internet network technology based on IP that makes the process of data transfer much faster and more stable.
5G
A fifth generation of cellular mobile communications which targets high data rate, reduced latency, energy saving, cost reduction, higher system capacity and massive device connectivity.
ADS
American Depositary Share (also known as an American Depositary Receipt or an "ADR"), a certificate traded on a U.S. securities market (such as the New York Stock Exchange) representing a number of foreign shares. Each of our ADS represents 100 shares of common stock.
APMK
Alat Pembayaran Menggunakan Kartu or card-based payment instruments, a payment instrument in the form of credit cards, ATM and/or debit cards.
ARPU
Average Revenue per User, a measure used primarily by telecommunications and networking companies which states how much revenue is generated by the user on average. It is defined as the total revenue from specified services divided by the number of users of such services.
ATM
Automated Teller Machine.
Backbone
The main telecommunications network consisting of transmission and switching facilities connecting several network access nodes. The transmission links between nodes and switching facilities include microwave, submarine cable, satellite, fiber optic and other transmission technology.
Bandwidth
The capacity of a communication link.
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Bapepam-LK
Badan Pengawas Pasar Modal dan Lembaga Keuangan or the Indonesian Capital Market and Financial Institution Supervisory Agency, the predecessor to the OJK.
BRAS
Broadband Remote Access Server, a network element that routes Internet Protocol traffic to and from broadband remote access devices through an Internet Access Provider's network to the Internet and that facilitates the convergence of multiple Internet traffic sources.
Brexit
On June 23, 2016, the United Kingdom held a referendum in which a majority of voters voted in favor of the United Kingdom leaving the European Union (commonly referred to as "Brexit").
As a result of the referendum, the United Kingdom Government has negotiated and may further negotiate the terms of the United Kingdom's withdrawal from the European Union and of the United Kingdom's future relationship with the European Union. The effects of Brexit will depend on any agreements arising out of such negotiations or the absence of such agreements (commonly referred as "no-deal Brexit").
Broadband
A signaling method that includes or handles a relatively wide range (or band) of frequencies.
BTS
Base Transceiver Station, equipment that transmits and receives radio telephony signals to and from other telecommunication systems.
Business process as-a-service
Business process as-a-service is the delivery of business process outsourcing services employing a cloud computing service model built to serve various tenants simultaneously.
BWA
Broadband Wireless Access, a technology that provides high speed wireless internet access or computer networking access over a wide area.
CDMA
Code Division Multiple Access, a transmission technology where each transmission is sent over multiple frequencies and a unique code is assigned to each data or voice transmission, allowing multiple users to share the same frequency spectrum.
Common stock
Our Series B Shares having a par value of Rp50 per share.
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CFU
Customer Facing Unit, similar to a strategic business unit, it is an organizational unit that interacts with specific customer segments, with responsibility for their respective profit and loss, and which regroup subsidiaries and business portfolios relevant to the specific business segments they are in charge of interacting with.
CPE
Customer Premises Equipment, any handset, receiver, set-top box or other equipment used by the consumer of wireless, fixed line or broadband services, which is the property of the network operator and located on the customer's premises.
DCS
Digital Communication System, a cellular system using GSM technology operating in the 1.8 GHz frequency.
Defined Benefit Pension Plan or DBPP
A type of pension plan in which an employer promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending on investment returns. It is considered 'defined' in the sense that the formula for computing the retirement benefits is known in advance.
Defined Contribution Pension Plan or DCPP
A type of retirement plan in which the amount of the employer's annual contribution is specified. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through the employer's contributions and, if applicable, the employee's contributions) plus any investment earnings on the money in the account. Only the employer's contributions to the account are guaranteed, not future benefits. In defined contribution plans, future benefits fluctuate on the basis of investment earnings.
DLD
Domestic Long Distance, a long distance call service designed for customers who live in different areas within one country. These areas generally have different area codes.
DTH
Direct-to-Home satellite broadcasting, the distribution of television signals from high-powered geostationary satellites to small dish antennas and satellite receivers in homes across the country.
Dwiwarna Share
The Series A Dwiwarna Share having a par value of Rp50 per share. The Dwiwarna Share is held by the Government and provides special voting rights and veto rights over certain matters related to our corporate governance. For more information, see Item 7 "Major Shareholders and Related Party Transactions — Major Shareholders — Relationship with the Government and Government Agencies."
E-Commerce
Electronic Commerce, the buying and selling of products or services over electronic systems such as the internet and other computer networks.
