PT INDOSAT Tbk AND SUBSIDIARIES - IDNFinancials

PT INDOSAT Tbk AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2015, DECEMBER 31, 2014 AND JANUARY 1, 2014AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2015 AND 2014

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

PT INDOSAT Tbk AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2015, DECEMBER 31, 2014 AND JANUARY 1, 2014AND FOR THE SIX-MONTH PERIODS ENDEDJUNE 30, 2015 AND 2014

Table of Contents

Section

Report on Review of Interim Financial Information

Unaudited Interim Consolidated Statements of Financial Position......................................... Schedule 1

Unaudited Interim Consolidated Statements of Profit or Loss andOther Comprehensive Income................................................................................................ Schedule 2

Unaudited Interim Consolidated Statements of Changes in Equity........................................ Schedule 3

Unaudited Interim Consolidated Statements of Cash Flows .................................................. Schedule 4

Notes to the Unaudited Interim Consolidated Financial Statements ...................................... Schedule 5

***************************


PT INDOSAT Tbk AND SUBSIDIARIES Schedule 1/1

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

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAS AT JUNE 30, 2015, DECEMBER 31, 2014 AND JANUARY 1, 2014(Expressed in millions of Indonesian Rupiah, except par value per share)

December 31,2014 January 1, 2014

June 30, (As restated; (As restated;Notes 2015 Note 2c) Note 2c)

ASSETS

CURRENT ASSETS

Cash and cash equivalents 4 9,420,792 3,480,011 2,233,532Accounts receivable

- Trade, net of allowance forimpairment of Rp728,485(December 31, 2014:Rp629,913; January 1, 2014:Rp521,406)

Related party 5 648,878 518,952 632,203Third party 5 2,178,543 1,573,160 1,636,136

- Others, net of allowance forimpairment of Rp38,429(December 31, 2014: Rp37,657;January 1, 2014: Rp35,388) 17,697 9,015 16,294

Inventories, net of allowance fordecline in value of Rp14,907(December 31, 2014: Rp14,907;January 1, 2014: Rp13,213 ) 43,355 49,408 36,004

Derivative assets 20 17,129 75,986 195,569Advances 37,122 23,297 34,867Prepaid taxes

- Corporate income taxes 16 231,643 132,316 676- Other taxes 16 249,778 231,747 218,073

Prepaid frequency fees and licenses 6 1,153,451 2,050,295 1,757,586Prepaid expenses - others 501,566 427,012 373,183Other current financial assets - net 7 27,971 16,287 31,673Other current assets 447 3,490 3,184

Total Current Assets 14,528,372 8,590,976 7,168,980

NON-CURRENT ASSETS

Due from related parties - net 32 9,951 3,496 7,167Deferred tax assets - net 16 91,597 92,057 101,853Property and equipment - net 8 40,616,490 40,775,907 42,190,111Goodwill and other

intangible assets - net 9 1,351,187 1,356,562 1,362,600Long-term prepaid expenses -

net of current portion 10 942,366 897,767 810,354Long-term prepaid licenses -

net of current portion 6 110,136 134,345 200,186Long-term advances 11 149,980 79,107 92,162Long-term prepaid pension -

net of current portion 22,31 77,941 86,732 123,814Long-term receivables 6,659 7,213 10,246Other non-current financial assets - net 12 144,228 160,903 1,557,367Other non-current assets - net 13 668,431 1,084,632 941,206

Total Non-current Assets 44,168,966 44,678,721 47,397,066

TOTAL ASSETS 58,697,338 53,269,697 54,566,046







LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term loans 14 523,907 849,448 1,499,849Accounts payable - trade

- Related parties 32 83,855 30,532 47,603- Third parties 779,288 660,027 291,707

Procurement payable 15 4,397,345 3,095,518 3,064,287Taxes payable 16

- Corporate income taxes 13,565 19,351 15,337- Other taxes 70,392 56,017 73,923

Accrued expenses 17 2,034,353 2,150,914 2,084,694Long-term employee benefit obligations

- current portion 22 35,240 35,240 22,433Unearned income 1,048,834 1,102,099 922,403Deposits from customers 112,296 238,338 49,335Derivative liabilities 20 46,913 31,740 36,903Current maturities of:

- Loans payable 18 1,678,119 2,613,500 2,443,367- Bonds payable 19 9,206,890 8,333,611 1,928,557- Sharia bonds 19 54,843 - 427,753

Provision for legal case 30 1,358,643 1,358,643 -Other current financial liabilities 490,731 423,029 362,448Other current liabilities 147,919 149,807 223,498

Total Current Liabilities 22,083,133 21,147,814 13,494,097

NON-CURRENT LIABILITIES

Due to related parties 32 15,548 30,159 33,301Obligations under finance lease -

net of current maturities 33 3,582,373 3,631,591 3,594,112Deferred tax liabilities - net 16 416,991 705,917 984,676Loans payable - net of current maturities 18 6,711,195 3,727,118 4,346,317Bonds payable - net of current maturities 19 9,088,216 6,962,080 12,814,468Sharia bonds - net of current maturities 19 1,020,499 660,405 470,739Long-term employee benefit obligations -

net of current portion 22 1,021,900 960,627 746,971Other non-current financial liabilities 7,540 17,049 81,805Other non-current liabilities 29 1,156,129 1,128,382 1,228,415

Total Non-current Liabilities 23,020,391 17,823,328 24,300,804

TOTAL LIABILITIES 45,103,524 38,971,142 37,794,901







EQUITY

Equity Attributable toOwners of the ParentCapital stock - Rp100 par value

per A share and B shareAuthorized - 1 A share and

19,999,999,999 B sharesIssued and fully paid - 1 A share

and 5,433,933,499 B shares 23 543,393 543,393 543,393Additional paid-in capital 23 1,546,587 1,546,587 1,546,587Retained earnings

- Appropriated 134,446 134,446 134,446- Unappropriated 10,172,323 10,906,119 12,914,483

Difference in transactions of equitychanges in associated companies/subsidiaries 404,104 404,104 404,104

Difference in foreign currency translation (9,875) (9,081) (5,210)Remeasurement gains on defined

benefit plans 92,268 92,268 222,054Unrealized changes in fair value of

available-for-sale investment 12 - - 413,700

Equity attributable to:Owners of the Parent 12,883,246 13,617,836 16,173,557Non-controlling interests 710,568 680,719 597,588

TOTAL EQUITY 13,593,814 14,298,555 16,771,145

TOTAL LIABILITIES AND EQUITY 58,697,338 53,269,697 54,566,046




UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS ANDOTHER COMPREHENSIVE INCOMEFOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2015, AND 2014(Expressed in millions of Indonesian Rupiah, except loss per share)

Six-month periods ended June 30,2014

Notes 2015 (As restated; Note 2c)

REVENUES 24Cellular 10,223,593 9,365,300Multimedia, Data Communication, Internet ("MIDI") 1,835,269 1,705,796Fixed telecommunications 561,102 542,021

Total Revenues 12,619,964 11,613,117

(EXPENSES) INCOME

Cost of telecommunication services 25 (5,365,907) (4,926,703)Depreciation and amortization 8,9 (4,169,351) (3,952,909)Personnel 26 (901,526) (848,686)General and administrative 27 (503,959) (438,920)Marketing (486,293) (372,033)Loss on foreign exchange - net (91,202) (118,812)Amortization of deferred gain on sale and

leaseback of towers 29 70,525 70,525Provision for legal case 30 - (1,358,643)Gain on sale of available-for-sale investment 12 - 413,700Others - net (132,308) (75,666)

Total Expenses (11,580,021) (11,608,147)

OPERATING PROFIT 1,039,943 4,970

Gain (loss) on change in fair value of derivatives- net 20 147,241 (178,726)

Interest income 109,461 75,344Financing cost 28 (1,283,849) (1,232,928)(Loss) gain on foreign exchange - net (905,280) 252,409

(1,932,427) (1,083,901)

LOSS BEFORE INCOME TAX (892,484) (1,078,931)

INCOME TAX BENEFIT (EXPENSE) 16Current (62,508) (62,961)Deferred 288,466 79,954

Income Tax Benefit - Net 225,958 16,993

LOSS FOR THE PERIOD (666,526) (1,061,938)




UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS ANDOTHER COMPREHENSIVE INCOMEFOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2015, AND 2014(Expressed in millions of Indonesian Rupiah, except loss per share)

Six-month periods ended June 30,2014

Notes 2015 (As restated; Note 2c)

OTHER COMPREHENSIVE INCOME (LOSS)

Items that maybe subsequently reclassifiedto Profit or LossDifference in foreign currency translation (794) (3,738)Available-for-sale investments - reclassification

adjustment for gains included in profit or loss 12,40 - (413,700)Income tax effect - -

(794) (417,438)

Items that will not be reclassified to Profit or LossRemeasurement gains on defined benefit plans - 6,831Income tax effect - (1,708)

- 5,123

Other Comprehensive Loss for the period - net of tax (794) (412,315)

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (667,320) (1,474,253)

(LOSS) PROFIT FOR THE PERIOD ATTRIBUTABLE TO:Owners of the Parent (733,796) (1,117,254)Non-controlling interests 67,270 55,316

(666,526) (1,061,938)

TOTAL COMPREHENSIVE INCOME (LOSS)FOR THE PERIOD ATTRIBUTABLE TO:Owners of the Parent (734,590) (1,529,170)Non-controlling interests 67,270 54,917

(667,320) (1,474,253)

BASIC AND DILUTED LOSS PER SHAREATTRIBUTABLE TO OWNERS OFTHE PARENT 23c (135.04) (205.61)


PT INDOSAT Tbk AND SUBSIDIARIES Schedule 4


UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2015, AND 2014(Expressed in millions of Indonesian Rupiah)

Six-month periods ended June 30,

Notes 2015 2014

CASH FLOW FROM OPERATING ACTIVITIESCash received from:

- Customers 11,577,740 11,774,738- Settlement from currency forward contracts 229,256 -- Refund of corporate income taxes 131,894 -- Refund of Value Added Taxes 103,077 53,279- Interest income 102,778 75,375

Cash paid to/for:- Authorities, other operators, suppliers and others (5,512,221) (5,211,097)- Financing cost (1,211,144) (1,240,381)- Employees (966,159) (997,149)- Corporate income taxes (91,553) (372,873)- Settlement from currency forward contracts - (29,068)- Interest rate swap contracts 20 (7,985) (8,866)- Swap cost from cross currency swap contracts - (3,111)

Net cash provided by operating activities 4,355,683 4,040,847

CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of property and equipment 43,309 29,288Cash dividend received from other long-term investments 4,752 4,525Acquisitions of property and equipment (2,783,857) (3,256,117)Purchase of other long-term investment (39,791) -Acquisitions of intangible assets (2,497) (2,966)Net proceeds from sale of long-term investment - 1,379,114

Net cash used in investing activities (2,778,084) (1,846,156)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from long-term loans 5,198,090 700,000Proceeds from bonds payable 3,100,000 -Repayment of long-term loans (3,444,342) (402,651)Repayment of short-term loans (325,000) (1,500,000)Repayment of bonds payable (320,000) (1,630,000)Decrease in restricted cash and cash equivalents - (1,969)Proceeds from short-term loans - 700,000Cash dividend paid by subsidiaries to non-controlling interests (16,363) (14,175)

Net cash provided by (used in) financing activities 4,192,385 (2,148,795)

Net foreign exchange differencesfrom cash and cash equivalents 170,797 (60,500)

NET INCREASE (DECREASE) IN CASHAND CASH EQUIVALENTS 5,940,781 (14,604)

CASH AND CASH EQUIVALENTSAT BEGINNING OF PERIOD 3,480,011 2,233,532

CASH AND CASH EQUIVALENTSAT END OF PERIOD 4 9,420,792 2,218,928



NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2015, DECEMBER 31, 2014 AND JANUARY 1, 2014,AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2015 AND 2014(Expressed in millions of Indonesian Rupiah and thousands ofUnited States Dollar, unless otherwise stated)

1. GENERAL

a. The

PT was established in the Republic of Indonesia onNovember 10, 1967 within the framework of the Indonesian Foreign Investment Law No. 1 of1967 based on notarial deed No. 55 of Mohamad Said Tadjoedin, S.H. The deed ofestablishment was published in Supplement No. 24 of State Gazette No. 26 datedMarch 29, 1968 of the Republic of Indonesia. In 1980, the Company was sold by AmericanCable and Radio Corporation, an International Telephone & Telegraph subsidiary, to the

-ownedCompany (Persero).

On February 7, 2003, the Company received the approval from the Capital Investment

from a State-owned Company (Persero) to a Foreign Capital Investment Company.Subsequently, on March 21, 2003, the Company received the approval from the Ministry ofJustice and Human Rights of the Republic of Indonesia on the amendment of its Articles ofAssociation to reflect the change in its legal status.

amendment was covered by notarial deed No. 123 dated January 28, 2010 of Aulia Taufani,S.H. (as a substitute notary of Sutjipto, S.H.), as approved in the Extraordinary GeneralMeeting of Share held on January 28, 2010, in order to comply with the

-(currently the Indonesian Financial2008 on the Principles of Articles of Association of Limited Liability Companies that ConductPublic Offering of Equity Securities and Public Companies and Rule No. IX.E.1 on AffiliateTransactions and Certain Conflict of Interests Transactions. The latest amendment of the

and Human Rights of the Republic of Indonesia based on its letters No. AHU-09555.AH.01.02year 2010 dated February 22, 2010 and No. AHU-AH.01.10-04964 dated February 25, 2010.

purposes, objectives and business activities, appointment of acting President Director if the

definition of conflict of interests.

to provide telecommunications networks, telecommunications services as well as informationtechnology and/or convergence technology services by carrying out the following mainbusiness activities:

a. To provide telecommunications networks, telecommunications services as well asinformation technology and/or convergence technology services, including but not limitedto providing basic telephony services, multimedia services, internet telephony services,network access point service, internet services, mobile telecommunications networks andfixed telecommunications networks; and

b. To engage in payment transactions and money transfer services throughtelecommunications networks as well as information technology and/or convergencetechnology.




1. GENERAL (continued)

a. (continued)

The Company can provide supporting business activities in order to achieve the purposes andobjectives, and to support its main businesses, as follows:

a. To plan, to procure, to modify, to build, to provide, to develop, to operate, to lease, to rent,

business in providing telecommunications networks, telecommunications services as wellas information technology and/or convergence technology services;

b. To conduct business and operating activities (including development, marketing and salesof telecommunications networks, telecommunications services as well as informationtechnology and/or convergence technology services by the Company), including research,customer services, education and courses (both domestic and overseas); and

c. To conduct other activities necessary to support and/or related to the provision oftelecommunications networks, telecommunications services as well as informationtechnology and/or convergence technology services including, but not limited to, electronictransactions and provision of hardware, software, content as well as telecommunications-managed services.

The Company started its commercial operations in 1969.

For the six-month periods ended June 30, 2015 and 2014, the Company has performed all themain and supporting business activities as stated in its Articles of Association.

Based on Law No. 3 of 1989 on Telecommunications and pursuant to Government RegulationNo. 77 of 1991, the Company had been re-

the Government.

In 1999, the Government issued Law No.

telecommunications activities cover:

Telecommunications networksTelecommunications servicesSpecial telecommunications services

National state-owned companies, regional state-owned companies, privately-ownedcompanies and cooperatives are allowed to provide telecommunications networks andservices. Individuals, government institutions and legal entities, other than telecommunicationsnetworks and service providers, are allowed to render special telecommunications services.

The Telecommunications Law prohibits activities that result in monopolistic practices andunhealthy competition and expects to pave the way for market liberalization.

Based on the Telecommunications Law, the Company ceased as an Operating Body and hasto obtain licenses from the Government for the Company to engage in the provision of specifictelecommunications networks and services.





a. (continued)

granted the Company an in-principle license as a nationwide Digital Communication Systemer as compensation for the early termination of the

exclusivity rights on international telecommunications services given to the Company prior tothe granting of such license effective August 1, 2003. On August 23, 2001, the Companyobtained the operating license from the MOC. Subsequently, based on Decree No. KP.247dated November 6, 2001 issued by the MOC, the operating license was transferred to the

On September 7, 2000, the Government, through the MOC, also granted the Companyin-principle licenses for local and domestic long-distance telecommunications services ascompensation for the termination of its exclusivity rights on international telecommunicationsservices. On the other hand, PT Telekomunikasi Indonesia Tbin-principle license for international telecommunications services as compensation for the early

-distance telecommunicationsservices.

Based on a letter dated August 1, 2002 from the MOC, the Company was granted an operatinglicense for fixed local telecommunications network covering Jakarta and Surabaya. Thisoperating license was converted to become a national license on April 17, 2003 based onDecree No. KP.130 year 2003 of the MOC. The values of the above licenses granted toTelkom and the Company on the termination of their exclusive rights on local/domestic andinternational telecommunications services, respectively, have been determined by anindependent appraiser.

The following are operating licenses obtained by the Company and PT Indosat Mega Media,a subsidiary:

License No. Date Issued Issuing BodyPeriod ofLicense

Description

19/KEP/M.KOMINFO/02/2006 and29/KEP/M.KOMINFO/03/2006

February 14, 2006andMarch 27, 2006

Ministry ofCommunicationsand InformationTechnology("MOCIT")

10 years Determination of the winner andoperating license for IMT-2000cellular network provider using 2.1GHz radio frequency spectrum (athird generation ["3G"] mobilecommunications Technology) for 1block (2 x 5 Mhz) of Frequency (*)

643/KEP/M.KOMINFO/06/2015(previously504/KEP/M.KOMINFO/08/2012 and252/KEP/M.KOMINFO/07/2011)

June 30, 2015 MOCIT Evaluatedevery 5years

Amended Indosat's Mobile CellularLicense which allows Indosat todeploy 3rd Generation PartnershipProject (3G system) at 800 MHz,900 MHz and 1800 MHz spectrumband, and also International MobileTelecommunication 2000 (IMT2000) at 2100 MHz. The MinisterialDecree replaces Indosat's previouslicense No.504/KEP/M.KOMINFO/08/2012 andNo.252/KEP/M.KOMINFO/07/ 2011.

(*) As one of the winners in the selection of IMT-2000 cellular providers, the Company was obliged to, among others, pay upfront fee of Rp320,000 (Note3a) and radio frequency fee (Note 33d).





a. (continued)


Description

460/M.KOMINFO/12/2011 December 7, 2011 MOCIT Satelliteend of life

Approval for Indosat to utilize OrbitalSlot 150.5o EL (East Latitude). OnSeptember 19, 2013, the MOCITissued letter No. 838/KOMINFO/DJSDPPI.2/SP.01/09/2013

up Orbital Slot 150.5o EL. TheCompany replied to the letter onSeptember 30, 2013 describing the

Palapa E Satellite to fill up theOrbital Slot 150.5o EL. However, onMarch 26, 2014, the Companyreceived a letter stating that theMOCIT decided not to extend the

Orbital Slot 150.5o EL and declaredthat such license utilization willcease as of September 1, 2015. OnMarch 27, 2014, the Company senta letter to MOCIT requesting aclarification on such decision. OnMay 9, 2014, the Company receiveda response from the MOCITclarifying and reconfirming itsdecision. On June 12, 2014, theCompany replied to such letterinforming MOCIT that the Companyaccepted the decision.

181/KEP/M.KOMINFO/12/2006

December 12,2006

MOCIT 10 years Allocation of two nationwidefrequency channels, i.e., channels589 and 630 in the 800 MHzspectrum for Local Fixed WirelessNetwork Services with LimitedMobility

KEP No. 799, Year 2014 September 12,2014

MOCIT 10 years Determination of the use offrequency 800 MHz with radiofrequency band of 887.5 - 890 MHzpaired with radio frequency band of932.5 - 935 MHz

KEP No. 414, Year 2014

(previously51/DIRJEN/2008)

September 12,2014

MOCIT Evaluatedevery 5years

Amended operating license forinternet interconnection services(Network Access Point / NAP),which replaces the previous licenseNo. 51/DIRJEN/2008 dated January9, 2008



April 7, 2014 MOCIT Evaluatedevery 5years

Amended operating license asinternet service provider, whichreplaces the previous license No.01/DIRJEN/2008 dated January 7,2008.





a. (continued)


Description



April 7, 2014 MOCIT Evaluatedevery 5years

Amended operating license fortelephony internet services, whichreplaces the previous licenses No.52/DIRJEN/2008 dated January 9,2008 and No. 823/DIRJEN/2002for Voice over Internet ProtocolService with national coverage thatexpired in 2007


July 27, 2009 MOCIT 10 years Operating license for "PacketSwitched" local fixedtelecommunications network using2.3 GHZ radio frequency spectrumof Broadband Wireless Access(BWA)(**)


September 1,2009

MOCIT 10 years Operating license for one additionalblock (2 x 5 Mhz) of 3Gfrequency(***)


May 27, 2010 MOCIT Evaluatedevery 5years

Amended operating license fornationwide closed fixedcommunications network(e.g.,VSAT, frame relay, etc.), whichreplaces the previous licenseNo.KP.69/Thn 2004 given to theCompany



and


August 24, 2010 MOCIT Evaluatedevery 5years

Amended operating license for fixednetwork and basic telephonyservice which covers the provisionof local, national long-distance, andinternational long-distancetelephony services, which replacesthe previous license No.KP.203/Thn 2004 given to theCompany

(**) PT Indosat Mega Media was obliged to, among others, pay upfront fee of Rp18,408 (Note 3a) and radio frequency fee (Note 33d).(***) The Company was obliged to, among others, pay upfront fee of Rp320,000 (Note 3a) and radio frequency fee (Note 33d).

On January 9, 2008, based on letter No. 10/14/DASP from Bank Indonesia (Central Bank), theCompany obtained approval for - prepaid cards as a new means of makingpayments to certain merchants. The Company was also appointed as a special principal andtechnical acquirer for such prepaid cards. On November 19, 2009, the Company launched

- to the public.

On March 17, 2008, the MOCIT issued Ministerial Decree No. 02/PER/M.KOMINFO/2008 onthe Guidelines of Construction and Utilization of Telecommunications Tower Sharing. Basedon this Decree, the construction of telecommunications towers requires permits from therelevant governmental institution and the local government determines location in which thetowers can be constructed. Furthermore, a telecommunications provider or tower providerwhich owns telecommunications towers is obliged to allow other telecommunications operatorsto utilize its telecommunications towers without any discrimination. The Decree also mandatedthat each of the tower contractor, provider and owner be 100% locally owned companies.





a. (continued)

On March 30, 2009, the Ministry of Domestic Affairs, Ministry of Public Works, MOCIT andHead of BKPM jointly issued Decrees No. 18 Year 2009, No. 07/PRT/M/2009,No. 19/PER/M.KOMINFO/03/09 and No. 3/P/2009, respectively, on the Detailed Guidelines ofConstruction and Utilization of Sharing Telecommunications Towers. The Decrees define therequirements and procedures for tower construction. A tower provider can be either atelecommunications operator or a non-telecommunications operator. If a tower provider is anon-telecommunications operator, it is required to be a 100% locally owned company.

On September 3, 2010, based on letter No. 12/67/DASP/25 from Bank Indonesia (CentralBank), the Company obtained approval to become a to customersin the local and international markets.

On December 13, 2010, based on letter No. 2619/BSN/D3-d3/12/2010 from the NationalStandardization Bureau (Badan Standardisasi Nasional), the Company obtained IssuerIdentification Number (IIN) on its applications for -wallet .On March 23, 2011, the President of the Republic of Indonesia issued Regulation or PeraturanPemerintah on becomes the

On February 12, 2014, MOCIT issued letter No.11 year 2014 about the procedure for theimposition of administrative sanction such as fines against a telecommunications provider.Such administrative sanction will be charged if the telecommunications provider fails to fulfillthe obligation stated in its operating license (or also known modern license izinpenyelenggaraan and statutory provisions.

The Company is domiciled at Jalan Medan Merdeka Barat No. 21, Jakarta and has 5 regionaloffices located in Jakarta, Semarang, Surabaya, Medan and Balikpapan.

company of the Company and its subsidiaries (collectively referred to hereafter as the. The immediate parent company of the Company is Ooredoo Asia Pte. Ltd.,

previously Qatar Telecom (Qtel Asia) Pte. Ltd., Singapore.

b. The

On September 23, 1994, the Company obtained the effective statement from the Capital

Stock Exchange through BAPEPAM Letter No. S-1656/PM/1994 and in the New York StockExchange of its 362,425,000 B shares, consisting of 22,510,870 American Depositary Shares(ADS, each representing 10 B Shares) and 103,550,000 B shares from the divestment of the B

Indonesia Stock Exchange (new entity after the merger of the Jakarta Stock Exchange and theSurabaya Stock Exchange in November 2007) since October 19, 1994, whileADS were registered in the New York Stock Exchange from October 19, 1994 until May 17,2013. On July 25, 2014, the Company filed a 15 F form to the U.S. Securities and Exchange

the U.S.Securities Exchange Act of 1934, which has become effective since June 30, 2015.





b. (continued)

Based on a resolution at their EGMS held on March 8, 2004, the stockholdersapproved the split of ,resulting in the increase in the number of authorized shares from 4,000,000,000 to20,000,000,000 shares and in the number of issued and fully paid shares from 1,035,500,000to 5,177,500,000 shares.

During the period of August 1, 2004 to December 31, 2006, the Company had issuedadditional 256,433,500 B shares in connection with the exercise of its Employee Stock Option

s I and II. The ESOP prograAnnual General Meeting held on June 26, 2003.

As of June 30, 2015, the outstanding bonds issued to the public by the Company anda subsidiary were as follows:

Bond (Note 19) Effective Date Traded on:

1.Fifth Indosat Bonds in Year 2007 SeriesB with Fixed Rates May 29, 2007 Indonesia Stock Exchange

2.Seventh Indosat Bonds in Year 2009 withFixed Rates December 8, 2009 Indonesia Stock Exchange

3. Indosat Sukuk Ijarah IV in Year 2009 December 8, 2009 Indonesia Stock Exchange

4 Guaranteed Notes Due 2020 July 29, 2010 Singapore Exchange Securities TradingLimited

5. Eighth Indosat Bonds in Year 2012 withFixed Rates

June 27, 2012 Indonesia Stock Exchange

6. Indosat Sukuk Ijarah V in Year 2012 June 27, 2012 Indonesia Stock Exchange

7. Shelf Registration Indosat Bond I Phase Iin Year 2014 with Fixed Rates

December 12, 2014 Indonesia Stock Exchange

8. Shelf Registration Indosat Sukuk Ijarah IPhase I in Year 2014

December 12, 2014 Indonesia Stock Exchange

9. Shelf Registration Indosat Bond I PhaseII in Year 2015 with Fixed Rates


10. Shelf Registration Indosat Sukuk Ijarah IPhase II in Year 2015 with Fixed Rates


c. Directors, Commissioners and Audit Committee

Based on resolutions at the AGMS held on June 10, 2015, EGMS held on January 28, 2015,and AGMS held on May 22, 2014 and June 18, 2013, which are notarized under Deeds No.27, No. 55, No. 98 and No. 84 of Aryanti Artisari S.H., M.Kn. on the same dates, the

s Board of Commissioners and Board of Directors as of June 30,2015, December 31, 2014 and January 1, 2014, respectively, is as follows:





c. Directors, Commissioners and Audit Committee (continued)

Board of Commissioners: June 30, 2015 December 31, 2014 January 1, 2014

President Commissioner Dr. Nasser Mohammed H.E Sheikh Abdulla bin H.E Sheikh Abdulla binMarafih Mohammed S.A. Mohammed S.A.

Al Thani Al Thani

Commissioner Ahmed Yousef Ebrahim Dr. Nasser Mohammed Dr. Nasser MohammedAl-Derbesti Marafih Marafih

Commissioner Khalid Ibrahim A. AlMahmoud - Rachmad Gobel

Commissioner Richard Farnsworth Richard Farnsworth Richard Farnsworth

Seney(i)

Seney(i)

Seney(i)

Commissioner Astera Primanto Bhakti - Rionald Silaban

Commissioner Elisa Lumbantoruan(i)

- Rudiantara(i)

Commissioner Chris Kanter Chris Kanter(i)

Chris Kanter(i)

Commissioner Cynthia Alison Gordon Cynthia Alison Gordon Cynthia Alison Gordon

Commissioner Wijayanto Samirin(i)

Soeprapto(i)

Soeprapto(i)

Commissioner Beny Roelyawan Beny Roelyawan Beny Roelyawan

Board of Directors: June 30, 2015 December 31, 2014 January 1, 2014

President Director and ChiefExecutive Officer Alexander Rusli Alexander Rusli(ii) Alexander Rusli

Director and Chief FinancialOfficer Curt Stefan Carlsson(iii) Curt Stefan Carlsson Curt Stefan Carlsson

Director and Chief Sales &Distribution Officer(previously Director andChief Commercial Officer) Joy Wahjudi(iv) Joy Wahjudi -

Director and ChiefTechnology Officer John Martin Thompson John Martin Thompson -

Director and Chief Wholesaleand Enterprise Officer(previously Director and

Chief Wholesale andInfrastructure Officer) Sarwoto Atmosutarno(v) Fadzri Sentosa Fadzri Sentosa

(i) Independent Commissioner

(ii) Appointed as independent director to comply with Regulation 1-A of the Indonesia Stock Exchange.

(iii) Based on the minutes of the AGMS dated June 10, 2015, Mr. Curt Stefan Carlsson was replaced by Mr. Caba Pinter as a Director and Chief FinancialOfficer, which was effective on July 10, 2015.

(iv) Based on the minutes of EGMS dated January 28, 2015, Mr. Alexander Rusli was replaced by Mr. Joy Wahjudi as independent Director.

(v) Based on the minutes of the AGMS dated June 10, 2015, Mr. Sarwoto Atmosutarno was appointed as a Director and Chief Wholesale and EnterpriseOfficer, which was effective on the same date. On July 8, 2015 the Board of Commisioners released a resolution to temporarily discharge Mr. SarwotoAtmosutarno as a member of Board of Director until the next AGMS.





c. Directors, Commissioners and Audit Committee (continued)

June 30, 2015, December 31, 2014and January 1, 2014, is as follows:

June 30, 2015 December 31, 2014 January 1, 2014

Chairman Richard Farnsworth Seney Richard Farnsworth Seney Richard Farnsworth Seney

Member Chris Kanter Chris Kanter Chris Kanter

Member -(vi)

- Rudiantara

MemberUnggul Saut MarupaTampubolon

Unggul Saut MarupaTampubolon

Unggul Saut MarupaTampubolon

Member Kanaka Puradiredja Kanaka Puradiredja Kanaka Puradiredja

(vi) Subsequently, based on BOC Resolution dated July 8, 2015, Mr. Elisa Lumbantoruan was appointed as a member of Audit Committee.

