PERUSAHAAN PERSEROAN (PERSERO) PT TELEKOMUNIKASI INDONESIA TBK

Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk

Equities

TLKM

ID1000129000

Integrated Telecommunications Services

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Perusahaan Perseroan Persero PT Telekomunikasi Indonesia Tbk : Financial Statements (Unaudited) 3Q 2020

November 04, 2020 at 03:10 am EST

Perusahaan Perseroan (Persero)

PT Telekomunikasi Indonesia Tbk. and its subsidiaries

Consolidated financial statements

as of September 30, 2020 and for nine months period then ended (unaudited)

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020 AND FOR THE NINE MONTHS PERIOD THEN ENDED

(UNAUDITED)

TABLE OF CONTENTS
	Page
Statement of the Board of Directors
Consolidated Statement of Financial Position	1
Consolidated Statement of Profit or Loss and Other Comprehensive Income	2
Consolidated Statement of Changes in Equity	3-4
Consolidated Statement of Cash Flows	5
Notes to the Consolidated Financial Statements	6-134

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As of September 30, 2020 (unaudited) and December 31, 2019 (audited)

ASSETS	Notes			September 30, 2020	December 31, 2019

CURRENT ASSETS
Cash and cash equivalents	2e,2u,3,33,38	17,420	18,242
Other current financial assets	2e,2u,4,33,38	383	554
Trade receivables - net provision for
impairment of receivables
Related parties	2u,2ae,5,38	1,151	1,792
Third parties	33	11,570	10,005
Contract assets	2r,2u,2ae,6,38	822	-
Other receivables - net of provision for
impairment of receivables	2u,38	237	292
Inventories - net provision for obsolescence	7	1,026	585
Assets held for sale	11	39	39
Contract cost	2ae,9	441	-
Prepaid taxes	2t,28a	3,224	2,569
Claim for tax refund	2t,28b	804	992
Other current assets	8,33	3,560	6,652
Total Current Assets				40,677	41,722
NON-CURRENT ASSETS
Long-term investments	2u,10	2,052	1,944
Property and equipment - net of accumulated depreciation	2ab,11,36	156,641	156,973
Right of use assets	2ae,12	17,760	-
Intangible assets - net of accumulated amortization	2n,2ab,14	6,702	6,446
Deferred tax assets - net	2t,2ae,28f	2,975	2,898
Contract assets	2u,2ae,6,38	295	-
Contract cost	2ae,9	1,312	-
Other non-current assets	2t,2u,13,28,33,38	4,805	11,225
Total Non-current Assets				192,542	179,486
TOTAL ASSETS				233,219	221,208
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade payables
Related parties	2u,15,38	818	819
Third parties	33	13,766	13,078
Other payables	2u,38	520	449
Taxes payable	2t,28c	3,532	3,431
Accrued expenses	2u,16,33,38	13,684	13,736
Unearned income - current	2r	631	7,352
Contract liabilities	17a	6,801	-
Advances from customers	2c,33	2,010	1,289
Short-term bank loans	2p,2u,18a,33,38	9,515	8,705
Current maturities of long-term borrowings	2m,2p,2u,2v,18b,33,38	12,209	9,510
Total Current Liabilities				63,486	58,369
NON-CURRENT LIABILITIES
Deferred tax liabilities - net	2t,2ae,28f	749	1,230
Unearned income - net off current portion	2r	-	803
Contract liabilities	2r,2ae,17b	1,025	-
Long service award provisions	2s,32	1,124	1,066
Pension benefits and other post-employment
benefits obligations	2s,31	8,522	8,078
Long-term borrowings - net of current maturities	2m,2p,2u,2v,19,33,38	40,044	33,869
Other liabilities	2o,2u	380	543
Total Non-current Liabilites				51,844	45,589
TOTAL LIABILITIES				115,330	103,958
EQUITY
Capital stock	1c,21	4,953	4,953
Additional paid-in capital	2w,22	2,711	2,711
Other equity	2f,2u,23	541	408
Retained earnings
Appropriated	30	15,337	15,337
Unappropriated		78,175	76,152
Net equity attributable to:
Owners of the parent company		101,717	99,561
Non-controlling interest	20	16,172	17,689
TOTAL EQUITY				117,889	117,250
TOTAL LIABILITIES AND EQUITY				233,219	221,208

The accompanying notes form an integral part of these consolidated financial statements.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

REVENUES	Notes	2020		2019
2c,2r,24,33		99,941		102,631
Operation, maintenance and telecommunication
service expenses	2c,2r,26,33	(25,098)	(31,056)
Depreciation and amortization expenses	2k,2l,2m,11,12,14	(21,038)	(17,259)
Personnel expenses	2c,2r,2s,25,33	(10,406)	(9,744)
Interconnection expenses	2c,2r,33	(4,261)	(3,920)
General and administrative expenses	2c,2r,27,33	(4,234)	(4,932)
Marketing expenses	2c,2r,33	(2,356)	(2,949)
Losses on foreign exchange - net	2q	(2)	(58)
Other income - net	2l,2r		465		741
OPERATING PROFIT			33,011		33,454
Finance income	2c,33	644		882
Finance cost	2c,2p,2r,33	(3,457)	(3,219)
Share of loss of associated companies - net	2f,10	(136)	(3)
Impairment of long term investment in associated companies			(308)	-
PROFIT BEFORE INCOME TAX			29,754		31,114
INCOME TAX (EXPENSE) BENEFIT	2t,2ae,28
Current		(7,378)	(8,196)
Deferred		575		282
			(6,803)		(7,914)
PROFIT FOR THE PERIOD		22,951		23,200
OTHER COMPREHENSIVE INCOME
Other comprehensive income to be reclassified to profit
or loss in subsequent periods:
Foreign currency translation	2f,2q,23	181		(61)
Change in fair value of available-for-sale financial assets	2u,23	-		4
Share of other comprehensive income of associated companies	2f,10	-		39
Other comprehensive income not to be reclassified to profit
or loss in subsequent periods:
Defined benefit actuarial gain (losses) - net	2s,31	-		-
Other comprehensive income (losses) - net			181		(18)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		23,132		23,182
Profit for the period attributable to:
Owners of the parent company		16,679		16,459
Non-controlling interests	2b,20	6,272		6,741
Total comprehensive income for the period attributable to:			22,951		23,200

Owners of the parent company		16,860		16,441
Non-controlling interests	2b	6,272		6,741
BASIC EARNING PER SHARE			23,132		23,182

(in full amount)	2y,29
Net income per share		168.37		166.15
Net income per ADS (100 Series B shares per ADS)		16,836.89		16,614.81

The accompanying notes form an integral part of these consolidated financial statements.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited) (Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

									Attributable to owners of the parent company
									Additional						Retained earnings					Non-controlling

	Description		Notes	Capital stock			paid-in capital			Other equity	Appropriated			Unappropriated			Net		interests		Total equity
	Balance, December 31, 2019					4,953	2,711	408			15,337	76,152			99,561			17,689	117,250
The impact of applying new accounting standards		2ad	-			-			(48)			-			606			558		(50)		508
Balance, January 1, 2020					4,953		2,711		360			15,337		76,758		100,119		17,639	117,758
Adjustment of non-controlling interest					-	-	-			-	-	-	(14)	(14)
Cash dividends	20,30			-	-	-			-	(15,262)	(15,262)	(7,725)	(22,987)
Profit for the period		2b,20	-	-	-			-	16,679	16,679	6,272	22,951
Other comprehensive income		2f,2q,2s,2u,20	-	-	181			-	-	181	-	181
Balance, September 30, 2020					4,953			2,711			541			15,337			78,175		101,717			16,172	117,889

The accompanying notes form an integral part of these consolidated financial statements.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited) (Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

								Attributable to owners of the parent company
								Additional						Retained earnings				Non-controlling

	Description		Notes	Capital stock			paid-in capital			Other equity	Appropriated			Unappropriated		Net		interests	Total equity
	Balance, January 1, 2019				4,953	2,455	507			15,337	75,658			98,910		18,393	117,303
Capital contribution to subsidiaries				-			-			-			-		-		-		59	59
Transaction under common control				-	249	-			-	-	249	170	419
Divestment of subsidiaries				-	226	-			-	-	226	-	226
Acquisition of non-controlling interest				-	-	(3)			-	-	(3)	27	24
Cash dividends	20.30		-	-	-			-	(16,229)	(16,229)	(8,538)	(24,767)
Profit for the period		2b,20	-	-	-			-	16,459	16,459	6,741	23,200
Other comprehensive income		2f,2q,2s,2u,20	-	-	(57)			-	39	(18)	-	(18)
Balance, September 30, 2019				4,953			2,930			447			15,337		75,927		99,594		16,852	116,446

The accompanying notes to the consolidated financial statements, form an integral part ofthese consolidated financial statements taken as a whole.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Months Period Ended September 30, 2020 and 2019(unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

CASH FLOWS FROM OPERATING ACTIVITIES	Notes	2020	2019

Total cash receipts from customers and other operators		96,087	98,450
Cash receipts from tax refund		2,912	-
Cash receipts from finance income		652	882
Cash payments for expenses		(29,152)	(43,984)
Cash payments to employees		(9,832)	(9,404)
Cash payments for corporate and final income taxes		(7,625)	(6,254)
Cash payment for finance costs		(3,541)	(3,264)
Cash payments for short-term and low-value lease asset		(2,065)	-
Cash payments for value added taxes - net		(35)	1,531
Cash receipts from others - net		49	306
Net cash provided by operating activities				47,450		38,263
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption in other current financial assets - net		274	714
Proceeds from insurance claims	11	218	95
Proceeds from sale of property and equipment	11	141	1,261
Dividends received from associated companies	10	5	11
Purchase of property and equipment	11,40	(17,538)	(21,563)
Purchase of intangible assets	14,40	(1,916)	(1,424)
Additional contribution on long-term investments	10	(458)	(225)
Decreases in advances and other assets - net		(16)	(289)
Proceeds from divestment of subsidiaries		-	395
Acquisition of businesses, net of acquired cash		-	(1,108)
Net cash used in investing activities				(19,290)		(22,133)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans and other borrowings	18,19	17,629	21,744
Repayments of loan and other borrowings	18,19	(19,291)	(15,422)
Cash dividends paid to the Company's stockholder	30	(15,262)	(16,229)
Cash dividends paid to non-controlling interests of subsidiaries		(7,725)	(8,538)
Repayment of principal portion of lease liabilities		(4,541)	-
Capital contribution from non-controling interests of subsidiaries		-	59
Net cash used in financing activities				(29,190)		(18,386)
NET DECREASE IN CASH AND CASH
EQUIVALENTS		(1,030)	(2,256)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS		208	(166)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	3		18,242		17,439
CASH AND CASH EQUIVALENTS AT END OF PERIOD	3		17,420		15,017

The accompanying notes form an integral part of these consolidated financial statements.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL

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. Decree No. 7 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 21).
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 Articles of Association has been amended several times, the latest amendments of which were pertaining to the increase in the flexibility and independency of the Board 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 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 with applied the Limited Company principle. In regard to achieving its objectives, the Company is involved in the following activities:
1. Main business:
2. 1. Planning, building, providing, developing, operating, marketing or selling or leasing, and maintaining telecommunications and information networks in a broad sense in accordance with prevailing regulations.
  2. Planning, developing, providing, marketing or selling, and improving telecommunications and information services in a broad sense in accordance with prevailing regulations.
  3. Investing including equity capital in other companies in line with achieving the purposes and objectives of the Company.
3. Supporting business:
4. 1. Providing payment transactions and money transferring services through telecommunications and information networks.
  2. Performing activities and other 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 moving assets, information systems, education and training, repairs and maintenance facilities.
  3. 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.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL (continued)

Establishment and general information (continued)
The Company was granted several networks and/or services licenses by the Government which are valid for an unlimited period of time as long as the Company complies with prevailing laws 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:

						Grant date/latest
License		License No.		Type of services		renewal date
License of electronic		Bank Indonesia License		Electronic money		July 3, 2009
money issuer		No. 11/432/DASP
License of money		Bank Indonesia License		Money remittance		August 5, 2009
remittance		No. 11/23/bd/8		service
License to operate internet		127/KEP/DJPPI/		Internet telephone		March 30, 2016
telephone services for		KOMINFO/3/2016		services for public
public purpose				purpose
License to operate fixed		839/KEP/M.KOMINFO/		Fixed domestic long		May 16, 2016
domestic long distance	05/2016		distance and basic
network				telephone services
				network
License to operate fixed		844/KEP/M.KOMINFO/		Fixed closed network		May 16, 2016
closed network	05/2016
License to operate fixed		846/KEP/M.KOMINFO/		Fixed international and		May 16, 2016
international network	05/2016		basic telephone
				services network
License to operate circuit		948/KEP/M.KOMINFO/		Circuit switched based		May 31, 2016
switched based local	05/2016		local fixed line
fixed line network				network
License to operate data		191/KEP/DJPPI/		Data communication		October 31, 2016
communication system		KOMINFO/10/2016		system services
services
License to operate internet		2176/KEP/M.KOMINFO/		Internet service	December 30, 2016
service provider	12/2016		provider
License to operate content		1040/KEP/M.KOMINFO/		Content service		May 16, 2017
service provider	16/2017		provider
License for the		1004/KEP/M.KOMINFO/		Interconnection	December 26, 2018
implementation of	2018		services
internet interconnection
services

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL (continued)

Company's Board of Commissioners, Directors, Audit Committee, Corporate Secretary, Internal Audit, and Employees
1. Board of Commissioners and Directors
  Based on resolutions made at the Annual General Meeting ("AGM") of Stockholders of the Company as covered by notarial deed No. 31 of Ashoya Ratam., S.H., M.Kn. dated June 19, 2020 and No. 133 of Ashoya Ratam., S.H., M.Kn. dated May 24, 2019, the composition of the Company's Boards of Commissioners and Directors as of September 30,
  2020 and December 31, 2019, respectively, were as follows:

President Commissioner	September 30, 2020	December 31, 2019
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	Wawan Iriawan	Cahyana Ahmadjayadi
Independent Commissioner	Chandra Arie Setiawan	Margiyono Darsasumarja
President Director	Ririek Adriansyah	Ririek Adriansyah
Director of Finance	Heri Supriadi	Harry Mozarta Zen
Director of Digital Business	Muhammad Fajrin Rasyid	Faizal Rochmad Djoemadi
Director of Strategic Portfolio	Budi Setyawan Wijaya	Achmad Sugiarto
Director of Enterprise and Business
Service	Edi Witjara	Bogi Witjaksono
Director of Wholesale and
International Services	Dian Rachmawan	Edwin Aristiawan
Director of Human Capital
Management	Afriwandi	Edi Witjara
Director of Network, Information
Technology and Solution	Herlan Wijanarko	Zulhelfi Abidin
Director of Consumer Service	FM Venusiana R	Siti Choiriana

Audit Committee, Corporate Secretary, and Internal Audit

The composition of the Company's Audit Committee, Corporate Secretary, and Internal Audit as of September 30, 2020 and December 31, 2019, were as follows:

Chairman	September 30, 2020		December 31, 2019
Chandra Arie Setiawan		Margiyono Darsasumarja
Member	Marsudi Wahyu Kisworo		Tjatur Purwadi
Member	Wawan Iriawan		Ismail
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

Employees
As of September 30, 2020 and December 31,2019, the Company and subsidiaries ("Group") had 25,416 employees and 24,272 employees, respectively.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL (continued)

Public offering of securities of the Company
The Company's shares prior to its Initial Public Offering ("IPO") totalled 8,400,000,000, consisting of 8,399,999,999 Series B shares and 1 Series A Dwiwarna share, and 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.
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 21). Profit per ADS information have been retrospectively adjusted 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 September 30, 2020, all of the Company's Series B shares are listed on the IDX and 40.929.645ADS shares are listed on the NYSE (Note 21).

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL (continued)

Public offering of securities of the Company (continued)
On June 25, 2010 the Company issued the second rupiah bonds with a nominal amount of Rp1,005 billion for Series A, a five-year period and Rp1,995 billion for Series B, a ten-year period, respectively, are listed on the IDX (Note 19.b.i).

On June 16, 2015, the Company issued Continuous Bonds I Telkom Phase I 2015, with a nominal amount Rp2,200 billion for Series A, a seven-year period, Rp2,100 billion for Series B, a ten-year period, Rp1,200 billion for Series C, a fifteen-year period and Rp1,500 billion for Series D, a thirty-year period, respectively which are listed on the IDX (Note 19.b.i).

Subsidiaries
As of September 30, 2020 and December 31, 2019, the Company has consolidated the following directly or indirectly owned subsidiaries (Notes 2b and 2d):
i. Direct subsidiaries:

Total assets before

Nature of business/date of

Year of start

Percentage of ownership*

elimination

Subsidiary/place of

Incorporation or acquisition

of commercial

September 30,

December 31,

September 30,

December 31,

incorporation

by the Company

operations

2020

2019

2020

2019

PT Telekomunikasi

Telecommunication - provides

1995

96,900

82,730

Selular

telecommunication facilities

("Telkomsel"),

and mobile celuller

Jakarta, Indonesia

services using Global

Systems for Mobile

Communication ("GSM")

technology/

May 26, 1995

PT Dayamitra

Telecommunication/

1995

100

21,199

20,114

Telekomunikasi

May 17, 2001

("Dayamitra"),

Jakarta, Indonesia

PT Multimedia

Network telecommunication

1998

100

16,280

16,478

Nusantara

services and multimedia/

("Metra"),

May 9, 2003

Jakarta, Indonesia

PT Telekomunikasi

Telecommunication/

1995

100

12,883

10,970

Indonesia International

July 31, 2003

("TII"),

Jakarta, Indonesia

PT Graha Sarana Duta

Leasing of offices and

1982

100

6,165

6,055

("GSD"),

providing building

Jakarta, Indonesia

management and

maintenance services, civil

consultant and developer/

April 25, 2001

PT Telkom Satelit

Telecomunication - provides

1996

100

4,699

3,309

Indonesia

satellite communication

("Telkomsat"),

system, services and

Jakarta, Indonesia

facilities/

September 28, 1995

PT Telkom Akses

Construction, service and

2013

100

4,070

4,436

("Telkom Akses"),

trade in the field of

Jakarta, Indonesia

telecommunication/

November 26, 2012

PT PINS Indonesia

Telecommunication

1995

100

2,474

2,995

("PINS"),

construction and services/

Jakarta, Indonesia

August 15, 2002

PT Infrastruktur

Construction, service and

2014

100

1,676

1,706

Telekomunikasi

trade in the field of

Indonesia

telecommunication/

("Telkom Infratel"),

January 16, 2014

Jakarta, Indonesia

*Percentage of ownership amounting to 99.99% is presented with rounding 100%.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL (continued)

d. Subsidiaries (continued)

i. Direct subsidiaries (continued):

Subsidiary/place of

incorporation

PT Metra-Net

("Metra-Net"),

Jakarta, Indonesia

PT Napsindo Primatel Internasional ("Napsindo"), Jakarta, Indonesia

								Total assets before
Nature of business/date of		Year of start	Percentage of ownership*		elimination
Incorporation or acquisition		of commercial	September 30,		December 31,		September 30,		December 31,
by the Company		operations	2020	2019	2020	2019
Multimedia portal service/		2009		100		100		1,325		996
April 17, 2009
Telecommunication -		1999; ceased	60	60	5	5
provides Network Access		operations on
Point (NAP), Voice Over		January 13,
Data (VOD) and other	2006
related services/
December 29, 1998

*Percentage of ownership amounting to 99.99% is presented with rounding 100%.

Indirect subsidiaries:

Total assets before

Nature of business/date of

Year of start

Percentage of ownership*

elimination

Subsidiary/place of

Incorporation or acquisition

of commercial

September 30,

December 31,

September 30,

December 31,

incorporation

by the Company

operations

2020

2019

2020

2019

PT Sigma Cipta Caraka

Information technology

1988

100

6,112

6,796

("Sigma"),

service - system

Tangerang, Indonesia

implementation and

integration service,

outsourcing and software

license maintenance/

May 1,1987

Telekomunikasi

Telecommunication/

2008

100

3,650

3,635

Indonesia

December 6, 2007

International Pte. Ltd.,

("Telin Singapore"),

Singapore

Telekomunikasi

Telecommunication/

2010

100

3,317

1,830

Indonesia

December 8, 2010

International Ltd,

("Telin Hong Kong"),

Hong Kong

PT Infomedia Nusantara

Data and information

1984

100

2,317

2,626

("Infomedia"),

service - provides

Jakarta, Indonesia

telecommunication

information services and

other information services

in the form of print and

electronic media and call

center services/

September 22,1999

PT Telkom Landmark

Service for property

2012

2,239

2,056

Tower

development and

("TLT"),

management/

Jakarta, Indonesia

February 1, 2012

PT Metra Digital

Trading and/or providing

2013

100

1,879

1,475

Investama

service related to

("MDI"),

information and

Jakarta, Indonesia

tehnology, multimedia,

entertainment and

investment/

January 8, 2013

PT Finnet Indonesia

Information technology

2006

1,564

1,001

("Finnet"),

services/

Jakarta, Indonesia

October 31, 2005

*Percentage of ownership amounting to 99.99% is presented with rounding 100%.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL (continued)

d. Subsidiaries (continued)

ii. Indirect subsidiaries (continued):

										Total assets before
		Nature of business/date of		Year of start	Percentage of ownership*		elimination
Subsidiary/place of		Incorporation or acquisition		of commercial	September 30,	December 31,		September 30,		December 31,
incorporation		by the Company		operations	2020		2019	2020	2019
PT Metra Digital		Directory information		2013		100		100		1,076	1,146
Media		services/
("MD Media"),		January 22, 2013
Jakarta, Indonesia
PT Melon		Digital content exchange	2010		100		100	833	578
("Melon"),		hub services/
Jakarta, Indonesia		November 14, 2016
PT Persada Sokka		Providing telecommunication	2008		95		95	824	870
Tama		network infrastucture/
("PST"),		February 19, 2019
Jakarta, Indonesia
Telekomunikasi		Telecommunication/	2012		100		100	796	706
Indonesia		September 11, 2012
International
("Telin TL") S.A.,
Dili, Timor Leste
TS Global Network		Satellite services/	1996		70		70	727	732
Sdn. Bhd.		December 14, 2017
("TSGN"),
Petaling Jaya,
Malaysia
PT Telkomsel Mitra		Bussiness management	2019		100		100	592	569
Inovasi		consulting and capital
("TMI"),		venture services/
Jakarta, Indonesia		January 18, 2019
PT Swadharma		System Integrator Services/	2001		51		51	567	520
Sarana		April 2, 2018
Informatika
("SSI"),
Jakarta, Indonesia
PT Administrasi		Health insurance	2002		100		100	471	395
Medika		administration services/
("Ad Medika"),		February 25, 2010
Jakarta, Indonesia
PT Graha Yasa		Tourism service/	2012		51		51	292	288
Selaras		April 27, 2012
("GYS"),
Jakarta, Indonesia
PT Nusantara		Service and trading/	2014		100		100	261	272
Sukses Investasi		September 1, 2014
("NSI"),
Jakarta, Indonesia
PT Metraplasa	Network & e-commerce	2012		60		60	155	214
("Metraplasa"),		services/
Jakarta, Indonesia		April 9, 2012
PT Nutech Integrasi		System integrator/	2001		60		60	128	177
("Nutech"),		December 13, 2017
Jakarta, Indonesia

*Percentage of ownership amounting to 99.99% is presented with rounding 100%.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL (continued)

d. Subsidiaries (continued)

ii. Indirect subsidiaries (continued):

Total assets before

Nature of business/date of

Year of start

Percentage of ownership*

elimination

Subsidiary/place of

Incorporation or acquisition

of commercial

September 30,

December 31,

September 30,

December 31,

incorporation

by the Company

operations

2020

2019

2020

2019

Telekomunikasi

Telecomunication

2014

100

111

Indonesia

December 11, 2013

International Inc.,

("Telkom USA"),

Los Angeles, USA

Telekomunikasi

Telecommunication/

2013

100

104

Indonesia

January 9, 2013

International Pty Ltd,

("Telkom Australia"),

Sydney, Australia

Telekomunikasi

Telecommunication/

2013

Indonesia Intl

July 2, 2013

(Malaysia) Sdn. Bhd

("Telin Malaysia"),

Malaysia

PT Satelit

Satellite services/

2013

100

Multimedia

March 25, 2013

Indonesia

("SMI"),

Jakarta, Indonesia

*Percentage of ownership amounting to 99.99% is presented with rounding 100%.

e. Acquisition transactions of subsidiaries

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. Based on an analysis of the terms and conditions associated with the transaction, it was concluded that at the acquisition date Dayamitra had substantially held 100% ownership of PST shares and as such there were no non-controlling interests.

PST is a company engaged in managing tower rental. This new investment is expected to strengthen the Company's business portfolio. From the acquisition date to September 30, 2020, total revenue and profit before tax recorded by PST and recognized in the consolidated statements of profit or loss and other comprehensive income amounted to Rp384 billion and Rp97 billion, respectively. This acquisition was accounted as a business combination.

Purchase 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:

Transfer of ownership 2,100 telecommunication towers (3,982 tenants) and their licenses;
Transfer of 1,731 leases of lands previously leased by Indosat from third parties;
369 leases of lands owned by Indosat; and
Transfer of the collocation contracts and the related user's details of 3,982 existing tenants in the towers being acquired.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

1. GENERAL (continued)

e. Acquisition transactions of subsidiaries (continued) i. Dayamitra (continued)

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 acquired for these two transactions were:

	Indosat's
Assets	Tower		PST shares	Total

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 (Note 14)	-	467	467

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 from 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.

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 in accordance with Indonesian Financial Accounting Standards, which have been completed and authorized for issuance by the Board of Directors of the Company on November 4, 2020.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of the Company and subsidiaries (collectively referred to as "the Group") have been prepared in accordance with Financial Accounting Standards ("Standar Akuntansi Keuangan" or "SAK") including Indonesian Statement of Financial Accounting Standards ("Pernyataan Standar Akuntansi Keuangan" or "PSAK") and interpretation of Financial Accounting Standards ("Interpretasi Standar Akuntansi Keuangan" or "ISAK") in Indonesia published by the Financial Accounting Standards Board of Institute of Indonesian Chartered Accountants and Regulation No. VIII.G.7 of the Capital Market and Financial Institution Supervisory Agency ("Bapepam-LK") regarding the Presentation and Disclosure of Financial Statements of Issuers or Public Companies, enclosed in the decision letter KEP-347/BL/2012.

