Académique Documents
Professionnel Documents
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FROM MASSIVE
DEPLOYMENT
TO SETTING UP
OUR NEW WAVE
Vision
The Indonesian wireless
telecommunications
solutions company.
Mission
First choice wireless
telecommunications
solutions provider in
Indonesia working
in partnership with
shareholders and other
alliances to create value
for investors, employees
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
4
From Massive Deployment
To Setting Up Our New Wave
INCOME STATEMENTS
Operating Revenues*) 36,670 29,145 21,133 14,765 11,146
Operating Expenses (Incl. Depreciation) 16,791 12,836 8,772 6,744 4,800
EBITDA 25,604 20,737 15,408 10,672 8,026
EBIT 19,879 16,309 12,361 8,021 6,346
Net Income 13,624 11,182 8,647 5,473 4,237
CASH FLOWS
Cash Flow From Operations**) 20,650 16,335 12,892 8,913 6,610
Cash Flow For Investing Activities (13,170) (13,144) (8,438) (5,470) (5,311)
Cash Flow From Financing Activities ***)
3,349 2,678 (936) (341) 475
Dividends (10,137) (5,645) (4,616) (1,840) (1,057)
Net Cash In/Out Flows 692 224 (1,098) 1,262 717
FINANCIAL RATIOS
EBITDA Margin 1) 70% 71% 73% 72% 72%
Net Income Margin2) 37% 38% 41% 37% 38%
Return On Assets3) 33% 35% 38% 31% 32%
Return On Equity 4)
55% 55% 55% 45% 48%
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
2
O PERATIONAL HIGHLIGHTS
Customer Base
Postpaid kartuHALO 1,913 1,662 1,471 1,328 1,007
Prepaid simPATI 23,986 21,378 16,004 11,558 8,582
Prepaid Kartu As 21,991 12,557 6,794 3,405 -
Total 47,890 35,597 24,269 16,291 9,589
Total ARPU1)
Postpaid kartuHALO 264 274 291 304 314
Prepaid simPATI 84 83 84 84 95
Prepaid Kartu As 57 54 45 48 -
Blended 80 84 87 102 123
Non-voice ARPU
Postpaid kartuHALO 49 47 47 41 30
Prepaid simPATI 25 24 25 23 23
Prepaid Kartu As 23 18 15 17 -
Blended 25 23 24 24 24
Network Data
BTS/Capacity
Base Station 20,858 16,057 9,895 6,205 4,820
Overall Network Capacity (in million subscribers) 50.5 38.8 26.2 17.9 10.8
Quality of Service
Call success rate 94.24% 94.43% 94.32% 95.19% 94.62%
Call completion rate 99.20% 99.42% 99.30% 99.26% 99.19%
Employee Data
1) ARPU refers to average monthly ARPU (average revenue per user) of the year which is calculated by taking the sum of the ARPU for each month of
the year and dividing by 12. ARPU is computed by dividing total cellular revenues for either postpaid or prepaid subscribers (excluding connection
fees, interconnection revenues, international roaming revenues from visitors, dealer discounts and tax) for each month by the respective average
number of postpaid or prepaid subscriber for that month.
2) Effective ARPU is calculated from booked net operating revenues (included discount) divided by the average number of subscribers (number of
subscribers at the beginning of the year added with number of subscribers at the end of the year divided by 2) and then divided by 12.
JAN U A R Y MARCH MA Y
Launching the Telkomsel Football Launching of m-ATM Bersama, Launching of “Telkomsel Pelindung
World mobile content services of “My a service enabling prepaid users Dataku” for all Telkomsel customers,
National Team” and “Liga Indonesia (simPATI) to do banking transactions providing back-up protection of
2007” in cooperation with PSSI from their cellular handphones. customer’s phone books and data
(the Indonesian National Football bases.
Association). Launching of HALOhybrid (a new
monthly plan of kartuHALO), offering Launching of the simPATI “Pake
FEB RU A R Y customers the convenience of a post Banyak Gratis Pake Banyak” program,
Launching of simPATI ekstra in paid card with the flexibility of a a customer retention program that
Surabaya with the starter-package prepaid card. provides free bonuses on every
price of Rp 10,000 with numerous minimum three-minute calls or six text
benefits. APRIL messages during peak time (07.00-
Launching of the HSDPA (High Speed 20.00).