The Company and its subsidiaries have approximately 4,229, 4,185 and 4,200employees, including non-permanent employees, as of June 30, 2015, December 31, 2014and January 1, 2014, respectively.

d.

As of June 30, 2015, December 31, 2014 and January 1, 2014, the Company has direct andindirect ownership in the following Subsidiaries:

Name of Subsidiary Location Principal Activity

Start ofCommercialOperations

Percentage ofOwnership (%)

as ofJune 30, 2015

Percentage ofOwnership (%) as ofDecember 31, 2014,and January 1, 2014

Indosat Palapa Company(1) Amsterdam Finance 2010 100.00 100.00

Indosat Mentari Company(1) Amsterdam Finance 2010 100.00 100.00

Indosat Singapore Pte.

Singapore Telecommunication 2005 100.00 100.00

PT Indosat Mega Media

Jakarta Multimedia 2001 99.85 99.85

PT Interactive Vision(2) Jakarta Pay TV - 99.83 99.83

PT Starone Mitra Semarang Telecommunication 2006 84.08 72.54

Telekomunikasi(4)

PT Aplikanusa Lintasarta Jakarta Data 1989 72.36 72.36

Communication

PT Lintas Media Danawa Jakarta Information and 2008 50.65 50.65(3) Communication

Services

PT Artajasa Pembayaran Jakarta Telecommunication 2000 39.80 39.80(3)

PT Portal Bursa Digital Jakarta Digital 2015 62.00 -(5) Telecommunication





d. (continued)

Total Assets (Before Eliminations)

Name of subsidiary June 30, 2015 December 31, 2014 January 1, 2014

IPBV(1)

8,919,776 8,317,283 8,128,654IMBV

(1)8,911,727 8,308,978 8,120,891

ISPL 118,282 99,352 116,223IMM 906,678 907,250 853,065IVM

(2)6,264 6,054 5,681

SMT(4)

253,793 247,102 236,781Lintasarta 2,563,059 2,398,613 2,196,079LMD

(3)4,923 6,960 7,332

APE(3)

561,783 496,944 422,165PBD

(5)41,167 - -

(1) IPBV and IMBV were incorporated in Amsterdam on April 28, 2010 to engage in treasury activities, to lend and borrow money, whether in the form ofsecurities or otherwise, to finance enterprises and companies, and to grant security in respect of their respective obligations or those of their Groupcompanies and third parties.

(2) IVM, a subsidiary of IMM, was established on April 21, 2009 to engage in Pay TV services. IMM made capital injections to IVM on March 9 and 30, 2011totaling Rp4,999. On July 12, 2011, IVM obtained the license to conduct its Pay TV services. However, as of June 30, 2015, IVM has not started itscommercial operations.

(3) Lintasarta has direct 55% and 70% ownership in APE and LMD, respectively.(4) On July 11, 2013, the Company made additional capital injection to SMT amounting to Rp16,549, resulting in the increase of th ownership in

SMT from 72.54% to 84.08%. On June 30, 2015, the Company entered into an early termination agreement for Fixed Wireless Access (FWA/CDMA)revenue sharing arrangement between the Company and SMT.

(5) PBD was established on February 12, 2015 in Jakarta as a collaboration between the Company and Smaato Inc., which is engaged in the web portal.The Company made an initial capital injection amounting to Rp1,606 which represented 51.40%. Furthermore, on May 18, 2015, the Company madeadditional capital injection to PBD amounting to Rp34,383, which increased the Company's ownership in PBD to 62.00%.

e. Merger of the Company, Satelindo, Bimagraha and IM3

Based on Merger Deed No.Warsito, S.H., the Company, SatelindoPTentity. All assets and liabilities owned by Satelindo, Bimagraha and IM3 were transferred to theCompany on the merger date. These three companies were dissolved by operation of lawwithout the need to undergo the regular liquidation process.

merged with the Company, or as the entities that entered into contractual agreements thatwere taken over by the Company as a result of the merger.

f. Approval and Authorization for the Issuance of the Interim Consolidated FinancialStatements

The fair presentation of theseinterim consolidated financial statements in accordance with Indonesian Financial AccountingStandards, which were approved and authorized for issuance by the Board of Directors of theCompany on August 27, 2015, as reviewed and recommended for approval by the AuditCommittee of the Company on such date.




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Presentation of Interim Consolidated Financial Statements

The interim consolidated financial statements have been prepared in accordance withIndonesian Financial Accounting Standards, which comprise the Statements andInterpretations issued by the Financial Accounting Standards Board of the Indonesian Institute

, and the Regulation No. VIII.G.7 regarding the Presentation andDisclosures of Financial Statements of issuers issued by BAPEPAM-LKas enclosed in the Decision Letter No. KEP-347/BL/2012 of the Chief of BAPEPAM-LK .

The interim consolidated financial statements are prepared in accordance with Statement ofFinancial Accounting Standar

The interim consolidated financial statements, except for the interim consolidated statement ofcash flows, have been prepared on the accrual basis using the historical cost concept ofaccounting, except as disclosed in the relevant notes herein.

The interim consolidated statement of cash flows, which has been prepared using the directmethod, presents receipts and disbursements of cash and cash equivalents classified intooperating, investing and financing activities.

The preparation of the interim consolidated financial statements in conformity with IndonesianFinancial Accounting Standards requires the use of certain critical accounting estimates andassumptions. It also requires management to exercise its judgement in the process of applying

ement orcomplexity, or areas where judgements and estimates are significant to the interimconsolidated financial statements are disclosed in Note 3.

Functional and presentation currency

the c

Figures in the interim consolidated financial statements are rounded in millions of Rupiah,unless otherwise stated.

Interpretations of Statements of Financial Accounting Standards (

The following standards have been adopted by the Group for the first time for the financial yearbeginning on or after January 1, 2015 and have a material impact on the financialstatements:

- Amendment to PSAK 1 resentation of Financial Statements regarding othercomprehensive income. The main change resulting from the amendment is the

of whether they are potentially reclassifiable to profit or loss subsequently (reclassificationadjustments).

- Instrumentsoffsetting financial assets and liabilities on the statement of financial position.

-related to offsetting.




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

a. Basis of Presentation of Interim Consolidated Financial Statements (continued)

Changes to the Statements of FinancialInterpretations of Statement (continued)

- Value Mby providing a precise definition of fair value and a single source of fair value measurementand disclosure requirements. The requirements do not extend the use of fair valueaccounting but provide guidance on how it should be applied where its use is alreadyrequired or permitted by other PSAKs.

- PSAK Benefits .policies have been: to immediately recognize all past service costs and to replace interestcost and expected return on plan assets with a net interest amount that is calculated byapplying the discount rate to the net defined benefit liability (asset). In addition, all actuarialgains or losses related to post-employment benefit obligations are recognized as othercomprehensive income. See note 2c for the impact on the financial statements.

The adoption of the following revised interpretation of the accounting standards, which are

accounting policies and had no material effect on the amounts reported for the current periodinterim consolidated financial statements:

-- s- PSAK 46 (revised 2014- PSAK 48 (revised 2014 of assets- PSAK 55 (revised 2014 s: Recognition and Measurement"- PSAK 65 (revised 2014--- ISAK 26, of embedded derivatives-- Withdrawal of ISAK 7 "Consolidation - special purpose entities"- Withdrawal of ISAK 12 "Jointly controlled entities: Non-monetary contribution by venturers"

b. Principles of Consolidation

Subsidiaries

The interim consolidated financial statements include the financial statements of the Companyand its subsidiaries. Subsidiaries are all entities over which the Group has control. The Groupcontrols an entity when the Group is exposed to, or has rights to, variable returns from itsinvolvement with the entity and has the ability to affect those returns through its power over theentity. Subsidiaries are fully consolidated from the date on which the control is transferred tothe Group. They are de-consolidated from the date on which that control ceases.

The acquisition method is used to account for business combinations. The considerationtransferred for the acquisition of a subsidiary is the fair value of the assets given, shares issuedor liabilities incurred or assumed at the date of acquisition. The excess of the aggregate of theconsideration transferred, and the fair value of non-controlling interest over the net identifiableassets acquired and liabilities assumed. If this consideration is lower than the fair value of thenet assets of the subsidiary acquired, the difference is recognized directly in the profit or loss.





b. Principles of Consolidation (continued)

Subsidiaries (continued)

Inter-company transactions, balances and unrealized gains on transactions between groupcompanies are eliminated. Unrealized losses are also eliminated unless the transactionprovides evidence of an impairment of the transferred assets.

The financial statements of the subsidiaries are prepared for the same reporting period as theGroup. When necessary, adjustments are made to bring the accounting policies in line withthose of the Group.

Below is the summarized financial information for a subsidiary that has non-controlling interestthat are material to the Group.

LINTASARTA31 December 1 January

30 June 2015 2014 2014

CURRENT:Assets 1,268,186 1,221,848 1,143,044Liabilities (367,064) (297,530) (307,845)

Total current net assets 901,122 924,318 835,199

NON-CURRENT:Assets 1,294,873 1,176,765 1,053,035Liabilities (82,448) (72,512) (91,846)

Total non-current net assets 1,212,425 1,104,253 961,189

NET ASSETS 2,113,547 2,028,571 1,796,388

LINTASARTASix-month periods ended

30 June2015 2014

Revenues 888,814 803,693Profit before income tax 232,165 211,169Income tax expense (56,591) (55,972)Profit for the period 175,574 155,197

Total comprehensive income 175,574 155,197

Total comprehensive incomeattributable to non-controlling interest 29,394 20,737

Dividends paid to non-controlling interest 16,602 18,391





b. Principles of Consolidation (continued)

Associates

Associates are all entities over which the Group has significant influence but not control,generally accompanying a shareholding of between 20% and 50% of the voting rights.Investments in associates are accounted for using the equity method of accounting and areinitially recognizon acquisition.

post-acquisition profits or loss are recognized in the profit or loss, andits share of post-acquisition movements in other comprehensive income is recognized in othercomprehensive income with a corresponding adjustment to the carrying amount of theinvestment.

The Group determines at each reporting date whether there is any objective evidence that theinvestment in the associate is impaired. If this is the case, the Group calculates the amount ofimpairment as the difference between the recoverable amount of the associate and its carryingvalue and recognizes the amou (loss) of associates in the profit orloss.

Unrealized gains on transactions between the Group and its associates are eliminated to theinterest in the associates. Unrealized losses are also eliminated unless

the transaction provides evidence of an impairment of the asset being transferred.

c. Restatement of Consolidated Financial Statements

Effective January 1, 2015, the Group has retrospectively adopted PSAK 24 (Revised 2013):.

under the previous version and (ii) significant changes in the recognition, presentation anddisclosure of post-employment benefits which, among others, are as follows:

Actuarial gains and losses are now required to be recognized in other comprehensiveincome (OCI) and excluded permanently from profit or loss.

Expected return on plan assets will no longer be recognized in profit or loss. Expectedreturns are replaced by recognizing interest income (or expense) on the net defined benefitasset (or liability) in profit or loss, which is calculated using the discount rate used tomeasure the pension obligation.

Unvested past service costs can no longer be deferred and recognized over the futurevesting period. Instead, all past service costs will be recognized at the earlier of when theamendment/curtailment occurs or when the Group recognizes related restructuring ortermination costs.





c. Restatement of Consolidated Financial Statements (continued)

The impacts of the restatement are as follows:

As of January 1, 2014:

January 1, 2014(As previously Restatement January 1, 2014

reported) adjustments (As restated)

ASSETSCurrent assets

Prepaid expenses - others 373,220 (37) 373,183Non-current Assets

Deferred tax asset - net 96,057 5,796 101,853Long-term prepaid pension

- net of current portion 81,826 41,988 123,814Long-term receivables 12,838 (2,592) 10,246

LIABILITIESCurrent liabilities

Accrued expenses 2,085,034 (340) 2,084,694Non-current Liabilities

Deferred tax liabilities - net 893,285 91,391 984,676Long-term employee benefit

obligations - net of currentportion 1,046,414 (299,443) 746,971

EQUITYRetained earnings - unappropriated 12,877,143 37,340 12,914,483Remeasurement gains on

defined benefit plans - 222,054 222,054Non-controlling interests 603,435 (5,847) 597,588

As of December 31, 2014:

December 31, 2014(As previously

reported)Restatementadjustments

December 31, 2014(As restated)

ASSETSCurrent assets

Prepaid expenses - others 427,720 (708) 427,012Non-current Assets

Deferred tax asset - net 85,181 6,876 92,057Long-term prepaid pension

- net of current portion 75,080 11,652 86,732Long-term receivables 10,177 (2,964) 7,213

LIABILITIESCurrent liabilities

Accrued expenses 2,150,949 (35) 2,150,914Non-current Liabilities

Deferred tax liabilities - net 662,929 42,988 705,917Long-term employee benefit

obligations - net of currentportion 1,091,315 (130,688) 960,627

EQUITYRetained earnings - unappropriated 10,889,973 16,146 10,906,119Remeasurement gains on

defined benefit plans - 92,268 92,268Non-controlling interests 686,542 (5,823) 680,719





b. Restatement of Consolidated Financial Statements (continued)

The impacts of the restatement are as follows: (continued)

For the six-month period ended June 30, 2014:

Six-month periodended June 30, 2014

(As previouslyreported)

Restatementadjustments

Six-month periodended June 30, 2014

(As restated)

EXPENSEPersonnel (843,576) (5,110) (848,686)

INCOME TAX BENEFIT(EXPENSE)

Deferred 79,086 868 79,954

PROFIT (LOSS) FOR THEPERIOD ATTRIBUTABLE TO:

Owners of the Parent (1,112,369) (4,885) (1,117,254)Non-controlling interests 54,673 643 55,316

OTHER COMPREHENSIVEINCOME (LOSS)

Remeasurement gains ondefined benefit plan beforeincome tax effect - 6,831 6,831

Income tax effect - (1,708) (1,708)

Remeasurement gains ondefined benefit plan afterincome tax effect - 5,123 5,123

BASIS AND DILUTED LOSSPER SHARE ATTRIBUTABLETO OWNERS OF THE PARENT(in full Rupiah) (204.71) (0.90) (205.61)

d. Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and cash in banks and all unrestricted timedeposits (including deposits on call) with original maturities of three months or less at the timeof placement.

Time deposits which are pledged as collateral for bank guarantees are not classified as part of

-

e. Inventories

Inventories, which mainly consist of Subscriberpacks, broadband modems, cellular handsets and pulse reload vouchers, are valued at thelower of cost or net realizable value. Net realizable value is the estimated selling price in theordinary course of business less selling expenses. Cost is determined using the weightedaverage method.

A provision for impairment of inventory is determined on the basis of the estimated future salesof individual inventory items.





f. Prepaid Frequency Fee and Licenses and Other Prepaid Expenses

Prepaid frequency fee and licenses and other prepaid expenses, which mainly consist offrequency fee, rentals, upfront fee of 3G and BWA licenses, advertising and insurance, areexpensed as the related asset is utilized. The non-current portions of prepaid rentals andupfront fee of 3G and BWA licenses are presented -term Prepaid Expenses -

-term Prepaid Licenses -respectively.

g. Property and Equipment

Property and equipment are stated at cost which includes freight costs, handling costs, sitepreparation costs, installation costs, internal labour costs, and certain capitalized borrowingcosts incurred during the construction phase, less accumulated depreciation and impairment invalue.

Depreciation is applied from the date the assets are put into service or when the assets areready for service, except land, using the straight-line method over their estimated useful lives,as follows:

Years

Buildings 20 to 40Information technology equipment 3 to 5Office equipment 3 to 5Building and leasehold improvements 3 to 25Vehicles 3 to 5Cellular technical equipment 8Transmission and cross-connection equipment 3 to 15

technical equipment 7Operation and maintenance center and measurement unit 3 to 5Fixed access network equipment 3 to 10

The residual values, useful lives and methods of depreciation of property and equipment arereviewed and adjusted prospectively, if appropriate, at each financial period end.

In accordance with ISAK 25, landrights,including the legal costs incurred at initial acquisition of landrights, are stated at cost and notamortized. Specific costs associated with the renewal or extension of land titles are deferredand amortized over the legal term of the landrights or economic life of the land, whicheverperiod is shorter.

The cost of maintenance and repairs is charged to profit or loss as incurred; significant

capitalized. When property and equipment are retired or otherwise disposed of, their costs andthe related accumulated depreciation are derecognized from the accounts, and any resultinggains or losses are recognized in profit or loss.

Property and equipment acquired in exchange for a non-monetary asset or for a combinationof monetary and non-monetary assets are measured at fair values unless:

(i) the exchange transaction lacks commercial substance, or

(ii) the fair value of neither the assets received nor the assets given up can be measuredreliably.





g. Property and Equipment (continued)

The acquired assets are measured this way even if the Group cannot immediately derecognizethe assets given up. If the acquired assets cannot be reliably measured at fair value, theirvalue is measured at the carrying amount of the assets given up plus cash consideration.

The accumulated costs of the construction of buildings and the installation of equipment arecapitalized as property and equipment under construction and installation. These costs arereclassified to property and equipment when the construction or installation is complete.

Property and equipment under construction and installation are stated at cost, which includes

as interest, finance charges in respect of finance leases and foreign exchange differences(estimated quarterly to the extent that they are regarded as an adjustment to interest costs bycapping the exchange differences taken as borrowing costs at the amount of borrowing costson the functional currency equivalent borrowings) that can be attributed to qualifying assets,are capitalized to the cost of property and equipment under construction and installation. Otherborrowing costs are recognized as an expense in the period in which they are incurred.Capitalization of borrowing costs ceases when the construction or installation is completed andthe constructed or installed asset is ready for its intended use.

h. Intangible assets

a) Goodwill

Goodwill is initially measured as the excess of the aggregate of the considerationtransferred, and the fair value of non-controlling interest over the net identifiable assetsacquired and liabilities assumed. If this consideration is lower than the fair value of the netassets of the subsidiary acquired, the difference is recognized directly in the profit or loss.Goodwill on acquisitions of subsidiaries is included in intangible assets.

For the purpose of impairment testing, goodwill acquired in a business combination isallocated to each of the CGUs, or groups of CGUs, that is expected to benefit from thesynergies of the combination. Each unit or group of units to which the goodwill is allocatedrepresents the lowest level within the entity at which the goodwill is monitored for internalmanagement purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events orchanges in circumstances indicate a potential impairment. The carrying value of goodwill iscompared to the recoverable amount, which is the higher of value in use and the fair valueless costs of disposal. Any impairment is recognized immediately as an expense and is notsubsequently reversed.

b) Other intangible assets

Separately acquired intangible assets are shown at historical cost. Intangible assetsacquired in a business combination are recognized at fair value at the acquisition date.Intangible assets have a finite useful life and are carried at cost less accumulatedamortization. Amortization is calculated using the straight-intangible assets consist of separately acquired non-integrated software (software which isnot an integral part of the related hardware) and other intangible assets arising from theacquisition of Satelindo in 2002.





h. Intangible assets (continued)

b) Other intangible assets (continued)

Other intangible assets are amortized using the straight-line method based on the estimateuseful lives of the assets as follows:

YearsCustomer base- Prepaid 6- Post-paid 5Spectrum license 5Brand 8Non-integrated software 5

Software which is not an integral part of the related hardware are amortized using thestraight-line method over 5 years

i. Impairment of Non-financial Assets

Goodwill is not subject to amortization but is tested annually for impairment, or more frequentlyif events or changes in circumstances indicate that they might be impaired. Assets that aresubject to amortization are reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. An impairment loss is

value in use. For the purposes of assessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cash flows. Non-financial assets other thangoodwill that suffer impairment are reviewed for possible reversal of the impairment at eachreporting date.

Reversal on impairment loss for assets other than goodwill would be recognized if, and only if,

since the last impairment test was carried out. Reversal on impairment losses will beimmediately recognized on profit or loss. Impairment losses relating to goodwill would not bereversed.

j. Leases

The determination of whether an arrangement is, or contains, a lease is based on thesubstance of the arrangement at the inception date. The arrangement is assessed for whetherfulfilment of the arrangement is dependent on the use of a specific asset or assets or thearrangement conveys a right to use the asset or assets, even if that right is not explicitlyspecified in the arrangement.

Group as a lessee

A finance lease that transfers to the Group substantially all the risks and benefits incidental toownership of the leased item, is capitalized at the commencement of the lease at the fair valueof the leased property or, if lower, at the present value of the minimum lease payments. Leasepayments are apportioned between finance charges and reduction of the lease liability so as toachieve a constant rate of interest on the remaining balance of the liability. Finance chargesare recognized in financing cost in profit or loss.





j. Leases (continued)

Group as a lessee (continued)

A leased asset is depreciated over the useful life of the asset. However, if there is noreasonable certainty that the Group will obtain ownership by the end of the lease term, theasset is depreciated over the shorter of the estimated useful life of the asset and the leaseterm.

The current portion of obligations under finance lease is presented as part of Other CurrentFinancial Liabilities.

Leases in which a significant portion of the risks and rewards of ownership are retained by thelessor are classified as operating leases.

Operating lease payments are recognized as an operating expense in profit or loss on astraight-line basis over the lease term.

Group as a lessor

A lease in which the Group does not transfer substantially all the risks and benefits of theownership of an asset is classified as an operating lease. Initial direct costs incurred innegotiating an operating lease are added to the carrying amount of the leased asset andrecognized over the lease term on the same basis as rental income. Contingent rents, if any,are recognized as revenue in the period they are earned.

A lease in which the Group transfers substantially all the risks and benefits of the ownership ofan asset is classified as a finance lease. The leased asset is recognized as asset held under afinance lease in the interim consolidated statement of financial position and is presented as areceivable at an amount equal to the net investment in the lease. Costs incurred by the Groupin connection with negotiating and arranging a lease are recognized as an expense when theselling profit is recognized.

Sale-and-leaseback transactions

When the Group enters into a sale-and-leaseback transaction, the Group analyzes if theleaseback arrangement meets the criteria of a finance lease or operating lease. Where theclassification results in a finance lease, any excess of sales proceeds over the carrying valueof the asset sold is deferred and amortized over the lease term. Where the transaction isclassified as an operating lease and it is clear that the transaction is established at fair value,any profit or loss is recognized immediately.

k. Revenue and Expense Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow tothe Group and the revenue can be reliably measured. Revenue is measured at the fair value of

following specific recognition criteria must also be met before revenue is recognized:





k. Revenue and Expense Recognition (continued)

Cellular

Cellular revenues arising from airtime and roaming calls are recognized based on the duration

basis, while value added service revenue is presented on a net basis after compensation tocontent providers.

For post-paid subscribers, monthly service fees are recognized as the service is provided.

Sales of initial/reload vouchers are recorded as unearned revenue and recognized as revenueupon usage of the airtime or upon expiration of the airtime.

Sales of wireless broadband modems and cellular handsets are recognized upon delivery tothe customers.

Revenues from wireless broadband data communications are recognized based on theduration of usage or fixed monthly charges depending on the arrangement with the customers.

Customer Loyalty Program

The customer loyalty program allowed customers to accumulate points for every reload andpayment by the prepaid and post-paid subscribers, respectively. The points could then beredeemed for free telecommunications and non-telecommunications products, subject to aminimum number of points being obtained.

Customer loyalty credits are accounted for as a separate component of the sales transaction inwhich they were granted. The Company records a liability at the time of reload and payment byits prepaid and post-paid subscribers, respectively, based on the fair value expected to beincurred to supply products in the future. The consideration received is allocated between thecellular products sold and the points issued, with the consideration allocated to the pointsequal to their fair value. Fair value of the points issued is deferred and recognized as revenuewhen the points are redeemed, the redemption period expired or when the program isterminated.

Dealer Commissions

Consideration in the form of sales discount given by the Company to a dealer is recognized asa reduction of revenue.

If the Company receives, an identifiable benefit in exchange for a consideration given by theCompany to a dealer, and the fair value of such benefit can be reasonably estimated, theconsideration will be recorded as a marketing expense.

Tower Leasing

Revenue arising from tower leasing classified as an operating lease is recognized on thestraight-line basis over the lease term based on the amount stated in the agreement betweenthe Company and the lessee.






Cellular (continued)

Multiple-element Arrangements

Where two or more revenue-generating activities or deliverables are sold under a singlearrangement, each deliverable that is considered to be a separate unit of accounting isaccounted for separately. The total revenue is allocated to each separately identifiablecomponent based on the relative selling prices of each component and the appropriaterevenue recognition criteria are applied to each component as described above.

MIDI

Internet

Revenues from installation services are deferred and recognized over the expected averageperiod of the customer relationship. Revenues from monthly service fees are recognized as theservices are provided. Revenues from usage charges are recognized monthly based on theduration of internet usage or based on the fixed amount of charges, depending on thearrangement with the customers.

Internet Protocol Virtual Private Network (IP VPN), Multiprotocol Label Switching (MPLS),Frame Net, World Link and Direct Link

Revenues arising from installation services are deferred and recognized over the expectedaverage period of the customer relationship. Revenues from monthly service fees arerecognized as the services are provided.

Satellite Operating Lease

Revenues are recognized on the straight-line basis over the lease term.

Revenues from other MIDI services are recognized when the services are rendered.

Fixed Telecommunications

International Calls

Revenue from outgoing international call traffic is reported on a gross basis.

Fixed Wireless

Fixed wireless revenues arising from usage charges are recognized based on the duration ofsuccessful calls made

For post-paid subscribers, monthly service fees are recognized as the services are provided.

For prepaid subscriber, sale of initial/reload vouchers is recorded as unearned income andrecognized as income upon usage of the airtime or upon expiration of the airtime.

Fixed Line

Revenues from fixed line installations are deferred and recognized over the expected averageperiod of the customer relationship. Revenues from usage charges are recognized based onthe






Interconnection Revenue

Revenues from network interconnection with other domestic and internationaltelecommunications carriers are recognized monthly on the basis of the actual recorded trafficfor the month.

Agency Relationships

Revenues from agency relationship are recorded based on the gross amount billed to thecustomer when the Group acts as a principal in the sale of services.

When the Group acts as an agent and earns commission from the supplier of the service,revenue is recorded based on the net amount retained (the amount paid by the customer lessthe amount paid to the supplier).

Expenses

Interconnection Expenses

Expenses from network interconnection with other domestic and internationaltelecommunications carriers are accounted for as operating expenses in the period these areincurred.

Other Expenses

Expenses are recognized when they are incurred.

l. Termination benefits

Termination benefits are payable when employment is terminated by the Group before thenormal retirement date, or whenever an employee accepts voluntary redundancy in exchangefor these benefits. The Group recognizes termination benefits at the earlier of the followingdates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when theentity recognizes costs for a restructuring and involves the payment of termination benefits.Benefits falling due more than 12 months after the end of the reporting period are discountedto their present value.

m. Long-term Employee Benefits

Pension plan

actuarial calculation using the projected-unit-credit method and applying the assumptions ondiscount rate, and annual rate of increase in compensation.

All remeasurements, comprising of actuarial gains and losses, and the return of plan assets(excluding net interest) are recognized immediately through other comprehensive income inorder for the net pension asset or liability recognized in the interim consolidated statement offinancial position to reflect the full value of the plan deficit and surplus. Remeasurements arenot reclassified to profit or loss in subsequent periods.

All past service costs are recognized at the earlier of when the amendment/curtailment occursand when the related restructuring or termination costs are recognized. As a result, unvestedpast service costs can no longer be deferred and recognized over the future vesting period.





m. Long-term Employee Benefits (continued)

Pension plan (continued)

The interest cost and expected return on plan assets used in the previous version of PSAK 24(Revised 2013) are replaced with a net-interest amount, which is calculated by applying thediscount rate to the net defined benefit liability or asset at the start of each annual reportingperiod.

Post-retirement healthcare benefits

The Company provides post-retirement healthcare benefits to their retirees. The expectedcosts of these benefits are accrued over the period of employment using the same accountingmethodology as used for defined benefit pension plans. Actuarial gains and losses arising fromexperience adjustments and changes in actuarial assumptions are charged or credited toequity in other comprehensive income in the period in which they arise. These obligations arevalued annually by independent qualified actuaries.

Other long-term employee benefits

The Group provides long service awards and leave benefits for some of its employees. Theentitlements to these benefits are usually based on the completion of a certain service periodby the employee in accordance with the Collective Labor Agreement. The estimated costs ofthese benefits are recognised over the period of employment. These benefits are accountedfor using the same methodology as for the defined benefit pension plan, except for actuarialgains and losses which are recognized in profit or loss. These obligations are valued annuallyby an independent qualified actuary.

n. Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and afinancial liability or equity instrument of another entity.

1. Financial assets

Initial recognition

Financial assets within the scope of PSAK 55 (Revised 2014) are classified as financialassets at fair value through profit or loss, loans and receivables, held-to-maturityinvestments, or available-for-sale financial assets, as appropriate. The Group determinesthe classification of its financial assets at initial recognition.

All financial assets are recognized initially at fair value plus transaction costs, except in thecase of financial assets which are recorded at fair value through profit or loss.

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

receivable, due from related parties, derivative assets, and other current and non-currentfinancial assets (quoted and unquoted financial instruments).





n. Financial Instruments (continued)

1. Financial assets (continued)

Subsequent measurement

The subsequent measurement of financial assets depends on their classification asfollows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held fortrading and financial assets designated upon initial recognition at fair value throughprofit or loss.

Financial assets at fair value through profit or loss are financial assets held for trading.A financial asset is classified in this category if acquired principally for the purpose ofselling in the short term. Derivatives, including separated embedded derivatives, arealso classified as held for trading unless they are designated as effective hedginginstruments. Financial assets at fair value through profit or loss are carried in theinterim consolidated statement of financial position at fair value, with changes in fairvalue recognized in profit or loss. Asset in this category are classified as current assetsif expected to be settled within 12 months, otherwise they are classified as non-current.

derivative assets.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. After initial measurement, suchfinancial assets are subsequently measured at amortized cost using the effective

into account any discount or premium on acquisition and fees or costs that are anintegral part of the EIR. The EIR amortization is included in profit or loss. The lossesarising from impairment are also recognized in profit or loss.

and other accounts receivable, duefrom related parties, other current financial assets and other non-current financialassets are included in this category. They are included in current assets, except formaturities greater than 12 months after the end of the reporting period. These areclassified as non-current assets.

