GENERAL | 1. GENERAL a. Establishment and general information Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk. (the “Company”) was originally part of “Post en Telegraafdienst” , which was established and operated commercially in 1884 under the framework of Decree No. 7 dated March 27, 1884 of the Governor General of the Dutch Indies which was published in State Gazette No. 52 dated April 3, 1884. In 1991, the status of the Company was changed into a state-owned limited liability corporation (“Persero”) based on Government Regulation No. 25/1991. The ultimate parent of the Company is the Government of the Republic of Indonesia (the “Government”) (Notes 1c and 23). The Company was established based on notarial deed No. 128 dated September 24, 1991 of Imas Fatimah, S.H. The deed of establishment was approved by the Ministry of Justice of the Republic of Indonesia in its Decision Letter No. C2‑6870.HT.01.01.Th.1991 dated November 19, 1991 and was published in State Gazette No. 5 dated January 17, 1992, Supplement No. 210. The Company's Articles of Association have been amended several times, in 2019 changes were made to adjust the Company's business activities based on Indonesian Standard Business Classification (“KBLI”) and to increase the flexibility and independence of the Board of Commissioners in approving the Directors’ actions at a certain threshold as stated in notarial deeds No. 32 dated June 21, 2019 of Ashoya Ratam, S.H., M.Kn. Such amendments were accepted and approved by the Ministry of Law and Human Rights of the Republic of Indonesia (“MoLHR”) in its letter No. AHU-0032595.AH.01.02 dated June 24, 2019. In 2020, the Company , in accordance with its Articles of Association, amended its Company name to Limited Liability Company (Persero) PT Telekomunikasi Indonesia Tbk. or abbreviated as PT Telkom Indonesia (Persero) Tbk. in the Indonesia Stock Exchange. At the 2019 Annual General Meeting (“AGM”) of Stockholders of the Company, the Company made changes to the composition of the Company's management, as stated in the notarial Deed No. 12 dated July 10, 2020 of Ashoya Ratam, S.H., Mkn.. The change in the composition of the management has been received by the MoLHR in its letter No. AHU-AH. 01.03-0291419 dated July 16, 2020. In accordance with Article 3 of the Company’s Articles of Association, the scope of its activities is to provide telecommunication network and telecommunication and information services, and to optimize the Company’s resources to provide high quality and competitive goods and/or services to gain/pursue profit in order to increase the value of the Company by applying the Limited Liability Company principle. In regard to achieving its objectives, the Company is involved in the following activities: i. Main business: (a) Planning, building, providing, developing, operating, marketing or selling or leasing, and maintaining telecommunications and information networks in a broad sense in accordance with prevailing laws and regulations. (b) Planning, developing, providing, marketing or selling, and improving telecommunications and information services in a broad sense in accordance with prevailing laws and regulations. (c) Investing including in the form of equity capital in other companies in line with and to achieve the purposes and objectives of the Company. ii. Supporting business: (a) Providing payment transactions and money transferring services through telecommunications and information networks. (b) Performing other activities and undertakings in connection with the optimization of the Company’s resources, which among others, include the utilization of the Company’s property and equipment and movable assets, information systems, education and training, and repairs and maintenance facilities. (c) Collaborating with other parties in order to optimize the information, communication or technology resources owned by other parties as service provider in information, communication and technology industry, as to achieve the purposes and objectives of the Company. The Company’s head office is located at Jalan Japati No. 1, Bandung, West Java. The Company was granted several networks and/or services provision licenses by the Government which are valid for an unlimited period of time as long as the Company complies with prevailing laws and regulations and fulfills the obligation stated in those licenses. For every license issued by the Ministry of Communication and Information (“MoCI”), an evaluation is performed annually and an overall evaluation is performed every five years. The Company is obliged to submit reports of networks and/or services annually to the Indonesian Directorate General of Post and