Undertaking corporate social activities Downlink Packet Access) service,
for flood victims in cooperation with the “Telkomsel FLASH”. JUNE
Indonesian Red Cross, MERC and other Introducing the Telkomsel Business
social organisations; and forwarding Solution “Unleashed the Power” to
aids from TELKOM and Singtel to corporate users in Jakarta, through a
communities affected by the flood. seminar and exhibition program.
4
JU L Y S E P T EMBER NOV EMBER
Arranging a scholarship program ‘Gen Presenting the annual program of Launching of Telkomsel TUNAI or
Asik’ for the Kartu As Community that TELKOMSELsiaga 2007, in its 11th year, T-CASH service at the Ministry of
reaches 18 million users. The program at Senayan City Jakarta, featuring SOE, allowing Telkomsel customers
supports the multiple intelligence Islamic religious themes and studies in to carry out financial transactions on
concept for performing high school line with the Ramadhan and Idul Fitri their mobile phone. Currently, T-CASH
students, nationwide; and provides spirit. The program was extended for service is available in two pioneering
educational aids to schools. the homecoming trips (“mudik”) related merchants in Jakarta, Fuji Image Plaza
to the Idul Fitri holidays, including and IndoMaret.
Launching of a new 3G Video Call Mudik by Bus, Car Community Mudik,
Conference feature, enabling Motorcycle Mudik Rally, Family Mudik Launching of Telkomsel Mobile
customers to arrange video and Mudik by Airplane. Blogging via both WAP and WEB, also
conferencing with up to nine known as My Pulau. All Telkomsel
individuals, all face-to-face in one Donating funds to the community customers can join My Pulau by
screen. of Nanggalo district, Padang, which registering on the service website,
suffered an earthquake. A Ramadhan www.mypulau.com.
AU G U S T fasting break was also arranged for
Signing of cooperation agreements 1,000 orphans.
with the Indonesian Comic Community DEC EMBER
(Samali’s academy, Splash, Launching of ‘simPATI TalkMania’ Launching of simPATI PeDe, that offers
KomikIndonesia.com); and with for simPATI customers to make a simpler and more competitive tariff
inTouch as the application provider for unrestricted phone calls, between scheme of Rp 0.5 per second after 1st
Telkomsel’s mobile comic (m-Komik) 07.00-22.00, to all Telkomsel minute onwards, round-the-clock,
service development in Jakarta. subscribers with a rate of only for all Telkomsel users. simPATI
Rp 25,000 per day. subscribers can switch between the
use of simPATI Ekstra and simPATI
O C T O BER PeDe. Telkomsel is the first in the
As part of its corporate social market to offer customers flexibility in
responsibility programs, Telkomsel the choice of tariff schemes within the
reaches out to individuals and the same prepaid card, and the ability
communities that make up the to switch between tarriff schemes as
market for mobile cellular services desired.
in Indonesia, among other things by
donating Rp 3.0 billion for 13,000 Inauguration of two Telkomsel
orphans in nine cities during the holy Telecommunications Center facilities
month of Ramadhan. in Timika and Jayapura, with the
capacities to serve more than one
million subscribers in the province of
Papua, as part of Telkomsel’s High
Performance Network reach to remote
areas.
“THE REWARDS OF
INNOVATIVE PRODUCTS,
RELIABLE NETWORK
QUALITY AND EXCELLENT
CUSTOMER SERVICE”
6
T-CASH
“CHARGE IT TO MY CELLPHONE”
Convenient payment transactions with your mobile phone. T-CASH
is easy to use, secured and turns your mobile cellphone into an
electronic wallet. It stores monetary value on your cellular mobile
chip for easy discharge and recharge. Currently available in selected
participating merchants, but expect to see a growing number of the
“T-CASH Accepted Here” signs on the doors of your favourite stores
and restaurants.
“PLACING
TELKOMSEL IN
A NEW GROWTH
CURVE, WITH
NEW WAVE
SERVICES”
Rinaldi Firmansyah
President Commissioner
On behalf of the Board of Commissioners, I am Operating revenue grew by 26% to post record
pleased to share with you some of the highlights earnings of Rp 36.67 trillion. While net income rose
of Telkomsel’s achievements and results of 22% on a year-to-year basis to Rp 13.62 trillion.
operations for the year ending December 31, 2007.