Available-for-sale (AFS) financial assets

AFS financial assets are non-derivative financial assets that are designated asavailable- for-sale or are not classified in any of the three other categories. They areincluded in non-current assets unless the investment matures or management intendsto dispose within 12 months from the end of the reporting period. After initialmeasurement, AFS financial assets are measured at fair value with unrealized gains orlosses recognized in other comprehensive income until the investment isderecognized, at which time the cumulative gain or loss is recognized, or determinedto be impaired, and is reclassified from other comprehensive income to profit or loss.






1. Financial assets (continued)

Subsequent measurement (continued)

Available-for-sale (AFS) financial assets (continued)

The Group has the following investments classified as AFS:

- Investments in shares of stock that do not have readily determinable fair value inwhich the equity interest is less than 20%. These are carried at cost lessallowance for impairment.

- Investments in shares of stock that have readily determinable fair value in whichthe equity interest is less than 20% and which are classified as available-for-sale.These are recorded at fair value.

The Group financial assets classified as AFS is presented as part of non-currentfinancial assets.

2. Financial liabilities

Initial recognition

Financial liabilities within the scope of PSAK 55 (Revised 2014) are classified as financialliabilities at fair value through profit or loss, loans and borrowings, or as derivativesdesignated as hedging instruments in an effective hedge, as appropriate. The Groupdetermines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognized initially at fair value and, in the case of loans andborrowings, inclusive of directly attributable transaction costs.

accrued expenses, deposits from customers, loans and bonds payable, due to relatedparties, derivative liabilities, and other current and non-current financial liabilities.

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held fortrading and financial liabilities designated upon initial recognition at fair value throughprofit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purposeof selling or repurchasing in the near term. This category includes derivative financialinstruments entered into by the Group that are not designated as hedging instrumentsin hedge relationships as defined by PSAK 55 (Revised 2014). Separated embeddedderivatives are also classified as held for trading unless they are designated aseffective hedging instruments.

Gains or losses on liabilities held for trading are recognized in profit or loss.






2. Financial liabilities (continued)

Subsequent measurement (continued)

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequentlymeasured at amortized cost using the EIR method. The EIR amortization is included infinancing costs in profit or loss.

Gains or losses are recognized in profit or loss when the liabilities are derecognized aswell as through the EIR amortization process.

3. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in theconsolidated statement of financial position if, and only if, there is a currently enforceablelegal right to offset the recognized amounts and there is an intention to settle on a netbasis, or to realize the assets and settle the liabilities simultaneously.

4. Fair value of financial instruments

The Group measures derivatives at fair value at each consolidated statement of financialposition date. Also, fair values of financial instruments measured at amortized cost aredisclosed in Notes 18 and 19.

Fair value is the price that would be received to sell an asset or paid to transfer a liability inan orderly transaction between market participants at the measurement date. The fairvalue measurement is based on the presumption that the transaction to sell the asset ortransfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset orliability.

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that marketparticipants would use when pricing the asset or liability, assuming that market participantsact in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant'sability to generate economic benefits by using the asset in its highest and best use or byselling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and forwhich sufficient data are available to measure fair value, maximizing the use of relevantobservable inputs and minimizing the use of unobservable inputs.






4. Fair value of financial instruments (continued)

All assets and liabilities for which fair value is measured or disclosed in the consolidatedfinancial statements are categorized within the fair value hierarchy, described as follows,based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets orliabilities

Level 2 - Valuation techniques for which the lowest level input that is significant tothe fair value measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant tothe fair value measurement is unobservable

For assets and liabilities that are recognized at fair value in the consolidated financialstatements on a recurring basis, the Group determines whether transfers have occurredbetween Levels in the hierarchy by re-assessing categorization (based on the lowest levelinput that is significant to the fair value measurement as a whole) at the end of eachreporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets andliabilities on the basis of the nature, characteristics and risks of the asset or liability and thelevel of the fair value hierarchy as explained above.

Credit risk adjustment

The Company adjusts the price in the more advantageous market to reflect any differencesin counterparty credit risk between instruments traded in that market and the ones beingvalued for financial asset positions. In determining the fair value of financial liabilitypositions, the Company's own credit risk associated with the instrument is taken intoaccount.

5. Amortized cost of financial instruments

Amortized cost is computed using the EIR method less any allowance for impairment andprincipal repayment or reduction. The calculation takes into account any premium ordiscount on acquisition and includes transaction costs and fees that are an integral part ofthe EIR.

6. Impairment of financial assets

The Group assesses at the end of each reporting period whether there is any objectiveevidence that a financial asset or a group of financial assets is impaired. A financial assetor a group of financial assets is deemed to be impaired if, and only if, there is objectiveevidence of impairment as a result of one or more events that have occurred after the

on the estimated future cash flows of the financial asset or the group of financial assetsthat can be reliably estimated. Evidence of impairment may include indications that thedebtors or a group of debtors are experiencing significant financial difficulty, default ordelinquency in interest or principal payments, the probability that they will enter bankruptcyor other financial reorganization and where observable data indicate that there is ameasurable decrease in the estimated future cash flows, such as changes in arrears oreconomic conditions that correlate with defaults.






6. Impairment of financial assets (continued)

Financial assets carried at amortized cost

For the loans and receivables category, the amount of the loss is measured as theof estimated

future cash flows (excluding future credit losses that have not been incurred)

of the asset is reduced and the amount of the loss is recognized in the profit or loss. Ifa loan has a floating interest rate, the discount rate for measuring any impairment lossis the current effective interest rate determined under the contract. As a practicalexpedient, the Group may measure impairment on the basis of an invalue using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and thedecrease can be related objectively to an event occurring after the impairment wasrecognized (such as an improvement i ersal of thepreviously recognized impairment loss is recognized in the profit or loss.

AFS financial assets

In the case of an equity investment classified as an AFS financial asset, objectiveevidence would include a significant or prolonged decline in the fair value of theinvestment below its cost.

Where there is objective evidence of impairment, the cumulative loss - measured asthe difference between the acquisition cost and the current fair value, less anyimpairment loss on that investment previously recognized in profit or loss - is recycledfrom other comprehensive income to profit or loss. Impairment loss on equityinvestment is not reversed through profit or loss; increase in its fair value afterimpairment is recognized in other comprehensive income.

7. Derecognition of financial assets and liabilities

Financial assets

A financial asset (or where applicable, a part of a financial asset or part of a group ofsimilar financial assets) is derecognized when: (1) the rights to receive cash flows from theasset have expired; or (2) the Group has transferred its rights to receive cash flows fromthe asset or has assumed an obligation to pay the received cash flows in full withoutmaterial delay to a third p -Group has transferred substantially all the risks and rewards of the asset, or (b) the Grouphas neither transferred nor retained substantially all the risks and rewards of the asset, buthas transferred control of the asset.

Financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged orcancelled or has expired.

When an existing financial liability is replaced by another from the same lender onsubstantially different terms, or the terms of an existing liability are substantially modified,such an exchange or modification is treated as a derecognition of the original liability andthe recognition of a new liability, and the difference in the respective carrying amounts isrecognized in profit or loss.






8. Derivative financial instruments

The Company enters into and engages in cross currency swaps, interest rate swaps andforward foreign exchange contracts, if considered necessary, for the purpose of managing

s andbonds payable in foreign currencies. These derivative financial instruments, while providingeffective economic hedges of specific interest rate and foreign exchange risks under the

meet the criteria forhedge accounting as provided in PSAK 55 (Revised 2014) and are initially recognized atfair value on the date the derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value ispositive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value of derivatives during the period,which are entered into as economic hedges that do not qualify for hedge accounting, aretaken directly to profit or loss.

Derivative assets and liabilities are presented under current assets and liabilities,respectively. Embedded derivative is presented with the host contract in the interimconsolidated statement of financial position, which presentation represents an appropriatepicture of overall future cash flows for the instrument taken as a whole.

The net changes in fair value of derivative instruments, swap cost or income, terminationcost or income, and settl(Loss) on Change in Fair Value of Derivatives -

o. Foreign Currency Transactions and Balances

The Group considers the primary indicators and other indicators in determining its functionalcurrency. If indicators are mixed and the functional currency is not obvious, management usesits judgement to determine the functional currency that most faithfully represents the economiceffects of the underlying transactions, events and conditions.

The interim consolidated financial statements are presented in rupiah, which is the Companyfunctional currency and presentation currency. Transactions involving foreign currencies arerecorded at the rates of exchange prevailing at the time the transactions are made. At interimconsolidated statement of financial position date, monetary assets and liabilities denominatedin foreign currencies are adjusted to reflect the prevailing exchange rates at such date and theresulting gains or losses are credited or charged to current operations, except for foreignexchange differentials that can be attributed to qualifying assets which are capitalized toproperties under construction and installation.

The functional currency of IPBV, IMBV and ISPL is the U.S. dollar. As at the end of thereporting period, the assets and liabilities of these subsidiaries are translated into thepresentation currency of the Company at the spot rate which is the exchange rate prevailing atthe end of the reporting period and their statements of comprehensive income are translated atthe average exchange rates during the period. The resulting differences arising from thetranslations of the financial statements of IPBV, IMBV and ISPL are included in other

in the interim consolidated statement of changes in equity.





o. Foreign Currency Transactions and Balances (continued)

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalentsare classified as part of other income or expenses while all other foreign exchange gains andlosses are classified as part of operating profit.

As of June 30, 2015, December 31, 2014, and December 31, 2013, the foreign exchange ratesused (in full amounts) were Rp13,332, Rp12,440, and Rp12,189 respectively, per US$1, whichwere computed by taking the average of the buying and selling rates of bank notes lastpublished by Bank Indonesia for such dates.

p. Income Tax

Current tax expense is provided based on the estimated taxable income for the period.Deferred tax assets and liabilities are recognized for temporary differences between thefinancial and the tax bases of assets and liabilities at each reporting date. Future tax benefits,such as tax losses carryover, are also recognized to the extent that realization of such benefitsis probable. The tax effects for the period are allocated to current operations, except for the taxeffects from transactions which are directly charged or credited to equity.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply inthe period when the assets are realized or the liabilities are settled, based on tax rates (and taxlaws) that have been enacted or substantively enacted at the interim consolidated statement offinancial position date. Changes in the carrying amount of deferred tax assets and liabilitiesdue to a change in tax rates are credited or charged to current operations, except to the extentthat they relate to items previously charged or credited to equity.

The Company recognizes deferred tax liabilities and deferred tax assets associated with itsinvestments in subsidiaries and associates, except:

In respect of taxable temporary differences, when the timing of the reversals of thetemporary differences can be controlled and it is probable that the temporary differenceswill not reverse in the foreseeable future.

In respect of deductible temporary differences, deferred tax assets are recognized only tothe extent that it is probable that the temporary differences will reverse in the foreseeablefuture and taxable income will be available against which the temporary differences can beutilized.

Deferred income tax assets are recognized only to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can be utilized.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right tooffset current tax assets against current tax liabilities and when the deferred income taxesassets and liabilities relate to income taxes levied by the same taxation authority on either thesame taxable entity or different taxable entities where there is an intention to settle thebalances on a net basis.





p. Income Tax (continued)

The amounts of additional tax principal and penalty imposed through a tax assessment letterpart of Income Tax Benefit (Expense) - Current of the current period

in the interim consolidated statement of comprehensive income, unless further settlement issubmitted. The amounts of tax principal and penalty imposed through an SKP are deferred aslong as they meet the asset recognition criteria.

For each of the consolidated entities, the tax effects of temporary differences and tax lossescarryover, which individually are either assets or liabilities, are shown at the applicable netamounts.

q. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided tothe chief operating decision maker. The chief operating decision-maker, who is responsible forallocating resources and assessing performance of the operating segments, has beenidentified as the Board of Directors that makes strategic decisions.

A segment is a distinguishable component of the Group that is engaged in providing certainproducts (business segment), which component is subject to risks and rewards that aredifferent from those of other segments.

Segment revenue, expenses, results, assets and liabilities include items directly attributable toa segment as well as those that can be allocated on a reasonable basis to that segment. Theyare determined before intra-group balances and intra-group transactions are eliminated.

r. Basic and Diluted Earnings (Loss) per Share

The amount of basic earnings (loss) per share is computed by dividing profit (loss) for theperiod attributable to owners of the Parent by the weighted-average number of sharesoutstanding during the period.

There were no potentially dilutive shares as of June 30, 2015 and 2014.

s. Transactions with Related Parties

The Group has transactions with related parties as defined under PSAK 7 (Revised 2010),

The details of the accounts and the significant transactions entered into with related parties arepresented in Note 32.

t. Concession Financial Assets

The Group constructs or upgrades infrastructure (construction or upgrade services) underarrangements to provide public service and operates and maintains that infrastructure(operation services) for a specified period of time. These arrangements may includeinfrastructure used in a public-to-private service concession arrangement for its entire usefullife.





t. Concession Financial Assets (continued)

The arrangements are accounted for based on the nature of the consideration. The financialasset model is used when the Group has an unconditional contractual right to receive cash oranother financial asset from, or at the direction of, the grantor for the construction services.

In the financial asset model, the amount due from the grantor meets the definition of areceivable which is measured at fair value. It is subsequently measured at amortized cost. Theamount initially recognized plus the cumulative interest on that amount is calculated using theeffective interest method.

The consideration received or receivable is allocated by reference to the relative fair values ofthe services provided, typically a construction component and a service element for operatingand maintenance services performed. Revenue from the concession arrangements earnedunder the financial asset model consists of: (i) the fair value of the amount due from thegrantor; and (ii) interest income related to the capital investment in the project.

Assets carried under concession arrangements are derecognized on disposal or when nofuture economic benefits are expected from its future use or disposal or when the contractualrights to the financial assets expire.

u. Provision

A provision is recognized when the Group has a present legal or constructive obligation as aresult of past events; it is probable that an outflow of resources will be required to settle theobligation; and the amount can be reliably estimated. A provision is not recognized for futureoperating losses.

3. EMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the interim consolidated financial statements requires management tomake judgements, estimates and assumptions that affect the reported amounts of revenues,expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of thereporting period. However, uncertainty about these assumptions and estimates could result inoutcomes that require a material adjustment to the carrying amount of the assets or liabilitiesaffected in future periods.

a. Judgements

In the process of applfollowing judgements, apart from those including estimations and assumptions, which have themost significant effect on the amounts recognized in the interim consolidated financialstatements:

Determination of functional currency

The functional currency of each of the entities in the Group is the currency of the primaryeconomic environment in which each entity operates. It is the currency that mainlyinfluences the revenue and cost of rendering services.




3. EMENTS, ESTIMATES AND ASSUMPTIONS(continued)

a. Judgements (continued)

Leases

The Group classifies leases into finance leases or operating leases in accordance with theaccounting policies stated in Note 2j. Determining whether a lease transaction is a financelease or an operating lease is a complex issue and requires substantial judgement as towhether the lease agreement transfers substantially all the risks and rewards of ownershipto or from the Group. Careful and considered judgement is required on various complexaspects that include, but are not limited to, the fair value of the leased asset, the economiclife of the leased asset, whether renewal options are included in the lease term anddetermining an appropriate discount rate to calculate the present value of the minimumlease payments.

The classification as a finance lease or operating lease determines whether the leasedasset is capitalizable and recognized in the interim consolidated statement of financialposition.

The Group has various lease agreements where the Group acts as either a lessee orlessor in respect of certain assets. The Group evaluates whether significant risks andrewards of ownership of the leased asset are transferred to the lessee or retained by theGroup based on PSAK 30 (Revised 2011),judgements and estimates of transfer of risks and rewards of ownership of leased asset.

Tower leases

For tower leases, the unit of account is considered at the level of the slot or site spacebecause the lease is dependent on the use of a specific space in the tower where theCompany places its equipment.

Licenses

In 2006, the Company was granted a license to use 2.1 GHz radio frequency spectrum (a3G mobile communications technology - Note 1a) by the MOCIT. The Company wasobliged to, among others, pay upfront fee and annual radio frequency fee for 10 years(Note 33d). The upfront fee is recorded as part of Long-term Prepaid Licenses for the non-current portion and Prepaid Expenses for the current portion, and amortized over the 10-year license term using the straight-line method.

In 2009, the Company received additional 3G license (Note 1a), and IMM was granted anmunications network using 2.3 GHz

were obliged to, among others, pay upfront fee and annual radio frequency fee for 10years (Note 33d). The upfront fee is recorded as part of Long-term Prepaid Licenses forthe non-current portion and Prepaid Expenses for the current portion, and amortized overthe 10-year license term using the straight-line method.

Management believes, as supported by written confirmation from the Directorate GeneralDGPT , that the 3G and BWA licenses may be returned

at any time without any financial obligation to pay the remaining outstanding annual radiofrequency fees (i.e., the license arrangement does not transfer substantially all the risksand rewards incidental to ownership). Accordingly, the Company and IMM recognize theannual radio frequency fee as prepaid operating lease expense, amortized using thestraight-line method over the term of the rights to operate the 3G and BWA licenses.Management evaluates its plan to continue to use the licenses on an annual basis.





a. Judgements (continued)

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or CGU exceeds its recoverableamount, which is the higher of its fair value less costs to sell and its value in use. The fairvalue less costs to sell calculation is based on available data from binding sales

incremental costs for disposing of the asset. The value in use calculation is based on adiscounted cash flow model. The cash flows are derived from the budget for the next fiveyears and do not include restructuring activities that the Group is not yet committed to or

tested. The recoverable amount is the most sensitive to the discount rate used for thediscounted cash flow model as well as the expected future cash inflows and the growthrate used for extrapolation purposes. The key assumptions used to determine therecoverable amount for the different CGUs, including a sensitivity analysis, are disclosedand further explained in Note 9.

Exchange of asset transactions

During 2010 to 2013, the Group entered into several contracts for the exchange of assetsof a third party supplier with certain existing cellular technical equipment of the Group. Forthe exchange of asset transactions, the Group evaluated whether the transactions

Property, Plant and, which requires the Group to make judgements and estimates of the future

cash flow and the fair value of the asset received and given up as a result of thetransactions. Management considers the exchange of asset transactions to have met thecriteria of commercial substance; however, the fair value of neither the asset received northe asset given up could be measured reliably, hence, their value was measured at thecarrying amount of the asset given up plus cash consideration paid.

Provision for legal case

The Group has recently been involved in a significant legal case and subsequently

decided to recognize a provision for legal case as the Supreme Court decision isconsidered final and binding. Such provision is made based on the amount stated in the

judicial review under the prevailing laws. It is possible that future financial performancecould be materially affected by the result of the judicial review relating to the case.





b. Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty atthe end of the reporting period that have a significant risk of causing a material adjustment tothe carrying amounts of assets and liabilities within the next reporting period are discussedbelow:

Determination of fair values of financial assets and financial liabilities

When the fair value of financial assets and financial liabilities recorded in the interimconsolidated statement of financial position cannot be derived from active markets, theirfair value is determined using valuation techniques, including the discounted cash flowmodel. The inputs to these models are taken from observable markets where possible, butwhere this is not feasible, a degree of judgement is required in establishing fair value. Thejudgements include considerations of inputs such as liquidity risk, credit risk and volatility.Changes in assumptions about these factors could affect the reported fair value of thefinancial instruments. See Note 21 for further discussion.

Estimating useful lives of property and equipment and intangible assets

The Group estimates the useful lives of its property and equipment and intangible assetsbased on expected asset utilization as anchored on business plans and strategies that alsoconsider expected future technological developments and market behavior. The estimation

assessment of industry practice, internal technical evaluation and experience with similarassets. The estimated useful lives are reviewed at least each financial year end and areupdated if expectations differ from previous estimates due to physical wear and tear,technical or commercial obsolescence and legal or other limitations on the use of theassets. It is possible, however, that future results of operations could be materially affectedby changes in the estimates brought about by changes in the factors mentioned above.

The amounts and timing of recorded expenses for any period are affected by changes in

property and equipment increases the recorded operating expenses and decreases non-s property and

equipment decreases the recorded operating expenses and increases non-current assets.

Recoverability of deferred tax assets

The Group reviews the carrying amounts of deferred tax assets at the end of eachreporting period and reduces these to the extent that it is no longer probable that sufficienttaxable income will be available to allow all or part of the deferred tax assets to be utilized.

differences is based on the level and timing of forecasted taxable income of theast results and future

expectations on revenues and expenses as well as future tax planning strategies.However, there is no assurance that the Group will generate sufficient taxable income toallow all or part of the deferred tax assets to be utilized.





b. Estimates and Assumptions (continued)

Estimating provision for impairment loss on receivables

The level of a specific provision is evaluated by management on the basis of factors thataffect the collectability of the accounts. In these cases, the Group uses judgement basedon the best available facts and circumstances, including but not limited to, the length of the

-party credit reports and known market factors, to record specific reserves for customers

to collect. These specific reserves are re-evaluated and adjusted as additional informationreceived affects the amounts estimated.

In addition to specific provision against individually significant receivables, the Group alsorecognizes a collective impairment provision against credit exposure of its debtors whichare grouped based on common credit characteristics, and although not specificallyidentified as requiring a specific provision, have a greater risk of default than when thereceivables were originally granted to the debtors.

Any collective provision recognized is based on historical loss experience using variousfactors such as historical performance of the debtors within the collective group andjudgements on the effect of deterioration in the markets in which the debtors operate andidentified structural weaknesses or deterioration in the cash flows of debtors.

Estimation of pension cost and other employee benefits

The cost of the defined benefit pension plan and the present value of the pensionobligation are determined using actuarial valuations. An actuarial valuation involvesmaking various assumptions that may differ from actual developments in the future. Theseinclude the determination of the discount rate, ultimate cost trend rate, next year trend rate,period to reach ultimate cost trend rate salary growth rate and mortality rates. Due to thecomplexities involved in the valuation and its long-term nature, a defined benefit obligationis highly sensitive to changes in these assumptions. All assumptions are reviewed at eachreporting date.

The parameter most subject to change is the discount rate. In determining the appropriatediscount rate, management considers the market yields (at the end of the reporting period)on government bonds and extrapolated as needed along the yield curve to correspond withthe expected term of the defined benefit obligation. The currency and term of thegovernment bonds are consistent with the currency and estimated term of the post-employment benefit obligations.

The mortality rate is based on Indonesian Mortality Table ( TMI ) 2011. Those mortalitytables tend to change only at intervals in response to demographic changes. Salary growthrate is based on expected future inflation, productivity and normal progress of employeeswithin a given group and promotions.

Further details about the assumptions used, including a sensitivity analysis, are presentedin Note 31.





b. Estimates and Assumptions (continued)

Revenue recognition

assumptions that may affect the reported amounts of revenues and receivables.

traffic subject to settlements require traffic reconciliations before actual settlement is done,which may not be the actual volume of traffic as measured by the Company. Initialrecognition of revenues is based on observed traffic adjusted by the normal experienceadjustments, which historically are not material to the interim consolidated statement ofprofit or loss and comprehensive income. Differences between the amounts initiallyrecognized and the actual settlements are taken up in the accounts upon reconciliation.

However, there is no assurance that the use of such estimates will not result in materialadjustments in future periods.

The Group recognizes revenues from installation fees and the corresponding costs overthe expected average periods of customer relationship for MIDI and fixedtelecommunications services. The Group estimates the expected average period ofcustomer relationship based on the most recent churn-rate analysis.

Uncertain tax exposure

In certain circumstances, the Group may not be able to determine the exact amount of itscurrent or future tax liabilities or recoverable amount of the claim for tax refund due toongoing investigations by, or discussions with, the taxation authority. Uncertainties existwith respect to the interpretation of complex tax regulations and the amount and timing offuture taxable income. In determining the amount to be recognized in respect of anuncertain tax liability or the recoverable amount of the claim for tax refund related touncertain tax positions, the Group applies similar considerations as it would use indetermining the amount of a provision to be recognized in accordance with PSAK 57(Revised 2009), Provisions, Contingent Liabilities and Contingent Assets and PSAK 46(Revised 2014), . The Group makes an analysis of all uncertain taxpositions to determine if a tax liability for uncertain tax benefit or a provision forunrecoverable claim for tax refund should be recognized.

The Group presents interest and penalties for the underpayment of income tax, if any, inIncome Tax Expense - Current in profit or loss.




4. CASH AND CASH EQUIVALENTS

This account consists of the following:

June 30, December 31, January 1,2015 2014 2014

Cash on handRupiah 1,772 1,893 2,046U.S. dollar - 60 45

1,772 1,953 2,091Cash in banks

Related parties (Note 32)Rupiah

PT Bank Mandiri (Persero) Tbk ("Mandiri") 123,674 42,505 68,19528,021 31,828 166

PT Bank Rakyat Indonesia (Persero) Tbk("BRI") (including PT Bank BRI Syariah

RI Syariah 3,703 3,003 306PT Bank Negara Indonesia (Persero) Tbk ("BNI") 3,560 9,003 4,711PT Bank Pembangunan Daerah Maluku

- 1,430 1,291 1,133PT Bank Pembangunan Daerah DKI Jakarta 982 1,869 2,314PT Bank Pembangunan Daerah Jawa Timur 969 938 1,606PT Bank Pembangunan Daerah Nusa Tenggara

Timur 777 1,478 652PT Bank Pembangunan Daerah Yogyakarta 683 1,068 2,073PT Bank Pembangunan Daerah Jawa Barat

dan Banten Tbk ("BPD - Jawa Barat") 186 259 1,596PT Bank Pembangunan Daerah Sumatera Selatan 97 1,748 513Others (each below Rp1,000) 2,359 4,641 3,082

U.S. dollarMandiri 71,629 35,912 57,621Others 118 77 62

Third partiesRupiah

PT Bank Central Asia Tbk ("BCA") 76,772 10,690 5,178PT Standard Chartered Bank 20,910 4 -

14,534 30,724 5,603PT Bank CIMB Niaga Tbk ("CIMB Niaga") 12,306 9,426 5,198Citibank N.A., Jakarta Branch ("Citibank") 7,335 5,071 5,036

6,328 15,614 2785,103 1,102 631

Deutsche Bank AG, 3,417 3,369 982,798 1,113 1,2812,466 3,080 4711,844 1,256 5,809

PT Bank Mega Syariah yariah 1,072 580 3,630PT Bank UOB Indonesia 627 10 4,659Hongkong and Shanghai Bank Corporation,

476 15,109 1,149Others (each below Rp1,000) 397 522 482

U.S. dollarFortis Bank N.V., The Netherlands 111,392 95,680 77,154DB 41,353 37,249 33,864UOB 32,628 - -Citibank 16,376 6,672 7,652Citibank N.A., Singapore Branch 9,713 57,911 54,375Bukopin 2,235 266 384CIMB Niaga 1,194 2,989 5,225Others 956 51 51

610,420 434,108 362,238




4. CASH AND CASH EQUIVALENTS (continued)


Time deposits and deposits on callRelated parties (Note 32)

RupiahQNBK 654,000 50,000 -Mandiri 481,000 961,500 232,897BTN 370,130 124,920 83,658BRI 167,000 227,000 70,000BNI 115,450 123,450 120,755PT Bank Jawa Barat Banten Syariah and

BPD - Jawa Barat 96,500 69,500 62,500BPD - Sumatera Barat 35,000 35,000 10,000BPD - Maluku 25,000 25,000 -PT Bank Syariah Syariah 14,000 25,000 22,000BRI Syariah 2,500 2,500 14,700Others 2,000 2,000 2,000

U.S. dollarQNBK 3,106,356 161,720 36,567BRI 399,960 - -Mandiri 30,680 28,627 18,907BNI 20,746 - -Mandiri Syariah - - 60,945

Third partiesRupiah

CIMB Niaga (including CIMB Niaga Syariah) 616,500 27,500 47,000DB 387,534 16,522 95,899PT Bank Tabungan Pensiunan Nasional Tbk 237,000 132,000 20,000Muamalat 147,850 131,000 81,500Bukopin 120,000 100,000 36,000PT Bank Saudara Tbk (previously PT Bank

Himpunan Saudara 1906 Tbk) 61,500 59,500 52,000PT Bank Artha Graha Internasional Tbk 55,000 50,000 -PT Standard Chartered Bank 50,000 - -BTPN Syariah 47,000 - -Mega Syariah 44,250 48,600 43,500Mega 41,000 41,000 11,000Panin Syariah 30,000 - -PT Bank ANZ Indonesia 20,000 20,000 10,000Bukopin Syariah 15,000 - -Bumi Putera 15,000 - -PT Bank Pundi Indonesia Tbk 12,500 10,000 1,500Danamon 12,000 47,000 50,000BII (including BII Syariah) 8,500 9,500 8,500Bank Agris 7,500 - -UOB 3,000 - -PT Bank MNC Internasional Tbk - 83,000 12,000Others 250 2,600 600

U.S. dollarBukopin 733,260 - -Permata Syariah 266,640 - 182,835Muamalat 199,980 - 30,473DB 137,016 398,411 439,278CIMB Niaga 19,998 31,100 12,189

8,808,600 3,043,950 1,869,203

9,420,792 3,480,011 2,233,532




4. CASH AND CASH EQUIVALENTS (continued)

Time deposits and deposits on call denominated in rupiah and US$ earned interest at annual ratesranging from the following:


Denominated in Rupiah 3.5% to 10.50% 3.75% to 11.50% 2.00% to11.00%Denominated in USD 0.03% to 3.50% 0.02% to 3.50% 0.03% to 3.50%

The interest rates on deposits on call and time deposits with related parties are comparable tothose offered by third parties.

