Scheme Document

Transcription

Scheme Document

THIS SCHEME DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. THIS SCHEME
DOCUMENT INCLUDES AN EXPLANATORY STATEMENT MADE IN COMPLIANCE WITH SECTION 897 OF THE
COMPANIES ACT 2006 OF ENGLAND AND WALES
THE MEETING OF SCHEME CREDITORS TO CONSIDER AND, IF THOUGHT FIT, APPROVE THE PROPOSED
SCHEME WILL BE HELD ON 11 MARCH 2011 COMMENCING AT 10:00 A.M. (LONDON TIME) AT THE OFFICES OF
O’MELVENY & MYERS LLP AT WARWICK COURT, 5 PATERNOSTER SQUARE, LONDON EC4M 7DX, ENGLAND
The Scheme Document is being sent to Persons who are believed to be Scheme Creditors. Scheme Creditors include Persons who hold an
economic or beneficial interest as principal in the Existing Notes at the Record Time.
The Record Time for this Scheme (which is also the Voting Time) is 5 p.m. (London time) on 8 March 2011, which is two (2) Business Days prior to
the Scheme Meeting in London, England.
If you have assigned, sold or otherwise transferred, or assign, sell or otherwise transfer all of your interests as Scheme Creditor before the Record Time,
you must forward a copy of this Scheme Document to the Person or Persons to whom you have assigned, sold or otherwise transferred, or to whom you
assign, sell or otherwise transfer, such interests; thereafter, you need not take any further action with respect to this Scheme Document.
If you have only partially assigned, sold or transferred such interests, or partially assign, sell or otherwise transfer such interests before the Record Time,
you should: (i) read this Scheme Document carefully; (ii) forward a copy of this Scheme Document to the Person or Persons to whom you have assigned,
sold or transferred, or to whom you assign, sell or otherwise transfer, such partial interests; and (iii) take such steps as you consider appropriate
following consideration of the matters described in this Scheme Document. Copies of this Scheme Document are available from the Information Agent.
A transferee of an economic or beneficial interest in Existing Notes after the Record Time will not be entitled to vote at the Scheme Meeting.
Such transferee will need to make arrangements with the transferor to ensure that the transferor votes in accordance with the wishes of the
transferee. Persons who have acquired either an economic or beneficial interest in Existing Notes after the Record Time should contact the
Person from whom they acquired such economic or beneficial interest to ensure delivery of the Scheme Consideration to them. The Scheme
Company accepts no responsibility or liability in respect of such matters whatsoever.
If you are in any doubt as to any aspect of the proposed Scheme or about any action you should take, you should consult immediately with a
professional adviser of your own choice.
PROPOSED
SCHEME OF ARRANGEMENT
(UNDER SECTION 895 OF THE COMPANIES ACT 2006 OF ENGLAND AND WALES)
BETWEEN
MOBILE-8 TELECOM FINANCE COMPANY B.V.
(A PRIVATE COMPANY WITH LIMITED LIABILITY INCORPORATED UNDER THE LAWS OF THE NETHERLANDS)
AND
SCHEME CREDITORS
(AS DEFINED IN THE SCHEME)
A meeting of Scheme Creditors to consider and, if thought fit, approve the proposed Scheme will be held on 11 March 2011 commencing at 10:00 a.m.
(London time) at the offices of O’Melveny & Myers LLP at Warwick Court, 5 Paternoster Square, London EC4M 7DX, England. The notice of the Scheme
Meeting is set out in Appendix 3. Instructions regarding actions to be taken by Scheme Creditors prior to the Scheme Meeting are set out in Appendix
1. In the event that the Scheme is approved by the requisite majorities of Scheme Creditors, the Court must sanction the Scheme at a hearing in order for it
to become legally binding. All Scheme Creditors will be entitled to attend such hearing before the Court in person or through legal counsel to support or
oppose the sanction of the Scheme. It is expected that such sanction hearing will be held at 10:30 a.m. (London time) on 29 March 2011.
The New Notes have not been and will not be registered under the US Securities Act of 1933 (the “US Securities Act”), or any state or other
securities laws of the United States or any other jurisdiction. The New Notes are being offered outside the United States in accordance with
Regulation S under the US Securities Act. None of the New Notes may be offered or sold in the United States or to any US Persons except in
accordance with Regulation S under the US Securities Act. In the event that any holder of Existing Notes is resident in the United States, the
Parent will rely on the exemption from registration under Section 3(a)(10) of the US Securities Act. The Court has been informed that any order
sanctioning the Scheme, if granted, may constitute the basis for an exemption from the registration requirements of the US Securities Act
provided by Section 3(a)(10). The Distribution of the Scheme Consideration to Persons resident in certain jurisdictions, including the states
of Arizona, California, Colorado, Guam and Indiana, will also be subject to the limitations described in Appendix 2.
This Scheme Document does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale or Distribution of New
Notes under the Scheme in any jurisdiction in which any offer or sale is not permitted.
In making any investment decision, Scheme Creditors must rely on their own independent examination of the Scheme and the New Notes
in order to satisfy themselves as to the relative merits and risks involved. The New Notes have not been recommended by any US federal or state
securities commission or other regulatory authority in any other jurisdiction. Furthermore, none of the foregoing authorities have confirmed the
accuracy or determined the adequacy of this Scheme Document. Any representation or statement to the contrary is a criminal offence.
Important information relating to all relevant securities law considerations is set out under the heading "Important Notice" on pages 1 to 5 of this Scheme
Document.
HELPLINES AND DOCUMENT REQUESTS
The Scheme Company has appointed Lynchpin Bondholder Management as Information Agent in order to assist Scheme Creditors and other interested
parties in connection with the Scheme and, in particular, the proper completion of Account Holder Letters. If you have any questions relating to this
Scheme Document or the completion of the Account Holder Letter, please contact the Information Agent at:
Address: Room 402, Wellington Plaza, 56-58 Wellington Street, Central, Hong Kong.
Telephone: +852-2526-5406
Fax: +852-2526-5020
[email protected]
2 February 2011
TABLE OF CONTENTS
PAGES
1.
IMPORTANT NOTICE
1-5
2.
DEFINITIONS
6 - 15
3.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
16
4.
IMPORTANT INSTRUCTIONS FOR NOTEHOLDERS, ACCOUNT HOLDERS AND
INTERMEDIARIES
17 - 18
5.
QUESTIONS AND ANSWERS
19 - 23
6.
LETTER FROM THE BOARD OF MOBILE-8 TELECOM FINANCE COMPANY B.V.
24 - 31
7.
EXPLANATORY STATEMENT
32 - 41
8.
42 - 66
APPENDIX 1
INSTRUCTIONS ON HOW TO VOTE
67 - 69
APPENDIX 2
EFFECT OF SECURITIES LAW RESTRICTIONS UNDER THE SCHEME
70 - 75
APPENDIX 3
NOTICE OF SCHEME MEETING
76 - 77
APPENDIX 4
FORM OF ACCOUNT HOLDER LETTER
78 - 85
APPENDIX 5
FORM OF DEED OF RELEASE
86 - 88
APPENDIX 6
FORM OF DEED OF UNDERTAKING
89 - 90
APPENDIX 7
FORM OF TRUST DEED
91- 97
APPENDIX 8
FAIRNESS OPINION OF INDEPENDENT FINANCIAL ADVISER
98 - 125
APPENDIX 9
SUPPORTING NOTEHOLDER LETTER
126 - 134
APPENDIX 10 EXCHANGE OFFER MEMORANDUM
-i-
135 - End
PRELIMINARY
IMPORTANT NOTICE
1.
GENERAL
Definitions: Capitalised words and phrases used in this Scheme Document have the meaning
provided on pages 6 to 15.
Scheme Creditors: This Scheme Document is being sent to Persons who are believed to be
Scheme Creditors at the date of this Scheme Document. Scheme Creditors include Persons
who hold an economic or beneficial interest as principal in Existing Notes at the Record Time
(herein, “Noteholders”). This Scheme Document is accompanied by an Account Holder Letter,
which contains, among other things, voting instructions and elections. It is important that you
read this Scheme Document carefully for information about the Scheme and that Noteholders
contact their Account Holder to ensure that an Account Holder Letter is completed and returned
on their behalf.
Transfers of Existing Notes: If you have assigned, sold or otherwise transferred, or assign, sell or
otherwise transfer, all of your interests as Scheme Creditor before the Record Time, you must
forward a copy of this Scheme Document to the Person or Persons to whom you have assigned, sold
or otherwise transferred, or to whom you assign, sell or otherwise transfer, such interests. Thereafter,
you need not take any further action with respect to this Scheme Document.
If you have only partially assigned, sold or otherwise transferred such interests, or partially assign,
sell or otherwise transfer such interests before the Record Time, you should: (i) read this Scheme
Document carefully; (ii) forward a copy of this Scheme Document to the Person or Persons to
whom you have assigned, sold or transferred, or to whom you assign, sell or otherwise transfer,
such partial interests; and (iii) take such steps as you consider appropriate following consideration
of the matters described in this Scheme Document. Copies of this Scheme Document are available
from the Information Agent.
A transferee of an economic or beneficial interest in Existing Notes after the Record Time
will not be entitled to vote at the Scheme Meeting. Such transferee will need to make
arrangements with the transferor to ensure that the transferor votes in accordance with the
wishes of the transferee. Persons who have acquired an economic or beneficial interest as
principal in Existing Notes after the Record Time should contact the Person from whom
they acquired such economic or beneficial interest to ensure delivery of the Scheme
Consideration to them. The Scheme Company, the Parent, the Information Agent, the
Existing Trustee, the Collateral Agent and the Paying and Transfer Agent do not accept any
responsibility or liability in respect of such matters.
Record Time: The Record Time for the Scheme will be 5.00 p.m. (London time) on 8 March 2011.
Scheme Meeting: A meeting of Scheme Creditors to consider and, if thought fit, approve the
Scheme will be held on 11 March 2011 commencing at 10:00 a.m. (London time) at the offices of
O’Melveny & Myers LLP at Warwick Court, 5 Paternoster Square, London EC4M 7DX, England. The
notice of the Scheme Meeting is set out at Appendix 3. Instructions about actions to be taken by
Scheme Creditors prior to the Scheme Meeting are set out in Appendix 1. In the event that the
Scheme is approved by the requisite majorities of Scheme Creditors, the Court must then sanction
the Scheme at a hearing and an office copy of the order of the Court must be delivered to the
Registrar of Companies in order for the Scheme to become legally binding. All Scheme Creditors
will be entitled to attend such hearing before the Court in person or through legal representatives to
support or oppose the sanction of the Scheme. It is expected that such sanction hearing will be held
at 10:30 a.m. (London time) on 29 March 2011.
Reliance: This Scheme Document has been prepared in connection with a proposed scheme of
arrangement under Section 895 of the Act to be made between the Scheme Company and Scheme
Creditors. Nothing in this Scheme Document or any other document issued with or appended to it
should be relied on for any purpose other than to make a decision about whether to vote in favour of
or against the Scheme. In particular and without limitation, nothing contained in this Scheme
Document or any other document issued with or appended to it should be relied on in connection
-1-
PRELIMINARY
with the purchase of any shares, bonds, notes (other than the New Notes) or assets of, or the
making of any investment in, the Scheme Company, the Parent or any other member of the Group.
Information: The Scheme Company and the Parent have taken all reasonable steps to ensure that
the Scheme Document contains the information reasonably necessary to enable Scheme Creditors
to make an informed decision about the effect of the Scheme. To the best of the knowledge and
belief of the Scheme Company and the Parent, the information contained in this Scheme Document
accords with the facts and does not omit anything likely to affect the import of such information.
No Audit: An audit has not been performed of the financial position of the Scheme Company and/or
the Parent by any party in connection with this Scheme Document and/or the proposed Scheme and,
accordingly, each of the Scheme Company, the Parent, the Information Agent, the Existing Trustee,
the Collateral Agent and the Paying and Transfer Agent do not express or give any audit opinion.
Whilst there are no reasons to doubt the information used in preparing this Scheme Document, the
Scheme Company and the Parent reserve the right to alter any conclusions reached should the
basis or accuracy of such information change at any time.
Date of Statements: The statements contained in this Scheme Document are made as at the date
of this Scheme Document, unless another time is specified in relation to them. Delivery of this
Scheme Document shall not give rise to any implication that there has been no change in the facts
set out in this Scheme Document since that date. Any material variation of facts will be notified to
Scheme Creditors in the manner considered most appropriate by the Scheme Company prior to the
Scheme Meeting.
No Warranty: Nothing contained in this Scheme Document constitutes a warranty or guarantee of
any kind, express or implied, and nothing contained in this Scheme Document constitutes any
admission of any fact or Liability on the part of the Scheme Company or the Parent with respect to
any asset to which it may be entitled or any claim or Liability against it. No Person has been
authorised by the Scheme Company or the Parent to make any representations concerning the
Scheme or to provide any other information which is inconsistent with the statements contained in
the Scheme Document. If made, any such representations may not be relied upon as having been
authorised by the Scheme Company or the Parent.
No Verification: None of the Scheme Company, the Parent, the Information Agent, the Existing
Trustee, the Collateral Agent, the Paying and Transfer Agent or their respective advisers has
verified that any of the information contained in this Scheme Document is in accordance with the
facts and does not omit anything likely to affect the import of such information. Each of the Existing
Trustee, the Collateral Agent, the Paying and Transfer Agent, the Information Agent and each of
their and the Group's respective financial and legal advisers expressly disclaims responsibility for
such information or omission.
No Opinion: In accordance with normal practice, none of the Scheme Company, the Parent, any
other member of the Group, the Existing Trustee, the Collateral Agent, the Paying and Transfer
Agent or the Information Agent and their respective financial or legal advisers has expressed any
opinion as to the merits of the Scheme or with respect to the effect of the Scheme, except as
otherwise expressly stated in this Scheme Document.
No Forecast: Nothing in this Scheme Document shall be deemed to be a forecast, projection or
estimate of the future financial performance of the Group, except where otherwise specifically stated.
Qualified by Reference: The summary of the principal provisions of the Scheme contained in this
Scheme Document is qualified in its entirety by reference to the Scheme. Each Scheme Creditor is
advised to read and consider carefully the text of the Scheme in full. This is because this Scheme
Document and, in particular, the Explanatory Statement (including the Exchange Offer
Memorandum), has been prepared solely to assist Scheme Creditors in respect of voting on the
Scheme.
Class of Creditors: Scheme Creditors constitute a single class of creditors of the Scheme
Company and not the general body of creditors of the Scheme Company as a whole.
-2-
PRELIMINARY
Risk Factors: There are many factors beyond the control of the Scheme Company and the Parent
which may impact upon the Scheme. Scheme Creditors are referred to the information under the
heading "Risk Factors" set out in the Exchange Offer Memorandum.
Professional Advice: Scheme Creditors should not construe the contents of this Scheme
Document as legal, tax or financial advice, and should consult with their own professional adviser as
to each of the matters described in this Scheme Document.
Existing Trustee: The Existing Trustee expresses no view on the contents of this Scheme
Document or the proposed Scheme. The Existing Trustee has not been involved in the negotiation of
the terms of the proposed Scheme and makes no representations in connection therewith. The
Existing Trustee accepts no responsibility for any of the factual statements contained in this Scheme
Document or the effect or effectiveness of the proposed Scheme.
Collateral Agent: The Collateral Agent expresses no view on the contents of this Scheme
Document or the proposed Scheme. The Collateral Agent has not been involved in the negotiation of
the terms of the proposed Scheme and makes no representations in connection therewith. The
Collateral Agent accepts no responsibility for any of the factual statements contained in this Scheme
Document or the effect or effectiveness of the proposed Scheme.
Paying and Transfer Agent: The Paying and Transfer Agent expresses no view on the contents of
this Scheme Document or the proposed Scheme. The Paying and Transfer Agent has not been
involved in the negotiation of the terms of the proposed Scheme and makes no representations in
connection therewith. The Paying and Transfer Agent accepts no responsibility for any of the factual
statements contained in this Scheme Document or the effect or effectiveness of the proposed
Scheme.
2.
SECURITIES LAW CONSIDERATIONS
No Offer: This Scheme Document does not constitute an offer to sell or the solicitation of an offer to
buy. There will not be any sale or Distribution of New Notes under the Scheme in any jurisdiction in
which any offer or sale is not permitted.
Investment Decision: In making any investment decision, Scheme Creditors must rely on their
own independent examination of the Scheme in order to satisfy themselves as to the relative merits
and risks involved. The New Notes have not been recommended by any US federal or state
securities commission or other regulatory authority in the United States, England and Wales or any
other jurisdiction. Furthermore, none of the foregoing authorities have confirmed the accuracy or
determined the adequacy of this Scheme Document. Any representation or statement to the
contrary is a criminal offence.
Exemption from Registration: The New Notes which are to be issued under the Scheme after the
Effective Date will not be registered under the US Securities Act or any state or other securities laws
of the United States or any other jurisdiction. Accordingly, the New Notes are being offered outside
the United States in accordance with Regulation S under the US Securities Act. None of the New
Notes may be offered or sold in the United States or to any US Persons except in accordance with
Regulation S under the US Securities Act.
In the event that any holder of the Existing Notes is resident in the United States, the Scheme
Company will rely on the exemption from registration under Section 3(a)(10) of the Securities Act.
The Court has been informed that any order sanctioning the Scheme, if granted, may constitute
the basis for an exemption from the registration requirements of the US Securities Act provided by
Section 3(a)(10). The Distribution of the Scheme Consideration to Persons resident in certain
jurisdictions, including the states of Arizona, California, Colorado, Guam and Indiana, will also be
subject to the limitations described in Appendix 2.
Section 3(a)(10) of the US Securities Act exempts from registration under the US Securities Act
securities issued in exchange for one or more outstanding securities where, among other
requirements, the terms and conditions of the issuance and exchange of such securities have been
approved by a court of competent jurisdiction, after a hearing upon the fairness of the terms and
-3-
PRELIMINARY
conditions of the issuance and exchange at which all Persons to whom the securities will be issued
have the right to appear and receive timely notice thereof.
Given that the Scheme Company has its centre of main interests in England, the Court is a court of
competent jurisdiction and authorised to conduct a hearing at which the fairness of the terms and
conditions of the Scheme will be considered. The Scheme, if sanctioned by the Court, will establish
the basis for exemption of the New Notes from the registration requirements of the US Securities Act.
The Court will be informed that the Scheme Company and the Parent may rely upon the exemption
based upon the approval of a court of competent jurisdiction as provided by Section 3(a)(10) of the
US Securities Act.
Distribution of Scheme Consideration: The Distribution of Scheme Consideration in the form of
New Notes to Persons resident in certain jurisdictions, including the states of Arizona, California,
Colorado, Guam and Indiana will be subject to the limitations described in Appendix 2. In connection
with these limitations, each Noteholder will be required to submit a duly completed Account Holder
Letter and affirmatively make the appropriate Securities Law Representations in order to receive
Scheme Consideration in the form of New Notes.
The Securities Law Representations may be provided by Noteholders through their Account Holders
by way of an Account Holder Letter. Except as otherwise described, if a duly completed Account
Holder Letter is not submitted or the appropriate Securities Law Representations are not
affirmatively made by either a Noteholder or its Account Holder, New Notes will not be Distributed to
such Noteholder and the relevant Noteholder will be deemed to be an Ineligible Person. The New
Notes that would have been issued to Ineligible Persons will instead be issued to the Scheme
Company to be held on trust for the benefit of the Ineligible Persons in accordance with the terms of
the Trust Deed, as described in paragraph 2.11 of the Explanatory Statement. Important US
securities laws restrictions relating to the initial issuance and subsequent transfer of the New Notes
are discussed in more detail in Appendix 2.
Compliance with Laws: Each Scheme Creditor entitled to receive Scheme Consideration must
comply with all applicable laws and regulations in force in each relevant jurisdiction and must
separately obtain any Authorisation required to be obtained by applicable laws and regulations to
which it is subject. For the avoidance of doubt, none of the Scheme Company, the Parent, the
Information Agent or their respective advisers shall have any responsibility for any such
Authorisations or other ancillary matters whatsoever. Please refer to Appendix 2 for detailed
information about the Distribution of Scheme Consideration in certain jurisdictions.
FOR NEW HAMPSHIRE RESIDENTS: NEITHER THE FACT THAT A REGISTRATION
STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER
421−B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW
HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A
PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY
THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421−B IS TRUE,
COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION
MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS
OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO
ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
Switzerland: The New Notes are being offered to Scheme Creditors in Switzerland without any
public offering and only to the extent that they have no intention to Distribute them to the public.
This Scheme Document is personal and confidential to each Scheme Creditor and does not
constitute an offer to any other Person. This Scheme Document shall in particular not be
copied and/or distributed to the public in or from Switzerland.
This Scheme Document does not constitute an issue prospectus pursuant to Article 652a or
Article 1156 of the Swiss Code of Obligations. The New Notes will not be listed on the SWX
Swiss Exchange and, therefore, any documents relating to the New Notes, including, but not
limited to, this Scheme Document, may not comply with the disclosure standards of the listing rules
-4-
PRELIMINARY
of the SWX Swiss Exchange.
United Kingdom: No invitation or inducement to engage in investment activity (within the meaning
of section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) has been
communicated or caused to be communicated, or will be communicated or caused to be
communicated, in connection with the issue or sale of the New Notes, in circumstances in which
section 21(1) of the FSMA does not apply to the Scheme Company or the Parent.
All applicable provisions of the FSMA have been complied with, and will be complied with, with
respect to anything done by the Scheme Creditors in relation to the New Notes in, from or otherwise
involving the United Kingdom.
-5-
DEFINITIONS
DEFINITIONS
Capitalised words and phrases used in this Scheme Document have the meanings provided below.
"Accepted"
means in relation to a Scheme Claim, the acceptance by the
Scheme Company of such claim (or part thereof) without dispute or,
where applicable and only for purposes of any entitlement to
Scheme Consideration, the acceptance or determination by the
Adjudicator of such claim (or part thereof) in accordance with the
Adjudication Procedure.
"Accepted Claim"
means a Scheme Claim against the Scheme Company calculated
with reference to the principal amount of Existing Notes as of the
Record Time to which such Claim relates which has been Accepted,
which shall be used for the purposes of determining the entitlement
of each Scheme Creditor to Scheme Consideration as provided for
in the Scheme.
"Account Holder"
means a Person who is recorded in the books of Euroclear or
Clearstream as being a holder of Existing Notes in an account with
Euroclear or Clearstream or, as the context may require, was
recorded in such books as being a holder of Existing Notes in such
an account at the Record Time.
"Account Holder Letter" means a letter from an Account Holder on behalf of the relevant
Noteholder in the form set out at Appendix 4.
"Acquisition"
means the acquisition of the Target Shares by the Parent.
"Adjudication
Procedure"
means the procedure for the resolution of Disputed Claims under
this Scheme as set out in Chapter 6 of the Scheme.
"Adjudicator"
means such suitably qualified Person as the Scheme Company
may, in its absolute discretion, select to act as adjudicator in respect
of any Disputed Claim in accordance with the Adjudication
Procedure.
"Authorisations"
means each, any or all necessary notifications, registrations,
applications, filings, authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions, noaction relief, exemption relief orders and approvals, and all
appropriate waiting periods (including any extensions thereof), in
connection with the Scheme.
"Bar Date"
means the date falling two (2) calendar months after the Effective
Date (or if such date is not a Business Day, then the next
succeeding Business Day), being the latest date by which
Noteholders must: (i) provide a duly completed Account Holder
Letter to the Information Agent; and (ii) make the Securities Law
Representations to the Scheme Company and the Parent (and the
Scheme Company and the Parent are or, if referred to the
Adjudicator, the Adjudicator is satisfied as to the accuracy thereof)
in order to become Eligible Persons and be entitled to receive
“Bar Time”
means 5:00 p.m. (London time) on the Bar Date.
"Bid"
has the meaning provided in the New Notes Term Sheet.
"Bid Notice"
-6-
DEFINITIONS
"Blocking Instructions" means, as applicable, the irrevocable instructions given by Account
Holders (in accordance with customary procedures of the relevant
Clearing System) to either Clearstream or Euroclear to block all
interests in Existing Notes, which are the subject of an Account
Holder Letter, in the securities account to which they are credited
with effect from the Record Time (or the date of the relevant
Account Holder Letter if the Record Time has passed).
"Board"
means the board of directors of the Scheme Company from time to
time.
"Business Day"
means a day (other than a Saturday or a Sunday) on which banks
are open for general business in London, England.
"Cash Waterfall Date"
"Chairman"
means the chairman of the Scheme Meeting.
"Claim"
means all and any actions, causes of action, claims, counterclaims,
suits, debts, sums of money, accounts, contracts, agreements,
promises, contributions, indemnifications, damages, judgments,
executions, demands or rights whatsoever or howsoever arising,
whether present, future, prospective or contingent, known or
unknown, whether or not for a fixed or unliquidated amount, whether
or not involving the payment of money or the performance of an act
or obligation, whether arising at common law, in equity or by statute
in England and Wales or in any other jurisdiction or in any other
manner whatsoever, and "Claims" shall be construed accordingly.
"Clearing Systems"
means Euroclear and Clearstream.
"Clearstream"
means Clearstream Banking, société anonyme.
"Collateral Agent"
means DB Trustees (Hong Kong) Limited in its capacity as
Collateral Agent under the Existing Security Documents.
"Completion Notice"
means the notice to be issued by the Scheme Company and
delivered to the Information Agent for circulation to Scheme
Creditors via the Clearing Systems confirming satisfaction of the
Conditions and specifying the Effective Date and the Settlement
Date.
"Conditions"
means each of the conditions precedent to the effectiveness of the
Scheme, as set out in Chapter 5 of the Scheme.
"Contingency Reserve
Account"
"Conversion Discount" has the meaning provided in the New Notes Term Sheet.
"Conversion Price"
"Court"
means the High Court of Justice of England and Wales.
"Debt Buy-back"
"Deed of Release"
means a deed of release in the form attached at Appendix 5.
"Deed of Undertaking"
means a deed of undertaking in the form attached at Appendix 6.
"Disputed Claim"
means any dispute whatsoever arising in relation to a Claim of a
-7-
DEFINITIONS
Scheme Creditor under or in respect of the Existing Notes and/or
the Existing Indenture.
"Distribution"
means: (i) any payment of cash or cash-in-kind; (ii) any payment of
dividends or interest; (iii) the granting of any option over any
securities and/or debt instruments; (iv) the issuance of any
securities and/or other debt instruments; (v) any ‘in specie’
distribution of a tangible asset or chose in action; or (vi) anything
similar to those described in (i) through (v) above; and “Distribute”
and “Distributed” shall be construed accordingly.
"Dollars" and "US$"
refer to the lawful currency of the United States from time to time.
"EBITDA"
has the meaning provided in the Fiscal Agency Agreement.
"Effective Date"
means the date on which the Scheme becomes effective in
accordance with its terms.
"EGM"
means the extraordinary general meeting of the shareholders of the
Parent held on 20 December 2010.
"Eligible Person"
means any Noteholder (acting, where applicable, through its Account
Holder) which has: (i) provided the Information Agent with a duly
completed Account Holder Letter in respect of its Scheme Claims;
and (ii) provided the Scheme Company and the Parent with
affirmative Securities Law Representations (and the Scheme
Company and the Parent are or, if referred to the Adjudicator, the
Adjudicator is satisfied as to the accuracy thereof), in each case prior
to the Bar Time.
"Euroclear"
means Euroclear Bank S.A./N.V.
"Exchange Offer
Memorandum"
means the Exchange Offer Memorandum attached to the Scheme
Document as Appendix 10.
"Excluded Liabilities"
means any Liability of the Scheme Company (other than Scheme
Claims) which are not compromised and discharged in full (or in
part) upon the Settlement Date and which Liabilities may be due to
any Person including, without limitation:
(i)
the Parent in respect of the Scheme Costs; and
(ii)
the Existing Trustee, the Collateral Agent and the Paying and
Transfer Agent in respect of: (1) any fees and expenses; and
(2) any amounts under any indemnity, in each case due to
them under the terms of the Existing Indenture and/or the
Existing Security Documents in respect of the period ending on
the Settlement Date.
"Existing Depositary"
means Deutsche Bank AG, London Branch, or such other Person
as may be appointed as common depositary in accordance with the
Existing Indenture from time to time.
"Existing Global Note"
means the Existing Notes represented by one or more notes in global
form registered in the name of BT Globenet Nominees Limited as
nominee for the Existing Depositary.
"Existing Guarantees"
means each of the guarantees granted by the Existing Guarantors
in respect of the Liabilities of the Scheme Company under the
Existing Notes and Existing Indenture.
"Existing Guarantors"
means the Parent and each other member of the Group that has
-8-
DEFINITIONS
guaranteed the obligations of the Scheme Company under the
terms of the Existing Indenture.
"Existing Indenture"
means the indenture constituting the Existing Notes dated 15
August 2007 by and among the Scheme Company, the Parent, the
Existing Trustee and the Collateral Agent.
"Existing Notes"
means the US$100,000,000 11.25% guaranteed senior notes due
2013 issued by the Scheme Company pursuant to the Existing
Indenture.
"Existing Security"
means the security created by the Existing Security Documents.
"Existing Security
Documents"
means, together, the Share Pledge and the Security Agreement.
"Existing Trustee"
means DB Trustees (Hong Kong) Limited, in its capacity as trustee
under the Existing Indenture.
"Explanatory
Statement"
means the explanatory statement of the Scheme Company set out
in this Scheme Document in compliance with the Act.
"Fairness Opinion"
means the fairness opinion prepared by the Independent Financial
Adviser and attached at Appendix 8.
"Fiscal Agency
Agreement"
means the fiscal agency agreement to be entered into on or prior to
the Settlement Date between the Parent and the Fiscal Agent with
respect to the New Notes, the terms of which shall be consistent
with the New Notes Term Sheet and otherwise as agreed between
the Parent and the Fiscal Agent.
"Fiscal Agent"
means such suitably qualified Person as may be selected by the
Parent to act as fiscal agent in respect of the New Notes, and any
successor thereto.
"Force Majeure"
means any act of god, government act, war, fire, flood, earthquake,
and other natural disasters, strikes, changes to effective legislation,
explosion, civil commotion or act of terrorism which prevents the
fulfillment of obligations under this Scheme, and the occurrence of
which is not the direct or indirect result of action or inaction of any
Scheme Creditor or the Scheme Company.
"FSMA"
means the Financial Services and Markets Act 2000 (as amended),
as applicable in England and Wales.
"Global"
means PT Global Mediacom Tbk, a company incorporated under
the laws of the Republic of Indonesia, whose registered office is at
Menara Kebon Sirih, 28th Floor, Jl. Kebon Sirih Kav. 17-19, Jakarta
10340, Indonesia.
"Governmental Entity"
means any federal, national or local government, governmental,
regulatory or administrative authority, agency or commission or any
court, tribunal or judicial body of England and Wales, the United
States or any other relevant jurisdiction.
"Group"
means the Parent and each Subsidiary of the Parent from time to
time, and "Group Company" shall be construed accordingly.
"Helpline"
means +852-2526-5406, by which Account Holders, Intermediaries
and Noteholders may contact the Information Agent for guidance on
the completion and submission of Account Holder Letters and other
-9-
DEFINITIONS
procedural matters relevant to the Scheme and the general
operation of the Clearing Systems.
"Indebtedness"
means, as the context requires, the aggregate amount of all
indebtedness and Liabilities (whatsoever and howsoever arising)
owed by any of: (i) the Scheme Company under or in respect of the
Existing Indenture, the Existing Security Documents and/or the
Existing Notes (including, for the avoidance of doubt, Scheme
Claims); (ii) the Existing Guarantors under or in respect of the
Existing Indenture, the Existing Guarantees, the Existing Security
Documents and/or the Existing Notes; and (iii) the Parent under or
in respect of the Intercompany Loan.
"Independent Financial means Grant Thornton Specialist Services Pte. Ltd. of 47 Hill Street,
Adviser"
#05-01 Singapore Chinese Chamber of Commerce & Industry
Building, Singapore 179365.
"Indonesian Bankruptcy means Law Number 37 of 2004 of the Republic of Indonesia.
Law"
"Industry Report"
means the Indonesia Telecommunications Report prepared by
Business Monitor International for the third quarter of 2010.
"Ineligible Person"
means any Noteholder which is not an Eligible Person by reason of
its inability or failure to:
(i)
submit a duly completed Account Holder Letter in respect of its
Scheme Claims to the Information Agent; or
(ii)
give the Securities Law Representations to the Scheme
Company and the Parent (or the Scheme Company and the
Parent not being or, if referred to the Adjudicator, the
Adjudicator not being satisfied as to the accuracy thereof),
in each case prior to the Bar Time.
"Information Agent"
means Lynchpin Bondholder Management of Room 402, Wellington
Plaza, 56-58 Wellington Street, Central, Hong Kong.
"Insolvency
Proceeding"
means any proceeding, process, appointment or application under
any law relating to insolvency, reorganisation, winding-up, or
composition or adjustment of debts, including, without limitation,
winding-up, liquidation, bankruptcy, provisional liquidation,
receivership, administration, provisional supervision, company
voluntary arrangement, suspension of payment under court
supervision or any other analogous proceedings in any jurisdiction.
"Intercompany Loan"
means the US$100,000,000 intercompany loan made available by
the Scheme Company to the Parent under the terms of the
Intercompany Loan Agreement.
"Intercompany Loan
Agreement"
means the intercompany loan agreement dated 15 August 2007
between the Scheme Company and the Parent.
"Interest Payment Date" has the meaning provided in the New Notes Term Sheet.
"Interest Period"
"Intermediary"
means a Person who holds an interest in Existing Notes on behalf of
another Person or Persons (or, as the context may require, who
held an interest at the Record Time) but which interest is or was not
held as an Account Holder.
- 10 -
DEFINITIONS
"Liability"
means any debt, liability or obligation of a Person, whatsoever,
whether it is present, future, prospective or contingent, whether or
not its amount is fixed or undetermined, whether or not it involves
the payment of money or performance of an act or obligation and
whether it arises at common law, in equity or by statute, in England
and Wales or in any other jurisdiction, or in any other manner
whatsoever, but such expression does not include any such liability
which is barred by statute or otherwise unenforceable under
applicable law or arises under a contract which is void or, being
voidable, has been duly avoided; and "Liabilities" shall be
construed accordingly.
"Margin Ratchet"
"Margin Ratchet
Account"
"MCB Options"
means options to subscribe for future issuances of mandatorily
convertible bonds by the Parent.
"MCB Programme"
means the issuance by the Parent of mandatorily convertible bonds
and MCB Options.
"Net Refinancing
Amount"
"New Depositary"
means the Person appointed to act as common depositary for the
Clearing Systems in respect of the New Global Note.
"New Global Note"
means the New Notes represented by one or more notes in global
form registered in the name of a nominee for the New Depositary.
"New Notes"
means the US$100,000,000 restructuring notes due 2025 to be
issued by the Parent on the terms and conditions set out in the
Fiscal Agency Agreement.
"New Notes Term
Sheet"
means the term sheet in respect of the New Notes set out at pages
35 to 41 of this Scheme Document.
"Noteholders"
means Persons with an economic or beneficial interest as principal
in the Existing Notes held through the Clearing Systems at the
Record Time.
"Notice of Scheme
Meeting"
means the notice of the Scheme Meeting in substantially the form
set out at Appendix 3.
"Parent"
means PT Mobile-8 Telecom Tbk, a company incorporated under
the laws of the Republic of Indonesia, whose registered office is at
Menara Kebon Sirih, 18th and 19th Floors, Jalan Kebon Sirih, Kav.
17-19, Jakarta 10340, Indonesia.
"Parent Board"
means the board of directors of the Parent from time to time.
"Paying and Transfer
Agent"
has the meaning provided in the Existing Indenture.
"Person"
means any natural person, corporation, limited or unlimited liability
company, trust, joint venture, association, corporation, partnership,
Governmental Entity or other entity whatsoever.
"Phase I MCBs"
means mandatorily convertible bonds with a principal amount of Rp.
- 11 -
DEFINITIONS
900,000,000,000.
"Phase II MCBs"
means additional mandatorily convertible bonds to be issued by the
Parent
with a principal amount not exceeding Rp.
3,800,000,000,000.
"Post"
delivery by pre-paid first class post or air mail or generally
recognised commercial courier service, and "Posted" shall be
construed accordingly.
"Proceeding"
means any process, suit, action, legal or other legal proceeding
including without limitation any arbitration, mediation, alternative
dispute resolution, judicial review, adjudication, demand, execution,
distraint, forfeiture, re-entry, seizure, lien, enforcement of judgment,
enforcement of any security (including, without limitation,
enforcement of any letters of credit or Insolvency Proceedings) in
any jurisdiction.
“Purchase Price”
means the amount of Rp. 3,775,371,942,000, payable by the Parent
to the Sellers in connection with the Acquisition.
"Record Date"
means 8 March 2011, being the date which is two (2) Business
Days prior to the Scheme Meeting.
“Record Time”
means 5:00 p.m. (London time) on the Record Date.
"Redemption Amount"
"Redemption Date"
"Registrar of
Companies"
means the registrar or other government officer performing the duty
of administration and registration of companies in England and
Wales.
"Regulation S"
means Regulation S under the US Securities Act.
"Release"
means the release of the Released Parties by the Releasing Parties
set forth in Chapter 2 and Chapter 6 of the Scheme.
"Released Claim"
means any and all Indebtedness or other Claim with respect to
Indebtedness of whatsoever nature against any Released Party,
including any Claim against any such party to recover any debt
owing by the Scheme Company and/or any of the Existing
Guarantors or any loss or damage which the claimant or any other
Person may have suffered or incurred as a result of or arising from
the Existing Notes, the Existing Indenture, the Existing Guarantees,
the Existing Security Documents, the Intercompany Loan and/or the
negotiation, preparation and implementation of the Scheme,
together with all rights to repayment of principal, and payment of
interest, default interest, premium, additional amounts, make whole
amounts, fees and commissions and other amounts or accretions
whatsoever arising in respect of the same, whether or not known,
whether or not existing at law or in equity, whether by way of
litigation or proof of debt or otherwise, and whether in contract, tort
or otherwise against any Released Party, but shall not include any
Indebtedness due to the Existing Trustee, the Collateral Agent and
the Paying and Transfer Agent in respect of: (i) any fees and
expenses; and (ii) any amounts under any indemnity, in each case
due to them under the terms of the Existing Indenture and/or the
Existing Security Documents in respect of the period ending on the
Settlement Date, or any Claim of the Existing Trustee, the Collateral
- 12 -
DEFINITIONS
Agent or the Paying and Transfer Agent in respect of such amounts.
"Released Parties"
means the Scheme Company, the Parent, each of the Existing
Guarantors (which includes, for the avoidance of doubt, the Parent)
and each of their respective predecessors, successors and assigns
and their former and present directors in their capacities as such,
and “Released Party” shall be construed accordingly.
"Releasing Parties"
means the Scheme Company, the Parent and each Existing
Guarantor (which includes, for the avoidance of doubt, the Parent)
and each Scheme Creditor, on behalf of itself and each of its
predecessors, successors and assigns.
"Restructuring Charge" has the meaning provided in the New Notes Term Sheet.
"Restructuring Charge
Payment Date"
"Rights Issue"
means the issuance of: (i) 75,684,753,658 series B shares in the
capital of the Parent; and (ii) warrants to subscribe for additional
series B shares in the capital of the Parent, by way of a rights issue
in order to fund the Acquisition.
"Rupiah" and "Rp."
refer to the lawful currency of the Republic of Indonesia from time to
time.
"Rupiah Notes"
means the Rp. 675 billion notes issued by the Parent pursuant to a
trust deed dated 22 February 2007 between the Parent (as issuer)
and PT Bank Permata Tbk (as trustee).
"Scheme"
means the scheme of arrangement proposed by the Scheme
Company under Section 895 of the Act in its present form subject
only to such modifications, conditions and/or approvals as may be
imposed by the Court and as permitted by the terms of the Scheme.
"Scheme Claim"
means any Claim or right in respect of the Indebtedness or any
other Liability of the Scheme Company to any Person arising
directly or indirectly out of, in relation to or in connection with the
Existing Indenture and/or the Existing Security Documents and/or in
respect of the Existing Notes, including any Liability of the Scheme
Company in respect of any loss or damage suffered or incurred as a
result of, or in connection with, such Liability, whether arising before,
at or after the Record Time by reason of a Liability of the Scheme
Company incurred on or before that time, and including, for the
avoidance of doubt, any and all interest, default interest, premium,
principal, additional amounts, make whole amounts, fees and
commissions accruing on, or payable in respect of, or any other
accretions whatsoever arising in respect of, such claims or rights
whether before, at or after the Record Time.
"Scheme Company"
means Mobile-8 Telecom Finance Company B.V., a private
company with limited liability, incorporated under the laws of The
Netherlands, which has its statutory seat in Amsterdam,
Netherlands. The Scheme Company is registered as a foreign
company in England and has its head office, principal place of
business and effective place of management at 54 Clarendon Road,
Watford WD17 1DU, England.
"Scheme
Consideration"
means the New Notes to be Distributed in accordance with the
Scheme.
- 13 -
DEFINITIONS
"Scheme Costs"
means the funds made available to the Scheme Company by the
Parent for the purposes of funding all of the costs and expenses of
the Scheme.
"Scheme Creditor"
means a creditor of the Scheme Company in respect of a Scheme
Claim and includes (for the avoidance of doubt, but without double
counting in each case):
(i)
Noteholders;
(ii) the Existing Trustee;
(iii)
the Existing Depositary; and
(iv)
Account Holders and Intermediaries.
"Scheme Document"
means this composite document dated 2 February 2011 addressed
to Scheme Creditors containing, among other things, the
Explanatory Statement and the terms of the Scheme (including all
appendices, schedules and annexures hereto).
"Scheme Meeting"
means the meeting convened at the direction of the Court at which
the Scheme will be considered and voted upon and any
adjournment thereof.
"Securities Law
Representations"
means those necessary representations to be made by all Eligible
Persons for the benefit of the Scheme Company and the Parent as
set out at Part 6 of the Account Holder Letter.
“Security Agreement”
means the security agreement dated 15 August 2007 entered into
by the Scheme Company in favour of the Collateral Agent in respect
of the Intercompany Loan.
"Sellers"
means PT Bali Media Telekomunikasi, PT Global Nusa Data and PT
Wahana Inti Nusantara.
"Settlement Date"
means the date that is two (2) Business Days after the Bar Date (or
if such date is not a Business Day, then the next succeeding
Business Day).
"Shares"
"Share Pledge"
means the deed of pledge of shares dated 15 August 2007 entered
into by the Parent in favour of the Collateral Agent in respect of the
entire issued share capital of the Scheme Company.
"Stock Exchange"
means the Indonesian stock exchange (Bursa Efek Indonesia).
"Subsidiary"
means an entity of which a Person owns directly or indirectly more
than fifty percent (50%) of the voting capital or similar right of
ownership.
"Supplemental
Indenture"
means the supplemental indenture dated 13 December 2010
entered into between the Existing Trustee, the Collateral Agent, the
Scheme Company and the Parent in respect of the Existing
Indenture.
"Supporting Noteholder has the meaning provided in the Supporting Noteholder Letter.
Group"
"Supporting Noteholder means the letter from the Supporting Noteholder Group attached at
Letter"
Appendix 9.
- 14 -
DEFINITIONS
"Surplus Cash"
"Surplus Cash
Account"
"Target"
means PT Smart Telecom, a company incorporated under the laws
of the Republic of Indonesia, whose registered office is at Jl. H.
Agus Salim No. 45 Kel. Kebon Sirih, Menteng, Jakarta 10340,
Indonesia.
"Target Shares"
means ordinary shares representing ninety-nine point nine four
percent (99.94%) of the issued share capital of the Target.
"Tender Offer Account" has the meaning provided in the New Notes Term Sheet.
"Tender Offer Notice"
"Trust Deed"
means the trust deed to be executed by the Scheme Company on
or prior to the Settlement Date in the form attached at Appendix 7,
pursuant to which the Scheme Company will agree to hold the New
Notes that would otherwise have been issued to Ineligible Persons
on trust for the benefit of the Ineligible Persons on the terms set out
therein.
"US Person"
has the meaning provided in Regulation S.
"US Securities Act"
means the US Securities Act of 1933 (as amended) including the
rules and regulations promulgated thereunder.
"Voting Date"
means the Record Date.
"Voting Time"
means 5:00 p.m. (London time) on the Voting Date.
- 15 -
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
EXPECTED TIMETABLE OF PRINCIPAL EVENTS (1)
EXPECTED DATE AND TIME(2)
EVENT
(3)
Record Time
5.00 p.m. on 8 March 2011
Voting Time(4)
5.00 p.m. on 8 March 2011
Scheme Meeting
(5)
10.00 a.m. on 11 March 2011
(6)
Court hearing to sanction Scheme
10:30 a.m. on 29 March 2011
(7)
Effective Date
Not earlier than 31 March 2011
Bar Time(8)
Not earlier than 31 May 2011
(9)
Settlement Date
Not earlier than 3 June 2011
Notes:
(1)
All references to time are references to London time unless otherwise stated.
(2)
All dates in this expected timetable and mentioned throughout the Scheme Document assume that the Scheme
Meeting is not adjourned.
(3)
Entitlement to Scheme Consideration will be assessed as at the Record Time and Account Holder Letters must be
completed in respect of interests in Existing Notes acquired prior to the Record Time. The Record Time and the
Voting Time will be the same.
(4)
Each Scheme Creditor will need to give its instructions to the relevant Account Holder as to voting. Scheme
Creditors should note, however, that unless a valid Account Holder Letter is delivered at or before the Voting Time,
the voting instructions contained in the Account Holder Letter will be disregarded for the purposes of voting at the
Scheme Meeting and the Scheme Creditor will not be able to vote at the Scheme Meeting.
(5)
The Scheme Meeting will commence at the time stated.
(6)
The Court will hear the petition to sanction the Scheme. If this date changes: (i) the dates of all subsequent steps,
including the Effective Date will be affected; and (ii) the date of the hearing will be announced at the Scheme
Meeting to the extent then known.
(7)
The Effective Date is an expected date and may be later. The Effective Date is the date on which the Scheme
becomes effective in accordance with its terms. The Effective Date shall be no more than ten (10) Business Days
following the determination by the Scheme Company, in good faith, that each of the Conditions has been satisfied,
or waived or will be satisfied or waived in accordance with the terms of the Scheme prior to or contemporaneously
with effectiveness of the Scheme.
(8)
The Bar Time will be 5:00 p.m. (London time) on the Bar Date. The Bar Date is an expected date and will occur two
(2) calendar months after the Effective Date (or on the next succeeding Business Day). The Bar Date is the latest
date by which Noteholders must submit a completed Account Holder Letter to the Information Agent and provide the
appropriate Securities Law Representations to the Scheme Company and the Parent in order to become Eligible
Persons and be entitled to receive Scheme Consideration in the form of New Notes.
(9)
The date on which: (i) the Scheme Company shall use its commercially reasonable endeavours to procure that the
Existing Global Note is cancelled by the Existing Depositary; and (ii) Scheme Consideration in the form of New
Notes shall be Distributed to and on behalf of Eligible Persons. The Settlement Date is an expected date and will
occur two (2) Business Days after the Bar Date.
- 16 -
IMPORTANT INSTRUCTIONS
IMPORTANT INSTRUCTIONS FOR
NOTEHOLDERS, ACCOUNT HOLDERS AND INTERMEDIARIES
You have been sent this Scheme Document because you are thought to be a Scheme Creditor. For the
purposes of the Scheme, you will be a Scheme Creditor if (inter alia) you have an economic or beneficial
interest as principal in the Existing Notes held in global form by the Existing Depositary in a Clearing System
at the Record Time (being 5.00 p.m. (London time) on 8 March 2011).
Please determine whether you are a Noteholder, an Account Holder or an Intermediary in respect of an
interest or interests in the Existing Notes. You may fall within more than one of these capacities depending
on the circumstances applying to you. A diagrammatic representation of each of these various capacities is
set out on the following page to assist your understanding of the structure of the Existing Notes and the
Clearing Systems.
1.
NOTEHOLDER
You are a Noteholder if you hold or, as the case may be, held an economic or beneficial interest as
principal in Existing Notes through the Clearing Systems at the Record Time. Examples of
Noteholders include:
(a)
a Person who holds such an interest for his own account;
(b)
a trustee who is holding such an interest as part of the assets of the trust which he
administers; and
(c)
an executor or personal representative where the estate of the deceased contains such an
interest which was held for the deceased's own account.
If you are a Noteholder, please read this Scheme Document carefully and follow the instructions set
out in Appendix 1.
2.
ACCOUNT HOLDER
You are an Account Holder in respect of an interest in Existing Notes held through the Clearing
Systems if you are recorded as holding that interest in Existing Notes in an account with any of the
Clearing Systems or were recorded as holding such an interest in such account at the Record Time.
Account Holders consist of those Persons holding securities accounts with Euroclear and/or
Clearstream.
If you are an Account Holder, you should promptly forward a copy of this Scheme Document to all
Persons on whose behalf you hold an interest in Existing Notes.
3.
INTERMEDIARY
You are an Intermediary if you hold an interest in Existing Notes on behalf of another Person or you
held such an interest at the Record Time, and in either case you are not or (as appropriate) were not
an Account Holder in respect of that interest. Examples of Intermediaries are stockbrokers,
investment managers and nominee companies.
If you are an Intermediary, you should promptly forward a copy of this Scheme Document to all
Persons on whose behalf you hold an interest in Existing Notes.
4.
EXISTING TRUSTEE
DB Trustees (Hong Kong) Limited, in its capacity as Existing Trustee for the Existing Notes, has
confirmed that it has been directed by Noteholders holding a majority in outstanding principal
amount of the Existing Notes not to, and accordingly will not, vote in respect of the Existing Notes at
the Scheme Meeting.
- 17 -
IMPORTANT INSTRUCTIONS
INTERESTS IN EXISTING NOTES IN GLOBAL FORM
HELD THROUGH CLEARING SYSTEMS
BT Globenet Nominees Limited
as nominee for Deutsche Bank AG,
London Branch
Euroclear or Clearstream
(Clearing System)
OR
Account Holder
holding for own account as
Noteholder*
Account Holder
holding as custodian
OR
Noteholder*
Intermediary
holding for own account
holding as an agent
Second
Intermediary
holding as an agent
Noteholder*
holding for own account
*
In respect of interests in Existing Notes held at the Record Time.
- 18 -
To assist Scheme Creditors in making a decision to vote either in favour of or against the Scheme, the
following Questions and Answers have been prepared. Reading these Questions and Answers is not a
substitute for reading the whole of the Scheme Document in full. Capitalised words and phrases used in
these Questions and Answers have the meaning provided at pages 6 to 15 of this Scheme Document.
What is the purpose of the Scheme Document?
The purpose is to present information relating to the Scheme, to satisfy the requirements of the Act and
applicable securities laws and to enable Scheme Creditors to make an informed decision about the Scheme.
The Scheme Document also sets out the expected timetable for implementation of the Scheme.
What is a scheme of arrangement?
A scheme of arrangement is a compromise or arrangement between a company and its creditors (or a class
of them) pursuant to section 895 of the Act. To become legally binding such arrangements must be
sanctioned by the Court, and, in addition:

a simple majority (50%) in number of Scheme Creditors present and voting at the Scheme Meeting
in person or by proxy (hereafter, a ‘majority in number’), representing at least seventy-five percent
(75%) in value of the Scheme Claims of the Scheme Creditors present and voting at the Scheme
Meeting in person or by proxy (hereafter, a ‘majority in value’) must vote in favour of the Scheme at
the Scheme Meeting; and

each and every condition specified by the terms of the arrangement must be satisfied or waived in
accordance with the terms of the arrangement; and

an office copy of the order of the Court sanctioning such arrangement must be delivered to the
Registrar of Companies for registration.
Only if each of these requirements is satisfied will the Scheme become legally binding (as a matter of
English law) on: (i) the Scheme Company; and (ii) all Scheme Creditors, regardless of whether such
Scheme Creditors attended or voted (in favour or against) or did not vote on the Scheme at the Scheme
Meeting.
When is a scheme of arrangement used?
A scheme of arrangement is frequently used as a means of implementing a financial restructuring and as an
alternative to the commencement of Insolvency Proceedings.
What is the objective of implementing the Scheme?
The objective of the Scheme is to compromise and discharge the Liabilities of the Scheme Company (and,
consequently, of the Existing Guarantors) in respect of the Existing Notes in exchange for (and conditional
upon) the issuance of New Notes by the Parent, so as to create more favourable trading conditions for the
Group to continue to carry on business as a going concern.
What compromise or arrangement does the Scheme seek to implement?
The Scheme seeks to fully and absolutely compromise and discharge the Liabilities of the Scheme
Company (and, consequently, each Existing Guarantor) under or in respect of the Existing Notes. These
Liabilities comprise approximately US$100,000,000 principal outstanding under the Existing Notes owed by
the Scheme Company plus accrued and unpaid interest. All such Indebtedness will be satisfied in exchange
for (and conditional upon the receipt by Noteholders of) Scheme Consideration to be Distributed in
accordance with the terms of the Scheme.
- 19 -
Scheme Consideration will be Distributed in the form of New Notes to be issued by the Parent. The Parent
will issue the New Notes in satisfaction of its obligations and Liabilities to the Scheme Company under the
Intercompany Loan (the outstanding amount of which is currently US$100,000,000 plus accrued and unpaid
interest) and Intercompany Loan Agreement.
What are the financial consequences of the Scheme?
If the Scheme becomes effective:

all Indebtedness owed by the Scheme Company as at the Settlement Date under or in respect of the
Existing Notes and by the Existing Guarantors under or in respect of the Existing Guarantees shall,
as a matter of English law, be compromised and discharged in full and thereby cease to be
enforceable against the Scheme Company and the Existing Guarantors (save that the Indebtedness
due to the Existing Trustee, the Collateral Agent and the Paying and Transfer Agent in respect of
any accrued and unpaid fees and expenses due to them under the terms of the Existing Indenture
and/or the Existing Security Documents in respect of the period ending on the Settlement Date shall
survive); and

the compromises implemented by the Scheme shall be made in exchange for (and shall be
conditional upon the receipt of) Scheme Consideration to be distributed to Noteholders directly or to
Account Holders for the benefit of Noteholders in the form of New Notes (except in the case of
Ineligible Persons, who shall receive a beneficial entitlement to New Notes held on trust by the
Scheme Company in accordance with the terms of the Trust Deed).
Scheme Consideration will comprise New Notes in an aggregate principal amount of US$100,000,000
(representing one hundred percent (100%) of the outstanding principal amount of the Existing Notes).
What are the Conditions and what is their relevance to the Effective Date?
The Conditions to the Scheme are set out in full at Chapter 5 of the Scheme. The Effective Date of the
Scheme only arises once each of the Conditions has been satisfied (or waived in accordance with the
Scheme). The Scheme Company will issue the Completion Notice to the Information Agent (which will
circulate such Completion Notice within the Clearing Systems for the benefit of Scheme Creditors) upon the
satisfaction or waiver of the Conditions in order to provide Scheme Creditors with reasonable notice of when
Scheme Consideration will be Distributed in accordance with the Scheme. The Completion Notice will also
specify the Effective Date of the Scheme.
What happens if the Conditions are not satisfied or waived?
The Scheme will not become effective. If the Scheme is not implemented, it is likely that the Scheme
Company and/or the Parent will be unable to continue to carry on business as a going concern and that
Insolvency Proceedings will be commenced in respect of the Scheme Company and/or the Parent.
What is the position of the Board with regard to the Scheme?
The Board, having considered the terms of the Scheme, the opinions expressed by the Independent
Financial Adviser, and advice from appropriate legal and financial advisers, considers that the Scheme is in
the best interests of the Scheme Company and its shareholders and creditors as a whole. Based on the
foregoing, the Board recommends that Scheme Creditors vote in favour of the Scheme at the Scheme
Meeting.
Who is a Scheme Creditor?
You are a Scheme Creditor if you are a creditor of the Scheme Company in respect of a Scheme Claim. If
you hold (or held) an economic or beneficial interest as principal in Existing Notes at the Record Time, you
will be a Scheme Creditor in your capacity as a Noteholder.
- 20 -
How is the majority for the Scheme calculated?
The Scheme Creditors attending and voting at the Scheme Meeting (in person or by proxy) will be counted
for the 'majority in number' requirement, and the Scheme Claims of Scheme Creditors attending and voting
at the Scheme Meeting (in person or by proxy) will be counted for the 'majority in value' requirement.
I am a Noteholder. How do I cast a vote?
If you are a Noteholder and wish to vote at the Scheme Meeting, you should contact your Account Holder (or
any Intermediary through which you hold your interest in Existing Notes) to ensure that an Account Holder
Letter is completed on your behalf and submitted to the Information Agent prior to the Voting Time. Please
give ample time to allow your Account Holder to process your instructions and submit an Account Holder
Letter on your behalf. To ensure timely submission of your Account Holder Letter, please check with your
Account Holder for clarification as to the processing time required and deliver the appropriate materials well
before that time.
In addition, you should ensure that Blocking Instructions in respect of your holding in the Existing Notes are
submitted to the relevant Clearing System prior to submission of your Account Holder Letter and that the
Blocking Instruction reference numbers are listed in Part 2 of your Account Holder Letter.
An Account Holder Letter will not be valid unless it includes reference numbers for the Blocking
Instructions submitted in respect of the Existing Notes the subject of that Account Holder Letter.
Please note that Euroclear and/or Clearstream may impose an earlier deadline for the submission of
Blocking Instructions and/or Account Holder Letters. To ensure timely submission of your Blocking
Instructions and Account Holder Letter, please ask your Account Holder to check with the relevant Clearing
System as to whether any earlier deadline is applicable and ensure your Blocking Instructions and Account
Holder Letter are submitted well before any applicable deadlines.
Any Noteholder that fails to submit a duly completed Account Holder Letter in respect of its Scheme Claims
to the Information Agent prior to the Voting Time will not be entitled to vote at the Scheme Meeting. Any
Noteholder who fails to submit a duly completed Account Holder Letter in respect of its Scheme Claims to
the Information Agent or who fails affirmatively to make the Securities Law Representations to the Scheme
Company and the Parent (or the Scheme Company and the Parent are not or, if referred to the Adjudicator,
the Adjudicator is not satisfied as to the accuracy thereof) prior to the Bar Time will be deemed to be an
Ineligible Person. The New Notes that would have been issued to Ineligible Persons will instead be issued to
the Scheme Company to be held on trust for the benefit of the Ineligible Persons in accordance with the
terms of the Trust Deed, as described in paragraph 2.11 of the Explanatory Statement.
What are Blocking Instructions and why are they necessary?
Blocking Instructions are irrevocable instructions which prevent trading in the Existing Notes until the
Settlement Date. These restrictions are necessary:

in the case of Blocking Instructions in respect of Existing Notes that are the subject of an Account
Holder Letter submitted prior to the Record Time, to prevent the same holding of Existing Notes
being voted more than once and to ensure delivery of Scheme Consideration to the correct Person;
and

in the case of Blocking Instructions in respect of Existing Notes that are the subject of an Account
Holder Letter submitted after the Record Time, to ensure delivery of Scheme Consideration to the
correct Person.
What happens if Scheme Creditors do not approve the Scheme?
If the Scheme is not approved by the majorities required by the Act, the Scheme will not become effective. If
the Scheme is not implemented, it is likely that the Scheme Company and/or the Parent will be unable to
- 21 -
continue to carry on business as a going concern and that Insolvency Proceedings will be commenced in
respect of the Scheme Company and/or the Parent.
What other important terms relate to the Scheme Consideration?
Applicable securities laws in the US and other jurisdictions require that Scheme Consideration in the form of
New Notes be Distributed only to Eligible Persons. In order for a Noteholder to receive New Notes, such
Noteholder must: (i) submit a duly completed Account Holder Letter in respect of its Scheme Claims to the
Information Agent; and (ii) affirmatively make the Securities Law Representations set out in Part 6 of the
Account Holder Letter to the Scheme Company and the Parent.
Any Noteholder who fails to submit a duly completed Account Holder Letter in respect of its Scheme Claims
to the Information Agent or who fails affirmatively to make the Securities Law Representations to the
Scheme Company and the Parent (or the Scheme Company and the Parent are not or, if referred to the
Adjudicator, the Adjudicator is not satisfied as to the accuracy thereof) prior to the Bar Time will be deemed
to be an Ineligible Person. The New Notes that would have been issued to Ineligible Persons will instead be
issued to the Scheme Company to be held on trust for the benefit of the Ineligible Persons in accordance
with the terms of the Trust Deed, as described in paragraph 2.11 of the Explanatory Statement.
What is the location, date and time of the Scheme Meeting?
The Scheme Meeting will take place at the offices of O’Melveny & Myers LLP at Warwick Court, 5
Paternoster Square, London EC4M 7DX, England at 10:00 a.m. (London time) on 11 March 2011. The
notice which convenes the Scheme Meeting is set out at Appendix 3.
When do you expect the Scheme to become effective?
Provided that: (i) the Scheme receives the approval of the requisite majorities of Scheme Creditors at the
Scheme Meeting; (ii) the Court grants an order which sanctions the Scheme; and (iii) all other Conditions are
satisfied or waived in a timely manner in accordance with the terms of the Scheme, it is expected that the
Effective Date will occur on or around 31 March 2011.
What are the tax consequences of the Scheme?
Tax considerations may be complex. The tax consequences arising for you as a result of the Scheme
becoming effective depend on the facts relating to your own personal situation. It is recommended that you
consult with your own tax adviser for a full understanding of any such tax consequences as they may be
applicable to you.
What is the Helpline?
If you have any questions relating to the Scheme Document or the Account Holder Letter please contact the
Information Agent at the Helpline. You may contact the Information Agent by telephone between the hours
of 9:00 a.m. and 6:30 p.m. (Hong Kong time) on +852-2526-5406 or by e-mail at
[email protected]. The Information Agent cannot and will not provide advice on the merits of the
Scheme or give any financial or legal advice, and will under no circumstances be soliciting proxies or votes
in respect of the Scheme.
What happens to the Existing Global Note following the Settlement Date?
On the Settlement Date, the Existing Global Note and the Existing Indenture will (subject to and conditional
upon the receipt by Noteholders of Scheme Consideration in the form of New Notes) cease to be
enforceable as a matter of English law and in accordance with the terms of the Scheme. Accordingly, the
Scheme Company shall use its commercially reasonable efforts to procure that the Existing Global Note is
cancelled by the Existing Depositary. The Scheme Company shall give all such instructions as are required
to be given by it to the Existing Trustee and/or the Existing Depositary for this purpose.
- 22 -
Where can I obtain copies of the Scheme Document and accompanying Schedules and Appendices?
Further
copies
of
the
Scheme
Document
can
be
obtained
on-line
at
http://www.lynchpinbm.com/projects/public-projects/mobile8 or via e-mail request to the Information Agent at
[email protected].
- 23 -
LETTER FROM THE BOARD
OF MOBILE-8 TELECOM FINANCE COMPANY B.V.
54 Clarendon Road
Watford WD17 1DU
England
Dear Scheme Creditors,
1.
INTRODUCTION
This letter is part of an Explanatory Statement which has been sent to you for the reasons set out
below. In considering the action to take in relation to the Scheme, you should not rely exclusively on
this letter and should also consider the more detailed information contained elsewhere in the
Scheme Document. Capitalised words and phrases used in this letter have the meaning provided at
pages 6 to 15 of this Scheme Document.
2.
PURPOSE OF THE EXPLANATORY STATEMENT
The Explanatory Statement, which is provided pursuant to the Act, has been prepared for the
purpose of providing you with sufficient information to make an informed decision whether to vote in
favour of or against the Scheme.
The principal terms and effects of the Scheme are summarised in the Explanatory Statement. The
Scheme itself begins at page 42 of this Scheme Document. You are urged to read the Explanatory
Statement (including the Exchange Offer Memorandum) as well as the Scheme carefully and in their
entirety. You should seek and take whatever advice you consider necessary to enable you to make
a decision about whether to vote in favour of or against the Scheme.
This letter explains why the Board considers the Scheme is in the best interests of Scheme
Creditors, shareholders of the Parent and the Group as a whole. In those circumstances, the Board
recommends that you vote in favour of the Scheme at the Scheme Meeting.
3.
BACKGROUND
(a)
Initial Expansion and Current Financial Difficulties
The Parent was established under the laws of the Republic of Indonesia on 2 December
2002 and is listed on the Stock Exchange. The Parent provides mobile telecommunications
services in the Indonesian market. The wireless telecommunications penetration rate in
Indonesia has increased rapidly during the period from the establishment of the Parent until
the present date. Against this backdrop, the Parent’s business initially expanded quickly,
with its subscriber base reaching 1,830,000 in 2006 and 3,012,800 in 2007. This rapid
expansion in subscriber base and market share was accompanied by a sizeable growth in
gross revenues to Rp. 751.2 billion for the financial year ended 31 December 2006 and Rp.
1,117.7 billion for the financial year ended 31 December 2007.
On the back of this rapid business growth, the Parent sought to expand its mobile phone
network, both within its principal market (the Indonesian island of Java) and in other major
Indonesian islands, including Bali, Kalimantan, Sulawesi and Sumatera. In order to fund this
expansion, the Parent:
(i)
established the Scheme Company to raise funding through the issuance of the
Existing Notes;
(ii)
issued Rupiah denominated bonds in an aggregate principal amount of Rp. 675
billion; and
(iii)
entered into a sale and leaseback scheme in respect of its telecommunications
towers.
- 24 -
The above transactions were intended to consolidate the Parent’s capital base and provide
funding for an aggressive expansion strategy. However, this expansion strategy has (to date)
not proved successful, and the Parent is now suffering considerable financial difficulty as a
result of the following:
(i)
delays in completion of the Parent’s expansion program outside Java, resulting
chiefly from technical issues and difficulties in obtaining construction permits;
(ii)
sustained and aggressive competition in the Indonesian mobile telecommunications
market, caused by the issuance of numerous additional operating licences by the
Indonesian government. This was highlighted by a recent Industry Report, which
indicated that growth in the Indonesian telecommunications industry “continues to
slow as a result of market saturation and the presence of so many operators”;
(iii)
declining profit margins as a result of price wars between the numerous Indonesian
telecommunications operators. Indeed, the Industry Report emphasised “aggressive
competition so that tariffs have been reduced heavily to attract customers, resulting
in falling ARPU (average revenue per user) rates”; and
(iv)
difficulty attracting additional funding as a result of the recent global financial turmoil.
The impact of the above factors has resulted in a decline in the revenues of the Parent, with
the result that the Parent suffered net losses of Rp. 1,068.9 billion for the year ended 31
December 2008, Rp. 724.4 billion for the year ended 31 December 2009 and Rp. 1,052.4
billion for the nine month period ended 30 September 2010. The decline in the financial
position of the Parent has had a material and adverse impact on the ability of the Parent and
the Scheme Company to service their existing indebtedness.
(b)
Existing Default
The Existing Indenture contains a provision which required the Scheme Company to
redeem the Existing Notes if Global became the beneficial owner of less than fifty-one per
cent (51%) of the shares in the Parent. On 19 September 2008, Global sold a portion of its
shares in the Parent, thereby reducing its beneficial ownership to below fifty-one per cent
(51%).
On 6 November 2008, the Scheme Company indicated that it would be unable to redeem
the Existing Notes following the change of control because of the weak financial condition of
the Parent. The failure by the Scheme Company to redeem the Notes constituted an Event
of Default under the terms of the Existing Indenture and, on 14 November 2008, the Existing
Trustee accelerated the Existing Notes by notice to the Scheme Company and the Parent.
On 7 January 2009, the Existing Trustee filed a claim for all amounts outstanding under the
Existing Notes in the Jakarta courts. The claim named (among others) the Scheme
Company and the Parent as defendants. The claim was subsequently withdrawn in
December 2009, but the Existing Notes remain due and payable.
(c)
Restructuring to Date
The decline in financial position outlined above also resulted in the Parent defaulting on its
obligations in respect of indebtedness to certain onshore Indonesian creditors, including its
indebtedness in respect of the Rupiah Notes. Since these defaults occurred, the Parent has
engaged in a concerted attempt to restructure its onshore indebtedness. In particular:
(i)
in June 2009 the Parent completed a restructuring of the Rupiah Notes, which
involved an extension of payment dates and a decrease in interest rate. In addition,
in August 2010 the holders of the Rupiah Notes agreed to waive all existing
covenant defaults; and
(ii)
the Parent has restructured its indebtedness to numerous onshore trade creditors
and owners of telecommunications towers leased to the Parent.
- 25 -
The focus on restructuring the Parent’s onshore debt reflected: (i) the need to maintain
relationships with onshore suppliers, trading partners and working capital lenders in order to
continue trading; and (ii) the fact that onshore creditors hold security over the operating
assets of the Parent. The compromise and arrangement in respect of the Existing Notes,
which the Scheme Company proposes to implement via the Scheme, is considered to be
the next step in this restructuring process.
(d)
Business Combination
On 18 January 2011, the Parent acquired the Target Shares. The Target is an Indonesian
telecommunications operator. The Target Shares were purchased by the Parent from the
Sellers. The Purchase Price for the Target Shares was Rp. 87.3 per share, which equates to
a total aggregate purchase price of Rp. 3,775,371,942,000. The Purchase Price was
determined based on an independent appraisal of the value of the Target Shares.
The consideration for the Acquisition was funded by way of the Rights Issue. The Sellers
acted as standby buyers for the Rights Issue and subscribed for the Rights Issue shares
that were not subscribed for by the existing shareholders of the Parent. The funds received
by the Parent as a result of the Rights Issue were applied in payment of the Purchase Price
to the Sellers. The Acquisition and the Rights Issue were approved by the holders of a
majority of the issued share capital of the Parent at the EGM.
The Parent Board considers that consolidation with another telecommunications operator is
the only realistic way of allowing the Parent to survive as a going concern and provide
significant returns to its stakeholders. In particular, the Parent Board considers that the
Acquisition will benefit the Parent by facilitating cooperation to achieve economies of scale,
increased access to capital and consolidation of user bases. The Board notes that the
Target is currently experiencing financial difficulties similar to those faced by the Parent and
that, accordingly, the Acquisition will not result in any immediate financial benefit for the
Parent. However, for the reasons outlined above, the Acquisition has potential long term
benefits and may increase the potential for the Parent to trade out of its current financial
difficulties and service its obligations in respect of the New Notes.
(e)
MCB Programme
At the EGM, the holders of a majority of the issued share capital of the Parent also
approved the MCB Programme. Accordingly, on 11 January 2011, the Parent issued the
Phase I MCBs to PT Valensia Persada. The funds received by the Parent as a result of the
issuance of the Phase I MCBs will be applied as follows: (i) Rp. 700,000,000,000 will be
applied in satisfaction of the indebtedness of the Parent in respect of certain commercial
paper issued by the Parent; and (ii) the remainder will be applied for working capital
purposes and to fund future capital expenditures. The Phase I MCBs bear interest at a rate
of 6% per annum and mature on 11 January 2016. Interest will be compounded quarterly
and added to the principal amount of the Phase I MCBs. The principal amount of the Phase
I MCBs (including compounded interest) will (to the fullest extent permitted by applicable law)
be redeemable by the issuance of ordinary share capital of the Parent on maturity.
The MCB Options will provide the holders of Phase I MCBs with the right to subscribe for
the Phase II MCBs. The funds received by the Parent as a result of the issuance of the
Phase II MCBs will be applied for working capital purposes, to fund future capital
expenditures and to refinance existing indebtedness of the Parent. The Phase II MCBs will
bear interest at a rate of 6% per annum and mature on the date falling five years from their
issuance. Interest will be compounded quarterly and added to the principal amount of the
Phase II MCBs. The principal amount of the Phase II MCBs (including compounded interest)
will (to the fullest extent permitted by applicable law) be redeemable by the issuance of
ordinary share capital of the Parent on maturity.
- 26 -
4.
REASONS FOR THE PROPOSED SCHEME
The purpose of the Scheme is to effect a compromise of the Existing Notes. This compromise will
result in the Scheme Company and the Existing Guarantors being discharged from Indebtedness
arising under the Existing Notes and Existing Indenture.
In exchange for the arrangement and compromise mentioned above, Noteholders who are Eligible
Persons will receive Scheme Consideration in the form of New Notes. New Notes will be accepted
by Noteholders in full and final repayment of the Liabilities of the Scheme Company in respect of the
Existing Notes (with the exception of any Liabilities to the Existing Trustee, the Collateral Agent and
the Paying and Transfer Agent in respect of: (i) any fees and/or expenses; and (ii) any amounts
under any indemnity, in each case due to them under the terms of the Existing Indenture and/or the
Existing Security Documents in respect of the period ending on the Settlement Date shall survive
and remain in full force and effect) and the Existing Guarantors in respect of the Existing
Guarantees. The New Notes will be issued by the Parent in satisfaction of its Liabilities to the
Scheme Company in respect of the Intercompany Loan and under the Intercompany Loan
Agreement.
Noteholders will receive the economic benefit of such New Notes through their arrangements with
Account Holders and the general operation of the Clearing Systems. The New Notes are to be
issued and allotted on a Dollar for Dollar basis such that each Eligible Person will be entitled to
receive US$1,000 in principal amount of New Notes for every US$1,000 in principal amount of
Existing Notes held by such Eligible Person. The New Notes that would have been issued to
Ineligible Persons (who are Noteholders which cannot or do not submit a duly completed Account
Holder Letter in respect of their Scheme Claims to the Information Agent or give the appropriate
Securities Law Representations to the Scheme Company and the Parent prior to the Bar Time) will
instead be issued to the Scheme Company to be held on trust for the benefit of the Ineligible
Persons in accordance with the terms of the Trust Deed.
The New Notes will have an aggregate principal amount equivalent to the aggregate principal
amount outstanding in respect of the Existing Notes, but will be subject to different economic terms.
The terms and conditions of the New Notes are summarised at paragraph 2.10 of the Explanatory
Statement. In particular, the New Notes will have extended payment terms and a return which is
linked to the financial performance of the Parent - the overall intention being to structure the return in
such a manner that: (i) the Parent is able to comply with its debt service obligations in respect of the
New Notes whilst it seeks to recover its financial position; and (ii) the holders of New Notes benefit
from an increased return in the event that the financial performance of the Parent exceeds
expectations, for example as a result of the Acquisition.
5.
WHY IMPLEMENT THE SCHEME NOW?
The Board believes that, if the Scheme is not implemented, the Group will be unable to discharge its
financial Liabilities in full and will therefore be unlikely to be able to continue to operate as a going
concern. As set out in this letter and in the Scheme Document itself, the Scheme Company has
been unable to discharge its Indebtedness under the Existing Notes. Moreover, given the existence
of the Existing Guarantees granted by the Existing Guarantors, such failure to discharge the
underlying primary Indebtedness threatens the viability of the Group as a whole.
The uncertainty over the financial viability of the Scheme Company and the Parent has been
generally known for a significant period of time. This has put significant pressure on the ability of the
Group to retain key personnel, suppliers and customers. Furthermore, local creditors of the Group
have expressed, and continue to express, material concerns over the financial condition of the
Group. If these concerns are not addressed satisfactorily, there is a real risk that financial creditors
in Indonesia may withdraw or limit the amount of any working capital facilities made available to the
Group, which would have a very significant and negative impact on the ability of the Group to
continue its operations. These operations are vital to the survival of the Group as a going concern.
Moreover, enforcement proceedings (including applicable Insolvency Proceedings) could be initiated
which would materially and adversely affect the operations of the Group as a whole. In order to
avoid such unfortunate scenarios, the Scheme is intended to create a more stable financial
environment whereby the business of the Group can be developed to ensure, among other things,
- 27 -
the payment of all working capital facilities of the Group in the ordinary course of utilisation. In the
opinion of the Board and the Parent Board, the implementation of the Scheme would significantly
enhance the chance of avoiding enforcement action and/or Insolvency Proceedings.
It is against this difficult background that the Board believes it is imperative that the Scheme be
implemented as soon as possible. If the Scheme is not successfully implemented, there is genuine
concern that the Group would not be able to continue to operate as a going concern and that it
would become necessary for Insolvency Proceedings to be commenced.
Both the Scheme and the Acquisition are integral parts of the recovery and consolidation strategy
currently being pursued by the management of the Scheme Company and the Parent Guarantor,
with the intention of restoring the fortunes of the Group in order to allow the group to resume its debt
service obligations.
6.
ALTERNATIVES TO THE PROPOSED SCHEME
The Scheme Company and the Board have considered various alternative strategies to what is
presently proposed. Alternative strategies are necessarily limited but include: (i) a purely consensual
arrangement – that is to say, implementing a restructuring of the Existing Notes without the Scheme;
and (ii) the commencement of Insolvency Proceedings in respect of the Scheme Company and/or
the Parent.
Consensual Arrangement. The primary advantage of the Scheme over a consensual arrangement
with Scheme Creditors is that if the Scheme becomes effective in accordance with its terms and the
Act, it will be binding on all Scheme Creditors whether they voted in favour of, or against, or did not
vote on, the Scheme.
This is particularly important where, as in this matter, economic or beneficial interests in an Existing
Global Note are held by many different Persons through the Clearing Systems and it is not possible
to identify all of the holders of such economic or beneficial interests. The Scheme Company and the
Parent requested that the Information Agent carry out a bondholder identification exercise via the
Clearing Systems between 13 September 2010 and 22 September 2010. This exercise resulted in
the identification of the holders of only seventy-seven percent (77%) of the Existing Notes. The
failure to identify the holders of a significant portion of the Existing Notes via this identification
exercise means that the Scheme Company has no option but to seek to effect a restructuring of the
Existing Notes via a collective procedure whereby unidentified minority holders can be bound by the
terms of a restructuring consented to by the majority.
Conversely, any consensual arrangement can only bind those Persons who expressly agree to such
an arrangement. The inability to bind all Persons with an interest in the Existing Notes may cause
Scheme Creditors to be reluctant to enter into any such arrangements as non-consenting Scheme
Creditors may seek to obtain more favourable terms by 'holding-out' from such arrangements. There
is also a risk that any dissenting creditors may commence enforcement action or petition for the
initiation of Insolvency Proceedings in respect of the Scheme Company and/or the Parent. The issue
of ensuring that any dissenting or 'hold-out' Scheme Creditors are bound by the compromise
arrangements is the major factor suggesting that implementation of the proposed Scheme is the
most efficient and pragmatic means to achieve a restructuring of the Existing Notes.
Insolvency Proceedings. A further alternative to the proposed Scheme is for the Scheme
Company to enter into an Insolvency Proceeding in England and Wales and/or such other
jurisdiction (if any) as might have jurisdiction over the affairs of the Scheme Company, and/or for the
Parent to file for bankruptcy in Indonesia in accordance with the Indonesian Bankruptcy Law. If the
Scheme Company were to enter into Insolvency Proceedings in England and Wales, the only
applicable Insolvency Proceeding would likely be an insolvent liquidation of the Scheme Company (it
being unlikely that any of the statutory purposes of a UK administration could realistically be
achieved).
Appendix 8 exhibits the Fairness Opinion from the Independent Financial Advisor. The Fairness
Opinion includes estimated recoveries to Noteholders, in the event that the Group were to enter into
liquidation or bankruptcy (as applicable). The Fairness Opinion includes estimated returns to
Scheme Creditors in a liquidation or bankruptcy (as applicable) of the Group (rather than in a
- 28 -
liquidation of the Scheme Company) given: (i) the existence of the Existing Guarantees; and (ii) the
fact that the Scheme Company’s only asset (save for a small cash balance) is the receivable due
from the Parent pursuant to the Intercompany Loan. In such a scenario, based on the Fairness
Opinion, the non-discounted recovery to Noteholders is no more than approximately six point one
percent (6.1%) of the outstanding principal amount of the Existing Notes. In contrast, the Fairness
Opinion indicates that the net present value of the returns to Noteholders under the terms of the
Scheme and the New Notes is approximately thirty-two point five percent (32.5%) (based on the
assumptions set out in the Fairness Opinion). The Fairness Opinion was prepared prior to
completion of the Acquisition. Accordingly, the Scheme Company has instructed the Independent
Financial Adviser to update the Fairness Opinion to take into account the impact of the Acquisition
and intends to circulate the updated Fairness Opinion to Scheme Creditors by 15 February 2011.
Having considered the potential alternative strategies, the Scheme Company, the Board and the
Parent Board have concluded that commencing Insolvency Proceedings in respect of the Scheme
Company and/or the Parent would not be in the best interests of the Group, or its creditors and
shareholders. Rather, the Scheme Company, the Board and the Parent Board believe the
implementation of the Scheme offers the best prospects for the Scheme Company and the Group in
the light of prevailing circumstances. Ultimately, the Scheme Company, the Board and the Parent
Board believe that the Scheme offers Noteholders the best prospects of allowing the Group to
continue to carry on its business as a going concern and of obtaining any reasonable recovery in
light of the potential economic consequences of insolvency.
7.
THE PROPOSED SCHEME
Your attention is drawn to the Explanatory Statement, which describes in fuller detail the terms of
the Scheme. You are urged to read the Explanatory Statement, the Exchange Offer Memorandum
and the Scheme carefully and in their entirety and to seek and take whatever advice you consider
necessary in order to make a decision as to whether to vote in favour of or against the Scheme.
The Scheme seeks to compromise and discharge all Liabilities of the Scheme Company and the
Existing Guarantors under and in respect of the Existing Notes and Existing Indenture (with the
exception of Liabilities due to the Existing Trustee, the Collateral Agent and the Paying and Transfer
Agent in respect of any accrued and unpaid fees and expenses due to them under the terms of the
Existing Indenture and/or the Existing Security Documents in respect of the period ending on the
Settlement Date, which shall survive). Accordingly, upon the Settlement Date, the immediate effect
of the Scheme is that all Indebtedness due under: (i) the Existing Notes; and (ii) the Existing
Guarantees granted by the Existing Guarantors will (as a matter of English law) be fully
compromised and discharged, in exchange for (and conditional upon) the issuance of the New
Notes by the Parent in accordance with the terms of the Scheme.
New Notes will be accepted by Noteholders in full and final repayment of the Liabilities of the
Scheme Company in respect of the Existing Notes (with the exception of any Liabilities to the
Existing Trustee, the Collateral Agent and the Paying and Transfer Agent in respect of: (i) any fees
and/or expenses; and (ii) any amounts under any indemnity, in each case due to them under the
terms of the Existing Indenture and/or the Existing Security Documents in respect of the period
ending on the Settlement Date shall survive and remain in full force and effect) and the Existing
Guarantors in respect of the Existing Guarantees. The New Notes will be issued by the Parent in
satisfaction of its Liabilities to the Scheme Company in respect of the Intercompany Loan and under
the Intercompany Loan Agreement.
8.
COMPLETION OF THE SCHEME AND SUPPORTING NOTEHOLDER GROUP
(a)
Completion of the Scheme
In addition to each of the other Conditions, in order for the Scheme to become effective, it
will be necessary, among other things, to secure the requisite support of the Scheme
Creditors at the Scheme Meeting (namely, a majority in number and a majority in value, as
set out above) as well as the sanction of the Court.
- 29 -
(b)
Supporting Noteholder Group
The Board understands that the Supporting Noteholder Group supports the implementation
of the Scheme and intends to vote in favour of the Scheme at the Scheme Meeting. A letter
from the legal counsel to the Supporting Noteholder Group confirming the Supporting
Noteholder Group’s support for the Scheme is attached at Appendix 9.
The Board understands that certain members of the Supporting Noteholder Group
purchased their holdings in the Existing Notes in a transaction coordinated with the
purchase of a minority of the issued share capital of the Parent by PT Gerbangmas Tunggal
Sejahtera. Prior to completion of the Rights Issue, PT Gerbangmas Tunggal Sejahtera
owned less than three percent (3%) of the issued share capital of the Parent. The Board
further understands that these members of the Supporting Noteholder Group are
independent commercial concerns who purchased their holdings in the Existing Notes for
their own account and economic interest. However, the Board understands that their
holdings in the Existing Notes were purchased with the knowledge and consent of the
Target and with a view to ultimately pursuing a restructuring of the Parent that involved
restructuring the financial terms of the Existing Notes and combining the business of the
Parent with that of the Target.
The Board notes that, following completion of the Rights Issue, twenty four point zero five
percent (24.05%) of the issued share capital of the Parent is held by PT Wahana Inti
Nusantara. PT Wahana Inti Nusantara is a Subsidiary of PT Gerbangmas Tunggal
Sejahtera, which holds ninety-one percent (91%) of its issued share capital. In addition, PT
Wahana Inti Nusantara is an associated company of: (i) PT Bali Media Telekomunikasi,
which subscribed for series B shares representing eighteen point seven percent (18.7%) of
the issued share capital of the Parent by way of the Rights Issue; and (ii) PT Global Nusa
Data, which subscribed for series B shares representing twenty point eight four percent
(20.84%) of the issued share capital of the Parent by way of the Rights Issue
9.
RELOCATION OF THE SCHEME COMPANY TO ENGLAND
Following the decision to effect a restructuring of the Indebtedness of the Scheme Company and the
Parent in respect of the Existing Notes, the Board and the Parent Board considered various options
for implementation of a restructuring and concluded that a restructuring would be most effectively
implemented via a scheme of arrangement under the Act. The Scheme Company and the Parent
have been advised by their legal counsel that the laws of the other potential forums for a
restructuring of the Indebtedness of the Scheme Company and/or the Parent in respect of the
Existing Notes (Indonesia and the Netherlands) do not provide any mechanism whereby dissenting
secured creditors may be bound by the terms of a restructuring agreed by a specified majority.
Following this determination, the Board decided to take various actions to move the centre of main
interests (“COMI”) of the Scheme Company to England to allow the Scheme Company to implement
a restructuring of its Indebtedness in respect of the Notes via a scheme of arrangement under
English law. The steps taken by the Scheme Company to move its COMI to England included:
(a)
appointing a sole director, who is a British citizen and resident in England;
(b)
registering as an overseas company with the Registrar of Companies (the Scheme
Company has been allotted registered company number FC029797);
(c)
entering into a tenancy agreement in respect of office premises at 54 Clarendon Road,
Watford WD17 1DU, England;
(d)
opening English bank accounts;
(e)
retaining Oakwood Corporate Services Limited of Webber House, 26-28 Market Street,
Altrincham, Cheshire WA14 1PF, England, to provide it with corporate administration
services in England;
- 30 -
(f)
notifying creditors of the transfer of its COMI to England both by circulating a notice via the
Clearing Systems and placing a statement on the Parent’s website that the Scheme
Company is now operating from England; and
(g)
following discussions with and in full view of the Supporting Noteholder Group and other
Scheme Creditors, carrying out its administrative and head office functions in England.
These steps have been taken to ensure that: (i) the Scheme Company will have a “sufficient
connection” with England and Wales; and (ii) the Court will have jurisdiction to sanction the Scheme.
10.
CHANGE IN GOVERNING LAW
Between 26 October and 5 November 2010, the Scheme Company conducted a consent solicitation
process with the assistance of the Existing Trustee. During this process, the Scheme Company
solicited consent from the Noteholders to (amongst other things) a change in the governing law
applicable to the Existing Indenture, the Existing Notes and the Existing Guarantees from the laws of
the State of New York to the laws of England and Wales. When the consent solicitation process
ended on 5 November 2010, the Scheme Company had received the consent of the holders of (in
aggregate) seventy-five point seven percent (75.7%) in outstanding principal amount of the Existing
Notes to this amendment. The Existing Indenture provides that (with the exception of certain
reserved matters) the terms and conditions applicable to the Existing Notes may be amended with
the consent of the holders of a majority in outstanding principal amount of the Existing Notes.
Accordingly, on 13 December 2010, the Existing Trustee executed the Supplemental Indenture,
pursuant to which the governing law applicable to the Existing Indenture, the Existing Notes and the
Existing Guarantees was changed from the laws of the State of New York to the laws of England
and Wales.
11.
RISK FACTORS
The Group's ability to continue to operate as a going concern following implementation of the
Scheme is subject to certain operating and other risks. You are advised to consider the matters set
out in the Explanatory Statement as well as those matters set out under the heading "Risk Factors"
in the Exchange Offer Memorandum.
12.
RECOMMENDATION
The Board, having considered the terms of the Scheme, the opinions expressed by the Independent
Financial Adviser, and advice from appropriate legal and financial advisers, considers that the
Scheme is in the best interests of the Scheme Company and its shareholders and creditors as a
whole. Based on the foregoing, the Board recommends that Scheme Creditors vote in favour of the
Scheme at the Scheme Meeting.
Yours faithfully,
Tan Yok Siew
sole member of the Board
2 February 2011
- 31 -
1.
INTRODUCTION
You have been sent this Scheme Document because the Scheme Company believes that you have
an interest in the Existing Notes by virtue of being a Scheme Creditor. The Board strongly
recommends that you consider this Scheme Document and the accompanying Exchange Offer
Memorandum containing detailed financial, business and other information on the Scheme
Company and the remainder of the Group.
For the purposes of complying with the Act, the Scheme proceeds on the basis that Scheme
Creditors constitute a single class of creditors of the Scheme Company. The Scheme only
compromises Scheme Claims and Claims against Existing Guarantors held by Scheme Creditors
and does not apply or affect other Persons (including the general body of creditors of the Scheme
Company as a whole). Given that the Scheme Company is merely a financing vehicle within the
Group, there are only limited other Persons who may have become creditors of the Scheme
Company in the ordinary course of business; in this regard, the Parent has financed and will
continue to finance Scheme Costs by way of an intercompany loan, which costs shall be Excluded
Liabilities.
Your attention is drawn to the letter and recommendation of the Board beginning at page 24 of this
Scheme Document. This letter summarises the benefits to Scheme Creditors of the Scheme
becoming effective.
2.
THE SCHEME
2.1
Overview
The Scheme is intended to compromise and discharge the Liabilities of the Scheme Company and
each Existing Guarantor in respect of the Existing Notes and under the Existing Indenture and the
Existing Guarantees. In consideration of this compromise and discharge, Noteholders will receive
Scheme Consideration in the form of New Notes. In order to ensure compliance with applicable US
securities laws and those of other jurisdictions, the New Notes (which will be issued as Scheme
Consideration) can only be Distributed to Eligible Persons in the manner set out in the Scheme. New
Notes that would have been issued to Ineligible Persons will instead be issued to the Scheme
Company to be held on trust by the Scheme Company for the benefit of the Ineligible Persons in
accordance with the terms of the Trust Deed.
The overall objectives of the Scheme are: (i) to maximise recoveries to Persons with a financial
interest in the Scheme Company in a fair and equitable way consistent with applicable law and the
economic consequences of financial distress; and (ii) to enable the Group as a whole to continue to
carry on business as a going concern.
2.2
The Scheme and its Conditions
In order to ensure that the interests of Scheme Creditors are protected, the Scheme does not
become legally binding unless and until the Conditions have been satisfied (or waived in accordance
with the Scheme). Each of the Conditions must be satisfied or waived in order for the Effective Date
to occur.
Following satisfaction of the Conditions, the Scheme Company shall issue and deliver the
Completion Notice to the Information Agent, which will circulate such notice within the Clearing
Systems for the benefit of all Scheme Creditors. A list of each of the Conditions is set out in Chapter
5 of the Scheme. The most important Condition is that the Scheme must be sanctioned by the Court
in order to become effective in accordance with the Act.
2.3
Scheme Consideration
The arrangement and compromise to be effected by the Scheme of Scheme Claims arising by
reason of the Indebtedness under or in respect of the Existing Notes (including the waiver of
- 32 -
accrued and unpaid interest in respect of the Existing Notes) shall be made in exchange for the
Scheme Consideration to be Distributed to Noteholders in accordance with the terms of the Scheme.
The Scheme Consideration in the form of New Notes will be Distributed on the Settlement Date. On
the Settlement Date, the Parent will deposit with the New Depositary, the New Global Note in an
aggregate principal amount of US$100,000,000 (representing one hundred percent (100%) of the
outstanding principal amount of the Existing Notes). Economic, beneficial or other proprietary
interests in the New Global Note will be held by Account Holders within the Clearing Systems in the
usual manner for the benefit of Noteholders who are Eligible Persons.
New Notes will be issued on a Dollar for Dollar basis, such that each Eligible Person will be entitled
to receive US$1,000 in principal amount of New Notes for every US$1,000 in principal amount of
Existing Notes held by such Eligible Person at the Record Time.
New Notes that would have been issued to Ineligible Persons will instead be issued to the Scheme
Company to be held on trust by the Scheme Company for the benefit of the Ineligible Persons in
accordance with the terms of the Trust Deed. Each Ineligible Person shall have a beneficial interest
in a principal amount of New Notes held by the Scheme Company (as trustee) equivalent to the
outstanding principal amount of the Existing Notes held by such Ineligible Person at the Record
Time.
2.4
2.5
Important Matters concerning the New Notes
(a)
The New Notes will be issued in denominations and integral multiples of US$1,000. No
denominations of New Notes of less than US$1,000 will be issued.
(b)
New Notes will not be Distributed pursuant to the Scheme to or to the order of, or for the
account or benefit of, any Person if such Distribution would be prohibited by any applicable
law or regulation. Each recipient of New Notes will be required to provide certain Securities
Law Representations to the Scheme Company and the Parent. In summary, the Securities
Law Representations will confirm that the issue of New Notes to that Noteholder would not
infringe the laws of any jurisdiction and would not require the Scheme Company or the
Parent to observe or obtain any Authorisation.
(c)
In the event that New Notes cannot be Distributed because any Securities Law
Representation has not or cannot be made or the Scheme Company, the Parent or, if
referred to Adjudicator, the Adjudicator is not satisfied as to the accuracy thereof, such New
Notes will instead be issued to the Scheme Company to be held on trust for the Ineligible
Persons in accordance with the terms of the Trust Deed.
Indebtedness of the Scheme Company and the Parent
Details of the existing and projected Indebtedness of the Scheme Company and the Parent are set
out in the Exchange Offer Memorandum.
Apart from Scheme Claims the Scheme does not seek to compromise any Liabilities due to any
other Person (including the Parent in respect of the Scheme Costs). All such other Liabilities
(including Scheme Costs) are Excluded Liabilities which are expected to be paid as and when they
become due and payable in the ordinary course of business.
2.6
Compromise of Scheme Claims and Intercompany Loan
(a)
On the Settlement Date: (i) all Scheme Claims against the Scheme Company arising under
the Existing Notes; and (ii) all Liabilities of, and Claims against, the Existing Guarantors
under the Existing Guarantees, shall be compromised and discharged in full. Furthermore,
the Existing Indenture shall be extinguished and cease to have any effect whatsoever under
the laws of England and Wales and each of the Scheme Company and the Existing
Guarantors shall cease to have any further Liabilities or obligations under the Existing
Indenture. The compromise and discharge of the Scheme Claims, the Existing Guarantees
and the Existing Indenture shall be conditional upon receipt by Noteholders who are Eligible
Persons of Scheme Consideration in the form of New Notes in accordance with the terms of
the Scheme.
- 33 -
2.7
(b)
On the Settlement Date, the Parent will issue New Notes to Noteholders who are Eligible
Persons in exchange for the compromise and discharge of the Indebtedness of the Scheme
Company in respect of the Existing Notes and the Existing Guarantors in respect of the
Existing Guarantees. New Notes will be accepted by Noteholders in full and final repayment
of the Liabilities of the Scheme Company in respect of the Existing Notes (with the
exception of any Liabilities to the Existing Trustee, the Collateral Agent and the Paying and
Transfer Agent in respect of: (i) any fees and/or expenses; and (ii) any amounts under any
indemnity, in each case due to them under the terms of the Existing Indenture and/or the
Existing Security Documents in respect of the period ending on the Settlement Date shall
survive and remain in full force and effect) and the Existing Guarantors in respect of the
Existing Guarantees.
(c)
The issuance of the New Notes by the Parent on the Settlement Date will satisfy its
Liabilities to the Scheme Company in respect of the Intercompany Loan and under the
Intercompany Loan Agreement and such Liabilities will be absolutely and irrevocably
compromised and discharged on the Settlement Date.
Discharge of Existing Global Note and Existing Indenture
On the Settlement Date, the Existing Global Note and the Existing Indenture shall, as a matter of
English law, be extinguished in accordance with the terms of the Scheme (save that the Claims of
the Existing Trustee, the Collateral Agent and the Paying and Transfer Agent in respect of any
accrued and unpaid fees and expenses due to them under the terms of the Existing Indenture
and/or the Existing Security Documents in respect of the period ending on the Settlement Date shall
survive).
2.8
Release of the Existing Security
Each Scheme Creditor will authorise and instruct the Scheme Company to, at any time on or after
the Settlement Date:
2.9
(a)
enter into, execute and deliver on behalf of each Scheme Creditor any instruction to the
Existing Trustee to take whatever action is necessary to release (and where applicable, reassign) the Existing Security; and
(b)
take such other actions as may be required under the Existing Security Documents and/or
the Existing Indenture to release (and, where applicable, re-assign) the Existing Security.
Effectiveness of the Scheme
Upon the Effective Date, the Scheme will be binding on the Scheme Company and all Scheme
Creditors, regardless of whether such Scheme Creditors attended or voted (in favour of or against
the Scheme) at the Scheme Meeting.
2.10
Summary of the New Notes
This summary may not include all terms and conditions of the New Notes which Scheme Creditors
may consider relevant in order to make an informed voting decision on the terms of the Scheme and
is qualified in its entirety by reference to the Exchange Offer Memorandum attached at Appendix 10.
- 34 -
PT MOBILE-8 TELECOM TBK
SUMMARY OF TERMS AND CONDITIONS OF US$100,000,000 RESTRUCTURING NOTES DUE 2025
Issuer
The Parent
New Notes
US$100,000,000 aggregate principal amount of restructuring notes due 2025
Issue Date
To be issued on the Settlement Date
Term
New Notes will have a term of 15 years and will mature in 2025
Interest
New Notes will bear interest at a rate of 1% per annum, from and including the
Settlement Date to and including 2015
New Notes will bear interest at a rate of 1.5% per annum, from and including
2016 to and including 2020
New Notes will bear interest at a rate of 2% per annum, from and including
2021 to and including 2025
Interest will be payable semi-annually in arrears on each Interest Payment
Date.
Interest Payment
Dates
30 June and 31 December in each year
Interest Period
Each period from (and including) an Interest Payment Date to (but excluding)
the next Interest Payment Date
Calculation of
Interest
The amount of interest payable in respect of the New Notes for any Interest
Period will be calculated by applying the applicable rate of interest to the
outstanding principal amount of the New Notes (after accounting for any
redemptions made on the first day of such Interest Period), dividing the
product by two and rounding the resulting figure to the nearest cent. If interest
is required to be calculated for any period other than a scheduled Interest
Period, it will be calculated on the basis of a 360 day year consisting of twelve
30 day months and in the case of an incomplete month, the actual number of
calendar days elapsed.
Margin Ratchet
In the event there are sufficient funds standing to the credit of the Margin
Ratchet Account on any Interest Payment Date falling after 31 December 2015
the interest rate applicable to the New Notes for the preceding Interest Period
shall be increased by an additional 3% per annum and such interest shall be
paid in cash on the relevant Interest Payment Date
Redemption
On each date set out below (each a “Redemption Date”) the Parent will
redeem the Dollar amount of the New Notes set out opposite such Redemption
Date (“Redemption Amount”) on a pro rata basis.
Date
Amount
31 December 2016
31 December 2017
31 December 2018
31 December 2019
31 December 2020
31 December 2021
31 December 2022
31 December 2023
31 December 2024
31 December 2025
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
In the event that New Notes are redeemed as a result of Early Redemption or
- 35 -
Debt Buy-backs, the Redemption Amounts shall be reduced by the aggregate
principal amount of New Notes redeemed in inverse chronological order.
Early Redemption
In the event that the Parent raises any additional financial indebtedness with a
principal amount in excess of US$10 million (other than pursuant to the Rights
Issue and the MCB Programme, or otherwise in connection with the
Acquisition), it shall apply the Net Refinancing Amount in redemption of the
New Notes on a pro rata basis within 14 days of receipt of the proceeds of
such additional financial indebtedness, unless otherwise agreed by the holders
of 51% in outstanding principal amount of the New Notes.
For this purpose, "Net Refinancing Amount" means the net proceeds of any
additional financial indebtedness raised by the Parent after deducting all fees,
costs and expenses incurred in connection with the raising of such financial
indebtedness less such amount as is determined by the Parent Board as
reasonably necessary to meet the Parent's working capital requirements and
other financial obligations falling due during the tenor of such financial
indebtedness. The Net Refinancing Amount in respect of any additional
financial indebtedness shall be set out in an officer's certificate signed by a
director of the Parent.
Redemption
Premium
A redemption premium of 25% shall apply to each Early Redemption of New
Notes and each redemption the New Notes on a Redemption Date, such that
for each US$1.00 of principal amount of the New Notes redeemed, the Parent
shall pay US$1.25.
Shares
Ordinary listed shares in the capital of the Parent.
Conversion Price
The average of the last dealt prices of a Share for the 25 consecutive trading
days on which the Shares are traded on the Stock Exchange immediately
preceding the relevant Redemption Date or Restructuring Charge Payment
Date (as applicable) less the Conversion Discount.
Conversion Discount
20%
Optional Conversion
The Parent will (to the extent permitted by applicable laws and regulations and
to the extent that its shares remain listed) have the option to settle each
obligation to redeem New Notes on any Redemption Date by delivering a
number of Shares calculated by converting the relevant US$ Redemption
Amount into Rupiah at the then prevailing exchange rate and dividing the
resulting Rupiah amount by the Conversion Price to the holders of New Notes
on a pro rata basis.
Transaction
Accounts
On or prior to the Settlement Date, the Parent will establish the following
accounts with a reputable Indonesian bank:

Surplus cash account (“Surplus Cash Account”)

Contingency reserve account (“Contingency Reserve Account”)

Margin ratchet account (“Margin Ratchet Account”)

Tender offer account (“Tender Offer Account”)
The above accounts will be operated by the Parent in accordance with the
provisions of the Fiscal Agency Agreement and the terms and conditions of the
New Notes.
Surplus Cash
On each Interest Payment Date falling after 31 December 2015, the Parent
shall transfer 50% of its Surplus Cash into a Surplus Cash Account.
For this purpose, “Surplus Cash” means the amount obtained by deducting
the following from the Parent’s EBITDA for the preceding Interest Period: (i)
finance charges; (ii) principal payments in respect of outstanding
- 36 -
indebtedness; (iii) taxes; (iv) extraordinary or exceptional cash items; and (v)
budgeted capital expenditures.
Cash Waterfall
On each Cash Waterfall Date falling after 31 December 2015, the Parent shall
apply the balance standing to the credit of the Surplus Cash Account as
follows:

First, in payment to the Contingency Reserve Account, until such time as
the balance standing to the credit of the Contingency Reserve Account
exceeds US$10,000,000

Second, in payment to the Margin Ratchet Account, until such time as the
balance standing to the credit of the Margin Ratchet Account is sufficient
to fund the payment of additional interest on the outstanding principal
amount of the New Notes on the following Interest Payment Date in
accordance with the Margin Ratchet

Third, in payment to the Tender Offer Account
For this purpose, “Cash Waterfall Date” means each date falling 20 days after
an Interest Payment Date.
Debt Buy-backs
When the balance standing to the credit of the Tender Offer Account exceeds
US$10,000,000, the Parent will deliver a notice (“Tender Offer Notice”) to
each holder of New Notes, inviting it to tender New Notes held by it for
redemption.
Any holder of New Notes wishing to make such tender offer (a “Bid”) shall be
required to deliver a notice (“Bid Notice”) to the Parent on or prior to the date
falling 30 days from the date of the Tender Offer Notice.
The Parent will accept Bids in inverse order of the price offered (with the offers
representing the largest discount to face value being accepted first). If the
Parent notifies a holder of New Notes that its Bid has been accepted, the Parent
shall pay the redemption amount specified in the relevant Bid Notice to the
relevant holder of New Notes by wire transfer to such account as is specified in
the relevant Bid Notice within 30 days of such notification. On receipt of the
relevant redemption amount, the relevant New Notes shall be treated as
redeemed in full.
The Parent shall be entitled to determine a reserve price for any tender offer
and specify such reserve price in the relevant Tender Offer Notice.
Covenants
Limited covenant package, covering: (i) compliance with applicable laws and
regulations; (ii) maintenance of business and authorizations; (iii) maintenance
of properties and insurance; (iv) payment of taxes; and (v) provision of
financial statements.
Events of Default
Customary events of default for an issuance of this kind.
Security
The New Notes will be unsecured obligations of the Parent.
Tax
All payments of interest, Redemption Amounts and/or Restructuring Charges
shall be made after deduction of any taxes that the Parent is required to
withhold by the applicable laws and regulations. The Parent will not be
required to gross-up payments of interest, Redemption Amounts and/or
Restructuring Charges and such payments will be received by the holders of
New Notes net of any tax deduction that the Parent is required to withhold by
applicable laws and regulations.
Amendments
Customary amendment provisions for English law Fiscal Agency Agreement,
including:

Consent of holders of 51% of outstanding principal amount of New Notes
required to amend terms and conditions of New Notes, except in relation
- 37 -
to certain reserved matters.