Informatics (“DGPI”), which replaced the previous Indonesian Directorate General of Post and Telecommunications (“DGPT”). The reports comprise information such as network development progress, service quality standard achievement, numbers of customers, license payment, and universal service contribution, while for internet telephone services for public purpose, internet interconnection service, and internet access service, there is additional information required such as operational performance, customer segmentation, traffic, and gross revenue. Details of these licenses are as follows: License License No. Type of services Grant date/latest License of electronic money issuer Bank Indonesia License No. 11/432/DASP Electronic money July 3, 2009 License of money remittance Bank Indonesia License Money remittance service August 5, 2009 License to operate internet telephone services for public purpose 127/KEP/DJPPI/ KOMINFO/3/2016 Internet telephone services for public purpose March 30, 2016 License to operate fixed domestic long distance network 839/KEP/M.KOMINFO/ 05/2016 Fixed domestic long distance and basic telephone services network May 16, 2016 License to operate fixed closed network 844/KEP/ M.KOMINFO/05/2016 Fixed closed network May 16, 2016 License to operate fixed international network 846/KEP/ M.KOMINFO/05/2016 Fixed international and basic telephone services network May 16, 2016 License to operate circuit switched based local fixed line network 948/KEP/ M.KOMINFO/05/2016 Circuit switched based local fixed line network May 31, 2016 License to operate data communication system services 191/KEP/DJPPI/ KOMINFO/10/2016 Data communication system services October 31, 2016 License to operate internet service provider 2176/KEP/ M.KOMINFO/12/2016 Internet service provider December 30, 2016 License to operate content service provider 1040/KEP/ M.KOMINFO/16/2017 Content service provider May 16, 2017 License for the implementation of internet interconnection services 1004/KEP/ M.KOMINFO/2018 Interconnection services December 26, 2018 b. Company’s Board of Commissioners, Directors, Audit Committee, Corporate Secretary, and Internal Audit i. Board of Commissioners and Directors Based on resolutions made at the AGM of Stockholders of the Company as covered by notarial deed No. 133 of Ashoya Ratam., M.Kn. dated May 24, 2019 and No. 12 of Ashoya Ratam., S.H., M.Kn., dated July 10, 2020, the composition of the Company’s Boards of Commissioners and Directors as of December 31, 2019 and 2020, respectively, were as follows: 2019 2020 President Commissioner/ Independent Commissioner Rhenald Kasali Rhenald Kasali Commissioner — Alex Denni Commissioner — Rizal Mallarangeng Commissioner — Ahmad Fikri Assegaf Commissioner Ismail Ismail Commissioner Marcelino Rumambo Pandin Marcelino Rumambo Pandin Independent Commissioner Marsudi Wahyu Kisworo Marsudi Wahyu Kisworo Independent Commissioner Cahyana Ahmadjayadi Wawan Iriawan Independent Commissioner Margiyono Darsasumarja Chandra Arie Setiawan President Director Ririek Adriansyah Ririek Adriansyah Director of Finance Harry Mozarta Zen Heri Supriadi Director of Digital Business Faizal Rochmad Djoemadi Muhammad Fajrin Rasyid Director of Strategic Portfolio Achmad Sugiarto Budi Setyawan Wijaya Director of Enterprise and Business Service Bogi Witjaksono Edi Witjara Director of Wholesale and International Services Edwin Aristiawan Dian Rachmawan Director of Human Capital Management Edi Witjara Afriwandi Director of Network, Information Technology and Solution Zulhelfi Abidin Herlan Wijanarko Director of Consumer Service Siti Choiriana FM Venusiana R ii. Audit Committee, Corporate Secretary, and Internal Audit The composition of the Company’s Audit Committee, Corporate Secretary, and Internal Audit as of December 31, 2019 and 2020, were as follows: 2019 2020 Chairman Margiyono Darsasumarja Chandra Arie Setiawan Member Tjatur Purwadi Marsudi Wahyu Kisworo Member Ismail Wawan Iriawan Member Marcelino Rumambo Pandin Marcelino Rumambo Pandin Member Sarimin Mietra Sardi Sarimin Mietra Sardi Member — Ahmad Fikri Assegaf Member — Emmanuel Bambang Suyitno Corporate Secretary Andi Setiawan Andi Setiawan Internal Audit Harry Suseno Hadisoebroto Harry Suseno Hadisoebroto c. Public offering of securities of the Company The Company’s number of shares prior to its Initial Public Offering (“IPO”) was totalling 8,400,000,000, consisting of 8,399,999,999 Series B shares and 1 Series A Dwiwarna share, were wholly-owned by the Government. On November 14, 1995, 933,333,000 new Series B shares and 233,334,000 Series B shares owned by the Government were offered to the public through an IPO and listed on the Indonesia Stock Exchange (“IDX”) and 700,000,000 Series B shares owned by the Government were offered to the public and listed on the New York Stock Exchange (“NYSE”) and the London Stock Exchange (“LSE”), in the form of American Depositary Shares (“ADS”). There were 35,000,000 ADS and each ADS represented 20 Series B shares at that time. In December 1996, the Government had a block sale of its 388,000,000 Series B shares, and in 1997, distributed 2,670,300 Series B shares as incentive to the Company’s stockholders who did not sell their shares within one year from the date of the IPO. In May 1999, the Government further sold 898,000,000 Series B shares. To comply with Law No. 1/1995 on Limited Liability Companies, at the AGM of Stockholders of the Company on April 16, 1999, the Company’s stockholders resolved to increase the Company’s issued share capital by the distribution of 746,666,640 bonus shares through the capitalization of certain additional paid-in capital, which was made to the Company’s stockholders in August 1999. On August 16, 2007, Law No. 1/1995 on Limited Liability Companies was amended by the issuance of Law No. 40/2007 on Limited Liability Companies which became effective on the same date. Law No. 40/2007 has no effect on the public offering of shares of the Company. The Company has complied with Law No. 40/2007. In December 2001, the Government had another block sale of 1,200,000,000 shares or 11.9% of the total outstanding Series B shares. In July 2002, the Government further sold a block of 312,000,000 shares or 3.1% of the total outstanding Series B shares. At the AGM of Stockholders of the Company held on July 30, 2004, the minutes of which are covered by notarial deed No. 26 of A. Partomuan Pohan, S.H., LLM., the Company’s stockholders approved the Company’s 2‑for‑1 stock split for Series A Dwiwarna and Series B share. The Series A Dwiwarna share with par value of Rp500 per share was split into 1 Series A Dwiwarna share with par value of Rp250 per share and 1 Series B share with par value of Rp250 per share. The stock split resulted in an increase of the Company’s authorized capital stock from 1 Series A Dwiwarna share and 39,999,999,999 Series B shares to 1 Series A Dwiwarna share and 79,999,999,999 Series B shares, and the issued capital stock from 1 Series A Dwiwarna share and 10,079,999,639 Series B shares to 1 Series A Dwiwarna share and 20,159,999,279 Series B shares. After the stock split, each ADS represented 40 Series B shares. During the Extraordinary General Meeting (“EGM”) held on December 21, 2005 and the AGMs held on June 29, 2007, June 20, 2008, and May 19, 2011, the Company’s stockholders approved phase I, II, III, and IV plan, respectively, of the Company’s program to repurchase its issued Series B shares. During the period December 21, 2005 to June 20, 2007, the Company had bought back 211,290,500 shares from the public (stock repurchase program phase I). On July 30, 2013, the Company has sold all such shares. At the AGM held on April 19, 2013 as covered by notarial deed No. 38 dated April 19, 2013 of Ashoya Ratam, S.H., M.Kn., the stockholders approved the changes to the Company’s plan on the treasury stock acquired under phase III. At the AGM held on April 19, 2013, the minutes of which were covered by notarial deed No. 38 of Ashoya Ratam, S.H., M.Kn., the stockholders approved the Company’s 5‑for‑1 stock split for Series A Dwiwarna and Series B shares. Series A Dwiwarna share with par value of Rp250 per share was split into 1 Series A Dwiwarna share with par value of Rp50 per share and 4 Series B shares with par value of Rp50 per share. The stock split resulted in an increase of the Company’s authorized capital stock from 1 Series A Dwiwarna and 79,999,999,999 Series B shares to 1 Series A Dwiwarna and 399,999,999,999 Series B shares. The issued capital stock increase from 1 Series A Dwiwarna and 20,159,999,279 Series B shares to 1 Series A Dwiwarna and 100,799,996,399 Series B shares. After the stock split, each ADS represented 200 Series B shares. Effective from October 26, 2016, the Company change the ratio of Depositary Receipt from 1 ADS representing 200 Series B shares to become 1 ADS representing 100 Series B shares (Note 23). Profit per ADS information have been retrospectively adjusted in the consolidated statements of profit or loss and other comprehensive income to reflect the changes in the ratio of ADS. On May 16 and June 5, 2014, the Company deregistered from Tokyo Stock Exchange (“TSE”) and delisted from the LSE, respectively. As of December 31, 2020, all of the Company’s Series B shares are listed on the IDX and 38,393,803 ADS shares are listed on the NYSE (Note 23). On June 25, 2010, the