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e-Money
Electronic Money, money or script that is only exchanged electronically.
Earth Station
The antenna and associated equipment used to receive or transmit telecommunication signals via satellite.
EDGE
Enhanced Data rates for GSM Evolution, a digital mobile phone technology that allows improved data transmission rates as a backward-compatible extension of GSM.
Edutainment
Education and entertainment.
Fiber Optic
Cables using optical fiber and laser technology through which modulating light beams representing data are transmitted through thin filaments of glass.
Fixed Line
Fixed wireline and fixed wireless.
Fixed Wireless
The local wireless transmission link using a cellular, microwave, or radio technology to connect customers at a fixed location to the local telephone exchange.
Fixed Wireline
A fixed wire or cable path linking a subscriber at a fixed location to a local exchange, usually with an individual phone number.
Gateway
A peripheral that bridges a packet based network (IP) and a circuit based network (PSTN).
Gb
Gigabyte, a unit of information used, for example, to quantify computer memory or storage capacity.
Gbps
Gigabyte per second, the average number of bits, characters, or blocks per unit time passing between equipment in a data transmission system. This is typically measured in multiples of the unit bit per second or byte per second.
GHz
Gigahertz. The hertz (symbol Hz), is the international standard unit of frequency defined as the number of cycles per second of a periodic phenomenon.
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GMS
General Meeting of Shareholders, which may be an annual general meeting of shareholders ("AGMS") or an extraordinary general meeting of shareholders ("EGMS").
GPON
Gigabyte-Passive Optical Network, the most widely deployed type of passive optical network system that brings fiber optic cabling and signals all or most of the way to end users.
GPRS
General Packet Radio Service, a data packet switching technology that allows information to be sent and received across a mobile network and only utilizes the network when there is data to be sent.
GSM
Global System for Mobile Telecommunication, a European standard for digital cellular telephone.
IDD
International Direct Dialing, a service that allows a subscriber to make an international call without the assistance or intervention of an operator from any telephone terminal.
IMS
IP multimedia subsystem, a service which combines wireless and fixed line technologies for voice and data communications.
Installed Lines
Complete lines fully built-out to the distribution point and ready to be connected to subscribers.
Interconnection
The physical linking of a carrier's network with equipment or facilities not belonging to that network.
Internet of Things (or "IoT")
Infrastructure which interconnects physical and virtual things using interoperable information and communication technologies.
IP
Internet Protocol, the method or protocol by which data is sent from one computer to another on the internet.
IP Core
A block of logic data that is used in making a field-programmable gate array or application-specific integrated circuit for a product.
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IPTV
Internet Protocol Television, a system through which television services are delivered using the Internet Protocol suite over a packet-switched network such as the internet, instead of being delivered through traditional terrestrial, satellite signal, and cable television formats.
ISP
Internet Services Provider, an organization that provides access to the internet.
KPPU
Komisi Pengawasan Persaingan Usaha or Commission for the Supervision of Business Competition.
Leased Line
A dedicated telecommunications transmissions line linking one fixed point to another, rented from an operator for exclusive use.
Mbps
Megabytes per second, a measure of speed for digital signal transmission expressed in millions of bits per second.
Metro Ethernet
Bridge or relationship between locations that are apart geographically, this network connects LAN customers at several different locations.
MHz
Megahertz, a unit of measure of frequency equal to one million cycles per second.
Mobile Broadband
The marketing term for wireless internet access through a portable modem, mobile phone, USB Wireless Modem or other mobile devices.
MPLS
Multi-Protocol Label Switching, an advanced routing method used within service provider network infrastructures to speed up and shape traffic flows as data travels from one node to the next.
MoCI
The Ministry of Communication and Informatics of the Republic of Indonesia, to which regulatory responsibility over telecommunications was transferred from the Ministry of Communication and Information in February 2005.
MRTG
The Multi-Router Traffic Grapher is a free software for monitoring and measuring the traffic load on network links. It allows users to visualize in graphical format the traffic load of a network over a specific period of time.
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MSOE
Kementerian Badan Usaha Milik Negara or the Ministry of State-Owned Enterprises of the Republic of Indonesia.
Network Access Point
A public network exchange facility where ISPs connect with one another in peering arrangements.
Next Generation Network
A packet-based network able to provide multiple services, including telecommunication services, and to make use of multiple broadband and quality-of-service-enabled technologies, in which service-related functions are independent from underlying transport-related technologies. Such a network is able to handle multiple types of traffic (such as voice, data, and multimedia) by encapsulating these into packets, similar to how packets are transmitted over the internet.
