Report Q1 2009 Telkomsel

This document contains certain financial conditions and results of operation, and may also contain certain projections, plans, strategies, and objectives of the Company, which would be treated as forward looking statements within the meaning of applicable law. Forward looking statements, by their nature, involve risk and uncertainty and actual results and development could differ materially from those expressed or implied in these statements. Telkomsel does not guarantee that any action will bring results as expected.

PT TELEKOMUNIKASI SELULAR (TELKOMSEL) JANUARY – MARCH 2009 RESULTS

Telkomsel reports its unaudited financial and operational results for the period ended March 31, 2009. The Company’s financial statements are consolidated by PT Telekomunikasi Indonesia, Tbk.

SUMMARY Telkomsel recorded strong customer base growth in 1Q09 by adding 6.83 million new customers. The growth was driven by strong growth of the prepaid simPATI product. Chargeable MOU (minutes of use) grew 60% from 20.7 billion minutes in 1Q08 to 33.1 billion minutes in 1Q09. Chargeable SMS also showed a positive growth of 70% increasing from 13.5 to 22.9 billion records year on year. Operating revenue in 1Q09 decreased 4% to Rp 9.25 trillion compared to the same quarter last year due to impact of lower effective tariffs. The following are the highlights of Telkomsel financial and operational results for 1Q09: Operating revenues EBITDA Net income Net Add Total customer EBITDA margin (net revenue) Debt to equity ratio

Rp 9.25 trillion Rp 5.89 trillion Rp 2.58 trillion 6.83 million customers 72.13 million customers 64% 0.28

FINANCIAL RESULTS (UNAUDITED) Earnings & EBITDA For the first quarter of 2009, Telkomsel’s operating revenues declined 4% YoY to Rp 9.25 trillion. This decline was attributable to lower effective tariffs when compared to 1Q08. The impact of the tariff decline was offset by a 41% YoY customer base growth and a 60% increase in minutes of use (MoU). On a quarterly basis, operating revenues in 1Q09 were 6% lower when compared to 4Q08. The quarter on quarter change is mostly attributed to the increase usage and spending during the moslem festive season and year-end celebrations that supported the previous quarter’s revenue performance results.

5/11/2009

1 of 9

ƒ

ƒ ƒ ƒ

ƒ

Operating revenue from prepaid products which is dominated by simPATI, increased 1% YoY to Rp 8.03 trillion on the back of 42% prepaid customer base growth offset by lower revenue due to tariff declines. Prepaid revenues accounted for 87% of operating revenues. Postpaid revenue decreased 17% to Rp 0.99 trillion as a result of tariff reductions. International roaming revenue increased 6% to Rp 0.16 trillion, mainly contributed by the increase of tap-out revenue (revenue from inbound roamers). Interconnection revenue decreased 26% to Rp 0.59 trillion due to tariff decline in April 2008. Interconnection expense increased 2% YoY to Rp 0.57 trillion which explained the 89% decrease in net interconnection revenue YoY from Rp 253 billion in 1Q08 to Rp 27 billion in 1Q09. Other (Network lease) increased 740% to Rp 42 billion in 1Q09 from Rp 5 billion in 1Q08. It refers to usage of Telkomsel’s telecommunication facilities by other operators. Previously, it was recorded under Interconnection Revenue.

Operating expenses (including depreciation) increased 22% to Rp 5.31 trillion, which was mainly due to the increase in operation & maintenance costs and depreciation expense. ƒ Personnel expenses decreased 8% YoY to Rp 0.29 trillion due to lower employees’ incentive in 1Q09.