Accelerated
Repayment Schedule
Consent of holders of 75% of outstanding principal amount of New Notes
required to amend terms and conditions of New Notes in relation to
certain reserved matters.
In the event that the financial position of the Parent improves such that the
holders of the New Notes reasonably believe that the Parent is capable of
satisfying its financial obligations in respect of the New Notes prior to the
scheduled Redemption Dates, the holders of not less than 75% in outstanding
principal amount of the New Notes may sign and deliver to the Parent an
accelerated redemption schedule for approval by the Parent. The Parent will
be entitled, by notice to the holders of New Notes, to approve or reject such
accelerated redemption schedule within a period of 14 days from the date on
which such accelerated redemption schedule is delivered to the Parent. In the
event that the Parent does not reject such accelerated redemption schedule
within such 14 day period it shall be deemed to have accepted such
accelerated redemption schedule and the terms and conditions of the New
Notes shall be amended accordingly.
Any accelerated redemption schedule delivered by the holders of New Notes
to the Parent must be based on a reasonable assessment of the ability of the
Parent to service its financial obligations in respect of the New Notes based on
its projected cashflows.
Restructuring
Charge
US$24,000,000, payable by the Parent to the holders of New Notes on a pro
rata basis. The Restructuring Charge will be payable on the dates and in the
amounts set out below (each a “Restructuring Charge Payment Date”).
Date
Amount
31 December 2026
31 December 2027
US$12,000,000
US$12,000,000
The Parent will (to the extent permitted by applicable laws and regulations and
to the extent that its shares remain listed) have the option to settle each
payment in respect of the Restructuring Charge by delivering a number of
Shares calculated by converting the relevant US$ amount into Rupiah at the
then prevailing exchange rate and dividing the resulting Rupiah amount by the
Conversion Price to the holders of New Notes on a pro rata basis.
The entitlement of holders of New Notes to receive payments (or Shares) in
respect of the Restructuring Charge shall be determined by reference to their
holdings of New Notes on 31 December 2025.
Governing Law
2.11
The Fiscal Agency Agreement will be governed by English law.
Distribution of Scheme Consideration
(a)
New Notes
On the Settlement Date:
(i)
the Parent will issue New Notes at one hundred percent (100%) of their principal
amount on, and subject to, the terms of the Scheme and the Fiscal Agency
Agreement;
(ii)
the New Notes shall be issued in global form and shall be represented by one New
Global Note issued to and registered in the name of a nominee for the New
Depositary;
(iii)
the Parent shall deposit the New Global Note with the New Depositary for the
Clearing Systems; and
- 38 -
(iv)
economic, beneficial and other proprietary interests in the New Global Note shall be
allocated through relevant accounts in the Clearing Systems to Account Holders for
the benefit of Noteholders which are Eligible Persons, in the aggregate principal
amount of New Notes to which they are entitled, as calculated in accordance with
the terms of this Scheme.
New Notes represent financial Liabilities and Indebtedness in principal amounts of no less
than US$1,000 in accordance with the terms of the Fiscal Agency Agreement. Entitlements
to New Notes will be rounded down to the nearest US$1,000. All entitlements of less than
that amount shall be disregarded entirely.
(b)
Ineligible Persons
Any New Notes that would otherwise have been allocated to and on behalf of Ineligible
Persons pursuant to paragraph (a) above will instead be issued to the Scheme Company to
be held on trust for the Ineligible Persons in accordance with the terms of the Trust Deed.
2.12
Meeting of Scheme Creditors
Before the Scheme can become effective and binding on the Scheme Company and the Scheme
Creditors, a resolution to approve it must be passed by the statutory majorities prescribed by
Section 899 of the Act. The statutory majorities are a simple majority (50%) in number of Scheme
Creditors present and voting in person or by proxy at the Scheme Meeting (herein, a ‘majority in
number’) representing seventy five percent (75%) in value of the Scheme Claims of the Scheme
Creditors present and voting in person or by proxy the Scheme Meeting (herein, a ‘majority in
value’).
The Scheme Meeting has been summoned by the Court to take place at 10:00 a.m. (London time)
on 11 March 2011 at the offices of O’Melveny & Myers LLP at Warwick Court, 5 Paternoster Square,
London EC4M 7DX. A formal notice of the Scheme Meeting is enclosed at Appendix 3. A form of
proxy for use at the Scheme Meeting is contained in the Account Holder Letter enclosed at
Appendix 4.
2.13
Voting
Votes of Scheme Creditors will be admitted at the Scheme Meeting at a value equal to the
outstanding principal amount of the Existing Notes in which such Scheme Creditors held an
economic or beneficial interest as principal at the Record Time (without double counting). Votes of
Scheme Creditors at the Scheme Meeting will be counted for both the ‘majority in number’ and
‘majority in value’ requirements of the Act. Scheme Creditors may cast votes attributable to their
interests in the Existing Notes either in Person or by proxy at the Scheme Meeting.
DB Trustees (Hong Kong) Limited, in its capacity as Existing Trustee for the Existing Notes, has
confirmed that it has been directed by Noteholders holding a majority in outstanding principal
amount of the Existing Notes not to, and accordingly will not, vote in respect of the Existing Notes at
the Scheme Meeting.
2.14
Use of Proxy
If you are a Noteholder, whether or not you are able to attend the Scheme Meeting or any
adjournment thereof, you are strongly urged to complete and sign the form of proxy set out in the
Account Holder Letter enclosed at Appendix 4 in accordance with the instructions printed thereon. It
is requested that a completed Account Holder Letter (including the form of proxy) be delivered to the
Information Agent prior to the Voting Time. However, if a form of proxy is not so delivered, it may be
handed to the Chairman at the Scheme Meeting.
2.15
Sanction by the Court
For the Scheme to become effective and binding: (i) the Court must sanction the Scheme after it has
been approved by the requisite statutory majorities; (ii) each of the Conditions must have been
satisfied (or waived in accordance with the Scheme); and (iii) an office copy of the order of the Court
- 39 -
sanctioning the Scheme must have been delivered to the Registrar of Companies. The Court
hearing for sanction of the Scheme is expected to take place at 10:30 a.m. (London time) on 29
March 2011. All Scheme Creditors are entitled to attend the hearing in person or through legal
representatives to support or oppose the sanctioning of the Scheme.
Scheme Creditors will be notified of the precise date and location of the sanction hearing once they
are known through electronic notices issued into the Clearing Systems and by posting of notice on
the Information Agent’s website at http://www.lynchpinbm.com/projects/public-projects/mobile8.
2.16
Transfers of interests in Existing Notes after the Record Time
No assignment or transfer of any economic, beneficial or other proprietary interest in Existing Notes
after the Record Time shall be recognised for the purposes of determining entitlements to attend
and vote at the Scheme Meeting and to receive Scheme Consideration. Accordingly a transferee of
an economic or beneficial interest in Existing Notes after the Record Time should make
arrangements with the transferor to ensure that the transferor votes in accordance with the wishes of
the transferee and for the transferee to receive the New Notes if the Scheme becomes effective.
Any transferor should provide a copy of the Scheme Document to any transferee before the
interests in the relevant Existing Notes are sold to the transferee.
2.17
3.
Impact of Securities Law
(a)
New Notes will not be Distributed to or to the order, or for the account or benefit, of any
Person where such Distribution would be prohibited by any applicable law or regulation.
(b)
If a Noteholder is unable to affirmatively make the Securities Law Representations for the
benefit of the Scheme Company and the Parent, no New Notes shall be allotted and issued
or acknowledged as indebtedness to such Noteholder, but such New Notes shall instead be
issued to the Scheme Company to be held on trust for the Ineligible Persons in accordance
with the terms of the Trust Deed.
(c)
The New Notes will not be registered under the US Securities Act or any state or other
securities laws of the United States or any other jurisdiction. Accordingly, the New Notes are
being offered outside the United States in accordance with Regulation S under the US
Securities Act. None of the New Notes may be offered or sold in the United States or to any
US Persons except in accordance with Regulation S under the US Securities Act.
(d)
In the event that any holder of Existing Notes is resident in the United States, the Scheme
Company will rely on the exemption from registration under Section 3(a)(10) of the US
Securities Act. The Court has been informed that any order sanctioning the Scheme, if
granted, may constitute the basis for an exemption from the registration requirements of
the US Securities Act provided by Section 3(a)(10). The Distribution of the Scheme
Consideration to Persons resident in certain jurisdictions, including the states of Arizona,
California, Colorado, Guam and Indiana, will also be subject to the limitations described in
Appendix 2.
(e)
For the purpose of qualifying for the Section 3(a)(10) exemption the Scheme Company will
advise the Court prior to the hearing that the Scheme Company and the Parent will rely on
such exemption and will not register the New Notes under the US Securities Act based on
the Court's sanctioning of the Scheme following a hearing on its fairness to the Scheme
Creditors.
RECOMMENDATION OF THE BOARD
The Board believes, after considering the terms of the Scheme, the advice and recommendations of
the Parent and appropriate legal and financial advisers, and the Fairness Opinion provided by the
Independent Financial Advisor, that the Scheme is an important step in improving the financial
health of the Group and the Scheme Company. Accordingly, the Board recommends that you
support the Scheme by voting in favour of the Scheme at the Scheme Meeting.
- 40 -
Your attention is also drawn to the recommendation of the Board set out in the "Letter from the
Board" beginning on page 24 of this Scheme Document.
- 41 -
THE SCHEME OF ARRANGEMENT
No. 383 of 2011
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
(UNDER SECTION 895 OF THE COMPANIES ACT 2006 OF ENGLAND AND WALES)
BETWEEN
(A PRIVATE COMPANY WITH LIMITED LIABILITY INCORPORATED UNDER THE LAWS OF THE
NETHERLANDS)
AND
SCHEME CREDITORS
(AS DEFINED IN THE SCHEME)
CHAPTER ONE : PRELIMINARY (INTERPRETATION, DEFINITIONS AND RECITALS)
1.
INTERPRETATION AND DEFINITIONS
1.1
Interpretation
In this Scheme, unless the Scheme otherwise expressly provides or the context otherwise requires:
(a)
references to Chapters, clauses, sub-clauses, paragraphs and sub-paragraphs are
references to the Chapters, clauses, sub-clauses, paragraphs and sub-paragraphs
respectively of this Scheme;
(b)
references to Appendices are references to the appendices to the Scheme Document;
(c)
references to a Noteholder or "holder of Existing Notes" are references to a party who has
an economic or beneficial interest as principal in the Existing Notes;
(d)
references to a statute or a statutory provision include the same as subsequently modified,
amended or re-enacted from time to time;
(e)
references to an agreement, deed or document shall be deemed also to refer to such
agreement, deed or document as amended, supplemented, restated, verified, replaced
and/or novated (in whole or in part) from time to time and to any agreement, deed or
document executed pursuant thereto;
(f)
the singular includes the plural and vice versa and words importing one gender shall include
all genders; and
- 42 -
(g)
1.2
headings to Chapters, clauses, sub-clauses and Appendices are for ease of reference only
and shall not affect the interpretation of this Scheme.
Definitions
In this Scheme:
"Accepted"
means in relation to a Scheme Claim, the acceptance by the Scheme
Company of such claim (or part thereof) without dispute or, where
applicable and only for purposes of any entitlement to Scheme
Consideration, the acceptance or determination by the Adjudicator of
such claim (or part thereof) in accordance with the Adjudication
Procedure.
"Accepted Claim"
means a Scheme Claim against the Scheme Company calculated
with reference to the principal amount of Existing Notes as of the
Record Time to which such Claim relates which has been Accepted,
which shall be used for the purposes of determining the entitlement
of each Scheme Creditor to Scheme Consideration as provided for in
the Scheme.
"Account Holder"
means a Person who is recorded in the books of Euroclear or
Clearstream as being a holder of Existing Notes in an account with
Euroclear or Clearstream or, as the context may require, was
recorded in such books as being a holder of Existing Notes in such
an account at the Record Time.
"Account Holder Letter" means a letter from an Account Holder on behalf of the relevant
Noteholder in the form set out at Appendix 4.
"Acquisition"
means the acquisition of the Target Shares by the Parent.
"Adjudication
Procedure"
means the procedure for the resolution of Disputed Claims under this
Scheme as set out in Chapter 6 of the Scheme.
"Adjudicator"
means such suitably qualified Person as the Scheme Company may,
in its absolute discretion, select to act as adjudicator in respect of any
Disputed Claim in accordance with the Adjudication Procedure.
"Authorisations"
means each, any or all necessary notifications, registrations,
applications, filings, authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions, no-action
relief, exemption relief orders and approvals, and all appropriate
waiting periods (including any extensions thereof), in connection with
the Scheme.
"Bar Date"
means the date falling two (2) calendar months after the Effective
Date (or if such date is not a Business Day, then the next
succeeding Business Day), being the latest date by which
Noteholders must: (i) provide a duly completed Account Holder
Letter to the Information Agent; and (ii) make the Securities Law
Representations to the Scheme Company and the Parent (and the
Scheme Company and the Parent are or, if referred to the
Adjudicator, the Adjudicator is satisfied as to the accuracy thereof)
in order to become Eligible Persons and be entitled to receive
“Bar Time”
means 5:00 p.m. (London time) on the Bar Date.
"Bid"
- 43 -
"Bid Notice"
"Blocking Instructions" means, as applicable, the irrevocable instructions given by Account
Holders (in accordance with customary procedures of the relevant
Clearing System) to either Clearstream or Euroclear to block all
interests in Existing Notes, which are the subject of an Account
Holder Letter, in the securities account to which they are credited
with effect from the Record Time (or the date of the relevant Account
Holder Letter if the Record Time has passed).
"Board"
means the board of directors of the Scheme Company from time to
time.
"Business Day"
means a day (other than a Saturday or a Sunday) on which banks
are open for general business in London, England.
"Cash Waterfall Date"
"Chairman"
means the chairman of the Scheme Meeting.
"Claim"
means all and any actions, causes of action, claims, counterclaims,
suits, debts, sums of money, accounts, contracts, agreements,
promises, contributions, indemnifications, damages, judgments,
executions, demands or rights whatsoever or howsoever arising,
whether present, future, prospective or contingent, known or
unknown, whether or not for a fixed or unliquidated amount, whether
or not involving the payment of money or the performance of an act
or obligation, whether arising at common law, in equity or by statute
in England and Wales or in any other jurisdiction or in any other
manner whatsoever, and "Claims" shall be construed accordingly.
"Clearing Systems"
means Euroclear and Clearstream.
"Clearstream"
means Clearstream Banking, société anonyme.
"Collateral Agent"
means DB Trustees (Hong Kong) Limited in its capacity as Collateral
Agent under the Existing Security Documents.
"Completion Notice"
means the notice to be issued by the Scheme Company and
delivered to the Information Agent for circulation to Scheme Creditors
via the Clearing Systems confirming satisfaction of the Conditions
and specifying the Effective Date and the Settlement Date.
"Conditions"
means each of the conditions precedent to the effectiveness of the
Scheme, as set out in Chapter 5 of the Scheme.
"Contingency Reserve
Account"
"Conversion Discount" has the meaning provided in the New Notes Term Sheet.
"Conversion Price"
"Court"
means the High Court of Justice of England and Wales.
"Debt Buy-back"
"Deed of Release"
means a deed of release in the form attached at Appendix 5.
"Deed of Undertaking"
means a deed of undertaking in the form attached at Appendix 6.
- 44 -
"Disputed Claim"
means any dispute whatsoever arising in relation to a Claim of a
Scheme Creditor under or in respect of the Existing Notes and/or the
Existing Indenture.
"Distribution"
means: (i) any payment of cash or cash-in-kind; (ii) any payment of
dividends or interest; (iii) the granting of any option over any
securities and/or debt instruments; (iv) the issuance of any securities
and/or other debt instruments; (v) any ‘in specie’ distribution of a
tangible asset or chose in action; or (vi) anything similar to those
described in (i) through (v) above; and “Distribute” and “Distributed”
shall be construed accordingly.
"Dollars" and "US$"
refer to the lawful currency of the United States from time to time.
"EBITDA"
has the meaning provided in the Fiscal Agency Agreement.
"Effective Date"
means the date on which the Scheme becomes effective in
accordance with its terms.
"EGM"
means the extraordinary general meeting of the shareholders of the
Parent held on 20 December 2010.
"Eligible Person"
means any Noteholder (acting, where applicable, through its Account
Holder) which has: (i) provided the Information Agent with a duly
completed Account Holder Letter in respect of its Scheme Claims;
and (ii) provided the Scheme Company and the Parent with
affirmative Securities Law Representations (and the Scheme
Company and the Parent are or, if referred to the Adjudicator, the
Adjudicator is satisfied as to the accuracy thereof), in each case prior
to the Bar Time.
"Euroclear"
means Euroclear Bank S.A./N.V.
"Exchange Offer
Memorandum"
means the Exchange Offer Memorandum attached to the Scheme
Document as Appendix 10.
"Excluded Liabilities"
means any Liability of the Scheme Company (other than Scheme
Claims) which are not compromised and discharged in full (or in
part) upon the Settlement Date and which Liabilities may be due to
any Person including, without limitation:
(i)
the Parent in respect of the Scheme Costs; and
(ii)
the Existing Trustee, the Collateral Agent and the Paying and
Transfer Agent in respect of: (1) any fees and expenses; and
(2) any amounts under any indemnity, in each case due to
them under the terms of the Existing Indenture and/or the
Existing Security Documents in respect of the period ending on
the Settlement Date.
"Existing Depositary"
means Deutsche Bank AG, London Branch, or such other Person as
may be appointed as common depositary in accordance with the
Existing Indenture from time to time.
"Existing Global Note"
means the Existing Notes represented by one or more notes in global
form registered in the name of BT Globenet Nominees Limited as
nominee for the Existing Depositary.
"Existing Guarantees"
means each of the guarantees granted by the Existing Guarantors in
respect of the Liabilities of the Scheme Company under the Existing
Notes and Existing Indenture.
- 45 -
"Existing Guarantors"
means the Parent and each other member of the Group that has
guaranteed the obligations of the Scheme Company under the terms
of the Existing Indenture.
"Existing Indenture"
means the indenture constituting the Existing Notes dated 15 August
2007 by and among the Scheme Company, the Parent, the Existing
Trustee and the Collateral Agent.
"Existing Notes"
means the US$100,000,000 11.25% guaranteed senior notes due
2013 issued by the Scheme Company pursuant to the Existing
Indenture.
"Existing Security"
means the security created by the Existing Security Documents.
"Existing Security
Documents"
means, together, the Share Pledge and the Security Agreement.
"Existing Trustee"
means DB Trustees (Hong Kong) Limited, in its capacity as trustee
under the Existing Indenture.
"Explanatory
Statement"
means the explanatory statement of the Scheme Company set out in
this Scheme Document in compliance with the Act.
"Fairness Opinion"
means the fairness opinion prepared by the Independent Financial
Adviser and attached at Appendix 8.
"Fiscal Agency
Agreement"
means the fiscal agency agreement to be entered into on or prior to
the Settlement Date between the Parent and the Fiscal Agent with
respect to the New Notes, the terms of which shall be consistent
with the New Notes Term Sheet and otherwise as agreed between
the Parent and the Fiscal Agent.
"Fiscal Agent"
means such suitably qualified Person as may be selected by the
Parent to act as fiscal agent in respect of the New Notes, and any
successor thereto.
"Force Majeure"
means any act of god, government act, war, fire, flood, earthquake,
and other natural disasters, strikes, changes to effective legislation,
explosion, civil commotion or act of terrorism which prevents the
fulfillment of obligations under this Scheme, and the occurrence of
which is not the direct or indirect result of action or inaction of any
Scheme Creditor or the Scheme Company.
"FSMA"
means the Financial Services and Markets Act 2000 (as amended),
as applicable in England and Wales.
"Global"
means PT Global Mediacom Tbk, a company incorporated under the
laws of the Republic of Indonesia, whose registered office is at
Menara Kebon Sirih, 28th Floor, Jl. Kebon Sirih Kav. 17-19, Jakarta
10340, Indonesia.
"Governmental Entity"
means any federal, national or local government, governmental,
regulatory or administrative authority, agency or commission or any
court, tribunal or judicial body of England and Wales, the United
States or any other relevant jurisdiction.
"Group"
means the Parent and each Subsidiary of the Parent from time to
time, and "Group Company" shall be construed accordingly.
"Helpline"
means +852-2526-5406, by which Account Holders, Intermediaries
and Noteholders may contact the Information Agent for guidance on
- 46 -
the completion and submission of Account Holder Letters and other
procedural matters relevant to the Scheme and the general operation
of the Clearing Systems.
"Indebtedness"
means, as the context requires, the aggregate amount of all
indebtedness and Liabilities (whatsoever and howsoever arising)
owed by any of: (i) the Scheme Company under or in respect of the
Existing Indenture, the Existing Security Documents and/or the
Existing Notes (including, for the avoidance of doubt, Scheme
Claims); (ii) the Existing Guarantors under or in respect of the
Existing Indenture, the Existing Guarantees, the Existing Security
Documents and/or the Existing Notes; and (iii) the Parent under or in
respect of the Intercompany Loan.
"Independent Financial means Grant Thornton Specialist Services Pte. Ltd. of 47 Hill Street,
Adviser"
#05-01 Singapore Chinese Chamber of Commerce & Industry
Building, Singapore 179365.
"Indonesian Bankruptcy means Law Number 37 of 2004 of the Republic of Indonesia.
Law"
"Industry Report"
means the Indonesia Telecommunications Report prepared by
Business Monitor International for the third quarter of 2010.
"Ineligible Person"
means any Noteholder which is not an Eligible Person by reason of
its inability or failure to:
(i)
submit a duly completed Account Holder Letter in respect of its
Scheme Claims to the Information Agent; or
(ii)
give the Securities Law Representations to the Scheme
Company and the Parent (or the Scheme Company and the
Parent not being or, if referred to the Adjudicator, the
Adjudicator not being satisfied as to the accuracy thereof),
in each case prior to the Bar Time.
"Information Agent"
means Lynchpin Bondholder Management of Room 402, Wellington
Plaza, 56-58 Wellington Street, Central, Hong Kong.
"Insolvency
Proceeding"
means any proceeding, process, appointment or application under
any law relating to insolvency, reorganisation, winding-up, or
composition or adjustment of debts, including, without limitation,
winding-up,
liquidation,
bankruptcy,
provisional
liquidation,
receivership, administration, provisional supervision, company
voluntary arrangement, suspension of payment under court
supervision or any other analogous proceedings in any jurisdiction.
"Intercompany Loan"
means the US$100,000,000 intercompany loan made available by
the Scheme Company to the Parent under the terms of the
Intercompany Loan Agreement.
"Intercompany Loan
Agreement"
means the intercompany loan agreement dated 15 August 2007
between the Scheme Company and the Parent.
"Interest Payment Date" has the meaning provided in the New Notes Term Sheet.
"Interest Period"
"Intermediary"
means a Person who holds an interest in Existing Notes on behalf of
another Person or Persons (or, as the context may require, who held
an interest at the Record Time) but which interest is or was not held
as an Account Holder.
- 47 -
"Liability"
means any debt, liability or obligation of a Person, whatsoever,
whether it is present, future, prospective or contingent, whether or not
its amount is fixed or undetermined, whether or not it involves the
payment of money or performance of an act or obligation and
whether it arises at common law, in equity or by statute, in England
and Wales or in any other jurisdiction, or in any other manner
whatsoever, but such expression does not include any such liability
which is barred by statute or otherwise unenforceable under
applicable law or arises under a contract which is void or, being
voidable, has been duly avoided; and "Liabilities" shall be construed
accordingly.
"Margin Ratchet"
"Margin Ratchet
Account"
"MCB Options"
means options to subscribe for future issuances of mandatorily
convertible bonds by the Parent.
"MCB Programme"
means the issuance by the Parent of mandatorily convertible bonds
and MCB Options.
"Net Refinancing
Amount"
"New Depositary"
means the Person appointed to act as common depositary for the
Clearing Systems in respect of the New Global Note.
"New Global Note"
means the New Notes represented by one or more notes in global
form registered in the name of a nominee for the New Depositary.
"New Notes"
means the US$100,000,000 restructuring notes due 2025 to be
issued by the Parent on the terms and conditions set out in the Fiscal
Agency Agreement.
"New Notes Term
Sheet"
means the term sheet in respect of the New Notes set out at pages
35 to 41 of this Scheme Document.
"Noteholders"
means Persons with an economic or beneficial interest as principal
in the Existing Notes held through the Clearing Systems at the
Record Time.
"Notice of Scheme
Meeting"
means the notice of the Scheme Meeting in substantially the form set
out at Appendix 3.
"Parent"
means PT Mobile-8 Telecom Tbk, a company incorporated under the
laws of the Republic of Indonesia, whose registered office is at
Menara Kebon Sirih, 18th and 19th Floors, Jalan Kebon Sirih, Kav. 1719, Jakarta 10340, Indonesia.
"Parent Board"
means the board of directors of the Parent from time to time.
"Paying and Transfer
Agent"
has the meaning provided in the Existing Indenture.
"Person"
means any natural person, corporation, limited or unlimited liability
company, trust, joint venture, association, corporation, partnership,
Governmental Entity or other entity whatsoever.
"Phase I MCBs"
means mandatorily convertible bonds with a principal amount of Rp.
- 48 -
900,000,000,000.
"Phase II MCBs"
means additional mandatorily convertible bonds to be issued by the
Parent
with a principal amount not exceeding Rp.
3,800,000,000,000.
"Post"
delivery by pre-paid first class post or air mail or generally recognised
commercial courier service, and "Posted" shall be construed
accordingly.
"Proceeding"
means any process, suit, action, legal or other legal proceeding
including without limitation any arbitration, mediation, alternative
dispute resolution, judicial review, adjudication, demand, execution,
distraint, forfeiture, re-entry, seizure, lien, enforcement of judgment,
enforcement of any security (including, without limitation,
enforcement of any letters of credit or Insolvency Proceedings) in any
jurisdiction.
“Purchase Price”
means the amount of Rp. 3,775,371,942,000, payable by the Parent
to the Sellers in connection with the Acquisition.
"Record Date"
means 8 March 2011, being the date which is two (2) Business Days
prior to the Scheme Meeting.
“Record Time”
means 5:00 p.m. (London time) on the Record Date.
"Redemption Amount"
"Redemption Date"
"Registrar of
Companies"
means the registrar or other government officer performing the duty
of administration and registration of companies in England and
Wales.
"Regulation S"
means Regulation S under the US Securities Act.
"Release"
means the release of the Released Parties by the Releasing Parties
set forth in Chapter 2 and Chapter 6 of this Scheme.
"Released Claim"
means any and all Indebtedness or other Claim with respect to
Indebtedness of whatsoever nature against any Released Party,
including any Claim against any such party to recover any debt
owing by the Scheme Company and/or any of the Existing
Guarantors or any loss or damage which the claimant or any other
Person may have suffered or incurred as a result of or arising from
the Existing Notes, the Existing Indenture, the Existing Guarantees,
the Existing Security Documents, the Intercompany Loan and/or the
negotiation, preparation and implementation of the Scheme,
together with all rights to repayment of principal, and payment of
interest, default interest, premium, additional amounts, make whole
amounts, fees and commissions and other amounts or accretions
whatsoever arising in respect of the same, whether or not known,
whether or not existing at law or in equity, whether by way of
litigation or proof of debt or otherwise, and whether in contract, tort
or otherwise against any Released Party, but shall not include any
Indebtedness due to the Existing Trustee, the Collateral Agent and
the Paying and Transfer Agent in respect of: (i) any fees and
expenses; and (ii) any amounts under any indemnity, in each case
due to them under the terms of the Existing Indenture and/or the
Existing Security Documents in respect of the period ending on the
Settlement Date, or any Claim of the Existing Trustee, the Collateral
- 49 -
Agent and/or the Paying and Transfer Agent in respect of such
amounts.
"Released Parties"
means the Scheme Company, the Parent, each of the Existing
Guarantors (which includes, for the avoidance of doubt, the Parent)
and each of their respective predecessors, successors and assigns
and their former and present directors in their capacities as such,
and “Released Party” shall be construed accordingly.
"Releasing Parties"
means the Scheme Company, the Parent and each Existing
Guarantor (which includes, for the avoidance of doubt, the Parent)
and each Scheme Creditor, on behalf of itself and each of its
predecessors, successors and assigns.
"Restructuring Charge" has the meaning provided in the New Notes Term Sheet.
"Restructuring Charge
Payment Date"
"Rights Issue"
means the issuance of: (i) 75,684,753,658 series B shares in the
capital of the Parent; and (ii) warrants to subscribe for additional
series B shares in the capital of the Parent, by way of a rights issue
in order to fund the Acquisition.
"Rupiah" and "Rp."
refer to the lawful currency of the Republic of Indonesia from time to
time.
"Rupiah Notes"
means the Rp. 675 billion notes issued by the Parent pursuant to a
trust deed dated 22 February 2007 between the Parent (as issuer)
and PT Bank Permata Tbk (as trustee).
"Scheme"
means the scheme of arrangement proposed by the Scheme
Company under Section 895 of the Act in its present form subject
only to such modifications, conditions and/or approvals as may be
imposed by the Court and as permitted by the terms of the Scheme.
"Scheme Claim"
means any Claim or right in respect of the Indebtedness or any other
Liability of the Scheme Company to any Person arising directly or
indirectly out of, in relation to or in connection with the Existing
Indenture and/or the Existing Security Documents and/or in respect
of the Existing Notes, including any Liability of the Scheme Company
in respect of any loss or damage suffered or incurred as a result of,
or in connection with, such Liability, whether arising before, at or after
the Record Time by reason of a Liability of the Scheme Company
incurred on or before that time, and including, for the avoidance of
doubt, any and all interest, default interest, premium, principal,
additional amounts, make whole amounts, fees and commissions
accruing on, or payable in respect of, or any other accretions
whatsoever arising in respect of, such claims or rights whether
before, at or after the Record Time.
"Scheme Company"
means Mobile-8 Telecom Finance Company B.V., a private
company with limited liability, incorporated under the laws of The
Netherlands, which has its statutory seat in Amsterdam,
Netherlands. The Scheme Company is registered as a foreign
company in England and has its head office, principal place of
business and effective place of management at 54 Clarendon Road,
Watford WD17 1DU, England.
"Scheme
Consideration"
means the New Notes to be Distributed in accordance with the
Scheme.
- 50 -
"Scheme Costs"
means the funds made available to the Scheme Company by the
Parent for the purposes of funding all of the costs and expenses of
the Scheme.
"Scheme Creditor"
means a creditor of the Scheme Company in respect of a Scheme
Claim and includes (for the avoidance of doubt, but without double
counting in each case):
(i)
Noteholders;
(ii) the Existing Trustee;
(iii)
the Existing Depositary; and
(iv)
Account Holders and Intermediaries.
"Scheme Document"
means this composite document dated 2 February 2011 addressed
to Scheme Creditors containing, among other things, the Explanatory
Statement and the terms of the Scheme (including all appendices,
schedules and annexures hereto).
"Scheme Meeting"
means the meeting convened at the direction of the Court at which
the Scheme will be considered and voted upon and any adjournment
thereof.
"Securities Law
Representations"
means those necessary representations to be made by all Eligible
Persons for the benefit of the Scheme Company and the Parent as
set out at Part 6 of the Account Holder Letter.
“Security Agreement”
means the security agreement dated 15 August 2007 entered into by
the Scheme Company in favour of the Collateral Agent in respect of
the Intercompany Loan.
"Sellers"
means PT Bali Media Telekomunikasi, PT Global Nusa Data and PT
Wahana Inti Nusantara.
"Settlement Date"
means the date that is two (2) Business Days after the Bar Date (or if
such date is not a Business Day, then the next succeeding Business
Day).
"Shares"
"Share Pledge"
means the deed of pledge of shares dated 15 August 2007 entered
into by the Parent in favour of the Collateral Agent in respect of the
entire issued share capital of the Scheme Company.
"Stock Exchange"
means the Indonesian stock exchange (Bursa Efek Indonesia).
"Subsidiary"
means an entity of which a Person owns directly or indirectly more
than fifty percent (50%) of the voting capital or similar right of
ownership.
"Supplemental
Indenture"
means the supplemental indenture dated 13 December 2010
entered into between the Existing Trustee, the Collateral Agent, the
Scheme Company and the Parent in respect of the Existing
Indenture.
"Supporting Noteholder has the meaning provided in the Supporting Noteholder Letter.
Group"
"Supporting Noteholder means the letter from the Supporting Noteholder Group attached at
Letter"
Appendix 9.
- 51 -
"Surplus Cash"
"Surplus Cash
Account"
"Target"
means PT Smart Telecom, a company incorporated under the laws
of the Republic of Indonesia, whose registered office is at Jl. H. Agus
Salim No. 45 Kel. Kebon Sirih, Menteng, Jakarta 10340, Indonesia.
"Target Shares"
means ordinary shares representing ninety-nine point nine four
percent (99.94%) of the issued share capital of the Target.
"Tender Offer Account" has the meaning provided in the New Notes Term Sheet.
"Tender Offer Notice"
"Trust Deed"
means the trust deed to be executed by the Scheme Company on
or prior to the Settlement Date in the form attached at Appendix 7,
pursuant to which the Scheme Company will agree to hold the New
Notes that would otherwise have been issued to Ineligible Persons
on trust for the benefit of the Ineligible Persons on the terms set out
therein.
"US Person"
has the meaning provided in Regulation S.
"US Securities Act"
means the US Securities Act of 1933 (as amended) including the
rules and regulations promulgated thereunder.
"Voting Date"
means the Record Date.
"Voting Time"
means 5:00 p.m. (London time) on the Voting Date.
2.
THE SCHEME COMPANY
2.1
The Scheme Company is a private company with limited liability and was incorporated under the
laws of The Netherlands on 18 July 2007. The Scheme Company is, and at all material times since
incorporation has been, a wholly owned subsidiary of the Parent.
2.2
In August 2007, the Scheme Company entered into arrangements which govern US$100,000,000 of
debt incurred by the Scheme Company in the form of Existing Notes, as set forth in the Existing
Indenture.
2.3
The Indebtedness of the Scheme Company in respect of the Existing Notes was guaranteed by the
Existing Guarantors pursuant to the Existing Guarantees and secured by the Existing Security
created by the Existing Security Documents.
3.
THE PARENT
3.1
The Parent was established under the laws of the Republic of Indonesia on 2 December 2002 as a
limited liability company. The Parent is currently listed on the Stock Exchange.
3.2
As of the date of this Scheme Document, the authorised share capital of the Parent is Rp. 12,600.0
billion, consisting of Rp. 2,023.6 billion of series A shares and Rp. 10,576.4 billion of series B
shares, divided into 20.2 billion shares of series A and 211.5 billion shares of series B of Rp. 100
and Rp. 50 nominal value each, respectively. 20.2 billion shares of series A and 98.3 billion shares
of series B have been issued and paid up.
- 52 -
4.
THE OBJECT AND PURPOSE OF THE SCHEME
4.1
The principal object and purpose of this Scheme is to compromise and discharge the Liabilities of
the Scheme Company and each Existing Guarantor in respect of the Existing Notes and under the
Existing Indenture and the Existing Guarantees. The Existing Notes are currently in default and the
Scheme Company and the Parent (in its capacity as an Existing Guarantor) are unable to meet their
obligations in respect of the Existing Notes. The compromise effected pursuant to the Scheme will
enable the Group to continue to carry on business as a going concern and is an alternative to the
commencement of Insolvency Proceedings in respect of the Scheme Company and/or the Parent.
4.2
On the Settlement Date, the Scheme Claims of Scheme Creditors against the Scheme Company will
be fully compromised and discharged, and will no longer be enforceable against the Scheme
Company. In consideration of such compromise and discharge, the Scheme Company shall procure
that New Notes are Distributed by the Parent to Noteholders in accordance with the terms of the
Scheme. The New Notes will be accepted by Noteholders in full and final repayment of the Liabilities
of the Scheme Company in respect of the Existing Notes (with the exception of any Liabilities to the
Existing Trustee, the Collateral Agent and the Paying and Transfer Agent in respect of: (i) any fees
and/or expenses; and (ii) any amounts under any indemnity, in each case due to them under the
terms of the Existing Indenture and/or the Existing Security Documents in respect of the period
ending on the Settlement Date shall survive and remain in full force and effect) and the Existing
Guarantors in respect of the Existing Guarantees.
4.3
On the Settlement Date, by reason of the terms of the Scheme, Scheme Creditors will discharge
and release absolutely the Existing Guarantors in full from all Claims under or in respect of the
Existing Guarantees.
4.4
The compromise and discharge of the Scheme Claims and Existing Guarantees by Scheme
Creditors on the Settlement Date will be in exchange for and conditional upon receipt by
Noteholders of Scheme Consideration in the form of New Notes to be Distributed by the Parent in
accordance with the terms of the Scheme.
5.
BINDING OF THIRD PARTIES
The Parent has agreed, if necessary, to appear by legal representatives at the hearing of the petition
to sanction the Scheme and to undertake to the Scheme Company, the Court and the Scheme
Creditors to be bound by the terms of the Scheme and to execute and do or procure to be executed
and done all such documents, acts and things as may be necessary or desirable to be executed or
done by it for the purpose of giving effect to the Scheme. The form of undertaking of the Parent in
this regard is set out at Appendix 6.
6.
EXISTING NOTES ISSUED BY THE SCHEME COMPANY
Each of the Existing Notes is held under customary arrangements whereby:
(a)
the Existing Notes were constituted by the Existing Indenture;
(b)
the Existing Notes were issued in global registered form, with the Existing Global Note being
held by the Existing Depositary (or its nominee) through the Clearing Systems under
electronic systems designed to facilitate paperless transactions of dematerialised securities;
(c)
such electronic systems involve interests in the Existing Global Note being held by Account
Holders (which Persons must be participants in the Clearing Systems) being recorded
directly in the books or other records maintained by the Clearing Systems themselves; and
(d)
each Account Holder may be holding its recorded interest in the Existing Global Note on
behalf of one or more Noteholders.
- 53 -
7.
THE EXISTING TRUSTEE AND THE SCHEME
The Existing Trustee, as trustee of the Existing Notes, has confirmed that it has been directed by
Noteholders holding a majority in outstanding principal amount of the Existing Notes not to, and
accordingly will not, vote in respect of the Existing Notes at the Scheme Meeting.
8.
EFFECT ON SCHEME CREDITORS
The compromise and other arrangements effected by the Scheme shall apply to all Existing Notes
and shall be binding on all Noteholders and other Scheme Creditors and the rights of Noteholders
and other Scheme Creditors obtained under the Scheme shall be accepted by Noteholders and
other Scheme Creditors in full and final settlement of all claims under or in respect of the Existing
Indenture, the Existing Notes and the Existing Guarantees.
- 54 -
CHAPTER TWO : EFFECTIVENESS OF THE SCHEME
9.
APPLICATION AND EFFECTIVENESS OF THE SCHEME
9.1
The compromise and arrangement effected by this Scheme shall apply to all Scheme Claims and
shall be binding on all Scheme Creditors and their respective successors and assigns.
9.2
All rights of each Scheme Creditor to Scheme Consideration under this Scheme shall be accepted in
full and final settlement and absolute discharge of all of its Scheme Claims.
9.3
Excluded Liabilities shall not be compromised or discharged by this Scheme.
9.4
The Scheme Company shall specify the Effective Date and the Settlement Date in the Completion
Notice. The Effective Date shall be no more than ten (10) Business Days following the determination
by the Scheme Company, in good faith, that each of the Conditions has been satisfied or waived or
will be satisfied or waived in accordance with the terms of the Scheme prior to or
contemporaneously with effectiveness of the Scheme. For the avoidance of doubt, the requirement
for the Parent to provide a duly executed Deed of Undertaking is an express condition to
effectiveness of the Scheme and may not be waived.
9.5
The Scheme Company shall notify the Information Agent of the Effective Date and the Information
Agent shall notify Scheme Creditors of the Effective Date by posting a notice to that effect on its
website at http://www.lynchpinbm.com/projects/public-projects/mobile8.
10.
EFFECT OF THE SCHEME
(a)
all of the rights, title and interest of Scheme Creditors in respect of Scheme Claims and
Claims against the Existing Guarantors shall be subject to each of the compromises and
arrangements set out in this Scheme;
(b)
each Scheme Creditor shall be treated as having absolutely and irrevocably waived its
entitlement to all accrued and unpaid interest and/or default interest in respect of the
Existing Notes;
(c)
the Noteholders shall become entitled to the Scheme Consideration in accordance with the
terms of the Scheme;
(d)
Scheme Claims and Claims against the Existing Guarantors shall be absolutely and
irrevocably discharged and extinguished and shall thereby become Released Claims (save
that the rights of the Existing Trustee, the Collateral Agent and the Paying and Transfer
Agent to payment and/or reimbursement of: (i) any fees and/or expenses; and (ii) any
amounts under any indemnity, in each case due to them under the terms of the Existing
Indenture and/or the Existing Security Documents in respect of the period ending on the
Settlement Date shall survive and remain in full force and effect);
(e)
the obligations and Liabilities of the Released Parties shall be compromised and discharged
in accordance with the terms of this Scheme (save that the rights of the Existing Trustee,
the Collateral Agent and the Paying and Transfer Agent to payment and/or reimbursement
of: (i) any fees and/or expenses; and (ii) any amounts under any indemnity, in each case
due to them under the terms of the Existing Indenture and/or the Existing Security
Documents in respect of the period ending on the Settlement Date shall survive and remain
in full force and effect);
(f)
the Existing Indenture shall cease to be enforceable and shall cease to have any effect
whatsoever (save that the rights of the Existing Trustee, the Collateral Agent and the Paying
and Transfer Agent to payment and/or reimbursement of: (i) any fees and/or expenses; and
(ii) any amounts under any indemnity, in each case due to them under the terms of the
- 55 -
Existing Indenture and/or the Existing Security Documents in respect of the period ending
on the Settlement Date shall survive and remain in full force and effect);
(g)
the Scheme Company shall, as soon as reasonably practicable, use its commercially
reasonable efforts to procure that the Existing Global Note is cancelled by the Existing
Depositary and shall give all such instructions as are required to be given by it to the
Existing Trustee and/or the Existing Depositary for this purpose;
(h)
the Scheme Company shall procure that the Parent issue the New Notes in accordance with
the terms of this Scheme. New Notes will be accepted by Noteholders in full and final
repayment of the Liabilities of the Scheme Company in respect of the Existing Notes (with
the exception of any Liabilities to the Existing Trustee, the Collateral Agent and the Paying
and Transfer Agent in respect of: (i) any fees and/or expenses; and (ii) any amounts under
any indemnity, in each case due to them under the terms of the Existing Indenture and/or
the Existing Security Documents in respect of the period ending on the Settlement Date
shall survive and remain in full force and effect) and the Existing Guarantors in respect of
the Existing Guarantees; and
(i)
the issuance of the New Notes by the Parent on the Settlement Date will satisfy its Liabilities
to the Scheme Company in respect of the Intercompany Loan and under the Intercompany
Loan Agreement and such Liabilities will be absolutely and irrevocably compromised and
discharged.
11.
NO RIGHT TO COMMENCE PROCEEDINGS
11.1
From and after the Effective Date, no Scheme Creditor shall be entitled to commence, continue or
procure the commencement or continuation of any Proceeding, whether directly or indirectly, against
any of the Released Parties or in respect of any property of any of the Released Parties in respect of
any Scheme Claim, any Claim against any Existing Guarantor or any Released Claim, save that the
Existing Trustee, the Collateral Agent and the Paying and Transfer Agent will be entitled to
commence or continue Proceedings in respect of any accrued and unpaid fees and expenses due to
them under the terms of the Existing Indenture and/or the Existing Security Documents in respect of
the period ending on the Settlement Date.
11.2
The Scheme Company shall be fully entitled to enforce the obligations of the Scheme Creditors
under paragraph 11.1 above in its own name.
11.3
Each other Released Party shall be fully entitled to enforce paragraph 11.1 above, in its own name,
(whether by way of a Proceeding or by way of defence or estoppel (or similar) in any jurisdiction
whatsoever) as if it were a party hereto, pursuant to the provisions of the Contracts (Rights of Third
Parties) Act 1999 and/or any other applicable law which so permits.
11.4
Each Scheme Creditor is deemed to acknowledge that if it, or any Person claiming through it, takes
any Proceedings against the Released Parties in breach of paragraph 11.1 and the Release, the
Released Party shall be entitled to obtain an order as of right staying those Proceedings and
providing for payment, by the Scheme Creditor concerned and any Person claiming through it, of
any costs, charges or other expenses howsoever incurred by such Released Party as a result of
taking such Proceedings on a full indemnity basis.
12.
COMPROMISE AND ARRANGEMENT WITH SCHEME CREDITORS AND OTHER PERSONS
(a)
the Scheme Claims shall be compromised and discharged fully and absolutely, in each case
so as to bind legally the Scheme Creditors (including, for the avoidance of doubt, any
Person who has or acquires after the Record Time any economic, beneficial or proprietary
interest in or arising out of a Scheme Claim) (save that the rights of the Existing Trustee, the
Collateral Agent and the Paying and Transfer Agent to payment and/or reimbursement of: (i)
any accrued and unpaid fees and/or expenses; and (ii) any amounts under any indemnity, in
each case due to them under the terms of the Existing Indenture and/or the Existing
- 56 -
Security Documents in respect of the period ending on the Settlement Date shall survive
and remain in full force and effect);
13.
(b)
by reason of the terms of the Scheme, Scheme Creditors will discharge and release
absolutely the Existing Guarantors in full from all Claims and Liabilities under or in respect of
the Existing Guarantees as a matter of English law so as to bind legally the Scheme
Creditors (including, for the avoidance of doubt, any Person who has or acquires after the
Record Time any economic, beneficial or proprietary interest in or arising out of such Claim)
(save that the rights of the Existing Trustee, the Collateral Agent and the Paying and
Transfer Agent to payment and/or reimbursement of: (i) any accrued and unpaid fees and/or
expenses; and (ii) any amounts under any indemnity, in each case due to them under the
terms of the Existing Indenture and/or the Existing Security Documents in respect of the
period ending on the Settlement Date shall survive and remain in full force and effect);
(c)
the Parent shall deposit with the New Depositary in its capacity as common depositary for
the New Global Note, and on behalf of its nominee (as registered holder of the New Global
Note), the New Global Note for the benefit of Account Holders (which Persons must be
participants in the Clearing Systems) to be allotted through relevant accounts in the Clearing
Systems to Eligible Persons on a Dollar for Dollar basis in accordance with the terms of the
Scheme such that each Eligible Person will be entitled to receive US$1,000 in principal
amount of New Notes for every US$1,000 in principal amount of Existing Notes held by
such Eligible Person at the Record Time; and
(d)
any interests in New Notes which would otherwise have been Distributed to an Ineligible
Person will instead be allocated to the account of the Scheme Company to be held on trust
for the relevant Ineligible Person in accordance with the terms of the Trust Deed. Each
Ineligible Person shall have a beneficial interest in a principal amount of New Notes held by
the Scheme Company (as trustee) equivalent to the outstanding principal amount of the
Existing Notes held by such Ineligible Person at the Record Time.
INSTRUCTIONS TO EXISTING DEPOSITARY AND EXISTING TRUSTEE
Each Scheme Creditor hereby authorises and instructs the Scheme Company on and after the
Settlement Date to:
14.
(a)
give all such instructions as are required to be given by it to the Existing Trustee and/or the
Existing Depositary to ensure that the Existing Global Note is cancelled and disposed of by
the Existing Depositary;
(b)
take such other action as may be required under the Existing Indenture to effect the
cancellation and full absolute discharge of the Existing Notes and the Existing Guarantees,
including the cancellation and disposal of the Existing Notes; and
(c)
instruct the Existing Trustee, the Existing Depositary, each Account Holder and/or each
Intermediary to take whatever action is necessary or reasonably appropriate to give effect to
the terms of the Scheme.
INSTRUCTIONS TO COLLATERAL AGENT
Each Scheme Creditor hereby authorises and instructs the Scheme Company at any time on or after
the Settlement Date to:
(a)
enter into, execute and deliver on behalf of each Scheme Creditor any instruction to the
Collateral Agent to take whatever action is necessary to release (and where applicable, reassign) the Existing Security; and
(b)
take such other actions as may be required under the Security Documents and/or the
Existing Indenture to release (and, where applicable, re-assign) the Existing Security.
- 57 -
CHAPTER THREE : BAR TIME AND DETERMINATION OF ACCEPTED CLAIMS
15.
BAR TIME
15.1
All Persons claiming to be Noteholders must provide the Information Agent with a duly completed
Account Holder Letter in respect of their Scheme Claims and make the affirmative Securities Law
Representations to the Scheme Company and the Parent (and the Scheme Company and the
Parent or, if referred to the Adjudicator, the Adjudicator must be satisfied as to the accuracy thereof)
prior to the Bar Time in order to be entitled to receive Scheme Consideration in the form of New
Notes. Any Noteholder which does not provide the Information Agent with a duly completed Account
Holder Letter in respect of its Scheme Claims or does not make the Securities Law Representations
to the Scheme Company and the Parent (or the Scheme Company, the Parent or, if referred to the
Adjudicator, the Adjudicator is not satisfied as to the accuracy thereof) as required by the Scheme
shall be deemed for all purposes to be an Ineligible Person.
15.2
As soon as practicable after the Effective Date, the Information Agent shall display a notice on its
website at http://www.lynchpinbm.com/projects/public-projects/mobile8 informing Scheme Creditors
of the Bar Time.
16.
DETERMINATION OF ACCEPTED CLAIMS
16.1
All Accepted Claims shall be determined as at the Record Time.
16.2
Each Scheme Creditor shall have an Accepted Claim equivalent to the outstanding principal amount
of such Scheme Creditor's interest in the Existing Global Note at the Record Time as set forth in the
records of the relevant Clearing System, Account Holder and/or Intermediary, as applicable (without
double counting).
16.3
If the Scheme Company refuses to Accept an alleged Claim received from an alleged Scheme
Creditor, Account Holder or other Person, it shall promptly prepare a statement in writing or
electronic mail of its reasons for doing so and promptly send such statement to the Person alleging
such Claim against the Scheme Company.
16.4
In the event that there is any dispute between the Scheme Company and any Person as to the
existence or the amount of the Liability or Claim asserted by an alleged Scheme Creditor (other than
disputes that arise in connection with the casting of votes at the Scheme Meeting, which shall be
resolved by the Chairman in accordance with Chapter 6), the Scheme Company or such alleged
Scheme Creditor shall refer the matter to the Adjudicator in accordance with the Adjudication
Procedure. The opinion of the Adjudicator shall, insofar as permitted by law, be final and binding on
the Scheme Company and such alleged Scheme Creditor. Any such Claim Accepted by the
Adjudicator on or prior to the Bar Time in accordance with the Adjudication Procedure shall be
treated as an Accepted Claim as at the Record Time.
16.5
The entitlement of each Noteholder to Scheme Consideration to be Distributed in accordance with
Chapter 5 of this Scheme shall only be calculated on the basis of Accepted Claims.
17.
SALES, ASSIGNMENTS AND TRANSFERS
None of the Scheme Company, the Parent or the Information Agent shall recognise any sale,
assignment, transfer or any disclosed sub-participation of any Scheme Claim after the Record Time.
18.
PROVISION OF INFORMATION
18.1
Account Holder Letters shall provide the Information Agent with all information requested in, and be
submitted in accordance with the instructions set out in, the form of Account Holder Letter.
18.2
If the Information Agent refuses to accept an Account Holder Letter it shall promptly prepare a
written statement or electronic mail of its reasons for doing so and send such statement to the party
that provided such Account Holder Letter.
- 58 -
CHAPTER FOUR : DISTRIBUTION OF NEW NOTES TO NOTEHOLDERS
19.
DISTRIBUTION OF NEW NOTES TO ELIGIBLE PERSONS
19.1
On the Settlement Date, the Parent shall issue New Notes at one hundred percent (100%) of their
principal amount in an aggregate principal amount of US$100,000,000 (representing one hundred
percent (100%) of the outstanding principal amount of the Existing Notes).
19.2
New Notes will be exchanged for Existing Notes on a Dollar for Dollar basis, such that each Eligible
Person will be entitled to receive US$1,000 in principal amount of New Notes for every US$1,000 in
principal amount of Existing Notes to which such Eligible Person was entitled at the Record Time.
19.3
The New Notes shall be issued in global form and shall be represented by one New Global Note
issued to and registered in the name of a nominee of the New Depositary.
19.4
The Parent shall deposit the New Global Note with the New Depositary for the Clearing Systems.
19.5
Interests in the New Global Note shall be allocated through relevant accounts in the Clearing
Systems to Account Holders on behalf of Eligible Persons, in the aggregate principal amount of New
Notes to which they are entitled as calculated in accordance with the terms of this Scheme.
19.6
New Notes are indebtedness in principal amounts of no less than US$1,000 in accordance with the
terms of the Fiscal Agency Agreement. Entitlements to New Notes will be rounded down to the
nearest US$1,000. All entitlements of less than that amount which would have arisen, but for this
paragraph, shall be disregarded entirely.
20.
DISTRIBUTION OF NEW NOTES TO INELIGIBLE PERSONS
20.1
Any interests in New Notes which would be Distributed pursuant to paragraph 19 of this Chapter 4
which are not so Distributed on the basis that the applicable Noteholder is an Ineligible Person will
instead be issued to the Scheme Company. The Scheme Company will hold such interests in New
Notes on trust for the Ineligible Persons in accordance with the terms of the Trust Deed.
20.2
If, at the Bar Time, any Noteholder has not provided the Information Agent with a duly completed
Account Holder Letter in respect of its Scheme Claims or has not made the Securities Law
Representations to the Scheme Company and the Parent (or the Scheme Company, the Parent or,
if referred to the Adjudicator, the Adjudicator is not satisfied as to the accuracy thereof), such Person
shall be deemed for all purposes to be an Ineligible Person and the Scheme Company shall, on or
prior to the Settlement Date, duly execute the Trust Deed so that the New Notes which would
otherwise have been issued to such Ineligible Person on the Settlement Date can instead be issued
to the Scheme Company and held by the Scheme Company on trust for such Ineligible Person in
21.
GENERAL MATTERS AS TO DISTRIBUTION
The Scheme Company and/or the Parent (as applicable) shall give all necessary instructions to the
Information Agent to give effect to the provisions of this Chapter 4 of the Scheme.
22.
THE INFORMATION AGENT
The Information Agent shall not be liable for any Claim arising in respect of the performance of its
duties as Information Agent under this Scheme except where such Claim results from its own fraud,
gross negligence or willful misconduct.
- 59 -
CHAPTER FIVE : CONDITIONS TO THE EFFECTIVENESS OF THE SCHEME
23.
The Scheme shall only become effective following the satisfaction, or waiver by the Scheme
Company, of all of the following conditions:
Scheme
Procedures:
(i)
the approval of the Scheme (with or without modifications) by a
simple majority (50%) in number of the Scheme Creditors attending
and voting at the Scheme Meeting either in person or by proxy
representing seventy-five percent (75%) in value of the Scheme
Claims of the Scheme Creditors attending and voting at the Scheme
Meeting either in person or by proxy;
(ii) the sanction of the Scheme (with or without modifications) by the
Court; and
(iii) the delivery of an office copy of the order of the Court to the Registrar
of Companies for registration;
Approvals,
Consents and
Authorisations:
(i)
all Authorisations (if any) having been obtained and remaining in full
force and effect without variation, and all necessary statutory or
regulatory obligations in all relevant jurisdictions having been
complied with and no requirement having been imposed by any one
or more Governmental Entities which is not expressly provided for (or
is in addition to requirements expressly provided for) in relevant laws,
rules, regulations or codes in connection with the Scheme or any
matters, documents or things relating thereto, in each aforesaid case
up to and at the time when the Scheme becomes effective;
(ii) no Governmental Entity in any jurisdiction having taken or instituted
any Proceeding (or enacted, made or proposed, and there not
continuing to be outstanding, any statute, regulation, demand or
order) that would make the Scheme void, unenforceable or illegal (or
which would impose any material and adverse conditions or
obligations on or with respect to the Scheme); and
Other
(i)
the Parent duly executing the Deed of Undertaking.
The Scheme Company shall determine whether any Condition has been satisfied and its
determination shall, in the absence of manifest error, be binding on the Parent, each Releasing
Party and each Scheme Creditor. For the avoidance of doubt, the requirement for the Parent to
provide a duly executed Deed of Undertaking is an express condition to effectiveness of the Scheme
and may not be waived.
The Scheme Company may, at any hearing to sanction the Scheme, consent on behalf of all
Scheme Creditors, each Releasing Party and the Parent to any modification of the Scheme or any
terms or conditions which the Court may think fit to approve or impose and which would not directly
or indirectly have a materially adverse effect on the interests of any Scheme Creditor, any Releasing
Party or the Parent under the Scheme.
- 60 -
CHAPTER SIX : GENERAL
24.
IMPACT OF SECURITIES LAW
24.1
New Notes will not be Distributed to or to the order, or for the account or benefit, of any Person
where such Distribution would be prohibited by any application of law or regulation. Any interests in
New Notes that would have been Distributed to any Person but for such prohibition will instead be
issued to the Scheme Company. The Scheme Company will hold such interests in New Notes on
trust for the Ineligible Persons in accordance with the terms of the Trust Deed.
24.2
The New Notes will not be registered under the US Securities Act or any state or other securities
laws of the United States or any other jurisdiction. Accordingly, the New Notes are being offered
outside the United States in accordance with Regulation S under the US Securities Act. None of the
New Notes may be offered or sold in the United States or to any US Persons except in accordance
with Regulation S under the US Securities Act.
24.3
In the event that any holder of Existing Notes is resident in the United States, the Parent will rely on
the exemption from registration under Section 3(a)(10) of the US Securities Act. The Court has
been informed that any order sanctioning the Scheme, if granted, may constitute the basis for an
exemption from the registration requirements of the US Securities Act provided by Section
3(a)(10). The Distribution of the Scheme Consideration to Persons resident in certain jurisdictions,
including the states of Arizona, California, Colorado, Guam and Indiana will also be subject to the
limitations described in Appendix 2.
24.4
For the purpose of qualifying for the Section 3(a)(10) exemption the Scheme Company will advise
the Court prior to the hearing that the Parent will rely on such exemption and will not register the
New Notes under the US Securities Act based on the Court's sanctioning of the Scheme following a
hearing on its fairness to the Scheme Creditors.
25.
THE ADJUDICATOR
25.1
There shall be one Adjudicator whose duty it will be to act as an expert, and not as an arbitrator,
with respect to all matters referred to him under the terms of the Scheme.
25.2
The office of Adjudicator shall be vacated if the holder of such office:
(a)
dies; or
(b)
is convicted of an indictable offence; or
(c)
resigns his office (which shall be permissible and effective only if he gives at least two (2)
months notice to the Scheme Company prior to such resignation); or
(d)
becomes bankrupt; or
(e)
is disqualified from membership of a professional body of which he is a member; or
(f)
is disqualified for acting as a company director by any court of competent jurisdiction; or
(g)
becomes mentally disordered.
25.3
In the event of a vacancy in the office of the Adjudicator, the Scheme Company shall appoint a
suitably qualified replacement.
25.4
The Adjudicator shall have the powers, duties and functions, and the rights, conferred upon him by
the Scheme. In exercising his powers and carrying out his duties and functions under the Scheme,
the Adjudicator shall act in good faith and with due care and diligence in the interests of the Scheme
Creditors as a whole, and shall exercise his powers under the Scheme for the purpose of ensuring
that the Scheme is implemented in compliance with its terms.
- 61 -
25.5
The Adjudicator shall be a fit and proper Person who in the opinion of the Scheme Company is duly
qualified to carry out the functions allocated to such Person under the Scheme.
26.
DISPUTE RESOLUTION PROCEDURES
26.1
The Scheme Company shall seek, in the first instance, to resolve any Disputed Claim by agreement.
If such attempt at resolution is unsuccessful after the expiry of a period of five (5) days, the Scheme
Company shall refer the dispute to the Adjudicator by forwarding written notice of the Disputed
Claim to the Adjudicator and to the Scheme Creditor, as applicable, together with the relevant
documents relating to such dispute.
26.2
Once a Disputed Claim is referred to the Adjudicator, the following timetable shall apply:
(a)
within two (2) days of receiving notification of the Disputed Claim, the Adjudicator may call
upon the Scheme Company and/or the relevant Scheme Creditor to produce any further
documents or other information which he deems necessary;
(b)
if such documentation or other information is not received within five (5) calendar days of
the date upon which the Adjudicator makes the request, the Adjudicator shall, subject to
paragraph (c) below, make his determination on the basis of the documents received from
the Scheme Company and/or the relevant Scheme Creditor, as applicable, by such time;
(c)
within five (5) calendar days of: (i) such documentation being provided by the Scheme
Company and/or the Scheme Creditor, as applicable; or (ii) the expiry of the period provided
for in paragraph (b) above, the Adjudicator shall provide the Scheme Company and the
Scheme Creditor with a copy of his written decision and thereafter the amount Accepted by
the Adjudicator in respect of the Disputed Claim shall be binding on the Scheme Company
and the Scheme Creditor, and (to the fullest extent permitted by applicable law) there shall
be no right of challenge or appeal from the decision of the Adjudicator; and
(d)
if the Adjudicator does not require further information he shall, within five (5) calendar days
of receiving notification of the Disputed Claim from the Scheme Company, provide the
Scheme Company and the Scheme Creditor with a copy of his written decision and
thereafter the amount Accepted by the Adjudicator in respect of the Disputed Claim shall be
binding on the Scheme Company and (to the fullest extent permitted by applicable law) the
Scheme Creditor and there shall be no right of challenge or appeal from the decision of the
Adjudicator.
26.3
The Scheme Company, in the event of an unresolved dispute, shall give the Scheme Creditor
written notice that the Scheme Company shall be forwarding to the Adjudicator the relevant
documents pertaining to the Disputed Claim.
26.4
The Adjudicator shall determine the issues by reference only to the documents submitted unless, at
his discretion, he wishes to hear oral submissions from either or both of the parties, and/or seek
such professional advice as he deems necessary and appropriate to carry out his duties as
Adjudicator. The Adjudicator may allow a further two (2) calendar days for oral submissions and/or
professional advice should he deem it appropriate.
26.5
The Adjudicator shall be entitled to make such order or give such directions in respect of his
reasonable remuneration and reasonable costs and expenses as he shall think just, including an
order to either one or both of the parties to deposit such sum as the Adjudicator shall deem
appropriate in respect of costs before commencement of the Adjudication Procedure, and in the
exercise of his powers conferred herein he shall be entitled to:
(a)
direct that any or all of his remuneration, costs and expenses shall be paid by the Scheme
Company; or
(b)
direct that any or all of his remuneration, costs and expenses shall be paid by the Scheme
Creditor in respect of whose claim the dispute has arisen, in which case, the same shall be
paid by the Scheme Creditor forthwith and in any case no later than fourteen (14) calendar
days from the date of such direction failing which the Scheme Company shall pay such
- 62 -
amount subject to the right of the Scheme Company to be reimbursed in full by the Scheme
Creditor and may at its discretion seek to deduct the same from any amount which may be
or may become due to the Scheme Creditor under the terms of the Scheme.
26.6
Notwithstanding any other provision of this Scheme, in the event that any Disputed Claim has not
been resolved by the Adjudicator prior to the Bar Time, no Scheme Consideration shall be
Distributed in respect of such Disputed Claim unless the Adjudicator subsequently determines that
such Disputed Claim is a Scheme Claim and should be Accepted by the Scheme Company. In the
event of such determination:
(a)
(b)
if the creditor in respect of such Disputed Claim is an Eligible Person:
(i)
such creditor shall be entitled to receive Scheme Consideration in the form of New
Notes in accordance with the terms of the Scheme; and
(ii)
interests in New Notes shall be Distributed to such creditor within one (1) calendar
month of such determination in accordance with the procedure set out in paragraph
19 of Chapter 4; or
if the creditor in respect of such Disputed Claim is an Ineligible Person, the interests in New
Notes which would otherwise have been Distributed to such creditor will instead be issued
to the Scheme Company within one (1) calendar month of such determination. The Scheme
Company will hold such interests in New Notes on trust for the relevant creditor in
27.
GENERAL PROVISIONS IN RELATION TO VOTING
27.1
Every Scheme Creditor whose votes are validly cast in person or by proxy at the Scheme Meeting
shall have one (1) vote for every Dollar of outstanding principal amount of the Existing Notes in
which it holds an economic or beneficial interest as principal at the Record Time (without double
counting).
27.2
The Chairman of the Scheme Meeting will collate the votes from each Scheme Creditor and will add
the votes during the Scheme Meeting. The Chairman shall then report to the Scheme Creditors as to
whether the Scheme has been approved.
27.3
For purposes of voting at the Scheme Meeting, any vote need only indicate whether the Scheme
Creditor casting such vote votes to approve or to not approve the Scheme. For the avoidance of
doubt, the Securities Law Representations required to be submitted and made by Noteholders
(through their Account Holders) in order to be entitled to Scheme Consideration in the form of New
Notes need not be provided and made in order for an otherwise properly lodged vote to be admitted
at the Scheme Meeting.
27.4
Subject to any inherent jurisdiction of the Court, the decision of the Chairman of the Scheme
Meeting as to the admission of votes at that meeting shall be final for the purposes of, and in relation
to the proceedings at, the Scheme Meeting.
28.
QUORUM REQUIRED FOR SCHEME MEETING
28.1
The Scheme Meeting shall require a quorum of two (2) Scheme Creditors present in person or by
proxy.
28.2
No business shall be transacted at the Scheme Meeting unless a quorum is present when the
meeting proceeds to business.
29.
CHAIRMAN OF SCHEME MEETING
The Chairman of the Scheme Meeting shall be Mr. Joel Hogarth, a partner at O’Melveny & Myers
LLP, solicitors to the Scheme Company as to English law, or failing him, any other partner of
O’Melveny & Myers LLP.
- 63 -
30.
BAR DATE
At least fourteen (14) calendar days prior to the Bar Date, the Scheme Company shall notify
Noteholders by sending notice to their Account Holders via the Clearing Systems that the Bar Time
is the last time for submitting a duly completed Account Holder Letter to the Information Agent and
providing the Securities Law Representations to the Scheme Company and the Parent in order to
receive Scheme Consideration in the form of New Notes.
31.
SCHEME COSTS
The Parent shall pay all Scheme Costs incurred by the Scheme Company in connection with the
negotiation, preparation and implementation of the Scheme as and when they arise, including the
costs of holding the Scheme Meeting and the costs of the petition to the Court to sanction the
Scheme, the costs, charges, expenses and disbursements of all financial and legal advisors to the
Scheme Company and the Parent and (where necessary) the remuneration, costs and expenses of
the Adjudicator.
32.
MODIFICATIONS OF THE SCHEME
The Scheme Company may, at any hearing to sanction the Scheme, consent on behalf of all
Scheme Creditors to any modification of the Scheme or any terms or conditions which the Court
may think fit to approve or impose and which would not directly or indirectly have a materially
adverse effect on the interests of any Scheme Creditor under the Scheme.
33.
MODIFICATIONS OF THE RIGHTS ATTACHING TO THE NEW NOTES
Nothing in this Scheme shall prevent the modification of any of the New Notes in accordance with
their respective terms.
34.
FURTHER RELEASES
34.1
Without prejudice to the generality of the foregoing and for the avoidance of doubt, with immediate
effect on and from the Settlement Date, but subject to paragraph 34.3 below, each Releasing Party
releases, waives, acquits and forever discharges to the fullest extent permitted by law, the Released
Parties from and against any and all Released Claims which any of the Releasing Parties can, shall
or may have, whether now or hereafter against the Released Party, whether known or unknown,
fixed or contingent, provided that the foregoing shall not impair or limit any right of any Releasing
Party or Released Party created under the Scheme.
34.2
Each of the Scheme Creditors hereby:
(a)
irrevocably authorises the Scheme Company to enter into, execute and deliver as a deed at
any time after the Settlement Date on behalf of the Scheme Creditors one or more Deeds of
Release in the form attached at Appendix 5; and
(b)
irrevocably appoints the Scheme Company to act as its agent, and grants an irrevocable
power of attorney to the Scheme Company, for the purpose of executing the same.
34.3
The discharge and release of the Released Claims will be conditional upon receipt by Noteholders
of Scheme Consideration in the form of New Notes to be Distributed by the Parent in accordance
with the terms of the Scheme.
35.
NOTICE
35.1
Any notice or other written communication to be given under or in relation to this Scheme shall be
given in writing and shall be deemed to have been duly given if it is delivered by hand or sent by
Post, and by air mail where it is addressed to a different country from that in which it is posted, to:
(a)
in the case of the Scheme Company: 54 Clarendon Road, Watford WD17 1DU, England;
- 64 -
(b)
in the case of a Scheme Creditor, its last known address according to the Scheme
Company, provided that all deliveries of notices, documents of title and cheques required to
be made by this Scheme shall be effected by posting the same in pre-paid envelopes
addressed to the Scheme Creditors or, if so directed by the Scheme Creditors, to the
relevant Account Holder for the Persons respectively entitled thereto at the addresses as
appearing in the relevant Account Holder Letter or to such other addresses (if any) as such
Persons may respectively direct in writing; and
(c)
in the case of any other Person, to any address set forth for that Person in any agreement
entered into in connection with the Scheme.
Neither the Parent nor the Scheme Company shall be responsible for any loss or delay in the
transmission of the documents of title or cheques posted in accordance with this paragraph 35
which shall be posted at the risk of the addressee.
35.2
35.3
In addition:
(a)
any notice or other written communication to be given to the Scheme Creditors under or in
relation to this Scheme shall also be deemed to have been duly given if sent by electronic
means through the Clearing Systems; and
(b)
any Account Holder Letter delivered to the Information Agent by a Scheme Creditor shall be
deemed to have been duly given if sent by e-mail to [email protected].
Any notice or other written communication to be given under the Scheme shall be deemed to have
been served:
(a)
if delivered by hand, on the first Business Day following delivery;
(b)
if sent by Post, on the second Business Day after posting if the recipient is in the country of
dispatch, and otherwise on the seventh day after posting; and
(c)
if distributed electronically through the Clearing Systems, on the fifth Business Day after
such distribution.
35.4
In proving service, it shall be sufficient proof, in the case of a notice sent by Post, that the envelope
was properly stamped, addressed and placed in the Post.
35.5
The accidental omission to send any notice, written communication or other document in
accordance with this paragraph or the non-receipt of any such notice by any Scheme Creditor shall
not affect any of the provisions of the Scheme or the effectiveness thereof.
36.
NO ADMISSIONS OF LIABILITY
Save as expressly set out in this Scheme or the Explanatory Statement, nothing in the Scheme or
the Explanatory Statement or the Distribution thereof to any Person evidences or constitutes any
admission by the Scheme Company or the Parent that a Person is a Scheme Creditor or that a
Liability is owed to any Person in respect of any Claim or right. The failure to distribute the Scheme,
the Scheme Document, Explanatory Statement, any notice or any other communication to any
Scheme Creditor shall not constitute an assertion by the Scheme Company or the Parent that such
Person is not a Scheme Creditor or that no Liability is owed to such Person.
37.
FORCE MAJEURE
None of the Scheme Creditors, the Parent, the Scheme Company, the Information Agent, the
Existing Trustee, the Collateral Agent or the Paying and Transfer Agent shall be in breach of its
obligations under the Scheme as a result of any delay or non-performance of its obligations under
this Scheme arising from any Force Majeure.
- 65 -
38.
CONFLICT & INCONSISTENCY
In the case of a conflict or inconsistency between the terms of the Scheme and the terms of the
Explanatory Statement, the terms of the Scheme will prevail.
39.
GOVERNING LAW AND JURISDICTION
The Scheme shall be governed by, and construed in accordance with, the laws of England and
Wales. The Scheme Company, the Parent, each Existing Guarantor, the Information Agent and
each of the Scheme Creditors hereby agree that any Disputed Claim or other dispute shall be
determined in accordance with the Adjudication Procedure provided by this Scheme.
2 February 2011
- 66 -
APPENDIX 1
APPENDIX 1
INSTRUCTIONS ON HOW TO VOTE
Scheme Creditors are creditors of the Scheme Company in respect of Scheme Claims and include (for the
avoidance of doubt but without double counting in each case): (i) Noteholders; (ii) the Existing Trustee; (iii)
the Existing Depositary; and (iv) Account Holders and Intermediaries. For the purposes of the Scheme you
will be a Noteholder if you hold or, as the case may be, held an economic or beneficial interest as principal
in Existing Notes held in global form through the Clearing Systems at the Record Time.
Noteholders should immediately contact their Account Holders (through any Intermediaries, if
appropriate) to ensure that a valid Account Holder Letter is submitted in respect of their interests in
the Existing Notes at the Record Time.
Each Noteholder will need to give instructions to its Account Holders as to voting and arrange for Blocking
Instructions in respect of the Existing Notes to which it is entitled to be delivered to the relevant Clearing
System. Each Noteholder should note that, unless a duly completed Account Holder Letter in respect of its
Scheme Claims is delivered to the Information Agent on or prior to the Voting Time, the voting instructions
contained in that Account Holder Letter will be disregarded for the purposes of voting at the Scheme
Meeting and the Noteholder will not be able to vote at the Scheme Meeting. An Account Holder Letter will
only be valid if it contains reference numbers for the Blocking Instructions submitted to the Clearing Systems
in relation to the Existing Notes that are the subject of such Account Holder Letter.
The Voting Time will also be the Record Time for the purposes of determining entitlement to Scheme
Consideration.
Scheme Consideration will be Distributed to Noteholders specified in an Account Holder Letter who are
Eligible Persons on the Settlement Date. Eligible Persons are Noteholders (acting, where applicable,
through their Account Holders) who have: (i) provided the Information Agent with a duly completed Account
Holder Letters in respect of their Scheme Claims; and (ii) provided the Scheme Company or the Parent with
affirmative Securities Law Representations (and the Scheme Company and the Parent are or, if referred to
the Adjudicator, the Adjudicator is satisfied as to the accuracy thereof), in each case prior to the Bar Time.
Any interests in New Notes which would otherwise have been Distributed to an Ineligible Person will instead
be allocated to the account of the Scheme Company to be held on trust for the relevant Ineligible Person in
These instructions contain important guidance and information which should be carefully considered by
Account Holders when completing their Account Holder Letters and by Noteholders when giving instructions
to Account Holders to complete such Account Holder Letters.
Requirement for an Account Holder Letter
1.
2.
A valid Account Holder Letter constitutes:
(a)
(where received prior to the Voting Time) a Noteholder’s instruction as to voting in respect of
the Scheme Meeting;
(b)
(where received prior to the Bar Time) a Noteholder’s confirmation that any New Notes to be
delivered as Scheme Consideration shall be delivered to the Clearing System account
which evidences such Noteholder’s interest in the Existing Notes; and
(c)
(where received prior to the Bar Time) a Noteholder’s confirmation (and that of the relevant
Account Holder) that it is eligible to participate in the offer and sale of the New Notes in
accordance with applicable securities laws and regulations.
Scheme Consideration will not be Distributed to or to the order, or for the account or benefit, of any
Person where such Distribution would be prohibited by any applicable law or regulation. Noteholders
will be required to give the Securities Law Representations in order to establish their eligibility to
- 67 -
APPENDIX 1
participate in the offer and sale of the New Notes under applicable securities laws. Where a required
confirmation cannot be given, this should be indicated in the Account Holder Letter. In these
circumstances, the relevant Noteholder may not be eligible to receive New Notes and such
Noteholder should contact the Information Agent without delay.
3.
It will be the responsibility of Account Holders to obtain from the Intermediaries and/or Noteholders
on whose behalf they are acting, in accordance with the procedures established between them,
whatever information or instructions they may require to submit duly completed Account Holder
Letters on behalf of the relevant Noteholders. To assist this process, Noteholders (through
Intermediaries, if appropriate) are strongly encouraged to contact the Account Holder through which
they hold their Existing Notes to enable that Account Holder to complete an Account Holder Letter
and deliver such Account Holder Letter to the Information Agent prior to the Voting Time (or the Bar
Time if the Voting Time has passed).
4.
Account Holders should ensure that Blocking Instructions are delivered in respect of Existing Notes
that are the subject of an Account Holder Letter and that the reference numbers of such Blocking
Instructions are referred to in the relevant Account Holder Letter. In the event that any Account
Holder Letter is delivered prior to the Voting Time, the Existing Notes the subject of that Account
Holder Letter must be blocked with immediate effect from the Voting Time. In the event that any
Account Holder Letter is delivered after the Voting Time, but prior to the Bar Time, the Existing
Notes the subject of that Account Holder Letter must be blocked with immediate effect from the date
of such Account Holder Letter. The procedures for blocking Existing Notes are described in more
detail at paragraphs 11 to 16 below.
5.
Any Account Holder Letter and Blocking Instructions delivered will be irrevocable unless and until
the Scheme is not approved by the requisite statutory majorities at the Scheme Meeting, or the
Court refuses to sanction the Scheme, or the Scheme is withdrawn.
6.
By delivering an Account Holder Letter to the Information Agent, the Account Holder: (a) confirms to
the Scheme Company, the Parent and the Information Agent that Blocking Instructions in respect of
the Existing Notes which are the subject of the Account Holder Letter have been issued to the
relevant Clearing System with effect from or before the Voting Time (or the date of the relevant
Account Holder Letter if the Voting Time has passed) in accordance with the normal procedures of
such Clearing System; and (b) gives the other confirmations required by the Account Holder Letter.
7.
Valid Account Holder Letters should be delivered to the Information Agent (by facsimile, e-mail or
post) by no later than the Voting Time for voting purposes and by no later than the Bar Time for the
purposes of the Distribution of Scheme Consideration on the Settlement Date. Voting instructions
given in Account Holder Letters delivered after the Voting Time will be disregarded for voting
purposes at the Scheme Meeting. An Account Holder Letter will be deemed delivered when actually
received by the Information Agent, provided that if the Information Agent subsequently identifies any
error in the Account Holder Letter or determines that an Account Holder Letter is not valid, such
Account Holder Letter will not be deemed delivered until all such errors have been rectified or the
Account Holder Letter has been completed to the satisfaction of the Information Agent (which may,
in certain circumstances, request that a new Account Holder Letter be submitted). The Information
Agent will confirm receipt of Account Holder Letters to Account Holders who submit them. This
confirmation does not imply automatic acceptance of the Account Holder Letter. The Information
Agent will be able to process only valid and duly completed Account Holder Letters.
Voting in respect of the Existing Notes
8.
A Noteholder who wishes to attend and vote in person at the Scheme Meeting should ensure that
this is recorded in the Account Holder Letter delivered on its behalf and that the voting intention
section of the Account Holder Letter is completed (although this does not bind such Noteholder to
vote in any particular way at the Scheme Meeting). In order to attend the Scheme Meeting, the
Noteholder or, if different, the Person nominated in the Account Holder Letter by such Noteholder,
will be required to produce a copy of the Account Holder Letter and a valid passport as proof of
identity at the registration desk for the Scheme Meeting at least one (1) hour prior to the scheduled
start time of the Scheme Meeting.
- 68 -
APPENDIX 1
9.
A Noteholder who wishes to authorise the Information Agent to appoint a proxy (other than the
Chairman) to attend and vote at the Scheme Meeting on his behalf should ensure that the identity of
the relevant proxy and the manner in which the proxy should vote are recorded in the relevant
Account Holder Letter. The Account Holder Letter so completed will constitute authority to the
Information Agent to complete and execute a form of proxy in the name of and on behalf of the
Noteholder. In order to attend the Scheme Meeting the Person appointed as proxy should produce a
copy of the Account Holder Letter including the form of proxy in which it is named as proxy. Where
this copy can be matched against one of the copies provided by the Information Agent to the
Scheme Company, the Person appointed as proxy will be admitted to the Scheme Meeting upon
presentation of a valid passport as proof of identity. Where a copy of the form of proxy cannot be
produced by the Person appointed as proxy, admittance to the Scheme Meeting will be permitted
only on the production of a valid passport as proof of identity, provided that identity conforms with
the details in the relevant copy of the form of proxy submitted by the Information Agent to the
Scheme Company. Requesting that a form of proxy be completed by the Information Agent on
behalf of a Noteholder does not prevent that Noteholder from attending and voting at the relevant
meeting on production of a copy of the Account Holder Letter in which it is named as a Noteholder.
10.
A Noteholder who does not wish to attend the Scheme Meeting but who wishes to authorise the
Information Agent to appoint the Chairman of the Scheme Meeting as his proxy to vote on his behalf
at the Scheme Meeting should ensure that this and the manner in which the Chairman should vote
are recorded in the relevant Account Holder Letter. The Account Holder Letter so completed will
constitute authority to the Information Agent to complete and execute a form of proxy in the name of
and on behalf of the Noteholder appointing the Chairman of the Scheme Meeting as proxy to vote
on that Noteholder’s behalf. Requesting that a form of proxy be completed by the Information Agent
on behalf of the Noteholder does not prevent that Noteholder from attending and voting at the
relevant meeting on production of a copy of the Account Holder Letter in which it is named as the
Scheme Creditor.
Procedure for blocking Existing Notes
11.
Account Holders should ensure that the relevant Clearing System has received and complied with
Blocking Instructions in respect of all Existing Notes which are the subject of an Account Holder
Letter with effect from or before the Voting Time (or the date of the relevant Account Holder Letter if
the Voting Time has passed). Account Holders should note that Euroclear and/or Clearstream may
impose an earlier deadline for the submission of Blocking Instructions. To ensure timely submission
of Blocking Instructions, Account Holders should check with the relevant Clearing System as to
whether any earlier deadline is applicable and ensure Blocking Instructions are submitted well
before any applicable deadlines.
12.
Noteholders procuring the submission of Account Holder Letters should instruct the relevant
Account Holders to confirm (and Account Holders should ensure that the Account Holder Letter
cross references) the relevant Blocking Instruction reference number.
13.
Existing Notes held in Euroclear or Clearstream should be blocked in accordance with the
procedures of the relevant Clearing System and the deadlines required by that Clearing System.
14.
The Information Agent will request Euroclear and/or Clearstream (as the case may be) to confirm to
its satisfaction that the relevant Existing Notes have been blocked with effect from or before the
Voting Time (or the date of the relevant Account Holder Letter if the Voting Time has passed). In the
event that the relevant Clearing System fails to do so, the Information Agent shall be entitled to
reject the Account Holder Letter.
15.
The Information Agent will use all reasonable endeavours to assist Account Holders to complete
their Account Holder Letters. However, failure to deliver a valid Account Holder Letter in the manner
and within the deadlines referred to above may prejudice voting instructions being counted and/or
timely delivery of Scheme Consideration.
16.
None of the Information Agent, the Scheme Company, the Parent or any other Person will be
responsible for any losses or liabilities incurred by a Scheme Creditor as a result of any
determination by the Information Agent that an Account Holder Letter contains an error or is
incomplete, even if this is subsequently shown not to have been the case.
- 69 -
APPENDIX 2
APPENDIX 2
EFFECT OF SECURITIES LAW RESTRICTIONS UNDER THE SCHEME
General principles of the Scheme
Each Noteholder entitled to receive New Notes under the Scheme must comply with all laws and regulations
applicable to it in force in any relevant jurisdictions and must obtain any Authorisations required to be
obtained by it under the laws and regulations applicable to it in force in any relevant jurisdiction to which it is
subject and the Parent, the Scheme Company, their respective directors and their respective advisers shall
not have any responsibility therefor.
New Notes will not be Distributed pursuant to the Scheme to or to the order of, or for the account or benefit
of, any Person where such Distribution would be prohibited by any applicable law or regulation.
Any determination made by the Scheme Company or the Parent with respect to legal or regulatory
prohibitions on the Distribution of New Notes pursuant to the Scheme will be made solely with regard to such
laws and regulations as are generally applicable to Persons located in the relevant jurisdiction. Such
determinations will not take account of any legal or regulatory restrictions that may be applicable to a
particular Scheme Creditor by virtue of any business or other activity conducted by such Person in such
jurisdiction, or the regulatory status or other relevant legal attributes of such Person.
In order to receive Scheme Consideration in the form of New Notes, each Noteholder will be required to
represent that it is not requesting delivery of any New Notes to, or for the account or benefit of, a Person that
is located in any jurisdiction where the Distribution of New Notes to that Person would be prohibited by any
applicable law or regulation or so prohibited except after the Scheme Company or the Parent has obtained
any Authorisation. Noteholders may make this representation in an Account Holder Letter.
Noteholders are strongly advised to consult their professional advisers in respect of the contents of the
Securities Law Representations and as to whether any laws or regulations which may be applicable to them
may give rise to any Liability or penalty, or require them to obtain any governmental or other consents or to
pay any taxes or duties, as a result of the implementation of the Scheme. None of the Scheme Company,
the Parent, any other member of the Group, the Existing Trustee, the Collateral Agent, the Paying and
Transfer Agent, the Fiscal Agent, the Existing Depositary, the New Depositary, the Information Agent, their
respective directors or any other party accepts any responsibility for any Liabilities (including but not limited
to consequential Liabilities) or regulatory, civil or criminal sanctions or penalties incurred by the Scheme
Creditors as a result of the implementation of the Scheme in respect of laws or regulations applicable to
them.
Effect of securities law confirmations under the Scheme
To the extent that New Notes that would otherwise be deliverable pursuant to the Scheme cannot be
delivered because of a legal or regulatory prohibition described above, such New Notes shall instead be
allocated to the account of the Scheme Company to be held on trust for the relevant Noteholders in
In addition, if any Securities Law Representation has been given inappropriately then New Notes will be
allocated to the account of the Scheme Company to be held on trust for the relevant Noteholders in
accordance with the terms of the Trust Deed. The Securities Law Representation will be deemed to have
been given inappropriately if: (a) information provided in or in connection with the Scheme indicates that
such information has been submitted by, or on behalf of, or delivery of New Notes is being requested to or to
the order of, or for the account or benefit of, a Person that is located in any jurisdiction where the Distribution
of New Notes to that Person would be prohibited by any applicable law or regulation; or (b) the Scheme
Company or the Parent obtains actual knowledge that any such Securities Law Representation is false.
Each of the Scheme Company and the Parent reserves the right to take whatever steps it deems necessary
to verify any question of fact that may impact on the accuracy of the Securities Law Representations. The
determination as to whether any Securities Law Representation has been appropriately given will be made
by the Scheme Company and the Parent or, if referred to the Adjudicator, the Adjudicator.
- 70 -
APPENDIX 2
Please note that any Scheme Creditor located in Arizona, California, Colorado, Guam or Indiana will
not be able to make the required confirmations unless it meets the qualifications set forth opposite
the name of such jurisdiction below.
Jurisdiction
Qualification
Arizona
Any bank, savings institution, trust company, insurance company, investment
company as defined in the US Investment Company Act of 1940, a pension or
profit sharing trust or other financial institution or institutional buyer, or a dealer,
whether the Person is acting for itself or in a fiduciary capacity.
California
Any broker-dealer, bank, savings and loan association, trust company, insurance
company, investment company registered under the Investment Company Act of
1940, pension or profit-sharing trust (other than a pension or profit-sharing trust of
the issuer, a self-employed individual retirement plan or individual retirement
account), or such other institutional investor or governmental agency or
instrumentality designated by rule of the Commissioner of Corporations, whether
the purchaser is acting for itself or as trustee, provided that any seller who is not
registered as a broker-dealer in California shall have no place of business in
California, shall be registered as a broker-dealer under the US Securities
Exchange Act of 1934, shall not previously have had any certificate denied or
revoked under any California securities statute and shall not direct offers to sell or
buy into California in any manner to Persons other than those described above.
Furthermore, sales may not be made by either registered or non-registered brokerdealers in California to such institutional investors unless the purchaser represents
that it is purchasing for its own account (or such trust account) for investment and
not with a view to or for sale in connection with any Distribution of the security. By
rule, the Commissioner has designated as an "institutional investor" the Federal
Government, any agency or instrumentality of the Federal Government, any
corporation wholly owned by the Federal Government, any state, any city, city and
county, or county, or any agency or instrumentality of a state, city, city and county,
or county, or any state university or state college, and any retirement system for
the benefit of employees of any of the foregoing. Furthermore, the Commissioner
has also designated as an "institutional investor": (a) Any organization described in
Section 501(c)(3) of the Internal Revenue Code, as amended December 29, 1981,
which has total assets (including endowment, annuity and life income funds) of not
less than $5,000,000 according to its most recent audited financial statement; (b)
Any corporation which has a net worth on a consolidated basis according to its
most recent audited financial statement of not less than $14,000,000, and (c) Any
wholly-owned subsidiary of any institutional investor described herein.
Colorado
Any broker-dealer, or a financial or institutional investor, whether the purchaser is
acting for itself or in some fiduciary capacity. A financial or institutional investor
includes: (a) a depositary institution, which is defined as: (i) a Person that is
organised or chartered, or is doing business or holds an authorisation certificate,
under the laws of a state or of the United States which authorises the Person to
receive deposits, including deposits in savings, share, certificate, or other deposit
accounts, and that is supervised and examined for the protection of depositors by
an official or agency of a state or the United States, or (ii) a trust company or other
institution that is authorised by federal or state law to exercise fiduciary powers of
the type a national bank is permitted to exercise under the authority of the
comptroller of the currency and is supervised and examined by an official or
agency of a state or the United States; (b) an insurance company; (c) a separate
account of an insurance company; (d) an investment company registered under
the US Investment Company Act of 1940; (e) a business development company as
defined in the US Investment Company Act of 1940; (f) any private business
development company as defined in the US Investment Advisers Act of 1940; (g)
an employee pension, profit-sharing or benefit plan if the plan has total assets in
excess of US$5,000,000 or its investment decisions are made by a named
fiduciary, as defined in ERISA, that is a broker-dealer registered under the
- 71 -
APPENDIX 2
Exchange Act, an investment adviser registered or exempt from registration under
the US Investment Advisers Act of 1940, a depositary institution, or an insurance
company; (h) an entity, but not an individual, a substantial part of whose business
activities consist of investing, purchasing, selling, or trading in securities of more
than one issuer and not of its own issue and that has total assets in excess of
US$5,000,000 as of the end of its latest fiscal year; (i) a small business investment
company licensed by the US federal small business administration under the US
Small Business Investment Act of 1958; and (j) any other institutional buyer.
Guam
Any bank, savings institution, trust company, insurance company, investment
company as defined in the Investment Company Act of 1940, pension or profitsharing trust, or other financial institution or institutional buyer, or to any dealer,
whether the purchaser is acting for itself or in a fiduciary capacity, provided that
any seller who is not registered as a broker-dealer in Guam shall have no place of
business in Guam and shall effect transactions in Guam exclusively with or
through such Persons whether acting for themselves or as trustees.
Indiana
A depository institution or international banking institution, an insurance company,
a separate account of an insurance company, an investment company as defined
in the Investment Company Act of 1940, a broker-dealer registered under the
Securities Exchange Act of 1934, an employee pension, profit-sharing, or benefit
plan if the plan has total assets in excess of ten million dollars ($10,000,000) or its
investment decisions are made by a named fiduciary, as defined in the Employee
Retirement Income Security Act of 1974, that is a broker-dealer registered under
the Securities Exchange Act of 1934, an investment adviser registered or exempt
from registration under the Investment Advisers Act of 1940, a depository
institution, or an insurance company; a plan established and maintained by a state,
a political subdivision of a state, or an agency or instrumentality of a state or a
political subdivision of a state for the benefit of its employees, if the plan has total
assets in excess of ten million dollars ($10,000,000) or its investment decisions are
made by a duly designated public official or by a named fiduciary, as defined in the
employee Retirement Income Security Act of l974, that is a broker-dealer
registered under the Securities Exchange Act of 1934, an investment adviser
registered or exempt from Registration under the Investment Advisers Act of 1940,
a depository institution, or an insurance company; a trust, if it has total assets in
excess of ten million dollars ($10,000,000), its trustee is a depository institution,
and its participants are exclusively plans of the types identified above, regardless
of the size of their assets, except a trust that includes as participants self-directed
individual retirement accounts or similar self-directed plans; an organization
described in Section 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts trust or similar business trust, limited liability company, or
partnership, not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of ten million dollars ($10,000,000), a small business
investment company licensed by the Small Business Administration under Section
301(c) of the Small Business Investment Act of 1958 with total assets in excess of
ten million dollars ($10,000,000), a private business development company, as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940 with total
assets in excess of ten million dollars ($10,000,000), a federal covered investment
adviser acting for its own account, a "qualified institutional buyer", as defined in
Rule 144A(a)(1), other than Rule 144A(a)(1)(i)(H), adopted under the Securities
Act of 1933, a "major US institutional investor", as defined in Rule 15a-6(b)(4)(i)
adopted under the Securities Exchange Act of 1934, and any other Person, other
than an individual, of institutional character with total assets in excess of ten million
dollars ($10,000,000) not organized for the specific purpose of evading the Indiana
securities act.
British Virgin Islands
This Scheme Document shall not constitute any invitation to the public in the British Virgin Islands to
subscribe for any of the New Notes, whether directly or indirectly.
- 72 -
APPENDIX 2
Cayman Islands
The New Notes may not be offered or sold in the Cayman Islands.
Hong Kong
The New Notes have not been offered or sold and will not be offered or sold in Hong Kong, by means of any
document, other than: (i) to “professional investors” as defined in the Securities and Futures Ordinance
(Cap. 571) of Hong Kong and any rules made under that Ordinance; or (ii) in other circumstances which do
not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong
Kong or which do not constitute an offer to the public within the meaning of that Ordinance.
No advertisement, invitation or document relating to the New Notes has been issued by, or been in the
possession for the purposes of issue of, the Scheme Creditors and will not be issued or in the possession
for the purposes of issue, whether in Hong Kong or elsewhere, of the Scheme Creditors, which is directed
at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted
to do so under the securities laws of Hong Kong) other than with respect to New Notes which are, or are
intended to be, disposed of only to persons outside Hong Kong or only to “professional investors” as defined
in the Securities and Futures Ordinance and any rules made under that Ordinance.
Indonesia
This Scheme Document and any offering in respect of the New Notes does not constitute a public offering in
Indonesia under Law Number 8 of 1995 regarding Capital Markets. This Scheme Document may not be
distributed in Indonesia and the New Notes may not be offered or sold in Indonesia or to Indonesian citizens
wherever they are domiciled, or to Indonesian residents in a manner which constitutes a public offer under
the laws of Indonesia.
Italy
The offering of the New Notes is not being made in the Republic of Italy. This Scheme Document has not
been submitted to the clearance procedures of the Commissione Nazionale per le Società e la Borsa
(“CONSOB”) pursuant to Italian laws and regulations. Accordingly, holders of the Existing Notes are hereby
notified that, to the extent such holders are persons resident and/or located in the Republic of Italy, the
offering of the New Notes is not available to them and they may not offer to exchange Existing Notes
pursuant to the Scheme nor may the New Notes be offered, sold or delivered in the Republic of Italy and, as
such, any request or instruction to tender Existing Notes received from or on behalf of such persons shall be
ineffective and void, and neither this Scheme Document nor any other offering material relating to the
Existing Notes or the New Notes may be distributed or made available in the Republic of Italy.
Member State of the European Economic Area
This Scheme Document and any invitation or communication in respect of the New Notes will only be
delivered or so communicated to Persons in a Member State of the European Economic Area which has
implemented Directive 2003/71/EC (the "Prospectus Directive") (each, a "Relevant Member State") who
are qualified investors within the meaning of the law in that Relevant Member State implementing Article
2(1)(e) of the Prospectus Directive (each, a "Qualified Investor").
Each Person in a Relevant Member State who is a financial intermediary (as that term is used in Article 3(2)
of the Prospectus Directive), other than the Scheme Company, shall not acquire New Notes on a nondiscretionary basis on behalf of, nor shall they be acquired with a view to their offer or resale to, Persons in a
Relevant Member State who are not Qualified Investors.
Switzerland
The New Notes are being offered to Scheme Creditors in Switzerland without any public offering and
only to the extent that they have no intention to Distribute them to the public. This Scheme Document
is personal and confidential to each Scheme Creditor and does not constitute an offer to any other
Person. This Scheme Document shall in particular not be copied and/or distributed to the public in or
- 73 -
APPENDIX 2
from Switzerland.
This Scheme Document does not constitute an issue prospectus pursuant to Article 652a or Article
1156 of the Swiss Code of Obligations. The New Notes will be listed on the SWX Swiss Exchange and,
therefore, any documents relating to the New Notes, including, but not limited to, this Scheme Document,
may not comply with the disclosure standards of the listing rules of the SWX Swiss Exchange.
Singapore
This Scheme Document has not been and will not be registered as a prospectus with the Monetary Authority
of Singapore. Accordingly, this document may not be circulated or Distributed, and the New Notes may not
be offered or sold or caused to be made the subject of an invitation for subscription or purchase, whether
directly or indirectly, to Persons in Singapore other than: (i) to an institutional investor under Section 274 of
the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"); (ii) to a relevant Person pursuant to
Section 275(1) of the SFA, or any Person pursuant to Section 275(1A) of the SFA, and in accordance with
the conditions specified in Section 275 of the SFA; or (iii) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA.
Where the New Notes are subscribed or purchased under Section 275 of the SFA by a relevant Person
which is:
1.
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share capital of which is owned by one or
more individuals, each of whom is an accredited investor; or
2.
a trust (where the trustee is not an accredited investor), the sole purpose of which is to hold
investments, and of which each beneficiary is an individual who is an accredited investor, shares,
debentures and units of shares and debentures of that corporation or the beneficiaries' rights and
interest (howsoever described) in that trust shall not be transferred within six months after that
corporation or that trust has acquired the New Notes pursuant to an offer made under Section 275
except:
(a)
to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant
Person defined in Section 275(2) of the SFA, or to any Person pursuant to an offer that is
made on terms that such shares, debentures and units of shares and debentures of that
corporation or such rights and interest in that trust are acquired at a consideration of not
less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether
such amount is to be paid in cash or by exchange of securities or other assets, and further
for corporations, in accordance with the conditions specified in Section 275 of the SFA;
(b)
where no consideration is or will be given for the transfer; or
(c)
where the transfer is by operation of law.
The Netherlands
The New Notes may not, have not and will not, directly or indirectly, be offered, sold, pledged, transferred or
delivered in the Netherlands, whether at their initial Distribution or at any time thereafter, and neither this
explanatory statement nor any other document in respect of any offering may be Distributed or circulated in
the Netherlands, other than to professional market parties within the meaning of the Exemption Regulation
pursuant to the Dutch Act on the Supervision of the Credit System 1992 (Vrijstellingsregeling Wtk 1992)
(which includes, inter alia, banks, insurance companies, securities firms, collective investment undertakings
and pension funds supervised in the Netherlands or exempted from supervision on the basis of Dutch
legislation), provided that these parties acquire the relevant notes for their own account. The New Issuer has
represented, warranted and agreed that it will not offer the New Notes other than in accordance with the
foregoing.
Each person or legal entity, by purchasing one or more of the New Notes (or any interest therein), will be
deemed to have represented and agreed for the benefit of the New Issuer as set forth in the following legend
(which shall be placed on each note, whether or not offered to Dutch residents):
- 74 -
APPENDIX 2
ANY PERSON WHO HOLDS AN ECONOMIC OR BENEFICIAL INTEREST IN THE NEW NOTES SHALL
BE DEEMED TO HAVE REPRESENTED AND AGREED THAT IT IS A PROFESSIONAL MARKET
PARTY AND IS ACQUIRING THE NEW NOTES (OR ANY INTEREST THEREIN) FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A PROFESSIONAL MARKET PARTY, AS DEFINED IN
SECTION 1 SUBSECTION E OF THE EXEMPTION REGULATION PURSUANT TO THE DUTCH ACT ON
THE SUPERVISION OF THE CREDIT SYSTEM 1992 (VRIJSTELLINGSREGELING WTK 1992), AND TO
HAVE FURTHER REPRESENTED AND AGREED THAT: (i) IT MAY NOT OFFER, SELL, PLEDGE,
TRANSFER OR DELIVER AN ECONOMIC OR BENEFICIAL INTEREST IN THE NEW NOTES TO ANY
RESIDENT OF THE NETHERLANDS WHO IS NOT SUCH A PROFESSIONAL MARKET PARTY; AND (ii)
IT WILL PROVIDE NOTICE OF THIS RESTRICTION TO ANY SUBSEQUENT TRANSFEREE.
United Kingdom
No invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA
has been communicated or caused to be communicated, or will be communicated or caused to be
communicated in connection with the issue or sale of the New Notes, in circumstances in which section
21(1) of the FSMA does not apply to the Scheme Company or the Parent.
All applicable provisions of the FSMA have been complied with, and will be complied with, with respect to
anything done by the Scheme Creditors in relation to the New Notes in, from or otherwise involving the
United Kingdom.
United States
The New Notes have not been and will not be registered under the US Securities Act, or any state or other
securities laws of the United States or any other jurisdiction. The New Notes are being offered outside the
United States in accordance with Regulation S under the US Securities Act. None of the New Notes may be
offered or sold in the United States or to any US Persons except in accordance with Regulation S under the
US Securities Act.
In the event that any holder of Existing Notes is resident in the United States, the Parent will rely on the
exemption from registration under Section 3(a)(10) of the US Securities Act. The Court has been informed
that any order sanctioning the Scheme, if granted, may constitute the basis for an exemption from the
registration requirements of the US Securities Act provided by Section 3(a)(10).
- 75 -
APPENDIX 3
APPENDIX 3
NOTICE OF SCHEME MEETING
No. 383 of 2011
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF MOBILE-8 TELECOM FINANCE COMPANY B.V.
and
IN THE MATTER OF THE COMPANIES ACT 2006 OF ENGLAND AND WALES
NOTICE IS HEREBY GIVEN that by an Order dated 21 January 2011 (the “Order”) made in the above
matter, the High Court of Justice of England and Wales (the “Court”) has directed that a meeting of Scheme
Creditors (as defined in the Scheme) of the above-named company (hereinafter called the "Scheme
Company") (the "Scheme Meeting") be convened for the purpose of considering and, if thought fit,
approving (with or without modification) a scheme of arrangement pursuant to section 895 of the Companies
Act 2006 of England and Wales (the “Act”) (the "Scheme"), proposed to be made between the Scheme
Company and the Scheme Creditors and that such Scheme Meeting shall be held at 10 a.m. (London time)
on 11 March 2011 at the offices of O’Melveny & Myers LLP at Warwick Court, 5 Paternoster Square, London
EC4M 7DX, England.
A copy of the Scheme is incorporated in the composite document to be dispatched to Scheme Creditors in
respect of the Scheme, which includes an explanatory statement pursuant to Section 897 of the Act (the
"Scheme Document"). Unless otherwise indicated, capitalised words and phrases used herein have the
meaning provided in the Scheme Document.
Copies of the Scheme Document and the Order are available free of charge on request by Scheme
Creditors to the Scheme Company or its solicitors, O’Melveny & Myers LLP, and may also be downloaded
from the website of the Information Agent at http://www.lynchpinbm.com/projects/public-projects/mobile8 or
obtained by email to the Information Agent at [email protected].
VOTING ARRANGEMENTS
The following is a summary of the arrangements which have been made for the purpose of voting in respect
of the Scheme at the Scheme Meeting. Full details of these arrangements, and the action to be taken by
Scheme Creditors, are set out in the Scheme Document.
The Existing Trustee, as trustee of the Existing Notes, has been directed by Noteholders holding a majority
in outstanding principal amount of the Existing Notes not to, and accordingly will not, vote in respect of the
Existing Notes at the Scheme Meeting.
Votes attributable to Existing Notes may be cast by Noteholders by submitting a valid Account Holder Letter
in respect of their interests in Existing Notes.
By the Order, the Court has appointed Mr. Joel Hogarth, a partner at O’Melveny & Myers LLP, solicitors to
the Scheme Company as to English law, or failing him, any other partner of O’Melveny & Myers LLP, to act
as Chairman at the Scheme Meeting, and has directed the Chairman to report the result of the Scheme
Meeting to the Court.
In the event that the Scheme is approved by Scheme Creditors or Persons voting on their behalf, a hearing
before the Court is necessary in order to sanction the Scheme. All Scheme Creditors will be entitled to
attend the Court hearing in person or through legal representatives to support or oppose the sanctioning of
the Scheme. It is expected that the Court hearing will be held at 10:30 a.m. (London time) on 29 March 2011
at the Royal Courts of Justice, Strand, London WC2A 2LL, England. The Scheme will be subject to the
subsequent sanction of the Court.
- 76 -
APPENDIX 3
Each Noteholder will need to give instructions to the relevant Account Holders as to voting. Noteholders
should note, however, that unless a valid Account Holder Letter is delivered on or before the Voting Time,
the voting instructions contained in that Account Holder Letter will be disregarded for the purposes of voting
at the Scheme Meeting and the Noteholder will not be able to vote at the Scheme Meeting.
The Voting Time will also be the Record Time for the purposes of determining entitlement to Scheme
Consideration.
If you are a Noteholder, whether or not you are able to attend the Scheme Meeting or any adjournment
thereof, you are strongly urged to complete and sign the form of proxy contained at Part 4 of the Account
Holder Letter, in accordance with the instructions printed thereon. It is requested that the completed Account
Holder Letter (including the completed proxy form) be lodged by hand or by Post at Room 402, Wellington
Plaza, 56-58 Wellington Street, Central, Hong Kong or by facsimile to +852-2526-5020 marked for the
attention of Ms. Melanie Emmitt, to be received not later than the Voting Time. However, if a completed
Account Holder Letter (including a completed proxy form) is not so lodged or sent by facsimile, it may be
handed to the Chairman at the Scheme Meeting.
Dated this 2nd day of February 2011
O’Melveny & Myers LLP
Solicitors to the Scheme Company
- 77 -
APPENDIX 4
APPENDIX 4
FORM OF ACCOUNT HOLDER LETTER
ACCOUNT HOLDER LETTER
For use by Account Holders in Euroclear and Clearstream in respect of $100,000,000 guaranteed senior
secured notes due 2013 (ISIN: XS0313108143 (Regulation S Global Note)) issued by MOBILE-8 TELECOM
FINANCE COMPANY B.V. (“Scheme Company”) in relation to the Scheme Company’s scheme of
arrangement under section 895 of the Companies Act 2006 (“Scheme”).
Unless otherwise indicated, capitalised words and phrases used in this Account Holder Letter have the
meaning provided in the scheme document dated 2 February 2011 which contains, among other things, the
explanatory statement of the Scheme Company relating to the Scheme (“Scheme Document”), subject to
any amendments or modifications made by the Court.
The Scheme will, if implemented, materially affect certain creditors of the Scheme Company and the Parent
including the holders of the Existing Notes. Persons who are account holders with Euroclear or Clearstream
(together “Account Holders”) should use this Account Holder Letter to register details of their holdings of
the Existing Notes and to make certain elections with respect to the voting and the delivery of any Scheme
Consideration.
DEADLINES FOR RECEIPT OF BLOCKING INSTRUCTIONS
AND ACCOUNT HOLDER LETTER
This Account Holder Letter must be delivered by post, facsimile or e-mail to Lynchpin Bondholder
Management of Room 402, Wellington Plaza, 56-58 Wellington Street, Central, Hong Kong. (“Information
Agent”) (telephone number: +852-2526-5406; facsimile number: +852-2526-5020; e-mail:
[email protected]), marked for the attention of Ms. Melanie Emmitt, and must be received by
the Information Agent by:
1.
no later than 5:00 p.m. (London time) on 8 March 2011 (“Voting Time”) in order for the voting
instructions contained in this Account Holder Letter to constitute valid voting instructions for the
purposes of the Scheme; and
2.
no later than the Bar Time in order for the relevant Noteholder to be entitled to receive Scheme
Consideration in the form of New Notes. Any Noteholder which does not provide the Information
Agent with a duly completed Account Holder Letter or does not make the Securities Law
Representations to the Scheme Company and the Parent (or the Scheme Company, the Parent or,
if referred to the Adjudicator, the Adjudicator is not satisfied as to the accuracy thereof) prior to the
Bar Time shall be deemed for all purposes to be an Ineligible Person.
A separate Account Holder Letter must be completed in respect of each separate beneficial holding of
Existing Notes.
You are strongly advised to read the Explanatory Statement and, in particular, Appendix 1 to the Scheme
Document, before you complete this Account Holder Letter. Appendix 1 to the Scheme Document contains
detailed information on the various options contained in this Account Holder Letter.
This Account Holder Letter shall be governed by and construed in accordance with English law.
FOR ASSISTANCE CONTACT
Lynchpin Bondholder Management
Address: Room 402, Wellington Plaza, 56-58 Wellington Street, Central, Hong Kong.
Telephone: +852-2526-5406
Fax: +852-2526-5020
[email protected]
- 78 -
APPENDIX 4
PART 1 : NOTEHOLDER DETAILS
If you are not the Noteholder (that is, a Person with an economic or beneficial interest as principal in the
Existing Notes held in global form through the Clearing Systems), please ensure that you identify the
Noteholder on whose behalf you are submitting this Account Holder Letter. If such Noteholder does not wish
to provide details of his identity, please identify a Person authorised to act as his representative.
Full Name of Noteholder:
Address of Noteholder:
Jurisdiction of Incorporation of Noteholder (required if Noteholder is a company, partnership or other nonnatural Person)
Details of Authorised Employee (required if Noteholder is a company, partnership or other non-natural
Person):
Name and Title of Authorised Employee:
Passport Number of the Noteholder or Authorised Employee
Telephone number of Noteholder or Authorised Employee
Facsimile number of Noteholder or Authorised Employee
E-mail address of Noteholder or Authorised Employee
- 79 -
APPENDIX 4
PART 2 : HOLDING DETAILS
Details of the Existing Notes to which this Account Holder Letter relates
The Account Holder holds the following Existing Notes, which have been “blocked” by delivery a of Blocking
Instruction (the reference number of which is provided below) to the relevant Clearing System.
ISIN
Amount Blocked at
Clearing System
Clearing System
Clearing System
Account Number
Blocking Instruction
Reference Number*
* Corresponding to Blocking Instruction.
If the details of more than five (5) positions in respect of this Account Holder Letter need to be inserted, use
a continuation sheet. If you have used a continuation sheet, please tick the following box to confirm that this
is the case.

Further positions are listed on a continuation sheet.
- 80 -
APPENDIX 4
PART 3 : CONFIRMATIONS
The Account Holder named below confirms to the Scheme Company, the Parent and the Information
Agent (select “yes” or “no” as appropriate for each item):
A.
B.
C.
That all authority conferred or agreed to be conferred pursuant to this Account Holder Letter and
every obligation of the Account Holder under this Account Holder Letter shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the Account Holder and shall not be affected by, and shall survive, the death or
incapacity of the Account Holder and that all of the information in this Account Holder Letter is
complete and accurate.

Yes

No
That the Account Holder has irrevocably instructed Clearstream and/or Euroclear, as the case may
be, to block the Existing Notes identified in Part 2 of this Account Holder Letter with effect on and
from the Voting Time (or, if this Account Holder Letter is submitted after the Voting Time, the date of
this Account Holder Letter) and that a reference number for each such Blocking Instruction appears
in this Account Holder Letter.

Yes

No
That in relation to the Existing Notes identified in Part 2 of the Account Holder Letter the Account
Holder has authority:
(a)
to give the voting instructions set out in Part 4 of this Account Holder Letter and, if
applicable, to nominate the Person named in Part 4 of this Account Holder Letter to attend
and speak at the Scheme Meeting;
(b)
to give the confirmations set out in this Part 3 of this Account Holder Letter on behalf of itself
and the relevant Noteholder (if different); and
(c)
to make the Securities Law Representations given in Part 6 of this Account Holder Letter on
behalf of the relevant Noteholder.

Yes

No
An Account Holder who is unable to confirm “yes” in respect of paragraphs A to C above should
contact the Information Agent for assistance.
- 81 -
APPENDIX 4
PART 4 : VOTING
A.
Attendance at the Scheme Meeting
The Noteholder wishes:
B.

to appoint the Chairman of the Scheme Meeting as his proxy to attend and vote on his
behalf at the Scheme Meeting (please now only complete paragraph C below)

to attend and vote at the Scheme Meeting in person (please now only complete paragraph
B below)

to appoint a proxy (other than the Chairman of the Scheme Meeting) to attend and vote on
his behalf at the Scheme Meeting (please now only complete paragraph C below)
Indication of Voting Intention (for Noteholders that intend to attend and vote at the Scheme
Meeting in person)
The Noteholder intends to attend and vote (and the Account Holder is hereby authorised to vote on
its behalf) at the Scheme Meeting as follows. The Noteholder understands that this expression of
intention is not binding and that it may vote as it sees fit at the Scheme Meeting.
C.