Basis of preparation of financial statements
The consolidated financial statements, except for the consolidated statements of cash flows, are prepared on the accrual basis. The measurement basis used is historical cost, except for certain accounts which are measured using the basis mentioned in the relevant notes herein.
The consolidated statements of cash flows are prepared using the direct method and present the changes in cash and cash equivalents from operating, investing and financing activities.
Figures in the consolidated financial statements are presented and rounded to billions of Indonesian rupiah ("Rp"), unless otherwise stated. For the figures in the consolidated financial statements which still contain values but below Rp1 billion, are presented with zeros.
Accounting standards issued but not yet effective Effective January 1, 2021
- PSAK 22: Business Combination
  This amendment clarifies the definition of business in order to assist the entity in determining whether a transaction should be recorded as a business combination asset acquisition.
- PSAK 73: Lease
  This amendment provides that lessee may choose not to assess whether the lease concession related to Covid-19 is a modification of the lease and provides requirements that must be met for such practical ways to be applied.
Principles of consolidation
The consolidated financial statements consist of the financial statements of the Company and the subsidiaries over which it has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has the power over the investee, exposure or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect its returns.

Generally, there is a presumption that majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

The contractual arrangement with the other vote holders of the investee,
Rights arising from other contractual arrangements, and
The Group's voting rights and potential voting rights.

The Group re-assesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control over the subsidiary. Assets, liabilities, income and expenses, of a subsidiary acquired or disposed of during the year are included in the consolidated statements of profit or loss and other comprehensive income from the date the Group gain control until the date the Group ceases to control the subsidiary.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Principles of consolidation (continued)
Profit or loss and each component of other comprehensive income ("OCI") are attributed to the equity holders of the Company and to the non-controlling interests, even if this results in the non- controlling interests having a deficit balance.
All assets and liabilities, equity, revenue and expenses and cash flow from transactions within Group have been eliminated at the time of consolidation.
In case of loss of control over a subsidiary, the Group:
- derecognizes the assets (including goodwill) and liabilities of the subsidiary at the carrying amounts on the date when it loses control;
- derecognizes the carrying amounts of any non-controlling interests of its former subsidiary on the date when it loses control;
- recognizes the fair value of the consideration received (if any) from the transaction, events, or condition that caused the loss of control;
- recognizes the fair value of any investment retained in the subsidiary at fair value on the date of loss of control;
- recognizes any surplus or deficit in profit or loss that is attributable to the Group.
Transactions with related parties
The Group has transactions with related parties. The definition of related parties used is in accordance with the Bapepam-LK's Regulation No. VIII.G.7 regarding the Presentations and Disclosures of Financial Statements of Issuers or Public Companies, enclosed in the decision letter No. KEP-347/BL/2012. The party which is considered as a related party is a person or entity that is related to the entity that is preparing its financial statements.
Under the Regulation of Bapepam-LK No. VIII.G.7, a government-related entity is an entity that is controlled, jointly controlled or significantly influenced by the government. Government in this context is the Minister of Finance or the Local Government, as the shareholder of the entity.
Key management personnel are identified as the persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of the Group. The related party status extends to the key management of the subsidiaries to the extent they direct the operations of subsidiaries with minimal involvement from the Company's management.
Business combinations
Business combination is accounted for using the acquisition method. The consideration transferred is measured at fair value, which is the aggregate of the fair value of the assets transferred, liabilities incurred or assumed and the equity instruments issued in exchange for control of the acquiree. For each business combination, non-controlling interest is measured at fair value or at the proportionate share of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Acquisition-related costs are expensed as incurred. The acquiree's identifiable assets and liabilities are recognized at their fair values at the acquisition date.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed, and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the re- assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) d. Business combinations (continued)

When the determination of consideration from a business combination includes contingent consideration, it is measured at its fair value on acquisition date. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognized in profit or loss when adjustments are recorded outside the measurement period. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments made against goodwill. Measurement-period adjustments are adjustments that arise from additional information obtained during the measurement period, which cannot exceed one year from the acquisition date, about facts and circumstances that existed at the acquisition date.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group shall report in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Group shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. The measurement period ends immediately after the Company receives the information about the facts and circumstances that existed at the acquisition date or learns that additional information cannot be obtained. However, the measurement period must not exceed one year from the date of acquisition.

In a business combination achieved in stages, the acquirer remeasures its previously held equity interest in the acquiree at its acquisition-date fair value and recognizes the resulting gain or loss, if any, in profit or loss.

Based on PSAK 38 (Revised 2012), "Common Control Business Combination", the transfer of assets, liabilities, shares or other ownership instruments among the companies under common control would not result in a gain or loss for the Company or individual entity in the same group. Since the restructuring transaction between entities under common control does not result in a change of the economic substance of the ownership of assets, liabilities, shares or other instruments of ownership, which are exchanged, assets or liabilities transferred are recorded at book value using the pooling-of-interests method.

In applying the pooling-of-interests method, the components of the financial statements for the period during the restructuring occurred must be presented in such a manner as if the restructuring has occurred since the beginning of the earliest period presented. The excess of consideration paid or received over the carrying value of interest acquired, net of income tax, is directly recognized to equity and presented as "Additional Paid-in Capital" under the equity section of the consolidated statement of financial position.

At the initial application of PSAK 38 (Revised 2012), all balances of the Difference In Value of Restructuring Transactions of Entities under Common Control was reclassified to "Additional Paid- in Capital" in the consolidated statement of financial position.

Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, cash in banks and all unrestricted time deposits with original maturities of three months or less at the time of placement.
Time deposits with maturities of more than three months but not more than one year are presented as part of "Other Current Financial Assets" in the consolidated statements of financial position (Note 2u).

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments in associated companies
An associate is an entity over which the Group (as investor) has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but does not include control or joint control over those operating policies. The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.
The Group's investments in its associates are accounted for using the equity method.
Under the equity method, the investment in an associate is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the investor's share of the net assets of the associate since the acquisition date. On acquisition of the investment, any difference between the cost of the investment and the entity's share of the net fair value of the investee's identifiable assets and liabilities is accounted for as follows:
1. Goodwill relating to an associate or a joint venture is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment, and
2. Any excess of the entity's share of the net fair value of the investee's identifiable assets and liabilities over the cost of the investment is included as income in the determination of the entity's share of the associate or joint venture's profit or loss in the period in which the investment is acquired.

The consolidated statements of profit or loss and other comprehensive income reflect the Group's share of the results of operations of the associate. Any change in the other comprehensive income of the associate is presented as part of other comprehensive income. In addition, when there has been a change recognized directly in the equity of the associate, the Group recognizes it share of the change in the consolidated statements of changes in equity. Unrealized gain and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The Group determines at each reporting date whether there is any objective evidence that the investments in associated companies are impaired. If there is, the Group calculates and recognizes the amount of impairment as the difference between the recoverable amount of the investments in the associated companies and their carrying value.

These assets are included in "Long-term Investments" in the consolidated statements of financial position.

For the purpose of reporting these investments using the equity method, the assets and liabilities of these companies as of the statement of financial position date are translated into Indonesian rupiah using the rate of exchange prevailing at that date, while revenues and expenses are translated into Indonesian rupiah at the average rates of exchange for the year. The resulting translation adjustments are reported as part of "translation adjustment" in the equity section of the consolidated statements of financial position.

Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost, less provision for impairment. This provision for impairment is made based on management's evaluation of the collectability of the outstanding amounts. Receivable are written off in the year they are determined to be uncollectible (Note 2u).

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Inventories
Inventories consist of components, which are subsequently expensed upon use. Components represent telephone terminals, cables, and other spare parts. Inventories also include Subscriber Identification Module ("SIM") cards, handsets, wireless broadband modems and blank prepaid vouchers, which are expensed upon sale.
The costs of inventories consist of the purchase price, import duties, other taxes, transport, handling, and other costs directly attributable to their acquisition. Inventories are recognized at the lower of cost and net realizable value. Net realizable value is the estimate of selling price less the expected costs to sell.
Cost is determined using the weighted average method.
The amounts of any write-down of inventories below cost to net realizable value and all losses of inventories are recognized as expense in the period in which the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of general and administrative expenses in the year in which the reversal occurs.
Provision for obsolescence is primarily based on the estimated forecast of future usage of these inventory items.
Prepaid expenses
Prepaid expenses are amortized over their future beneficial periods using the straight-line method.
Assets held for sale
Assets (or disposal groups) are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.
Assets that meet the criteria to be classified as held for sale are reclassified from property and equipment and depreciation on such assets is ceased.
Intangible assets
Intangible assets mainly consist of software. Intangible assets are recognized if it is highly probable that the expected future economic benefits that are attributable to each asset will flow to the Group, and the cost of the asset can be reliably measured.
Intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Intangible assets are amortized over their estimated useful lives. The Group estimates the recoverable value of its intangible assets. When the carrying amount of an intangible asset exceeds its estimated recoverable amount, the asset is written down to its estimated recoverable amount.
Intangible assets except goodwill are amortized using the straight-line method, based on the estimated useful lives of the intangible assets as follows:

	Years
Software	3-6
License	3-20
Other intangible assets	1-30
	19

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Intangible assets (continued)
Intangible assets are derecognized on disposal, or when no further economic benefits are expected, either from further use or from disposal. The difference between the carrying amount and the net proceeds received from disposal is recognized in the consolidated statements of profit or loss and other comprehensive income.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
The cost of an item of property and equipment includes: (a) purchase price, (b) any costs directly attributable to bringing the asset to its location and condition, and (c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
Property and equipment, except land rights, are depreciated using the straight-line method based on the estimated useful lives of the assets as follows:

	Years
Buildings	15-40
Leasehold improvements	2-15
Switching equipment	3-15
Telegraph, telex and data communication equipment	5-15
Transmission installation and equipment	3-25
Satellite, earth station and equipment	3-20
Cable network	5-25
Power supply	3-20
Vehicles	4-8
Data processing equipment	3-20
Other telecommunication peripherals	5
Office equipment	2-5
Customer Premises Equipment ("CPE") asset	4-5
Other equipment	2-5

Significant expenditures related to leasehold improvements are capitalized and depreciated over the lease term.

The depreciation method, useful life and residual value of an asset are reviewed at least at each financial year-end and adjusted, if appropriate. The residual value of an asset is the estimated amount that the Group would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset is already of the age and in the condition expected at the end of its useful life.

Property and equipment acquired in exchange for a non-monetary asset or for a combination of monetary and non-monetary assets are measured at fair value unless, (i) the exchange transaction lacks commercial substance; or (ii) the fair value of neither the asset received nor the asset given up is measured reliably.

Major spare parts and standby equipment that are expected to be used for more than 12 months are recorded as part of property and equipment.

When assets are retired or otherwise disposed of, their cost and the related accumulated depreciation are derecognized from the consolidated statement of financial position and the resulting gains or losses on the disposal or sale of the property and equipment are recognized in the consolidated statements of profit or loss and other comprehensive income.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property and equipment (continued)
Certain computer hardware can not be used without the availability of certain computer software. In such circumstance, the computer software is recorded as part of the computer hardware. If the computer software is independent from its computer hardware, it is recorded as part of intangible assets.
The cost of maintenance and repairs are charged to the consolidated statements of profit or loss and other comprehensive income as incurred. Significant renewals and betterments are capitalized.
Property under construction is stated at cost until the construction is completed, at which time it is reclassified to the property and equipment account to which it relates. During the construction period until the property is ready for its intended use or sale, borrowing costs, which include interest expense and foreign currency exchange differences incurred on loans obtained to finance the construction of the asset, as long as it meets the definition of a qualifying asset are, capitalized in proportion to the average amount of accumulated expenditures during the period. Capitalization of borrowing cost ceases when the construction is completed and the asset is ready for its intended use or sale.
Leases
Accounting policy for leases applied from January 1, 2020
PSAK 73 sets out a comprehensive model for identification of lease agreements and its treatment in the financial statements of both lessees and lessors. PSAK 73 introduces a control model for the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer.
The Group adopted PSAK 73 as at January 1, 2020 using the modified retrospective method by recognizing the cumulative effect of initially applying PSAK 73 as an adjustment to the opening balance of equity at January 1, 2020. Accordingly, the comparative information presented for 2019 has not been restated and it is presented, as previously reported, under PSAK 30 and the related interpretations.
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term corresponds to the non-cancellable period of each contract, except in cases where the Group is reasonably certain of exercising renewal options contractually foreseen.
The Group has made use of the package of practical expedients available under the transition guidance within PSAK 73, which among other things:
- the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
- the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2020 as short-term leases;
- the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application;
- the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease;
- apply PSAK 73 to leases that were previously identified under PSAK 30 and ISAK 8, and not to apply PSAK 73 to those that were not previously identified under these two standards;
- not to separate non-lease components from lease components, and instead, account for both as a single lease component; and
- not to recognize a lease liability and a Right-of-Use ("ROU") asset for leases where the underlying assets are low-value assets (i.e. underlying assets with a maximum value of USD5,000 or IDR50 million when new).

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (continued)
PSAK 73 also permits the Group not to reassess the Group prior conclusions about lease identification, lease classification and the Group has elected to carry forward the historical lease assessments and relied on its assessment made applying PSAK 30 and ISAK 8 Determining whether an Arrangement contains a Lease. The Group applies the definition of a lease and related guidance set out in PSAK 73 to all lease contracts entered into or modified on or after January 1, 2020.
1. The Group as Lessee
  The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and ROU assets representing the right to use the underlying assets.
  The Group recognizes ROU assets at the commencement date of the lease. ROU assets are measured at cost, less any accumulated amortization and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of ROU assets includes the amount of lease liabilities recognized, initial direct costs incurred, restoration costs and lease payments made at or before the commencement date less any lease incentives received.
  ROU assets are amortized on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:

	Years
Buildings	15-40
Transmission installation and equipment	3-25
Power supply	3-20
Vehicles	4-8
Others	2-25

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The ROU assets are subject to impairment in accordance with PSAK 48 Impairment of Assets.

Lease liabilities

At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) m. Leases (continued)

The Group as Lessee (continued)
Short-term leases with a duration of less than 12 months, short-term lease ends within 12 months after January 1, 2020 and low-value leases, as well as those lease elements, partially or totally not complying with the principles of recognition defined by PSAK 73 will be treated similarly to operating leases. The Group will recognize those lease payments on a straight-line basis over the lease term in the consolidated statements of profit or loss and other comprehensive income.
The Group as Lessor
Under PSAK 73, a lessor continues to classify leases as either finance leases or operating leases and account for those two types of leases differently. Leases in which the Group transfers substantially all the risks and rewards incidental to ownership of an asset are classified as finance leases, otherwise it will be classified as an operating leases. Lease classification is made at the inception date and is reassessed only if there is a lease modification.
At the commencement date, the Group recognizes assets held under a finance lease at an amount equal to the net investment in the lease and present it as finance lease receivable. The net investment in the lease include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and residual value guarantees provided to the lessor by the lessee. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the lessee and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate.
As required by PSAK 73, an allowance for expected credit loss has been recognized on the finance lease receivables.
Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.
If an arrangement contains lease and non-lease components, the Group applies PSAK 72 Revenue from Contracts with Customers to allocate the consideration in the contract.

Accounting policy for leases applied until December 31, 2019

As lessee
A lease is classified at the commencement date as a finance lease or operating lease. A lease that transfers substantially all the risks and benefits associated with ownership of shares to the Group is classified as a finance lease.
The finance lease is capitalized at the beginning of lease terms at the fair value of the leased assets or, if lower, present value of the minimum lease payment. Lease payments are apportioned between the finance charge and rental expenses. The finance charge is allocated to each period during the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability. Financial charges are recognized as finance costs in profit or loss.
The Group did not change the initial carrying amounts of recognized assets and liabilities at the date of initial application for leases previously classified as finance leases (i.e. the ROU assets and lease liabilities equal the lease assets and liabilities recognized under PSAK 30). The requirements of PSAK 73 were applied to these leases from January 1, 2020.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases (continued)
Accounting policy for leases applied until December 31, 2019(continued)
1. As lessee (continued)
  Leased assets are depreciated based on the useful lives. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease terms, the leased assets are fully depreciated over the shorter of the lease terms and their economic useful lives.
  Operating leases are leases other than finance leases. Payments are charged under operating leases are recognized as an expense in profit or loss on a straight-line basis over the lease period.
2. As lessor
  Leases where the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The initial direct costs incurred in negotiating and arranging operating leases are added to the carrying value of the leased assets and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as income in the period in which they are earned.
Deferred charges - land rights
Costs incurred to process the initial legal land rights are recognized as part of the property and equipment and are not amortized. Costs incurred to process the extension or renewal of legal land rights are deferred and amortized using the straight-line method over the shorter of the legal term of the land rights or the economic life of the land.
Trade payables
Trade payables are obligations to pay for goods and/or services that have been acquired from suppliers in the ordinary course of business. Trade payables are classified as current liabilities if the payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statements of profit or loss and other comprehensive income over the period of the borrowings using the effective interest method.
Fees paid on obtaining loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facilities will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facilities will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facilities to which it relates.
Foreign currency translations
The functional currency and the reporting currency of the Group are both the Indonesian rupiah, except for the functional currency of Telekomunikasi Indonesia International Ltd., Hong Kong, Telekomunikasi Indonesia International Pte. Ltd., Singapore, Telekomunikasi Indonesia International Inc., USA and Telekomunikasi Indonesia International S.A., Timor Leste whose functional currency is maintained in U.S. dollars and Telekomunikasi Indonesia International, Pty. Ltd., Australia whose functional currency is Australian dollars, TS Global Network Sdn. Bhd., and Telekomunikasi Indonesia International Sdn. Bhd. whose functional currency is Malaysian ringgit.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currency translations (continued)
Transactions in foreign currencies are translated into Indonesian rupiah at the rates of exchange prevailing at transaction date. At the consolidated statements of financial position dates, monetary assets and liabilities denominated in foreign currencies are translated into Indonesian rupiah based on the buy and sell rates quoted by Reuters prevailing at the consolidated statements of financial position dates, as follows (in full amount):

	September 30, 2020		December 31, 2019
United States dollar ("US$") 1	Buy		Sell		Buy		Sell
14,840		14,920		13,880		13,885
Australian dollar ("AU$") 1	10,562	10,620	9,724	9,729
Euro ("EUR") 1	17,373	17,473	15,559	15,571
Japanese yen ("JPY") 1	140.45	141.22	127.76	127.82
Malaysian ringgit ("MYR") 1	3,569	3,593	3,390	3,394

The resulting foreign exchange gains or losses, realized and unrealized, are credited or charged to the consolidated statements of profit or loss and other comprehensive income of the current year, except for foreign exchange differences incurred on borrowings during the construction of qualifying assets which are capitalized to the extent that the borrowings can be attributed to the construction of those qualifying assets (Note 2l).

Revenue and expense recognition Revenue from contract with customers
PSAK 72 establishes a comprehensive framework to determine how, when and how much revenue is to be recognized. The standard provides a single, principles-basedfive-step model for the determination and recognition of revenue to be applied to all contracts with customers. The standard also provides specific guidance requiring certain types of costs to obtain and/or fulfil a contract to be capitalized and amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the capitalized cost relates.
The Group adopted PSAK 72 as at January 1, 2020 using the modified retrospective method by recognising the cumulative effect of initially applying PSAK 72 as an adjustment to the opening balance of equity at January 1, 2020.
The Group has also elected to apply the following practical expedients on the transition date:
1. Completed contracts - the Group applied PSAK 72 only to customer contracts that had not been completed on January 1, 2020; and
2. Contract modifications - instead of applying a retrospective approach to quantify the cumulative effects of contract modifications from the time each modification was made; the Group aggregated the effects of all contract modifications that occured before January 1, 2020 in order to:
3. 1. identify satisfied and unsatisfied performance obligations;
  2. determine the transaction price of the latest modified contract; and
  3. allocate the transaction price to the satisfied and unsatisfied performance obligations as of January 1, 2020.

Moreover, the Group also elected to apply practical expedient to not account for the effect of financing component when the period between the payment for a promised good or service and the transfer for such good or service to the customer is less than one year, in adopting PSAK 72.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue and expense recognition (continued) Revenue from contract with customers(continued)
Below is the summary of the Group's revenue recognition accounting policy for each revenue stream:
1. Mobile
  Revenue from mobile primarily comprises of revenue from cellular service which among others: telephone service, interconnection service, internet and data service and Short Messaging Services ("SMS") service. Those services are offered on postpaid or prepaid basis, which for prepaid, the sales of starter packs (also known as SIM cards and start-up load vouchers) and pulse reload vouchers are recognized initially as contract liabilities. The Group recognize contract assets for provision of service from postpaid customers not yet billed.
  All mobile services revenues are recognized based on output method, either per actual usage or allowance unit used (if services sold in plan basis), because the customer simultaneously receives and consumes the benefits provided by the Group.
  For services sold in bundled plan, total consideration is allocated to performance obligations based on stand-alone selling price for each of product and/or service. The Group estimated the stand-alone selling price using the price enacted if the services are sold on a stand-alone basis. Most bundled plans sold by the Group only include services which are generally satisfied over the same period of time. Therefore the revenue recognition pattern is generally not impacted by the allocation.
  As part of its marketing programme, the Group had a customer loyalty programme named "Telkomsel Poin", which allows customers to accumulate points for every certain multiple of the telecommunication service usage. The points can be redeemed in the future for free or discounted products or services, provided that other qualifying conditions are achieved.
  The consideration that is received is allocated between the telecommunication services and the points issued, with the consideration allocated to points that are equal to its fair value. The fair value of the points is determined according to historical information relating to the redemption rate of award points. The fair value of the points that are issued is deferred and recognized as revenue when the points are redeemed or have expired.
1. Consumer
  Revenue from Consumer primarily comprises of revenue from fixed telephone and Indihome services. Revenues from fixed telephone service are derived from customer who subscribes to fixed telephone service only. While revenues from Indihome service are derived from customer who subscribes to internet service or to more than one retail products. Those services are offered on postpaid basis which billed in in the following month. The contracts are offered as month to month contract.
  All consumer services are recognized using the output method based on the customer's actual usage or time elapsed if the service sold as plan basis as the customer simultaneously receives and consumes the benefits provided by the Group.
  The Group has a bundled services plan named "Indihome". Under this bundled plan, the customer is allowed to subscribe to a combination of Consumer's service (i.e. telephone, internet and data and paid TV). Prior to 2018, the Group allocates the total contract price to the distinct performance obligations based on the stand-alone selling price of each performance obligation. The Group estimates the stand-alone selling price using the price enacted if the services are sold on a stand-alone basis. Starting from 2019, this bundled service presented under single line item "Indihome" in note to financial statements (Note 24) in order to be more appropriate and representative of services delivered to customers.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue and expense recognition (continued) Revenue from contract with customers(continued)
1. Consumer (continued)
  Customers may be required to pay an upfront fee at the commencement of the contract. The upfront fee is considered to be a material right because the customer is not required to pay an upfront fee when the customer renews the service beyond the original contract period. The Group values the renewal option in the amount of the consideration received from the upfront fee for the installation service. The Group defers the amount of renewal option and recognizes it as revenue on a straight-line basis over the expected term of the customer relationships. The Group estimates the expected customer life based on the historical information and customer trends and updates the evaluation on an annual basis.
2. Enterprise
  Revenue from Enterprise primarily comprises of revenue from providing telephone service, data and internet service, information technologies service, and other services (e.g. sales of peripherals, manage service, call center service, e-health,e-payment, and others.). Some of the contracts with enterprise customers are bespoke in nature.
  Revenues from enterprise are recognized overtime using output method based on actual usage or time elapsed if the provision of service does not depend on usage (i.e. minute of voice, kilobyte of data, etc.), except for sales of goods which are recognized as a point in time, because the customer simultaneously receives and consumes the benefits provided by the Group. Revenues for performance obligations that are satisfied at a point in time is recognized when control of goods is transferred to the customer, typically when the customer has physical possession of the goods.
  Some of the arrangements in enterprise are offered as bundled arrangements. For bundled arrangements, the product and/or service in the contract is accounted for as an individual performance obligation when it is separately identifiable from other promises in the contract and the customer can benefit from the product/service on its own. The total consideration is allocated to each distinct performance obligation that has been included in the contract, based on its stand-alone selling price. The stand-alone selling price is determined according to the observable prices at which individual product and/or service are sold separately, adjusted for market conditions and normal discounts as appropriate. Alternatively, when the observable prices are not available, the expected cost plus margin approach is used to determine the stand- alone selling prices.
  Certain contracts with enterprise customers may give rise to variable consideration as the contract price depends on a future event (e.g. usage based contract or revenue-share based contract). In estimating the variable consideration, the Group is required to use either the expected value method or the most likely amount method based on the method that better predicts the amount of consideration to which it will be entitled. The Group determines that the most expected value method is the appropriate method to use in estimating the variable consideration for a single contract with a large number of possible outcomes.
  Before including any amount of variable consideration in the transaction price, the Group considers whether the amount of variable consideration is constrained. The Group determines that the estimates of variable consideration are not constrained based on its historical experience, business forecast and the current economic conditions and only includes variable consideration to the extent that it is highly probable that a significant reversal in the amount of cummulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue and expense recognition (continued) Revenue from contract with customers(continued)
1. Enterprise (continued)
  When another party is involved in providing products and/or services to a customer, the Group is the principal if it controls the specified products and/or services before those products and/or services are transferred to the customer. Revenues are recorded on the net amount that has been retained (the amount paid by the customer less the amount paid to the suppliers), when, in substance, the Group has acted as agent and earned commission from the suppliers of the products and/or services sold.

iv. Wholesale and International Business ("WIB")

Revenue from WIB is mainly comprised of interconnections service for interconnection of other telecommunications carriers' subscriber calls to the Group's subscribers (incoming) and calls between other telecommunications carriers subscribers through the Group's network (transit) and network service with other telecommunications carriers. All of these services are recognized based on output method using the basis of the actual recorded traffic for the month.

Incremental cost of obtaining/fulfilling contract with customers

The incremental costs of obtaining/fulfiling contracts with customers, which principally is comprised of sales commissions and contract fulfilment costs, are initially recognized on the statement of financial position. These costs are subsequently amortized on a systematic basis that is consistent with the period and pattern of transfer to the customer of the related products or services. Costs that do not qualify as costs of obtaining/fulfilling contract with customers are expensed as incurred or in accordance with other relevant standards.