Operation & maintenance expenses increased 32% to Rp. 2.19 trillion, mainly due to network infrastructure growth (the number of BTS increased by 28% and overall network capacity increased by 39%), which affected frequency fees, transmission and repair & maintenance costs. ƒ General & administration expenses increased 5% YoY to Rp. 0.17 trillion, mainly related to professional fees and insurance. ƒ Marketing expenses declined 2% YoY to Rp. 0.22 trillion, mainly due to lower sponsorship expense. ƒ Other operating expenses consist of the cost of cards, concession fees & USO charges, accounts receivable collection costs and provision for bad debt, all of which increased in line with sales/customer base growth. In 1Q09, these expenses increased 8% to Rp. 0.48 trillion, which was largely the result of higher A/R collection cost and provisioning for bad debt. Depreciation expenses increased 26% to Rp. 1.96 trillion due to network infrastructure growth (BTS grew by 28%, while overall network capacity expanded by 39%). ƒ

EBITDA for 1Q09 reached Rp 5.90 trillion, a 13% decrease compared to Rp 6.80 trillion in 1Q08. The decrease in EBITDA growth was a result of negative growth in operating revenue (-4%) combined with relatively higher operating expenses growth (19% excluding depreciation). EBITDA margin decreased from 71% in 1Q08 to 64% in 1Q09. Other income/(expenses) increased 563% from a net expense of Rp 53 billion in 1Q08 to a net expense of Rp 353 billion in 1Q09. The main contributor was an increase in interest expenses in 1Q09 due to higher outstanding loans balance and higher interest rate in 1Q09 as compared to 1Q08. Following the global economic downturn, the company experienced forex losses in 1Q09 that amounted to Rp 84 billion when compared to forex gains of Rp 13 billion in the same quarter last year. The forex loss in 1Q09 was 83% lower than the previous quarter. In addition, there was a tax refund in 1Q08. Income tax expenses decreased 36% due to lower income before tax because of the application of new income tax rate from 3Q08 of 28% (in 2009) and a further reduction to 25% (from 2010 onwards) that replaced the previously progressive tax rate that ranged from 10% - 30%. Net income decreased 29% to Rp 2.58 trillion in 1Q09 from Rp 3.61 trillion in 1Q08. Non-voice/data revenue (net) in 1Q09 of Rp 2.52 trillion decreased 22% YoY mainly due to the tariff adjustment in April 2008. Non-voice revenue 1Q09 contributed 27% of net operating revenue.

5/11/2009

2 of 9

STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2009 (In Billions of Rupiah and Millions of U.S. Dollar) 2008 Rp .

Rp .

2009 US$ (*)

Growth

OPERATING REVENUES Post-paid Prepaid International roaming Interconnection : - Revenues - Expense Other (network lease) Net Operating Revenues

1,204 7,985 151 807 (554) 5 9,598

994 8,026 159 594 (567) 42 9,248

85 690 15 51 (49) 4 796

-17% 1% 6% -26% 2% 740% -4%

OPERATING EXPENSES Personnel Operation & maintenance General & administrative Marketing Other operating expenses Depreciation Total Operating Expenses

316 1,655 168 227 443 1,548 4,357

291 2,186 175 222 479 1,956 5,309

26 188 15 19 41 168 457

-8% 32% 5% -2% 8% 26% 22%

EBIT (EARNINGS BEFORE INTEREST & TAXES) OTHER INCOME/(EXPENSES) Interest income & financing charges Foreign exchange gain/(loss) Others - net Other income/(expenses) - net

5,241

3,939

339

-25%

(21) (7) (1) (29)

147% -755% -118% 563%

INCOME BEFORE TAX INCOME TAX EXPENSE NET INCOME

5,188 1,573 3,615

3,586 1,008 2,578

310 87 223

-31% -36% -29%

EBITDA EBITDA Margin - over net oper. revenues

6,790 71%

5,895 64%

507 64%

-13% -7%

33% 51%

20% 35%

20% 35%

-13% -16%

ROA ROE

(106) 13 40 (53)

(262) (84) (7) (353)

- (*) US$ 1 = Rp. 11,637 (average end of months Jan-Mar 2009 mid-rate, quoted from Bank Indonesia) - Revenues are presented net of discounts and international roaming & mobile data provider charges