5. ACCOUNTS RECEIVABLE - TRADE



Related parties (Note 32)Telkom (including US$229 in 2015, US$174

in 2014 and US$70 in 2013) 65,402 47,588 99,971Others (including US$3,322 in 2015, US$2,592

in 2014 and US$6,752 in 2013) 613,091 495,797 556,548

Sub-total 678,493 543,385 656,519

Less allowance for impairment (29,615) (24,433) (24,316)

Net 648,878 518,952 632,203

Third partiesLocal companies (including US$46,178 in

2015,US$44,317 in 2014 and US$34,143in 2013) 1,416,408 1,060,491 801,108

Overseas international carriers (US$69,282in 2015, US$52,538 in 2014 and US$76,513in 2013) 924,189 653,570 932,619

Post-paid subscribers:Cellular 441,316 377,218 333,783Fixed telecommunications 95,500 87,361 65,716

Sub-total 2,877,413 2,178,640 2,133,226

Less allowance for impairment (698,870) (605,480) (497,090)

Net 2,178,543 1,573,160 1,636,136

Total 2,827,421 2,092,112 2,268,339




5. ACCOUNTS RECEIVABLE TRADE (continued)

The aging schedule of the accounts receivable - trade is as follows:

June 30, 2015 December 31, 2014 January 1, 2014Percentage Percentage Percentage

Amount % Amount % Amount %

Related parties0 - 6 months 417,415 61.52 488,448 89.89 611,654 93.177 - 12 months 188,606 27.80 10,813 1.99 13,070 1.9913 - 24 months 44,571 6.57 18,105 3.33 8,967 1.36Over 24 months 27,901 4.11 26,019 4.79 22,828 3.48

Total 678,493 100.00 543,385 100.00 656,519 100.00

Third parties0 - 6 months 1,448,859 50.35 1,088,048 49.94 1,296,795 60.797 - 12 months 428,620 14.90 153,961 7.07 80,735 3.7913 - 24 months 404,038 14.04 325,077 14.92 270,766 12.69Over 24 months 595,896 20.71 611,554 28.07 484,930 22.73

Total 2,877,413 100.00 2,178,640 100.00 2,133,226 100.00

The changes in the allowance for impairment of accounts receivable - trade are as follows:

June 30, 2015 (Six Months) Total Related Parties Third Parties

Balance at beginning of period 629,913 24,433 605,480Provision - net (Note 27) 73,252 3,882 69,370Net effect of foreign exchange adjustment 25,320 1,300 24,020

Balance at end of period 728,485 29,615 698,870

Individual impairment 136,873 19,233 117,640Collective impairment 591,612 10,382 581,230

Total 728,485 29,615 698,870

Gross amount of individually assessed receivablebefore its impairment allowance 437,486 140,980 296,506

December 31, 2014 (One Year) Total Related Parties Third Parties

Balance at beginning of year 521,406 24,316 497,090Provision net 84,816 1,319 83,497Net effect of foreign exchange adjustment 35,054 302 34,752Write-offs (11,363) (1,504) (9,859)

Balance at end of year 629,913 24,433 605,480


Total 629,913 24,433 605,480





5. ACCOUNTS RECEIVABLE TRADE (continued)

December 31, 2013 (One Year) Total Related Parties Third Parties

Balance at beginning of year 564,630 42,632 521,998Provision (reversal) net 102,307 (5,369) 107,676Net effect of foreign exchange adjustment 21,867 1,108 20,759Write-offs (167,398) (14,055) (153,343)

Balance at end of year 521,406 24,316 497,090


Total 521,406 24,316 497,090


The aging schedule of the allowance for impairment of accounts receivable - trade is as follows:

June 30, 2015 December 31, 2014 January 1, 2014Allowance Allowance Allowance

for for forGross impairment Gross impairment Gross impairment

Not past due 532,091 - 780,656 - 776,889 -Past due:

- up to 6 months 1,334,182 112,648 795,840 78,460 1,131,560 28,246- more than

7 to 12 months 617,226 56,220 164,774 59,710 93,805 21,173- more than

13 to 24 months 448,609 98,961 343,182 91,032 279,733 54,160- more than

24 months 623,798 460,656 637,573 400,711 507,758 417,827

Total 3,555,906 728,485 2,722,025 629,913 2,789,745 521,406

The Group has made provision for impairment of accounts receivable - trade based on the

credit history. The Group does not apply a distinction between related party and third partyaccounts receivable in assessing amounts past due. As of June 30, 2015, December 31, 2014 and2013, the carrying amount of trade accounts receivable of the Group considered past due but notimpaired amounted to Rp2,295,330, Rp1,311,456 and Rp1,491,450, respectively.

Management believes that trade accounts receivable past due but not impaired, along with tradeaccounts receivable that are neither past due nor impaired, are due from customers with goodcredit history and are expected to be recoverable.

The net effect of foreign exchange adjustment was due to the strengthening or weakening of therupiah vis-à-vis the U.S. dollar in relation to U.S. dollar accounts previously provided withallowance and was charged or credited Loss on Foreign Exchange -

dit risk is disclosed in Note 37.

Management believes the established allowance is sufficient to cover impairment of accountsreceivable - trade.




6. PREPAID FREQUENCY FEES AND LICENSES


Annual frequency fees 1,096,321 1,984,454 1,691,7453G and BWA upfront fees 167,266 200,186 266,027

1,263,587 2,184,640 1,957,772Less: Non-current portion (110,136) (134,345) (200,186)

Current portion 1,153,451 2,050,295 1,757,586

7. OTHER CURRENT FINANCIAL ASSETS - NET



Restricted cash and cash equivalents (includingUS$419 in 2015,US$241 in 2014 and US$205in 2013) 13,593 5,656 25,008

Others (including US$223 in 2015,US$15 in 2014and US$22 in 2013) 14,378 10,631 6,665

Total 27,971 16,287 31,673




8. PROPERTY AND EQUIPMENT

The details of property and equipment are as follows:

Six-Month Period Ended June 30, 2015

Balance Balance

at Beginning Transactions during the Period at End

of Period Additions Derecognitions Reclassifications of Period

Cost

Direct ownershipLandrights 538,026 - (10,985) - 527,041Buildings 944,818 130 - 5,305 950,253Information technology equipment 4,677,814 63 (95,412) 203,892 4,786,357Office equipment 1,284,627 7,762 (4,300) 661 1,288,750Building and leasehold

improvements 11,653,182 500 (10,624) 595,025 12,238,083Vehicles 16,644 - (2,323) 47 14,368Cellular technical equipment 48,446,311 - (28,532) 913,939 49,331,718Transmission and cross -

connection equipment 24,196,385 161,771 (283,497) 374,683 24,449,342FWA technical equipment 1,342,712 - (154) - 1,342,558Operation and maintenance

center and measurement unit 1,552,519 - (6) 23,852 1,576,365Fixed access network

equipment 1,328,351 - (208) 72,553 1,400,696Properties under

construction andinstallation 3,074,802 3,815,217 - (2,189,957) 4,700,062

Under finance leaseBuilding and leasehold

improvements (Note 2j) 4,318,622 45,555 (11,290) - 4,352,887

Total 103,374,813 4,030,998 (447,331) - 106,958,480

Accumulated Depreciation

Direct ownershipBuildings (400,230) (10,758) - - (410,988)Information technology

equipment (3,711,484) (161,169) 95,412 (150) (3,777,391)Office equipment (1,048,588) (33,804) 4,300 (337) (1,078,429)Building and leasehold

improvements (6,777,102) (437,320) 10,504 572 (7,203,346)Vehicles (14,816) (474) 2,323 (85) (13,052)Cellular technical equipment (30,531,355) (2,255,190) 24,632 - (32,761,913)Transmission and cross-

connection equipment (15,041,033) (980,441) 283,267 - (15,738,207)FWA technical equipment (1,332,154) (3,726) 154 - (1,335,726)Operation and maintenance

center and measurement unit (1,418,374) (23,685) 6 - (1,442,053)Fixed access network equipment (1,097,531) (26,409) 208 - (1,123,732)


improvements (Note 2j) (1,226,239) (228,503) 5,991 - (1,448,751)

Total (62,598,906) (4,161,479) 426,797 - (66,333,588)

Less: Impairment in value - (8,402) - - (8,402)

Net Book Value 40,775,907 40,616,490




8. PROPERTY AND EQUIPMENT (continued)

Year Ended December 31, 2014

Balance Balance



Cost

Direct ownershipLandrights 547,117 - (9,091) - 538,026Buildings 873,787 715 (10,029) 80,345 944,818Information technology equipment 4,352,467 204 (45,942) 371,085 4,677,814Office equipment 1,275,400 12,364 (8,314) 5,177 1,284,627Building and leasehold

improvements 10,802,485 2,495 (57,884) 906,086 11,653,182Vehicles 18,373 246 (2,374) 399 16,644Cellular technical equipment 42,984,188 - (333,424) 5,795,547 48,446,311Transmission and cross -

connection equipment 22,151,806 268,484 (47,598) 1,823,693 24,196,385FWA technical equipment 1,345,306 - (2,594) - 1,342,712Operation and maintenance

center and measurement unit 1,496,098 1,117 - 55,304 1,552,519Fixed access network

equipment 1,207,051 - - 121,300 1,328,351Properties under



improvements (Note 2j) 3,891,958 426,664 - - 4,318,622

Total 97,065,291 6,826,772 (517,250) - 103,374,813


Direct ownershipBuildings (383,276) (18,176) 1,222 - (400,230)Information technology

equipment (3,417,837) (339,738) 45,940 151 (3,711,484)Office equipment (1,012,778) (44,460) 8,314 336 (1,048,588)Building and leasehold

improvements (6,015,000) (812,787) 51,257 (572) (6,777,102)Vehicles (16,279) (998) 2,376 85 (14,816)Cellular technical equipment (26,353,932) (4,503,152) 325,729 - (30,531,355)Transmission and cross-

connection equipment (13,144,491) (1,944,104) 47,562 - (15,041,033)FWA technical equipment (1,327,294) (7,453) 2,593 - (1,332,154)Operation and maintenance

center and measurement unit (1,368,162) (50,212) - - (1,418,374)Fixed access network equipment (1,049,851) (47,680) - - (1,097,531)


improvements (Note 2j) (786,280) (439,959) - - (1,226,239)

Total (54,875,180) (8,208,719) 484,993 - (62,598,906)

Net Book Value 42,190,111 40,775,907





Year Ended December 31, 2013

Balance Balance



Cost

Direct ownershipLandrights 545,499 1,618 - - 547,117Buildings 871,174 2,609 - 4 873,787Information technology equipment 3,649,793 - (6,286) 708,960 4,352,467Office equipment 1,213,413 36,734 (7,474) 32,727 1,275,400Building and leasehold

improvements 10,413,096 - (81,938) 471,327 10,802,485Vehicles 22,637 - (4,264) - 18,373Cellular technical equipment 39,953,889 57,069 (397,614) 3,370,844 42,984,188Transmission and cross -

connection equipment 21,164,810 192,428 (219,115) 1,013,683 22,151,806FWA technical equipment 1,345,306 - - - 1,345,306Operation and maintenance

center and measurement unit 1,478,308 - - 17,790 1,496,098Fixed access network

equipment 1,190,936 - - 16,115 1,207,051Properties under



improvements (Note 2j) 3,551,653 340,305 - - 3,891,958Information technology equipment 50,670 - - (50,670) -

Total 88,417,645 9,364,337 (716,691) - 97,065,291


Direct ownershipBuildings (365,694) (17,582) - - (383,276)Information technology

equipment (3,039,529) (384,594) 6,286 - (3,417,837)Office equipment (977,644) (42,608) 7,474 - (1,012,778)Building and leasehold

improvements (5,296,960) (799,979) 81,939 - (6,015,000)Vehicles (19,154) (1,215) 4,090 - (16,279)Cellular technical equipment (21,851,774) (4,842,704) 340,546 - (26,353,932)Transmission and cross-

connection equipment (11,312,803) (1,909,579) 77,891 - (13,144,491)FWA technical equipment (931,908) (395,386) - - (1,327,294)Operation and maintenance

center and measurement unit (1,301,739) (66,423) - - (1,368,162)Fixed access network equipment (992,098) (57,753) - - (1,049,851)


improvements (Note 2j) (363,549) (422,731) - - (786,280)

Total (46,452,852) (8,940,554) 518,226 - (54,875,180)

Net Book Value 41,964,793 42,190,111





Submarine cables (presented as part of transmission and cross-connection equipment) represent

maintained and owned with other countries, based on the respective contracts and/or theconstruction and maintenance agreements.

16-2044. The landrights are renewable.

Depreciation expense charged to profit or loss amounted to Rp4,161,479 and Rp3,944,468 for thesix-month periods ended June 30, 2015 and 2014, respectively.

Management believes that there is no further impairment in asset values or recovery ofthe impairment reserve as contemplated in PSAK 48 (Revised 2014) as of June 30, 2015,December 31, 2014 and January 1, 2014, except for land for public area recognized in 2015amounting to Rp8,402.

As of June 30, 2015, the Group had no property and equipment pledged as collateral to any creditfacilities.

As of June 30, 2015, the Group insured its property and equipment (except for Internationalsubmarine cables and landrights) for US$138,361 and Rp34,156,780 including insurance

sufficient to cover possible losses arising from fire, explosion, lightning, aircraft damage, businessinterruption and other natural disasters.

As of June 30, 2015, the Group had property and equipment with total cost amounting toRp7,254,969 which have been fully depreciated but are still being used.

As of June 30, 2015,income approach amounted to Rp53,413,000. Such value is based on the present value ofestimated future net cash flows from the continuing use of assets and included in the fair valuemeasurement level 3. The unobservable inputs used are earnings growth factor, risk-adjusteddiscount rate and expected cash inflows.

Based on the latest annual report, as of June 30, 2015, the level of percentage completion ofassets under construction is about 44% of the contract value with an estimated completion datebetween July 2015 and March 2018. The balance of the assets under construction consists mainlyof cellular technical equipment, building and leasehold improvements, transmission and crossconnection equipment and information technology equipment.

There were no borrowing costs capitalized to properties under construction and installation for thesix-month periods ended June 30, 2015 and 2014, respectively.

For the six-month period ended June 30, 2015 and the year ended December 31, 2014 proceedsof, and net gain, from the sales of certain property and equipment were as follows:

June 30, 2015 December 31, 2014

Proceeds 43,310 517,250Net book value (15,235) (484,993)

Net Gain 28,075 32,257




9. GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in goodwill and other intangible assets, including non-integrated software, for the six-month period ended June 30, 2015 and the years ended December 31, 2014 and December 31,2013, are as follows:

Non-integrated Other intangible

software assets Goodwill Total

Cost

At January 1, 2014 315,727 597,607 2,944,362 3,857,696Additions 11,306 - - 11,306

At December 31, 2014 327,033 597,607 2,944,362 3,869,002Additions 2,497 - - 2,497

At June 30, 2015 329,530 597,607 2,944,362 3,871,499

Accumulated Amortization

At January 1, 2014 277,599 597,518 1,619,979 2,495,096Amortization 17,339 5 - 17,344

At December 31, 2014 294,938 597,523 1,619,979 2,512,440Amortization 7,857 15 - 7,872

At June 30, 2015 302,795 597,538 1,619,979 2,520,312

Net Book Value

At January 1, 2014 38,128 89 1,324,383 1,362,600

At December 31, 2014 32,095 84 1,324,383 1,356,562

At June 30, 2015 26,735 69 1,324,383 1,351,187

Other intangible assets are mainly arising from the acquisition of Satelindo in 2002. The details areas follows:

Amount

Acquisition of Satelindo:Spectrum license 222,922Customer base- Post-paid 154,220- Prepaid 73,128Brand 147,178

597,448Others 159

Total 597,607




9. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

Goodwill arose from the acquisition of ownership in Bimagraha and Satelindo in 2001 and 2002,respectively, and from the acquisition of additional ownership in Lintasarta in 2005, in SMT in 2008and in LMD in 2010. Goodwill acquired through business combination has been allocated to thecellular business unit, which is a

Goodwill is tested for impairment annually (as at December 31) and when circumstances indicatethe carrying value may be impaired. The Company considers the relationship between its marketcapitalization and its book value, among other factors, when reviewing for indications ofimpairment. As of December 31, 2014, the market capitalization of the Company was above thebook value of its equity. The recoverable amount of the cellular business unit has been determinedbased on fair values less coDiscounted Cash Flows Method) and the Market Approach (a Public Company Guideline Method).

Key assumptions used in the FVLCTS calculation at December 31, 2014:

Discount rates -as the discount rate for the discounted cash flows. The estimated pre-tax WACC applied indetermining the recoverable amount of the cellular business unit is between 16.27% and 17.36%.

- The CAGR projection for the 5-year budget periodforecast is between 4.2% and

8.7%.

Cost to Sell - As the recoverable amount of the cellular business unit is determined using FVLCTS,the estimated cost to sell the business is based on a certain percentage of the equity value. Theestimated cost to sell used for this calculation is at approximately 1.0% of the enterprise value.

As a result of the impairment testing, management did not identify an impairment for the cellularbusiness unit to which goodwill of Rp1,324,383 is allocated.

The Company considers the relationship between its market capitalization and its book value,among other factors, when reviewing for indicators of impairment. As of June 30, 2015, the marketcapitalization of the Company was above the book value of its equity. As a result, management didnot perform an impairment calculation as of June 30, 2015.

10. LONG-TERM PREPAID EXPENSES


June 30,2015

December 31,2014

January 1,2014

Sites and tower rental 1,182,079 1,070,767 827,942Properties rental 109,052 131,083 240,140Operation and maintenance 47,880 50,938 57,052Others 147 - -

Total prepaid expenses 1,339,158 1,252,788 1,125,134

Less current portion (396,792) (355,021) (314,780)

Long-term prepaid expenses 942,366 897,767 810,354

Current portion of the long- -in the current assets.




11. LONG-TERM ADVANCES

This account represents advances to suppliers and contractors for the purchase and construction/installation of property and equipment which will be reclassified to the related property andequipment accounts upon the receipt of the property and equipment purchased or after theconstruction/installation of the property and equipment has reached a certain percentage ofcompletion.

12. OTHER NON-CURRENT FINANCIAL ASSETS - NET


June 30,2015

December 31,2014

January 1,2014

Other long-term investments 159,649 119,859 1,507,299Less allowance for impairment (113,577) (113,577) (113,577)

46,072 6,282 1,393,722

Restricted cash and cash equivalents(including US$503 in 2015,US$184 in 2014and US$121 in 2013) 50,022 114,598 94,874

Employee loans receivable 9,086 7,973 8,890Others (including US$1,363 in 2015, US$1,336 in

2014 and US$1,317 in 2013) 39,048 32,050 59,881

98,156 154,621 163,645

Total 144,228 160,903 1,557,367

Other long-term investments - net represents direct investments in equity shares classified asavailable-for-sale, with ownership interest of less than 20% as follows:

Ownership (%)

June 30, December January 1, June 30, December January 1,Location 2015 31, 2014 2014 Measurement 2015 31, 2014 2014

PT Tower BersamaInfrastructureB 29)* Indonesia - - 5.00 Fair value - - 1,390,992

PT First Media Tbk Indonesia 1.07 1.07 1.07 Fair value 50,000 50,000 50,000Pendrell Corporation

[previously ICO GlobalCommunication (Holdings) United StatesLimited]** of America <0.01 <0.01 <0.01 Cost 49,977 49,977 49,977

Asean Cableship Pte. Ltd.Singapore 16.67 16.67 16.67 Cost 1,265 1,265 1,265

Others **** 12.80-16.89 12.80-18.89 12.80-18.89 Cost 58,407 18,617 15,065

Total 159,649 119,859 1,507,299Less: allowance for impairment (113,577) (113,577) (113,577)

Net 46,072 6,282 1,393,722

* The Company received dividend income amounting to Rp14,390 from Tower Bersama on October 3, 2013.** since the Company did

not exercise its right in relation to a rights issue conducted by ICO Global Communication (Holdings) Limited. On July 21, 2011, ICO Global Communicationchanged its name to Pendrell Corporation. Furthermore, as of June 30, 2015, December 31, 2014 and January 1, 2014has been diluted to 0.0065%.

*** The Company received dividend income from its investment in ACPL totaling US$363 (equivalent to Rp4,752), US$1,992 (equivalent to Rp23,228) andUS$3,573 (equivalent to Rp38,751) for the six-month period ended June 30, 2015, and the years ended December 31, 2014 and December 31, 2013,respectively.

**** The Company received dividend income from its investment in Acasia Communications SDN BHD totaling RM8.86 (equivalent to Rp33) for the year endedDecember 31, 2014.




12. OTHER NON-CURRENT FINANCIAL ASSETS - NET (continued)

On August 2, 2012, the Company received 5% ownership in Tower Bersama as part of itscompensation from the sale-and-leaseback of telecommunication towers (Note 29). OnMarch 14, 2014, the Company entered into an agreement with Merrill Lynch, Singapore, Pte. Ltd.

Rp5,800 per share (in full amount). On March 19, 2014, the Company received the net proceedsfrom the sale of its shares in Tower Bersama amounting Rp1,379,114 (net of brokerage and legalfees, and related income tax). The cumulative fair value gain of Rp413,700 previously recorded inother comprehensive income was recycled to profit or loss in March 2014.

Tower Bersama is mainly engaged in telecommunication infrastructure service. PT First Media Tbkis mainly engaged in cable television and internet network service provider. Pendrell Corporation ismainly engaged in satellite service. ACPL is mainly engaged in repairs and maintenance ofsubmarine cables.

The Company has provided allowance for impairment of its investments in equity sharesamounting to Rp113,577 each as of June 30, 2015, December 31, 2014 and January 1, 2014,respectively, which the Company believes is adequate to cover impairment losses on theinvestments.

13. OTHER NON-CURRENT ASSETS - NET


June 30,2015

December 31,2014

January 1,2014

Investments in associated companies 58,310 58,660 56,880Less allowance for impairment (56,300) (56,300) (56,300)

Investments net (i) 2,010 2,360 580Claims for tax refunds (ii) 560,543 1,005,341 875,594Others 105,878 76,931 65,032

Total 668,431 1,084,632 941,206

(i) Investments in associated companies are accounted under equity method. The carrying valuecomprised the acquisition cost adjusted with accumulated equity in undistributed net income(loss).

-based telecommunication and certified service company for chip-basedATM/debit card and related devices and infrastructure, respectively.

Carryingvalue

LocationOwnership

%Acquisition

costJune 30,

2015December 31,

2014January 1,

2014

MMAI Indonesia 26.67 56,512 56,300 56,300 56,300CBI Indonesia 33.33 1,000 2,010 2,360 580

Total 57,512 58,310 58,660 56,880Less allowance for

impairment (56,300) (56,300) (56,300)

2,010 2,360 580




13. OTHER NON-CURRENT ASSETS NET (continued)

(ii) Claims for tax refunds

Claims for tax refunds of corporate income tax and other taxes which the Tax Authority hasconfirmed and the Group has sprepaid taxes and are classified as current assets as the Group expects to receive the refundswithin 12 months from the reporting date (see Note 16).

Claims for tax refunds of corporate income tax and other taxes which either have not beenconfirmed by the Tax Authority or are in disputewithin Other non-current assets . These are classified as long-term assets as it is expectedthat they may be recovered beyond 12 months from the reporting date. Once, the TaxAuthority confirms the claims and there are no disputes, then the Group reclassifies those intoprepaid taxes. The details of non-current claims, net of estimated allowance for taxadjustments, are as follows:

June 30,2015

December 31,2014

January 1,2014

Corporate income tax:- Not yet confirmed by the tax authority 153,235 352,174 385,384- In disputes 273,537 274,214 65,570

426,772 626,388 450,954

Other taxes under objections or appeals:- 280,446 525,716 583,150- Other taxes 1,486 1,398 1,398Allowance for tax adjustments (148,161) (148,161) (159,908)

133,771 378,953 424,640

Total 560,543 1,005,341 875,594

Based on the assessment of the tax uncertainties inherent in the claims for tax refunds, theGroup determines whether an allowance for tax adjustments on the claims for tax refunds isnecessary. Such allowance is presented as a contra account against the claims.

Provision for uncertain tax exposures for which there are no corresponding tax assetsrecognized is presented as part of Other non-current liabilities .

Claims for tax refunds of overpaid VAT that are in dispute are as follows:

June 30,2015

December 31,2014

January 1,2014

The Company:- 2012 fiscal year 148,161 148,161 148,161- 2011 fiscal year 119,344 119,344 131,091- 2010 fiscal year - 199,786 199,786- 2009 fiscal year - - 50,347- 2011 and 2012 restitution 8,281 53,765 53,765

275,786 521,056 583,150The Subsidiary 4,660 4,660 -

280,446 525,716 583,150





(ii) Claims for tax refunds (continued)

The details of significant claims of overpaid VAT are further described below.

2010 fiscal year

In 2012, the Company received tax assessment letters confirming an underpayment of VATamounting to Rp106,619. The Company paid the amount and filed an objection against it. Anadditional underpayment VAT of Rp93,167 was assessed in the objection process. TheCompany paid the additional amount and submitted an appeal letter against the total claims ofRp199,786 to the Tax Court. In 2015, the Tax Court decided to accept partially the claim fromthe Company amounting to Rp103,077. The Company accepted the result, received the refundand charged the difference to the 2015 profit or loss.

2011 fiscal year

In June 2013, the Company received tax assessment letters confirming an underpayment ofVAT amounting to Rp119,344. The Company paid the amount and submitted an objectionagainst the assessment, which was later rejected. In November 2014, the Company filed anappeal to the Tax Court against the assessment. As at the date of these interim consolidatedfinancial statements, the result has not been determined.

2012 fiscal year

In September 2013, the Company received tax assessment letters confirming anunderpayment of VAT amounting to Rp148,161 (including penalties). The Company paid theamount and submitted an objection against the assessment, which was later rejected. InNovember 2014, the Company filed an appeal to the Tax Court against the assessment. As atthe date of these interim consolidated financial statements, the result has not been determined.

Claims for tax refunds of overpaid corporate income tax that are in dispute are as follows:

June 30,2015

December 31,2014

January 1,2014

The Company:- 2012 fiscal year 422 422 -- 2009 fiscal year 65,570 65,570 65,570- 2008 fiscal year 97,132 97,132 -- 2007 fiscal year 110,413 110,413 -

273,537 273,537 65,570The Subsidiaries - 677 -

273,537 274,214 65,570





(ii) Claims for tax refunds (continued)

The details of significant claims on corporate income tax are further described below.

2007 and 2008 fiscal years

In December 2013, the Company received tax assessment letters confirming underpaymentsof corporate income tax of Rp110,413 and Rp97,132 for 2007 and 2008 fiscal years,respectively. The Company paid the amounts and filed objections against them, which werelater rejected. In June 2015, the Company filed an appeal to the Tax Court. As at the date ofthese interim consolidated financial statements, the result has not been determined.

2009 fiscal year

In April 2011, the Company received a tax assessment letter confirming an overpayment ofcorporate income tax of Rp29,272 as compared to its claim of Rp95,677. In July 2011, theCompany filed an objection to defend its remaining claim of Rp65,570, which was laterrejected. The Company filed an appeal to the Tax Court in September 2012 and as at the dateof these interim consolidated financial statements, the result has not been determined.

14. SHORT-TERM LOANS


June 30,2015

December 31,2014

January 1,2014

Related parties:BNI 275,000 600,000 -Mandiri - - 1,500,000

Third party:Mizuho 250,000 250,000 -

525,000 850,000 1,500,000Less: Unamortized loans issuance cost (1,093) (552) (151)

523,907 849,448 1,499,849

Summary of the drawdown and repayment of the short-term loans is as follows:

June 30,2015

December 31,2014

January 1,2014

Bank Drawdown Repayment Drawdown Repayment Drawdown Repayment

BNI - (325,000) 1,150,000 (550,000) - -Mizuho - - 250,000 - - -Mandiri - - - (1,500,000) 1,300,000 (100,000)

Total - (325,000) 1,400,000 (2,050,000) 1,300,000 (100,000)




14. SHORT-TERM LOANS (continued)

Other significant information relating to short-term loans as of June 30, 2015 are as follows:

Total Interest rate

Bank facility Period per annum Collateral

BNI Rp700,000 June 16, 2015 - JIBOR+2.5% NoneJune 16, 2016

Mizuho Rp250,000 November 21, 2014 - JIBOR+1.5% NoneNovember 21, 2015

The Company is required to comply with certain financial covenants such as maintaining itsEBITDA to interest ratio >=3, net debt to equity <= 2.5 and net debt to EBITDA <= 4.

The above revolving time loan facilities wereworking capital, capital expenditure and/or refinancing requirements. As at each reporting date, theCompany was in compliance with the covenants of its short-term loans.

The amortization of the loans issuance costs for the six-month periods ended June 30, 2015 and2014 amounted to Rp569 and Rp188, respectively (Note 28).

As at June 30, 2015, the unused credit facilities was Rp425,000.

15. PROCUREMENT PAYABLE

This account consists of amounts due for capital and operating expenditures procured from thefollowing:

June 30,2015

December 31,2014

January 1,2014

Third parties (including US$164,142 in 2015,US$74,051 in 2014 and US$81,178 in 2013) 4,349,527 3,047,553 3,020,299

Related parties (Note 32) (including US$ nil in2015, US$157 in 2014 and US$42 in 2013) 47,818 47,965 43,988

4,397,345 3,095,518 3,064,287

The billed amount of procurement payable amounted to Rp303,868, Rp631,042 and Rp801,308 asof June 30, 2015, December 31, 2014 and January 1, 2014, respectively. The unbilled amount ofprocurement payable amounted to Rp4,093,477, Rp2,464,476 and Rp2,262,979 as of June 30,2015, December 31, 2014 and January 1, 2014, respectively.