Revenue from other sources

Revenue from other sources's comprise of revenue from telecommunication tower leases and other rental. Rental income is recognized on a straight-line basis over the lease term and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.

Accounting policy for revenue applied until December 31, 2019

Cellular revenues
Revenues from postpaid service, which consist of usage and monthly charges, are recognized as follows:
1. Airtime and charges for value added services are recognized based on usage by subscribers.
2. Monthly subscription charges are recognized as revenues when incurred by subscribers.

Revenues from prepaid service, which consist of the sale of starter packs (also known as SIM cards and start-up load vouchers) and pulse reload vouchers, are recognized initially as unearned income and recognized as revenue based on 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.

Fixed line telephone revenues
Revenues from usage charges are recognized as customers incur the charges. Monthly subscription charges are recognized as revenues when incurred by subscribers.
Revenues from fixed line installations are deferred and recognized as revenue on the straight- line basis over the expected term of the customer relationships. The Group estimates the expected customer life based on the historical information and customer trends and updates the evaluation on an annual basis

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue and expense recognition (continued)
Accounting policy for revenue applied until December 31, 2019 (continued)
1. Indihome's revenues
  Revenues from Indihome service is derived from customer who subscribes to internet service or to more than one retail products. Those services are offered on postpaid basis which is billed in the following month. The contracts are offered as month to month contract and revenues are recognized monthly as its billed.
  Revenues from Indihome connection installations are deferred and recognized as revenue on a straight-line basis over the estimated term of customer relationship based on historical information and customer trends and also update its annually evaluation.
2. Interconnection revenues
  Revenues from network interconnection with other domestic and international telecommunications carriers are recognized monthly on the basis of the actual recorded traffic for the month. Interconnection revenues consist of revenues derived from other operators' subscriber calls to the Group's subscribers (incoming) and calls between subscribers of other operators through the Group's network (transit).
3. Data, internet, and information technology service revenues
  Revenues from data communication and internet are recognized based on service activity and performance which are measured by the duration of internet usage or based on the fixed amount of charges depending on the arrangements with customers.
  Revenues from sales, installation and implementation of computer software and hardware, computer data network installation service and installation are recognized when the goods are delivered to customers or the installation takes place.
  Revenue from computer software development service is recognized using the percentage-of- completion method.
4. Network revenues
  Revenues from network consist of revenues from leased lines and satellite transponder leases which are recognized over the period in which the services are rendered.
5. Other revenues
  Revenues from sales of peripherals or other telecommunications equipments are recognized when delivered to customers.
  Revenues from telecommunication tower leases are recognized on straight-line basis over the lease period in accordance with the agreement with the customers.
  Revenues from other services are recognized when services are rendered to customers.
6. Multiple-elementarrangements
  Where two or more revenue-generating activities or deliverables are sold under a single arrangement, each deliverable that is considered to be a separate unit of accounting is accounted for separately. The total revenue is allocated to each separately identifiable component based on the relative fair value of each component and the appropriate revenue recognition criteria are applied to each component as described above.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue and expense recognition (continued)
Accounting policy for revenue applied until December 31, 2019 (continued)
1. Agency relationship
2. Revenues from an agency relationship are recorded based on the gross amount billed to the customers when the Group acts as principal in the sale of goods and services. Revenues are recorded based on the net amount retained (the amount paid by the customer less amount paid to the suppliers) when, in substance, the Group has acted as agent and earned commission from the suppliers of the goods and services sold.
3. Customer loyalty programme
4. 1. The Group operates a loyalty programme, which allows customers to accumulate points for every certain multiple of the telecommunication services usage. The points can be redeemed in the future for free or discounted products or services, provided other qualifying conditions are achieved.
    Consideration received is allocated between the telecommunication services and the points issued, with the consideration allocated to the points equal to their fair value. Fair value of the points is determined based on historical information about redemption rate of award points. Fair value of the points issued is deferred and recognized as revenue when the points are redeemed or expired.
  2. Expenses
    Expenses are recognized as they are incurred.
Employee benefits
1. Short-termemployee benefits
2. All short-term employee benefits which consist of salaries and related benefits, vacation pay, incentives and other short-term benefits are recognized as expense on undiscounted basis when employees have rendered service to the Group.
3. Post-employmentbenefit plans and other long-term employee benefits
4. Post-employment benefit plans consist of funded and unfunded defined benefit pension plans, defined contribution pension plan, other post-employment benefits, post-employment health care benefit plan, defined contribution health care benefit plan and obligations under the Labor Law.
  Other long-term employee benefits consist of Long Service Awards ("LSA"), Long Service Leave ("LSL"), and pre-retirement benefits.
  The cost of providing benefits under post-employment benefit plans and other long-term employee benefits calculation is performed by an independent actuary using the projected unit credit method.
  The net obligations in respect of the defined pension benefit plans 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. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of Government bonds that are denominated in the currencies in which the benefits will be paid and that have terms to maturity approximating the terms of the related retirement benefit obligation. Government bonds are used as there are no deep markets for high quality corporate bonds.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) s. Employee benefits (continued)

Post-employmentbenefit plans and other long-term employee benefits (continued)
Plan assets are assets owned by defined benefit pension plan and post-retirement health care benefits plan as well as qualifying insurance policy. The assets are measured at fair value as of reporting dates. The fair value of qualifying insurance policy is deemed to be the present value of the related obligations (subject to any reduction required if the amounts receivable under the insurance policies are not recoverable in full).
Remeasurement, comprising of actuarial gain and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability (asset)) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability (asset)) are recognized immediately in the consolidated statements of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized immediately in profit or loss on the earlier of:
1. The date of plan amendment or curtailment; and
2. The date that the Group recognized restructuring-related costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or assets.

Gains or losses on curtailment are recognized when there is a commitment to make a material reduction in the number of employees covered by a plan or when there is an amendment of defined benefit plan terms such as that a material element of future services to be provided by current employees will no longer qualify for benefits, or will qualify only for reduced benefits.

Gains or losses on settlement are recognized when there is a transaction that eliminates all further legal or constructive obligation for part or all of the benefits provided under a defined benefit plan (other than the payment of benefit in accordance with the program and included in the actuarial assumptions).

For defined contribution plans, the regular contributions constitute net periodic costs for the period in which they are due and, as such, are included in "Personnel Expenses" as they become payable.

Share-basedpayments
The Company operates an equity-settled,share-based compensation plan. The fair value of the employee's services rendered which are compensated with the Company's shares is recognized as an expense in the consolidated statements of profit or loss and other comprehensive income and credited to additional paid-in capital at the grant date.
Early retirement benefits

Early retirement benefits are accrued at the time the Group makes a commitment to provide early retirement benefits as a result of an offer made in order to encourage voluntary redundancy. A commitment to a termination arises when, and only when a detailed formal plan for the early retirement cannot be withdrawn.

Taxes Income tax
Current and deferred income taxes are recognized as income or an expense and included in the consolidated statements of profit or loss and other comprehensive income, except to the extent that the tax arises from a transaction or event which is recognized directly in equity, in which case, the tax is recognized directly in equity.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Taxes (continued) Income tax (continued)
Current income tax assets and liabilities are measured at the amounts expected to be recovered or paid using the tax rates and tax laws that have been enacted or substantively enacted at each reporting date. Management periodically evaluates positions taken in Annual Tax Returns ("Surat Pemberitahuan Tahunan"/ "SPT Tahunan") with respect to situations in which applicable tax regulation is subject to interpretation. Where appropriate, management establishes provisions based on the amounts expected to be paid to the Tax Authorities.
Tax assessment
Amendment to taxation obligation is recorded when an assessment letter ("Surat Ketetapan Pajak" or "SKP") is received or, if appealed against, when the results of the appeal are determined. The additional taxes and penalty imposed through an SKP are recognized in the current year profit or loss, unless objection/appeal is taken. The additional taxes and penalty imposed through the SKP are deferred as long as they meet the asset recognition criteria. The changes due to an error will be disclosed in accordance with PSAK 25: Accounting Policies, Changes in Accounting Estimates and Error
Deferred tax
The Group recognizes deferred tax assets and liabilities for temporary differences between the financial and tax bases of assets and liabilities at each reporting date. The Group also recognizes deferred tax assets resulting from the recognition of future tax benefits, such as the benefit of tax losses carried forward to the extent their future realization is probable. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates and tax laws at each reporting date which are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced if there is no longer probable that sufficient taxable profit will be available to compensate part or all of the benefits of deferred tax assets. Unrecognized deferred tax assets are reassessed at each reporting date and recognized if it is probable that future taxable profits will be available for recovery. Tax deductions arising from the reversal of deferred tax assets are excluded from estimates of future taxable income.
Deferred tax transactions which are recognized outside profit or loss are recognized outside profit or loss. Therefore, deferred taxes on these transactions are recognized either in other comprehensive income or recognized directly in equity.
Deferred tax assets and liabilities are offset in the consolidated statements of financial position, if and only if it has a legally enforceable right to set off current tax assets and liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same Tax Authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
Value added tax ("VAT")
Revenues, expenses and assets are recognized net of the VAT amount except:
1. VAT arising from the purchase of assets or services that cannot be credited by the Tax Office, which VAT is recognized as part of the acquisition cost of the asset or as part of the applied expenses; and
2. Receivables and payables are presented including the amount of VAT.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Taxes (continued) Uncertainty over income tax
In accordance with ISAK 34: Uncertainty Over Income Tax Treatments which is effective on January 1, 2019, stated that the recognition and measurement of tax assets and liabilities that contain uncertainty over income tax are determined by considering whether to be treated separately or together, the assumptions used in the examination of tax treatments by the Tax Authorities, consideration the probability that the Tax Authorities will accept uncertain tax treatment and re-consideration or estimation if there is a change in facts and circumstances.
If the acceptation of tax treatment is probable, the measurement is in line with income tax fillings. If the acceptation of tax treatment is not probable, the Group uses tax amounts using the method that provides the better predict of resolution (i.e. most likely amount or expected value).
Accordingly, management believes that the interpretation did not have a significant impact on the consolidated financial statements.
Final tax
Indonesian tax regulations impose final tax on several types of transactions based on the gross value of the transaction. Therefore, final tax which is charged based on such transaction remains subject to tax even though the tax payer incurred a loss on the transaction.
Final tax on construction services and lease is presented as part of "Other Income (Expenses) - net".
Financial instruments
The Group classifies financial instruments into financial assets and financial liabilities. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The group adopted PSAK 71 as at January 1, 2020
1. Financial assets
  Initial recognition and measurement
  Financial assets are classified, at initial recognition, and subsequently measured at amortized cost, fair value through OCI ("FVTOCI"), and fair value through profit or loss ("FVTPL").
  The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component of for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transactions costs. Trade receivables that do not contain a significant financing component or which the Group has applied the practical expedient are measured at the transaction price determined under PSAK 72.
  In order for a financial asset to be classified and measured at amortized cost or FVTOCI, it needs to give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. This assessment is referred to as the solely payments of principal and interest (SPPI) testing and it is performed at instrument level.
  The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
  Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to buy or sell the asset.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) u. Financial instruments (continued)

Financial assets (continued) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
1. Financial assets at amortized cost (debt instruments)
  This category is the most relevant to the Group. The Group measures financial assets at amortized cost if both of the following conditions are met:
2. - The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
  - The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest rate ("EIR") method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. The Group's financial assets at amortized cost consist of cash and cash equivalents, other current financial assets, trade and other receivables, and other non-current assets.

Financial assets at FVTOCI with recycling of cumulative gains and losses (debt instruments)
The Group measures debt instruments at FVTOCI if both of the following conditions are met:
- The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

For debt instruments at FVTOCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the statement of profit or loss and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in OCI. Upon derecognition, the cumulative fair value change recognized in OCI is recycled to profit or loss.

The Group have no debt instruments classified at FVTOCI with recycling of cumulative gains and losses as of September 30, 2020.

Financial assets designated at FVTOCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at FVTOCI when they meet the definition of equity under PSAK 71 and are not held for trading. The classification is determined on an instrument- by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at FVTOCI are not subject to impairment assessment. There's no equity investments elected under this category as of September 30, 2020.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) u. Financial instruments (continued)

Financial assets (continued) Subsequent measurement (continued)d. Financial assets at FVTPL
Financial assets at FVTPL include financial assets held for trading, financial assets designated upon initial recognition at FVTPL, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not fulfilled with solely payments of principal and interest (SPPI) testing are classified and measured at FVTPL, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at FVTOCI, as described above, debt instruments may be designated at FVTPL on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at FVTPL are carried in the statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss. The Group's financial assets at FVTPL consists of equity investments, other long-term investments, mutual funds, and convertible bonds.

Expected credit losses ("ECL")

The Group recognizes an allowance for ECL for all debt instruments not held at FVTPL. ECL are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECL are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECL are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECL. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECL at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For debt instruments at FVTOCI, the Group applies the low credit risk simplification. At every reporting date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the external credit rating of the debt instrument. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

The Group's debt instruments at FVTOCI comprise solely of quoted bonds that are graded in the top investment category (Very Good and Good) by the Good Credit Rating Agency and, therefore, are considered to be low credit risk investments. It is the Group's policy to measure ECL on such instruments on a 12-month basis. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. The Group uses the ratings from the Good Credit Rating Agency both to determine whether the debt instrument has significantly increased in credit risk and to estimate ECL.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) u. Financial instruments (continued)

Financial assets (continued)
Expected credit losses ("ECL") (continued)
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. Trade receivables is written off when there is low possibility of recovering the contractual cash flow, after all collection efforts have been done and have been fully provided for allowance.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loan and borrowings and payables, net of directly attributable transaction costs.
The Group classifies its financial liabilities as: (i) financial liabilities at FVTPL or (ii) financial liabilities measured at amortized cost.
The Group's financial liabilities include trade and other payables, accrued expenses, interest-bearing loans, other borrowings and other liabilities. Interest-bearing loans consist of short-term bank loans, two-step loans, bonds and notes, long-term bank loans, and obligations under finance leases.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below: a. Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss.

Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of recognition, and only if the criteria in PSAK 71 are satisfied. The Group has not designated any financial liability as at FVTPL.

Financial liabilities measured at amortized cost
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and other borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortisation process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. This category generally applies to interest-bearing loans and other borrowings. For more information, refer to Note 19 Long-Term Loans and Other Borrowings.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) u. Financial instruments (continued)

iii. Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle them on a net basis, or realize the assets and settle the liabilities simultaneously. The right of set-off must not be contingent on a future event and must be legally enforceable in all of the following circumstances:

1. the normal course of business;
2. the event of default; and
3. the event of insolvency or bankruptcy of the Group and all of the counterparties.
Derecognition of financial instruments
The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when the Group transfers substantially all the risks and rewards of ownership of the financial asset.
The Group derecognizes a financial liability when the obligation specified in the contract is discharged or cancelled or has expired.
Hedge Accounting
The Group does not apply hedge accounting.

Accounting policy for financial instruments applied until December 31, 2019

The Group classifies financial instruments into financial assets and financial liabilities. A Financial assets and liabilities are recognized initially at fair value including transaction costs. These are subsequently measured either at fair value or amortized cost using the effective interest method in accordance with their classification.

i. Financial assets

The Group classifies its financial assets as (i) financial assets at fair value through profit or loss,

loans and receivables, (iii) held-to-maturity investment or (iv) available-for-sale financial assets. The classification depends on the purpose for which the financial assets are acquired. Management determines the classification of financial assets at initial recognition.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the assets.

The Group's financial assets include cash and cash equivalents, other current financial assets, trade receivables and other receivables, other non-current financial assets, and available-for-sale investments.

Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets classified as held for trading. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling or repurchasing it in the near term and for which there is evidence of a recent actual pattern of short-term profit taking. Gains or losses arising from changes in fair value of the trading securities are presented as other income (expense) in consolidated statements of profit or loss and other comprehensive income in the period in which they arise.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)
Accounting policy for financial instruments applied until December 31, 2019 (continued)
1. Financial assets (continued)
2. 1. Loans and receivables
    Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
    Loans and receivables consist of, among other, cash and cash equivalents, other current financial assets, trade and other receivables, and other non-current assets (long-term trade receivables and restricted cash).
    These are initially recognized at fair value including transaction costs and subsequently measured at amortized cost, using the effective interest method.
  2. Held-to-maturityinvestments
    Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities on which management has the positive intention and ability to hold to maturity, other than:
  3. - those that the Group, upon initial recognition, designates as at fair value through profit or loss;
    - those that the Group designates as available-for-sale; and
    - those that meet the definition of loans and receivables.
  4. Available-for-salefinancial assets
    Available-for-sale investments are non-derivative financial assets that are intended to be held for indefinite periods of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Available- for-sale investments primarily consist of mutual funds, corporate and government bonds and capital stock, which are recorded as part of "Other current financial assets" and "Long-term investments" in the consolidated statements of financial position.

Available-for-sale investments are stated at fair value. Unrealized holding gains or losses on available-for-sale investments are excluded from income of the current period and are reported as a separate component in the equity section of the consolidated statements of financial position until realized. Realized gains or losses from the sale of available-for-sale investments are recognized in the consolidated statements of profit or loss and other comprehensive income, and are determined on the specific identification basis.

Impairment of financial assets

The Group assesses the impairment of financial assets if there is objective evidence that a loss event has a negative impact on the estimated future cash flows of the financial assets. Impairment is recognized when the loss can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognized.

For financial assets carried at amortized cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a Group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in the collective assessment of impairment.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)
Accounting policy for financial instruments applied until December 31, 2019 (continued)
1. Financial assets (continued)
Impairment of financial assets (continued)
The amount of any impairment loss identified is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognized in profit or loss.
For available-for-sale financial assets, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. When a decline in the fair value of an available-for-sale financial asset has been recognized in other consolidated comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in other consolidated comprehensive income is recognized in profit or loss as an impairment loss. The amount of the cumulative loss is the difference between the acquisition cost (net of any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized.
1. Financial liabilities
The Group classifies its financial liabilities as (a) financial liabilities at fair value through profit or loss or (b) financial liabilities measured at amortized cost.
The Group's financial liabilities include trade and other payables, accrued expenses, interest- bearing loans, other borrowings and other liabilities. Interest-bearing loans consist of short-term bank loans, two-step loans, bonds and notes, long-term bank loans, and obligations under finance leases.
1. 1. Financial liabilities at fair value through profit or loss
    Financial liabilities at fair value through profit or loss are financial liabilities classified as held for trading. A financial liability is classified as held for trading if it is incurred principally for the purpose of selling or repurchasing it in the near term and for which there is evidence of a recent actual pattern of short-term profit taking.
  2. Financial liabilities measured at amortized cost
    Financial liabilities that are not classified as liabilities at fair value through profit or loss fall into this category and are measured at amortized cost. Financial liabilities measured at amortized cost are trade and other payables, accrued expenses, interest-bearing loans, other borrowings, and other liabilities. Interest-bearing loans consist of short-term bank loans, two-step loans, bonds and notes, long-term bank loans, and obligations under finance leases.
2. Offsetting financial instruments
  Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle them on a net basis, or realize the assets and settle the liabilities simultaneously. The right of set-off must not be contingent on a future event and must be legally enforceable in all of the following circumstances:
3. 1. the normal course of business;
  2. the event of default; and
  3. the event of insolvency or bankruptcy of the Group and all of the counterparties.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) u. Financial instruments (continued)

iv. Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged, or liability settled, in an arm's length transaction.

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm's length market transactions, reference to the current fair value of another instrument that is substantially the same, a discounted cash flow analysis or other valuation models.

1. Derecognition of financial instrument
  The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when the Group transfers substantially all the risks and rewards of ownership of the financial asset.
  The Group derecognizes a financial liability when the obligation specified in the contract is discharged or cancelled or has expired.
Sukuk Ijarah
Sukuk Ijarah issued by the Group is recognized at nominal value, adjusted to the premium or discount and related transaction costs. The difference between the carrying amount and the nominal value is amortized on a straight-line basis over the period of the sukuk and is recognized in the income statement as the sukuk issuance expense.
Sukuk Ijarah, after adjusting for premium or discount and unamortized transaction costs, is presented as part of liabilities.
Treasury stock

Reacquired Company shares of stock are accounted for at their reacquisition cost and classified as "Treasury Stock" and presented as a deduction in equity. The cost of treasury stock sold/transferred is accounted for using the weighted average method. The portion of treasury stock transferred for employee stock ownership program is accounted for at its fair value at grant date. The difference between the cost and the proceeds from the sale/transfer of treasury stock is credited to "Additional Paid-in Capital".

Dividends
Dividend for distribution to the stockholders is recognized as a liability in the consolidated financial statements in the year in which the dividend is approved by the stockholders. The interim dividend is recognized as a liability based on the Board of Directors' decision supported by the approval from the Board of Commissioners.
Basic and diluted earnings per share and earnings per ADS
Basic earnings per share is computed by dividing profit for the year attributable to owners of the parent company by the weighted average number of shares outstanding during the year. Income per ADS is computed by multiplying the basic earnings per share by 100, the number of shares represented by each ADS.
The Company does not have potentially dilutive financial instruments.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Segment information
The Group's segment information is presented based upon identified operating segments. An operating segment is a component of an entity:
1. that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity);
2. whose operating results are regularly reviewed by the Group's Chief Operating Decision Maker ("CODM") i.e., the Directors, to make decisions about resources to be allocated to the segment and assess its performance; and
1. for which discrete financial information is available.

Provisions
Provisions are recognized when the Group has present obligations (legal or constructive) arising from past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and the amount can be measured reliably.

Provisions for onerous contracts are recognized when the contract becomes onerous for the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfill the contract.

ab. Impairment of non-financial assets

At the end of each reporting period, the Group assesses whether there is an indication that an asset may be impaired. If such indication exists, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the Cash-Generating Unit ("CGU") to which the asset belongs ("the asset's CGU").

The recoverable amount of an asset (either individual asset or CGU) is the higher of the asset's fair value less costs to sell and its value in use ("VIU"). Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated net future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, the Group uses an appropriate valuation model to determine the fair value of the asset. These calculations are corroborated by valuation multiples or other available fair value indicators.

Impairment losses of continuing operations are recognized in profit or loss as part of "Depreciation and Amortisation" in the consolidated statements of profit or loss and other comprehensive income.

At the end of each reporting period, the Group assesses whether there is any indication that previously recognized impairment losses for an asset, other than goodwill, may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss for an asset, other than goodwill, is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognized. The reversal is limited such that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the carrying amount that would have been determined, net of depreciation, had no impairment been recognized for the asset in prior periods. Reversal of an impairment loss is recognized in profit or loss.

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment loss relating to goodwill can not be reversed in future periods.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) ac. Current and non current classifications

The Group presents assets and liabilities in the statement of financial position based on current/non- current classification. An asset is presented current when it is:

expected to be realized or intended to be sold or consumed in the normal operating cycle;
held primarily for the purpose of trading;
expected to be realized within twelve months after the reporting period; or cash or cash equivalent unless restricted from being exchanged or used to settle a liability for a least twelve months after the reporting period.

Asset which do not meet above criterias, classified as non current assets.

A liability is current when:

it is expected to be settled in the normal operating cycle;
it is held primarily in the proposed of trading;
it is due to be settled within twelve months after reporting period;
there is no unconditional right after deferred the settlement of the liability for at least twelve months after the reporting period.

The terms of liability that could, at the option of counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Liabilities which do not meet above criterias, classified as long term liabilities. Deffered tax assets and liabilities are classified as non-current assets and liabilities.

ad. Changes in accounting policy and disclosures

PSAK 71

The Group has applied PSAK 71 modified retrospective approach on the required effective date, January 1, 2020. The 2020 opening balances have been adjusted, but the previous periods have not been restated. Some of the key changes that impacted the Group include the following:

Classification and measurement
Under PSAK 71, the Group classifies its financial assets as at amortized cost, at FVTPL, and at FVTOCI. Previously under PSAK 55, its classified as loan and receivables and available for sale. The classification is based on two criteria: the Group's business model for managing the assets; and whether the instruments' contractual cash flows represent solely payments of principal and interest on the principal amount outstanding.
The assessment of the Group's business model was made as of the date of initial application, January 1, 2020, and then applied retrospectively to those financial assets that were not derecognized before January 1, 2020. The assessment of whether contractual cash flows on debt instruments are solely payments of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.

The classification and measurement requirements of PSAK 71 have an impact on some of the Group's available for sale financial assets as they have to be measured at FVTPL as the instruments' contractual cash flow does not represent solely payments of principal and interest. The Group continued measuring at amortized cost for all financial assets previously classified as loans and receivables under PSAK 55 (2013).

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ad. Changes in accounting policy and disclosures (continued)

PSAK 71 (continued)

Classification and measurement (continued)
The table below illustrates the classification and measurement of financial assets under PSAK
71 and PSAK 55 at the date of initial application, January 1, 2020:

	Original measurement		New measurement
Cash and cash equivalents	category under PSAK 55		category under PSAK 71
Loans and receivables		Amortized cost
Trade receivables	Loans and receivables		Amortized cost
Convertible bonds	Available for sale		FVTPL
Debt instruments	Available for sale		FVTOCI
Equity investments	Available for sale		FVTPL

Impairment
The adoption of PSAK 71 has fundamentally changed the Group's accounting for impairment losses for financial assets by replacing PSAK 55's incurred loss approach with a forward- looking ECL approach. PSAK 71 requires the Group to recognise an allowance for ECL for all debt instruments not held at FVTPL and contract assets.

PSAK 72

The Group has adopted PSAK 72 from January 1, 2020 using the modified retrospective approach, which means the Group elected not to restate comparative figures but any adjustments to the carrying amounts at transition date were recognized in the opening balance of retained earnings and non-controlling interest. Some of the key changes that impacted the Group include the following:

Based on the new requirements under PSAK 72, contract assets and contract liabilities have been added as new lines in the consolidated statements of financial position. Previously, contract assets were reported as trade receivables and contract liabilities were reported as unearned income.
Contract costs that consist of costs to obtain and fulfill the contract have been added as new line in the consolidated statement of financial position. Previously, these contract costs were expensed as incurred or amortized with systematic basis that is inconsistent with the recognition of related revenue.
Revenues from contracts with customers which measured under PSAK 72 are separately presented from revenues from other sources.