Company issued the second Rupiah bonds with a nominal amount of Rp1,005 billion for Series A, with a five-year period, and Rp1,995 billion for Series B, with a ten-year period, respectively, which are listed on the IDX (Note 21b). On June 16, 2015, the Company issued Continuous Bonds I Telkom Phase I Year 2015, with a nominal amount Rp2,200 billion for Series A, with a seven-year period, Rp2,100 billion for Series B, with a ten-year period, Rp1,200 billion for Series C, with a fifteen-year period, and Rp1,500 billion for Series D, with a thirty-year period, respectively which are listed on the IDX (Note 21b). On December 21, 2015, the Company sold the remaining shares of treasury shares phase III. On June 29, 2016, the Company sold the treasury shares phase IV. At the AGM held on April 27, 2018, which were covered by notarial deed No. 54 of Ashoya Ratam, S.H., M.Kn., the stockholders approved for cancellation 1,737,779,800 shares of treasury stock by reduced the Company's capital stock. d. Subsidiaries As of December 31, 2019 and 2020, the Company has consolidated the following directly or indirectly owned subsidiaries (Notes 2b and 2d): i. Direct subsidiaries: Year of Subsidiary/place of commencement Percentage of ownership* Total assets before elimination incorporation Nature of business operations 2019 2020 2019 2020 PT Telekomunikasi Seluler (“ Telkomsel ”), Jakarta, Indonesia Telecommunication - provides telecommunication facilities and mobile celullar services using Global Systems for Mobile Communication ("GSM") technology 1995 65 65 104,621 102,187 PT Dayamitra Telekomunikasi (“ Dayamitra ”), Jakarta, Indonesia Leasing of towers and other telecommunication services 1995 100 100 21,815 26,613 PT Multimedia Nusantara (“ Metra ”), Jakarta, Indonesia Network telecommunication services and multimedia 1998 100 100 17,369 17,946 PT Telekomunikasi Indonesia International (“ TII ”), Jakarta, Indonesia Telecommunication 1995 100 100 11,352 12,182 PT Graha Sarana Duta (“ GSD ”), Jakarta, Indonesia Leasing of offices and providing building management and maintenance services, civil consultant and developer 1982 100 100 6,043 6,148 PT Telkom Satelit Indonesia (“ Telkomsat ”), Jakarta, Indonesia Telecommunication - provides satellite communication system, and the related services and infrastructures 1996 100 100 3,306 4,483 PT Telkom Akses (“ Telkom Akses ”), Jakarta, Indonesia Construction, service and trading in the field of telecommunication 2013 100 100 4,463 4,336 PT PINS Indonesia (“ PINS ”), Jakarta, Indonesia Telecommunication construction and services 1995 100 100 3,015 1,864 PT Metra-Net (“ Metra-Net ”), Jakarta, Indonesia Multimedia portal service 2009 100 100 997 1,320 PT Infrastruktur Telekomunikasi Indonesia (“ Telkom Infratel ”), Jakarta, Indonesia Construction, service and trading in the field of telecommunication 2014 100 100 1,706 1,074 PT Napsindo Primatel Internasional (“ Napsindo ”), Jakarta, Indonesia Telecommunication - provides Network Access Point ("NAP"), Voice Over Data ("VOD"), and other related services 1999; ceased operations on January 13, 2006 60 60 5 5 * Percentage of ownership amounting to 99.99% is presented with rounding of 100%. ii. Indirect subsidiaries: Year of Subsidiary/place of commencement Percentage of ownership* Total assets before elimination incorporation Nature of business operations 2019 2020 2019 2020 PT Sigma Cipta Caraka (“ Sigma ”), Tangerang, Indonesia Information technology service - system implementation and integration service, outsourcing and software license maintenance 1988 100 100 6,824 6,008 PT Metra Digital Investama (“ MDI ”), Jakarta, Indonesia Trading and/or providing service related to information and technology, multimedia, entertainment and investments 2013 100 100 1,732 3,461 Telekomunikasi Indonesia International Pte. Ltd., (" Telin Singapore "), Singapore Telecommunication 2008 100 100 3,763 3,320 Telekomunikasi Indonesia International Ltd., (" Telin Hong Kong "), Hong Kong Telecommunication 2010 100 100 2,026 2,652 PT Infomedia Nusantara (“ Infomedia ”), Jakarta, Indonesia Data and information service-provides telecommunication information services and other information services in the form of print and electronic media, and call center services 1984 100 100 2,629 2,387 PT Telkom Landmark Tower (“ TLT ”), Jakarta, Indonesia Property development and management services 2012 55 55 2,057 2,204 PT Finnet Indonesia (“ Finnet ”), Jakarta, Indonesia Information technology services 2006 60 60 1,001 1,371 PT Metra Digital Media (“ MD Media ”), Jakarta, Indonesia Directory information services 2013 100 100 1,144 1,121 PT Melon Indonesia (“ Melon ”) , Jakarta, Indonesia