16. TAXATION

a. Prepaid taxes


June 30,2015

December 31,2014

January 1,2014

Claims for tax refunds of corporate income tax:- Fiscal year 2013 231,643 - -- Fiscal year 2012 - 132,316 -- Fiscal year 2011 - - 676

231,643 132,316 676

Other taxes:- VAT 236,612 222,927 214,454- Claims for tax refunds 6,082 1,579 -- Other taxes 7,084 7,241 3,619

249,778 231,747 218,073

b. Taxes payable


June 30,2015

December 31,2014

January 1,2014

Corporate income tax:Article 29 9,866 19,351 6,198Article 25 3,699 - 9,139

13,565 19,351 15,337

Other taxes:Article 21 34,274 17,664 37,109Article 23 11,755 11,499 7,369Article 26 2,747 10,916 11,315Article 4(2), Final Tax 13,422 13,416 17,453VAT 4,201 1,893 674Others 3,993 629 3

70,392 56,017 73,923




16. TAXATION (continued)

c. Income tax (benefit) expense

Six-month periods ended 30 June

2015

2014(As restated;

Note 2c)

The CompanyCurrent - -Deferred (286,881) (88,173)

(286,881) (88,173)SubsidiariesCurrent 62,508 62,961Deferred (1,585) 8,219

60,923 71,180ConsolidatedCurrent 62,508 62,961Deferred (288,466) (79,954)

(225,958) (16,993)

The reconciliation between the theoretical tax amount on the consolidated loss before incometax and the consolidated income tax benefit is as follows:


2015

2014(As restated;

Note 2c)

Consolidated loss before income tax (892,484) (1,078,931)

Tax calculated at applicable tax rate (223,121) (269,733)Tax assessments 24,178 1,223Income subject to final tax (47,931) (140,289)Non-deductible expenses 24,562 26,278Unrecognized deferred tax assets - 323,383Others (3,646) 42,145

Consolidated income tax benefit (225,958) (16,993)





c. Income tax (benefit) expense (continued)

The reconciliation between loss before income tax of the Company and its taxable loss for theperiods ended June 30, 2015 and 2014 are as follows:


2015

2014(As restated;

Note 2c)

Consolidated loss before income tax (892,484) (1,078,931)Less: Profit or loss before income tax of subsidiaries,

adjusted for consolidation elimination (252,630) 1,057,629

Loss before income tax of the Company (1,145,114) (21,302)

Fiscal adjustments:Finance leases 185,008 (7,649)Employee benefits (20,398) (21,523)Allowance for impairment 90,375 54,362Depreciation and amortization 573,856 597,596Dividend income 28,906 29,369Tax assessments 96,711 4,891Non-deductible expenses 99,884 105,113Income subject to final tax (131,409) (521,704)Others 20,094 61,316

(202,087) 280,469

Accumulated tax losses (579,255) (783,366)Tax loss adjustments and prior year correction (165,829) -

Tax loss of the Company (947,171) (502,897)

Current income tax of the Company - -Prepayment of corporate income tax of the Company (23,259) (70,103)

Overpayment of corporate income tax of the Company (23,259) (70,103)

Current income tax of the Subsidiaries 62,508 62,961Prepayment of corporate income tax of the Subsidiaries (52,642) (60,237)

Corporate income tax payable of the Subsidiaries 9,866 2,724

In June 2015, the Company filed a revised 2014 annual corporate income tax return to reduceits previously reported taxable income by Rp183,373 and accordingly, increase its previouslyreported accumulated tax loss carryforwards by the same amount. Prior year correction inrelation to 2013 fiscal year amounting to (Rp17,544).

In these interim consolidated financial statements, the amount of the tax loss is based onpreliminary calculation. Corporate income tax return is filed on an annual basis.





d. Deferred tax assets (liabilities)June 30, 2015

BeginningCredited/

(charged) to Charged to Ending

balance profit or loss equity balanceDeferred tax assets

(liabilities)

The Company:Finance leases 253,988 46,252 - 300,240Employee benefits 297,846 (5,100) - 292,746Tax loss carryforwards 144,814 91,979 - 236,793Allowance for impairment 207,058 24,361 - 231,419Depreciation and

amortization (1,321,337) 143,740 - (1,177,597)Investment in subsidiaries (268,052) (17,608) - (285,660)Others (3,904) 3,257 - (647)

(689,587) 286,881 - (402,706)Subsidiaries (16,330) 2,045 - (14,285)

Deferred tax liabilities- net (705,917) 288,926 - (416,991)

Deferred tax assets- Subsidiaries 92,057 (460) - 91,597

December 31, 2014 (As restated; Note 2c)

BeginningCredited/



(liabilities)

The Company:Finance leases 222,715 31,273 - 253,988Employee benefits 228,515 26,488 42,843 297,846Tax loss carryforwards 195,842 (51,028) - 144,814Allowances for impairment 168,608 38,450 - 207,058Depreciation and

amortization (1,538,661) 217,324 - (1,321,337)Investment in subsidiaries (229,260) (38,792) - (268,052)Others (13,975) 10,071 - (3,904)

(966,216) 233,786 42,843 (689,587)Subsidiaries (18,460) 1,924 206 (16,330)

Deferred tax liabilities - net (984,676) 235,710 43,049 (705,917)

Deferred tax assets- Subsidiaries 101,853 (10,265) 469 92,057





d. Deferred tax assets (liabilities) (continued)

December 31, 2013 (As restated; Note 2c)

BeginningCredited/



(liabilities)

The Company:Finance leases 52,556 170,159 - 222,715Employee benefits 277,769 170,087 (219,341) 228,515Tax losses carryforwards 216,788 (20,946) - 195,842Allowances for impairment 186,731 (18,123) - 168,608Depreciation and

amortization (2,192,650) 653,989 - (1,538,661)Investment in subsidiaries (200,754) (28,506) - (229,260)Others (18,488) 4,050 463 (13,975)

(1,678,048) 930,710 (218,878) (966,216)Subsidiaries (6,218) (12,160) (82) (18,460)

Deferred tax liabilities - net (1,684,266) 918,550 (218,960) (984,676)

Deferred tax assets- Subsidiaries 100,693 8,129 (6,969) 101,853

As of June 30, 2015, December 31, 2014 and January 1, 2014, the aggregate amounts oftemporary differences associated with investments in subsidiaries, for which deferred taxassets (liabilities) have not been recognized, were Rp857,339, Rp838,089 and (Rp451,447),respectively.

As of June 30, 2015, deferred tax assets of Rp351,354 (December 31, 2014: Rp352,755;January 1, 2014: Rp43,149) arising from tax loss carryforwards of certain subsidiaries were notrecognized as it is not probable that taxable income of those subsidiaries will be availableagainst which the tax losses can be utilized.

As of June 30, 2015, the Group had tax loss carryforwards that can be carried over through to2020 based on the following schedule:

Year of Expiration IMM SMT The Company Total

2015 - 46,041 410,957 456,9982016 - 22,770 - 22,7702017 - 32,391 - 32,3912018 - 25,905 163,707 189,6122019 1,256,562 17,495 170,420 1,444,4772020 - 4,250 202,087 206,337

Total 1,256,562 148,852 947,171 2,352,585





e. Tax assessments

income tax have been completed for all fiscalyears prior to 2014.

Certain tax assessments of the Group that are significant are further described below:

2010 fiscal year

On March 24, 2014, the Company received several tax assessment letters confirmingunderpayments of various other taxes totaling Rp5,401 (including penalties). The Companyaccepted the results, paid the amount in April 2014 and charged the amount to the 2014 profitor loss.

2012 fiscal year

In November 2014, the Company received several tax assessment letters confirmingunderpayments of income tax articles 26 and 4(2) amounting to Rp313,769 and Rp13,489(including penalties), respectively. The Company accepted the assessment related to article4(2), paid the amount in December 2014 and charged the amount to the 2014 profit or loss. InFebruary 2015, the Company submitted an objection letter against the assessment on theincome tax article 26. As of the issuance date of these interim consolidated financialstatements, the Company has not received any decision in relation to the objection.

In November 2014, the Company also received a tax assessment letter confirming anoverpayment of corporate income tax of Rp131,894 as compared to its claim of Rp132,315and a reduction of tax loss by Rp331,499. In February 2015, the Company received the refundand submitted an objection letter against the correction of the tax loss. As at the date of thesefinancial statements, the result has not been determined.

2013 fiscal year

In June 2015, the Company received a tax assessment letter confirming an overpayment ofcorporate income tax amounting to Rp231,643, similar to the amount claimed by the Company.However, the tax loss for 2013 was reduced by Rp173,535. The Company received the refundof the overpayment in July 2015 and is currently evaluating whether to accept the assessmentor to file an objection against it.

f. Administration

The taxation laws of Indonesia require that the Company and its local subsidiaries submit theirindividual annual corporate income tax return on the basis of self-assessment. Under theprevailing tax regulations, the DGT may assess or amend taxes within five years of the timethe tax becomes due.




17. ACCRUED EXPENSES


June 30,2015

December 31,2014

January 1,2014

Interest 367,668 337,773 344,019Network repairs and maintenance 352,733 272,568 233,392Employee benefits 230,401 332,123 336,972Rental 229,548 210,962 107,898Dealer incentives (Note 2k) 216,506 264,624 146,355Marketing 151,412 185,420 165,008

116,201 98,415 92,711Utilities 92,479 78,892 103,590Consultancy fees 73,135 55,752 63,716Internet circuit 57,026 100,246 176,519General and administrative 33,229 38,325 27,392Concession fee (Note 35) 32,341 40,046 30,667Blackberry access fee 16,103 59,259 84,914Others (each below Rp20,000) 65,571 76,509 171,541

Total 2,034,353 2,150,914 2,084,694

18. LOANS PAYABLE



Loans payable:Related parties (Note 32) 16,800 16,800 1,050Third parties - net* 8,372,514 6,323,818 6,788,634

8,389,314 6,340,618 6,789,684

Less current maturities:Related parties (6,300) (3,150) -Third parties - net ** (1,671,819) (2,610,350) (2,443,367)

(1,678,119) (2,613,500) (2,443,367)

Non-current portion:Related parties 10,500 13,650 1,050Third parties 6,700,695 3,713,468 4,345,267

Total 6,711,195 3,727,118 4,346,317

* net of unamortized debt issuance cost and consent solicitation fees of Rp66,228 as of June 30, 2015, Rp54,809 as ofDecember 31, 2014 and Rp80,364 as of January 1, 2014.

** net of unamortized debt issuance cost and consent solicitation fees of Rp678 as of June 30, 2015, Rp426 as ofDecember 31, 2014 and Rp41 as of January 1, 2014.




18. LOANS PAYABLE (continued)

The loans from related parties consist of the following:


Loans from non-controlling interests of APEYayasan Kesejahteraan Karyawan

12,250 12,250 -PT Multi Visi Komputama 3,500 3,500 -

Loans from non-controlling interests of LMDMedialand International 700 700 700Danawa Indonesia 350 350 350

16,800 16,800 1,050Less current maturities:Loans from non-controlling interests of APE

YKK Bank Indonesia (4,900) (2,450) -PT Multi Visi Komputama (1,400) (700) -

(6,300) (3,150) -

Non-current portion:Loans from non-controlling interests of APE

YKK Bank Indonesia 7,350 9,800 -PT Multi Visi Komputama 2,100 2,800 -

Loans from non-controlling interests of LMDMedialand International 700 700 700Danawa Indonesia 350 350 350

Total 10,500 13,650 1,050

The details of the loans from related parties are as follows:

Counterparties Loan Type MaturityTotal

FacilityAmount

Interest rate per annumand interest

payment period

Remarks onRepayment and

Others

a. Loans from non-controllinginterests of APE :

i. YKK Bank Indonesia

ii. PT Multi Visi Komputama

Unsecured loan

Unsecured loan

November 3,2017

November 3,2017

Rp21,000

Rp6,000

10.50% p.a.

Payable on monthly basis,which shall commence 1month after the firstdrawdown

To finance businessdevelopment, improvequality of service andadaptation tointernational standardof payment.

Loan principalinstallment payable onquarterly basis, whichshall commence after 6months grace period.

b. Loans from non-controllinginterest of LMD :

i. Medialand International Unsecured loan April 13, 2016 Rp700 2% p.a.To finance workingcapital.

ii. Danawa Indonesia Unsecured loan August 13,2016

Rp350Payable on the first and thelast installment of paymentprinciple payable





The loans from third parties consist of the following:

June 30,2015

December 31,2014

January 1,2014

a. HSBC Revolving Time Loan 1,855,439 - -b. HSBC France 1,171,470 1,207,831 1,409,586c. AB Svensk Exportkredit ("SEK"), Sweden with Guarantee

from Exportkreditnamnden ("EKN") 1,062,395 1,268,570 1,784,991d. BCA Investment Credit Facility 898,980 898,808 998,442e. Mizuho Revolving Time Loan 796,538 - -f. BTMU Revolving Time Loan 663,479 - -g. DBS Revolving Time Loan 662,079 - -h. Bank Sumitomo Mitsui Indonesia ("BSMI") Revolving

Time Loan 649,843 649,681 649,355i. Citibank Revolving Time Loan 531,445 - -j. 9-Year Commercial Loan 80,846 100,474 147,397k. BCA Revolving Time Loan - 999,893 1,499,959l.

- 749,296 298,904m. - 349,449 -n. SMI Revolving Time Loan - 99,816 -

Total 8,372,514 6,323,818 6,788,634

Less current maturities 1,671,819 2,610,350 2,443,367

Non-current portion 6,700,695 3,713,468 4,345,267

The details of the loans from third parties are as follows:

CounterpartiesType and total

of Facility Payment Schedule

Interest Rate perAnnum and

Interest PaymentMethod

MaturityDate Remarks

HSBC Revolving timeloanUS$200,000

Each drawdown maturesat the maximum of 36months from the date, byMarch 12, 2018

USD LIBOR + 1.68%and payable inmonthly or quarterly

March 12,2018

To finance generalfunding requirementThe Company mayrepay the whole orany part of the loan.

HSBC France Twelve years -COFACE term:US$157,243

Twelve years -SINOSURE term:US$44,200

Payable in twenty semi-annual installments

Payable in twenty semi-annual installments

5.69% and payable insemi-annually.

USD LIBOR + 0.35%and payable in semi-annually.

September30, 2019

September30, 2019

To finance Palapa DSatellite.

SEK Sweden withGuarantee fromEKN

Facility A:US$100,000

Payable semi-annually LIBOR + 0.25%, SEKFunding Cost of1.05% and EKNPremium Margin of1.57% and payable insemi-annually.

May 31, 2016

To finance thepurchase oftelecommunicationequipment.

Facility B:US$155,000

Payable semi-annually Commercial InterestReference Rate("CIRR") + 0.05% andEKN Premium Marginof 1.61% and payablein semi-annually.

February 28,2017

Facility C:US$60,000

Payable semi-annually Commercial InterestReference Rate("CIRR") + 0.05% andEKN Premium Marginof 1.59% and payablein semi-annually.

November30, 2017










BCA Five-yearsinvestment creditfacility:Rp1,000,000

Payable annually 10% and payable inquarterly.

December12, 2018

To finance the capitalexpenditure and/ordebt refinancing.

The Company mayrepay the whole orany part of the loan.

Mizuho Revolving timeloan:US$60,000

Each drawdown maturesat the maximum of 24months from the date, byFebruary 5, 2017

USD LIBOR + 0.9%and payable inmonthly or quarterly

February5, 2017

To finance thegeneral fundingrequirement.


Bank of TokyoMitsubishi - UFJ

Revolving timeloan:US$50,000

Each drawdown maturesat the maximum of 24months from the date, byDecember 10, 2016.

Six-month USDLIBOR + 1.2% andpayable in semi-annually

December10, 2016.

To refinance andfinance the generalfunding requirements.

Revolving timeloan:Rp250,000

Each drawdown maturesat the maximum of 36months from the date, byMarch 12, 2018

JIBOR + 2.45% andpayable in monthly,quarterly or semi-annually.

December23, 2016

To finance theworking capital,capital expendituresand general fundingrequirements.


DBS Revolving timeloan:US$50,000

Each drawdown maturesat the maximum of 24months from the date, byMay 11, 2017.

USD LIBOR + 0.9%and payable inmonthly or quarterly.

May 11, 2017 To finance thegeneral fundingrequirement.


BSMI Revolving timeloan:Rp650,000


JIBOR + 1.25% andpayable in monthly,quarterly or semi-annually.

December31, 2015

To finance thegeneral fundingrequirement .


Citibank Revolving timeloan:US$40,000

Each drawdown maturesat the maximum of 24months from the date, byFebruary 9, 2017.

USD LIBOR + 1.35%and payable inmonthly or quarterly.

February 9,2017



HSBC JakartaBranch, CIMBNiaga and Bankof China LimitedJakarta Branch

Nine-yearsunsecuredcommercialfacility:US$27,037

Payable in fifteen semi-annual payments after24 months from the dateof loan agreement. Forthe 1st five installments:US$1,351.85 each; andUS$2,027.78 each for theremaining installmentsthereafter.

USD LIBOR + 1.45%and payable in semi-annually.

November28, 2016

To finance Palapa DSatellite.

BCA Revolving timeloan:Rp1,500,000

Each drawdown maturesat the maximum of 24months from the date, byFebruary 10, 2016.

JIBOR + 2.75% p.a.and payable inmonthly.

February 10,2016

To finance workingcapital, capitalexpenditures andgeneral fundingrequirements.











IIF and SMI Syndicatedrevolving timeloan:Rp750,000

Each drawdown maturesat the maximum of 36months from the date, byOctober 18, 2016.

JIBOR + 2.25% andpayable in quarterlyor semi-annually.

October 18,2016



BNP Paribas Revolving timeloan:Rp350,000

Each drawdown maturesat the maximum of 36months from the date, byOctober 15, 2017.

JIBOR + 2.5% andpayable in monthly orquarterly.

October 15,2017

To finance capitalexpenditure andgeneral fundingrequirement.


SMI Revolving timeloan:Rp100,000


Three-months JIBOR+ 2.45% and payablein quarterly.

December10, 2017

To finance capitalexpenditure.


The future scheduled principal payments of all the loans payable as of June 30, 2015 are asfollows:

Twelve months ending June 30,

2020 and

2016 2017 2018 2019 thereafter Total

In rupiah

BCA - investment credit facility 100,000 150,000 150,000 500,000 - 900,000BSMI - revolving time loan 650,000 - - - - 650,000Loans from non-controlling

interests of APE 6,300 9,450 - - - 15,750Loans from non-controlling

interests of LMD - 1,050 - - - 1,050

Sub-total 756,300 160,500 150,000 500,000 - 1,566,800

In U.S. dollar

HSBC - revolving time loan - - 1,866,480 - - 1,866,480HSBC France 268,489 268,489 268,489 268,489 134,243 1,208,199SEK, Sweden 599,940 409,483 57,137 - - 1,066,560Mizuho - revolving time loan - 799,920 - - - 799,920BTMU - revolving time loan - 666,600 - - - 666,600DBS - revolving time loan - 666,600 - - - 666,600Citibank - revolving time loan - 533,280 - - - 533,2809-Year Commercial Facility 54,069 27,034 - - - 81,103

Sub-total 922,498 3,371,406 2,192,106 268,489 134,243 6,888,742

Total 1,678,798 3,531,906 2,342,106 768,489 134,243 8,455,542

Less:Unamortized debt issuance costs and consent solicitation fees (66,228)

Net 8,389,314

All loans are neither collateralized by any specific Group assets nor guaranteed by other parties.As at June 30 2015, the Company has fully utilized the loan facilities. The Company is required tocomply with certain covenants, such as maintaining its EBITDA to interest ratio not less than 3, netdebt to equity not to exceed 1.75 and net debt to EBITDA not to exceed 3.5.





As at each reporting date, the Group has complied with all financial ratios required under the loanagreements. In 2012, the Company has received the consent letters from SEK Sweden and HSBCFrance (as a debtor, for the 12-years Coface and Sinosure term facilities) regarding the Company'ssale of asset transaction (Note 29).

The total amortization of debt issuance cost and consent solicitation fees on the loans for the six-month periods ended June 30, 2015 and 2014 amounted to Rp15,447 and Rp15,527, respectively.The amount of payments made for the six-month period ended 30 June 2015 were US$94,597 inrelation to credit facilities obtained from, HSBC and EKN and Rp 2,200,000 in relation to thoseobtained from BCA, IIF-SMI, BNP Paribas, SMI.

19. BONDS PAYABLE AND SHARIA BONDS

Bonds Payable and Sharia Bonds consist of the following:

June 30,2015

December 31,2014

January 1,2014

Bonds Payable:

a. Guaranteed Notes Due 2020 8,654,319 8,013,764 7,838,343b. Eighth Indosat Bonds in Year 2012 with Fixed Rates 2,693,611 2,693,156 2,692,304c. Shelf Registration Indosat Bond I Phase II in Year 2015

with Fixed Rates 2,676,743 - -d. Shelf Registration Indosat Bond I Phase I in Year 2014

with Fixed Rates 2,303,651 2,302,946 -e. Fifth Indosat Bonds in Year 2007 with Fixed Rates 1,367,582 1,367,027 2,595,343f. Seventh Indosat Bonds in Year 2009 with Fixed Rates 599,200 598,951 1,297,708g. Sixth Indosat Bonds in Year 2008 with Fixed Rates - 319,847 319,327

18,295,106 15,295,691 14,743,025Less: current maturities (9,206,890) (8,333,611) (1,928,557)

Non-current portion bonds payable 9,088,216 6,962,080 12,814,468

Sharia Bonds:

h. Shelf Registration Indosat Sukuk Ijarah I Phase II inYear 2015 414,746 - -

i. Indosat Sukuk Ijarah V in Year 2012 299,368 299,303 299,182j. Shelf Registration Indosat Sukuk Ijarah I Phase I in

Year 2014 189,463 189,411 -k. Indosat Sukuk Ijarah IV in Year 2009 171,765 171,691 199,524l. Indosat Sukuk Ijarah II in Year 2007 - - 399,786

1,075,342 660,405 898,492

Less: current maturities (54,843) - (427,753)

Non-current portion sharia bonds 1,020,499 660,405 470,739




19. BONDS PAYABLE AND SHARIA BONDS (continued)

BondNominal

Interest Maturity RemarksAmount

a. Guaranteed US$650,000 7.375% p.a. July 29, 2020 The notes is used for refinancing purposesand redeemable at the option of IPBV:Notes Due

2020Payable semi-

Annually Prior to July 29, 2013, the Issuer mayredeem up to a maximum of 35% of theoriginal aggregate Notes issued with theproceeds of one or more Public Offeringsat a redemption price equal to 107.375%of the principal amount.

Prior to July 29, 2015, the Issuer will beentitled at its option to redeem all or anyportion of the Notes at a redemption priceequal to 100% of the principal amount ofthe Notes plus the Applicable Premium.On and after July 29, 2015, the Issuermay redeem the Notes in whole or in partat any time and from time to time atcertain redemption prices.

Issuer may redeem the Notes at a priceequal to 100% of the principal amountthereof, plus any accrued and unpaidinterest to (but not including) theredemption date and any additionalamounts, in the event of certain changesaffecting withholding taxes in Indonesiaand the Netherlands.Upon a change in control of IPBV, theholder of the notes has the right to requireIPBV to repurchase all or any part of such

Based on latest rating reports (released inMay, April and March 2015), the noteshad BB+ (positive outlook), Ba1 (stableoutlook) and BBB (stable outlook) ratings

.Based on Managing Boardmeeting held on January 22, 2015, it wasresolved that IPBV would take theopportunity to redeem the Notes on July29, 2015.See Note 38b for the early redemption onthe Guaranted Notes 2020.

b. Eighth Indosat Bonds in Year 2012

Series A Rp1,200,000 8.625% p.a. June 27, 2019 To finance frequency fee, purchase of, and

repurchase of Second Indosat Bonds inYear 2002 Series B.The Company can buy back part or all ofthe bonds, after the 1st anniversary of thebonds, at market price.Based on the latest rating report released

in November 2014, the bonds had idAAA(stable outlook) rating from PT

Payable quarterly

Series B Rp1,500,000 8.875% p.a. June 27, 2022

Payable quarterly





BondNominal

Interest Maturity RemarksAmount

c. Shelf Registration Indosat Bonds I Phase II in Year 2015Series A Rp554,000 8.55% p.a.

Payable quarterlyJune 14,

2016 To refinance loans from BCA, BNI,BNPP, SMI, IIF-SMI and GuaranteedNotes Due 2020, also purchase of BSS.The Company can buy back part or all

of the bonds, after the 1st

anniversary ofthe bonds, at market price.Based on the latest rating reportreleased in May 2015, the bonds had

idAAA rating from Pefindo.

Series B Rp782,000 9.25% p.a.Payable quarterly

June 4,2018

Series C Rp584,000 10% p.a.Payable quarterly

June 4,2020

Series D Rp337,000 10.25% p.a.Payable quarterly

June 4,2022

Series E Rp427,000 10.40% p.a.Payable quarterly

June 4,2025

d. Shelf Registration Indosat Bonds I Phase I in Year 2014

Series ARp950,000 10.00% p.a.

Payable quarterlyDecember 12,

2017To refinance loans from BCA, BNI, andBTMU, also to pay license fee.The Company can buy back part or all of

the bonds, after the 1st

anniversary of thebonds, at market price.Based on the latest rating report released

in November 2014, the bonds had idAAArating from Pefindo.

Series BRp750,000 10.30% p.a.


2019

Series CRp250,000 10.50% p.a.


2021Series D Rp360,000 10.70% p.a.


2024

e. Fifth Indosat Bonds in Year 2007Series A Rp1,230,000 10.20% p.a.

Paid quarterlyMay 29, 2014 To finance capital expenditure.

The Company can buy back part or all of


anniversary of thebonds, at market price.On May 29, 2014, the Company paid theseries A bonds in full.

Series B Rp1,370,000 10.65% p.a.Payable quarterly

May 29, 2017 Based on the latest rating report released

in November 2014, the bonds had idAAArating from Pefindo.

f. Seventh Indosat Bonds in Year 2009Series A Rp700,000 11.25% p.a.

Paid quarterlyDecember 8,

2014To finance the repayment of ex

rate bonds.The Company can buy back part or all of


anniversary of thebonds, at market price.

Series B Rp600,000 11.75% p.a.Payable quarterly

December 8,2016

Based on the latest rating report released

in November 2014, the bonds had idAAArating from Pefindo.On December 8, 2014, the Company paidthe series A bonds in full.

g. Sixth Indosat Bonds in Year 2008Series B Rp320,000 10.80% p.a.

Payable quarterlyApril 9, 2015 To finance capital expenditure.

The Company can buy back part or all of


anniversary of thebonds, at market price.Based on the latest rating report releasedin February 2015, the bonds Series B had

idAAA rating from Pefindo.On April 9, 2015, the Company paid theSeries B bonds in full.





Bond

Nominal

Annual Fixed Ijarah Return Maturity RemarksAmounth. Shelf Registration Indosat Sukuk Ijarah I Phase II year 2015

Series A Rp55,000 Rp4,703, payable on aquarterly basis startingSeptember 4, 2015 up toJune 14, 2016.

June 14,2016

To finance frequency fee.The Company can buy backpart or all of the bonds, after

the 1st

anniversary of thebonds, at market price.Based on the latest ratingreport released in May 2015,

the bonds had idAAA(sy) ratingfrom Pefindo.

Series B Rp76,000 Rp7,030, payable on aquarterly basis startingSeptember 4, 2015 up toJune 4, 2018.

June 4, 2018

Series C Rp67,000 Rp6,700, payable on aquarterly basis startingSeptember 4, 2015 up toJune 4, 2020.

June 4, 2020

Series D Rp43,000 Rp4,408, payable on aquarterly basis startingSeptember 4, 2015 up toJune 4, 2022.

June 4, 2022

Series E Rp175,000 Rp18,200, payable on aquarterly basis startingSeptember 4, 2015 up toJune 4, 2025.

June 4, 2025

i.Indosat Sukuk.Ijarah V in year

Rp300,000 Rp25,875, payable on aquarterly basis startingSeptember 27, 2012 up toJune 27, 2019.

June 27, 2019 To finance frequency fee,purchase of BSS, andrepurchase of Second IndosatBonds in Year 2012 Series B.The Company can buy backpart or all of the bonds, after

the 1st

anniversary of thebonds, at market price.Based on the latest ratingreport released in November

2014, the bonds had idAAA(sy)rating from Pefindo.

j. Shelf Registration Indosat Sukuk Ijarah I Phase I in Year 2014Series A Rp64,000 Rp6,400, payable on a

quarterly basis starting March12, 2015 up to December 12,2017.

December 12,2017

To finance license fee.The Company can buy backpart or all of the bonds, after

the 1st


2014, the bonds had idAAA(sy)

rating from Pefindo.

Series B Rp16,000 Rp1,648, payable on aquarterly basis starting March12, 2015 up to December 12,2019.

December 12,2019

Series C Rp110,000 Rp11,550, payable on aquarterly basis starting March12, 2015 up to December 12,2021.

December 12,2021





Bond

Nominal

Annual Fixed Ijarah Return Maturity RemarksAmount

k.Series A Rp28,000 Rp3,150, paid on a quarterly

basis starting March 8, 2010up to December 8, 2014.

December 8,2014

To finance capital expenditure.The Company can buy backpart or all of the bonds, after

the 1st


2014, the bonds had idAAA(sy)rating from Pefindo.On December 8, 2014, theCompany paid the series Abonds in full.

Series B Rp172,000 Rp20,210, payable on aquarterly basis starting March8, 2010 up to December 8,2016.

December 8,2016

l. Indosat SukukIjarah II inYear 2007

Rp400,000 Rp40,800, paid on a quarterlybasis starting August 29, 2007up to May 26, 2014.

May 29, 2014 To finance capital expenditure.The Company could buy backpart or all of the bonds, after1st anniversary of the bonds, atmarket price.Based on the latest ratingreport released in March 2014,the bonds had idAA+(sy) (stableoutlook) rating from Pefindo.On May 26, 2014, theCompany paid the bonds infull.

The future scheduled principal payments of all the bonds payable outstanding as of June 30, 2015are as follows:


2020 and

2016 2017 2018 2019 thereafter * Total

In U.S. dollar

Guaranteed NotesDue 2020* 8,665,800 - - - - 8,665,800

In Rupiah

Eighth Indosat Bonds* - - - 1,200,000 1,500,000 2,700,000Shelf Registration Indosat

Bonds I Phase II* 554,000 - 782,000 - 1,348,000 2,684,000Shelf Registration Indosat

Bonds I Phase I* - - 950,000 - 1,360,000 2,310,000Fifth Indosat Bonds* - 1,370,000 - - - 1,370,000Seventh Indosat Bonds* - 600,000 - - - 600,000

Total 9,219,800 1,970,000 1,732,000 1,200,000 4,208,000 18,329,800

Less:- unamortized notes issuance cost (8,755)- unamortized bonds issuance cost and consent solicitation fees (23,213)- unamortized notes discount (2,726)

Net 18,295,106





The future scheduled principal payments of all the Sharia bonds outstanding as of June 30, 2015are as follows:


2020 and

2016 2017 2018 2019 thereafter * Total

In RupiahShelf Registration Indosat

Sukuk Ijarah I Phase II* 55,000 - 76,000 - 285,000 416,000Sukuk Ijarah V* - - - 300,000 - 300,000

Shelf Registration IndosatSukuk Ijarah I Phase I* - - 64,000 - 126,000 190,000

Sukuk Ijarah IV* - 172,000 - - - 172,000

Total 55,000 172,000 140,000 300,000 411,000 1,078,000

Less:- unamortized bonds issuance cost and consent solicitation fees (2,658)

-

Net 1,075,342

* Refer to previous discussion on early repayment options for each bond/note.