In the transition date of PSAK 72, the application of variable consideration and timing of revenue recognition principle results in the Group recognized an increase in retained earnings as the amount of revenue recognized for the completed performance obligation under PSAK 72 is greater than the revenue recognized under the previous revenue standard. In return, the Group recognizes contract assets as the Group's right to consideration in exchange for the completed performance obligation. The contract assets are subsequently reclassified as trade receivables when the consideration becomes unconditional.

The Group also recognizes capitalisation of incremental costs of obtaining and fulfilling the contracts with customers. In contrast to the previous standards that required the Group to expense these costs as incurred, the capitalised contract costs are now amortized on a consistent basis with the transfer to the customer of the goods or services to which the contract costs relate.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) ad. Changes in accounting policy and disclosures (continued)

PSAK 73

The Group has applied PSAK 73 using modified retrospective approach on the required effective date, January 1, 2020. The 2019 opening balances have been adjusted, but the previous periods have not been restated. Some of the key changes that impacted the Group include the following:

Right-of-useassets and lease liabilities
Adoption of PSAK 73 resulted in the Group's future minimum lease payments under non- cancellable operating leases to be recognized as lease liabilities with corresponding Right-of-Use ("ROU") assets.
Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2020. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2020 was 7.41%.
Sublease
The Group has reclassified certain of its sublease agreements as finance leases. The portion of the ROU assets subject to sublease is de-recognized and a sublease receivable is recognized in the balance sheet when the sublease commences.

The effect of adopting PSAK 71, PSAK 72, and PSAK 73 were as follows:

ASSETS	PSAK 71,72, and 73

Trade receivables - net provision for impairment
of receivables	(1,134)
Contract assets	969
Other receivables - net provision for impairment
of receivables	(24)
Contract cost	1,185
Other current assets	(1,403)
Long-term investments	244
Property and equipment - net of accumulated depreciation	(2,154)
ROU assets	20,541
Deferred tax assets	(87)
Other non-current assets	(3,170)
		14,967
LIABILITIES
Accrued expenses	87
Unearned income - current	903
Contract liabilities	(1,065)
Deferred tax liabilities	(41)
Unearned income - net of current portion	83
Long-term borrowings - net of current maturities	(14,425)
		(14,458)
EQUITY
Other equity	48
Retained earnings - unappropriated	(606)
Non-controlling Interests	50
		(508)
44

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ad. Changes in accounting policy and disclosures (continued)

The impact of the changes to the current period financial statements is as follow:

			Previous
STATEMENT OF FINANCIAL POSITION	New standard		standard	Adjusment

ASSETS
Cash and cash equivalents	17,420	17,420	(0)
Trade receivables - net provision for impairment
of receivables	12,721	13,821	(1,100)
Contract asset	822	-	822
Other receivables - net provision for impairment
of receivables	237	324	(87)
Contract cost	441	-	441
Other current assets	3,560	4,796	(1,236)
Long-term investments	2,052	1,829	223
Property and equipment - net of accumulated
depreciation	156,641	158,795	(2,154)
Right-of-use assets	17,760	-	17,760
Deferred tax assets - net	2,975	3,062	(87)
Contract asset - nettoff current portion	295	-	295
Contract cost - nettoff current portion	1,312	-	1,312
Other non-current assets	4,805	7,708	(2,903)
TOTAL ASSETS	221,041		207,756	13,285
LIABILITIES
Accrued expenses	13,684	14,195	511
Unearned income	631	5,762	5,131
Contract liabilities	6,801	-	(6,801)
Short-term loans and current maturities
of long-term borrowings	12,209	7,576	(4,633)
Deferred tax liabilities	749	697	(52)
Contract liabilities - netoff current portion	1,025	-	(1,025)
Long-term loans and other borrowings	40,044	33,459	(6,585)
TOTAL LIABILITIES	75,143		61,688	(13,455)
EQUITY
Other equity	541	589	48
Retained earnings	78,175	78,121	(54)
Non-controlling Interests	16,172	16,348	176
TOTAL EQUITY	94,888		95,058	170
STATEMENT OF PROFIT OR LOSS
REVENUES	99,941	99,897	(44)
Operations, maintenance and telecommunication
service	(25,098)	(27,570)	(2,472)
Depreciation and amortization	(21,038)	(18,007)	3,031
General and administrative	(4,234)	(4,206)	28
Marketing	(2,356)	(2,787)	(431)
Other income (expenses) - net	465	455	(10)
Finance income	644	562	(82)
Finance costs	(3,457)	(2,810)	647
Tax effect	575	586	11
OTHER COMPREHENSIVE INCOME (EXPENSES)
Net (loss) gain on available for sale
financial assets	-	1	1
Profit for the year attributable to:
Owners of the parent company	16,679	17,231	552
Non-controlling interests	6,272	6,398	126

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ad. Changes in accounting policy and disclosures (continued)

The impact of the changes to the current period financial statements is as follow (continued):

	(In billions of
STATEMENT OF CASHFLOWS	Indonesia Rupiah)

Net cash flows from operating activities (PSAK 30R)
Operating lease payments	(2,065)
Net cash flows from financing activities (PSAK 73)
Payment of principal portion of lease liabilities	(4,541)

ae. Critical accounting considerations, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make decisions, estimates and assumptions that affect the amount of revenue, expenses, assets and liabilities reported, and the accompanying disclosures, and disclosures of contingent liabilities, at the end of the reporting period.

Uncertainty about these assumptions and estimates can produce results that require a material adjustment to the carrying amounts of assets and liabilities affected in the coming periods.

Consideration
The following considerations were made by management in applying the Group's accounting policies that have the most significant influence on the amounts recognized in the consolidated financial statements:
Income taxes
Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes 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 amounts of income tax are disclosed in Note 28.
Estimates and assumptions
Estimates and assumption are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
1. Retirement benefits

The present value of the retirement benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate and return on investment (ROI). Any changes in these assumptions will impact the carrying amount of the retirement benefit obligations.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ae. Critical accounting considerations, estimates and assumptions (continued)

Estimates and assumptions (continued)
1. Retirement benefits (continued)
  The Group determines the appropriate discount rate at the end of each reporting period. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the obligations. In determining the appropriate discount rate, the Group considers the interest rates of Government bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related retirement benefit obligations.
  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 benefit obligations.
  Other key assumptions for retirement benefit obligations are based in part on current market conditions. Additional information is disclosed in Notes 31 and 32.
2. Useful lives of property and equipment
  The Group estimates the useful lives of its property and equipment 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 Group's collective assessment of industry practice, internal technical evaluation, and experience with similar assets.
  The Group reviews its estimates of useful lives at least each financial year-end and such estimates are updated if expectations differ from previous estimates due to changes in expectation of physical wear and tear, technical or commercial obsolescence, and legal or other limitations on the continuing use of the assets. The amounts 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 amounts of property and equipment are disclosed in Note 11.
3. Determining the lease term of contracts with renewal and termination options - Group as lessee
  The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
  The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ae. Critical accounting considerations, estimates and assumptions (continued)

Estimates and assumptions (continued)
1. Credit loss provision for financial assets
  For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a credit provision methodology that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors, and the economic environment.
  For term deposits and debt instruments at fair value through OCI, the Group applies the low credit risk simplification. At every reporting date, the Group evaluates whether the deposits or debt instrument are considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the internal credit rating of the instrument. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.
  The Group assesses whether there is objective evidence that other receivables or other financial assets 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 provisions are adjusted periodically to reflect the actual and anticipated experience. Details of the nature and carrying amounts of provision for impairment of other receivables are disclosed in Note 5.
2. Revenue
3. 1. Critical judgements in determining the performance obligation, timing of revenue recognition and revenue classification
    The Group provides information technology services that are bespoke in nature. Bespoke products consist of various goods and/or services bundled together in order to provide integrated solution services to customers. In addition to the bespoke service, Group also provide multiple standard product as bundling product in contract with customer. Significant judgment is required in determining the number and nature of performance obligations promised to customers in those contracts. The number and nature of performance obligations will determine the timing of revenue recognition for such contract.
    The Group reviews the determination of performance obligations on a contract-by- contract basis. When a contract consisting of several goods and/or service is assessed to have one performance obligations, the Group applies a single method of measuring progress for the performance obligation based on the measurement method that best depicts the economics of the contract, which in most cases is over time.
    The Group also presents the revenue classification using consistent approach. When a contract consisting of several goods and/or service is assessed to have one performance obligations, the Group presents that performance obligations in one financial statement line items which best represent the main service of the Group, which in most cases is the internet, data communication and information technology services.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ae. Critical accounting considerations, estimates and assumptions (continued)

Estimates and assumptions (continued)
1. Revenue (continued)
2. 1. Critical judgements in determining the stand-alone selling price
    The Group provides wide array of products related to telecommunication and technology. To determine the stand-alone selling price for goods and/or services that do not have any readily available observable price, the Group uses the expected cost- plus margin approach.
    Significant judgment is required in determining the margin for each contract that contains goods and/or services with an unobservable price. The Group currently determines the appropriate margin based on historical achievement and information from an independent party.
3. Test for impairment of non-current assets and goodwill
  The application of the acquisition method in a business combination requires the use of accounting estimates in allocating the purchase price to the fair market value of the assets and liabilities acquired, including intangible assets. Certain business acquisitions by the Group resulted goodwill, which is not amortized but is tested for impairment annually and every indication of impairment exists.
  The calculation of future cash flows in determining the fair value of fixed assets and other non-current assets of entities acquired at the acquisition date with significant estimates. Although management believes that the assumptions used are appropriate, significant changes to those assumptions can materially affect the evaluation of recoverable amounts and may result in impairment according to PSAK 48: Impairment of Assets.
4. Acquisition
  The Group evaluates each acquisition transaction to determine whether it will be treated as an asset acquisition or business combination. For transactions that are treated as an asset acquisition, the purchase price is allocated to the assets obtained, without the recognition of goodwill. For acquisitions that meet the business combination definition, the Group applies the accounting acquisition method for assets acquired and liabilities assumed are recorded at fair value at the acquisition date, and the results of operations are included with the Group's results from the date of each acquisition.
  Any excess from the purchase price paid for the amount recognized for assets acquired and liabilities incurred is recorded as goodwill. The Group continues to evaluate acquisitions that are counted as a business combination for a period not exceeding one year after the applicable acquisition date of each transaction to determine whether additional adjustments are needed to allocate the purchase price paid for the assets acquired and liabilities assumed. The fair value of assets acquired and liabilities incurred are usually determined using either an estimated replacement cost or a discounted cash flow valuation method. When determining the fair value of tangible assets acquired, the Group estimates the cost of replacing assets with new assets by considering factors such as the age, condition and economic useful lives of the assets. When determining the fair value of the intangible assets obtained, the Group estimates the applicable discount rate and the time and amount of future cash flows, including the rates and terms for the extension and reduction.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

3. CASH AND CASH EQUIVALENTS

		September 30, 2020		December 31, 2019
		Balance		Balance
		Foreign				Foreign
		currency		Rupiah		currency		Rupiah
	Currency	(in millions)		equivalent		(in millions)		equivalent
Cash on hand	Rp	-		40		-		37
Cash in banks
Related parties
PT Bank Mandiri (Persero) Tbk. ("Bank Mandiri")	Rp	-	983	-	1,407
	US$	15	225	9	122
	EUR	2	27	1	23
	HKD	1	2	0	1
	JPY	1	0	1	0
	AUD	0	0	0	0
PT Bank Negara Indonesia (Persero) Tbk. ("BNI")	Rp	-	1,096	-	1,033
	US$	2	33	6	86
	SGD	0	0	0	0
	EUR	-	-	0	0
PT Bank Rakyat Indonesia (Persero) Tbk. ("BRI")	Rp	-	166	-	198
	US$	1	17	3	44
PT Bank Tabungan Negara (Persero) Tbk. ("BTN")	Rp	-	54	-	51
Others	Rp	-	13	-	20
	US$	0	0	0	0
Sub-total	SGD	0	0	-	-
			2,616				2,985
Third parties
The Hongkong and Shanghai Banking
Corporation Ltd. ("HSBC Hongkong")	US$	19	286	14	188
	HKD	6	11	6	10
PT Bank CIMB Niaga Tbk. ("Bank CIMB Niaga")	Rp	-	288	-	33
	US$	0	1	0	0
Mega International Commercial Bank Co., Ltd.	MYR	2	5	-	-

("Mega ICBC")	US$	15	221	2	24
	TWD	30	15	27	12
PT Bank Permata Tbk ("Bank Permata")	Rp	-	124	-	335
	US$	-	-	4	62
Standard Chartered Bank ("SCB")	Rp	-	0	-	0
	US$	6	87	11	150
	SGD	7	70	1	7
PT Bank Pembangunan Daerah ("BPD")	Rp	-	110	-	121
PT Bank HSBC Indonesia ("HSBC")	Rp	-	3	-	3
Others (each below Rp75 billion)	Rp	-	254	-	401
	US$	18	267	6	89
	MYR	16	56	4	12
	SGD	1	7	0	3
	EUR	0	7	1	17
	TWD	0	0	0	1
	AUD	0	3	1	7
	MOP	0	1	0	1
Sub-total	HKD	0	0	0	0
			1,816				1,476
Total cash in banks			4,432			4,461
Time deposits
Related parties
BNI	Rp	-	2,299	-	2,693
	US$	54	802	32	450
BRI	Rp	-	2,238	-	2,561
	US$	44	646	36	500
Bank Mandiri	Rp	-	2,254	-	1,129
	US$	36	540	16	215
BTN	Rp	-	1,900	-	2,733
Sub-total	US$	-	-	4	49
			10,679				10,330

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

3. CASH AND CASH EQUIVALENTS (continued)

September 30, 2020

Balance

December 31, 2019

Balance

		Foreign				Foreign
		currency		Rupiah	currency		Rupiah
Time deposits (continued)	Currency	(in millions)		equivalent	(in millions)		equivalent

Third parties
PT Bank Pembangunan Daerah Jawa Barat
dan Banten Tbk ("BJB")	Rp	-	736		-	1,394
	US$	6	85		-	-
PT Bank Maybank Indonesia Tbk. ("Maybank")	Rp	-	35		-	14
	US$	35	522		5	70
PT Bank Mega Tbk ("Bank Mega")	Rp	-	226		-	400
PT Bank CIMB Niaga Tbk
("Bank CIMB Niaga")	Rp	-	132		-	992
	US$	5	75		29	398
PT Bank Danamon Tbk. ("Bank Danamon")	Rp	-	173		-	1
PT Bank Tabungan Pensiunan Nasional Tbk. ("BTPN")	Rp	-	125		-	1
PT Bank DBS Indonesia ("Bank DBS")	Rp	-	125		-	29
Others	Rp	-	19		-	43
	US$	1	16		8	42
Sub-total	MYR	-	-		9	30
			2,269				3,414
Total time deposits			12,948			13,744
Allowance for expected credit loss				(0)				-
Total				17,420				18,242

Interest rates per annum on time deposits are as follows:

	September 30, 2020	December 31, 2019
Rupiah	3.25% - 8.25%	4.00% - 9.25%
Foreign currency	0.70% - 2.90%	0.50% - 3.30%

The related parties in which the Group places its funds are state-owned banks. The Group placed the majority of its cash and cash equivalents in these banks because they have the most extensive branch networks in Indonesia and are considered to be financially sound banks, as they are owned by the State.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

4. OTHER CURRENT FINANCIAL ASSETS

		September 30, 2020		December 31, 2019
		Balance			Balance
		Foreign currency	Rupiah		Foreign currency	Rupiah
Time deposits	Currency	(in millions)	equivalent		(in millions)	equivalent

Related parties
BRI	Rp	-			50	-	-
BNI	Rp	-			20	-	-
Bank Mandiri	Rp	-			10	-	-
Third parties
SCB	US$	-			-	8	111
Others	Rp	-			18	-	18
Total time deposits	US$	5			76	6	71
				174			200
Mutual funds
Related parties
PT Bahana TCW Investment Management
("Bahana TCM")	Rp	-			74	-	71
Total mutual funds					74			71
Escrow accounts	Rp	-			8	-	142
	US$	1			21	1	15
	MYR	-			-	6	19
Others	Rp	-			106	-	102
Allowance for expected credit loss	MYR	-			-	2	5
				(0)			-
Total					383			554

The time deposits have maturities of more than three months but not more than one year, with interest rates as follows:

	September 30, 2020	December 31, 2019
Rupiah	4.15% - 6.50%	6.50%
Foreign currency	0.15% - 1.08%	1.20% - 2.51%

5. TRADE RECEIVABLES

Trade receivables arise from services provided to both retail and non-retail customers, with details as follows:

a. By debtor
(i)	Related parties			September 30, 2020	December 31, 2019

	State-owned enterprises	1,297			1,604
	Indonusa	537			494
	Indosat	191			150
	Others	391			459
	Total			2,416			2,707
	Provision for impairment of receivables	(1,265)		(915)
	Net			1,151			1,792
(ii)	Third parties			September 30, 2020	December 31, 2019

	Individual and business subscribers	15,600			13,710
	Overseas international carriers	2,377			1,583
	Total		17,977			15,293
	Provision for impairment of receivables	(6,407)		(5,288)
	Net		11,570			10,005
		52

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

5. TRADE RECEIVABLES (continued)

By age
1. Related parties

								September 30, 2020	December 31, 2019
	Up to 3 months							1,493					1,563
	3 to 6 months							278					237
	More than 6 months							645					907
	Total							2,416					2,707
	Provision for impairment of receivables						(1,265)				(915)
	Net							1,151					1,792
(ii)	Third parties					September 30, 2020	December 31, 2019

	Up to 3 months							10,489					9,270
	3 to 6 months							1,390					1,077
	More than 6 months							6,098					4,946
	Total							17,977					15,293
	Provision for impairment of receivables						(6,407)					(5,288)
	Net							11,570					10,005
(iii)	Aging of total trade receivables	September 30, 2020	December 31, 2019

							Allowance for	Expected						Provision for
				Gross				expected	credit	Gross			impairment of
						credit losses	loss rate			receivables
	Not past due		9,585	562		5.9%					8,250	395
	Past due up to 3 months	2,397	335		14.0%					2,583	513
	Past due more than 3 to 6 months	1,668	717		43.0%					1,314	458
	Past due more than 6 months	6,743	6,058		89.8%					5,853	4,837
	Total			20,393			7,672							18,000	6,203

The Group has made provision for impairment of trade receivables based on the collective assessment of historical impairment rates and individual assessment of its customers' credit history. The Group does not apply a distinction between related party and third party receivables in assessing amounts past due. As of September 30, 2020 and December 31, 2019, the carrying amounts of trade receivables of the Group considered past due but not impaired amounted to Rp3,698 billion and Rp3,942 billion, respectively. Management believes that receivables past due but not impaired, along with trade receivables that are neither past due nor impaired, are due from customers with good credit history and are expected to be recoverable.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

5. TRADE RECEIVABLES (continued)
c. By currency
(i)	Related parties
					September 30, 2020				December 31, 2019
	Rupiah	2,400			2,705
	U.S. dollar	16			2
	Others	-			0
	Total	2,416			2,707
	Provision for impairment of receivables	(1,265)			(915)
	Net		1,151			1,792
(ii)	Third parties			September 30, 2020			December 31, 2019

	Rupiah	14,675				12,883
	U.S. dollar	3,175			2,298
	Australian dollar	6			12
	Others	121			100
	Total		17,977				15,293
	Provision for impairment of receivables	(6,407)			(5,288)
	Net			11,570				10,005
d. Movements in the provision for impairment of receivables
					September 30, 2020				December 31, 2019
Beginning balance	6,203				5,029
Adjustment on initial application of PSAK 71	225			-
Provision recognized during the period	1,244			2,283
Receivables written off	-			(1,109)
Ending balance			7,672				6,203

The receivables written off relate to both related party and third party trade receivables.

Management believes that the provision for impairment of trade receivables is adequate to cover losses on uncollectible trade receivables.

As of September 30 ,2020, certain trade receivables of the subsidiaries amounting to Rp6,149 billion have been pledged as collateral under lending agreements (Notes 18 and 19c).

6. CONTRACT ASSETS
Contract assets	September 30, 2020
1,265
Provision for expected credit losses	(148)
Net	1,117
Short term portion	(822)
Long term portion		295

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

7. INVENTORIES	September 30, 2020	December 31, 2019

Components	683		351
SIM cards and blank prepaid vouchers	242		154
Others	162		172
Total	1,087		677
Provision for obsolescence
Components	(30)		(62)
SIM cards and blank prepaid vouchers	(28)		(28)
Others	(3)	(2)
Total	(61)		(92)
Net		1,026		585

Movements in the provision for obsolescence are as follows:

		September 30, 2020	December 31, 2019
Beginning balance	92	67
Provision recognized during the year	-	25
Inventory written off	(31)	-
Ending balance		61	92

Management believes that the provision is adequate to cover losses from decline in inventory value due to obsolescence.

The inventories recognized as expense and included in operations, maintenance and telecommunication service expenses as of September 30, 2020 and 2019 amounted to Rp358 billion and Rp1,493 billion, respectively (Note 26).

Certain inventories of the subsidiaries amounting to Rp343 billion have been pledged as collateral under lending agreements (Notes 19c).

As of September 30, 2020 and December 31, 2019, modules (part of property and equipment) and components held by the Group with book value amounting to Rp108 billion and Rp112 billion, respectively, have been insured against fire, theft, and other specific risks. Total sum insured as of September 30, 2020 and December 31, 2019 amounted to Rp155 billion, respectively.

Management believes that the insurance coverage is adequate to cover potential losses of inventories arising from the insured risks.

8. OTHER CURRENT ASSETS

The breakdown of other current assets is as follows:

		September 30, 2020	December 31, 2020
Prepaid annual frequency license (Note 36c.i)	1,832	3,879
Advances	929	670
Prepaid salaries	354	189
Prepaid rental	167	1,403
Others	278	511
Total		3,560	6,652

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

9. CONTRACT COST

Movement of contract costs for the nine months period ended September 30, 2020 is follow:

		September 30, 2020
At January 1, 2020	Cost to obtain	Cost to fulfill			Total
696		489			1,185
Amortisation during the year	(103)	(354)	(457)
Addition current year	526		499	1,025
At September 30, 2020	1,119		634			1,753
Short term portion	(172)	(269)	(441)
Long term portion		947		365			1,312

10. LONG-TERM INVESTMENTS

The Group has investments in several entities as follows:

								September 30, 2020
				Adjustment
	Percentage	Beginning		on initial		Share of	Changes of net	Share of			Share of other				Ending
	of		application		additions	net profit			comprehensive
Long-term	ownership	balance		of PSAK 71		(deductions)	fair value	(loss)	Dividend	income		Impairment	balance

investments
in associated
companies:
Tiphonea	24.00	526	-	-		-		(6)		-		-	(308)		212
Finaryab	26.58	267	-	-				(135)		-		-	-		132
Indonusac	20.00	210	-	-		-		-		-		-	-		210
Jalind	33.00	77	-	-		-		11		(5)	-	-		83
Othersi	6.32-51.00	130		-		-		-		(6)		-		-		-		124
Sub-total		1,210	-		-		-		(136)		(5)		-		(308)		761
Other long-term
investments		734	244	334		(21)	-		-		-	-		1,291
Total long-term
investments		1,944		244	334		(21 )	(136 )		(5 )	-	(308)		2,052

Summarized financial information of the Group's investments accounted under the equity method for period September 30, 2020:

Statements of financial position	Tiphone*			Finarya			Indonusa*		Jalin	Others

Current assets	8,165	2,141	495	159	1,045
Non-current assets	778	120	253	216	4,324
Current liabilities	(3,824)	(1,789)	(534)	(84)	(1,573)
Non-current liabilities	(741)	(3)	(278)	(39)	(5,337)
Equity (deficit)	4,378			469			(64)		252	(1,541)
Statements of profit or loss and other
comprehensive income
Revenues	28,442	21	794	194	1,045
Operating expenses	(27,621)	(505)	(738)	(145)	(1,015)
Other income (expenses) including
finance costs - net	(321)	5	1	(3)	(219)
Profit (loss) before tax	500			(479)			57		46	(189)
Income tax benefit (expense)	(138)	(8)	(10)	(11)	(5)
Profit (loss) for the year	362			(487)			47		35	(194)
Other comprehensive income (loss)	77	-	(1)	-	-
Total comprehensive income (loss)
for the period		439		(487)		46		35	(194)

* Based on financial information as of December 31,2019 and in the period ended the same year.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

10. LONG-TERM INVESTMENTS (continued)

							December 31, 2019
							Share of			Share of other
	Percentage of		Beginning		Additions	net profit			comprehensive				Ending
Long-term investments	ownership		balance		(deduction)	(loss)	Dividend	income		Impairment	balance

in associated
companies:
Tiphonea	24.00	1,602	-		88		(11)	19	(1,172)		526
Finaryab	26.58	-	484		(217)	-		-	-		267
Indonusac	20.00	210	-		-		-		-	-		210
Jalind	33.00	-	70		7		-		(0)	-		77
Cellume	30.40	79	-		(8)	-		-	-		71
ILCSf	49.00	44	-		(13)	-		0	-		31
GSNg	45.00	14	-		(1)	-		-	-		13
Teltraneth	51.00	-	34		(24)	-		1	-		11
Othersi	6.32-32.00	4	(2)	2		-		-	-		4
Sub-total			1,953		586		(166)		(11)		20		(1,172)	1,210
Other long-term
investments		519	215		-		-		-	-		734
Total long-term
investments			2,472		801		(166)	(11)	20	(1,172)		1,944

Summarized financial information of the Group's investments accounted under the equity method for year 2019:

Statements of financial position	Tiphone		Finarya		Indonusa	Jalin	Cellum		ILCS	GSN	Teltranet	Others

Current assets	8,165	2,382	495		100	14	119		17		291		615
Non-current assets	778	132	253		222	17	41		169		66		4,033
Current liabilities	(3,824)	(1,533)	(534)		(78)	(10)	(95)		(2)		(356)		(1,089)
Non-current liabilities	(741)	(3)	(278)		(10)	(27)	(2)		(155)		(58)		(5,101)
Equity (deficit)	4,378		978		(64)		234	(6)		63		29		(57)	(1,542)
Statements of profit or loss and other
comprehensive income
Revenues	28,442	38	794		205	13	206		7		195		784
Operating expenses	(27,621)	(877)	(738)		(148)	(40)	(212)		(9)		(242)		(800)
Other income (expenses) including
finance costs - net	(321)	17	1		2	-	(16)		(0)		(15)		(128)
Profit (loss) before tax	500		(822)		57		59	(27)		(22)		(2)		(62)	(144)
Income tax benefit (expense)	(138)	1	(10)		(17)	-	(4)		(0)		(43)		(1)
Profit (loss) for the period	362		(821)		47		42	(27)		(26)		(2)		(105)	(145)
Other comprehensive income (loss)	77	-	(1)		(0)	-	0		-)		2		-
Total comprehensive income (loss)
for the period	439		(821)	46		42	(27)	(26)		(2)		(103)		(145)

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

10. LONG-TERM INVESTMENTS (continued)

Tiphone was established on June 25, 2008 as PT Tiphone Mobile Indonesia Tbk. Tiphone is engaged in the telecommunication equipment business, such as celullar phone including spare parts, accessories, pulse reload vouchers, repair service, and content provider through its subsidiaries. On September 18, 2014, the Company through PINS acquired 25% ownership in Tiphone for Rp1,395 billion.
As of September 30,2020 and December 31, 2019, the fair value of the investment amounted to Rp212 billion and Rp526 billion, respectively. The fair value was calculated by multiplying the number of shares by the published price quotation as of September 30, 2020 and December 31, 2019 amounting to Rp121 and Rp300 per share, respectively.
Reconciliation of financial information to the carrying amount of long-term investment in Tiphone as of December 31, 2019 is as follows:

Assets	December 31, 2019
8,943
Liabilities	(4,565)
Net Assets	4,378
Group's proportionated share of net assets
(24.00% in 2019)	1,051
Goodwill	647
Impairment	(1,172)
Carrying amount of long-term invesment		526

On January 21, 2019, Telkomsel established a subsidiary of PT Fintek Karya Nusantara ("Finarya") with an initial investment amounted to Rp25 billion and on February 22, 2019 Telkomsel transferred its assets amounted to Rp150 billion. For this transaction, Telkomsel obtained 2,499 and 14,974 shares, respectively (equal to 100% ownership). Telkomsel with PT Mandiri Capital Indonesia, PT BRI Ventura Indonesia, PT BNI Sekuritas, PT Jasamarga Tollroad Operator, PT Dana Tabungan dan Asuransi Pegawai Negeri (Persero), PT Pertamina Retail, PT Kereta Commuter Indonesia ("KCI"), PT Asuransi Jiwasraya (Persero), and PT Danareksa Capital, entered in to shareholder agreement on July 31, 2019, October 31, 2019, and

December 31, 2019 relating to the increasing issued and paid up capital made by each shareholder. On December 31, 2019, Telkomsel owned 48,530 shares or equivalent to 26.58% ownership.

c Indonusa had been a subsidiary of the Company until 2013 when the Company disposed 80% of its interest in Indonusa. On May 14, 2014, based on the Circular Resolution of the Stockholders of Indonusa as covered by notarial deed No. 57 dated April 23, 2014 of FX Budi Santoso Isbandi, S.H., which was approved by the MoLHR in its Letter No. AHU-02078.40.20.2014 dated April 29, 2014, Indonusa's stockholders approved an increase in its issued and fully paid capital by Rp80 billion. The Company waived its right to own the new shares issued and transferred it to Metra, as the result, Metra's ownership in Indonusa increased to 4.33% and the Company's ownership become 15.67%.