OJK
Otoritas Jasa Keuangan or the Indonesian Financial Services Authority, the successor of Bapepam-LK, an independent institution with authority to regulate and supervise financial services activities in the banking sector, capital market sector as well as non-bank financial industry sector.
OSS
The Online Single Submission; an electronic platform administered by the Investment Coordinating Board of the Republic of Indonesia to facilitate business licensing in Indonesia.
OTN
Optical Transport Network, a technology for sending various types of data traffic over optical fiber networks based on optical wavelengths that enables more efficient transmission for multi-service traffic by relying on multiplexing capability.
Over The Top
A generic term commonly used to refer to the delivery of audio, video and other media over the internet without the involvement of a multiple-system operator in the control or distribution of the content.
Payment switching service
A payment switching service is a service that allows members of a particular network to make payments through cards, digital money (for example through the use of digital applications that allow money transfers), and/or fund transfers between different financial institutions. Such payments can be made between members of the same network or between members and non-members.
Pay TV
Pay Television, premium television, or premium channels, subscription-based television services, usually provided by both analog and digital cable and satellite, but also increasingly via digital terrestrial and internet television.
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PKLN
Tim Pinjaman Komersial Luar Negeri, or Foreign Commercial Loan Coordinating Team, an inter-agency team of the Government charged with, among others, considering requests of Indonesian SOEs such as us for consent to obtain foreign commercial loans.
Point of presence
An access point, location or facility that connects to and helps other devices establish a connection with the Internet, which may consist of a router, switches, servers and other data communication devices. We operate two layers of points of presence, namely main and primary points of presence. A "main point of presence" is the transport backbone that aggregates national traffic. A "primary point of presence" is the aggregate regional transport backbone which has the capability of creating services.
PCEF
Policy and Charging Enforcement Function, provides user traffic handling and quality of service (QoS) at the gateway and responsible for providing service data flow detection and counting, along with online and offline charging interactions. PCRF and PCEF are closely related functional entities, which include policy control decision making and flow based charging control functionalities.
PCRF
Policy and Charging Rules Function, a node which operates in real time in order to determine policy rules in multimedia network. It operates at the core of the network and has access to subscriber databases and other specialized functions, e.g. charging system, so that to allocate broadband network resources and manage flow-based charges for subscribers and services.
PSTN
Public Switched Telephone Network, a telephone network operated and maintained by us that provides infrastructure and services for public telecommunication. Originally only an analog system, the PSTN is now almost entirely digital, even though most subscribers are connected via analog circuits. It now includes mobile phones in addition to fixed-line phones.
Radio Frequency Spectrum
The part of the electromagnetic spectrum corresponding to radio frequencies, i.e. frequencies lower than around 300 GHz (or, equivalently, wavelengths longer than about 1 mm).
RIO
Reference Interconnection Offer, a regulatory term covering all facilities, including interconnection tariffs, technical facilities and administrative issues offered by one telecommunications operator to other telecommunications operator for interconnection access.
RMJ
Regional Metro Junction, an inter-city cable network installation service in one region (region/province).
Roaming
A general term referring to the extension of connectivity service in a location that is different from the home location where the service was registered.
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Satellite Transponder
Radio relay equipment embedded in a satellite that receives signals from Earth and amplifies and transmits the signal back to the Earth.
SCCS
Submarine Communications Cable System, a cable laid on the seabed between land-based stations to carry telecommunication signals across the ocean.
SDN
Software Defined Networking, a network architecture that aims to make networks agile and centrally programmable through software to improve control by enabling companies, operators and service providers to respond quickly to changing business requirements.
SLG
Service Level Guarantee or service level agreement is an agreement between us and our customers regarding the level of the quality of service.
SME
Small and Medium Enterprise.
SMS
Short Messaging Service, a technology allowing the exchange of text messages between mobile phones and between fixed wireless phones.
SOE
State-Owned Enterprise, a Government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, Government business enterprise, or parastatal, a legal entity created by a Government to undertake commercial activities on behalf of a Government owner.
Softswitch
A central device in a telephone network that connects calls from one phone line to another, entirely by means of software running on a computer system. This work was formerly carried out by hardware, with physical switchboards to route the calls.