We began the year faced with tough challenges Compliance with Sarbanes Oxley Act (SOA)
stemming from an increasingly competitive mobile As an operating subsidiary of TELKOM, which
cellular market, eroding tariff rates from intense holds 65% of Telkomsel shares, and therefore
market competition, and concern over the issue of consolidates the financial statements of Telkomsel
non-competitive pricing placed upon Telkomsel by into those of TELKOM’s, Telkomsel is bound by the
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
the Commission for the Supervision of Business same SOA compliance requirement that is expected
Competition (Komisi Pengawas Persaingan Usaha/ of TELKOM as a NYSE listed company. A major
KPPU). feature of this SOA Compliance is the Internal
Control over Financial Reporting (ICoFR) that has to
Despite these challenges, Telkomsel remained be implemented under very rigorous regimen, and
focused on serving its customers that resulted in audited by independent auditors for its veracity.
the growth of both our revenue and profitability. We
posted significant growth in each of our business I am pleased to note of that this process has been
lines, whether in the personal use of our mobile carried out with real commitments on the part of
cellular services, the commercial applications of Telkomsel and that, furthermore, the Boards of
our GSM cellular technology, or in our growing Telkomsel have given their full support behind the
enterprise and wholesale business portfolio. ICoFR efforts.
8
Better Coordination with TELKOM How was it that in 2007, with tremendous downward
My position as President Commissioner of price pressure in the mobile cellular market from
Telkomsel, which I am concurrently serving as aggressive competition, Telkomsel still managed
the President Director of TELKOM, underlines to register growing customers, growing business
the growing emphasis that we are placing in the revenues, and growing profitability?
competitive strength of the TELKOM Group. The
Group benefits from the leadership of Telkomsel The answer to that question is genuine long-
in the mobile cellular market, and vice versa, term sustainability. Telkomsel has built a robust
Telkomsel benefits from better management strategic edge through the breadth of our network
coordination with TELKOM for many of its coverage, the size of our customer base, and the
marketing and, especially, network and enterprise depth of our business strategy. It is the combination
wholesale business initiatives. of all three that has made Telkomsel strong and
sustainable over the years.
It is the intention of both Telkomsel and TELKOM
to leverage on our leadership strengths to further As a market leader, Telkomsel continues to delight
solidify our number one position in the market. its customers with more rewarding experiences
and value-added benefits from using our mobile
cellular products and services.
Robust Customer Base
Telkomsel has the privilege of serving more than 47 Looking Ahead with Confidence
million customers as at year-end 2007, making us With the support of our stakeholders, to all of
by far the largest mobile cellular services provider whom we owe a great debt of gratitude, Telkomsel
in the country and throughout Southeast Asia by is poised for continued success in the years to
the sheer size of our customer base alone. Our size come.
makes our responsibility as a service company an
equally sizeable one. We have the responsibility of Having established a truly broad and nationwide
meeting if not exceeding the expectations of each service network, we have the capacity to defend and
and every one of our 47 odd million customers. grow the market share of our basic mobile cellular
That’s a tall order. But one that we are managing services. More importantly, however, we are also
quite well, apparently. Because our customer equipped to increase the capacity of our service - in
base continues to grow, and the increase in the response to growing opportunities in the unfolding
additional amount of traffic -or Minutes-of-Use New Wave market in Indonesia. This places
(MoU)- generated by our new customers continues Telkomsel solidly in a new growth curve, extending
to eclipse the decline in average revenue per user our long-term sustainability even further.
(ARPU).
Long-term Sustainability
The above phenomenon has sustained the growth
of Telkomsel from one year to another, for the past
decade; and is likely to continue well into the future
if the trend persists. This brings us to the point
that Telkomsel could never have been involved in
alleged price-fixing or over-pricing.
Rinaldi Firmansyah
President Commissioner
“WITH FOOTPRINTS
ACROSS INDONESIA,
WE NOW MOVE
QUICKLY TO DEPLOY
NEXT GENERATION
NETWORK TO
SUPPORT
NEW WAVE
PENETRATION”
Kiskenda Suriahardja
President Director
10
million users of our network, a lowering of our tariff resources strategically, recruiting and training
rate by even one basis point could add millions of our people effectively, as well as attracting and
minutes of newly generated traffic on our network. retaining talents.
This places tremendous pressures on our network, We continue to serve our customers, big or small,
not to mention our operating centers: traffic routing, to the best of our abilities - striving always to leave
operations management, customer service, billings, behind a good impression and satisfying experience
disaster recovery, customer complaint and many among our customers.
more.