Jalin was previously a subsidiary. On June 19, 2019 the company sold 67% of its shares to PT Danareksa (Persero)

("Danareksa") amounted to Rp395 billion.

Investment in Cellum is accounted for under the equity method, which covered by a conditional shares subsciption agreement between Metranet and Cellum in January 30, 2018. Cellum is a company which engaged in mobile payment and commerce

services.

PT Integrasi Logistik Cipta Solusi ("ILCS") is engaged in providing E-trade logistic services and other related services.

On August 31, 2017, NSI and third party established PT Graha Sakura Nusantara ("GSN") which engaged in real estate,

residential and apartment marketing business.

Investment in Teltranet is accounted for under the equity method, which covered by an agreement between Metra and Telstra Holding Singapore Pte. Ltd. dated August 29, 2014. Teltranet is engaged in communication system services.

Metra does not have control to determine the financial and operating policies of Teltranet.

The unrecognized share of losses in other investments cumulatively as of September 30, 2020 are Rp498 billion.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

11. PROPERTY AND EQUIPMENT

									Reclassifications/	September
At cost:	January 1, 2020		Acquisition	Additions		Deductions	Translations	30, 2020

Directly acquired assets
Land rights	1,644	-		9	-		2		1,655
Buildings	14,062	-		107	-		1,447		15,616
Leasehold improvements	1,549	-		3	(173)		15		1,394
Switching equipment	17,348	-		223	(1,919)		1,032		16,684
Telegraph, telex and data communication
equipment	2,258	-		-	-		(675)		1,583
Transmission installation and equipment	151,750	-		1,643	(2,298)		5,429		156,524
Satellite, earth station and equipment	12,344	-		69	(1)		145		12,557
Cable network	54,357	-		3,263	(56)		344		57,908
Power supply	20,113	-		167	(208)		656		20,728
Data processing equipment	16,409	-		148	(323)		1,666		17,900
Other telecommunication peripherals	5,340	-		1,173	-		16		6,529
Office equipment	2,361	-		104	(418)		58		2,105
Vehicles	568	-		48	(11)		36		641
Other equipment	123	-		18	-		(54)		87
Property under construction	2,619	-		10,947	-		(9,430)		4,136
Asset under finance lease
Transmission installation and equipment	5,500	-		-	-		(5,500)		-
Data processing equipment	1	-		-	-		(1)		-
Vehicles	503	-		-	-		(503)		-
Office equipment	42	-		-	-		(42)		-
CPE assets	22	-		-	-		(22)		-
Power supply	-	-		-	-		-		-
Revenue Sharing Agreement ("RSA")
assets	89	-		-	-		(89)		-
Total	309,002		-		17,922		(5,407)		(5,470)		316,047

										Reclassifications/	September
Accumulated depreciation and	January 1, 2020		Acquisition	Additions		Deductions	Translations	30, 2020

impairment losses:
Directly acquired assets
Buildings	4,113	-		576	-		30		4,719
Leasehold improvements	1,091	-		180	(225)		-		1,046
Switching equipment	11,976	-		1,187	(1,917)		29		11,275
Telegraph, telex and data communication
equipment	1,580	-		-	-		-		1,580
Transmission installation and equipment	79,993	-		8,475	(2,265)		272		86,475
Satellite, earth station and equipment	5,809	-		655	(1)		8		6,471
Cable network	14,171	-		1,844	(56)		64		16,023
Power supply	13,596	-		1,117	(201)		50		14,562
Data processing equipment	11,977	-		1,146	(318)		(1)		12,804
Other telecommunication peripherals	1,766	-		799	-		(1)		2,564
Office equipment	1,678	-		235	(401)		31		1,543
Vehicles	210	-		59	(5)		14		278
Other equipment	66	-		1	-		(1)		66
Asset under finance lease
Transmission installation and equipment	3,734	-		-	-		(3,734)		-
Data processing equipment	1	-		-	-		(1)		-
Vehicles	115	-		-	-		(115)		-
Office equipment	44	-		-	-		(44)		-
CPE assets	20	-		-	-		(20)		-
Power supply	-	-		-	-		-		-
RSA assets	89	-		-	-		(89)		-
Total	152,029		-		16,274		(5,389)		(3,508)		159,406
Net book value		156,973										156,641

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

11. PROPERTY AND EQUIPMENT (continued)

	January 1,								Reclassifications/	December 31,
At cost:	2019		Acquisition		Additions		Deductions	translations	2019

Directly acquired assets
Land rights	1,626	6	16	-		(4)		1,644
Buildings	11,833	12	779	(4)	1,442		14,062
Leasehold improvements	1,375	-	37	(58)	195		1,549
Switching equipment	15,921	-	1,228	(61)	890		17,348
Telegraph, telex, and data communication
equipment	1,586	-	675	-		(3)		2,258
Transmission installation and equipment	141,408	686	6,768	(6,240)		9,128		151,750
Satellite, earth station, and equipment	11,972	-	108	(11)	275		12,344
Cable network	45,451	-	8,197	(113)	822		54,357
Power supply	17,864	-	793	(253)	1,709		20,113
Data processing equipment	14,265	10	709	(107)	1,532		16,409
Other telecommunication peripherals	3,423	-	1,904	-		13		5,340
Office equipment	2,142	7	208	(101)	105		2,361
Vehicles	641	-	99	(167)	(5)		568
Other equipment	94	-	57	-		(28)		123
Property under construction	4,876	81	14,923	(20)	(17,241)		2,619
Asset under finance lease
Transmission installation and equipment	5,603	-	-	(102)	(1)		5,500
Data processing equipment	1	-	-	-		-		1
Vehicles	578	1	54	(80)	(50)		503
Office equipment	16	-	30	(4)	-		42
CPE assets	22	-	-	-		-		22
Power supply	125	-	-	-		(125)		-
RSA assets	252	-	-	-		(163)		89
Total	280,444		803		36,585		(7,321)		(1,509)		309,002

		January 1,								Reclassifications/	December 31,
Accumulated depreciation and	2019		Acquisition		Additions		Deductions	translations	2019

impairment losses:
Directly acquired assets
Buildings	3,405	-	726	(4)	(14)		4,113
Leasehold improvements	949	-	198	(56)	-		1,091
Switching equipment	10,550	-	1,488	(45)	(17)		11,976
Telegraph, telex, and data communication
equipment	1,320	-	260	-		-		1,580
Transmission installation and equipment	74,247	-	11,059	(5,260)		(53)		79,993
Satellite, earth station, and equipment	5,005	-	818	(10)	(4)		5,809
Cable network	12,185	-	2,349	(102)	(261)		14,171
Power supply	12,316	-	1,454	(239)	65		13,596
Data processing equipment	10,747	-	1,304	(61)	(13)		11,977
Other telecommunication peripherals	1,029	-	737	-		-		1,766
Office equipment	1,312	-	383	(55)	38		1,678
Vehicles	281	-	72	(137)	(6)		210
Other equipment	75	-	1	-		(10)		66
Asset under finance lease
Transmission installation and equipment	3,241	-	587	(94)	-		3,734
Data processing equipment	1	-	-	-		-		1
Vehicles	126	-	72	(58)	(25)		115
Office equipment	70	-	3	(3)	(26)		44
CPE assets	20	-	-	-		-		20
Power supply	73	-	-	-		(73)		-
RSA assets	244	-	-	-		(155)		89
Total	137,196		-		21,511		(6,124)		(554)		152,029
Net book value		143,248										156,973

a. Gain on sale of property and equipment
2020			2019
Proceeds from sale of property and equipment		141		1,261
Net book value	(6)	(664)
Gain on disposal or sale of property and equipment			135		597

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

11. PROPERTY AND EQUIPMENT (continued) b. Others

As of December 31, 2019, the CGUs that independently generate cash inflows are fixed wireline, cellular, and others. Management believes that there is no indication of impairment in the assets of such CGUs as of December 31, 2019.
Interest capitalized to property under construction amounted to Rp89 billion and Rp87 billion for the nine months period ended September 30, 2020 and 2019, respectively. The capitalization rate used to determine the amount of borrowing costs eligible for capitalization ranged from 2.38% to 11.00% and 3.79% to 11.00% for the nine months period ended September 30, 2020 and 2019, respectively.
No foreign exchange loss was capitalized as part of property under construction for the nine months period ended September 30,2020 and for the year ended December 31,2019.
On September 30, 2020 and 2019, the Group obtained proceeds from the insurance claim on lost and broken property and equipment, with a total value of Rp218 billion and Rp95 billion, respectively, and were recorded as part of "Other Income (expenses) - net" in the consolidated statements of profit or loss and other comprehensive income. On September 30, 2020 and 2019, the net carrying value of those assets of Rp36 billion and Rp15 billion, respectively, were charged to the consolidated statements of profit or loss and other comprehensive income.
In 2018, the estimated useful lives of radio software license and data processing equipment were changed from 7 to 10 years and from 3 to 5 years, respectively. The impact of reduction in the depreciation expense for the nine months ended September 30, 2020 amounting to Rp233 billion.
The change in useful lives will increase/(decrease) profit before income tax in future years as follows:


	Years					Increase (Decrease)
	2021						18
2022					(106)
(vi) In	2019,	Telkomsel's certain	equipment	units with	net carrying amount	of
Rp803 billion were exchanged with equipment from Ericsson AB, PT Ericsson Indonesia,
PT	Huawei	Tech Investment,	PT Nokia	Solutions and	Network Indonesia,	and

PT ZTE Indonesia. As of September 30, 2020, Telkomsel's equipment units with net carrying amount of Rp39 billion are going to be exchanged and, therefore, these equipment were reclassified as "Assets held for sale" in the consolidated statements of financial position.

The Group owns several pieces of land located throughout Indonesia with Building Use Rights ("Hak Guna Bangunan" or "HGB") for a period of 10-50 years which will expire between 2020 and 2069. Management believes that there will be no issue in obtaining the extension of the land rights when they expire.
As of September 30, 2020, the Group's property and equipment excluding land rights, with net carrying amount of Rp146,456 billion were insured against fire, theft, earthquake and other specified risks, including business interruption, under blanket policies totalling Rp24,650 billion, US$38 million, HK$8 million, SG$269 million, AU$4 million, and MYR44 million and first loss basis amounted to Rp2,750 billion. Management believes that the insurance coverage is adequate to cover potential losses from the insured risks.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

PROPERTY AND EQUIPMENT (continued) b. Others (continued)
1. As of September 30, 2020, the percentage of completion of property under construction was around 41.80% of the total contract value, with estimated dates of completion until December 2021. 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.
2. All assets owned by the Company have been pledged as collateral for bonds (Notes 19b.i). Certain property and equipment of the Company's subsidiaries with gross carrying value amounting to Rp9,016 billion have been pledged as collateral under lending agreements (Notes 18, 19c, and 19d).
3. As of September 30, 2020, the cost of fully depreciated property and equipment of the Group that are still used in operations amounted to Rp62,626 billion. The Group is currently performing modernization of network assets to replace the fully depreciated property and equipment.
4. In 2019, 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 Rp36,842 billion.
RIGHT OF USE ASSETS
The Group leases several assets including land rights, building, transmission installation and equipments, power supply, vehicles, and other equipments used in its operations, which generally have lease term between 2 and 15 years.
The Group also has certain leases with lease terms of twelve months or less and low-value leases. The Group applies the 'short-term lease' and 'lease of low-value assets' recognition exemptions for these leases. There are no lease contracts with variable lease payments. Short-term and low-value assets lease expense of Rp2.065 billion were incurred for the period ended September 30, 2020.
The carrying amounts of right of use assets recognized and the movement during the period:

		December 31,		Effect	January 1,						Reclassification/ September 30,
At cost:	2019		Adoption PSAK 73	2020		Additions		Deduction	translation	2020

Land rights	-	3,772		3,772	745	-		4	4,521
Buildings	-	594		594	234	(209)	29	648
Transmission installation
and equipment	-	14,964		14,964	74	(571)	(72)	14,395
Power supply	-	514		514	-	-		-	514
Vehicles	-	513		513	8	(2)	-	519
Others	-	184		184	-	-		-	184
Total	-		20,541		20,541		1,061		(782)		(39)	20,781
Accumulated
amortization:
Land rights	-	-		-	(581)	-		-	(581)
Buildings	-	-		-	(122)	23		(6)	(105)
Transmission installation
and equipment	-	-		-	(2,473)	324		64	(2,085)
Power supply	-	-		-	(122)	-		-	(122)
Vehicles	-	-		-	(83)	-		-	(83)
Others	-	-		-	(45)	-		-	(45)
Total	-		-		-		(3,426)		347		58	(3,021)
Net book value		-											17,760

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

12. RIGHT OF USE ASSETS (continued)

Maturity analysis of lease payments are as follows:

Years	September 30, 2020		December 31, 2019
2020		6,175			936
2021		776			785
2022		2.948			607
2023		2,240			255
2024		1,394			85
Thereafter	2,186			45
Total lease payments	15,719			2,713
Interest	(2,161)			(373)
Net present value of lease payments	13,558			2,340
Adjustment on initial application of PSAK 73	-			14,425
Total lease liability	13,558			16,765
Current maturities (Note 18b)	(5,397)			(3,185)
Long-term portion (Note 19)		8,161			13,580
Reconciliation of operating lease commitment and lease liabilities are as follows:
Operating lease commitments				18,367
Less:
Commitments relating to short-term leases				(70)
Commitments relating to leases of low-value assets			(58)
Operating lease commitments as at January 1, 2020			18,239
Weighted average incremental borrowing rate as at January 1, 2020			7.41%
Discounted operating lease commitments as at January 1, 2020			14,355
Add:
Adjustments as a result of a different treatment of extension and termination option	70
Lease liabilities as at January 1, 2020				14,425

13. OTHER NON-CURRENT ASSETS

The breakdown of other non-current assets is as follows:

Prepaid annual frequency license	September 30, 2020	December 31, 2019

net of current portion (Note 8)	1,300		1,488
Claim for tax refund (Note 28b)	777		3,666
Prepaid income taxes (Note 28a)	769		678
Advances for purchases of property and equipment	586		481
Deferred charges	555		570
Prepaid rent	267		3,170
Security deposit	161		210
Convertible bonds	151		319
Others	239		643
Total		4,805		11,225

Prepaid rental covers rent of leased line, telecommunication equipment, land and building under lease agreements of the Group with remaining rental periods over 1 year.

As of September 30, 2020 and 2019, deferred charges represent deferred Indefeasible Right of Use ("IRU") Agreement charges. Total amortization of deferred charges for the nine months period ended September 30, 2020 and 2019 amounted to Rp47 billion and Rp51 billion, respectively.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

14. INTANGIBLE ASSETS

The details of intangible assets are as follows:

											Other intangible
Gross carrying amount:		Goodwill		Software		License	assets			Total

Balance, January 1, 2020	1,432		12,480		96		1,571	15,579
Additions	-		1,634		6		1	1,641
Deductions	-		(6)		-		-	(6)
Reclassifications/translations	4		16		(12)		(86)	(78)
Balance, September 30, 2020	1,436		14,124		90		1,486			17,136
Accumulated amortization:
Balance, January 1, 2020	(29)		(8,400)		(93)		(611)	(9,133)
Amortization	(32)		(1,199)		(6)		(90)	(1,327)
Deductions	-		6		-		-	6
Reclassifications/translations	-		-		8		12	20
Balance, September 30, 2020	(61)		(9,593)		(91)		(689)			(10,434)
Net book value	1,375		4,531		(1)		797			6,702
											Other intangible
Gross carrying amount:		Goodwill		Software		License	assets			Total

Balance, January 1, 2019	1,066		10,680		94		687	12,527
Additions	-		1,942		4		511	2,457
Acquisition	467		-		-		379	846
Deductions	(104)		(166)		(12)		(14)	(296)
Reclassifications/translations	3		24		10		8	45
Balance, December 31, 2019		1,432			12,480			96		1,571		15,579
Accumulated amortization and impairment
losses:
Balance, January 1, 2019	(29)		(6,896)		(81)		(489)	(7,495)
Amortization	-		(1,165)		(357)		(145)	(1,667)
Deductions	-		71		2		14	87
Reclassifications/translations	-		(410)		343		9	(58)
Balance, December 31, 2019		(29)			(8,400)			(93)		(611)		(9,133)
Net book value			1,403			4,080			3		960		6,446

Goodwill resulted from the acquisition of Sigma (2008), Admedika (2010), data center PT Bina Data Mandiri ("BDM") (2012), Contact Centres Australia Pty. Ltd. (2014), PT Media Nusantara Data Global ("MNDG") (2015), Melon and PT Griya Silkindo Drajatmoerni ("GSDm") (2016), TSGN and Nutech (2017), SSI, CIP, and Telin Malaysia (2018), and PST (2019) (Note 1e).
The amortization is presented as part of "Depreciation and Amortization" in the consolidated statements of profit or loss and other comprehensive income. The remaining amortization periods of software range from 1-6 years.
As of September 30, 2020 the cost of fully amortized intangible assets that are still used in operations amounted to Rp6,698 billion.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

15. TRADE PAYABLES
The breakdown of trade payables is as follows:	September 30, 2020		December 31, 2019
Related parties

Purchases of equipments, materials, and services	544	683
Payables to other telecommunication providers	274	136
Sub-total	818		819
Third parties
Purchases of equipments, materials and services	10,985	10,634
Radio frequency usage charges, concession fees,
and Universal Service Obligation ("USO") charges	1,421	1,374
Payables to other telecommunication providers	1,360	1,070
Sub-total	13,766		13,078
Total		14,584		13,897
Trade payables by currency are as follows:	September 30, 2020		December 31, 2019

Rupiah	11,812	12,027
U.S. Dollar	2,724	1,823
Others	48	47
Total		14,584		13,897

Refer to Note 33 for details of related parties transactions.

16. ACCRUED EXPENSES

The breakdown of accrued expenses is as follows:

September 30, 2020 December 31, 2019

Operation, maintenance, and telecommunication services	9,212
General, administrative, and marketing expenses	2,252
Salaries and benefits	2,084
Interest and bank charges	136
Total		13,684

17. CONTRACT LIABILITIES a. Current portion

September 30, 2020

8,450

2,658

2,412

216

13,736

December 31, 2019

Prepaid pulse reload vouchers Material rights for contract renewal Others

Total

b. Non-current portion

5,256

104

1,441

6,801

September 30, 2020

5,212

1,447

6,735

December 31, 2019

Indefeasible Right of Use	302
Material rights for contract renewal	567
Others	156
Total		1,025

327

389

803

The balance of contract liabilities as of December 31, 2019 is presented as unearned income in the consolidated statements of financial position.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

18. SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS a. Short-termbank loans

		September 30, 2020		December 31, 2019
		Outstanding		Outstanding
		Foreign				Foreign
		currency			Rupiah	currency	Rupiah
Lenders	Currency	(in millions)			equivalent	(in millions)	equivalent
Related parties
Bank Mandiri	Rp	-	2,900	-	2,400
BNI	Rp	-	1,040	-	1,238
PT Bank BNI Syariah ("BNI Syariah")	Rp	-	-	-	17
Sub-total					3,940		3,655
Third parties
HSBC	Rp	-	2,206	-	1,754
	US$	0	3	0	4
MUFG Bank, Ltd. ("MUFG Bank")	Rp	-	1,941	-	1,705
Bank DBS	Rp	-	652	-	722
	US$	1	13	1	13
PT Bank UOB Indonesia ("UOB Indonesia")	Rp	-	250	-	500
UOB Singapore ("UOB Singapore")	US$	9	134	-	-
PT Bank BTPN ("BTPN") (previously
"Sumitomo")	Rp	-	125	-	-
SCB	Rp	-	100	-	150
Bank CIMB Niaga	Rp	-	78	-	78
PT Bank Central Asia Tbk. ("BCA")	Rp	-	73	-	124
Sub-total					5,575		5,050
Total					9,515		8,705

Other significant information relating to short-term bank loans as of September 30, 2020 is as follows:

			Total facility			Interest rate per
Mandiri	Borrower	Currency	(in billions)	Maturity date	Interest rate	annum	Security**

2019 - 2020	The Company,	Rp	2,600	November 21, 2020 -	Monthly,	1 bulan	None
	Finnet			April 28, 2021	Quarterly	JIBOR + 1.50%
						3 bulan
BNI						JIBOR + 0.60%

2014 - 2017	Sigmaa, GSD	Rp	325	November 8, 2020 -	Monthly	9.00%	Trade
				January 9, 2021			receivables and
							property and
							equipment
2018 - 2019	Telkom Infratel,	Rp	2,960	October 2, 2020 -	Monthly	1 month	Trade
	Infomediab,			June 6, 2021		JIBOR + 2.20% -	receivables
	Sigmah,					2.50%
HSBC	Metranet, GTS

2018	Sigmac,h	Rp	600	July 31, 2021	Monthly	6.74%	Trade
							receivables
2018	Sigmac,h	US$	0.004	July 31, 2021	Monthly	4.12%	Trade
							receivables
2018 - 2019	The Company,	Rp	3,337	April 8, 2021 -	Monthly,	1 month	Trade
	Sigma, Melon,			August 30, 2021	Quarterly	JIBOR + 0.60% -	receivables
	Metra,					0.70%
	MD Media, PINS					3 month
						JIBOR + 1.00%

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

18. SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS (continued)

Short-termbank loans (continued)

Other significant information relating to short-term bank loans as of September 30, 2020 is as follows:

			Total facility			Interest rate per
Mandiri	Borrower	Currency	(in billions)	Maturity date	Interest rate	annum	Security**

MUFG Bank
2018 - 2019	The Company,	Rp	1,860	March 27, 2021 -	Monthly	1 month	None
	Infomedia,			August 23, 2021		JIBOR + 0.70%
	Metra, GSD,
Bank DBS	Telkom Infratel

2016	Nutech	Rp	17	October 18, 2020	Monthly	10.50%	None
2018	Telkom Infratel,	Rp	600	February 26, 2021 -	Monthly	1 month	None
	Infomedia			July 31, 2021		JIBOR + 0.70%
2016	Sigmad,e	US$	0.02	July 31, 2021	Semi-annually	3.25% (US$).	Trade
UOB Indonesia						10.75% (Rp)	receivables

2016	Finnetf	Rp	500	December 20, 2020	Monthly	1 month	None
UOB Singapore						JIBOR + 2.00%

2016	Telin	US$	0.049	December 18, 2020	Monthly	1 month	None
Bank BTPN						JIBOR + 1.25%

2013	PINS	Rp	250	February 13, 2021	Quarterly	3 month	None
SCB						JIBOR + 2.25%

2015	GSDg	Rp	150	October 16, 2020	Monthly	Cos of fund + 2.5%	None
Bank CIMB Niaga
2013	GSDh	Rp	85	January 1, 2021	Monthly	10.90% - 11.50%	Trade
							receivables and
							property and
BCA							equipment

2019	Telkom Infratel	Rp	600	November 22, 2020	Monthly	1 month	Trade
						JIBOR + 1.75%	receivables

In original currency

** Refer to Note 5 and Note 11 for details of trade receivables and property and equipment pledged as collateral.

Based on the latest amendment on April 23, 2019.

Based on the latest amendment on March 28, 2018 and July 6, 2018.