FOR the Scheme

AGAINST the Scheme
Appointment of Proxy
The Noteholder wishes to appoint (and the Account Holder is hereby authorised to appoint on its
behalf):

the Chairman of the Scheme Meeting; or (tick box if appropriate)

the following individual (tick box if appropriate and fill in the details immediately below)
Name:
Address:
Passport Number:
as its proxy and wishes its proxy to vote:

FOR the Scheme

AGAINST the Scheme
- 82 -
APPENDIX 4
PART 5 : NEW NOTES
The Account Holder named in Part 7 of this Account Holder Letter confirms to the Scheme Company, the
Parent and the Information Agent that any New Notes to be delivered to the Account Holder as Scheme
Consideration shall be delivered to the clearing system account referred to in Part 2 of this Account Holder
Letter.
- 83 -
APPENDIX 4
PART 6 : SECURITIES LAW REPRESENTATIONS
As a result of applicable securities laws and regulations, in order to receive Scheme Consideration in the
form of New Notes (or an economic or beneficial interest therein held through the Clearing Systems),
Noteholders must make the following representations. Noteholders who are able to make these
representations must make them through the relevant Account Holder (or Intermediary, as applicable) in this
Account Holder Letter.
We understand and unconditionally acknowledge that:
1.
the New Notes will not be registered under the US Securities Act or any state or other securities
laws of the United States or any other jurisdiction. Accordingly, the New Notes are being offered
outside the United States in accordance with Regulation S under the US Securities Act. None of
the New Notes may be offered or sold in the United States or to any US Persons except in
accordance with Regulation S under the US Securities Act or as set out in paragraph 2 below;
2.
in the event that any holder of Existing Notes is resident in the United States, the Parent will rely on
the exemption from registration under Section 3(a)(10) of the US Securities Act. The Court has
been informed that any order sanctioning the Scheme, if granted, may constitute the basis for an
exemption from the registration requirements of the US Securities Act provided by Section
3(a)(10);
3.
the Distribution of New Notes to Persons located in certain jurisdictions, including the states of
Arizona, California, Colorado, Guam and Indiana, is also subject to the limitations described in
Appendix 2 of the Scheme Document; and
4.
defined terms used in these Securities Law Representations shall be those defined in the Scheme.
Furthermore, we represent for the benefit of the Scheme Company, the Parent and the Information Agent
that:
1.
we have complied with all laws and regulations applicable to us in force in any relevant jurisdictions
as required for us to receive Scheme Consideration in the form of New Notes and have obtained all
Authorisations required to be obtained by us under the laws and regulations applicable to us in force
in any relevant jurisdiction to which we are subject and the Scheme Company, the Parent, the
Information Agent, their respective directors and their respective advisers shall not have any
responsibility therefor;
2.
the Distribution of New Notes to us will not infringe the laws of any jurisdiction or require the Scheme
Company, the Parent or the Information Agent to observe or obtain any Authorisation;
3.
we are not requesting delivery of any New Notes to or to the order of, or for the account or benefit of,
a Person that is located in any jurisdiction where the Distribution of New Notes to that Person would
be prohibited by any applicable law or regulation or require the Scheme Company, the Parent or the
Information Agent to observe or obtain any Authorisation; and
4.
in the event that we are a US person (as defined in Regulation S under the US Securities Act)) or
are located in the United States of America, we are a "qualified institutional buyer" (as defined in
Rule 144A under the US Securities Act) or purchasing for the account of a qualified institutional
buyer and: (i) the New Notes have not been offered to us by any form of general solicitation or
general advertising; and (ii) our receipt of the New Notes is not part of a plan or scheme to evade
the registration requirements of the US Securities Act.
Signed by:
……………………………………………..
Duly authorised for and on behalf of
[insert name of Scheme Creditor]
- 84 -
APPENDIX 4
PART 7 : EXECUTION BY ACCOUNT HOLDER
Full name of Euroclear or Clearstream Account Holder:
Clearing System Account Number of Account Holder:
Details of Authorised Employee of Account Holder:
Full Name and Job Title:
Telephone number (including country code):
Facsimile number (including country code):
E-mail address:
Address (including postal code and country):
Authorised Employee Signature:
Date:
2011
Before returning this Account Holder Letter, please ensure that you have provided all the
information requested. Acceptance of this Account Holder Letter by the Information Agent is subject
to Euroclear and/or Clearstream (as the case may be) confirming to the satisfaction of the
Information Agent that the Existing Notes identified in Part 2 of this Account Holder Letter have been
blocked with effect from or before the Voting Time (or the date of the this Account Holder Letter if
the Voting Time has passed). Information in this Account Holder Letter must be consistent with the
relevant Blocking Instructions.
- 85 -
APPENDIX 5
APPENDIX 5
FORM OF DEED OF RELEASE
THIS DEED (the “Deed”) is made on [●] 2011 by:
(1)
MOBILE-8 TELECOM FINANCE COMPANY B.V., a private company with limited liability,
incorporated under the laws of The Netherlands, whose head office, principal place of business and
effective place of management is at 54 Clarendon Road, Watford WD17 1DU, England (the
“Scheme Company”); and
(2)
THE SCHEME CREDITORS (as defined herein), acting by the Scheme Company pursuant to the
authority conferred upon the Scheme Company by the Scheme Creditors under paragraph 34 of
Chapter 6 of the Scheme (as defined herein).
WHEREAS:
(A)
Pursuant to the terms of the Scheme, each Scheme Creditor has authorised the Scheme Company
to enter into and execute and deliver this Deed on its behalf.
(B)
The parties hereto have agreed to enter into and execute and deliver this Deed on the terms set out
below pursuant to the Scheme.
NOW IT IS AGREED as follows:
1.
INTERPRETATION
1.1
Unless otherwise indicated, capitalised words and phrases used in this Deed have the meaning
provided in the Scheme. In addition:
“Directors and Former Directors” means any person who is, or who has been at any time since 15
August 2007, a director of the Scheme Company, the Parent or any other member of the Group; and
“Scheme” means the scheme of arrangement entered into between the Scheme Company and
certain creditors of the Scheme Company under section 895 of the Act sanctioned by the Court on
[●] 2011.
1.2
In this Deed:
(a)
references to any act, statute or statutory provision shall include a reference to that
provision as amended, re-enacted or replaced from time to time whether before or after the
date of this Deed and any former statutory provision replaced (with or without modification)
by the provision referred to;
(b)
words in the plural shall include the singular and vice versa; and
(c)
reference to a person includes a reference to any body corporate, unincorporated
association or partnership and to that person’s legal personal representatives or
successors.
2.
WAIVER, RELEASE AND CONFIRMATION
2.1
Pursuant to the Scheme, each Scheme Creditor (on its own behalf and on behalf of any person to
whom it may have transferred Existing Notes after the Record Time) and the Scheme Company
hereby irrevocably and unconditionally waive, in each case to the fullest extent permitted as a matter
of law, each and every Claim which they or any of them have or may have against any or all of:
- 86 -
APPENDIX 5
(a)
the Parent;
(b)
the Scheme Company;
(c)
each other member of the Group; and
(d)
the Directors and Former Directors,
in relation to or arising out of or being in any way connected with the Existing Notes, the Existing
Indenture, the Existing Guarantees, the Existing Security Documents, the Intercompany Loan, the
Intercompany Loan Agreement or any Scheme Claims and/or the implementation of the Scheme
(with the exception of the Claims of the Existing Trustee, the Collateral Agent and the Paying and
Transfer Agent in respect of: (i) any fees and expenses; and (ii) any amounts due under any
indemnity, in each case due to them under the terms of the Existing Indenture and/or the Existing
Security Documents in respect of the period ending on the Settlement Date, which shall survive and
remain in full force and effect).
2.2
Pursuant to the Scheme, each Scheme Creditor (on its own behalf and on behalf of any person to
whom it may have transferred Existing Notes after the Record Time) and, other than in respect of
itself, the Scheme Company hereby irrevocably and unconditionally release, in each case to the
fullest extent permitted as a matter of law, each and all of:
(a)
the Parent;
(b)
the Scheme Company;
(c)
each other member of the Group; and
(d)
the Directors and Former Directors,
from each and every Liability which they or any of them may have to the Scheme Company or a
Scheme Creditor or any person to whom a Scheme Creditor may have transferred Existing Notes
after the Record Time, in relation to or arising out of or being in any way connected with the Existing
Notes, the Existing Indenture, the Existing Guarantees, the Existing Security Documents, the
Intercompany Loan, the Intercompany Loan Agreement or any Scheme Claims and/or the
implementation of the Scheme (other than Liabilities due to the Existing Trustee, the Collateral
Agent and the Paying and Transfer Agent in respect of: (i) any fees and expenses due to them; and
(ii) any amounts under any indemnity, in each case due to them under the terms of the Existing
Indenture and/or the Existing Security Documents in respect of the period ending on the Settlement
Date, which shall survive and remain in full force and effect).
2.3
The Scheme Creditors hereby acknowledge that the right of Noteholders to receive Scheme
Consideration as defined in, and in accordance with the provisions of, the Scheme is accepted in full
and final settlement of all Claims and Liabilities waived and released pursuant to this Deed (with the
exception of the Claims of, and Liabilities due to, the Existing Trustee, the Collateral Agent and the
Paying and Transfer Agent in respect of: (i) any fees and expenses; and (ii) any amounts under any
indemnity, in each case due to them under the terms of the Existing Indenture and/or the Existing
Security Documents in respect of the period ending on the Settlement Date, which shall survive and
remain in full force and effect).
3.
FURTHER ASSURANCE
Each party shall, at its own cost, do and execute or procure to be done and executed all necessary
acts, deeds, documents and things reasonably within its power to give effect to this Deed.
4.
CONFLICT
This Deed is expressly intended to supplement the obligations set out in the Scheme in relation to
the releases to be given thereunder. If at any time there shall be any conflict between the provisions
of this Deed and the provisions of the Scheme, the provisions of this Deed shall prevail.
- 87 -
APPENDIX 5
5.
THIRD PARTIES
The Parent, the other members of the Group and the Directors and Former Directors shall be able to
enforce this Deed. Save as aforesaid, a person who is not a party to this Deed shall have no rights,
whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise, to enforce any of its
terms.
6.
COUNTERPARTS
This Deed may be executed in two or more counterparts each of which shall be deemed to be an
original and which together shall constitute one and the same instrument.
7.
GOVERNING LAW
This Deed and any non-contractual obligations arising under or in connection with this Deed is
governed by and is to be construed in accordance with English law. Any matter, claim or dispute
arising out of or in connection with this Deed is to be governed by and construed in accordance with
English law.
IN WITNESS of which this Deed has been duly executed and delivered on the date first appearing on this
Deed.
The Scheme Company
EXECUTED AND DELIVERED
AS A DEED on behalf of
by:
)
)
)
)
Mr. Tan Yok Siew
Sole Director
The Scheme Creditors
THE SCHEME CREDITORS
by MOBILE-8 TELECOM FINANCE COMPANY B.V.
acting pursuant to the authority conferred upon it by the
Scheme Creditors under paragraph 34 of Chapter 6 of
the Scheme by:
)
)
)
)
)
)
)
Mr. Tan Yok Siew
Sole Director
- 88 -
APPENDIX 6
APPENDIX 6
FORM OF DEED OF UNDERTAKING
THIS DEED OF UNDERTAKING (this “Deed”) is made on [●] 2011 by:
(1)
PT MOBILE-8 TELECOM TBK, a limited liability company incorporated in the Republic of Indonesia
(the “Parent”).
IN FAVOUR OF
(2)
MOBILE-8 TELECOM FINANCE COMPANY B.V., a private company with limited liability
incorporated under the laws of The Netherlands, whose head office, principal place of business and
effective place of management is at 54 Clarendon Road, Watford WD17 1DU, England (the
“Scheme Company”);
(3)
THE HIGH COURT OF JUSTICE OF ENGLAND AND WALES (the “Court”); and
(4)
THE SCHEME CREDITORS (the “Scheme Creditors”).
WHEREAS
(A)
The Scheme Company proposes to enter into a scheme of arrangement under Section 895 of the
Companies Act 2006 of England and Wales with the Scheme Creditors.
(B)
The Scheme Creditors are creditors of the Scheme Company and the Parent, in its capacity as an
Existing Guarantor in respect of the Existing Notes. The Scheme will apply to, among other things,
all Liabilities of the Scheme Company and the Parent in respect of the Existing Notes (other than
Liabilities due to the Existing Trustee, the Collateral Agent and the Paying and Transfer Agent in
respect of: (i) any fees and expenses; and (ii) any amounts under any indemnity, in each case due
to them under the terms of the Existing Indenture and/or the Existing Security Documents in respect
of the period ending on the Settlement Date, which shall survive and remain in full force and effect).
(C)
The terms of the Scheme are described in further detail in the scheme document dated 2 February
2011 which contains, among other things, the explanatory statement of the Scheme Company
relating to the Scheme (the “Scheme Document”).
DEFINITIONS
Unless otherwise indicated, capitalised words and phrases used in this Deed have the meaning provided in
the Scheme Document.
THIS DEED WITNESSES AND IT IS HEREBY DECLARED AS FOLLOWS:
1.
The Parent:
(a)
hereby undertakes, to and for the benefit of the Scheme Company, the Court and the
Scheme Creditors to instruct counsel to appear on its behalf at each hearing in connection
with the Scheme to give an undertaking on its behalf to the Scheme Company, the Court
and the Scheme Creditors to be bound by the Scheme;
(b)
hereby consents to the Scheme and, upon the Scheme being sanctioned by the Court,
agrees to be bound by it on the terms and conditions and in such form as may be
sanctioned by the Court; and
(c)
upon the Scheme being sanctioned by the Court, hereby undertakes to execute or procure
to be executed all such documents, and do or procure to be done all such acts and things,
- 89 -
APPENDIX 6
as the Scheme Company and/or the Court may consider necessary or desirable for the
purposes of giving effect to the Scheme.
2.
This Deed and any non-contractual obligations arising out of or in connection with this Deed shall be
governed by, and construed in accordance with, the laws of England and Wales.
Deed.
The Parent
PT MOBILE-8 TELECOM TBK
by:
)
)
)
)
Name:
Director
Name:
Director
- 90 -
APPENDIX 7
APPENDIX 7
FORM OF TRUST DEED
THIS DEED OF TRUST (this “Deed”) is made on [●] 2011 by:
(1)
MOBILE-8 TELECOM FINANCE COMPANY B.V., a limited liability company incorporated in the
Netherlands, whose head office, principal place of business and effective place of management is at
54 Clarendon Road, Watford WD17 1DU, England (the “Trustee”, which expression, where the
context so admits, includes all persons for the time being the trustee or trustees of the trusts created
by this Deed).
IN FAVOUR OF
(2)
THE BENEFICIARIES, as such term is defined below.
WHEREAS
(A)
The Trustee proposes to enter into a scheme of arrangement (“Scheme”) under Section 895 of the
Companies Act 2006 of England and Wales with the Scheme Creditors.
(B)
Under the terms of the Scheme, the Parent will issue New Notes to Noteholders that are Eligible
Persons in exchange for Existing Notes issued by the Scheme Company.
(C)
New Notes that would otherwise have been issued to Noteholders that are Ineligible Persons will
instead be issued to the Trustee to be held on trust for the benefit of the Ineligible Persons (as
Beneficiaries) in accordance with the terms of this Deed.
(D)
The terms of the Scheme are described in further detail in the scheme document dated 2 February
2011 which contains, among other things, the explanatory statement of the Scheme Company
relating to the Scheme (the “Scheme Document”).
DEFINITIONS
Unless otherwise indicated, capitalised words and phrases used in this Deed have the meaning provided in
the Scheme Document. In addition:
“Beneficiaries” means the Ineligible Persons (as such term is defined in the Scheme Document) and shall
include the Discretionary Trust Beneficiaries to the extent necessary as a result of the operation of Clause
1.3 below.
“Discretionary Trust Beneficiaries” means the Parent and each Subsidiary of the Parent from time to time.
“Market Note Price” means the highest bid for the New Notes available for acceptance by the Trustee (or
its custodian) through the Clearing Systems on the Initial Share Sale Date or relevant Business Day falling
within the Extended Share Sale Period (as applicable).
“Market Price” means:
(a)
in the case of New Notes, the Market Note Price; and
(b)
in the case of Shares, the Market Share Price.
“Market Share Price” means the highest bid for the Shares available for acceptance by the Trustee (or its
custodian) through the Stock Exchange on the Initial Note Sale Date or relevant Business Day falling within
the Extended Note Sale Period (as applicable).
“New Note Amount” means the outstanding principal amount of the New Notes issued to the Trustee on the
Settlement Date:
- 91 -
APPENDIX 7
(a)
as increased as a result of any issuance of New Notes to the Trustee pursuant to paragraph 26.6 of
Chapter 6 of the Scheme; and
(b)
as reduced as a result of any redemption of the New Notes by the Parent.
“New Note Payment” means any payment from the Parent to the Trustee in respect of the New Notes
(including, but not limited to, any payment of interest, Redemption Amount or Restructuring Charge).
“Pro Rata Share” means, in relation to:
(a)
the New Note Amount;
(b)
any New Note Payment;
(c)
any Share Payment; and/or
(c)
any Shares,
(i)
in the case of a Beneficiary other than the Discretionary Trust Beneficiaries, an amount or
number (as applicable) reflecting the same proportion of the New Note Amount, such New
Note Payment, such Share Payment or such Shares (as applicable) as the proportion that
the outstanding principal amount of the Existing Notes held by the relevant Beneficiary at
the Record Time bore to the aggregate outstanding principal amount of Existing Notes held
collectively by that Beneficiary and each other Beneficiary at the Record Time; and
(ii)
in the case of the Discretionary Trust Beneficiaries, an amount or number (as applicable)
reflecting the same proportion of the New Note Amount, such New Note Payment, such
Share Payment or such Shares (as applicable) as the proportion that the outstanding
principal amount of New Notes allocated to the Discretionary Trust Beneficiaries as a result
of the operation of Clause 1.3 below bears to the aggregate outstanding principal amount of
Existing Notes held collectively by the Beneficiaries and any Ineligible Person that has
ceased to be a Beneficiary as a result of the operation of Clause 1.3 below at the Record
Time.
“Share Payment” means any dividend, distribution or other payment made by the Parent to the Trustee in
respect of Shares.
“Shares” means ordinary shares in the capital of the Parent issued by the Parent to the Trustee in
satisfaction of its obligation to redeem New Notes on a Redemption Date or make a payment in respect of
the Restructuring Charge.
THIS DEED WITNESSES AND IT IS HEREBY DECLARED AS FOLLOWS:
1.
DECLARATION OF TRUST
1.1
The Trustee hereby declares that it shall hold the economic and/or beneficial interests in the New
Notes issued to it on the Settlement Date on trust for the benefit of the Beneficiaries in accordance
with the terms of this Deed.
1.2
Under the terms of the Scheme, New Notes will be issued in exchange for Existing Notes on a
Dollar for Dollar basis, such that each Noteholder shall be entitled to receive US$1,000 in principal
amount of New Notes for each US$1,000 in outstanding principal amount of Existing Notes held by
such Noteholder at the Record Time. Accordingly, each Beneficiary shall have a beneficial
entitlement to its Pro Rata Share of the New Notes held by the Trustee.
1.3
In the event that any Ineligible Person does not submit a duly completed Account Holder Letter prior
to the Bar Date and the identity of such Ineligible Person cannot be otherwise ascertained by the
Trustee on or prior to the date falling one (1) month from the Settlement Date, the New Notes that
would otherwise have been held by the Trustee on trust for such Ineligible Person shall instead be
held by the Trustee on discretionary trust for the Discretionary Trust Beneficiaries, such that:
- 92 -
APPENDIX 7
1.4
2.
(a)
the beneficial interest held by such Ineligible Person in such New Notes is absolutely and
irrevocably extinguished;
(b)
such Ineligible Person ceases to be a Beneficiary for the purposes of this Deed;
(c)
the Discretionary Trust Beneficiaries become a Beneficiary for the purposes of this Deed in
place of such Ineligible Person; and (d)
the Trustee may elect (in its sole discretion and at a time of its choosing) to vest the
beneficial interest in such New Notes in one or more Discretionary Trust Beneficiaries.
In the event that the beneficial interest in any New Notes is vested in one or more Discretionary
Trust Beneficiaries in accordance with Clause 1.3(d) above, the Trustee may (in its sole discretion
and at a time of its choosing) transfer the legal title to such New Notes to such Discretionary Trust
Beneficiaries, whereupon:
(a)
the fiduciary obligations of the Trustee in respect of such New Notes shall cease; and
(b)
such Discretionary Trust Beneficiaries will cease to be a Beneficiary for the purposes of this
Deed.
DISTRIBUTIONS OF NEW NOTES PAYMENTS
In the event that the Trustee receives any New Note Payment, it shall, as soon as reasonably
practicable following receipt of such New Note Payment, distribute such New Note Payment to the
Beneficiaries, such that each Beneficiary receives its Pro Rata Share.
3.
CONVERSION OF NEW NOTES
3.1
In the event that the Trustee is issued with any Shares (or any interest in Shares) it shall hold such
Shares (or interests in Shares) on trust for the benefit of the Beneficiaries in accordance with the
terms of this Deed and each Beneficiary shall have a beneficial entitlement to its Pro Rata Share of
the Shares held by the Trustee.
3.2
In the event that the Trustee receives any Share Payment, it shall, as soon as reasonably
practicable following receipt of such Share Payment, distribute such Share Payment to the
Beneficiaries, such that each Beneficiary receives its Pro Rata Share.
4.
SALE OF NEW NOTES
4.1
A Beneficiary shall be entitled, by written instruction to the Trustee, to require the Trustee to dispose
of all (but not part of) its Pro Rata Share of New Notes, by the sale of the economic and/or beneficial
interest in such New Notes through the Clearing Systems on the date (“Initial Note Sale Date”)
falling ten (10) Business Days from the date on which the Trustee receives such written instruction.
4.2
In the event that the Trustee is unable to dispose of any New Notes on the Initial Sale Date,
because there are no bids for New Notes available for acceptance by the Trustee (or its custodian)
through the Clearing Systems, or for any other reason, the Trustee shall attempt to dispose of the
relevant New Notes on each of the next ten (10) Business Days following the Initial Note Sale Date
(“Extended Note Sale Period”). If the Trustee is unable to dispose of the relevant New Notes
during the Extended Note Sale Period, it shall take additional instructions from the relevant
Beneficiary regarding the sale of such New Notes and, to the extent reasonably practicable, act in
accordance with such instructions.
4.3
A Beneficiary may only instruct the Trustee to dispose of the New Notes to which it is entitled under
this Clause 4 if it simultaneously instructs the Trustee to dispose of any Shares to which it is entitled
under Clause 5 below.
5.
SALE OF SHARES
5.1
A Beneficiary shall be entitled, by written instruction to the Trustee, to require the Trustee to dispose
of all (but not part of) its Pro Rata Share of any Shares, by the sale of such Shares through the
- 93 -
APPENDIX 7
Stock Exchange on the date (“Initial Share Sale Date”) falling ten (10) Business Days from the date
on which the Trustee receives such written instruction.
5.2
In the event that the Trustee is unable to dispose of any Shares on the Initial Share Sale Date,
because there are no bids for Shares available for acceptance by the Trustee (or its custodian)
through the Stock Exchange, or for any other reason, the Trustee shall attempt to dispose of the
relevant Shares on each of the next ten (10) Business Days following the Initial Share Sale Date
(“Extended Share Sale Period”). If the Trustee is unable to dispose of the relevant Shares during
the Extended Share Sale Period, it shall take additional instructions from the relevant Beneficiary
regarding the sale of such Shares and, to the extent reasonably practicable, act in accordance with
such instructions.
5.3
A Beneficiary may only instruct the Trustee to dispose of the Shares to which it is beneficially
entitled under this Clause 5 if it simultaneously instructs the Trustee to dispose of any New Notes to
which it is entitled under Clause 4 above.
6.
DISTRIBUTION OF SALE PROCEEDS
6.1
Any sale of New Notes and/or Shares pursuant to the terms of this Deed shall be made at the
Market Price and the Trustee shall distribute the proceeds of sale to the relevant Beneficiary as
soon as reasonably practicable following such sale.
6.2
The distribution of the proceeds of sale will be made in full and final satisfaction of the rights of the
relevant Beneficiary under this Deed and, with immediate effect from the date of distribution, such
Beneficiary shall cease to constitute a Beneficiary for purposes of this Deed.
7.
VOTING
7.1
The Trustee shall (unless prevented from doing so by any applicable law or other regulation or any
other restriction that is binding on the Trustee) promptly provide the Beneficiaries with copies of all
communications and documents it receives under or in relation to the New Notes and/or any Shares.
7.2
Each Beneficiary shall keep confidential all non-public information provided by the Trustee and not
disclose such information: (i) except as required by applicable law; and/or (ii) to its officers,
employees and professional advisers.
7.3
The Trustee shall, as soon as reasonably practicable after its having actual notice thereof, but in any
event within five (5) Business Days of its receipt of such actual notice, notify each Beneficiary in
writing of any matter in respect of which the Trustee may make any decision or cast any vote in
respect of the New Notes and/or the Shares.
7.4
Subject to Clauses 7.5 and 7.6 below, any Beneficiary may, within ten (10) Business Days of notice
of a vote or other proposed action by the holders of the New Notes and/or any Shares, by notice in
writing to the Trustee, direct the Trustee to vote its Pro Rata Share of New Notes and/or Shares.
7.5
If the Trustee has not received direction from any Beneficiary in respect of the exercise of its voting
and other rights and remedies as set out above within the ten (10) Business Day period set out in
Clause 7.4 above, the Trustee may exercise such voting and other rights and remedies as it sees fit
(in its sole discretion).
7.6
Notwithstanding the preceding provisions of this Clause 7, the Trustee shall have an overriding right
to refrain from acting in accordance with any directions in relation to the New Notes and/or the
Shares if the Trustee reasonably believes that to act in accordance with such directions may:
(a)
cause the Trustee to breach any applicable law or regulation; or
(b)
not be reasonably possible in the circumstances; or
(c)
cause it to expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of any of its own rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or satisfactory
indemnity against such risk or liability is not assured to it.
- 94 -
APPENDIX 7
8.
ROLE OF TRUSTEE
8.1
Section 1 of the Trustee Act 2000 shall not apply to any function of the Trustee in relation to any
trust constituted under this Deed. Where there are any inconsistencies between the Trustee Act
1925 and the Trustee Act 2000 and the provisions of this Deed, the provisions of this Deed shall, to
the extent allowed by law, prevail, and in the case of any such inconsistency with the Trustee Act
2000, the provisions of this Deed shall constitute a restriction or exclusion for the purposes of that
Act.
8.2
The Trustee shall not be responsible for acting upon any written instruction purporting to be provided
by a Beneficiary in accordance with the terms of this Deed, save in relation to its own gross
negligence, willful default or fraud.
8.3
No provision of this Deed shall require the Trustee to do anything which may: (a) be illegal or
contrary to applicable law or regulation; (b) cause it to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties or in the exercise of any of its own
rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or
satisfactory indemnity against such risk or liability is not assured to it.
8.4
Save as expressly otherwise provided in this Trust Deed, the Trustee shall have absolute and
uncontrolled discretion as to the exercise or non-exercise of its trusts, powers, authorities and
discretions under this Deed (the exercise or non-exercise of which as between the Trustee and the
Beneficiaries shall be conclusive and binding on the Beneficiaries) and shall not be responsible for
any liabilities, losses, costs, charges or expenses which may result from their exercise or nonexercise (save in relation to its own gross negligence, willful default or fraud) and in particular the
Trustee shall not be bound to act at the request or direction of the Beneficiaries or otherwise under
any provision of this Trust Deed or to take at such request or direction or otherwise any other action
under any provision of this Deed unless it shall first be indemnified and/or secured to its satisfaction
against all liabilities, losses, costs, charges and expenses to which it may render itself liable or
which it may incur by so doing.
8.5
As between itself and the Beneficiaries the Trustee may determine all questions and doubts arising
in relation to any of the provisions of this Deed. Such determinations, whether made upon such a
question actually raised or implied in the acts or proceedings of the Trustee, will be conclusive and
shall (in the absence of manifest error) bind the Trustee and the Beneficiaries.
8.6
Notwithstanding anything else herein contained, the Trustee may refrain from doing anything which
would or might in its opinion be contrary to any law of any jurisdiction, any court order or arbitral
award or any directive or regulation of any agency or any state or which would or might otherwise
render it liable to any person or which it would not have the power to do in that jurisdiction and may
do anything which is, in its opinion, necessary to comply with any such law, court order, arbitral
award, directive or regulation.
8.7
Notwithstanding anything to the contrary in this Deed, the Trustee shall not be liable to any person
for any matter or thing done or omitted in any way in connection with or in relation to this Deed, save
in relation to its own gross negligence, willful default or fraud.
9.
APPOINTEES
9.1
Whenever it considers it expedient in the interests of the Beneficiaries, the Trustee may, in the
conduct of its trust business, instead of acting personally, employ and pay an agent selected by it,
whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting
or conducting, any business and to do or concur in doing all acts required to be done by the Trustee
(including the receipt and payment of money).
9.2
Whenever it considers it expedient in the interests of the Beneficiaries, the Trustee may delegate to
any person subject to using reasonable care in such delegation on any terms (including power to
sub-delegate) all or any of its functions.
- 95 -
APPENDIX 7
9.3
In relation to any asset held by it under this Deed, the Trustee may appoint any person to act as its
nominee or custodian on any terms.
9.4
Provided that the Trustee exercises reasonable care in selecting any agent, delegate, nominee or
custodian appointed under this Clause 9 (an “Appointee”), the Trustee will not have any obligation
to supervise the Appointee and will not be responsible for any loss, liability, cost, claim, action,
demand or expense incurred by reason of the Appointee's misconduct or default or the misconduct
or default of any substitute appointed by the Appointee.
10.
RETIREMENT OF TRUSTEES AND APPOINTMENT OF CO-TRUSTEES
10.1
Any Trustee may retire at any time on giving at least thirty (30) days' prior written notice to the
Parent and the Beneficiaries, without giving any reason and without being responsible for any costs
occasioned by such retirement. If any Trustee gives notice of retirement at a time when it is the sole
Trustee, that Trustee shall, as soon as reasonably practicable, appoint another entity selected by
that Trustee as its successor.
10.2
The Trustee may, by written notice to the Parent and the Beneficiaries appoint anyone to act as an
additional Trustee jointly with the Trustee:
(a)
if the Trustee considers such appointment to be in the interests of the Beneficiaries;
(b)
to conform with any legal requirement, restriction or condition in a jurisdiction in which a
particular act is to be performed; or
(c)
to obtain a judgment or to enforce a judgment or any provision of this Deed in any
jurisdiction.
Subject to the provisions of this Deed the Trustee may confer on any person appointed as an
additional Trustee such functions as it thinks fit. The Trustee may by written notice to the Parent, the
Beneficiaries and that person remove any person appointed as an additional Trustee.
10.3
If there are more than two Trustees the majority of them acting together will be competent to perform
the Trustee's functions.
11.
CONFLICT
This Deed is expressly intended to supplement the obligations set out in the Scheme. If at any time
there shall be any conflict between the provisions of this Deed and the provisions of the Scheme,
the provisions of this Deed shall prevail.
12.
THIRD PARTIES
This Deed is for the benefit of the Beneficiaries and the Beneficiaries shall be able to enforce the
terms of this Deed. Save as aforesaid, a person who is not a party to this Deed shall have no rights,
whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise, to enforce any of its
terms.
13.
GOVERNING LAW
This Deed, and any non-contractual obligations arising under or in connection with this Deed, shall
be governed by and construed in accordance with English law.
14.
NOTICES
14.1
Any notice, instruction or other written communication to be given to the Trustee under or in relation
to this Deed shall be given in writing and shall be deemed to have been duly given if it is delivered
by hand or sent by Post to the Trustee at 54 Clarendon Road, Watford WD17 1DU, England, or
such other address as may be notified by the Trustee to the Beneficiaries from time to time.
- 96 -
APPENDIX 7
14.2
Any notice, instruction or other written communication to be given to the Trustee under or in relation
to this Deed shall be deemed to have been served:
(a)
if delivered by hand, on the first Business Day following delivery; and
(b)
if sent by Post, on the second Business Day after posting if the recipient is in the country of
dispatch, and otherwise on the seventh day after posting.
Deed.
The Trustee
by:
)
)
)
)
)
)
Tan Yok Siew
Sole Director
- 97 -
APPENDIX 8
APPENDIX 8
FAIRNESS OPINION OF INDEPENDENT FINANCIAL ADVISOR
- 98 -
IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to
the attached Exchange Offer Memorandum (the “Exchange Offer Memorandum”), whether received by e-mail or
otherwise received as a result of electronic communication and you are therefore advised to read this disclaimer
page carefully before reading, accessing or making any other use of the attached document, in accessing the attached
Exchange Offer Memorandum, you agree to be bound by the following terms and conditions, including any
modifications to them from time to time, each time you receive any information from us as a result of such access.
Capitalized terms used in this disclaimer but not otherwise defined shall have the meanings provided in the
Exchange Offer Memorandum.
Your Representations: You have been sent the attached Exchange Offer Memorandum on the basis that (i) you are
not a person to whom it is unlawful to send the attached Exchange Offer Memorandum or to make an invitation
under the Exchange Offer under applicable laws and (ii) you consent to delivery by electronic transmission.
If you receive this document by e-mail, your use of this e-mail is at your own risk and it is your responsibility to
take precautions to ensure that it is free from viruses and other items of a destructive nature.
This Exchange Offer Memorandum has been sent to you in an electronic form. You are reminded that documents
transmitted via this medium may be altered or changed during the process of transmission and consequently none of
the Issuer or any person who controls, or is a director, officer, employee or agent of the Issuer, nor any affiliate of
any such person accepts any liability or responsibility whatsoever in respect of any difference between the Exchange
Offer Memorandum distributed to you in electronic format and the hard copy version available to you on request
from the Issuer.
You are reminded that the attached Exchange Offer Memorandum has been delivered to you on the basis that you
are a person into whose possession this Exchange Offer Memorandum may be lawfully delivered in accordance with
the laws of the jurisdiction in which you are located and you may not nor are you authorized to deliver this
Exchange Offer Memorandum to any other person.
Restrictions: Nothing in this electronic transmission constitutes an offer of securities for sale in Australia, Belgium,
European Economic Area, France, Germany, Hong Kong, Italy, Indonesia, Singapore, Switzerland, the United
Kingdom, the United States or any other jurisdiction in which the making of such an offer would not be in
compliance with the laws or regulations of such jurisdiction.
THE EXCHANGE OFFER MEMORANDUM MAY NOT BE DOWNLOADED, FORWARDED OR
DISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON AND MAY NOT BE
REPRODUCED IN ANY MANNER WHATSOEVER. ANY DOWNLOADING, FORWARDING,
DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS
UNAUTHORIZED, FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION
OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE LAWS OF OTHER
JURISDICTIONS.
EXCHANGE OFFER MEMORANDUM
STRICTLY CONFIDENTIAL
US$100,000,000 Restructuring Notes
PT Mobile-8 Telecom Tbk (the “Issuer” or “Mobile-8” or the
“Company”)
(incorporated with limited liability under the laws of the Republic of Indonesia)
Mobile-8 Telecom Finance Company B.V. (the “Original Issuer” or “Mobile-8 B.V.”)
(incorporated with limited liability under the laws of The Netherlands)
Offer to Exchange any and all of the Original Issuer’s outstanding
11.25% Guaranteed Senior Notes due 2013
for up to US$100,000,000 aggregate principal amount of restructuring notes due 2025
We are presently unable to comply with our payment obligations in respect of the Existing Notes and under
the terms of the indenture dated August 25, 2007, by and among the Original Issuer, Issuer and DB Trustees (Hong
Kong) Limited, in its capacity as trustee and collateral agent (the “Existing Indenture”) pursuant to which the
Existing Notes were constituted.
To effect an arrangement and compromise in respect of the Existing Notes and to release the Original
Issuer and the guarantors in respect of the Existing Notes from any indebtedness arising in respect of the Existing
Notes and under the Existing Indenture, the Original Issuer is seeking to implement a scheme of arrangement (the
“Scheme”) pursuant to Section 895 of the Companies Act 2006 of England and Wales (the “Companies Act”). In
order for the Scheme to become effective: (i) the Scheme must be approved by a majority in number representing
seventy-five percent (75%) in value of the holders of the Existing Notes present and voting (in person or by proxy)
at the meeting of creditors (“Scheme Meeting”) convened by the High Court of Justice England and Wales (the
“Court”) for purposes of considering and, if thought fit, approving, the Scheme; (ii) the Scheme must be sanctioned
by the Court; and (iii) an office copy of the Court order sanctioning the Scheme must be delivered to the Registrar of
Companies of England and Wales for registration. If the Scheme becomes effective it will (under the laws of
England and Wales) be binding on all holders of the Existing Notes.
We are launching this exchange offer (the “Exchange Offer”) to implement the Scheme. Pursuant to the
Scheme and this Exchange Offer, the Original Issuer is offering to exchange any and all of its US$100,000,000 in
aggregate principal amount of the Existing Notes for up to US$100,000,000 in aggregate principal amount of
restructuring notes due 2025 (the “New Notes”) to be issued by the Issuer, on the terms and subject to the conditions
set forth in this Exchange Offer Memorandum. The Issuer is offering to issue, for each US$100,000 in principal
amount of the Existing Notes validly tendered and accepted, US$100,000 in principal amount of the New Notes. No
accrued and unpaid interest will be paid on the Existing Notes tendered in the Exchange Offer and such accrued and
unpaid interest will be waived in accordance with the terms of the Scheme in the event that the Scheme becomes
effective. The Exchange Offer will expire at the Bar Time as defined in the Scheme documents (the “Expiration
Time”). See “Terms of Exchange Offer”.
Our obligation to accept for exchange the Existing Notes validly tendered is subject to, and conditional
upon, the Scheme becoming effective. Each holder of the Existing Notes that votes in favour of the Scheme at the
Scheme Meeting will be treated as having validly tendered its Existing Notes for exchange. In addition, in the event
that the Scheme becomes effective all holders of the Existing Notes will (under the laws of England and Wales) be
bound to tender their Existing Notes for the New Notes on or prior to the Expiration Time. Accordingly, if the
Scheme becomes effective, any holder of the Existing Notes that does not tender its Existing Notes for exchange
prior to the Expiration Time will be treated as having tendered its Existing Notes for exchange immediately prior to
the Expiration Time.
THE EXCHANGE OF THE EXISTING NOTES FOR THE NEW NOTES INVOLVES A HIGH
DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE TWELVE OF THIS EXCHANGE
OFFER MEMORANDUM FOR A DISCUSSION OF RISKS THAT YOU SHOULD CONSIDER PRIOR
TO TENDERING EXISTING NOTES.
The New Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended
(the “Securities Act”), nor the securities laws of any state of the United States. Accordingly, the New Notes are
being offered outside the United States in accordance with Regulation S under the Securities Act. In the event that
any holder of the Existing Notes is resident in the United States, the Company will be relying on the exemption from
registration under Section 3(a)(10) of the Securities Act. The Court has been informed that any order sanctioning the
Scheme, if granted, will constitute the basis for an exemption from the registration requirements of the U.S.
Securities Act provided by Section 3(a)(10). The distribution of the Scheme consideration (which comprises the
issue of the New Notes) to persons resident in the jurisdictions of Arizona, California, Colorado, Guam and Indiana
will be subject to the certain limitations as described in the Scheme documents.
The New Notes may not be offered or sold in the United States or to any U.S. persons except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
January 14, 2011
TABLE OF CONTENTS
Page
Important Information ....................................................................................................................................................i
Forward-Looking Statements .......................................................................................................................................iv
Certain Defined Terms and Conventions......................................................................................................................iv
Summary........................................................................................................................................................................1
Risk Factors .................................................................................................................................................................12
Exchange Rates and Exchange Controls .....................................................................................................................37
Capitalization...............................................................................................................................................................39
Selected Consolidated Financial Information and Operating Data..............................................................................40
Management’s Discussion and Analysis of Financial Condition and Results of Operations ......................................46
The Telecommunications Industry in Indonesia..........................................................................................................67
Regulation of the Telecommunications Industry in Indonesia ....................................................................................71
Business.......................................................................................................................................................................76
Management ..............................................................................................................................................................112
The Issuer ..................................................................................................................................................................116
Related Party Transactions ........................................................................................................................................117
Description of Other Material Indebtedness and Other Material Obligations ...........................................................119
Description of the New Notes....................................................................................................................................123
Taxation.....................................................................................................................................................................128
Transfer Restrictions..................................................................................................................................................130
Summary of Certain Principal Differences Between Indonesian GAAP and U.S. GAAP ........................................132
General Information ..................................................................................................................................................141
Glossary of Technical Terms.....................................................................................................................................142
Financial Statements..................................................................................................................................................145
IMPORTANT INFORMATION
For information about the Exchange Offer and the terms and conditions of the New Notes, you should rely
only on the information contained in this Exchange Offer Memorandum. We have not authorized any person to
provide you with different information. If anyone provides you with different or inconsistent information, you
should not rely on it.
Each holder of the Existing Notes, by accepting the Exchange Offer, will be deemed to have made certain
acknowledgments, representations and agreements as set forth under “Transfer Restrictions”. The New Notes have
not been registered under the Securities Act or any state securities laws or the laws of any other jurisdiction, are
subject to restrictions on transferability and resales, and unless so registered, may not be transferred or resold except
pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act and other applicable securities laws. Each person acquiring the New Notes in the Exchange Offer
should be aware that it may be required to bear the financial risks of this investment for an indefinite period of time.
Each person contemplating accepting the Exchange Offer and making an investment in the New Notes
must make its own investigation and analysis of the creditworthiness of the Issuer and its own determination of the
suitability of such investment, with particular reference to its own investment objectives and experience, and any
other factors that may be relevant to it in connection with such investment.
The delivery of this Exchange Offer Memorandum shall not in any circumstances create any implication
that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the condition
(financial or otherwise) of the Issuer since the date of this Exchange Offer Memorandum. Unless otherwise
indicated, all information in this Exchange Offer Memorandum is given as of the date hereof. The Issuer does not
i
undertake any obligation to publicly update or review this Exchange Offer Memorandum, whether as a result of new
information, future events or otherwise.
This Exchange Offer Memorandum does not constitute an offer of, or the solicitation of an offer to
exchange, the New Notes in any jurisdiction where it is unlawful to make such an offer or solicitation. The
distribution of this Exchange Offer Memorandum in certain jurisdictions may be restricted by law. Persons into
whose possession this Exchange Offer Memorandum comes are required to inform themselves about and to observe
any such restrictions. This Exchange Offer Memorandum may not be used for, or in connection with, any offer to, or
solicitation by, anyone in any jurisdiction or under any circumstances in which such offer or solicitation is not
authorized or is unlawful.
None of the Issuer or any of its affiliates or agents makes any representation about the legality of the
acceptance of the Exchange Offer or the acquisition of the New Notes by an investor under applicable investment or
similar laws. None of the Issuer or any of its affiliates or agents makes any recommendation as to whether holders of
the Existing Notes should tender the Existing Notes pursuant to the Exchange Offer and, if given or made any such
recommendation may not be relied upon as authorized by the Issuer and any of its respective affiliates or agents.
Each prospective investor is advised to consult its own counsel and business adviser as to legal, business and related
matters concerning the acceptance of the Exchange Offer and the New Notes. The contents of this Exchange Offer
Memorandum are not to be construed as legal, business or tax advice.
Each prospective purchaser of the New Notes must comply with all applicable laws and regulations in force
in any jurisdiction in which it purchases, offers or sells the New Notes and must obtain any consent, approval or
permission required of it for the purchase, offer or sale by it of the New Notes under the laws and regulations in
force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and none of the
Issuer or any of its respective affiliates or agents shall have any responsibility therefor.
This Exchange Offer Memorandum contains summaries intended to be accurate with respect to certain
terms of the New Notes, but reference is made to the actual documents, certain of which will be made available free
of charge to prospective investors upon request to Mobile-8, for complete information with respect thereto, and all
summaries are qualified in their entirety by such reference.
Notwithstanding anything to the contrary contained herein, a holder of the Existing Notes or beneficial
owner of the Existing Notes (and each employee, representative, or other agent of a holder of the Existing Notes or
beneficial owner of the Existing Notes ) may disclose to any and all persons, without limitation of any kind, the U.S.
federal and state tax treatment and U.S. federal and state tax structure of the transactions described in this Exchange
Offer Memorandum and all materials of any kind that are provided to the holder of the Existing Notes or beneficial
owner of the Existing Notes relating to such tax treatment and tax structure (as such terms are defined in Treasury
Regulation section 1.6011-4). This authorization of tax disclosure is retroactively effective to the commencement of
discussions with holders of the Existing Notes and beneficial owners of the Existing Notes regarding the
transactions contemplated herein.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES ANNOTATED, 1955, AS AMENDED, WITH THE STATE OF NEW HAMPSHIRE NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE NEW HAMPSHIRE SECRETARY
OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR
EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE
SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF,
OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT
ii
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF
THIS PARAGRAPH.
NOTICE TO INVESTORS IN THE REPUBLIC OF ITALY
The Exchange Offer is not being made directly or indirectly in (and is not available to any resident of, or
person located in) the Republic of Italy. This Exchange Offer Memorandum has not been submitted to the clearance
procedure of the Commissione Nazionale per le Societa e la Borsa (CONSOB) pursuant to Italian laws and
regulations. Holders of the Existing Notes are hereby notified that, to the extent such holders of the Existing Notes
are Italian residents or persons located in the Republic of Italy, the Exchange Offer is not available to them and they
may not tender the Existing Notes. To ascertain whether a person is located in the Republic of Italy, the applicable
laws and regulations governing tender offers in the Republic of Italy shall apply.
NOTICE TO INVESTORS IN THE REPUBLIC OF INDONESIA
The New Notes have not been offered or sold and will not be offered or sold in the Republic of Indonesia
or to any Indonesian nationals, corporations or residents, including by way of invitation, offering or advertisement,
and this Exchange Offer Memorandum and any other offering material relating to the New Notes has not been
distributed, and will not be distributed, in the Republic of Indonesia or to any Indonesian nationals, corporations or
residents in a manner which would constitute a public offering of the New Notes under the laws or regulations of the
Republic of Indonesia.
NOTICE TO INVESTORS IN SINGAPORE
This Exchange Offer Memorandum has not been and will not be registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this Exchange Offer Memorandum and any other document or
material in connection with the offer or sale, or invitation for subscription or purchase, of the New Notes may not be
circulated or distributed, nor may the New Notes be offered or sold, or be made the subject of an invitation for
subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to existing holders of
the Existing Notes pursuant to Section 273(1)(cf) of the Securities and Futures Act (Chapter 289) of Singapore (the
“Securities and Futures Act”) or (ii) otherwise pursuant to, and in accordance with the conditions of, any other
applicable provision of the Securities and Futures Act.
iii
FORWARD-LOOKING STATEMENTS
Certain statements in this Exchange Offer Memorandum constitute “forward-looking statements”,
including statements regarding our expectations and projections for future operating performance and business
prospects. The words “believe”, “expect”, “anticipate”, “estimate”, “project”, “will”, “aim”, “will likely result”,
“will continue”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “should”, “will pursue”
and similar expressions or variations of these expressions identify forward-looking statements. In addition, all
statements other than statements of historical facts included in this Exchange Offer Memorandum, including,
without limitation, those regarding our financial position and results, business strategy, plans and objectives of
management for future operations (including development plans and objectives relating to our services) are forwardlooking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding our present and future business strategies and the
environment in which we will operate in the future. The important factors that could cause some or all of those
assumptions not to occur or cause our actual results, performance or achievements to differ materially from those in
the forward-looking statements include, among other things, our ability to successfully implement our strategy, the
condition of and changes in the local, Indonesian, Asian or global economies, our growth and expansion, technology
changes, changes in interest rates and the value of the Rupiah against the U.S. dollar and other currencies, changes
in government regulation and licensing of our businesses in Indonesia, and competition in the telecommunications
industry. Additional factors that could cause our actual results, performance or achievements to differ materially
include, but are not limited to, those discussed under “Risk Factors”. These forward-looking statements speak only
as of the date of this Exchange Offer Memorandum. We expressly disclaim any obligation or undertaking to release,
publicly or otherwise, any updates or revisions to any forward-looking statement contained herein to reflect any
change in our expectations with regard thereto or any change in events, conditions, assumptions or circumstances on
which any such statement is based.
CERTAIN DEFINED TERMS AND CONVENTIONS
In this Exchange Offer Memorandum, when we refer to:

the “Government”, we are referring to the Government of the Republic of Indonesia;

the “Exchange Offer”, we are referring to the offering by the Issuer to exchange the Existing Notes for the
New Notes;

“we”, “our”, “us”, “Mobile-8”, “Company” or “Issuer”, we are referring to PT Mobile-8 Telecom Tbk and,
where relevant, the Former Subsidiaries;

“Indonesia”, we are referring to the Republic of Indonesia;

“Former Subsidiaries”, we are referring to PT Komunikasi Selular Indonesia, PT Metro Selular Nusantara
and PT Telekomindo Selular Raya, each of which was merged with and into Mobile-8 effective as of May
31, 2007;

“MOCIT”, we are referring to the Indonesian Ministry of Communication and Information Technology;

“United States” or “U.S.”, we are referring to the United States of America;

“Indonesian Rupiah” and “Rp.”, we are referring to the lawful currency of the Republic of Indonesia; and

“U.S. dollar” and “US$”, we are referring to the lawful currency of the United States of America.
iv
We maintain our accounts in Indonesian Rupiah. For convenience, certain Rupiah amounts have been
translated into U.S. dollars at specified rates. Unless otherwise indicated, all Rupiah amounts related to any date or
period prior to or as of December 31, 2009 have been translated into U.S. dollar amounts based on the Bank
Indonesia rate (“IBR”) as of December 31, 2009, which was Rp. 9,400.0 to US$1.00, and all Rupiah amounts related
to any date or period after December 31, 2009 have been translated into U.S. dollar amounts based on the IBR as of
September 30, 2010, which was Rp. 8,924.0 to US$1.00, or in the case of amounts relating to the financial
information for PT Smart Telecom for the unaudited financial statements for the eight-months ended August 31,
2009 and 2010, the applicable reference date and exchange rate are August 31, 2010 and Rp. 9,041.0 to US$1.00,
respectively. Such translations should not be construed as representations that the Indonesian Rupiah or U.S. dollar
amounts referred to could have been, or could be, converted into Rupiah or U.S. dollars, as the case may be, at that
or any other rate or at all. See “Exchange Rates and Exchange Controls” for further information regarding rates of
exchange between Rupiah and U.S. dollars.
We use certain terms in this Exchange Offer Memorandum which are used in the telecommunications
industry in Indonesia and in the telecommunications industry in general to analyze companies, although they may be
defined in different ways. In this Exchange Offer Memorandum, the following key terms have the following
meanings:
“Average Monthly Churn” for any period means the total number of disconnections or deactivations from
our network, either voluntary or involuntary, in the period divided by the number of subscribers at the end of the
period, divided by the number of months in the period, expressed as a percentage.
“Average Revenue Per User”, or “ARPU”, for prepaid and postpaid subscribers presented for any period
means total gross revenues from either prepaid or postpaid subscribers on our network (excluding international
roaming revenues from foreigners using the Mobile-8 network, sales of starter packs to prepaid subscribers,
activation fees, if any, for postpaid subscribers and dealer discounts) for each month in the period divided by the
sum of the average number of prepaid or postpaid subscribers, as the case may be, for each month in the period.
ARPU excludes revenue and subscribers on our former AMPS network.
“Blended ARPU” presented for any period is (i) the sum of the total gross revenues from prepaid and
postpaid subscribers (excluding international roaming revenues from foreigners using the Mobile-8 network, sales of
starter packs to prepaid subscribers, activation fees, if any, for postpaid subscribers and dealer discounts) divided by
(ii) the sum of the average number of prepaid and postpaid subscribers for each month in the period. Blended ARPU
excludes revenue and subscribers on our former AMPS network.
“Subscriber” in respect of our prepaid service means the number of subscribers that have not been
deactivated. We deactivate the account of our prepaid subscribers a certain period after the expiry of the voucher.
We change our policy on the length of such period from time to time and historical subscriber numbers were based
on the policy in effect at such time. “Subscriber” in respect of our postpaid service excludes postpaid accounts
which have been delinquent for a certain period of time.
We have explained certain technical terms in this Exchange Offer Memorandum to assist the general
reader. See “Glossary of Technical Terms” for an explanation of these terms.
We have obtained certain market data, certain industry forecasts and certain data relating to Indonesia used
throughout this Exchange Offer Memorandum from market research, publicly available information and industry
publications. Industry publications generally state that the information contained therein has been obtained from
sources believed to be reliable, but that the accuracy and completeness of the information is not guaranteed.
Similarly, while we believe these industry forecasts and market research to be reliable, we have not independently
verified this information and do not make any representation as to the accuracy of this information.
We have included in this Exchange Offer Memorandum various statistical data relating to our subscriber
base and to usage of our wireless telecommunication services, such as our number of subscribers, market share,
v
market penetration, churn rate and ARPU, and non-GAAP performance measures, such as EBITDA and EBITDA
margin. We have described the manner in which we calculated these data in this Exchange Offer Memorandum.
This data is derived from management estimates and are not part of our consolidated financial statements and have
not been audited or reviewed by auditors, consultants and experts. You should note, however, that other companies
in the wireless telecommunications industry may calculate and present these data in a different manner and,
therefore, you should use caution in comparing our data with data presented by other companies, as the data may not
be directly comparable.
Any discrepancies in the tables included in this Exchange Offer Memorandum between the amounts listed
and the totals are due to rounding.
CHANGES IN AUDITORS
Our summary consolidated income statement, balance sheet and cash flows statement, as of and for the
years ended December 31, 2007, 2008 and 2009 have been derived from our restated audited consolidated financial
statements for those periods, which have been audited by Osman Bing Satrio & Rekan, independent public
accountants, the member firm of Deloitte Touche Tohmatsu, Kanaka Puradirejda, Suhartono, independent public
accountants, and Mulyamin Sensi Suryanto, independent public accountants, respectively. Our summary
consolidated income statement, balance sheet and cash flows statement, as of and for the nine-months ended
September 30, 2009 (unaudited) and 2010 (unaudited) have been derived from our consolidated financial statements
for those periods and have been reviewed by Mulyamin Sensi Suryanto.
Mulyamin Sensi Suryanto was our independent public accounting firm to (i) audit our consolidated
financial statements as of and for the year ended December 31, 2009 and (ii) review our unaudited financial
statements as of and for the nine-months ended September 30, 2010. Kanaka Puradirejda, Suhartono was our
independent registered public accounting firm to audit our consolidated financial statements as of and for the year
ended December 31, 2008. Osman Bing Satrio & Rekan, independent public accountants, the member firm of
Deloitte Touche Tohmatsu was our independent accounting firm to audit our consolidated financial statements as of
and for the year ended December 31, 2007. Each of our auditors for years ended December 31, 2009 and 2008 raised
substantial doubts about our abilities to continue as a going concern.
ENFORCEABILITY OF FOREIGN JUDGMENTS
The Issuer is incorporated in Indonesia. All of the Issuer’s commissioners, directors and executive officers
reside in Indonesia. All or a substantial portion of the Issuer’s assets and the assets of such persons are located in
Indonesia. As a result, it may not be possible for investors to effect service of process, including judgments, upon
the Issuer or such persons outside of Indonesia or within the United States, or to enforce against the Issuer or such
persons in courts outside of Indonesia or in the U.S. judgments obtained in courts outside of Indonesia, including
judgments predicated upon the civil liability provisions of the U.S. federal securities laws or the securities laws of
any state within the U.S., or upon other basis.
The agreements entered into with respect to the issue of the New Notes are governed by the laws of
England and Wales. The Issuer will designate the Original Issuer, Mobile-8 Telecom Finance Company B.V.
(“Mobile-8 B.V.”), which has its principal place of business in England and Wales, as its agent for service of
process with respect to the New Notes.
The Issuer has been advised that judgments of courts outside of Indonesia, which includes judgments of
English courts, are not enforceable in Indonesian courts. However, a foreign court judgment may be permitted to be
offered and accepted as non-conclusive evidence in a proceeding on the underlying claim in an Indonesian court,
and given such evidentiary weight as the Indonesian court may deem appropriate in its sole discretion. A claimant
may be required to pursue claims in Indonesia courts on the basis of Indonesian law by de novo re-examination of
the underlying claim before such Indonesian courts. There are, however, doubts as to whether Indonesian courts will
issue judgments on the claims brought therein.
vi
[THIS PAGE INTENTIONALLY LEFT BLANK]
vii
SUMMARY
You should read the following summary together with the more detailed information regarding our
Company and the New Notes being offered in this offering and our financial statements and the notes thereto, which
are attached to this Exchange Offer Memorandum. You are recommended to read this entire Exchange Offer
Memorandum carefully, including in particular our consolidated financial statements and the section entitled “Risk
Factors.”
Overview
We are a cellular operator in Indonesia, with approximately 2.1 million subscribers as of September 30,
2010 across all Fren, Hepi and Mobi products. We offer an extensive range of prepaid and postpaid CDMA based
wireless services, including voice and data services. Our network’s coverage currently extends to all major cities,
most secondary cities and whole of Java, Bali, Batam, some areas of North Sumatera, South Sumatera, Lampung,
some areas of North and South Sulawesi and Kalimantan.
We have experienced a significant decline in our financial performance over the course of the last three
years. Our EBITDA for the years ending December 31, 2007, 2008 and 2009 were Rp. 399.5 billion, Rp. (83.8)
billion and Rp. (357.1) billion, respectively. Our EBITDA for the nine-months ending September 30, 2010 was Rp.
(386.2) billion compared to EBITDA of Rp. (319.1) billion for the nine-months ending September 30, 2009. Our
gross revenues for the year ended December 31, 2009, were Rp. 537.4 billion a decrease of 42.0% as compared to
Rp. 926.5 billion for the year ended December 31, 2008. In addition, we have not been able to increase our
subscriber base since 2007. Our subscriber base declined from 3.0 million as of December 31, 2008 to
approximately 2.9 million subscribers as of December 31, 2009, representing a decline of approximately 3.3%. As
of December 31, 2009 approximately 2.8 million subscribers or 95.7% of our subscriber base were prepaid
subscribers and approximately 0.1 million subscribers or 4.3% were postpaid subscribers.
Towards the end of 2009, Indonesia had an estimated total of 175.1 million mobile subscribers according to
Business Monitor International report for the third quarter of 2010. This represents a penetration rate of 73.8% and
is an increase of 25.4% from 139.6 million subscribers in 2008 and an increase of 80.0% from 97.3 million
subscribers in 2007. Despite the recent increase in the number of wireless subscribers in Indonesia, Indonesia’s
wireless telecommunications penetration rate remains one of the lowest in the Asia Pacific region.
Our network operates on the 800 MHz spectrum utilizing CDMA2000 1X technology. As of December 31,
2009, the principal components of our CDMA2000 1X network infrastructure consisted of 1,458 base transceiver
stations (BTS), 55 base station controllers that connect one BTS to another, and 28 mobile switching centers. We
were the first wireless operator in Indonesia to commercially launch 3G high-speed mobile services in May 2006,
based on CDMAEV-DO technology.
We adopt a multi-channel strategy for our distribution and sales, with the primary distribution channels
being our approximately 120 independent distributors, 46 Mobile-8 Centers, Mobile-8 sales force and alternative
channels such as bank ATM networks and PC vendors. As of September 30, 2010, we had more than 20,000
independent outlets distributing our prepaid starter packs and more than 27,000 independent outlets selling our
electronic or physical vouchers.
Restructuring
In March 2007, Mobile-8 issued secured Rupiah-denominated bonds (the “Rupiah Bonds”) in the principal
amount of Rp. 675.0 billion pursuant to a trust deed dated February 22, 2007 between Mobile-8, as issuer, and PT
Bank Permata Tbk, as trustee. The Rupiah Bonds were also listed on the Indonesia Stock Exchange. In 2009, we
completed a restructuring of a substantial portion of our long term debt including the Rupiah Bonds. The
restructuring of the Rupiah Bonds was approved on June 29, 2009, and a total of Rp. 68.5 billion of such bonds were
converted to equity of Mobile-8. In addition, the financial terms of the Rupiah Bonds were amended and the
maturity date extended to June 15, 2017. An additional Rp. 831.9 billion of debt and other liabilities, including
1
payables from Samsung of Rp. 230.7 billion were converted to equity. These debt-to-equity swaps have
strengthened our balance sheet and will allow us to pursue new growth opportunities.
On August 15, 2007, our wholly-owned subsidiary Mobile-8 B.V., issued US$100.0 million principal
amount 11.25% Guaranteed Senior Notes due on March 1, 2013 (the “Existing Notes” or “2007 Guaranteed Secured
Notes”). The 2007 Guaranteed Secured Notes are listed on the Singapore Stock Exchange. On September 19, 2008,
PT Global Mediacom Tbk. sold a portion of its shares in Mobile-8 and consequently reduced its beneficial
ownership to below 51%. This constituted a change of control under the terms of the Existing Notes and the Original
Issuer was required to make an offer to holders of the Existing Notes to redeem the Existing Notes held by such
holders. On November 6, 2008, the Original Issuer indicated that it would be unable to redeem the Existing Notes
following the change of control because of its current financial condition and the global financial turmoil. The
failure by the Original Issuer to make an offer to redeem the Existing Notes constituted a default under the Existing
Notes and on November 12, 2008, the trustee for the Existing Notes accelerated the Existing Notes by notice to the
Original Issuer. On January 7, 2009, the trustee filed a claim in the Central Jakarta Indonesian Court of Justice for
all amounts outstanding under the Existing Notes, amounting to US$100.0 million, plus US$3.5 million in interest.
On December 3, 2009, the trustee withdrew the case. We have made no payment since the acceleration of the
Existing Notes.
Although we believe that the implementation of the Exchange Offer will improve our financial flexibility
and will allow us to better manage our cash flow and preserve our cash and cash equivalents, we cannot assure you
that we will be able to generate positive cash flow. Our failure to generate positive cash flow could have a material
adverse effect on our business, results of operations, financial condition and prospects, as well as our ability to meet
our payment obligations under the New Notes. We cannot assure you that we will not default on our payment or
other obligations under the New Notes or again seek protection from our creditors in the English or other courts.
Through the Scheme and this Exchange Offer we intend to exchange the Existing Notes for the New Notes.
The New Notes will have terms as set forth in this Exchange Offer Memorandum. See “Description of Notes.”
Following the Scheme and the Exchange Officer, we plan to further restructure our debts and liabilities so that we
can strengthen our balance sheet. In addition, we intend to continue to negotiate with our creditors and bondholders
to implement the debt-to-equity conversions and raise additional equity to finance our business plan.
Operating Strategy
Leverage our strategic alliance with PT Smart Telecom (“Smart Telecom”)
We plan to continue to implement our strategic alliance with Smart Telecom in order to achieve the cost
savings and efficiencies described above. We intend to build upon our existing relations with Smart Telecom. As
part of our restructuring process, as contemplated by the Scheme, we propose to acquire (the “Acquisition”) the
ordinary shares representing a majority of the issued share capital of Smart Telecom (the “Target Shares”). See
“Business-Proposed Acquisition”.
Redesign and increase our network coverage area in existing areas
We plan to redesign our network to focus on existing areas of service. Currently, as a result of lack of
resources, we have stopped expanding our network into new areas, instead we plan to improve network coverage in
the existing areas of service.
Reduce capital expenditure and accelerate roll-out of network infrastructure
In undertaking our network coverage expansion, we plan to lease substantially all of our future tower
requirements to mitigate our roll-out risks, accelerate the network roll-out process and reduce capital expenditures.
Tower operators will provide site location, operating and maintenance services and, in certain situations, power
supply. We believe this strategy will also free up management resources to allow us to concentrate on providing,
improving and marketing our wireless services.
2
Currently, we primarily utilize backbone infrastructure using our microwave transmission equipment. We
intend to increase our backbone infrastructure capacity through leasing and joint development with other
telecommunication service providers.
Acquire new subscribers and retain existing subscribers
We believe that we can continue to increase our market share by focusing on the mass market and certain
market segments such as the youth market and small-to-medium enterprises as well as by offering a clear value
proposition to subscribers. We also will continue to work with handset vendors to offer a wider range of handsets to
our subscribers. In addition to acquiring new subscribers, we will continue to focus on retaining our existing
subscribers.
Strengthen and extend our distribution and marketing
We recently implemented what we believe is an enhanced distribution platform that creates incentives for
distributors to sell our products and improves our ability to reach our target market. We have also devised alternative
channels such as bank ATMs and PC vendors to expand our reach. We will strengthen and extend our distribution
network and be innovative around our distribution channels to ensure we reach as many potential subscribers as
possible.
We will also continue to refine our marketing initiatives and promotions as our subscriber base continues to
grow and its characteristics change. We continue to introduce new marketing promotions from time to time to
promote our brand values of simplicity, best value and innovative and contemporary products and services. Our
initial pricing plans were focused on generating subscriber growth while more recent tariff promotions have been
targeted at improving profitability
General Information
The correspondence address of the Issuer is 18th Floor of MNC Tower, Jl. Kebon Sirih No. 17 - 19 Jakarta
10340, and its telephone number at that address is +62 21 392 0218. Mobile-8’s website is located at www.mobile8.com. The information found on or accessible through Mobile-8’s website is not incorporated into and does not
form a part of this Exchange Offer Memorandum.
3
SUMMARY OF THE EXCHANGE OFFER
The following summary contains basic information about the New Notes we are offering. It does not
contain all the information that is important to you. For a more complete understanding of the New Notes, please
refer to the Scheme documents that accompany this Exchange Offer Memorandum (the “Scheme Documents”).
Capitalized terms used in this “Summary of the Exchange Offer” section and not otherwise defined shall have the
meaning ascribed to such term in the Scheme Documents.
Securities Offered ..........................................US$100,000,000 aggregate principal amount of restructuring notes due
2025.
Issuer .............................................................PT Mobile-8 Telecom Tbk
Issue Date ......................................................To be issued on the Settlement Date
Term ..............................................................The New Notes will have a term of 15 years.
Maturity Date.................................................The New Notes will mature in 2025.
Interest ...........................................................The New Notes will bear interest at a rate of 1% per annum, from and
including the Settlement Date to and including 2015.
The New Notes will bear interest at a rate of 1.5% per annum, from and
including 2016 to and including 2020.
The New Notes will bear interest at a rate of 2% per annum, from and
Interest will be payable semi-annually in arrears on each Interest
Payment Date.
Interest Payment Dates ..................................June 30 and December 31, in each year
Interest Period................................................Each period from (and including) an Interest Payment Date to (but
excluding) the next Interest Payment Date
Calculation of Interest ...................................The amount of interest payable in respect of the New Notes for any
Interest Period will be calculated by applying the applicable rate of
interest to the outstanding principal amount of the New Notes (after
accounting for any redemptions made on the first day of such Interest
Period), dividing the product by two and rounding the resulting figure
to the nearest cent. If interest is required to be calculated for any period
other than a scheduled Interest Period, it will be calculated on the basis
of a 360 day year consisting of twelve 30 day months and in the case of
an incomplete month, the actual number of calendar days elapsed.
Margin Ratchet ..............................................In the event there are sufficient funds standing to the credit of the
Margin Ratchet Account (as defined below) on any Interest Payment
Date falling after December 31, 2015 the interest rate applicable to the
New Notes for the preceding Interest Period shall be increased by an
additional 3% per annum and such interest shall be paid in cash on the
relevant Interest Payment Date.
4
Redemptions ..................................................On each date set out below (each a “Redemption Date”) the Issuer will
redeem the Dollar amount of the New Notes set out opposite such
Redemption Date (“Redemption Amount”) on a pro rata basis.
Date
Amount
December 31, 2016
December 31, 2017
December 31, 2018
December 31, 2019
December 31, 2020
December 31, 2021
December 31, 2022
December 31, 2023
December 31, 2024
December 31, 2025
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
In the event that New Notes are redeemed as a result of Early
Redemption or Debt Buy-backs, the Redemption Amounts shall be
reduced by the aggregate principal amount of New Notes redeemed in
inverse chronological order.
Early Redemption ..........................................In the event that the Issuer raises any additional financial indebtedness
with a principal amount in excess of US$10,000,000 (other than
pursuant to the Rights Issue and the MCB Programme, or otherwise in
connection with the Acquisition), it shall apply the Net Refinancing
Amount in redemption of the New Notes on a pro rata basis within 14
days of receipt of the proceeds of such additional financial
indebtedness, unless otherwise agreed by the holders of 51% in
outstanding principal amount of the New Notes.
For this purpose, “Net Refinancing Amount” means the net proceeds of
any additional financial indebtedness raised by the Issuer after
deducting all fees, costs and expenses incurred in connection with the
raising of such financial indebtedness less such amount as is
determined by the board of directors of the Issuer as reasonably
necessary to meet the Issuer’s working capital requirements and other
financial obligations falling due during the term of such financial
financial indebtedness shall be set out in an officer’s certificate signed
by a director of the Issuer.
Redemptions Premium ..................................A redemption premium of 25% shall apply to each Early Redemption
of New Notes and each redemption of the New Notes on a Redemption
Date, such that for each US$1.00 of principal amount of the New Notes
redeemed, the Issuer shall pay US$1.25.
Shares ............................................................Ordinary listed shares in the capital of the Issuer.
Conversion Price ...........................................The average of the last dealt prices of a Share for the 25 consecutive
trading days on which the Shares are traded on the Stock Exchange
immediately preceding the relevant Redemption Date or Restructuring
Charge Payment Date (as applicable) less the Conversion Discount.
5
Conversion Discount .....................................20%
Optional Conversion......................................The Issuer will (to the extent permitted by applicable laws and
regulations and to the extent that its shares remain listed) have the
option to settle each obligation to redeem the New Notes on any
Redemption Date by delivering a number of Shares calculated by
converting the relevant US$ Redemption Amount into Rupiah at the
then prevailing exchange rate and dividing the resulting Rupiah amount
by the Conversion Price to the holders of the New Notes on a pro rata
basis.
Transaction Accounts ....................................On or prior to the Settlement Date, the Issuer will establish the
following accounts with a reputable Indonesian bank:




The above accounts will be operated by the Issuer in accordance with
the provisions of the Fiscal Agency Agreement and the terms and
conditions of the New Notes.
Surplus Cash..................................................On each Interest Payment Date falling after December 31, 2015, the
Issuer shall transfer 50% of its Surplus Cash into a Surplus Cash
Account.
For this purpose, “Surplus Cash” means the amount obtained by
deducting the following from the Issuer’s EBITDA for the preceding
Interest Period: (i) finance charges; (ii) principal payments in respect of
outstanding indebtedness; (iii) taxes; (iv) extraordinary or exceptional
cash items; and (v) budgeted capital expenditures.
Cash Waterfall ...............................................On each Cash Waterfall Date falling after December 31, 2015, the
Issuer shall apply the balance standing to the credit of the Surplus Cash
Account as follows:

First, in payment to the Contingency Reserve Account, until such
time as the balance standing to the credit of the Contingency
Reserve Account exceeds US$10,000,000

Second, in payment to the Margin Ratchet Account, until such time
as the balance standing to the credit of the Margin Ratchet Account
is sufficient to fund the payment of additional interest on the
outstanding principal amount of the New Notes on the following
Interest Payment Date in accordance with the Margin Ratchet

6
For this purpose, “Cash Waterfall Date” means each date falling 20
days after an Interest Payment Date.
Debt Buy-backs .............................................When the balance standing to the credit of the Tender Offer Account
exceeds US$10,000,000, the Issuer will deliver a notice (“Tender Offer
Notice”) to each holder of the New Notes, inviting it to tender the New
Notes held by it for redemption.
Any holder of the New Notes wishing to make such tender offer (a
“Bid”) shall be required to deliver a notice (“Bid Notice”) to the Issuer
on or prior to the date falling 30 days from the date of the Tender Offer
Notice.
The Issuer will accept Bids in inverse order of the price offered (with
the offers representing the largest discount to face value being accepted
first). If the Issuer notifies a holder of the New Notes that its Bid has
been accepted, the Issuer shall pay the redemption amount specified in
the relevant Bid Notice to the relevant holder of the New Notes by wire
transfer to such account as is specified in the relevant Bid Notice within
30 days of such notification. On receipt of the relevant redemption
amount, the relevant New Notes shall be treated as redeemed in full.
The Issuer shall be entitled to determine a reserve price for any tender
offer and specify such reserve price in the relevant Tender Offer
Notice.
Certain Covenants..........................................Limited covenant package, covering: (i) compliance with applicable
laws and regulations; (ii) maintenance of business and authorizations;
(iii) maintenance of properties and insurance; (iv) payment of taxes;
and (v) provision of financial statements.
Events of Default ...........................................Customary events of default for an issuance of this kind
Security..........................................................The New Notes will be unsecured obligations of the Issuer.
Tax.................................................................All payments of interest, Redemption Amounts and/or Restructuring
Charges shall be made after deduction of any taxes that the Issuer is
required to withhold by the applicable laws and regulations. The Issuer
will not be required to gross-up payments of interest, Redemption
Amounts and/or Restructuring Charges and such payments will be
received by the holders of the New Notes net of any tax deduction that
the Issuer is required to withhold by applicable laws and regulations.
Amendments..................................................Customary amendment provisions for English law Fiscal Agency
Agreement, including:

Consent of holders of 51% of outstanding principal amount of the
New Notes required to amend terms and conditions of the New
Notes, except in relation to certain reserved matters.

Notes in relation to certain reserved matters.
7
Accelerated Repayment Schedule .................In the event that the financial position of the Issuer improves such that
the holders of the New Notes reasonably believe that the Issuer is
capable of satisfying its financial obligations in respect of the New
Notes prior to the scheduled Redemption Dates, the holders of not less
than 75% in outstanding principal amount of the New Notes may sign
and deliver to the Issuer an accelerated redemption schedule for
approval by the Issuer. The Issuer will be entitled, by notice to the
holders of New Notes, to approve or reject such accelerated redemption
schedule within a period of 14 days from the date on which such
accelerated redemption is delivered to the Issuer. In the event that the
Issuer does not reject such accelerated redemption schedule within such
14 day period it shall be deemed to have accepted such accelerated
redemption schedule and the terms and conditions of the New Notes
shall be amended accordingly.
Any accelerated redemption schedule delivered by the holders of New
Notes to the Issuer must be based on a reasonable assessment of the
ability of the Issuer to service its financial obligations in respect of the
New Notes based on its projected cashflow.
Restructuring Charge.....................................US$24,000,000, payable by the Issuer to the holders of the New Notes
on a pro rata basis. The Restructuring Charge will be payable on the
dates and in the amounts set out below (each a “Restructuring Charge
Payment Date”).
Date
Amount
December 31, 2026
December 31, 2027
US$12,000,000
US$12,000,000
The Issuer will (to the extent permitted by applicable laws and
option to settle each payment in respect of the Restructuring Charge by
delivering a number of Shares calculated by converting the relevant
US$ amount into Rupiah at the then prevailing exchange rate and
dividing the resulting Rupiah amount by the Conversion Price to the
holders of the New Notes on a pro rata basis.
The entitlement of holders of the New Notes to receive payments (or
Shares) in respect of the Restructuring Charge shall be determined by
reference to their holdings of the New Notes on December 31, 2025.
Governing Law ..............................................The New Notes will be governed by English law.
Risk Factors ...................................................An investment in the New Notes is subject to significant risks which
should be carefully considered by potential investors. See “Risk
Factors.”
8
SUMMARY CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA
You should read the summary consolidated financial information presented below in conjunction with our
consolidated financial statements as of and for the three years ended December 31, 2007, 2008 and 2009, and as of
and for the nine-months ended September 30, 2009 and 2010, and the notes to these consolidated financial
statements, which are attached to this Exchange Offer Memorandum.
consolidated income statement, balance sheet and cash flows statement, as of and for the nine-months ended
September 30, 2009 (unaudited) and 2010 (unaudited) have been derived from our consolidated financial statements
for those periods and have been reviewed by Mulyamin Sensi Suryanto.
Certain amounts presented in the other financial data table and amounts presented in the selected operating
data table are unaudited amounts which were not part of our historical consolidated financial statements and our
unaudited interim consolidated financial statements.
Our consolidated financial statements have been prepared in accordance with Indonesian GAAP and
reporting practices. Indonesian GAAP differs in certain respects from U.S. GAAP. See “Summary of Certain
Principal Differences Between Indonesian GAAP and U.S. GAAP”. We have not quantified or identified the impact
of the differences between Indonesian GAAP and U.S. GAAP.
Income Statement
2007
(Rp.)
Operating Revenues
Telecommunication services..
992.1
Interconnection services..........
125.7
Total operating revenue .......... 1,117.7
Discount..................................
(41.8)
Operating revenues - net ......... 1,076.0
Operating Expenses
Operations, maintenance and
telecommunication services ....
329.3
Depreciation and
amortization ............................
229.8
Sales and marketing ................
152.2
Personnel.................................
131.7
General and administration .....
63.2
Total operating expenses.........
906.2
169.7
Operating income (loss) .......
Other Income (Expenses)
Gain (loss) on foreign
exchange - net .........................
4.4
Gain (loss) on change in fair
value of derivative-net ............
Realized gain arising from
restructuring transactions
among entities under
-
As of September 30,
As of December 31,
(Rp. in billions and US$ in millions)
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
820.4
106.2
926.5
(31.6)
894.9
464.7
72.7
537.4
(32.9)
504.5
49.4
7.7
57.2
(3.5)
53.7
351.7
56.4
408.2
(25.4)
382.8
261.9
39.7
301.6
(10.7)
290.9
29.4
4.4
33.8
(1.2)
32.6
471.0
518.2
55.1
413.2
351.3
39.4
319.3
272.9
160.0
74.8
1,298.0
(403.1)
318.4
150.5
135.0
58.0
1,180.0
(675.5)
33.9
16.0
14.4
6.2
125.5
(71.9)
238.1
136.0
106.0
46.6
940.0
(557.2)
267.6
179.4
106.7
39.7
944.6
(653.8)
30.0
20.1
12.0
4.4
105.9
(73.3)
(182.8)
241.9
25.7
186.7
70.9
7.9
(142.0)
117.9
12.5
123.0
(25.9)
(2.9)
-
42.2
4.5
-
-
-
9
Income Statement
2007
(Rp.)
common control ......................
Gain on sale of property and
equipment ...............................
Investment income (loss) ........
Interest income........................
Amortization of goodwill........
Interest expenses and other
finance charges .......................
Others - net .............................
Others (expenses) income net ...........................................
Income (loss) before tax..........
Tax (expense) benefit
Current.............................
Deferred...........................
Net Income (loss) ..................
Basic earnings (loss) per
share .......................................
Balance Sheet
Cash and cash equivalents.......
Short-term investments ...........
Total current assets..................
Total assets..............................
Total current liabilities ............
Total liabilities ........................
Total equity .............................
3.8
29.1
27.9
(11.5)
0.7
32.9
9.0
(11.5)
21.5
10.7
0.5
(11.5)
2.3
1.1
0.1
(1.2)
10.2
12.9
0.2
(8.6)
(2.3)
(19.6)
0.5
(8.6)
(0.3)
(2.2)
(0.1)
(1.0)
(202.2)
35.5
(367.3)
(114.6)
(414.9)
(7.6)
(44.1)
(0.8)
(326.5)
(21.0)
(378.4)
(4.1)
(42.4)
(0.5)
(112.9)
56.8
(775.4)
(1,178.5)
0.8
(674.7)
0.1
(71.8)
(23.0)
(580.2)
(367.5)
(1,021.3)
(41.2)
(114.4)
(6.5)
50.3
109.6
(1,068.9)
(0.5)
(49.2)
(724.4)
(5.3)
(77.1)
140.2
(440.0)
(0.3)
(30.7)
(1,052.4)
0.0
(3.4)
(117.9)
(34.5)
-
(21.7)
(29.5)
2.8
(52.8)
As of December 31
As of September 30,
2008
2009
2009
2009
2010
2007
(Rp.)
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
852.7
198.4
1,474.7
4,536.7
345.0
2,740.6
1,796.2
Statement of Cash Flows
2007
(Rp.)
Net cash provided by (used
in) operating activities ...........
in) investing activities............
in) financing activities ...........
Net increase (decrease) in
cash and cash equivalents ......
Cash and cash equivalents
at beginning of year ...............
Effect of foreign exchange
rate changes ...........................
at end of year .........................
As of September 30,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
-
2010
(US$)
23.7
23.8
2.5
26.7
17.6
2.0
289.0
199.5
21.2
225.2
26.0
2.9
621.9
441.1
46.9
670.3
384.8
43.1
4,761.9
4,756.9
506.1
5,227.5
4,641.6
520.1
1,086.2
1,269.2
135.0
2,140.6
2,109.9
236.4
4,034.6
3,964.4
421.7
4,940.1
4,703.9
527.1
727.3
792.5
84.3
287.4
(62.3)
(7.0)
As of September 30,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
154.1
(476.8)
(69.3)
(7.4)
(12.7)
(690.2)
(77.3)
(687.5)
(310.6)
11.9
1.3
21.7
50.7
5.7
526.0
(42.1)
57.6
6.1
(6.0)
633.2
71.0
(829.5)
0.2
-
3.0
(6.3)
(0.7)
859.9
852.7
23.7
2.5
23.7
23.8
2.7
0.2
0.6
(0.1)
-
(0.1)
-
-
852.7
23.7
23.8
2.5
26.7
17.6
2.0
(7.4)
10
Nine-months ended
Year ended
September 30,
December 31,
2008
2009
2009
2010
(Rp. in billions)
(83.8)
(357.1)
(319.1)
(386.2)
2007
EBITDA (Consolidated)
399.5
Adjustments:
Amortization of goodwill ..............................
Interest income .............................................
Interest expense .............................................
Gain (loss) on foreign exchange ....................
Income tax (expense) benefit.........................
Depreciation and amortization ......................
Others ............................................................
Net Income...........................................................
Selected Operating Data
2007
Telecommunication services
Voice .........................................
Short messaging service (SMS).
Data……………………………
Monthly service charges ...........
Others ........................................
Subtotal .....................................
Interconnection services
Domestic ...................................
International ..............................
Subtotal .....................................
Total operating revenue ................. Discount .........................................
Operating Revenues - Net ...........
(11.5)
27.9
(202.2)
4.4
(6.5)
(229.8)
68.5
50.3
(11.5)
9.0
(367.3)
(182.8)
109.6
(319.3)
(222.8)
(1,068.9)
(11.5)
0.5
(414.9)
241.9
(49.7)
(318.4)
184.8
(724.4)
Year ended
December 31,
(Rp. in billions)
2008
2009
(8.6)
0.2
(326.5)
186.7
140.2
(238.1)
125.2
(440.0)
(8.6)
0.5
(378.4)
70.9
(31.1)
(267.6)
(51.9)
(1,052.4)
Nine-months ended
September 30,
2009
2010
785.6
156.5
37.2
2.4
10.5
992.1
665.0
117.0
27.2
3.2
7.9
820.4
331.5
82.9
32.1
4.2
14.0
464.7
256.0
62.0
20.2
3.1
10.4
351.7
167.2
44.7
39.5
2.8
7.7
261.9
109.0
16.6
125.7
1,117.7
(41.8)
1,076.0
87.4
18.8
106.2
926.5
(31.6)
894.9
59.4
13.3
72.7
537.4
(32.9)
504.5
46.1
10.4
56.4
408.2
(25.4)
382.8
31.3
8.4
39.7
301.6
(10.7)
290.9
11
RISK FACTORS
You should carefully consider the following risk factors, as well as other information set out in this
Exchange Offer Memorandum, prior to making an investment in the New Notes. The risks described below are not
the only ones that may affect the Company and the New Notes. Additional risks not presently known to us or that we
currently deem immaterial may also impair our business, cash flows, results of operations, financial condition or
prospects. In general, investing in securities of issuers in emerging market countries such as Indonesia involves
risks not typically associated with investing in the securities of companies in countries with more developed
economies.
Risks Relating to Our Business and the Wireless Telecommunications Industry
We have negative cash flow and have suffered a decline in the number of subscribers who use our
services and we need additional resources to expand our operations and return to profitability
The increasingly competitive market in the telecommunication industry has had a material adverse effect
on our business, cash flows, results of operations, financial condition and prospects. Starting in 2007, we have failed
to grow our subscriber base and have suffered a significant decrease in subscribers, which in turn has had a material
adverse effect on our business, cash flows, results of operations, financial condition and prospects. Consequently,
we currently have negative cash flow and cannot assure you that our financial condition will improve in the near
future or at all.
We are presently unable to comply with our present payment obligations and suspended payment of our
indebtedness to our creditors
On September 19, 2008, PT Global Mediacom Tbk. sold a portion of its shares in the Company and
consequently reduced its beneficial ownership to below 51%. This constituted a change of control under the terms of
the Existing Notes and the Original Issuer was required to make an offer to holders of the Existing Notes to redeem
the Existing Notes held by such holders. On November 6, 2008, the Original Issuer indicated that it would be unable
to redeem the Existing Notes following the change of control because of its current financial condition and the
global financial turmoil. The failure by the Original Issuer to make an offer to redeem the Existing Notes constituted
a default under the Existing Notes and on November 12, 2008, the trustee for the Existing Notes accelerated the
Existing Notes by notice to the Original Issuer. On January 7, 2009, the trustee filed a claim in the Central Jakarta
Indonesian Court of Justice for all amounts outstanding under the Existing Notes, amounting to US$100.0 million,
plus US$3.5 million in interest. On December 3, 2009, the trustee withdrew the case. We have made no payment of
principal or interest since the acceleration of the Existing Notes.
adverse effect on our business, results of operations, financial condition and prospects, as well as our ability to meet
our payment obligations under the New Notes. We cannot assure you that we will not default on our payment or
other obligations under the New Notes or again seek protection from our creditors in the English or other courts.
We have a recent history of losses and may incur additional losses in the future
The increasingly competitive market of the Indonesian telecommunication industry has had a material
adverse effect on our business and financial performance. Increased competition has resulted in aggressive price
competition between operators. Additionally, delays in implementing our expansion plan have caused material
losses to the Company. Beginning in 2008, we have suffered a significant decrease in customer demand for our
CDMA products, which has had a material adverse effect on our business and financial performance. We have
recorded decreasing revenues since 2007. As a result, we incurred net losses of Rp. 1,068.9 billion for the year
ended December 31, 2008 and Rp. 724.4 billion for the year ended December 31, 2009. If market and business
conditions do not improve, we may incur additional losses in the future. We will need to generate significant
12
additional revenues and reduce operating costs to achieve profitability. Our ability to achieve sustained profitability
depends on factors such as:

the growth rate of the wireless telecommunications market in Indonesia;

the competitiveness of our wireless telecommunication services;

our ability to provide new services to meet the demands of subscribers and our ability to grow our
revenue and subscriber base and to capitalize from economies of scale from an increased subscriber
base;

Government regulations; and

pricing policies of our competitors.
We cannot assure that we will achieve sufficient revenues or gross profits, or that our growth and other
business strategies will be successful and that we will achieve sustained profitability in the future.
We will continue to have substantial indebtedness after the Exchange Offer and issuance of the New
Notes and our significant indebtedness could adversely affect our financial health
We have and will continue to have after the Exchange Offer and issuance of the New Notes substantial
indebtedness. As of September 30, 2010, our total debt was Rp. 2,261.2 billion. Subject to the restrictions under our
debt agreements, we may incur additional indebtedness from time to time for capital expenditures or for other
purposes.
As a result of this substantial indebtedness, we will require substantial cash flow to meet our obligations
under our current and anticipated indebtedness. Therefore, a substantial part of our cash flow from operations will
not be available for our business. In addition, our substantial indebtedness also has the following consequences:

our exposure to adverse general economic conditions could increase;

the Company may have difficulty satisfying its obligations under the New Notes and, if it fails to
comply with these requirements, an event of default could result;

any failure to comply with the covenants contained in our debt instruments or the occurrence of any
other event of default under those instruments could lead to an acceleration of all amounts outstanding
thereunder, which would require that we immediately repay those amounts;

our compliance with certain provisions in our debt instruments may not be entirely within our control;

financial and other restrictive covenants in our debt instruments limit the amount of additional funds
we can borrow and our ability to consummate asset sales;

our flexibility in planning for, or reacting to, changes in our business and industry may be limited;

we will be sensitive to fluctuations in the value of the Indonesian Rupiah against the U.S. dollar and
other currencies because a significant portion of our debt obligations and capital expenses are
denominated in U.S. dollars, while most of our revenues are denominated in Indonesian Rupiah;

as a result of the possible application of cross default provisions in our debt agreements, a default
under one of our debt agreements could constitute an event of default under other debt agreements;

certain of our borrowings may expose us to the risk of increased interest rates;
13

we may be required to dedicate a substantial portion of our cash flow from operations to required
payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital
expenditures and other general corporate activities; and

our flexibility in planning for, or reacting to, changes in our business and industry may be limited and
we may be placed at a competitive disadvantage against any less leveraged competitors.
We cannot assure you that our substantial indebtedness and these restrictions will not materially and
adversely affect our ability to finance our future operations or capital needs or to engage in other business activities,
or otherwise adversely affect our business, cash flows, results of operations, financial condition and prospects.
In addition, our ability to service current and future debt will depend upon our future performance, which,
in turn, depends on the successful implementation of our strategy and on financial, competitive, regulatory, technical
and other factors, general economic conditions, the demand and tariffs for our services, and other factors specific to
the telecommunications industry, many of which may be beyond our control. We cannot assure you that our cash
flows from operations will be sufficient, or that additional investments or financing will be available, to allow us to
meet our payment obligations as they fall due on the New Notes.
Our business and results of operations are dependent on a national demand of CDMA products, which
may be adversely affected by changes in consumer preference and other factors
Our sales for our CDMA products depend on the growth in the purchase of CDMA products in Indonesia,
including mobile phones and mobile broadband services. Demand and purchase of CDMA products are affected by
changes in consumer preference as a result of changes in technology, particularly with the increasing availability of
smartphones such as the Blackberry and the Apple iPhone. Due largely to the recent economic downturn, global
demand for CDMA products has decreased significantly beginning in 2009. We experienced a significant decline in
demand for our products in part due to the adverse market conditions. Our operating revenue decreased from Rp.
382.8 billion for the nine-months ended September 30, 2009 to Rp. 290.9 billion for the nine-months ended
September 30, 2010. We cannot assure you as to how substantial this or other economic downturns will be or how
long they will last. We cannot assure you when our product sales will return to historical levels. In addition, any
significant change in consumer preference towards or away from CDMA products could have a material impact on
the national demand of our products, which in turn will have a material impact on our business, cash flows, results
of operations, financial condition and prospects.
We encountered difficulties in expanding our CDMA network outside of Java and the failure to
successfully expand our network and our business could adversely affect our cash flows, results of operations,
financial condition and prospects
Our CDMA network is heavily concentrated within Java and during the period 2007-2008, we tried to
expand our network to cover other parts of Indonesia, such as Bali, Sumatera, Sulawesi and Kalimantan. We
engaged a particular vendor in early 2007 to develop our CDMA networks as part of our business expansion.
However, the vendor was unable to complete the network installation on schedule and subsequently we encountered
difficulties in obtaining construction permits and electricity supply. As a result, until 2008, our network outside of
the Java region was not fully integrated significantly limiting our ability to compete with our competitors in some
regions. We also suffered delays in network construction as a result of the general economic decline in the second
half of 2008. As a result, we have decided to limit further development programs and for the time being not to
expand further into new areas.
We operate in an industry that is heavily regulated and a legal and regulatory environment that is
undergoing significant reforms, and these reforms and changes in regulations could have a material adverse
effect on our business, cash flows, results of operations, financial condition and prospects
The telecommunications industry in Indonesia is heavily regulated and there are a number of uncertainties
in the current regulatory environment. The Telecommunications Law No. 36 of 1999 (the “Telecommunications
Law”), provides key guidelines for industry reforms, including industry liberalization, facilitation of new entrants
14
and changes to the industry’s competitive structure. In recent years, the complexity and volume of regulatory
changes has created an environment of regulatory uncertainty. In addition, as the reform of the telecommunication
industry continues in Indonesia, other competitors, including those with greater resources than we have, may enter
the telecommunication sector and compete with us in providing wireless telecommunication services.

Licenses. We rely on licenses issued by the Ministry of Communication and Information Technology
(“MOCIT”) for the provision of our wireless telecommunication services as well as for the operation
of our network and utilization of our allocated spectrum frequencies. Any breach of the terms and
conditions of our licenses or failure to comply with any applicable regulations could result in fines
being imposed on us or our licenses being revoked by the Government. The Government has adjusted
the regional licenses held by our Former Subsidiaries and in May 2007, granted Mobile-8 a single
nationwide cellular operating license that allows us to operate wireless services nationwide in
Indonesia. Concurrently, the Government also granted Mobile-8 an operational fixed wireless access
(“FWA”) license, which allows us to build our FWA service network. We were also granted a Voice
over Internet Protocol (“VoIP”) operating license by MOCIT, in October 2005, which we rely on to
provide VoIP services. Our existing cellular operating license, FWA operating license, and our VoIP
operating license were granted by MOCIT for an unlimited lifetime, subject to our compliance with the
relevant regulations. MOCIT periodically reviews compliance by operators with relevant regulations,
and MOCIT may request amendments to the terms of our licenses in the course of performing its
regulatory role. In this regard, in April and May, 2007, the Government requested that we and we
agreed to, voluntarily surrender approximately 5 MHz of radio spectrum, consisting of three out of
seven channels, with national coverage. MOCIT has allocated substantially all of the available
spectrum in the 450, 800, 900, 1800 and 1900 MHz band. However, we cannot assure you that
additional spectrum will not become available in the future to additional or existing competitors or that
the Government will not reallocate existing spectrum. Any grant of additional spectrum, revocation of
existing spectrum or unfavorable amendment of the terms of our licenses (including license fees),
could have a material adverse effect on our business, cash flows, results of operations, financial
condition and prospects.

Tariffs. MOCIT is the principal regulator of the telecommunications industry in Indonesia and, through
the Indonesian Telecommunication Regulatory Body (Badan Regulasi Telekomunikasi Indonesia, or
“ITRB”), is responsible for the setting and adjustment of tariff levels. Our minimum tariffs for all
services are prescribed by MOCIT, which are subject to periodic review and adjustment. All basic
telephony services through wireless network providers are required to submit to ITRB any plan to
adjust its tariff levels. Any such adjustment plan of a ‘dominant operator’ is subject to approval from
ITRB. An operator is deemed to be a ‘dominant operator’ if it controls at least 25% of the total
operating revenues generated by all operators’ in the relevant service segment. Through the control
over the ‘dominant operators tariff scheme, the Government indirectly maintains a certain level of
control over tariffs applied by all operators. We can give you no assurance that the level of tariffs will
not be raised or reduced in the future. Since a significant portion of our revenues are affected by the
tariff scheme fixed by the Government from time to time, any future change, or a lack of change, in the
Government’s tariff policies could adversely affect our business, cash flows, results of operations,
financial condition and prospects.

Towers. On March 30, 2009, the Government, through a joint decree of the Minister of Domestic
Affairs, the Minister of Public Works, MOCIT and the Head of Indonesia Investment Coordinating
Board (Badan Koordinasi Penanaman Modal, or “BKPM”), implemented a requirement on joint
utilization of towers amongst operators. This requirement was previously implemented in the DKI
Jakarta areas by virtue of the decree of the Governor of DKI Jakarta. However, through the joint
decree, the requirement on tower sharing has been implemented in all regions.
We cannot assure you that other regulatory changes initiated by the Government, the amendment or
interpretation of current laws and regulations, or the introduction of additional laws and regulations, will not
adversely affect our business, cash flows, results of operations, financial condition and prospects.
15
We have not been able to successfully integrate, market or expand our FWA product offering and it is
uncertain as to when we will be able to do so, if at all
We obtained a FWA license in December 2007 which allows us to build our FWA service network. We
market our FWA product under the brand name “Hepi”. However, due to lack of resources we have not been able to
effectively expand and market Hepi, which was originally positioned as a second brand for Mobile-8 and was
expected to compete head-to-head with three other FWA service providers.
In addition, we also integrated our FWA and cellular services into a single platform, which allows our
customers to register for two separate telephone numbers in a single chip. We launched this product under the brand
name “Fren Duo” in June 2009. Fren Duo is available in 13 major cities across Indonesia and we plan to
continuously develop our marketing initiative for our FWA products, as well as our other products, and to integrate
FWA services with our other services. We cannot assure you that our integration, marketing or expansion initiatives
regarding our FWA services will be successful. Failure to effectively integrate, market or expand our FWA products
may adversely affect our business, cash flows, results of operations, financial condition and prospects.
We face intense competition from other telecommunication businesses in Indonesia
We face substantial competition in the telecommunications industry in Indonesia, which is mainly based on
factors such as price, network coverage and quality, range of services and features offered and customer service. Our
cellular services business competes primarily against other CDMA operators, such as Bakrie Telecom through their
Esia brand and Indosat through their StarOne brand. In addition, we also face intense competition from GSM
providers, the dominant cellular platform in Indonesia, such as PT Telekomunikasi Selular (“Telkomsel”), PT
Indonesia Satellite Corporation Tbk (“Indosat”), and PT XL Axiata Tbk. (“XL Axiata”, formerly known as PT
Excelcomindo Pratama Tbk). The three leading providers in Indonesia are Telkomsel, Indosat and XL Axiata, and
together, these three providers had a market share of approximately 83.4% in terms of the number of wireless
subscribers as of 2009.
The Government may issue additional licenses to other cellular service providers in the future, which may
compete with us. Some of our competitors are larger than us, and have greater financial, technical, marketing and
other resources to respond to competitive developments in the wireless telecommunications industry than we do, and
may also enjoy better economies of scale and offer services at lower prices than we can, thereby adversely affecting
our revenues, growth and profitability.
We, along with our competitors, may also be subject to competition from providers of new
telecommunication services which arise as a result of technological advances. For example, internet-based carriers,
such as Google Voice, Yahoo Voice and Skype, allow users to make calls and send SMS, and offer additional
services such as the ability to route calls to multiple handsets and access to internet services. Any of these alternative
providers may offer products and service packages with which we are unable to compete.
Accordingly, we cannot assure you that we will be able to continue to compete effectively in the market for
wireless telecommunication services or that the level of existing and future competition will not adversely affect our
business, cash flows, results of operations, financial condition and prospects.
Our operating data may not be comparable to that of other cellular telecommunication operators
Telecommunication market practices for the calculation of minutes of usage, average revenue per user
(“ARPU”), average revenue per minute (“ARPM”), churn and number of prepaid subscribers may be applied
differently between various telecommunication operators. For example, we calculate minutes of usage based on
outgoing minutes of use for any given period, while other telecommunication operators may calculate minutes of
usage based on both outgoing and incoming minutes of use, with the result that each call minute originating and
terminating on the same cellular telecommunication network will be counted twice, once for the outgoing call and
once for the incoming call. Our grace period prior to deactivation of prepaid subscribers may be different from those
of other telecommunication operators.
16
Further, when we offer our subscribers incentive programs involving free minutes of call usage, we include
these free minutes of call usage in our minute of usage calculation, while other telecommunication operators may
offer such incentive programs and then either include or exclude the free minutes offered to their customers when
calculating minutes of usage. In addition, our calculation of minutes of usage includes only minutes of voice call
usage and does not recognize SMS usage, while other telecommunication operators may convert SMS into minutes
of usage (e.g., one SMS equals one minute of usage) in their calculation of minutes of usage. As a result of these and
other potential differences in calculation of subscribers, minutes of usage, ARPU, ARPM and churn, our calculation
of subscribers, minutes of usage, ARPU, ARPM and Average Monthly Churn Rate may not be precisely comparable
to those of other telecommunication operators.
Accordingly, you should not place undue reliance on comparisons between us and our competitors based
on these operational metrics.
We may not be able to successfully extend and/or launch existing or new products and services into new
markets
We have introduced, and we intend to continue to introduce and develop, a number of products and
services for our subscribers, and in particular, data services. There can be no assurance that we will be able to
successfully extend and/or launch existing or new products and services. We may not identify market trends
correctly, and any new products or services we launch may not be provided in a cost-effective manner or on a pricecompetitive basis because we may misread consumer demand or sentiment. In addition, as part of our strategy, we
have entered into a joint-service venture with Smart Telecom on March 3, 2010. The joint-service will use the brand
name “SmartFren” and we will share our marketing campaigns, distribution channels, handset productions and BTS
towers.
Our ability to successfully implement this strategy is subject to a number of risks, including greater time
than expected to achieve brand awareness in these new markets and higher implementation costs than anticipated,
which in turn could cause us to forego, delay or postpone our expansion plans. If we fail to successfully extend
and/or launch new products and services, or extend our business in new markets, our business, cash flows, results of
operations, financial condition and prospects may be materially and adversely affected.
The price and limited choice of CDMA handsets could significantly impair our ability to attract new
subscribers
There is a limited choice of CDMA handsets in Indonesia and a very limited second-hand market for
CDMA handsets. A GSM subscriber with a GSM handset is required to purchase a CDMA handset in order to use
our services. CDMA handsets are also generally more expensive than comparable GSM handsets. The limited
choice and comparable expense involved in acquiring CDMA handsets could significantly impair our ability to
attract new subscribers. This could have a material adverse effect on our business, cash flows, results of operations,
Our failure to react to rapid technological changes could adversely affect our business, cash flows,
results of operations, financial condition and prospects
The telecommunications industry is characterized by rapidly changing technology and high customer
demand for new products and services. Technological developments are also shortening product life cycles and
facilitating development of new products that are able to offer various telecommunication segments in one medium.
The rapid change in technology may also lead to the development of wireless communication technologies or
alternative services that exceed our levels of service or which consumers prefer over our services. For example,
companies such as Vonage Holdings Corporation, Google and Skype, offer broadband telephone services using
VoIP technology, which enables voice communications over the Internet through the conversion and compression of
voice signals into data packets. An increasing number of mobile communication devices, including mobile phone
handsets, have also incorporated Skype or similar technologies into their devices, which allow voice
communications to be made using connections to the Internet, thus bypassing the traditional voice channels.
17
We cannot accurately predict how emerging and future technological changes will affect our operations or
the competitiveness of our services. We cannot assure you that our technologies will not become obsolete, or be
subject to competition from new technologies in the future, or that we will be able to acquire new technologies
necessary to compete in changed circumstances on commercially acceptable terms.
Build-out of our network infrastructure or provision of our wireless services cannot be guaranteed
We have made substantial investments in our network infrastructure and information technology systems.
Currently, our network service area covers major cities, most secondary cities as well as some rural areas across
Java and selected areas of Bali. Prior to 2006, we were building-out our CDMA2000 1X network in the other islands
in the Indonesian archipelago, as well as installing additional base transceiver stations on Java, in order to build a
nationwide network. Currently, as a result of lack of resources, we have stopped covering new areas and stopped the
building out of our network.
We cannot assure you that we will be able to recommence or continue construction of a nationwide
network or provide our wireless services in a timely, effective and cost-efficient manner. If we are unable to do so,
we may experience a decline in our customer base as subscribers choose to use the services of our competitors with
broader or better networks.
We incur substantial capital expenditures in our business and we may not be able to obtain external
financing for our capital expenditure plans
We incur substantial capital expenditures in our business, including the build-out of our network and the
development of our range of services and products. We estimate that we will spend approximately Rp. 350.0 billion
in 2010 for a range of projects, including expansion and upgrade of our wireless network coverage. Our actual
capital expenditures may be significantly higher than this planned amount, and we cannot assure you whether, or at
what cost, our planned or other possible capital projects will be completed or that we will be able to obtain financing
to fund our capital expenditure plans.
Our ability to obtain external financing on terms acceptable to us in the future is subject to a variety of
factors including the following:

our future results of operations, financial condition and cash flows;

prevailing economic conditions in Indonesia;

the Government’s policies relating to foreign currency borrowings;

the amount of capital other Indonesian and telecommunications companies may seek to raise in the
international capital markets;

the levels of interest rates, the availability of financing for the telecommunications industry and
the condition of the financial markets; and

the projected risks associated with investment in Indonesia.
If we are unable to obtain sufficient funding or funding at terms acceptable to us for our planned capital
expenditures or otherwise fund these expenditures through our financing arrangements, including internal cash
flows, we may have to forego, delay or postpone certain of our planned capital expenditures.
We may have defaulted or may default under our contracts and other agreements with third parties
Due to lack of resources and other factors, we have failed to make certain required payments and/or have
entered into restructuring discussions with some of our major suppliers and other contractual counterparties. We
cannot guarantee you that we will be able to resume payments under our contracts and other agreements with third
18
parties, or that the restructuring discussions with those third parties will be successful. Failure to resolve such
disputes with suppliers or other third parties may allow such parties to terminate their contractual arrangements with
us and may give rise to claims for damages, which may materially adversely affect our business, cash flows, results
of operations, financial condition and prospects.
Fluctuations in the value of the Rupiah may materially and adversely affect our business and financial
condition
One of the most important immediate causes of the economic crisis which began in Indonesia in mid-I997
was the depreciation and volatility of the value of the Rupiah as measured against other currencies, such as the U.S.
dollar. Although the Rupiah has appreciated considerably from its low point of approximately Rp. 17,000 per one
U.S. dollar in January 1998, the Rupiah continues to experience significant volatility. See “Exchange Rates and
Exchange Controls” for further information on changes in the value of the Rupiah as measured against the U.S.
dollar in recent periods.
The Rupiah has generally been freely convertible and transferable (except that Indonesian banks may not
transfer Rupiah to persons outside of Indonesia who lack a bona fide trade or investment purpose). However, from
time to time, Bank Indonesia has intervened in the currency exchange markets in furtherance of its policies, either
by selling Rupiah or by using its foreign currency reserves to purchase Rupiah. There can be no assurance that the
current floating exchange rate policy of Bank Indonesia will not be modified, that additional depreciation of the
Rupiah against other currencies, including the U.S. dollar, will not occur, or that the Government will take
additional action to stabilize, maintain or increase the value of the Rupiah, or that any of these actions, if taken, will
be successful.
Modification of the current floating exchange rate policy could result in significantly higher domestic
interest rates, liquidity shortages, capital or exchange controls or the withholding of additional financial assistance
by multinational lenders. This could result in a reduction of economic activity, an economic recession, loan defaults
and increases in the price of imports.
Any of the foregoing consequences could have a material adverse effect on our business, cash flows, results
of operations, financial condition and prospects, and could harm our ability to meet our obligations under the New
Notes.
Our ability to obtain adequate financing to remain competitive in the industry in which we operate is
highly dependent upon the overall business and economic situation in Indonesia and globally
The delivery of many of our products and services is capital intensive. In order to be competitive, we must
continually expand, modernize and update our technology, which involves substantial capital investment.
Our ability to fund capital expenditures in the future will depend upon our future operating performance,
which is subject to prevailing economic conditions, levels of interest rates and financial, business and other factors,
many of which are beyond our control, and upon our ability to obtain additional external financing.
Factors that could affect our ability to procure financing include any impairment of financial systems in the
event of another downturn in financial markets and market disruption risks, which could adversely affect the
liquidity, interest rates and availability of any third party funding sources.
If the capital and credit markets experience volatility and the availability of funds is restricted, credit
spreads could widen, which would increase financing costs. Moreover, it is possible that our ability to access the
capital and credit markets may be limited at a time when we would like or need to do so, which could have a
material and adverse impact on our ability to grow our business, refinance maturing debt, pay dividends, secure or
maintain credit ratings or react to changing economic and business conditions.
Furthermore, future credit facilities may contain covenants that limit our operating and financing activities
and require the creation of security interests over assets. In addition, we can only incur additional financing in
19
compliance with the terms of our debt agreements, including the terms of the New Notes. Accordingly, we cannot
assure you that we will have sufficient capital resources to improve or expand, for example, our cellular
telecommunications infrastructure or update our other technology to the extent necessary to remain competitive in
the Indonesian telecommunications market, the absence of which would have a material adverse effect on our
The growth of our wireless business may be adversely affected by any constraints to available bandwidth
and mobile telecommunication network congestion
One of the principal limitations on a wireless network’s subscriber capacity is the amount of spectrum
available for use by the system. While there is room for spectrum expansion in less developed areas in Indonesia,
there is limited ability to expand further in congested areas such as Jakarta, where congestion has adversely affected
service quality. The rapid growth of our subscriber base, together with increasing demand, has led to high subscriber
usage. The available spectrum for use has various implications for our business. As the number of our subscribers
increases, the utilization rate of our network will also increase, which may result in bandwidth capacity constraints
in the longer term. While we believe that we can address this up to a certain extent through adding base transceiver
stations, system upgrades and efficient allocation of bandwidth, we may face difficulties and/or additional costs in
acquiring the use of sites for base transceiver stations and no assurance can be given that these efforts will be
sufficient. However, inability to address such capacity constraints in a timely manner, or to finance the requisite
capital expenditures necessary to utilize our spectrum capacity successfully as and when we need it, may cause us to
experience difficulty in attracting and retaining subscribers, which may materially and adversely affect our business,
cash flows, results of operations, financial condition and prospects.
If the current trend of increased data transmission use by our subscribers continues, our bandwidth capacity
requirements are likely to increase. Growth of our business will depend in part upon our ability to manage
effectively our bandwidth capacity and to implement timely and efficiently new bandwidth-efficient technologies if
they become available. We cannot assure you that bandwidth constraints will not adversely affect the growth of our
wireless business.
We are one of six Indonesian telecommunication operators to have been found liable for SMS price
fixing
On November 1, 2007, the Business Competition Supervisory Commission (Komisi Pengawas Persaingan
Usaha, or “KPPU”) issued a decision regarding a preliminary investigation of eight telecommunication companies
(including us) based on allegations of fixing the prices of SMS messages between early 2004 and April 2008 in
breach of Article 5 of Law No. 5 Year 1999 on Anti-Monopoly and Unfair Competition (the “Anti-Monopoly
Law”). On June 18, 2008, we and five other telecommunication companies, namely Telkom, Telkomsel, XL Axiata,
Bakrie Telecom and Smart Telecom, were found liable for price fixing.
We were ordered by the KPPU to pay a fine of Rp. 5.0 billion and to revise our SMS charges. We and the
other telecommunication operators have appealed the decision of the KPPU in separate jurisdictions in July 2008,
and the Indonesian Supreme Court is currently considering the question of the proper jurisdiction for a joint appeal
hearing. We have, as a consequence, revised our SMS charges. However, any other legal actions arising from the
KPPU decision could subject us to legal damages and other substantial liabilities, which could lead to a decrease in
our revenue and affect our business, cash flows, results of operations, financial condition and prospects.
If we are not able to attract and retain subscribers, our financial performance could be impaired
Our ability to compete successfully for new subscribers and to retain our existing subscribers will depend
on:

pricing;

our marketing and sales and service delivery activities;
20

our ability to anticipate and develop new or enhanced services that are attractive to existing or potential
subscribers; and