Digital content exchange hub services 2010 100 100 578 848 PT Persada Sokka Tama (" PST "), Jakarta, Indonesia Providing telecommunication network infrastucture 2000 95 95 870 830 Telekomunikasi Indonesia International S.A. (“ Telin TL ”) S.A., Dili, Timor Leste Telecommunication 2012 100 100 735 719 TS Global Network Sdn. Bhd. (" TSGN "), Petaling Jaya, Malaysia Satellite service 1996 70 70 727 664 PT Telkomsel Mitra Inovasi (" TMI "), Jakarta, Indonesia Business management consulting and capital venture services 2019 100 100 569 594 PT Swadharma Sarana Informatika (" SSI "), Jakarta, Indonesia Cash replenishment services and ATM maintenance 2001 51 51 594 576 PT Administrasi Medika (“ Ad Medika ”), Jakarta, Indonesia Health insurance administration services 2002 100 100 395 479 PT Nusantara Sukses Investasi (" NSI "), Jakarta, Indonesia Service and trading 2014 100 100 266 316 PT Graha Yasa Selaras (“ GYS ”), Jakarta, Indonesia Tourism service 2012 51 51 286 289 PT Metraplasa (“ Metraplasa ”), Jakarta, Indonesia Network and e-commerce services 2012 60 60 221 260 PT Nutech Integrasi (" Nutech "), Jakarta, Indonesia System integrator 2001 60 60 177 136 Telekomunikasi Indonesia International Inc. (“ Telkom USA ”), Los Angeles, USA Telecommunication 2014 100 100 90 115 Telekomunikasi Indonesia International Pty. Ltd. (“ Telkom Australia ”) , Sydney, Australia Telecommunication 2013 100 100 117 88 Telekomunikasi Indonesia Intl (Malaysia) Sdn. Bhd. (“ Telin Malaysia ”), Malaysia Telecommunication 2013 70 70 68 39 PT Satelit Multimedia Indonesia (“ SMI ”), Jakarta, Indonesia Satellite services 2013 100 100 16 16 * Percentage of ownership amounting to 99.99% is presented with rounding of 100%. e. Acquisition transactions of subsidiaries i. Dayamitra PST On February 19, 2019, Dayamitra purchased 95% ownership in PST from Rahina Dewayani and Rahayu based on a Conditional Stock Sale and Purchase Agreement. Based on the agreement, Dayamitra purchased 95% ownership of PST amounting to Rp1,113 billion and is required to purchase the remaining 5% ownership of PST within a maximum of 24 months from March 8, 2019, at the same price per share as the acquisition of 95% shares. In connection with such requirement, on December 31, 2019 Dayamitra recognized the liabilities to the previous shareholder of Rp80 billion. In accordance with the terms and conditions of the agreement, at acquisition date, Dayamitra had substantially held 100% ownership of PST shares. The acquisition was accounted as a business combination. PST is a company engaged in managing tower rental. This new investment is expected to strengthen the Company's business portfolio. Acquisition of Indosat’s Towers On October 14, 2019, Dayamitra signed a Sales Purchase Agreement ("SPA") with PT Indosat, Tbk. ("Indosat") related to the purchase of Indosat's towers. The matters stipulated and agreed simultaneously with the SPA are as follows: (a) (b) (c) (d) On December 20, 2019, Dayamitra and Indosat have signed Letter Agreement (Closing Memo), as a follow-up on the SPA, amounting to Rp4,443 billion. In addition, Dayamitra and Indosat also signed Master Tower Lease Agreement ("MTLA"), which stipulated that Indosat agreed to lease back for one each of the slot in 2,100 telecommunication towers acquired. This acquisition was accounted for as an asset acquisition. The fair values of the identifiable assets and liabilities at acquisition date for these two transactions were: Indosat’s Tower PST shares Total Assets Current assets 517 146 663 Property and equipment 3,453 634 4,087 Non-current assets — 91 91 Liabilities — (610) (610) Net book value of net assets 3,970 261 4,231 The difference between fair value and book value of fixed assets — 398 398 Other non-current assets 473 194 667 Deferred tax — (148) (148) Fair value of identifiable net assets acquired 4,443 705 5,148 Fair value consideration transferred 4,443 1,172 5,615 Goodwill — 467 467 ii. Telkomsel Based on notarial deed of Bonardo Nasution, S.H. No. 12 dated January 18, 2019, Telkomsel established TMI. On February 18, 2019, Telkomsel paid Rp550 billion for 549,989 shares of the total 550,000 shares of TMI. TMI is a company engaged in innovation and strategic investment. This new investment is expected to strengthen the Company's business portfolio in order to transform to telecommunication digital company. f. Completion and authorization for the issuance of the consolidated financial statements The Company’s management is responsible for the preparation and fair presentation of these consolidated financial statements which have been completed and authorized for issuance by the Board of Directors of the Company on April 30, 2021. |