Based on the latest amendment on July 16, 2018.

Based on the latest amendment on December 5, 2018.

Facility in U.S. Dollar. Withdrawal can be executed in U.S. Dollar and Rupiah.

Based on the latest amendment on June 5, 2018.

Based on the latest amendment on January 18, 2019.

Unsettled loan will be automatically extended.

As stated in the agreements, the Group is required to comply with all covenants or restrictions such as limitation that the Company must have a majority shareholding of at least 51% of the subsidiaries in the agreement and maintaining financial ratios. As of December 31, 2019, the Group has complied with all covenants or restrictions, except for certain loans. As of December 31, 2019, the Group obtained waiver from lenders to not demand the loan payment as consequence of the breach of covenants, except for Telkom Infratel, the waiver from BCA was received on January 27, 2020.

On November 21, 2019, the Company, Dayamitra, and GSD entered credit agreements amendments with Bank Mandiri amounting to Rp2,400 billion. As of September 30, 2020, all facilities had been used.

On February 20, 2020, the Company, Infomedia, and Telkom Infratel entered credit agreements changes with Bank DBS amounting to Rp600 billion. As of September 30, 2020, the unused facilities was amounting to Rp125 billion.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

18. SHORT-TERM BANK LOANS AND CURRENT MATURITIES OF LONG-TERM BORROWINGS (continued)

Short-termbank loans (continued)
On March 27, 2020, the Company, Metra, Infomedia, and Telin entered credit agreements changes with MUFG Bank amounting to Rp600 billion. As of September 30, 2020, the unused facilities was amounting to Rp230 billion.
On May 28, 2020, the Company, Metra, MD Media, and Metranet entered credit agreements changes with HSBC amounting to Rp1,000 billion. As of September 30, 2020, the unused facilities was amounting to Rp130 billion.
On June 18, 2020, the Company, Infomedia, MD Media, and Telkom Infratel entered credit agreements changes with MUFG Bank amounting to Rp1,560 billion. As of September 30, 2020, the unused facilities was amounting to Rp900 billion.
On August 24, 2020, the Company, Sigma, and Melon entered credit agreements changes with HSBC amounting to Rp700 billion. As of September 30, 2020, the unused facilities was amounting to Rp207 billion.
On August 19, 2020, the Company and GSD entered credit agreements changes with MUFG Bank amounting to Rp900 billion. As of September 30, 2020, the unused facilities was amounting to Rp19 billion.
The credit facilities were obtained by the Group for working capital purposes.

b. Current maturities of long-term borrowings	Notes			September 30, 2020	December 31, 2019

Two-step loans	19a	191	194
Bonds and notes	19b	478	2,491
Bank loans	19c	5,103	5,434
Other borrowings	19d	1,040	627
Obligation under finance lease	12	-	764
Lease liabilities	12	5,397	-
Total				12,209	9,510

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS

	Notes		September 30, 2020	December 31, 2019
Two-step loans	19a	466		542
Bonds and notes	19b	6,991		7,467
Bank loans	19c	21,712		21,171
Other borrowings	19d	2,714		3,113
Obligation under finance leases	12	-		1,576
Lease liabilities	12	8,161		-
Total			40,044		33,869

Scheduled principal payments as of September 30, 2020 are as follows:

							Year
	Notes		Total	2021	2022	2023	2024	Thereafter
Two-step loans	19a		466		69		153	135	109	-
Bonds and notes	19b	6,991	-	2,199	-	-	4,792
Bank loans	19c	21,712	3,136	4,860	5,319	3,573	4,824
Other borrowings	19d	2,714	109	1,041	1,052	512	-
Lease liabilities	12	8,161	569	2,470	1,938	1,211	1,973
Total			40,044		3,883		10,723	8,444	5,405		11,589

Two-steploans
Two-step loans are unsecured loans obtained by the Government from overseas banks which are then re-loaned to the Company. Loans obtained up to July 1994 are payable in Rupiah based on the exchange rate at the date of drawdown. Loans obtained after July 1994 are payable in their original currencies and any resulting foreign exchange gain or loss is borne by the Company.

September 30, 2020

December 31, 2019

Outstanding

Foreign currency

Rupiah

Foreign currency

Rupiah

Lenders

Currency

(in millions)

equivalent

(in millions)

equivalent

Overseas banks

Yen

3,456

488

3,839

491

US$

120

Total

106

125

657

736

Current maturities (Note 18b)

(191)

(194)

Long-term portion

466

542

Principal payment

Interest rate per

Lenders

Currency

schedule

Interest payment period

annum

Overseas banks

Yen

Semi-annually

2.95%

US$

Semi-annually

3.85%

Semi-annually

8.38%

The loans were intended for the development of telecommunications infrastructure and supporting telecommunications equipment. The loans will be settled semi-annually and due on various dates until 2025.

The Company had used all facilities under the two-step loans program since 2008 and the withdrawal period for the two-step loan has ended.

Under the loan covenants, the Company is required to maintain financial ratios as follows:

Projected net revenue to projected debt service ratio should exceed 1.2:1 for the two-step loans originating from Asian Development Bank ("ADB").
Internal financing (earnings before depreciation and finance costs) should exceed 20% compared to annual average capital expenditures for loans originating from the ADB.

As of September 30, 2020 , the Company has complied with the above-mentioned ratios.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS (continued) b. Bonds and notes

		September 30, 2020	December 31, 2019
		Outstanding		Outstanding
		Foreign currency		Rupiah			Foreign currency		Rupiah
Bonds and notes	Currency	(in millions)		equivalent	(in millions)			equivalent
Bonds
2010
Series B	Rp	-	-		-	1,995
2015
Series A	Rp	-	2,200		-	2,200
Series B	Rp	-	2,100		-	2,100
Series C	Rp	-	1,200		-	1,200
Series D	Rp	-	1,500		-	1,500
Medium Term Notes ("MTN")
MTN I Telkom 2018
Series A	Rp	-	-		-	-
Series B	Rp	-	-		-	200
Series C	Rp	-	296		-	296
MTN Syariah Ijarah I Telkom 2018
Series A	Rp	-	-		-	-
Series B	Rp	-	-		-	296
Series C	Rp	-	182		-	182
Total				7,478					9,969
Unamortized debt issuance cost			(9)		(11)
Total				7,469					9,958
Current maturities (Note 18b)			(478)		(2,491)
Long-term portion				6,991					7,467

i. Bonds

2010

						Interest	Interest rate
Bonds	Principal	Issuer	Listed on	Issuance date	Maturity date	payment period	per annum
Series B	1,995	The Company	IDX	June 25, 2010	July 6, 2020	Quartely	10.20%

The bonds are not secured by specific security but by all of the Company's assets, movable or non-movable, either existing or in the future (Note 11b.x). The underwriters of the bonds are PT Bahana Securities ("Bahana"), PT Danareksa Sekuritas, and PT Mandiri Sekuritas and the trustee is Bank CIMB Niaga. Based on the General Meeting of Bondholders on September 26, 2018, the trustee was changed to BTN.

The Company received the proceeds from the issuance of bonds on July 6, 2010.

The funds received from the public offering of bonds net of issuance costs, were used to finance capital expenditures which consisted of wave broadband (bandwidth, softswitching, datacom, information technology, and others), infrastructure (backbone, metro network, regional metro junction, internet protocol, and satellite system) and to optimize legacy and supporting facilities (fixed wireline and wireless).

As of September 30, 2020, the rating of the bonds issued by PT Pemeringkat Efek Indonesia ("Pefindo") is idAAA (Triple A).

Based on the Indenture Trusts Agreement, the Company is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:

Debt to equity ratio should not exceed 2:1.
EBITDA to interest ratio should not be less than 5:1.
Debt service coverage is at least 125%.

As of September 30, 2020 the Company has complied with the above-mentioned ratios.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS (continued) b. Bonds and notes (continued)

Bonds (continued)
2015

					Issuance		Interest	Interest rate
Bonds	Principal	Issuer	Listed on	date	Maturity date	payment period	per annum
Series A	2,200		The Company	IDX	June 23, 2015	June 23, 2022	Quarterly	9.93%
Series B	2,100		The Company	IDX	June 23, 2015	June 23, 2025	Quarterly	10.25%
Series C	1,200		The Company	IDX	June 23, 2015	June 23, 2030	Quarterly	10.60%
Series D	1,500		The Company	IDX	June 23, 2015	June 23, 2045	Quarterly	11.00%
Total	7,000

The bonds are not secured by specific security but by all of the Company's assets, movable or non-movable, either existing or in the future (Note 11b.x). The underwriters of the bonds are Bahana, PT Danareksa Sekuritas, PT Mandiri Sekuritas, and PT Trimegah Sekuritas Indonesia, Tbk. and the trustee is Bank Permata.

The Company received the proceeds from the issuance of bonds on June 23, 2015.

The funds received from the public offering of bonds net of issuance costs, were used to finance capital expenditures which consisted of wave broadband, backbone, metro network, regional metro junction, information technology application and support, and merger and acquisition of some domestic and international entities.

As of September 30,2020, the rating of the bonds issued by Pefindo is idAAA (Triple A).

Based on the Indenture Trusts Agreement, the Company is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:

Debt to equity ratio should not exceed 2:1.
EBITDA to interest ratio should not be less than 4:1.
Debt service coverage is at least 125%.

As of September 30, 2020, the Company has complied with the above-mentioned ratios.

MTN
MTN I Telkom Year 2018

Interest

Issuance

Maturity

payment

Interest rate

Notes

Currency

Principal

date

period

per annum

Security

Series A

262

September 4, 2018

September 14, 2019

Quarterly

7.25%

All assets

Series B

200

September 4, 2018

September 4, 2020

Quarterly

8.00%

All assets

Series C

296

September 4, 2018

September 4, 2021

Quarterly

8.35%

All assets

758

Based on Agreement of Issuance and Appointment of Monitoring Agents of Medium Term Notes ("MTN") I Telkom Year 2018 dated August 31, 2018 as covered by notarial deed No. 24 of Fathiah Helmi, S.H., the Company issued MTN with the principal amount up to Rp758 billion in series.

Bahana, PT BNI Sekuritas, PT CGS-CIMB Sekuritas Indonesia, PT Danareksa Sekuritas, and PT Mandiri Sekuritas act as the Arranger, BTN as the Monitoring Agent and PT Kustodian Sentral Efek Indonesia ("KSEI") as the Payment Agent and the Custodian. The MTN are traded in private placement programs. The funds obtained from MTN are used for access network and backbone development.

As of September 30, 2020, the rating of the MTN issued by Pefindo is idAAA (Triple A).

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS (continued) b. Bonds and notes (continued)

MTN (continued)

MTN I Telkom Year 2018 (continued)

Under to the agreement, the Company is required to comply with all covenants or restrictions including maintaining financial ratios as follows:

Debt to equity ratio should not exceed 2:1.
EBITDA to interest ratio should not be less than 4:1.
Debt service coverage is at least 125%.

As of September 30,2020, the Company has complied with the above-mentioned ratios.

MTN Syariah Ijarah I Telkom Year 2018

Annual

Issuance

Maturity

Return

return

Notes

Currency

Principal

date

period

payment

Security

Series A

264

September 4, 2018

September 14, 2019

Quarterly

The Right to benefit of

ijarah objects

Series B

296

September 4, 2018

September 4, 2020

Quarterly

The Right to benefit of

ijarah objects

Series C

182

September 4, 2018

September 4, 2021

Quarterly

The Right to benefit of

ijarah objects

742

Based on Agreement of Issuance and Appointment of Monitoring Agents of MTN Syariah Ijarah Telkom Year 2018 dated August 31, 2018 as covered by notarial deed No. 26 of Fathiah Helmi, S.H., the Company issued MTN Syariah Ijarah with the principal amount up to Rp742 billion in series.

Bahana, PT BNI Sekuritas, PT CGS-CIMB Sekuritas Indonesia, PT Danareksa Sekuritas, and PT Mandiri Sekuritas act as the Arranger, BTN as the Monitoring Agent and KSEI as the Payment Agent and the Custodian. The MTN Syariah Ijarah are traded in private placement programs. The funds obtained from MTN Syariah Ijarah are used for investment projects. The object of MTN Syariah Ijarah transaction is telecommunication network which is located in the special region of Yogyakarta, its network telecommunication involves cable network, information technology equipments, and other production tools of telecommunication services.

As of September 30,2020 the rating of the MTN Syariah Ijarah issued by Pefindo is idAAA sy (Triple A Syariah).

Under to the agreement, the Company is required to comply with all covenants or restrictions including maintaining financial ratios as follows:

Debt to equity ratio should not exceed 2:1.
EBITDA to interest ratio should not be less than 4:1.
Debt service coverage is at least 125%.

As of September 30, 2020, the Company has complied with the above-mentioned ratios.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS (continued) c. Bank loans

		September 30, 2020		December 31, 2019
		Outstanding		Outstanding
		Foreign			Foreign
		currency	Rupiah		currency			Rupiah
Lenders	Currency	(in millions)	equivalent		(in millions)			equivalent
Related parties
BNI	Rp	-	8,643	-	5,898
Bank Mandiri	Rp	-	6,370	-	7,611
BRI	Rp	-	2,827	-	1,758
BNI Syariah	Rp	-	46	-	52
Sub-total			17,886					15,319
Third parties
BCA	Rp	-	2,941	-	1,665
MUFG Bank	Rp	-	2,363	-	2,981
	US$	-	-	8	108
Bank Permata	Rp	-	757	-	-
Bank DBS	Rp	-	641	-	770
Syndication of banks	Rp	-	25	-	1,250
	US$	30	453	37	514
UOB Singapore	US$	31	459	40	556
ANZ	Rp	-	396	-	440
Bank CIMB Niaga	Rp	-	343	-	439
Citibank	Rp	-	250	-	500
BTPN	Rp	-	199	-	537
PT Bank ICBC Indonesia ("ICBC")	Rp	-	125	-	159
Others	Rp	-	2	-	1,366
Sub-total	MYR	12	43	19	66
		8,997					11,351
Total			26,883					26,670
Unamortized debt issuance cost			(68)			(65)
			26,815					26,605
Current maturities (Note 18b)			(5,103)			(5,434)
Long-term portion			21,712					21,171

Other significant information relating to bank loans as of September 30, 2020 is as follows:

			Total	Current
			facility	period	Principal	Interest
			(in	payment	payment	payment		Interest rate
BNI	Borrower	Currency	billions)*	(in billions)*	schedule	period		per annum		Security**

2018 - 2019	GSD, The	Rp	2,942	40	2018 - 2026	Monthly,	8.75%.		Trade
	Company					Quarterly	9.00%		receivables
										and all
										assets
2013 - 2018	The Company,	Rp	11,112	1,375	2016 - 2033	Monthly,		1 month		Trade
	Telkomsel,					Quarterly		JIBOR +		receivables,
	GSD, TLT,						2.20% -		inventory,
	Sigma,						2.50%;		and property
	Dayamitra,							3 months		and
								JIBOR +		equipment
							1.85% -
Bank Mandiri							2.25%

2017 - 2018	The Company,	Rp	9,455	6,386	2018 - 2025	Monthly,	8.50% -		Trade
	Telkomsel,					Quarterly	9.00%		receivables,
	Balebat									inventory,
										and property
										and
										equipment
2017 - 2019	The Company,	Rp	5,163	130	2019 - 2026	Quarterly,		3 months		None
	GSD,					Semi-		JIBOR +
	Dayamitra,					annually	0.60% -
BRI	Telkomsel						1.85%

2019	The Company	Rp	2,000	-	2021 - 2026	Quarterly	9.00%		All assets
2017 - 2019	The Company,	Rp	1,253	231	2019 - 2025	Quarterly		3 months		Property and
	Dayamitra,							JIBOR +		equipment
	GSD						1.85% -
							2.00%

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS (continued) c. Bank loans (continued)

Other significant information relating to bank loans as of September 30, 2020 is as follows (continued):

			Total	Current
			facility	period	Principal	Interest
			(in	payment	payment	payment		Interest rate
Bank BNI Syariah	Borrower	Currency	billions)*	(in billions)*	schedule	period		per annum		Security**

2019	SSI	Rp	55	6	2019 - 2024	Monthly	10.00%		None
BCA
2017 - 2019	The Company,	Rp	6,420	167	2018 - 2027	Quarterly,		3 months		Trade
	Metra,					Semi-		JIBOR +		receivables
	Dayamitra,					annually	1.50% -		and property
	Telkom						1.85%		and
MUFG Bank	Infratel, PST									equipment

2015 - 2018	GSD, Metra,	Rp	3,200	351	2018 - 2025	Quarterly		3 months		Property and
	Dayamitra							JIBOR +		equipment
							1.43% -		and lease
Bank Permata							1.50%		agreement

2019	Nutech	Rp	7	0.5	2019 - 2026	Monthly	9.25%		None
2020	Dayamitra	Rp	750	-	2020 - 2027	Quarterly		3 months		Property and
								JIBOR +		equipment
Bank DBS							1.50%

2016	Nutech	Rp	6	1	2017 - 2021	Monthly	11.00%		Trade
										receivables
										and property
										and
										equipment
2017 - 2019	PINS,	Rp	905	128	2018 - 2026	Quarterly		3 months		None
	Dayamitra,							JIBOR +
	Telkomsat						1.50% -
Bank Sindikasi							1.85%

2015	GSD	Rp	100	16	2016 - 2022	Quarterly		3 months		All assets
								JIBOR +
							2.00%
2018	TII	US$	0.09	0.007	2019 - 2024	Semi-		6 months		None
						annually		LIBOR +
UOB Singapore							1.25%

2016	TII	US$	0.06	0.009	2019 - 2024	Monthly		1 months		None
								LIBOR +
ANZ							1.25%

2015 - 2017	GSD, PINS	Rp	750	44	2020	Quarterly		3 months		None
								JIBOR +
Bank CIMB							2.00%

Niaga
2017 - 2019	GSD, Metra	Rp	495	89	2018 - 2024	Quarterly		3 months		None
								JIBOR +
Citibank							1.50%

2018	The Company	Rp	1,000	250	2019 - 2020	Quarterly	8.50%		None
BTPN
2015 - 2019	GSD, Metra,	Rp	559	71	2018 - 2023	Quarterly		3 months		None
	Dayamitra, TII							JIBOR +
							1.44% -
ICBC							1.50%

2017	GSD	Rp	272	34	2017 - 2023	Quarterly		3 months		Trade
								JIBOR +		receivables
							2.36%		and property
										and
										equipment

* In original currency

** Refer to Note 5, note 7 and Note 11 for details of trade receivables, inventories and property and equipment pledged as collateral.

Telkomsel has no collateral for its bank loans, or other credit facilities. The terms of the various agreements with Telkomsel's lenders and financiers require compliance with a number of covenants and negative covenants as well as financial and other covenants, which include, among other things, certain restrictions on the amount of dividends and other profit distributions which could adversely affect Telkomsel's capacity to comply with its obligation under the facility. The terms of the relevant agreements also contain default and cross default clauses. As of September 30, 2020, Telkomsel has complied with the above covenants.

Based on the latest amendment on December 11, 2018.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS (continued)

Bank loans (continued)
As stated in the agreements, the Group is required to comply with all covenants or restrictions such as dividend distribution, obtaining new loans, and maintaining financial ratios. As of September 30, 2020, the Group has complied with all covenants or restrictions, except for certain loans. As of December 31, 2019, the Group obtained waiver from lenders for the non-fulfillment financial ratios except for the current ratios in Telkom Infratel. Waiver for Telkom Infratel received on January 27, 2020, with the result that as of December 31, 2019, bank loans of BCA amounting to Rp50 billion are reclassified as current liabilities.
On March 13, 2015, the Company, GSD, Metra and Infomedia entered into several credit facilities agreements with BTPN, MUFG Bank, ANZ, and syndication of banks (BCA and BNI) with total facilities amounting to Rp750 billion, Rp750 billion, Rp500 billion, and Rp3,000 billion, respectively. Based on amendment on August 2, 2016, Dayamitra and Telkom Akses are included as borrowers into BTPN and MUFG Bank credit facilities agreement and excluded GSD from those agreement. Based on the latest amendment on March 13, 2017, PINS is included as one of borrower into ANZ's credit facility agreement. In 2017, PINS drawn down the facility amounted to Rp200 billion. As of September 30, 2020 the unused facilities for BTPN, MUFG Bank, and ANZ amounted to Rp82.6 billion, Rp82.6 billion, and Rp60 billion, respectively.
On March, 24, 2017, the Company, Dayamitra, Sigma, GSD, and TII entered several credit agreements with BRI, BNI, and Bank Mandiri with total facilities amounting to Rp1,000 billion, Rp2,005 billion and Rp1,500 billion, respectively. As of September 30, 2020, the unused facility for Bank Mandiri amounted to Rp5 billion.
On March 30, 2017, The Company, GSD, Metra, Dayamitra, PINS, and Telkomsat entered into several credit agreements with MUFG Bank, BTPN, Bank DBS, Bank CIMB Niaga, and BCA with total facilities amounting to Rp400 billion, Rp400 billion, Rp850 billion, Rp495 billion, and Rp850 billion, respectively. Based on amendment on June 29, 2017, Telkom Infratel is included as one of borrower into BCA's credit facility agreement replaced PINS. As of September 30, 2020, the unused facilities for MUFG Bank, BTPN, Bank DBS, Bank CIMB Niaga, and BCA amounted to Rp79.5 billion, Rp79.5 billion, Rp420 billion, Rp20 billion, and Rp564 billion, respectively.
On March, 21 and 27, 2018, the Company and Dayamitra entered into several credit agreements with BRI and MUFG Bank with total facilities amounting to Rp200 billion and Rp800 billion, respectively. As of September 30, 2020, all facilities has been used.
On February 26, 2018, the Company and Telin entered into several credit agreements with BRI with total facilities amounting to Rp775, respectively. As of September 30, 2020, all facilities has been used.
On January 15, 2019, the Company, Infomedia, TII, Telkom Infratel, Telkomsat, and Sigma entered into several agreements with BTPN with total facilities amounting to Rp628 billion. As of September 30, 2020, the unused facility for BTPN amounting to Rp538 billion.
On June 19, 2019, the Company and Dayamitra entered into a credit agreement with BNI with total facilities amounting to Rp2,160 billion and Rp840 billion, respectively. As of September 30, 2020 the unused facility for BNI amounting to Rp840 billion.
On July 8, 2019, The Company, PINS, and GSD entered into a credit agreement with Bank CIMB Niaga with total facilities amounting to Rp500 billion, Rp300 billion, and Rp200 billion, respectively. As of September 30, 2020, the unused facility for Bank CIMB Niaga amounting to Rp908 billion.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS (continued) d. Bank loans (continued)

On November 21, 2019, The Company, Dayamitra, and GSD entered into a credit agreement with Bank Mandiri with total facilities amounting to Rp1,400 billion, Rp1,113 billion, and Rp200 billion, respectively. As of September 30, 2020, the unused facility for Bank Mandiri amounting to Rp405 billion.

The credit facilities were obtained by the Group for working capital purposes. d. Other borrowing

Lenders

Currency

Outstanding

September 30, 2020

December 31, 2019

PT Sarana Multi Infrastruktur

3,762

3,748

Unamortized debt issuance cost

(8)

Total

3,754

3,740

Current maturities (Note 18b)

Long-term portion

(1,040)

(627)

2,714

3,113

i. Dayamitra

Total

Current

facility

period

Principal

(in

payment

Interest rate

PT Sarana Multi

Borrower

Currency

billions)

(in billions)

schedule

per annum

Security

Infrastruktur

October 12, 2016

Dayamitra

700

100

Semi-annually

3 months

Property and

(2018-2024)

JIBOR+1.85%

equipment

(Note 9)

March 29, 2017

Dayamitra

600

514

Semi-annually

3 months

Property and

(2018-2024)

JIBOR+1.85%

equipment

(Note9)

Under the agreement, Dayamitra is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:

Debt to equity ratio should not exceed 5:1.
Net debt to EBITDA ratio should not exceed 4:1.
Minimal debt service coverage at least 100%.

As of September 30, 2020, Dayamitra has complied with the above-mentioned ratios.

ii. The Company

			Total	Current period		Principal	Interest
			facility	payment		payment	rate
PT Sarana Multi	Borrower	Currency	(in billions)	(in billions)		schedule	per annum	Security

Infrastruktur
November 14, 2018	The Company	Rp	1,000	110		Semi-annually	8.35%	None
					(2019-2023)
March 29, 2019	The Company	Rp	2,273	350		Semi-annually	8.49%	None
					(2020-2024)

Under the agreement, The Company is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:

Debt to equity ratio should not exceed 2:1.
EBITDA to interest ratio should not be less than 4:1.
Minimal debt service coverage at least 125%.

As of September 30, 2020, The Company has complied with the above-mentioned ratios.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

19. LONG-TERM LOANS AND OTHER BORROWINGS (continued) d. Other borrowing (continued)

iii. Telkomsat

		Total	Current period		Principal	Interest
		facility	payment		payment	rate
Borrower	Currency	(in billions)	(in billions)		schedule	per annum	Security
PT Sarana Multi
Infrastruktur
March 29, 2019 Telkomsat	Rp	164	164		Semi-annually	8.49%	None
				(2020-2024)

Under the agreement, Telkomsat is required to comply with all covenants or restrictions, including maintaining financial ratios as follows:

Debt to equity ratio should not exceed 2:1.
EBITDA to interest ratio should not be less than 4:1.
Minimal debt service coverage at least 125%.

As of September 30, 2020, Telkomsat has complied with the above-mentioned ratios.

On June 15, 2020, The Company, Telkomsat, and Telkom Infratel entered into a credit agreement with PT Sarana Multi Infrastruktur amounting to Rp2,836 billion, Rp164 billion, and Rp0 billion, respectively. As of September 30, 2020, the unused facility for PT Sarana Multi Infrastruktur amounting to Rp36 billion.

20. NON-CONTROLLING INTERESTS
The details of non-controlling interests are as follows:
Non-controlling interests in net assets of subsidiaries:	September 30, 2020	December 31, 2019

Telkomsel	15,769		17,221
GSD	218		230
TII	108		108
Metra	77		130
Total	16,172		17,689
Non-controlling interests in net income (loss)	2020		2019

of subsidiaries:
Telkomsel	6,292		6,759
GSD	(10)		(22)
TII	(1)	(5)
Metra	(9)	8
Dayamitra	-		1
Total		6,272		6,741

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

20. NON-CONTROLLING INTERESTS (continued)

Material partly-owned subsidiary

As of September 30,2020 and December 31,2019 the non-controlling interest holds 35% ownership interest in Telkomsel which is considered material to the company (Note 1d).