our ability to anticipate and respond to various competitive factors affecting the industry, including
new services that may be introduced by our competitors, changes in consumer preferences,
demographic trends, economic conditions, and discount pricing and other strategies that may be
implemented by our competitors.
In addition, a key element in the economic success of telecommunications service providers is the ability to
retain subscribers as measured by the rate of subscriber churn. Our ability to retain subscribers and reduce our rate
of subscriber churn is affected by a number of factors including, the actual or perceived quality and coverage of our
network and the attractiveness of our service offerings. Our ability to retain subscribers in our businesses also is
affected by competitive pricing pressures and the quality of our customer service. Our efforts to reduce our rate of
subscriber churn may not be successful. A high rate of churn could impair our ability to increase the revenues of, or
cause a deterioration in the operating margins of, our business.
Despite spending significant financial resources to increase our subscriber base, the number of our
subscribers may increase without a corresponding increase in our revenues
We have expended significant financial resources to develop and expand our cellular network and add to
our cellular subscriber base. However, factors such as the increasing prices of primary goods in Indonesia, may
decrease our cellular subscribers’ purchasing power. In addition, despite the increase in the numbers of our
subscribers, we may not receive a corresponding increase in our revenues due to our competitive tariff pricing. We
believe that this is partly due to declining voice usage, the industry trend of increasing SMS usage, increased
penetration into the lower income segments of the market comprised principally of low usage users and the
requirement that we offer discounts to our normal tariffs in connection with our marketing, loyalty and retention
programs. We cannot assure you that further expansions of our customer base will result in corresponding increases
to our revenues.
We lease the land on which a number of our base transceiver stations are located and may not be able to
maintain these leases
Our interests in the immovable property on which our base transceiver stations and call center are situated
consist of leasehold or, in the case of co-located base transceiver stations, site sharing arrangements. A loss of these
interests, including losses arising from the default by one or more of our lessors under their mortgage financing,
would interfere with our ability to conduct our business and to generate revenue. Our inability to protect our rights
to the land under our base transceiver stations could have an adverse effect on our business, cash flows, results of
operations, financial condition and prospects.
A failure in the continuing operations of our network, certain key systems, or the gateways to or
networks of other network operators could adversely affect our business
We depend to a significant degree on the uninterrupted operation of our network to provide our services. In
addition, we rely on interconnection to the networks of other telecommunications operators to carry calls from our
subscribers to the subscribers of fixed line operators and other wireless operators both within Indonesia and
overseas. If for any reason these interconnection arrangements were disrupted, whether because of a failure by a
counterparty to perform its contractual obligations under the interconnection agreements that we have entered into
with such other operators to govern the interconnection arrangements, or for any other reason, one or more of our
services may be delayed, interrupted or stopped, the quality of our services may be lowered, our subscriber churn
rates may increase or our interconnection rates may increase, all of which could materially adversely affect our
We depend on certain technologically sophisticated management information systems and other systems,
such as our billing and customer relationship management system, to enable us to conduct our operations. Our
network, including our information systems, information technology and infrastructure and the networks of other
21
operators with whom our subscribers interconnect, are vulnerable to damage or interruptions in operation from a
variety of events including earthquakes, fires, power losses, equipment failures, network software flaws,
transmission cable disruptions or similar events. Because of interconnection capacity constraints, our wireless
subscribers have at times experienced blocked calls. We cannot assure you that these interconnection facilities can
be increased or maintained at current levels.
The Government, as a majority shareholder of Telkom and a shareholder of Indosat, may implement
policies that favor Telkom and Indosat
The Government owns an approximately 51.2% equity interest in PT Telekomunikasi Indonesia Tbk.
(“Telkom”). The Government also owns an approximately 14.3% equity interest in Indosat. The Government,
through MOCIT, exercises regulatory power over the Indonesian telecommunications industry and may have
objectives that are not necessarily consistent with the maximization of profits by industry participants. Certain
Government policies or objectives may favor Telkom and/or Indosat and have a material adverse impact on our
business, cash flows, results of operations, financial condition and prospects. We cannot assure you that the policies
and plans of the Government will not prejudice our business. Similarly, we cannot assure you that the Government
will not favor Telkom and Indosat when implementing future decisions, or when exercising regulatory power over
the Indonesian telecommunications industry.
We depend on the continuing efforts of our executive officers, and our business may be disrupted if we
lose their services
Our success depends on the continued services of our executive officers. We rely on their expertise and
experience in the management of our business and in the execution of our business strategy. If one or more of our
executive officers were unable or unwilling to continue in their present positions, or if they joined a competitor or
formed a competing company, we may not be able to replace them readily and our business may be temporarily
disrupted.
If we are unable to attract, train, retain and motivate skilled personnel, our business may be materially
and adversely affected
Our success depends, to a significant extent, on our ability to attract, train, retain and motivate skilled
personnel. There is a shortage of skilled personnel in the telecommunications sector in Indonesia and this shortage is
likely to continue. As a result, competition for certain specialist personnel is intense. Our inability to recruit, train,
retain and motivate key employees could have a material adverse effect on our business, cash flows, results of
Concerns about health risks associated with wireless equipment may reduce the demand for our services
Wireless handsets and base transceiver stations have been alleged to pose health risks, including cancer,
due to radio frequency emissions from handset devices and electromagnetic fields from base transceiver stations.
Lawsuits have been filed against numerous wireless telecommunications providers in a number of jurisdictions
seeking not only damages but also remedies that could increase our cost of doing business. We cannot assure you
that our business, cash flows, results of operations, financial condition and prospects will not be adversely affected
by litigation of this nature or public perception about health risks. Although CDMA handsets use lower radio
transmitting power as compared to GSM handsets, the actual or perceived risk of wireless telecommunications
devices could adversely affect us as well as the industry as a whole, through a reduction in subscribers, reduced
network usage per subscriber or reduced financing available to the wireless telecommunications industry. Further
research and studies are ongoing, and we cannot assure you that additional studies will not demonstrate a link
between radio frequency emissions or electromagnetic fields and health concerns.
22
We expect our allowances for doubtful accounts for postpaid subscribers may increase as we seek to
expand our number of postpaid subscribers
Operating a mobile telecommunications network involves inherent risk of incurring bad debt, which may
cause loss of revenue and non-recoverable expenses. There is an inherent risk in operating a mobile
telecommunications network of potential abuse by individuals, groups, businesses or other organizations that use our
services and avoid paying for them. The effects of these activities may be, among others, the loss of revenue due to
us and the incurrence of out-of-pocket expenses which we will have to pay to third parties in connection with those
services, such as interconnect fees, payments to other operators and payments to content providers. Most or all of
these payments may be non-recoverable. The fraud and bad debt we experience in a given period will adversely
affect our results of operations and directly reduce our cash flow. Our screening process, deposit schemes and
restrictions on access to our services in the event of non-payment may not be effective in limiting our bad debt
exposure. Consequently, we may have a significant number of subscribers that are unable to or do not pay their bills
on time, or at all, which could have an adverse effect on our business, cash flows, results of operations, financial
We make allowances for doubtful accounts based on our assessment of the recoverability of the accounts
receivable on maturity. For our postpaid subscribers, we make full allowance for doubtful accounts on accounts
receivable that are overdue for more than 120 days. The provisions for doubtful accounts with respect to our
subscribers for the years ended December 31, 2007, 2008, 2009 and the nine-months ended September 30, 2010
were, Rp. 3.3 billion, Rp. 9.0 billion, Rp. 12.3 billion and Rp. 24.2 billion, respectively, or 0.3%, 1.0%, 2.3% and
8.0%, respectively, of our gross revenues. We are currently instituting a variety of measures to increase the number
of our postpaid subscribers, in line with our plan to increase our focus on data and multimedia services, and as part
of our strategy to increase the number of our total subscribers and revenues. We have implemented a more
streamlined postpaid approval process to make it simpler and faster for a subscriber to apply for a postpaid account,
with further verification of the information submitted in the application conducted after we have provisionally
approved the application. We have also increased the minimum credit limit granted to our subscribers together with
the introduction of a more comprehensive set of credit evaluation criteria under the new process. As a result of our
efforts to increase the number of postpaid subscribers, we expect that the total amount of our allowances for
doubtful accounts for postpaid subscribers may increase in the future. A failure to control the amount of our doubtful
accounts as we expand the number of our postpaid subscribers could have a material adverse effect on our business,
cash flows, results of operations, financial condition and prospects.
Our ability to maintain and expand our wireless network or conduct our business may be affected by
disruption of supplies and services from our principal suppliers and termination of our leases of base transceiver
station sites and tower space
We rely upon a few principal vendors to supply a substantial portion of the equipment required to maintain
and expand our wireless network, including our microwave backbone, and upon other vendors in relation to other
supplies necessary to conduct our business. We have terminated the supply agreement with our principal supplier of
network equipment, Samsung Electronics Co. Ltd. and we have not decided on a supplier going forward. Our
subscriber information and management system is supplied by Huawei Technology Co. Ltd. (“Huawei”). We are
currently engaged in discussions with Huawei in order to reach settlement of disputes under our contracts in the
amount of approximately US$11.8 million.
We lease 636 towers from PT Profesional Telekomunikasi Indonesia, 294 towers from PT Tower Bersama,
182 towers from PT Solusindo Kreasi Pratama, 127 towers from PT Komet Konsorsium and 338 towers from 18
other tower providers, each of which provides leases for less than 100 towers respectively. We depend on equipment
and other supplies and services from such vendors and third party providers to maintain and replace key components
of our wireless network, lease our base transceiver station sites and tower space and operate our business. If we are
unable to obtain adequate supplies or services or leases of base transceiver station sites or tower space in a timely
manner or on commercially acceptable terms, or if there are significant increases in the cost of such supplies,
services or such leases, our ability to maintain and to expand our wireless network, and our business, cash flows,
results of operations, financial condition and prospects, may be adversely affected.
23
We may not be able to manage successfully our foreign currency exchange risk
Changes in exchange rates have affected and may continue to affect our business, cash flows, results of
operations, financial condition and prospects. Most of our debt obligations, including the New Notes, and a majority
of our capital expenditures are, and we expect will continue to be, denominated in U.S. dollars. Most of our
revenues are mainly denominated in Indonesian Rupiah. We may also incur additional long-term indebtedness in
currencies other than the Indonesian Rupiah, including the U.S. dollar, to finance further capital expenditures.
Our insurance coverage may be insufficient to cover our losses
We carry property insurance coverage for our fixed assets and equipment that we believe to be adequate in
amount and scope to insure against ordinarily foreseeable losses. In addition, we maintain business interruption
insurance for loss of profits arising from interruption or interference to our business following from loss, destruction
or damage of covered assets. We also maintain other insurance policies including coverage for motor vehicles and
group life, health and personal accident coverage for our employees. However, if a major natural disaster or other
unforeseen event were to destroy or damage a significant portion of our fixed assets, our insurance may not be
adequate to compensate us for all losses that may occur. If we were to suffer an uninsured loss to our fixed assets,
such occurrence could have a material adverse effect on our business, cash flows, results of operations, financial
We may not be able to complete the proposed acquisition of Smart Telecom (the “Acquisition”) on a
timely basis or at all, and if we are unable to complete the Acquisition, much of the pro forma financial
information in this Exchange Offer Memorandum will not apply
The proposed Acquisition would be subject to approval by us and by Smart Telecom, as well as other
conditions to closing. Accordingly, we cannot assure you that the Acquisition will occur within the time anticipated
or at all. If we are unable to complete the Acquisition, much of the pro forma financial and other information
included in this Exchange Offer Memorandum, which gives effect to the Acquisition, would not reflect our
Company going forward. As such, you should give careful consideration to our financial information set forth in this
Exchange Offer Memorandum that depicts our Company without giving effect to the Acquisition.
We may not realize all of the anticipated benefits of the Acquisition of Smart Telecom or other potential
future business combinations.
Our ability to realize the anticipated benefits of the Acquisition of Smart Telecom or other potential future
business combinations or acquisitions will depend, in part, on our ability to integrate the businesses of such acquired
company with our businesses. The combination of two independent companies is a complex, costly and time
consuming process. This process may disrupt the business of either or both of the companies, and may not result in
the full benefits expected. The difficulties of combining the operations of the companies include, among others:

coordinating marketing functions;

unanticipated issues in integrating information, communications and other systems;

unanticipated incompatibility of purchasing, logistics, marketing and administration methods;

retaining key employees;

consolidating corporate and administrative infrastructures;

the diversion of management’s attention from ongoing business concerns; and

coordinating geographically separate organizations.
24
There is no assurance that we will realize the full benefits of the Acquisition of Smart Telecom or any other
business combinations or acquisitions.
Risks Relating to Indonesia
We are headquartered in Jakarta, the capital city of Indonesia and the majority of our commissioners,
directors and officers, and substantially all of our assets and operations are based in Indonesia. As a result, future
political, economic, legal and social conditions in Indonesia, as well as certain actions and policies that the
Indonesian Government may or may not take or adopt, could have a material adverse effect on our business, cash
flows, results of operations, financial condition and prospects and our ability to make payments under the Exchange
Offer.
Political, economic and social instability may adversely affect our business
Since the collapse of President Soeharto’s regime in 1998, Indonesia has experienced a process of
democratic change, resulting in political and social events that have highlighted the unpredictable nature of
Indonesia’s changing political landscape. These events have resulted in political instability, as well as general social
and civil unrest on certain occasions in the past few years.
Since 2000, thousands of Indonesians have participated in demonstrations in Jakarta and other Indonesian
cities both for and against the Government and Government officials, as well as in response to specific issues,
including fuel subsidy reductions, privatization of state-owned enterprises, anti-corruption measures,
decentralization and provincial autonomy, potential increases in electricity charges and the American-led military
campaigns in Afghanistan and Iraq. Although these demonstrations were generally peaceful, some have turned
violent. In June 2001, demonstrations and strikes affected at least 19 cities after the Government mandated a 30.0%
increase in fuel prices. Similar demonstrations occurred in January 2003, when the Government again tried to
increase fuel prices, as well as electricity rates and telephone charges. In both instances, the Government was forced
to drop or substantially reduce the proposed increases. In March 2005, the Government implemented an
approximately 29.0% increase in fuel prices. In October 2005, the Government implemented a new policy that
resulted in a significant increase in fuel prices. In response, several non-violent mass protests were organized in
opposition to the increases in domestic fuel prices, and political tensions have resulted from the Government’s
decision. There can be no assurance that this situation or future sources of discontent will not lead to further political
and social instability.
Separatist movements and clashes between religious and ethnic groups have resulted in social and civil
unrest in parts of Indonesia. In the provinces of Aceh and Papua, there have been clashes between supporters of
those separatist movements and the Indonesian military. In Papua, continued activity by separatist rebels has led to
violent incidents, in Maluku, clashes between religious groups have resulted in casualties and displaced persons and
in the province of Kalimantan, clashes between ethnic groups have produced fatalities and refugees over the past
several years. In recent years, the Government has made progress in negotiations with these troubled regions
(including the recently signed memorandum of understanding between the Government and the leaders of the Aceh
separatist movement), but there is no guarantee that the terms of any agreement reached between the Government
and the separatists will be upheld. Human rights violators, including those from high-ranking military positions,
have recently begun to be more actively prosecuted in Indonesia, most notably with respect to alleged violations
occurring in Timor Leste (formerly East Timor), Aceh, Papua and Maluku. However, the success of these
prosecutions has been mixed, and many public commentators and demonstrators have criticized the Government’s
failure to prosecute human rights violations in Indonesia more vigorously.
In 2004, Indonesians directly elected the President, Vice-President and representatives in the Indonesian
parliament (the “Parliament”) for the first time through proportional voting with an open list of candidates. At the
lower governmental level, Indonesians have started directly electing their respective heads of local governments. In
2009, another set of elections were held in Indonesia to elect the President, Vice-President and representatives in the
Parliament. The July 2009 presidential elections resulted in the re-election of President Susilo Bambang
Yudhoyono. Although the 2004 and 2009 elections were conducted peacefully, political campaigns in Indonesia
25
may bring a degree of political and social uncertainty to Indonesia. Political and social unrest may occur if the
results of future elections are disputed or unpopular.
Political and social developments in Indonesia have been unpredictable in the past, and, as a result,
confidence in the Indonesian economy has remained low. Any resurgence of political instability could adversely
affect the Indonesian economy, which could adversely affect our business. There can be no assurance that social and
civil disturbances will not occur in the future and on a wider scale, or that any such disturbances will not, directly or
indirectly, have a material adverse effect on our business, cash flows, results of operations, financial condition and
prospects.
Indonesia is located in an earthquake zone and is subject to significant geological risk that could
lead to social unrest and economic loss
The Indonesian archipelago is one of the most volcanically active regions in the world. Because it is located
in the convergence zone of three major lithospheric plates, it is subject to significant seismic activity that can lead to
destructive earthquakes and tsunamis, or tidal waves. On December 26, 2004, an underwater earthquake off the coast
of Sumatra released a tsunami that devastated coastal communities in Indonesia, Thailand and Sri Lanka. In
Indonesia, more than 220,000 people died or were recorded as missing in the disaster which caused billions of U.S.
Dollars in damages. In May 2006, a 6.3 magnitude earthquake struck roughly 30 miles southwest of Mount Merapi,
in central Java, killing at least 6,000 people and leaving at least 200,000 people homeless in the Yogyakarta region
and prompted eruption of the volcano. In July 2006, a 7.7 magnitude underwater earthquake that struck
approximately 220 miles south of Jakarta and the resulting tsunami that followed killed at least 500 people and left at
least 35,000 people homeless. A 7.9 magnitude earthquake struck Bengkulu and West Sumatra on September 12,
2007 resulting in 25 deaths, numerous injuries and the evacuation of some 115,000 people. Most recently, in
September 2009, two major earthquakes struck West Java and West Sumatra, with magnitudes of 7.0 and 7.6
respectively, leading to the death of more than 600 people. In January and February 2007, many parts of Jakarta and
its surrounding areas suffered extensive flooding. Approximately 100 people were killed and 100,000 people in
Jakarta and its surrounding areas were evacuated to safe and dry areas due to the flood. This 2007 flood resulted in
more damage, deaths and victims left homeless than prior floods in Jakarta. Flooding and landslides in Central and
East Java that occurred between the end of 2007 to early 2008 caused 100 deaths and estimated damage amounting
to Rp. 2.0 trillion.
While these events did not have a significant economic impact on the Indonesian capital markets, the
Government has had to expend significant amounts of resources on emergency aid and resettlement efforts. A
significant portion of these costs has been underwritten by foreign governments and international aid agencies.
However, there can be no assurance that such aid will continue to be forthcoming, or that it will be delivered to
recipients on a timely basis. If the Government is unable to deliver foreign aid to affected communities in a timely
manner, political and social unrest could result. Additionally, recovery and relief efforts are likely to continue to
strain the Government’s finances and may affect its ability to meet its obligations on its sovereign debt. Any such
failure on the part of the Government, or declaration by it of a moratorium on its sovereign debt, could potentially
trigger an event of default under numerous private-sector borrowings including ours, thereby materially and
adversely affecting our business, cash flows, results of operations, financial condition and prospects.
There can also be no assurance that future geological occurrences will not significantly impact the
Indonesian economy. A significant earthquake or other geological disturbance in any of Indonesia’s more populated
cities and financial centers could severely disrupt the Indonesian economy and undermine investor confidence,
thereby materially and adversely affecting our business, cash flows, results of operations, financial condition and
prospects.
An outbreak of avian flu, the H1N1 virus or another infectious disease could adversely affect our
business, cash flows, results of operations, financial condition and prospects
26
The outbreak of an infectious disease in Asia and elsewhere, together with any resulting restrictions on
travel or quarantines imposed, could have a negative impact on the economy and our business activities. In turn,
this would adversely affect our revenue. Examples are the outbreak in 2003 of Severe Acute Respiratory
Syndrome (“SARS”) in Asia, the outbreak in 2004 and 2005 of Avian influenza, or “bird flu” in Asia and the
recent outbreak of Influenza A (“H1N1”). There can be no assurance that any precautionary measures taken
against infectious disease would be effective.
During the last three years, large parts of Asia experienced unprecedented outbreaks of avian flu. As of
May 6, 2009, the World Health Organization (“WHO”) had confirmed a total of 258 fatalities in a total number of
423 cases reported to the WHO, which only reports laboratory confirmed cases of avian flu. Of these, the
Indonesian Ministry of Health reported to the WHO 115 fatalities in a total number of 141 cases of avian flu in
Indonesia. In June 2006, the WHO announced that human-to-human transmission of avian flu had been
confirmed in Sumatra, Indonesia. According to the United Nations Food and Agricultural Organization, the avian
flu virus is entrenched in 31 of Indonesia’s 33 provinces and efforts to contain avian flu are failing in Indonesia.
This means that there is an increasing possibility that the virus may mutate into a deadlier form. No fully effective
avian flu vaccines have been developed and an effective vaccine may not be discovered in time to protect
against the potential avian flu pandemic.
Most recently, in April 2009, there was an outbreak of H1N1 virus which originated in Mexico but has
since spread globally to countries including confirmed reports in Indonesia, Hong Kong, Japan, Malaysia,
Singapore and elsewhere in Asia. In August and September 2009, there were a number of deaths in Indonesia
resulting from H1N1. The H1N1 virus is believed to be highly contagious and may not be easily contained. As of
October 25, 2009 the WHO had confirmed over 5,700 fatalities in more than 440,000 cases of H1N1 reported to
the WHO, which only reports laboratory confirmed cases of H1N1.
A future outbreak of an infectious disease or any other serious public health concern could seriously
harm our business in the countries that we operate in. Past occurrences of epidemics, depending on their scale,
have caused different degrees of damage to the national and local economies of the countries affected. An
outbreak of avian flu, SARS, H1N1 or another contagious virus or disease or the measures taken by the
governments of affected countries against such potential outbreaks, could seriously interrupt our operations. This
could have a material adverse effect on our business, cash flows, results of operations, financial condition and
prospects. The perception that an outbreak of avian flu, SARS, H1N1 or another contagious disease may occur
again may also have an adverse effect on the economic conditions of the countries that we have business in.
Terrorist attacks in Indonesia could destabilize the country, which may materially and adversely affect
our businesses
The terrorist attacks on the United States on September 11, 2001, together with the military response by the
United States and its allies in Iraq and Afghanistan have resulted in substantial and continuing economic volatility
and social unrest in Southeast Asia. The recent terrorist attacks in Southeast Asia have exacerbated this volatility.
Further developments stemming from these events or other similar events could cause further volatility. Any
additional significant military or other response or any further terrorist activities could also materially and adversely
affect international financial markets and the Indonesian economy.
In Indonesia during the last eight years, there have been various bombing incidents directed towards the
Indonesian Government and foreign governments, and public and commercial buildings frequented by foreigners,
including the Jakarta Stock Exchange Building and Jakarta’s Soekarno-Hatta International Airport. On October 12,
2002, over 200 people were killed in a bombing at a tourist area in Bali. On August 5, 2003, a bomb exploded at the
JW Marriott Hotel in Jakarta killing at least 13 people and injuring 149 others. On September 9, 2004, a car bomb
exploded at the Australian Embassy in Jakarta, killing more than six people. On May 28, 2005, bomb blasts in
Central Sulawesi killed 22 people and injured almost 60 people. On October 1, 2005, bomb blasts in Bali killed 23
people and injured over 100 others. Recently, on July 17, 2009, bomb blasts at the JW Marriott Hotel and Ritz Carlton
Hotel in Jakarta killed at least eight people and injured 50 others. Indonesian, Australian and U.S. government
officials have indicated that these bombings may be linked to an international terrorist organization.
Demonstrations have also taken place in Indonesia in response to plans for and subsequent to US, British and
Australian military action in Iraq. The Indonesian authorities are still investigating these incidents, but have
27
suggested that they may be linked to the activities of certain Islamic militant groups. There can be no assurance
that further terrorist acts will not occur in the future.
Further terrorist acts may occur in the future. Following the military involvement of the United States and
its allies in Iraq, a number of governments have issued warnings to their citizens in relation to a perceived increase
in the possibility of terrorist activities in Indonesia, targeting foreign, particularly U.S., interests. Such terrorist acts
could destabilize Indonesia and increase internal divisions within the Indonesian Government as it considers
responses to such instability and unrest, thereby adversely affecting investors’ confidence in Indonesia and the
Indonesian economy. Violent acts arising from and leading to instability and unrest have in the past had, and could
continue to have, a material adverse effect on investment and confidence in, and the performance of, the Indonesian
economy, and in turn our businesses. Although such acts have not in the past targeted our assets or those of our
subscribers, there can be no assurance that they will not do so in the future. Our current insurance policies do not
cover terrorist attacks. Any terrorist attack, including damage to our infrastructure or that of our subscribers, could
cause interruption to parts of our businesses and materially and adversely affect our business, cash flows, results of
Labor activism and unrest could adversely affect our Company and our customers in general, which in
turn could affect our business, cash flows, results of operations, financial condition and prospects
Laws permitting the formation of labor unions, combined with weak economic conditions, have resulted,
and may in the future result, in labor unrest and activism in Indonesia. In 2000, the Indonesian Government issued a
labor regulation increasing the amount of severance, service and compensation payments payable to terminated
employees. Employees who resign during a change of control of their employer are also entitled, under the
regulation, to service and compensation payments, provided that such employees have worked for their employer for
at least three years. A new labor law took effect on March 25, 2003, that permits employees to form unions without
intervention from their employers. These labor laws and regulations may make it more difficult for businesses,
including our businesses, to maintain flexible labor policies. There can be no assurance that labor unrest and
activism in Indonesia will not occur in the future, or that any such unrest or activism will not have a material adverse
effect on investment and confidence in, and the performance of the Indonesian economy, which, in turn, could
materially and adversely affect our business, cash flows, results of operations, financial condition and prospects.
Any significant labor dispute, unrest or activism in Indonesia could materially and adversely affect our
Regional autonomy may adversely affect our business through imposition of local restrictions, taxes and
levies
Indonesia is a large and diverse nation covering a multitude of ethnicities, languages, traditions and
customs. During the administration of the former President Soeharto, the central Indonesian Government controlled
and exercised decision making authorities on almost all aspects of national and regional administration, including
the allocation of revenues generated from extraction of national resources in the various regions. This led to a
demand for greater regional autonomy, in particular with respect to the management of local economic and financial
resources. In response to such demand, the Indonesian Parliament in 1999 passed Law 22 of 1999 regarding
Regional Autonomy and Law 25 of 1999 regarding Fiscal Balance Between the Central Indonesian Government and
the Regions, which have since been revoked and replaced by the provisions of regional autonomy under Law 8 of
2005 and Law 32 of 2004, respectively. Under these regional autonomy laws, regional autonomy was expected to
give the regions greater powers and responsibilities over the use of ‘national assets’ and to create a balanced and
equitable financial relationship between the central and local governments. However, under the pretext of regional
autonomy, certain regional governments have put in place various restrictions, taxes and levies which may differ
from restrictions, taxes and levies put in by other regional governments and/or are in addition to restrictions, taxes
and levies stipulated by the central Indonesian government. Our business and operations are located throughout
Indonesia and may be adversely affected by conflicting or additional restrictions, taxes and levies that may be
imposed by the applicable regional authorities.
28
Indonesia relies on funding from multinational lenders and the inability to obtain such funding would
have adverse consequences for Indonesia and us
In 1997, the Indonesian Government sought financial assistance from the International Monetary Fund
(“IMF”) and in October 1997, IMF agreed to provide relief contingent upon the implementation of economic
reforms, such as the Government undertaking asset sales and abolishing subsidies for commodities and other
consumer products. The most recent disbursement by IMF was on December 19, 2003 when it disbursed
approximately US$505.0 million to the Government. Indonesia left the IMF-supported program at the end of 2003
with total loans of US$9.8 billion. On October 12, 2006, the Government repaid US$3.2 billion in outstanding debt
to IMF, clearing all its debt to IMF earlier than the scheduled repayment period of seven years ending in 2010.
In addition to IMF, the World Bank has been an important source of funding for development projects and
programs in all sectors of the Indonesian economy. The World Bank’s lending program is subject to regular
compliance reviews and can be reduced or withdrawn at any time.
Total indebtedness of the Indonesian Government and Indonesian private sector companies from foreign
lenders amounted to US$164.5 billion as of December 31, 2009, which was approximately 31.6% of Indonesia’s
GDP for that year.
The members of the Paris Club and the Consultative Group on Indonesia (“CGI”), are all important sources
funding for the Indonesian Government. The Paris Club is an informal voluntary group of 19 creditor countries that
seeks to coordinate solutions for payment difficulties experienced by debtor nations. CGI is a group of 19 donor
countries and 13 international organizations that meets annually to coordinate donor assistance to Indonesia. CGI is
the successor organization to IGGI, an international group of lenders established in 1967 by the Netherlands to
coordinate multilateral aid to Indonesia. The Indonesian Government dismissed the IGGI on March 24, 1992.
Therefore, since April 8, 1992, the IGGI was replaced by the CGI which is led by the World Bank. Most of the
members of CGI were previously members of IGGI, such as Japan, United States, Australia, France, Germany, Italy,
the World Bank and the IMF. The Paris Club and the CGI accounted for approximately two-fifths of the Indonesian
Government’s total debt at the end of 2005. However, the Paris Club has publicly stated that as a result of the
Indonesian Government’s decision to end the IMF program, it would no longer reschedule payment of debts owned
to its members or to other creditors by the Indonesian Government, although there were further debt reschedulings
as a result of the earthquake and tsunami in December 2004.
The inability of the Indonesian Government to obtain adequate funding as a result of the termination of the
Government’s IMF program, a reduction or elimination of funding from the World Bank, or similar agencies or
creditor support for debt rescheduling, could have adverse economic, political and social consequences in Indonesia,
which, in turn, could have a material adverse effect on our business, cash flows, results of operations, financial
condition and prospects. The Indonesian Government may, in connection with future agreements with the World
Bank or other lenders, undertake additional economic or structural initiatives the effects of which are presently
unknown.
Wage inflation may adversely affect our business
In recent years, wages in the jurisdictions where we operate in have risen as a result of the devaluation of
the Rupiah, fuel price increases and general price increases. Over the past five years, the minimum wage in
Indonesia increased between 9.0% and 16.0% per year. Any national inflation of wages will have a significant
impact on the operating costs of our business and on our profit margin.
Indonesian corporate and other disclosure and accounting standards differ from those in the United
States, countries in the European Union and other jurisdictions
Our financial statements are prepared in accordance with Indonesian GAAP, which differ from U.S.
GAAP. As a result, our financial statements and reported earnings could be different from those which would be
reported under U.S. GAAP. This Exchange Offer Memorandum does not contain a reconciliation of our financial
statements to U.S. GAAP, and there can be no assurance that such reconciliation, if performed, would reveal
material differences. See “Summary of Certain Differences Between Indonesian GAAP and U.S. GAAP.”
29
Downgrades of credit ratings of Indonesia or Indonesian companies could materially and adversely
affect us and the market price of the New Notes
In 1997, certain recognized statistical rating organizations, including Moody’s and Standard & Poor’s,
downgraded Indonesia’s sovereign rating and the credit ratings of various credit instruments of the Government and
a large number of Indonesian banks and other companies. Currently, Indonesia’s sovereign foreign currency longterm debt is rated “Ba2” by Moody’s, upgraded from “Ba3” on September 16, 2009, “BB-” by Standard & Poor’s,
upgraded from “B+” on July 26, 2006 and “BB” by Fitch, upgraded from “BB-” on February 14, 2008 and its shortterm foreign currency debt is rated “NP” by Moody’s, “B” by Standard & Poor’s and “B” by Fitch. On June 11,
2009, Moody’s revised its outlook on the sovereign rating for Indonesia from stable to positive. These ratings reflect
an assessment of the Government’s overall financial capacity to pay its obligations and its ability or willingness to
meet its financial commitments as they become due.
No assurance can be given that Moody’s, Standard & Poor’s, Fitch or any other statistical rating
organization will not further downgrade the credit ratings of Indonesia or other Indonesian companies. Any such
downgrade could have an adverse impact on liquidity in the Indonesian financial markets, the ability of the
Government and Indonesian companies, including us, to raise additional financing and the interest rates and other
commercial terms at which such additional financing is available and could have a material adverse effect on us.
Current Bapepam-LK regulations may restrict our ability to issue additional debt securities
On November 25, 2009, Bapepam-LK Regulation IX.E.2 on Material Transactions and Change of Core
Business was issued, which amended the previous regulation issued in 2001 (the “Material Transactions
Regulation”). This regulation is applicable to publicly listed companies in Indonesia and their unlisted consolidated
subsidiaries. Pursuant to the Material Transactions Regulation, each borrowing and lending in one transaction or a
series of related transactions for a particular purpose or activity having a transaction value of 20% to 50% of the
publicly listed company’s equity, as determined by the latest audited annual financial statements, semi-annual
limited reviewed financial statements or audited interim financial statements (if any), must be announced to the
public and the listed company must also prepare an appraisal report. The announcement relating to the material
transaction must be made to the public in at least one Indonesian language daily newspaper having national
circulation no later than the end of the second business day after the material transaction is executed. The
announcement is required to include a summary of the transaction, a summary of the appraisal report (including its
purpose, the parties involved, the assumptions, qualifications and methodology used in the appraisal report and the
conclusion of the fairness analysis), the amount borrowed or lent, and a summary of the terms and conditions of the
borrowing or lending. The issuance of the New Notes falls within the 20% to 50% threshold. Accordingly, in
connection with the issuance, we are required to obtain and submit to Bapepam-LK an appraisal report from an
independent appraiser (registered with Bapepam-LK), a summary of which is required to be published in a
newspaper announcement two days after closing of the issuance. We have appointed an independent appraiser,
Martokoesoemo Prasetyo & Rekan, to prepare this appraisal report, which we expect to be completed on or about
the original issue date of the New Notes. For a material transaction (in this case borrowing and lending) with a value
in excess of 50% of a company’s equity, it must also obtain shareholders’ approval whereby shareholders holding
more than half of all shares with valid voting rights are present or represented, and more than half of such
shareholders present or represented approve the transaction, in addition to fulfilling the appraisal disclosure
requirements. If within twelve months from the Exchange Offer we decide to issue additional debt securities which,
if aggregated together with the issuance of the New Notes, is deemed to be a single transaction, and we exceed the
50% threshold, we would be required to obtain shareholders’ approval, as well as a new appraisal report. There is no
assurance that we would be able to obtain the approval of our shareholders or a favorable appraisal report in order to
issue such additional debt securities. This requirement could limit our ability to finance our future operations and
capital needs or pursue business opportunities and activities that may be in our interest, which could materially and
adversely affect our business, cash flows, results of operations, financial condition and prospects.
The appraisal report may not be accurate or complete, and you will not have access to it
The appraiser is relying upon the accuracy and completeness of the information, including certain
projections, that we provide to the appraiser. The appraisal report will be based on certain assumptions, including
30
certain assumptions with respect to the terms of the New Notes, and projections, which, by their nature, are
subjective and uncertain and may differ from actual results. The appraiser has not independently verified such
information, and assumes no responsibility for and expresses no view as to any, such information, projections or the
assumptions on which they were based. Our independent auditors have not examined, reviewed or compiled the
projections and accordingly, do not express an opinion or any other form of assurance with respect thereto.
Unanticipated results of, or changes in, our business or the telecommunications industry, or changes in general or
local economic conditions or other relevant factors, could affect such projections and the conclusions in the
appraisal report. After the issuance of the New Notes, we expressly disclaim any duty to, and neither we nor the
appraiser will, provide an update to the report of the differences between the projections or the assumptions made in
the appraisal report. Accordingly, the appraisal report is not a prediction or an indication of the Company’s actual
ability to perform their obligations under the New Notes. Accordingly, investors should not rely on the requirement
of the company to obtain an appraisal report when making an investment decision.
The full appraisal report, including the detailed projections underlying the analysis and the assumptions on
which the appraiser’s conclusions are based, is confidentially submitted to Bapepam-LK and not available to
shareholders or to you for review. The summary of the appraisal report will only be published in a local newspaper
two days following closing of the Exchange Offer and will not include a full statement of all of the relevant facts,
information and assumptions on which the appraiser bases its conclusions.
Risks Relating to the New Notes
Through the purchase of the New Notes, noteholders may be exposed to a legal system subject to
considerable discretion and uncertainty; it may be difficult or impossible for noteholders to pursue claims under
the New Notes
Indonesian legal principles relating to the rights of debtors and creditors, or their practical implementation
by Indonesian courts, may differ materially from those that would apply within the United States or the European
Union. Neither the rights of debtors nor the rights of creditors under Indonesian law are as clearly established or
recognized as under legislation or judicial precedent in most United States and European Union jurisdictions. In
addition, under Indonesian law, debtors may have rights and defenses to actions filed by creditors that these debtors
would not have in jurisdictions such as the United States and the European Union member states.
Indonesia’s legal system is a civil law system based mainly on written statutes; judicial and administrative
decisions do not constitute binding precedent and are not systematically published. Indonesia’s commercial and civil
laws as well as rules on judicial process were historically based on Dutch law as in effect prior to Indonesia’s
independence in 1945, and some have not been revised to reflect the complexities of modern financial transactions
and instruments. Indonesian courts are often unfamiliar with sophisticated commercial or financial transactions,
leading in practice to uncertainty in the interpretation and application of Indonesian legal principles. The application
of Indonesian law depends in large part upon subjective criteria such as the good faith of the parties to the
transaction and principles of public policy, the practical effect of which is difficult or impossible to predict.
Indonesian judges operate in an inquisitorial legal system, have very broad fact-finding powers and a high level of
discretion in relation to the manner in which those powers are exercised. In practice, Indonesian court decisions may
omit a clear articulation of the legal and factual analysis of the issues presented in a case. As a result, the
administration and enforcement of laws and regulations by Indonesian courts and Indonesian governmental agencies
may be subject to considerable discretion and uncertainty. Furthermore, corruption in the court system in Indonesia
has been widely reported in publicly available sources. See, for example, U.S. Department of State, Indonesia:
Country Reports on Human Rights Practices (2003); World Bank, Raising Investment in Indonesia: A Second
Generation of Reforms (2005); and Transparency International, International Corruption Perceptions Index (2003).
As a result, it may be difficult for noteholders to pursue a claim against the Company in Indonesia, which
may adversely affect or eliminate entirely noteholders’ ability to obtain and enforce a judgment against the
Company or in Indonesia or increase noteholders’ costs of pursuing, and the time required to pursue, claims against
the Company.
31
The New Notes will be subordinated to other secured indebtedness of the Company
The New Notes will be direct, general, unconditional and unsubordinated obligations of the Company and
will rank pari passu in right of payment with all other existing and future unsubordinated and unsecured
indebtedness of the Company and senior in right of payment to all subordinated indebtedness of the Company, if
any. However, the New Notes will be effectively subordinated to any secured obligations of the Company to the
extent of the assets serving as security therefore. In bankruptcy, the holder of a security interest with respect to any
assets of the Company would be entitled to have the proceeds of such assets applied to the payment of such holder’s
claim before the remaining proceeds, if any, are applied to the claims of the noteholders.
In March 2007, Mobile-8 issued secured Rupiah-denominated bonds in the principal amount of Rp. 675.0
billion pursuant to a trust deed dated February 22, 2007 between Mobile-8, as issuer, and PT Bank Permata Tbk., as
trustee. The entire principal amount of the bonds is payable in a single installment on March 15, 2017. The bonds
are secured by fiducia security over certain existing and future telecommunication equipment owned by Mobile-8.
In the event of a default on these Rupiah denominated bonds or other secured indebtedness, those creditors would be
senior to the New Notes to the extent of any collateral.
The Company is incorporated in Indonesia, and it may not be possible for investors to effect service of
process or to enforce certain judgment, on the Company outside of Indonesia
The Company is a public limited liability company incorporated in Indonesia operating within the
framework of Indonesian laws relating to capital markets and all of its significant assets are located in Indonesia. In
addition, all of the Company’s commissioners and directors reside in Indonesia. As a result, it may be difficult for
investors to effect service of process, including judgments, on the Company or its commissioners and directors
outside of Indonesia, or to enforce against the Company or its commissioners and directors outside of Indonesia.
The judgments of English courts may not be enforceable in Indonesian courts, although such judgments
could be admissible as non-conclusive evidence in a proceeding on the underlying claim in an Indonesian court. As
a result, holders of the New Notes would be required to pursue claims against the Company or its commissioners,
directors and executive officers in Indonesian courts.
The Company may be subject to restrictive debt covenants that may limit its ability to finance its future
operations and capital needs and to pursue business opportunities and activities
The current or future debt of the Company may restrict the ability of the Company to:

incur or guarantee additional indebtedness and issue certain preferred stock, including, with
respect to the Company, layering of debt;

create or incur certain liens;

make certain payments, including dividends or other distributions, with respect to the Rupiah
bonds of the Company;

prepay or redeem subordinated debt or equity;

make certain investments and capital expenditures;

create encumbrances or restrictions on the payment of dividends or other distributions, loans or
advances to and on the transfer of assets to the Company or any of its subsidiaries;

sell, lease or transfer certain assets, including stock of subsidiaries;

engage in certain transactions with affiliates;
32

enter into unrelated businesses or engage in prohibited activities; and

consolidate or merge with other entities; and impair the security interest for the benefit of the
noteholders of the New Notes.
These covenants could limit the Company’s ability to finance its future operations and capital needs and its
ability to pursue business opportunities and activities that may be in its interest. Any future inability to incur
additional debt could materially and adversely affect the Company’s business, cash flows, results of operations,
The insolvency laws of Indonesia and England and Wales differ significantly from those of other
jurisdictions with which the Noteholder may be familiar
Any insolvency proceedings by or against us would most likely be based on the bankruptcy laws of
Indonesia which differ in significant respects from, and may not be as favorable to the noteholders as compared to
similar provisions under the laws of other jurisdictions with which the noteholders may be familiar. Under
bankruptcy laws in the U.S., for example, courts typically have jurisdiction over a debtor’s property, wherever they
are located, including property situated in other countries. However, courts in Indonesia may not recognize a U.S.
bankruptcy court’s jurisdiction. Accordingly, noteholders may have difficulties in administering a U.S. bankruptcy
case involving an Indonesia debtor with property located outside of the U.S., and any orders or judgments of a
bankruptcy court in the U.S. may not be enforceable outside of the U.S.
There has been no prior market for the New Notes, an active trading market for the New Notes may not
develop, and the trading price of the New Notes could be materially and adversely affected
The New Notes are a new issue of securities for which there is currently no trading market. The Company
cannot predict whether an active trading market for the New Notes will develop or be sustained. If an active trading
market were to develop, the New Notes could trade at prices that may be lower than the initial issue price. Whether
or not the New Notes could trade at lower prices depends on many factors, including:

prevailing interest rates and the markets for similar securities;

general economic conditions; and

the Company’s financial condition, historical financial performance and future prospects.
If an active market for the New Notes fails to develop or be sustained, the trading price of the New Notes
could be materially and adversely affected. Lack of a liquid, active trading market for the New Notes may adversely
affect the price of the New Notes or may otherwise impede a holder’s ability to dispose of the New Notes.
We may not have the funds necessary to purchase the New Notes on the mandatory redemption dates
Pursuant to the terms of the New Notes, on December 31, 2016 and each successive December 31 until
December 31, 2025, we will (unless we exercise our optional conversion rights pursuant to the terms of the New
Notes) redeem US$10,000,000 of the New Notes on a pro rata basis. If we do not have or have access to sufficient
funds to repurchase the New Notes, then we would not be able to repurchase your New Notes. If such an event were
to occur, we may require third-party financing, but we cannot assure you that we would be able to obtain that
financing on favorable terms or at all.
We may not be able to redeem the New Notes upon a liquidation of the Company
In the event of a voluntary liquidation or dissolution of the Company, or the appointment of a receiver and/
or manager in respect of the whole or substantially the whole of any of the Company’s undertaking, property or
assets, we cannot assure you that we will be able to redeem the New Notes when required pursuant to the terms of
the New Notes.
33
Holders of the New Notes will not have any shareholder rights before conversion
An investor in the New Notes will not be a holder of shares of the Company. No holder of the New Notes
will have any rights, any right to receive dividends or other distributions or any other rights with respect to any
shares of the Company until such time, if any, as the Company converts such noteholders New Notes for shares of
the Company. For example, in the event that an amendment is proposed to our certificate of incorporation or bylaws
requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the
amendment occurs prior to delivery of shares to you, you will not be entitled to vote on the amendment, although
you will nevertheless be subject to any changes in the powers, preferences or rights of our common stock.
Holders of the New Notes have limited anti-dilution protection
The conversion price of the New Notes will be adjusted in the event that these is a sub-division,
consolidation or re denomination, rights issue, bonus issue, reorganisation, capital distribution or other adjustment
including an offer or scheme which affects the shares of the Company. There is no requirement that there should be
an adjustment for every corporate or other event that may affect the value of the shares of the Company. Events in
relation to such events in respect of which no adjustment is made in the New Notes may adversely affect the value
of the Notes.
Short selling of the shares of the Company by purchasers of the New Notes could materially and
adversely affect the market price of the shares of the Company
The issuance of the New Notes may result in downward pressure on the market price of the shares of the
Company. Many investors in convertible securities seek to hedge their exposure in the underlying equity securities,
often through short selling of the underlying equity securities or similar transactions. Any short selling and similar
hedging activity could place significant downward pressure on the market price of the shares of the Company,
thereby having a material adverse effect on the market value of the shares of the Company owned by an investor as
well as on the trading price of the New Notes.
Future issuances or sales of shares of the Company could significantly affect the trading price of the
New Notes and the shares delivered upon conversion thereof
The future issuance of shares of the Company by the Company or the disposal of shares by any of our
major shareholders or the perception that such issuance or sales may occur may significantly affect the trading price
of the New Notes and the shares delivered upon conversion thereof. There may be no restriction on the ability of our
Company to issue shares or the ability of any shareholder to dispose of, encumber or pledge its shares, and there can
be no assurance that the Company will not issue shares or that such shareholder will not dispose of; encumber or
pledge, its shares.
Holders of the New Notes will bear the risk of fluctuations in the price of the shares of the Company
The market price of the New Notes at any time will be affected by fluctuations in the price of the shares of
the Company. The shares are currently listed on the Indonesian Stock Exchange. There can be no certainty as to the
effect, if any, that future issues or sales of the shares, or the availability of such shares for future issue or sale, will
have on the market price of the shares prevailing from time to time and therefore on the price of the New Notes.
We will not be able to convert the New Notes upon a delisting of our shares from the Indonesian Stock
Exchange
In the event that our shares are delisted from the Indonesian Stock Exchange we will lose the option to
convert the New Notes into shares of our Company. Accordingly, the New Notes will no longer be convertible
which may affect the value of the New Notes.
The New Notes will not contain any restrictions on the ability of the Company or any of its affiliates or
other related parties of the Company to own, vote on or consent to matters in respect of the New Notes
34
The New Notes will not contain any terms or provisions that restrict the ability of affiliates of the Company
to own the New Notes or to vote on or consent to matters in respect of the New Notes. The Company, its affiliates or
other related parties may acquire interests in the New Notes, and would be entitled to the same rights to vote on or
consent to matters, including requested waivers, on an equal basis with other holders of New Notes. The Company,
its affiliates and related parties may have interests which are different from those of other holders of New Notes, and
we cannot assure you that the Company, its affiliates or related parties will not acquire or own a percentage of
outstanding New Notes that permit them individually or collectively to block the taking of certain actions by
noteholders, or that the Company, its affiliates and related parties will not be able to approve changes to the terms of
the New Notes, including material amendments to the covenants and economic terms of the New Notes including
the interest rate, interest payment date, the redemption or conversion terms or the maturity of the New Notes.
Accordingly, we cannot assure you that the economic terms of the New Notes will not change without your consent
prior to their redemption or maturity as a result of the voting rights of the Company, its affiliates and related
parties.
Risks Relating to the Restructuring
The Scheme may be objected to and may not be completed
If the Scheme is approved at the Scheme Meeting, it is possible for a person with an interest in the Scheme
(whether a Scheme creditor or otherwise) to file objections to the Scheme with the Court, to attend or be represented
at the hearing of the Court to sanction the Scheme in order to make representations that the Scheme should not be
approved and to appeal against the granting of a Court order sanctioning the Scheme. Therefore, there can be no
assurance that objections will not be made at or before the Court hearings or that an appeal will not be made against
the grant of the order by the Court and that any such objections or appeal will not delay or prevent the Exchange
Offer.
Transfers of the New Notes are restricted, which may adversely affect their value
The New Notes are being offered and sold pursuant to an exemption from registration under the U.S.
Securities Act and applicable state securities laws of the U.S. The New Notes have not been and will not be
registered under the U.S. Securities Act or any U.S. state securities laws. Therefore, the holders of the New Notes
may not transfer or sell the New Notes in the U.S. or to U.S. holders except pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities
laws, or pursuant to an effective registration statement, and each holder of the New Notes may be required to bear
the risk of its investment in the New Notes for an indefinite period of time. The New Notes contain provisions that
restrict the New Notes from being offered, sold or otherwise transferred except pursuant to the exemption under the
U.S. Securities Act. Furthermore, the Company has not registered the New Notes under any other country’s
securities laws. It is the holder’s obligation to ensure that its offers and sales of the New Notes within the U.S. and
other countries comply with applicable securities laws.
The New Notes will initially be held in book-entry form, and therefore holders must rely on the
procedures of the relevant Clearing Systems to exercise any rights and remedies
The New Notes will initially only be issued in global certificated form and held through the Clearing
Systems. Interests in the global notes will trade in book-entry form only, and notes in definitive registered form, or
definitive registered notes, will be issued in exchange for book-entry interests only in very limited circumstances.
Owners of book-entry interests will not be considered record owners of the New Notes. The common depositary, or
its nominee, for the Clearing Systems will be the sole registered holder of the global notes representing the New
Notes. Payments of principal, interest and other amounts owing on or in respect of the global notes representing the
New Notes will be made to the paying agent for the New Notes, which will make payments to the Clearing Systems.
Thereafter, these payments will be credited to participants’ accounts that hold book-entry interests in the global
notes representing the notes and credited by such participants to indirect participants. After payment to the common
depositary for the Clearing Systems, the Company will have no responsibility or liability for the payment of interest,
principal or other amounts to the owners of book-entry interests. Accordingly, if a holder owns a book-entry interest,
it must rely on the procedures of the Clearing Systems, and if each holder of the New Notes is not a participant in
35
the Clearing Systems, on the procedures of the participant through which such holder owns its interest, to exercise
any rights and obligations of a holder of the New Notes.
Unlike the noteholders of the New Notes themselves, owners of book-entry interests will not have the
direct right to act upon the Company’s solicitations for consents, requests for waivers or other actions from holders
of the New Notes. Instead, if a noteholder owns a book-entry interest, a noteholder will be permitted to act only to
the extent it has received appropriate proxies to do so from the Clearing Systems. The procedures implemented for
the granting of such proxies may not be sufficient to enable a noteholder to vote on a timely basis.
Similarly, upon the occurrence of an event of default under the New Note, unless and until definitive
registered notes are issued in respect of all book-entry interests, if a noteholder owns a book-entry interest, such
noteholder will be restricted to acting through the Clearing Systems. The procedures to be implemented through the
Clearing Systems may not be adequate to ensure the timely exercise of rights under the New Notes.
36
EXCHANGE RATES AND EXCHANGE CONTROLS
Exchange Rates
Bank Indonesia is the sole issuer of the Rupiah and is responsible for maintaining its stability. Since 1970,
Indonesia has implemented three exchange rate systems: a fixed rate between 1970 and 1978, a managed floating
exchange rate system between 1978 and 1997 and a free-floating exchange rate system since August 14, 1997.
Under the managed floating rate system, Bank Indonesia maintained the stability of the Rupiah through a trading
band policy, pursuant to which Bank Indonesia would enter the foreign currency market and buy or sell Rupiah, as
required, when trading in the Rupiah exceeded bid and offer prices announced by Bank Indonesia on a daily basis.
On August 14, 1997, Bank Indonesia terminated the trading band policy and instituted the current free-floating
exchange rate system, allowing the Rupiah to float without an announced level at which it would intervene, which
resulted in a substantial decrease in the value of the Rupiah relative to the U.S. dollar. Under the current system, the
exchange rate of the Rupiah is determined by the market, reflecting the interaction of supply and demand in the
market. Bank Indonesia may take measures, however, to maintain a stable exchange rate.
The following table shows the Rupiah-U.S. dollar exchange rate based on the middle exchange rate at the
end of each month or day, as the case may be, during the periods indicated. The Rupiah middle exchange rate is
calculated based on Bank Indonesia’s buying and selling rates. We do not make any representations that the Rupiah
or U.S. dollar amounts referred to in this Exchange Offer Memorandum could have been or could be converted into
U.S. dollars or Rupiah, as the case may be, at the rate indicated or any other rate or at all.
Low(1)
2005
2006
2007
2008
2009
2010
January
February
March
April
May
June
July
August
September
Source: Bank Indonesia
High(1)
Average(2)
(Rupiah per US$1.00)
9,165.0
8,775.0
8,828.0
9,051.0
9,400.0
10,310.0
9,395.0
9,419.0
12,151.0
11,980.0
9,751.0
9,141.0
9,164.0
9,757.0
10,356.0
9,130.0
9,280.0
9,070.0
9,001.0
9,017.0
9,015.0
8,952.0
8,932.0
8,924.0
9,408.0
9,413.0
9,313.0
9,075.0
9,373.0
9,295.0
9,094.0
9,041.0
9,034.0
9,276.0
9,348.0
9,176.0
9,027.0
9,183.0
9,148.0
9,049.0
8,972.0
8,975.0
Period End
9,830.0
9,419.0
9,419.0
10,950.0
9,400.0
9,365.0
9,335.0
9,115.0
9,012.0
9,180.0
9,083.0
8,952.0
9,041.0
8,924.0(3)
(1) For full years, the high and low amounts are determined based upon the month-end middle exchange rate
announced by Bank Indonesia during the year indicated. The high and low figures for months occurring in 2010
are determined based on the daily middle exchange rates during the month indicated.
(2) For full years, the average shown is calculated based on the middle exchange rate announced by Bank Indonesia
on the last day of each month during the year indicated. For each month, the average shown is calculated based
on the daily middle exchange rates during the month indicated.
(3) The exchange rate as of September 30, 2010 was Rp. 8,924.0 = US$1.00.
37
Exchange Controls
There are currently no foreign exchange control restrictions in Indonesia. Foreign currency is generally
freely transferable to, from and within Indonesia. However, in order to maintain the stability of the Rupiah and to
prevent the utilization of the Rupiah for speculative purposes by non-Indonesian residents, Bank Indonesia has
introduced regulations to prohibit the movement of Rupiah from banks within Indonesia to banks, legal entities or
other offshore institutions domiciled outside Indonesia, or to an offshore branch or office of an Indonesian bank or
Indonesian legal entities, or any investment in Rupiah denomination with foreign parties and/or Indonesian citizens
domiciled or permanently residing outside Indonesia, thereby limiting offshore trading to existing sources of
liquidity. In addition, Bank Indonesia has the authority to request information and data concerning the foreign
exchange activities of all persons and legal entities that are domiciled, or plan to be domiciled in Indonesia for at
least one year. Bank Indonesia regulations also require companies that have total assets or total annual gross
revenues of at least Rp. 100.0 billion to report to Bank Indonesia all data concerning their foreign currency
activities, if the relevant foreign currency transaction is not conducted through a domestic bank or domestic nonbank financial institution (such as insurance companies, securities companies, finance companies or venture capital
companies). If certain transactions are conducted via a domestic bank or domestic non-bank financial institution,
such domestic bank or financial institution is required to report the transaction to Bank Indonesia. The transactions
that must be reported include receipts and payments through bank accounts outside of Indonesia.
Purchasing of Foreign Currencies against Rupiah through Banks
Pursuant to Bank Indonesia Regulation No. 10/28/PBI/2008 regarding the Purchasing of Foreign
Currencies against Rupiah through banks, as implemented by the Circular Letter of Bank Indonesia No. 10/42/DPD,
dated November 27, 2008 (“PBI No. 10/2008”), the conversion of Indonesian Rupiah to foreign currencies or the
purchase of foreign currency in an amount exceeding US$100,000 per month (or its equivalent) by any company
(including the purchase of foreign currencies for derivative transactions), must be based on an underlying
transaction, which is defined as an activity the basis for which foreign currencies are purchased, and include
payments on foreign currency-denominated debt. Further, the amount of foreign currencies that will be purchased
must be at the most equal to the nominal value of the underlying transaction.
Indonesian companies purchasing foreign currencies in excess of US$100,000 will be required to submit
certain supporting documents to the selling bank, including among others, the relevant underlying transaction
document, a duly stamped statement confirming that the underlying agreement is valid and that the foreign currency
purchased will only be used for settlement of the payment obligations under the underlying agreement. For
purchases of foreign currency not exceeding US$100,000, such company must declare in a duly stamped letter that
its aggregate foreign currency purchases do not exceed US$100,000 per month in the Indonesian banking system.
38
CAPITALIZATION
The following table sets forth the Company’s cash and cash equivalents, indebtedness and capitalization as
of September 30, 2010. The Rupiah amounts presented have been extracted from our audited consolidated financial
statements as of and for the nine-months ended September 30, 2010. You should read this table in conjunction with
our audited consolidated financial statements as of and for the nine-months ended September 30, 2010, including the
notes thereto, found elsewhere in this Exchange Offer Memorandum.
As of September 30, 2010
Actual
(Rp. billions)
Cash and cash
equivalents:
Short-term debt(1):
Long-term debt(2):
Total Debt(3):
Shareholder’s equity(4) :
Total Capitalization:
17.6
Actual
(US$ millions)
2.0
756.0
1,505.2
2,261.2
(62.3)
2,198.9
84.7
168.7
253.4
(7.0)
246.4
Except as disclosed in this Exchange Offer Memorandum, there have been no material adverse changes in
our cash and cash equivalents, indebtedness and capitalization since September 30, 2010.
(1) Represents commercial paper totaling Rp. 756.0 billion as of September 30, 2010.
(2) Represents the fair value of United States Dollar denominated bonds of principal amount US$100.0 million and
Rupiah denominated bonds of principal Rp. 606.5 billion as of September 30, 2010.
(3) “Total debt” as used in this Exchange Offer Memorandum consists of the Company’s interest bearing
obligations.
(4) Represents equity, which comprised of (i) issued and paid up capital Rp. 2,863.6 billion, (ii) additional paid-up
capital Rp. 726.7 billion, and (iii) retained earnings (deficit) Rp. (3,652.5) billion as of September 30, 2010.
39
SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA
You should read the summary consolidated financial information presented below in conjunction with our
consolidated financial statements as of and for the three years ended December 31, 2007, 2008 and 2009, and as of
and for the nine-months ended September 30, 2009 and 2010, and the notes to these consolidated financial
statements, which are attached to this Exchange Offer Memorandum.
consolidated income statement, balance sheet and cash flows data, as of and for the nine-months ended September
30, 2009 (unaudited) and 2010 (unaudited) have been derived from our consolidated financial statements for those
periods and have been reviewed by Mulyamin Sensi Suryanto.
Certain amounts presented in the other financial data table and amounts presented in the selected operating
data table are unaudited amounts which were not part of our historical consolidated financial statements and our
unaudited interim consolidated financial statements.
Our consolidated financial statements have been prepared in accordance with Indonesian GAAP and
reporting practices. Indonesian GAAP differs in certain respects from U.S. GAAP. See “Summary of Certain
Principal Differences Between Indonesian GAAP and U.S. GAAP”. We have not quantified or identified the impact
of the differences between Indonesian GAAP and U.S. GAAP.
Income Statement
2007
(Rp.)
Operating Revenues
Telecommunication
services .................................
Interconnection services........
Total operating revenue ........
Discount................................
Operating revenues - net .......
Operating Expenses
Operations, maintenance
and telecommunication
services .................................
Depreciation and
amortization ..........................
Sales and marketing ..............
Personnel...............................
General and administration ...
Total operating expenses.......
Operating income (loss) .....
exchange - net .......................
Gain (loss) on change in
fair value of derivative-net....
Realized gain arising from
restructuring transactions
As of December 31,
As of September 30,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
992.1
125.7
1,117.7
(41.8)
1,076.0
820.4
106.2
926.5
(31.6)
894.9
464.7
72.7
537.4
(32.9)
504.5
49.4
7.7
57.2
(3.5)
53.7
351.7
56.4
408.2
(25.4)
382.8
261.9
39.7
301.6
(10.7)
290.9
29.4
4.4
33.8
(1.2)
32.6
329.3
471.0
518.2
55.1
413.2
351.3
39.4
229.8
152.2
131.7
63.2
906.2
169.7
319.3
272.9
160.0
74.8
1,298.0
(403.1)
318.4
150.5
135.0
58.0
1,180.0
(675.5)
33.9
16.0
14.4
6.2
125.5
(71.9)
238.1
136.0
106.0
46.6
940.0
(557.2)
267.6
179.4
106.7
39.7
944.6
(653.8)
30.0
20.1
12.0
4.4
105.9
(73.3)
4.4
(182.8)
241.9
25.7
186.7
70.9
7.9
-
(142.0)
117.9
12.5
123.0
(25.9)
(2.9)
-
-
42.2
4.5
-
-
-
40
As of September 30,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
Income Statement
2007
(Rp.)
among entities under
common control ....................
Gain on sale of property
and equipment.......................
Investment income (loss) ......
Interest income......................
Amortization of goodwill......
Interest expenses and other
finance charges .....................
Others - net ...........................
Others (expenses) income net .........................................
Income (loss) before tax........
Tax (expense) benefit
Current...........................
Deferred.........................
Net Income (loss) .................
Basic earnings (loss) per
share .....................................
Balance Sheet
3.8
29.1
27.9
(11.5)
0.7
32.9
9.0
(11.5)
21.5
10.7
0.5
(11.5)
2.3
1.1
0.1
(1.2)
10.2
12.9
0.2
(8.6)
(2.3)
(19.6)
0.5
(8.6)
(0.3)
(2.2)
(0.1)
(1.0)
(202.2)
35.5
(367.3)
(114.6)
(414.9)
(7.6)
(44.1)
(0.8)
(326.5)
(21.0)
(378.4)
(4.1)
(42.4)
(0.5)
(112.9)
56.8
(775.4)
(1,178.5)
0.8
(674.7)
0.1
(71.8)
(23.0)
(580.2)
(367.5)
(1,021.3)
(41.2)
(114.4)
(6.5)
50.3
109.6
(1,068.9)
(0.5)
(49.2)
(724.4)
(5.3)
(77.1)
140.2
(440.0)
(0.3)
(30.7)
(1,052.4)
(3.4)
(117.9)
(52.8)
(34.5)
-
(21.7)
(29.5)
2.8
As of December 31,
As of September 30,
2008
2009
2009
2009
2010
2007
(Rp.)
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
Assets:
Current Assets
Cash and cash equivalents................... 852.7
Restricted cash in bank........................
20.9
Short-term investments ....................... 198.4
Trade accounts receivable
Related parties .............................
2.2
Third parties - net of allowance
for doubtful accounts ..................
15.9
Other accounts receivable ...................
9.7
Inventories........................................... 173.5
Prepaid taxes ....................................... 101.5
Prepaid expenses .................................
89.8
Other current assets .............................
10.2
Total current assets.............................. 1,474.7
Noncurrent Assets
Deferred tax assets - net ...................... 135.0
Property and equipment - net of
accumulated depreciation.................... 2,650.5
Goodwill and other intangible asset net of accumulated amortization ......... 189.8
Deferred charges - net .........................
76.9
Long-term prepaid expenses ...............
Others noncurrent assets .....................
9.8
Total noncurrent assets..................... 3,062.0
23.7
289.0
23.8
199.5
2.5
21.2
-
-
19.0
1.4
81.9
81.2
54.8
66.8
621.9
15.2
1.3
32.6
61.1
44.3
63.3
441.1
1.6
0.1
3.5
6.5
4.7
6.7
46.9
244.6
195.4
3,613.9
184.7
5.9
86.1
4.8
4,140.1
4.1
41
26.7
225.2
-
2010
(US$)
17.6
26.0
2.0
2.9
-
-
15.0
1.5
35.8
121.9
182.5
59.6
670.3
9.3
1.7
179.6
41.9
86.3
22.4
384.8
1.0
0.2
20.1
4.7
9.7
2.5
43.1
20.8
384.8
166.0
18.6
3,505.5
372.9
3,581.4
3,489.9
391.1
172.3
98.1
344.6
4,315.9
18.3
10.4
36.7
459.1
175.4
1.4
69.4
344.7
4,557.2
163.1
106.9
330.9
4,256.9
18.3
12.0
37.1
477.0
2.1
As of December 31,
As of September 30,
2008
2009
2009
2009
2010
2007
(Rp.)
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
4,761.9
4,756.9
506.1
5,227.5
4,641.6
Total assets......................................... 4,536.7
Balance Sheet
2010
(US$)
520.1
Liabilities and Equity
Current Liabilities
Trade accounts payable
Related parties ...............................
1.5
Third parties...................................
72.1
Short-term loans..................................
Other accounts payable .......................
15.4
Taxes payable......................................
7.2
Accrued expenses................................ 100.8
Unearned revenues .............................. 106.1
Deposits from customers.....................
16.7
Current maturity of long-term lease
liabilities..............................................
25.2
Total current liabilities ........................ 345.0
Noncurrent Liabilities
Accounts payable to related parties.....
16.6
Long-term liabilities for purchase of
property and equipment - net of
current maturities ................................ 775.6
Bonds payable - net............................. 1,571.1
Post-employment benefits obligation..
32.3
Total noncurrent liabilities .................. 2,395.6
Total liabilities ................................... 2,740.6
1,169.0
1,733.0
39.2
2,948.4
4,034.6
1,125.7
1,519.4
50.1
2,695.2
3,964.4
119.8
161.6
5.3
286.7
421.7
1,128.0
1,613.2
48.9
2,799.5
4,940.1
1,028.3
1,505.2
60.5
2,594.0
4,703.9
115.2
168.7
6.8
290.7
527.1
Equity
Capital stock
In 2010 and 2009: ..............................
- Series A - Rp. 100 par value per
share ....................................................
- Series B - Rp. 50 par value per
share ....................................................
In 2008 and 2007 - Rp. 100 par
value per share ....................................
Authorized: ........................................
In 2010: ..............................................
- Series A - 20,235,872,427 shares......
- Series B - 119,528,255,146 shares....
In 2009, 2008 and 2007 60,000,000,000 shares.........................
Issued and paid-up: ............................
In 2010: ..............................................
- Series A - 20,235,872,427 shares......
- Series B - 16,800,141,007 shares......
In 2009: ..............................................
- Series A - 20,235,872,427 shares......
- Series B – 12,797,783,900 shares .....
In 2008 and 2007 - 20,235,872,427
shares................................................... 2,023.6
Additional paid-up capital................... 533.1
2,023.6
533.1
2,663.5
725.1
283.3
77.1
2,023.6
533.1
2,863.6
726.7
320.9
81.4
3.2
576.0
160.4
23.1
226.0
23.4
13.3
0.1
391.6
80.0
48.3
12.1
604.2
18.3
16.9
0.0
41.7
8.5
5.1
1.3
64.3
1.9
1.8
9.1
1,226.0
94.6
55.7
595.1
47.0
23.3
0.1
478.2
756.0
69.3
7.6
671.7
15.9
22.5
0.0
53.6
84.7
7.8
0.9
75.3
1.8
2.5
60.8
1,086.2
97.7
1,269.2
10.4
135.0
90.0
2,140.6
88.7
2,109.9
9.9
236.4
7.2
42
-
-
9.5
-
-
Balance Sheet
As of December 31,
As of September 30,
2008
2009
2009
2009
2010
2007
(Rp.)
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
Difference in value of restructuring
transactions among entities under
common control ..................................
42.2
42.2
Retained earnings (deficit) .................
Appropriated .......................................
0.1
0.1
0.1
Unappropriated.................................... (802.9) (1,871.7) (2,596.1)
727.3
792.5
Total Equity ....................................... 1,796.2
4,761.9
4,756.9
Total Liabilities and Equity.............. 4,536.7
2007
(Rp.)
Cash Flows from Operating
Activities
Cash receipts from customers.......... 949.0
Cash paid to suppliers and
employees ........................................ (647.4)
Cash generated from (used in)
operations ........................................ 301.6
Cash receipts from tax refund..........
6.6
Interest received...............................
55.7
Income tax paid ...............................
(21.2)
Interest expenses and financial
charges paid ..................................... (188.6)
Net cash provided by (used in)
operating activities........................... 154.1
Cash Flows from Investing
Activities
Redemption from short-term
investment........................................ 2,762.3
Net proceeds from sale of
property and equipment ...................
10.3
Increase (decrease) in restricted
cash in bank .....................................
(20.9)
Placement in short-term
investment........................................ (2,858.8)
Acquisition of property and
equipment ........................................ (580.4)
investing activities ........................... (687.5)
Cash Flows from Financing
Activities
Proceeds from short-term loan.........
Payment for accounts payable to
related parties - net ..........................
4.7
Payment of liabilities lease ..............
(11.8)
Proceeds from the issuance of
1,571.1
-
42.2
-
2010
(US$)
-
0.0
0.1
0.1
(276.2) (2,311.7) (3,652.7)
84.3
287.4
(62.3)
506.1
5,227.5
4,641.6
0.0
(409.3)
(7.0)
520.1
As of September 30,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
833.9
466.5
49.6
451.0
306.7
34.4
(1,030.6)
(488.7)
(52.0)
(439.4)
(801.4)
(89.8)
(196.6)
58.6
13.4
(2.6)
(22.2)
41.7
1.3
(0.5)
(2.4)
4.4
0.1
(0.1)
11.6
15.2
1.1
(0.4)
(494.7)
34.2
0.5
(0.5)
(55.4)
3.8
0.1
(0.1)
(349.5)
(89.7)
(9.5)
(40.2)
(229.7)
(25.7)
(476.8)
(69.3)
(7.4)
(12.7)
(690.2)
(77.3)
1,196.0
100.2
10.7
75.9
153.8
17.2
1.1
57.0
6.1
29.9
-
-
20.9
-
-
-
-
-
(1,261.6)
-
-
-
-
-
(267.0)
(145.4)
(15.5)
(84.1)
(103.1)
(11.6)
(310.6)
11.9
1.3
21.7
50.7
5.7
-
80.0
8.5
-
676.0
75.8
(7.2)
(15.2)
-
(0.8)
(1.6)
-
2.3
(8.2)
-
(42.8)
-
(4.8)
-
(10.5)
(31.6)
43
2007
(Rp.)
bonds ...............................................
Proceeds from exercise of
warrants ...........................................
Settlement of long-term loans..........
Purchase of property and
equipment ........................................
financing activities...........................
Net increase (decrease) in cash
and cash equivalents ........................
Cash and cash equivalents at
beginning of year .............................
Effect of foreign exchange rate
changes ............................................
Cash and cash equivalents at end
of year..............................................
Supplemental Disclosures
Non Cash Investing and
Financing Activities:
Decrease in liabilities through
issuance of shares ...........................
Increase in property and
equipment through accounts
payable.............................................
equipment through finance lease
obligation.........................................
Increase (decrease) in net asset
value of short-term investment ........
equipment through capitalization
of borrowing cost.............................
of foreign exchange difference ........
As of September 30,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
154.8
(661.5)
-
-
-
-
-
-
(531.3)
-
-
-
-
-
-
526.0
(42.1)
57.6
6.1
(6.0)
633.2
71.0
(829.5)
0.2
-
3.0
(6.3)
(0.7)
859.9
852.7
23.7
2.5
23.7
23.8
2.7
0.2
0.6
(0.1)
-
(0.1)
-
-
852.7
23.7
23.8
2.5
26.7
17.6
2.0
-
-
831.9
88.5
-
201.7
22.6
-
429.6
80.8
8.6
140.0
210.6
23.6
812.6
459.8
22.5
2.4
0.6
3.7
0.4
1.3
29.8
10.7
1.1
10.1
(9.2)
(1.0)
35.6
22.1
-
-
-
-
-
2.7
33.8
-
-
-
-
-
(7.4)
2007
Other Financial Data
Operating Income (Loss) ............................................ 169.7
Depreciation and amortization ................................... (229.8)
EBIDTA ..................................................................... 399.5
EBIDTA margin (%)...................................................
35.7
Annualized EBITDA................................................... 399.5
Total debt ................................................................... 1,571.1
44
Year ended
Nine-months ended
December 31,
September 30,
2008
2009
2009
2010
(Rp. in billions)
(403.1)
(319.3)
(83.8)
(9.0)
(83.8)
1,733.0
(675.5)
(318.4)
(357.1)
(66.5)
(357.1)
1,599.4
(557.2)
(238.1)
(319.1)
(78.2)
(425.5)
1,613.2
(653.8)
(267.6)
(386.2)
(128.1)
(514.9)
2,261.2
EBITDA (Consolidated)
Adjustments:
Amortization of goodwill ..................................
Interest income .................................................
Interest expense .................................................
Gain (loss) on foreign exchange ........................
Income tax (expense) benefit.............................
Depreciation and amortization ..........................
Others ................................................................
Net Income...............................................................
Nine-months ended
Year ended
September 30,
December 31,
2008
2009
2009
2010
2007
(Rp. in billions)
399.5
(83.8)
(357.1)
(319.1)
(386.2)
(11.5)
27.9
(202.2)
4.4
(6.5)
229.8
68.5
50.3
2007
Voice .........................................
Short messaging service (SMS).
Data……………………………
Monthly service charges ...........
Others ........................................
Subtotal .....................................
Domestic ...................................
International ..............................
Subtotal .....................................
Total operating revenue ................. Discount .........................................
Operating Revenues - Net ........... (11.5)
9.0
(367.3)
(182.8)
109.6
319.3
(222.8)
(1,068.9)
(11.5)
0.5
(414.9)
241.9
(49.7)
318.4
184.8
(724.4)
(8.6)
0.2
(326.5)
186.7
140.2
(238.1)
125.2
(440.0)
(8.6)
0.5
(378.4)
70.9
(31.0)
(267.6)
(51.9)
(1,052.4)
Year ended
Nine-months
December 31,
ended September 30,
(Rp. in billions)
2008
2009
2009
2010
785.6
156.5
37.2
2.4
10.5
992.1
665.0
117.0
27.2
3.2
7.9
820.4
331.5
82.9
32.1
4.2
14.0
464.7
256.0
62.0
20.2
3.1
10.4
351.7
167.2
44.7
39.5
2.8
7.7
261.9
109.0
16.6
125.7
1,117.7
(41.8)
1,076.0
87.4
18.8
106.2
926.5
(31.6)
894.9
59.4
13.3
72.7
537.4
(32.9)
504.5
46.1
10.4
56.4
408.2
(25.4)
382.8
31.3
8.4
39.7
301.6
(10.7)
290.9
45
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our consolidated financial
statements and accompanying notes and our selected consolidated financial information and operating data
included elsewhere in this Exchange Offer Memorandum. Our consolidated financial statements, except as
otherwise indicated, have been presented in conformity with Indonesian GAAP, which differs in certain respects
from U.S. GAAP. For a description of certain principal differences between Indonesian GAAP and U.S. GAAP, see
“Summary of Certain Principal Differences between Indonesian GAAP and U.S. GAAP”.
Unless otherwise indicated, references in this discussion and analysis to our results of operations or
financial condition for a specified year are to our fiscal year ended December 31 of such year.
Overview
Basis of Presentation
We maintain our records and prepare our financial statements using accounting principles and reporting
practices generally accepted in Indonesia. The measurement basis used is the historical cost, except for certain
accounts which are measured on the basis described in the accounting policies set forth in our financial statements.
Our financial statements, other than our statements of cash flows, are prepared on the accrual basis of accounting.
We prepare our statements of cash flows using the direct method of accounting with classifications of cash flows
into operating, investing and financing activities.
The reporting currency used in the preparation of our financial statements is the Rupiah. Transactions
involving foreign currencies are recorded at the rates of exchange prevailing at the time the transactions are made.
At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are adjusted into
Indonesian Rupiah using Bank Indonesia’s middle rate. The resulting gains or losses are credited or charged to
current operations.
Transactions during the year involving foreign currencies are recorded at the rates of exchange prevailing at
the time the transactions are made. At balance sheet date, monetary assets and liabilities denominated in foreign
currencies are adjusted to reflect the rates of exchange prevailing at that date as published by Bank Indonesia. The
resulting gains or losses are credited or charged to current operations.
The consolidated financial statements include the financial statements of the Company and its subsidiaries,
wherein the Company has direct or indirect ownership interest of more than 50% of the voting rights of the
subsidiary’s capital stock and is able to govern the financial and operating policies of an enterprise so as to benefit
from its activities. A subsidiary is excluded from consolidation when the control in such subsidiary is intended to be
temporary because the subsidiary is acquired and held exclusively with a view to its subsequent disposal in the near
future; or when the subsidiary operates under long-term restrictions which significantly impair its ability to transfer
funds to the parent company. When an entity either began or ceased to be controlled during the year, the results of
the operations of that entity are included in the consolidated financial statements only from the date that the control
46
commenced up to the date that the control ceased. Intercompany balances and transactions, including unrealized
gains or losses on intercompany transactions, are eliminated to reflect the financial position and the results of
operations of the Company and its subsidiary as one business entity.
Factors Affecting Our Results of Operations
Our business and financial condition has been, and will continue to be, affected by a number of important
factors, including the following:
Average Revenue Per User (“ARPU”)
The average monthly Blended ARPU was Rp. 39,795 in 2007, Rp. 23,962 for 2008, Rp. 13,366 for 2009
and Rp. 12,088 for the nine-months ended September 30, 2010. The average monthly ARPU for our postpaid
service, was Rp. 115,320 in 2007, Rp. 86,409 for 2008, Rp. 58,678 for 2009 and Rp. 49,951 for the nine-months
ended September 30, 2010. The average monthly ARPU for our prepaid service, was Rp. 37,221 in 2007, Rp.
21,501 for 2008, Rp. 11,129 for 2009 and Rp. 10,388 for the nine-months ended September 30, 2010.
The decline in average monthly ARPU between 2007 and the nine-months ended September 30, 2010 was
primarily due to (i) lowering of tariffs to attract new subscribers; and (ii) increased penetration of the market
resulting in an increasing number of new low-usage subscribers.
The table below shows certain information relating to our ARPU for each quarter of 2009 and the first and
second quarters of 2010.
Gross revenues
Number of
subscribers
Prepaid ARPU
Postpaid ARPU
Blended ARPU
As of the last date of or for the periods
January April 1,
July 1,
October 1, January 1, April 1,
July 1,
1, 2009 to 2009 to
2009 to
2009 to
2010 to
2010 to
2010 to
March
June 30, September December March 31, June 30,
September
31, 2009
2009
30, 2009
31, 2009
2010
2010
30, 2010
(Gross Revenue in Rp. billions, ARPU in Rp. thousands, and number of subscribers
in thousands)
(Unaudited)
135.6
133.9
138.6
129.2
97.1
106.0
98.5
3,211.2
3,004.0
3,113.6
2,872.6
2,778.9
2,597.4
2,137.4
11.1
69.2
13.9
11.0
61.9
13.4
10.9
54.3
13.0
11.5
49.4
13.1
9.2
51.1
11.0
10.8
49.6
12.4
11.2
49.2
12.9
Subscriber Growth
Our subscriber base has decreased from approximately 3,012,800 as of December 31, 2007 to 3,004,400 as
of December 31, 2008 and 2,872,600 as of December 31, 2009. As of September 30, 2010 our subscriber base was
approximately 2,137,400, representing a decline of 31.4% from September 30, 2009. The decline in our subscriber
base has largely been driven by, among other things, the lack of resources to maintain network quality and the
termination of our operation of several BTS that we determined had low operating efficiency.
We will continue to focus on acquiring new subscribers and retaining our existing subscriber base.
Subscriber churn measures our ability to retain subscribers. The blended Average Monthly Churn rate for our
subscriber base was 5.5% in 2007, 8.7% in 2008, 7.8% in 2009 and 9.5% for the nine-months ended September 30,
2010. Our churn rate increased in the first nine-months of 2010 in part as a result of increased competition in the
market and capacity constraints.
47
Capital Expenditure
We have incurred substantial capital expenditures in the build-out of our network and the development of
our services and products. Our capital expenditures for the years ended December 31, 2007, 2008 and 2009 and for
the nine-months ended September 30, 2010 was Rp. 1,378.3 billion, Rp. 1,212.1 billion, Rp. 248.7 billion and Rp.
317.4 billion, respectively. The substantial amount of capital expenditures results in significant depreciation
expenses over the useful lives of the assets as well as substantial indebtedness and additional financing costs. A
large part of our capital expenditures for equipment is denominated in U.S. dollars, which is affected by any
fluctuation in the exchange rate. Therefore, any depreciation of the Indonesian Rupiah against the U.S dollar will
result in increased capital expenditures.
Tax Loss Carryforwards
As a result of fiscal losses, we have had significant tax loss carryforwards. On April 17, 2008 we were
permitted to transfer the tax loss carryforwards of our Former Subsidiaries in the amount of Rp. 251.1 billion to the
Company. As at December 31, 2008 and 2009 we had accumulated tax loss carryforwards of Rp. 1,817.5 billion and
Rp. 2,191.9 billion, respectively, and as at September 30, 2010, we had accumulated tax loss carryforwards of Rp.
2,939.7 billion. Our tax loss carryforwards expire between 2008 and 2010. We recognize deferred tax assets on
accumulated tax losses to the extent that we believe that such tax asset would be utilized to offset our future taxable
income, which will reduce our cash outflow for corporate income tax in the future.
Competition
We face substantial competition in the telecommunications industry in Indonesia, which is mainly based on
factors such as price, network coverage, quality and customer service. We compete with several other mobile and
fixed wireless service providers. The leading wireless telecommunications companies in Indonesia are Telkomsel,
Indosat, and XL Axiata. Together, these three providers had a market share of approximately 80.0% in terms of
number of wireless service subscribers as of 2009. In addition, the Government awarded licenses to newcomers such
as Bakrie Telecom and Axis to provide GSM and/or CDMA wireless service. We expect the market, exacerbated by
new entrants in the industry and the development of new technologies, products and services, to remain highly
competitive. This increase in competition may result in slower growth in our subscriber base, a higher churn rate,
increased subscriber acquisition cost, slower revenue growth and/or a decline in revenue. See “Risk Factors — Risks
Relating to Our Business and the Wireless Telecommunications Industry — The Indonesian telecommunications
industry is highly competitive.”
Government Regulation
The telecommunications industry in Indonesia is subject to various Government regulations and actions by
Government regulators. We cannot predict the impact that any new regulations may have on our business. Some or
all of these new regulations may generate greater competition, lower tariffs, create restrictions on foreign
shareholding structure or otherwise adversely affect our business, financial condition, results of operations and
prospects.
Interconnection
MOCIT implemented cost based interconnection rules in 2007 and updated such rules in April 2008. Under
these rules, the interconnection charges that an operator may charge are based on the costs incurred by that operator
for the relevant network infrastructure. As a result of the cost based interconnection rules, operators have started to
lower their respective tariffs. In the third quarter of 2007, we lowered our retail tariff in order to compete with other
operators. As a result of the new tariff, our minute of usage increased but our ARPU decreased.
Price-setting Regulation
Our minimum tariffs are prescribed by MOCIT. The floor price of the service rate as of April 2008 is
determined by adding the originating cost of the call and the terminating cost of the call. See “Business — Tariffs
48
and Interconnection Charges”. Under applicable regulations, we are also required to pay to the Government various
fees, including a license concession fee, frequency fee and a universal service obligation (“USO”) fee. As a result,
any future changes in the Government’s tariff policies and fees could affect our business, financial condition, results
of operations and prospects.
Competition aspects of Indonesian businesses and their activities are governed by Law No. 5 of 1999
concerning the Prohibition of Monopolistic Practices and Unfair Business Competition (“Law No. 5”). Law No. 5
defines “monopolistic practices” as “the centralization of economic power by one or more entrepreneurs causing
control of production and/or marketing of certain goods and/or services, resulting in unfair business competition and
causing damage to the public interest” and “unfair business competition” as the competition among individuals or
companies (either legal or non-legal entities) domiciled or operating in Indonesia conducting their production
activities and/or in marketing goods and/or services, conducted in a manner which is unfair or in contravention to
the law or hampering business competition. We believe that our business operations currently comply with the
prevailing laws and regulations on competition. However, there can be no assurance that the competition laws and
regulations will not change or that there may be different interpretations in the future on the applicability of such
competition laws to our business practices which may adversely affect our financial condition, results of operation
and prospects.
The Telecommunications Law imposed on each operator the duty to provide assurance to its customers in
relation with its service quality, tariffs, compensation and other relevant maters. The Telecommunications Law also
provides to a customer the right to make a claim against a telecommunication operator for injury or damage
resulting from negligence of such operator.
See “Risk Factors — Risks Relating to Our Business and the Wireless Telecommunications Industry — We
operate in an industry that is heavily regulated and a legal and regulatory environment that is undergoing significant
reforms. These reforms and changes in regulations could have a material adverse effect on our business, financial
condition and results of operations” and “Regulation of the Telecommunications Industry in Indonesia.”
Economic and Political Situation in Indonesia
We conduct substantially all our operations in Indonesia. Accordingly, our results of operations and
financial condition are significantly affected by Indonesia’s economic and political conditions and the economic
measures undertaken by the Government. Macroeconomic conditions in Indonesia impact our financial
performance and operations, in particular, our ability to generate subscriber based revenues. We believe that as the
Indonesian economy continues to grow, more people in Indonesia will subscribe for mobile communication
services. The rate of Indonesia’s GDP growth was 6.3% in 2007, 6.1% in 2008 and 4.5% in 2009. According to the
2009 Annual Report of the Bank of Indonesia, household consumption grew at 5.8%, 5.8% and 4.9% in 2007, 2008
and 2009, respectively, and year-on-year development in salary increases grew at 11.4%, 10.9% and 8.4% in 2007,
2008 and 2009, respectively.
Indonesia’s annual inflation rate as measured by taking the average of each month’s inflation rate, and
which tends to increase our operating expenses, was approximately 6.4%, 10.3%, 4.9% in 2007, 2008 and 2009,
respectively. The interest rate on a one-month Bank Indonesia Certificate (SBI) as of December 31, 2007, 2008 and
2009 was 8.0%, 10.8% and 6.5%, respectively, and was 6.5% as of September 30, 2010. See “Risk Factors — Risks
Relating to Indonesia — A slowdown in economic growth or negative growth in Indonesia could adversely affect
our business, cash flows, results of operations, financial condition and prospects.”
Foreign Exchange Volatility
Substantially all of our operating revenues are denominated in Indonesian Rupiah. Although our
expenditures, including labor costs, are generally denominated in Indonesian Rupiah, which provides us with a
partial hedge against foreign exchange rate fluctuations, a significant amount of our capital expenditures for
equipment are denominated in U.S. dollars. Any depreciation of the Rupiah against the U.S. dollar would increase
the amount of our Rupiah revenue required to meet our capital expenditure requirements, increase the costs of our
capital expenditures in Rupiah terms and result in a corresponding increase in our depreciation costs. As of
49
September 30, 2010, we also had Rp. 1,522.5 billion of foreign currency denominated monetary liabilities which
were primarily U.S. dollar denominated debt, including the debt under the 11.25% Guaranteed Senior Notes, and
Rp. 6.6 billion of foreign currency denominated monetary assets, consisting principally of U.S. dollar denominated
cash and cash equivalents and short-term investment. As a result, any significant appreciation in the value of the
U.S. dollar against the Indonesian Rupiah could have an adverse effect on our expenditures and net profits. See
“Exchange Rates” for further information on the volatility of the Indonesian Rupiah.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with accounting principles generally
accepted in Indonesia. The preparation of consolidated financial statements under Indonesian GAAP may in certain
circumstances, require management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially
from those estimates. We base our estimates on historical experience and on various other assumptions that our
management believes are reasonable under the circumstances. However, critical accounting policies are reflective of
significant judgments and uncertainties and may result in materially different results under different assumptions
and conditions.
We believe that our critical accounting policies are those described below.
Revenue Recognition
We recognize revenues from our prepaid voice and data telecommunication services from the sales of
starter packs, principally comprising the RUIM card and preloaded pulse to distributors, agents or subscribers and
from usage of pulse. We recognize the revenue from the sales of the RUIM cards at the time of delivery of the
starter packs to such distributors, agents or subscribers, in an amount equal to the excess, if any, of the price at
which we sell the starter pack over the value of pulse bundled with the starter pack. Revenue from sales of pulse
bundled with starter packs and reload vouchers are initially recorded as unearned revenue and then proportionately
recognized as revenue based on prevailing tariffs when the pulse is used or as non-usage revenue when expired. We
recognize the revenue from sales of pulse bundles with starter packs and reload vouchers net of discounts provided
to distributors and agents and record such discounts as interconnection charges and discounts.
We recognize revenue from our postpaid voice and data telecommunication services at the time the services
are rendered to subscribers based on prevailing tariffs and duration of successful phone calls and other usage made
through our network.
We recognize revenue from monthly service charges and value added services based on the monthly
billings during the period.
Revenues from network interconnection and interconnection charges based on agreements with other
domestic and international carriers are recognized on the basis of actual recorded traffic as incurred.
Revenue from sales of wireless broadband modems and cellular handsets are recognized upon delivery to
the customers. Revenues from wireless broadband data communications are recognized based on the duration or
usage or fixed monthly charges depending on the arrangement with the customers.
Property and Equipment
We estimate the useful lives of property and equipment, except land, in order to determine the amount of
depreciation expense to be recorded during any reporting period. Property and equipment, except land, is
depreciated on a straight-line basis over the estimated useful life of the asset.
50
Construction in progress is stated at cost which includes borrowing costs during construction on debts
incurred to finance the construction. Construction in progress is transferred to the respective property and equipment
when ready for use.
Impairment of Assets
To the extent that the estimated recoverable amount of an asset is lower than its carrying amount, an
estimated impairment loss is recognized and charged to current operations and the asset is immediately written down
to its recoverable amount. Estimated recoverable amount is the higher of the anticipated discounted cash flows from
the continuing use of the asset and the amount obtainable from the sale of the asset, less any costs of disposal.
Allowance for Doubtful Accounts
Account receivables are carried at original invoice amounts less allowance for doubtful accounts. We
review all outstanding receivables at the balance sheet date and record an allowance. We provide for the allowance
based on the status of the individual account receivables at the end of each period. We also evaluate specific account
receivables where there are indications that the receivable may be doubtful or not collectible. We record an
allowance based on our best estimates to reduce the receivable balance to the amount that is expected to be
collected.
Leases
We lease substantially all of our future tower requirements. Our lease transactions will increase in line with
the number of new network locations and will commence on the date the tower is used for our network operations.
We have adopted the PSAK 30 (Revised 2007), “Leases,” for lease transactions, including amendments to executed
lease transactions. Under the PSAK 30 (Revised 2007), “Leases” are classified as finance/capital lease whenever the
terms of the lease transfers substantially all of the risks and rewards of ownership to the lessee. Examples of
situations that individually or in combination would normally lead to a lease being classified as a finance lease are:
(a)
the lease transfers ownership of the asset to the lessee by the end of the lease term;
(b)
the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower
than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the
inception of the lease, that the option will be exercised;
(c)
the lease term is for the major part of the economic life of the asset even if title is not transferred;
(d)
at the inception of the lease the present value of the minimum lease payments amounts to at least
substantially all of the fair value of the leased asset; and
(e)
the leased assets are of such a specialized nature that only the lessee can use them without major
modifications.
Indicators of situations that individually or in combination could also lead to a lease being classified as a
finance lease are:
(a)
if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by
the lessee;
(b)
gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for
example, in the form of a rent rebate equaling most of the sales proceeds at the end of the lease);
and
(c)
the lessee has the ability to continue the lease for a secondary period at a rent that is substantially
lower than market rent.
51
Assets held under finance leases are initially recognized at the lower of the fair value of the leased asset or
the present value of the minimum lease payments. Present value is calculated by discounting the minimum lease
payments using the implicit interest rate or, (and if that is not practicable to determine), the lessee’s incremental
borrowing rate. As defined under the accounting standard, the implicit interest rate is the discount rate which will
cause the present value of the minimum lease payments to be equal to the total of the fair value of the leased asset
and initial direct cost of the lessor. The incremental borrowing rate is the rate which the lessee would have to pay on
a similar lease or if that is not determinable, the rate which the lessee would incur to borrow over a similar term,
with similar security, the funds to purchase the asset. The corresponding liability to the lessor is recorded as finance
lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation.
All other leases which do not qualify as finance lease are classified as operating lease.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the moving
weighted average method. The cost of purchase comprises both the purchase price and costs directly attributable to
the acquisition of the inventory, such as import duties and transportation charge, less all attributable discounts,
allowances or rebates. Net realizable value is the estimate of the selling price in the ordinary course of business, less
selling expenses. Allowance is made, where necessary, for obsolete, slow moving and defective inventories.
Deferred Charges
Direct costs incurred in relation to the subscriber acquisition program is deferred and amortized based on
the subscriber’s churn rate, and not exceeding 36 months. Churn rate is reviewed periodically to reflect annual churn
rate of subscribers for the period, and additional impairment losses, if any, are charged to current operations.
Goodwill
Positive goodwill represents the excess of the cost of acquisition over our Company’s interest in the fair
value of the net assets of the subsidiary. Positive goodwill is recognized as an asset and amortized on a straight-line
basis over twenty years.
Income Tax and Deferred Tax Benefit (Expense)
Current tax expense is determined based on the taxable income for the year computed using the prevailing
tax rates. We adopt the liability method in determining deferred tax expenses and benefits. Under this method,
deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized
for deductible temporary differences to the extent it is probable that taxable income will be available in future
periods against which the deductible temporary differences can be utilized. Management judgment is utilized to
determine such potential future benefit.
Results of Operations
Operating Revenues
Our total revenues consist of revenues from (i) telecommunication services and (ii) interconnection
services.
Our CDMA telecommunication services are our principal source of revenue and include revenues from (i)
voice, (ii) SMS, (iii) data, (iv) monthly service charges and (v) others, such as revenue from rental of transmission
tower space, connection and service charges. We also derive domestic and international interconnection service
revenues from other telecommunications operators. Our interconnection service revenues are presented net of
52
interconnection charges from other telecommunications operators for interconnection to their networks by our
subscribers and discounts.
The following table shows the breakdown of our respective sources of revenues and each item as a
percentage of our gross revenues for the periods indicated:
Year ended December 31,
2008
2009
2007
Rp.
%
Rp.
%
Rp.
US$
(audited)
(audited)
%
(audited)
Nine-months ended September 30,
2009
2010
Rp.
%
Rp.
US$
%
(unaudited)
(unaudited)
(Rp. in billions and US$ in millions, except percentages)
Telecommunication
services
Voice ................... 785.6
SMS ..................... 156.5
Data ..................... 37.2
Monthly service
charges .....................
2.4
10.5
Others ..................
Subtotal .................... 992.1
70.3
14.0
3.3
665.0
117.0
27.2
71.8
12.6
2.9
331.5
82.9
32.1
35.3
8.8
3.4
61.7
15.4
6.0
256.0
62.0
20.2
62.7
15.2
4.9
167.2
44.7
39.5
18.7
5.0
4.4
55.4
14.8
13.1
0.2
0.9
88.8
3.2
7.9
820.4
0.3
0.9
88.5
4.2
14.0
464.7
0.4
1.5
49.4
0.8
2.6
86.5
3.1
10.4
351.7
0.8
2.5
86.2
2.8
7.7
261.9
0.3
0.9
29.3
0.9
2.6
86.8
Interconnection
services
Domestic ............. 109.0
International ......... 16.6
Subtotal .................... 125.7
Gross revenues ......... 1,117.7
9.8
1.5
11.2
100.0
87.4
18.8
106.2
926.5
9.4
2.0
11.5
100.0
59.4
13.3
72.7
537.4
6.3
1.4
7.7
57.2
11.1
2.5
13.5
100.0
46.1
10.4
56.4
408.2
11.3
2.5
13.8
100.0
31.3
8.4
39.7
301.6
3.5 10.4
0.9
2.8
4.4 13.2
33.8 100.0
Discount .................... (41.8)
(3.7)
(31.6)
(3.4)
(32.9)
(3.5)
(6.1)
(25.4)
(6.2)
(10.7)
(1.2)
(3.5)
Operating
revenues - Net
96.3
894.9
96.6
504.5
53.7
93.9
382.8
93.8
290.9
32.6
96.5
1,076.0
Revenues from Telecommunication Services. Revenues from telecommunication services consist of
revenues from prepaid and postpaid voice telecommunication services, SMS, data, monthly service charges, unused
portion of vouchers that have expired and other value-added services, before discount.
Prepaid revenues from telecommunication services primarily consist of the sale of starter packs, which
contains a RUIM card and bundled airtime, usage revenue as reload vouchers are used and non-usage revenue when
vouchers expired. Usage revenue is derived from airtime, local calls, domestic long distance calls, international
calls, SMS, data and other value added services.
Postpaid revenues from telecommunication services consist of revenues from airtime, local calls, domestic
long distance calls, international calls, SMS, data and other value added services.
We do not charge our prepaid subscribers a monthly service charge. Our postpaid subscribers are subject to
a minimum usage charge of Rp. 25,000 per month.
We do not charge our subscribers for domestic roaming services or for incoming calls. For calls from our
network to the network of another operator, we recognize all amounts chargeable to our subscriber for the call,
including long distance tariffs and international tariffs, as voice and data revenue. We will remit to the other
operators any applicable amounts, such as for long distance tariffs and international tariffs, which we recognize as
interconnection charges.
53
See “Business — Tariffs and Interconnection Charges” for further information on tariffs.
Revenues from Interconnection Services. Revenues from interconnection services consist of revenues from
domestic interconnection services and international roaming.
Domestic interconnection service revenues comprise revenues that we receive from other domestic
operators for interconnecting onto our network when subscribers of such other operators call our subscribers. This
includes interconnection service revenues that we receive for incoming international calls that are received through
the international gateways of Indosat and Telkom. Rates for domestic interconnection are based on interconnection
agreements that we have entered into with other domestic operators. For non-VoIP international calls, we receive a
percentage of the applicable international call tariffs for incoming calls from Indosat and an agreed amount per
minute for incoming calls from Telkom.
For calls from the network of another fixed line operator (including a fixed wireless operator) to our
network, the other operator will remit to us the terminating charge, which is currently Rp. 203 per minute for local
calls and Rp. 626 per minute for long distance calls. For calls from the network of another wireless operator to our
network, the other operator will remit to us the terminating charge, which is currently Rp. 261 per minute for local
calls and Rp. 493 per minute for long distance calls. Revenues that we receive for domestic long distance
interconnection terminating on our network depends on whether we carry the long distance signal between the
points of interconnection. See “Business — Tariffs and Interconnection Charges — Interconnection Charges.”
International roaming revenues represent revenues that we receive for inbound international roaming from
other international wireless operators for their subscribers in Indonesia through our network. As of September 30,
2010, we had international inbound roaming arrangements with 19 CDMA operators in other countries, including,
Japan, Korea, Taiwan, Thailand, China, New Zealand, U.S., Vietnam, Macau, India, Guam, Jamaica, Bangladesh,
Mexico and Canada and 56 GSM operators in Algeria, Australia, Brunei, Bulgaria, Cambodia, China, Congo,
Cyprus, Egypt, France, Greece, Hong Kong, India, Italy, Luxembourg, Macau, Malaysia, Monaco, the Netherlands,
New Zealand, Nigeria, Pakistan, the Philippines, Portugal, Russia, Saudi Arabia, Singapore, Slovenia, South Africa,
Sri Lanka, Switzerland, Thailand, Tunisia, Turkey, UAE, Uzbekistan, Vietnam and Yemen. Our roaming
agreements with these operators establish the charges for these services. The charges for international inbound
roaming are denominated principally in U.S. dollars, and we receive payments from operators outside Indonesia for
these services in U.S. dollars.
Interconnection Charges and Discounts. Just as we receive interconnection service revenues from other
wireless operators for interconnecting onto our network when their subscribers call our subscribers, we are required
to pay interconnection charges when our subscribers place calls to the subscribers of other domestic and
international wireless operators. We also recognize as interconnection charges the amounts we are required to pay
our partners under revenue sharing arrangements when our subscribers access data and other value-added services
(e.g. ringback tones) supported by our partners. Rates for domestic and international interconnection charges are
based on interconnection agreements that we have entered into with other operators, and are recognized on the basis
of actual recorded traffic as incurred. See “Business — Tariffs and Interconnection Charges — Interconnection
Charges.”
Discounts represent discounts that we provide to distributors and agents for the sale of starter packs and
vouchers.
Our Operating Expenses
Our operating expenses include costs related to (i) depreciation and amortization, (ii) operations,
maintenance and telecommunication services, (iii) personnel, (iv) sales and marketing and (v) general and
administrative.
54
The following table shows the breakdown of our operating expenses and each item as a percentage of our
gross revenues for the periods indicated:
2007
Rp.
%
(audited)
2008
2009
Rp.
%
Rp.
US$
(audited)
%
(audited)
2009
2010
Rp.
%
Rp.
US$
%
(unaudited)
(unaudited)
Operating
Expenses
Operations,
maintenance and
telecommunication
services ....................
Depreciation and
amortization .............
Sales and
marketing .................
Personnel .................
General and
administrative ..........
Total Operating
Expenses .................
329.3
29.5
471.0
50.8
518.2
55.1
96.4
413.2
101.2
351.3
39.4
116.5
229.8
20.6
319.3
34.5
318.4
33.9
59.2
238.1
58.3
267.6
30.0
88.7
152.2
131.7
13.6
11.8
272.9
160.0
29.4
17.3
150.5
135.0
16.0
14.4
28.0
25.1
136.0
106.0
33.3
26.0
179.4
106.7
20.1
12.0
59.5
35.4
63.2
5.7
74.8
8.1
58.0
6.2
10.8
46.6
11.4
39.7
4.4
13.2
906.2
81.1
1,298.0
140.1
1,180.0
125.5
219.6
940.0
230.3
944.6
105.9
313.2
Depreciation and Amortization. Depreciation and amortization expenses comprise: (i) depreciation on
telecommunications infrastructure, building and fixtures, vehicles, office equipment, and other supporting
equipment over the estimated useful life of the assets, and (ii) amortization of expenses related to subscriptions
accumulation through certain promotional programs, including subsidies provided to handset buyers.
Operations, Maintenance and Telecommunication services. Operating, maintenance and
telecommunications service expenses comprise: (i) rental space to base station controller and telecommunication
infrastructure including rent for backbone capacity, interconnection link and transmission, tower leases, (ii) charges
on frequency use that consist of (a) license concession fee of telecommunication services (BHP Jastel) amounting to
0.5% of operating revenues that have been adjusted to certain elements including interconnection expenses and
discount, (b) charges on frequency radio that is calculated by adhering to a formula that has been established by the
Government based on among other things the total number of carriers in our BTS and (c) USO charges amounting to
1.25% of operating revenues that are adjusted to certain factors including interconnection expenses and discount,
(iii) electricity and generator, (iv) repairs and maintenance, (v) interconnection charges, and (vi) operational
transportation.
Personnel. Personnel expenses consist of (i) salary and allowances, (ii) outsourced labors, (iii) employee
benefits, (iv) recruitment, training and development, and (v) other personnel expenses.
Sales and Marketing. Sales and marketing expenses consist of (i) advertising and promotion, (ii) RUIM
card and voucher expenses, (iii) distribution, (iv) commissions, and (v) other expenses such as external marketing
research expenses.
General and Administrative. General and administrative expenses consist of (i) rental of offices and
Mobile-8 Centers, (ii) transportation, (iii) electricity, water and telephone, (iv) travel expenses, (v) bad debt
55
expenses, (vi) office expenses, (vii) insurance, (viii) security and cleaning, (ix) professional expenses, (x)
entertainment and donation, and (xi) other general expenses and administration, including related expenses on postal
and delivery, and also billing administration and permits.
Operating Income (Loss)
Operating income (loss) is derived from operating revenues deducted by total operating expenses.
Other Income (Charges) — Net
Other income (charges) include, among others, (i) net gain (loss) on foreign exchange, (ii) investment
income, (iii) interest income, (iv) amortization of goodwill - net, (v) interest expense and financial charges, and (vi)
net gain (loss) on sale and disposal of property and equipment.
Deferred Tax Benefit (Expense)
Deferred tax is computed based on the effect of the temporary differences between the financial statement
carrying amounts of assets and liabilities and their respective tax bases. Deferred tax is calculated at the tax rates
that have been enacted or substantively enacted as of balance sheet date. It is charged or credited in the statement of
income, except where it relates to items charged or credited directly to equity, in which case the deferred tax is also
charged or credited directly to equity.
Net Income (Loss)
Net income (loss) is derived from operating income (loss) deducted by (i) other income (charges) — net
and (ii) deferred tax benefit (expense).
Nine-months Ended September 30, 2010 Compared to Nine-Months Ended September 30, 2009
Revenue from Telecommunication services. Our revenue from telecommunication services decreased
25.5% from Rp. 351.7 billion in the nine-months ended September 30, 2009 to Rp. 261.9 billion in the nine-months
ended September 30, 2010. The decrease was primarily due to decrease in airtime usage. In particular, our voice
revenues decreased 34.7% from Rp. 256.0 billion in the nine-months ended September 30, 2009 to Rp. 167.2 billion
in the nine-months ended September 30, 2010.
Revenue from Interconnection Services. Our revenue from interconnection services decreased 29.6% from
Rp. 56.4 billion in the nine-months ended September 30, 2009 to Rp. 39.7 billion in the nine-months ended
September 30, 2010. The decrease was primarily due to declining revenue arising from domestic interconnecting
service, as a result of the decrease in incoming call traffic.
Gross Revenues. Our gross revenues decreased 26.1% from Rp. 408.2 billion in the nine-months ended
September 30, 2009 to Rp. 301.6 billion in the nine-months ended September 30, 2010.
Discounts. Discounts decreased 57.9% from Rp. 25.4 billion in the nine-months ended September 30, 2009
to Rp. 10.7 billion in the nine-months ended September 30, 2010. The decrease was primarily due to the decrease of
outgoing call traffic, in line with the decrease of revenue from interconnection services as a result of the decrease in
incoming call traffic.
Operating Revenues — Net. Our operating revenues-net decreased 24.0% from Rp. 382.8 billion in the
nine-months ended September 30, 2009 to Rp. 290.9 billion in the nine-months ended September 30, 2010.
Depreciation and Amortization. Our depreciation and amortization costs increased 12.4% from Rp. 238.1
billion in the nine-months ended September 30, 2009 to Rp. 267.6 billion in the nine-months September 30, 2010.
The increase was primarily due to asset that are still under construction have been used and depreciable. As a
56
percentage of our gross revenues, our depreciation and amortization costs increased from 58.3% in the nine-months
ended September 30, 2009 to 88.7% in the nine-months ended September 30, 2010.
Operations, Maintenance and Telecommunication services. Our operations, maintenance and
telecommunication services costs decreased 15.0% from Rp. 413.2 billion in the nine-months ended September 30,
2009 to Rp. 351.3 billion in the nine-months ended September 30, 2010. The decrease was primarily due to the
decrease of electricity and generator expenses from Rp. 69.5 billion in the nine-months ended September 30, 2009,
to Rp. 45.5 billion in the nine-months ended September 30, 2010, the decrease of interconnection charges from Rp.
104.2 billion in the nine-months ended September 30, 2009, to Rp. 81.1 billion in the nine-months ended September
30, 2010, decrease of frequency usage expense from Rp. 82.5 billion in the nine-month period ended September 30,
2009, to Rp. 76.6 billion in the ninet month period ended September 30, 2010, decrease in repairs and maintenance
expense from Rp. 43.6 billion in the nine-months ended September 30, 2009, to Rp. 12.3 billion in the nine-months
ended September 30, 2010. These decreases are compensated with the increase of rental space for base station
controller and telecommunication infrastructure from Rp. 110.1 billion in the nine-months ended September 30,
2009, to Rp. 132.8 billion in the nine-months ended September 30, 2010.
As a percentage of our gross revenues, our operations, maintenance and telecommunication services costs
increased from 101.2% in the nine-months ended September 30, 2009 to 116.5% in the nine-months ended
September 30, 2010.
Personnel. Our personnel expenses increased 0.7% from Rp. 106.0 billion in the nine-months ended
September 30, 2009 to Rp. 106.7 billion in the nine-months ended September 30, 2010. The increase was primarily
due to the increase of outsourced labor expense from Rp. 13.7 billion in the nine-months ended September 30, 2009,
to Rp. 14.7 billion in the nine-months ended September 30, 2010.
As a percentage of our gross revenues, our personnel expenses increased from 26.0% in the nine-months
ended September 30, 2009 to 35.4% in the nine-months ended September 30, 2010.
Sales and Marketing. Our sales and marketing expenses increased 31.9% from Rp. 136.0 billion in the
nine-months ended September 30, 2009 to Rp. 179.4 billion in the nine-months ended September 30, 2010. The
increase was primarily due to increase of advertising and promotion expense from Rp. 113.3 billion in the ninemonths ended September 30, 2009 to Rp. 141.1 billion in the nine-months ended September 30, 2010, increase of
RUIM cards and voucher expense from Rp. 12.6 billion in the nine-months ended September 30, 2009 to Rp. 27.3
billion in the nine-months period ended September 30, 2010 and increase of distribution expense from Rp. 5.3
billion in the nine-months ended September 30, 2009 to Rp. 7.3 billion in the nine-months ended September 30,
2010. However, the increase was partially offset by the decrease of commissions expense from Rp 3.9 billion in the
nine-months period ended September 30, 2009 to Rp. 3.6 billion in the nine-months period ended September 30,
2010.
As a percentage of our gross revenues, our sales and marketing expenses increased from 33.3% in the ninemonths ended September 30, 2009 to 59.4% in the nine-months ended September 30, 2010.
General and Administrative. Our general and administrative expenses decreased 14.8% from Rp. 46.6
billion in the nine-months ended September 30, 2009 to Rp. 39.7 billion in the nine-months ended September 30,
2010. The decrease was in line with the decrease in entertainment and donation expense from Rp. 6.4 billion in the
nine-months ended September 30, 2009 to Rp. 0.2 billion in the nine-months ended September 30, 2010. On the
other hand, there was an increase in bad debt expense from Rp. 3.3 billion in the nine-months ended September 30,
2009 to Rp. 6.3 billion in the nine-months ended September 30, 2010.
As a percentage of our gross revenues, our general and administrative expenses increased from 11.4% in
the nine-months ended September 30, 2009 to 13.2% in the nine-months ended September 30, 2010.
57
Total Operating Expenses. Our total operating expenses increased 0.5% from Rp. 940.0 billion in the ninemonths ended September 30, 2009 to Rp. 944.6 billion in the nine-months ended September 30, 2010.
As a percentage of our gross revenues, our total operating expenses increased from 230.3% in the ninemonths ended September 30, 2009 to 313.2% in the nine-months ended September 30, 2010.
Operating Income (Loss). As a result of the foregoing, there has been an increase in operating loss from Rp.
557.2 billion in the nine-months ended September 30, 2009 to Rp. 653.8 billion in the nine-months ended September
30, 2010.
Other Income (Charges) — Net. Our other charges - net increased from Rp. 23.0 billion in the nine-months
ended September 30, 2009 to Rp. 367.5 billion in the nine-months ended September 30, 2010. This was primarily
due to investment loss of Rp. 19.6 billion, loss on change in fair value of derivative financial instrument of Rp. 25.9
billion and loss on disposal of property and equipment of Rp. 2.3 billion in the nine-months ended September 30,
2010, compared to gain positions in the nine-months ended September 30, 2009, for such transaction.
Deferred Tax Benefit (Expense). Our deferred tax shifted from a deferred tax benefit of Rp. 140.2 billion in
the nine-months ended September 30, 2009, to a deferred tax expense of Rp. 30.7 billion in the nine-months ended
September 30, 2010.
Net Income (Loss). As a result of the foregoing, our net loss increased 139.2% from Rp. 440.0 billion in the
nine-months ended September 30, 2009 to Rp. 1,052.4 billion in the nine-months ended September 30, 2010.
Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
Revenue from Telecommunication Services. Our revenue from telecommunication services decreased
43.4% to Rp. 464.7 billion in 2009 from Rp. 820.4 billion in 2008. The decrease was primarily due to relatively flat
number of subscribers, compared to 2008, while ARPU also declined as a result of very tight competition among
cellular telecommunication operators in Indonesia during 2009.
Revenue from Interconnection Services. Our revenue from interconnection services decreased 31.5% from
Rp. 106.2 billion in 2008 to Rp. 72.7 billion in 2009. The decrease was primarily due to declining revenue from
domestic interconnection service, as a result of the combination of the decrease in interconnection tariff as well as
that of incoming call traffic.
Gross Revenues. Our gross revenues decreased 42.0% from Rp. 926.5 billion in 2008 to Rp. 537.4 billion
in 2009.
Discounts. Discounts increased 4.1% from Rp. 31.6 million in 2008 to Rp. 32.9 million in 2009. As a
percentage of our operating revenues, the interconnection and discount expenses increased from 3.4% in 2008 to
6.1% in 2009. The increase was mainly due to rising outgoing call traffic compared to the incoming traffic
(incoming call) which resulted in the increase of expenses that are payable to other operators.
Operating Revenues — Net. Our operating revenues-net decreased 43.6% from Rp. 894.9 billion in 2008 to
Rp. 504.5 billion in 2009.
58
Depreciation and Amortization. Our depreciation and amortization costs remained steady, decreasing
slightly by 0.3% from Rp. 319.3 billion in 2008 to Rp. 318.4 billion in 2009.
Operations, Maintenance and Telecommunication Services. Our operations, maintenance and
telecommunication services costs increased 10.0% from Rp. 471.0 billion in 2008 to Rp. 518.2 billion in 2009. The
increase was primarily due to the increase of rental space for base station controller and telecommunication
infrastructure from Rp. 119.4 billion in 2008 to Rp. 167.2 billion in 2009, the frequency usage expense from Rp.
94.6 billion in 2008 to Rp. 107.8 billion in 2009 and electricity and generator expenses from Rp. 71.1 billion in 2008
to Rp. 85.0 billion in 2009. However, those increases was offset by the decrease of interconnection charged from
Rp. 163.1 billion in 2008 to Rp. 135.5 billion in 2009.
As a percentage of our Operating revenues, the operating, maintenance and telecommunication service
expenses increased from 50.8% in 2008 to 96.4% in 2009.
Personnel. Personnel expenses decreased by 15.7% from Rp. 160.0 billion in 2008 to Rp. 135.0 billion in
2009. This decrease was mainly derived from the decline in salaries from Rp. 124.2 billion in 2008 to Rp. 105.8
billion in 2009, outsourced labors from Rp. 21.9 billion in 2008 to Rp. 17.4 billion in 2009, as well as recruitment,
training and development expenses from Rp. 2.9 billion in 2008 to Rp. 0.2 billion in 2009. The amount of declines
was equivalent to the increase in employee benefits from Rp. 8.8 billion in 2008 to Rp. 11.2 billion in 2009.
Sales and Marketing. Sales and marketing expenses decreased by 44.8% from Rp. 272.9 billion in 2008 to
Rp. 150.5 billion in 2009. This decrease was mainly a result of declining advertisement and promotional expenses
from Rp. 237.6 billion in 2008 to Rp. 121.4 billion in 2009, RUIM cards and voucher expenses from Rp. 20.2
billion in 2008 to Rp. 16.4 billion in 2009 and distribution expenses from Rp. 9.3 billion in 2008 to Rp. 7.0 billion in
2009. On the other hand, commission and distribution expenses increased from Rp. 4.5 billion in 2008 to Rp. 4.7
billion in 2009.
General and Administrative. Our general and administrative expenses decreased by 22.4% from Rp. 74.8
billion in 2008 to Rp. 58.0 billion in 2009. The decline was mainly due to the decline in bad debt expenses from Rp.
9.6 billion in 2008 to Rp. 3.3 billion in 2009; official travel expenses from Rp. 6.0 billion in 2008 to Rp. 1.9 billion
in 2009; transportation expenses from Rp. 4.0 billion in 2008 to Rp. 1.3 billion in 2009; electricity, water and
telephone expenses from Rp. 5.6 billion in 2008 to Rp. 3.8 billion in 2009; office expenses from Rp. 3.4 billion in
2008 to Rp. 1.8 billion in 2009, and rent of offices and Mobile-8 Centers from Rp. 20.7 billion in 2008 to Rp. 19.5
billion in 2009. However, the decrease was offset by the increase in entertainment and donation expenses from Rp.
1.4 billion in 2008 to Rp. 6.6 billion in 2009.
Total Operating Expenses. Our total operating expenses decreased by 8.0% from Rp. 1,134.9 billion in
2008 to Rp. 1,044.5 billion in 2009. As a percentage of operating revenues, total operating expenses were up from
122.5% in 2008 to 194.4% in 2009.
Operating Income (Loss). Our operating loss increased from Rp. 403.1 billion in 2008 to Rp. 675.5 billion
in 2009.
Other Income (Charges) — Net. The Company posted a net other income of Rp. 0.8 billion in 2009
compared to net other charges of Rp. 775.4 billion in 2008. The difference was mainly attributable to a gain on
foreign exchange translation of Rp. 241.9 billion in 2009, compared to a loss on foreign exchange translation of Rp.
182.8 billion in 2008; gains earned on changes in the fair value of derivative financial instruments amounting to Rp.
117.9 billion in 2009, compared to a loss of Rp. 142.0 billion in 2008; recognition of gains from the realization of
59
differences in the transaction value in restructuring of the controlling entity amounting to Rp. 42.2 billion in 2009;
and gains made on the sales of fixed assets that increased from Rp. 0.7 billion in 2008 to Rp. 21.5 billion in 2009.
In addition, we recognized decrease in investment income from Rp. 32.9 billion in 2008 to Rp. 10.7 billion
in 2009, as well the increase in interest and financial charges on borrowings and bonds from Rp. 47.0 billion in 2008
to Rp. 66.5 billion in 2009, and the increase in penalty fines on the use of frequency from Rp. 5.8 billion in 2008 to
Rp. 24.0 billion in 2009.
Deferred Tax Benefit (Expense). In 2009, we posted tax expense amounting to Rp. 49.7 billion, compared
to a tax benefit in the amount of Rp. 109.6 billion in 2008.
Net Income (Loss). As a result of the above, we posted a decline in net loss from Rp. 1,068.9 billion in
2008 to Rp. 724.4 billion in 2009.
Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
Revenue from Telecommunication Services. In 2008, revenue from telecommunication services decreased
by 17.3% from Rp. 992.1 billion in 2007 to Rp. 820.4 billion in 2008. The decrease was mainly due to relatively flat
number of subscribers as compared to 2007, while ARPU has decreased as a result of tough competition among
telecommunication operators in Indonesia during 2008.
Revenue from Interconnection Services. In 2008, revenue from interconnection services decreased by
15.5% from Rp. 125.7 billion in 2007 to Rp. 106.2 billion in 2008. This decrease was primarily due to decrease in
revenue from domestic interconnection services, as a result of combination of decrease in interconnection tariff and
incoming calls traffic.
Gross Revenues. Our gross revenues decreased 17.1% from Rp. 1,117.7 million in 2007 to Rp. 926.5
million in 2008.
Discounts. Discount decreased by 24.4% from Rp. 41.8 billion in 2007 to Rp. 31.6 billion in 2008. The
decrease was mainly due to combination of decrease in interconnection tariff and call traffic which resulted in a
decrease in interconnection charges, and a decrease in the number of starter packs and vouchers sold, which are sold
at a discount to our distributors and resulted in a decrease in the total discount.
Operating Revenues — Net. Our net revenues decreased by 16.8% from Rp. 1,076.0 billion in 2007 to Rp.
894.9 billion in 2008.
Depreciation and Amortization. Depreciation and amortization expenses increased 38.9% from Rp. 229.8
billion in 2007 to Rp. 319.3 billion in 2008. This increase is caused primarily by the addition of assets, mainly in the
form of telecommunications infrastructure and finance leased assets in 2008.
Operations, Maintenance and Telecommunication Services. In 2008, operation, maintenance and
telecommunication services expenses increased by 43.0% from Rp. 329.3 billion in 2007 to Rp. 471.0 billion in
2008. The increase was primarily due to increases in rental space for base station and telecommunication
infrastructure from Rp. 53.3 billion in 2007 to Rp. 119.4 billion in 2008, frequency usage charges from Rp. 43.3
60
billion in 2007 to Rp. 94.6 billion in 2008, and electricity and generator from Rp. 25.2 billion in 2007 to Rp. 71.1
billion in 2008, cost of repair and maintenance of Rp. 12.6 billion in 2007 to Rp. 18.5 billion in the year 2008,
operational and transportation costs of Rp. 1.3 billion in 2007 to become Rp. 4.3 billion in the year 2008. Such
increases are in line with our network expansion during 2008. However those increases was offset by the decrease of
interconnection charges from Rp193.4 billion in 2007 to Rp. 163.1 billion in 2008.
Personnel. Our personnel expenses increased 21.5% from Rp. 131.7 billion in 2007 to Rp. 160.0 billion in
2008. This increase is caused mainly by increase in salaries to adjust to inflation rate which caused the increase in
salary expense from Rp. 97.1 billion in 2007 to Rp. 124.2 billion in 2008, and outsourcing of employees from Rp.
16.6 billion in 2007 to Rp. 21.9 billion in 2008. The increase is compensated by decreases in employee benefits from
Rp. 12.3 billion in 2007 to Rp. 8.8 billion in 2008 and the cost of recruitment, training, and development of Rp. 4.7
billion in 2007 to Rp. 2.9 billion in 2008.
Sales and Marketing. Our sales and marketing expenses increased 79.1% from Rp. 152.2 billion in 2007 to
Rp. 272.9 billion in 2008. The increase is due to increases in advertising and promotion of Rp. 111.0 billion in 2007
to Rp. 237.6 billion in 2008 which is compensated by decreases in the costs of card and voucher from Rp. 22.8
billion in 2007 to Rp. 20.2 billion in 2008, distribution from Rp. 11.4 billion in 2007 to Rp. 9.3 billion in 2008, and
commissions from Rp. 6.5 billion in 2007 to Rp. 4.5 billion in 2008.
General and Administrative. Our general and administrative expenses increased 18.3% from Rp. 63.2
billion in 2007 to Rp. 74.8 billion in 2008. This increase is mainly due to an increase in provision from doubtful
accounts from Rp. 4.3 billion in 2007 to Rp. 9.6 billion in 2008, the number of rental of office premises and Mobile8 Centers from Rp. 16.0 billion in 2007 to Rp. 20.7 billion in 2008 and the cost of security and cleaning from Rp.
3.7 billion in 2007 to Rp. 5.7 billion in 2008. However, this increase is compensated by a decrease in the cost of
transportation from Rp. 7.2 billion in 2007 to Rp. 4.0 billion in the year 2008.
Total Operating Expenses. As a result of the explanations presented in the previous paragraphs, our total
Operating Expenses increased 59.2% from Rp. 712.8 billion in 2007 to Rp. 1,134.9 billion in 2008. As a percentage
of our Gross Revenues, our Total Operating Expenses increased from 63.8% in 2007 to 122.5% in 2008.
Operating Income (Loss). In 2008 we experienced an operating loss of Rp. 403.1 billion as compared to
operating income of Rp. 169.7 billion in 2007.
Other Income (Charges) — Net. We booked a net other charges of Rp. 775.4 billion in 2008 as compared to
Rp. 112.9 billion in 2007. This change is mainly due to foreign exchange loss of Rp. 182.8 billion in 2008 as
compared to gains of Rp. 4.4 billion in 2007, the increase in interest expenses and finance charges from Rp. 202.2
billion in 2007 to Rp. 367.3 billion in 2008 and the loss on change in fair value of derivative financial instrument of
Rp. 142 billion in 2008 as compared to gains of Rp. 2.8 billion in 2007.
The increase in interest expense and finance charges is mainly due to increase in interest relation to finance
lease liabilities from Rp. 52.1 billion in 2007 to Rp. 203.1 billion in 2008 in relation to the increase in the number of
towers that we leased in 2008.
Deferred Tax Benefit. In the year 2008, we recorded deferred tax benefit of Rp. 109.6 billion as compared
to the deferred tax expense of Rp. 6.5 billion in 2007.
61
Net Income (Loss). As a result of the foregoing, we recorded a net loss of Rp. 1,068.9 billion in 2008 as
compared to a net income of Rp. 50.4 billion in 2007.
Liquidity and Capital Resources
In recent years our principal use of cash has been for operational expenses, interest payments on loan
obligations and obligations under capital lease, and also our network expansion. Meanwhile our cash receivables in
2009 were mainly derived from sales of fixed assets and proceeds from claims on tax refunds. Our main source of
liquidity since we commenced our wireless operations in 2003 has been cash provided by financing activities,
including proceeds from issuance of capital stock, bank loans, working capital facilities and promissory notes. Our
primary source of liquidity in 2009 was sales of fixed assets and proceeds of claims on tax refunds.
The following table summarizes our cash flows for the periods indicated:
2007
(Rp.)
Activities
Cash receipts from customers..........
949.0
Cash paid to suppliers and
employees ........................................
(647.4)
operations ........................................
301.6
Cash receipts from tax refund..........
6.6
55.7
Income tax paid ...............................
(21.2)
Interest expenses and financial
charges paid .....................................
(188.6)
operating activities...........................
154.1
Activities
Redemption from short-term
investment........................................ 2,762.3
Net proceeds from sale of
property and equipment ...................
10.3
Increase (decrease) in restricted
cash in bank .....................................
(20.9)
Placement in short-term
investment........................................ (2,858.8)
equipment ........................................
(580.4)
investing activities ...........................
(687.5)
Activities
Proceeds from short-term loan.........
Payment for accounts payable to
related parties - net ..........................
4.7
Payment of liabilities lease ..............
(11.8)
Proceeds from the issuance of
bonds ............................................... 1,571.1
As of September 30,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
833.9
466.5
49.6
451.0
306.7
34.4
(1,030.6)
(488.7)
(52.0)
(439.4)
(801.4)
(89.8)
(196.6)
58.6
13.4
(2.6)
(22.2)
41.7
1.3
(0.5)
(2.4)
4.4
0.1
(0.1)
11.6
15.2
1.1
(0.4)
(494.7)
34.2
0.5
(0.5)
(55.4)
3.8
0.1
(0.1)
(349.5)
(89.7)
(9.5)
(40.2)
(229.7)
(25.7)
(476.8)
(69.3)
(7.4)
(12.7)
(690.2)
(77.3)
1,196.0
100.2
10.7
75.9
153.8
17.2
1.1
57.0
6.1
29.9
-
-
20.9
-
-
-
-
-
-
-
-
-
-
(267.0)
(145.4)
(15.5)
(84.1)
(103.1)
(11.6)
(310.6)
11.9
1.3
21.7
50.7
5.7
-
80.0
8.5
-
676.0
75.8
(10.5)
(31.6)
(7.2)
(15.2)
(0.8)
(1.6)
2.3
(8.2)
(42.8)
(4.8)
-
-
-
-
-
-
(1,261.6)
62
2007
(Rp.)
Proceeds from exercise of
warrants ...........................................
Settlement of long-term loans..........
Purchase of property and
equipment ........................................
financing activities...........................
and cash equivalents ........................
Cash and cash equivalents at
beginning of year .............................
changes ............................................
Cash and cash equivalents at end
of year..............................................
Supplemental Disclosures
Non Cash Investing and
Financing Activities:
Decrease in liabilities through
issuance of shares ...........................
equipment through accounts
payable.............................................
equipment through finance lease
obligation.........................................
Increase (decrease) in net asset
value of short-term investment ........
of borrowing cost.............................
of foreign exchange difference ........
As of September 30,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
154.8
(661.5)
-
-
-
-
-
-
(531.3)
-
-
-
-
-
-
526.0
(42.1)
57.6
6.1
(6.0)
633.2
71.0
(829.5)
0.2
-
3.0
(6.3)
(0.7)
859.9
852.7
23.7
2.5
23.7
23.8
2.7
0.2
0.6
(0.1)
-
(0.1)
-
-
852.7
23.7
23.8
2.5
26.7
17.6
2.0
-
-
831.9
88.5
-
201.7
22.6
-
429.6
80.8
8.6
140.0
210.6
23.6
812.6
459.8
22.5
2.4
0.6
3.7
0.4
1.3
29.8
10.7
1.1
10.1
(9.2)
(1.0)
35.6
22.1
-
-
-
-
-
2.7
33.8
-
-
-
-
-
(7.4)
Cash Flows from Operating Activities
Net cash provided by (used in) operating activities consist of cash receipts from customers, cash paid to
suppliers and employees, cash generated from (used in) operations, cash receipts from tax refund, interest received,
income tax paid and interest, penalty and financing charges paid.
Net cash used in operating activities amounted to Rp. 69.3 billion in 2009, decrease from Rp. 476.8 billion
in 2008. This changes was primarily due to declining payment of interest and financial charges of Rp. 89.7 billion in
2009, compared to Rp. 349.5 billion in 2008 as well as from (i) the decrease in cash receipts from tax refund
amounting to Rp. 41.7 billion in 2009, compared to Rp. 58.6 billion in 2008 and (ii) the decrease in cash receipts
from interest and investment income of Rp. 1.3 billion in 2009, compared to Rp. 13.3 billion in 2008.
63
Cash Flows from Investing Activities
The principal items that have historically affected net cash used in investing activities have been proceeds
from sale of property and equipment, acquisitions of property and equipment, placement of and receipt from short
term investment, additions to restricted cash and investments in subsidiaries.
Net cash provided by investment activities amounting to Rp. 11.9 billion in 2009, compared to net cash
used in investment activities amounted to Rp. 310.6 billion in 2008. This changes primarily due to (i) net cash
receipts from redemption of short-term investment amounting to Rp. 100.2 billion in 2009, compared to net cash
used in placement of short-term investment amounted to Rp. 65.6 billion in 2008, (ii) the decrease in cash used in
acquisition of property and equipment of Rp. 145.4 billion in 2009, compared to Rp. 267.0 billion in 2008 and (iii)
the increase in net cash proceeds from sale of property and equipment of Rp. 57.0 billion in 2009, compared to Rp.
1.1 billion in 2008.
Cash Flows from Financing Activities
Our main source of liquidity since we commenced our wireless operations in 2003 has been cash provided
by financing activities, and the principal items that have historically affected net cash provided by financing
activities have been proceeds from long term loans from notes payable, proceeds from (and payment of) accounts
payable to related parties, proceeds from advances for stock subscription, payment of bank loans, payment of
liability for purchase of property and equipment, additional bank loans, proceeds from issuance of bonds and
proceeds from issuance of capital stock.
Net cash provided by financing activities amounting to Rp. 57.6 billion in 2009, compared to net cash used
in financing activities amounting to Rp. 42.1 billion in 2008. This turnaround due to (i) the decrease in cash used in
payment of lease liabilities of Rp. 15.2 billion in 2009, compared to Rp. 31.6 billion in 2008, (ii) the decrease in net
cash used in payment for accounts payable to related parties of Rp. 7.2 billion in 2009, compared to Rp. 10.5 billion
in 2008 and (iii) proceed from short-term loan of Rp. 80.0 billion in 2009.
Indebtedness
We have and expect to continue to have substantial indebtedness. As of September 30, 2010, our total debt
was Rp. 2,261.2 billion. Subject to the restrictions under our debt agreements, we may incur additional indebtedness
from time to time for capital expenditures or for other purposes.
The following table summarizes our short term and long term debt as of the dates indicated:
As of December 31,
As of September 30,
2008
2009
2009
2009
2010
2010
Rp.
(audited)
Rp.
(audited)
US$
Rp.
(unaudited)
Rp.
(unaudited)
US$
Short-term debt ............................
Long-term debt ............................
1,733.0
80.0
1,519.4
8.5
161.6
1,613.2
756.0
1,505.2
84.7
168.7
Total.............................................
1,733.0
1,599.4
179.2
1,613.2
2,261.2
253.4
See “Description of Other Material Indebtedness and Other Material Obligations”.
Capital Expenditures
We have made substantial investments in our network infrastructure over the past three years. The majority
of our capital expenditures were made primarily to install our CDMA2000 1X network in Java as well as to improve
our network capacity and coverage. We include as capital expenditures the cost of equipment for installation into
64
our network and other property, plant and equipment. We include the cost of these items on our balance sheet when
we receive the equipment from our suppliers.
The following table summarizes our historical capital expenditures relating to our network and other
property, plant and equipment (excluding additions to property and equipment resulting from acquisition of our
subsidiaries) for the periods indicated:
Capital Expenditure:
2007
Rp.
(Rp. in millions and US$ in thousands)
2008
2009
2009
Rp.
Rp.
US$
(audited)
Land...............................................................
Telecommunication Infrastructure ................
Building and Improvements ..........................
Office Equipment ..........................................
Vehicles.........................................................
Other supporting Equipment .........................
Leased Assets Telecommunication
Infrastructure .................................................
Total
(unaudited)
(unaudited)
(unaudited)
9.8
500.0
2.8
24.7
1.7
26.6
3.0
518.2
1.2
18.9
211.0
2.6
156.4
0.5
66.7
0.3
16.6
0.1
7.1
812.6
1,378.3
459.8
1,212.1
22.5
248.7
2.4
26.5
In 2010, we believe that we will incur approximately Rp. 350.0 billion in capital expenditures primarily for
improving the quality of our network and other infrastructure and equipment needs.
We cannot assure you, however, that we will be able to obtain additional external financing to fund our
planned capital expenditures. See “Risk Factors — Risks Relating to Our Business and the Wireless
Telecommunications Industry — We are incurring substantial capital expenditures in connection with our expansion
plans, and we may not be able to obtain external financing for our capital expenditure plans” for a further
description of the risks relating to our sources of financing.
We estimate that we will spend approximately Rp. 350.0 billion in 2010 for a range of projects, including
expansion and upgrade of our wireless network coverage. Our actual capital expenditures may differ from our
planned capital expenditures due to various factors, including our future cash flows, results of operations and
financial condition, changes in the Indonesian economy, the availability of vendor or other financing on terms
acceptable to us, technical or other problems in obtaining or installing equipment, changes in the regulatory
environment in Indonesia, changes in our business plans and strategies and changes in the exchange rates between
the U.S. dollar and Indonesian Rupiah which would affect the cost of our equipment purchases.
Market Risk
Our major market risk exposures are to changes in currency exchange rates and interest rates.
Foreign currency risk
Our foreign currency exposures give rise to market risk associated with exchange rate movements against
the Indonesian Rupiah, our functional and reporting currency. As of September 30, 2010, we had Rp. 1,522.5 billion
of foreign currency denominated monetary liabilities, primarily U.S. dollar denominated debt and payables, and Rp.
6.6 billion of foreign currency denominated monetary assets, consisting principally of U.S. dollar denominated cash
and cash equivalents and short-term investment. Changes in exchange rates have affected and may continue to affect
the amount outstanding under the facility which is denominated in U.S. dollars. Most of our revenues are mainly
65
denominated in Indonesian Rupiah. We may also incur additional long-term indebtedness in currencies other than
the Indonesian Rupiah, including the U.S. dollar, to finance further capital expenditures.
We do not generally enter into hedging contracts to limit our foreign exchange exposures. To the extent the
Indonesian Rupiah declines in value relative to the U.S. dollar, the value of our U.S. dollar monetary net liabilities
will increase in Indonesian Rupiah terms.
Interest rate risk
We are exposed to interest rate risk resulting from fluctuations in interest rates. As of September 30, 2010,
our bonds payable had fixed interest rates. We are exposed to interest rate risk as a result of cash deposited in
interest bearing deposits. We generally placed our cash in short-term investments and time deposits. We do not
currently use any derivative instruments to manage our interest rate risk.
Effects of Inflation
Indonesia had an annual inflation rate of 6.4% in 2007, 10.3% in 2008, 4.9% in 2009 and 4.0% in the first
six months of 2010 according to Bank Indonesia as measured by taking the average of each month’s inflation rate.
We do not consider inflation in Indonesia, where all of our operations are currently located, to have a material
impact on the results of our operations. Inflation in Indonesia would adversely affect our net income and cash flow
to the extent that we are unable to increase our revenues to cover any increases in our operating expenses resulting
from inflation. We have in the past, and may in the future, be constrained in our ability to raise customer charges in
response to inflation because of competitive pressures and Government regulation, among other facts.
66
THE TELECOMMUNICATIONS INDUSTRY IN INDONESIA
In this section, we have included data relating to the telecommunications industry, Indonesian economy
and other statistics, including information relating to us and our competitors’ relative positions in the Indonesian
telecommunications industry. This information is based on industry publications, published sources or other
publicly available information or the beliefs of our management. We believe that the sources used are reliable.
However, we cannot ensure the accuracy of the information, and we have not independently verified this
information.
Introduction
Indonesia’s wireless market is among the largest in Asia, behind China and India in terms of number of
subscribers. Despite Indonesia having a fast-growing mobile sector and dynamic competition, it remains one of the
least-penetrated markets in the Asia Pacific region. In addition, despite its economy remaining stable, there are
concerns that security and corruption issues in Indonesia could render the country as a risky investment.
The wireless market in Indonesia has grown significantly over the years, and this growth has been
accompanied by increased competition amongst the wireless operators. Following the Government’s decision to
open the telecommunication industry in 2007, the market for telecommunication service in Indonesia has become
largely saturated and Indonesia now has 11 wireless operators serving approximately 143 million subscribers,
primarily in the larger cities in Indonesia. Competition and overcrowding of the market reached its peak in 2007 and
2008, when it resulted in significant tariff wars between the operators.
The following table sets out certain estimation relating to the mobile penetration rates in 2009 for Indonesia
and other countries within its region:
Mobile
Country
Penetration (%)
Hong Kong
172.6
Singapore
140.2
Vietnam
120.1
Taiwan
117.5
Malaysia
109.5
Thailand
102.2
Philippines
81.4
Indonesia
71.5
China
53.5
India
43.6
Source: BMI Indonesia Telecommunications Report Q3 2010
The Telecommunication Industry in Indonesia
Towards the end of 2009, Indonesia had an estimated total of 175.1 million mobile subscribers,
representing a penetration rate of 73.8%. This was an increase of 25.4% from 139.6 million subscribers in 2008 and
an increase of 80% from 97.3 million subscribers in 2007. Coupled with the growth of Indonesia’s GDP by 4.5%
during 2009, we believe that Indonesia’s telecommunication market will continue to grow, with Business Monitor
International (BMI) predicting the average annual growth to be 17.6% over the next five years. Bank Indonesia
predicts that the Indonesian economy will continue to expand in 2010 with GDP growth estimated to be between
5.0% and 5.5%, which we believe will result in more demand and spending for telecommunication services.
Despite the promising growth, the market total blended ARPU continued to decrease. For the year ended
December 31, 2009, the market average ARPU was Rp. 33.4, a decrease of 24.4% from the market average ARPU
of Rp. 44.2 for the year ended December 31, 2008 and a decrease of 42.5% from the market average ARPU of Rp.
58.1 for the year ended December 31, 2007. BMI expects ARPU to continue to decline over the next five years,
67
mostly as a result of the dominance of prepaid subscribers in Indonesia, as well as the heavy reduction in tariffs by
operators to attract new subscribers.
Currently, Indonesia has 11 wireless operators for both GSM and CDMA. The GSM operators are PT
Telekomunikasi Selular (“Telkomsel”), PT Indonesia Satellite Corporation Tbk. (“Indosat”), PT XL Axiata Tbk.
(“XL Axiata”, formerly known as PT Excelcomindo Pratama Tbk.), PT Hutchinson CP Telecommunications
(“Hutchinson”) and PT Natrindo Telepon Selular (“Axis”). The CDMA operators are PT Bakrie Telecom (“Bakrie
Telecom”), PT Telekomunikasi Indonesia (Persero) Tbk. (“PT Telkom”), Indosat through its StarOne brand,
Mobile-8, Smart Telecom and PT Sampoerna Telecom (“Sampoerna Telecom”). Although competition had resulted
in tariff wars in SMS pricing in the period of 2007 and 2008, it also led to innovation in the offering of services by
the operators, such as prepaid Blackberry service, wireless internet data service and various value-added services,
such as ring-back tones, content and value-added services associated with 3G network.
In Indonesia, fixed line services are primarily provided by Telkom, a majority state-owned company, which
owns and operates the country’s primary PSTN. All telecommunications operators interconnect with Telkom’s
network to access its fixed line users. Telkom’s local fixed line network monopoly ceased when Indosat received a
commercial license to provide local telephone services on August 1, 2002 and a commercial license to provide
domestic long-distance services on May 13, 2004. Indosat has since commenced the build out of a separate fixed
line network using largely fixed wireless systems.
The following table sets out the types of service being offering by the different telecommunication
operators in Indonesia:
Operator
GSM:
Telkomsel
Indosat
XL Axiata
Hutchinson
Axis
CDMA:
Bakrie Telecom
PT Telkom
Indosat
Mobile-8
Smart Telecom
Sampoerna Telecom
Key Lines of Business
Mobile, Mobile Data, 3G Broadband
Mobile, Mobile Data, 3G Broadband, Fixed Services
Mobile Data, 3G Broadband, Fixed Wireless Access
Mobile, Mobile Data, 3G Broadband, Fixed Wireless Access
Wireless Technology: GSM and CDMA
According to BMI, the total number of mobile subscribers in Indonesia has reached 175.1 million in 2009
and can be expected to increase in the upcoming years. The launch of prepaid services in 1998, which has been
widely accepted in the Indonesian market as evidenced by its continued dominance in the Indonesia’s mobile
market, enabled wireless operators to overcome increasing bad debts from the previous years’ economic crisis.
Investment continues to increase in the wireless telecommunications industry with operators upgrading their
networks and consumer spending increasing.
In recent years, the Indonesian telecommunication market has attracted foreign investment from a variety
of countries, including Singapore (Telkomsel), Malaysia (XL Axiata & Axis), United Arab Emirates (XL Axiata),
Qatar (Indosat), Saudi Arabia (Axis) and Hong Kong (Hutchinson). Many of these countries are relatively new to
the telecommunication industry in Indonesia, with both Hutchinson and Smart Telecom entering the market in 2007
and Axis re-launching Natrindo in 2008.
68
Despite the mobile market in Indonesia still being largely dominated by Telkomsel, the market remains
flooded by cheap price plans largely offered by the smaller operators. The following table sets out Indonesia’s
wireless operators and estimate of their mobile subscribers in 2009:
Operating Brands*
Operator
Telkomsel
Halo, Simpati, As (Telkomsel)
Indosat
IM3; Matrix; Mentari; StarOne
XL Axiata
XL Prabayar, Xl Pascabayar
Mobile-8
Fren
Bakrie Telecom
Esia
Hutchinson ‘3’ Telecom
3
Smart Telecom
Smart
Axis
Axis
Total
Source: BMI Indonesia Telecommunications Report Q3 2010
Subscribers
(million)
81.6
33.1
31.4
4.0**
10.6
8.5
1.5
4.3
175
Market Share
(%)
46.6
18.9
17.9
2.3
6.1
4.9
0.9
2.5
100.0
* “Operating Brands” in this context only refers to GSM and/or CDMA brands.
** This figure is based on the BMI report as compared to 2.9 million subscribers as of December 31, 2009
disclosed by the Company in this Exchange Offer Memorandum.
Competition in the Indonesian wireless industry is based primarily on pricing, availability, distribution
coverage, value-added features, service quality, network coverage, quality of data services and brand. In 2009, the
wireless market in Indonesia continued to be dominated by Telkomsel, Indosat and XL Axiata. As of 2009, these
GSM operators collectively had approximately 83.4% share of the Indonesian wireless market. Based on a BMI
report, as of 2009, Telkomsel was the largest operator, with approximately 81.6 million subscribers and a market
share of approximately 46.6%. Indosat was the second largest operator with approximately 33.1 million subscribers
and approximately 18.9% market share and XL Axiata had approximately 31.4 million subscribers and a market
share of approximately 17.9%. We are the only operator which has cellular and fixed wireless license under the
same CDMA platform, with approximately 2.9 million subscribers and a market share of approximately 1.7% as of
2009.
In part, subscriber growth in Indonesia has been driven by the “calling party pays” system, the launch of
prepaid service, as well as the introduction of SMS. The calling party pays system requires the originators of
telephone calls to pay for calls. Based on international experience, countries which implement a calling party pays
system typically experience higher wireless penetration rates because wireless subscribers are more likely to give
out their telephone numbers and keep their handsets switched on.
Subscriber Divisions: Prepaid and Postpaid
Since its introduction in 1998, prepaid service has been popular in Indonesia as in other Asian countries
because it permits subscribers to register for wireless service without undergoing a credit review. Prepaid service
also gives subscribers more control over monthly expenditures. The popularity of prepaid service has also been
revived with the introduction of prepaid Blackberry service by a number of wireless operators. Figures provided by
five operators showed that the total number of prepaid subscribers have reached 161.1 million subscribers for the
year ended December 31, 2009, representing an increase of 18.2% from 136.2 million subscribers for the year ended
December 31, 2008.
Meanwhile, Indonesia’s postpaid market continued to be largely dominated by Telkomsel and Indosat, who
in combination have an aggregate market share of 47.5% share of the five operators’ total postpaid customer base in
2009.
69
Wireless Technology: Mobile Broadband
Historically, data services in Indonesia were primarily comprised of narrow bandwidth leased line services,
x.25 service, digital data network service and integrated service digital network. Digital data network services are
digital leased line services for data transmission. Integrated service digital network is a protocol that offers high
capacity dial-in access for public networks. This protocol allows simultaneous handling of digitized voice and data
traffic on the same digital links via integrated switches across the public network. x.25 is an open standard packet
switching protocol that allows low- to medium-speed terminals to have either dial-in or permanent access to a
network from a user’s premises. Charges for these services have been declining in recent years.
The rise of the Internet and the wider adoption of multimedia applications are expected to increase demand
for sophisticated broadband data services. Operators in Indonesia are deploying advanced broadband networks to
provide high-end data services such as frame relay, asynchronous transfer mode and Internet protocol service. In
particular, virtual private network services, utilizing Internet protocol technologies, may capture a larger market
share as they provide a reliable and cost-effective alternative to private networks that rely on dedicated leased lines.
Indosat was the first operator to launch 3.5G HSPA-based mobile broadband services in Indonesia in May
2008. In comparison, Indonesia has a well-developed wireless broadband market, compared to the fixed-line
broadband market. According to industry data, approximately 315,000 people in Indonesia were accessing the
internet via mobile broadband technology, as compared to the 300,000 people who accessed the internet via fixedline connection.
Currently, there are four operators offering the HSPA networks: Indosat, XL Axiata, Telkomsel and
Hutchinson Telecom. It is expected that mobile broadband access will continue to grow in the coming year, as
operators focus on expanding their existing 3G networks, as well as the growing popularity of smartphone handsets
such as the Blackberry or the Apple iPhone.
Smaller mobile operators have also launched their own attractive mobile broadband offers. Mobile-8
launched its Mobi service at the end of 2009, which allows affordable internet access over its CDMA-based network
in five locations (Jl. Kebon Sirih (Annex), Roxy, Depok in Jakarta and BEC and Jl Holy in Bandung) across the
Jakarta and Bandung region. Smart Telecom has also launched a mobile internet tariff offering free internet access,
as well as chat and social networking access as part of a deal that requires the purchase of a certain handset.
70
REGULATION OF THE TELECOMMUNICATIONS INDUSTRY IN INDONESIA
The Government has extensive regulatory authority and supervisory control over the telecommunications
sector in Indonesia, primarily through MOCIT. The legal framework for the telecommunications industry is based
on specific laws, Government regulations and ministerial decrees enacted and issued from time to time. MOCIT is
responsible for the overall supervision and regulation of the industry. Within the Ministry of Communications and
Information, various directorates and bureaus carry out specific regulatory duties. MOCIT has authority to issue
implementing decrees, which are typically broad in scope, thereby giving MOCIT considerable latitude.
Prior to April 1996, the Ministry of Tourism, Post and Telecommunications was responsible for the
regulation of telecommunications in Indonesia. In April 1996, the Ministry of Communications was granted
regulatory responsibility over the telecommunications industry in Indonesia. In 2005, these regulatory
responsibilities were transferred to the Ministry of Communications and Information. Through the Directorate
General of Post and Telecomunication (“DGPT”), a directorate under the Ministry of Communications and
Information, the Government regulates the radio frequency spectrum allocation for all operators, which are required
to obtain a license from the Ministry of Communications and Information, for each of their services utilizing radio
frequency spectrum.
The Government has historically maintained a monopoly over telecommunication services within
Indonesia. Reforms in recent years have attempted to create a regulatory framework to promote competition and
accelerate the development of telecommunications facilities and infrastructure. The regulatory reforms embodied in
a new law, which came into effect on September 8, 2000, are intended to increase competition by removing
monopolistic controls, increase the transparency and predictability of the regulatory framework, create opportunities
for strategic alliances with foreign partners and facilitate the entrance of new participants to the industry. The
deregulation of the Indonesian telecommunications sector is closely linked with Indonesia’s national economic
recovery program. The Government’s “Memorandum of Economic and Financial Policies” states that the objective
of the economic recovery program is to stabilize the economy through a comprehensive plan based on:

deregulation;

promoting competition;

liberalization;

restructuring;

improving market access; and

introducing market-oriented regulations.
The Telecommunications Law
The Government’s telecommunications reform policy is formulated in its “Blueprint of the Indonesian
Government’s Policy on Telecommunications” as stipulated in the Decree of the Minister of Communication No.
KM.72/1999 dated September 17, 1999 (“Decree 72/1999”). The policies stated in the blueprint relate to;

an increase the telecommunications sector’s performance;

liberalization of the telecommunications sector by removing the monopolistic structure and shifting to
a more competitive system;

an increase in transparency and certainty of the regulatory framework;

enhanced job opportunities throughout Indonesia;
71

creating opportunities for national telecommunications operators to form strategic alliances with
foreign partners; and

creating business opportunities for small and medium enterprises and cooperatives.
Law No. 3 of 1989 which is referred to in Decree 72/1999 has been revoked and superseded by Law No.36
of 1999 on Telecommunication (as discussed below). However, to date, Decree 72/1999 has never been formally
revoked by a further decree or regulation.
The Telecommunications Law came into effect on September 8, 2000, and replaces the old
telecommunications law provided under Law No. 3 of 1989. The Telecommunications Law provides key guidelines
for industry reforms, including industry liberalization, facilitation of new entrants and changes to the industry’s
competitive structure. The Telecommunications Law outlines the framework and substantive principles for the
liberalization of the Indonesian telecommunications industry. The Government implements regulations and
guidelines through Government regulations, ministerial decrees and other directives by Government bodies.
Government Regulation No. 52 of 2000 on Telecommunications Operations and Government Regulation
No. 53 of 2000 on Radio Frequency Spectrum and Satellite Orbits (the “Frequency and Satellite Orbits Regulation”)
were introduced as the initial implementing regulations of the Telecommunications Law. The Minister of
Communications has also promulgated various decrees, including the Minister of Communications Decree No.
KM.20 of 2001 as amended by Minister of Communication Decree No. KM 29 of 2004 and further amended by the
MOCIT, Regulation No. 40/P/M. KOMINFO/12/2006 on Telecommunications Network Operation (the
“Telecommunications Network Decree”), the Minister of Communications Decree No. 21 of 2001 on
Telecommunication Services Operation as amended by Minister of Communications Decree No. KM30 of 2004 on
Telecommunication Services Operation (the “Telecommunication Services Decree”), and the Minister of
Communications Decree No. KM31 of 2003 as amended by Minister of Communications Information, Regulation
No. 26/P/M KOMINFO/11/2005 on the Indonesian Telecommunications Regulatory Body (the
“Telecommunications Regulatory Body Decree”).
On January 25, 2010, The Minister of Communications published Regulation No.
01/PER/M.KOMINFO/01/2010 on Telecommunication Network Operation (the “Telecommunications Network
Decree”) to replace Minister of Communications Decree No. KM.20 of 2001 and all related amendments.
ITRB
The Telecommunications Law allows the Government to delegate its authority to regulate, supervise and
control the telecommunications sector in Indonesia to an independent regulatory body, while maintaining the
authority to formulate policies over the industry and the role of an impartial policy maker and supervisor of the
telecommunications sector. On July 11, 2003, the Minister of Communications promulgated the
Telecommunications Regulatory Body Decree No. KM 31 of 2003, as amended by MOCIT Regulation No.25/P/
M.Kominfo/11/2005 dated 29 November 2005, pursuant to which MOCIT delegated its authority to regulate,
supervise and control the telecommunications sector in Indonesia to an independent regulatory body known as the
ITRB, while maintaining the authority to formulate policies over the industry. The ITRB is comprised of officials
from the DGPT and the Committee of Telecommunication Regulations and is headed by the Director General of
Post and Telecommunication Services.
ITRB, which commenced performing its functions in 2004, exercises the regulatory and supervisory control
over the industry which was previously exercised by the Minister of Communications or through the Director
General of Post and Telecommunications, including regulatory and supervisory control for telecommunications
network and service operations, regulating the standards for telecommunications equipment and devices, and
supervising the performance of telecommunications network and service providers.
Ministry of Communications Decree No. KM 67 of 2003 stipulates the relationship between the Ministry of
Communications, from which telecommunications regulatory responsibility was transferred to MOCIT in February
2005, and ITRB. As part of its regulatory function, ITRB is authorized to (i) carry out the selection or evaluation for
72
licensing of telecommunications networks and services in accordance with the Ministry of Communications and
Information’s policy, and (ii) propose to MOCIT the operation performance standards for telecommunications
networks and services, service quality standards, interconnection charges and equipment standardization. As part of
its monitoring function, the ITRB is authorized to monitor and is required to report to MOCIT on (i) the
implementation of the operation performance standards for telecommunications networks and services, (ii) the
competition among network and service operators, and (iii) compliance with the utilization of telecommunication
equipment in accordance to the applicable standards. As part of its controlling function, the ITRB is also authorized
and required to report to MOCIT regarding (i) the facilitation of any dispute resolution among network and service
operators, and (ii) the control of the use of telecommunications equipment and implementation of service quality
standards. Decisions of the ITRB are in the form of a DGPT decree.
Classification of Telecommunications Providers
The Telecommunications Law classifies telecommunications operations into three categories:
(i) telecommunications network providers, (ii) telecommunication services providers and (iii) special
telecommunications providers. The Telecommunications Operations Regulation (the “Telecommunications
Operations Regulation”) further classifies telecommunications network operators into two categories: (i) fixed
telecommunications network operators and (ii) mobile telecommunications network operators. Fixed
telecommunications network operators consist of local fixed network operators, fixed network operators for long
distance direct dialing, fixed network operators for international direct, and closed fixed network operators. Mobile
telecommunications network operators consist of terrestrial mobile network operators, cellular network operators,
and satellite mobile network operators. Local fixed network operators, cellular network operators, and satellite
mobile network operators are required to provide basic telephony services. The Telecommunications Operations
Regulation also classifies telecommunications service operations into three categories: basic telephony service
operations, value-added telephony service operations, and multimedia service operations.
Under the Telecommunications Law, licenses are required for each category of telecommunications
operation. A telecommunications network provider is licensed to own and/or operate a telecommunications network.
A telecommunications service provider license entitles the provider to provide services but does not require a
provider to own a network. Special telecommunications licenses are required for providers of private
telecommunication services or purposes relating to broadcasting and national security interests. The
Telecommunications Network Decree provides that MOCIT shall issue telecommunications network operating
licenses. The telecommunications network operating licenses will only be issued after the network provider (i)
obtained the principal permit; (ii) passed the operation feasibility evaluation; and (iii) submitted the application to
obtain the telecommunication operating licenses. The Telecommunication Services Decree differentiates the basic
telephony service operating license to be issued by MOCIT from the other value-added telephony and multimedia
service operating licenses issued by the Director General of Post and Telecommunications. With the establishment
of the ITRB, the regulatory function of telecommunications network and service operations currently falls within the
purview of the ITRB. However, licensing authority remains with the Ministry of Communications and Information.
Termination of Exclusivity Rights
In 1995, Telkom was granted a monopoly to provide local fixed line telecommunication services until
December 31, 2010, and domestic long distance direct dialing services until December 31, 2005. Indosat and
Satelindo (which has been merged with Indosat) were granted a duopoly for exclusive provision of basic
international telecommunication services until 2004.
As a consequence of promulgating the Telecommunications Law and the Telecommunication Services
Operation Decree, the Government terminated the exclusive rights of Telkom and the duopoly previously given to
Indosat and Satelindo. The Government has adopted a duopoly policy for Telkom and Indosat to compete with each
other as full network and service providers. Telkom received a commercial license to provide IDD services in May
2004, and Indosat received a license to provide local telephone service commercial in August 2002, and a
commercial license to provide domestic long-distance services in May 2004.
On March 11, 2004, the Ministry of Communications issued Decree No. KM28 of 2004 that further
implements the Government’s policy of encouraging competition in the markets for domestic long distance and IDD
73
services by requiring each operator to implement a three digit access code in the form of “01X” for access to its
domestic long distance service to permit a subscriber to choose a long distance provider, instead of using the “0”
access code. On April 1, 2005, MOCIT announced that it would make available to Indosat the “011” domestic long
distance access code in five major cities that were technically ready for interconnection, including Jakarta, and
progressively extend it to all other area codes within five years, and that Telkom had been assigned “017” as its
domestic long distance access code. On May 17, 2005, MOCIT issued regulation No. 06/P/M.KOMINFO/5/2005,
which provided that the three digit access code in the form of “01X” and “0” access code for access to domestic long
distance services may be used. The “0” access code is being used to accommodate customers who prefer not to
choose their long-distance carrier, while the “01X” access code has to be implemented gradually in local areas in
which there are technical capabilities to support such services. By April 1, 2010, the “01X” long-distance services
must be commenced in all areas to accommodate customers who prefer to choose their long-distance carrier.
Tariffs
For a description of the current tariff regime under the Telecommunications Law, see the description of
tariffs under “Business — Tariffs and Interconnection Charges.”
Interconnection Arrangements
In accordance with the express prohibitions in the Telecommunications Law on activities that may create
monopolistic practices and unfair business competition, the Telecommunications Law requires network providers to
allow users on one network to access users or services on another network based on fees agreed by each network
operator. The Telecommunications Operations Regulations provide that interconnection charges between two or
more network operators shall be transparent, mutually agreed upon and fair. On February 8 2006, MOCIT issued
decree No. 08/Per/M-Kominfo/02/2006 on Interconnection, which (i) states that the calculation for interconnection
fee shall be based on a cost-based formula and (ii) requires operators to disclose information relating to their
interconnection pricing and arrangements with other operators and their essential network facilities relating to
interconnection to ensure transparency in the interconnect pricing. In January 2007, the ITRB implemented the new
interconnection regime.
Fee Regime
Based on the Telecommunications Law in conjunction with other regulations, each telecommunications
operator is required to pay to the Government a license concession fee for telecommunication services, a license
concession fee for radio frequency and a satellite orbit fee, where applicable.
The license concession fee for telecommunication services for each telecommunications operator is 0.5%
of gross revenues, adjusted for bad debts and certain other items. The license concession fee for radio frequency, is
calculated by applying a formula principally based on the frequency bandwidth and the combined radio frequency
transmission output rating of the equipment of the telecommunications operator.
Regulation of Fixed Wireless Access (“FWA”)
The regulation of FWA came into effect on March 11, 2004 with the issuance of the Minister of
Communication Decree No. KM.35 of 2004 dated 11 March 2004 regarding FWA (“The Fixed Wireless Access
Regulation”). The Fixed Wireless Access Regulation provides that the coverage of FWA is limited to only one area
code number and no roaming facility can be provided. In relation to such limitations, the subscriber’s number can
only be registered under one area code number and therefore cannot be utilized outside this area.
Universal Service Obligations
Under the Minister of Communication Decree No. KM34 of 2004 on Universal Service Obligations (the
“USO Decree”), fixed network operators are obliged to provide telecommunication facilities and infrastructure in
the areas designated by the Government as universal service obligations, or USO, areas, with the participation of
other operators. Pursuant to MOCIT Regulation No.15/PER/M.KOMINFO/9/2005, other service and network
74
providers, including mobile operators, are required to pay to the Government a USO fee of 1.25% of gross revenues,
adjusted for bad debts and certain other items.
Common Tower Policy
The central Government has issued draft legislation to introduce a common tower policy, which would
provide an operator access to another operator’s telecommunication towers. The proposed legislation standardizes
towers through establishing minimum technical standards for existing and new towers for use as common towers.
These are expected to include standards relating to, among others, number of antennae that it can carry, operational
and maintenance matters and supervision. While the central Government’s draft legislation is yet to be issued, these
requirements are already applicable in Jakarta through Governor of DKI Jakarta Regulation No. 89 of 2006, issued
on September, 22 2006. Other regions are expected to follow the central Government’s tower sharing regulations.
Voice Over Internet Protocol (VoIP)
The Ministry of Communications regulates the operation of VoIP for public use through Decree No. 23 of
2002 on the Operation of Internet Telephony For Public Use, as amended by Decree No. KM31 of 2004 (“VoIP
Decree”), which requires the operation of VoIP for public use to be carried out by Indonesian legal entities having
specific licenses to do so from the Directorate General of Post and Telecommunications. Currently there are several
licensed VoIP operators, namely Mobile-8, XL Axiata, Telkom, Indosat, Gaharu Sejahtera and Atlasat Solusindo.
Other VoIP operators may provide VoIP services in cooperation with these licensed VoIP operators. A VoIP
operator may determine the VoIP tariff using a cost basis approach.
Foreign Ownership Limitation
Government Regulation No. 20 of 1994 (“GR 20/1994”) provides that foreign shareholding in
telecommunication companies can be as high as 95%. However, under the Presidential Regulation No. 30 of 2010
(“PR 30/2010”) on Lists of Business Sectors Closed and Sectors Open with Certain Requirements for Investment,
enacted on 25 May 2010, the maximum foreign ownership in a wireless network operator is 65%, and fixed wireless
access is 49%, and in a VoIP provider company is 49%. Unlike its predecessor regulation, PR 30/2010 does not
exempt publicly listed companies from the maximum foreign ownership limitations. However, it does not impose
retroactive effect, requiring adjustment for existing foreign ownership in an Indonesian company.
While GR 20/1994 should prevail over PR 30/2010, in the event of any inconsistency, there is some
uncertainty as to how the Government will implement the regulation regarding the foreign ownership limitation.
75
BUSINESS
Overview
We are a cellular operator in Indonesia, with approximately 2.1 million subscribers as of September 30,
2010 across all Fren, Hepi and Mobi products. We offer an extensive range of prepaid and postpaid CDMA based
wireless services, including voice and data services. Our network’s coverage currently extends to all major cities,
most secondary cities and whole of Java, Bali, Batam, some areas of North Sumatera, South Sumatera, Lampung,
some areas of North and South Sulawesi and Kalimantan.
Towards the end of 2009, Indonesia had an estimated total of 175.1 million mobile subscribers according to
Business Monitor International report for the third quarter of 2010. This represents a penetration rate of 73.8% and
is an increase of 25.4% from 139.6 million subscribers in 2008 and an increase of 80% from 97.3 million
subscribers in 2007. Despite the recent increase in the number of wireless subscribers in Indonesia, Indonesia’s
wireless telecommunications penetration rate remains one of the lowest in the Asia Pacific region.
Our network operates on the 800 MHz spectrum utilizing CDMA2000 1X technology. As of December 31,
2009, the principal components of our CDMA2000 1X network infrastructure consisted of 1,458 base transceiver
stations (BTS), 55 base station controllers that connect one BTS to another, and 28 mobile switching centers. We
were the first wireless operator in Indonesia to commercially launch 3G high-speed mobile services in May 2006,
based on CDMAEV-DO technology.
We adopt a multi-channel strategy for our distribution and sales, with the primary distribution channels
being our approximately 120 independent distributors, 46 Mobile-8 Centers, Mobile-8 sales force and alternative
channels such as bank ATM networks and PC vendors. As of September 30, 2010, we had more than 20,000
independent outlets distributing our prepaid starter packs and more than 27,000 independent outlets selling our
electronic or physical vouchers.
Restructuring
In March 2007, Mobile-8 issued secured Rupiah-denominated bonds (the “Rupiah Bonds”) in the principal
amount of Rp. 675.0 billion pursuant to a trust deed dated February 22, 2007 between Mobile-8, as issuer, and PT
Bank Permata Tbk, as trustee. The Rupiah Bonds were also listed on the Indonesia Stock Exchange. In 2009, we
completed a restructuring of a substantial portion of our long term debt including the Rupiah Bonds. The
restructuring of the Rupiah Bonds was approved on June 29, 2009, and a total of Rp. 68.5 billion of such bonds were
converted to equity of Mobile-8. In addition, the financial terms of the Rupiah Bonds were amended and the
maturity date extended to June 15, 2017. An additional Rp. 831.9 billion of debt and other liabilities, including
payables from Samsung of Rp. 230.7 billion were converted to equity. These debt-to-equity swaps have
strengthened our balance sheet and will allow us to pursue new growth opportunities.
On August 15, 2007, our wholly-owned subsidiary Mobile-8 B.V. issued US$100.0 million principal
amount 11.25% Guaranteed Senior Notes due on March 1, 2013 (the “Existing Notes” or “2007 Guaranteed Secured
Notes”). The 2007 Guaranteed Secured Notes are listed on the Singapore Stock Exchange. On September 19, 2008,
PT Global Mediacom Tbk. sold a portion of its shares in Mobile-8 and consequently reduced its beneficial
76
ownership to below 51%. This constituted a change of control under the terms of the Existing Notes and the Original
Issuer was required to make an offer to holders of the Existing Notes to redeem the Existing Notes held by such
holders. On November 6, 2008, the Original Issuer indicated that it would be unable to redeem the Existing Notes
following the change of control because of its current financial condition and the global financial turmoil. The
failure by the Original Issuer to make an offer to redeem the Existing Notes constituted a default under the Existing
Notes and on November 12, 2008, the trustee for the Existing Notes accelerated the Existing Notes by notice to the
Original Issuer. On January 7, 2009, the trustee filed a claim in the Central Jakarta Indonesian Court of Justice for
all amounts outstanding under the Existing Notes, amounting to US$100.0 million, plus US$3.5 million in interest.
On December 3, 2009, the trustee withdrew the case. We have made no payment since the acceleration of the
Existing Notes.
adverse effect on our business, financial condition and results of operations, as well as our ability to meet our
payment obligations under the New Notes. We cannot assure you that we will not default on our payment or other
obligations under the New Notes or again seek protection from our creditors in the English or other courts.
Through the Scheme and this Exchange Offer we intend to exchange the Existing Notes for the New Notes.
The New Notes will have terms as set forth in this Exchange Offer Memorandum. See “Description of Notes.”
Following the Scheme and the Exchange Officer, we plan to further restructure our debts and liabilities so that we
can strengthen our balance sheet. In addition, we intend to continue to negotiate with our creditors and bondholders
to implement the debt-to-equity conversions and raise additional equity to finance our business plan.
History
We were established as a company in 2002. In December 2003, we commenced operations with the
offering of prepaid wireless services through our “Fren” brand under the CDMA 2000 1X platform. Until 2007, we
had three subsidiaries: (i) Metrosel, a wholly-owned subsidiary which we first acquired in a share swap on March 7,
2003, (ii) Komselindo, a 98.6% owned subsidiary which we first acquired in a share swap on February 21, 2003, and
(iii) Telesera, a wholly-owned subsidiary which we acquired on September 28, 2004. Each of these entities operated
wireless services on the AMPS cellular systems prior to being acquired by us. Starting in 2004, we progressively
phased out the AMPS system, after we launched services on the CDMA2000 1X platform or, in the case of Telesera,
since its acquisition. By March 31, 2007, we had phased out all of the AMPS operations operated by these
subsidiaries. On July 18, 2007, we established our only subsidiary, Mobile-8 B.V. Mobile-8 B.V. is a private limited
liability company under the laws of the Netherlands.
On November 29, 2006, we completed an initial public offering, or “IPO”, of our shares and listing on the
Indonesian Stock Exchange. We issued a total of 3.9 billion ordinary shares in the offering at a price of Rp. 225 per
share, resulting in total gross offering proceeds of Rp. 877.5 billion. Based on the closing price of our shares on the
Indonesian Stock Exchange on September 30, 2010, our market capitalization was Rp. 1,851.8 billion. As of
December 31, 2009 all of our approximately 33.0 billion outstanding shares were listed on the Indonesian Stock
Exchange.
In order to rationalize our corporate structure, we completed a corporate reorganization pursuant to which
each of Metrosel, Komselindo and Telesera was merged with and into Mobile-8 with effect from May 31, 2007.
After the reorganization, we hold our operating licenses within a single entity, Mobile-8.
In May 2007, the Government granted us a fixed wireless access (“FWA”) in-principle license and in May
2008 we launched our first FWA product. By the end 2009, we offered FWA services in 13 major cities in
Indonesia. In April 2008, we introduced a new feature called “World Passport”, in which we became the first
CDMA operator in the world to join the GSM Association to enable our customers to communicate around in the
world in both the CDMA mobile network and GSM network.
In February 2009, we launched a new product called Mobile Data service for both postpaid and prepaid. In
May 2009, to fulfill the portfolio of the products, we launched FWA postpaid service. Moreover, to enhance the
77
products’ advantage, in June 2009, we have launched Fren Duo, a hybrid service which integrates both cellular and
FWA services in one card that allows customers to register for two services in a single chip. Fren Duo has received a
good response from subscribers who have recognized the benefits of having the FWA service in addition to cellular
service. Fren Duo allows subscribers to enjoy the lower tariff benefit of FWA service with the full mobility of
cellular service. At December 31, 2009 Fren Duo was available in 13 major cities across Indonesia.
On March 3, 2010 we announced a strategic alliance with another cellular operator in Indonesia, PT Smart
Telecom, (“Smart Telecom”) to introduce a joint cellular service between Mobile-8’s Fren and Smart Telecom’s
SMART. We believe the new joint brand, SmartFren, will allow us to save costs by: (i) consolidating our fixed
assets including galleries and towers, (ii) sharing marketing campaigns under the SmartFren brand, (iii) sharing costs
relating to shops and distribution networks, and (iv) sharing support and logistics including in handset and RUIM
production. In addition, we believe that the alliance will allow us to better compete with our larger competitors. As
of the date of the announcement, the combined companies had subscribers of approximately 5.5 million.
Operating Strategy
Leverage our strategic alliance with Smart Telecom
We plan to continue to implement our strategic alliance with Smart Telecom in order to achieve the cost
savings and efficiencies described above. We intend to build upon our existing relations with Smart Telecom. As
part of our restructuring process, as contemplated by the Scheme, we propose to acquire (the “Acquisition”) the
ordinary shares representing a majority of the issued share capital of Smart Telecom (the “Target Shares”). See
“Business-Proposed Acquisition”.
Redesign and increase our network coverage area in existing areas
We plan to redesign our network to focus on existing areas of service. Currently, as a result of lack of
resources, we have stopped expanding our network into new areas, instead we plan to improve network coverage in
the existing areas of service.
Reduce capital expenditure and accelerate roll-out of network infrastructure
In undertaking our network coverage expansion, we plan to lease substantially all of our future tower
requirements to mitigate our roll-out risks, accelerate the network roll-out process and reduce capital expenditures.
Tower operators will provide site location, operating and maintenance services and, in certain situations, power
supply. We believe this strategy will also free up management resources to allow us to concentrate on providing,
improving and marketing our wireless services.
Currently, we primarily utilize backbone infrastructure using our microwave transmission equipment. We
intend to increase our backbone infrastructure capacity through leasing and joint development with other
telecommunication service providers.
Acquire new subscribers and retain existing subscribers
We believe that we can continue to increase our market share by focusing on the mass market and certain
market segments such as the youth market and small-to-medium enterprises as well as by offering a clear value
proposition to subscribers. We also will continue to work with handset vendors to offer a wider range of handsets to
our subscribers. In addition to acquiring new subscribers, we will continue to focus on retaining our existing
subscribers.
Strengthen and extend our distribution and marketing
We recently implemented what we believe is an enhanced distribution platform that creates incentives for
distributors to sell our products and improves our ability to reach our target market. We have also devised alternative
channels such as bank ATMs and PC vendors to expand our reach. We will strengthen and extend our distribution
78
network and be innovative around our distribution channels to ensure we reach as many potential subscribers as
possible.
We will also continue to refine our marketing initiatives and promotions as our subscriber base continues to
grow and its characteristics change. We continue to introduce new marketing promotions from time to time to
promote our brand values of simplicity, best value and innovative and contemporary products and services. Our
initial pricing plans were focused on generating subscriber growth while more recent tariff promotions have been
targeted at improving profitability.
Our Business
Our business consists primarily of providing wireless telecommunication services, which includes basic
voice services and value-added services. Our network interconnects with the networks of substantially all fixed line
and wireless operators in Indonesia to enable our subscribers to call, and to receive calls, from subscribers of other
telecommunications operators in Indonesia as well as to and from international destinations. We receive
interconnection revenues from and pay interconnection fees to operators with whom we interconnect. We operate
our network on the CDMA2000 1X platform using the 800 MHz spectrum. We offer 3G high-speed mobile services
based on CDMAEV-DO technology. The following table sets forth a breakdown of our revenues for the periods
indicated:
2007
Rp.
%
2008
2009
Rp.
%
Rp.
US$
(audited)
(audited)
%
(audited)
2009
2010
Rp.
%
Rp.
US$
%
(unaudited)
(unaudited)
Telecommunicatio
n services
Voice ..................
SMS ....................
Data ....................
Monthly service
charges ....................
Others ................
Subtotal ...................
785.6
156.5
37.2
70.3
14.0
3.3
665.0
117.0
27.2
71.8
12.6
2.9
331.5
82.9
32.1
35.3
8.8
3.4
61.7
15.4
6.0
256.0
62.0
20.2
62.7 167.2
15.2 44.7
4.9 39.5
18.7
5.0
4.4
55.4
14.8
13.1
2.4
10.5
992.1
0.2
0.9
88.8
3.2
7.9
820.4
0.3
0.9
88.5
4.2
14.0
464.7
0.4
1.5
49.4
0.8
2.6
86.5
3.1
10.4
351.7
0.8
2.8
2.5
7.7
86.2 261.9
0.3
0.9
29.3
0.9
2.6
86.8
Interconnection
services
Domestic ............ 109.0
International........
16.6
Subtotal ................... 125.7
Gross revenues ........ 1,117.7
9.8
1.5
11.2
100.0
87.4
18.8
106.2
926.5
9.4
2.0
11.5
100.0
59.4
13.3
72.7
537.4
6.3 11.1
1.4
2.5
7.7 13.5
57.2 100.0
46.1
10.4
56.4
408.2
11.3 31.3
2.5
8.4
13.8 39.7
100.0 301.6
3.5
0.9
4.4
33.8
10.4
2.8
13.2
100.0
(1.2)
(3.5)
32.6
96.5
Discount...................
Operating revenues
- Net
(41.8)
1,076.0
(3.7)
(31.6)
(3.4)
(32.9)
(3.5)
(6.1)
(25.4)
(6.2
(10.7)
96.3
894.9
96.6
504.5
53.7
93.9
382.8
93.8 290.9
Telecommunication Services
We offer a wide range of voice and non-voice wireless telecommunication services to our subscribers on
either a postpaid or prepaid basis under the “Fren” brand and under “Mobi” brand for mobile internet services. Our
CDMA based wireless telecommunication services include basic wireless voice services, SMS, mobile internet
services, other value-added services, domestic roaming and international inbound roaming.
79
The following table shows certain operating information relating to our wireless business for the periods
indicated:
As of or for the nine-months
As of or for the year ended December 31,
ended September 30,
2008
2009
2009
2010
2007
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Number of subscribers:
Prepaid ......................
Postpaid.....................
Total number of
subscribers ......................
Average revenue per
user (Rp.)
Prepaid ......................
Postpaid.....................
Blended .....................
Average Monthly Churn
rate-blended ....................
2,920.2
92.6
2,855.5
148.9
2,750.3
122.3
2,972.4
141.2
2,031.0
106.4
3,012.8
3,004.4
2,872.6
3,113.6
2,137.4
37.2
115.3
39.8
21.5
86.4
24.0
11.1
58.7
13.4
11.0
61.8
13.4
10.4
50.0
12.1
5.5%
8.7%
7.8%
7.0%
9.5%
We experienced rapid growth of our subscriber in the first years after we commenced CDMA prepaid
wireless services in December 2003 and postpaid services in April 2004. We had approximately 795,000 subscribers
as of December 31, 2005, 1.8 million subscribers as of December 31, 2006, and 3.0 million subscribers as of
December 31, 2007. However, in the last three years we have not been able to grow our subscriber base. Our
subscriber base declined from 3.0 million as of December 31, 2008 to approximately 2.9 million subscribers as of
December 31, 2009, representing a decline of approximately 3.3%. As of December 31, 2009 approximately 2.8
million subscribers or 95.7% of our subscriber base were prepaid subscribers and approximately 0.1 million
subscribers or 4.3% were postpaid subscribers.
Our ARPU differs significantly between postpaid and prepaid subscribers. ARPU for postpaid subscribers
tends to be higher, in part reflecting the appeal of postpaid services to higher income subscribers. ARPU for prepaid
subscribers is lower, reflecting the broader appeal of prepaid services to a wider range of subscribers, many of
whom are lower income subscribers. Our ARPU for prepaid subscribers in 2007, 2008 and 2009 was Rp. 37.2, Rp.
21.5, and Rp. 11.1 thousand, respectively, as compared to Rp. 115.3, Rp. 86.4, and Rp. 58.7 thousand for postpaid,
for the same periods, respectively.
Prepaid. As with other significant wireless operators in Indonesia, prepaid subscribers constitute a
substantial majority of our total subscribers. As of December 31, 2009, we had approximately 2.8 million prepaid
subscribers, representing approximately 95.7% of our total subscriber base. Prepaid subscribers purchase reload
vouchers that contain fixed amounts of service value rather than receiving monthly bills, and are not required to pay
monthly service charges. Prepaid services increase the accessibility of wireless services to the average lower income
subscribers.
A person becomes a prepaid subscriber by purchasing a starter pack, which includes a RUIM card, or a
bundled package which includes a handset. Our prepaid starter pack, which is marketed as “Fren Sobat” and “Fren
Duo”, are priced at Rp. 5,000 and includes a Rp. 5,000 credit. From time to time, we may offer other starter pack
packages. We do not charge our subscribers an activation fee to activate their RUIM cards.
Prepaid subscribers may purchase additional service value by purchasing physical reload vouchers or
electronic reload vouchers. Physical reload vouchers, which are available in denominations of Rp. 10,000, Rp.
20,000, Rp. 30,000, Rp. 50,000 and Rp. 100,000, consist of plastic cards, a portion of which the subscriber scratches
off after purchase to reveal a numerical code. The subscriber is required to call a designated number and input the
numerical code from the card into an automated system to be credited with the relevant service value.
80
Electronic reload vouchers are available in various denominations from Rp. 10,000 to Rp. 50,000, and
allow additional service value to be loaded when the subscriber pays us, without the need for a physical card.
Reload vouchers expire after the end of the active period and a 30-day grace period. Only incoming calls
may be made during the grace period. The active periods vary from fifteen days for the Rp. 10,000 voucher to 180
days for the Rp. 200,000 and higher value vouchers.
As CDMA handsets were not widely available from third party suppliers in the past, we have offered
various prepaid packages bundling subsidized locked CDMA handsets with our prepaid starter packs in order to
attract subscribers. For example, we offered an affordably priced bundled package priced at Rp. 255,000 (before
tax), which included a Smartfren OT 203c handset and Rp. 5,000 worth of starter pack.
We currently offer seven prepaid bundled packages, which includes handsets that we do not subsidize, and
bundling price starts from Rp. 255,000 (before tax) to Rp. 799,000 (before tax), which also include Rp. 5,000 worth
of starter pack per unit bundling. The benefits included in the bundling packages vary, such as free SMS, free on-net
calls or free data. Most of the benefits are awarded to subscribers based on the amount of the reload voucher. From
time to time, we revise our existing packages or offer new promotional packages.
The loyalty bonuses are awarded based on two categories, (i) longevity of service and (ii) denomination of
reload voucher. The bonuses are given to subscribers during special events such as Indonesia’s Independence Day,
Christmas Day or Hari Raya. We also cooperate with third parties in delivering the loyalty programs. For example,
one of our loyalty programs include a free meal package at KFC for every subscriber who tops up in a minimum
amount of Rp. 50,000.
Our prepaid subscribers may sign up for postpaid services at any time without having to change their phone
numbers, subject to certain credit-related eligibility requirements.
Postpaid. As of December 31, 2009, we had 122,300 postpaid subscribers, representing approximately
4.3% of our total subscriber base. Our postpaid services are generally targeted at higher income subscribers,
corporate subscribers and subscribers with data usage requirements.
We offer five postpaid service packages: (i) Postpaid Maxi; (ii) Postpaid Duo, which provides two services
in one card, and free on-net benefits; (iii) FWA package, which provides a maximum monthly discount Rp. 25,000,
(iv) Corporate postpaid and (v) SHOP (Smartfren Handphone Ownership Program). We offer all of our postpaid
subscribers free national roaming.
We do not charge our postpaid subscribers an activation fee to activate their RUIM cards. Our normal
minimum monthly service charges are Rp. 25,000. For postpaid subscribers, we also offer handset bundling
packages with a free handset for subscribers who sign a contract with a minimum spending requirement under our
SHOP program. This is mainly targeted at professionals and corporate users. From time to time, we revise our
packages or offer promotional packages.
Under our subscriber application process, we are able to provisionally approve an application generally
within 24 hours. Upon further verification of the information submitted in the application, we may then, if
appropriate, revise the credit limit, block the number or terminate the account. We have also increased the minimum
credit limit granted to our subscribers and at the same time introduced a more comprehensive set of credit evaluation
criteria under the new process. We believe that our process provides a balanced approach between making it simpler
and faster for a subscriber to apply for a postpaid account and conducting the appropriate verification process to
minimize bad debts and fraud.
SMS, Data and Other Value-added Services. In addition to our wireless voice services, we offer a number
of data and other value-added services, including SMS. The following sets forth a brief description of our valueadded services, which are offered to our postpaid and prepaid subscribers.

SMS. SMS allows our subscribers to send short text messages of up to 160 characters on any handsets
81
which support this function. Our subscribers are able to send SMSs to other CDMA/GSM operators’
subscribers in Indonesia as well as to other international GSM operators’ subscribers. Since 2007, we
entered into an agreement with 52 GSM international operators in the Asia Pacific region, Europe and
Saudi Arabia for international SMS services. We plan to enter into further cooperation arrangements with
other leading GSM international operators as well as with international CDMA operators for international
SMS service.

Mobile Internet / Wireless Data. Mobile Internet allows our subscribers to access the Internet anywhere
within our wireless coverage areas through an appropriately equipped mobile phone or equipping the laptop
with a wireless data card or by using a handset. Our Mobile Internet service also allows mobile virtual
private network access. We also offer CDMA2000 1X and CDMAEV-DO capable data modem cards for
mobile Internet access on notebook computers. We offer 3G high-speed mobile Internet services in Jakarta
based on our EV-DO platform.

WAP Access. WAP access enables handsets equipped with wireless access protocol to access a variety of
information including news, financial information, games, and snapshots of traffic at various roads in
Jakarta.

SMS On Demand. This provides interactive features and a variety of information delivered through SMSs,
and enables a subscriber to obtain news, leisure-related information, Indonesian / English word translations
and religious content, participate in SMS auctions, give comments on certain forums, check usage and
prepaid balances and reload credit.

Voice Mail Service. This feature allows callers to leave voice or fax messages or a call back number if the
handset is not answered, switched off or in out of service areas. In active condition, the call will be
forwarded to Call Waiting facility, if still unanswered then forwarded to Voice Mail Service.

Call Forwarding. This allows our subscribers to forward incoming calls unconditionally or based on various
preset conditions, such as when the handset has been switched off or is in out of service areas, the line is
busy and/or when handset is not answered.

Fren Ringo. This allows our subscribers to change the waiting tone a caller hears when they call our
subscriber and before the call is answered, from the ordinary tone to a selection of popular songs.

Calling Number Identification Restriction. We provide this facility free to enable our subscribers to restrict
their mobile phone numbers from being displayed on the handset of the party being called.

Call Waiting. We provide this facility free to enable our subscribers to answer incoming calls when they
are engaged on another call by putting the other call on hold.

Domestic Roaming. We provide this facility free to enable our subscribers to use their handsets anywhere
within our coverage areas. Subscribers continue to pay airtime and any applicable long distance charges.
Interconnection
To enable our subscribers to call and to receive calls from subscribers of other telecommunications
operators in Indonesia as well to and from international destinations, our network interconnects with the networks of
other telecommunications operators in Indonesia, except for Batam Bintan Telecommunication, which is a local
operator with a special coverage area on Batam and Bintan islands. We have entered into interconnection
agreements with various domestic and international service providers that provide for interconnections between our
wireless network and the PSTN, the international gateways operated by Indosat and Telkom for IDD calls, as well as
other networks operated by other telecommunications operators.
We are entitled to receive interconnection revenues from other operators for interconnecting onto our
network when subscribers of such other operators call our subscribers, and we are required to pay interconnection
82
fees to other operators for interconnecting to such other operators’ networks when our subscribers call the
subscribers of such other operators.
MOCIT has set guidelines on interconnection rates between telecommunications operators. Wireless
operators are permitted to directly interconnect with each other, and the terminating wireless operator is permitted to
earn interconnection revenues from the tariff usually allocated to Telkom for indirect interconnection with the
PSTN. See “Regulation of the Telecommunications Industry in Indonesia.”
International Roaming. We currently have international roaming agreements with 19 CDMA operators in
other countries, namely, Japan, South Korea, Australia, India, New Zealand, Thailand, China, Hong Kong, Taiwan,
USA, Canada, Guam, Vietnam and Macau, for inbound roaming to allow subscribers of such operators to use their
CDMA wireless handsets in Indonesia through our network. As we are currently the only CDMA wireless operator
in Indonesia operating on the 800 MHz spectrum, the most commonly used frequency for CDMA services globally,
visitors from overseas with CDMA handsets are likely to roam on our network. Our roaming agreements with these
operators establish the charges for these services. The charges for international inbound roaming are denominated
principally in U.S. dollars, and we receive payments from operators outside Indonesia for these services in U.S.
dollars.
We have installed equipment to facilitate international outbound roaming to enable our subscribers to roam
internationally on the networks of CDMA operators with whom we have entered into international roaming
agreements. We have also entered into 56 GSM operation agreements with operators in Australia, Hong Kong,
Malaysia, the Philippines, Saudi Arabia, Singapore, Sri Lanka, and Thailand and several other countries to allow our
subscribers to roam on a GSM network by inserting their RUIM cards into a GSM handset.
Products and Services
As of September 30, 2010, we offer the following products and services:
Products

FREN Prepaid. Offers the benefits of complimentary activation fee, free roaming and competitive
tariff rate. Fren is marketed in over 45,000 outlets. Working in cooperation with several national
banks, Mobile-8 provides convenient ways to reload using more than 5,000 ATM, internet banking,
phone banking as well as through Visa.

Fren Duo. A product that offers subscribers the benefits of the Fren cellular and FWA services in a
single RUIM card simultaneously (dual-on). Benefits of Fren Duo: two active and dedicated numbers
in one card; one top-up for two cards simultaneously; local phone numbers are fixed/non-changing;
and inexpensive outgoing and incoming calls.

Fren Sobat. Offers the “open communication solutions,” with unrestrictive terms and conditions that
are dedicated to customers who communicate frequently with loved ones. Communicating with
relatives and loved ones become much more affordable with free Fren-to-Fren calls and low SMS rate
of Rp. 88/SMS to all operators. Fren Sobat also offers highly competitive conference call rates four
numbers in sequence with very affordable tariff for conference call facilities, and a 50% credit bonus
for the first eight reloads.

Fren Postpaid MAXI (50 & 100) Package. Postpaid package that offers various bonus surprises - with
more calls generating more bonus surprises, such as unlimited talk, unlimited SMS, unlimited internet
and billing discount.

Fren Postpaid Corporate Package. Postpaid service for corporations seeking cost-effective
telecommunications, in addition to the convenience and high-quality service that is provided to
business customers through the One Bill system. These corporate customers can enjoy Free Calls, Free
SMS, Free Internet/Data with optional packages that are highly flexible.
83

Fren Duo Postpaid. An innovative two-number-in-one-card of the Fren Postpaid service; subscribers
enjoy the convenience of a GSM cellular number (0888xxx) and the economies of the CDMA with the
FWA number (021XXX, 031xxx, etc).

FWA Postpaid Discount Package (particularly for homes & small office). A discount package for
subscribers in homes and small offices. In this package, registered subscribers get a maximum discount
of Rp. 25,000 on their monthly billing. The discount becomes effective once minimum billing of Rp.
25,000 is met.

Fren Mobile Internet. This service is developed wit the support of the CDMA2000 1X and CDMAEVDO technology, to provide high speed internet access for browsing, e-mail, chatting, video streaming
and also online games. In addition to being stable and highly affordable, the service is 40 times faster
than the date transfer speed of GPRS.

Fren Smart Buy (FSB). A bundling of cellphone and modem offering with instant activation and noninstant approval by using Fren Postpaid service for personal and corporate postpaid subscribers.

World Passport. An international roaming capability on both GSM and CDMA networks worldwide.
All Mobile-8 customers can use Fren when they are abroad and communicate with each other by voice,
SMS and data. At the present time, the international roaming service of Mobile-8 is available only to
post-paid subscribers.

Mobile Broadband Internet / Mobi. Mobile Broadband Internet service that is based on advanced
CDMA EVDO Rev A technology that is equivalent to a 3.5G service, and available to subscribers in
the areas of Jakarta, Bogor, Depok, Tangerang, Bekasi and Bandung. With download speeds up to 3.1
Mbps and upload speed of up to 1.8 Mbps, Mobi supports various applications that require large
bandwidth to enable sending and receiving large files quickly and easily.

Mobi Prepaid. A prepaid product that offers more benefits and choices. With a Mobi starter pack of
Rp. 75,000, the customer receives a Preload Balance of Rp. 50,000; and the fantastic offer for an
EVDO Rev A USB Modem of Rp. 499,000 with a 50% credit bonus for five reloads. In addition, Mobi
offers competitive on-line rates of Rp. 0.5/KB for the hours (00.00-12:00), and Rp0.5/KB outside those
hours. Also, subscribers need not reload at certain nominal amounts for their internet connections.

Mobi Unlimited. The need for unlimited internet access with maximum speed drives subscribers to
choose the unlimited internet package. In response to this need, Mobi offers the most affordable
unlimited internet package available in the market today. Price starts from Rp. 50,000 and subscribers
can have access to unlimited internet for one full month anywhere and at any time.

Mobi Postpaid. Mobi postpaid offers convenience to subscribers to enjoy competitive Mobi tariff rate
without time restrictions and reload requirements. Customers can switch to postpaid subscription with
the convenience of not having to subscribe for 12 months, and moreover they can change packages
every month. The three packages offer subscribers the freedom to manage their monthly internet needs.

Mobi Modem Package. A highly affordable offer to obtain the Mobi Modem Package for Rp. 499,000.
Subscribers will get the USB EVDO Modem REV.A (3.5 G CDMA), at the competitive rate of
Rp0.1/Kb and a free Mobi number in addition to a 50% credit bonus for every five reloads.

Mobi Sehat (antiporn package). This Mobi Modem Package provides tremendous benefits to parents,
teachers and educators, particularly in supervising the flow of information to internet users who are
children. Users of this service will automatically be restricted to porn program, and subsequently also
to negative contents such as transgression to moral values, gambling, ethnic and religious prejudices,
violence, and others.
84
Services

Corporate Services. The service offers a total solution concept for corporate customers, both for voice
and data, such as: Mobile Access Hunting, Data Access Services, Mobile Virtual Private Network, and
VoIP Services (Voice over Internet Protocol).

International Connection 01068. Fren and Hepi subscribers can do international call from SLI 01068
service with a discounted fee up to 80% by using this access code 01068 (country code) (phone
number), subscribers can communicate with family, friends and business relation to any cellular
number and PSTN abroad.

SMS International 001. A service that can only be used by Fren subscribers to send SMS to the number
abroad, without any registration or card changing. The subscribers need only to dial (001+Country
Code+ Cellular No).

Traffic Monitoring (Live Traffic). Value-added services that allow customers to monitor traffic
conditions: 5 points: (Bundaran HI, Kebon Jeruk Highway, Semanggi, Cawang, Graha PasifikSurabaya).

Mailing List SMS. A service that provides delivery information to support users to many numbers.
Users can use this SMS mailing list service to create one community to share news and message to
fellow community members easily. This service can be used for personal and corporate, as well as Fren
and Hepi subscribers.

Yahoo Messenger. This Yahoo Messenger service provides chatting application service to users from
their own cellular easily and practically. The users may operate all the functions in chatting service
thru their cellular by SMS, such as add friends, get, ignore, read, reply and direct interactive with other
customers.

FunCall. This FunCall service provides the possibility to enjoy the features of karaoke by recording
your voice and sending messages with the song you like. Please call 5050.

M-Call Me. A service offered if customers do not have credit but want to be contacted. Customers only
need to type # 83 + FREN number and the message will be sent to the destination number and request
that number to call back.

M-Talk. This is a short voice message system where customers send and receive messages through
voice. M-Talk is an alternative to send messages for both Fren and other cellular numbers. It is done by
just sending a message by using M-Talk and typing # 81 + Fren number or other cellular numbers

My Data. This facility helps customers to store phone numbers so they do not need to worry when they
lose their phone or replace their handset. Customer can download phone numbers from the server when
needed only by SMS. To information, type: Info and send to 2080.

RingGo. Mobile-8 offers a Personal Ring Back Tone as a value added service whereby subscribers can
choose a variety of personal ring tones as an expression of their personality. Fren RingGo also
provides other attractive features such as grouping by time, by caller and the ability to give melodies to
other Fren subscribers as gifts. This RingGo information can be access thru website:
http://ringgo.Mobile-8.com

b-Live. A service that provides variety of rich content applications under BREW application and has
launched by Mobile-8 entitled b-Live. This service called “One Click Entertainment” and offered the
user to download and use various of interesting application, such as Facebook, ringtone, online news
reading and games. Subscribers can enjoy the convenience of this service thru handset low-end to
handset high-end.
85

Fren Geger or Fren Gesek-Gesek-Grreengg. Fren Geger Rewards program is targeted for the Fren
Prepaid customers. By joining this program prepaid subscribers will have the opportunity to win
millions of spectacular prizes.

SMS 123. An SMS portal to access various information on product and promotion easy and free. This
service can be accessed by: type Fren then SMS to 123

WAP. A WAP portal to access various entertainment services and streaming by Mobile. The service
can directly access to handphone with WAP access. WAP address of Mobile-8: http://wap.Mobile8.net

Voice Mail Service. A facility that allows the caller to leave a message in voice form, call back number
or facsimile. When the telephone is active, the caller will be directed to call waiting facility and if
unanswered then the call will be directed to voice mail service.

Short Message Service. This facility allows all users to send and receive text messages using Fren
cellular phone up to 160 characters.

Calling Number Identification Restriction. This facility allows all users to hide their Fren phone
numbers in the receiver’s phone screen.

Call Forward Unconditional. This facility allows all Fren users to divert all incoming calls to other
phone numbers with no specific conditions.

Call Forward Default. This facility allows all Fren users to divert all incoming calls to other phone
numbers whenever they are busy, unable to answer, or out of reach.

Call Forward Busy. This facility allows all Fren users to divert all incoming calls to other phone
numbers whenever they are busy.

Call Forward No Answer. This facility allows all Fren users to divert all incoming calls to other phone
numbers whenever they are not able to answer the call.

Call Waiting. This facility allows all users to accept other incoming call during a conversation.

Call Hold. Provides all users to hold a conversation without being disconnected when accepting other
incoming call.

Mobile Internet Data Access. A facility that allows all users to access high speed internet both through
cellular phone and network cable as well as notebook and wireless data card, using company’s
networks.

Roaming. This facility allows all subscribers and customers to use Fren number out of town, within the
Company’s network.
Tariffs and Interconnection Charges
Tariff System
In 2003, we entered into several bilateral agreements with other domestic telecommunication operators
regarding interconnection tariff sharing for each call sent from or terminated on our network. Based on MOCIT
Regulation No. 8/Per/M.KOMINFO/02/2006 dated February 8, 2006, the interconnection tariff is determined using
the cost based interconnection tariff which should be included in the Interconnection Offering Document of each
operator.
86
Voice Tariffs
Voice tariffs include tariffs charged to the caller for calls to other cellular operators, local PSTN, long
distance and international calls. We do not charge our subscribers for incoming calls.
Our minimum postpaid and prepaid tariffs are prescribed by MOCIT. The floor price of the service rate as
of September 30, 2010 is determined by adding the originating cost of the call and the terminating cost of the call.
Although activation charges may be freely determined by wireless operators, we currently do not impose any
activation charges for our cellular services.
Postpaid Tariffs
Our maximum charges for outgoing domestic calls for postpaid subscribers, effective September 30, 2010,
are as follows:
Zone
Calls to the PSTN local
Call to the PSTN long distance
Calls to another cellular network local
Calls to another cellular network long distance
Calls to Mobile-8 subscribers (for all domestic zones)
Maximum Postpaid Tariff
(Rp. per Minute)
Rp. 454
Rp. 1,200
Rp. 454
Rp. 1,200
Free
From time to time, we revise our tariffs or offer promotional packages, which may provide lower tariffs
than the tariffs set forth above. For international calls, our postpaid subscribers are normally charged between Rp.
8,000 and Rp. 11,000 per minute depending on the destination country and time of call. We also offer a promotional
flat rate for VoIP-based calls of Rp. 1,000 per minute to 22 designated countries and Rp. 2,000 per minute for other
countries.
Prepaid Tariffs
Our maximum charges for outgoing domestic calls for prepaid subscribers, effective September 30, 2010,
are as follows:
Zone
Calls to the PSTN Local
Calls to the PSTN long distance
Calls to another cellular network local
Calls to another cellular network long distance
Calls to Mobile-8 subscribers (for all domestic zones) (2)
Maximum Prepaid Tariff
(Rp. per Minute)
Rp. 500
Rp. 1,500
Rp. 500
Rp. 1,500
Free upon top up
From time to time, we revise our tariffs or offer promotional packages, which may provide lower tariffs
than the tariffs set forth above. For international calls, our prepaid subscribers are normally charged between Rp.
8,000 and Rp. 12,000 per minute depending on the destination country and time of call. We also offer a promotional
flat rate for VoIP calls of Rp. 1,000 per minute to 22 designated countries and Rp. 2,000 per minute for other
countries.
SMS Tariffs
Except for subscribers who may be on promotional prepaid service packages, we charge our postpaid
subscribers Rp. 88 per SMS and our prepaid subscribers Rp. 88 per SMS for SMSs within Indonesia. For
international SMS, we charge Rp. 500 per SMS. SMSs between different operators in Indonesia are currently on a
87
“sender keeps all” basis. For SMSs sent to international operators, we pay a termination fee of approximately
US$0.0032 per SMS.
Data Tariffs
We offer three postpaid wireless data packages, which provide 500MB of data for Rp. 88,000 per month,
1.25GB of data for Rp. 150,000 per month and 3GB of data for Rp. 250,000 per month. We normally charge our
postpaid subscribers Rp. 0.9 per KB outside of our promotional packages. For prepaid subscribers, we charge Rp.
1.0 per KB. Our subscribers are also able to opt for a time-based charge. For this service, our subscribers are
required to register with the Internet service provider and are billed by the Internet service provider and are charged
Rp. 176 per minute for both postpaid and prepaid subscribers, a portion of which we receive a portion from the
Internet service provider.
Interconnection Charges
We are entitled to receive interconnection revenues from other operators for interconnecting onto our
network when subscribers of such other operators call our subscribers, and we are required to pay interconnection
fees to other operators for interconnecting to such other operators when our subscribers call the subscribers of such
other operators. The following sets forth a summary of the common types of interconnection and how revenues are
shared among operators.
The interconnection charges to be paid to operators in respect of usage are as follows:
Call type
Local Termination: ................................ From PSTN
From Cellular
Non-Local Termination: ........................ From PSTN
From Cellular
Transit: .................................................. Local
Non-local
International
PSTN
(Rp. per minute)
73
203
69
295
612
Mobile
(Rp. per minute)
261
261
380
493
69
295
498
Local Interconnection to Fixed Line Network
For local calls from our network to a fixed line network, the fixed line operator is entitled to receive from
us Rp. 203 per minute, representing a share of the local interconnection call tariff.
Domestic Long Distance Interconnection with Wireless Network
As cellular operators in Indonesia do not charge their subscribers for domestic roaming in Indonesia, when
our subscribers are roaming domestically in an area outside their home area and they call a subscriber of another
operator in a different area, we charge our subscribers long distance rates but will be charged for local
interconnection rates by the other operator where there is no point of connection in the other city. However,
conversely, if our subscribers roam domestically outside of their home area and they call subscribers of another
operator in their home area, we charge our subscriber domestic local rates but will be charged only long distance
interconnection rates by the other operator if there is no point of interconnection in the home city of the other
operator’s subscriber.
Domestic Long Distance Interconnection with Fixed line Network
For domestic long distance calls that originate on our network and terminate on a fixed line network, we
will remit Rp. 626 per minute to the fixed line operator.
88
International Interconnection
We interconnect with the international gateways of Indosat and Telkom for outgoing and incoming
international calls. For non-VoIP international calls routed through Indosat’s and Telkom’s gateways, we will be
charged by Indosat or Telkom, as the case may be, a percentage of the applicable international call tariffs or agreed
amount per minute for outgoing calls and will charge Indosat or Telkom, as the case may be, a certain percentage of
the applicable international call tariffs or agreed amount per minute for incoming calls. With effect from April 2008,
the Government has regulated international connections such that we will receive Rp. 498 per minute for incoming
calls from overseas operators.
Our Wireless Network
Our network’s coverage currently extends to all major cities, most secondary cities and whole of Java, Bali,
Batam, some areas of North Sumatera, South Sumatera, Lampung, some areas of North and South Sulawesi and
Kalimantan.
As of September 30, 2010, the principal components of our CDMA2000 1X network infrastructure
consisted of:

1,458 BTSs, or base transceiver station, including 50 CDMAEV-DO BTSs, plus 61 sites with repeater
equipment installed in cell sites, which contains transmitters, receivers and other equipment that
communicate by radio signals with cellular telephone handsets within the range of the base transceiver
station. Most of our BTSs and repeaters are situated within or on top of buildings or on vacant land
owned or leased by us for periods ranging from one to 12 years (for a description of such leasing
arrangements. See “Description of Other Material Indebtedness and Other Material Obligations”);

55 base station controllers that connect to and control the BTSs;

28 mobile switching centers that route calls to the proper destinations;

Backbone transmission infrastructure, in Java, with high capacity SDH (Synchronous Digital
Hierarchy) architecture and other transmission facilities, including transmission towers, that link the
mobile switching centers, base station controllers and BTSs. Except in Jakarta where we have a fiber
optic connection to Telkom’s network, our backbone transmission facilities use microwave
transmission. Our backbone transmission network is configured in an overall ring structure with
additional regional rings, which enables the transmission signal to be maintained even in the event of
any single point failure along the ring and enhances overall network reliability. Our backbone network
incorporates 2 rings in Jakarta, a Jakarta-Bandung ring, a Central Java ring, a Surabaya ring, a
Surabaya-Malang ring, a northern backbone and a southern backbone. The network also incorporates
active standby protection that allows for instantaneous rerouting, automatically protects service circuits
and minimizes downtime in the event of equipment malfunction;

Backbone transmission infrastructure, outside of Java, using leased lines;

9 home location registers that are databases containing information on and the profile of our
subscribers;

19 packet data serving nodes that act as gateways for mobile Internet data traffic;

4 SMS centers that control and route SMS traffic; and

Other equipment, including an intelligent network billing system that calculates billing amounts based
on voice and data usage.
The following table sets forth certain information relating to the growth of our CDMA network
89
infrastructure:
As of December 31,
2008
2009
2007
Base transceiver stations ..............................
945
1,563
1,458
Base station controllers ..................................
51
55
55
Mobile switching centers ...............................
16
28
28
Home location registers .................................
9
9
9
* Certain BTS are temporarily turned off and in the process of relocation.
As of September 30,
2010
1,458*
55
28
9
The major suppliers of our network equipment are ZTE and Huawei Technology Co. Ltd.
On December 19, 2006, we signed the System Implementation, License and Maintenance Agreement with
Huawei Technology Co., Ltd (Huawei) for the purchase of billing system with the contract value of US$49 million
for the total purchase for five years, wherein purchases for the first year amounted to US$21 million, while in the
second and subsequent years, the purchase of billing systems will depend on the growth of our subscriber base. The
remaining US$15 million is currently under negotiation with Huawei.
On June 25, 2007, we entered into a supply agreement with ZTE Corporation (ZTE). We agreed to
purchase specific products at a specific volume from ZTE. The term of this supply agreement commences with
effect from the date of signing of the agreement and continues until the first anniversary date or until the expiry of
the after sales agreement whichever is the latest, unless terminated earlier by the Company, the implementations of
this contract is on hold and we are in the process to terminate the agreement.
Handsets
As CDMA handsets were not widely available from third party suppliers in the past, we have offered
various prepaid packages bundling subsidized locked CDMA handsets with our prepaid starter packs in order to
attract subscribers. For example, we offered an affordably priced bundled package priced at Rp. 388,000 (included
VAT), which included a Samsung handset and Rp. 10,000 worth of starter pack. Our lowest priced bundled package
is the “ZTE C169 Package” priced at Rp. 168,000 (included VAT) which includes a ZTE handset and a Rp. 10,000
of starter pack. Our branded handsets from Samsung offer dual-mode functionality. There are currently over 20
models of CDMA handsets available on the market. We intend to work with distributors to offer additional imported
handsets.
We have entered into a supply agreement with ZTE Corporation on June 25, 2007 for the purchase and
supply of a minimum of 1 million units of 800 MHz CDMA handsets, each delivery to be defined by individual
purchase orders, the latest of which to be issued no later than December 31, 2007. This agreement describes the
exclusive supply relationship between ZTE and Mobile-8, which enables us to offer our new ZTE bundling package
priced at Rp. 388,000, which includes a ZTE handset and Rp. 10,000 worth of credit. We are in the process of
finalizing an agreement to restructure the payments terms and method of payment to ZTE.
We do not currently subsidize any of our handset sales other than for selected post paid programs. We
intend to focus on promoting our own brand handsets supplied from ZTE that target the entry level market and aim
to lower our subscriber’s cost barrier to owning a CDMA handset.
In September 2007, we introduced BREW, an application that enables subscribers with entry level CDMA
handsets to enjoy a rich multimedia service contents and high-speed mobile Internet. Thus, we became the first
operator to operate BREW in Indonesia. In December 2007, b-Live was launched commercially as a One Click
Entertainment with BREW applications, available on CDMA ZTE C300 and C330 handsets, which offers nine
applications including ringtone browser, news, horoscope, dictionary, games, and others.
Up to 2009, the BREW application continue to be developed so that it can now be used in a wide ranging
handset brands including Nokia, Motorola, Samsung, Haier, and ZTE. In addition, the BREW application
development is also becoming more comprehensive with six types of category namely b-Entertained, b-Fun, b90
Genius, b-SMSkatalog, b-Updated and b-Woman offering more than 20 applications. The BREW application will
continue to be developed to provide the best service possible for subscribers now and in the future.
In 2009, to support our brands more effectively, we intensified our business relationship with major handset
importers and distributors, in order to bundle our Fren and Mobi services as an attractive package offering. Other
marketing and distribution initiatives by us during 2009 included offering top-up revenue sharing with handset
distributor and retailers, forming direct sales teams to penetrate deeper into residential areas in major cities, and
undertaking a more focused sales and promotional campaign among communities in the greater metropolitan Jakarta
area, Surabaya, Semarang and Bandung.
Network Maintenance
Our network operation center monitors and manages our network 24 hours a day, seven days a week. Our
network control center is also able to reroute network traffic in order to minimize downtime experienced by
subscribers. We have an integrated network management system which enables us to monitor all of our network
infrastructure through a single platform.
Spectrum
We operate on the 800 MHz frequency spectrum and were originally allocated 10 MHz of frequency
bandwidth in the 880 MHz–890 MHz spectrum for downlinks and 835 MHz-845 MHz for uplinks. In May 2007, at
the request of the Government, we voluntarily relinquished to the Government three out of seven carriers, or
approximately 5 MHz of our frequency bandwidth, with nationwide coverage. Our remaining frequency spectrum is
within the CDMA2000 1X spectrum standard of the International Telecommunication Union (ITU), thus, enabling
handset interoperability and international roaming capabilities. As CDMA technology provides increased system
capacity that supports more users for the same frequency bandwidth, we believe our bandwidth is adequate to
support our subscriber growth. See “Risk Factors — Risks Relating to Our Business and the Wireless
Telecommunications Industry — The growth of our wireless business may be adversely affected by any constraints
to available bandwidth and mobile telecommunication network congestion.”
Network Development and Expansion
As of September 30, 2010, our network’s coverage extends to all major cities, most secondary cities and
whole of Java, Bali, Batam, some areas of North Sumatera, South Sumatera, Lampung, some areas of North and
South Sulawesi and Kalimantan. Since 2007, we have been developing Next Generation Network CDMA 2000 1X
(NGN CDMA 2000 1X), a nation-wide Internet Protocol (IP)-based network that is cost-effective in terms of
investment and operation. This IP-based network allows Mobile-8 to provide coverage service with minimal
investment, which in turn enables the provision of long-distance phone call services at affordable prices.
By 2008, the development of NGN CDMA 2000 1X in addition to providing Mobile services also provided
FWA and EVDO services, the latter being a high-speed broadband data service. As of the end 2009, we have
completed the construction of 1,458 Base Transceiver Stations (BTS), 55 Base Station Controllers (BSC) that
connect and control one BTS to another, 28 Switching Centers (MSC/WSS), 9 Home Location Registers (HLR), a
database containing subscriber profile information, 19 Packet Data Serving Nodes (PDSN), that function as
gateways for mobile Internet data traffic, 4 SMS Centers that control and distribute SMS traffic, and other
equipment, including an Intelligent Network Billing System for subscriber service and a billing system that
calculates total charges for voice services and data usage.
We operate a supporting transmission infrastructure with high-capacity Microwave SDH (Synchronous
Digital Hierarchy), and Fiber optic leased-line transmission facilities that connect the cellular conversation control
centers, MSC/WSS, WGW, BSC, and BTS units. Our transmission network is designed with Redundant Hot
standby as well as Loop configurations, thereby providing high reliability any may avoid failures when there are
damages in one of the transmission node.
91
We have a Network Operation Center (NOC) that monitors and manages its network 24-hours a day. We
also have an integrated network management system, NMS, which enables the monitoring of the entire network
infrastructure.
Licenses
We rely on an operating license issued by MOCIT for the provision of our wireless telecommunication
services as well as for the operation of our network and utilization of our allocated spectrum frequencies. We
possess a license to provide basic telephony services through CDMA 2000 1X wireless network with national
coverage. The Government has adjusted the regional licenses held by our Former Subsidiaries and has granted
Mobile-8 an operating license on fixed wireless access. This fixed cellular operating license allows us to provide
fixed wireless services on a nationwide basis and should be valid for an unlimited lifetime, subject to our
compliance with the relevant regulations and the provisions in the license. We currently offer FWA services in 13
major cities in Indonesia and expect to expand this service to other cities in 2010. MOCIT, with due regard to
prevailing laws and regulations, may request amendments to the terms of our licenses in the course of performing its
regulatory role.
We also have a VoIP operating license, which we rely on to provide VoIP services.
Our annual license fee consists of three components: (a) frequency usage charges, which includes a license
concession fee of approximately 0.5% of gross revenues, adjusted for certain items including interconnection
charges and discounts, payable in arrears, (b) a radio frequency fee, calculated by applying a formula set by the
Government based on, among others, the number of carriers in our BTSs, payable 1 year in advance and (c) a USO
fee of 1.25% of gross revenues, adjusted for certain items including interconnection costs and discounts, payable in
arrears.
Tower Sharing
The DKI Jakarta regional government has issued a regulation implementing tower sharing in Jakarta with
other regions expected to follow. As a consequence, we outsource towers to tower operators who provide site
location, operating and maintenance services, and in certain situations, power supplies. We have entered into Tower
Rental Agreements with PT Tower Bersama, PT Profesional Telekomunikasi Indonesia and other tower providers.
See “Description of Other Material Indebtedness and Other Material Obligations” and “Risk Factors — Risks
Relating to Our Business and the Wireless Telecommunications Industry — We operate in an industry that is
heavily regulated and a legal and regulatory environment that is undergoing significant reforms. These reforms and
changes in regulations, could have a material adverse effect on our business, financial condition and results of
operations — Towers”. We intend to lease substantially all our future tower requirements and are currently in
discussions with certain tower operators.
The advantages of outsourcing towers includes (1) lower costs as a result of tower sharing, (2) an
accelerated network roll-out process, (3) reduced capital expenditures, avoiding large cash commitments at an early
stage, and (4) reduced demand on management and employee resources.
Customer Service
We have a customer relationship management system which enables our customer service personnel to
access relevant information. We provide the following primary means of accessing customer service:

Customer Care Lines. We operate a 24-hour call center that is accessible by our subscribers through a
toll free number at “888” from their Fren number and 08881856868 from other number. Our customer
care line has an interactive voice response system with a two-language capability, namely, Indonesian,
and English, with an option to speak with a customer care person at our call center. We also operate a
toll free number at “444” which covers prepaid registration activity and has language capability in both
Indonesian and English. Our new call center operates with one system and is equipped with state of the
art technology and utilizes new tools including workforce management and a knowledge database. We
92
are currently extending our customer care lines to include a channel for priority customers, which
enables us to meet our customer demands based on their usage and payment method.

Mobile-8 Centers. As of September 30, 2010, we had 46 Mobile-8 Centers, including 8 in the Greater
Jakarta area, which provide a full range of customer services.

Internet Website. Our website provides general information on our products, services and business in
Indonesian and English.

SMS. Subscribers can perform limited services through SMS, such as checking balances and
registration of a subscriber’s particulars for prepaid accounts which is required under Indonesian law.

Corporate Sales Team. We have direct sales personnel to serve corporations, which provide a single
point of contact for these subscribers, including for customer services.

Distributor Hotline. We have established a dedicated hotline to support our distributors.
Distribution, Sales and Marketing
Distribution and Sales
We have adopted a multi-channel strategy for our product distribution and sales in order to ramp up the
distribution and availability of our products and subscriber acquisition rapidly. We believe we can grow our market
share through increased awareness of the Mobile-8 brand dispatched through the right distribution model. We
provide exclusive regional rights and offer incentives and bonus programs to the distributors. Distributors also
receive professional sales training.
In 2009, we launched the following marketing and distribution initiatives:

Partnership programs for handset bundling, in which distributors import handsets while we provide the
service;

Continue top-up revenue sharing through various distribution channels;

Developing direct sales teams to further penetrate into prospective residential areas in major cities;

Strengthening distribution in Java, especially in the greater Jakarta area and East Java; and

Execute a more focused community selling and corporate sales in the greater Jakarta area, Surabaya,
Semarang and Bandung.
Due to the limited network coverage outside Java, we adapted Fren’s marketing and distribution strategy in
2009. Before that, we had already developed several marketing and distribution channels that comprised of
distributors, Mobile-8 Ambassadors, Mobile-8 Centers, Direct Sales Teams and alternative channels.
During the first half of 2009, we expanded our distribution channels through all available channels. As of
the end of 2009, we own 55 distributors that are supported by 257 Mobile-8 Ambassadors, 46 Mobile-8 Centers and
Direct Sales Teams consisting of more than 200 people. Currently, our products are spread in 200,000 outlets and
more than 22,000 outlets are visited regularly by Mobile-8 Ambassador as Mobile-8 “touch points”.
Moreover, we are supported by alternative channels such as ATM banking, internet banking facilities, as
well as a credit card network of VISA member banks via SMS that facilitate electronic mobile credit reload for Fren
and Hepi pre-paid vouchers.
93
In the second half of 2009, we reviewed the implementation of our network expansion, sales and
distribution strategies in light of the more competitive market that led to weaker performance.
The review resulted in the redesign of network development that places more priority on:

Increased services at networks already operating on the island of Java; and

Efforts to establish network operations outside Java, especially those capable of reaching areas with
high population densities.
As of the end of 2009, our network has already covered the whole of Java and Bali, and some areas in and
around Medan, Palembang, Lampung, Batam, Banjarmasin, Makassar and Manado.
Prepaid. We distribute and sell our prepaid products and services through the primary distribution channels
described below.

Mobile-8 Centers. We operate 46 Mobile-8 Centers, which provide subscribers with full access to our
products and services.

Distributors. Distributors are independently operated, typically cover certain distribution areas, and
distribute our products and services to dealers, retailers and outlets. We predominantly sell our
products to distributors on a cash basis. As of September 30, 2010, we had approximately 120
distributors.

Mobile-8 Sales Force. Our sales force sells our physical products, such as starter packs and physical
reload vouchers, to dealers, retailers and outlets. Our sales force is supplemented by Fren
Ambassadors, who are outsourced sales personnel. Our sales force generally calls on dealers, retailers
and outlets on a weekly cycle and sell our products on a cash basis. As of September, 2010, we had
over 546 sales employees and over 344 Fren Ambassadors.

Dealers, retailers and outlets. These are independently operated. We have increased the numbers of
dealers, retailers and outlets rapidly in the last year. The total number of outlets that sell our prepaid
starter packs increased from 12,122 as of December 31, 2009 to over 24,000 as of September 30, 2010.
As of September 30, 2010, approximately 27,000 independent outlets sold our electronic or physical
vouchers.

Banks. Electronic reload vouchers of Rp. 50.000, Rp. 100.000, Rp. 150.000, Rp. 200.000, Rp. 300.000
and Rp. 500.000 can be purchased through seven major banks, namely, BCA, Bank Mandiri, BII, Bank
Permata, BNI, Bank NISP and Citibank, through their ATMs, Internet banking, phone banking and
SMS banking. In addition, Rp. 50.000, Rp. 100.000, Rp. 150.000, Rp. 200.000, Rp. 300.000 and Rp.
500.000 vouchers may be purchased with VISA credit cards, through which a prepaid subscriber can
elect to have a prepaid account refilled automatically in one of the following ways: (i) whenever the
prepaid account balance falls below Rp. 10.000; (ii) a fixed amount monthly; or (iii) on demand,
through SMS.
We plan to continue to expand our distribution network, increase the number of sales and service outlets
and depots which provide supporting infrastructure for inventory and customer service. We also plan to implement a
monthly distribution audit to check on the distribution coverage of our products.
Postpaid. Subscribers may subscribe for a postpaid account only through our Mobile-8 Centers. We also
have a corporate sales team dedicated to managing our corporate accounts, covering West, East and Central Java.
We price our products and services to corporate subscribers similarly to our postpaid subscribers, with minor
differences. To be eligible for a corporate account, corporations are required to have a minimum of 25 subscribers.
94
We provide the corporate customer with a single bill and also a service level guarantee for 12 months, which may be
extended.
We do not charge our postpaid subscribers an activation fee to activate their RUIM cards. Our normal
monthly service charges considered as a minimum spending requirement were Rp. 25,000 per month for direct
postpaid subscribers.
For postpaid subscribers, we also offer handset bundling packages with various discounts on the handset
cost for subscribers who sign a contract with a minimum spending requirement. These packages are generally
targeted at professionals and corporate users. We offer all of our postpaid subscribers free national roaming. From
time to time, we revise our packages or offer promotional packages.
Marketing and Branding
Our marketing program includes the use of print, television and radio advertising, road shows, flyers,
customer service and distribution personnel and special promotional campaigns, to strengthen our brand name,
increase our profile and educate the general public about us and our products and services. We incurred Rp. 152.2
billion in 2007, Rp. 272.9 billion in 2008, Rp. 150.5 billion in 2009, and Rp. 179.4 billion for the nine-months ended
September 30, 2010 on advertising and promotional activities.
Our product and development department carries out marketing research to explore ways to incorporate
technology for the benefit of our subscribers. We also carry out market research from time to time both internally
and externally through marketing research companies that we engage. We seek to use the most effective or
appropriate type or combination of media or methods of advertising for a particular product or campaign. For
example, we generally use television advertising for major campaigns, we rely on radio advertising in certain
regions where radio usage is higher and we launched our wireless data cards using road shows located in malls and
office areas so as to be able to provide a live demonstration of the product to our target audience.
Based on the results of a survey undertaken by a third party and commissioned by us, “Fren” has a 98%
brand awareness in Indonesia. We continue to reinforce the “Fren” brand name. Our brand values are “Simplicity”,
“Innovation”, “Best Value” and “Young and Trendy”, which are achieved through the use of Fren¬branded
handsets, Fren-branded stores, Fren Ambassadors and extensive media programs (including TV and Print media).
In addition, we introduce tariff promotions from time to time. Currently, we offer one flat rate nationwide
of Rp. 500 per minute to any mobile user and PSTN, while for long distance, we charge at Rp. 1,200 per minute.
On-net calls are free of charge upon top-up. Any top up of minimum Rp. 25,000 will get free 30 days of on-net calls,
while top up of less than Rp. 50,000 will get free 15 days of on-net calls.
We continue to seek entry level subscribers by offering affordably priced bundled handset packages. Our
current handset promotion offers a prepaid bundled package priced at Rp. 255,000, which includes a SmartFren
handset that we do not subsidize, and Rp. 5,000 worth of starter pack. The bundling package comes with free SMS
and on-net calls based on top up denomination.
In 2009, we offered the following marketing programs:

Movie Treat with Fren. A customer loyalty and retention program for both Fren prepaid and postpaid
users. Appreciation is provided to loyal Fren customers and subscribers who are given a free pair of
tickets to cinemas on Valentine’s Day.

Tariff Slash for Long Distance Calls. A special offer that slashes the voice rate by Rp. 100/30 seconds
of long distance calls to home numbers or publicly switched telephone network (PSTN) nationwide.

Ramadhan Voucher of Rp. 30.000. A Ramadhan edition voucher of Rp. 30,000 that allows users to
top-up and at the same time donate infaq in the amount of Rp. 600 without deducting the balance thru
the National Alms Board, BAZNAS.
95

Buy Fren Voucher Get Free Indomaret Products. A special offer to customers who buy the Fren
vouchers at any Indomaret outlet, giving them free bonus of household products.

Let’s Save. In cooperation with Megalife, Mobile-8 has provided a simple way to save by using the
credits of customers. Simply send an SMS through Fren by typing MENABUNG and send to 2131.

Credit Bonus of 25% for Fren Regulars. Credit Bonus of 25% is given to Fren Regulars for every
reload within the active period of their Fren numbers.

Credit Bonus of 25%. Credit Bonus of 25% is given for every reload at BCA ATM.

On Time Payment Program. An appreciation program for postpaid Fren subscribers who pay their bills
on time and receive a shopping voucher gift from Carrefour.

Home Travel Insurance Promo. An accident insurance protection program for all Fren users during
their homecoming trips for Ramadhan and Lebaran.

Rampak Beduk Event. In cooperation with BAZNAZ, the event welcomes the fasting month with the
launching of SMS Infaq and Ramadhan voucher worth Rp. 30,000.

Music on Cellphone. FrenDuo promotion with Nexian NX-981 cellphone worth Rp. 200,000,
cellphone music package 2 ON, 2 Active Numbers in one cellphone. FrenDuo promotion with
cellphones Vitell V306 & V305 worth Rp. 255,000, cellphone music 2 ON, 2 Active Numbers in one
hape.

Multimedia Dual On Cellphone. Frenduo promotion with cellphone Cross CG31 worth Rp. 665,000,
cellphone multimedia package 2 ON, 2 Active Numbers in 1 card + 1 Active Number.

Low-cost Cellphone. Frenduo promotion with cellphone TiPhone 1233 worth Rp. 249,000, low-cost
cellphone package 2 ON, 2 Active Numbers in one card.

Qwerty EVDO Cellphone. Frenduo promotion with cellphone Motorola Q CDMA worth Rp.
1,399,000, cellphone qwerty EVDO package, 2 Active Numbers and bonus of 1GB in single
cellphone.

Low-cost Music Cellphone. Frenduo promotion with cellphone Motorola W212 worth Rp. 249,000,
low-cost cellphone music package 2 ON, 2 Active Numbers in single cellphone.

All Risk Handset Insurance. An insurance program for handset by using Fren number and a one-time
premium payment of Rp. 30,000 valid for the bundling of certain handset types over 12 months.

Flexibility of Payment. In order to make payment easier for customers, Mobile-8 opens several
payment channels for reload vouchers, as well as payment for postpaid invoices. Supported by ATM
network, internet banking, credit cards and SMS banking from established banks in Indonesia, Mobile8 subscribers enjoy the convenience of paying their bills.
In 2010, we continue to have all the programs that were implemented in 2009 and continue to offer various
bundling programs, as well as customer appreciation program to accelerate the penetration of Fren in the market.
The programs that we currently offer are:

Hape Fren Seru. This is a low-end handset bundling program that offers Facebook shortcut in the
menu. This bundling program was initiated as a response to the high demand of easy access to
Facebook in the Indonesian telecommunication market.
96

Hape Fren SUMO. Hape Fren SUMO stands for Super Modem. This handset offers modem capability
to have internet access for the end users. This bundling program is well accepted in the cities that still
uses 2000 1X technology.

Hape Fren Browzer. Hape Fren Browzer is a QWERTY phone which offers GSM and CDMA
services in one handset. This phone costs approximately Rp. 799.000 before tax and is intended for the
medium level segment. This bundling program is suitable for the end users who need to have
convenient mobile communications services that are affordable.