Switch
A mechanical, electrical or electronic device that opens or closes circuits, completes or breaks an electrical path, or selects paths or circuits, used to route traffic in a telecommunications network.
TIMES
Telecommunication, Information, Media, Edutainment and Service.
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TPE
A normalized way to refer to transponder bandwidth, which means how many transponders would be used if the same total bandwidths used only 36 MHz transponder (1 TPE = 36 MHz).
USO
Universal Service Obligation, the service obligation imposed by the Government on all telecommunications services providers for the purpose of providing public services in Indonesia.
VoIP
Voice over Internet Protocol, a means of sending voice information using the IP.
VPN
Virtual Private Network, a secure private network connection, built on top of publicly-accessible infrastructure, such as the internet or the public telephone network. VPNs typically employ some combination of encryption, digital certificates, strong user authentication and access control to secure the traffic they carry. VPNs provide connectivity to many machines behind a gateway or firewall.
VSAT
Very Small Aperture Terminal, a relatively small antenna, typically 1.5 to 3.0 meters in diameter, placed in the user's premises and used for two-way communications by satellite.
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CERTAIN DEFINITIONS, CONVENTIONS AND GENERAL INFORMATION
Unless the context otherwise requires, the terms "Company," "Telkom," "Group," "Telkom Group," "we," "us," and "our" refers to Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk and its subsidiaries. "Indonesia" refers to the Republic of Indonesia. "Government" refers to the Government of the Republic of Indonesia. "United States," "U.S." or "US" refers to the United States of America. "United Kingdom" or the "UK" refers to the United Kingdom of Great Britain and Northern Ireland. "HK$" refers to the Hong Kong Dollar, the lawful currency of Hong Kong. "MYR" refers to the Malaysian Ringgit, the lawful currency of Malaysia. "Rupiah," "Indonesian Rupiah" or "Rp" refers to the lawful currency of Indonesia. "SG$" refers to the Singapore Dollar, the lawful currency of Singapore. "U.S. Dollar" or "US$" refers to the lawful currency of the United States. "TW$" refers to the Taiwan Dollar, the lawful currency of Taiwan.
Our audited consolidated financial statements as of December 31, 2018 and 2019 and for the years ended December 31, 2017, 2018 and 2019 included in this Form 20-F (the "Consolidated Financial Statements") have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
Solely for the convenience of the reader, certain Indonesian Rupiah amounts have been converted into U.S. Dollar at specified rates. Unless otherwise indicated, the U.S. Dollar equivalent information for amounts in Indonesian Rupiah are converted at the Reuters Rate for December 31, 2019 at 04.00 PM Jakarta time, which was Rp13,882.5 to US$1.00. The exchange rate of Indonesian Rupiah for U.S. Dollar on December 31, 2019 was Rp13,901 to US$1.00 based on the middle exchange which is calculated based on the Bank Indonesia buying and selling rate. The Federal Reserve Bank of New York does not certify for customs purposes a noon buying rate for cable transfers in Indonesian Rupiah. No representation is made that the Indonesian Rupiah or U.S. Dollar amounts shown herein could have been or could be converted into U.S. Dollar or Indonesian Rupiah, as the case may be, at any particular rate or at all. See Item 3 "Key Information — Selected Financial Data — Exchange Controls" for further information regarding rates of exchange between the Indonesian Rupiah and the U.S. Dollar.
Certain numerical figures set out herein, including financial data, have been subject to rounding adjustments and, as a result, the totals of the data disclosed herein may vary slightly from the actual arithmetic totals of such information. Percentages and amounts reflecting changes over time periods relating to financial and other data under Item 5 " — Operating and Financial Review and Prospects" are calculated using the rounded numerical data in the narrative description under Item 5 " — Operating and Financial Review and Prospects" and not the numerical data in our Consolidated Financial Statements.
This Form 20‑F contains "forward-looking statements" as defined in Section 27A of the U.S. Securities Act of 1933, as amended ("Securities Act") and Section 21E of the U.S. Securities Exchange Act of 1934, as amended ("Exchange Act"), within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our expectations and projections for our future operating performance and business prospects. The words "believe," "expect," "anticipate," "estimate," "project," and similar words identify forward-looking statements. In addition, all statements other than statements of historical facts included in this Form 20‑F are forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements herein are reasonable, we can give no assurance that such expectations will prove to be correct. These forward-looking statements are subject to a number of risks and uncertainties, including changes in the economic, social and political environments in Indonesia. This Form 20‑F discloses, under Item 3 "Key Information — Risk Factors" and elsewhere, important factors that could cause actual results to differ materially from our expectations.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not applicable.