The summarized financial information of Telkomsel below is provided based on amounts before elimination of inter-company balances and transactions.

Summarized statement of financial position
		September 30, 2020	December 31, 2019
Current assets	14,107			18,657
Non-current assets	82,794			64,073
Current liabilities	(29,694)		(20,892)
Non-current liabilities	(22,110)		(12,629)
Total equity	45,097			49,209
Attributable to:
Equity holders of parent company	29,328			31,988
Non-controlling interest	15,769			17,221
Summarized statements of profit or loss and other comprehensive income
Revenues	2020			2019
65,134				68,321
Operating expenses	(41,109)		(42,153)
Other expense - net	(1,014)		(225)
Profit before income tax	23,011				25,943
Income tax expense - net	(4,995)		(6,631)
Profit for period from continuing operations	18,016				19,312
Other comprehensive income (loss) - net	-		-
Net comprehensive income for the period	18,016				19,312
Attributable to non-controlling interest	6,292		6,759
Dividend paid to non-controlling interest	7,725		8,490
Summarized statements of cash flows	2020			2019
Operating activities
35,164				31,620
Investing activities	(7,691)		(9,791)
Financing activities	(29,069)		(21,187)
Net (decrease) increase in cash and cash equivalents		(1,596)				642

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

21. CAPITAL STOCK

				September 30, 2020
							Percentage of			Total paid-in
Description		Number of shares				ownership			capital
Series A Dwiwarna share
Government	1	0	0
Series B shares			52.09	2,580
Government	51,602,353,559
The Bank of New York Mellon Corporation*	4,092,964,480	4.13	205
Directors (Note 1b):	1,156,955
Ririek Adriansyah	0	0
Budi Setyawan Wijaya	180,000	0	0
Dian Rachmawan	120,222	0	0
Afriwandi	42,500	0	0
Herlan Wijanarko	42,500	0	0
Edi Witjara	32,500	0	0
Public (individually less than 5%)	43,365,323,883	43.78	2,168
Total		99,062,216,600			100.00		4,953
				December 31, 2019
							Percentage of			Total paid-in
Description		Number of shares				ownership			capital
Series A Dwiwarna share
Government	1	0	0
Series B shares
Government	51,602,353,559	52.09	2,580
The Bank of New York Mellon Corporation*	4,601,837,380	4.65	230
Directors (Note 1b):
Ririek Adriansyah	1,156,955	0	0
Harry Mozarta Zen	474,692	0	0
Faizal Rochmad Djoemadi	126,800	0	0
Bogi Witjaksono	55,000	0	0
Edi Witjara	32,500	0	0
Siti Choiriana	540	0	0
Public (individually less than 5%)	42,856,179,173	43.26	2,143
Total			99,062,216,600			100.00		4,953

* The Bank of New York Mellon Corporation serves as the Depositary of the registered ADS holders for the Company's ADSs.

The Company issued only 1 Series A Dwiwarna share which is held by the Government and can not be transferred to any party, and has a veto in the General Meeting of Stockholders of the Company with respect to election and removal of the Boards of Commissioners and Directors, issuance of new shares, and amendments of the Company's Articles of Association.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

22. ADDITIONAL PAID-IN CAPITAL
Proceeds from sale of 933,333,000 shares in excess of	September 30, 2020		December 31, 2019

par value through IPO in 1995	1,446	1,446
Excess of value over cost of selling 211,290,500 shares
under the treasury stock plan phase I	544	544
Excess of value over cost of selling 215,000,000 shares
under the treasury stock plan phase II	576	576
Excess of value over cost of treasury stock transferred to
employee stock ownership program	228	228
Excess of value over cost of selling 22,363,000 shares
under the treasury stock plan phase III	36	36
Excess of value over cost of selling 864,000,000 shares
under the treasury stock plan phase IV	1,996	1,996
Capitalization into 746,666,640 Series B shares in 1999	(373)	(373)
Reduction additional paid in capital as a result of
cancellation treasury stock	(2,454)	(2,454)
Differences from acquisitionof non-controlling interest	(22)	(22)
Difference in value arising from restructuring transactions
between entities under common control	734	734
Net		2,711		2,711

23. OTHER EQUITY
										September 30,2020		December 31, 2019
	Translation adjustment													749			568
	Effect of change in equity of associated companies							386					386
	Unrealized holding gain on available-for-sale securities				6			54
	Difference due to acquisition of non controlling interests in
	subsidiaries													(637)		(637)
	Other equity components													37			37
	Total													541			408
24. REVENUES
2020			Mobile			Consumer		Enterprise			WIB		Others	Consolidated revenue
	Telephone revenues			13,448			817		652			222			-	15,139
	Interconnection revenues			326			-		-			5,704			-	6,030
	Data, internet, and information
	technology service revenues
	Cellular internet and data	45,364	-	-	-			-		45,364
	Internet, data communication, and
	information technology services	-	5	4,892	1,204			-		6,101
	SMS	3,463	-	343	-			-		3,806
	Others	-	-	554	452			176		1,182
	Total data, internet, and information
	technology service revenues	48,827	5	5,789	1,656			176		56,453
	Network revenues			4			-		379			693			-	1,076
	Indihome revenues			-			14,334		1,779			-			-	16,113
	Other revenues
	Manage service and terminal	-	-	714	-			-		714
	Call center service	-	-	557	53			-		610
	E-health	-	-	408	-			-		408
	E-payment	-	-	345	-			17		362
	Others	-	32	840	304			257		1,433
	Total other revenues			-			32		2,864			357			274	3,527
	Total revenues from
	contract with customer	62,605	15,188	11.463	8,632			450		98,338
	Revenues from other source			-			-		-			1,603			-	1,603
	Total revenues			62,605			15,188		11,463			10,235			450	99,941
	Adjustments and eliminations			(2)			18		2			(2)			(296)
	Total external revenues as reported in		62,603		15,206		11,465	10,233				154
	note operating segment
					80

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

24. REVENUES

2019			Mobile	Consumer			Enterprise		WIB			Others	Consolidated revenue
Telephone revenues			19,098			1,065		875			213			-	21,251
Interconnection revenues			462			-		-			4,305			-	4,767
Data, internet, and information
technology service revenues
Cellular internet and data	41,242			-	-	-	-	41,242
Internet, data communication, and
information technology services	-			35	6,194	965	-	7,194
SMS	5,178			-	273	-	-	5,451
Others		-			-		323	267		90		680
Total data, internet, and information	46,420			35	6,790	1,232	90	54,567
technology service revenues
Network revenues			3			-		647			695			-	1,345
Indihome revenues			-			12,113		1,651			-			-	13,764
Other revenues
Manage service and terminal	-			-	1,584	1	-	1,585
Tower lease	-			-	-	914	-	914
Call center service	-			-	442	113	-	555
E-payment	-			-	356	-	122	478
E-health	-			-	377	-	-	377
Others	-			34	1,985	687	322	3,028
Revenues from other source			-			34		4,744			1,715			444	6,937
Total revenues			65,983			13,247		14,707			8,160			534	102,631
Adjustments and eliminations			-			2		214			31			(321)
Total external revenues as reported in
note operating segment		65,983			13,249		14,921	8,191		213

Management expects that most of the transaction price allocated to the unsatisfied contracts as of September 30, 2020 will be recognised as revenue during the next reporting period. Unsatisfied performance obligations as of September 30, 2020, wihich management expect to be realised within one year is Rp7,036 billion, and more than one year Rp5,086 billion.

The Group entered into non-cancelable lease agreements. The lease agreements cover leased lines, telecommunication equipment, and land building. These leases have terms of between 1 to 10 years. All leases include a clause to enable upward revision of the rental charge on annual basis according to prevailing market conditions. These lessee is also required to provide a residual value guaranted on the properties. Rental income recognized by the Group for the nine months period ended September 30, 2020 is Rp1,603 billion.

There is no revenue from major customer with exceeds 10% of total revenues for the nine months period ended September 30, 2020.

Refer to Note 33 for details of related parties transactions.

Presentation of revenue accounts in the consolidated financial statement for the nine months period ended September 30, 2019 have been adjusted in accordance with the presented accounts in the consolidated financial statement for the nine months period ended September 30, 2020. Summary of adjusted revenue accounts for the nine months ended September 30, 2019, are as follows:

	Before adjustment		Adjustment		After adjustment
Telephone revenues	Consumer	Enterprise		Consumer	Enterprise		Consumer	Enterprise
2,339	1,494		(1,274)	(619)		1,065	875
Data, internet, and information technology
service revenues
Internet, data communication, and information
technology services	9,075	7,078	(9,040)	(884)		35	6,194
Pay TV	1,406	135	(1,406)	(135)		-	-
Others	32	325	(32)	(2)		-	323
Network revenues	-	658	-	(11)		-	647
Indihome revenues	-	-	12,113	1,651		12,113	1,651
Other revenues
Others	395	-	(361)		-	34	-

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

25. PERSONNEL EXPENSES
The breakdown of personnel expenses is as follows:
2020		2019
Salaries and related benefits		6,215		6,038
Vacation pay, incentives, and other benefits	2,831	2,593
Pension Benefit Cost (Note 31)	849	655
Net periodic post-employment health care
benefit cost (Note 31)	214	153
LSA expense (Note 32)	128	115
Obligation under the Labor Law (Note 31)	107	110
Other post-employment benefit cost (Note 31)	18	24
Others	44	56
Total			10,406		9,744

Refer to Note 33 for details of related parties transactions.

26. OPERATION, MAINTENANCE AND TELECOMMUNICATION SERVICE EXPENSES

The breakdown of operation, maintenance and telecommunication service expenses is as follows:

Operation and maintenance				2020		2019
			14,122		17,620
Radio frequency usage charges (Note 36c.i)	4,397		4,273
Leased lines and CPE	2,049		3,544
Concession fees and USO charges	1,749		1,813
Electricity, gas, and water	782		793
Cost of SIM cards and vouchers (Note 7)	348		465
Tower leases	16		356
Cost of sales of handset (Note 7)	10		1,028
Others	1,625		1,164
Total					25,098		31,056
Refer to Note 33 for details of related parties transactions.
27. GENERAL AND ADMINISTRATIVE EXPENSES
The breakdown of general and administrative expenses is as follows:
Provision for impairment of receivables and		2020		2019

contract assets	1,235	1,899
General expenses	1,172	1,230
Professional fees	620	473
Training, education, and recruitment	226	327
Travelling	197	285
Social contribution	163	135
Collection expenses	136	137
Meeting	130	198
Others	355	248
Total			4,234				4,932

Refer to Note 33 for details of related parties transactions. 82

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION
a. Prepaid taxes	September 30, 2020			December 31, 2019
The Company:

Income Tax
Article 22 - Witholding tax on goods delivery
and imports	-			6
Article 23 - Witholding tax on service delivery	6			90
VAT	765			678
Subsidiaries:
Income tax	170	-
Income tax corporate
Article 4 (2) - Final tax	-			13
Article 22 - Witholding tax on goods delivery
and imports	5			-
Article 23 - Witholding tax on service delivery	482			2
VAT	2,565			2,458
Total prepaid taxes	3,993					3,247
Current portion	(3,224)	(2,569)
Non-current portion (Note 13)		769					678
b. Claims for tax refund	September 30, 2020	December 31, 2019
The Company

Corporate income tax	103			406

VAT	193			2,046
Subsidiaries
Corporate income tax	709			992
Income tax article 23 - Witholding tax on
services delivery	17			44
VAT	559			1,170
Total claims for tax refund		1,581			4,658
Current portion	(804)			(992)
Non-current portion (Note 13)			777			3,666

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)
c. Taxes payable		September 30, 2020	December 31, 2019
The Company:

Income taxes
Article 4 (2) - Final tax	27		43
Article 21 - Individual income tax	49		101
Article 22 - Withholding tax on goods delivery
and imports	9		7
Article 23 - Withholding tax on services	22		38
Article 25 - Installment of corporate income tax	103		6
Article 26 - Withholding tax on non-resident
income	5		9
Article 29 - Corporate income tax	542		1,059
VAT - Tax collector	335		487
Subsidiaries:	1,092		1,750

Income taxes
Article 4 (2) - Final tax	115		153
Article 21 - Individual income tax	90		108
Article 22 - Withholding tax on goods delivery
and imports	3		3
Article 23 - Withholding tax on services	10		80
Article 25 - Installment of corporate income tax	500		7
Article 26 - Withholding tax on non-resident
income	38		5
Article 29 - Corporate income tax	456		473
VAT	1,228		852
Total taxes payable		2,440		1,681
3,532		3,431
d. The components of consolidated income tax expense (benefit) are as follows:
Current	2020		2019

The Company	1,311		1,154
Subsidiaries	6,067		7,042
Deferred		7,378				8,196

The Company	77		(205)
Subsidiaries	(652)		(77)
Net income tax expense			(575)				(282)
	6,803				7,914

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

The components of consolidated income tax expense (benefit) are as follows (continued):
The reconciliation between the profit before income tax and the estimated taxable income of the Company for the nine months period ended September 30, 2020 and 2019 are as follows:

Profit before income tax consolidation	2020		2019
29,754		31,114
Add back consolidation eliminations	16,776		17,966
Consolidated profit before income tax and eliminations	46,530		49,080
Less: profit before income tax of the subsidiaries	(29,042)		(31,954)
Profit before income tax attributable to the Company
before deduction of income subject to final tax	17,488		17,126
Less: income subject to final tax	(325)		(419)
Profit before income tax attributable to the Company
after deduction of income subject to final tax	17,163		16,707
Temporary differences:
Provision for impairment of receivables	733		1,386
Provision for employee benefits	(38)	(61)
Deferred installation fee	206		123
Depreciation and gain on sale of property
and equipment	(400)		(289)
Net periodic pension and other post-employment
benefits costs	(158)		(213)
Finance leases	1		(5)
Other provisions	56		75
Net temporary differences		400		1,016
Permanent differences:
Net periodic post-retirement health care benefit costs	214		152
Employee benefits	125		139
Donations	155		147
Equity in net income of associates and subsidiaries	(11,434)		(12,368)
Others	57		(314)
Net permanent differences		(10,883)		(12,244)
Taxable income of the Company		6,680		(5,479)
Current corporate income tax expense		1,269		1,096
Final income tax expense	42		58
Total current income tax expense of the Company		1,311		1,154
Current income tax expense of the subsidiaries	6,067		7,042
Total current income tax expense			7,378		8,196

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

The components of income tax expense (benefit) are as follows (continued):
The reconciliation between the income tax expense calculated by applying the applicable tax rate of 19% to the profit before income tax less income subject to final tax, and the net income tax expense as shown in the consolidated statements of profit or loss and other comprehensive income is as follows:

Profit before income tax consolidation		2020	2019
	29,754			31,114
(Less) add: consolidated income subject to final tax - net	(1,888)	(1,581)
			27,866		29,533
Income tax expense calculated at the Company's
applicable statutory tax rate of 19% (2020) and 20%
(2019)			5,295	5,907
Difference in applicable statutory tax rate for
subsidiaries	643	1,237
Non-deductible expenses	529	549
Final income tax expense	42	60
Adjustment on tax rate Perpu No.01/2020	94	-
Unrecognized deferred tax	44	10
Others	156	151
Net income tax expense			6,803		7,914

Tax Law No. 36/2008 with implementing rules under Government Regulation No.56/2015 stipulates a reduction of 5% from the top rate applicable to qualifying listed companies, for those whose stocks are traded in the IDX which meet the prescribed criteria that the public owns 40% or more of the total fully paid and traded shares, and such shares are owned by at least 300 parties, with each party owning less than 5% of the total paid-up shares. These requirements must be met by a company for a period of 183 days in one fiscal year. The Company has met all of the required criteria; therefore, for the purpose of calculating current income tax expense and liabilities for the financial reporting the years ended December 31, 2019, the Company has reduced the applicable tax rate by 5%.

In March 2020, the Government issued Government Regulation in lieu of Law No.1/2020 concerning State Financial Policy and Financial System Stability for Handling Corona Virus Disease 2019 (COVID-19) and / or in the Context of Facing Threats that Harm National Economy and / or Financial System Stability, which has been stipulated into Law No.2/2020, governing the adjustments to the tax rates of domestic corporate taxpayers and permanent establishments, to 22% for fiscal years 2020 and 2021, and 20% for fiscal years 2022. Furthermore, the Government issues Government Regulations ("PP") No. 30/2020 concerning Reduction of Income Tax Rates for Domestic Taxpayers in the form of a Public Company, which regulates the tax rate of 3% lower for domestic taxpayers in the form of publicly listed companies whose shares are listed and traded on the IDX with a minimum of 40% of the total all shares subscribed by the company and such shares are owned by at least 300 shareholders, where the ownership of each may not exceed 5%. These requirements must be fulfilled by companies that listed their shares on the stock exchange in a minimum of 183 calendar days within one fiscal year, and the fulfillment of the requirements referred to is carried out by the Public Company Taxpayer by submitting a report to the Directorate General of Taxes. For the nine month period ended September 30, 2020, the Company still met the required criteria, so the Company applied a tax rate of 3% lower in calculating the Company's corporate income tax expense and liabilities.

The Company applied the tax rate of 19% for the nine months period ended September 30, 2020 and 20% for the year ended December 31, 2019. The subsidiaries applied the tax rate of 22% for the nine months period ended September 30, 2020 and 25% for the year ended December 31, 2019.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued) e. Tax assessment

The Company

The Company will submit the above taxable income and current income tax expense computation in its income tax return ("Surat Pemberitahuan Tahunan" or Annual Tax Return) for fiscal year 2020 that will be reported to the tax office based on prevailing regulations.

VAT fiscal year 2007

On November 15, 2013, the Company received Tax Underpayment Assessment Letters ("SKPKBs") for the underpayment of VAT for the fiscal period January to September and November 2007 amounting to Rp142 billion.

On January 20, 2014, the Company filed its objection to the Tax Authorities, and in December 2014, Tax Authorities issued a decision which rejected the objections. The Company accepted the assessment on the underpayment of VAT amounting to Rp22 billion (including penalty of Rp10 billion). The accepted portion was charged to the 2014 consolidated statements of profit or loss and other comprehensive income. The portion of VAT international incoming call interconnection amounting to Rp120 billion (including penalty of Rp39 billion) is recognized as claim for tax refund.

On March 12, 2015, the Company has filed an appeal to the Tax Court on the rejection of its objection to the assessment of VAT international incoming call interconnection.

On August 1 and 2, 2017, the Tax Court issued a verdict regarding to VAT international incoming call interconnection appeal process. The verdict stated that the international incoming call interconnection transaction is the taxable services and categorized as export service that subject to 0% VAT and granted all the Company's appeal. In September 2017, the Company received tax refund amounting to Rp116 billion and for remaining balance amounting to Rp5 billion has been compensated to Tax Collection Letter ("STP") for withholding tax article 21 and SKPKBs of VAT on tax collected and self-assessed offshore VAT for fiscal year 2012. On October 26 and November 23, 2017, the Company received a notification from Tax Court that Tax Authorities filed a request for judicial review. On November 23 and December 21, 2017, to response the judicial review from Tax Authorities, the Company filed the contra memorandum for judicial review to Supreme Court ("SC") regarding to VAT international incoming call interconnection.

In September and November 2018, the Company received the verdicts from the SC, which were decided in April and October 2018, as the result of the tax audit for fiscal period June to August and November 2007. Based on the verdict, the SC rejected the Tax Authorities' judicial review and strengthen the Tax Court's verdict.

In January, February and March 2019, the Company received the SC's verdicts, which were decided in October and December 2018, as the result of the tax audit for fiscal period January to April and September 2007. On September 19, 2019, the Company received the verdict from the SC, which was decided on May, 8, 2019, as the result of the tax audit for fiscal period May 2007. Based on the verdict, the SC rejected the Tax Authorities' judicial review and strengthen the Tax Court's verdict. Accordingly, the Company has received all the SC's verdicts as the result of the assessment regarding to VAT international incoming call interconnection for fiscal period January to September and November 2007 that strengthen the Company's tax treatment regarding to the VAT for international incoming call interconnection transactions.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

e. Tax assessment (continued)

The Company (continued)
Income tax and VAT fiscal year 2011
On October 21, 2014, the Company received SKPKBs from the Tax Authorities as the result of the tax audit for fiscal year 2011. Based on SKPKBs, the Company received VAT underpayment assessment for the fiscal period January to December 2011 amounting to Rp182.5 billion (including penalty of Rp60 billion) and corporate income tax underpayment amounting to Rp2.8 billion (including penalty of Rp929 million). The accepted portion of SKPKBs amounting to Rp4.7 billion (including penalty of Rp2 billion) was charged to the 2014 consolidated statements of profit or loss and other comprehensive income. The portion of VAT international incoming call interconnection amounting to Rp177.9 billion (including penalty of Rp58 billion) is recognized as claim for tax refund.

VAT fiscal year 2011

On January 7, 2015, the Company filed an objection and on October 20, 2015, Tax Authorities issued a rejection regarding this objection.

On January 20, 2016, the Company filed an appeal on the Tax Court on the rejection of its objection to the assessment of VAT international incoming call interconnection.

On April 4 and 5, 2017, the Tax Court issued a verdict which were decided on March 20, 2017, regarding to VAT international incoming call interconnection appeal process. The verdict stated that the international incoming call interconnection transaction is the taxable services and categorized as export service that subject to 0% VAT and granted the Company's appeal for the fiscal period January and September to December 2011 amounting to Rp73.9 billion. Tax Court rejected the Company's appeal for the fiscal period February to August 2011 amounting to Rp104 billion, since the Company did not meet the administrative requirement. Regarding this rejection, on June 19 and 21, 2017, the Company filed judicial review. In May 2017, the Company received tax refund for the fiscal period January and September to December 2011 amounting to Rp73,9 billion which compensated with STP 2013 and 2014 amounting to Rp59.9 billion and Rp14 billion, respectively.

On October 15, 2018, the Company received a notification from Tax Court that Tax Authorities filed the judicial review for the fiscal period January and September to December 2011. On November 13, 2018, to response the judicial review from Tax Authorities, the Company filed contra memorandum for judicial review to SC for the fiscal period January and September to December 2011. In April and November 2018, the Company received a notification from Tax Court that Tax Authorities filed a contra memorandum for judicial review for the fiscal period February to August 2011.

In May to September, and November, 2019, the Company has received the SC's verdicts, which were decided in March, April, May, July, August, and September 2019, wherein the SC has granted the Company's judicial review for fiscal period February, March, and May to August 2011 and rejected the Tax Authorities's judicial review for the fiscal period January and September to December 2011. On August 21, 2019, the Company received tax refund for fiscal period March, May, and June 2011 amounting to Rp44 billion. Regarding the verdict for the fiscal period April 2011, which was decided in April 2019, the SC granted the Company's appeal request and the verdict has been uploaded through the SC's website. Accordingly, as of the date of approval and authorization for the issuance of these consolidated financial statements, the appeal process for fiscal period January to December 2011 has obtained the legal force from the SC.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

e. Tax assessments (continued)

The Company (continued)
Income tax and VAT fiscal year 2012
On May 3, 2016, the Tax Authorities issued Field Tax Audit Notification Letter for fiscal period January to December 2012. On November 3, 2016, Tax Authorities issued SKPKBs for fiscal year 2012, wherein the Company was liable for underpayment of corporate income tax amounting to Rp991.6 billion (including penalty of Rp321.6 billion), VAT underpayment amounting to Rp467 billion (including penalty of Rp153.5 billion), self-assessed offshore VAT underpayment amounting to Rp1.2 billion (including penalty of Rp392 million), VAT on tax collected underpayment amounting to Rp57 billion (including penalty of Rp18.5 billion). The Company also received STP for VAT amounting to Rp37.5 billion, withholding tax article 21 underpayment amounting to Rp16.2 billion (including penalty of Rp5.3 billion), final withholding tax article 21 underpayment amounting to Rp1.2 billion (including penalty of Rp407 million), withholding tax article 23 underpayment amounting to Rp63.5 billion (including penalty of Rp20.6 billion), withholding tax article 4 (2) underpayment amounting to Rp25 billion (including penalty of Rp8.1 billion), and withholding tax article 26 underpayment amounting to Rp197.6 billion (including penalty of Rp64 billion). The Company has agreed to the recalculation of input tax credit on international incoming call interconnection services amounting to Rp35.2 billion, corporate income tax amounting to Rp613.3 million, and withholding tax article 26 amounting to Rp311.5 million that have been charged in the 2016 consolidated statements of profit or loss and other comprehensive income. On November 16, 2016, the Company filed an objection regarding to the remaining assessments.

On March 1, 2017 and May 9, 2017, the Company received the decision letter from Tax Authorities for the underpayment of self-assessed offshore VAT amounting to Rp1.8 million (including penalty of Rp0.6 million) and the underpayment of VAT on tax collected amounting to Rp4.4 billion (including penalty of Rp1.4 billion). Based on the decision letter, the Company decided to accept the decision from Tax Authorities. On October 19, 2017, the Tax Authorities issued decision letter on Company's objections, wherein the Tax Authorities has decreased the Company's underpayment for corporate income tax and increased of the Company's underpayment for withholding tax article 21, final withholding tax article 21, withholding tax article 23, withholding tax article 4 (2), and withholding tax article 26. Based on decision letter, the Company was liable for underpayment of withholding tax article 21 amounting to Rp20.7 billion (including penalty of Rp6.7 billion), underpayment of final withholding tax article 21 amounting to Rp23.8 billion (including penalty of Rp7.7 billion), underpayment of withholding tax article 23 amounting to Rp115.7 billion (including penalty of Rp37.5 billion), underpayment of withholding tax article 4 (2) amounting to Rp25 billion (including penalty of Rp8.1 billion), underpayment of withholding tax article 26 amounting to Rp197.6 billion (including penalty of Rp64.1 billion), and underpayment of corporate income tax amounting to Rp496.4 billion (including penalty of Rp161 billion). On October 30 and 31, 2017, the Tax Authorities issued decision letter on Company's objection, wherein the Tax Authorities has decreased and increased the Company's underpayment of VAT for the fiscal period January to December 2012 amounting to Rp429.3 billion (including penalty of Rp141.2 billion).