On the subject of service, we have the obligation
Because of our size, we do not base our strategy on to return some of the value that we create on
reacting to every move that our competitors make in a sustainable basis, to the communities and
the market. Instead, we take a long-term approach, environment which support and sustain our
and plan our moves well in advance. The size of our growth. We are meeting this obligation through
business may seem large and cumbersome. But a well-planned and sustainable corporate
in reality, it gives us the advantage of being able to social responsibility initiatives that seek to help
plan ahead to ensure our future growth and long- communities gain economic empowerment, social
term sustainability. progress and a safe environment.
Kiskenda Suriahardja
President Director
12
BUSINESS OVERVIEW
“TELKOMSEL’S CUSTOMERS
ENJOY A BROAD RANGE OF
INNOVATIVE, VALUE-ADDED
SERVICES AT THEIR FINGER
TIPS, FROM THE LEADING
MOBILE CELLULAR
OPERATOR”
A new Video Surveillance service has enabled users Besides depositing money into the wallet account, the
to survey video transmission of particular locations, service also allows T-Cash customers to purchase
streets and rooms on their handset monitors for the goods or pay for services using the money in their
purpose of surveillance. Telkomsel offers special wallet accounts, either through their mobile phones
access to Video Surveillance via Video Call 3606 direct or via a T-Cash card. This is an extension of the
on caller’s handset, for real-time traffic surveillance banking features that Telkomesel had introduced
of certain streets and locations in Surabaya and to its mobile cellular services, allowing for money
Palembang. transfers, balance inquiries, bills payments through a
banking menu - positioning Telkomsel as the leading
Other innovative value-added services introduced innovator in the mobile financial transaction service.
during the year included Telkomsel PelindungDataku
(Phonebook Backup), You’ve Got Mail and Collect
14
Product Feature and Tariff
FEATURES kartuHALO simPATI Kartu As
In 2007, we saw increased competition in the
mobile industry as mobile operators, both
GSM and CDMA services, launched aggressive Call Hold Y Y Y
Call Waiting Y Y Y
marketing and promotional programs. Despite
Voice Mail Y Y N/A
the stiff competition, however, we continued Call Forwarding Y Y N/A
to lead the market with the introduction of SMS Y Y Y
numerous product features and aggressive Mobile Fax & Data Y N/A N/A
send 100 or more SMS in a month will receive 100 advantage of the company through Web 2 SMS (Web-
SMS credit for free. This was further complimented based SMS Broadcast), NSP Corporate (personal
by the Kartu As School Community Program, which is ring tones that use a Company Jingle), Mobile VPN
a cooperation program run between Telkomsel and (a direct extension number on a cellular handset
the various schools and tertiary institutions. For this for convenience and affordability), Fixed Wireless
program, registered members enjoy a special tariff of Connectivity (an alternative solution for areas that
Rp 8 per second of voice or video call as well as are not served by fixed lines or has no more fixed line
Rp 50 for every SMS sent to another registered capacity), and Top-up simPATI (Convenient automatic
member. The program had been very successful, with top-up for simPATI users).
more than 600 schools joining the program from the
period of September to December, with more schools
being planned for the year 2008.
16
Mobile Commerce electronic wallet service (Telkomsel Cash), was soft
Telkomsel recently formed a new business unit, launched in November 2007, using the brand name of
Digital Business, with the aim of developing New T-Cash.
Wave services that include mobile commerce.
Customer Quality Assurance
Programs carried out by Digital Business in 2007 As the leading service provider, Telkomsel believes
included: that its broad range of services will make the
Company more competitive in this service-oriented
The introduction of mATM Bersama in cooperation industry, especially as the Company enters into more
with the ATM Bersama network (Artajasa), linked restrictive or demanding regulations in the interest
into a network of 68 banks in the country. This of consumer protection and rights. Once these
service allowed Telkomsel customers to conduct regulations are passed, mobile cellular services
banking transactions by mobile phone. It was first operators (STBS) have to fulfill services standards
made available only to simPATI card users, and then based on the service level agreement (SLA) in the
extended to users of kartuHALO and Kartu As (nation- areas of billings, activations, customer complaints,
wide). Some of the features include balance inquiry call center, restoration of disrupted services in
and funds transfer (first phase), as well as payments networks (dropped calls and blocking calls) and short
and purchases (second phase). message services (SMS).