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ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
A. SELECTED FINANCIAL DATA
The following tables present our selected consolidated financial information and operating statistics as of the dates and for each of the periods indicated. The selected financial information as of and for the years ended December 31, 2015, 2016, 2017, 2018, and 2019 presented below is based upon our Consolidated Financial Statements prepared in conformity with IFRS as issued by the IASB. The selected financial information as of and for the years ended December 31, 2015, 2016, 2017, 2018, and 2019 should be read in conjunction with and is qualified in its entirety by reference to, our Consolidated Financial Statements, including the notes thereto, and the other information included elsewhere in this Form 20-F and in our previous Form 20-F filed with the SEC on May 21, 2019.
The Public Accountant Firm ("KAP") Purwantono, Sungkoro & Surja (formerly Purwantono, Suherman & Surja) (a member firm of Ernst & Young Global Limited) ("Purwantono, Sungkoro & Surja") audited our Consolidated Financial Statements, prepared as of and for the years ended December 31, 2015, 2016, 2017, 2018, and 2019.
KEY CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME DATA
IFRS
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| Years Ended December 31, | ||||||||||
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| 2015 |
| 2016 |
| 2017 |
| 2018 |
| 2019 | ||
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| (Rp billion) |
| (Rp billion) |
| (Rp billion) |
| (Rp billion) |
| (Rp billion) |
| (US$ million) |
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| except for per share and per ADS amount | ||||||||||
Revenues |
| 102,470 |
| 116,333 |
| 128,256 |
| 130,788 |
| 135,557 |
| 9,765 |
Expenses(1) |
| 70,103 |
| 77,073 |
| 84,293 |
| 92,202 |
| 92,901 |
| 6,692 |
Operating Profit |
| 32,369 |
| 39,172 |
| 43,902 |
| 38,533 |
| 43,994 |
| 3,169 |
Profit before Income Tax |
| 31,293 |
| 38,166 |
| 42,628 |
| 36,077 |
| 38,299 |
| 2,759 |
Net Income Tax Expense |
| (8,023) |
| (9,017) |
| (9,958) |
| (9,366) |
| (10,439) |
| (752) |
Profit for the Year |
| 23,270 |
| 29,149 |
| 32,670 |
| 26,711 |
| 27,860 |
| 2,007 |
Attributable to owners of the parent company |
| 15,451 |
| 19,333 |
| 22,120 |
| 17,802 |
| 19,068 |
| 1,374 |
Attributable to non-controlling interests |
| 7,819 |
| 9,816 |
| 10,550 |
| 8,909 |
| 8,792 |
| 633 |
Other Comprehensive Income (Losses) - Net |
| 493 |
| (2,099) |
| (2,332) |
| 4,954 |
| (2,189) |
| (157) |
Total Comprehensive Income for the Year |
| 23,763 |
| 27,050 |
| 30,338 |
| 31,665 |
| 25,671 |
| 1,850 |
Attributable to owners of the parent company |
| 16,003 |
| 17,312 |
| 19,927 |
| 22,631 |
| 17,029 |
| 1,227 |
Attributable to non-controlling interests |
| 7,760 |
| 9,738 |
| 10,411 |
| 9,034 |
| 8,642 |
| 623 |
Weighted average number of shares outstanding (in millions after stock split) |
| 98,177 |
| 98,638 |
| 99,062 |
| 99,062 |
| 99,062 |
| - |
Basic and Diluted Earnings per Share (in full amount) |
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|
|
|
|
|
|
|
|
|
|
|
Profit per share(2) |
| 157.38 |
| 195.99 |
| 223.30 |
| 179.71 |
| 192.49 |
| 0.01 |
Profit per ADS (100 Series B Shares per ADS) |
| 15,738.00 |
| 19,599.85 |
| 22,329.40 |
| 17,970.52 |
| 19,248.51 |
| 1.39 |
Dividend relating to the period (accrual basis, in full amount) |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share |
| 94.63 |
| 136.75 |
| 167.66 |
| 163.82 |
| - |
| - |
Dividends declared per ADS |
| 9,463 |
| 13,675 |
| 16,766 |
| 16,382 |
| - |
| - |
Dividend paid in the period (cash basis, in full amount)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share |
| 89.46 |
| 94.63 |
| 136.75 |
| 167.66 |
| 163.82 |
| 0.01 |
Dividends declared per ADS |
| 8,946 |
| 9,463 |
| 13,675 |
| 16,766 |
| 16,382 |
| 1.18 |
Notes