Balance Sheet Telkomsel’s Total Assets increased 14% to Rp 52.95 trillion. Total liabilities increased 39% to Rp 23.33 trillion. Meanwhile, Total Equities decreased 1% to Rp 29.61 trillion. ƒ Current assets decreased 20% to Rp 4.98 trillion, due to lower cash balance. ƒ Non-current assets increased 19% to Rp 47.97 trillion mainly due to the increase in Fixed Assets (FA). FA rose 19% to Rp 46.57 trillion as a result of a significant growth in network infrastructures (28% growth in BTS and 39% expansion in overall network capacity). ƒ Current liabilities grew 53% to Rp 17.11 trillion, largely because of increase in accrued liabilities and current maturities of medium-term loans. ƒ Non-current liabilities increased 12% to Rp 6.23 trillion, which was mainly from medium-term loans.

5/11/2009

3 of 9

As of March 31, 2009 Telkomsel’s outstanding loans was Rp 8.24 trillion, which Rp 4.56 trillion was presented as current liabilities and Rp 3.68 trillion as non-current liabilities. BALANCE SHEETS AS OF MARCH 31, 2008 AND 2009 (In Billions of Rupiah and Millions of U.S. Dollar) ASSETS CURRENT ASSETS Cash and cash equivalents (2) Acct. /Unbilled receivables Prepayments Others Total Current Assets

2008 Rp .

2009 Rp .

US$ (1)

Growth

4,227 771 724 513 6,235

2,047 551 1,502 880 4,980

178 48 130 76 430

-52% -28% 107% 72% -20%

NON-CURRENT ASSETS Long-term Investment Fixed assets - net Advances for fixed assets Equipment no used in operations - net Intangible assets - net Others Total Non-Current Assets TOTAL ASSETS

20 38,988 70 52 366 821 40,317 46,552

20 46,567 1 30 319 1,028 47,965 52,945

2 4,023 0 3 28 89 4,145 4,575

0% 19% -98% -43% -13% 25% 19% 14%

CURRENT LIABILITIES Short-term loans Accounts payable & Accr. Liabilities Taxes payable Unearned revenue Curr. maturities of med/long-term loan Curr. maturities of oblig. under finance lease Total Current Liabilities

167 5,435 914 2,037 2,636 11,189

9,431 540 2,461 4,560 114 17,106

815 47 213 394 10 1,479

74% -41% 21% 73% 53%

3,240 2,137 180 5,557

3,680 2,293 255 6,228

318 198 22 538

14% 7% 42% 12%

EQUITY Capital stock - Rp 1,000,000 par value Authorized - 650,000 shares Issued and fully paid - 182,570 shares Additional paid-in capital Retained earnings Total Equity

183 1,505 28,118 29,806

183 1,505 27,923 29,611

16 130 2,412 2,558

0% 0% -1% -1%

TOTAL LIAB. & STOCKHOLDERS' EQUITY

46,552

52,945

4,575

14%

NON-CURRENT LIABILITIES Med/Long term loan - net of current maturities Deferred tax liabilities Others Total Non-current Liabilities

-

Notes: (1) US$ 1 = Rp.11,575 (middle rate of end of reporting period). (2) Consisting of US$ 81.1 mln, Euro 45.9 mln and Rp 405.3 bn for 2009

5/11/2009

4 of 9

Cash Flows and Capital Expenditures Net cash generated from operations in 1Q09 was Rp. 5.19 trillion, a 13% increase compared to 1Q08 as a result of an increase in cash receipt from Telkomsel’s customers and a tax refund. Net cash used in financing activities increased 17% to Rp 1.17 trillion, mainly due to repayment of medium-term loans in 1Q09. In Rp. Billion

Cash Flow from Operating Activities *) Cash Flow for Investing Activities Cash Flow from Financing Activities Net Decrease in Cash & Cash Equivalents Addition to Fixed Assets (incl. CIP) New Contracts Issued during the Period