A host of benefits could be derived from the use of the With respect to Billing Complaints Handling
mATM Bersama Card, such as for: Performance, the number of complaints on the
accuracy of monthly billings should not exceed 5%
Loyalty programs that capitalise on the use of a card of the total billings. Settlements of those complaints
specially designed for the Mobile Banking service, should reach at least 90% of the total complaints and
without having to change MSISDN number. must be settled within 30 working days.
Telesales program to reach customers who have For activations, the verification process (address
registered in their bank or ATM, but have yet to and other supporting documents) for postpaid card
activate their card. Telkomsel will contact and offer customers must be completed within five working
customers new cards with certain activation dates. days for 90% of total activation requests. For prepaid
card customers, the process must be finalized within
Cross-selling or corporate programs that promote 24 hours for 98% of total activation requests.
cooperation with the banking industry in the area of
co-branding (such as joint exhibitions, seminars, etc). At the Call Center Service Level, a minimum of 75%
of callers have to be served no later than 30 seconds
Usage stimulation program that rewards users from the time they press the menu to speak with
with the most banking transactions, to increase use a customer service officer. A minimum of 85% of
of card. Conducted every three months, rewards the complaints has to be settled within a 12-month
are determined based on most frequent banking period.
transactions.
The number of Complaints of Disruption for every
M-Banking Existing enhancement program that 1,000 customers should not exceed 50 for a period
seeks to enhance the mobile banking services to of 12 months. On Network Quality (End Service
existing customers. It can be in the form of extra Availability), the number of dropped calls and blocked
features or improved media access such as Media calls should not exceed 5% of total calls.
WAP Banking, USSD, etc.
On SMS, a successful delivery within an interval of
Telkomsel Cash service that allows customers to 30 seconds should reach at least 95% of delivered
use their handsets to pay for purchases at selected SMSs. And the number of SMS delivered later than 60
merchants who have been appointed as participating minutes should be lower than 5% of the total number
merchants of the T-Cash program. This mobile of SMS sent.
“PREPARING TELKOMSEL’S
HUMAN CAPITAL FOR THE
NEW WAVE ERA”
February 2008.
Grapari. The restructuring policy also affected • iExpense (covering medical, phone, per diem
regulations on the function, role and authority of allowances) began to be used in February 2008.
organizational units, the interrelation of roles and the • Enhancement Training Module & Code of Conduct
work output assessment for officials with structural (CoC), both of which were launched in 2007.
jobs. • Notification via SMS was launched in January
2008.
Parallel to the restructuring program was a series of • Income tax article 21 Enhancement Module had
job analysis for all positions. The final reports of the been in use since September 2007.
job analysis are at the confirmation stage with the job
holders.
18
On the training area, aside from conducting regular Several activities that Telkomsel undertook with
trainings program, the Training Development parent companies in 2007, included:
Division has made a breakthrough in organizing the • Employee Exchange 2007, in which TELKOM
Enlightment Program in Makassar. This particular placed two of its employees at the HR Operation
program will be continued in other cities as well. Division and HR Development Division as staffs for
two years.
In line with the Collective Labour Agreement • Joint formulation of Customer Service material by
2006-2008, new policies were introduced under the two companies.
the HRM sub directorate. The policies included: • Telkomsel also sent two employees to work in its
Implementation Policy for Bipartite Co-operative other parent company, Singtel, to upgrade their
Institution, Job Valuation (Run 1-2), Employees knowledge and skills for three months.
Competence Assessment Policy (Run-3) and
Employees Business Trip. The employee transfer HR Management supported the unification of ISO-
and mourning support policy is still in the process of 9000 certification for Call Centers and Grapari, by
discussion as of year-end of 2007. following up on the audit findings that are related to
HR and preparing the necessary policies, systems and
Several projects currently in progress includes procedures in fulfilment of ISO-9000 standards.
the follow up to Job Valuation method currently
being used. Throughout 2007, an evaluation was Telkomsel aims to be the employer of choice. The
carried out on the Job Valuation method, which was Company takes care of its employees, provides
first introduced in 2005 and subjected to a series extensive training for personal development, and
of revisions in line with growing complexities and supports the spiritual needs of every individual.
contextual demands. The evaluation also compares Telkomsel objectively evaluates individual
the method to other job valuation method commonly performances, and considers employees as assets
in use currently. of the Company, and thereby protects and improves
their welfare.
As the new organization structure came to effect,
there is a need for evaluating the effectiveness of the
new structure, requiring Telkomsel to develop the
appropriate assessment tools for it. Parallel with this,
an evaluation on the entire business process must
also be performed in the hope of further improving
the Company’s business processes.