(1) | Expenses are calculated as the sum of the following expenses: operation, maintenance, and telecommunication service, depreciation and amortization, personnel, interconnection, general and administrative, marketing, gains (losses) on foreign exchange - net, share in profit (loss) of associated companies - net, impairment of long term investment in associated companies and other income (expense) - net. |
(2) | Using Indonesian Financial Accounting Standards ("IFAS") results, our profit for the year attributable to owners of the parent company was Rp15,489 billion, Rp19,352 billion, Rp22,145 billion, Rp18,032 billion, and Rp18,663 billion for 2015, 2016, 2017, 2018, and 2019, and our net income per share would be Rp157.77, Rp196.19, Rp223.55, Rp182.03, and Rp188.4 for 2015, 2016, 2017, 2018, and 2019. We distribute dividends based on profit attributable to owners of the parent company and net income per share determined in reliance on IFAS. |
14
(3) | In 2015, we paid a cash dividend for 2014 of Rp89.46 per share. In 2016, we paid a cash dividend for 2015 of Rp94.63 per share. In 2017, we paid a cash dividend for 2016 of Rp136.75 per share. In 2018, we paid a cash dividend for 2017 of Rp167.66 per share. In 2019, we paid a cash dividend for 2018 of Rp163.82 per share. |
KEY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DATA
IFRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, | ||||||||||
|
| 2015 |
| 2016 |
| 2017 |
| 2018 |
| 2019 | ||
|
| (Rp billion) |
| (Rp billion) |
| (Rp billion) |
| (Rp billion) |
| (Rp billion) |
| (US$ million) |
|
| except for per share | ||||||||||
Cash and cash equivalents |
| 28,117 |
| 29,767 |
| 25,145 |
| 17,435 |
| 18,241 |
| 1,314 |
Trade and other receivables |
| 7,872 |
| 7,900 |
| 9,564 |
| 9,928 |
| 11,272 |
| 812 |
Prepaid other taxes |
| 2,657 |
| 2,621 |
| 2,833 |
| 3,325 |
| 3,251 |
| 234 |
Other current assets |
| 5,839 |
| 5,246 |
| 7,183 |
| 7,280 |
| 5,502 |
| 396 |
Total Current Assets |
| 47,912 |
| 47,701 |
| 47,561 |
| 42,843 |
| 40,917 |
| 2,946 |
Property and equipment |
| 103,455 |
| 114,230 |
| 129,872 |
| 142,912 |
| 153,174 |
| 11,034 |
Right-of-use assets |
| - |
| - |
| - |
| - |
| 20,893 |
| 1,505 |
Intangible assets |
| 3,056 |
| 3,089 |
| 3,530 |
| 5,032 |
| 6,446 |
| 464 |
Deferred tax assets - net |
| 201 |
| 769 |
| 2,804 |
| 2,477 |
| 2,779 |
| 200 |
Total Non-Current Assets |
| 118,016 |
| 131,642 |
| 150,624 |
| 163,057 |
| 194,140 |
| 13,985 |
Total Assets |
| 165,928 |
| 179,343 |
| 198,185 |
| 205,900 |
| 235,057 |
| 16,931 |
Trade and other payables |
| 14,284 |
| 13,690 |
| 15,791 |
| 15,214 |
| 14,324 |
| 1,032 |
Current income tax liabilities |
| 1,802 |
| 1,236 |
| 801 |
| 404 |
| 1,545 |
| 111 |
Accrued expenses |
| 8,247 |
| 11,283 |
| 12,630 |
| 12,769 |
| 12,761 |
| 919 |
Contract liabilities |
| 4,360 |
| 5,563 |
| 5,427 |
| 5,252 |
| 7,430 |
| 535 |
Short-term bank loans and current maturities of long-term borrowings |
| 4,444 |
| 5,432 |
| 7,498 |
| 10,339 |
| 22,114 |
| 1,593 |
Total Current Liabilities |
| 35,413 |
| 39,762 |
| 45,376 |
| 46,322 |
| 61,349 |
| 4,419 |
Deferred tax liabilities - net |
| 2,110 |
| 745 |
| 933 |
| 1,197 |
| 1,204 |
| 87 |
Pension benefits and other post-employment benefit obligations |
| 4,171 |
| 6,126 |
| 10,195 |
| 5,555 |
| 8,078 |
| 582 |
Long-term loans and other borrowings |
| 30,168 |
| 26,367 |
| 27,974 |
| 33,743 |
| 44,843 |
| 3,230 |
Total Non-Current Liabilities |
| 37,332 |
| 34,305 |
| 40,978 |
| 42,572 |
| 56,484 |
| 4,069 |
Total Liabilities |
| 72,745 |
| 74,067 |
| 86,354 |
| 88,894 |
| 117,833 |
| 8,488 |
Capital stock(1) |
| 5,040 |
| 5,040 |
| 5,040 |
| 4,953 |
| 4,953 |
| 357 |
Net equity attributable to owners of the parent company |
| 74,934 |
| 84,163 |
| 92,467 |
| 98,739 |
| 99,796 |
| 7,188 |
Non-controlling interests |
| 18,249 |
| 21,113 |
| 19,364 |
| 18,267 |
| 17,428 |
| 1,255 |
Total Equity |
| 93,183 |
| 105,276 |
| 111,831 |
| 117,006 |
| 117,224 |
| 8,443 |
Net Debt |
| 6,495 |
| 2,032 |
| 10,327 |
| 26,647 |
| 48,716 |