Hape Fren Starberry. This handset bundling program offers a stylish and handy QWERTY phone. The
bundling package is offered in an affordable price at Rp. 599,000 (before VAT). The high demand for
stylish QWERTY phone in the Indonesian telecommunication market is one of the reasons for Fren to
bring Starberry to the CDMA market. This bundling program is segmented for youth and women
segment.
Competition
The market for cellular services in Indonesia has grown significantly over last few years as has
competition. A total of 11 cellular operators service approximately 143 million subscribers primarily in the larger
cities of Indonesia.
We compete for subscribers primarily with Telkomsel, Indosat and XL Axiata, which currently dominate
the market with approximately 80% of the Indonesian wireless market as of December 31, 2009. We compete
primarily on the basis of pricing, availability, distribution coverage, value-added features, service quality, network
coverage, quality of data services and brand. We believe that as the market for wireless services in Indonesia
develops, subscribers will place increasing value on value-added features and service quality.
The following table sets forth information on the key operators in the wireless market in Indonesia as of
September 30, 2010.
Operator
Telkomsel ............
Indosat ..................
XL Axiata .............
Mobile-8 ..............
Wireless
system
GSM 900/1800
GSM 900/1800
GSM 900/1800
CDMA800
Licensed
coverage
Nationwide
Nationwide
Nationwide
Nationwide
Hutchison .............
NTS .....................
Bakrie ......................
TelkornFlexi ........
GSM1800
GSM1800
CDMA800
CDMA800
Nationwide
Nationwide
Nationwide
Nationwide
Current coverage
Nationwide
Nationwide
Nationwide
Java, Bali, selected areas of Sumatera and
Sulawesi and limited cities in Kalimantan
Java and Bali
Limited cities in Java and Sumatera
Limited cities in West Java and Banten
Nationwide
In addition to competition for subscribers, we also compete with other operators for access to various
distribution channels. Most GSM operators and GSM handset distributors already have mature product distribution
channels, while we had to establish distribution channels for our CDMA products, which was a new technology in
the wireless market. To address this, we adopted a strategy of initially sourcing CDMA handsets directly and using a
multi-channel distribution approach.
We also compete with fixed wireless CDMA based fixed wireless phone services, which are currently
offered by Telkom primarily in Java, PT Bakrie Telecom Tbk in Greater Jakarta and West Java, and Indosat in
Surabaya. Since December 2002, Telkom, the majority shareholder of Telkomsel, has operated TelkomFlexi, a
CDMA fixed wireless service. We also compete with fixed wireless services provided by PT Bakrie Telecom Tbk
and Indosat in certain cities. Fixed wireless services charge subscribers at PSTN tariff rates that are substantially
lower than tariffs for wireless services, and offer subscribers the ability to use a wireless handset with limited
97
mobility (within the same area code), although certain operators allow their subscribers to have up to two additional
temporary telephone numbers assigned for use in different cities. Fixed wireless operators pay lower regulatory fees
than those applied to wireless services, although fixed wireless subscribers generally have all features offered by
wireless services except international roaming and roaming to other area codes. In June 2010, we were awarded an
in-principle license by the Government that will allow us to provide fixed wireless services to consumers, which we
plan to launch in the near future as a complimentary product in selected cities.
In addition, in 2005, the Government awarded licenses to provide wireless telecommunication services in
the 1800 MHz and 1900 MHz spectrums to PT Hutchison CP Telecommunications, a joint venture between
Hutchison Telecommunications International Limited and the CP Group of Indonesia, and PT Natrindo Telepon
Seluler, a subsidiary of Maxis Communications Berhad, a Malaysian wireless operator. PT Hutchison CP
Telecommunications recently launched GSM and high-speed third generation, or 3G, wireless services on the
WCDMA platform under the brand “3”, and we expect PT Natrindo Telepon Seluler to commence offering similar
services in the near future. These 3G operators have to pay an upfront fee to obtain the 3G license.
We believe that we have a number of competitive strengths, including the CDMA2000 1X platform that we
use, that will enable us to compete successfully in the Indonesian wireless telecommunications market. For a
description of these competitive strengths, see “— Competitive Strengths” and for a description of the risks we face
from our competitors, see “Risk Factors — Risks Relating to our Business and the Wireless Telecommunications
Industry — The Indonesian wireless telecommunications industry is highly competitive”.
We also face competition from new and emerging technologies. See “Risk Factors — Risks Relating to our
Business and the Wireless Telecommunications Industry — Our failure to react to rapid technological changes could
adversely affect our business.”
Billing, Payment and Credit Management
Our new subscriber information management system has various features which work to attract customers
including;

regional charging, which allows each region to have a different tariff plan, and

The Friends and Family program and Closed User Group program, which attracts subscribers with
attractive tariffs, and enhances customer retention through the granting of bonuses based on usage, call
type and longevity.
We bill our direct postpaid subscribers on a monthly basis and send bills to them through courier services.
Our subscribers may settle their bills through several available payment methods, namely through fifteen major
banks, through their ATMs, Internet banking, telephone banking and SMS banking, credit card auto debit, or cash or
credit card at our Mobile-8 Centers.
We have four billing cycles for our commercial subscribers, depending on which week of the month a
subscriber’s account is activated, and an additional cycle for our employees. Each bill is due 20 days after the billing
date, which bills for the period up to the day before the billing date. We send an SMS to our postpaid subscribers on
the billing date to inform our subscriber of the billed amount and the subscriber typically receives the physical bill
eight or more days before the due date. If the subscriber has not settled the payment by the due date, we will send a
SMS notification on the due date to remind the subscriber of the due date. Increasing levels of call barring and
additional steps are implemented if the bill remains outstanding. Three days after the due date, we will block
outgoing calls and send a SMS notifying that outgoing calls have been blocked. Seven to ten days after the due date,
we will send a third SMS notifying that both outgoing and incoming calls have been blocked. We will generate a
second invoice 10 days after the due date, and additional invoices every 30 days after that up until the seventh
invoice 160 days after the due date. We deactivate the number 120 days after the due date and write off the amount
of outstanding bill at that point. We do not charge late payment fees or interest, although we will charge a
reactivation fee of Rp. 15,000 to replace the RUIM card if a number has been deactivated. We also have field
collectors in Jakarta, Surabaya and Bandung that visit subscribers to collect outstanding bills, and engage external
98
debt collection agencies if the bill is overdue by more than 60 days in areas outside Jakarta, Surabaya and Bandung.
For subscribers with bills that have been outstanding for more than four months, upon request, we will discuss with
a subscriber an installment payment plan for the settlement of the outstanding bill.
Revenue Assurance and Management of Fraud
Our revenue assurance division historically monitors areas where there are revenue leakages or
opportunities lost and attempts to eliminate or minimize them. The revenue assurance division checks for
completeness of data in our subscriber information management system and for interconnection billings, and verifies
subscribers’ usage and tariff calculations.
Our revenue assurance division focuses on means to increase revenues by being proactively involved in
new product development activities together with our marketing team. Our revenue assurance division also
considers ways to minimize costs such as interconnection cost. We expect that our revenue assurance division will
continue to primarily focus on revenue management activities.
We have implemented fraud prevention measures to evaluate subscribers who sign up for postpaid plans.
We verify data in subscribers’ application forms, including address, home and office telephone numbers and other
personal information. We have not experienced material revenue loss associated with fraud in the past.
Quality Standards
We benchmark our wireless quality standards against generally accepted industry standards and parameters
set out in our modern licenses, including availability of network and successful call ratio. Since our commercial
launch, we have met or exceeded the required regulatory minimum parameters.
Information Technology
Our core information technology systems, other than our network-related systems, comprise an Oracle
finance system, a subscriber information management and billing system from Huawei Technology Co. Ltd. and a
voucher management system. Our essential databases are backed up daily. We have also implemented a supplychain management and collection system. The benefits of our subscriber information management system include
the ability to track usage, allowing us to award usage bonuses based on activation period, call types and top up
voucher purchases. The subscriber information management system allows us to offer friends and family calling
plans, group calling plans, regional calling tariffs, automatically adjust rates based on usage and charge based on
duration of data usage.
Information technology plays a key role in providing cellular services and Fixed Wireless Access (FWA)
services. For this, we strive to improve and enhance its information technology systems to support day-to-day
operations effectively and efficiently. Some achievements in the field of IT for the year 2009 include:

Network Availability 99.59%: A measurement of how IT has delivered its services to users and
partners by ensuring that network equipment is available in a timely manner to meet the business
requirements of the company;

Improving Employee Productivity through IT: Improving employee productivity through IT by
allowing only legitimate e-mails and browsing for users by blocking 43% of total traffic;

Implementing a Single “Sign on” Messaging System: Integration of messaging system authentication
to Windows AD so that users only need to remember a single username to access corporate resources;

SMS Alerting System: Implementation of an automatic SMS alert system for all network equipment
and user problems, hence improving response and resolution time of all IT related incidents;
99

Developing the www.mobile-8.com infrastructure in-house: Developing the www.mobile-8.com
infrastructure in-house to improve the availability, security and performance of the system;

Improving IT Service for Users: Improving IT Services for Users by resolving 98.98% of user
problems with only 1.77% tickets pending;

Migration of Main Domain Controller: Migration of the main domain controller from old to new
machine to improve IT System performance; and

E-Leave Development: E-Leave is a system that Human Capital Management (HCM) division
requested from IT. It is an application that will manage employee leave that is currently done manually
by HCM.
Intellectual Property
We are the registered owners of the “Mobile-8,” “Fren,” “Hore”, “Kartu Hore” “Fren Smartbuy,” “Fren
Rame” and “Fren Sip” trademarks. We are also, in cooperation with PT Samsung Electronics Indonesia, the
registered copyright owner of “SAMSUNG SCH N-356” a computer program for handsets. We are also the
registered owners of the “V,” “Spirit lebih nyata iritnya”, “Komselindo Sahabat Komunikasi Anda”, “Komselindo”,
“Manis Manado dan Minahasa” and “Terasa Terima Saja” trademarks, and the “Komselindo” and “Metrosel” art
logos, all registered under the name of our Former Subsidiaries.
Employees
As of December 31, 2009, we had 777 employees, and an additional 904 outsourced personnel, primarily
Fren Ambassadors and certain junior customer service personnel, in our call center and Mobile-8 Centers, and 102
daily rated workers which included production personnel. The table below sets out the number of employees, by
category, as of the dates indicated:
Director..........................................................
Senior Vice President ....................................
Vice President................................................
Senior Manager .............................................
Manager.........................................................
Supervisor......................................................
Staff ...............................................................
Total..............................................................
As of December 31,
2008
2007
5
5
7
9
21
23
34
31
100
105
253
288
437
404
865
857
2009
5
7
13
38
93
267
354
777
As of September
30,
2010
5
6
13
45
119
273
378
839
From 2008 to 2009 we experienced an employee reduction of 10.2% mainly due to employee resignation.
We largely use outsourced personnel at our Mobile-8 Centers for personnel below the level of supervisors
as well as at our call center.
We actively look to recruit talented employees. In 2009, our recruitment department continued its
recruitment in and outside Java. Strategies used in recent years for employee recruitment include referrals,
advertisements, internal opportunity system, job fair and campus recruitment. We also have a commitment to
advance our existing employees through internal promotion aimed at discovering outstanding talent within the
company through our own assessment mechanism.
100
We place great emphasis on the value of education as well as on the training and development of our
employees. We send our employees on various types of internal and external training programs and courses,
covering function programs such as sales and technical courses, including leadership courses and cross training
programs. We also develop and maintain our outsourced personnel such as Fren Ambassador and Customer Service
with training and development program and career path system. We had 230 training programs involving 4,053
participants in 2009. We also place great value on talent and have a management development program to encourage
and develop the talents and skills of our employees.
Under the mandatory social security plan for all employees, we contribute 4.2 % of the gross basic salary of
each employee and each employee contributes 2.0% of the employee’s gross basic salary to the social security plan.
None of our employees belong to unions and we do not have a collective labor agreement.
Insurance
As of December 31, 2009, our telecommunication infrastructure was insured with PT Tugu Pratama
Indonesia, PT Asuransi Sinar Mas, PT Asuransi Central Asia, PT Asuransi Adira Dinamika, PT Asuransi MSIG
Indonesia, PT Asuransi Ekspor Indonesia dan PT Asuransi Wahana Tata, third parties, against fire, theft and other
possible risks with total coverage of US$228.9 million, while other property excluding land, were insured with PT
Asuransi Sinar Mas, third parties, with total coverage of Rp. 2.2 billion. We also cover our tower assets against
public liability risk with PT Zurich Insurance Indonesia, third party, for a total of US$5.0 million. Our management
believes that the insurance coverage is adequate to cover possible losses on the assets insured.
We also maintain a property all risk insurance relating to our warehouse and packaging facilities with a
coverage of Rp. 104.8 billion. We have life, critical illness and hospitalization insurance for our permanent, full time
and active employees.
We maintain a directors and officers liability insurance against claims arising from wrongful acts
committed or allegedly committed by our officers and directors in their capacity as such with a maximum coverage
of US$10.0 million.
Properties
As of December 31, 2009, we own several parcels of land located in Jakarta, West Java, Central Java, East
Java, Medan, Banda Aceh, Padang, Ujung, Pandang, Palu, Kendari, Manado, Bali, Jambi, Palembang, Lampung,
Mataram, Balikpapan, Benjarmasin and Pantianak measuring 63,775 square meters of land which we utilize for
offices, our base transceiver stations and other outlets. As of September 30, 2010, we also leased from other parties
approximately 9,079 square meters of space for office use and Mobile-8 Centers. We also lease space at a number of
locations for our base transceiver stations. For a description of such leasing arrangements, see “Description of Other
Material Indebtedness and Other Material Obligations.” Our head office at MNC Tower, Jalan Kebon Sirih No.1719, Central Jakarta, Indonesia is leased from PT Usaha Gedung Bimantara, a subsidiary of Global Mediacom, under
three leases for an aggregate of Rp. 324.5 million per month. The leases are for an aggregate area of approximately
3,091 square meters and are renewable annually.
Legal Proceedings
From time to time we may be involved in legal proceedings concerning matters that arise in the ordinary
course of our business. However, other than as disclosed below, we are not currently involved in any litigation or
regulatory actions the outcome of which could have a material adverse effect on our results of operations or
financial condition, nor is management aware of any such litigation or regulatory actions threatened against us.
A former employee has filed two civil lawsuits against the Company, one of which is pending on appeal at
the High Court of Jakarta. On July 27, 2005, our former employee brought a civil lawsuit against us, which was
referred to the Jakarta Branch of the National Labor Dispute Settlement Committee (Panitia Penyelesaian
Perselisihan Perburuhan Pusat, or “P4D”) and was subsequently referred to the national branch of P4D. On
December 6, 2005, P4D upheld the initial decision of the Jakarta branch of P4D and allowed the termination of
101
employment to stand and ordered us to pay compensation. We have since paid the amount ordered by P4D. On May
16, 2007, the same former employee brought another civil lawsuit against us. On September 25, 2007, the District
Court for Central Jakarta held that the claim by the former employee cannot stand. However, we were ordered to pay
costs for the whole proceeding. We have not made any of the payments ordered by the District Court for Central
Jakarta and have filed an appeal on this case.
On June 18, 2008, we were one of the six telecommunication companies who were found liable for SMS
price fixing by the KPPU. We were ordered to pay a fine of Rp. 5.0 billion. We filed an appeal to the Indonesian
Supreme Court on July 14, 2008, seeking, amongst others, the setting aside of the finding of the KPPU and our
release from paying the Rp. 5.0 billion fine. The decision from the appeal is currently still pending. Please see “Risk
Factors - We are one of six Indonesian telecommunication operators to have been found liable for SMS price
fixing.”
On January 20, 2009, we were summoned to the Central Jakarta Indonesia court of justice (“Court”) over a
civil case placed by DB Trustee (Hong Kong) Limited, the trustee under the 2007 Guaranteed Secured Notes, for all
amounts outstanding under the Existing Notes, amounting to US$100.0 million, plus US$3.5 million in interest, due
to our failure to conduct an offer to purchase as a consequence of PT Global Mediacom Tbk.’s ownership falling
below 51% in 2008. On December 3, 2009, DB Trustee (Hong Kong) limited withdrew the case through a letter sent
to the Court. On June 29, 2009, we were summoned to the Central Jakarta Indonesia Court of Justice over a civil
case placed by PT Global Mediacom Tbk (“MCOM”), because MCOM was not aware and did not provide any
consent for the change control clause under the indenture. On December 3, 2009, MCOM withdrew the case through
a letter sent to the Central Jakarta Indonesia Court.
On August 8, 2007, we entered into a swap agreement with Lehman Brothers Special Financing (“LBSF”)
with a notional amount of US$100.0 million. On August 26, 2008, the Company received a settlement claim from
LBSF for the period from March 3, 2008 to September 2, 2008 in the amount of US$2,047,576.03. On June 29,
2009, we received a notice of early termination date from LBSF demanding a termination payment of
US$2,560,472. On February 23, 2010, we received a further notice from LBSF demanding a settlement amount of
US$5,416,997 based on missed payments and interest. We did not make any of the payments demanded by LBSF
and filed a lawsuit in the District Court for Central Jakarta against LBSF. In November 2010, the District Court for
Central Jakarta ordered LBSF to pay damages in the amount of US$ 4.25 million. The ruling also stated that (i) the
swap agreement and (ii) LBSF’s claim for US$2,560,472 are not valid.
Acquisition and Issuance of Mandatory Convertible Bonds
On March 3, 2010 we announced a strategic alliance with another cellular operator in Indonesia, PT Smart
Telecom (“Smart Telecom”), to introduce a joint cellular service between Mobile-8’s Fren and Smart Telecom’s
SMART. See “Business-History”. We intend to build upon our existing relations with Smart Telecom. As part of
our restructuring process, we propose to acquire (the “Acquisition”) ordinary shares representing approximately
99.94% of the issued share capital of Smart Telecom (the “Target Shares”). Smart Telecom’s revenues for the three
years ending December 31, 2007, 2008, 2009 and the eight-months ending August 31, 2010 were Rp. 10.8 billion,
344.7 billion, Rp. 1,596.8 billion, and Rp 918.4 billion, respectively. Net income (loss) for the same periods were
Rp. (72.8) billion, Rp. (301.0) billion, Rp. 68.7 billion and Rp. (415.9) billion, respectively. See the financial
statements of Smart Telecom set forth below. Smart Telecom is currently owned and controlled by the Sinar Mas
Group, which currently owns less than 3% of the issued and outstanding shares of the Company through its
subsidiary, PT Gerbangmas Tunggal Sejahtera. Following the consummation of the Acquisition, we will provide
you with a supplemental disclosure which will include additional information regarding Smart Telecom.
We plan to purchase the Target Shares from PT Bali Media Telekomunikasi, PT Global Nusa Data and PT
Wahana Inti Nusantara (the “Sellers”). The purchase price for the Target Shares will be Rp. 87.3 per share, which
equates to a total aggregate purchase price of Rp. 3,775,371,942,000. The consideration for the Acquisition will be
funded by way of the issuance of (i) 75,684,753,658 Series B shares in the capital of the Company, and (ii) warrants
to subscribe for ordinary shares in the capital of the Company, by way of a rights issue (the “Rights Issue”). The
Rights Issue will be underwritten by the Sellers. The funds received by the Company as a result of the Rights Issue
will be applied in payment of the purchase price for the Acquisition to the Sellers. The existing shareholders of the
Company will have a pre-emptive right to acquire the Series B shares of the Company issued pursuant to the Rights
102
Issue. If the existing shareholders do not exercise their pre-emption right, the Sellers (who will act as standby buyers
in the Rights Issue) will have the right to acquire 29.4%, 32.8% and 37.8%, respectively, of any shares not acquired
by the existing shareholders.
The following table sets forth the anticipated (as of January 14, 2011) allocation of ordinary shares in the
Company issued pursuant to the Rights Issue:
Shareholder
Existing Shareholders
PT Bali Media Telekomunikasi
PT Global Nusa Data
PT Wahana Inti Nusantara
Total
Shares
297,497,472
22,166,388,758
24,707,934,856
28,512,932,572
75,684,753,658
% of Shares Issued Pursuant to Rights Issue
0.39%
29.29%
32.65%
37.67%
100%
The Sellers (who will act as standby buyers in the Rights Issue) are owned and controlled by the Sinar Mas
Group. Accordingly, following the Acquisition, it is anticipated that the Sinar Mas Group will indirectly own and
control approximately 63.58% the Company. The following table sets forth the anticipated (as of January 14, 2011)
shareholding of the Company following the Rights Issue:
Shareholder
PT Global Nusa Data
Total
Shares
43,178,377,732
22,166,388,758
24,707,934,856
28,512,932,572
118,565,633,918
% of Outstanding Shares
36.42%
18.70%
20.84%
24.04%
100%
On January 11, 2011, we conducted a private placement of mandatory convertible bonds in the aggregate
principal amount of Rp. 900.0 billion (the “MCBs”). The MCBs are issued to PT Valensia Persada. The MCBs
mature on January 11, 2016 and have an interest rate of 6% per annum compounded quarterly. The principal amount
of the MCBs and the accrued and capitalized interest will be converted into ordinary shares in the capital of the
Company on the maturity date at a conversation rate of Rp. 50 per share and include an option to subscribe for
future issuances of mandatory convertible bonds (the “Option MCBs”) subject to their further offering by the
Company (such transactions, collectively, the “MCB Programme”). The holders of the MCBs have the option to
acquire up to Rp. 3,800.0 billion in aggregate principal amount of the Option MCBs. The option to acquire the
Option MCBs expires on January 11, 2016. The Option MCBs (if issued) will have a maturity date of five years
from the date of issuance and an interest rate of 6% per annum compounded quarterly. The principal amount of the
Option MCBs and the accrued and capitalized interest will be converted into ordinary shares in the capital of the
Company on the maturity date. On a fully diluted basis, the pro forma MCBs and the Option MCBs will represent
71.7% percent of the Company’s capitalization as of September 30, 2010.
The funds received by the Company from the issuance of the MCBs will be applied to repay up to Rp. 700
billion in short term debt, for working capital purposes and capital expenditures of the Company and its subsidiaries.
The following table sets forth the shareholding of the Company and the pro forma shareholding after giving
effect to the conversion of the MCBs and the Option MCBs, each as of September 30, 2010*:
Shareholding as of
September 30, 2010
Shares
Existing
Shareholders
MCBs
37,036,013,434
-
%
Pro Forma as of September
30, 2010 Post MCB Issuance
Shares
%
30, 2010 Post Option MCB
Issuance
Shares
%
100.0%
37,036,013,434
67.3%
37,036,013,434
28.3%
0.0%
18,000,000,000
32.7%
18,000,000,000
13.7%
103
Option MCBs
Total
-
0.0%
-
0.0%
76,000,000,000
58.0%
37,036,013,434
100.0% 55,036,013,434
100.0% 131,036,013,434
100.0%
* This table does not take into account 5,844,866,826 shares issued by the Company in November 2010.
On December 20, 2010, at an extraordinary shareholder meeting of the Company, a majority of the
shareholders approved (i) the Rights Issue, (ii) the Acquisition and (iii) the MCB Programme.
Similar to us, Smart Telecom is a licensed mobile telephony operator providing CDMA technology in
Indonesia. Smart Telecom’s key lines of business are mobile, mobile data, and 3G. Smart Telecom has
approximately 3.4 million subscribers and 1.9% share of mobile subscriber market in Indonesia.
We believe that because of compatible technological platforms, a business combination of our Company
with Smart Telecom will provide certain benefits and synergies, including the following:
Area of Synergy
Sales


Product Strategy





Technical

Marketing



Operational costs




Synergistic Advantages
The products of both companies would be available at joint sales outlets and
galleries
Utilizing a combined pool of human resources in order to increase efficiency and
increase sales
Benchmarking and optimizing distribution costs
Harmonizing the product types to eliminate head to head competition and to
reduce the costs incurred for promotion
Implement tariff innovations which would increase the community of customers
for both companies (on-net traffic)
Potential for roaming for customers from both companies which would widen the
network that may be used by the customers of both companies
Plans to purchase handsets and other products jointly in order to obtain the best
possible prices and terms and conditions
Operation of dual band CDMA utilizing two networks with different frequencies
which would improve coverage quality
Cooperation to develop technology and other products for the future
Utilizing joint branding to improve brand awareness and brand recognition
Plans to conduct joint media advertising in order to achieve more favorable tariffs
and terms and conditions
Reducing the burden on the network operations
Increased efficiency due to the related infrastructure use and towers
Plans to increase capital expenditure and operational costs in order to increase
bargaining power with suppliers
Increased synergy in the customer service centre and call center and other
supporting venues
The following is a summary of the financial information for Smart Telecom for the audited financial
statements for the three years ended December 31, 2007, 2008 and 2009, and for the financial statements for the
eight-months ended August 31, 2009 (unaudited) and 2010 (audited).
Income Statement
2007
(Rp.)
Operating Revenues
Operating revenues .................
Discount..................................
Operating revenues - net .........
10.8
(6.1)
4.8
As of August 31,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
344.7
(145.2)
199.5
1,596.8
(1,050.8)
546.1
104
169.9
(111.8)
58.1
929.6
(636.8)
292.8
918.4
(476.6)
441.7
101.6
(52.7)
48.9
Income Statement
2007
(Rp.)
Operating Expenses
telecommunication
services ..............................
Depreciation and
amortization .......................
Sales and marketing ................
Personnel.................................
Interconnection .......................
General and administration .....
Total operating expenses.........
Operating income (loss) .......
Gain (loss) on disposal of
property and equipment .....
exchange - net ....................
Interest income (expense) net ......................................
Others - net .............................
Others income (expenses) net ......................................
Income (loss) before tax..........
Tax benefit (expense)
Deferred tax .......................
Net Income (loss) ..................
Balance Sheet
As of August 31,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
31.6
207.0
437.7
46.6
31.7
17.9
53.4
1.6
35.3
171.6
(166.8)
101.9
64.4
89.3
49.2
60.1
572.0
(372.4)
309.8
110.8
96.5
121.0
79.0
1,154.7
(608.7)
33.0
11.8
10.3
12.9
8.4
122.8
(64.8)
0.4
0.3
273.1
327.4
36.2
150.3
62.9
58.2
79.6
46.7
670.9
(378.1)
364.5
149.0
71.1
61.9
50.8
1,024.6
(582.9)
0.3
(0.2)
-
40.3
16.5
7.9
6.8
5.6
113.3
(64.5)
-
0.3
1.9
(20.7)
699.1
(20.7)
571.6
110.9
12.3
4.2
3.5
(6.8)
(12.8)
(13.6)
31.2
(6.8)
(12.8)
(9.4)
26.0
(9.8)
2.2
1.2
0.2
9.6
(157.3)
(40.0)
(412.5)
717.0
108.4
76.3
11.5
584.0
205.9
103.1
(479.8)
84.5
(72.8)
111.5
(301.0)
(39.7)
68.7
(4.2)
7.3
(26.5)
179.4
63.9
(415.9)
As of December 31,
As of August 31,
2008
2009
2009
2009
2010
2007
(Rp.)
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
Assets:
Current Assets
Cash and cash equivalents................
178.2
Related parties ............................
3.1
Third parties - net of allowance
for doubtful accounts of Rp 0.5
in 2010, Rp 0.6 in 2009 and Rp
1.0 in 2008 .................................
1.0
Other accounts receivable ................
23.0
Inventories - net of allowance for
obsolescence of Rp 2.2 in 2008 ..
142.8
Prepaid taxes ....................................
196.4
Prepaid expenses ..............................
41.0
Advances..........................................
822.1
Total current assets........................... 1,407.5
Noncurrent Assets
11.4
(53.1)
0.0
7.1
(46.0)
2010
(US$)
107.0
65.0
6.9
205.4
47.5
5.3
9.2
6.0
0.6
4.8
4.1
0.5
11.7
3.2
26.2
3.9
2.8
0.4
16.2
9.4
82.3
3.9
9.1
0.4
318.3
411.1
53.6
35.4
949.5
239.5
152.2
48.1
36.6
577.7
25.5
16.2
5.1
3.9
61.5
213.7
150.7
67.8
548.8
1,216.9
196.7
164.9
46.9
58.4
604.7
21.8
18.2
5.2
6.5
66.9
105
Balance Sheet
As of December 31,
As of August 31,
2008
2009
2009
2009
2010
2007
(Rp.)
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
121.6
233.1
193.4
20.6
206.7
257.4
Deferred tax assets ...........................
accumulated depreciation of
Rp 393.3 in 2010, Rp 192.8 in
2009 and Rp 56.5 in 2008 ...........
554.8
Intangible asset - net of
accumulated amortization of Rp
405.5 in 2010, Rp 244.6 in
2009 and Rp 76.2 in 2008 ...........
102.7
Long-term advances .........................
Leasehold improvement - net...........
13.2
Others assets.....................................
50.9
Total noncurrent assets.....................
843.3
Total assets....................................... 2,250.8
Current Liabilities
Trade accounts payable ....................
Other accounts payable ....................
Taxes payable...................................
Accrued expenses.............................
Unearned revenues ...........................
Deposits from customers..................
Vendor’s guarantee deposit..............
Current maturities of long-term
debt obligation under capital
lease ............................................
Current portion of bank loans ..........
Total current liabilities .....................
Long-term bank loans - net of
current portion ............................
Vendor’s guarantee deposit..............
Convertible bonds ............................
Defined-benefit post employment
reserve.........................................
Other liabilities.................................
Total noncurrent liabilities ...............
Total liabilities ................................
2010
(US$)
28.5
1,194.3
4,444.0
472.8
4,471.5
4,498.4
497.6
344.4
2,770.6
85.5
4,627.9
5,577.4
478.5
365.0
86.2
5,567.2
6,144.8
50.9
38.8
9.2
592.3
653.7
405.9
76.9
5,161.0
6,377.9
426.3
351.0
25.8
5,558.8
6,163.5
47.2
38.8
2.9
614.8
681.7
0.1
83.9
2.1
34.9
10.1
0.6
-
16.8
79.7
5.1
48.8
55.1
6.6
-
154.4
120.5
3.9
357.9
54.8
22.4
-
16.4
12.8
0.4
38.1
5.8
2.4
-
39.8
234.7
4.0
208.1
59.2
8.3
-
229.3
175.2
6.8
364.9
57.8
26.7
31.2
25.4
19.4
0.8
40.4
6.4
3.0
3.5
1.0
132.7
186.5
398.7
281.9
995.7
30.0
105.9
226.2
780.3
474.4
1,366.3
52.5
151.1
835.4
0.1
-
2,743.0
0.9
118.2
2,395.8
32.4
329.0
254.9
3.4
35.0
2,714.8
34.7
352.1
1,965.4
-
217.4
-
5.6
0.4
841.6
974.2
10.1
2,872.3
3,271.0
16.8
2,774.0
3,769.7
1.8
295.1
401.0
10.0
3,111.7
3,892.0
22.7
1,988.2
3,354.5
2.5
219.9
371.0
410.6
552.5
683.3
72.7
552.5
683.3
75.6
Equity
Capital Stock
Series A - par value of Rp 1,000
per share
Series B - par value of Rp 30 per
share
Authorized:
- Series A - 242,270,227
shares
- Series B - 31,924,324,100
106
Balance Sheet
As of December 31,
As of August 31,
2008
2009
2009
2009
2010
2007
(Rp.)
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
shares
Issued and paid-up:
- Series A - 242,270,277
shares
- Series B - 14,702,074,899
shares in 2010 and 2009 and
10,341,209,899 shares in
2008 .......................................
Additional paid-up capital................
613.1
Advances for stock subscription ......
598.1
Deficit ............................................. (345.3)
Total Shareholders’ Equity ........... 1,276.5
Total Liabilities and Equity........... 2,250.8
1,478.9
921.3
(646.3)
2,306.4
5,577.4
107
2,269.4
(577.6)
2,375.1
6,144.8
241.4
(61.4)
252.7
653.7
1,478.9
921.3
(466.8)
2,485.9
6,377.9
2,269.4
849.9
(993.5)
2,809.1
6,163.5
2010
(US$)
251.0
94.0
(109.9)
310.7
681.7
2007
(Rp.)
Activities
Cash receipt from customers ...........
16.1
Cash paid to contractors,
suppliers, employees and
others .......................................... (1,101.2)
operations.................................... (1,085.1)
Tax received (paid)..........................
Income tax paid ...............................
(4.8)
Interest expense and financial
charges paid ................................
operating activities...................... (1,089.9)
Activities
Proceeds from disposal of
property and equipment ..............
0.7
Acquisition of intangible assets .......
(3.3)
Payment for advances......................
(55.5)
Payment for leasehold
improvement ...............................
(12.9)
equipment ................................... (224.4)
Net cash used in investing
activities...................................... (295.3)
Activities
Proceeds from bank loans................ 614.2
Proceeds from convertible loans......
Prepayment of bank loans................
(0.1)
Received vendor’s guarantee
deposit.........................................
Payment of obligation under
capital lease.................................
(1.4)
Cash receipt for paid-up capital.......
Cash receipt for stock
subscription................................. 598.1
Net cash provided by financing
activities...................................... 1,210.7
and cash equivalents ................... (174.5)
Cash and cash equivalents at the
beginning of the period ............... 352.7
As of August 31,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
363.8
682.9
72.6
351.4
653.8
72.3
(1,425.8)
(840.4)
(89.4)
(595.1)
(1,028.6)
(113.8)
(1,061.9)
(4.6)
-
(157.5)
361.8
2.9
(16.8)
38.5
0.3
(243.7)
330.4
2.3
(374.8)
49.4
0.8
(41.5)
5.5
0.1
(18.4)
(7.4)
(0.8)
(1.9)
(8.1)
(0.9)
(73.0)
(100.8)
(10.7)
(46.6)
(24.8)
(2.7)
(1,157.9)
98.9
10.5
40.3
(357.5)
(39.5)
6.4
(1,666.8)
3.4
(451.7)
0.4
(48.1)
2.3
(427.8)
1.1
(10.0)
0.1
(1.1)
(11.3)
(0.8)
(0.1)
(0.3)
-
-
(663.3)
(101.8)
(10.8)
(99.4)
(48.7)
(5.4)
(2,335.1)
(551.0)
(58.6)
(525.1)
(57.5)
(6.4)
2,144.0
109.5
(451.9)
417.2
262.0
(194.4)
44.4
27.9
(20.7)
417.2
262.0
(122.7)
(135.2)
(15.0)
-
40.2
4.3
40.2
-
-
(1.0)
409.6
-
-
-
-
-
921.3
-
-
-
533.4
59.0
525.0
55.9
596.7
398.2
44.0
(361.6)
72.9
7.8
111.9
(16.9)
(1.9)
178.2
107.0
11.4
107.0
65.0
7.2
3,131.4
108
2007
(Rp.)
changes .......................................
Cash and cash equivalents at the
end of the period .........................
As of August 31,
As of December 31,
2008
2009
2009
2009
2010
2010
(Rp.)
(Rp.)
(US$)
(Rp.)
(Rp.)
(US$)
-
290.4
(114.9)
12.2
(13.4)
(0.6)
-
178.2
107.0
65.0
6.9
205.4
47.5
5.3
Pro-Forma Financials for Mobile-8 and Smart Telecom:
The following table is the pro forma balance sheet of Smart Telecom assuming that the Acquisition took place on
August 31, 2010. The balance sheet of Smart Telecom has been reviewed by Mulyamin Sensi Suryanto, independent
public accountants and takes into account the following assumptions:

The consolidated pro forma balance sheet is prepared based on the audited consolidated financial
statements of the Mobile-8 and Smart Telecom as of August 31, 2010 and is prepared using the going
concern assumption.

The Acquisition is assumed to have taken place on August 31, 2010.

In this pro forma balance sheet, Smart Telecom is treated as a subsidiary of Mobile-8 instead of a
company merged into Mobile-8.

The consolidated pro forma balance sheet is prepared using the purchase method in which any excess
identified between the cost of acquisition and the fair value of the identifiable net assets of the
subsidiary acquired at the date of the transaction is recognized as goodwill and amortized using the
straight line method up to the period of its use.

Asset and liabilities acquired are recognized separately on the acquisition date if there is a high
probability of future economic benefits that will flow to or from the acquirer; and on the basis of
acquired cost or fair value.

The fair value of the assets and liabilities of Smart Telecom as of August 31, 2010 is equivalent to its
book value on August 31, 2010, except the fixed assets amounting to Rp. 4.6 billion which is
determined based on the report by KJPP Suhartanto Budhihardjo dan Rekan No. SBR-PN-1000234
dated October 1, 2010. Any excess identified between the cost of acquisition of Smart Telecom and the
fair value of its assets after deduction of deferred tax amounting to Rp. 0.9 billion will be recognized as
goodwill.

The MCB Programme as recognized by PSAK No. 55 (2006 Revision), whereby the components of
the financial instruments consisting of the liability and the equity should be separated. All MCBs must
be converted into shares in the fifth year so that the MCBs are presented as a component of
shareholders’ equity.

Issuance of warrants and MCB options are not taken into account for purposes of this pro-forma
consolidated balance sheet.

This pro-forma consolidated balance sheet eliminates transactions between the Company, its
subsidiaries and Smart Telecom.

The issuance of the MCBs has been conducted and a portion of the Rp. 900 billion in proceeds have
been used to repay Rp. 700 billion in short term debt.
109
Mobile-8
(historical)
Assets:
Current Assets
Cash and cash equivalents………………
Short-term investments ………………...
Related Parties…………………...
Third parties -net of allowance
for doubtful accounts…………….
Other accounts receivable………………
Inventories - net of allowance for decline
in value………………………………….
Prepaid taxes……………………………
Prepaid expenses………………………..
Other current assets……………………..
Total Current Assets…………………….
Noncurrent Assets
Deferred tax assets - net………………...
accumulated depreciation ………………
Goodwill and other intangible asset…….
Deferred charges-net …………………...
Other assets……………………………..
Total Noncurrent Assets………………...
Total Assets
Current Liabilities
Related Parties ...………………...
Third Parties……………………..
Short-term loan …………………………
Other accounts payable ………………...
Taxes payable…………………………...
Accrued expenses ………………………
Unearned revenue……………………….
Deposits from customers………………..
Suppliers Deposits ……………………...
Current portion of long-term liabilities
Finance Lease Payable…………
Bank Loans …………………….
Total Current Liabilities...……………
Long-term liabilities-net of current
portion
Finance Lease Payable………...
Bank Loans…………………….
Bonds Payable…………………………..
Post-employment benefits obligation…...
Total Noncurrent Liabilities…………….
Total Liabilities………………………
Adjustment
Pro Forma
Rp.
(in billions)
Smart
Telecom
(historical)
Rp.
(in billions)
Rp.
(in billions)
Rp.
(in billions)
31.6
26.0
47.5
-
208.9
-
288.0
26.0
4.1
-
4.1
10.0
1.8
184.5
82.3
3.9
196.7
(49.1)
(0.9)
-
41.1
63.1
20.8
378.9
164.9
46.9
58.4
604.7
158.8
206.0
110.0
79.3
1,142.5
166.5
3,521.2
257.4
4,498.4
(29.9)
119.8
394.0
8,139.4
164.1
126.4
330.9
4,309.1
4,688.1
426.3
376.7
5,558.8
6,163.5
488.6
726.0
58.8
8.6
645.0
13.6
24.4
-
229.3
175.2
6.8
364.9
57.8
26.7
31.2
(342.3)
(700.0)
-
375.6
26.0
234.0
15.3
1,009.9
71.4
51.1
31.2
91.2
2,056.2
474.4
1,366.3
(1,042.3)
91.2
474.4
2,380.2
1,033.9
1,513.4
59.4
2,606.7
4,662.9
1,965.4
22.7
1,988.2
3,354.5
(1,042.3)
1,033.9
1,965.4
1,513.4
82.1
4,594.9
6,975.1
110
878.2
968.1
1,126.9
43.2
4.8
381.2
1,468.6
126.4
707.7
10,836.0
11,978.5
Mobile-8
(historical)
Minority Interests……………………
Equity
Issued and paid-up capital ……………...
Additional paid-up capital………………
Advance payment of capital…………….
Mandatory convertible
bonds…………….
Deficit…………………………………...
Total Equity…………………………..
Total Liabilities and Equity…………...
Rp.
(in billions)
Smart
Telecom
(historical)
Rp.
(in billions)
-
-
Adjustment
Pro Forma
Rp.
(in billions)
Rp.
(in billions)
1.8
1.8
2,863.6
726.7
-
683.3
2,269.4
849.9
-
3,393.1
(2,269.4)
(849.9)
900.0
6,940.1
726.7
900.0
(3,652.5)
25.2
4,688.1
(993.5)
2,809.1
6,163.5
993.5
2,167.4
1,125.1
(3,565.1)
5,001.6
11,978.5
111
MANAGEMENT
In accordance with Indonesian law, we have a Board of Commissioners and a Board of Directors. The two
boards are separate and no individual may be a member of both boards.
The following table sets forth certain information concerning our Commissioners and Directors.
Name
Commissioners
Henry Cratien Suryanaga
Age
Sarwono Kusumaatamadja
67
Reynold M. Batubara
Directors:
Merza Fachys
Anthony Chandra Kartawiria
54
53
53
Agus Heryanto Lukas
54
Yopie Widjaya
L. Juliana Dotulong
39
49
48
Position
Date Joined
President Commissioner/
Independent Commissioner
Vice-President
Commissioner/ Independent
Commissioner
November 2009
President Director
Director/ Chief Financial
Officer
Director/ Chief Network
Development Officer
Director
Director
May 2009
March 2008
November 2009
November 2009
December 2002
November 2009
April 2010
Board of Commissioners
The principal functions of our Board of Commissioners are to give advice and recommendations to, and
supervise the policies of, our Board of Directors. The Board of Commissioners consists of a maximum of seven
members, including a President Commissioner. Each Commissioner serves a term that ends on the close of the fifth
annual general meeting of shareholders following the date of the Commissioner’s appointment. In carrying out its
supervisory activities, the Board of Commissioners represents the interests of the shareholders and is accountable to
the shareholders. Shareholders at a general meeting of shareholders have the power to nominate, elect and remove
members of the Board of Commissioners by means of shareholder resolution.
Henry Cratein Suryanaga, 48, was appointed as President Commissioner in November 2009. Mr. Suryanga
graduated from Atmajaya Catholic University in 1968 and has a Masters of Business degree from New York
University, USA. Mr. Suryanga was also licensed as an investment manager by BAPEPAM-LK in 1998. He began
his career as an audit manager at an insurance company before leaving in 1987 to serve as General Manager,
President, Director, and Commissioner at several national and multi-national companies.
Sarwono Kusumaatmadja, 66, has served as Vice-President Commissioner since November 2009.
Graduating from Bandung Institute of technology in 1974, Mr. Kusumaatmadja has extensive experience as a
statesman. Throughout his career, Mr. Kusumaatmadja has focused on the improvement of Indonesian education,
social welfare, and the maintenance of the environment. He was Minister for the Empowerment of State Apparatus
from 1988 to 1993, Minister of the Environment from 1993 to 1998 and the Minister of Maritime and Fisheries from
1999 to 2001. Mr. Kusumaatmadja is currently the Chairman of the Indonesian Maritime Council and Chairman of
the MAPPEL Advisory Board.
Reynold M. Batubara, 53, has served as Commissioner since November 2009. Mr. Batubara spent most of
his career as an audit manager, serving last with Ernst & Young in both their Amsterdam and Indonesian offices. He
has also served at the head of an Internal Audit Unit and as a member of a Risk Management Committee for several
international banks. Mr. Batubara graduated with an economics degree from the University of Indonesia, Indonesia.
112
Board of Directors
We are managed on a day-to-day basis by our Board of Directors. Under our Articles of Association, the
Board of Directors consists of a maximum of eight members, including a President Director. Members of the Board
of Directors are nominated, elected and removed by shareholders resolutions in a general meeting of shareholders.
Each Director serves a term that ends on the close of the fifth annual general meeting of shareholders following the
date of the Director’s appointment.
Certain information with respect to our Directors is set out below:
Merza Fachys, 53, has served as President Director since June 2009. Mr. Fahys received a degree in
electrical engineering from the Bandung Institute of technology in 1980 and an MBA from IPMI Business School in
2006. Prior to joining our Company, he had 27 years of experience in engineering, information technology and
telecommunications. During his career, Mr. Fachys served as an Account Manager, Regional Manager and General
Manager with companies such as Indostat, Telkom and INTI. From May of 2007 to March 2008, Mr. Fachys was
Mobile-8’s Director and Chief Corporate Affairs Officer.
Anthony Chandra Kartawiria, 53, has served as Director and Chief Financial Officer since March 2008. A
professional with an extensive career in banking, finance and capital markets, Mr. Kartawiria has held the position
of Director in Finance Company and Bank . He has received a degree in commerce in 1985. from the University of
Carleton, Ottawa, Ontario, Canada.
Agus Heryanto Lukas, 53, has served as Director and Chief Network Development Officer since 2003.
Prior to joining our Company, Mr. Lukas was employed by Metrosel. He joined Metrosel in 1995 as Vice President
of Operations and as Vice President of the Network Engineering Department in 1997 before being promoted to
Operation Director in 1999 and to President Director in 2001. He obtained his engineering degree from Universitas
Kristen Satya Wacana in 1981.
Yopie Widjaya, 38, has served as Director of the Company since November 2009. Graduating with a
degree in economics from Atmajaya Catholic University (Indonesia) Mr. Widjaya has had an extensive career in
finance, information technology and telecommunications. He served as Manager, Senior Executive, and Director at
Prasetyo, Utomo & Co., PT Multipolar Tbk. and Share Star Indonesia prior to joining our Company in 2009.
Juliana Dotulong, 49, has served as Director of the Company since April 2010. Ms. Dotulong has served in
various capacities since joining the Company in May 2003. Prior to joining our Company, Ms. Dotulong was
employed by XL Axiata, PT Bank Pos Nusantara and PT Bank Rajawali International. Ms. Dotulong received her
degree from the California Polytechnic State University, in San Luis Obispo, California.
Audit Committee
Reynold M. Batubara, 54, has served as the Chairman of the Audit Committee since November 2009. Mr.
Batubara spent most of his career as an audit manager, serving last with Ernst & Young in both their Amsterdam and
Indonesian offices. He has also served at the head of an Internal Audit Unit and as a member of a Risk Management
Committee for several international banks. Mr. Batubara graduated with an economics degree from the University of
Indonesia, Indonesia.
Prof. Dr. Wahjudi Prakarsa, 72, has served as an Audit Committee Member since October 2006. A
distinguished serving professor of the Faculty of Economics of the University of Indonesia, he is the Founder and
Dean of the Graduate Accountancy Program and Graduate Business School of the University of Indonesia. He
graduated with a PhD degree in Accountancy from the University of Missouri, USA in 1980.
Andreas Bahana, 67, has served as an Audit Committee Member since October 2006. He has previously
held positions in several companies, including as Consultant of PT Optik Melawai Prima Jakarta, as representative
officer of PT Pastika Bhinna Ekapaksa in Jakarta, a project officer at PT Ciputra Development in Jakarta and a
113
Director at PT LF Astra and PT Graha Kartika Kencana, Jakarta. He obtained a degree in Electrical Engineering
from the Bandung Institute of Tecnology, Bandung, Indonesia in 1972, and an MBA degree in 1986.
Corporate Secretary
Chris Taufik, is a law graduate of the Faculty of Law Trisakti University – Jakarta – Indonesia. He joined the
Company in 2005 as Vice President of Legal. In May 2008, he was appointed to serve concurrently as the Corporate
Secretary. He has previously held positions in several telecommunication companies with over 10 years of
experience in the industry.
Compensation of Commissioners and Directors
Total compensation for Directors and Commissioners was Rp. 6,787.5 million for the year ended December 31,
2009 and Rp. 5,852.6 million for the nine-months ended September 30, 2010.
114
SHAREHOLDERS
Our authorized capital is Rp. 2,023.59 billion of series A and Rp. 5,976.41 billion of series B, comprising
of 20.23 billion shares of series A and 119.53 billion shares of series B of Rp. 100 and Rp. 50 per share,
respectively, of which 20,235,872,427 shares of series A and 16,800,141,007 shares of series B were issued and
outstanding as of September 30, 2010. The following table sets forth information with respect to the ownership of
the ordinary shares of our Company as of September 30, 2010*:
Shareholder
Series A
Series B
Total
%
Jerash Investment Ltd.
6,475,479,000
6,475,479,000
17.48%
Qualcomm Incorporated
1,013,051,863
1,013,051,863
2.74%
Corporate United Investments
4,186,863,458
4,186,863,458
11.30%
Limited
PT ETrading Securities
404,611,912
3,549,404,382
3,954,016,294
10.68%
Public
12,342,729,652
9,063,873,167
21,406,602,819
57.80%
Total
20,235,872,427
16,800,141,007
37,036,013,434
100.00%
Public
On November 29, 2006, we completed an initial public offering of shares and listing on the Indonesian
Stock Exchange. We issued a total of 3.9 billion ordinary shares in the offering at a price of Rp. 225 per share,
resulting in total gross offering proceeds of Rp. 877.5 billion. In 2007 and 2009 we issued an additional 16.3 billion
and 12.8 billion shares, respectively.
The Sellers (who will act as standby buyers in the Rights Issue) are owned and controlled by the Sinar Mas
Group. Accordingly, following the Acquisition, it is anticipated that the Sinar Mas Group will indirectly own and
control approximately 63.58% the Company. The following table sets forth the anticipated (as of January 14, 2011)
shareholding of the Company following the Rights Issue:
Shareholder
PT Global Nusa Data
Total
Shares
43,178,377,732
22,166,388,758
24,707,934,856
28,512,932,572
118,565,633,918
% of Outstanding Shares
36.42%
18.70%
20.84%
24.04%
100%
The following table sets forth the shareholding of the Company and the pro forma shareholding after giving
effect to the conversion of the MCBs and the Option MCBs, each as of September 30, 2010*:
Shareholding as of
September 30, 2010
Shares
Existing
Shareholders
37,036,013,434
30, 2010 Post MCB Issuance
%
Shares
%
Pro Forma as of September 30,
2010 Post Option MCB Issuance
Shares
%
100.0%
37,036,013,434
67.3%
37,036,013,434
28.3%
MCBs
-
0.0%
18,000,000,000
32.7%
18,000,000,000
13.7%
Option MCBs
-
0.0%
-
0.0%
76,000,000,000
58.0%
Total
37,036,013,434
100.0% 55,036,013,434
100.0% 131,036,013,434
100.0%
115
THE ISSUER
The Issuer was incorporated via a Notarial Deed No. 11 dated December 2, 2002 of Imas Fatimah, S.H.,
public notary in Jakarta under the laws of the Republic of Indonesia. The correspondence address of the Issuer is
18th Floor of MNC Tower, Jl. Kebon Sirih No. 17 - 19 Jakarta 10340, and its telephone number at that address is
+62 21 392 0218. The Issuer has had its Deed of Establishment approved by the by the Minister of Justice and
Human Rights of the Republic of Indonesia in his Decision Letter No. C-24156.HT.01.01.TH.2002 dated December
16, 2002, as stated in Supplement No. 1772 to State Gazette of the Republic of Indonesia No. 18, dated March 3,
2003.
The principal objects of the Issuer are set out in Article 3 of its Articles of Association and are, among
other things, is to conduct business in the area of telecommunication, with the following scope of activities:
a.
Offer telecommunication services in the Republic of Indonesia;
b.
Provide multimedia products and related services including but not limited to direct and indirect sales
of voice services, data/image and mobile commercial services;
c.
Develop, lease and own a wireless telecommunications network in 800 MHZ band based exclusively
on Code Division Multiple Access (CDMA) technology, specifically CDMA 2000 1X and 1X EVDO
technology;
d.
Trading telecommunication goods, equipment and/or products, including but not limited to import of
such telecommunication goods, equipment and/or products;
e.
Distribute and sell telecommunication goods, equipment and/or products; and
f.
Provide after sales services for telecommunication goods, equipment and/or products.
On March 4, 2003, the Issuer obtained the approval from the Chairman of the Capital Investment
Coordinating Board (BKPM) in his Letter No. 21/V/PMA/2003 with regard to the change of the Issuer’s legal status
from Domestic Capital Investment Company to become a Foreign Capital Investment Company.
The authorized share capital of the Issuer consists of Rp. 2,023.59 billion of series A and Rp. 5,976.41
billion of series B divided into 20.23 billion shares of series A and 119.53 billion shares of series B of Rp. 100 and
Rp. 50 nominal value each, respectively. 20,235,872,427 shares of series A and 16,800,141,007shares of series B
have been issued and paid up upon incorporation of the Issuer.
As of the date of this Exchange Offer Memorandum, the Issuer has outstanding indebtedness see
“Description of Other Material Indebtedness and Other Material Obligations” in the nature of borrowings (including
loan capital issued, or created but unused), term loans, liabilities under acceptances or acceptance credits,
mortgages, charges or guarantees or other contingent liabilities, except as otherwise described in this Exchange
Offer Memorandum. As of the date of this Exchange Offer Memorandum, the Issuer has one subsidiary and has not
carried on any business other than as described in this Exchange Offer Memorandum in connection with this
Exchange Offer.
The financial statements for the Issuer are included in this Exchange Offer Memorandum.
116
RELATED PARTY TRANSACTIONS
We are a party to a number of agreements with our shareholders, subsidiaries and third party companies
that have similar shareholders or management. We believe these agreements and transactions have been entered into
on arm’s-length terms or on terms that we believe have been at least as favorable to us as similar transactions with
non-related parties would have been.
The following sets forth a summary of material transactions with our related parties:
Licensing Agreement with QUALCOM

We entered into a contract with QUALCOMM in 2003 for the license of “BREW”, a software
application that delivers mobile content on the BREW platform to mobile handsets with such
capability. For such licenses, we paid a one time fee of US$300,000 to QUALCOMM.
Fund Management

We entered into a Fund Management Contract on December 15, 2006 with PT Bhakti Asset
Management (“BAM”), a related party, where we appointed BAM as our fund manager. On December
2006, we placed funds amounting to Rp. 100 billion in our investment account managed by BAM. In
2007, we placed additional funds amounting to US$26.3 million and Rp. 350 billion and withdrew
funds amounting to US$25 million. As of September 30, 2010, the net asset value of the fund
amounted to Rp. 26.0 billion.
Other Transactions

We engaged Bsec to perform underwriting activities in relation to the issuance of the Rupiah Bonds
payable.

We have entered into a space rental agreement, advertising, and operation and maintenance
transactions with related parties. Payables from these transactions are interest free and have no definite
terms of payment.

We have entered into agreements with related parties regarding telecommunication services for their
customers. The details of revenue from telecommunication services, trade accounts receivable,
interconnection charges and discount and trade accounts payable to related parties are set forth in the
Notes to our consolidated financial statements described below.
Change in Ownership

On November 11, 2009, PT Global Mediacom Tbk sold all of its shares in the Issuer. Following to the
change of the Issuer’s shareholders, the Issuer is no longer affiliated to the companies within the
Global Mediacom group and Bhakti Investama.
Issuance of Commercial Paper by PT Sinar Mas Sekuritas

On November 25, 2009, the Company signed an agreement with PT Sinar Mas Sekuritas (“Sinar Mas
Sekuritas”) to arrange the issuance of commercial paper on a best effort basis with maximum amount
of Rp. 200.0 billion. The loan issuance will be made in several stages, based on withdrawal requests to
Sinar Mas Sekuritas. The commercial loan will mature on November 30, 2011 and bears a fixed
interest rate of 16% per annum. The interest is payable at the end of February, May, August, and
November 2011. As of September 30, 2010, the Company has issued the maximum amount allowed
under the agreement. The proceeds of the MCB Programme will be used to repay this obligation in
full.
117

On March 22, 2010, the Company signed an agreement with Sinar Mas Sekuritas to arrange the
issuance of commercial paper on a best effort basis with maximum amount of Rp. 100.0 billion. The
loan issuance will be made in several stages, based on withdrawal requests to Sinar Mas Sekuritas. The
commercial loan will mature on February 28, 2011 and bears a fixed interest rate of 16% per annum.
The interest is payable at the end of, May, August, and November 2010 and at the end of February
2011. As of September 30, 2010, the Company has issued the maximum amount allowed under the
agreement.

On May 7, 2010, the Company signed an agreement with Sinar Mas Sekuritas
to arrange the issuance of commercial paper on a best effort basis with maximum amount of
Rp. 300.0 billion. The loan issuance will be made in several stages, based on withdrawal
requests to Sinar Mas Sekuritas. The commercial loan will mature on May 31, 2011 and bears a fixed
interest rate of 16% per annum. The interest is payable at the end of May, August and November 2010
and at the end of February and May 2011. As of September 30, 2010, the Company has issued the
maximum amount allowed under the agreement. The proceeds of the MCB Programme will be used to
repay this obligation in full.

On July 7, 2010, the Company signed an agreement with Sinar Mas Sekuritas to arrange the issuance
of commercial paper on a best effort basis with maximum amount of Rp. 200.0 billion. The loan
issuance will be made in several stages, based on withdrawal requests to Sinar Mas Sekuritas. The
commercial loan will mature on May 31, 2011 and bears a fixed interest rate of 16% per annum. The
interest is payable at the end of August and November 2010 and at the end of February, May and
August 2011. As of September 30, 2010, the Company has issued Rp. 126.0 billion from the maximum
amount allowed under the agreement. The proceeds of the MCB Programme will be used to repay this
obligation in full.

On December 21, 2010, the Company signed an agreement with Sinar Mas Sekuritas to arrange the
issuance of commercial paper on a best effort basis with maximum amount of Rp. 50.0 billion. The
loan issuance will be made in several stages, based on withdrawal requests to Sinar Mas Sekuritas. The
commercial loan will mature on November 30, 2011 and bears a fixed interest rate of 16.0% per
annum. The interest is payable at the end of February, May, August and November 2011. As of
September 30, 2010, the Company has not issued any amount from the maximum amount allowed
under the agreement.

The above commercial papers are secured by property of the Company such as land, towers,
telecommunication infrastructure and other supporting equipment.
See the notes to our consolidated financial statements or amounts of accounts payable and other
information relating to additional transactions with our related parties.
118
DESCRIPTION OF OTHER MATERIAL INDEBTEDNESS AND OTHER MATERIAL OBLIGATIONS
The following is a summary of the terms of our current material indebtedness and other material
obligations as of the date of this Exchange Offer Memorandum. The following summary does not purport to be
complete. Please refer to our financial statements and the notes thereto included elsewhere in this Exchange Offer
Memorandum for additional information with respect to our indebtedness and other obligations.
Rupiah Bonds
In March 2007, we issued secured Rupiah-denominated bonds (the “Rupiah Bonds”) in the principal
amount of Rp. 675.0 billion pursuant to a trust deed dated February 22, 2007 between the Company, as issuer, and
PT Bank Permata Tbk, as trustee. Interest on the Rupiah Bonds is payable quarterly in arrears on June 15,
September 15, December 15 and March 15 of each year. Interest payments on the bonds commenced on June 15,
2007. The Company is allowed to buy back, either as treasury bonds or early redemption, a portion or the entire
bonds prior to the maturity date, after the first anniversary of the bonds issuance (March 15, 2007). Commencing
March 15, 2008, the Company will be permitted to undertake a tender offer to repurchase all or part of the
outstanding bonds, provided that the Company is not otherwise in default under the trust deed.
The Rupiah Bonds are secured by fiducia security over certain existing and future telecommunication
equipment owned by the Company holding a value of not less than 130% of the principal amount of the bonds.
Based on the latest report from Pefindo released on March 16, 2009, the bonds have idD (default) rating.
The Company is required to fulfill certain general and financial covenants in accordance with the bonds
conditions. On March 16, 2007, the bonds were listed in the Indonesia Stock Exchange.
The costs incurred in relation to the issuance of the Rupiah Bonds totaling to Rp. 11.2 billion were recorded
in our financial statements as debt issuance cost and amortized over the term of the Rupiah Bonds. Unamortized
bond issuance costs amounting to Rp. 4.4 billion and Rp. 7.1 billion as of December 31, 2009 and 2008,
respectively, are presented as deduction of the outstanding face value of the bonds in our financial statements.
Restructuring of Bonds
Based on the Bondholders’ Meeting dated June 29, 2009 as stated in Notarial Deed No. 246 of Sutjipto
S.H., notary public in Jakarta, and the Bondholders Meeting dated August 18 2010 as stated in Notarial Deed No. 71
of Linda Herawati, notary public in Jakarta, the bondholders agreed to restructure the outstanding Rupiah Bonds of
the Company on the following terms:
1.
The maturity date of the Rupiah Bonds was extended to June 15, 2017.
2.
Interest on the Rupiah Bonds is payable as follows:
a.
12.375% for 9 quarters starting in June 15, 2007;
b.
5% for 8 quarters starting in September 15, 2009;
c.
8% for 12 quarters starting in September 15, 2011; and
d.
18% for 12 quarters starting in September 15, 2014.
3.
Outstanding interest due on March 15 and June 15, 2009 including penalty to be paid in 4 equal payments
and the last payment date is March 15, 2010.
4.
The Company is required to maintain a sinking fund in the amount of the next interest payment due.
119
5.
The Company is required to fulfill certain general and financial covenants. One clause requires a capital
injection in 2011 if the Company fails to have positive EBITDA in the first quarter of 2011.
At an Extraordinary Stockholders’ General Meeting held on October 30, 2009, the shareholders of the
Company approved a debt-to-equity conversion of the Rupiah Bonds. On December 9, 2009, the Company has
entered into agreement with a portion of our bondholders to execute the debt-to-equity conversion. As of December
31, 2009, the Company had converted bonds with face value of Rp. 68.5 billion and the related interest and penalties
totaling to Rp. 2.5 billion into the Company’s Series B shares.
On February 19, 2009, the Company and PT Bank Permata Tbk (Permata), as trustee, entered into
Amendment of Fiduciary Over the Company’s Equipment as stated in Notarial Deed No.104 of Aulia Taufani, SH.,
substitute of Sutjipto, SH., notary public in Jakarta, concerning the Company’s obligation to increase the guarantee
to 130% of the total outstanding bonds since the rating of the bonds decreased. The latest amendment of the Deed of
Trustee Agreement was executed as stated on the Notarial Deed No. 73, dated July 17, 2009 of Aulia Taufani, SH.,
substitute of Sutjipto, S.H., notary in Jakarta, to accommodate Bondholders’ Meeting resolution on June 29, 2009.
Currently, the Company is in the process of renewing the Fiduciary Guarantee to maintain 130% level and to lower
the fiduciary amount as a result of debt-to-equity conversion on December 9, 2009.
On September 15, 2010, the Company defaulted on the payment of the outstanding interest and penalties
totaling Rp. 7.6 billion on the Rupiah Bonds. Consequently, Indonesia Stock Exchange suspended the trading of the
Company’s stock. Based on the Indonesia Stock Exchange’s announcement No. Peng-UPT-0006/BEI.PPJ/03-2010,
the suspension of the Company’s stock transactions has been revoked. On December 23, 2010, the Indonesian Stock
Exchange resumed trading in stock of the Company.
Based on the Bondholders’ Meeting dated November 23, 2010, the bondholders agreed to the following
terms:
1.
The interest rate on the Rupiah Bond starting on September 15, 2014 shall be reduced from 18.0% to a
floating rate in accordance with the Bank of Indonesia rate which shall not be lower than 8.0% and not
higher than 10.0%.
2.
An optional debt to equity conversion of the Rupiah Bonds with conversion rate at Rp. 50 per share.
3.
Outstanding interest due on September 15, 2010 (including penalties) have to be paid at the latest
December 15, 2010. On December 22, 2010, the Company paid the outstanding interest and penalties due
on the Rupiah Bonds.
Issuance of Commercial Paper by PT Sinar Mas Sekuritas
On November 25, 2009, the Company signed an agreement with PT Sinar Mas Sekuritas (“Sinar Mas
Sekuritas”) to arrange the issuance of commercial paper on a best effort basis with maximum amount of Rp. 200.0
billion. The loan issuance will be made in several stages, based on withdrawal requests to Sinar Mas Sekuritas. The
commercial loan will mature on November 30, 2011 and bears a fixed interest rate of 16% per annum. The interest
is payable at the end of February, May, August, and November 2011. As of September 30, 2010, the Company has
issued the maximum amount allowed under the agreement. The proceeds of the MCB Programme will be used to
repay this obligation in full.
On March 22, 2010, the Company signed an agreement with Sinar Mas Sekuritas to arrange the issuance of
commercial paper on a best effort basis with maximum amount of Rp. 100.0 billion. The loan issuance will be made
in several stages, based on withdrawal requests to Sinar Mas Sekuritas. The commercial loan will mature on
February 28, 2011 and bears a fixed interest rate of 16% per annum. The interest is payable at the end of, May,
August, and November 2010 and at the end of February 2011. As of September 30, 2010, the Company has issued
the maximum amount allowed under the agreement.
120
On May 7, 2010, the Company signed an agreement with Sinar Mas Sekuritas to arrange the issuance of
in several stages, based on withdrawal requests to Sinar Mas Sekuritas. The commercial loan will mature on May
31, 2011 and bears a fixed interest rate of 16% per annum. The interest is payable at the end of May, August and
November 2010 and at the end of February and May 2011. As of September 30, 2010, the Company has issued the
maximum amount allowed under the agreement. The proceeds of the MCB Programme will be used to repay this
obligation in full.
On July 7, 2010, the Company signed an agreement with Sinar Mas Sekuritas to arrange the issuance of
in several stages, based on withdrawal requests to Sinar Mas Sekuritas. The commercial loan will mature on May
31, 2011 and bears a fixed interest rate of 16% per annum. The interest is payable at the end of August and
November 2010 and at the end of February, May and August 2011. As of September 30, 2010, the Company has
issued Rp. 126.0 billion from the maximum amount allowed under the agreement. The proceeds of the MCB
Programme will be used to repay this obligation in full.
On December 21, 2010, the Company signed an agreement with Sinar Mas Sekuritas to arrange the
issuance of commercial paper on a best effort basis with maximum amount of Rp. 50.0 billion. The loan issuance
will be made in several stages, based on withdrawal requests to Sinar Mas Sekuritas. The commercial loan will
mature on November 30, 2011 and bears a fixed interest rate of 16.0% per annum. The interest is payable at the end
of February, May, August and November 2011. As of September 30, 2010, the Company has not issued any amount
from the maximum amount allowed under the agreement.
The above commercial papers are secured by property of the Company such as land, towers,
telecommunication infrastructure and other supporting equipment.
Guaranteed Senior Notes - US$ 100 million
On August 15, 2007, the Company’s wholly owned subsidiary Mobile-8 B.V., issued US$100.0 million
principal amount 11.25% Guaranteed Senior Notes due on March 1, 2013 (the “2007 Guaranteed Secured Notes”).
The 2007 Guaranteed Secured Notes are listed on the Singapore Stock Exchange.
Deutsche Bank Trustees (Hong Kong) Limited serves as Trustee and Collateral Agent for the 2007
Guaranteed Secured Notes. The 2007 Guaranteed Secured Notes bear interest at 11.25% per annum, payable on
March 1 and September 1 of each year, starting from March 1, 2008.
At any time on or after August 15, 2010, Mobile-8 B.V. may redeem the 2007 Guaranteed Secured Notes,
in whole or in part, at a redemption price equal to the percentage of determined principal amount already set, plus
accrued and unpaid interest, if any, on the redemption date, if redeemed during the 12 month period commencing on
August 15 of any year set forth as follows: year 2010 at 105.625%, year 2011 at 102.813% and year 2012 and years
there after at 100%. At any time prior to August 15, 2010, the Company may at its option redeem the 2007
Guaranteed Secured Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of
the 2007 Guaranteed Secured Notes plus the applicable premium as of, and accrued and unpaid interest, if any, to,
the redemption date.
The 2007 Guaranteed Secured Notes are guaranteed by the Company and secured by a pledge of the
Company’s shares in Mobile-8 B.V. and an assignment by Mobile-8 B.V. of all of its interest and rights under an
intercompany loan. The intercompany loan represents the loan in U.S. Dollars made on the original issue date by
Mobile-8 B.V. to the Company in the amount equal to the amount of the gross proceeds received by Mobile-8 B.V.
from the offering of the 2007 Guaranteed Secured Notes.
Based on the latest report from Standard & Poor’s released on December 2, 2008, the 2007 Guaranteed
Secured Notes have a “D” (Default) rating, while the Moody’s has withdrawn its rating on February 20, 2009.
121
The costs incurred in relation to the issuance of the 2007 Guaranteed Secured Notes totaling to Rp. 40.6
billion were recorded as notes issuance cost in our financial statements and amortized over the term of the 2007
Guaranteed Secured Notes. Unamortized notes issuance costs amounting to Rp. 22.7 billion and Rp. 29.8 billion as
of December 31, 2009 and 2008, respectively, are presented as in our financial statements deduction of the
outstanding face value of the 2007 Guaranteed Secured Notes.
As of September 30, 2010, the accrued interest on 2007 Guaranteed Secured Notes amounted to US$23.4
million or equivalent to Rp. 209.2 billion.
On January 20, 2009, the Company was summoned to the Central Jakarta Indonesia court of justice
(“Court”) over a civil case placed by DB Trustee (Hong Kong) Limited due to the Company’s failure to conduct an
offer to purchase the 2007 Guaranteed Secured Notes following PT Global Mediacom Tbk.’s ownership falling
below 51% in 2008. On December 3, 2009, DB Trustee (Hong Kong) limited withdrew the case through a letter sent
to the Court. See “Business.”
Finance Leases
The Company has entered into lease agreements with several tower providers (lessor) with lease terms
ranging from 11 to 12 years. The Company has options to extend the leases for additional 10 years. The Company’s
obligations under the finance leases are secured by the lessors’ title to the leased towers.
For the year ended December 31, 2009, we recorded finance charges of Rp. 123.5 billion under these
finance leases. The total of future minimum lease payments under these finance leases as at December 31, 2009 was
Rp. 1,223.3 billion.
Mandatory Convertible Bonds
On January 11, 2011, we conducted a private placement of mandatory convertible bonds in the aggregate
principal amount of Rp. 900.0 billion (the “MCBs”). The MCBs are issued to PT Valensia Persada. The MCBs
mature on January 11, 2016 and have an interest rate of 6% per annum compounded quarterly. The principal amount
of the MCBs and accrued and capitalized interest will be converted into ordinary shares in the capital of the
Company on the maturity date at a conversation rate of Rp. 50 per share and include an option to subscribe for
future issuances of mandatory convertible bonds (the “Option MCBs”) subject to their further offering by the
Company. The holders of the MCBs have the option to acquire up to Rp. 3,800.0 billion in aggregate principal
amount of the Option MCBs. The option to acquire the Option MCBs expires on January 11, 2016. The Option
MCBs (if issued) will have a maturity date of five years from the date of issuance and an interest rate of 6% per
annum compounded quarterly. The principal amount of the Option MCBs and accrued and capitalized interest will
be converted into ordinary shares with capital of the Company on the maturity date at a conversion rate of Rp. 50
per share. On a fully diluted basis, the pro forma MCBs and the Option MCBs will represent 71.7% percent of the
Company’s capitalization as of September 30, 2010.
122
DESCRIPTION OF THE NEW NOTES
The following contains basic information about the New Notes we are offering. It does not contain all the
information that is important to you. For a more complete understanding of the New Notes, please refer to the
Scheme documents that accompany this Exchange Offer Memorandum (the “Scheme Documents”). Capitalized
terms used in this “Description of the New Notes” section and not otherwise defined shall have the meaning
ascribed to such term in the Scheme Documents.
Securities Offered ..........................................US$100,000,000 aggregate principal amount of restructuring notes due
2025.
Issuer .............................................................PT Mobile-8 Telecom Tbk
Issue Date ......................................................To be issued on the Settlement Date
Term ..............................................................The New Notes will have a term of 15 years.
Maturity Date.................................................The New Notes will mature in 2025.
Interest ...........................................................The New Notes will bear interest at a rate of 1% per annum, from and
including the Settlement Date to and including 2015.
The New Notes will bear interest at a rate of 1.5% per annum, from and
The New Notes will bear interest at a rate of 2% per annum, from and
Interest will be payable semi-annually in arrears on each Interest
Payment Date.
Interest Payment Dates ..................................June 30 and December 31 in each year
Interest Period................................................Each period from (and including) an Interest Payment Date to (but
excluding) the next Interest Payment Date
Calculation of Interest ...................................The amount of interest payable in respect of the New Notes for any
Interest Period will be calculated by applying the applicable rate of
interest to the outstanding principal amount of the New Notes (after
accounting for any redemptions made on the first day of such Interest
Period), dividing the product by two and rounding the resulting figure
to the nearest cent. If interest is required to be calculated for any period
other than a scheduled Interest Period, it will be calculated on the basis
of a 360 day year consisting of twelve 30 day months and in the case of
an incomplete month, the actual number of calendar days elapsed.
Margin Ratchet ..............................................In the event there are sufficient funds standing to the credit of the
Margin Ratchet Account (as defined below) on any Interest Payment
Date falling after December 31, 2015 the interest rate applicable to the
New Notes for the preceding Interest Period shall be increased by an
additional 3% per annum and such interest shall be paid in cash on the
relevant Interest Payment Date.
123
Redemptions ..................................................On each date set out below (each a “Redemption Date”) the Issuer will
redeem the Dollar amount of the New Notes set out opposite such
Redemption Date (“Redemption Amount”) on a pro rata basis.
Date
Amount
December 31, 2016
December 31, 2017
December 31, 2018
December 31, 2019
December 31, 2020
December 31, 2021
December 31, 2022
December 31, 2023
December 31, 2024
December 31, 2025
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
US$10,000,000
In the event that New Notes are redeemed as a result of Early
Redemption or Debt Buy-backs, the Redemption Amounts shall be
reduced by the aggregate principal amount of New Notes redeemed in
inverse chronological order.
Early Redemption ..........................................In the event that the Issuer raises any additional financial indebtedness
with a principal amount in excess of US$10,000,000 (other than
pursuant to the Rights Issue and the MCB Programme, or otherwise in
connection with the Acquisition), it shall apply the Net Refinancing
Amount in redemption of the New Notes on a pro rata basis within 14
days of receipt of the proceeds of such additional financial
indebtedness, unless otherwise agreed by the holders of 51% in
outstanding principal amount of the New Notes.
For this purpose, “Net Refinancing Amount” means the net proceeds of
any additional financial indebtedness raised by the Issuer after
deducting all fees, costs and expenses incurred in connection with the
raising of such financial indebtedness less such amount as is
determined by the board of directors of the Issuer as reasonably
necessary to meet the Issuer’s working capital requirements and other
financial obligations falling due during the term of such financial
financial indebtedness shall be set out in an officer’s certificate signed
by a director of the Issuer.
Redemptions Premium ..................................A redemption premium of 25% shall apply to each Early Redemption
of New Notes and each redemption of the New Notes on a Redemption
Date, such that for each US$1.00 of principal amount of the New Notes
redeemed, the Issuer shall pay US$1.25.
Shares ............................................................Ordinary listed shares in the capital of the Issuer
Conversion Price ...........................................The average of the last dealt prices of a Share for the 25 consecutive
trading days on which the Shares are traded on the Stock Exchange
immediately preceding the relevant Redemption Date or Restructuring
Charge Payment Date (as applicable) less the Conversion Discount.
Conversion Discount .....................................20%
124
Optional Conversion......................................The Issuer will (to the extent permitted by applicable laws and
option to settle each obligation to redeem the New Notes on any
Redemption Date by delivering a number of Shares calculated by
converting the relevant US$ Redemption Amount into Rupiah at the
then prevailing exchange rate and dividing the resulting Rupiah amount
by the Conversion Price to the holders of the New Notes on a pro rata
basis.
Transaction Accounts ....................................On or prior to the Settlement Date, the Issuer will establish the
following accounts with a reputable Indonesian bank:




The above accounts will be operated by the Issuer in accordance with
the provisions of the Fiscal Agency Agreement and the terms and
conditions of the New Notes.
Surplus Cash..................................................On each Interest Payment Date falling after December 31, 2015, the
Issuer shall transfer 50% of its Surplus Cash into a Surplus Cash
Account.
For this purpose, “Surplus Cash” means the amount obtained by
deducting the following from the Issuer’s EBITDA for the preceding
Interest Period: (i) finance charges; (ii) principal payments in respect of
outstanding indebtedness; (iii) taxes; (iv) extraordinary or exceptional
cash items; and (v) budgeted capital expenditures.
Cash Waterfall ...............................................On each Cash Waterfall Date falling after December 31, 2015, the
Issuer shall apply the balance standing to the credit of the Surplus Cash
Account as follows:

First, in payment to the Contingency Reserve Account, until such
time as the balance standing to the credit of the Contingency
Reserve Account exceeds US$10,000,000

Second, in payment to the Margin Ratchet Account, until such time
as the balance standing to the credit of the Margin Ratchet Account
is sufficient to fund the payment of additional interest on the
outstanding principal amount of the New Notes on the following
Interest Payment Date in accordance with the Margin Ratchet

For this purpose, “Cash Waterfall Date” means each date falling 20
days after an Interest Payment Date.
Debt Buy-backs .............................................When the balance standing to the credit of the Tender Offer Account
exceeds US$10,000,000, the Issuer will deliver a notice (“Tender Offer
125
Notice”) to each holder of the New Notes, inviting it to tender the New
Notes held by it for redemption.
Any holder of the New Notes wishing to make such tender offer (a
“Bid”) shall be required to deliver a notice (“Bid Notice”) to the Issuer
on or prior to the date falling 30 days from the date of the Tender Offer
Notice.
The Issuer will accept Bids in inverse order of the price offered (with
the offers representing the largest discount to face value being accepted
first). If the Issuer notifies a holder of the New Notes that its Bid has
been accepted, the Issuer shall pay the redemption amount specified in
the relevant Bid Notice to the relevant holder of the New Notes by wire
transfer to such account as is specified in the relevant Bid Notice within
30 days of such notification. On receipt of the relevant redemption
amount, the relevant New Notes shall be treated as redeemed in full.
The Issuer shall be entitled to determine a reserve price for any tender
offer and specify such reserve price in the relevant Tender Offer
Notice.
Certain Covenants..........................................Limited covenant package, covering: (i) compliance with applicable
laws and regulations; (ii) maintenance of business and authorizations;
(iii) maintenance of properties and insurance; (iv) payment of taxes;
and (v) provision of financial statements.
Events of Default ...........................................Customary events of default for an issuance of this kind
Security..........................................................The New Notes will be unsecured obligations of the Issuer.
Tax.................................................................All payments of interest, Redemption Amounts and/or Restructuring
Charges shall be made after deduction of any taxes that the Issuer is
required to withhold by the applicable laws and regulations. The Issuer
will not be required to gross-up payments of interest, Redemption
Amounts and/or Restructuring Charges and such payments will be
received by the holders of the New Notes net of any tax deduction that
the Issuer is required to withhold by applicable laws and regulations.
Amendments..................................................Customary amendment provisions for English law Fiscal Agency
Agreement, including:

Notes, except in relation to certain reserved matters.

Notes in relation to certain reserved matters.
Accelerated Repayment Schedule .................In the event that the financial position of the Issuer improves such that
the holders of the New Notes reasonably believe that the Issuer is
capable of satisfying its financial obligations in respect of the New
Notes prior to the scheduled Redemption Dates, the holders of not less
than 75% in outstanding principal amount of the New Notes may sign
and deliver to the Issuer an accelerated redemption schedule for
126
approval by the Issuer. The Issuer will be entitled, by notice to the
holders of New Notes, to approve or reject such accelerated redemption
schedule within a period of 14 days from the date on which such
accelerated redemption schedule is delivered to the Issuer. In the event
that the Issuer does not reject such accelerated redemption schedule
within such 14 day period it shall be deemed to have accepted such
accelerated redemption schedule and the terms and conditions of the
New Notes shall be amended accordingly.
Any accelerated redemption schedule delivered by the holders of New
Notes to the Issuer must be based on a reasonable assessment of the
ability of the Issuer to service its financial obligations in respect of the
New Notes based on its projected cashflow.
Restructuring Charge.....................................US$24,000,000, payable by the Issuer to the holders of the New Notes
on a pro rata basis. The Restructuring Charge will be payable on the
dates and in the amounts set out below (each a “Restructuring Charge
Payment Date”).
Date
Amount
December 31, 2026
December 31, 2027
US$12,000,000
US$12,000,000
The Issuer will (to the extent permitted by applicable laws and
option to settle each payment in respect of the Restructuring Charge by
delivering a number of Shares calculated by converting the relevant
US$ amount into Rupiah at the then prevailing exchange rate and
dividing the resulting Rupiah amount by the Conversion Price to the
holders of the New Notes on a pro rata basis.
The entitlement of holders of the New Notes to receive payments (or
Shares) in respect of the Restructuring Charge shall be determined by
reference to their holdings of the New Notes on December 31, 2025.
Governing Law ..............................................The New Notes will be governed by English law.
Risk Factors ...................................................An investment in the New Notes is subject to significant risks which
should be carefully considered by potential investors. See “Risk
Factors.”
127
TAXATION
The following summary is based on tax laws Indonesia as in effect on the date of this Exchange Offer
Memorandum, and is subject to changes in Indonesian law, including changes that could have retroactive effect.
The following summary does not take into account or discuss the tax laws of any countries other than Indonesia.
Prospective purchasers in all jurisdictions are advised to consult their own tax advisors as to Indonesian or other
tax consequence of the acquisition, ownership and disposition of the New Notes.
Indonesian Taxation
The following is a summary with respect to taxes imposed by the Government. The summary does not
address any laws other than the tax laws of Indonesia in force and as they are applied in practice as of the date of
this Exchange Offer Memorandum.
General — Taxation of Residence and Non-Residence Resident Taxpayers
Resident taxpayers are subject to income tax in Indonesia on a worldwide income basis, at graduated rates
of maximum 35% (for individuals) and 25% (for corporations). Rates are applied against “taxable income” which is
net income minus allowable marital status exemptions (for individuals) and valid carry forward loss (for
corporations and individuals conducting business). On income derived from sources outside Indonesia, taxes
imposed by foreign authorities can be claimed as tax credit against Indonesian taxes on such offshore income, with
certain limitations.
Non-resident Taxpayers. Non-resident taxpayers are subject to income tax in Indonesia on most income
derived from sources within Indonesia. The mechanism of levy is through withholding at source at a rate of 20%.
Unlike resident taxpayers, the rate is applied against gross receipt. Agreement for the avoidance of double taxation
(“Tax Treaty”) between Indonesia and certain countries may reduce the 20% withholding. Notwithstanding the
afore-mentioned, if such non-resident taxpayer operates in Indonesia through a “permanent establishment”, and the
income derived is effectively connected thereto, the income is subject to tax identical to that of a resident (up to a
maximum rate of 35% for individuals and 25% for corporations).
Non-Residency Test. An individual is treated as a non-resident tax-payer if he or she is not present in
Indonesia. If otherwise present in Indonesia, the non-resident status continues to be retained provided the duration of
presence does not exceed 183 days in any twelve-month period, and while present in Indonesia, he or she does not
demonstrate any intent to reside. A corporation formally established offshore is treated as a non-resident taxpayer.
While possessing a non-resident status, a non-resident taxpayer can be considered as operating through a permanent
establishment if certain conditions are met. Once considered as operating through a permanent establishment, the
non-resident taxpayer is required to fulfill registration and statutory filing requirements (including the maintenance
of books and records). The Income Tax Law of Indonesia defines “permanent establishment” in terms of presence of
physical establishments. Where there are no physical establishments, a “permanent establishment” is also defined as
(among others) furnishing of services conducted by employees of a non-resident, which duration exceeds 60 days in
any twelve months period. Available Tax Treaties generally contain a more relaxed rule on “permanent
establishment” compared to the Indonesian Income Tax Law.
Withholding Tax — Interest
General Rule. Payments (or accruals) of interest in whatever name or form are subject to withholding tax.
The withholding tax rates are:

15% of the gross amount if paid by a resident taxpayer to another resident taxpayer. For the recipient
of the interest, the withholding tax serves as an advance tax to be offset against the 30%/35% income
tax applicable to a resident taxpayer. For the purpose of withholding tax, an interest recipient who is a
128
non-resident operating through a permanent establishment is treated like a resident taxpayer, and is
subject to 15% withholding tax. The withholding tax is waived if the recipient of the interest is an
Indonesian bank or a foreign bank operating through a permanent establishment;

20% of the gross amount if paid by a resident taxpayer to a non-resident taxpayer (not operating
through a permanent establishment). The rate is reduced by virtue of a tax treaty protection, under the
condition that the recipient is the “beneficial owner” of the interest.
Until July 7, 2005, presentation of a certificate of residence issued by the competent authority of the
country in which the interest recipient is a resident is sufficient to claim a treaty-reduced withholding tax rate. On
July 7, 2005, the Indonesian Directorate General of Taxation issued Circular (SE-4/Pj.34/2005) regarding
“beneficial owner”, which is designed to cause the Indonesian withholding party to be selective and discriminative
when applying the treaty-reduced withholding tax rate. The circular states that “special purpose vehicles” in the
form of “conduit companies” and the like do not fall under the definition of “beneficial owner” for purposes of
enjoying a treaty-reduced withholding rate.
Interest on the New Notes. The amount of any payment (or accrual) on the New Notes will be subject to
withholding tax in Indonesia at the rate of 15% (in the case of a resident recipient) and 20% or the relevant reduced
rate under an applicable tax treaty (in the case of an offshore recipient). The requirements and caution regarding
claiming tax treaty relief as discussed above applies.
Payments of principal of the New Notes are not subject to withholding tax in Indonesia. Discount on the
New Notes however, are considered interest and therefore subject to withholding tax.
Tax on Capital Gain — Trading of the New Notes
General Rule. Gain on sales of assets is subject to income tax. For resident taxpayers and non-resident
taxpayers operating through a permanent establishment, the generally applicable graduated rates of (maximum) 30%
for corporations and 35% for individuals is applicable. A different taxation mechanism applies to the gain on sales
of certain assets such as: publicly-listed shares, real property and bonds traded on (or whose transaction is reported
to) an Indonesian stock exchange. For non resident taxpayers, the withholding tax rate of 20% is applied against a
notional capital gain, the percentage of which is prescribed by the Minister of Finance. Tax Treaty between
Indonesia and certain countries may reduce the 20% withholding. To date, no notional capital gain is determined by
the Minister of Finance, except for capital gain on sale of non-listed shares in Indonesian companies.
Trading of the New Notes. With regards to capital gains on the disposal of the New Notes, there is no
mechanism to impose income tax because the Minister of Finance has not determined the notional capital gain
against which the 20% withholding tax is to be applied. However if the gain is derived by a resident taxpayer, or
non-resident taxpayer operating through a permanent establishment, such gain is taxable in Indonesia and subject to
income tax up to a maximum of 35% for individuals and 30% for companies.
Other Indonesian Taxes
There are no Indonesian estates, inheritance, succession, or gift taxes generally applicable to the
acquisition, ownership or disposition of the New Notes. There are no Indonesian stamp duty, issue, registration or
similar taxes or duties payable by holders of the New Notes as a result of their holding of the New Notes.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF
ALL TAX CONSEQUENCES RELATING TO THE OWNERSHIP OF NEW NOTES. PROSPECTIVE
PURCHASERS OF NEW NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS.
129
TRANSFER RESTRICTIONS
The New Notes have not been and will not be registered under the Securities Act and may not be offered or
sold within the United States (as defined in Regulation S under the Securities Act) except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, unless an
appropriate exemption from relevant securities law requirements is available, the New News may not be offered or
sold, directly or indirectly, in or into the United States.
Each recipient of the New Notes resident in the United States will be deemed to:
(1) acknowledge that the New Notes have not been and will not be registered under the Securities Act and may
not be offered or sold within the United States except as set forth below;
(2) (a) acknowledge that the New Notes that it is purchasing will be “restricted securities” as defined in Rule
144(a)(3) of the Securities Act to the same extent and in the same proportion as the New Notes held by the
seller of such the New Notes, and that it is aware of the extent to which such the New Notes are “restricted
securities” and (b) to the extent that such the New Notes are “restricted securities,” agree not to sell or trade
such the New Notes except pursuant to a transaction under Rule 144 of the Securities Act, an offshore
transaction meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, or
pursuant to another exemption from the registration requirements of the Securities Act;
(3) agree that it will inform each person to whom it transfers the New Notes of any restrictions on transfer of
such the New Notes; and
(4) acknowledge that the Issuer and others will rely upon the truth and accuracy of the foregoing
acknowledgements, representations and agreements, and agree that if any of the acknowledgements,
representations or agreements deemed to have been made by it are no longer accurate, it shall promptly
notify the Issuer. If it is acquiring the New Notes as a fiduciary or agent for one or more investor accounts,
it represents that it has sole investment discretion with respect to each such account and it has full power to
make the foregoing acknowledgements, representations and agreements on behalf of such account.
In addition, each recipient of the New Notes who is not a U.S. person as defined in Regulation S under the
Securities Act, and each subsequent purchaser of the New Notes in resales prior to the expiration of a period ending
40 days after the later of the commencement of the offering and the issue date of the New Notes (the “Distribution
Compliance Period”), by accepting delivery of this Exchange Offer Memorandum and the New Notes, will be
deemed to have represented, agreed and acknowledged that:
(1) the New Notes have not been and are not expected to be registered under the Securities Act or with any
securities regulatory authority of any state of the United States and are subject to significant restrictions on
transfer;
(2) each owner purchasing during the Distribution Compliance Period is not a U.S. person as defined in
Regulation S under the Securities Act and is purchasing the New Notes in an offshore transaction meeting
the requirements of Rule 903 or 904 of Regulation S under the Securities Act;
(3) during the Distribution Compliance Period, such owner will not offer, sell, pledge or otherwise transfer any
interest in the New Notes except to a non-U.S. person in an offshore transaction meeting the requirements
of Regulation S under the Securities Act; and
(4) the New Notes will bear a legend to the foregoing effect, unless the Issuer determines otherwise in
compliance with applicable law.
130
INDEPENDENT PUBLIC ACCOUNTANTS
The audited consolidated financial statements of Mobile-8 included in this Exchange Offer Memorandum
as of and for the years ended December 31, 2007, 2008 and 2009 have been audited by Osman Bing Satrio & Rekan,
independent public accountants, the member firm of Deloitte Touche Tohmatsu, Kanaka Puradirejda, Suhartono,
independent public accountants, and Mulyamin Sensi Suryanto, independent public accountants, respectively.
131
SUMMARY OF CERTAIN PRINCIPAL DIFFERENCES BETWEEN
INDONESIAN GAAP AND U.S. GAAP
Our consolidated financial statements included in the Exchange Offer Memorandum are prepared in
conformity with Indonesian GAAP, which differs in certain respects from U.S. GAAP. This summary should not be
taken as an exhaustive list of all the differences between Indonesian GAAP and U.S. GAAP. No attempt has been
made to identify all disclosure, presentation or classification differences that would affect the manner in which
transactions or events are presented in our consolidated financial statements or notes thereto. Those differences that
may have a material effect on our consolidated financial statements are summarized below. Management has not
quantified the effects of the differences discussed below. Accordingly, we cannot assure you that our consolidated
financial statements would not be materially different if prepared in accordance with U.S. GAAP.
Regulatory bodies that promulgate Indonesian GAAP and U.S. GAAP have significant on-going projects
that could affect the differences between Indonesian GAAP and U.S. GAAP described below and the impact of
these differences relative to our consolidated financial statements in the future. In making an investment decision,
investors must rely upon their own examination of us, the terms of the Exchange Offer, and the financial
information. Potential investors should consult their own professional advisers for an understanding of the
differences between Indonesian GAAP and U.S. GAAP, and how those differences might affect the financial
information disclosed in this Exchange Offer Memorandum herein.
Interest Capitalized on Construction in Progress
Under Indonesian GAAP, one of the requirements for capitalizing interest cost into a qualifying asset is that
the interest should be attributable to the qualifying asset (an asset that necessarily takes a substantial period of time
to construct for their intended use or sale, i.e. minimum of 12 months). To the extent that funds are borrowed
specifically for the purpose of financing the construction of the qualifying asset, the amount of interest cost eligible
for capitalization on that asset should be determined based on the actual interest cost incurred on that borrowing
during the period of construction less any investment income on the temporary investment of those borrowings.
Capitalization of interest ceases when the construction of the qualifying asset is substantially completed and the
construction in progress is ready for intended use.
If the funds are borrowed generally but are also used for the purpose of obtaining a qualifying asset, the
amount of borrowing costs eligible for capitalization should be determined by applying a capitalization rate to the
expenditures on that asset. The capitalization rate should be based on the weighted average of the borrowing costs
applicable to the borrowing of the enterprise that are outstanding during the period (not including borrowings made
specifically for the purpose of obtaining a qualifying asset). The amount of borrowing costs capitalized during a
period should not exceed the amount of borrowing costs incurred during that period.
Under U.S. GAAP, there is no minimum limit on the length of the construction period in which the interest
cost could be capitalized. The interest cost need not arise from borrowings that are specifically made to acquire the
qualifying assets. The amount of interest cost to be capitalized in a period is determined by applying an interest rate
to the average amount of accumulated expenditures for the assets during the period. Interest arising from any unused
borrowings is recognized directly as income.
The interest cost eligible for capitalization is the interest cost recognized on borrowings and other
obligations. The amount capitalized is to be an allocation of the interest cost incurred during the period required to
complete the asset. The interest rate for capitalization purposes is to be based on the rates of the enterprise’s
outstanding borrowings. If the enterprise associates a specific new borrowing with the asset, it may apply the rate on
that borrowing to the appropriate portion of the expenditures for the asset. A weighted average of the rates on other
borrowings is to be applied to expenditures not covered by specific new borrowings. Judgment is required in
identifying the borrowings on which the average rate is based.
132
Foreign Exchange Differences Capitalized to Construction in Progress
Under Indonesian GAAP, foreign exchange differences arising from borrowings used to finance the
construction of the qualifying assets are capitalized as part of the cost of the qualifying assets. Capitalization of
foreign exchange gains and losses ceases when the construction of the qualifying asset is substantially completed
and the constructed property is ready for its intended use.
Under U.S. GAAP, such foreign exchange differences are directly credited or charged to the income
statement.
Under Indonesian GAAP, property, plant and equipment built by investors under a revenue-sharing
arrangement are recognized in the accounting records of the party to whom ownership in such properties will be
transferred to at the end of the period of the revenue-sharing arrangements, with a corresponding initial credit to
unearned income. The property, plant and equipment are depreciated over their useful lives, while the unearned
income is amortized over the period of the revenue-sharing arrangement. The company records its share of the
revenue earned, net of the amount due to the investors.
Under U.S. GAAP, revenue-sharing arrangements are recorded in a manner similar to finance leases, where
the property, plant and equipment and obligation under such arrangement are reflected on the consolidated balance
sheet. All revenue generated from the arrangement is recorded as a component of operating revenue, while a portion
of the investors’ share of the revenue from the arrangement is recorded as interest expense with the balance treated
as a reduction of the obligation under the arrangement.
Land Rights
In Indonesia, with the exception of ownership rights granted to individuals, the title of land rests with the
State under the Basic Agrarian Law No.5 of 1960. Land use is granted through land rights whereby the holder of the
right enjoys the full use of the land for a stated period of time, subject to extensions. Generally, the land rights are
freely tradable and may be pledged as security under borrowing agreements. Under Indonesian GAAP, the cost of
acquired land rights is capitalized as land and is not depreciated unless it can be foreseen that an extension or
renewal of the land rights will not be granted.
Under U.S. GAAP, the cost of acquired land rights is amortized over the economic useful life or the
contractual period of land rights, which ranges from 15 to 45 years.
Revenue and Expense Recognition
Under Indonesian GAAP, connection fees are recognized as revenue when connection takes place (for
postpaid service). Sales of starter packs are recognized as revenues upon delivery of the starter packs to the
customers, distributors or agents and the preloaded pulse is initially recorded as unearned revenue and then
proportionately recorded as revenue based on usage of pulse by the customer (for prepaid services).
Under U.S. GAAP, revenue from upfront fees and incremental costs up to, but not exceeding such fees, are
deferred and recognized over the expected term of the customer relationship.
Under Indonesian GAAP, prior service cost is recognized immediately if vested or amortized on a straightline basis over the average period until the benefits become vested. The recognized amount is recorded as a
component of net periodic benefit cost for the year.
Under U.S. GAAP, the prior service cost (vested and non-vested benefits) is deferred and amortized
systematically over the estimated remaining service period for active employees and the amortized amount is
recorded in the consolidated statements of income.
133
Leases
Under the Statement of Financial Accounting Standards (“SFAS”) 30 (1994), “Leases,” a lease is classified
as a finance lease if it satisfies all of the following criteria:

The lessee has the option to purchase the leased asset at the end of the lease period at a price agreed upon at
the inception of the lease agreement;

The sum of periodic lease payments made by the lessee, plus the residual value, is equal to or greater than
the acquisition price of the leased asset and related interest, and

There is a minimum lease period of two years.
SFAS 30 was amended in 2007. The SFAS 30 (Revised 2007) is effective starting January 1, 2008 and
earlier application is encouraged. Under the SFAS 30 (Revised 2007) leases are classified as finance leases
whenever the terms of the lease transfers substantially all the risks and rewards of ownership to the lessee. The
revised SFAS 30 also provides examples of situations that individually or in combination would normally lead to a
lease being classified as a finance lease. All other leases which do not qualify as finance leases are classified as
operating leases.
Under U.S. GAAP, a leased asset is capitalized, and shall be classified as a capital lease if at its inception a
lease meets one or more of the following four criteria. Otherwise, it shall be classified as an operating lease. The
criteria are that:

The lease transfers ownership of the property to the lessee by the end of the lease term.

The lease contains a bargain purchase option.

The lease term is equal to 75% or more of the estimated economic life of the leased property. However, if
the beginning of the lease term falls within the last 25% of the total estimated economic life of the leased
property, including earlier years of use, this criteria shall not be used for purposes of classifying the lease.