Other Fields
In addition to the routine tasks described in this
report, there are several other activities that involve
resources from outside of the Company. These
activities included:
20
Investment Ahead of Growth Network Efficiencies
From first quarter of 2007, Telkomsel has revisited The operations of Telkomsel’s networks are
its deployment strategy to rural areas by selecting constantly improved in terms of cost efficiencies and
profitable rural areas to build the coverage. This is environmental conservation.
to ensure optimum business profitability is always
achieved. Power system is one of the areas that Telkomsel has
made major improvements, especially in reducing
Telkomsel always aims to build network the use of air conditioning systems. For the new BTS
infrastructure at least three months ahead of traffic sites, Telkomsel no longer uses shelter, hence do not
growth to ensure that sufficient capacity is available require air conditioning. For existing sites, Telkomsel
to support any sudden marketing initiatives. The has changed the cooling system from air conditioning
Company’s Capex Plan is therefore based on close to normal air flow within the shelter. Hundreds of
monitoring of traffic patterns, revenue and monthly sites have been optimized in order to reduce power
subscribers growth. consumption, thereby reducing greenhouse gas
emission (go green) as well as electricity costs.
Telkomsel Telecommunications
Center (TTC) Engaging New Wave
TTC is a telecommunications center that provides Telkomsel’s network is built for the New Wave
a full range of central network services such services with the deployment of soft switch and 3.5G
as: Mobile Switching Centre (MSC), Value Added nodes in its network. It has also been prepared for
Service (VAS), Base Station Center (BSC), Intelligent the NGN (Next Generation Network), ready for the
Network (IN), Information Technology (IT), and Data massive roll outs of data backbone and broadband
Center Building. The inauguration of TTC Jayapura services such as Telkomsel Flash. Another New Wave
complements 20 other operating TTC throughout service is already in the market, the cash transaction
Indonesia, including: Manado, Makassar, Denpasar, using cellular mobile terminal, T-Cash, offering a
Surabaya, Semarang, Solo, Bandung, Jakarta, glimpse of the exciting future that awaits Telkomsel’s
Lampung, Medan, Batam, Banjarmasin, Balikpapan, customers.
Pontianak, Palembang, and Timika.
During year 2007, aligned with Business Strategy Enabling Infrastructure Deployment
to increase revenue, IT has supported the roll out and Operations
of new product and service development such as As part of preventive measures in the face of the
Telkomsel Flash Mobile Broadband, HALOhybrid, flood disaster in February 2007, IT has successfully
simPATI 3 Get 3 Minutes and 6 Get 6 SMS Promo, migrated critical applications and data such as
Kartu As 100 Get 100 SMS Promo, simPATI Talk Indira (an application to monitor our prepaid cards’
Mania, and simPATI PeDe. The support was done by activities) from Atrium Data Center to TB Simatupang
preparing the billing and charging configuration for Data Center.
implementing those programs. In addition to that, IT
has also developed additional feature for enabling the We established Buaran Data Center to accommodate
program registration/notification, i.e. simPATI PeDe the growth of IT Infrastructures that are used to
registration module (*880#) deliver IT Services. This growth was triggered by the
increase of Telkomsel subscribers. The Buaran Data
Center began operations in October 2007. By the end
IRB Billing Migration of 2007, Telkomsel had two production data centers:
As part of the Convergent Online Charging (COC) TB Simatupang Data Center and Buaran Data Center,
initiative (phase 2), IRB Billing Migration is an upgrade both in Jakarta. In the near future, Telkomsel will
of billing platform (from Geneva to IRB 2..2) that cooperate with Sigma Caraka (a newly-acquired
enables the integration of IN (online customers) and TELKOM subsidiary company) to establish a Disaster
Billing (offline customers) into a single charging Recovery Center (DRC) facility as part of a Group
platform. The new platform will enable Telkomsel synergy initiative.
to have a single customer information file, thus
reducing efforts to maintain customer data (i.e. IT Governance
business process integration for postpaid and As mandated by Telkomsel Board of Commissioners
prepaid customers in the area of customer service (BOC), Telkomsel finally released the IT Master Plan
and financial reporting). Furthermore, IRB Billing (ITMP) 2007 – 2011. The ITMP will be used as a single
Migration is a major prerequisite for COC phase 2 reference for executing IT related investments by
benefits that will allow Telkomsel to offer enhanced Telkomsel.