| 3,509 |
Net Working Capital |
| 12,499 |
| 7,939 |
| 2,185 |
| (3,479) |
| (20,432) |
| (1,473) |
Issued and fully paid shares (in shares) |
| 100,799,996,400 |
| 100,799,996,400 |
| 100,799,996,400 |
| 99,062,216,600 |
| 99,062,216,600 |
| - |
Note:
(1) | As of December 31, 2019, our issued and fully paid-up capital consisted of one Dwiwarna Share and 99,062,216,599 shares of common stock and our authorized capital stock consisted of one Dwiwarna Share and 399,999,999,999 shares of common stock. |
Exchange Controls
The Consolidated Financial Statements are stated in Indonesian Rupiah. The conversion of Indonesian Rupiah amounts into U.S. Dollar are included solely for the convenience of the readers and have been made using the average of the market bid and offer rates of Rp13,882.5 to US$1.00 published by Reuters on December 31, 2019.
On March 31, 2020, the Reuters bid and offer rates were Rp16,300 and Rp16,320 to US$1.00.
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Foreign Exchange Controls
Indonesia has limited foreign exchange controls. The Indonesian Rupiah has been, and in general is, freely convertible. A number of regulations, however, have an impact on the exchange system. For example, only banks are authorized to deal in foreign exchange and execute exchange transactions related to the import and export of goods. In addition, Indonesian banks (including branches of foreign banks in Indonesia) are required to report to Bank Indonesia any fund transfers exceeding US$10,000. Based on the decree of the Head of the PKLN, we are required to obtain an approval from the PKLN prior to acquiring foreign commercial loans. We are also required to submit periodical reports to PKLN during the term of the loans.
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASON FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
Risks Related to Our Business
Operational Risks
A material failure in the continuing operations of our network, certain key systems, gateways to our network or the networks of other network operators could adversely affect our business, financial condition, results of operations and prospects
We depend to a significant degree on the uninterrupted operation of our network to provide our services. For example, we depend on access to our fixed wireline network for the operation of our fixed line network and the termination and origination of cellular telephone calls to and from fixed line telephones, and a significant portion of our cellular and international long distance call traffic is routed through the PSTN. We also depend on access to an internet and broadband network and a cellular network. Our integrated network includes a copper access network, fiber optic access network, BTSs, switching equipment, optical and radio transmission equipment, an IP Core network, satellites and application servers.
In addition, we also rely on interconnection to the networks of other telecommunications operators to carry calls and data from our subscribers to the subscribers of operators both within Indonesia and overseas. We also depend on certain technologically sophisticated management information systems and other systems, such as our customer billing system, to enable us to conduct our operations. Our network, including our information systems, IT and infrastructure and the networks of other operators with whom our subscribers are interconnected, are vulnerable to damage or interruptions in operation from a variety of sources including earthquake, fire, flood, power loss, equipment failure, network software flaws, transmission cable disruption or similar events. For example, during 2018 and 2019, a number of submarine cables that we rely on to provide services across the Indonesian archipelago were damaged mostly as a result of earthquakes. As a result, services in east Indonesia faced slowdowns and disruptions as we had to redirect affected traffic through satellites until the submarine cables could be restored.