All bonds are neither collateralized by any specific Group assets nor guaranteed by other parties.-

including the bonds.

On June 5, 2012, the Company and IPBV entered into a supplemental indenture with Bank of NewYork Mellon, as a trustee, for the IPBV Guaranteed Notes Due 2020 based on the consent letterreceived on May 21, 2012 representing 93.21% of the noteholders. The supplemental indentureincluded the amendment of certain definition under the previous Guaranteed Notes Due 2020indentures and the approval for the sale of asset transaction (Note 29).

On June 8, 2012, the Company received the consent letter from BRI, as a trustee, for the SeventhIndosat Bonds, Sixth Indosat Bonds, Fifth Indosat Bonds, Second Indosat Bonds and Sukuk Ijarah

The total amortization of bonds issuance cost, consent solicitation fees, notes issuance cost anddiscount for the six-month periods ended June 30, 2015 and 2014 amounted to Rp63,249 andRp8,928, respectively (Note 28).

As of June 30, 2015, December 31, 2014 and January 1, 2014, the Group has complied with allfinancial ratios required to be maintained under the Notes Indenture and Trustee Agreements.

20. DERIVATIVES

The Company entered into several swap and forward contracts. Listed below is information relatedto the contracts and their fair values as of June 30, 2015, December 31, 2014 and January 1,2014:

June 30, 2015

Notionalamount

Derivativeassets

Derivativeliabilities

InstrumentsInterest rate swap contracts USD 71,237

with decreasingamount - 24,224

Currency forward contracts USD 609,500 17,129 22,689

Total 17,129 46,913




20. DERIVATIVES (continued)

December 31, 2014

Notionalamount

Derivativeassets




Currency forward contracts USD 433,000 75,986 4,741

Total 75,986 31,740

January 1, 2014

Notionalamount

Derivativeassets




Currency forward contracts USD 244,000 195,569 -

Total 195,569 36,903

The net changes in fair value of the derivatives, swap income or cost, termination income or cost,and settlement of derivative instruments for the six-month periods ended June 30, 2015 and 2014,totaling Rp147,241 and Rp178,726, respectively, were credite (Loss) onchange in fair value of derivatives - n

The following are the details of the contracts:

Interest Rate Swap Contracts

No. Counter-partiesContract Period

andSwap Amount

Annual Swap Premium RateSwap

Premium Payment Date

Amount of Swap PremiumPaid / Amortized (Rp)

Six-month Periods EndedJune 30,

2015 2014

a. HSBC April 23, 2008 -November 27, 2016

5.42% of US$27,037, the notionalamount of which will decrease based onpredetermined schedule, in exchangefor6-month U.S. dollar LIBOR plus 1.45%per annum

Every April 1 and October1 up toOctober 2009, and everyMay 27 andNovember 27 up totermination date

1,944 2,572

b. HSBC April 23, 2008 -September 29, 2019

4.82% of US$44,200, the notionalamount of which will decrease based onpredetermined schedule, in exchangeforU.S. dollar LIBOR plus 0.35% perannum

Every January 28 andJuly 28 up toJuly 2009, and everyMarch 29 andSeptember 29 up totermination date

6,041 6,294

Total 7,985 8,866

Currency Forward Contracts

No. Counter-parties Settlement PeriodIDR/USD Fixing Rate(ranging in full amounts)

a. DBS July 1, 2015 August 14, 2015 Rp13,230 Rp13,495

b. Citibank July 23, 2015 Rp13,375 Rp13,420

c. BNP Paribas July 23, 2015 September 1, 2015 Rp13,375 Rp13,420

d. HSBC July 23, 2015 Rp13,398 Rp13,500

e. JP Morgan July 23, 2015 September 1, 2015 Rp13,195 Rp13,545

f. Standard Chartered July 23, 2015 Rp13,199 Rp13,500

g. CIMB Niaga July 23, 2015 Rp13,480

h. BTMU July 23, 2015 August 14, 2015 Rp13,195 Rp13,540

i. ING August 3, 2015 October 1, 2015 Rp13,420 Rp13,600

j. NATIXIS August 3, 2015 Rp13,420

k. Barclays August 14, 2015 September 1, 2015 Rp13,460 Rp13,545




21. FINANCIAL ASSETS AND LIABILITIES

The Group has various financial assets such as trade and other accounts receivable, and restrictedand unrestricted cash and cash equivalents, which

, bonds payable, andsharia bonds procurement payable, and trade accounts payable and others. The main purpose ofthese financiderivative transactions, primarily cross currency swaps, interest rate swaps, and currency forwardcontracts, for the purpose of managing its foreign exchange and interest rate exposures originating

instruments that are carried in the interim consolidated statement of financial position:

Carrying Amount Fair Value

June 30, December 31, January 1, June 30, December 31, January 1,

2015 2014 2014 2015 2014 2014

Current Financial AssetsCash and cash equivalents 9,420,792 3,480,011 2,233,532 9,420,792 3,480,011 2,233,532Accounts receivable - trade

and others - net 2,845,118 2,101,127 2,284,633 2,845,118 2,101,127 2,284,633Derivative assets 17,129 75,986 195,569 17,129 75,986 195,569Other current financial

assets - net 27,971 16,287 31,673 27,971 16,287 31,673

Total current financialassets 12,311,010 5,673,411 4,745,407 12,311,010 5,673,411 4,745,407

Non-current Financial AssetsDue from related parties 9,951 3,496 7,167 8,557 3,035 6,174Other non-current

financial assets - net 144,228 160,903 1,557,367 143,148 160,097 1,556,622Total non-current

financial assets 154,179 164,399 1,564,534 151,705 163,132 1,562,796

Total Financial Assets 12,465,189 5,837,810 6,309,941 12,462,715 5,836,543 6,308,203

Current Financial LiabilitiesShort-term loans 523,907 849,448 1,499,849 523,907 849,448 1,499,849Accounts payable - trade 863,143 690,559 339,310 863,143 690,559 339,310Procurement payable 4,397,345 3,095,518 3,064,287 4,397,345 3,095,518 3,064,287Accrued expenses 2,034,353 2,150,914 2,084,694 2,034,353 2,150,914 2,084,694Deposits from customers 112,296 238,338 49,335 112,296 238,338 49,335Derivative liabilities 46,913 31,740 36,903 46,913 31,740 36,903Loans payable - current

maturities 1,678,119 2,613,500 2,443,367 1,823,430 2,495,952 2,624,742Bonds payable - current

maturities 9,206,890 8,333,611 1,928,557 9,546,153 8,923,659 1,939,800Sharia bonds - current

maturities 54,843 - 427,753 55,000 - 432,760Other current financial

liabilities 490,731 423,029 362,448 490,731 423,029 362,448

Total current financialliabilities 19,408,540 18,426,657 12,236,503 19,893,271 18,899,157 12,434,128

Non-current FinancialLiabilities

Due to related parties 15,548 30,159 33,301 13,369 26,178 28,687Obligations under finance lease

net of current maturities 3,582,373 3,631,591 3,594,112 3,582,373 3,631,591 3,594,112Loans payable - net of

current maturities 6,711,195 3,727,118 4,346,317 6,693,757 3,999,202 3,277,844Bonds payable - net of

current maturities 9,088,216 6,962,080 12,814,468 9,068,669 6,753,363 13,603,516Sharia bonds- net of current

maturities 1,020,499 660,405 470,739 1,010,168 636,237 472,000Other non-current financial

liabilities 7,540 17,049 81,805 6,751 14,589 73,088

Total non-currentfinancial liabilities 20,425,371 15,028,402 21,340,742 20,375,087 15,061,160 21,049,247

Total Financial Liabilities 39,833,911 33,455,059 33,577,245 40,268,358 33,960,317 33,483,375




21. FINANCIAL ASSETS AND LIABILITIES (continued)

The fair values of the financial assets and liabilities are presented at the amounts at which theinstruments could be exchanged in a current transaction between willing parties, other than in aforced sale or liquidation.

The following methods and assumptions were used to estimate the fair value of each class offinancial instruments for which it is practicable to estimate such value:

Short-term financial assets and liabilities:

Short-term financial instruments with remaining maturities of one year or less (cash and cashequivalents, trade and other accounts receivable, other current financial assets, short-termloans, trade accounts payable, procurement payable, accrued expenses, deposits fromcustomers and other current financial liabilities)

These financial instruments approximate their carrying amounts largely due to their short-termmaturities.

Derivative financial instruments

Cross currency swap contracts

These derivatives are measured at their fair values using internal valuation techniques as noquoted market prices exist for such instruments. The principal technique used to value theseinstruments is the use of discounted cash flows. The key inputs include interest rate yieldcurves, forunderlying instruments. Cross currency swap contracts are measured using Level 2 of FairValue Hierarchy.

Interest rate swap contracts

These derivatives are measured at their fair values, computed using discounted cash flowsbased on observable market inputs which include interest rate yield curves and payment dates.Interest rate swap contracts are measured using Level 2 of Fair Value Hierarchy.

Currency forward contracts

These derivatives are measured at their fair values, computed using discounted cash flowsbased on observable market inputs which include foreign exchange rates, payment dates andthe spot price of the underlying instruments. Currency forward contracts are measured usingLevel 2 of Fair Value Hierarchy.

Long-term financial assets and liabilities:

Long-term fixed-rate and variable-rate financial liabilities (unquoted loans and bonds payable)

The fair value of these financial liabilities that are not traded in active market is determined bydiscounting future cash flows using applicable rates from observable current markettransactions for instruments with similar terms, credit risk and remaining maturities. Theseinstruments are included in Level 2.

The fair value of quoted bonds payable is based on quoted market prices at the financialposition date. These instruments are included in Level 1.





Long-term financial assets and liabilities: (continued)

Other long-term financial assets and liabilities (due from/to related parties, obligations underfinance lease and other non-current financial assets/liabilities)

Estimated fair value is based on discounted value of future cash flows adjusted to reflect

Due from/to related parties, obligations under finance lease, other non-current financialliabilities and other non-current financial assets except available for sale investment aremeasured using Level 2 while other non-current financial assets fair value unreadilymeasureable available for sale are measured using Level 3 Fair Value Hierarchy whichrepresent consideration payment or cost.

Financial instruments quoted in an active market

For equity investment classified as available-for-sale, the fair value of the investment in TowerBersama which was sold in March 2014 (Note 12) and in PT First Media was determinedbased on the latest market quotation as published by the Indonesia Stock Exchange.

Fair Value Hierarchy

Financial assets and liabilities are classified in their entirety based on the lowest level of input that issignificant to the fair value measurements. The assessment of the significance of a particular inputto the fair value measurements requires judgement, and may affect the valuation of the assets andliabilities being measured and their placement within the fair value hierarchy. The fair valuehierarchy consists as follows:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets orliabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fairvalue measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fairvalue measurement is unobservable

The best evidence of fair value is quoted prices in an active market. If the market for a financialinstrument is not active, an entity establishes fair value by using a valuation technique. Theobjective of using a valuation technique is to establish what the transaction price would have beenon the measurement date in an arm's length exchange motivated by normal businessconsiderations. Valuation techniques include using recent arm's length market transactions betweenknowledgeable, willing parties, if available, reference to the current fair value of another instrumentthat is substantially the same, discounted cash flow analysis and option pricing models. If there is avaluation technique commonly used by market participants to price the instrument and thattechnique has been demonstrated to provide reliable estimates of prices obtained in actual markettransactions, the entity uses that technique. The chosen valuation technique makes maximum useof market inputs and relies as little as possible on entity-specific inputs. It incorporates all factorsthat market participants would consider in setting a price and is consistent with accepted economicmethodologies for pricing financial instruments.





Fair Value Hierarchy (continued)

June 30, 2015Quoted prices Significant

in active andmarkets for observable

identical inputs, Significantassets or directly or unobservableliabilities indirectly inputs

Total (Level 1) (Level 2) (Level 3)Asset measured at fair value:Derivative assets 17,129 - 17,129 -

Other current financial assets - net 27,971 27,971 - -Other non-current financial asset - net 50,000 50,000 - -

Total asset measured at fair value 95,100 77,971 17,129 -

Asset for which fair values are disclosed:Due from related parties - net 8,557 - 8,557 -Other non-current financial assets - net 143,148 - 97,076 46,072

Total asset for which fair valuesare disclosed 151,705 - 105,633 46,072

Liabilities measured at fair value:Derivative liabilities 46,913 - 46,913 -Other current financial liabilities 24,078 - 24,078 -

Total liabilities measured at fair value 70,991 - 70,991 -

Liabilities for which fair values are disclosed:Loans payable - current maturities 1,823,430 - 1,823,430 -Bonds payable - current maturities 9,546,153 9,546,153 - -Sharia bonds - current maturities 55,000 55,000 - -Due to related parties 13,369 - 13,369 -Loans payable - net of current maturities 6,693,757 - 6,693,757 -Bonds payable - net of current maturities 9,068,669 9,068,669 - -Sharia bonds payable - net of current maturities 1,010,168 1,010,168 - -Obligation under finance lease 4,049,026 - 4,049,026 -Other non-current financial liabilities 6,751 - 6,751 -

Total liabilities for which fair valuesare disclosed 32,266,323 19,679,990 12,586,333 -

December 31, 2014Quoted prices Significant



TOTAL (Level 1) (Level 2) (Level 3)

Asset measured at fair value:Derivative assets 75,986 - 75,986 -Other current financial assets - net 16,287 16,287 - -Other non-current financial assets - net 50,000 50,000 - -

Total asset measured at fair value 142,273 66,287 75,986 -


Total asset for which fairvalues are disclosed 163,132 - 156,850 6,282





Fair Value Hierarchy (continued)

December 31, 2014 (continued)Quoted prices Significant



TOTAL (Level 1) (Level 2) (Level 3)Liabilities measured at fair value:Derivative liabilities 31,740 - 31,740 -Other current financial liabilities 2,355 - 2,355 -


Liabilities for which fair values are disclosed:Loans payable - current maturities 2,495,952 - 2,495,952 -Bonds payable - current maturities 8,923,659 8,923,659 - -Due to related parties 26,178 - 26,178 -Loans payable - net of current maturities 3,999,202 - 3,999,202 -Bonds payable - net of current maturities 6,753,363 6,753,363 - -Sharia bonds - net of current maturities 636,237 636,237 - -Obligation under finance lease 4,052,265 - 4,052,265 -Other non-current financial liabilities 14,589 - 14,589 -

Total liabilities for which fair valuesare disclosed 26,901,445 16,313,259 10,588,186 -

January 1, 2014Quoted prices Significant



TOTAL (Level 1) (Level 2) (Level 3)

Asset measured at fair value:Derivative assets 195,569 - 195,569 -Other current financial assets - net 31,673 31,673 - -Other non-current financial assets net 1,440,992 1,440,992 - -

Total asset measured at fair value 1,668,234 1,472,665 195,569 -


Total asset for which fair valuesare disclosed 171,804 - 169,074 2,730

Liabilities measured at fair value:Derivative liabilities 36,903 - 36,903 -

Other current financial liabilities 16,091 - 16,091 -






January 1, 2014 (continued)Quoted prices Significant



TOTAL (Level 1) (Level 2) (Level 3)Liabilities for which fair values

are disclosed:Loans payable - current maturities 2,624,742 - 2,624,742 -Bonds payable - current maturities 1,939,800 1,939,800 - -Sharia bonds payable - current maturities 432,760 432,760 - -Due to related parties 28,687 - 28,687 -Loans payable - net of current maturities 3,277,844 - 3,277,844 -Bonds payable - net of current maturities 13,603,516 13,603,516 - -Sharia bonds payable - net of

current maturities 472,000 472,000 - -Obligation under finance lease 3,940,469 - 3,940,469 -Other non-current financial liabilities 73,088 - 73,088 -

Total Liabilities for which fair valuesare disclosed 26,392,906 16,448,076 9,944,830 -

For the six-month periods ended June 30, 2015 and the years ended December 31, 2014 andDecember 31, 2013, there were no transfers between Level 1 and Level 2 fair valuemeasurements.

22. LONG-TERM EMPLOYEE BENEFITS

Long-term prepaid pension

The detail of prepaid pension benefit is as follows:December 31, January 1,

2014 2014(As restated; (As restated;

June 30, 2015 Note 2c) Note 2c)

Prepaid pension benefit (Note 31) 80,961 89,752 127,653Less: Current portion (3,020) (3,020) (3,839)

Non-current portion 77,941 86,732 123,814

The current portion of the long- -

Long-term employee benefit obligations

The details of post-employment benefit and other long-term employee benefit obligations are asfollows:

December 31, January 1,2014 2014

(As restated; (As restated;June, 30 2015 Note 2c) Note 2c)

Obligation under Labor Law No.13/2003(Note 31) 333,338 307,480 244,877

Other long-term employee benefits 48,900 47,836 42,001

1,057,140 995,867 769,404Less: Current portion (35,240) (35,240) (22,433)

Non-current portion 1,021,900 960,627 746,971




22. LONG-TERM EMPLOYEE BENEFITS (continued)Six-month periods ended

June 30,2014

(As restated;2015 Note 2c)

Post-retirement healthcare (Note 31) 38,791 29,847Obligation under Labor Law No.13/2003 (Note 31) 28,258 23,076Prepaid pension benefit cost (Note 31) 9,501 6,392Other long-term employee benefits 5,945 6,928

82,495 66,243

The amount recognized in other comprehensive income is as follows:

Six-month periods endedJune 30,

2014(As restated;

2015 Note 2c)

Remeasurement gains on defined benefit plan - 6,831Income tax effect - (1,708)

- 5,123

Details of pension and other post-employment benefit are further discussed in Note 31.

23. CAPITAL STOCK, ADDITIONAL PAID-IN CAPITAL AND LOSS PER SHARE

a. Capital Stock

by the Government and has special voting rights. The

veto rightwith respect to (i) amendment to the objective and purposes of the Company; (ii) increase ofcapital without pre-emptive rights; (iii) merger, consolidation, acquisition and demerger; (iv)

n the Articles ofAssociation; and (v)share also has the right to appoint one director and one commissioner of the Company.

ownership is as follows:

Number of Percentage

Shares Issued of Ownership

Stockholders and Fully Paid Amount (%)

June 30, 2015A. Share

Government 1 - -B. Shares

Ooredoo Asia, Pte. Ltd. 3,532,056,600 353,206 65.00Government 776,624,999 77,662 14.29SKAGEN Funds (SKAGEN AS) 292,740,950 29,274 5.39

Others (each holding below 5%) 832,510,950 83,251 15.32

Total 5,433,933,500 543,393 100.00




23. CAPITAL STOCK, ADDITIONAL PAID-IN CAPITAL AND LOSS PER SHARE (continued)

a. Capital Stock (continued)Number of Percentage

Shares Issued of Ownership

Stockholders and Fully Paid Amount (%)

December 31, 2014A. Share


Ooredoo Asia, Pte. Ltd. 3,532,056,600 353,206 65.00Government 776,624,999 77,662 14.29SKAGEN Funds (SKAGEN AS) 292,740,950 29,274 5.39Director:

Fadzri Sentosa 10,000 1 0.00Others (each holding below 5%) 832,500,950 83,250 15.32

Total 5,433,933,500 543,393 100.00

January 1, 2014A. Share


Ooredoo Asia, Pte. Ltd. 3,532,056,600 353,206 65.00Government 776,624,999 77,662 14.29SKAGEN Funds (SKAGEN AS) 298,880,950 29,888 5.50Director:

Fadzri Sentosa 10,000 1 0.00Others (each holding below 5%) 826,360,950 82,636 15.21

Total 5,433,933,500 543,393 100.00

b. Additional Paid-In Capital

-in capital stock as of June 30, 2015, December 31, 2014 andJanuary 1, 2014 consist of following:

Amount

Excess of proceeds over par value due to public offering 880,869Exercise of Employee Stock Option Phase I and II in 2006 - 2007 665,718

1,546,587c. Loss per Share

The basic and diluted loss per share calculation is as follows:


2014(As restated;

2015 Note 2c)

Loss for the period attributable to owner of the Parent (733,796) (1,117,254)

Weighted average number of ordinary shares outstanding 5,433,933,500 5,433,933,500

Basic loss per share (full amount Rupiah) (135.04) (205.61)

The Company has no potential dilutive ordinary shares. Therefore, the diluted loss per share isequivalent to the basic loss per share.




24. REVENUES

The details of this account consist of the following:


2015 2014CellularUsage charges 3,607,505 3,618,260Data 3,140,295 1,868,676SMS 2,284,930 2,282,696Interconnection services (Note 35) 981,232 1,139,342Value added services 404,898 338,492Tower leasing (Note 33e) 354,109 323,732Upfront discount and customer loyalty program (Note 2k) (832,667) (342,989)Others 283,291 137,091

10,223,593 9,365,300MIDIMultiprotocol Label Switching (MPLS) 401,854 239,415Leased line 135,558 62,724Internet 283,889 293,979Application services 184,566 134,339Internet Protocol Virtual Private Network (IP VPN) 398,385 463,517Satellite lease 175,928 149,585World link and direct link 147,288 146,852Frame net 77,019 36,927Digital data network 20,202 55,817Value added service 6,201 26,624Others 4,379 96,017

1,835,269 1,705,796Fixed TelecommunicationsInternational Calls 481,451 452,797Fixed Line 65,256 65,272Fixed Wireless 14,395 23,952

561,102 542,021

Total 12,619,964 11,613,117

The details of cellular revenue - value added services received by the Company from agencyrelationships are as follows:


2015 2014

Gross revenues 647,305 513,901Compensation to value added service providers (242,407) (175,409)

Net revenues 404,898 338,492

Operating revenues from related parties amounted to Rp1,050,596 and Rp1,071,461 for the six-month periods ended June 30, 2015 and 2014, respectively (Note 32). These amounts represent8.33% and 9.23% of the total operating revenues for the six-month periods ended June 30, 2015and 2014, respectively.

The operating revenues from interconnection services are presented on a gross basis (Note 2k).




25. EXPENSES - COST OF TELECOMMUNICATION SERVICES

The details of this account consist of the following:Six-month periods ended

June 30,2015 2014

Radio frequency fee (Note 35) 1,461,679 1,247,083Interconnection 1,187,381 1,266,423Maintenance 615,882 526,823Rent 503,469 445,181Utilities 480,345 475,494Leased circuits 172,189 188,144Cost of handsets and modems 171,170 7,393USO (Note 35) 165,749 139,728Blackberry access fee 128,623 218,205Cost of SIM cards and pulse reload vouchers 123,891 97,171Concession fee (Note 35) 86,452 73,271Installation 67,472 68,309Delivery and transportation 61,454 62,339Communication network 57,524 36,579License 32,508 29,993Billing and collection 22,464 20,853Others 27,655 23,714

5,365,907 4,926,703

Interconnection relates to the expenses for the interconnection between thetelecommunications networks and those owned by Telkom or other telecommunications carriers(Note 2k).

26. EXPENSES - PERSONNEL


June 30,2014


Salaries 347,664 318,327Incentives and other employee benefits 216,015 228,734Employee income tax allowance 120,666 102,616Bonuses 90,202 90,344Post-retirement healthcare benefits (Note 31) 38,791 29,847Medical expense 37,129 35,138Separation, appreciation and compensation expense

under Labor Law No. 13/2003 (Note 31) 28,258 23,076Net periodic pension cost (Note 31) 9,501 6,392Others (each below Rp5,000) 13,300 14,212

901,526 848,686

The personnel expenses capitalized to assets under construction and installation for the six-monthperiods ended June 30, 2015 and 2014 amounted to Rp53,368 and Rp29,472, respectively.




27. EXPENSES - GENERAL AND ADMINISTRATIVE


June 30,2015 2014

Professional fees 202,974 174,020Rent 76,752 70,885Provision for impairment of accounts receivable - net (Note 5) 73,252 45,150Transportation 38,696 41,054Insurance 33,239 14,640Administrative expenses 17,178 13,262Training, education and research 13,798 12,483Utilities 8,867 8,329Public relation 6,052 5,852Others (each below Rp5,000) 33,151 53,245

503,959 438,920

28. FINANCING COST

The details of this account consist of the following:


2015 2014

Interest on loans 972,707 982,246Finance charges under finance lease 226,966 220,418Amortization of debt and bonds / notes issuance

costs, consent solicitation fees and discount(Notes 14, 18 and 19) 79,265 24,643

Others 4,911 5,621

1,283,849 1,232,928

29. GAIN ON TOWER SALES

On February 7, 2012, the Company entered into an Asset Sale Agreement with PT Tower BersamaInfrastructure Tbk and its subsidiary, PT Solusi

Bersama for a total consideration of US$518,500, consisting of US$406,000 paid upfront and amaximum potential deferred payment of US$112,500. The upfront payment includes PT TowerBersama Infrastructure Tbk's shares of not less than 5% of the increase in its capital stock (uponthe Rights Issue of PT Tower Bersama Infrastructure Tbk). Based on the agreement, the Companyalso agreed to lease back the spaces in the 2,500 telecommunication towers for a 10-year periodwith fixed monthly lease rate of US$1,300 per tower slot (in full amount). The leases have anoption to be renewed for a further 10-year period.




29. GAIN ON TOWER SALES (continued)

On August 2, 2012, the Company and Tower Bersama closed the deal on the sale-and-leasebacktransaction of 2,500 telecommunication towers. On the closing date of such transaction, theCompany received cash amounting to US$326,289 (equal to Rp3,092,894) and obtained 5%ownership (equal to 239,826,310 shares) in Tower Bersama with a value of US$103,101(equivalent to Rp977,292) (Note12).

The total consideration of US$429,390 (equal to Rp4,070,187) is allocated to the sales of propertyand equipment amounting to Rp3,870,600 and the remainder is allocated to prepaid land lease andexisting tower lease contracts from the 2,500 towers. The total carrying amount of the separatelyidentifiable components of the transaction is Rp1,534,494 which includes the carrying amount ofproperty and equipment amounting to Rp1,372,674. As of the agreement closing date, theCompany recorded the excess of the selling price over the carrying amounts amounting toRp2,535,693 (including the Rp2,497,92

-and-Rp1,410,501. The deferred gain will be amortized over the term of the lease, being 10 years.

As of June 30, 2015, December 31, 2014 and January 1, 2014, the balances of the current portionof outstanding deferred gain on sale-and-leaseback transactions amounting to Rp141,050 each are

hile the balances of the Iong-term portionamounting to Rp858,055, Rp928,580 and Rp1,069,630, respectively, are presented as part of

-

For the six-month periods ended June 30, 2015 and 2014, the Company recorded amortization ofdeferred gain on sale-and-leaseback transactions amounting to Rp70,525 each.

30. PROVISION FOR LEGAL CASE

On January 18, 2012, the Company and IMM, a subsidiary, were investigated by the Attorney

IMM to provide 3G-based broadband internet services. IMM had been accused of illegally using the

s made a public statement that IMM has notbreached any prevailing law or regulations; nevertheless, the case continued to be investigated bythe AGO. During the investigation process, AGO was assisted by Badan Pengawasan Keuangandan Pembangunan [Indonesievaluate the State loss sustained under the Litigation Case. Subsequently, BPKP issued its reportNo. SR1024/D6/01/2012 dated November 9, 2012 including the attached BPKP audit report datedOctothat there is a State loss amounting to Rp1,358,343 incurred since IMM did not pay concession feeand tender upfront fee to the State.

On July 8, 2013, Pengadilan Tindak Pidana Korupsiwhich found Mr. Indar Atmanto (former President Director of IMM), guilty by virtue of representingIMM in signing and entering into a cooperation agreement with the Company and sentenced him tofour years imprisonment, and charging him the penalty amounting to Rp200 (if Mr. Indar Atmantorefuses to pay the penalty, he would serve an additional three months imprisonment). Based on thedecision, the Corruption Court inconsistently ordered IMM to pay substitution money in the amountof Rp1,358,343, as charged by the prosecutors for the losses sustained by the State, although IMMhas not been previously indicted as a defendant.




30. PROVISION FOR LEGAL CASE (continued)

A petition for an appeal was formally filed by Mr. Indar Atmanto on July 11, 2013 to the High Court15, 2013

to the appellate court. On January 10, 2014, the appellate court examined the case and reaffirmedthe decision of the Corruption Court. In addition, the appellate court increased the punishment ofMr. Indar Atmanto from four years to eight years imprisonment. The penalty and additionalimprisonment term (if Mr. Indar Atmanto refuses to pay the penalty) remained the same. However,the conviction against IMM to pay substitution money in the amount of Rp1,358,343 wasannulled. The appellate court considered IMM as a separate legal entity, and therefore stated thatany cases brought against it must be indicted separately as it was not accused yet as a defendantin the original case against Mr. Indar Atmanto.

Under Indonesian Law, the appellate court decision is not yet final and binding as Mr. IndarAtmanto and the AGO have submitted their petitions for cassation. A petition for cassation onbehalf of Mr. Indar Atmanto was filed on January 23, 2014 and the Memorandum of Cassation wassubmitted by the lawyers on February 5, 2014 to the Supreme Court. Mr. Indar Atmanto alsosubmitted his private Memorandum of Cassation on February 5, 2014. The AGO has also filed a

annulled the charge of substitution money against IMM. This cassation implies that the AGO willnot execute the decision of the appellate court before the Supreme Court issued its decision which,under Indonesian law, is considered as a final and binding decision.

Based on a posting in the official website of the Supreme Court, the Supreme Court reported that ithad examined and decided the Litigation Case on July 10, 2014, but no detailed information

On September 16, 2014, the South Jakarta Attorne Kejaksaan Negeri Jakarta Selatan

others, that (i) Mr. Indar Atmanto is found guilty and sentenced to eight years imprisonment andcharged with penalty of Rp300 (if the penalty is not paid, Mr. Indar Atmanto would serve anadditional six months imprisonment), and (ii) IMM pay the losses sustained by the State amountingto Rp1,358,343.