The net present value at the beginning of the lease term of the minimum lease payments, excluding that
portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid
by the lessor, including any profit thereon, equals or exceeds 90% of the excess of the underlying fair value
of the leased asset.
Impairment of Long-lived Assets
Under Indonesian GAAP, impairment loss is recognized when the asset’s carrying amount or its cashgenerating unit exceeds its recoverable amount, which is the higher of net selling price or value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects the current market assessment of the value and the risks specific to the asset. In addition, an enterprise
should assess at each balance sheet date whether there is any indication that an impairment loss recognized for an
asset in prior years may no longer exist or may have decreased. If any such indication exists, the enterprise should
estimate the recoverable amount of the asset. The increased carrying amount of an asset due to a reversal of an
impairment loss should not exceed the carrying amount that would have been determined (net of amortization or
depreciation) had no impairment loss been recognized for the asset in prior years.
Under U.S. GAAP, long lived assets held and used by an entity are required to be tested for impairment
whenever events or changes in circumstances indicate the carrying amount of the relevant asset may not be
recoverable. An impairment loss is recognized whenever the sum of the expected future cash flows (undiscounted
and without interest charges) is less than the carrying amount of the asset. An impaired asset is written down to its
estimated fair value based on its quoted market price in an active market or its discounted estimated future cash
flows. Reversals of previously recognized impairment losses are prohibited.
134
Gain (Loss) on Sale or Disposal of Property and Equipment
Under Indonesian GAAP, gain (loss) on sale or disposal of property and equipment is classified as a
component of other income (expenses) which is excluded from the determination of operating income.
Under U.S. GAAP, gain (loss) on sale or disposal of property and equipment is classified as a component
of operating expenses, and therefore included in the determination of operating income.
Under Indonesian GAAP, goodwill is amortized within a period of five years, unless a longer period, not
exceeding 20 years, can be justified.
Under U.S. GAAP, goodwill is not amortized. Rather, it is subjected to a test of impairment.
Business Combinations
Under the purchase method of accounting, on acquisition all identifiable assets and liabilities of the
acquiree are measured at fair value as at the date of the acquisition. Any excess of the cost of acquisition over the
acquirer’s interest in the fair value of the identifiable assets and liabilities acquired is recognized as goodwill. When
the cost of acquisition is less than the interest in the fair value of the identifiable assets and liabilities acquired as of
the date of acquisition, the fair values of the acquired non-monetary assets are reduced proportionately until all the
excess is eliminated. The excess remaining after reducing the fair value of non-monetary assets acquired is
recognized as negative goodwill.
Goodwill is amortized over its useful life on a straight-line basis unless another amortization method is
considered more appropriate under the circumstances. The amortization period should not exceed five years unless a
longer period not exceeding 20 years can be justified. The unamortized goodwill is reviewed for impairment at each
balance sheet date, whenever events or circumstances indicate that its value is impaired.
Negative goodwill is treated as deferred revenue and recognized as income on a systematic basis over a
period of 20 years.
Further, Indonesian GAAP requires transaction among entities under common control that meet certain
conditions to be accounted for in the same manner as pooling of interests where net assets are transferred at book
value. The difference between the transfer price and book value of the net assets, equity or other ownership
instrument transferred is recorded as a “Difference arising from restructuring transactions among entities under
common control”, an account under stockholders’ equity. In July 2004, the IAI revised the existing SFAS No. 38,
Accounting for Restructuring of Entities Under Common Control. The revised standard provides for the realization
of the restructuring difference to gain or loss if the conditions therein are fulfilled.
The SFAS No. 38 (Revised 2004) is effective for the financial statements covering periods beginning on or
after January 1, 2005. Under U.S. GAAP, the excess of the purchase consideration over the sum of the amounts
assigned to assets acquired less liabilities assumed, is accounted for as goodwill. Goodwill arising on acquisition is
recognized in the balance sheet as an asset and is not amortized. It is reviewed for impairment at least annually. If
the fair value of the identifiable net assets acquired exceeds the cost of the acquired business, the excess over cost
(i.e. negative goodwill) should reduce proportionally the fair values assigned and allocated on a pro rata basis for all
of the acquired assets, including purchased research and development assets required to be written off, with the
exception of financial assets (other than equity method investments), assets to be disposed of by sale, deferred
income tax assets, prepaid assets related to pension or other post retirement benefit plans, and any other current
assets. Any remaining “negative goodwill” is recognized as an extraordinary gain.
Under U.S. GAAP, goodwill is reviewed for impairment at least annually (at the same time each year) at
the reporting unit level. A reporting unit, which may differ from a cash generating unit (it is likely to be at a more
aggregated level), is an operating segment or one level below an operating segment. A two-step goodwill
impairment test is performed. First, the fair value of the reporting unit including goodwill is compared to its carrying
amount. If the fair value of the reporting unit is less than the book value, goodwill will be considered to be impaired.
135
Next, the goodwill impairment is measured as the excess of the carrying amount of goodwill over its implied fair
value. The implied fair value of goodwill is determined by a hypothetical purchase price allocation whereby the fair
value determined in the first step is allocated to the various assets and liabilities included in the reporting unit in the
same manner as goodwill is determined in a business combination.
Under U.S. GAAP, restructuring transactions among entities under common control are accounted for
using a method similar to pooling-of-interests method. Any excess of the outstanding shares of the combined entities
at par or stated amounts over the total capital stock of the separate combining entities is deducted first from the
combined other contributed capital and the remaining balance is deducted from the combined retained earnings.
Employee Benefits
Prior to January 1, 2004, Indonesian GAAP provided the accounting standards for retirement benefits, i.e.,
defined benefits and defined contribution pension plans. Current service cost of a defined benefit plan is recognized
as expense in the current period, while past service cost, experience adjustments, effects of changes in actuarial
assumptions and effects of program adjustments with respect to existing employees are recognized as expense or
income systematically over the estimated average remaining working lives of the employees. This standard does not
provide for the 10% corridor approach for actuarial gains or losses and limitation in the asset carrying amount,
which are specifically provided in the revised standard described below.
In 2004, the Indonesian Institute of Accountants issued a revised standard on accounting for employee
benefits, which provides for a comprehensive accounting for employee benefits covering several types of employee
benefit costs and is effective for financial statements covering periods beginning or after July 1, 2004. The revised
standard requires the use of the projected unit credit method to measure obligations and costs for defined benefit
plans. The revised standard also provides, among other things, guidance for the recognition of past service cost in
which past service cost is recognized as an expense on a straight-line basis over the period until the benefits become
vested. To the extent that the benefits are already vested immediately following the introduction of, or changes to, a
defined benefit plan, an enterprise should recognize past service cost immediately. Meanwhile, voluntary
termination benefits are recognized as liabilities when the company is demonstratively committed to providing
termination benefits as a result of an offer made in order to encourage voluntary redundancy.
Under U.S. GAAP, there are various standards for accounting for employee benefit plans depending on the
nature of the plan and the types of benefits provided, i.e. defined benefits or defined contribution retirement plans
(e.g. pension plans), post-retirement plans (e.g. post-retirement health care, life insurance, and other welfare
benefits, such as tuition assistance, day care, legal services, and housing subsidies provided after retirement) or postemployment benefit plans (e.g., benefits to former or inactive employees after employment but before retirement
such as, salary continuation benefits, supplemental unemployment benefits, severance benefits, and disability-related
benefits). The accounting for such plans may result in differences between U.S. GAAP and Indonesian GAAP,
particularly with respect to the recognition of past service cost and minimum liability for a defined benefit plan.
Voluntary termination benefits liabilities are recognized only when the employees have accepted the offer and the
related amount can be reasonably estimated.
Under Indonesian GAAP, transition obligations relating to pension and post-retirement healthcare benefits
are recognized on January 1, 2004, when PSAK 24 (Revised 2004) was adopted.
Under U.S. GAAP, the transition obligations arising from the adoption of SFAS 87 on Employers’
Accounting for Pensions” (“SFAS 87”) and SFAS 106 on Employers’ Accounting for Post-Retirement Benefits
Other Than Pensions (“SFAS 106) are amortized systematically over the estimated remaining service periods for
active employees and for 20 years, respectively. However, different adoption dates resulted in significant differences
in cumulative unrecognized actuarial gains and losses. On September 2006, the Financial Accounting Standards
Board issued SFAS 158 on Employers’ Accounting for Defined Benefit Pension and Other Post-Retirement Plans
(“SFAS 158”), to amend, amongst others, FASB Statements No. 87 and 106. SFAS 158 requires recognition of the
funded status on the balance sheet. The unrecognized actuarial losses, prior service costs and transition obligations
were recognized, net of tax, in the accumulated other comprehensive balance of income. These will continue to be
amortized and reported as a component of net periodic benefit costs in the consolidated statements of income in
accordance with the requirements under SFAS 87, SFAS 106 and SFAS 112.
136
Deferred Taxes
Under Indonesian GAAP, deferred tax assets are only recognized if it is probable that future taxable profits
will be available against which the deferred tax assets can be utilized. The carrying amount is reviewed periodically
and reduced if appropriate. For financial reporting purposes, deferred tax assets and liabilities are presented as noncurrent accounts.
Under U.S. GAAP, deferred tax assets are recognized to the extent that available evidence supports their
realization. The future reversal of taxable temporary differences, taxable income in prior carry back periods (as
permitted by tax law), tax planning strategies, and future taxable income exclusive of reversing temporary
differences and carry forwards must be evaluated in determining whether or not a valuation allowance is necessary.
A valuation allowance is provided if it is more likely than not that all or a portion of the deferred tax assets will not
be realized. For financial reporting purposes, deferred tax assets and liabilities are presented either as current or noncurrent accounts based on the expected realization of the asset or liabilities.
Uncertain Tax Positions
Under Indonesian GAAP, the additional tax and penalties due in a tax assessment is charged to expense
unless an objection or appeal is submitted, in which case the amounts paid is deferred and recognized as an asset.
U.S. GAAP specifies that an enterprise cannot recognize a tax benefit in its financial statements unless it is
“more likely than not” that the benefit will be sustained on audit by the taxing authority solely on the basis of the
technical merits of the associated tax position. In such an assessment, an enterprise must assume that the position
will be (1) examined by a taxing authority that has full knowledge of all relevant information and (2) resolved in the
court of last resort. If the recognition threshold is not met, no benefit can be recognized, even when the enterprise
believes that some amount of benefit will ultimately be realized.
If the recognition threshold is met, the enterprise measures the tax benefit by using the largest amount of
the tax benefit that, in its judgment, is more than 50.0% likely to be realized. The analysis should be based on the
amount the taxpayer would ultimately accept in a negotiated settlement with the taxing authority. To compute the
amount that is more than 50.0% likely to be realized, an enterprise should perform a cumulative-probability
assessment of the possible outcome(s). Assigning probabilities in measuring a recognized tax position requires a
high degree of judgment and should be based on all relevant facts, circumstances, and information.
Deferred Charges
Under Indonesian GAAP, direct costs incurred in relation to subscriber acquisition can be deferred and
amortized over a period which reflects the expected subscriber retention rates.
Under U.S. GAAP, costs incurred in relation to subscriber acquisition are generally charged to current
operations except for costs which meet the capitalization criteria.
Embedded Derivatives
Under Indonesian GAAP, contracts denominated in a currency other than the functional currency of either
of the contracting party are not presumed to contain embedded foreign currency derivatives if such contracts are
denominated in currency that is commonly used in local business transactions.
An exemption not to bifurcate similar embedded derivatives under U.S. GAAP is very limited. SFAS 133
par. 15 states: “an embedded foreign currency derivative instrument shall not be separated from the host contract
and considered a derivative instrument if the host contract is not a financial instrument and it requires payment(s)
denominated in (a) the functional currency of any substantial party to that contract or (b) the currency in which the
price of the related goods or services that are acquired or delivered are routinely denominated in international
commerce (for example, the U.S. Dollar for crude oil transactions).”
137
Consolidation
Under Indonesian GAAP, control is presumed to exist when the parent company owns, directly or
indirectly through subsidiaries, more than 50% of the voting rights of an entity. Even when an entity owns 50% or
less of the voting rights of an enterprise, control exists when one of the following conditions is met:

having more than 50% of the voting rights by virtue of an agreement with other investors;

having the right to govern the financial and operating policies of the enterprise under the articles
of association or an agreement;

having the ability to appoint or remove the majority of the members of management; or

having the ability to control the majority of votes at meetings of management.
Indonesian GAAP requires a special purpose entity (“SPE”) to be consolidated when the substance of the
relationship between an entity and the SPE indicates that the SPE is controlled by that entity. The substance of the
relationship is identified based on an analysis of risks and rewards.
Under U.S. GAAP, an entity should first consider the guidance under Financial Accounting Standards
Board (“FASB”) Interpretation No. 46 (revised in December 2003), “Consolidation of Variable Interest Entities
(“FIN 46(R)”). This requires an entity to be consolidated if the entity is a variable interest entity (“VIE”). VIEs are
evaluated for consolidation based on all contractual, ownership or other interests that expose their holders to the
risks and rewards of that entity, such interests being termed as “variable interests”. The holder of a variable interest
that receives the majority of the potential variability in expected losses of expected residual returns of the VIE is the
VIE’s primary beneficiary, and is required to consolidate the VIE in its financial statements.
If it has been determined that an entity is outside the scope of FIN 46(R), then consideration should be
given to Accounting Research Bulletin No. 51, “Consolidated Financial Statements”, and FASB 94, “Consolidation
of all Majority-owned subsidiaries”, which generally requires consolidation when one of the companies in a group
directly or indirectly has a controlling financial interest in the other companies. The usual condition for determining
if a controlling financial interest exists is ownership of a majority of the voting interest; accordingly, as a general
rule, ownership by one company, directly or indirectly, of over 50% of the outstanding voting shares of another
company is a condition pointing towards consolidation. Consolidation of majority-owned subsidiaries is required in
the preparation of consolidated financial statements, unless control is temporary and does not rest with the majority
owner.
Under Indonesian GAAP, non-controlling interests are presented in the consolidated balance sheets
between the equity and the liability sections. Under U.S. GAAP, non-controlling interests are presented in
accordance with FAS 160 and is presented as part of equity in the consolidated balance sheets, separately from the
parents’ equity.
Debt Issuance Costs
Under Indonesian GAAP, debt issuance costs for listed companies are deducted directly from the proceeds
of the related bond or debt instrument to determine the net proceeds. The difference between the net proceeds and
the nominal value of the debt issued is amortized over the term of the debt or bond on a straight-line basis. For the
purposes of balance sheet presentation, debt instruments are presented net of the unamortized debt issuance cost.
U.S. GAAP requires that debt issuance costs be reported in the balance sheet as deferred charges.
Generally, debt issuance costs are capitalized as an asset and amortized over the term of the debt using the interest
method.
138
Debt-Restructuring
Under Indonesian GAAP, for debt restructuring which are carried out using modification of terms, the
carrying amount of the liability at the time of restructuring is not changed unless the carrying amount of the liability
exceeds the total future cash payments (principal and interest) specified by the new terms of the loan, in which case
such excess is recognized as a restructuring gain (net of expenses incurred by the debtor) which is presented as an
extraordinary item in the statements of income. The future interest obligations are accounted for as premium on debt
restructuring and is presented as part of the loan.
After the restructuring, all cash payments under the terms of the new loan are deducted from the principal
amount of the loan and the premium on debt restructuring, and no interest expense is recognized on such loan until
maturity.
Under U.S. GAAP, modification of terms of a financial liability that results in exchange of instruments
with terms that are substantially different is accounted for as an extinguishment of debt.
U.S. GAAP provides that the terms are substantially different if the discounted present value of the future
cash flows under the new terms, including any fees paid, net of any fees received and discounted using the original
effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows
of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an
extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment.
Inventory
Under Indonesian GAAP, inventories are measured at the lower of cost or net realizable value. Net
realizable value is defined as the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale. A new assessment is made of net realizable value in
each subsequent period. When the circumstances which previously caused inventories to be written down below cost
no longer exist, the amount of the write-down is reversed so that the new carrying amount of the inventory is the
lower of the cost or the revised net realizable value.
Under U.S. GAAP, inventories are measured at the lower of cost or market. Market is defined as
replacement costs which cannot exceed net realizable value or fall below net realizable value reduced by a normal
profit margin. Once adjusted, inventories are not recorded at amounts above the new cost.
Under Indonesian GAAP, companies which present their cash flows using the direct method are not
required to present a reconciliation of net income to net cash flow from operating activities.
Under U.S. GAAP, companies which present their cash flows using the direct method are required to
present, in a separate schedule, a reconciliation of the net income to cash flows from operating activities. Such
reconciliation should show: (a) the effects of all deferrals of past operating cash receipts and payments, such as
changes during the period in inventory, deferred income, and all accruals of expected future operating cash receipts
and payments, such as changes during the period in receivables and payables, and (b) the effects of all items which
cash effects are investing or financing cash flows, such as depreciation, amortization of goodwill, and gains or losses
on sales of property and equipment and discontinued operations, and gains or losses on extinguishment of debt.
Disclosures
In general, the disclosure requirements for Indonesian GAAP are not as extensive as those required by U.S.
GAAP. Areas where U.S. GAAP requires specific additional disclosures include, among others, concentrations of
credit risk, related party transactions, significant subscribers and suppliers, pensions, segment related disclosures and
new accounting pronouncements. In addition, certain line items included in the Indonesian GAAP balance sheet and
139
income statements would be reclassified in preparing and presenting a U.S. GAAP balance sheet and income
statement.
140
GENERAL INFORMATION
(1)
Mobile-8 was incorporated in Jakarta, Indonesia under the laws of the Republic of Indonesia and
is registered with the Company Registration Office of central Jakarta. Mobile-8’s registration
number is 09.05.1.64.45134 dated May 31 2007, which is valid until February 6, 2013. Mobile-8’s
registered business and operational office is situated at located at MNC Tower, 18th and 19th
Floors, Jl. Kebon Sirih Kav. 17-19, Jakarta 10340, Indonesia.
(2)
Copies of Mobile-8’s articles of association and copies of the Indenture and the Security
Documents will be available for inspection by any Noteholder during usual business hours on any
weekday (except Saturdays and public holidays) at its registered office and at the specified offices
of the Trustee.
(3)
The Issuer will apply for admission of the New Notes for clearance through Euroclear and
Clearstream, Luxembourg and allocation of a Common Code and International Securities
Identification Number for the New Notes following completion of the Scheme.
(4)
Where necessary, we have obtained all consents from our lenders for the issue of the New Notes.
(5)
Except as disclosed in this Exchange Offer Memorandum, there has been no significant change in
our financial or trading position and no material adverse change in our financial position or
prospects since September 30, 2010.
(6)
Except as disclosed in this Exchange Offer Memorandum, we are not involved in any litigation or
arbitration proceedings or any regulatory investigations relating to claims or amounts which are
material in the context of the issue of the New Notes, nor, so far as we are aware, is any such
litigation or arbitration pending or threatened.
(7)
For the years ended December 31, 2007, 2008 and 2009 Osman Bing Satrio & Rekan, independent
public accountants, the member firm of Deloitte Touche Tohmatsu, Kanaka Puradirejda,
Suhartono, independent public accountants, and Mulyamin Sensi Suryanto, independent public
accountants, respectively, have audited and rendered unqualified opinions on our consolidated
financial statements.
(8)
Submission by us to the jurisdiction of the English courts, and the appointment of an agent of
service of process, are valid and binding under Indonesian law. The choice of laws of England and
Wales as the governing law, under the laws of the Republic of Indonesia, is a valid choice of law
and should be honored by the courts of the Republic of Indonesia, subject to proof thereof and
considerations of public policy. A judgment of a foreign (non-Indonesian) court will not be
enforceable by the courts of Indonesia, although such a judgment could be admissible as evidence
in a proceeding on the underlying claim in an Indonesian court and would be given such
evidentiary weight as the court may deem appropriate.
141
GLOSSARY OF TECHNICAL TERMS
The following explanations are not intended as technical definitions, but to assist the general reader to
understand certain terms as used in this Exchange Offer Memorandum.
AMPS
Advanced Mobile Phone System, an analog wireless
system standard.
Base station controller
Equipment used in a GSM wireless telecommunications
network for controlling call set-up, signaling and
maintenance functions as well as the use of radio
channels of one or more base stations.
Base transceiver station (BTS)
Fixed transceiver equipment in each cell of a wireless
telecommunications network that communicates by
radio signal with cellular handsets in that cell.
CDMA (Code Division Multiple
Access)
Transmission technology where each transmission is
sent over multiple frequencies and a unique code is
assigned to each data or voice transmission, allowing
multiple users to share the same frequency spectrum.
Data packet
A data transmission technique whereby information is
segmented and routed in discrete data envelopes called
“packets”, each with its own appended control
information for routing, sequencing and error checking.
Digital
A method of storing, processing and transmitting
information through the use of distinct electronic or
optical pulses that represent the binary digits 0 and 1.
Digital transmission and switching technologies employ
a sequence of these pulses to represent information as
opposed to the continuously variable analog signal.
Compared to analog networks, digital networks allow
for greater capacity, lower interference, protection
against eavesdropping and automatic error correction.
Fiber optic cable
A transmission medium constructed from extremely
pure and consistent glass through which digital signals
are transmitted as pulses of light. Fiber optic cables offer
greater transmission capacity and lower signal distortion
than traditional copper cables.
Fixed line
A fixed path (wire or cable) linking a subscriber at a
fixed location to a local exchange, usually with an
individual phone number.
Fixed wireless
A local wireless transmission link using wireless,
microwave or radio technology to link a subscriber at a
fixed location to a local exchange.
142
Frequency band
A specified range of frequencies. Frequency refers to the
number of times per second that a wave (e.g.,
electromagnetic wave) oscillates or swings back and
forth in a complete cycle from its starting point to its end
point.
GPRS (General Packet Radio
Service)
A standard for wireless communications which supports
a wide range of bandwidths and is particularly suited for
sending and receiving data including e-mail and large
volumes of data.
GSM (Global System for Mobile
Communications)
A digital wireless telecommunications system
standardized by ETSI based on digital transmission and
wireless network architecture with roaming in use
throughout Europe, in Japan and in various other
countries. GSM systems operate in the 900 MHz (GSM
900), 1900 MHz (GSM 1900) and 1800 MHz (GSM
1800) frequency bands.
IDD (International Direct Dialing)
The ability to dial a call from one country to another
country without the assistance of a telephone operator by
dialing an international prefix.
Interconnection
The practice of allowing a competing telephone operator
to connect its network to the network or network
elements of certain other telephone operators to enable
the termination of phone calls made by subscribers of
the competing telephone operator’s network to the
subscribers of the other telephone operator’s network.
ISP (Internet Service Provider)
A company that provides access to the Internet. ISPs are
connected to one another through Network Access
Points (NAPS).
IT (Information Technology)
A general term covering telecommunications, computing
and media technologies.
MHz (Megahertz)
A measure of frequency. One MHz equals 1,000,000
cycles per second.
Multimedia Messaging Services
(MMS)
A wireless telecommunications system that allows short
messaging service (SMS) messages to include graphics,
audio or video components.
PSTN (Public Switched Telephone
Network)
Roaming
The world’s collection of interconnected voice-oriented
public telephone networks.
The wireless telecommunications feature that permits
subscribers of one network to use their cellular handsets
and telephone numbers when in a region covered by
another operator’s network.
143
RUIM Card (Removable User
Identity Module Card)
An electronic card inserted into a CDMA mobile
handset that store the information to identify the
subscriber to the network. It is the equivalent of the SIM
card used on GSM phones.
SIM (Subscriber Identity Module)
An electronic card inserted into a GSM mobile handset
that stores the information to identify the subscriber to
the network.
SMS (Short Messaging Service)
A wireless communications system which allows users
to send alphanumeric messages from one cellular
handset to another either directly or via a message center
operator.
Switch
A device used to set up and route telephone calls either
to the number called or to the next switch along the path.
They may also record information for billing and control
purposes.
VSAT (Very Small Aperture
Terminal)
A station used in satellite communication of voice, data
and video signals. A VSAT consists of a transceiver and
a device that is placed indoors to interface with the end
user’s communication device.
VoIP (Voice over Internet Protocol)
A category of hardware and software that enables people
to use the Internet as the transmission medium for
telephone calls. VoIP does not offer the same quality
telephone service as direct telephone connections.
WCDMA (Wideband Code Division
Multiple Access)
A CDMA technology adopted by the European
Telecommunications Standards Institute Europe for 3G
mobile systems and is designed to be backward
compatible with the GSM standard.
144
FINANCIAL STATEMENTS
(attached)
145
PT MOBILE 8 – TELECOM Tbk
Laporan Keuangan konsolidasian/
Consolidated Financial Statements
Untuk tahun-tahun yang berakhir pada 31 Desember 2008
dan 2007/
For the years ended 31 December 2008 and 2007
Beserta/ and
LAPORAN AUDITOR INDEPENDEN /
INDEPENDENT AUDITOR’S REPORT
PT MOBILE-8 TELECOM Tbk
DAN ANAK PERUSAHAAN/ AND SUBSIDIARY
DAFTAR ISI
Halaman/
Page
CONTENTS
LAPORAN AUDITOR INDEPENDEN
INDEPENDENT AUDITOR’S REPORT
SURAT PERNYATAAN DIREKSI
DIRECTORS’ STATEMENTS
LAPORAN KEUANGAN – Pada tanggal 31
Desember 2008 dan 2007, serta untuk tahuntahun yang berakhir pada tanggal tersebut
FINANCIAL STATEMENTS – As of
December 31, 2008 and 2007, and for the
years then ended
•
1–2
•
Consolidated Balances Sheets
Laporan Laba Rugi Konsolidasian
3
•
Consolidated Statements of Income
•
Laporan Perubahan Ekuitas Konsolidasian
4
•
Consolidated Statements of Changes in
Shareholders Equity
•
Laporan Arus Kas Konsolidasian
5
•
Consolidated Statements of Cash
Flows
•
Catatan Atas Laporan Keuangan
Konsolidasian
6 – 79
•
Notes to Consolidated Financial
Statements
•
Neraca Konsolidasian
PT. MOBILE-8 TELECOM Tbk DAN ANAK PERUSAHAAN
NERACA KONSOLIDASI
31 DESEMBER 2008 DAN 2007
PT. MOBILE-8 TELECOM Tbk AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
Catatan/
Notes
2008
Rp
2007
Rp
ASET
ASET LANCAR
Kas dan setara kas
Bank yang dibatasi penggunaannya
Investasi jangka pendek
Piutang usaha
Pihak hubungan istimewa
Pihak ketiga - setelah dikurangi
penyisihan piutang ragu-ragu sebesar
Rp 8.950.704.253 tahun 2008 dan
Rp 3.308.642.253 tahun 2007
Piutang lain-lain
Persediaan - setelah dikurangi penyisihan
penurunan nilai persediaan sebesar
Rp 3.168.744.260 tahun 2008 dan 2007
Pajak dibayar dimuka
Biaya dibayar dimuka
Aset lancar lainnya
Jumlah Aset Lancar
ASSETS
23.734.079.923
288.987.187.533
4.144.987.512
3f,4
5
3g,6
3h,7
3d,43
18.999.756.284
1.423.481.805
8
15.852.343.568
9.674.401.700
81.875.706.246
81.158.313.583
176.861.658.143
66.765.686.835
3i,9
3s,10,38
3j,11
12
173.525.673.587
101.502.862.083
89.782.729.447
10.245.600.742
743.950.857.864
ASET TIDAK LANCAR
Aset pajak tangguhan - bersih
Aset tetap - setelah dikurangi akumulasi
penyusutan sebesar Rp 1.192.581.303.846
tahun 2008 dan Rp 1.410.982.712.321
tahun 2007
Goodwill - bersih
Beban tangguhan - bersih
Aset tidak lancar lainnya
3.613.932.169.001
178.364.373.986
5.933.698.473
11.091.696.557
Jumlah Aset Tidak Lancar
JUMLAH ASET
852.668.943.331
20.869.423.987
198.378.065.771
2.205.649.442
1.474.705.693.658
CURRENT ASSETS
Restricted cash in bank
Short-term investments
Related parties
Third parties - net of
allowance for doubtful accounts of
Rp 8,950,704,253 in 2008 and
Rp 3,308,642,253 in 2007
Other accounts receivable
Inventories - net of allowance
for decline in value of
Rp 3,168,744,260 in 2008 and 2007
Prepaid taxes
Prepaid expenses
Other current assets
Total Current Assets
2.650.483.517.449
189.816.332.238
76.905.596.872
9.838.375.279
NONCURRENT ASSETS
Deferred tax assets - net
Property and equipment - net of accumulated
depreciation of Rp 1,192,581,303,846
in 2008 and Rp 1,410,982,712,321
in 2007
Goodwill - net
Deferred charges - net
Other noncurrent assets
4.053.940.942.785
3.062.037.948.463
Total Noncurrent Assets
4.797.891.800.649
4.536.743.642.121
TOTAL ASSETS
244.619.004.768
3s,38
3k,3n,13
3l,14
3m,15
16
134.994.126.625
See accompanying notes to consolidated financial statements which are an
integral part of the consolidated financial statements.
Lihat catatan atas laporan keuangan konsolidasi yang merupakan
bagian yang tidak terpisahkan dari laporan keuangan konsolidasi.
-1-
NERACA KONSOLIDASI
31 DESEMBER 2008 DAN 2007 - Lanjutan
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2008 AND 2007 - Continued
Catatan/
Notes
2008
Rp
2007
Rp
KEWAJIBAN DAN EKUITAS
KEWAJIBAN LANCAR
Hutang usaha
Pihak ketiga
Hutang lain-lain
Hutang pajak
Biaya masih harus dibayar
Pendapatan diterima dimuka
Uang jaminan pelanggan
Hutang sewa pembiayaan jangka panjang
yang jatuh tempo dalam satu tahun
Jumlah Kewajiban Lancar
LIABILITIES AND EQUITY
3.247.566.505
576.002.845.626
160.402.697.770
23.102.969.799
261.922.153.387
23.393.882.804
13.290.396.558
18
3s,19
20,43,45
3r,21
22
1.463.202.001
72.106.900.844
15.417.778.029
7.211.814.491
100.800.193.873
106.100.248.918
16.702.708.204
60.783.204.986
3n,26
25.174.443.320
1.122.145.717.435
KEWAJIBAN TIDAK LANCAR
Hutang kepada pihak hubungan istimewa
Hutang sewa pembiayaan - setelah dikurangi
bagian yang jatuh tempo dalam satu tahun
Hutang obligasi
Kewajiban imbalan pasca kerja
1.169.013.923.462
1.733.013.170.186
39.222.956.000
Jumlah Kewajiban Tidak Lancar
2.948.427.851.560
EKUITAS
Modal saham - nilai nominal Rp 100 per saham
Modal dasar - 60.000.000.000 saham
Modal ditempatkan dan disetor 20.235.872.427 saham tahun
2008 dan 2007
Tambahan modal disetor
Selisih nilai transaksi restrukturisasi entitas
sepengendali
Saldo laba (defisit)
Ditentukan penggunaannya
Tidak ditentukan penggunaannya
Jumlah Ekuitas
JUMLAH KEWAJIBAN DAN EKUITAS
17
3d,43
7.177.801.912
344.977.289.680
3d,23,43
3n,26
3o,25
3q,39
CURRENT LIABILITIES
Related parties
Third parties
Other accounts payable
Taxes payable
Accrued expenses
Unearned revenue
Deposits from customers
Current maturity of long-term
finance lease liabilities
Total Current Liabilities
775.592.054.984
1.571.129.412.665
32.296.622.000
NONCURRENT LIABILITIES
Accounts payable to related parties
Long-term finance lease liabilities net of current maturity
Bonds payable
Post-employment benefits obligation
2.395.580.111.743
Total Noncurrent Liabilities
16.562.022.094
EQUITY
Capital stock - Rp 100 par value per share
Authorized - 60,000,000,000 shares
2.023.587.242.700
533.133.592.379
42.245.424.126
100.000.000
(1.871.748.027.551)
28
3p,29
30
2.023.587.242.700
533.133.592.379
42.245.424.126
100.000.000
(802.880.018.507)
Issued and paid-up - 20,235,872,427
shares in 2008 and 2007
Additional paid-up capital
Difference in value of restructuring transaction
among entities under common control
Retained earnings (deficit)
Appropriated
Unappropriated
727.318.231.654
1.796.186.240.698
Total Equity
4.797.891.800.649
4.536.743.642.121
TOTAL LIABILITIES AND EQUITY
-2-
LAPORAN LABA RUGI KONSOLIDASI
UNTUK TAHUN-TAHUN YANG BERAKHIR 31 DESEMBER 2008 DAN 2007
2008
Rp
PENDAPATAN USAHA
Jasa telekomunikasi
Jasa interkoneksi
Jumlah pendapatan
Beban interkoneksi dan potongan harga
Pendapatan Usaha - Bersih
BEBAN USAHA
Penyusutan dan amortisasi
Operasi, pemeliharaan dan jasa
telekomunikasi
Penjualan dan pemasaran
Karyawan
Umum dan administrasi
Jumlah Beban Usaha
LABA (RUGI) USAHA
PENGHASILAN (BEBAN) LAIN-LAIN
Penghasilan investasi
Penghasilan bunga
Keuntungan (kerugian) kurs mata uang
asing - bersih
Keuntungan penjualan dan penghapusan
aset tetap
Amortisasi goodwill - bersih
Beban bunga dan keuangan
Kerugian perubahan nilai
wajar instrumen keuangan derivatif
Lain-lain - bersih
Beban Lain-lain - Bersih
LABA (RUGI) SEBELUM PAJAK
MANFAAT (BEBAN) PAJAK
Pajak kini
Pajak tangguhan
Jumlah
LABA (RUGI) BERSIH
LABA (RUGI) PER SAHAM DASAR
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
Catatan/
Notes
2007
Rp
3r,31
820.364.842.908
106.159.931.757
926.524.774.665
(194.694.127.649)
992.081.662.327
125.654.293.308
1.117.735.955.635
(235.190.471.600)
731.830.647.016
882.545.484.035
OPERATING REVENUES
Total revenues
Interconnection charges and discount
Operating Revenues - Net
319.275.171.318
3r
3k,13,15,32
229.785.290.011
307.942.137.420
272.851.555.857
160.022.543.562
74.790.116.481
33
34
35,39
36, 50
135.882.422.150
152.224.120.785
131.686.472.562
63.239.421.686
OPERATING EXPENSES
Depreciation and amortization
telecommunication services
Sales and marketing
Personnel
General and administration
712.817.727.194
Total Operating Expenses
169.727.756.841
OPERATING INCOME (LOSS)
1.134.881.524.638
(403.050.877.622)
32.854.289.241
8.980.825.174
6
4
29.086.389.472
27.928.068.899
(182.759.945.197)
3c
4.439.988.434
741.096.354
(11.451.958.252)
(367.252.536.716)
3k,13
3l,14
37
3.797.211.803
(11.451.958.252)
(202.203.126.628)
(142.001.680.062)
(114.552.095.127)
48
45a, 50
35.517.407.225
(775.442.004.585)
(112.886.019.047)
(1.178.492.882.207)
38
(1.068.868.003.999)
(52,82)
3t,41
Other Charges - Net
56.841.737.794
INCOME (LOSS) BEFORE TAX
(6.496.440.585)
(6.496.440.585)
TAX BENEFIT (EXPENSE)
Current tax
Deferred tax
Total
50.345.297.209
NET INCOME (LOSS)
3s
109.624.878.208
109.624.878.208
OTHER INCOME (CHARGES)
Investment income
Interest income
exchange - net
Gain on sale and disposal of
property and equipment
Amortization of goodwill - net
Interest expenses and financial charges
Loss on change in fair value of derivative
financial instrument
Others - net
2,80
BASIC EARNINGS (LOSS) PER SHARE
See accompanying notes to consolidated financial statements which are
an integral part of the consolidated financial statements.
-3-
LAPORAN PERUBAHAN EKUITAS KONSOLIDASI
Catatan/
Notes
Saldo per 1 Januari 2007
Pengaruh penyajian kembali sehubungan
dengan penggabungan usaha
Saldo per 1 Januari 2007 - Disajikan kembali
Penerbitan 43.045.567 saham, nilai
nominal Rp 100 per saham ke
pemegang saham minoritas Komselindo
Penerbitan waran
Cadangan umum
Laba bersih periode berjalan
2
2
Modal
Disetor/
Paid-up
Capital
Rp
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Tambahan
Modal Disetor/
Additional paid-up
capital
Rp
Selisih Nilai
Transaksi
Restrukturisasi
Entitas Sepengendali/
Saldo Laba (Defisit)/Retained
Difference in Value
Earnings (Deficit)
of Restructuring
Transaction Among
Ditentukan
Tidak Ditentukan
Entities under
Penggunaannya/
Penggunaannya/
Common Control
Appropriated
Unappropriated
Rp
Rp
Rp
Jumlah Ekuitas/
Total Equity
Rp
1.958.536.016.000
442.203.024.931
42.245.424.126
-
(852.608.300.573)
1.590.376.164.484
1.958.536.016.000
1.254.540.742
443.457.565.673
42.245.424.126
-
(517.015.143)
(853.125.315.716)
737.525.599
1.591.113.690.083
4.304.556.700
60.746.670.000
-
(4.304.556.700)
93.980.583.406
-
-
100.000.000
-
(100.000.000)
50.345.297.209
154.727.253.406
50.345.297.209
Balance as of January 1, 2007
Effect of the restatement in relation to
of Komselindo
Balance as of January 1, 2007 - As restated
The effect of the restatement in relation
to merger - Minority interest in net loss
of Komselindo
Issuance of warrants
Net income for the period - As restated
Saldo per 31 Desember 2007
2.023.587.242.700
533.133.592.379
42.245.424.126
100.000.000
(802.880.018.507)
1.796.186.240.698
Balance as of December 31, 2007
Saldo per 1 Januari 2008
2.023.587.242.700
533.133.592.379
42.245.424.126
100.000.000
(802.880.023.552)
1.796.186.235.653
Balance as of January 1, 2008
Rugi bersih periode berjalan
-
Saldo per 31 Desember 2008
2.023.587.242.700
533.133.592.379
42.245.424.126
-
(1.068.868.003.999)
100.000.000
(1.871.748.027.551)
(1.068.868.003.999)
727.318.231.654
Net loss for the period
Balance as December 31, 2008
See accompanying notes to consolidated financial statements which
are an integral part of the consolidated financial statements.
Lihat catatan atas laporan keuangan konsolidasi yang
merupakan bagian yang tidak terpisahkan dari laporan keuangan
konsolidasi.
-4-
LAPORAN ARUS KAS KONSOLIDASI
2008
Rp
ARUS KAS DARI AKTIVITAS OPERASI
Penerimaan kas dari pelanggan
Pembayaran kas kepada pemasok dan karyawan
CONSOLIDATED STATEMENTS OF CASH FLOWS
2007
Rp
837.364.252.128
(1.001.200.776.276)
949.015.483.252
(645.943.007.721)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to suppliers and employees
Kas diperoleh dari operasi
Penerimaan restitusi pajak
Penerimaan bunga
Pembayaran pajak penghasilan
Pembayaran beban bunga dan keuangan
(163.836.524.148)
58.626.743.765
13.347.208.473
(2.634.043.743)
(349.500.978.202)
303.072.475.531
6.596.014.882
55.743.044.075
(21.148.176.088)
(188.639.537.210)
Cash generated from operations
Cash receipts from tax refund
Interest received
Income tax paid
Interest expenses and financial charges paid
Kas Bersih Diperoleh Dari (Digunakan Untuk)
Aktivitas Operasi
(443.997.593.855)
155.623.821.190
ARUS KAS DARI AKTIVITAS INVESTASI
Pencairan investasi jangka pendek
Penurunan (peningkatan) bank yang
dibatasi penggunaannya
Hasil bersih penjualan aset tetap
Pembayaran uang jaminan
Pembayaran pajak pertambahan nilai barang moda
Perolehan aset tetap
Penempatan investasi jangka pendek
Net Cash Provided by (Used in)
Operating Activities
1.196.015.871.278
2.762.330.648.451
NET CASH FLOWS FROM INVESTING ACTIVITIES
Redemption from short-term investment
20.869.423.987
1.114.779.496
(3.412.311.646)
(29.400.819.070)
(266.951.546.501)
(1.261.624.504.641)
(20.869.423.987)
10.254.177.453
(1.493.515.020)
(47.551.830.157)
(532.844.210.371)
(2.858.819.522.148)
Decrease (increase) in restricted cash in bank
Net proceeds from sale of property and equipment
Payment for refundable deposits
Payment of value added tax for capital expenditures
Acquisitions of property and equipment
Placement in short-term investment
(343.389.107.097)
(688.993.675.779)
Kas Bersih Digunakan Untuk Aktivitas Investasi
ARUS KAS DARI AKTIVITAS PENDANAAN
Penerimaan (pembayaran) hutang kepada
pihak hubungan istimewa - bersih
Pembayaran atas hutang:
Sewa pembiayaan
Pembelian aset tetap
Penerimaan dari hutang obligasi - bersih
Penerimaan dari pelaksanaan waran
Penerimaan dari penjualan waran
Pelunasan atas pinjaman jangka panjang
Kas Bersih Diperoleh Dari (Digunakan Untuk)
Aktivitas Pendanaan
PENURUNAN BERSIH KAS DAN
SETARA KAS
(10.528.265.182)
4.666.736.710
(31.577.284.189)
-
(11.832.235.662)
(531.274.285.714)
1.571.129.412.665
154.788.000.000
(661.500.000.000)
(42.105.549.371)
525.977.627.999
(829.492.250.323)
(7.392.226.590)
Net Cash Used in Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (payment) of accounts payable
to related parties - net
Payment of:
Financial lease
Purchase of property and equipment
Proceeds from issuance of bonds - net
Proceeds from excercise of warrants
Proceeds from sale of warrants
Settlement of long-term loan
Net Cash Provided by (Used in)
Financing Activities
NET DECREASE IN CASH AND
CASH EQUIVALENTS
KAS DAN SETARA KAS AWAL PERIODE
Pengaruh perubahan kurs mata uang asing
852.668.943.331
557.386.915
859.881.059.264
180.110.657
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
Effect of foreign exchange rate changes
KAS DAN SETARA KAS AKHIR PERIODE
23.734.079.923
852.668.943.331
CASH AND CASH EQUIVALENTS AT
END OF PERIOD
PENGUNGKAPAN TAMBAHAN
Aktivitas investasi dan pendanaan yang tidak
mempengaruhi kas:
Penambahan aset tetap melalui
hutang sewa pembiayaan
Penambahan aset tetap dengan hutang
usaha
kapitalisasi biaya pinjaman
kapitalisasi selisih kurs
Penambahan nilai aset bersih investasi
jangka pendek
SUPPLEMENTAL DISCLOSURES
459.765.543.072
429.552.077.306
812.598.733.965
-
22.101.648.057
35.560.884.118
33.754.792.676
2.710.195.658
29.758.313.384
1.271.414.296
Lihat catatan atas laporan keuangan konsolidasi yang
merupakan bagian yang tidak terpisahkan dari laporan keuangan
konsolidasi.
Noncash investing and financing activities:
Increase in property and equipment through
finance lease obligation
accounts payable
capitalization of borrowing cost
Increase in property and equipment
through capitalization of foreign
exchange difference
Increase in net asset value of short-term
investment
-5-
CATATAN ATAS LAPORAN KEUANGAN KONSOLIDASI
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
SERTA UNTUK TAHUN-TAHUN YANG BERAKHIR PADA
AND FOR THE YEARS THEN ENDED
TANGGAL TERSEBUT
1.
UMUM
1.
a. Pendirian dan Informasi Umum
GENERAL
a. Establishment and General Information
PT Mobile-8 Telecom Tbk (“Perusahaan”)
didirikan berdasarkan akta No. 11 tanggal
2 Desember 2002 dari Imas Fatimah, S.H.,
notaris di Jakarta. Akta pendirian tersebut telah
disahkan oleh Menteri Kehakiman dan Hak
Asasi Manusia Republik Indonesia dalam Surat
Keputusannya No. C-24156.HT.01.01.TH.2002
tanggal 16 Desember 2002, yang dimuat
dalam Tambahan No. 1772, Berita Negara
Republik Indonesia No. 18 tanggal 3 Maret
2003. Anggaran Dasar Perusahaan telah
mengalami
beberapa
kali
perubahan.
Perubahan sehubungan dengan penerbitan
607.466.700
saham
baru
Perusahaan
dilakukan dengan akta No.181 tanggal 15
Agustus 2007 dari Aulia Taufani, S.H.,
pengganti Sutjipto, S.H., notaris di Jakarta.
Perubahan Anggaran Dasar Perusahaan telah
diterima oleh Menteri Hukum dan Hak Asasi
Manusia Republik Indonesia melalui Surat
Keputusannya
No. W7.HT.01.10.12408
tanggal 5 September 2007. Perubahan terakhir
dilakukan dengan akta No. 158 tanggal 24
April 2008 dari Sutjipto, S.H., notaris di
Jakarta, mengenai penyesuaian Anggaran
Dasar dengan Undang-undang No. 40 Tahun
2007 tentang Perseroan Terbatas. Perubahan
Anggaran Dasar ini telah disetujui oleh Menteri
Hukum dan Hak Asasi Manusia Republik
Indonesia
melalui
Surat
Keputusannya
No. AHU.52716.AH.01.02 tanggal 19 Agustus
2008.
PT. Mobile-8 Telecom Tbk (the “Company”)
was established based on deed No. 11 dated
December 2, 2002 of Imas Fatimah, S.H.,
notary in Jakarta. The deed of establishment
was approved by the Minister of Justice and
Human Rights of the Republic of Indonesia in
his
Decision
Letter
No.
C-24156.HT.01.01.TH.2002
dated
December 16, 2002, as stated in Supplement
No. 1772 to State Gazette of the Republic of
Indonesia No. 18, dated March 3, 2003. The
Company’s Articles of Association has been
amended
several
times.
Amendment
concerning the issuance of 607,466,700
Company’s new shares was made by deed
No. 181 dated August 15, 2007 of Aulia
Taufani, S.H., substitute of Sutjipto, S.H.,
notary in Jakarta. The change in the
Company’s Articles of Association was
approved by the Minister of Law and Human
Rights of the Republic of Indonesia in his
Decision Letter No. W7.HT.01.10.12408 dated
September 5, 2007. Latest amendment has
made by deed No. 158 dated April 24, 2008 of
Sutjipto, S.H., notary in Jakarta, concerning
the amendment of the Company’s Articles of
Association in accordance with the Limited
Liability Company Law No. 40 year 2007. Such
amendment has been approved by the
Minister of Law and Human Rights of the
Republic of Indonesia in his Decision Letter
No. AHU.52716.AH.01.02 dated Agustus 19,
2008.
Pada tanggal 4 Maret 2003, Perusahaan
memperoleh persetujuan dari Kepala Badan
Koordinasi Penanaman Modal (BKPM) melalui
suratnya No. 21/V/PMA/2003 mengenai
perubahan
status
Perusahaan
dari
Perusahaan Non Penanaman Modal Asing/
Penanaman Modal Dalam Negeri menjadi
Perusahaan Penanaman Modal Asing (PMA).
On March 4, 2003, the Company obtained the
approval from the Chairman of the Capital
Investment Coordinating Board (BKPM) in his
Letter No. 21/V/PMA/2003 with regard the
change of the Company’s status from non
foreign capital investment/ domestic capital
investment company to become a Foreign
Capital Investment Company(PMA).
Perusahaan berdomisili di Jakarta dengan
kantor pusat beralamat di Menara Kebon Sirih
Lt. 18, Jl. Kebon Sirih Kav. 17-19, Jakarta
10340. Perusahaan mulai beroperasi secara
komersial pada tanggal 8 Desember 2003.
Jumlah
karyawan
tetap
dan
kontrak
Perusahaan masing-masing 839 dan 26 orang
pada tahun 2008 dan 796 dan 69 orang pada
tahun 2007.
The Company is domiciled in Jakarta and its
head office is located at the 18th Floor of
Menara Kebon Sirih, Jl. Kebon Sirih No. 1719, Jakarta 10340. The Company started its
commercial operations on December 8, 2003.
It has total permanent and contract employees
of 839 and 26 in 2008 and 796 and 69 in 2007,
respectively.
-6-
AND FOR THE YEARS THEN ENDED – Continued
TANGGAL TERSEBUT – Lanjutan
Sesuai dengan ketentuan pasal 3 Anggaran
Dasar Perusahaan, maksud dan tujuan
Perusahaan adalah melakukan kegiatan usaha
dalam bidang telekomunikasi dan ruang
lingkup kegiatan usaha adalah sebagai berikut:
In accordance with article 3 of the Articles of
Association, the Company’s objectives and
purpose is to conduct business in the area of
telecommunication, with the following scope of
activities:
a.
Menawarkan jasa telekomunikasi di dalam
wilayah Republik Indonesia;
a.
Offer telecommunication services in the
Republic of Indonesia;
b.
Menyediakan berbagai produk multimedia
dan jasa terkait lainnya termasuk tetapi
tidak terbatas pada penjualan secara
langsung maupun tidak langsung voice
services, data/image dan jasa-jasa
komersial mobile lainnya;
b.
Provide multimedia products and related
services including but not limited to direct
and indirect sales of voice services, data/
image and mobile commercial services;
c.
Membangun, menyewakan dan memiliki
jaringan telekomunikasi tanpa kabel di
frekuensi 800 MHz yang secara eksklusif
berbasis teknologi Code Division Multiple
Access (CDMA) khususnya teknologi
CDMA 2000 1X dan 1X EVDO;
c.
Develop, lease and own a wireless
telecommunications network in 800 MHZ
band based exclusively on Code Division
Multiple Access (CDMA) technology,
specifically CDMA 2000 1X and 1X EVDO
technology;
d.
Memperdagangkan
barang-barang,
perangkat-perangkat dan/atau produkproduk telekomunikasi, termasuk tetapi
tidak terbatas pada impor atas barangbarang, perangkat-perangkat dan atau
produk-produk telekomunikasi tersebut;
d.
Trading
telecommunication
goods,
equipments and/or products, including but
not
limited
to
import
of
such
telecommunication goods, equipments
and/or products;
e.
Mendistribusikan
dan
menjual
barang-barang,
perangkat-perangkat
dan/atau produk-produk telekomunikasi;
e.
Distribute and sell telecommunication
goods, equipments and/or products;
f.
Menyediakan layanan purna jual atas
barang-barang, perangkat-perangkat dan
atau produk- produk telekomunikasi.
f.
Provide
after
sales
services
for
telecommunication goods, equipments
and/or products.
Previously the Company owned CDMA 2000
1X and CDMA 2000 1X EVDO technology
equipments and was granted with Basic
Telephony Operating License based on the
Minister of Communication Decision Letter No.
KP.309 TAHUN 2003 dated October 23, 2003,
whereby the Company can operate basic
telephony services through mobile cellular
network owned by PT Komunikasi Selular
Indonesia (Komselindo) and PT Metro Selular
Nusantara (Metrosel). Komselindo, Metrosel
and PT Telekomindo Selular Raya (Telesera)
each were granted with mobile cellular network
operating license using the Code Division
Multiple Access (CDMA) technology based on
(i) the Minister of Transportation Decision
Letter No. KP.284/2003 dated September 5,
2003, (ii) the Minister of Transportation
Decision Letter No.KP.282/2003 dated
August 27, 2003 and (iii) the Minister of
Communication and Information Decree No.
82/KEP/M.KOMINFO/8/2006 dated August 25,
2006.
Sebelumnya Perusahaan telah memiliki
perangkat teknologi CDMA 2000 1X dan
CDMA 2000 1X EVDO serta memperoleh Izin
Penyelenggaraan Jasa Teleponi Dasar melalui
Keputusan Menteri Perhubungan No. KP.309
TAHUN 2003 tanggal 23 Oktober 2003,
dimana Perusahaan dapat menyelenggarakan
jasa teleponi dasar melalui jaringan bergerak
selular milik PT Komunikasi Selular Indonesia
(Komselindo) dan PT Metro Selular Nusantara
(Metrosel).
Komselindo,
Metrosel
dan
PT Telekomindo Selular Raya (Telesera)
memperoleh izin Penyelenggaraan Jaringan
Bergerak Selular dengan menggunakan
teknologi CDMA masing-masing berdasarkan
(i) Surat Keputusan Menteri Perhubungan
No.KP.284 TAHUN 2003 tanggal 5 September
2003, (ii) No. KP.282 TAHUN 2003 tanggal 27
Agustus 2003 dan (iii) Keputusan Menteri
Komunikasi
dan
Informatika
No.82/KEP/M.KOMINFO/8/2006
tanggal
25 Agustus 2006.
-7-
Dengan mengakuisisi Komselindo, Metrosel
dan Telesera, Perusahaan dapat menjadi
penyelenggara jasa telekomunikasi nasional.
By acquiring Komselindo, Metrosel and
Telesera, the Company became a nationwide
telecommunication service provider.
Sebelum memperoleh izin-izin di atas,
Komselindo, Metrosel dan Telesera (anak
perusahaan)
telah
memperoleh
izin
penyelenggaraan jasa bergerak selular dengan
menggunakan teknologi AMPS masing-masing
berdasarkan (i) Surat Keputusan Menteri
Pariwisata,
Pos
dan
Telekomunikasi
No. KM.84/HK.501/MPPT-95
tanggal
22 November 1995, (ii) Surat Keputusan
Menteri Pariwisata, Pos dan Telekomunikasi
No.
PT.102/6/22/MPPT-96
tanggal
1 November
1996
dan
No.KM.22/PT.102/MPPT-97
tanggal
30
Januari 1997 dan (iii) Surat Keputusan Menteri
Pariwisata,
Pos
dan
Telekomunikasi
No.KM.81/PT.102/MPPT-97 tanggal 8 Juli
1997. Izin penyelenggaraan jasa bergerak
selular dengan menggunakan teknologi AMPS
berakhir
setelah
masing-masing
anak
perusahaan memperoleh izin penyelenggaraan
jasa bergerak selular dengan menggunakan
teknologi CDMA
Before being granted with the above licenses,
Komselindo, Metrosel and Telesera were
respectively granted with mobile cellular
network operating license using the AMPS
technology based on (i) the Minister of
Tourism,
Post
and Telecommunication
Decision Letter No. KM.84/HK.501/MPPT-95
dated November 22, 1995, (ii) the Minister of
Tourism,
Post
and Telecommunication
Decision Letter No. PT.102/6/22/MPPT-96
dated
November
1,
1996
and
No.KM.22/PT.102/MPPT-97 dated January
30, 1997, and (iii) the Minister of Tourism,
Post and Telecommunication Decision Letter
No.
KM.81/PT.102/MPPT-97
dated
July 8, 1997. The mobile cellular network
operating license using the AMPS technology
was terminated after each of the subsidiaries
received the license to provide mobile cellular
network services using the CDMA technology.
Berdasarkan Surat Menteri Komunikasi dan
Informatika
Republik
Indonesia,
No. 459/M.KOMINFO/XII/2006
tanggal
15 Desember 2006, Pemerintah mendukung
rencana penggabungan usaha (merger)
Metrosel, Komselindo, dan Telesera (anak
perusahaan) ke dalam Perusahaan. Selama
proses merger, Perusahaan dan anak
perusahaan dapat tetap menjalankan usaha
dengan tetap tunduk kepada hak dan
kewajiban
yang
terdapat
dalam
izin
penyelenggaraan masing-masing perusahaan.
Based on the Letter of the Minister of
Communication and Information of the
Republic
of
Indonesia,
No. 459/M.KOMINFO/XII/2006
dated
December 15, 2006 the Government
supported the Company’s merger plan of
Metrosel, Komselindo, and Telesera (the
subsidiaries) into the Company. During the
merger process, the Company and its
subsidiaries continued to conduct their normal
business in accordance with the rights and
obligations under their respective licenses.
Setelah Perusahaan memperoleh persetujuan
atas perubahan Anggaran Dasar Perusahaan
dalam rangka penggabungan usaha (merger)
dari Departemen Hukum dan Hak Asasi
Manusia Republik Indonesia, Perusahaan
memperoleh Izin Penyelenggaraan Jaringan
Bergerak Seluler yang meliputi seluruh wilayah
Indonesia berdasarkan Surat Keputusan
Menteri
Komunikasi
dan
Informatika
No. 293/KEP/M.KOMINFO/6/2007
tanggal
15 Juni 2007. Dengan diberikannya izin
penyelenggaraan jaringan bergerak selular ini
maka izin penyelenggaraan jaringan bergerak
selular dan izin penyelenggaraan jasa telepon
dasar yang sebelumnya diberikan kepada
Perusahaan dan anak perusahaan tidak
berlaku lagi.
After the Company obtained the approval upon
the changes of the Company’s Article of
Association with regard to such merger from
the Department of Law and Human Rights of
the Republic of Indonesia, the Company was
granted with a Mobile Cellular Network
Operating License with nationwide coverage
based on the Decision Letter of the Minister of
Communication
and
Information
No.293/KEP/M.KOMINFO/6/2007
dated
June 15, 2007. After granted with the mobile
cellular network operating license, then, the
mobile telephone cellular operating license
and basic telephony service operating license
which was previously granted to the Company
and its subsidiaries were terminated.
-8-
Selain izin tersebut di atas, pada tanggal
7
Desember
2007,
Perusahaan
juga
memperoleh Izin Penyelenggaraan Jaringan
Tetap Lokal Tanpa Kabel Dengan Mobilitas
Terbatas berdasarkan Surat Keputusan
Menteri
Komunikasi
dan
Informatika
No. 510/KEP/M.KOMINFO/12/2007.
Besides the abovementioned licenses, on
December 7, 2007 the Company also granted
with Local Fixed Wireless Network Services
with Limited Mobility License based on the
Decision
Letter
of
the
Minister
of
Communication
and
Information
No. 510/KEP/M.KOMINFO/12/2007.
Perusahaan tergabung dalam kelompok usaha
(grup) Global Mediacom. Pada tanggal
31
Desember 2008 dan 2007, susunan pengurus
Perusahaan adalah sebagai berikut:
The Company is part of the Global Mediacom
Group. On December 31, 2008 and 2007, the
Company’s management consisted of the
following:
Presiden Komisaris/
Komisaris independen
Komisaris
Komisaris Independen
Presiden Direktur
Direktur
Agum Gumelar
Hary Tanoesoedibjo
Djoko Leksono Sugiarto
Mohamad Suleiman Hidayat
Wityasmoro Sih Handayanto
Anthony Chandra Kartawiria
Susanto Sosilo
Merza Fachys
President Commissioner/
Commissioners
President Director
Directors
Jumlah gaji dan tunjangan yang diberikan
kepada Komisaris dan Direksi Perusahaan
untuk tahun yang berakhir 31 Desember 2008
dan
2007
masing-masing
sebesar
Rp9.421.326.538 dan Rp6.189.442.619.
Total salaries and benefits to commissioners
and directors of the Company for year ended
December 31, 2008 and 2007 amounting to
Rp9,421,326,538
and
Rp6,189,442,619,
respectively.
Berdasarkan
Keputusan
Komisaris
Perusahaan tanggal 10 Oktober 2006,
Komisaris
Perusahaan
menyetujui
pembentukan Komite Audit sesuai dengan
Peraturan Bapepam-LK No. IX.I.5. Adapun
susunan Komite Audit Perusahaan adalah
sebagai berikut:
Based on the Company’s Commissioners
Decision dated October 10, 2006, the
Commissioners of the Company had approved
the establishment of an audit committee which
was based on Bapepam-LK’s Rule No. IX.1.5.
The composition of the Company’s audit
committee is as follows:
Ketua
Anggota
Mohamad Suleiman Hidayat
Profesor Wahjudi Prakarsa
Andreas Bahana
Chairman
Members
b. Initial Public Offering of Shares and Bonds
b. Penawaran Umum Perdana Saham dan
Hutang Obligasi
On November 15, 2006, the Company
obtained an Effective Notice from the
Chairman of the Capital Market and Financial
Institution Supervisory Agency (BAPEPAMLK) in his letter No. S-2777/BL/2006 for the
Company’s
initial
public
offering
of
3,900,000,000 shares with Rp100 par value
per share, at an offering price of Rp225 per
share. On November 29, 2006, these shares
were listed in the Indonesia Stock Exchange
(formerly Jakarta and Surabaya Stock
Exchanges).
Pada tanggal 15 November 2006, Perusahaan
memperoleh Surat Pernyataan Efektif dari
Ketua Badan Pengawas Pasar Modal dan
Lembaga Keuangan (BAPEPAM-LK) dengan
Suratnya
No.S-2777/BL/2006
untuk
melakukan
penawaran
umum
perdana
3.900.000.000 saham Perusahaan kepada
masyarakat dengan nilai nominal Rp100 per
saham dan harga penawaran sebesar Rp225
per saham. Pada tanggal 29 November 2006,
seluruh saham tersebut telah dicatat di Bursa
Efek Indonesia (d/h Bursa Efek Jakarta dan
Surabaya).
-9-
On March 2, 2007, the Company obtained an
Effective Notice from the Chairman of the
BAPEPAM-LK in his letter No. S-980/BL/2007
for its public offering of “Mobile-8 Telecom
Bond I Year 2007 With Fixed Interest Rate”
(the Bonds) with a maximum nominal value of
Rp675 billion at 12.375% fixed interest rate
per annum which will be due on
March 15, 2012. On March 16, 2007, the
bonds were listed in the Indonesia Stock
Exchange
(formerly
Surabaya
Stock
Exchange).
memperoleh Surat Pernyataan Efektif dari
Ketua
BAPEPAM-LK
dengan
Suratnya
No.S-980/BL/2007
untuk
melakukan
penawaran umum “Obligasi I Mobile-8
Telecom Tahun 2007 Dengan Tingkat Bunga
Tetap” (Obligasi) dengan nilai nominal
maksimum sebesar Rp675 miliar pada tingkat
bunga tetap 12,375% per tahun yang jatuh
tempo pada tanggal 15 Maret 2012. Pada
tanggal 16 Maret 2007, Obligasi ini tercatat di
Bursa Efek Indonesia (d/h Bursa Efek
Surabaya).
c. Anak Perusahaan
2.
c. Subsidiary
Pendirian Anak Perusahaan
Establishment of a Subsidiary
Pada tanggal 18 Juli 2007, Perusahaan
mendirikan
Mobile-8
Telecom
Finance
Company B.V. (Mobile-8 B.V.), suatu
perseroan terbatas yang didirikan berdasarkan
hukum yang berlaku di Belanda dengan modal
dasar sebesar EUR90.000 yang terbagi atas
900 lembar saham dengan nilai nominal
EUR100 per lembar. Dari modal dasar
tersebut telah ditempatkan dan disetor penuh
sebesar EUR18.000 oleh Perusahaan.
On July 18, 2007, the Company established
Mobile-8 Telecom Finance Company B.V.
(Mobile-8 B.V.), a private limited liability
Company under the laws of The Netherlands
with authorized capital stock of EUR90,000
which is divided into 900 shares at EUR100
par value per share. Mobile-8 B.V. had issued
and paid-up capital of EUR18,000 are owned
by the Company.
Pada tanggal 31 Desember 2008, Mobile-8
B.V. mempunyai jumlah aset sebesar
USD105.044.757
atau
setara
dengan
Rp1.150.240.089.150.
As of December 31, 2008, Mobile-8 B.V. has
total assets of USD105,044,757 or equivalent
to Rp1,150,240,089,150.
Penawaran Umum Perdana Obligasi Anak
Perusahaan
Initial Bonds Offering of a Subsidiary
Pada tanggal 15 Agustus 2007, Mobile-8 B.V.
menerbitkan 11,25% Guaranteed Senior Notes
(Notes) sebesar USD100 juta, jatuh tempo
pada tanggal 1 Maret 2013. Bunga Notes
terhutang tengah tahunan setiap tanggal 1
Maret dan 1 September, dimulai sejak 1 Maret
2008. Notes ini tercatat di Bursa Efek
Singapura.
On August 15, 2007, Mobile-8 B.V. issued
11.25% Guaranteed Senior Notes (the Notes)
amounting to USD100 million, due on March 1,
2013. Interest of the Notes will be payable
semi-annually in arrears on March 1 and
September 1 of each year, commencing on
March 1, 2008. The Notes were listed at the
Singapore Stock Exchange.
PENGGABUNGAN USAHA
2.
Pada tanggal 2 Mei 2007, Perusahaan
memperoleh Surat Pernyataan Efektif dari Ketua
BAPEPAM-LK
dalam
Suratnya
No.
S-2065/BL/2007
sehubungan
dengan
penggabungan usaha Komselindo, Metrosel dan
Telesera ke dalam Perusahaan.
MERGER
On May 2, 2007, the Company obtained an
Effective Notice from the Chairman of the
BAPEPAM-LK in his letter No. S-2065/BL/2007
concerning the merger of Komselindo, Metrosel
and Telesera into the Company.
- 10 -
Sebelum penggabungan usaha, Perusahaan
memiliki 100% saham PT Metro Selular Nusantara
(Metrosel) dan PT Telekomindo Selular Raya
(Telesera), serta 98,57% saham PT Komunikasi
Selular Indonesia (Komselindo). Penggabungan
usaha dilakukan dengan metode penyatuan
kepemilikan (pooling of interest), dimana
Perusahaan tetap berdiri dan Komselindo,
Metrosel serta Telesera bubar demi hukum tanpa
melalui proses likuidasi. Penggabungan usaha
dinyatakan dalam akta No. 152 dan 153 tanggal
22 Mei 2007 dari Aulia Taufani S.H., pengganti
Sutjipto S.H., notaris di Jakarta. Berdasarkan akta
penggabungan usaha, seluruh aktivitas, operasi,
kekayaan, izin, kewajiban serta karyawan
Komselindo, Metrosel dan Telesera beralih secara
hukum kepada Perusahaan. Perubahan Anggaran
Dasar Perusahaan hasil penggabungan usaha
tersebut telah diterima oleh Menteri Hukum dan
Hak Asasi Manusia Republik Indonesia dalam
Surat No. W7-HT.01.04-7621 tanggal 29 Mei
2007.
Prior to the merger, the Company owned 100% of
the shares of PT Metro Selular Nusantara
(Metrosel) and PT Telekomindo Selular Raya
(Telesera), and 98.57% of the shares of
PT Komunikasi Selular Indonesia (Komselindo).
Accordingly, the merger was accounted for using
the pooling of interest method, wherein the
Company became the surviving entity and
Komselindo, Metrosel and Telesera were legally
dissolved without undergoing liquidation. The
merger was stated in deed No. 152 and No. 153
dated May 22, 2007 of Aulia Taufani S.H.,
substitute of Sutjipto S.H., notary in Jakarta.
Based on the merger deed, all activities,
operations, assets, permits, liabilities and
employees of Komselindo, Metrosel and Telesera
were legally transferred to the Company. The
change of the Articles of Association of the
Company as a result of the merger had been
received by the Minister of Law and Human Rights
of the Republic of Indonesia in his Letter
No. W7-HT.01.04-7621 dated May 29, 2007.
Pada tanggal 29 Mei 2007, Perusahaan
memperoleh persetujuan atas penggabungan
usaha dari Kepala Badan Koordinasi Penanaman
Modal
(BKPM)
dalam
Suratnya
No. 715/III/PMA/2007.
On May 29, 2007, the Company obtained the
approval for the merger from the Chairman of the
Capital Investment Coordinating Board (BKPM)
in his Letter No. 715/III/PMA/2007.
Pada tanggal 31 Mei 2007, perubahan Anggaran
Dasar Perushaan dalam rangka penggabungan
usaha telah didaftarkan dalam Daftar Perusahaan
Departemen Perdagangan Republik Indonesia
dengan agenda No. 1300/RUB.09.05/V/2007.
On May 31, 2007, the amendment of the
Company’s Articles of Association pursuant to
the merger was registered in the Company’s List
of the Department of Trade of the Republic of
Indonesia
with
agenda
No. 1300/RUB.09.05/V/2007.
Sehubungan dengan penggabungan usaha
tersebut, tidak ada saham baru yang dikeluarkan
untuk Metrosel dan Telesera karena Perusahaan
memiliki seluruh saham Metrosel dan Telesera,
sedangkan untuk Komselindo, terdapat sebanyak
4.319.692 saham dimiliki oleh pemegang saham
minoritas. Sebagai konsekuensi, Perusahaan
mengeluarkan saham baru kepada pemegang
saham minoritas tersebut dengan menggunakan
faktor konversi satu saham Komselindo akan
memperoleh 9.964.962 saham Perusahaan.
Faktor konversi tersebut didasarkan pada laporan
penilaian dari PT Zodiac Perintis Penilai, penilai
independen. Dengan penggunaan faktor konversi
tersebut, seluruh pemegang saham minoritas
Komselindo memperoleh sebanyak 43.045.567
saham Perusahaan dengan nilai nominal Rp100
per saham, sehingga jumlah modal disetor
Perusahaan
meningkat
menjadi
sebesar
Rp1.962.840.572.700.
In relation to this merger, no new shares were
issued to Metrosel and Telesera since the
Company owned 100% of the shares of these
companies. While for Komselindo, there were
4,319,692 shares owned by the minority
stockholders, consequently, the Company issued
new shares to the minority stockholders, using
conversion factor of one Komselindo’s share is
equivalent to 9,964,962 of the Company’s shares.
This conversion factor is based on the valuation
report of PT Zodiac Perintis Penilai, an
independent appraiser. Using this conversion
factor, all the minority stockholders of Komselindo
received 43,045,567 of the Company’s shares,
with par value of Rp100 per share, and the
Company’s paid-up capital increased to
Rp1,962,840,572,700.
- 11 -
Setelah
penggabungan
usaha,
komposisi
pemegang saham Perusahaan adalah sebagai
berikut:
Pemegang saham/Name of stockholders
After the merger, the Company’s stockholders
were as follows:
Jumlah Lembar
saham/
Number of
shares
Persentase
kepemilikan/
Percentage of
ownership
%
Jumlah modal
ditempatkan dan
disetor penuh/
Total paid-up capital
Rp
PT Global Mediacom Tbk (d/h/formerly
PT Bimantara Citra Tbk)
Asia Link B.V.
PT Centralindo Pancasakti Cellular
PT TDM Aset Manajemen
KT Freetel Co., Ltd., Korea
Public
11.899.894.294
1.182.053.593
1.013.051.863
716.546.828
477.076.670
404.611.912
3.935.170.567
60,63
6,02
5,16
3,65
2,43
2,06
20,05
1.189.989.429.400
118.205.359.300
101.305.186.300
71.654.682.800
47.707.667.000
40.461.191.200
393.517.056.700
Jumlah/Total
19.628.405.727
100,00
1.962.840.572.700
Pernyataan Standar Akuntansi Keuangan (PSAK)
No. 22, tentang “Akuntansi Penggabungan Usaha”
menyatakan bahwa dalam menerapkan metode
penyatuan kepemilikan, unsur-unsur laporan
keuangan dari perusahaan yang bergabung untuk
periode terjadinya penggabungan tersebut dan
untuk periode perbandingan yang diungkapkan
harus dimasukkan dalam laporan keuangan
gabungan seolah-olah perusahaan tersebut telah
bergabung sejak permulaan periode yang
disajikan tersebut.
The Statement of Financial Standard (PSAK)
No. 22, “Accounting for Business Combination”
stated that in applying the pooling of interest
method, the components of the financial
statements of the combined Company for the
period, during which the business combination
occurred and for the periods presented for
comparison purposes, must be presented in such
a manner as if the companies were combined
from the beginning of the earliest period
presented.
Jika
penggabungan
usaha
diasumsikan
dilaksanakan pada awal tahun 2007, saldo awal
hak
minoritas
Komselindo
sebesar
Rp1.254.540.742 akan tereliminasi dan dicatat
sebagai tambahan modal disetor atas penerbitan
saham kepada pemegang saham minoritas
Komselindo.
Assuming that the merger happened at the
beginning of 2007, the beginning balance of the
minority interest of Komselindo amounting to
Rp1,254,540,742 will be eliminated and to be
recorded under additional paid-up capital for the
shares to be issued to minority stockholders of
Komselindo.
Perusahaan memiliki 100% saham Metrosel dan
Telesera serta 98,57% saham Komselindo dan
laporan keuangannya dikonsolidasikan dalam
laporan keuangan Perusahaan.
The Company had 100% shares ownership in
Metrosel and Telesera, and 98.57% shares
ownership in Komselindo and their financial
statements had been consolidated into the
Company’s financial statements.
Seluruh perjanjian signifikan yang dilakukan
Telesera, Metrosel dan Komselindo telah dialihkan
secara hukum kepada Perusahaan.
All the significant agreements entered into by
Telesera, Metrosel and Komselindo were legally
transferred to the Company.
- 12 -
3.
IKHTISAR KEBIJAKAN AKUNTANSI PENTING
3.
a. Penyajian Laporan Keuangan Konsolidasi
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
a. Consolidated
Presentation
Financial
Statements
Laporan keuangan konsolidasi disusun dengan
menggunakan prinsip dan praktik akuntansi
yang berlaku umum di Indonesia yaitu
Pernyataan Standar Akuntansi Keuangan dan
Peraturan Badan Pengawas Pasar Modal
(Bapepam) No. VIII.G.7 tanggal 13 Maret
2000.
The consolidated financial statements have
been prepared using accounting principles and
reporting practices generally accepted in
Indonesia namely the Statements of Financial
Accounting Standards and Bapepam’s Rule
No. VIII.G.7 dated March 13, 2000.
Dasar
penyusunan
laporan
keuangan
konsolidasi, kecuali untuk laporan arus kas,
adalah dasar akrual. Mata uang pelaporan
yang digunakan untuk penyusunan laporan
keuangan konsolidasi adalah mata uang
Rupiah (Rp). Laporan keuangan konsolidasi
tersebut disusun berdasarkan nilai historis,
kecuali beberapa akun tertentu disusun
berdasarkan pengukuran lain sebagaimana
diuraikan dalam kebijakan akuntansi masingmasing akun tersebut.
The consolidated financial statements, except
for the consolidated statements of cash flows,
are prepared under the accrual basis of
accounting. The reporting currency used in the
preparation of the consolidated financial
statements is the Indonesian Rupiah, while the
measurement basis is the historical cost,
except for certain accounts which are
measured on the bases described in the
related accounting policies.
Laporan arus kas konsolidasi disusun dengan
menggunakan metode langsung dengan
mengelompokkan arus kas dalam aktivitas
operasi, investasi dan pendanaan.
The consolidated statements of cash flows are
prepared using the direct method with
classifications of cash flows into operating,
investing and financing activities.
b. Prinsip Konsolidasi
b. Principles of Consolidation
Laporan
keuangan
konsolidasi
menggabungkan
laporan
keuangan
Perusahaan dan entitas yang dikendalikan
oleh Perusahaan yang disusun sampai dengan
31 Desember setiap tahunnya. Pengendalian
dianggap ada apabila Perusahaan mempunyai
hak untuk mengatur dan menentukan
kebijakan finansial dan operasional dari
investee untuk memperoleh manfaat dari
aktivitasnya.
The
consolidated
financial
statements
incorporate the financial statements of the
Company and entities controlled by the
Company made up to December 31 each year.
Control is achieved where the Company has
the power to govern the financial and operating
policies of the investee entity so as to obtain
benefits from its activities.
Pada saat akuisisi, aset dan kewajiban anak
perusahaan diukur sebesar nilai wajar pada
tanggal akuisisi. Selisih lebih antara biaya
perolehan dan bagian Perusahaan atas nilai
wajar aset dan kewajiban yang dapat
diidentifikasi diakui sebagai goodwill.
On acquisition, the assets and liabilities of a
subsidiary are measured at their fair values at
the date of acquisition. Any excess of the cost
of acquisition over the Company’s interest in
the fair values of the identifiable assets and
liabilities acquired is recognized as goodwill.
Jika biaya perolehan lebih rendah dari bagian
Perusahaan atas nilai wajar aset dan
kewajiban yang dapat diidentifikasi yang
diakuisisi pada tanggal transaksi, maka nilai
wajar aset non-moneter yang diakuisisi harus
diturunkan secara proposional.
When the cost of acquisition is less than the
Company’s interest in the fair values of the
identifiable assets and liabilities acquired as at
the date of acquisition (i.e. discount on
acquisition), the fair values of the acquired
non-monetary
assets
are
reduced
proportionately.
- 13 -
Sisa selisih lebih setelah pengurangan nilai
wajar aset non-moneter tersebut, diakui
sebagai goodwill negatif.
The excess remaining after reducing the fair
values of non-monetary assets acquired, is
recognized as negative goodwill.
Hak pemegang saham minoritas dinyatakan
sebesar bagian minoritas dari biaya perolehan
historis aset bersih. Hak minoritas akan
disesuaikan untuk bagian minoritas dari
perubahan ekuitas. Kerugian yang menjadi
bagian minoritas melebihi hak minoritas
dialokasikan kepada bagian induk perusahaan.
The interest of the minority shareholders is
stated at the minority’s proportion of the
historical cost of the net assets. The minority
interest is subsequently adjusted for the
minority's share of movements in equity. Any
losses applicable to the minority interest in
excess of the minority interest are allocated
against the interests of the parent.
Hasil akuisisi anak perusahaan selama tahun
berjalan termasuk dalam laporan laba rugi
konsolidasi.
The results of subsidiaries acquired during the
year are included in the consolidated
statements of income.
Seluruh transaksi antar perusahaan, saldo,
penghasilan dan beban dieliminasi pada saat
konsolidasi.
All intra-group transactions, balances, income
and expenses are eliminated on consolidation.
Selisih antara biaya perolehan dan bagian
Perusahaan atas nilai wajar aset dan
kewajiban anak perusahaan dalam transaksi
restrukturisasi antara entitas sepengendali
dibukukan dalam akun “Selisih Nilai Transaksi
Restrukturisasi Entitas Sepengendali” dan
disajikan sebagai unsur ekuitas.
Difference between the acquisition cost and
Company’s interest in subsidiaries assets and
liabilities fair value in restructuring transaction
of entities under common control is recorded in
account “Difference in value of restructuring
transaction among entities under common
control” and presented as part of equity.
c. Foreign
Currency
Balances
c. Transaksi Dan Saldo Dalam Mata Uang
Asing
Transactions
and
Pembukuan Perusahaan diselenggarakan
dalam mata uang Rupiah. Transaksi-transaksi
selama tahun berjalan dalam mata uang asing
dicatat dengan kurs yang berlaku pada saat
terjadinya transaksi. Pada tanggal neraca, aset
dan kewajiban moneter dalam mata uang
asing disesuaikan untuk mencerminkan kurs
yang
berlaku pada tanggal tersebut.
Keuntungan atau kerugian kurs yang timbul
dikreditkan atau dibebankan dalam laporan
laba rugi tahun yang bersangkutan.
The books of accounts of the Company are
maintained in Indonesian Rupiah except the
foreign subsidiary. Transactions during the
year involving foreign currencies are recorded
at the rates of exchange prevailing at the time
the transactions are made. At balance sheet
date,
monetary
assets
and
liabilities
denominated in foreign currencies are adjusted
to reflect the rates of exchange prevailing at
that date. The resulting gains or losses are
credited or charged to current operations.
Pembukuan anak perusahaan diluar negeri
yang kegiatan usahanya merupakan bagian
integral dari kegiatan usaha Perusahaan
dijabarkan ke dalam mata uang Rupiah
dengan menggunakan prosedur yang sama.
The books of accounts of the foreign
subsididary which is an integral part of the
Company’s operations are translated to
Indonesian Rupiah using the same procedures.
- 14 -
d. Transaksi Hubungan Istimewa
Pihak-pihak yang
istimewa adalah:
mempunyai
d. Transactions with Related Parties
hubungan
Related parties consist of the following:
1)
perusahaan baik langsung maupun
melalui satu atau lebih perantara,
mengendalikan, atau dikendalikan oleh,
atau berada di bawah pengendalian
bersama, dengan Perusahaan (termasuk
holding companies, subsidiaries dan fellow
subsidiaries);
1)
companies that directly, or indirectly
through one or more intermediaries,
control, or are controlled by, or are under
common control with, the Company
(including holding companies, subsidiaries
and fellow subsidiaries);
2)
perusahaan asosiasi;
2)
associated companies;
3)
perorangan yang memiliki, baik secara
langsung maupun tidak langsung, suatu
kepentingan hak suara di Perusahaan
yang berpengaruh secara signifikan, dan
anggota keluarga dekat dari perorangan
tersebut (yang dimaksudkan dengan
anggota keluarga dekat adalah mereka
yang dapat diharapkan mempengaruhi
atau dipengaruhi perorangan tersebut
dalam transaksinya dengan Perusahaan);
3)
individuals owning, directly or indirectly,
an interest in the voting power of the
Company that gives them significant
influence over the Company, and close
members of the family of any such
individuals (close members of the family
are those who can influence or can be
influenced by such individuals in their
transactions with the Company);
4)
karyawan kunci, yaitu orang-orang yang
mempunyai wewenang dan tanggung
jawab untuk merencanakan, memimpin
dan mengendalikan kegiatan Perusahaan,
yang meliputi anggota dewan komisaris,
direksi dan manajer dari Perusahaan serta
anggota keluarga dekat orang-orang
tersebut; dan
4)
key management personnel who have the
authority and responsibility for planning,
directing and controlling the Company’s
activities,
including
commissioners,
directors and managers of the Company
and close members of their families; and
5)
perusahaan di mana suatu kepentingan
substansial dalam hak suara dimiliki baik
secara langsung maupun tidak langsung
oleh setiap orang yang diuraikan dalam
butir (3) atau (4), atau setiap orang
tersebut mempunyai pengaruh signifikan
atas perusahaan tersebut. Ini mencakup
perusahaan-perusahaan yang dimiliki
anggota dewan komisaris, direksi atau
pemegang saham utama dari Perusahaan
dan
perusahaan-perusahaan
yang
mempunyai anggota manajemen kunci
yang sama dengan Perusahaan.
5)
companies in which a substantial interest
in the voting power is owned, directly or
indirectly, by any person described in (3)
or (4) or over which such a person is able
to exercise significant influence. This
includes
companies
owned
by
commissioners,
directors
or
major
stockholders of the Company and
companies which have a common key
member of management as the Company.
All transactions with related parties, whether or
not made at similar terms and conditions as
those done with third parties, are disclosed in
the financial statements.
Semua transaksi dengan pihak hubungan
istimewa, baik yang dilakukan dengan atau
tidak dengan persyaratan dan kondisi yang
sama sebagaimana dilakukan dengan pihak
ketiga, diungkapkan dalam laporan keuangan.
- 15 -
e. Penggunaan Estimasi
e. Use of Estimates
The preparation of financial statements in
conformity with accounting principles generally
accepted in Indonesia requires management to
make estimates and assumptions that affect
the reported amounts of assets and liabilities,
and disclosure of contingent assets and
liabilities at the date of the financial
statements, and the reported amounts of
revenues and expenses during the reporting
period. Actual results could be different from
these estimates.
Penyusunan laporan keuangan sesuai dengan
prinsip akuntansi yang berlaku umum di
Indonesia
mengharuskan
manajemen
membuat
estimasi
dan
asumsi
yang
mempengaruhi jumlah aset dan kewajiban
yang dilaporkan dan pengungkapan aset dan
kewajiban kontinjensi pada tanggal laporan
keuangan serta jumlah pendapatan dan beban
selama periode pelaporan. Realisasi dapat
berbeda dengan jumlah yang diestimasi.
f. Cash and Cash Equivalents
f. Kas dan Setara Kas
Kas dan setara kas terdiri dari kas, bank dan
semua investasi yang jatuh tempo dalam
waktu tiga bulan atau kurang dari tanggal
perolehannya dan yang tidak dijaminkan serta
tidak dibatasi penggunaannya.
Cash and cash equivalents consist of cash on
hand and in banks and all unrestricted
investments with maturities of three months or
less from the date of placement.
Sertifikat Bank Indonesia yang jatuh temponya
kurang dari tiga bulan diklasifikasi sebagai kas
dan setara kas dan dinyatakan sebesar harga
perolehan dan disesuaikan dengan premi atau
diskonto yang belum diamortisasi.
Central Bank Certificate (SBI) with maturities
less than three months is classified as cash
and cash equivalents and stated at cost and
adjusted for the unamortized premium or
discount.
g. Investasi
g. Investments
Investasi dalam fund dinyatakan sebesar nilai
wajarnya berdasarkan nilai aset bersih.
Kenaikan (penurunan) nilai aset bersih
disajikan dalam laporan laba rugi tahun
berjalan.
Investments in funds are stated at net asset
value of the funds. Increase (decrease) in net
asset value of fund is reflected in the
consolidated statements of income for the
year.
h. Allowance for Doubtful Accounts
h. Penyisihan Piutang Ragu-ragu
Allowance for doubtful accounts is provided
based on a review of the status of the
individual receivable accounts at the end of the
period.
Penyisihan piutang ragu-ragu ditetapkan
berdasarkan penelaahan terhadap masingmasing akun piutang pada akhir tahun.
i.
i. Inventories
Persediaan
Inventories are stated at cost or net realizable
value, whichever is lower. Cost is determined
using the weighted average method.
Persediaan dinyatakan berdasarkan biaya
perolehan atau nilai realisasi bersih, mana
yang lebih rendah. Biaya perolehan ditentukan
dengan metode rata-rata tertimbang.
j.
j. Prepaid Expenses
Biaya Dibayar Dimuka
Prepaid expenses are amortized over their
beneficial periods using the straight-line
method.
Biaya dibayar dimuka dibebankan sesuai
dengan masa manfaat masing-masing biaya
dengan menggunakan metode garis lurus.
- 16 -
k. Property
and
Acquisitions
k. Aset Tetap – Pemilikan Langsung
Equipment
-
Direct
Pada tahun 2008, Perusahaan menerapkan
Pernyataan Standar Akuntansi Keuangan 16 –
Revisi 2007 – Aset Tetap. Perusahaan
menggunakan model biaya untuk pengukuran
aset tetapnya. Dengan model biaya, aset tetap
dinyatakan sebesar biaya perolehannya
setelah
dikurangi
dengan
akumulasi
penyusutan dan akumulasi rugi penurunan
nilai, jika ada.
In 2008, the Company adopted Statements of
Financial Accounting Standards 16 – Revised
2007 – Fixed Asset. The Company use the
cost model for measuring its fixed assets.
Under cost model, fixed assets are stated at
cost less accumulated depreciation and any
accumulated impairment losses, if any.
Aset tetap, kecuali tanah, disusutkan dengan
menggunakan metode garis lurus berdasarkan
taksiran masa manfaat ekonomis aset tetap
sebagai berikut:
Property and equipment except land, are
depreciated using the straight-line method
based on the estimated useful lives of the
assets as follows:
Tahun/Years
Infrastruktur telekomunikasi
Peralatan telekomunikasi
Menara pemancar
Fasilitas dan perangkat listrik
Bangunan
Prasarana
Kendaraan
Peralatan kantor
Peralatan penunjang lainnya
5, 8, 10,15
8 - 20
8
20
2-8
4
4
4-8
Telecommunication infrastructure
Telecommunication equipment
Relay towers
Electricity equipment and facility
Building
Improvements
Vehicles
Office equipment
Other supporting equipment
Nilai sisa, taksiran masa manfaat, dan metode
penyusutan atas aset tetap dievaluasi dan
disesuaikan setiap tanggal neraca. Dampak
dari revisi tersebut, jika ada, diakui dalam
laporan laba rugi pada periode terjadinya.
The residual values, estimated useful lives and
depreciation method of fixed assets are
reviewed, and adjusted as appropriate, at
each balance sheet date. The effects of any
revision are recognized in the income
statement when the changes arise.
Tanah
dinyatakan
berdasarkan
perolehan dan tidak disusutkan.
Land is stated at cost and is not depreciated.
biaya
Bila nilai tercatat suatu aset melebihi taksiran
jumlah yang dapat diperoleh kembali maka
nilai tersebut diturunkan ke jumlah yang dapat
diperoleh kembali tersebut, yang ditentukan
sebagai nilai tertinggi antara harga jual neto
dan nilai pakai. Penurunan nilai aset tersebut
diakui sebagai kerugian penurunan nilai aset
dan dibebankan pada tahun berjalan.
When the carrying amount of an asset
exceeds its estimated recoverable amount, the
asset is written down to its estimated
recoverable amount, which is determined as
the higher of net selling price or value in use.
Impairment of asset is recognized as loss on
impairment of asset which is charged to
current operations.
Beban
pemeliharaan
dan
perbaikan
dibebankan pada laporan laba rugi pada saat
terjadinya, pengeluaran yang memperpanjang
masa manfaat atau memberi manfaat
ekonomis di masa yang akan datang dalam
bentuk
peningkatan
kapasitas
atau
peningkatan standar kinerja dikapitalisasi. Aset
tetap yang sudah tidak digunakan lagi atau
yang dijual dikeluarkan dari kelompok aset
tetap berikut akumulasi penyusutannya.
Keuntungan atau kerugian dari penjualan aset
tetap tersebut dibukukan dalam laporan laba
rugi pada tahun yang bersangkutan.
The cost of repairs and maintenance is
charged
to
operations
as
incurred;
expenditures which extend the useful life of
the asset or result in increased future
economic benefits such as increase in
capacity and standards of performance are
capitalized. When assets are retired or
otherwise disposed of, their carrying values
and the related accumulated depreciation are
removed from the account and any resulting
gain or loss is reflected in the current
operations.
- 17 -
Construction in progress is stated at cost
which includes borrowing costs during
construction on debts incurred to finance the
construction. Construction in progress is
transferred to the respective property and
equipment account when completed and ready
for use.
Aset dalam penyelesaian dinyatakan sebesar
biaya perolehan. Biaya perolehan tersebut
termasuk biaya pinjaman yang terjadi selama
masa pembangunan yang timbul dari hutang
yang digunakan untuk pembangunan aset
tersebut. Akumulasi biaya perolehan akan
dipindahkan ke masing-masing aset tetap
yang bersangkutan pada saat selesai dan siap
digunakan.
l.
Goodwill
l.
Goodwill
Goodwill positif merupakan selisih lebih antara
biaya perolehan dan bagian Perusahaan atas
nilai wajar aset dan kewajiban anak
perusahaan yang dapat diidentifikasi. Goodwill
positif diakui sebagai aset dan diamortisasi
secara garis lurus selama 20 tahun.
Perusahaan menetapkan masa manfaat
goodwill positif berdasarkan manfaat ekonomis
yang diperoleh dari akuisisi anak perusahaan
yang memiliki izin jaringan telekomunikasi.
Dengan
akuisisi
tersebut,
Perusahaan
memperoleh manfaat ekonomis sebagai
penyelenggara telekomunikasi meliputi seluruh
wilayah Indonesia.
Positive goodwill represents the excess of the
cost of acquisition over the Company’s interest
in the fair value of the identifiable assets and
liabilities of subsidiary. Positive goodwill is
recognized as an assets and amortized on
straight-line method over 20 years. The
Company determined the useful life of goodwill
based on the economic benefits obtained from
acquisition
of
subsidiaries
with
telecommunication network licenses.
Goodwill negatif merupakan selisih lebih
antara bagian Perusahaan atas nilai wajar aset
dan kewajiban yang dapat diidentifikasi
dengan biaya perolehan anak perusahaan,
setelah pengurangan nilai wajar aset nonmoneter yang diperoleh. Goodwill negatif
diperlakukan
sebagai
penghasilan
ditangguhkan dan diakui sebagai penghasilan
dengan menggunakan metode garis lurus
selama 20 tahun.
Negative goodwill represents the excess of the
Company’s interest in fair value of the
identifiable assets and liabilities over the cost
of acquisition of a subsidiary, after reducing
the fair value of non-monetary assets
acquired. Negative goodwill is treated as
deferred income and recognized as income on
a straight-line method over 20 years.
Perusahaan menelaah nilai tercatat goodwill
pada saat terdapat peristiwa atau keadaan
yang menunjukkan bahwa nilai goodwill
menurun. Kerugian penurunan nilai diakui
sebagai beban usaha tahun berjalan.
The Company reviews the carrying amount of
goodwill whenever events or circumstances
indicate that its value is impaired. Impairment
loss is recognized as a charge to current
operations.
m. Beban Tangguhan
m. Deferred Charges
Direct cost incurred in relation to the
subscriber acquisition program is deferred and
amortized based on the subscribers churn
rate, and not exceeding thirty six months.
Churn rate is reviewed periodically to reflect
actual churn rate of subscriber for the year,
and additional impairment losses, if any, are
charged to current operations.
Biaya langsung dalam rangka program
perolehan pelanggan dicatat sebagai beban
tangguhan dan diamortisasi berdasarkan
tingkat penurunan pelanggan dan tidak
melebihi 36 bulan. Tingkat penurunan
pelanggan ditelaah secara periodik untuk
mencerminkan tingkat penurunan aktual tahun
berjalan, dan tambahan penurunan nilai, jika
ada, dibebankan pada tahun berjalan.
- 18 -
n. Sewa Guna Usaha
n. Leases
Sejak
tahun
2007
Perusahaan
telah
menerapkan Pernyataan Standar Akuntansi
Keuangan (PSAK) 30 – Revisi 2007 – Sewa.
Since 2007, the Company adopted Statement
of Financial Accounting Standards 30 –
Revised 2007 – Leases.
Sewa
diklasifikasikan
sebagai
sewa
pembiayaan
apabila
sewa
tersebut
mengalihkan secara substansial seluruh risiko
dan manfaat yang terkait dengan kepemilikan
asset. Sewa lainnya, yang tidak memenuhi
kriteriaa tersebut, diklasifikasikan sebagai
sewa operasi.
Leases are classified as finance leases
whenever the terms of the lease transfer
substantially all the risks and rewards of
ownership to the lessee. All other leases are
classified as operating leases.
Aset yang diperoleh melalui sewa pembiayaan
diakui sebagai aset sebesar nilai wajar aset
sewaan pada awal sewa atau sebesar nilai kini
dari pembayaran sewa minimum, jika nilai kini
lebih rendah dari nilai wajar. Kewajiban yang
berkaitan dengan sewa pembiayaan diakui
dalam neraca sebagai kewajiban sewa
pembiayaan.
Assets acquired under finance leases are
initially recognized as assets at the fair value
at the inception of the lease or, if lower, at the
present value of the minimum lease payments.
The corresponding liability to the lessor is
included in the balance sheet as a finance
lease obligation.
Pembayaran sewa minimum dipisahkan antara
bagian beban keuangan dan bagian pelunasan
kewajiban untuk menghasilkan tingkat suku
bunga periodik yang konstan atas saldo
kewajiban. Beban keuangan dibebankan
secara langsung ke laba atau rugi, kecuali
beban tersebut berkaitan langsung dengan
perolehan aset tertentu yang dikapitalisasi
sesuai dengan kebijakan umum biaya
pinjaman. Sewa kontinjen dibebankan pada
periode terjadinya.
Lease payments are apportioned between
finance charges and reduction of the lease
obligation so as to achieve a constant rate of
interest on the remaining balance of the
liability. Finance charges are charged directly
to profit or loss, unless they are directly
attributable to qualifying assets, in which case
they are capitalized in accordance with the
general policy on borrowing costs. Contingent
rentals are recognized as expenses in the
periods in which they are incurred.
Jumlah yang dapat disusutkan dari aset
sewaan dialokasikan ke setiap periode
akuntansi selama perkiraan masa penggunaan
dengan dasar yang sistematis dan konsisten
dengan kebijakan penyusutan aset tetap
(Catatan 2k). Jika terdapat kepastian memadai
bahwa Perusahaan akan mendapatkan hak
kepemilikan pada akhir masa sewa, perkiraan
masa penggunaan aset adalah umur manfaat
aset tersebut. Jika tidak, maka aset sewaan
disusutkan selama periode yang lebih pendek
antara masa sewa dan umur menfaatnya.
The depreciable amount of a leased asset is
allocated to each accounting period during the
period of expected use on a systematic basis
consistent with the depreciation policy the
lessee adopts for depreciable assets that are
owned (Note 2k). If there is a reasonable
certainty that the Company will obtain
ownership by the end of the lease term, the
period of expected use is the useful life of the
asset; otherwise, the asset is depreciated over
the shorter of the lease term and its useful life.
Sewa operasi diakui sebagai beban dengan
dasar garis lurus selama masa sewa. Sewa
kontinjen yang timbul dari sewa operasi diakui
sebagai beban pada periode terjadinya.
Operating leases are recognized as an
expense on a straight-line basis over the lease
term.
Contingent rentals arising under
operating leases are recognized as an
expense in the period in which they are
incurred.
- 19 -
o. Debt Issuance Costs
o. Biaya Emisi Hutang
Debt issuance costs are deducted directly
from the proceeds of the related bonds/debt to
determine the net proceeds. The difference
between the net proceeds and nominal value
is amortized using the straight-line method
over the term of the bonds/debt.
Biaya emisi hutang yang timbul sehubungan
dengan
penerbitan
obligasi/hutang
dikurangkan
dari
hasil
penerbitan
obligasi/hutang tersebut. Selisih antara hasil
emisi bersih dengan nilai nominal diamortisasi
dengan metode garis lurus selama jangka
waktu obligasi/hutang.
p. Biaya Emisi Saham
p. Issuance Costs of Shares
Biaya emisi saham disajikan sebagai bagian
dari tambahan modal disetor dan tidak
diamortisasi.
Share issuance costs are presented as part of
additional paid-up capital and are not
amortized.
q. Imbalan Pasca Kerja
q. Post-Employment Benefits
Perusahaan membukukan imbalan pasca kerja
imbalan pasti untuk karyawan sesuai dengan
Undang-Undang Ketenagakerjaan No. 13/2003.
Tidak terdapat pendanaan yang disisihkan
sehubungan dengan imbalan pasca kerja ini.
Pada tahun 2006 dan sampai dengan tanggal
31 Mei 2007, Komselindo, yang sebelumnya
adalah anak perusahaan, juga memberikan
program pensiun imbalan pasti untuk semua
karyawan tetapnya. Dana pensiun tersebut
dikelola oleh Dana Pensiun Bimantara
(Danapera).
The Company recognizes defined postemployment benefits in accordance with Labor
Law No. 13/2003. No funding has been made
to these defined benefit schemes. In 2006 and
until May 31, 2007, Komselindo, a former
subsidiary, had a defined benefit pension plan
covering all its local permanent employees in
addition to the defined post-employment
benefits under the Labor Law. The pension
plan is managed by Dana Pensiun Bimantara
(Danapera).
Perhitungan
imbalan
pasca
kerja
menggunakan metode Projected Unit Credit.
Akumulasi keuntungan dan kerugian aktuarial
bersih yang belum diakui yang melebihi 10%
dari nilai kini kewajiban imbalan pasti diakui
dengan metode garis lurus selama rata-rata
sisa masa kerja yang diperkirakan dari para
pekerja dalam program tersebut. Biaya jasa
lalu dibebankan langsung apabila imbalan
tersebut menjadi hak atau vested, dan
sebaliknya akan diakui sebagai beban dengan
metode garis lurus selama periode rata-rata
sampai imbalan tersebut menjadi vested.
The cost of providing post-employment
benefits is determined using the Projected Unit
Credit Method. The accumulated unrecognized
actuarial gains and losses that exceed 10% of
the Company’s defined benefits obligation is
recognized on a straight-line basis over the
expected average remaining working lives of
the participating employees. Past service cost
is recognized immediately to the extent that the
benefits are already vested, and otherwise is
amortized on a straight-line basis over the
average period until the benefits become
vested.
Jumlah yang diakui sebagai kewajiban imbalan
pasti di neraca merupakan nilai kini kewajiban
imbalan pasti disesuaikan dengan keuntungan
dan kerugian aktuarial yang belum diakui dan
biaya jasa lalu yang belum diakui.
The benefit obligation recognized in the
balance sheets represent the present value of
the defined benefit obligation, as adjusted for
unrecognized actuarial gains and losses and
unrecognized past service cost, as reduced by
the fair value of plan assets.
- 20 -
r. Revenue and Expense Recognition
r. Pengakuan Pendapatan dan Beban
Pendapatan jasa prabayar terdiri dari
penjualan paket perdana dan penjualan
voucher pulsa isi ulang. Paket perdana terdiri
dari kartu Removable User Identification
Module (RUIM) dan pulsa. Penjualan kartu
RUIM diakui sebagai pendapatan pada saat
paket perdana diserahkan kepada distributor,
agen atau pelanggan dan pulsa paket perdana
dicatat sebagai pendapatan diterima dimuka
dan diakui sebagai pendapatan pada saat jasa
diserahkan berdasarkan pulsa yang digunakan
oleh pelanggan.
Revenue from prepaid services consists of
sale of starter packs and pulse reload
vouchers.
Starter
packs
consists
of
Removable User Identification Module (RUIM)
card and preloaded pulse. Sale of RUIM cards
is recognized as revenue upon delivery of the
starter packs to distributors, agents or
customers and the preloaded pulse is initially
recorded as unearned revenue and then
proportionately recognized as revenue when
the related service is rendered based on
usage of pulse by customer.
Penjualan voucher pulsa isi ulang kepada
distributor, agen atau pelanggan dicatat
sebagai pendapatan diterima dimuka dan
diakui sebagai pendapatan pada saat jasa
diserahkan berdasarkan pulsa yang digunakan
oleh pelanggan atau pada saat voucher
tersebut kadaluarsa.
Sale of pulse reload vouchers to distributors,
agents and customers is initially recorded as
unearned revenue and then recognized as
revenue when the related service is rendered
based on usage of pulse by customer or
whenever the unused stored value of the
vouchers has expired.
Pendapatan dari jasa pasca bayar diakui pada
saat jasa diserahkan kepada pelanggan
berdasarkan tarif yang berlaku dan durasi
hubungan telepon melalui jaringan selular
Perusahaan.
Revenue from postpaid services is recognized
when the services are rendered to customers
based on prevailing tariffs and duration of
successful phone calls and other usage made
through the Company’s cellular network.
Pendapatan jasa bulanan (abonemen) dan
jasa layanan nilai tambah diakui berdasarkan
tagihan atas jasa yang diberikan pada bulan
tersebut.
Revenue from monthly service fee and value
added services are recognized based on the
monthly billings during the period.
Pendapatan dan beban interkoneksi yang
didasarkan pada perjanjian interkoneksi
dengan penyelenggara telekomunikasi dalam
negeri dan luar negeri, diakui pada saat
terjadinya.
Revenue from network interconnection and
interconnection charges which are based on
agreements with other domestic and
international telecommunications carriers, are
recognized as incurred.
Pendapatan jasa lainnya diakui pada saat jasa
tersebut diberikan kepada pelanggan.
Revenues from other services are recognized
when the services are rendered.
Beban diakui sesuai manfaatnya pada tahun
bersangkutan (accrual basis).
Expenses are
(accrual basis).
- 21 -
recognized
when
incurred
s. Income Tax
s. Pajak Penghasilan
Beban pajak kini ditentukan berdasarkan laba
kena pajak dalam periode yang bersangkutan
yang dihitung berdasarkan tarif pajak yang
berlaku.
Current tax expense is determined based on
the taxable income for the year computed
using prevailing tax rates.
Aset dan kewajiban pajak tangguhan diakui
atas konsekuensi pajak periode mendatang
yang timbul dari perbedaan jumlah tercatat
aset dan kewajiban menurut laporan keuangan
dengan dasar pengenaan pajak aset dan
kewajiban. Kewajiban pajak tangguhan diakui
untuk semua perbedaan temporer kena pajak
dan aset pajak tangguhan diakui untuk
perbedaan temporer yang boleh dikurangkan,
sepanjang
besar
kemungkinan
dapat
dimanfaatkan untuk mengurangi laba kena
pajak pada masa datang.
Deferred tax assets and liabilities are
recognized for the future tax consequences
attributable to differences between the
financial statement carrying amounts of assets
and liabilities and their respective tax bases.
Deferred tax liabilities are recognized for all
taxable temporary differences and deferred tax
assets are recognized for deductible
temporary differences to the extent that it is
probable that taxable income will be available
in future periods against which the deductible
temporary differences can be utilized.
Pajak tangguhan diukur dengan menggunakan
tarif pajak yang berlaku atau secara
substansial telah berlaku pada tanggal neraca.
Pajak tangguhan dibebankan atau dikreditkan
dalam laporan laba rugi, kecuali pajak
tangguhan yang dibebankan atau dikreditkan
langsung ke ekuitas.
Deferred tax is calculated at the tax rates that
have been enacted or substantively enacted
as of balance sheet date. Deferred tax is
charged or credited in the statement of
income, except when it relates to items
charged or credited directly to equity, in which
case the deferred tax is also charged or
credited directly to equity.
Aset dan kewajiban pajak tangguhan disajikan
di neraca, kecuali pajak tangguhan untuk
entitas yang berbeda, atas dasar kompensasi
sesuai dengan penyajian aset dan kewajiban
pajak kini.
Deferred tax assets and liabilities are offset in
the balance sheet, except if these are for
different legal entities, in the same manner the
current tax assets and liabilities are presented.
t. Earnings Per Share
t. Laba Per Saham
Laba per saham dasar di hitung dengan
membagi laba bersih residual dengan jumlah
rata-rata tertimbang saham yang beredar pada
tahun yang bersangkutan.
Basic earnings per share is computed by
dividing net income by the weighted average
number of shares outstanding during the
period.
Laba per saham dilusian dihitung dengan
membagi laba bersih residual dengan jumlah
rata-rata tertimbang saham biasa yang telah
disesuaikan dengan dampak dari semua efek
berpotensi saham biasa yang dilutif.
Diluted earnings per share is computed by
dividing net income by the weighted average
number of shares outstanding as adjusted for
the effects of all dilutive potential ordinary
shares.
u. Instrumen Keuangan Derivatif
u. Derivative Financial Instruments
Instrumen
keuangan
derivatif
dinilai
berdasarkan nilai wajar pada saat tanggal
kontrak dibuat dan selanjutnya dinilai kembali
berdasarkan nilai wajar pada tanggal laporan
keuangan.
Derivative financial instruments are initially
measured at fair value on the contract date,
and are measured to fair value at subsequent
reporting dates.
- 22 -
Instrumen keuangan derivatif ini digunakan
untuk mengelola resiko yang berkaitan erat
dengan mutasi tingkat bunga. Namun
demikian, akuntansi lindung nilai tidak
diperlakukan karena identifikasi lindung nilai
dan dokumentasi yang diperlukan sesuai
dengan standar akuntansi belum dipenuhi.
Oleh karena itu, keuntungan atau kerugian dari
instrument derivatif tersebut diakui pada
laporan laba rugi. Perusahaan dan anak
perusahaan tidak menggunakan instrumen
keuangan derivatif ini untuk tujuan spekulasi.
These derivative financial instruments are used
to manage exposure to interest rate
movement. However, hedge accounting is not
applied as the hedging designation and
documentation
required
by
accounting
standard have not been met. Accordingly,
gains or losses on derivative financial
instruments are recognized in earnings. The
Company and its subsidiary do not use
derivative financial instruments for speculative
purposes.
Derivatif yang melekat pada instrumen
keuangan lainnya atau kontrak lainnya atau
kontrak
utama
non-finansial
lainnya
diperlakukan sebagai derivatif terpisah bila
resiko dan karakteristiknya tidak secara jelas
dan erat berhubungan dengan resiko dan
karakteristik kontrak utama dan kontrak utama
tersebut tidak dinyatakan dengan nilai wajar,
dengan keuntungan atau kerugian yang belum
direalisasi diakui pada laporan laba rugi
konsolidasi.
Derivatives embedded in other financial
instruments or other non-financial host
contracts are treated as separate derivative
when their risk and characteristics are not
closely related to those of host contracts and
the host contracts are not carried at fair value,
with unrealized gain or loss recognized in the
consolidated statement of income.
v. Informasi Segmen
v. Segment Information
Informasi segmen disusun sesuai dengan
kebijakan akuntansi yang dianut dalam
penyusunan dan penyajian laporan keuangan.
Bentuk primer pelaporan segmen adalah
segmen usaha sedangkan segmen sekunder
adalah segmen geografis.
Segment information is prepared using the
accounting principles adopted for preparing
and presenting the financial statements. The
primary reporting segment information is based
on business segment, while the secondary
reporting segment information is based on
geographical segment.
Segmen usaha adalah komponen perusahaan
yang dapat dibedakan dalam menghasilkan
produk atau jasa, baik produk atau jasa
individual maupun kelompok produk atau jasa
terkait, dan komponen itu memiliki risiko dan
imbalan yang berbeda dengan risiko dan
imbalan segmen lain.
A business segment is a distinguishable
component of an enterprise that is engaged in
producing an individual product or service or a
group of related products or services and that
is subject to risks and returns that are different
from those of other segments.
Segmen
geografis
adalah
komponen
perusahaan yang dapat dibedakan dalam
menghasilkan produk atau jasa pada
lingkungan ekonomi tertentu dan komponen itu
memiliki risiko dan imbalan yang berbeda
dengan risiko dan imbalan pada komponen
yang beroperasi pada lingkungan ekonomi lain.
A geographical segment is a distinguishable
component of an enterprise that is engaged in
providing products or services within a
particular economic environment and that is
subject to risks and returns that are different
from those of components operating in other
economic environments.
Aset dan kewajiban yang digunakan bersama
dalam satu segmen atau lebih dialokasikan
kepada setiap segmen jika, dan hanya jika,
pendapatan dan beban yang terkait dengan
aset tersebut juga dialokasikan kepada
segmen-segmen tersebut.
Assets and liabilities that relate jointly to two or
more segments are allocated to their
respective segments, if and only if, their related
revenues and expenses also are allocated to
those segments.
- 23 -
4.
KAS DAN SETARA KAS
4.
2008
Rp
Kas
Bank
Rupiah
Bank Mandiri
Bank Central Asia