On January, 17 and 26, 2018, the Company filed an appeal on the rejection of its objection. In September 2018, the Tax Authorities issued the revision of decision letter on Company's objection, wherein the Tax Authorities has decreased the Company's underpayment of VAT for fiscal period March, April, September, and December 2012 amounting to Rp9.9 billion (including penalty of Rp3.2 billion). Therefore, as of December 31, 2018, the underpayment of VAT fiscal period January to December 2012 amounting to Rp419.4 billion (including penalty of Rp138 billion).

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

e. Tax assessments (continued)

(i) The Company (continued)

Income tax and VAT fiscal year 2012 (continued)

On December 16, 2019, the Company received the Tax Court's verdict regarding tax dispute for all taxes for fiscal year 2012. The Tax Court granted the several Company's request regarding withholding tax. Therefore, the amount should be paid by the Company for withholding tax article 21 amounting to Rp52.4 milion (including penalty of Rp17 million), withholding tax article 23 amounting to Rp1.4 billion (including penalty of Rp 0.4 billion), withholding tax article 26 amounting to Rp802.6 million (including penalty of Rp260.3 million), and withholding tax article 4 (2) amounting to Rp1.3 million (including penalty of Rp0.4 million). Regarding appeal request for final withholding tax article 21, the Tax Court granted all the Company's appeal. Furthermore, the Tax Court granted the several Company's appeal regarding corporate income tax and VAT. Therefore, the amount should be paid by the Company for corporate income tax amounting to Rp29.6 billion (including penalty of Rp9.6 billion) and VAT amounting to Rp51.1 billion (including penalty of Rp17.5 billion). On February 7, 2020, the Company received a refund of Rp.46.7 billion in December 2012 VAT refunds, all of which was compensated for the January to November 2012 tax return SKPKB.

In April 2020, the Company filed an application for reduction or cancellation of incorrect STP of VAT for the fiscal period of January to December 2012. The company filed a request for reduction in STP by recalculating it based on the decision on appeal, so that the value of the SPT, which was originally Rp37.5 billion, became Rp5.8 billion. In June 2020, the Tax Court granted Company's request. On July 2020, the Company received tax refund amounting to Rp31.7 billion and Rp20.9 million which compensated with STP PPh Article 21 from several KPPs.

In July 2020, the Company received notification from Tax Court that Tax Authorities filed a review memorandum for all Tax Court Decisions. In August 2020, to response the judicial review from Tax Authorities, the Company filed contra memorandum for judicial review to SC. As of the issuance date of these consolidated financial statements, the SC's decision not yet received.

Income tax and VAT fiscal year 2015

On August 23, 2016, the Tax Authorities issued Field Tax Audit Notification Letter for fiscal period January to December 2015.

On April 25, 2017, the Tax Authorities issued Tax Overpayment Assessment Letter ("SKPLB") for overpayment of corporate income tax amounting to Rp147 billion, and SKPKBs for underpayment of VAT amounting to Rp13 billion (including penalty of Rp4.1 billion), underpayment of VAT on tax collected amounting to Rp6 billion (including penalty of Rp1.5 billion), underpayment of self-assessed offshore VAT amounting to Rp55.3 billion (including penalty of Rp16.8 billion). The Company also received STP for VAT amounting to Rp34 billion, VAT on tax collected amounting to Rp7 billion, and self-assessed offshore VAT amounting to Rp8 billion. The Company accepted tax audit decision amounting to Rp17 billion for corporate income tax, to transfer deductible temporary differences related to provision for incentives to fixed wireless (Flexi) subscribers' migration amounting to Rp42 billion from Annual Tax Return of corporate income tax fiscal year 2015 to Annual Tax Return of corporate income tax fiscal year 2016. The Company also accepted underpayment of VAT, underpayment of VAT on tax collected, and STP for VAT on tax collected amounting to Rp26 billion. The accepted portion was charged to the 2017 consolidated statements of profit or loss and other comprehensive income. On July 24, 2017, the Company filed Objection Letter to the Tax Authorities for corporate income tax amounting to Rp210.5 billion and self-assessed offshore VAT amounting to Rp55 billion.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

e. Tax assessments (continued)

The Company (continued)

Income tax and VAT fiscal year 2015 (continued)

On May 3 and 22, 2018, the Tax Authorities issued decision letter on Company's objections for SKPLB of self-assessed offshore VAT amounting to Rp54.6 billion, wherein Tax Authorities has decreased the Company's underpayment and granted all the Company's objection. The Company has agreed with the Tax Authorities's decision regarding SKPLB of self-assessed offshore VAT amounting to Rp793 million and has been charged in the 2018 consolidated statements of profit or loss and other comprehensive income. On July 18, 2018, the Tax Authorities issued Decision Letter on Company's objections for SKPLB of corporate income tax, wherein the Tax Authorities has granted the several Company's objection and additional amount of overpayment which should be received amounting to Rp76 billion. On October 10, 2018, the Company filed an appeal.

On July 8, 2020, the Company received appeal decision from the Tax Court regarding corporate income tax dispute for fiscal year 2015. The Tax Court partially approved the appeal filed by the Company. On September 9, 2020, the Company received refunds of additional overpayment of corporate income tax amounting to Rp90.9 billion.

Income tax and VAT fiscal year 2016

On August 25, 2017, the Tax Authorities issued Field Tax Audit Notification Letter for fiscal periods January to December 2016.

On June 7, 2018, Tax Authorities issued SKPLB of corporate income tax amounting to Rp15.3 billion, SKPKB of withholding tax article 26 amounting to Rp556.7 million (including penalty of Rp180.5 million) and SKPLB of VAT amounting to Rp922.7 billion. The Company accepted the assessment on the overpayment of corporate income tax amounting to Rp15.3 billion and for the remaining balance amounting to Rp99.1 billion was charged as current income tax expense on tax assesment, underpayment of withholding tax article 26 amounting to Rp557 million, and correction of VAT In amounting to Rp10.5 billion, STP for VAT on tax collected amounting to Rp7.1 billion, VAT on free gifts amounting to Rp7.3 billion, VAT on transfer asset amounting to Rp1.2 billion, and STP for VAT amounting to Rp1.7 billion. The accepted portion was charged to the 2018 consolidated statements of profit or loss and other comprehensive income. In July 2018, the Company received tax refund amounting to Rp882.7 billion and for the remaining balance amounting to Rp39.9 billion has been compensated to STP for VAT amounting to Rp31.9 billion, VAT on tax collected amounting to Rp7.1 billion, withholding tax article 23 amounting to Rp556 million, and withholding tax article 21 amounting to Rp300 million. On August 31, 2018, the Company filed an objection to the Tax Authorities for VAT international incoming call interconnection services amounting to Rp151.7 billion and STP for VAT amounting to Rp30.3 billion.

On March 11 and May 27, 2019, the Tax Authorities issued decision letter on Company's objections, wherein the Tax Authorities granted all objections from the Company and increased the amount of overpayment for the fiscal period January to December 2016. In April and July 2019, the Company received tax refund amounting to Rp151.7 billion and amounting to Rp1.9 million has been compensated to withholding tax article 21 for several fiscal periods.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

e. Tax assessments (continued)

The Company (continued)

Income tax and VAT fiscal year 2017

On November 6, 2018, the Tax Authorities issued Field Tax Audit Notification Letter for fiscal period January to December 2017.

On November 13 and 14, 2019, the Tax Authorities issued SKPLB of corporate income tax amounting to Rp294.4 billion from overpayment amounting to Rp294.5 billion, SKPLB of VAT amounting to Rp746.9 billion from overpayment amounting to Rp748.3 billion, and SKPKB of withholding tax article 21 amounting to Rp1.8 billion (including penalty of Rp0.5 billion). The Company accepted the tax corrections amounting to Rp1.5 billion which consists of corporate income tax amounting to Rp0.1 billion and input VAT which cannot be credited amounting to Rp1.4 billion. Furthermore, the Company received STP and SKPKB regarding VAT on tax collected amounting to Rp1.2 billion and Rp957 million (including penalty of Rp0.3 billion), respectively. On November 14, 2019, the Tax Authorities issued Notice of Nil Tax Assessment ("SKPN") regarding self-assessed offshore VAT, withholding tax article 21 final, withholding tax article 22, withholding tax article 26, withholding tax article 4 (2). On January 23 and 24, 2020, the Company received VAT refunds of Rp.746.9 billion and Corporate Income Taxes of Rp.292.3 billion and Rp.2.1 billion has been compensated to SKPKB and STP VAT WAPU.

Income tax fiscal year 2018

On February 17, 2020, the Tax Authorities issued a Field Tax Audit Notification Letter for January to December 2018. On February 25, 2020, the Company has received an introductory return for VAT refunds for the January to December 2018 tax period amounting to Rp979.1 billion and Rp30.3 billion which have been compensated to the SKPKB corporate income tax and withholding income tax for fiscal year 2012. As of the date of approval and authorization for the issuance of these consolidated financial statements, the tax audit process is still ongoing.

(ii) Telkomsel

Income tax and VAT fiscal year 2006

In December 2013, the Tax Court accepted Telkomsel's appeal on the 2006 VAT and withholding taxes totaling Rp116 billion.

In February 2014, Telkomsel received the refund.

On July 3, 2015, in response to Telkomsel's letter claiming for interest income related to favorable 2006 VAT and withholding tax verdicts, the Tax Authorities informed Telkomsel that the claim cannot be granted since the Tax Authorities filed a request for judicial review to the SC.

On August 19, 2016, Telkomsel received a notification from the Tax Court that the Tax Authorities filed a request for judicial review to SC for the fiscal year 2006 VAT amounting to Rp108 billion. Telkomsel filed a contra memorandum for judicial review to the SC on September 14, 2016.

In April 2017, Tax Authorities has granted Telkomsel's claim for interest income which subsequently compensate with the corporate income tax installment for the period of April 2017.

In July 2018, Telkomsel received the official verdict from the SC which stated that the SC has rejected the Tax Authorities request for judicial review.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

e. Tax assessments (continued)

Telkomsel (continued)
Income tax and VAT fiscal year 2010
In May and June 2012, Telkomsel received the refund of the penalty on the underpayment of income tax article 25 for fiscal year 2010 amounting to Rp15.7 billion based on the Tax Court's verdict. On July 17, 2012, the Tax Authorities filed a judicial review to the SC on the Tax Court's Verdict. On September 14, 2012, Telkomsel filed a contra memorandum for judicial review to the SC. On May 24, 2012, Telkomsel filed an objection to the Tax Authorities for the 2010 underpayment of VAT amounting to Rp290.6 billion (including penalty of Rp67 billion) and recorded it as a claim for tax refund.

On May 2, 2016, Telkomsel received a notification from the Tax Court that the Tax Authorities filed a judicial review for 2010 underpayment of VAT amounting to Rp290.6 billion. On May 27, 2016, Telkomsel filed a contra memory to the SC. In July 2016, conservatively, Telkomsel recognized the tax penalty amounting to Rp15.7 billion as expense based on its previous experience on a similar income tax case.

On May 9, 2017, Telkomsel received the official verdict from the SC which rejected Telkomsel's request, therein Telkomsel paid the underpayment on July 10, 2017. On July 19, 2017, Telkomsel filed the second judicial review to contest against the SC's verdict.

On August 8, 2018, the SC accepted Telkomsel's judicial review.

On February 18, 2019, Telkomsel received "Surat Pelaksanaan Putusan Peninjauan Kembali" ("SP2PK") from the Tax Authorities regarding the VAT for fiscal year 2010 amounting to Rp290.6 billion. On March 25, 2019, Telkomsel received the refund from the Tax Authorities regarding the VAT for fiscal year 2010 amounting to Rp290.6 billion.

Income tax and VAT fiscal year 2011

On February 15, 2016, Telkomsel filed an appeal to the Tax Authorities for the 2011 underpayment of corporate income tax amounting to Rp250 billion (including penalty of Rp81.1 billion). Subsequently, on March 17, 2016, Telkomsel also filed an appeal to the Tax Court for the underpayment of VAT amounting to Rp1.2 billion (including penalty of Rp392 million).

On February 6, 2017, Telkomsel received the Tax Court's verdict for VAT cases of Rp1.2 billion in favor of Telkomsel. Subsequently, Telkomsel received the tax refund in March and June 2017. On March 2, 2017, Telkomsel received the Tax Court's verdict for the underpayment of corporate income tax which partially accepted Telkomel's appeal amounting to Rp247.6 billion and recorded the amount as part of claim for tax refund. On August 31, 2017, Telkomsel received the tax refund. In July and October 2017, Telkomsel received notification that the Tax Authorities had filed a judicial review to the SC for corporate income tax and VAT amounting to Rp62 billion and Rp1.2 billion, respectively. Telkomsel submitted its contra memorandum for judicial review in August and November 2017.

As of December 31, 2018, Telkomsel has received partial official verdicts from the SC which rejected the Tax Authorities's judicial review for VAT case amounting to Rp1.1 billion.

On October 17, 2019, Telkomsel filed a letter to Tax Court requesting the remaining official verdicts regarding VAT which have been announced by SC in favor of Telkomsel. In October 2019, Telkomsel has received the official verdicts from the SC which rejected the Tax Authorities' judicial review for corporate income tax amounting to Rp62 billion.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

e. Tax assessments (continued)

Telkomsel (continued)
Income tax and VAT fiscal year 2014
On May 31, 2019, Telkomsel received the SKPKB and STP for the fiscal year 2014 amounting to Rp150.6 billion (including penalty of Rp54.6 billion). Telkomsel accepted and paid the portion of Rp16.5 billion on June 27, 2019 and recorded it as other expense. On August 20, 2019, Telkomsel has paid amounting to Rp99.1 billion and recorded it as claim for tax refund. Subsequently, on August 23, 2019, Telkomsel filed an objection to the Tax Authorities amounting to Rp134.1 billion.
On July 15 and July 22, 2020, Telkomsel received objection decision letter from Tax Authorities which accepted Rp27.2 billion and rejected Rp106.8 billion. In August 27, 2020 Telkomsel received partially the tax refund Rp27.2 billion.
On September 28, 2020, Telkomsel filed an appeal to the Tax Court for the 2014 corporate income tax, withholding tax, and VAT. As of the date of approval and authorization for issuance of these financial statements, the appeal is still in process.
Income tax and VAT fiscal year 2015
On August 1, 2019, Telkomsel received the SKPKB and STP for fiscal year 2015 amounting to Rp384.8 billion (including penalty of Rp128.6 billion). On August 28, 2019, Telkomsel has paid the whole amount. For the amount of Rp34.6 billion was charged to the statement of profit or loss and other comprehensive income and for the remaining portion amounting to Rp350.2 billion was recorded as claim for tax refund. On September 24, 2019, Telkomsel filed an objection to the Tax Authorities amounting to Rp350.2 billion.
On July 13, 2020, Telkomsel received objection decision letter from Tax Authorities that rejected all Company's objection.
Income tax and VAT fiscal year 2018
On February 20, 2020, Telkomsel received the tax audit instruction letter for compliance of fiscal year 2018. As of the date of approval and authorization for issuance of these financial statements, the tax audit still in process.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

Deferred tax assets and liabilities
The details of the Group's deferred tax assets and liabilities are as follows:

		Effect of adoption			Credited to
		of new	(Charged)	other		Charged to
	December 31,	accounting	credited to profit comprehensive		equity and		September 30,
The Company	2019	standards	or loss	income		reclassification	2020

Deferred tax assets:
Provision for impairment of receivables	760	46		21		-	-	827
Net periodic pension and other
post-employment benefit costs	837	-		(139)		-	-	698
Difference between accounting and tax
bases of property and equipment	427	-		15		-	-	442
Provision for employee benefits	230	-		(36)		-	-	194
Deferred installation fee	92	-		24		-	-	116
Land rights, intangible assets and others	19	-		3		-	-	22
Accrued expenses and provision for
inventory obsolescence	75	(133)		31		-	-	(27)
Total deferred tax assets	2,440	(87)		(81)		-		-	2,272
Deferred tax liabilities:
Finance leases	(5)	-		1		-	-	(4)
Valuation of long-term investment	(11)	-		2		-	-	(9)
Total deferred tax liabilities	(16)	-		3		-		-	(13)
Deferred tax assets of the Company - net	2,424	(87)		(78)		-		-	2,259
Deferred tax assets of the other
subsidiaries - net	474	-		117		-	125	716
Total deferred tax asset - net	2,898	(87)		39		-		125	2,975
Telkomsel
Deferred tax assets:
Provision for employee benefits	865	-		(79)	-	-	786
Provision for impairment of receivables	259	-		(8)	-	-	251
Contract liabilities	-	9		(9)	-	-	-
Other financial instrument	-	100		2		-	-	102
Total deferred tax assets	1,124	109		(94)		-		-	1,139
Deferred tax liabilities:
Finance leases	(1,099)	-		(6)		-	-	(1,105)
Difference between accounting and tax
bases of property and equipment	(557)	-		594		-	-	37
License amortization	(151)	-		27		-	-	(124)
Contract cost	-	(27)		26		-	-	(1)
Other financial instrument	-	(59)		7		-	-	(52)
Total deferred tax liabilities	(1,807)	(86)		648		-		-	(1,245)
Deferred tax liabilities of Telkomsel - net	(683)	23		554		-		-	(106)
Deferred tax liabilities of the other
subsidiaries - net	(547)	(64)		(18)	-	(14)	(643)
Total deferred tax liabilities - net	(1,230)	(41)		536		-		(14)	(749)

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

Deferred tax assets and liabilities (continued)
The details of the Group's deferred tax assets and liabilities are as follows (continued):

										Credited to
							(Charged)	other			Charged to
		December 31, credited to profit	comprehensive		equity and	December 31,
The Company	2018					or loss	income			reclassification	2019

Deferred tax assets:
Net periodic pension and other
post-employment benefit costs	663			(70)		244	-			837
Provision for impairment of receivables	632			128			-	-			760
Difference between accounting and tax
bases of property and equipment	420			7			-	-			427
Provision for employee benefits	215			15			-	-			230
Deferred installation fee	92			0			-	-			92
Accrued expenses and provision for
inventory obsolescence	79			(4)		-	-			75
Land rights, intangible assets and others	9			10			-	-			19
Total deferred tax assets	2,110					86			244			-			2,440
Deferred tax liabilities:
Valuation of long-term investment	(11)		-		-	-			(11)
Finance leases	(1)		(4)	-	-			(5)
Total deferred tax liabilities	(12)			(4)		-			-			(16)
Deferred tax assets of the Company - net	2,098					82			244			-			2,424
Deferred tax assets of the other
subsidiaries - net	406			152			10	(94)			474
Total deferred tax assets - net	2,504					234			254			(94)			2,898
Telkomsel
Deferred tax assets:
Provision for employee benefits	641			83			141	-			865
Provision for impairment of receivables	270			(11)		-	-			259
Total deferred tax assets	911					72			141			-			1,124
Deferred tax liabilities:
Finance leases	(896)		(203)	-	-			(1,099)
Difference between accounting and tax
bases of property and equipment	(616)		68		-	(9)			(557)
License amortization	(118)		(33)	-	-			(151)
Total deferred tax liabilities	(1,630)				(168)		-			(9)			(1,807)
Deferred tax liabilities of Telkomsel - net	(719)				(96)		141			(9)			(683)
Deferred tax liabilities of the other															-
subsidiaries - net	(533)		165		16	(195)			(547)
Total deferred tax liabilities - net		(1,252)			69			157			(204)			(1,230)

As of September 30, 2020 and December 31, 2019, the aggregate amounts of temporary differences associated with investments in subsidiaries and associated companies, for which deferred tax liabilities have not been recognised were Rp28,047 billion and Rp29,731 billion, respectively.

Realization of the deferred tax assets is dependent upon the Group's capability in generating future profitable operations. Although realization is not assured, the Group believes that it is probable that these deferred tax assets will be realized through reduction of future taxable income when temporary differences reverse. The amount of deferred tax assets is considered realizable; however, it can be reduced if actual future taxable income is lower than estimates.

Administration
From 2008 to 2019, the Company has been consecutively entitled to income tax rate reduction of 5% for meeting the requirements in accordance with the Government Regulation No. 81/2007 as amended by Government Regulation No. 77/2013 and the latest by Government Regulation No. 56/2015 in conjunction with PMK No. 238/PMK.03/2008. On the basis of historical data, for the year ended December 31, 2019 and 2018, the Company calculates the deferred tax using the tax rate of 20%.

These consolidated financial statements are originally issued in the Indonesian language.

PERUSAHAAN PERSEROAN (PERSERO)

PT TELEKOMUNIKASI INDONESIA Tbk. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Period Ended September 30, 2020 and 2019 (unaudited)

(Amounts in the tables expressed in billions of Indonesian Rupiah, unless otherwise stated)

28. TAXATION (continued)

Administration (continued)
The taxation laws of Indonesia require that the Company and its local subsidiaries submit to individual tax returns on the basis of self-assessment. Under prevailing regulations, the Directorate General of Taxes ("DGT") may assess or amend taxes within a certain period. For fiscal years 2007 and earlier, the period is within ten years from the time the tax became due, but not later than 2013, while for fiscal years 2008 and onwards, the period is within five years from the time the tax became due.
The Ministry of Finance of the Republic of Indonesia has issued Regulation No. 85/PMK.03/2012

dated June 6, 2012 as amended by PMK No. 136 - PMK.03/2012 dated August 16, 2012 concerning the appointment of State-Owned Enterprises ("SOEs") to withhold, deposit and report VAT and Sales Tax on Luxury Goods ("PPnBM") according to the procedures outlined in the Regulation which is effective from July 1, 2012. The Ministry of Finance of the Republic of Indonesia also has issued Regulation No. 224/PMK.011/2012 dated December 26, 2012 concerning the appointment of SOEs to withhold income tax article 22 as amended by PMK No. 34/PMK.010/2017 dated March 1, 2017. The Company has withheld, deposited, and reported the VAT, PPnBM and also income tax article 22 in accordance with the Regulations.

In May 2019, the Company was appointed as Low Risk Taxable Entrepreneur through DGT Decree No.KEP-00080/WPJ.19/KP.04/2019. In accordance with the Ministry of Finance Regulation No. 39/PMK.03/2018 dated April 12, 2018 as amended by PMK No. 117/PMK.03/2019 dated August 16, 2019, the Company was given the preliminary return on tax overpayment as referred to the taxation laws.

29. BASIC EARNINGS PER SHARE

Basic earnings per share is computed by dividing profit for the periode attributable to owners of the parent company amounting to Rp16,679 billion and Rp16,459 billion by the weighted average number of shares outstanding during the period totaling 99,062,216,600 shares for the nine months period ended September 30, 2020 and 2019, respectively. The weighted average number of shares takes into account the weighted average effect of changes in treasury stock transaction during the year.

Basic earnings per share amounting to Rp168.37 and Rp166.15 (in full amount) for the nine months period ended September 30, 2020 and 2019, respectively.

The Company does not have potentially dilutive financial investments for the nine months period ended September 30, 2020 and 2019.

30. CASH DIVIDENDS AND GENERAL RESERVE

Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 133 dated May 24, 2019 of Ashoya Ratam, S.H., M.Kn., the Company's stockholders approved the distribution of cash dividend and special cash dividend for 2018 amounting to Rp10,819 billion (Rp109.22 per share) and Rp5,410 billion (Rp54.61 per share), respectively.

Pursuant to the AGM of Stockholders of the Company as stated in notarial deed No. 31 dated June 19, 2020 of Ashoya Ratam, S.H., M.Kn., the Company's stockholders approved the distribution of cash dividend and special cash dividend for 2019 amounting to Rp11,197 billion (Rp113.04 per share) and Rp4,065 billion (Rp41.03 per share), respectively.

Under the Limited Liability Company Law, the Company is required to establish a statutory reserve amounting to at least 20% of its issued and paid-up capital.

The balance of the appropriated retained earnings of the Company as of September 30, 2020 and December 31, 2019 amounting to Rp15,337 billion, respectively.

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PT Telekomunikasi Indonesia (Persero) Tbk published this content on 04 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2020 08:09:14 UTC

Latest news about Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk

Glass Lewis ESG Controversy Alert: Telekomunikasi Indonesia	Apr. 19	MT
Asian Equities Traded in the US as American Depositary Receipts Trend Lower in Thursday Trading	Apr. 18	MT
Perusahaan Perseroan PT Telekomunikasi Indonesia Tbk Reports Earnings Results for the First Quarter Ended March 31, 2024	Apr. 18	CI
Glass Lewis ESG Controversy Alert: Telekomunikasi Indonesia	Apr. 18	MT
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Perusahaan Perseroan PT Telekomunikasi Indonesia Tbk Provides Earnings Guidance for the Year 2024	Mar. 26	CI
Transcript : Perusahaan Perseroan PT Telekomunikasi Indonesia Tbk, 2023 Earnings Call, Mar 26, 2024	Mar. 26
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Perusahaan Perseroan PT Telekomunikasi Indonesia Tbk Reports Earnings Results for the Full Year Ended December 31, 2023	Mar. 24	CI
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Asian Equities Traded in the US as American Depositary Receipts Rise in Thursday Trading	Mar. 21	MT
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Chart Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk

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Company Profile

PT Telkom Indonesia (Persero) Tbk is an Indonesia-based telecommunication company. The Company is engaged in information and communication technology (ICT) services and telecommunications networks. The Company operates through five segments: Mobile, Consumer, Enterprise, WIB, and Others. The Mobile segment provides mobile voice, SMS, value added services, and mobile broadband. The Consumer segment provides Indihome services and other telecommunication services to home customers. The Enterprise segment provides end-to-end solution to corporate and institutions. The WIB segment provides interconnection services, leased lines, satellite, very small aperture terminal, broadband access, information technology services, data, and internet services to other licensed operator companies and institutions. Other segment provides digital content products, big data, business to business commerce, and financial services to individual and corporate customers.

Sector

Integrated Telecommunications Services

Calendar

2024-05-05 - Q1 2024 Earnings Release (Projected)

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Ratings for Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk

Trading Rating

Investor Rating

ESG Refinitiv

B-

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Analysts' Consensus

Sell

Buy

Mean consensus

BUY

Number of Analysts

Last Close Price

3,150 IDR

Average target price

4,331 IDR

Spread / Average Target

+37.48%

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Sector Other Integrated Telecommunications Services

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PERUSAHAAN PERSEROAN (PERSERO) PT TELEKOMUNIKASI INDONESIA TBK	-20.25%	19.87B
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