In relation to the Litigation Case above, the Company, IMM and Mr. Indar Atmanto filed a petition toPengadilan Tata Usaha Negarathe basis to calculate the Sdecision No. 231/G/2012/PTUN-JKT dated May 1, 2013, the panel of judges declared that the

s

K/TUN/2014 dated July 21, 2014, whereas based on Indonesian Law, the Supreme Cou

a provision for the legal case amounting to Rp1,358,643 (Note 32) (including the penalty imposedon Mr. Indar Atmanto) in the interim consolidated financial statements of the Group as of June 30,2015 and December 31, 2014.




30. PROVISION FOR LEGAL CASE (continued)

On January 16, 2015, Mr.Indar Atmanto and/or his lawyer received the official copy of theSupreme July 10, 2014 regarding the Litigation

review [PeninjauanNo. 08/AKTA.PID.SUS/PK/TPK/2015/PN.Jkt.Pst. As of the issuance date of the interimconsolidated financial statements, the Supreme Court has not yet made any verdict on suchjudicial review.

31. PENSION AND OTHER POST-EMPLOYMENT BENEFITS

Pension benefit plan

The Company and a subsidiary paid an upfront lump sum amount of cash to procure a groupinsurance from PT Asuransi Jiwasraya ("Jiwasraya") that covers certain employees of theirs. Theinsurance provides retirement, death and disability benefits to those employees. The scheme is insubstance a defined benefit plan for which the total costs of the benefits were all paid upfront bythe Company and the subsidiary. The promised retirement benefits are predicated on a constantannual percentage of increase in salaries, and that the employees will work until they retire.

The Company also procured death and disability insurance for its remaining employees that arenot covered under the above scheme. The total costs of such benefit were also paid upfront by theCompany to Jiwasraya.

All the above benefits are presented within the overall pension benefit plan.

Prepaid pension benefit cost

The net periodic pension cost of the Group was calculated based on actuarial valuations as ofDecember 31, 2014 and 2013. The actuarial valuations were prepared by an independent actuary,using the projected-unit-credit method, with the following principal assumptions:


Years endedDecember 31,

2015 2014 2014 2013

Annual discount rate 8.0 and 8.5% 9.0% 8.0 and 8.5% 9.0%

Annual rate of increase incompensation

3.0, 6.0 and9.0%

3.0, 6.0 and9.0%

3.0, 6.0 and9.0%

3.0, 6.0 and9.0%

Mortality rate (Indonesian MortalityTable - TMI)

TMI 2011 TMI 2011 TMI 2011 TMI 2011

The funded status of the plans is as follows:



Fair value of plan assets 608,511 576,053 549,859Present value of benefit obligation (527,550) (486,301) (422,206)

Prepaid pension 80,961 89,752 127,653Less: Current portion (3,020) (3,020) (3,839)





31. PENSION AND OTHER POST-EMPLOYMENT BENEFITS (continued)

Pension benefit plan (continued)

Prepaid pension benefit cost (continued)

The movements in the fair value of plan assets are as follows:



At the beginning of the year 576,053 549,859 576,335Expected return on plan assets 31,748 45,675 46,047Remeasurement: Return on plan assets - 5,434 2,017Contributions 710 10,773 10,435Benefit payments - (35,688) (84,975)

At the end of the year 608,511 576,053 549,859

The major categories of plan assets are as follows:

June 30, 2015 December 31, 2014 January 1, 2014Amount % Amount % Amount %

Mutual funds unit link 260,930 42.88% 228,002 39.58% 191,736 34.87%Properties 160,403 26.36% 162,965 28.29% 179,969 32.73%Shares 85,435 14.04% 100,003 17.36% 94,521 17.19%Time deposits 60,486 9.94% 48,331 8.39% 33,816 6.15%Other 41,257 6.78% 36,752 6.38% 49,817 9.06%

608,511 100.00% 576,053 100.00% 549,859 100.00%

The amounts recognized in the profit or loss are as follows:Six-month periods ended

June 30,2014


Current service cost 13,105 12,354Net interest on the net defined benefit liability (3,604) (5,962)

9,501 6,392

The movements in the present value of defined benefit obligation are as follows:


(As restated; (As restated;June 30, 2015 Note 2c) Note 2c)

At the beginning of the year 486,301 422,206 554,209Interest cost 28,144 37,566 32,263Current service cost 13,105 25,088 32,032Remeasurement:- Experience losses - 2,579 1,290- Losses (gains) from changes in

financial assumptions - 31,974 (119,506)Immediate recognition of service cost - - (2,803)Benefits payment outside settlement - (7,763) (15,215)Effect on curtailment - 1,112 8,129Effect of settlement - (26,461) (68,193)







Prepaid pension benefit cost (continued)

A quantitative sensitivity analysis for significant assumptions as of June 30, 2015 is as follows:

Impact to defined benefit obligationChanges Decrease in

assumption Increase in assumption assumption

Discount rate 1% Decrease by 6.47%-10.83% Increase by 7.00%-12.71%

The maturity of undiscounted defined benefits plan obligation as of June 30, 2015 is as follows:

Amount

Within the next 12 months (the next annual reporting period) 23,846Between 2 and 5 years 170,497Between 5 and 10 years 430,812Beyond 10 years 791,351

1,416,506

The average duration of the defined benefit plan obligation at the end of reporting period is 13.5years and 8.8 years for the Company and Lintasarta, respectively.

Obligations under Labor Law No. 13/2003

The net periodic pension cost of the Group was calculated based on actuarial valuations as ofDecember 31, 2014 and 2013. The actuarial valuations were prepared by an independent actuary,using the projected-unit-credit method, with the following principal assumptions:


Years ended December 31,

2015 2014 2014 2013

Annual discount rate 8.50% 9.0 and 9.5% 8.50% 9.0 and 9.5%

Annual rate of increase in compensation 7.50% 7.5 and 8.5% 7.50% 7.5 and 8.5%

The benefits obligations recognized in the consolidated statements of financial position are asfollows:



Present value of benefit obligations 333,338 307,480 244,877





Pension benefit (continued)

Obligations under Labor Law No. 13/2003 (continued)

The movements of accrued pension cost under the labor law are as follows:



At the beginning of the year 307,480 244,877 367,641Expenses charged in profit or loss 28,258 52,487 54,841Benefits paid (2,400) (8,494) (11,178)Remeasurement losses (gains) - 18,610 (166,427)

At the end of the year 333,338 307,480 244,877Current portion (6,518) (6,518) (5,396)


The amounts recognized in the profit or loss are as follows:


2014(As restated;

2015 Note 2c)

Current service cost 15,333 11,696Net interest on the net defined benefit liability 12,925 11,380

28,258 23,076




At the beginning of the year 307,480 244,877 367,641Current service cost 15,333 25,717 37,398Interest cost 12,925 22,746 23,650Immediate recognition of service cost - 6,489 728Remeasurement:

- Experience (gains) losses - (7,763) 7,222- Losses (gains) from changes in

financial assumptions - 26,373 (173,649)Actual benefits paid (2,400) (5,491) (1,680)Effect on curtailment - (2,279) (6,935)Effect of settlement - (3,003) (9,498)Cost of employee transferred in (out) - (186) -







Obligations under Labor Law No. 13/2003 (continued)

A quantitative sensitivity for significant assumptions as of June 30, 2015 is as follows:



Discount rate 1% Decrease by 9.46%-11.42% Increase by 10.84%-13.47%

The maturity of undiscounted defined benefit obligation as of June 30, 2015 is as follows:

Amount

Within the next 12 months (the next annual reporting period) 6,518Between 2 and 5 years 44,003Between 5 and 10 years 185,050Beyond 10 years 2,378,264

2,613,835

The average duration of the defined benefit plan obligation at the end of reporting period is 13.2years, 11.8 years and 14.2 years for the Company, Lintasarta, and IMM, respectively.

Post-retirement healthcare benefit

The Company provides post-retirement healthcare benefits to its retired employees who left theCompany after they fulfill the early retirement requirement. The spouse and children who havebeen officially registered in the administration records of the Company are also eligible to receivesuch benefits. The plan is managed by Jiwasraya.

The actuarial valuation for the post-retirement health care benefits was prepared by anindependent actuary, using the projected-unit-credit method, with the following principalassumptions:


Years ended December 31,

2015 2014 2014 2013

Annual discount rate 9.0% 9.5% 9.0% 9.5%

Ultimate cost trend rate 6.0% 6.0% 6.0% 6.0%

Next year trend rate 6.0% 8.0% 6.0% 8.0%

Period to reach ultimate cost trend rate 0 year 1 year 0 year 1 year

The benefit obligations recognized in the consolidated statements of financial position are asfollows:



Present value of benefit obligations 674,902 640,551 482,526





Post-retirement healthcare benefit (continued)

The movements of post-retirement healthcare benefit liabilities are as follows:



At the beginning of the year 640,551 482,526 1,017,673Expenses charged in profit or loss 38,791 51,761 90,107Benefits paid (4,440) (15,746) (22,269)Remeasurement loss (gain) - 122,010 (602,985)

At the end of the year 674,902 640,551 482,526Less: current portion (15,584) (15,584) (12,799)


The amounts recognized in the profit or loss are as follows:


2014(As restated;

2015 Note 2c)

Net interest on the net defined benefit liability 28,474 22,616Current service cost 10,317 7,231

38,791 29,847




At the beginning of the year 640,551 482,526 1,017,673Current service cost 10,317 15,876 40,321Interest cost 28,474 45,161 70,832Actual benefits paid (4,440) (14,296) (11,569)Remeasurement:

- Experience losses (gains) - 68,160 (285,903)- Losses (gains) from changes in

financial assumptions - 53,850 (317,082)Effect on curtailment - (9,773) (21,046)Effect of settlement - (1,450) (10,700)Others - 497 -

674,902 640,551 482,526





Post-retirement healthcare benefit (continued)

A quantitative sensitivity for significant assumptions as of June 30, 2015 is as follows:



Discount rate 1% Decrease by 15.83% Increase by 20.44%Medical cost trend 1% Increase by 20.87% Decrease by 16.36%

The maturity of undiscounted defined benefit obligation as of June 30, 2015 is as follows:

Amount

Within the next 12 months (the next annual reporting period) 15,584Between 2 and 5 years 76,659Between 5 and 10 years 143,244Beyond 10 years 1,837,505

2,072,992

The average duration of the defined benefit plan obligation at the end of reporting period is at 19.9years.

Five Annual Periods of Employee Benefits

Amounts of employee benefits for the five annual periods are as follows:

June 30, December 31, December 31, December 31, December 31,2015 2014 2013 2012 2011

Other post-employment benefits:Post-retirement HealthcarePresent value of benefit obligation (674,902) (640,551) (482,526) (1,017,673) (687,789)Experience gain (loss) adjustments

arising on plan liabilities - (68,160) 285,903 (21,453) 160,703

Obligations underLabor Law No. 13/2003

Present value of benefit obligation (333,338) (307,480) (244,877) (367,641) (291,135)Experience gain (loss) adjustments

arising on plan liabilities - 7,762 (7,222) (15,902) (68,539)

Prepaid pension benefit costPlan assets 608,511 576,053 549,859 576,335 538,902Present value of benefit obligation (527,550) (486,301) (422,206) (554,209) (463,074)Excess of plan assets over projected

benefit obligation 80,961 89,752 127,653 22,126 75,828

Experience gain (loss) adjustmentsarising on plan liabilities - (2,579) (1,290) (2,790) 12,626

Experience gain (loss) adjustmentsarising on plan assets - (5,433) (2,016) (4,640) (14,041)




32. ACCOUNTS AND TRANSACTIONS WITH RELATED PARTIES

The details of the accounts and the significant transactions entered into with related parties are asfollows:

Amount Percentage to total assets/liabilities (%)June 30, December 31, January 1, June 30, December 31, January 1,

2015 2014 2014 2015 2014 2014Cash and cash equivalents (Note 4)Entity under common control:QNBK 3,788,495 243,625 36,733 6.45 0.46 0.07

Government-related entities:Banks 1,970,015 1,728,212 842,226 3.36 3.24 1.54

Total 5,758,510 1,971,837 878,959 9.81 3.70 1.61

Accounts receivable - trade (Note 5)Government-related entities:State-owned companies 497,558 420,637 600,185 0.85 0.79 1.10Banks 165,717 113,901 - 0.28 0.21 -

Ultimate parent company:Ooredoo 15,218 8,847 56,334 0.03 0.02 0.10

Total 678,493 543,385 656,519 1.16 1.02 1.20

Less allowance for impairment 29,615 24,433 24,316 0.05 0.05 0.04

648,878 518,952 632,203 1.11 0.97 1.16

Prepaid expensesGovernment-related entities:State-owned companies 13,430 19,999 17,031 0.02 0.04 0.04Governmental departments 383 574 335 0.00 0.00 0.00

Entity under significant influence:Kopindosat 3,262 2,420 1,944 0.01 0.00 0.00

Key Management Personnel:Senior Management 1,755 3,820 1,959 0.00 0.01 0.00

Total 18,830 26,813 21,269 0.03 0.05 0.04

Other current and non-currentassets - financial and non-financial

Government-related entities:Banks 46,212 124,922 149,868 0.08 0.23 0.27Governmental departments 87 87 87 0.00 0.00 0.00

Total 46,299 125,009 149,955 0.08 0.23 0.27

Due from related partiesKey management personnel:Senior management 9,855 1,928 1,688 0.02 0.01 0.00

Government-related entities:State-owned companies 111 1,583 2,325 0.00 0.00 0.00

Entity under significant influence :Kopindosat - - 3,169 - - 0.01

Total 9,966 3,511 7,182 0.02 0.01 0.01

Less allowance for impairment 15 15 15 0.00 0.00 0.00

9,951 3,496 7,167 0.02 0.01 0.01

Long-term prepaid rentalsnet of current portion

Government-related entities:State-owned companies 18,820 19,007 21,082 0.03 0.04 0.04

Entity under significant influence :Kopindosat 7,645 6,046 6,212 0.01 0.01 0.01

Total 26,465 25,053 27,294 0.04 0.05 0.05

Long-term prepaid pension - netof current portion (Note 31)





32. ACCOUNTS AND TRANSACTIONS WITH RELATED PARTIES (continued)

The details of the accounts and the significant transactions entered into with related parties are asfollows: (continued)

Amount Percentage to total assets/liabilities (%)June 30, December 31, January 1, June 30, December 31, January 1,

2015 2014 2014 2015 2014 2014Short-term loan (Note 14)Government-related entity:Banks 273,922 599,481 1,499,849 0.61 1.54 3.97

Accounts payable - tradeGovernment-related entities:State-owned companies 63,847 16,605 41,603 0.14 0.04 0.11

Entities under significant influence:PT Personel Alih Daya 19,014 6,757 - 0.04 0.02 -Kopindosat - - 5,941 - - 0.02

Ultimate parent company:Ooredoo 994 7,170 59 0.00 0.02 0.00

Total 83,855 30,532 47,603 0.18 0.08 0.13

Procurement payable (Note 15)Entities under significant influence :PT Personel Alih Daya 27,564 12,351 15,934 0.06 0.03 0.04Kopindosat 15,034 16,582 13,581 0.03 0.04 0.04


Total 47,818 47,965 43,988 0.10 0.12 0.12

Accrued expensesGovernment-related entities:State-owned companies 190,364 265,859 112,464 0.42 0.68 0.30Governmental departments 2,656 2,842 - 0.01 0.01 -Banks 1,110 - - 0.00 - -

Key Management Personnel:Senior management 95,644 - - 0.21 - -

Entities under significant influence:PT Personel Alih Daya 62,175 83,283 46,118 0.14 0.21 0.12Kopindosat 29,875 68,491 14,464 0.07 0.18 0.04

Total 381,824 420,475 173,046 0.85 1.08 0.46

Due to related partiesUltimate parent company:Ooredoo 9,317 16,071 17,045 0.02 0.04 0.04

Government-related entities:State-owned companies 3,952 6,653 6,709 0.01 0.02 0.02Banks - - 55 - - 0.00

Entities under significant influence :Kopindosat 2,012 2,311 6,486 0.00 0.01 0.02PT Personel Alih Daya 267 5,124 3,006 0.00 0.01 0.01

Total 15,548 30,159 33,301 0.03 0.08 0.09

Other current financial liabilities -dividend payable

Government-related entities:State-owned companies - - 11,025 - - 0.03

Provision for legal caseGovernment-related entity:Government of the Republic of

Indonesia 1,358,643 1,358,643 - 3.01 3.49 -

Loans payable including currentmaturities (Note 18)

Non-controlling interest of APE and LMD 16,800 16,800 1,050 0.04 0.04 0.00





The details of the accounts and the significant transactions entered into with related parties are asfollows: (continued)

Percentage to totalAmount revenues or expenses (%)

Six-month periods ended Six-month periods endedJune 30, June 30,

2015 2014 2015 2014

Revenues (Note 24)Government-related entities:State-owned companies 676,279 646,044 5.36 5.56Banks 144,551 211,254 1.15 1.82Governmental departments 125,327 154,176 0.99 1.33

Entity under significant influence :Kopindosat 55,034 338 0.44 0.00

Ultimate parent company:Ooredoo 49,405 59,649 0.39 0.52

Total 1,050,596 1,071,461 8.33 9.23

ExpensesCost of telecommunication servicesGovernment-related entities:State-owned companies 989,992 1,222,539 8.66 10.53

Entity under significant influence:PT Personel Alih Daya 75,477 102,971 0.66 0.89Kopindosat 74,444 87,260 0.65 0.75

Ultimate parent company:Ooredoo 22,919 24,430 0.20 0.21

Total 1,162,832 1,437,200 10.17 12.38

PersonnelKey management personnel:Senior managementShort-term employee benefits 172,533 164,052 1.51 1.41Other long-term benefits 4,520 3,774 0.04 0.03Termination benefits 2,702 4,599 0.02 0.04

179,755 172,425 1.57 1.48

Government-related entities:State-owned companies 9,501 6,392 0.08 0.06

Total 189,256 178,817 1.65 1.54

MarketingEntities under significant influence :PT Personel Alih Daya 31,940 47,425 0.28 0.41Kopindosat 4,013 10,482 0.04 0.09

Total 35,953 57,907 0.32 0.50





Percentage to totalAmount revenue or expense (%)

Six-month periods ended Six-month periods endedJune 30, June 30,

2015 2014 2015 2014

General and administrationGovernment-related entitiesState-owned companies 57,220 17,033 0.50 0.15

Entities under significant influence :Kopindosat 15,537 12,717 0.14 0.11PT Personel Alih Daya 9,507 5,753 0.08 0.05

Total 82,264 35,503 0.72 0.31

Interest income - netGovernment-related entitiesBanks 44,642 28,488 2.31 2.63

The details of the accounts and the significant transactions entered into with related parties are asfollows:

No Related Parties Relationship Balances/Transactions

1.Banks: state-owned banks andregional development banks(BPD)

Government-related entities

Cash and cash equivalents, accountsreceivable - trade, other current andnon-current assets-financial and non-financial, short-term loan, accruedexpenses, due to related parties,revenues and interest income(financing cost) - net

2. State-owned companies Government-Accounts receivable - trade, prepaidexpenses, due from related parties,long-term prepaid rentals, long-termprepaid pension, accounts payable -trade, procurement payable, accruedexpenses, due to related parties,other current financial liabilities -dividend payable, revenues, expensescost of telecommunication services,expenses - personnel and expenses -general and administrative

related entities

3. Ooredoo Ultimate parent Accounts receivable - trade, accountspayable - trade, due to related parties,revenues and expenses - cost oftelecommunication services

company

4. Governmental departments Government-relatedentities

Prepaid expenses, other current andnon-current assets - financial andnon-financial, accrued expenses andrevenues

5. Kopindosat Entity undersignificant influence

Prepaid expenses, due from relatedparties, long-term prepaid rentals - netof current portion, accounts payable -trade, procurement payable, accruedexpenses, due to related parties,revenues, expenses cost ofservices, expenses marketing andexpenses - general and administrative





The relationship and nature of account balances/transactions with related parties are as follows:(continued)

No Related Parties Relationship Balances/Transactions

6. Senior management(consisting of members ofthe Boards of Directors andCommissioners and thosewho directly report to theBoard of Directors)

Key managementpersonnel

Prepaid expenses due from relatedparties, accrued expenses andexpenses - personnel

7. PT Personel Alih Daya Entity under Accounts payable - trade,procurement payable, accruedexpenses, due to related parties,expenses - cost of telecommunicationservices, expenses - marketing andexpenses - general and administrative

significant

influence

8. Non-controlling interest of APEand LMD

Non-controllinginterest

Loans payable including currentmaturities

9. Government ofThe Republic of Indonesia

Government-relatedentities

Provision for legal case

10. PT Bank QNB Kesawan Tbk( QNBK )

Entity under commoncontrol

Cash and cash equivalents

33. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES

a. Capital expenditureAs of June 30, 2015, commitments on capital expenditures amounted to US$79,931 andRp1,231,798.

Additional information relating to significant commitments on capital expenditures as of June30, 2015 is presented below.

Contract Date Description Parties

Amount of Contract/Purchase Orders

Issued

Amount ofContract/ POsNot Yet Served

October 1, 2010 andDecember 10, 2012.Subsequentlyupdated on January1, 2015

Procurement ofTelecommunicationsEquipment andRelated Services

PT EricssonIndonesia andEricsson AB

US$663,706

and

Rp2,618,504

US$11,346

and

Rp236,787

June 16, 2010 andDecember 10, 2012.Subsequentlyupdated on January1, 2015.

Procurement ofTelecommunicationsInfrastructure

PT Nokia SiemensNetworks and NokiaSiemens NetworksOy

US$622,636

and

Rp2,590,718

US$7,691

and

Rp56,863

August 2, 2010 andDecember 21, 2012.Subsequentlyupdated on January1, 2015.

Procurement ofTelecommunicationsInfrastructure

PT Huawei TechInvestment

US$313,845andRp1,381,233

US$8,432andRp413,651

These contracts shall expire after 5 years from the dates the contract were signed.




33. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES (continued)

b. Unused loan facility

As of June 30, 2015, the Company had revolving time loan facility as below:

Contract Period Parties Significant Terms

May 4, 2015 May 3, 2017 Australia and New ZealandBanking Group Limited.

Maximum amount:US$100,000

Interest rate of LIBOR + 1.05%per annum.

As of June 30, 2015, thisfacility has not beendrawdown.

c. Taxation matter

In March 2012, the Tax Court decided in favour of the Company in relation to compensation foroverpayment of corporate income tax assessment of 2004 fiscal year amounting to Rp60,674.In June 2012, the Tax Office filed a request for reconsideration to the Supreme Court. In July2012, the Company submitted a Counter-Memorandum Request for Reconsideration to theSupreme Court. As of the issuance date of these interim consolidated financial statements, theCompany has not received any decision from the Supreme Court.

d. Others

The Company

(i) On September 24, 2014, the Company and PTinto an agreement on the relocation and lease of Palapa C satellite transponder. Under theagreement, the Company agreed to lease out certain transponder capacity to PSN totalingUS$2,500 until August 31, 2016. During the six-month period ended June 30, 2015, theCompany earned lease revenue from PSN amounting to US$625.

(ii) On April 24, 2014, the Company entered into a cooperation agreement with Mandiri,int operation on the

development and implementation of mobile money platform. Based on the agreement,each party committed to bear 25% of the total cost incurred from such joint operation. As ofJune 30, 2015, the Company has made advance cost contribution amounting to Rp2,700.

(iii) On April 9, 2014, the Company and Bodhi Indonesia Corporation, Cayman Islands (anentity controlled by SoftBank Corporation) entered into a limited partnership agreement.Based on the agreement, the parties agreed to establish an investment fund called SBISAT Fund, L.P., to manage the investment, with initial commitment period of 4 years.Subsequently, on May 22, 2014, the Company entered into a subscription agreement withBodhi Indonesia Corporation, Cayman Islands. Based on the subscription agreement, theCompany committed to make capital contribution totaling US$14,500 to SB ISAT Fund,L.P. As of June 30, 2015, the Company has made capital contribution to the fundamounting to US$3,385 (equivalent to Rp43,343) (Note 12).





d. Others (continued)

The Company (continued)

(iv) On May 1, 2013, the Company and XL Axiata entered into a cooperation agreement for fiveyears period effective from the latest memorandum being signed. Under the agreement,both parties agreed to (i) perform construction of certain main cables, access cables and

accept that the ownership of the Network willbe with the party who performs the construction; (iii) share the utilization; and (iv) operateand maintain the Network. This agreement commenced from signing date and shallcontinue in effect until the end of lease period, unless terminated earlier by both parties.

(v) The Company and IMM have committed to pay annual radio frequency fee over the 3G andBWA licenses period, provided the Company and IMM hold the 3G and BWA licenses. Theamount of annual payment is based on the payment scheme set out in Regulations No.7/PER/M.KOMINFO/2/2006, No. 268/KEP/M.KOMINFO/9/2009 and No. 237/KEP/M.KOMINFO/7/2009 dated February 8, 2006, September 1, 2009 and July 27, 2009,respectively, of the MOCIT. The Company and IMM paid the frequency fee for the 3G andBWA licenses totaling Rp404,035 and Rp375,919, respectively, for the six-month periodsended June 30, 2015 and 2014.

(vi)

submarine cable in countries in the Asia-Pacific Region. As an FA, the Company collected

and OCU and for upgrading the APCN cable do not belong to the Company and, therefore,

separate accounts. As of June 30, 2015, the balance of the funds (including interestUS$4,097. Besides receiving

their share of the funds from the sale of IRU, DUC and OCU, the members of theconsortium also received their share of the interest earned by the above funds. Thisagreement will be expired in 30 years since the contract signed date.

(vii) Under a cooperation agreement, the compensation to Telkom relating to leased circuit/

collected revenues from such services. The Company also leases in circuits from Telkom tolink Jakarta, Medan and Surabaya.

(viii) Under a land transfer agreement, the Company is effectively leasing in a 134,925-squaremeter piece of land from Telkom for 30 years starting from 1994. The land property islocated at Daan Mogot, West Jakarta, whcurrently situated. A sum of US$40,000 less Rp43,220 was paid for the lease. As ofJune 30, 2015, the outstanding prepaid expense for the lease is Rp13,145.






Lintasarta

Lintasarta, a subsidiary, entered into agreements with MOCIT-BTIP, whereby Lintasartaagreed to provide telecommunication access and services in rural areas (USO Programs), asfollows:

WorkContract Date/

period

ContractAmount

Remarks

(i) Internet access service centers(Pusat Layanan Jasa AksesInternet

Work Packages (PaketPekerjaan) 7, 8 and 9

Cover the provinces of Bali,West Nusa Tenggara, EastNusa Tenggara, WestKalimantan, SouthKalimantan, East Kalimantan,Central Kalimantan, Malukuand Papua.

April 15, 2010/

4 years startingOctober 15, 2010

Rp352,813 In May 2010, Lintasarta enteredinto an agreement with PT Wira

procurement of equipment andinfrastructure required for theconstruction of PLIK with totalcontract value of Rp189,704 (inMarch 2011, amended becameRp 208,361)

(ii) Mobile center for internet accessand services (Pusat LayananJasa Akses Internet KecamatanBergerak

Work Packages 2, 3, 11, 15,16 and 18

Cover the provinces of NorthSumatra, West Sumatra,East Nusa Tenggara, WestKalimantan, SouthKalimantan and EastKalimantan.

December 12,2010/

4 years startingDecember 22, 2011(amended inOctober 2011)

Rp457,977 In March and May 2011,Lintasarta entered intoagreements with WEB and PTPersonel Alih Daya (a relatedparty), for the procurement ofequipment and infrastructurerequired for the construction ofPLIKB with total contract values ofRp 276,274 and Rp 60,739,respectively.

On January 3, 2014, theagreement for PLIKB of WorkPackage 2 was amended to,among others, revise the clauseon performance-relatedcompensation.

On January 3, 2014, theagreement for PLIKB of WorkPackage 1 was amended, amongothers, to revise the clause onperformance relatedcompensation.






Lintasarta (continued)

WorkContract Date/

period

ContractAmount

Remarks

(iii) Public Access Services forWireless Fidelity (WiFi) Internet inKewajiban Pelayanan Umum/Universal Service Obligation(KPU/USO) Regencies(Kabupaten) (Penyediaan JasaAkses Publik Layanan InternetWiFi Kabupaten KPU/USO)

Work Packages of 3 and 6,cover the provinces of WestKalimantan, SouthKalimantan, CentralKalimantan, East Kalimantan,Bali, West Nusa Tenggaraand East Nusa Tenggara.

Work Package of 4 coversthe provinces of Gorontalo,West Sulawesi

December 30,2011/

4 years startingDecember 12, 2011(amended inOctober 2011)

10 January 2012

Rp116,414

Rp91,491

In February 2012, Lintasartaentered into an agreement withPT Widtech Indonesia, for theprocurement of equipment andinfrastructure required for theconstruction of WiFi with totalcontract value of Rp 121,927.

The agreement was amendedtwice, with the latest amendmenton December 12, 2014 coveramendment on standards ofoperational service.

Fixed payment for above USO programs is received on a quarterly basis based onperformance evaluation. At the end of the concession period, Lintasarta must transfer allassets subject to the concession agreement to the local government.

On May 8, 2014, Lintasarta submitted arbitration requests to the Indonesia National Board ofthe dispute of

-BANI/2014 datedDecember 8, 2014, the Company has written off the uncollectible portion ofreceivables amounting to Rp32,813 (Note 5).

In March 2015, Lintasarta received a letter from BPPPTI dated 3 March 2015 informing allproviders of USO programs (including Lintasarta) to cease the operation of USO programs.Hence, no revenue from USO programs recognized by Lintasarta for six-month period ended30 June 2015.

On April 27, 2015, Lintasarta submitted another arbitration requests to the BANI in connectionember 2014

arising from the PLIK and MPLK agreements. Up to the date of this report, the arbitration claimis still in process.

As of June 30, 2015, the outstanding receivables related to above USO programs are- Trade -





e. Lease commitment as a lessor

As at June 30, 2015, December 31, 2014 and January 1, 2014, the future minimum leasereceivables

December 31, January 1,June, 30 2015 2014 2014

Within one year 489,517 490,691 444,932After one year but not more than

five years 1,844,137 1,875,134 1,729,048More than five years 1,012,548 1,182,885 1,339,623

3,346,202 3,548,710 3,513,603

The Company agreed to lease part of its telecommunications towers and sites to the partiesbelow which are required to pay the lease and maintenance fees in advance which arerecorded as part of unearned income:

Contracts Period Parties/ Lessee Payment Term

January 29, 2010 January 28,2022 (12 years).