Bank Internasional Indonesia
Bank Permata
Bank Negara Indonesia
Bank Niaga
Bank Danamon Indonesia
Lain-lain
Dollar Amerika Serikat
Standard Chartered Bank
Bank Mandiri
Sumitomo Mitsui Bank
Deutsche Bank
Lain-lain
Euro
Deutsche Bank
Deposito harian
Rupiah
Bank Mandiri
Deposito berjangka
Rupiah
Bank Mandiri
Bank Rakyat Indonesia
Bank Niaga
Bank Permata
Bank Permata
Deutsche Bank
Euro
Deutsche Bank
Jumlah
Tingkat bunga per tahun
Deposito harian
Deposito berjangka
Rupiah
5.
CASH AND CASH EQUIVALENTS
2007
Rp
918.868.922
974.386.109
9.477.007.165
7.587.967.411
514.834.759
349.584.508
286.890.100
269.597.885
153.760.102
1.517.000
41.025.123.578
26.572.433.515
1.945.150.706
825.727.444
2.270.278.318
531.577.229
246.929.252
2.005.000
1.133.667.297
179.415.088
98.656.544
75.343.665
82.340.277
301.919.357
4.132.962.965
79.099.308
107.254.581
71.981.505
145.875.900
245.147.885
-
64.000.000.000
400.000.000
-
400.000.000
120.000.000.000
50.000.000.000
10.000.000.000
310.827.000.000
218.109.966.579
2.058.753.300
-
23.734.079.923
852.668.943.331
-
4,00%
6,75%
-
6,75% - 8,25%
4,50% - 8,50%
BANK YANG DIBATASI PENGGUNAANNYA
5.
Pada tanggal 31 Desember 2007, akun ini
merupakan rekening bank Perusahaan di
Deutsche Bank yang dibatasi khusus digunakan
untuk pembelian handset.
Cash on hand
Cash in banks
Rupiah
Bank Mandiri
Bank Central Asia
Bank Internasional Indonesia
Bank Permata
Bank Negara Indonesia
Bank Niaga
Bank Danamon Indonesia
Others
U.S. Dollar
Standard Chartered Bank
Bank Mandiri
Sumitomo Mitsui Bank
Deutsche Bank
Others
Euro
Deutsche Bank
Call deposit
Rupiah
Bank Mandiri
Time deposits
Rupiah
Bank Mandiri
Bank Rakyat Indonesia
Bank Niaga
Bank Permata
U.S. Dollar
Bank Permata
Deutsche Bank
Euro
Deutsche Bank
Total
Interest rate per annum
Call deposit
Time deposits
Rupiah
U.S. Dollar
RESTRICTED CASH IN BANK
As of December 31, 2007, this account represents
the Company’s bank account in Deutsche Bank
which is restricted and specifically used for
payment for the purchase of handsets.
- 24 -
6.
INVESTASI JANGKA PENDEK
6.
2008
Rp
PT Bhakti Asset Management
TDM Aset Manajemen
Clariden Leu Ltd.
Lehman Liquidity Fund
Jumlah
SHORT-TERM INVESTMENTS
2007
Rp
200.647.490.550
87.480.000.000
859.696.983
288.987.187.533
66.845.304.675
80.000.000.000
47.454.099.375
4.078.661.721
198.378.065.771
PT Bhakti Asset Management
TDM Aset Manajemen
Clariden Leu Ltd.
Total
Pada tahun 2008 dan 2007, penghasilan
investasi
masing-masing
sebesar
Rp32.854.288.241 dan Rp29.086.389.472.
In 2008 and 2007, investment income amounted
to Rp32,854,288,241 and Rp29,086,389,472,
respectively.
PT Bhakti Asset Management (BAM)
PT Bhakti Asset Management (BAM)
Berdasarkan Kontrak Pengelolaan Dana tanggal
15 Desember 2006, Perusahaan menunjuk BAM,
pihak hubungan istimewa, sebagai manajer
investasi,
untuk
mengelola
dana
milik
Perusahaan sesuai dengan arahan investasi
Perusahaan dan peraturan perundang-undangan
yang berlaku.
Based on the Fund Management Contract dated
December 15, 2006, the Company had appointed
BAM, a related party, as fund manager, to
manage the Company’s fund in line with the
Company’s investment policy and prevailing
regulations.
Selama tahun yang berakhir 31 Desember 2008
Perusahaan melakukan tambahan penyetoran
bersih sebesar USD91.848.427 atau setara
dengan
Rp851.371.502.686
dan
Rp254.115.000.000, serta penarikan dana
sebesar USD66.598.427 atau setara dengan
Rp613.816.802.593 dan Rp339.169.471.613.
For the year ended December 31, 2008, the
Company placed additional fund amounting to
USD91,848,427
or
equivalent
to
Rp851,371,502,686 and Rp254,115,000,000,
and the Company also withdrew its fund
amounting to USD66,598,427 or equivalent
Rp613,816,802,593 and Rp339,169,471,613.
Pada tanggal 31 Desember 2008, nilai aset
bersih
dana
kelolaan
BAM
sebesar
Rp200.647.490.550.
As of December 31, 2008, the net asset value of
fund managed by BAM amounting to
Rp200,647,490,550.
TDM Aset Manajemen
TDM Aset Manajemen
Berdasarkan Kontrak Pengelolaan Dana tanggal
14 Desember 2007, Perusahaan menunjuk TDM,
sebagai manajer investasi, untuk mengelola dana
milik Perusahaan sesuai dengan arahan investasi
Perusahaan dan peraturan
perundangundangan yang berlaku.
Based on the Fund Management Contract dated
December 14, 2007, the Company had appointed
TDM, as fund manager, to manage the
Company’s fund in line with the Company’s
investment policy and prevailing regulations.
Selama tahun yang berakhir pada tanggal 31
Desember 2008 Perusahaan tidak melakukan
tambahan penyetoran.
For the year ended December 31, 2008, the
Company do not placed any additional fund.
bersih dana kelolaan sebesar Rp87.480.000.000.
the fund amounting to Rp87,480,000,000.
Clariden Leu Ltd.
Clariden Leu Ltd.
Selama tahun yang berakhir pada 31 Desember
2008, Perusahaan telah mencairkan
dana
sebesar USD5.000.000 atau setara dengan
Rp46.000.000.000.
For year ended December 31, 2008, the
Company withdrew its fund amounting to
USD5,000,000
or
equivalent
to
Rp46,000,000,000.
- 25 -
7.
bersih investasi sebesar USD78.511 atau
ekuivalen Rp859.696.983. Pada bulan Maret
2009, seluruh investasi sementara di Clariden
Leu sudah dicairkan.
the fund amounting to USD78,511 or equivalent
to Rp859,696,983. On March 2009, the entire
short-term invesment in Clariden Leu has been
withdrew.
Pada tanggal 29 Juni 2007, Perusahaan telah
menempatkan dana sebesar USD45.000.000
pada investasi sementara yang dikelola oleh
Lehman Liquidity Fund.
On June 29, 2007, the Company had placed fund
amounting to USD45,000,000 to manage by
Lehman Liquidity Fund.
bersih investasi sebesar USD433.025 atau
ekuivalen Rp4.078.661.721. Pada bulan Maret
2008, Perusahaan telah mencairkan seluruh
dana yang ditempatkan tersebut.
the fund amounting to USD433,025 or equivalent
to Rp4,078,661,721. On March 2008, the
Company withdrew its fund entirely.
PIUTANG USAHA
7.
2008
Rp
TRADE ACCOUNTS RECEIVABLE
2007
Rp
a. Berdasarkan langganan
(Catatan 43a)
Penyedia content
Agen dan pelanggan
Lain-lain
Sub-jumlah
Pihak ketiga
Agen dan pelanggan
Pelanggan postpaid
PT Selular Prima Sukses Jaya
Lain-lain (masing-masing
dibawah Rp 1 miliar)
Sub-jumlah
Operator dalam negeri
PT Bakrie Telecom Tbk
Sub-jumlah
a. By debtors
1.903.926.753
4.141.428
2.236.919.331
731.830.450
473.368.145
1.000.450.847
4.144.987.512
2.205.649.442
15.464.598.565
5.665.429.000
11.456.925.554
-
3.616.960.791
24.746.988.356
3.350.089.022
14.807.014.576
Related parties (Note 43a)
Content provider
Subscriber and agency
Lain-lain
Sub-total
Third parties
Subscriber and agency
Postpaid subscriber
PT Selular Prima Sukses Jaya
Others (each below
Rp 1 billion)
Sub-total
345.167.620
345.167.620
541.362.767
1.922.017.847
Domestic operator
PT Bakrie Telecom Tbk
Others (each below
Rp 1 billion)
Sub-total
1.413.651.209
1.444.653.352
2.858.304.561
1.455.295.593
976.657.805
2.431.953.398
Overseas operator
SK Telecom Co., Ltd.
Others
Sub-total
Jumlah
Penyisihan piutang
ragu-ragu
27.950.460.537
19.160.985.821
(8.950.704.253)
(3.308.642.253)
Total
Allowance for doubtful
accounts
Jumlah
18.999.756.284
15.852.343.568
Total
Bersih
23.144.743.796
18.057.993.010
Net
Operator luar negeri
SK Telecom Co., Ltd.
Lain-lain
Sub-jumlah
-
1.380.655.080
- 26 -
2008
Rp
b. Berdasarkan Umur (hari)
Belum jatuh tempo
Sudah jatuh tempo
1 - 30 hari
31 - 60 hari
61 - 90 hari
91 - 120 hari
> 120 hari
Jumlah
Penyisihan piutang
ragu-ragu
Bersih
c. Berdasarkan Mata Uang
Rupiah
Jumlah
Penyisihan piutang
ragu-ragu
Bersih
2007
Rp
16.016.620.006
11.228.106.400
695.234.143
1.832.785.747
821.908.652
699.271.403
12.029.628.098
32.095.448.049
1.966.257.335
745.500.895
836.479.906
855.462.792
5.734.827.935
21.366.635.263
(8.950.704.253)
(3.308.642.253)
23.144.743.796
18.057.993.010
29.237.143.488
2.858.304.561
32.095.448.049
18.934.681.865
2.431.953.398
21.366.635.263
(8.950.704.253)
(3.308.642.253)
23.144.743.796
18.057.993.010
Mutasi penyisihan piutang ragu-ragu:
Saldo akhir
Net
c. By Currencies
Rupiah
U.S. Dollar
Total
accounts
Net
The changes in allowance for doubtful accounts
are as follows:
2008
Rp
Saldo awal
Penambahan (Catatan 36)
Penghapusan
b. By Age Category (days)
Not yet due
Past due
1 - 30 days
31 - 60 days
61 - 90 days
91 - 120 days
More than 120 days
Total
accounts
2007
Rp
3.308.642.253
9.619.326.513
(3.977.264.513)
1.746.624.135
4.309.103.258
(2.747.085.140)
8.950.704.253
3.308.642.253
Beginning balance
Additions (Note 36)
Write-off
Ending balance
Manajemen berpendapat bahwa penyisihan
piutang ragu-ragu atas piutang kepada pihak
ketiga adalah cukup untuk menutup kerugian yang
mungkin timbul dari tidak tertagihnya piutang
tersebut, sedangkan terhadap piutang kepada
pihak hubungan istimewa tidak diadakan
penyisihan piutang ragu-ragu karena manajemen
berpendapat seluruh piutang tersebut dapat
ditagih.
Management believes that the allowance for
doubtful accounts is adequate to cover possible
losses on uncollectible receivables based on a
review of the status of the individual receivable
accounts at the end of the period, while no
allowance for doubtful accounts was provided on
receivables from related parties as management
believes that all such receivables are collectible.
Manajemen juga berpendapat bahwa tidak
terdapat risiko yang terkonsentrasi secara
signifikan atas piutang pihak ketiga.
Management believes that there are no significant
concentrations of credit risk in third party
receivables.
- 27 -
8.
8.
PIUTANG LAIN-LAIN
2008
Rp
Piutang bunga deposito
ZTE Corporation
Lehman Brother Special Financing
(Catatan 48)
Jumlah
9.
2007
Rp
1.006.027
-
1.403.377.402
4.481.734.025
-
2.818.277.828
1.422.475.778
1.423.481.805
PERSEDIAAN
971.012.445
9.674.401.700
9.
2008
Rp
Telepon genggam dan aksesoris
Kartu perdana dan voucher pulsa
isi ulang
Jumlah
Penyisihan penurunan nilai persediaan
Jumlah
Deposit's interest receivable
ZTE Corporation
Lehman Brother Special Financing
(Note 48)
Others (each below
Rp 1 billion)
Total
INVENTORIES
2007
Rp
49.134.258.634
141.188.855.056
Handsets and accessories
35.910.191.872
85.044.450.506
(3.168.744.260)
81.875.706.246
35.505.562.791
176.694.417.847
(3.168.744.260)
173.525.673.587
Starter packs and vouchers
Total
Allowance for decline in value
Total
Mutasi penyisihan penurunan nilai persediaan
adalah sebagai berikut :
Changes in the allowance for decline in value of
inventories are as follows :
2008
Rp
Saldo awal tahun
Penambahan
Saldo akhir tahun
OTHER ACCOUNTS RECEIVABLE
3.168.744.260
3.168.744.260
2007
Rp
979.776.048
2.188.968.212
3.168.744.260
Balance at beginning of year
Addition
Balance at end of year
Manajemen berpendapat bahwa penyisihan
penurunan nilai persediaan tersebut adalah cukup
untuk menutup kerugian yang mungkin timbul.
Management believes that the allowance for
decline in value of inventories is adequate to cover
possible losses.
Pada tanggal 31 Desember 2008, seluruh
persediaan
telah
diasuransikan
kepada
PT Asuransi AIU Indonesia dan PT Asuransi
Allianz Utama Indonesia terhadap risiko
kebakaran, pencurian dan risiko lainnya sebesar
Rp111,5 miliar. Manajemen berpendapat bahwa
nilai pertanggungan tersebut cukup untuk
menutupi kemungkinan kerugian yang dialami
Perusahaan.
As of December 31, 2008, inventories are insured
with PT Asuransi AIU Indonesia and PT Asuransi
Allianz Utama Indonesia against fire, theft and
other possible risks for Rp111.5 billion.
Management believes that the insurance coverage
is adequate to cover possible losses to the
Company.
- 28 -
10. PREPAID TAXES
10. PAJAK DIBAYAR DIMUKA
2008
Rp
2007
Rp
Pajak penghasilan
Pasal 28A
2008
2007
Pasal 26
Pajak pertambahan nilai - bersih
8.543.374.172
12.282.643.739
4.411.287.397
55.921.008.275
12.282.643.739
4.411.287.397
84.808.930.947
Jumlah
81.158.313.583
101.502.862.083
Income tax
Article 28A
2008
2007
Article 26
Value added tax - net
Total
Pada tanggal 28 Agustus 2008, Perusahaan
menerima Surat Ketetapan Pajak Lebih Bayar
(SKPLB) Pajak Pertambahan Nilai (PPN)
No.00044/407/07/054/08 untuk masa pajak
tahunan 2007 sebesar Rp57.776.067.796 yang
telah diterima Perusahaan pada bulan September
2008. Perusahaan mengajukan keberatan atas
SKPLB tersebut untuk jumlah PPN sebesar
Rp1.176.574.767, karena menurut Perusahaan
jumlah
kelebihan
bayar
PPN
sebesar
Rp58.952.642.563. Sampai dengan tanggal
laporan keuangan ini diterbitkan, belum ada
keputusan atas keberatan tersebut.
On August 28, 2008, the Company received
Overpayment Tax Assessment Letter (SKPLB) on
Value Added Tax No. 00044/407/07/054/08 for the
fiscal year 2007 amounting to Rp57,776,067,796
in which such amount has been received in
September 2008. The Company objected on such
SKPLB for an amount of Rp1,176,574,767, while
according to the Company total overpayment
amounting to Rp58,952,642,563. As of the
issuance date of the financial statements, the
Company has not received the objection decision.
Pada tanggal 17 Juli 2008, Perusahaan menerima
Surat Keputusan Direktur Jenderal Pajak No:KEP1293/WPJ.06/BD.06/2008
tentang
keberatan
Wajib Pajak atas Surat Ketetapan Pajak Kurang
Bayar (SKPKB) Pajak Pertambahan Nilai yang
menetapkan untuk mempertahankan SKPKB
No.00028/207/05/073/07 tanggal 30 April 2007
untuk
tahun
pajak
2005
sebesar
Rp17.897.451.678 yang sudah dibayar oleh
Perusahaan pada bulan Agustus 2007, sementara
menurut Perusahaan adalah nihil. Perusahaan
mengajukan banding atas keputusan tersebut dan
sampai dengan tanggal laporan keuangan ini
diterbitkan, belum ada tanggapan atas keberatan
tersebut.
On July 17, 2008, the Company received a
decision letter No:KEP-1293/WPJ.06/BD.06/2008
from the Director General of Taxation regarding
the Company’s objection on Tax Underpayment
Assessment Letter (SKPKB) on the Company’s
Value Added Tax wherein defending SKPKB
No.00028/207/05/073/07 dated April 30, 2007 for
the year 2005 amounting to Rp17,897,451,678
which has been paid by the Company on August
2007, while according to the Company is nil. The
Company appealed such decision and as of the
issuance date of the financial statements, the
Company has not received respons on the appeal.
Pada tanggal 5 Pebruari 2007, Perusahaan
menerima Surat Keputusan Direktur Jenderal
Pajak No:KEP-116/WPJ.06/BD.06/2007 tentang
keberatan Wajib Pajak atas SKPKB Pajak
Penghasilan pasal 21 yang menetapkan untuk
mempertahankan
SKPKB
No.00005/201/04/073/05 tanggal 30 Desember
2005 untuk tahun pajak 2004 yang menyatakan
bahwa kurang bayar Perusahaan sebesar
Rp1.022.384.685,
sementara
menurut
Perusahaan adalah Rp836.100.935. Perusahaan
mengajukan banding atas keputusan tersebut dan
sampai dengan tanggal laporan keuangan ini
diterbitkan, belum ada tanggapan atas keberatan
tersebut.
On February 5, 2007, the Company received a
the Company’s objection on SKPKB on the
Company’s Income Tax article 21 wherein
defending SKPKB No.00005/201/04/073/05 dated
December 30, 2005 for the year 2004 which stated
the Company's underpayment amounted to
Rp1,022,384,685, while according to the Company
amounted to Rp836,100,935. The Company
appealed such decision and as of the issuance
date of the financial statements, the Company has
not received respons on the appeal.
- 29 -
Pada tanggal 5 February 2007, Perusahaan
mempertahankan
SKPKB
Rp1.964.940.401,
sementara
menurut
Perusahaan
adalah
Rp1.580.431.014.
Perusahaan mengajukan banding atas keputusan
tersebut dan sampai dengan tanggal laporan
keuangan ini diterbitkan, belum ada tanggapan
atas keberatan tersebut.
December 30, 2005 for the year 2004 which
stated the Company's underpayment amounted to
Rp1,964,940,401, while according to the
Company amounted to Rp1,580,431,014. The
Company appealed to the such decision and as of
the issuance date of the financial statements, the
Company not already received such respons.
mempertahankan
SKPKB
Rp4.411.287.397 yang sudah dikompensasikan
dengan lebih bayar Pajak Pertambahan Nilai
tahun
pajak
2004,
sementara
menurut
Perusahaan adalah nihil. Perusahaan mengajukan
banding atas keputusan tersebut dan sampai
dengan tanggal laporan keuangan ini diterbitkan,
belum ada tanggapan atas keberatan tersebut.
December 30, 2005 for the year 2004 which
stated the Company's underpayment amounted to
Rp4,411,287,397 which has been compensated
against overpayment of Value Added Tax for fiscal
year 2004, while according to the Company is nil.
The Company appealed to the such decision and
as of the issuance date of the financial
statements, the Company not already received
such respons.
Pada tanggal 16 Januari 2006, Perusahaan
Pajak tentang Surat Keberatan Perusahaan yang
menyatakan Perusahaan kurang bayar atas Pajak
Pertambahan Nilai untuk masa Januari hingga
Juni 2004 sebesar Rp7.397.617.746 dan sisanya
sebesar Rp939.572.600 dikembalikan pada bulan
Pebruari 2006. Sehubungan dengan Keputusan
Keberatan tersebut, pada tanggal 13 Maret 2006
Perusahaan mengajukan banding ke Pengadilan
Pajak. Pada tanggal 16 Nopember 2006,
Perusahaan
telah
menerima
keputusan
pengadilan pajak yang mengabulkan permohonan
banding Perusahaan sebesar Rp6.724.318.701
(termasuk bunga sebesar Rp2.180.860.119).
Pada tanggal 26 Januari 2007, Perusahaan telah
menerima
pengembalian
bersih
sebesar
Rp6.596.014.882 setelah dikurangi beban bunga
sebesar Rp128.303.819.
On January 16, 2006, the Company received a
decision letter from the Director General of
Taxation regarding the Company’s objection on
Value Added Tax Assessment for the period of
January
to
June
2004
amounting
to
Rp7,397,617,746 wherein the remaining balance
of Rp939,572,600 was refunded in February 2006.
In relation to such decision on March 13, 2006, the
Company filed an appeal to the Tax Court. On
November 16, 2006, the Company received a
decision from the tax court which favored the
Company’s appeal amounting to Rp6,724,318,701
(including interest of
Rp2,180,860,119). On
January 26, 2007, the Company received the tax
refund amounting to Rp6,596,014,882 after
deducting the interest expense of Rp128,303,819.
- 30 -
11. BIAYA DIBAYAR DIMUKA
11. PREPAID EXPENSES
2008
Rp
2007
Rp
Sewa
Penggunaan spektrum frekuensi
radio (Catatan 45c)
Asuransi
Transportasi
Lain-lain
113.733.260.865
57.553.303.637
55.116.153.696
1.319.601.066
1.060.745.310
5.631.897.206
24.960.951.947
2.000.510.408
3.148.552.031
2.119.411.424
Rental
Radio frequency spectrum
usage charge (Note 45c)
Insurance
Transportation
Others
Jumlah
176.861.658.143
89.782.729.447
Total
12. ASET LANCAR LAINNYA
12. OTHER CURRENT ASSETS
Akun ini terdiri dari uang muka atas perluasan
jaringan, perjalanan dinas dan biaya operasional.
This account consists of advances for network
expansion, business travel and operational
expenses.
13. ASET TETAP
13. PROPERTY AND EQUIPMENT
1 Januari/
January 1 ,
2008
Rp
Biaya perolehan:
Pemilikan langsung
Tanah
Bangunan dan prasarana
Kendaraan
Peralatan kantor
Aset dalam penyelesaian:
Peralatan kantor
Aset sewa guna usaha :
Jumlah
Penambahan/
Additions
Rp
27.997.377.510
3.031.731.707
2.576.943.699.421
24.306.665.807
3.896.856.157
106.603.740.343
170.166.528.726
331.437.628.079
1.222.350.000
13.066.645.552
203.031.252.949
308.241.173.311
13.612.070.429
17.099.384.100
186.780.285.541
5.838.972.034
7.951.112.458
812.598.733.966
459.765.543.072
4.061.466.229.770
1.212.125.521.392
Pengurangan/
Deductions
Rp
431.584.658.991
6.649.119.544
1.829.916.309
19.384.965.137
7.629.618.334
-
467.078.278.315
Reklasifikasi/
Reclassi fications
Rp
31 Desember/
December 31,
2008
Rp
-
1.272.364.277.038
Acquisition cost:
Direct acquisitions
Land
Telecommunication
infrastructure
Building and improvements
Vehicles
Office equipment
Construction in progress:
Telecommunication
infrastructure
Office equiment
Leased asset:
Telecommunication
infrastructure
-
4.806.513.472.847
Total
288.829.078.806
1.369.164.711
11.707.271.939
7.444.229.441
(290.198.243.517)
(11.707.271.939)
(7.444.229.441)
31.029.109.217
2.765.625.747.315
20.249.060.974
2.066.939.848
111.992.692.697
373.012.392.782
204.823.215.335
7.743.770.524
17.606.267.117
Akumulasi penyusutan dan
penurunan nilai:
Pemilikan langsung
Kendaraan
Peralatan kantor
Aset sewa guna usaha :
1.239.733.371.789
16.657.781.002
1.766.387.975
75.885.575.222
60.228.911.829
127.802.121.054
573.397.170
827.139.003
13.566.554.394
35.791.409.086
16.710.684.504
69.742.565.991
Jumlah
1.410.982.712.321
248.303.186.698
Jumlah Tercatat
2.650.483.517.449
431.584.658.856
6.649.119.529
1.557.103.804
19.340.110.811
7.573.602.173
466.704.595.173
- 31 -
-
935.950.833.987
10.582.058.643
1.036.423.174
70.112.018.805
88.446.718.742
Accumulated depreciation
and impairment loss:
Direct acquisitions
Telecommunication
infrastructure
Vehicles
Office equipment
Leased asset:
Telecommunication
infrastructure
-
86.453.250.495
-
1.192.581.303.846
Total
3.613.932.169.001
Net Book Value
1 Januari/
January 1 ,
2007
Rp
Biaya perolehan:
Tanah
Kendaraan
Peralatan kantor
Aset dalam penyelesaian:
Peralatan kantor
Aset sewa guna usaha:
Jumlah
Penambahan/
Additions
Rp
Pengurangan/
Deductions
Rp
18.387.716.707
9.849.560.803
239.900.000
2.272.266.195.621
21.580.219.337
2.563.374.670
91.299.663.029
129.817.254.368
8.263.280.891
2.396.008.930
1.703.800.000
7.931.237.362
4.170.738.674
11.775.880.991
34.529.300
370.318.513
1.045.938.545
188.000.000
124.676.339.064
5.239.174.828
30.997.226.698
2.696.827.164.322
Reklasifikasi/
Reclassi fications
Rp
308.190.103.900
364.966.840
8.418.778.497
36.366.535.684
364.966.840
-
(364.966.840)
491.754.938.147
16.791.674.098
22.468.693.086
-
(308.190.103.900)
(8.418.778.497)
(36.366.535.684)
812.598.733.967
1.378.293.632.797
13.654.567.349
31 Desember/
December 31,
2007
Rp
27.997.377.510
2.576.943.699.421
24.306.665.807
3.896.856.157
106.603.740.343
170.166.528.726
308.241.173.311
13.612.070.429
17.099.384.100
-
812.598.733.967
-
4.061.466.229.770
Total
1.239.733.371.789
16.657.781.002
1.766.387.975
75.885.575.222
60.228.911.829
and impairment loss:
Telecommunication
infrastructure
Vehicles
Office equipment
Leased asset:
Telecommunication
infrastructure
Akumulasi penyusutan dan
penurunan nilai:
Kendaraan
Peralatan kantor
Aset sewa guna usaha:
1.122.174.154.055
15.885.079.202
1.884.555.783
64.101.166.766
40.366.109.554
-
Jumlah
1.244.411.065.360
Jumlah Tercatat
1.452.416.098.962
123.248.726.528
790.829.682
252.150.665
12.830.346.670
19.936.510.611
5.689.508.794
18.127.882
370.318.473
1.045.938.214
73.708.336
16.710.684.502
173.769.248.660
-
Pengurangan aset tetap berasal dari penjualan
dan pelepasan aset tetap adalah sebagai berikut:
Keuntungan penjualan dan
pelepasan aset tetap
Biaya sehubungan dengan penjualan
aset menara
Keuntungan penjualan dan
pelepasan aset tetap - bersih
-
16.710.684.502
-
1.410.982.712.321
Total
2.650.483.517.449
Net Book Value
The deductions in property and equipment due to
sale and disposal are as follows:
2008
Rp
Harga perolehan
Akumulasi penyusutan
Nilai tercatat
Harga jual
-
7.197.601.699
Acquisition costs:
Land
Telecommunication
infrastructure
Vehicles
Office equipment
Construction in progress:
Telecommunication
infrastructure
Office equiment
Leased asset:
Telecommunication
infrastructure
2007
Rp
467.078.278.315
(466.704.595.173)
373.683.142
1.114.779.496
741.096.354
-
13.654.567.349
(7.197.601.699)
6.456.965.650
15.835.766.788
9.378.801.138
(5.581.589.335)
741.096.354
Beban
penyusutan
adalah
sebesar
Rp248.303.186.698
dan Rp173.769.248.660
masing-masing untuk tahun yang berakhir 31
Desember 2008 dan 2007 (Catatan 32).
3.797.211.803
Acquisition cost
Net book value
Sales price
property and equipment
Cost related to sale of tower assets
property and equipment - net
Depreciation
expense
amounted
to
Rp248,303,186,698 and Rp173,769,248,660 for
each of years ended December 31, 2008 and
2007, respectively (Note 32).
- 32 -
Beban bunga dan beban keuangan lain yang
dikapitalisasi ke aset dalam penyelesaian
masing-masing sebesar Rp57.294.540.388 dan
Rp35.560.884.118 untuk tahun yang berakhir 31
Desember 2008 dan 2007. Kerugian kurs mata
uang asing-bersih yang dikapitalisasi ke aset
dalam penyelesaian masing-masing sebesar
Rp33.754.792.676 dan Rp2.710.195.658 untuk
tahun yang berakhir 31 Desember 2008 dan 2007.
Interest and other financial charges capitalized to
construction
in
progress
amounted
to
Rp57,294,540,388 and Rp35,560,884,118 for year
ended December 31, 2008 and 2007,
respectively. The Company capitalized net loss on
foreign exchange to construction in progress
amounting
to
Rp33,754,792,676
and
Rp2,710,195,658 for year ended December 31,
Perusahaan memiliki beberapa bidang tanah yang
terletak di Jakarta, Jawa Barat, Jawa Tengah,
Jawa Timur, Medan, Banda Aceh, Padang, Ujung
Pandang, Palu, Kendari, Manado, Bali, Jambi,
Palembang, Lampung, Mataram, Balikpapan,
Banjarmasin dan Pontianak seluruhnya seluas
2
75.823 m dengan hak guna bangunan (HGB)
atas nama Perusahaan dengan jangka waktu
antara 20 sampai dengan 30 tahun, jatuh tempo
antara tahun 2014 dan 2031 dan tanah seluas 660
2
m masih dalam proses sertifikasi. Manajemen
Perusahaan berpendapat tidak terdapat masalah
dengan sertifikasi dan perpanjangan hak atas
tanah karena seluruh tanah diperoleh secara sah
dan didukung dengan bukti pemilikan yang
memadai.
The Company owns several pieces of land located
in Jakarta, West Java, Central Java, East Java,
Medan, Banda Aceh, Padang, Ujung Pandang,
Palu, Kendari, Manado, Bali, Jambi, Palembang,
Lampung, Mataram, Balikpapan, Banjarmasin dan
Pontianak measuring 75,823 square meters with
Building Use Right (Hak Guna Bangunan or HGB)
under the name of the Company with term of 20 to
30 years and will expire between 2014 to 2031
and land measuring 660 square meters is still in
process of certification. Management believes that
there will be no difficulty in the extension and legal
processing of the landrights since these were
acquired legally and supported by sufficient
evidence of ownership.
Aset
dalam
penyelesaian
merupakan
pengembangan infrastruktur telekomunikasi dan
peralatan penunjang lainnya dalam rangka
ekspansi Perusahaan yang diperkirakan akan
selesai pada tahun 2009.
Construction in progress represents the
development of telecommunication infrastructure
and other supporting equipment under installation
for the expansion of the Company which is
estimated to be completed in 2009.
Pada tanggal 31 Desember 2008, aset tetap
infrastruktur telekomunikasi telah diasuransikan
kepada
PT Asuransi
Export
Indonesia,
PT
Asuransi
Allianz
Utama
Indonesia,
PT Asuransi Central Asia, PT Asuransi Wahana
Tata dan PT Asuransi Mitsui Sumitomo terhadap
risiko kebakaran, pencurian dan risiko lainnya
dengan
jumlah
pertanggungan
sebesar
USD213.594.324, sedangkan aset tetap lainnya,
kecuali tanah telah diasuransikan kepada
PT Asuransi AIU Indonesia dan PT Citra
International
Underwriters
dengan
jumlah
pertanggungan
sebesar
USD330.534
dan
Rp4.344.585.086.
Perusahaan
juga
mengasuransikan menara pemancar kepada
PT Zurich Insurance Indonesia terhadap risiko
kerugian publik dengan jumlah pertanggungan
USD5.000.000. Manajemen berpendapat bahwa
nilai pertanggungan tersebut cukup untuk
menutupi kemungkinan kerugian atas aset yang
dipertanggungkan.
As of December 31, 2008, the Company’s
telecommunication infrastructure were insured
with PT Asuransi Export Indonesia, PT Asuransi
Allianz Utama Indonesia, PT Asuransi Central
Asia, PT Asuransi Wahana Tata dan PT Asuransi
Mitsui Sumitomo against fire, theft and other
possible
risks
with
total
coverage
of
USD213,594,324, while other property and
equipment, excluding land, were insured with
PT Asuransi AIU Indonesia and PT Citra
International Underwriters with total coverage of
USD330,534
and
Rp4,344,585,086.
The
Company also covered its tower assets against
public liability risk with PT Zurich Insurance
Indonesia for a total of USD5,000,000.
Management believes that the insurance
coverage is adequate to cover possible losses on
the assets insured.
Pada tanggal 31 Desember 2008, sebagian
infrastruktur telekomunikasi dijadikan jaminan atas
obligasi I (Catatan 25).
As of December 31, 2008, part of the Company’s
telecommunication infrastructure were used as
collateral for the Company’s Bond I (Note 25).
- 33 -
14. GOODWILL
14. GOODWILL
This account represents positive goodwill arising
from the acquisitions of Metrosel and Telesera,
and negative goodwill from the acquisition of
Komselindo. Each company held the license to
provide mobile cellular network services. By
acquiring these companies, the Company obtains
economic
benefits
as
a
nationwide
telecommunication services provider. Furthermore
in 2007, Metrosel, Telesera and Komselindo had
been merged into the Company, and therefore,
positive goodwill and negative goodwill arising
from the acquisitions of the companies were
combined as follows:
Akun ini merupakan goodwill positif yang berasal
dari akuisisi Metrosel dan Telesera dan goodwill
negatif yang berasal dari akuisisi Komselindo.
Masing-masing
perusahaan
merupakan
pemegang izin penyelenggaraan jasa bergerak
selular. Dengan akuisisi ini, Perusahaan
memperoleh
manfaat
ekonomis
sebagai
penyelenggara telekomunikasi yang meliputi
seluruh wilayah Indonesia. Selanjutnya pada
tahun 2007, Metrosel, Telesera dan Komselindo
telah dilebur ke dalam Perusahaan. Oleh karena
itu, goodwill positif dan goodwill negatif dari
akuisisi
perusahaan
tersebut
digabungkan
sebagai berikut :
2008
Rp
2007
Rp
Jumlah bruto
264.984.073.565
264.984.073.565
Gross amount
Akumulasi amortisasi
Awal tahun
Amortisasi
Akhir tahun
Jumlah tercatat
75.167.741.327
11.451.958.252
86.619.699.579
178.364.373.986
63.715.783.075
11.451.958.252
75.167.741.327
189.816.332.238
Accumulated amortization
Beginning of year
Amortization
Ending of year
Carrying amount
Net amortization of goodwill for each of year
ended December 31, 2008 and 2007 amounting to
Rp11.451.958.252, respectively.
Amortisasi goodwill bersih masing-masing untuk
tahun yang berakhir 31 Desember 2008 dan 2007
masing-masing sebesar Rp11.451.958.252.
15. BEBAN TANGGUHAN - BERSIH
15. DEFERRED CHARGES - NET
Akun ini merupakan biaya subsidi ditangguhkan
dalam rangka program perolehan pelanggan
sebagai berikut:
This account represents deferred charges incurred
in relation to subscribers acquisition programs as
follows:
2008
Rp
Program frensip
Program stylo
Program slimo
Jumlah
Akumulasi amortisasi
Jumlah tercatat
2007
Rp
204.703.678.401
10.776.055.179
8.472.703.800
223.952.437.380
(218.018.738.907)
5.933.698.473
Beban amortisasi untuk tahun yang berakhir 31
Desember 2008 dan 2007 masing-masing
sebesar
Rp70.971.984.620
dan
Rp56.016.041.351 (Catatan 32).
204.703.678.401
10.776.055.179
8.472.703.800
223.952.437.380
(147.046.840.508)
76.905.596.872
Frensip program
Stylo program
Slimo program
Total
Accumulated amortization
Carrying amount
Amortization expense for years ended December
31,
2008
and
2007
amounted
to
Rp70,971,984,620
and
Rp56,016,041,351,
respectively (Note 32).
- 34 -
16. ASET TIDAK LANCAR LAINNYA
16. OTHER NONCURRENT ASSETS
2008
Rp
Perangkat lunak (Catatan 43c)
Uang jaminan sewa ruang
Lain-lain
Jumlah
2007
Rp
6.292.544.443
4.155.658.786
643.493.328
3.235.142.282
4.030.598.343
2.572.634.654
Software (Note 43c)
Rental deposits
Others
11.091.696.557
9.838.375.279
Total
17. HUTANG USAHA
17. TRADE ACCOUNTS PAYABLE
2008
Rp
a. Berdasarkan pemasok
(Catatan 43a)
PT Freekoms Indonesia
PT Flash Mobile
PT Infokom Elektrindo
Qualcomm Inc.
Sub-jumlah
Pihak ketiga
Operator dalam negeri
PT Telekomunikasi
Indonesia Tbk
PT Indosat Tbk
PT Telekomunikasi Selular
PT Excelcomindo Pratama Tbk
Lain-lain (dibawah Rp 1 miliar)
Sub-jumlah
Kontraktor dan pemasok
Samsung Electronics Co., Ltd
Huawei Technologies, Co., Ltd
PT Samsung Telecommunication
Indonesia
PT. Huawei Tech. Investment
ZTE Corporation
PT Mora Telematika Indonesia
PT NEC Indonesia
PT Maxima Cipta Integrasi
PT Interindo Internusa
PT Dawamiba Engineering
PT Telehouse Engineering
PT Baktisemangat Purnawirawan
PT Youngwoo Indonesia
Gemalto Pte, Ltd
PT Starion Berlian Indonesia
Comverse Inc.
PT Indonesia Media Exchange
PT Prosys Bangun Persada
Sub-jumlah
2007
Rp
2.180.121.754
644.593.206
265.159.828
157.691.717
3.247.566.505
26.131.926.538
5.195.207.316
2.746.976.754
1.226.297.488
660.735.307
35.961.143.403
180.275.416.848
121.546.116.900
1.102.355.650
360.846.351
1.463.202.001
12.840.712.958
6.693.720.124
4.159.942.110
1.296.625.808
1.483.392.717
26.474.393.717
-
116.558.902.812
36.152.352.400
23.159.250.000
21.351.553.456
8.434.376.689
1.635.898.187
1.314.038.521
1.074.296.176
495.000.000
379.830.000
251.972.327
153.546.375
-
1.072.155.860
6.249.474.993
1.057.953.676
1.295.224.000
1.045.463.173
1.078.675.301
7.991.251.582
3.628.473.200
3.179.063.204
2.908.433.847
1.270.984.875
23.579.083.982
536.361.634.672
11.708.450.302
42.485.604.013
- 35 -
a. By creditor
Related parties
(Note 43a)
PT Flash Mobile
Qualcomm Inc.
Sub-total
Third parties
Domestic operators
PT Telekomunikasi
Indonesia Tbk
PT Indosat Tbk
PT Telekomunikasi Selular
PT Excelcomindo Pratama Tbk
Others (below Rp 1 billion)
Sub-total
Contractors and suppliers
Samsung Electronics Co., Ltd
Huawei Technologies, Co., Ltd
PT Samsung Telecommunication
Indonesia
PT. Huawei Tech. Investment
ZTE Corporation
PT Mora Telematika Indonesia
PT NEC Indonesia
PT Maxima Cipta Integrasi
PT Interindo Internusa
PT Dawamiba Engineering
PT Telehouse Engineering
PT Baktisemangat Purnawirawan
PT Youngwoo Indonesia
Gemalto Pte, Ltd
PT Starion Berlian Indonesia
Comverse Inc.
PT Indonesia Media Exchange
PT Prosys Bangun Persada
Others (each below Rp 1 billion)
Sub-total
2008
Rp
Penyedia content (masing-masing
2007
Rp
Content providers
(each below Rp 1 billion)
3.680.067.551
3.146.903.115
Jumlah pihak ketiga
576.002.845.626
72.106.900.844
Total third parties
Jumlah Hutang Usaha
579.250.412.130
73.570.102.845
Total trade accounts payable
b. Berdasarkan mata uang
Rupiah
469.356.972.252
109.893.439.879
18.017.125.376
55.552.977.469
579.250.412.130
73.570.102.845
Jumlah
18. HUTANG LAIN-LAIN
b. By currency
U.S. Dollar
Rupiah
Total
18. OTHER ACCOUNTS PAYABLE
2008
Rp
2007
Rp
Lehman Brothers Special
Financing (Catatan 48)
The Hongkong and Shanghai
Banking Corporation, Ltd.
PT Cipta Reksa Pitama
PT Azec Indonesia Management
Services
PT Telekomunikasi Indonesia Tbk.
(Catatan 23)
142.001.680.062
-
14.240.285.446
9.874.039.882
Jumlah
160.402.697.770
15.417.778.029
1.860.081.339
1.246.764.387
1.599.422.369
540.371.746
1.053.886.536
443.944.032
-
2.960.000.000
19. HUTANG PAJAK
Lehman Brothers Special
Financing (Note 48)
The Hongkong and Shanghai
Banking Corporation, Ltd.
PT Cipta Reksa Pitama
PT Azec Indonesia Management
Services
PT Telekomunikasi Indonesia Tbk.
(Note 23)
Total
19. TAXES PAYABLE
2008
Rp
2007
Rp
Pajak penghasilan
Pasal 21
Pasal 23
Pasal 26
7.985.585.747
11.271.640.771
3.845.743.281
3.506.548.329
2.734.598.535
970.667.627
Income taxes
Article 21
Article 23
Article 26
Total
23.102.969.799
7.211.814.491
Total
- 36 -
20. BIAYA MASIH HARUS DIBAYAR
20. ACCRUED EXPENSES
2008
Rp
(Catatan 43b)
Biaya operasional
Sewa
Sub-jumlah
2007
Rp
17.796.707.461
1.145.518.669
18.942.226.130
7.597.256.186
278.226.845
7.875.483.031
89.001.680.982
70.918.241.780
48.053.778.851
24.096.042.443
Pihak ketiga
Bunga
Biaya operasional
Penggunaan frekuensi
(Catatan 45c)
Sewa
Perbaikan dan pemeliharaan
(Catatan 45a)
Lain-lain
Sub-jumlah
67.064.237.347
10.383.365.651
12.545.658.297
5.573.634.643
2.140.025.843
3.472.375.654
242.979.927.257
570.692.705
2.084.903.903
92.924.710.842
Jumlah
261.922.153.387
100.800.193.873
21. PENDAPATAN DITERIMA DIMUKA
Total
This account represents revenue from preloaded
voucher sales that had not been used with
unexpired stored values.
22. UANG JAMINAN PELANGGAN
22. DEPOSITS FROM CUSTOMERS
2008
Rp
2007
Rp
Pembelian voucher
Sewa fasilitas telekomunikasi
(Catatan 45e)
10.190.796.558
12.809.308.204
3.099.600.000
3.893.400.000
Jumlah
13.290.396.558
16.702.708.204
PIHAK
Third parties
Interest
Operating expenses
Frequency usage charges
(Note 45c)
Rental
Repairs and maintenance
(Note 45a)
Others
Sub-total
21. UNEARNED REVENUE
Akun ini merupakan pendapatan atas penjualan
voucher pulsa isi ulang prabayar yang belum
digunakan dan belum melewati masa berlakunya.
23. HUTANG
KEPADA
ISTIMEWA
Related parties (Note 43b)
Operating expenses
Rental
Sub-total
HUBUNGAN
Vouchers
Telecommunication facility usage
(Note 45e)
Total
23. ACCOUNTS PAYABLE TO RELATED PARTIES
2008
Rp
2007
Rp
PT Rajawali Citra Televisi
Indonesia
PT Usaha Gedung Bimantara
PT Global Mediacom Tbk
Lain-lain (masing-masing dibawah
Rp 1 miliar)
2.169.808.790
177.750.162
1.657.440.000
1.431.275.000
1.343.282.084
14.452.565.600
513.395.000
1.016.634.059
575.996.038
401.677.273
Jumlah
7.177.801.912
16.562.022.094
- 37 -
PT Rajawali Citra Televisi
Indonesia
Total
Hutang kepada PT Rajawali Citra Televisi
Indonesia (RCTI), PT Cipta Televisi Pendidikan
Indonesia (TPI) dan PT Global Infromasi Bermutu
(Global TV) berasal dari pemasangan iklan.
Payable to PT Rajawali Citra Televisi Indonesia
(RCTI) , PT Cipta Televisi Pendidikan Indonesia
(TPI) dan PT Global Infromasi Bermutu (Global
TV) represents the Company’s payable for
advertising expenses.
Selain itu, hutang kepada TPI merupakan hutang
atas pemasangan iklan dan hutang Metrosel atas
pemasangan iklan Telkom sebagai kompensasi
hutang Metrosel ke Telkom. Pada tanggal
22 Agustus
2007,
dilakukan
kesepakatan
penyelesaian hutang ini dimana Perusahaan akan
melakukan pembayaran langsung ke Telkom.
Payable to TPI also represents the Company’s
payable for advertising expenses and Metrosel’s
payable for advertising services rendered for
Telkom to compensate Metrosel’s payable to
Telkom. On August 22, 2007, there was an
agreement on payable settlement wherein the
Company will directly pay to Telkom.
Hutang kepada PT Usaha Gedung Bimantara dan
PT Global Mediacom Tbk merupakan hutang atas
sewa ruangan kantor dan galeri.
Payable to PT Usaha Gedung Bimantara and PT
Global Mediacom Tbk represents the Company’s
payable for warehouse and gallery rentals.
Hutang kepada PT Infokom Elektrindo merupakan
hutang atas berlangganan jasa internet.
Payable to PT Infokom Elektrindo represents the
Company’s payable for internet services.
Hutang lain-lain kepada pihak hubungan istimewa
merupakan hutang atas pemasangan iklan kepada
PT Global Informasi Bermutu, PT Media
Nusantara Informasi dan PT MNI Global.
Other payable to related parties represents the
Company’s payable for advertising expenses to
PT Global
Informasi
Bermutu,
PT Media
Nusantara Informasi and PT MNI Global.
24. HUTANG PEMBELIAN ASET TETAP
24. LIABILITY FOR PURCHASE OF EQUIPMENT
Berdasarkan perjanjian tanggal 21 Desember
2002 yang terakhir diubah tanggal 7 Juli 2005,
Perusahaan mengadakan perjanjian pinjaman
dengan Samsung Corporation (SC) dengan nilai
pinjaman maksimum sebesar USD102 juta, dalam
rangka pengadaan peralatan CDMA 2000 1X
Celullar Network melalui Supply Agreement
(Catatan 45a).
Based on agreement dated December 21, 2002
as lastly amended on July 7, 2005, the Company
entered into a Credit Agreement with Samsung
Corporation (SC), with a maximum credit limit of
USD102 million to finance the purchase of the
CDMA 2000 1X Cellular Network Equipment
under the Supply Agreement (Note 45a).
Pinjaman ini dibayar kembali dalam 7 (tujuh) kali
angsuran selama 3,5 tahun dimulai sejak
Nopember 2005 dengan tingkat bunga sebesar (a)
1,25% per tahun diatas tingkat bunga pinjaman
Export-Import Bank of Korea untuk saldo pinjaman
sebelum tanggal penyelesaian 13 Juli 2005 dan;
(b) 1% diatas Commercial Interest Reference Rate
terakhir dikeluarkan oleh Organization For
Economic Corporation and Development untuk
saldo pinjaman setelah tanggal Settlement Date.
Perusahaan
diwajibkan
untuk
memenuhi
persyaratan umum dan keuangan tertentu sesuai
dengan perjanjian.
The liability was payable in seven (7) equal
installments for three and a half (3.5) years
commencing in November 2005 and carried
interest at (a) 1.25% per annum over
Export-Import Bank of Korea Prime Lending Rate
for the outstanding balance before Settlement
Date of July 13, 2005 and; (b) 1% over the latest
Commercial Interest Reference Rate published by
the Organization for Economic Corporation and
Development for the outstanding balance after
Settlement Date. The Company was required to
fulfill certain general and financial covenants in
accordance to the agreement.
- 38 -
On March 16, 2007, the Company made an early
repayment of all its liability amounting to
USD58,285,714
or
equivalent
to
Rp531,274,285,662 and interest amounting to
USD1,391,862.86
or
equivalent
to
Rp12,686,829,969. The Company was also
charged
with
penalty
amounting
to
USD291,428.28
or
equivalent
to
Rp2,656,371,415. In relation with the settlement of
loan, the Company obtained statement letter from
SC dated March 20, 2007, which released the
collaterals under the agreement.
melakukan pelunasan lebih awal atas seluruh
hutang sebesar USD58.285.714 atau ekuivalen
Rp531.274.285.662 beserta bunga sebesar
USD1.391.862,86
atau
ekuivalen
Rp12.686.829.969. Perusahaan juga dikenakan
denda sebesar USD291.428,28 atau ekuivalen
Rp2.656.371.415. Sehubungan dengan pelunasan
hutang tersebut, Perusahaan memperoleh surat
pernyataan dari SC tanggal 20 Maret 2007, yang
telah membebaskan seluruh jaminan di dalam
perjanjian.
25. HUTANG OBLIGASI
25. BONDS PAYABLE
2008
Rp
2007
Rp
Obligasi - Rupiah
Guaranteed senior
notes - USD 100 juta
Jumlah
Biaya emisi hutang obligasi
yang belum diamortisasi
675.000.000.000
675.000.000.000
1.095.000.000.000
1.770.000.000.000
941.900.000.000
1.616.900.000.000
Bersih
1.733.013.170.186
(36.986.829.814)
(45.770.587.335)
1.571.129.412.665
Bonds - Rupiah
Guaranteed senior
notes - USD 100 million
Total
Unamortized bonds issuance cost
Net
Obligasi – Rupiah
Bonds – Rupiah
Perusahaan memperoleh pernyataan efektif dari
Ketua
BAPEPAM-LK
dengan
Suratnya
No. S-980/BL/2007 tanggal 2 Maret 2007 dalam
rangka Penawaran Umum Obligasi I (Obligasi)
sebesar Rp675 miliar. Sehubungan dengan
penerbitan obligasi tersebut, PT Bank Permata
Tbk bertindak sebagai wali amanat, berdasarkan
Akta Perjanjian Perwaliamanatan Obligasi I
No. 114 tanggal 22 Pebruari 2007 dari Sutjipto
S.H., notaris di Jakarta.
The Company obtained an Effective Notice from
the Chairman of BAPEPAM-LK in his Letter
No. S-980/BL/2007 dated March 2, 2007 for the
Public Offering of Bond I (the Bonds) of Rp675
billion. In relation to the issuance of the Bonds,
PT Bank Permata Tbk acting as Trustee, based
on Trust Deed on the Bond I No. 114 dated
February 22, 2007 of Sutjipto, S.H., notary in
Jakarta.
Hasil penerbitan obligasi digunakan untuk
melunasi seluruh hutang pembelian aset tetap
beserta bunga yang belum dibayar kepada
Samsung Corporation (Catatan 24) dan modal
kerja.
The proceeds were used to pay all amounts
outstanding plus accrued and unpaid interest
under the Company’s liability for purchase of
property and equipment to Samsung Corporation
(Note 24) and for working capital.
Obligasi ini ditawarkan dengan nilai 100% dari
jumlah pokok obligasi dengan tingkat bunga tetap
sebesar 12,375% per tahun. Bunga obligasi
dibayarkan setiap tiga bulan dimana pembayaran
pertama dilakukan pada tanggal 15 Juni 2007 dan
pembayaran terakhir akan dibayarkan pada
tanggal 15 Maret 2012. Obligasi ini berjangka
waktu lima tahun. Perusahaan diperkenankan
untuk membeli kembali sebagian pokok obligasi
sebelum tanggal jatuh tempo pelunasan obligasi,
The Bonds were offered at 100% of the bonds
principal amount, with fixed interest rate of
12.375% per annum. The interest is payable on
quarterly basis where the first payment will be
executed on June 15, 2007 and the last payment
will be on March 15, 2012. The Bonds will mature
in 5 years. The Company is allowed to buy back a
portion or the entire bonds prior to the maturity
date of bond settlement, with a condition that the
buy back is conducted after the first anniversary of
- 39 -
dengan
ketentuan
pembelian
kembali
dilaksanakan setelah hari jadi pertama penerbitan
obligasi (15 Maret 2007), dan Perusahaan
memiliki hak untuk mempertimbangkan obligasi
yang dibeli kembali sebagai obligasi treasury yang
akan dijual setelah itu, atau sebagai pelunasan
atau penebusan obligasi.
the bonds issuance (March 15, 2007), and the
Company has the right to consider the Bonds
buy-back as a treasury bonds which will be sold
afterwards, or as a settlement or redemption of the
Bonds.
Pada saat penerbitan, obligasi Perusahaan
tersebut memperoleh peringkat BBB+ (Stable
Outlook) dari PT Pemeringkat Efek Indonesia.
Obligasi (Pefindo) yang dijamin dengan jaminan
fidusia atas sebagian perangkat infrastruktur
telekomunikasi Perusahaan sebesar 110% dari
seluruh jumlah pokok obligasi yang masih beredar
(Catatan 13) apabila peringkat obligasi adalah
BBB atau lebih baik, apabila tidak, maka jaminan
fidusia menjadi 130% dari seluruh jumlah pokok
obligasi.
At issuance of the bonds, The Company obtained
a bond rating of BBB+ (Stable Outlook) based on
report dated May 21, 2008 from PT Pemeringkat
Efek Indonesia (Pefindo). The bonds are secured
by fiduciary guarantee over the Company’s
infrastructure
telecommunication
equipments
amounting to 110% of the total outstanding bonds
principal (Note 13) if the bond rating is idBBB or
above, otherwise the fiduciary guarantee is 130%.
Pada laporan terakhir tertanggal 18 Maret 2009
Pefindo melakukan revisi terhadap peringkat
obligasi tersebut menjadi idD (Default)
On its latest report, dated March 18, 2009, Pefindo
revised such bond rating to idD (Default).
Perusahaan
disyaratkan
untuk
memenuhi
beberapa batasan keuangan dan umum sesuai
dengan kondisi obligasi. Pada tanggal 16 Maret
2007, obligasi tersebut didaftarkan pada Bursa
Efek Indonesia.
The Company is required to fulfill certain general
and financial covenants in accordance with the
Bonds conditions. On March 16, 2007, the bonds
were listed at the Indonesia Stock Exchange
(Formerly Surabaya Stock Exchange).
Biaya yang berhubungan dengan penerbitan
obligasi sebesar Rp11.225.194.490 dicatat
sebagai biaya emisi pinjaman dan diamortisasi
selama periode pinjaman. Biaya emisi pinjaman
belum diamortisasi dicatat sebagai pengurang
pinjaman.
The costs incurred in relation to the issuance of
the bonds amounting to Rp11,225,194,490 were
recorded as debt issuance cost and amortized
over the term of the bonds. Unamortized debt
issuance cost is deducted from the face value of
the bonds.
Sampai dengan tanggal
laporan keuangan,
Perusahaan belum membayar bunga obligasi
yang jatuh tempo tanggal 15 Maret 2009 (untuk
periode 15 Desember 2008 – 15 Maret 2009)
sebesar Rp20.882.812.500.
As of the issuance date of the financial
statements, the Company has not paid the interest
due on March 15, 2009 (for the period December
15, 2008 – March 15, 2009) amounted to
Rp20,882,812,500.
Guaranteed Senior Notes – USD100 juta
Guaranteed Senior Notes – USD100 million
Pada tanggal 15 Agustus 2007, Mobile-8 Telecom
Finance Company B.V. (Mobile-8 B.V.), anak
Perusahaan, menerbitkan 11,25% Guaranteed
Senior Notes (Notes) sebesar USD100 juta, jatuh
tempo pada tanggal 1 Maret 2013. Notes ini
tercatat di Bursa Efek Singapura.
On August 15, 2007, Mobile-8 Telecom Finance
Company B.V (Mobile-8 B.V.), a subsidiary, issued
11.25% Guaranteed Senior Notes (the Notes)
amounting to USD100 million, due on March 1,
2013. The notes are listed on the Singapore Stock
Exchange.
Dalam rangka penerbitan Notes ini, DB Trustees
(Hong Kong) Limited bertindak sebagai wali
amanat dan agen penjamin. Notes ini ditawarkan
pada nilai nominal dengan tingkat bunga tetap
sebesar 11,25% per tahun. Bunga obligasi
dibayarkan setiap tanggal 1 Maret dan
1 September dimulai sejak 1 Maret 2008.
In relation to the issuance of the Notes, DB
Trustees (Hong Kong) Limited acting as Trustee
and Collateral Agent. The Notes were offered at
face value with fixed interest rate of 11.25% per
annum. The interest of the Notes is payable on
March 1 and September 1 of each year, starting
from March 1, 2008.
- 40 -
Setiap saat pada atau setelah tanggal 15 Agustus
2010, Mobile-8 B.V. dapat menebus Notesnya,
secara keseluruhan atau sebagian, pada harga
tebusan yang sama dengan persentase dari nilai
pokok yang telah ditetapkan, ditambah bunga
yang belum dibayar, jika ada, pada tanggal
tebusan, jika ditebus selama masa 12 bulan sejak
tanggal 15 Agustus dari tahun berikut: tahun 2010
sebesar 105,625%, tahun 2011 sebesar
102,813% dan tahun 2012 dan seterusnya
sebesar 100%. Setiap saat sebelum tanggal
15 Agustus 2010, Mobile-8 B.V. mempunyai opsi
untuk menebus Notes, secara keseluruhan tetapi
tidak secara sebagian, dengan harga tebusan
100% dari nilai pokok Notes, ditambah premi yang
berlaku saat itu, dan bunga yang belum dibayar,
jika ada, pada saat tanggal tebusan.
At any time on or after August 15, 2010, Mobile-8
B.V. may redeem the Notes, in whole or in part, at
a redemption price equal to the percentage of
determined principal amount already set, plus
accrued and unpaid interest, if any, on the
redemption date, if redeemed during the 12 month
period commencing on August 15 of any year set
forth as follows: year 2010 at 105.625%, year
2011 at 102.813% and year 2012 and years there
after at 100%. At any time prior to August 15,
2010, Mobile-8 B.V. may at its option redeem the
Notes, in whole but not in part, at a redemption
price equal to 100% of the principal amount of the
Notes plus the applicable premium as of, and
accrued and unpaid interest, if any, to, the
redemption date.
Selain itu, setiap saat saja sebelum 15 Agustus
2010, Mobile-8 B.V. dapat menebus sampai
dengan 35% dari nilai pokok Notes, ditambah
dengan bunga yang belum dibayar, jika ada, pada
saat tanggal tebusan; asalkan setidaknya 65%
dari nilai pokok agregrat Notes yang diterbitkan
pada tanggal penerbitan awal, tetap beredar
setelah tebusan tersebut dan tebusan tersebut
dilakukan dalam 60 hari setelah penutupan
penawaran saham di masa datang.
In addition, at any time prior to August 15, 2010,
Mobile-8 B.V. may redeem up to 35% of the
aggregate principal amount of the Notes, plus
accrued and unpaid interest, if any, to the
redemption date; provided that at least 65% of the
aggregate principal amount of the Notes originally
issued on the original issue date remains
outstanding after each such redemption and any
such redemption takes place within 60 days after
the closing of any future equity offering.
Hasil penerbitan Notes digunakan untuk melunasi
seluruh pinjaman dan bunga yang belum dibayar
dari fasilitas Lehman Commercial Paper Inc.
(Catatan 27) dan untuk pembelian perlengkapan
jaringan serta untuk tujuan umum Perusahaan.
The proceeds were used to pay all amounts
outstanding plus accrued and unpaid interest
under the Company’s loan facility with Lehman
Commercial Paper Inc. (Note 27) and the balance
for the purchase of network equipment and for
general corporate purpose.
Perusahaan dan Mobile-8 B.V. diwajibkan untuk
memenuhi persyaratan umum dan keuangan
tertentu.
The Company and Mobile-8 B.V. are required to
fulfill certain general and financial covenants.
Notes ini dijamin oleh Perusahaan dan Mobile-8
B.V.,
dimana
Perusahaan
menjaminkan
sahamnya di Mobile-8 B.V. dan Mobile-8 B.V.
mengalihkan seluruh haknya atas pinjaman antar
perusahaan. Pinjaman antar perusahaan dibuat
pada tanggal penerbitan Notes merupakan
pinjaman dalam US Dollar yang diberikan oleh
Mobile-8 kepada Perusahaan sebesar jumlah
yang sama dengan penerimaan Mobile-8 B.V. dari
penawaran Notes sesuai dengan perjanjian
pinjaman antar perusahaan awal yang dibuat
antara Mobile-8 B.V. dan Perusahaan.
The Notes are guaranteed by the Company and
Mobile-8 B.V. where the Company pledged its
shares in Mobile-8 B.V. and an assignment by
Mobile-8 B.V. of all of its interest and rights under
the Intercompany Loan. Intercompany loan
represents the loan in US Dollars made on the
original issue date by Mobile-8 B.V. to the
Company in the amount equal to the amount of
the gross proceeds received by Mobile-8 B.V.
from the offering of the Notes pursuant to the
intercompany loan agreement entered on the
original issue date between Mobile-8 B.V. and the
Company.
- 41 -
Pada saat penerbitan, Notes ini telah memperoleh
peringkat “B” dari Standard & Poor’s Rating Group
(Standard & Poor’s), yang merupakan divisi dari
Mc Graw-Hill Companies Inc, dan “B2” dari
Moody’s Investors Service, Inc. (Moody’s).
At the issuance, the Notes have been rated “B” by
Standard & Poor’s Rating Group (Standard &
Poor’s), a division at McGraw-Hill Companies, Inc.
and “B2” by Moody’s Investors Service, Inc.
(Moody’s).
Pada laporan terakhir tertanggal 2 Desember
2008, Standard & Poor’s melakukan revisi
terhadap peringkat Notes tersebut menjadi “D”.
Sedangkan Moody’s tidak lagi memberikan
peringkat terhadap Notes tersebut sejak 20
Pebruari 2009.
On its latest report, December 2, 2008, Standard
& Poor’s has downgraded its rating to ‘D” on
December 2nd 2008 while dan Moody’s has
withdrawn its rating as per February 20, 2009.
Biaya yang berhubungan dengan penerbitan
Notes sebesar Rp40.603.730.631, dicatat sebagai
biaya emisi pinjaman dan diamortisasi selama
periode pinjaman. Biaya emisi pinjaman belum
diamortisasi dicatat sebagai pengurang pinjaman.
The costs incurred in relation to the issuance of
the Notes amounting to Rp40,603,730,631, were
recorded as debt issuance cost and amortized
over the term of the bonds. Unamortized debt
issuance costs are deducted from the face value
of the bonds.
Sampai dengan tanggal
laporan keuangan,
Perusahaan belum membayar bunga obligasi
yang jatuh tempo tanggal 1 Maret 2009 (untuk
periode 1 September 2008 – 1 Maret 2009)
sebesar
USD5.625.000
atau
ekuivalen
Rp61.593.750.000.
As of the issuance date of the financial
statements, the Company has not paid the interest
due on March 1, 2009 (for the period September
1, 2008 – March 1, 2009) amounted to
USD5.625.000 or equivalent Rp61,593,750,000.
26. HUTANG SEWA PEMBIAYAAN
26. FINANCE LEASE LIABILITIES
Perusahaan mengadakan perjanjian sewa dengan
beberapa penyedia menara pemancar (lessor)
untuk jangka waktu 11 – 12 tahun. Perusahaan
mempunyai opsi untuk memperpanjang selama 10
tahun. Transaksi ini diklasifikasi sebagai sewa
pembiayaan karena secara substansial seluruh
risiko dan manfaat terkait dengan pemilikan
menara pemancar tersebut beralih kepada
Perusahaan. Kewajiban Perusahaan atas sewa
pembiayaan ini dijamin dengan hak pemilikan
lessor atas menara pemancar yang disewa.
The Company entered into lease agreements with
several tower providers (lessor) with lease terms
of 11 to 12 years. The Company has options to
extend for further 10 years. The leases were
classified as finance leases since substantially all
the risks and rewards incidental to the ownership
of the towers were transferred to the Company.
The Company’s obligations under the finance
leases are secured by the lessors’ title to the
leased towers.
- 42 -
Jumlah pembayaran minimum sewa pembiayaan
dan nilai kini pembayaran minimum sewa
pembiayaan adalah sebagai berikut:
The total of future minimum lease payments and
present value of future minimum lease payments
are as follows:
Pembayaran minimum
sewa pembiayaan di masa depan/
Future minimum lease
payments
2008
2007
Rp
Rp
Tidak lebih dari 1 tahun
Lebih dari 1 tahun sampai
dengan 5 tahun
Lebih dari 5 tahun
Jumlah
Dikurangi beban keuangan
di masa depan
Nilai kini pembayaran minimum
sewa pembiayaan dimasa depan
Nilai kini pembayaran minimum
sewa pembiayaan di masa depan/
Present value of future minimum
lease payments
2008
2007
Rp
Rp
273.246.426.482
218.044.133.042
60.783.204.986
25.174.443.320
1.321.258.756.534
1.028.210.749.681
843.743.211.422
807.535.121.955
431.409.344.195
737.604.579.267
233.240.731.438
542.351.323.546
2.622.715.932.697
1.869.322.466.419
1.229.797.128.448
800.766.498.304
(1.392.932.178.716)
(1.068.555.968.115)
-
-
1.229.797.128.448
800.766.498.304
Total
Less future finance
charges
Present value of future
minimum lease payments
60.783.204.986
1.169.013.923.462
25.174.443.320
775.592.054.984
Presented as
Current liabilities
Noncurrent liabilities
1.229.797.128.448
800.766.498.304
1.229.783.753.981
800.766.498.304
Disajikan sebagai
Kewajiban lancar
Kewajiban tidak lancar
Jumlah
27. PINJAMAN JANGKA PANJANG
No later than 1 year
Later than 1 year but not
later than 5 years
Later than 5 years
Total
27. LONG-TERM LOAN
Pada tanggal 20 September 2006, Perusahaan
memperoleh Fasilitas Pinjaman dari Lehman
Commercial Papers Inc. (LCPI), sebagai pengatur
dan kreditur pertama, sebesar USD70 juta, yang
telah diamandemen pada tanggal 29 Nopember
2006. Fasilitas pinjaman ini dapat ditarik sekaligus
pada tanggal penggunaaan dana (utilisasi), dan
dikenakan tingkat bunga per tahun sebesar USD
LIBOR ditambah 6% dengan periode bunga tiga
bulanan. Pelunasan pinjaman dilakukan dalam
satu kali pembayaran dimana batas waktu
pelunasan adalah paling lama 36 bulan setelah
tanggal utilisasi.
On September 20, 2006, the Company obtained a
Loan Facility from Lehman Commercial Papers
Inc. (LCPI) as the Arranger and Original Lender of
USD70 million which was amended and restated
on November 29, 2006. This facility has a one
time drawdown on the utilization date, and will
bear interest at US Dollar LIBOR plus 6% margin
per annum, with interest period of 3 months.
Principal repayment should be made in one lump
sum payment at the latest is 36th months after
utilization date.
Pada tanggal 5 Desember 2006, Perusahaan
telah merealisasi fasilitas pinjaman dari LCPI
sebesar USD70 juta. Sebagian dana dari
pinjaman ini digunakan untuk melunasi seluruh
wesel bayar sebesar Rp130,5 miliar dan
USD27.155.931 dan biaya bunga wesel bayar
sebesar
Rp271.875.000
dan
USD29.062.
Sehubungan dengan fasilitas ini, Perusahaan
membayar arrangement fee dan biaya legal
sebesar USD2,2 juta yang dicatat sebagai biaya
pinjaman dan diamortisasi selama periode
pinjaman.
On December 5, 2006, the Company drew down
the loan amounting to USD70 million. The
Company used part of the loan proceeds to repay
notes
payable
of
Rp130.5
billion
and
USD27,155,931 and interest on the notes payable
of Rp271,875,000 and USD29,062. In relation to
the loan facility, the Company was charged
arrangement and legal fees amounting to USD2.2
million which were recorded as debt issuance
costs and amortized over the period of the loan.
Pada tanggal 20 Agustus 2007, Perusahaan telah
melunasi seluruh pinjaman sebesar USD70 juta
dan bunga sebesar USD1,6 juta atau ekuivalen
Rp676.879.010.868
dan
mencatat
beban
keuangan sebesar Rp15.138.750.001 atas
pelunasan pinjaman lebih awal tersebut.
On August 20, 2007, the Company fully repaid the
loan amounting to USD70 million and interest of
USD1.6
million
or
equivalent
to
Rp676,879,010,868 and recognized financial
charge of Rp15,138,750,001 on the early
extinguishment of the loan.
- 43 -
28. MODAL SAHAM
28. CAPITAL STOCK
Jumlah
saham/
Number of
Shares
Nama Pemegang Saham/
Name of Stockholder
Jerash Investment Ltd.
UOB Kay Hian Private Limited
Masyarakat/Public, pemilikan kurang dari 5%/
less than 5% ownership
Jumlah/Total
Jumlah
modal disetor/
Total paid-up
capital
Rp
6.475.479.000
3.844.815.988
2.690.118.600
1.013.051.863
404.611.912
32,00
19,00
13,29
5,01
2,00
647.547.900.000
384.481.598.800
269.011.860.000
101.305.186.300
40.461.191.200
5.807.795.064
28,70
580.779.506.400
20.235.872.427
100,00
2.023.587.242.700
Jumlah
saham/
Number of
Shares
Nama Pemegang Saham/
Name of Stockholder
2008
Persentase
pemilikan/
Percentage
of ownership
%
2007
Persentase
pemilikan/
Percentage
of ownership
%
Jumlah
modal disetor/
Total paid-up
capital
Rp
Masyarakat/Public, pemilikan kurang dari 5%/
less than 5% ownership
13.519.895.988
1.013.051.863
404.611.912
66,81
5,01
2,00
1.351.989.598.800
101.305.186.300
40.461.191.200
5.298.312.664
26,18
529.831.266.400
Jumlah/Total
20.235.872.427
100,00
2.023.587.242.700
Based on the Shareholders Resolution upon
amendment of the Articles of Association of the
Company as stated in deed No. 168 dated
December 15, 2006 of Aulia Taufani, SH.,
substitute of Sutjipto, S.H., notary in Jakarta, the
Company’s
Stockholders
approved
the
participation of public to own 3.9 billion of the
Company’s shares of stock. Those changes had
been received by the Minister of Law and Human
Rights of the Republic of Indonesia in his Decision
Letter No. W7.HT.01.04-441 dated January 11,
2007.
Berdasarkan Akta Pernyataan Keputusan Para
Pemegang Saham atas perubahan Anggaran
Dasar No. 168 tanggal 15 Desember 2006, dari
Aulia Taufani, S.H., pengganti Sutjipto, S.H.,
notaris di Jakarta, para pemegang saham
menyetujui masuknya masyarakat sebagai
pemegang
saham
Perusahaan
dengan
kepemilikan saham sebanyak 3,9 miliar saham.
Perubahan ini telah diterima oleh Menteri Hukum
dan Hak Asasi Manusia Republik Indonesia
melalui Surat Keputusannya No.W7.HT.01.04-441
tanggal 11 Januari 2007.
- 44 -
Berdasarkan Akta Pernyataan Keputusan Para
Pemegang Saham atas perubahan Anggaran
Dasar No. 153 tanggal 22 Mei 2007, dari Aulia
Taufani, S.H., pengganti Sutjipto, S.H., notaris di
Jakarta, para pemegang saham menyetujui
pengeluaran saham baru kepada pemegang
saham minoritas Komselindo dalam rangka
penggabungan usaha sebanyak 43.045.567
saham dengan nilai nominal Rp100 per saham.
Akta perubahan ini telah diterima oleh Menteri
Hukum dan Hak Asasi Manusia Republik
Indonesia
melalui
Surat
Keputusannya
No. W7.HT.01.04-7621 tanggal 29 Mei 2007.
Based on the Shareholders Resolution upon
amendment of the Articles of Association of the
Company as stated in deed No. 153 dated May
22, 2007 of Aulia Taufani, SH., substitute of
Sutjipto, S.H., notary in Jakarta, the Company’s
stockholders approved the issuance of 43,045,567
new shares of the Company with Rp100 par value
per share for the minority stockholders of
Komselindo in relation to the merger. Those
changes had been received by the Minister of Law
and Human Rights of the Republic of Indonesia in
his Decision Letter No.W7.HT.01.04-7621 dated
May 29, 2007.
Berdasarkan
Akta
Pernyataan
Keputusan
Komisaris No. 181 tanggal 15 Agustus 2007 dari
Aulia Taufani, S.H., pengganti Sutjipto, S.H.,
notaris di Jakarta, para anggota komisaris
Perusahaan, berdasarkan kewenangan yang
diberikan oleh pemegang saham Perusahaan,
menyetujui penerbitan saham baru sebesar
607.466.700 saham dengan nilai nominal Rp100
per saham atau sebesar Rp60.746.670.000 yang
diambil bagian oleh pihak yang secara sah
memiliki hak atas waran berdasarkan Exercise
Notice yang diterima oleh Perusahaan. Akta
perubahan ini telah diterima oleh Menteri Hukum
dan Hak Asasi Manusia Republik Indonesia sesuai
Suratnya No. W7.HS.01.10-12408 tanggal 5
September 2007.
Based on the Decision of the Company’s
Commissioners as stated in deed No. 181 dated
August 15, 2007 of Aulia Taufani, SH., substitute
of Sutjipto, S.H., notary in Jakarta, the Company’s
commissioners, with the authority from the
Company’s Stockholders, approved the issuance
of 607,466,700 new shares of the Company with
par value per share of Rp100 or a total of
Rp60,746,670,000 which were subscribed by the
party that has legal ownership of the warrant
based on the Exercise Notice received by the
Company. Those amendment had been received
by the Minister of Law and Human Rights of the
Republic
of
Indonesia
in
his
Letter
No. W7.HT.01.10-12408 dated September 5,
2007.
Berdasarkan Akta Pernyataan Keputusan Rapat
Perubahan Anggaran Dasar No.158 tanggal 24
April 2008, para pemegang saham Perusahaan
menyetujui penyesuaian dan penyusunan kembali
seluruh Anggaran Dasar Perusahaan sehubungan
dengan diberlakukannya undang-undang No.40
tahun 2007 tentang Perseroan Terbatas.
Perubahan Anggaran Dasar Perusahaan telah
mendapatkan pengesahan dari Menteri Hukum
dan Hak Asasi Manusia Republik Indonesia
dengan surat keputusan
No.AHU52716.AH.01.02 tanggal 19 Agustus 2008.
Based on the Shareholder’s Resolution Upon
Amendment
of the Company’s Articles of
Association as stated in deed No.158 dated April
24, 2008, The Company’s stockholders approved
the amendment and restatement of the Note
Articles of Association of the Company (to comply
with the terms of the) Limited Liability Company
Law no. 40 year 2007. Such amandment in the
Company’s Articles of Association was approved
by the Minister of Law and Human Rights of the
Republic of Indonesia in his Decision Letter
No.52716.AH.01.02 dated Agustus 19, 2008.
Pada tahun 2007, PT Centralindo Pancasakti
Celular, Asia Link B.V. dan PT TDM Aset
Manajemen (sebagai pemegang saham pendiri)
telah menjual seluruh sahamnya di Perusahaan.
In 2007, PT Centralindo Pancasakti Celular, Asia
Link B.V. and PT TDM Aset Manajemen (as
founders’ stockholders) had sold their shares in
the Company.
- 45 -
29. TAMBAHAN MODAL DISETOR
29. ADDITIONAL PAID-UP CAPITAL
Tambahan modal disetor merupakan selisih
setoran modal dari pemegang saham dengan nilai
nominal saham setelah dikurangi dengan biaya
penerbitan saham, sebagai berikut:
Additional paid-up capital represents the
difference between the total paid-up capital
received from the stockholders and par value of
shares issued less share issuance cost, as
follows:
2008
Rp
Agio saham atas pengeluaran
saham
Tahun 2006
Tahun 2005
Tahun 2004
Tahun 2003
Dikurangi biaya penerbitan saham
Konversi tambahan modal disetor
(Catatan 28)
Jumlah
Agio saham atas penawaran
umum saham kepada masyarakat
setelah dikurangi dengan biaya
emisi saham sebesar
Rp 45.594.340.944
Tambahan modal disetor atas
hak minoritas pemegang saham
Komselindo sehubungan
dengan merger (Catatan 2)
Penurunan agio saham atas
penerbitan saham baru kepada
pemegang saham minoritas
Komselindo
Penjualan dan pelaksanaan
waran (Catatan 28 dan 45g)
Jumlah Agio Saham
2007
Rp
6.098.943.125
182.853.121.214
347.050.077.429
486.874.188.119
(10.915.145.012)
6.098.943.125
182.853.121.214
347.050.077.429
486.874.188.119
(10.915.145.012)
(1.011.663.819.000)
(1.011.663.819.000)
297.365.875
297.365.875
441.905.659.056
441.905.659.056
1.254.540.742
1.254.540.742
(4.304.556.700)
(4.304.556.700)
93.980.583.406
93.980.583.406
533.133.592.379
533.133.592.379
Additional paid-up capital from
shares issued
In 2006
In 2005
In 2004
In 2003
Less shares issuance costs
Conversion of additional
paid-up capital (Note 28)
Total
Additional paid-up capital from
initial public offering net of share issuance
costs of Rp 45,594,340,944
Additional paid-up capital
from minority interest of
Komselindo's stockholders
in relation to merger (Note 2)
Decrease in additional paid-up
capital from the issuance of new
shares to minority stockholders
of Komselindo
Sale and exercise of warrants
(Notes 28 and 45g)
Total Additional Paid-up Capital
30. SELISIH
NILAI
TRANSAKSI
RESTRUKTURISASI ENTITAS SEPENGENDALI
30. DIFFERENCE IN VALUE OF RESTRUCTURING
TRANSACTION AMONG ENTITIES UNDER
COMMON CONTROL
Selisih nilai transaksi restrukturisasi entitas
sepengendali merupakan selisih antara nilai
transaksi dengan jumlah tercatat atas perolehan
saham Komselindo dalam rangka restrukturisasi
entitas sepengendali.
Difference in value of restructuring transaction
among entities under common control represents
difference in transaction price over book value of
Komselindo’s shares purchased by the Company,
which is considered as a transaction among
entities under common control.
- 46 -
31. PENDAPATAN USAHA
31. OPERATING REVENUES
2008
Rp
Jasa telekomunikasi
Percakapan
Pesan singkat (SMS)
Data
Abonemen
Lain-lain
2007
Rp
Voice
Short messaging service (SMS)
Data
Monthly service charges
Others
665.091.691.093
116.908.570.746
27.205.100.783
3.234.761.804
7.924.718.482
785.559.837.828
156.485.446.100
37.190.432.066
2.383.037.276
10.462.909.057
820.364.842.908
992.081.662.327
87.353.980.804
18.805.950.953
109.020.726.252
16.633.567.056
106.159.931.757
125.654.293.308
Jumlah Pendapatan
926.524.774.665
1.117.735.955.635
Beban interkoneksi
Potongan harga
(163.105.159.887)
(31.588.967.762)
(193.415.692.309)
(41.774.779.291)
Interconnection charges
Discount
Sub-jumlah
(194.694.127.649)
(235.190.471.600)
Sub-total
731.830.647.016
882.545.484.035
Sub-jumlah
Jasa interkoneksi
Domestik
Jelajah Internasional
Sub-jumlah
Pendapatan Usaha - Bersih
32. BEBAN PENYUSUTAN DAN AMORTISASI
Jumlah
Gross Revenues
Operating Revenues - Net
248.303.186.698
173.769.248.660
70.971.984.620
56.016.041.351
319.275.171.318
229.785.290.011
AND
AMORTIZATION
Depreciation of property and
equipment (Note 13)
Amortization of deferred charges
(Note 15)
Total
33. OPERATIONS,
MAINTENANCE
AND
TELECOMMUNICATION SERVICES EXPENSES
2008
Rp
Jumlah
Sub-total
2007
Rp
33. BEBAN OPERASI, PEMELIHARAAN DAN JASA
TELEKOMUNIKASI
Sewa tempat untuk stasiun
pengendali dan infrastruktur
telekomunikasi
Beban penggunaan frekuensi
(Catatan 45c)
Listrik dan generator
Transportasi operasional
Lain-lain
Domestic
International Roaming
32. DEPRECIATION
EXPENSES
2008
Rp
Penyusutan aset tetap
(Catatan 13)
Amortisasi beban tangguhan
(Catatan 15)
Sub-total
2007
Rp
119.405.761.655
53.317.977.177
94.606.472.016
71.078.051.613
18.518.397.139
4.333.454.997
-
43.304.154.624
25.179.294.996
12.640.043.979
1.341.556.539
99.394.835
307.942.137.420
135.882.422.150
- 47 -
Rental of spaces for base station
and telecommunication
infrastructure
Frequency usage charges
(Note 45c)
Electricity and generator
Operational transportation
Others
Total
34. BEBAN PENJUALAN DAN PEMASARAN
34. SALES AND MARKETING EXPENSES
2008
Rp
2007
Rp
Iklan dan promosi
Kartu dan biaya voucher
Distribusi
Komisi
237.552.736.622
20.194.711.231
9.290.302.934
4.467.489.608
111.013.191.944
22.829.690.614
11.388.814.220
6.489.762.161
1.346.315.462
502.661.846
Jumlah
272.851.555.857
152.224.120.785
Untuk tahun yang berakhir 31 Desember 2008 dan
2007, masing-masing sebesar 52,73% dan
24,39% beban penjualan dan pemasaran
dilakukan dengan pihak hubungan istimewa
(Catatan 43b).
Total
35. PERSONNEL EXPENSES
2008
Rp
2007
Rp
Gaji dan tunjangan karyawan
Tenaga outsource
Imbalan kerja (Catatan 39)
Perekrutan, pelatihan dan
pengembangan
124.246.311.809
21.875.637.986
8.778.778.000
97.087.831.339
16.602.561.262
12.342.452.000
2.858.222.895
4.725.381.905
2.263.592.872
928.246.056
Jumlah
160.022.543.562
131.686.472.562
36. BEBAN UMUM DAN ADMINISTRASI
Salaries and allowances
Outsourcing of employees
Post-employment benefits (Note 39)
Recruitment, training and
development
Total
36. GENERAL AND ADMINISTRATION EXPENSES
2008
Rp
Jumlah
For years ended December 31, 2008 and 2007,
52.73% and 24.39% of total sales and marketing
expenses was rendered by related parties,
respectively (Note 43b).
35. BEBAN KARYAWAN
Sewa
Perjalanan dinas
Keamanan dan kebersihan
Listrik, air dan telepon
Asuransi
Transportasi
Penyisihan piutang ragu-ragu
(Catatan 7)
Beban kantor
Jasa profesional
Jamuan dan sumbangan
Pos dan pengiriman
Lain-lain (masing-masing dibawah
Rp 1 miliar)
Advertising and promotion
Card and voucher cost
Distribution
Commissions
2007
Rp
20.695.418.385
6.037.175.679
5.735.059.918
5.569.944.828
4.241.193.507
4.028.388.364
15.954.078.826
5.377.197.124
3.735.496.015
5.804.315.760
3.865.804.443
7.163.271.141
9.619.326.513
3.400.318.870
2.532.797.933
1.423.160.862
450.147.788
4.309.103.258
3.995.834.620
2.884.796.765
1.879.129.065
1.415.642.184
Rental
Travelling expenses
Security and cleaning
Electricity, water and telephone
Insurance
Transportation
Provision for doubtful accounts
(Note 7)
Office expenses
Professional fees
Entertainment and donation
Postal and courier
11.057.183.835
6.854.752.485
74.790.116.481
63.239.421.686
- 48 -
Total
37. BEBAN BUNGA DAN KEUANGAN
37. INTEREST
CHARGES
2008
Rp
Hutang sewa pembiayaan
(Catatan 26)
Hutang obligasi (Catatan 25)
Lehman Commercial Papers Inc.
(Catatan 27)
Samsung Corporation (Catatan 24)
Lain-lain
Jumlah
EXPENSES
AND
FINANCIAL
2007
Rp
203.131.277.693
145.587.651.430
52.082.397.246
90.883.016.569
18.533.607.593
52.117.113.285
7.005.032.548
115.566.980
367.252.536.716
202.203.126.628
38. PERPAJAKAN
Lease liabilities (Note 26)
Bonds payable (Note 25)
Lehman Commercial Papers Inc.
(Note 27)
Samsung Corporation (Note 24)
Others
Total
38. TAXATION
Manfaat (beban) pajak tangguhan Perusahaan
dan anak perusahaan terdiri dari:
Deferred tax benefit (expense) of the Company
and its subsidiaries consist of the following:
2008
Rp
2007
Rp
Pajak kini:
Perusahaan
Anak perusahaan
-
-
Current tax:
The Company
Subsidiaries
Jumlah beban pajak kini
-
-
Total current tax expense
Pajak tangguhan:
Perusahaan
Anak perusahaan
109.624.878.208
-
(6.496.440.585)
-
Deferred tax:
The Company
Subsidiaries
Jumlah manfat (beban) pajak tangguhan
109.624.878.208
(6.496.440.585)
Total deferred tax benefit (expense)
- 49 -
Pajak Kini
Current Tax
Rekonsiliasi antara laba sebelum pajak menurut
laporan laba rugi konsolidasi dengan lasba fiskal
A reconciliation between income before tax
expense per consolidated statements of income
and taxable income is as follows:
2008
Rp
Laba (rugi) sebelum pajak menurut
laporan laba rugi konsolidasi
Laba sebelum pajak
anak perusahaan
Laba (rugi) sebelum pajak Perusahaan
Perbedaan temporer:
Beban tangguhan
Penyusutan aset sewa
pembiayaan
Beban imbalan pasca kerja
Beban piutang ragu-ragu
Beban penurunan nilai persediaan
Pembayaran sewa pembiayaan
Perbedaan penyusutan komersial
dan fiskal
Lain-lain
Jumlah
Perbedaan yang tidak dapat
diperhitungkan menurut fiskal:
Amortisasi goodwill
Beban pajak
Kesejahteraan karyawan
Perjamuan dan sumbangan
Transportasi
Penghasilan bunga dikenakan
pajak final
Lain-lain
Jumlah
Laba (rugi) sebelum rugi fiskal
Perusahaan tahun sebelumnya
Akumulasi rugi fiskal tahun-tahun
sebelumnya - setelah penyesuaian
dengan surat ketetapan pajak dan
surat keberatan Perusahaandan dan
keputusan pengadilan pajak
2006
2005
2004
2003
Akumulasi rugi fiskal
2007
Rp
(1.178.492.882.207)
56.841.737.794
(2.423.790.217)
(23.643.966.815)
(1.180.916.672.424)
33.197.770.979
70.971.898.399
56.016.041.351
69.742.652.212
6.926.334.000
5.642.062.000
-
16.710.684.503
3.416.693.000
4.294.941.471
2.188.968.212
(39.954.066.555)
(8.969.979.044)
(81.322.246.248)
1.501.636.647
(64.405.963.432)
33.508.270.455
9.251.386.061
11.451.958.252
9.868.600.850
1.630.578.987
1.423.160.862
11.451.958.252
12.815.670.846
2.827.896.963
1.878.436.053
1.401.563.928
3.211.302.514
-
(7.491.194.243)
(298.645.477)
(11.235.800.039)
1.416.509.252
17.986.023.159
22.365.973.841
(1.129.422.378.810)
64.815.130.881
Income (loss) before tax per
consolidated statements of income
Income before tax
of subsidiaries
Income (loss) before tax expense
of the Company
Temporary differences:
Deferred charges
Depreciation of finance
leased assets
Post-employment benefits
Provision for doubtful accounts
inventory
Payments of finance lease
Difference between commercial
and fiscal depreciation expenses
Others
Total
Permanent differences:
Goodwill amortization
Tax expenses
Personnel expenses
Transportation
Interest income subjected
to final tax
Others
Total
Income (loss) before fiscal loss
carryforward of the Company
(57.513.281.809)
(283.403.865.286)
(347.166.993.354)
(8.257.890.849)
(207.684.324.782)
(460.823.419.814)
-
Fiscal loss carryforward - net of
adjustment per tax assessment
letter and the Company's
objection letter and tax
court decision
2006
2005
2004
2003
(1.825.764.410.108)
(603.692.613.715)
Fiscal loss carryforward
- 50 -
Laba bersih sebelum pajak dari anak perusahaan
untuk tahun yang berakhir 31 Desember 2008
merupakan
laba
Mobile-8
B.V.
sebesar
Rp2.423.790.217.
The net income before tax of subsidiaries for
years ended December 31, 2008 include the
income of Mobile-8 B.V. amounting to
Rp2,423,790,217.
Untuk tahun yang berakhir
31 Desember 2008
dan 2007, Perusahaan mengakui rugi pajak
sehingga tidak terdapat taksiran pajak kini untuk
periode tersebut.
For years ended December 31, 2008 and 2007,
the Company’s recorded tax loss, hence, there
was no estimated current income tax for those
periods.
menerima SKPLB Pajak Penghasilan Badan
tahunan 2007 milik Perusahaan yang menyatakan
bahwa lebih bayar pajak penghasilan badan tahun
2007 sebesar Rp12.239.025.011 dan laba fiskal
Perusahaan
sebesar
Rp61.218.176.523.
Sementara Perusahaan juga menerima SKPKB
Pajak Penghasilan pasal 21, 23, 4 ayat 2 dan 26
dengan jumlah Rp1.490.868.666. Sampai dengan
tanggal laporan keuangan ini diterbitkan,
Perusahan belum menerima pengembalian bersih
kelebihan pembayaran pajak tersebut.
On March 18, 2009. the Company received
SKPLB on Corporate Income Tax No.
00059/406/07/054/09 for the fiscal year 2007,
which stated that the Company’s corporate
income tax overpayment for fiscal year 2007
amounted to Rp12,239,025,011 and tax income
amounted to Rp61,218,176,523. While, the
Company also received Underpayment Tax
Assessment Letter (SKPKB) on Income Tax
article 21, 23, 4 (2) and 26 totalling to
Rp1,490,868,666. As of the issuance date of the
financial statements, the Company has not
received proceed of the overpayment.
menerima Surat Ketetapan Pajak Lebih Bayar
(SKPLB)
Pajak
Penghasilan
Badan
tahunan 2007 milik anak Perusahaan sebelum
merger, PT Komunikasi Selular Indonesia (KSI),
yang menyatakan bahwa lebih bayar pajak
penghasilan
badan
tahun
2007
sebesar
Rp2.347.189.369 dan laba fiskal Perusahaan
sebesar Rp110.473.929.831. Pada bulan Maret
2009 Perusahaan telah menerima pengembalian
lebih bayar tersebut sebesar Rp2.137.035.481 dan
sisanya sebesar Rp210.153.888 digunakan untuk
penyelesaian hutang Pajak Penghasilan pasal 23,
4 ayat 2 dan Pajak Pertambahan Nilai
Perusahaan.
On January 30, 2009. the Company received
Overpayment Tax Assessment Letter (SKPLB) on
Corporate Income Tax No.00014/406/07/014/09
for the fiscal year 2007 on behalf of the prior
merger Company’s subsidiary, PT Komunikasi
Selular Indonesia (KSI), which stated that the
Company’s corporate income tax overpayment for
fiscal year 2007 amounted to Rp2,347,189,369
and tax income amounted to Rp110,473,929,831.
On March 2009 the Company already received
such overpayment amounted to Rp2,137,035,481
and the remaining balance of Rp210,153,888 was
compensated against the Company’s tax payable
of Income Tax article 23, 4(2) and Value Added
Tax.
tahunan 2006 milik anak Perusahaan sebelum
merger, PT Telekomindo Selular Raya (TSR),
yang menyatakan bahwa lebih bayar pajak
penghasilan
badan
tahun
2007
sebesar
Rp4.885.435 dan rugi fiskal Perusahaan sebesar
Rp10.770.510.718. Pada bulan Pebruari 2008
Perusahaan telah menerima pengembalian
tersebut sebesar Rp3.465.346 dan sisanya
sebesar
Rp1.420.089
digunakan
untuk
penyelesaian hutang Pajak Penghasilan pasal 21
Perusahaan.
On January 12, 2008, the Company received
SKPLB on Corporate Income Tax No.
00007/406/06/901/08 for the fiscal year 2006, on
behalf of the prior merger Company’s subsidiary,
PT Telekomindo Selular Raya (TSR), which
stated that the Company’s corporate income tax
overpayment for fiscal year 2007 amounted to
Rp4,885,435 and fiscal loss amounted to
Rp10,770,510,718. On February 2008 the
Company has received such overpayment
amounted to Rp3,465,346 and the remaining
balance of Rp1,420,089 was compensated
against the Company’s tax payable of Income Tax
article 21.
- 51 -
Pada tanggal 15 Oktober 2008, Perusahaan
No.00175/406/06/054/08 dan Pajak Pertambahan
Nilai No.00058/407/06/054/08 untuk masa pajak
tahunan
2006
masing-masing
sebesar
Rp868.055.309 dan Rp6.065.736.163 yang telah
diterima Perusahaan pada bulan Nopember 2008
sebesar Rp5.145.150.360 dan sisanya sebesar
Rp1.788.641.112 digunakan untuk penyelesaian
hutang Pajak Penghasilan pasal 23, 26 dan Pajak
Pertambahan Nilai Perusahaan.
On October 15, 2008, the Company received
SKPLB on Corporate Income tax No.
00175/406/06/054/08 and Value Added Tax No.
00058/407/06/054/08 for the fiscal year 2006
amounting
to
Rp868,055,309
and
Rp6,065,736,163, respectively,
which was
received in November 2008 amounting to
Rp5,145,150,360 and remaining balance of
Rp1,788,641,112 was compensated against the
Company’s tax payable of Income Tax article 23,
26 and Value Added Tax.
Pada tanggal 8 Juli 2008, Perusahaan menerima
Surat Keputusan Direktur Jenderal Pajak No:KEP1079/WPJ.06/BD.06/2008
tentang
keberatan
Wajib Pajak atas SKPLB Pajak Penghasilan
Badan yang menetapkan untuk mempertahankan
SKPLB No.00028/406/05/073/07 tanggal 30 April
bahwa peredaran usaha Perusahaan sebesar
Rp413.244.435.394,
sementara
menurut
Perusahaan
adalah
Rp321.694.453.611.
tersebut dan sampai dengan tanggal laporan
keuangan ini diterbitkan, belum ada keputusan
atas gugatan tersebut.
On July 8, 2008, the Company received a decision
letter No:KEP-1079/WPJ.06/BD.06/2008 from the
Director General of Taxation regarding the
Company’s objection on SKPLB on the
Company’s Income Tax wherein defending SKPLB
No.00028/406/05/073/07 dated April 30, 2007 for
fiscal year 2004 which stated the Company’s
revenue amounted to Rp413,244,435,394, while
according to the Company amounted to
Rp321,694,453,611. The Company appealed on
such decision and as of the issuance date of the
financial statements, the Company has not
received response on such appeal.
Sehubungan dengan penggabungan usaha, pada
tanggal 25 Juni 2007, Perusahaan mengajukan
surat permohonan kepada Kantor Pelayanan
Pajak untuk pengunaan nilai buku atas pengalihan
harta dalam rangka merger sehingga Perusahaan
dapat menggunakan akumulasi rugi fiskal anak
perusahaan. Pada tanggal 16 Agustus 2007,
Perusahaan menerima Surat Keputusan Direktur
Jenderal
Pajak
No.30/PJ.03/2007
tentang
penolakan permohonan penggunaan akumulasi
rugi fiskal anak perusahaan. Pada tanggal
12 September 2007, Perusahaan mengajukan
gugatan kepada pengadilan pajak. Pada tanggal
30 April 2008, Perusahaan menerima Surat
Keputusan
Pengadilan
Pajak
No.Put.13799/PP/M.VII/99/2008 tertanggal 17
April
2008,
yang
mengabulkan
gugatan
Perusahaan.
Dengan
adanya
keputusan
Pengadilan Pajak ini, maka rugi fiskal anak
perusahaan yang yang dapat diperhitungkan
dalam Perusahaan berjumlah Rp251.126.636.375,
terdiri dari masing-masing Rp8.257.890.849 dari
rugi fiskal 2003, Rp66.141.656.045 dari rugi fiskal
2004, Rp119.213.807.672 dari rugi fiskal 2005,
dan Rp57.513.281.809 dari rugi fiskal 2006.
In relation to the merger, on June 25, 2007, the
Company filed a request to the Tax Service Office
to allow the Company to transfer tax loss
carryforwards of the former subsidiaries to the
Company. On August 16, 2007, the Company
received the Director General of Taxation
Decision Letter No.30/PJ.03/2007 rejecting the
request to transfer the former subsidiaries’
accumulated fiscal loss carryforwards to the
Company in relation to the merger. On
September 12, 2007, the Company had appealed
to the Tax Court. On April 30, 2008, the Company
received the Tax Court Decision Letter
No.Put.13799/PP/M.VII/99/2008 dated April 17,
2008, approving the Company’s appeal. With such
court
decision,
accumulated
fiscal
loss
carryforwards which were transferred to the
Company
totaling
to
Rp251,126,636,375,
comprises of Rp Rp8,257,890,849 from tax loss of
2003, Rp66,141,656,045 from tax loss of 2004,
Rp119,213,807,672 from tax loss of 2005, and
Rp57,513,281,809 from tax loss of 2006.
- 52 -
keberatan Wajib Pajak atas Surat Ketetapan
Pajak Kurang Bayar (SKPKB) Pajak Penghasilan
Badan yang menetapkan untuk mempertahankan
SKPKB No.00001/406/04/073/05 tanggal 30
Desember 2005 untuk tahun pajak 2004 yang
menyatakan bahwa rugi fiskal Perusahaan
sebesar Rp463.515.783.060, sementara menurut
Perusahaan
adalah
Rp466.766.718.031.
tersebut dan sudah menerima Surat Keputusan
Pengadilan Pajak No.Put.17019/PP/M.VII/15/2009
tanggal 18 Pebruari 2009 yang mengabulkan
gugatan Perusahaan.
the Company’s objection on Tax Underpayment
Assessment Letter (SKPKB) on the Company’s
Income Tax
wherein defending SKPKB No.
00001/406/04/073/05 dated December 30, 2005
for fiscal year 2004 which stated the Company’s
fiscal loss amounted to Rp463,515,783,060, while
according to the Company amounted to
Rp466,766,718,031. The Company appealed to
the such decision and received Tax Court
Decision Letter No.Put.17019/PP/M.VII/15/2009,
dated February 18, 2009 approving the
Company’s appeal.
Pada tanggal 29 Juni 2005, Perusahaan
No. 00028/406/03/073/05 dari Direktorat Jenderal
Pajak yang menyatakan bahwa lebih bayar pajak
penghasilan badan Perusahaan tahun 2003
adalah Rp557.753.145 dan rugi fiskal tahun 2003
adalah Rp62.062.457.743. Atas lebih bayar
tersebut dilakukan pemindahbukuan dengan
hutang pajak PPh pasal 23 dengan jumlah yang
sama sebesar Rp557.753.145. Pada tanggal
6 September 2005, Perusahaan mengajukan
keberatan atas rugi fiskal tahun 2003 berdasarkan
SKPLB tersebut. Berdasarkan surat keberatan
Perusahaan tersebut, rugi fiskal 2003 menurut
Perusahaan adalah Rp80.506.410.717. Sampai
dengan tanggal laporan keuangan ini diterbitkan,
belum ada keputusan atas gugatan tersebut. Pada
tanggal 6 September 2006, Perusahaan menerima
Keputusan
Dirjen
Pajak
No.KEP1073/WPJ.06/BD.06/2006
yang
menolak
Keberatan Perusahaan. Pada Tanggal 5 Oktober
2006, Perusahaan mengajukan banding atas
KEP-1073/WPJ.06/BD.06/2006. Pada tanggal 22
Agustus 2008, Perusahaan menerima Surat
Keputusan
Pengadilan
Pajak
No.Put.14694/PP/M.VII/15/2008,
yang
mengabulkan gugatan Perusahaan.
On June 29, 2005, the Company received SKPLB
No. 00028/406/03/073/05 from the Director
General of Taxation which stated that the
Company’s corporate income tax overpayment for
fiscal year 2003 amounted to Rp557,753,145 and
tax loss for fiscal year 2003 amounted to
Rp62,062,457,743. The overpayment had been
compensated against withholding tax article 23 in
the same amount totaling to Rp557,753,145. On
September 6, 2005, the Company filed an
objection letter against the fiscal loss amount for
fiscal year 2003 as stated in the SKPLB. Based on
the objection letter, the 2003 fiscal loss per
Company’s
calculation
amounted
to
Rp80,506,410,717. On September 6, 2006, the
Company received the Director General of
Taxation
Decision
Letter
No.KEP1073/WPJ.06/BD.06/2006 which rejected the
Company’s objection. On October 5, 2006, the
Company filed an appeal of
KEP1073/WPJ.06/BD.06/2006. On August 22, 2008,
the Company received Tax Court Decision Letter
No.Put.14694/PP/M.VII/15/2008, approving the
Company’s appeal.
- 53 -
Pajak Tangguhan
Deferred Tax
Rincian aset (kewajiban) pajak
tangguhan
Dikreditkan
(dibebankan) ke
laporan
laba rugi/
Credited
(charged)
to income
statement
Rp
31 Desember
2008/
December31,
2008
Rp
181.107.784.116
4.467.283.200
2.634.321.803
(23.071.679.062)
(63.699.568.111)
5.013.205.351
(2.690.993.713)
950.623.278
-
101.247.810.587
1.731.583.500
1.410.515.500
17.742.974.600
(20.330.561.562)
17.435.663.053
(9.988.516.639)
375.409.170
282.355.594.703
6.198.866.700
4.044.837.303
(5.328.704.462)
(84.030.129.738)
22.448.868.404
(12.679.510.352)
950.623.278
375.409.170
104.710.976.862
109.624.878.208
214.335.855.005
1 Januari
2008/
January 1,
2008
Rp
Aset (kewajiban) pajak tangguhan:
Rugi fiskal
Imbalan pasca kerja
Beban tangguhan
Depresiasi aset sewa pembiayaan
Pembayaran aset sewa pembiayaan
Lain-lain
Sub-jumlah
Pajak tangguhan anak perusahaan
sebelum merger
Jumlah
30.283.149.763
134.994.126.625
1 Januari
2007/
January 1,
2007
Rp
Aset (kewajiban) pajak tangguhan:
Rugi fiskal
Biaya masih harus dibayar:
Beban bunga
Imbalan pasca kerja
Beban tangguhan
Depresiasi aset sewa pembiayaan
Pembayaran aset sewa pembiayaan
Sub-jumlah
Pajak tangguhan anak perusahaan
sebelum merger
Jumlah
The details of the Company’s deferred tax assets
(liabilities) are as follows:
-
30.283.149.763
109.624.878.208
244.619.004.768
Dikreditkan
(dibebankan) ke
laporan
laba rugi/
Credited
(charged)
to income
statement
Rp
31 Desember
2007/
December31,
2007
Rp
200.552.323.378
(19.444.539.262)
181.107.784.116
8.100.849.873
3.214.826.479
3.442.275.300
1.345.839.362
(39.876.491.467)
(44.377.779.083)
293.932.814
(8.100.849.873)
(3.214.826.479)
1.025.007.900
1.288.482.441
16.804.812.405
(19.321.789.029)
5.013.205.351
(2.690.993.713)
656.690.464
4.467.283.200
2.634.321.803
(23.071.679.062)
(63.699.568.111)
5.013.205.351
(2.690.993.713)
950.623.278
132.695.776.656
(27.984.799.795)
104.710.976.862
21.488.359.210
30.283.149.763
(6.496.440.585)
134.994.126.625
8.794.790.553
141.490.567.209
- 54 -
Deferred tax assets (liabilities):
Fiscal loss
Allowance for doubtful accounts
Deferred charges
Depreciation of fixed assets
Depreciation of leased assets
Payments of finance leases
Allowance for decline in value of inventory
Others
Sub-total
Deferred tax of subsidiaries
before merger
Total
Deferred tax assets (liabilities):
Fiscal loss
Accrued expenses:
Interest expense
Allowance for doubtful accounts
Deferred charges
Depreciation of fixed assets
Depreciation of leased assets
Payments of finance leases
Allowance for decline in value of inventory
Sub-total
Deferred tax of subsidiaries
before merger
Total
Pada
31
Desember
2008,
Perusahaan
mempunyai akumulasi rugi fiskal sebesar
Rp1.825.764.410.108
yang
dapat
dikompensasikan dengan laba kena pajak di masa
datang. Pada 31 Desember 2008, Perusahaan
mengakui aktiva pajak tangguhan atas rugi fiscal
sebesar
Rp1.129.422.378.810.
Sisa
pajak
tangguhan
atas
rugi
fiskal
sebesar
Rp696.342.031.298
tidak
diakui
karena
Perusahaan belum memiliki dasar memadai untuk
memperkirakan laba kena pajak di masa
mendatang yang dapat dikompensasikan dengan
akumulasi rugi fiscal tersebut.
At December 31, 2008, the Company has
accumulated
tax
loss
carryforward
of
Rp1,825,764,410,108 available for offset against
future tax income. A deferred tax assets has been
recognized in respect of Rp1,129,422,378,810 of
such tax losses. No deferred tax of tax losses has
been recognized in respect of the remaining
Rp696,342,031,298 due to unpredictability of
future profit stream of which the tax loss can be
utilized.
Rekonsiliasi antara beban pajak dan hasil
perkalian laba akuntansi sebelum pajak dengan
tarif pajak yang berlaku adalah sebagai berikut:
A reconciliation between the total tax expense and
the amounts computed by applying the effective
tax rates to income before tax is as follows:
2008
Rp
Laba (rugi) sebelum pajak menurut
laporan laba rugi konsolidasi
Laba anak perusahaan
sebelum pajak
Laba (rugi) sebelum beban pajak Perusahaan
Pajak penghasilan dengan tarif
yang berlaku
Pengaruh pajak
Perbedaan tetap:
Amortisasi goodwill
Beban pajak
Kesejahteraan karyawan
Perjamuan dan sumbangan
Transportasi
Penghasilan bunga
dikenakan pajak final
Lain-lain
2007
Rp
(1.178.492.882.207)
56.841.737.794
(2.423.790.217)
(23.643.966.815)
(1.180.916.672.424)
33.197.770.979
(295.229.168.106)
9.959.331.182
2.862.989.563
2.467.150.213
407.644.747
355.790.216
350.390.982
3.435.587.476
3.844.701.254
848.369.089
563.530.816
963.390.754
(1.872.798.561)
(74.661.377)
(3.370.740.012)
424.952.775
4.496.505.782
6.709.792.152
181.107.784.116
181.107.784.116
8.100.849.983
11.315.676.462
Beban (manfaat) pajak - Perusahaan
Beban (manfaat) pajak anak perusahaan
(109.624.878.208)
27.984.799.795
Jumlah
(109.624.878.208)
Jumlah
Penyesuaian atas aset pajak
tangguhan tahun sebelumnya
Rugi fiskal
Biaya perbaikan dan pemeliharaan
Beban bunga
Jumlah
-
3.214.826.479
(21.488.359.210)
- 55 -
6.496.440.585
Income (loss) before tax expense per
consolidated statements of income
Income before tax
of subsidiaries
Income (loss) before tax expense the Company
Income tax at effective tax rate
Tax effect of
Permanent differences:
Goodwill amortization
Tax expense
Personnel expenses
Transportation
Interest income subjected
to final tax
Others
Total
Derecognition of prior year's deferred
tax assets
Fiscal loss
Repair and maintenance expense
Interest expense
Total
Tax (benefit) expense - the Company
Tax expense (benefit) subsidiaries
Total
39. KEWAJIBAN IMBALAN PASCA KERJA
39. POST-EMPLOYMENT BENEFITS OBLIGATION
Beban imbalan kerja yang dibebankan ke beban
karyawan (Catatan 35) adalah sebagai berikut :
The employee benefit expenses which were
charged to personnel expenses (Note 35) are as
follows:
2008
Rp
2007
Rp
Program pensiun imbalan pasti
Imbalan pasca-kerja lain
8.778.778.000
12.342.452.000
Defined benefit pension plan
Other post-employment benefits
Jumlah
8.778.778.000
12.342.452.000
Total
Kewajiban imbalan kerja yang tercatat di neraca
konsolidasi yang timbul adalah sebagai berikut:
The amounts of employee benefits obligations
included in the consolidated balance sheets are
as follows:
2008
Rp
Program pensiun imbalan pasti
Imbalan pasca-kerja lain
Kewajiban bersih
2007
Rp
39.222.956.000
39.222.956.000
32.296.622.000
32.296.622.000
Defined benefit pension plan
Other post-employment benefits
Net Liability
Program Pensiun Imbalan Pasti
Defined Benefit Pension Plan
Komselindo menyelenggarakan program pensiun
imbalan pasti untuk semua karyawan tetap. Dana
pensiun ini dikelola oleh Dana Pensiun Bimantara
(Danapera) yang akta pendiriannya telah disahkan
oleh Menteri Keuangan Republik Indonesia dengan
Surat Keputusannya No. 382/KM.17/1996 tanggal
15 Oktober 1996. Komselindo merupakan mitra
pendiri.
Komselindo provided a defined benefit pension
plan covering all of its employees. The pension
fund was managed by Dana Pensiun Bimantara
(Danapera) which deed of establishment was
approved by the Minister of Finance in his Decision
Letter No. 382/KM.17/1996 dated October 15,
1996. Komselindo was one of the founding
partners.
Sehubungan dengan penggabungan usaha
Komselindo ke dalam Perusahaan, program
pensiun tersebut dihentikan, dan saldo kewajiban
Komselindo sehubungan dengan program pensiun
ini telah diselesaikan.
In relation to the merger of Komselindo with the
Company, this pension plan had been terminated,
and Komselindo’s liability in relation to the pension
plan had been settled.
Imbalan Pasca Kerja Lain
Other Post-Employment Benefits
Perusahaan juga membukukan imbalan pasca
kerja imbalan pasti untuk karyawan sesuai
undang-undang yang berlaku. Tidak terdapat
pendanaan yang disisihkan sehubungan dengan
imbalan pasca-kerja ini. Jumlah karyawan yang
berhak atas imbalan pascakerja pada tanggal 31
Desember 2008 dan 2007 masing-masing adalah
832 karyawan dan 724 karyawan.
The Company also calculates and records
estimated defined post-employment benefits for its
qualifying employees in accordance with the Labor
Law. No funding has been made to these defined
benefit plan. The number of employees entitled to
the benefits are 832 and 724 on December 31,
- 56 -
Beban imbalan pasca kerja yang diakui dalam
laporan laba rugi adalah:
Amounts recognized in income with respect to
these post-employment benefits are as follows:
2008
Rp
Biaya jasa kini
Biaya bunga
Biaya jasa lalu
Biaya pemutusan kontrak kerja
Jumlah
Mutasi
kewajiban
bersih
dalam
konsolidasi adalah sebagai berikut:
2007
Rp
5.847.392.000
3.875.903.000
(2.172.796.000)
1.228.279.000
4.799.129.000
2.954.317.000
2.005.000
4.587.001.000
8.778.778.000
12.342.452.000
neraca
Current service cost
Interest cost
Past service cost
Contract termination cost
Total
Movements in the net liability recognized in the
consolidated balance sheets are as follows:
2008
Rp
2007
Rp
Saldo awal
Pembayaran manfaat
Beban tahun berjalan
32.296.622.000
(1.852.444.000)
8.778.778.000
28.033.244.000
(8.079.074.000)
12.342.452.000
Beginning of the year
Benefit payments
Amount charged to income
Saldo akhir
39.222.956.000
32.296.622.000
End of the year
Asumsi utama yang digunakan dalam menentukan
penilaian aktuarial adalah sebagai berikut:
Tingkat diskonto per tahun
Tingkat kenaikan gaji per tahun
Tingkat pensiun normal
The actuarial valuation was carried out using the
following key assumptions:
12% tahun/in 2008 dan/and
10% tahun/in 2007
9% tahun/in 2008 dan/and
2007
55 tahun/years
40. SEWA OPERASI
Discount rate per annum
Salary increase rate per annum
Normal pension rate
40. OPERATING LEASES
Perusahaan mengadakan perjanjian sewa operasi
menara pemancar dengan beberapa penyedia
menara pemancar untuk masa sewa 10 tahun.
Perjanjian tersebut juga memuat ketentuan yang
dapat mengakibatkan pengakhiran perjanjian
sebelum masa sewa berakhir.
The Company entered into operating lease
agreements with several tower providers in
relation to the rentals of transmitter towers with
the lease terms of 10 years. The lease
agreements include certain conditions that may
cause the leases to be terminated prior to the
expiry of the lease periods.
Tanah atas aset sewa pembiayaan diklasifikasi
sebagai sewa operasi karena hak pemilikan atas
tanah tidak akan beralih pada akhir masa sewa
dan tanah tersebut mempunyai manfaat tidak
terbatas.
Land related to the leased asset is classified as
operating lease since the title of ownership on the
land does not transfer to the Company at the end
of the lease term and land has an indefinite
economic useful life.
Beban sewa operasi atas perjanjian sewa operasi
menara pemancar, biaya jasa dan tanah atas
aset sewa pembiayaan untuk tahun yang berakhir
31 Desember 2008 sebesar Rp61.037.931.367
(Catatan 33).
Operating lease expenses relating to such
operating lease agreements, service charge and
land related to the finance leased assets
amounted to Rp61,037,931,367 for years ended
December 31, 2008 (Note 33).
- 57 -
41. LABA PER SAHAM
41. EARNINGS PER SHARE
Berikut ini adalah data yang digunakan untuk
perhitungan laba per saham dasar dan dilusian:
The calculation of basic and diluted earnings per
share are based on the following data:
2008
Rp
Laba (rugi) bersih untuk perhitungan
laba per saham
2007
Rp
(1.068.868.003.999)
50.345.297.209
Net income (loss) for computation
of earnings per share
Jumlah Saham
The Number of Shares
Pada tanggal 31 Desember 2008 dan 2007,
jumlah saham beredar Perusahaan sebanyak
20.235.872.427 saham dengan nilai nominal per
saham Rp100.
As of December 31, 2008 and 2007, the
Company’s outstanding shares totalled to
20,235,872,427 shares, with Rp100 par value per
share.
Sesuai Akta Pernyataan Keputusan Para
Pemegang Saham No. 111 tanggal 18 September
2006 yang dibuat dihadapan Aulia Taufani, S.H.,
pengganti Sutjipto, S.H., notaris di Jakarta, nilai
nominal Rp1.000 per saham diubah menjadi
Rp100 per saham dan tambahan modal disetor
sebesar Rp1.011.663.819.000 dikonversi menjadi
modal disetor sebanyak 10.116.638.190 saham
dengan nilai nominal Rp100 per saham.
Based on Deed of Decision of the Company’s
Stockholders No. 111 dated September 18, 2006
of Aulia Taufani, S.H., substitute of Sutjipto, S.H.,
notary in Jakarta, the Company’s par value per
share was changed from Rp1,000 to Rp100 and
additional
paid-up
capital
stock
of
Rp1,011,663,819,000
was
converted
into
10,116,638,190 shares of stock with par value per
share of Rp100.
Perubahan nilai nominal dan konversi tambahan
modal disetor menjadi modal disetor tersebut
merupakan penambahan jumlah saham tanpa
disertai perubahan sumber daya Perusahaan.
Oleh karena itu, untuk tujuan perhitungan jumlah
rata-rata tertimbang saham beredar, perubahan
nilai nominal dan konversi modal disetor tersebut
dianggap sudah terjadi pada awal periode laporan
keuangan disajikan.
The change in par value and conversion of
additional paid-up capital to paid-up capital
represents an increase in the number of shares
which do not involve the change in the Company’s
resources. Accordingly, for the purspose of
calculating weighted average number of
outstanding shares, the change in the par value
and the conversion into the paid-up capital were
considered to have occurred in the earliest period
of the financial statements presented.
Jumlah rata-rata tertimbang saham beredar
(penyebut) untuk perhitungan laba per saham
adalah sebagai berikut:
The weighted average number of outstanding
shares (denominator) for the computation of
earnings per share are as follows:
2008
Jumlah saham awal tahun
Penerbitan saham baru dalam
tahun berjalan (Catatan 28)
Jumlah rata-rata tertimbang saham,
nilai nominal Rp 1.000 per saham
Penerbitan saham baru untuk pemegang
saham minoritas Komselindo
(Catatan 2)
Penerbitan saham dari pelaksanaan waran
Jumlah rata-rata tertimbang saham
untuk perhitungan laba
per saham dasar
Jumlah saham yang seolah-olah
diterbitkan karena pelaksanaan waran
pada Lehman Brothers Opportunity Ltd
(LBOL) dan pihak ketiga
Jumlah rata-rata tertimbang saham
untuk perhitungan laba
per saham dilusian
2007
20.235.872.427
-
19.585.360.160
-
20.235.872.427
-
19.585.360.160
25.119.742
347.837.078
20.235.872.427
-
19.958.316.980
1.275.402.618
20.235.872.427
- 58 -
21.233.719.598
Beginning Balance
Issuance of new shares during
the year (Note 28)
Weighted average number of shares Rp 1,000 par value per shares
Issuance of new share to the minority
shareholders of Komselindo
(Note 2)
Issuance of shares from exercise of warrants
Total weighted average number
of shares to compute basic
earnings per share
Number of shares that would have been
issued due to exercise of warrants
issued to Lehman Brothers Opportunity Ltd
(LBOL) and other third party
Total weighted average number
of shares to compute diluted
earnings per share
Perusahaan tidak menghitung rugi per saham
dilusian untuk tahun yang berakhir 31 Desember
2008 karena pengaruh efek berpotensi saham
biasa terhadap perhitungan rugi per saham
bersifat anti dilutif.
The Company did not compute the diluted loss per
share for year ended December 31, 2008 because
the effect of potential shares is anti-dilutive.
42. PROGRAM OPSI SAHAM MANAJEMEN DAN
KARYAWAN
42. MANAGEMENT
OPTION PLAN
AND
EMPLOYEE
STOCK
Berdasarkan Rapat Umum Pemegang Saham
Luar Biasa pada tanggal 8 Mei 2007,
sebagaimana tercantum dalam Akta Notaris
No. 60 dari Aulia Taufani, S.H., pengganti Sutjipto,
S.H., notaris di Jakarta, para pemegang saham
menyetujui pengeluaran 587.560.805 saham atau
3% dari jumlah saham beredar Perusahaan tanpa
hak memesan efek terlebih dahulu sehubungan
dengan Program Opsi Saham Manajemen dan
Karyawan Perusahaan (Program).
Based on the minutes of the extraordinary general
meeting of stockholders dated May 8, 2007, as
stated in Notarial Deed No. 60 of Aulia Taufani,
S.H., the substitute of Sutjipto, S.H., notary in
Jakarta, the stockholders approved the issuance
of 587,560,805 shares or equal to 3% of the
Company’s total issued shares of stock which will
be made without pre-emptive rights in relation to
the Company’s Management and Employees
Stock Option Plan (the Plan).
Manajemen dan karyawan Perusahaan yang
memenuhi kriteria Program (peserta) akan
menerima penghargaan dalam bentuk opsi saham
dalam tiga periode, dimana sepertiga dari opsi
merupakan penghargaan yang menjadi hak
peserta pada setiap periode penghargaan.
Program opsi saham diberikan dalam lima tahap
yang dimulai pada tahun 2008 dan berakhir pada
2014 (20% dari jumlah opsi saham yang dapat
dikeluarkan berdasarkan program tersebut
dialokasi untuk setiap tahap).
The Company’s management and employees
qualified to avail of the Plan (participants) will
receive awards in the form of stock options which
will vest over a three-year period, with one-third of
the options which are the subject of the award
vesting on each anniversary of the award. The
Stock option plan will be granted in five phases
commencing in 2008 and ending in 2014 (with
20% of the total stock options issuable under the
Plan allocated in each phase).
Harga pelaksanaan opsi saham untuk setiap
tahap adalah harga rata-rata penutupan harga
saham Perusahaan di Bursa Efek Indonesia
dalam kurun waktu 25 hari bursa berturut-turut
sebelum
tanggal
pemberitahuan
rencana
pelaksanaan opsi saham kepada Bursa Efek
Indonesia.
The exercise price of the stock option granted
under any phase of the Plan will be the weighted
average of the closing price per share for 25
consecutive trading days prior to the date on
which the participant notifies the Indonesia Stock
Exchange of the exercise of such stock option.
Sampai dengan tanggal 31 Desember 2008, tidak
ada opsi saham yang telah diberikan untuk
manajemen dan karyawan Perusahaan.
As of December 31, 2008, no shares option have
been granted to the Company’s management and
employees.
- 59 -
43. SIFAT
DAN
ISTIMEWA
TRANSAKSI
HUBUNGAN
43. NATURE
OF
RELATIONSHIP
AND
TRANSACTIONS WITH RELATED PARTIES
Sifat Hubungan Istimewa
Nature of Relationship
a. PT Bhakti Investama Tbk (Bhakti) merupakan
a. PT Bhakti Investama Tbk (Bhakti) is the
pemegang saham induk PT Global Mediacom
Tbk (Mediacom).
ultimate stockholder of PT Global Mediacom
Tbk (Mediacom).
b. Mediacom,
Qualcomm
Incorporated
(Qualcomm), dan KT Freetel Co., Ltd., Korea
(KTF)
merupakan
pemegang
saham
Perusahaan.
b. Mediacom,
c.
PT Infokom Elektrindo (IE), PT MNC Sky
Vision, PT Rajawali Citra Televisi Indonesia
(RCTI), PT Media Nusantara Citra Tbk
(MNC), PT Media Nusantara Informasi (MNI),
PT Global Informasi Bermutu (Global TV),
PT Cipta Televisi Pendidikan Indonesia (TPI),
PT Freekoms Indonesia (Freekoms), PT MNI
Global (MNI Global), PT Telesindo Media
Utama
(Telesindo),
PT Flash
Mobile,
PT Bhakti Asset Management (BAM),
PT Bhakti Securities (Bsec), PT Bhakti Share
Registrar, PT Global Land Development Tbk.,
PT Usaha Gedung Bimantara (UGB) dan
PT Cross Media International merupakan
pihak hubungan istimewa karena pemegang
sahamnya sama atau pada akhirnya sama
dengan pemegang saham induk Perusahaan
atau mempunyai pengurus yang sama.
c.
Qualcomm
Incorporated
(Qualcomm), and KT Freetel Co., Ltd., Korea
(KTF) are stockholders of the Company.
Transaksi-transaksi Hubungan Istimewa
PT Infokom Elektrindo (IE), PT MNC Sky
Vision, PT Rajawali Citra Televisi Indonesia
(RCTI), PT Media Nusantara Citra Tbk
(MNC), PT Media Nusantara Informasi (MNI),
PT Global Informasi Bermutu (Global TV),
PT Cipta Televisi Pendidikan Indonesia (TPI),
PT Freekoms Indonesia (Freekoms), PT MNI
Global (MNI Global), PT Telesindo Media
Utama (Telesindo), PT Flash Mobile,
PT Bhakti
Asset
Management
(BAM),
PT Bhakti Securities (Bsec), PT Bhakti Share
Registrar, PT Global Land Development Tbk,
PT Usaha Gedung Bimantara (UGB) and
PT Cross Media International are related
parties which have the same stockholder or
ultimate stockholder as the Company or the
same management.
Transactions with Related Parties
Perusahaan melakukan transaksi tertentu dengan
pihak hubungan istimewa, yang meliputi antara
lain:
The Company has certain transactions with
related parties, among others, as follows:
a. Perusahaan melakukan perjanjian kerjasama
a. The Company entered into agreements with
dengan
pihak
hubungan
istimewa
sehubungan dengan penyelenggaraan jasa
telekomunikasi kepada pelanggan. Rincian
pendapatan jasa telekomunikasi dan piutang
usaha, beban interkoneksi dan potongan
harga, serta hutang usaha kepada pihak
hubungan istimewa sebagai berikut:
related parties regarding telecommunication
services for their customers. The details of
revenue from telecommunication services,
trade accounts receivable, interconnection
charges and discount and trade accounts
payable to related parties are as follows:
- 60 -
2008
Pendapatan
Usaha/
Operating
Revenue
Rp
Jasa content
PT Flash Mobile
Lain-lain
Qualcom Inc.
PT Media Nusantara Informasi
PT Flash Mobile
PT Rajawali Citra
Televisi Indonesia
Jumlah
Persentase dari pendapatan
usaha
Persentase dari jumlah aset
Persentase dari beban
interkoneksi dan potongan
harga
Persentase dari jumlah
kewajiban
Beban
interkoneksi dan
potongan harga/
Interconnection
charges and
discount
Rp
Piutang
Usaha/
Trade Accounts
Receivable
Rp
Hutang
Usaha/
Trade Accounts
Payable
Rp
7.215.039.000
1.441.570.250
646.136.020
492.376.041
1.415.692.140
6.718.634.873
840.946.475
605.310.918
2.180.121.754
265.159.828
644.593.206
614.129.001
689.751.491
1.841.048.902
1.161.093.847
1.860.000
375.095.344
2.538.623.616
-
157.691.717
-
805.336.140
698.870.140
13.253.010.804
4.144.987.512
10.703.515.883
3.247.566.505
Content provider
PT Flash Mobile
Others
Qualcom Inc.
PT Flash Mobile
PT Rajawali Citra
Televisi Indonesia
Total
Percentage to operating
revenues
Percentage to total assets
1,81%
0,09%
Percentage to interconnection
charges and discount
5,50%
0,08%
Percentage to total liabilities
2007
Pendapatan
Usaha/
Operating
Revenue
Rp
Jasa content
PT Flash Mobile
Jasa VoIP
PT Telesindo Media Utama
Lain-lain
PT Flash Mobile
PT Rajawali Citra
Televisi Indonesia
Jumlah
Persentase dari pendapatan
usaha
Persentase dari jumlah aset
Persentase dari beban
interkoneksi dan potongan
harga
Persentase dari jumlah
kewajiban
29.251.821.406
12.378.957.300
2.883.983.239
7.248.455.187
683.695.491
13.877.400
176.727.273
Piutang
Usaha/
Trade Accounts
Receivable
Rp
731.830.450
473.368.145
Beban
interkoneksi dan
potongan harga/
Interconnection
charges and
discount
Rp
2.107.931.544
11.681.864.500
1.454.830.734
-
603.727.819
722.542.847
1.860.000
194.400.000
136.080.000
81.648.000
52.773.597.296
2.205.649.442
15.848.354.597
Hutang
Usaha/
Trade Accounts
Payable
Rp
1.102.355.650
360.846.351
1.463.202.001
Content provider
PT Flash Mobile
VoIP services
PT Telesindo Media Utama
Others
PT Flash Mobile
PT Rajawali Citra
Televisi Indonesia
Total
Percentage to operating
revenues
Percentage to total assets
5,87%
0,05%
Percentage to interconnection
charges and discount
6,74%
0,05%
- 61 -
Percentage to total liabilities
b. Perusahaan
b. The Company entered into a space rental
juga melakukan transaksi
dengan
pihak
hubungan
istimewa
sehubungan
dengan
sewa
ruangan,
pemasangan iklan dan promosi serta operasi
dan pemeliharaan (Catatan 20 dan 23).
Hutang yang timbul dari transaksi ini tidak
dikenakan bunga dan tanpa jangka waktu
pembayaran tertentu. Rincian beban usaha,
hutang kepada pihak hubungan istimewa dan
biaya masih harus dibayar adalah sebagai
berikut:
Beban
usaha/
Operating
expenses
Rp
Sewa ruangan
PT Global Land Development Tbk
PT Bhakti Investama Tbk
Sub-jumlah
Pemasangan iklan
PT Cross Media Internasional
PT Rajawali Citra Televisi Indonesia
PT Cipta Televisi Pendidikan Indonesia
PT Global Informasi Bermutu
PT Media Nusantara Citra Network
PT Media Nusantara Informasi Global
PT Media Nusantara Citra
PT MNC Sky Vision
Sub-jumlah
Operasi dan pemeliharaan
Biaya pemeliharaan infrastruktur
teknologi informasi
Lainnya
PT Bhakti Share Registrar
Sub-jumlah
Jumlah
Persentase dari beban usaha
Persentase dari jumlah kewajiban
agreement, advertising, and operation and
maintenance transactions with related parties
(Notes 20 and 23). Payable from these
transactions are interest free and

Scheme Document

Transcription

Similar documents

Pengurusan Landskap oleh Pihak Berkepentingan

TandaslMalaYSla Jasinraihgangsa

MTIB Impian Lifestyle With Wood

It - Pernec Corporation Berhad

disambut dengan meriah - i

SISTEM INFORMASI AKUNTANSI SIKLUS SDM DAN PENGAJIAN

KerajaanSelangoFmahuse[llq`fPBTgOnabahan`,bol

deepavali - PLUSMiles

Buletin Akademik Jun 2012 - Terengganu

MANAJEMEN STRATEGI: - Universitas Kristen Maranatha