Q1 08

Q1 09

Growth

4,608 (2,150) (1,007) 1,451

5,196 (3,130) (1,174) 892

13% 46% 17% -39%

2,283 4,250

2,157 1,517

-6% -64%

*) Include effect of exchange rate changes

Cash flow for investing activities increased 46% to Rp 3.13 trillion (approximately USD 268.9 million), mostly for acquisition of fixed assets. Telkomsel added Rp 2.16 trillion (USD 185.4 million) to fixedassets in 1Q09. There were 928 new BTS (including 301 3G-BTS) installed.

OPERATIONAL RESULTS Customer Base At the end of 1Q09, Telkomsel customers reached 72.13 million (41% YoY growth), consisting of 1.95 million postpaid and 70.18 million prepaid customers (representing 3% and 97% of total customers, respectively). Telkomsel added 6.83 million customers in 1Q09, which was 98% higher than the netaddition in 1Q08. This higher net-add in 1Q09 when compared to 1Q08 was the result of the strong growth of simPATI with more than 7 million new customers due to it maintaining its strong brand image and attractive pricing offers. MOU & Revenue Per Minute (RPM) For the first 3 months of 2009, chargeable MoU reached 33.1 billion minutes, which was 60% higher than 1Q08 MoU. Compared to the previous quarter, it grew 6%. Voice RPM for 1Q09 is around Rp 200, 35% lower than 1Q08 which was Rp 310. SMS & Revenue Per SMS (RPS) Chargeable SMS reached 22.9 billion records for 1Q09, an increase of 70% when compared to 1Q08. Revenue per SMS for 1Q09 is around Rp 100, a decline of 44% from Rp 180 in 1Q08. ARPU ARPU is derived from monthly recurring customers’ usage. Following a decline in tariffs due to intense competition, effective price per minute has declined over the last few quarters which have in turn affected both postpaid and prepaid ARPU. ARPU of postpaid customers decreased 17% YoY to Rp 200K, ARPU for simPATI decreased 36% YoY to Rp 49K and ARPU of Kartu As decreased 35% YoY to Rp 26K. As a result, blended ARPU declined 30% to Rp 47K.

5/11/2009

5 of 9

OPERATIONAL INDICATORS AS OF MARCH 31, 2008 & 2009 Unit

2008

2009

Growth

CUSTOMER BASE Customer Base kartuHALO

Subscriber (000)

1,880

1,954

4%

simPATI Kartu As

Subscriber (000) Subscriber (000)

29,176 20,279

50,206 19,973

72% -2%

Total

Subscriber (000)

51,335

72,133

41%

14 7,173

142% 38%

Net Add Subscriber (000) Subscriber (000)

(33) 5,190

Kartu As

Subscriber (000)

(1,713)

Total

Subscriber (000)

3,444

6,834

98%

Billion minutes

20.7

33.1

60%

kartuHALO

Rp.'000 per mo.

240

200

-17%

simPATI

Rp.'000 per mo.

76

49

-36%

Kartu As

Rp.'000 per mo.

40

26

-35%

Rp.'000 per mo.

67

47

-30%

kartuHALO

Rp.'000 per mo.

49

40

-18%

simPATI

Rp.'000 per mo.

22

13

-41%

Kartu As

Rp.'000 per mo.

22

12

-45%

Blended

Rp.'000 per mo.

23

13

-43%

21,752

27,800

28%

53.6

74.6

39%

kartuHALO simPATI

MOU (excluding free & incoming mins)

(353)

79%

ARPU Total (3 months average)

Blended Non-voice/Data (3 months average)

NETWORK DATA Network Capacity Base stations installed (GSM/DCS/3G)

Unit

Overall capacity all network elements

Subs. mln.