Although we have implemented a business continuity plan and a disaster recovery plan, which we test regularly, we cannot guarantee that the implementation of such plans will be completely or partially successful should any portion of our network be severely damaged or interrupted. Any failure that results in an interruption of our operations or of the provision of any service, whether from operational disruption, natural disaster or otherwise, could adversely affect our business, financial condition, results of operations and prospects.
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We may, in the future, be required to share our network infrastructure and capacity with our competitors
In November 2016, the Government announced its intention to amend certain regulations, as a result of which we may, in the future, be required to share our network infrastructure and capacity with our competitors. In particular, the draft revision to Government Regulation No.52/2000 on Telecommunications ("Draft Revision to GR No.52/2000") contemplates providing the Government with the authority to require telecommunication operators such as our Company to share network capacity with other telecommunication operators in Indonesia. Draft Revision to GR No.52/2000 may also require telecommunication operators such as our Company to share proprietary network transmission equipment when the Government deems this to be necessary in order to maintain market competition and network efficiency and sustainability.
In addition, the Government also announced its intention to amend Government Regulation No.53/2000 on the Utilization of Radio Frequency Spectrum and Satellite Orbit ("Draft Revision to GR No.53/2000"). Draft Revision to GR No.53/2000 may require telecommunication operators such as our Company to share network with other telecommunication operators and service providers.
If these draft regulations are enacted by the Government in their current form, we would be required to share our network infrastructure and capacity with our competitors. This may allow our competitors to expand without significant capital expenditure outlay in areas where we operate. In addition, we cannot assure you that we will have sufficient network capacity to maintain our current business, product offerings and quality of service due to the additional traffic that we would need to service as a result of our competitors' access to our network. Our ability to service any increase in traffic within our network may consequently be limited, which may adversely affect our ability to increase our revenues through the expansion of our services.
Neither the Draft Revision to GR No.52/2000 nor the Draft Revision to GR No.53/2000 provide the details of the terms under which we may be required to share our network infrastructure and capacity with our competitors. We cannot assure you that the Government will adopt terms which we consider to be commercially reasonable. For example, we cannot assure you that any subsequent regulations will allow us to charge competitors who lease our network capacity with fees at rates which we consider to be commercially acceptable.
If the Draft Revision to GR No.52/2000 and the Draft Revision to GR No.53/2000 are adopted, and the terms under which such proposed regulations are implemented are not commercially reasonable, it could have a material adverse effect on our business, financial condition, results of operations and prospects.
Our operations may be adversely affected by an outbreak of an infectious disease, such as the novel coronavirus (COVID-19) or other epidemics
An outbreak of any severe infectious disease such as diseases caused by the novel coronavirus (COVID-19), Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory Syndrome (MERS), the H5N1 avian flu or the human swine flu (H1N1) or a similar communicable diseases, if uncontrolled, or restrictions or containment measures taken by the governments of affected countries, including Indonesia, could have a material adverse effect on the overall business sentiment in Indonesia and in economies where we carry out our business, on Indonesian and international consumers' confidence and purchasing behavior, and in turn, on demand for our products and services. Most recently, in January 2020, an outbreak of COVID-19 believed to have started in Wuhan, Hubei, China, spread aggressively in multiple countries, including Indonesia, other countries in Southeast Asia, Europe and North America. The World Health Organization (the "WHO") declared the outbreak to be a pandemic on March 11, 2020.
Various measures have been implemented to contain the outbreak resulting, in certain regions and countries, in extensive government-imposed restrictions and containment measures, including restrictions on domestic and international travel, restrictions on public gatherings, and local or general "stay at home" or quarantine orders. As at the date hereof, there are early indications that the COVID-19 outbreak and such measures have had a significant impact on national economies, including Indonesia, and may cause a global downturn. In response to the COVID-19 outbreak or other epidemics or outbreak of infectious diseases, similar or more stringent measures could be taken that may further worsen the Indonesian economy and the global economy.
17
If the current COVID-19 outbreak or other epidemics or outbreak of infectious diseases were to develop and persist, customers may delay, suspend or decrease orders for our products and services, and demand for certain of our products and services may decrease. Our distribution network and retails outlets may also experience significant disruption due to physical distancing measures and other containment measures. Regardless of enhanced hygiene and precautionary measures to safeguard the safety and health of our employees and customers, we could be subject to labour shortage or suspension of work if certain of our personnel, in Indonesia or elsewhere, were to become infected with the disease or restrictions and containment measures described above were