PT Hutchison CP Telecommunications Annually.

April 15, 2010 April 14, 2020 (10years).

PT Axis Telekom Annually.

May 24, 2010 May 23, 2020 (10years).

Annually.

June 3, 2010 June 2, 2020 (10years).

PT Berca Global Access Quarterly.

February 4, 2011 February 3,2021 (10 years).

PT Dayamitra Telekomunikasi Quarterly.

February 10, 2011 February 9,2016 (5 years)

PT First Media Tbk Semi-annually.

July 18, 2011 July 17, 2021 (10years)

PT Putra Arga Binangun Quarterly.

September 29, 2011 September28, 2021 (10 years)

PT Smart Telecom Quarterly.

March 3, 2014 March 2, 2024 (10years)

PT BBSC Telecode Quarterly.

f. Lease commitment as a lessee

During 2008-2013, the Company entered into several agreements with PT Solusi Menara

Pratama, PT XL Axiata, PT Dayamitra Telekomunikasi, PT BIT Teknologi Nusantara, PTSolusi Tunas Pratama, PT Corona Telecommunication Services, PT Mitrayasa SaranaInformasi, and PT Tower Bersama to lease part of spaces in their telecommunication towersand sites for an initial period of 5-10 years. The Company may extend the lease period foranother 10 years, with additional lease fees based on the inflation rates in Indonesia.





f. Lease commitment as a lessee (continued)

Future minimum rentals payable under the finance lease agreements as at June 30, 2015,December 31, 2014 and January 1, 2014 as follows:

PresentMinimum lease value of

payments lease paymentsJune 30, 2015Within one year 890,125 466,654After one year but not more than five years 3,296,706 2,228,577More than five years 1,528,349 1,353,796

Total 5,715,180 4,049,027

Less amount representing finance charge (1,666,153) -

Total 4,049,027 4,049,027

December 31, 2014Within one year 854,327 420,674After one year but not more than five years 3,228,738 2,082,877More than five years 1,785,803 1,548,714

Total 5,868,868 4,052,265Less amount representing finance charge (1,816,603) -

Total 4,052,265 4,052,265

January 1, 2014Within one year 772,032 346,357After one year but not more than five years 3,014,118 1,808,332More than five years 2,112,762 1,785,780

Total 5,898,912 3,940,469Less amount representing finance charge (1,958,443) -

Total 3,940,469 3,940,469

34. TARIFF SYSTEM

a. International telecommunications services

telecommunications regulations established by the International Telecommunications Union

These regulations require the international telecommunications administrations to establishand revise, under mutual agreement, accounting rates to be applied among them, taking intoaccount the cost of providing specific telecommunications services and relevantrecommendations from the Consultative Committee on International Telegraph and Telephone

countries and, where appropriate, into transit shares payable to the administrations of transitcountries.




34. TARIFF SYSTEM (continued)

a. International telecommunications services (continued)

The ITU also regulates that the monetary unit to be used, in the absence of special

equivalent to 1/3.061 SDR. Each administration shall, subject to applicable national law,establish the charges to be collected from its customers.

The tariffs billed to domestic subscribers for international calls originating in Indonesia, alsoknown as collection r s

b. Cellular services

Currently, the tariff for cellular services in Indonesia are regulated under Decree No.Tariff of Telecommunication Services

Under the decree, the cellular tariffs consist of the following:Tariff for basic telephony servicesTariff for roamingTariff for multimedia services, with the following structure:

Activation feeMonthly chargesUsage chargesAdditional facilities fee

The retail tariffs should be calculated based on Network Element Cost, Activation Cost ofRetail Services and Profit Margin.

c. Fixed telecommunications services

In April 2008, the MOCIT issued Decree No. 15/PER/M.KOMINFO/04/2008 about theguidelines on calculating basic telephony service tariffs through fixed network. This Decreealso applies to FWA network.

Under this decree, the tariffs for basic telephony services and SMS (Short Message Service)which is connected through fixed line network consist of the following:

Activation feeMonthly chargesUsage chargesAdditional facilities fee

35. INTERCONNECTION TARIFFS, USO, SPECTRUM FREQUENCY FEES AND REVENUESHARING

1. Structure of Interconnection Tariffs

As of January 30, 2014, the MOCIT issued letter No. 118/KOMINFO/DJPPI/PI.02.04/01/2014related to 2014 interconnection fee implementation. This new interconnection tariff should beimplemented by telecommunications network providers in 2014 and has become valid startingone month after the date the letter was signed until December 2016 and will be evaluatedyearly by BRTI. The main structure of interconnection tariffs is origination, termination andtransit.




35. INTERCONNECTION TARIFFS, USO, SPECTRUM FREQUENCY FEES AND REVENUESHARING (continued)

2. USO and Spectrum Frequency Fees

On January 16, 2009, the Government issued Regulation No. 7 Year 2009 increasing the USOdevelopment contribution from 0.75% to 1.25% and decreasing the concession fee from 1% to0.50% of annual gross revenue (after deducting bad debts and interconnection charges)effective January 1, 2009.

On December 13, 2010, the President of the Republic of Indonesia issued PP No.76/2010regarding the amendment of PP No.7/2009 on types and tariffs on non-tax state incomeimposed by the MOCIT. This regulation affects the computation method and payment of thespectrum fee allocated to the Company (800 Mhz, 900 Mhz and 1,800 Mhz frequency bands).

On July 26, 2013, the MOCIT issued Decree No. 21 Year 2013 on the Provision of ContentProvider Services on Cellular Network and Fixed Local Wireless Network with Limited Mobility.Under this new Decree, the content provider carriers are obliged to pay the USO andconcession fee obligations through the telecommunications operators.

On February 18, 2014, the MOCIT issued letter No. 94/DJPPI.3/PI.02.02/2/2014 regarding thenotification for the extension of the transition period of Decree No. 21 Year 2013 fromFebruary 6, 2014 to August 6, 2014.

3. Revenue Sharing

Revenue from access and usage charges from international telecommunications traffic withtelecommunications networks owned by more than one domestic telecommunications carrierwhich is not regulated by letter No. 118/KOMINFO/DJPPI/PI.02.04/01/2014 related to 2014interconnection fee implementation, is to be proportionally shared with each carrier, whichproportion is to be bilaterally arranged between the carriers.

36. SEGMENT INFORMATION

The Group manages and evaluates its operations in three major reportable segments: cellular,fixed telecommunications and MIDI. The operating segments are managed separately becauseeach offers different services/products and serves different markets. The Group mainly operates inone geographical area, so no geographical information on segments is presented.

The cellular segment currently provides the network coverage in all major cities and populationcenters across Indonesia by using GSM 900, DCS 1800 and 3G 2100 technologies. Its primaryservice is the provision of voice and data transfer which is sold through post-paid and prepaidplans.

The fixed telecommunication segment provides international long-distance services, fixed wirelessservices, services andlocal fixed telephony services.

The MIDI segment offers products and services which include internet, high-speed point-to-pointinternational and domestic digital leased line broadband and narrowband services, a high-performance packet-switching service and satellite transponder leasing and broadcasting services.

Refer to Notes 2k and 24 for the description of the types of products and services under eachreporting segment.




36. SEGMENT INFORMATION (continued)

No operating segments have been aggregated to form the above reportable operating segments.

Segment results and assets include items directly attributable to a segment as well as those thatcan be allocated on a reasonable basis. Capital expenditures for segment assets represent thetotal costs incurred during the period to acquire segment assets that are expected to be used formore than one year.

Management monitors the operating results of its business units separately for the purpose ofmaking decisions about resource allocation and performance assessment. Segment performanceis evaluated based on operating profit or loss which, in certain respects as explained in the tablebelow, is measured differently from operating profit or loss in the interim consolidated financial

me) and income taxesare managed on a group basis and are not allocated to operating segments.

Operating segments are reported based on financial information determined in conformity withIndonesian Financial Accounting Standards (IFAS), which reporting is also consistent with theinternal reporting provided to the chief operational decision maker. The chief operational decisionmaker is responsible for allocating resources and assessing performance of the operatingsegments, and has been identified as Board of Directors that makes strategic decisions.

The detail segment information is presented below:Reportable Segments

Fixed SegmentCellular Telecommunications MIDI Total

Six-month period ended June 30, 2015

RevenuesRevenues from external customers 10,223,593 561,102 1,835,269 12,619,964Inter-segment revenues 15,581 - - 15,581

Total revenues 10,239,174 561,102 1,835,269 12,635,545Inter-segment revenues elimination (15,581)

Revenues - net 12,619,964Depreciation and amortisation 3,673,389 62,106 433,856 4,169,351Other expenses 5,846,875 551,089 859,721 7,257,685

Unallocated expenses:Amortization of deferred gain on sale

and leaseback of towers 70,525Gain (loss) on foreign exchange - net (91,202)Others - net (132,308)Income tax benefit - net 225,958Gain on change in fair value of

derivatives - net 147,241Interest income 109,461

Financing cost (1,283,849)Gain (loss) on foreign exchange - net (905,280)

Loss for the period (666,526)

Other InformationSegment assets 47,487,913 1,132,087 7,463,705 56,083,705Unallocated assets 2,613,633

Assets - net 58,697,338

Segment liabilities 33,340,946 424,616 8,651,036 42,416,598Unallocated liabilities 2,686,926

Liabilities - net 45,103,524

Capital expenditures 3,477,913 61,815 493,767 4,033,495




36. SEGMENT INFORMATION (continued)

Reportable SegmentsFixed Segment

Cellular Telecommunications MIDI Total

Six month period ended June 30, 2014

RevenuesRevenues from external customers 9,365,300 542,021 1,705,796 11,613,117Inter-segment revenues 16,074 - - 16,074

Total revenues 9,381,374 542,021 1,705,796 11,629,191Inter-segment revenues elimination (16,074)

Revenues - net 11,613,117

Depreciation and amortisation 3,487,292 58,552 407,065 3,952,909Other expenses 5,101,710 465,537 1,019,095 6,586,342

Unallocated expenses:Gain on sale of investment 413,700Amortization of deferred gain on sale

and leaseback of towers 70,525Provision for legal case (1,358,643)Loss on foreign exchange - net (118,812)Others - net (75,666)Gain on foreign exchange - net 252,409Interest income 75,344Financing cost (1,232,928)Loss on change in fair value of

derivatives - net (178,726)Income tax benefit - net 16,993

Loss for the period (1,061,938)

Capital expenditure 3,246,554 46,129 478,806 3,771,489

As of December 31, 2014

Other informationSegment assets 42,964,358 744,526 6,674,312 50,383,196Unallocated assets 2,886,501

Assets - net 53,269,697



As of January 1, 2014

Other informationSegment assets 44,891,975 740,503 6,451,447 52,083,925Unallocated assets 2,482,121

Assets - net 54,566,046






37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

a. Risk Management

foreignexchange rate risk, equity price risk, credit risk and liquidity risk. The importance of managingthese risks has significantly increased in light of the considerable change and volatility in bothIndonesian and international financial markets. Theapproves the policies for managing these risks which are summarized below.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate becauchanges in market interest rates relates primarily to its loans and bonds payable with floatinginterest rates.

ows:

(1) Manage interest cost through a mix of fixed and variable rate debts. The Companyevaluates the fixed to floating rate ratio of its loans and bonds payable in line withmovements of relevant interest rates in the financial markets. Based on managementassessment, new financing will be priced either on a fixed or floating rate basis.

(2) Manage interest rate exposure on its loans and bonds payable by entering into interestrate swap contracts.

As of June 30, 2015, December 31, 2014 and January 1, 2014, more than 78%, 81% and 79%,debts are fixed-rated.

Several interest rate swap contracts are entered into to hedge floating rate U.S. dollar debts.These contracts are accounted for as transactions not designated as hedges, wherein thechanges in the fair value are credited or charged directly to profit or loss for the period/year.

The following table demonstrates the sensitivity to a reasonably possible change in interestrates, with all other variables held constant, of th -month period endedJune 30, 2015, and the years ended December 31, 2014 and December 31, 2013 (through theimpact on floating rate borrowings which is based on LIBOR for U.S. dollar borrowings and onJIBOR for rupiah borrowings).

Six month Year ended Year endedperiod ended December 31, December 31,June, 30 2015 2014 2013

Increase/decrease in basis points:U.S. dollar 5 4 4Rupiah 148 152 77

Effect on profit or loss for the period/year:U.S. dollar US$47 US$25 US$36

(equivalent toRp620) (equivalent to Rp308) (equivalent to Rp439)Rupiah 10,540 44,383 20,264




37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

a. Risk Management (continued)

Foreign exchange rate risk

Foreign exchange rate risk is the risk that the fair value or future cash flows of a financial

to exchange rate fluctuations results primarily from its U.S. dollar-denominated loans and bondspayable, accounts receivable, accrued expenses and procurement payable.

To manage foreign exchange rate risks, the Company entered into several cross currency swapand currency forward contracts and other permitted instruments, if considered necessary.These contracts are accounted for as transactions not designated as hedges, wherein thechanges in fair value are credited or charged directly to profit or loss for the period/year.

suppliers and contractors for the purchase and construction or installation of property ande represents Indonesian

rupiah-denominated collectibles from domestic operators.

To the extent the Indonesian rupiah depreciated further from the exchange rates in effect atns denominated

in foreign currencies would increase in Indonesian rupiah terms. However, the increases inthese obligations would be offset in part by increases in the values of foreign currency-denominated time deposits and accounts receivable. As of June 30, 2015, December 31, 2014and January 1, 2014, 52.24%, 50.27% and 26. -denominated debts were covered by several currency forward contracts.

-denominated assets andliabilities as of June 30, 2015, December 31, 2014 and January 1, 2014:

June 30, 2015 December 31, 2014 January 1, 2014U.S. Dollar Rupiah* U.S. Dollar Rupiah* U.S. Dollar Rupiah*

AssetsCash and cash equivalents 390,206 5,202,230 68,868 856,724 83,487 1,017,623Accounts receivable trade 119,011 1,586,653 99,621 1,239,283 117,478 1,431,942Derivative assets 1,285 17,129 6,108 75,986 16,045 195,569Other current financial assets - net 642 8,565 256 3,177 227 2,762Due from related parties net 526 7,007 54 677 45 553Other non-current financial

assets net 1,866 24,875 1,520 18,904 1,438 17,528

Total assets 513,536 6,846,459 176,427 2,194,751 218,720 2,665,977

Liabilities:Accounts payable - trade

Related parties 59 783 408 5,081 575 7,006Third parties 22,008 293,418 24,594 305,948 9,837 119,907

Procurement payable 164,142 2,188,337 74,208 923,144 81,220 989,989Accrued expenses 34,759 463,411 40,745 506,870 46,170 562,764Deposits from customers 3,250 43,333 3,197 39,770 2,696 32,866Derivative liabilities 3,519 46,913 2,551 31,740 3,028 36,903

other current financial liabilities 20,277 270,334 19,479 242,315 17,974 219,091Due to related parties 6 80 1,291 16,057 1,552 18,915Long-term loans payable (including

current maturities) 516,707 6,888,742 211,304 2,628,627 280,499 3,418,998Long-term bonds payable (including

current maturities) 650,000 8,665,800 650,000 8,086,000 650,000 7,922,850Obligation under finance lease 164,963 2,199,279 175,304 2,180,779 194,783 2,374,205Other non-current financial liabilities - - - - 3,669 44,726

Total liabilities 1,579,690 21,060,430 1,203,081 14,966,331 1,292,003 15,748,220

Net liabilities position 1,066,154 14,213,971 1,026,654 12,771,580 1,073,283 13,082,243

* The exchange rate used to translate the U.S. dollar amounts into rupiah were Rp13,332, Rp12,440 and Rp12,189 to US$1 (in full amounts) as published bythe Indonesian Central Bank as of June 30, 2015, December 31, 2014 and January 1, 2014, respectively.






Foreign exchange rate risk (continued)

The following table demonstrates the sensitivity to a reasonably possible change in the U.S.


Change in U.S. dollar exchange rate 2.13% 1.13% 2.90%Effect on consolidated loss/equity for

the period/year 302,788 144,758 378,869

Equity price risk

-term investments consist primarily of minority investments in the equity ofprivate Indonesian companies, public Indonesian companies and equity of foreign companies.With respect to the Indonesian companies in which the Group has investments, the financialperformance of such companies may be adversely affected by the economic conditions inIndonesia.

Credit risk

Credit risk is the risk that the Group will incur a loss arising from its customers, clients orcounterparties that fail to discharge their contractual obligations. There are no significantconcentrations of credit risk. The Group manages and controls this credit risk by setting limitson the amount of risk it is willing to accept for individual customers and by monitoringexposures in relation to such limits.

that all customers who wish to trade on credit terms are subject to credit verificationprocedures. In addition, receivable balances are monitored on an ongoing basis to reduce theexposure to bad debts. The Group places its funds in a number of different financialinstitutions, including state-owned and internationally recognized banks because they have themost extensive branch networks in Indonesia and are considered to be financially soundbanks.

The table below shows the maximum exposure to credit risk for the components of theconsolidated statement of financial position:

Maximum exposure(1)


Loans and Receivables:Cash and cash equivalents 9,420,792 3,480,011 2,233,532Accounts receivable

- Trade - net 2,827,421 2,092,112 2,268,339- Others - net 17,697 9,015 16,294

Other current financial assets - net 27,971 16,287 31,673Due from related parties - net 9,951 3,496 7,167Other non-current financial assets 98,156 154,621 163,645

Held-for-trading:Currency forward 17,129 75,986 195,569

Available-for-sale investments:Other long-term investments - net 46,072 6,282 2,730

12,465,189 5,837,810 4,918,949

(1) There are no collaterals held or other credit enhancements or offsetting arrangements that affect this maximum exposure.






Liquidity risk

Liquidity risk is defined as the risk that an entity will encounter difficulty in meeting obligationsassociated with financial liabilities that are settled by delivering cash or another financial asset.

ly arisen from the need to financeinvestments and capital expenditures related to the expansion of its telecommunications

and expand mobile and data network infrastructure and to fund operations, particularly duringthe network development stage.

Although the Group has substantial existing network infrastructure, the Group expects to incuradditional capital expenditures primarily in order to focus cellular network development in areasit anticipates will be high-growth areas, as well as to enhance the quality and coverage of itsexisting network.

In the management of liquidity risk, the Group monitors and maintains a level of cash deemedadequate to finance theflows. The Group also regularly evaluates the projected and actual cash flows, including itsloan maturity profiles, and continuously assesses conditions in the financial markets foropportunities to pursue fund-raising initiatives. These activities may include bank loans, debtcapital and equity market issues.

contractual undiscounted payments:

Expected maturity as of June 30,Total

2020 contractualand cash Interest Carrying

2016 2017 2018 2019 thereafter flows Value Amount

June 30, 2015Short-term loans 525,000 - - - - 525,000 (1,093) 523,907Accounts payable - trade 863,143 - - - - 863,143 - 863,143Procurement payable 4,397,345 - - - - 4,397,345 - 4,397,345Accrued expenses 2,034,353 - - - - 2,034,353 - 2,034,353Deposits from customers 112,296 - - - - 112,296 - 112,296Derivative liabilities 46,913 - - - - 46,913 - 46,913Other current financial

liabilities 914,202 - - - - 914,202 (423,471) 490,731Due to related parties - 15,548 - - - 15,548 - 15,548Obligations under finance

lease - 885,130 858,922 797,162 2,283,841 4,825,055 (1,242,682) 3,582,373Other non-current financial

liabilities 7,540 - - - - 7,540 - 7,540Loans payable 1,678,798 3,531,906 2,342,106 768,489 134,243 8,455,542 (66,228) 8,389,314Bonds payable 9,219,800 1,970,000 1,732,000 1,200,000 4,208,000 18,329,800 (34,694) 18,295,106Sharia bonds 55,000 172,000 140,000 300,000 411,000 1,078,000 (2,658) 1,075,342

19,854,390 6,574,584 5,073,028 3,065,651 7,037,084 41,604,737 (1,770,826) 39,833,911






Liquidity risk (continued)

Expected maturity as of December 31,Total



December 31, 2014Short-term loans 850,000 - - - - 850,000 (552) 849,448Accounts payable - trade 690,559 - - - - 690,559 - 690,559Procurement payable 3,095,518 - - - - 3,095,518 - 3,095,518Accrued expenses 2,150,914 - - - - 2,150,914 - 2,150,914Deposits from customers 238,338 - - - - 238,338 - 238,338Derivative liabilities 31,740 - - - - 31,740 - 31,740Other current financial

liabilities 856,683 - - - - 856,683 (433,654) 423,029Due to related parties - 30,159 - - - 30,159 - 30,159Obligations under finance

lease - 853,220 845,481 790,824 2,525,017 5,014,542 (1,382,951) 3,631,591Other non-current financial

liabilities 17,049 - - - - 17,049 - 17,049Loans payable 2,613,926 1,679,269 1,101,182 750,525 250,525 6,395,427 (54,809) 6,340,618Bonds payable 8,406,000 600,000 2,320,000 - 4,060,000 15,386,000 (90,309) 15,295,691Sharia bonds - 172,000 64,000 - 426,000 662,000 (1,595) 660,405

18,950,727 3,334,648 4,330,663 1,541,349 7,261,542 35,418,929 (1,963,870) 33,455,059

Expected maturity as of December 31,Total



December 31, 2013Short-term loans 1,500,000 - - - - 1,500,000 (151) 1,499,849Accounts payable - trade 339,310 - - - - 339,310 - 339,310Procurement payable 3,064,287 - - - - 3,064,287 - 3,064,287Accrued expenses 2,084,694 - - - - 2,084,694 - 2,084,694Deposits from customers 49,335 - - - - 49,335 - 49,335Derivative liabilities 36,903 - - - - 36,903 - 36,903Other current financial liabilities 788,124 - - - - 788,124 (425,676) 362,448Due to related parties - 33,301 - - - 33,301 - 33,301Obligations under finance lease - 771,409 770,925 763,186 2,821,359 5,126,879 (1,532,767) 3,594,112Other non-current financial liabilities 11,181 50,294 10,131 11,181 - 82,787 (982) 81,805Loans payable 2,443,408 1,593,408 1,207,394 634,897 990,941 6,870,048 (80,364) 6,789,684Bonds payable 1,930,000 320,000 600,000 1,370,000 10,622,850 14,842,850 (99,825) 14,743,025Sharia Ijarah bonds payable 428,000 - 172,000 - 300,000 900,000 (1,508) 898,492

12,675,242 2,768,412 2,760,450 2,779,264 14,735,150 35,718,518 (2,141,273) 33,577,245

b. Capital Management

The Group aims to achieve an optimal capital structure in pursuit of its business objectives,which include maintaining healthy capital ratios and strong credit ratings, and maximizingstockholder value.

in

agencies are based on its ability to remain within certain leverage ratios. The Group hascomplied with all externally imposed capital requirements.

Management monitors capital using several financial leverage measurements such as debt-to--to-equity ratio at a maximum of 2.50

as of June 30, 2015, December 31, 2014 and January 1, 2014.





a. Capital Management (continued)

As of June 30, 2015, December 31, 2014 and January 1, 2014 -to-equity ratioaccounts are as follows:

December 31, 2014 January 1, 2014June 30, 2015 (As restated) (As restated)

Loan and Guaranteed Loan and Guaranteed Loan and Guaranteedbonds notes bonds notes bonds notes

payable due 2020 payable due 2020 payable due 2020

Short-term loans 525,000 525,000 850,000 850,000 1,500,000 1,500,000Loans and bonds payable

including current maturities 27,863,342 27,863,342 22,443,427 22,443,427 22,612,898 22,612,898Obligation under finance lease - 4,049,026 - 4,052,265 - 3,940,469

Total debts 28,388,342 32,437,368 23,293,427 27,345,692 24,112,898 28,053,367

Total equity 13,593,814 13,593,814 14,298,555 14,298,555 16,771,145 16,771,145

Debt-to-equity-ratio 2.09 2.39 1.63 1.91 1.44 1.67

c. Offsetting Financial Assets and Financial Liabilities

The following financial assets and liabilities are subject to offsetting, enforceable master nettingarrangements or similar agreement.

Financial AssetsGross amountsof recognized Net amounts

financial of financialGross amounts liabilities assetsof recognized set off in the presented in

financial financial the financial Netting off Netassets position position arrangement amount

Accounts receivable-tradeAs at June 30, 2015 3,108,168 (280,747) 2,827,421 - 2,827,421As at December 31, 2014 2,644,445 (552,333) 2,092,112 - 2,092,112As at January 1, 2014 3,307,009 (1,038,670) 2,268,339 - 2,268,339

Financial LiabilitiesGross amountsof recognized Net amounts

financial of financialGross amounts assets liabilitiesof recognized set off in the presented in

financial financial the financial Netting off Netliabilities position position arrangement amount

Accounts payable-tradeAs at June 30, 2015 (1,143,890) 280,747 (863,143) - (863,143)As at December 31, 2014 (1,242,892) 552,333 (690,559) - (690,559)As at January 1, 2014 (1,377,980) 1,038,670 (339,310) - (339,310)

For the financial assets and liabilities subject to enforceable master netting arrangements orsimilar arrangements above, each agreement between the Group and the counterparty allowsfor net settlement of the relevant financial assets and liabilities when both parties elect to settleon a net basis. In the absence of such an election, financial assets and liabilities will be settledon a gross basis, however, each party to the master netting agreement or similar agreementwill have the option to settle all such amounts on a net basis in the event of default of the otherparty.

d. Collateral

The Company did not hold any collateral as of June 30, 2015, December 31, 2014 andJanuary 1, 2014.




38. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

a. On July 22, 2015, the Company entered into an interest rate swap contract with Bank of TokyoMitsubishi UFJ (BTMU), Jakarta with notional amount of US$100,000. This contract is valid fromJuly 22, 2015 until May 4, 2017.

b. On July 22, 2015, the Company made drawdowns of its Rp-denominated Revolving Time Loanfacilities from IIF -SMI, BNI, BNP Paribas and BTMU amounting to Rp500,000, Rp425,000,Rp350,000 and Rp250,000, respectively.

c. On July 22, 2015, the Company made drawdowns of its US-denominated Revolving Time Loanfacilities from ANZ and HSBC amounting to US$100,000 and US$60,000, respectively.

d. On July 28, 2015, the Company obtained a BBB rating (stable outlook) from Fitch forGuaranteed Notes due in 2020.

e. On July 29, 2015, Indosat Palapa Company B.V, a subsidiary of the Company, paid a total ofUS$697,937.5 for the early redemption of the Guaranteed Notes 2020 with a total principalamount at a price equal to 103.6875% of the principal amount purchased, plus the accrued andunpaid interest up to settlement date.

f. On July 30, 2015 the Company received the tax refund of its 2013 overpaid corporate incometax amounting to Rp231,643.

g. On August 3, 2015, the Company received the confirmation letter from BCA to decrease theinterest rate of Revolving Time Loan facility from 1-month JIBOR + 2.75% into 1-month /3-month/6-month JIBOR + 2.50% effective August 21, 2015.

h. On August 18, 2015, the Company made drawdown of its Rp-denominated Revolving TimeLoan facility from BCA amounting to Rp1,000,000.

i. On August 21, 2015, the Company made an amendment ofBCA agreement, whereby the Company obtained an additional three-year Revolving Time Loanfacility with maximum amount of Rp1,000,000. This loan bears interest at JIBOR + 2.50% perannum.

j. On August 24, 2015, the Company made repayment of its US-denominated Revolving TimeLoan facility from HSBC amounting to USD150,000.

k. On August 27, 2015, the Company made an amendment of RCF BNI agreement, whereby theexisting facility of Rp700,000 is extended up to June 15, 2016 and the Company obtained anadditional one-year Revolving Time Loan facility with maximum amount of Rp500,000 and withthe interest at JIBOR + 2.50% per annum.

l. As of August 27, 2015, the prevailing exchange rate of the rupiah to the United States dollarwas Rp14,128 to US$1 (in full amounts), while as of June 30, 2015, the prevailing exchangerate was Rp13,332 to US$1 (in full amounts). Using the exchange rate as of August 27, 2015,the Group suffered from exchange loss amounting to approximately Rp848,659 (excluding theeffect of revaluing derivative contracts on August 27, 2015) on the foreign currency liabilities,net of foreign currency assets, as of June 30, 2015.




38. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD (continued)

The translation of the foreign currency liabilities, net of foreign currency assets, should not beconstrued as a representation that these foreign currency liabilities and assets have been, couldhave been, or could in the future be, converted into rupiah at the prevailing exchange rate of therupiah to United States dollar as of June 30, 2015 or at any other rate of exchange.

The commitments for the capital expenditures denominated in foreign currencies as ofJune 30, 2015 as disclosed in Note 33a were approximately Rp1,129,268 if translated at theprevailing exchange rate as of August 27, 2015.

39. SUPPLEMENTARY INFORMATION FOR CASH FLOWSSix-month periods ended

June 30,2015 2014

Significant non-cash investing activities:Acquisition of fixed assets under finance lease 45,555 112,674Acquisition of fixed assets through incurrence

of payables 1,272,459 381,544Advance for acquisition of property and equipment 79,107 92,162

40. RESTATEMENT

The interim consolidated statement of comprehensive income for the six-month period ended June30, 2014 has been restated:(1) to(2) to correct the effect of not including the reclassification adjustment relating to the gain on sale

of an equity investment amounting to Rp 413,700.

The following table describes the impact of the restatement to the previously reported interimconsolidated statement of comprehensive income for the six-month period ended June 30, 2014:

Aspreviously Adjustment Adjustment Asreported (1) (2) restated

Loss for the period (1,057,696) (4,242) - (1,061,938)Other comprehensive loss (3,738) 5,123 (413,700) (412,315)

Total comprehensive loss (1,061,434) 881 (413,700) (1,474,253)

Refer to Note 2c for more details on the impact of the restatement to retrospectively adopt PSAK

In relation to the restatement to correct the presentation of reclassification adjustment, there wereno impacts to components of interim financial statements as of and for the six-month period endedJune 30, 2014, including the loss per share, other than the items disclosed above.

PT INDOSAT Tbk AND SUBSIDIARIES - IDNFinancials

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