Quality of Service Call success rate

%

95.28%

96.26%

0.98%

Call completion rate

%

98.58%

98.66%

0.08%

EMPLOYEE DATA Total employees

person

Efficiency ratio

Subs/employee

4,020

4,128

3%

12,770

17,474

37%

ACTIVITY HIGHLIGHTS New Products & Programs

ƒ

In January 2009, Telkomsel launched “Free 300 SMS” for Kartu As subscribers. By registering through *899# from 00.00-17.00 hours, with Rp 2,000 as registration fee, Kartu As customers enjoy free 300 SMS that can be used every day to all Telkomsel numbers between 00.00-19.00 hours.

5/11/2009

6 of 9

ƒ

ƒ

ƒ

A new edition of the simPATI PeDe starter pack was launched in February 2009, priced at Rp10,000. It provides a variety of benefits such as Rp5,000 credit value, free Rp5,000 credit for on-network usage, free Rp5,000 credit at the first and second re-charge, free Ring Back Tone, free 5 MB internet access, unlimited chatting with Chat Box and free games. The existing Rp0.5/second tariff remains valid with this new starter pack. In March 2009, Telkomsel and Apple brought iPhone 3G to Indonesia. It is now available at selected GraPARIs and official distributors across the greater Jakarta area and selected cities across Indonesia. The phone was launched with customized price plans for postpaid and prepaid customers and supported by installment offers with major banks across Indonesia In March 2009, “Kartu As Reborn” was launched which offers a “Prefixed Call Promotion” and included the reintrodcution of the “100 get 100 SMS” promotion. The “Prefixed Call Promo” provides special voice/video call tariff Rp 1,000 at the first minute and free until the 10th minutes (cyclic) to all Telkomsel numbers. The “100 get 100 SMS” promotion provides free 100 SMS to Telkomsel numbers after sending 100 chargeable SMS.

Awards

During the first quarter of 2009, Telkomsel received several awards for our innovative branding, products, reliable network and superior customer service: ƒ Forsel Awards 2008 for Telkomsel as Favorite GSM Operator 2008 from Forsel magazine. ƒ Top Brand Award 2009 for kartuHALO (Post Paid Cellular Simcard category) from Frontier Consulting Group and Marketing magazine. ƒ Top Brand Award 2009 for simPATI (Pre Paid Cellular Simcard category) from Frontier Consulting Group and Marketing magazine. ƒ Call Center Award 2009 for Caroline Telkomsel from Marketing magazine and CCSL (Center Customer Satisfaction & Loyalty). LOAN/DEBT During 1Q09, Telkomsel drew down Rp 300 billion as the remaining amount of a total of Rp 5.3 trillion loan facilities that were obtained in 2008. Telkomsel’s outstanding medium-term loans balance at end of March 2009 totalled Rp 8.24 trillion. Telkomsel has to observe certain agreed financial covenants related to its loans/debts. As of March 31, 2009 these covenants were as follows: Bank loans

Covenants t/b maintained EBITDA to debt service Debt to tangible net worth

Required ≥ 1.25 ≤ 2.00

Actual 4.52 0.28

OUTLOOK 2009 Telkomsel remains focus on maintaining revenue market share. Operating revenue for 2009 is expected to grow at mid single digit levels. We expect to grab 50% of the Big 3 total net add. Margin may potentially decline around 1-2%. Our capex is expected to be between USD 1.3 - 1.5 billion.

SIGNIFICANT ACCOUNTING POLICIES Indonesian GAAP

Revenue Recognition

Revenues from new connections are recognized upon delivery of starterpacks/SIMcard to distributors, dealers or directly to customers. Airtime, value-added services and monthly subscription charges are recognized when earned. Prepaid vouchers are initially recorded as unearned income and then

5/11/2009

7 of 9

proportionately recognized as usage revenue based on successful calls made or the usage of value added services by subscribers or whenever the unused stored value of the voucher has expired. Revenues from interconnection with other operators (usage revenue) are recognized monthly on the basis of the actual recorded traffic for the month. Operating revenues for interconnection services under interconnection agreements based on revenue-sharing arrangement are reported on a net basis, after interconnection expenses/charges.

Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method based on the estimated useful lives of the assets (infrastructures 5 and 10 years; supporting facilities and measurement equipment 3-10 years). Fixed Assets are insured to cover any possible losses caused by destruction or damage by riots, strike and malicious acts and any damage which cause business interruption.

Intangible Asset

Upon winning the right to operate the 3G license, the Company is required to pay an upfront fee and annual rights of usage fee for the next ten years. The upfront fee is recognized as intangible asset and amortized over the term of the license (10 years). The annual rights of usage is recognized as expense when incurred.

Significant Differences Between Indonesian GAAP and U.S. GAAP

Foreign Exchange Differences Capitalized for Assets Under Construction Under Indonesian GAAP, foreign exchange losses from borrowings used to finance assets under construction are capitalized only during severe devaluation or depreciation of a currency. Under U.S. GAAP, foreign exchange differences are charged to the results of operations. Interest Capitalized on Assets under Construction Under Indonesian GAAP, qualifying assets to which interest cost can be capitalized, are those that take a substantial period of time to be prepared for intended use or sale, i.e. minimum 12 months. Under U.S. GAAP, there is no limit to the length of the construction period in which the interest cost may be capitalized. The interest income arising from any unused borrowings is recognized directly to the results of operations. Employee Benefits Under U.S. GAAP (FAS No.158, effective December 2006), unrecognized gain or losses, past service cost and the transition of asset or obligation, net of tax, are recognized as other comprehensive income. Indonesian GAAP does not include such provision. Embedded derivative on contracts denominated in foreign currencies Under U.S. GAAP,

unless it is routinely denominated in international commerce in a single currency, it should be separated from the host contract and accounted for under embedded foreign currency derivative instruments.

5/11/2009

8 of 9

RECONCILIATION TO U.S. GAAP FOR THE PERIODS ENDED MARCH 31, 2009 AND 2008 (in billions of Rupiah)

Net income as reported under Indonesian GAAP U.S. GAAP Adjustments - Incr./(decr.) due to: a Capitalization of forex differences b Capitalization of interest expense e Recognition of finance leases d Depreciation on contracts with foreign currency derivative instr. Employee benefits Asset retirement obligations g Amortization of landrights Deferred income tax effect on U.S. GAAP adjustments Net adjustments Net Income in accordance with U.S. GAAP

S/H equity as reported under Indonesian GAAP U.S. GAAP Adjustments - Incr./(decr.) due to: e Foreign exchange gain, on contracts contained foreign currency Capitalization of interest expense Asset retirement obligations b Capitalization of interest expense Amortization of landrights Employee benefits e Recognition of finance leases Recognition of other comprehensive inc. related to empl. benefits Deferred income tax effect on U.S. GAAP adjustments

Net adjustments S/H Equities in accordance with U.S. GAAP

2009

2008

2,578

3,615

(5) 1 (0) (6) 1

6 5 5 (3) 0 (3) (6) (3)

(9)

1

2,569

3,616

29,611

29,806

(440) 288 0 (72) 6 (52) 36

46 285 (29) (16) (51) 7 (12) (86) (85)

(234)

59

29,377

29,865

PT Telekomunikasi Selular (“Telkomsel”/”the Company”) was officially established in 1995. The Company is 65% owned by PT Telekomunikasi Indonesia, Tbk. (“Telkom”: JSX: TLKM; NYSE: TLK; LSE: TKIA) and 35% owned by SingTel Mobile, a 100% owned subsidiary of Singapore Telecommunications Ltd. (“SingTel”: SGX: ST; ASX: SGT). Telkomsel is the largest mobile telecommunication company in Indonesia with a market share of subscribers of approximately 49%. You can register to receive these highlights automatically through Telkomsel’s Corporate Info site on www.telkomsel.com

5/11/2009

9 of 9