products and promotions to group customers such as
shared SMS bundle for families or corporations, and Telkomsel has also improved its IT Governance
billing statements for high-end prepaid customers. by establishing the Telkomsel IT Governance
framework, improving IT Organization (which include
IT Service Availability Improvement IT Organization Structure and Career Development
To meet business needs, IT has implemented the Program), defining IT Investment process, enabling
distribution architecture on MKios. This allows for IT Performance Management and implementing IT
the distribution of existing load and fault tolerance to Risk Management. These initiatives will be continued
increase MKios availability and performance. in 2008 to include establishing IT Continuity process,
IT Communication process and IT Program Oversight
IT implemented Storage Replication to enable (PMO).
redundancy/fault tolerance on storage infrastructure.
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
This would ensure the availability of data that would Telkomsel also continued the implementation of
eventually increase the availability of IT service. its IT Infrastructure Library (ITIL) framework. The
implementation includes the automation of ITIL
process such as SDLC (application management)
automation.
22
TELKOMSEL MOVIE
“LOOKING GOOD”
Stretch your creative imagination, and bring out that Oscar-
worthy film making talent of yours with Telkomsel Movie service.
Post your movie by dialing 3603 and impress your family and
friends with your latest movie.
24
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007 25
M - KOMIK
“COMICS ON THE MOVE”
Relive the glory days of the comic books on your cellular mobile monitor. m-
Komik is a colaboration between Telkomsel and the Samali Academy, Splash,
KomikIndonesia.com and InTouch. To access the service, send sms to obtain
free m-Komik application that is automatically installed in your phone menu.
Get reacquainted with legendary comic artists from RA Kosasih to Teguh
Santosa, Hans Jaladara, Djair Wrani, Mansjur Daman and Armin Tanjung, and
compare their works with those of today’s upstart comic artists. Free comic
contents include classics such as Mahabarata, Monster Ijo and many more.
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
26
GOOD CORPORATE GOVERNANCE
“GOOD CORPORATE
GOVERNANCE AT TELKOMSEL
ENSURES LONG-TERM
BUSINESS CONTINUITY AND
SUSTAINABLE GROWTH”
Board Of Commissioners direction and guidance on company policies for the
Telkomsel’s Articles of Association (the “Articles”) Directors in case of circumstances that may affect the
provides that the Board of Commissioners (BoC) performance of the Company.
shall consist of six members, including the President
Commissioner. The Shareholders’ Agreement further In performing its supervision duties, the BoC is
provides that the President Commissioner shall be supported by Committees that are formed by the BoC,
from TELKOM. namely the Audit Committee, the Capital Expenditure
Committee and the Remuneration Committee.
The principal functions of the BoC are to supervise
the management of Telkomsel by the Board In addition to the above, the BoC also assisted the
of Directors (BoD), and the implementation of BoD in:
Telkomsel’s Business Plan. The BoC is accountable • Formulating the Company’s Business Plan for 2008-
to the General Meeting of Shareholders. Members 2012.
of the BoC are elected by the shareholders of • Formulating the Company’s Budget of 2008.
Telkomsel. The shareholders are entitled to nominate • Compiling the Company’s Annual Report
a number of candidates as Commissioners (and • Executing the Annual General Meeting of
recommend the removal of such Commissioners) in Shareholders.
proportion to the size of their respective ownership.
TELKOM is currently entitled to nominate four Board of Directors
Commissioners, and SingTel Mobile is entitled The principal functions of the BoD are to lead and
to nominate two Commissioners. However, since manage Telkomsel as well as to control and manage
TELKOM only assigns three representatives on the the Company’s assets. The BoD shall consist of
BoC, one position on the BoC is currently vacant. five Directors, one of whom shall be the President
Director.
Meetings of the BoC must be held at least once every
three months and at any other time at the request The shareholders are entitled to nominate more
of any member of the BoC. The quorum for all BoC than one candidate as a Director (and recommend
meetings is four members of the Board, one of whom the removal of such Director) in proportion to their
must be a Commissioner nominated by SingTel respective shareholdings. TELKOM is currently
Mobile. entitled to nominate three Directors and SingTel
Mobile is entitled to nominate two Directors. The
Results of meetings of the BoC shall be by affirmative President Director and Director of Finance shall be
vote of a majority of the members of the Board. In TELKOM’s representatives.
the event of a tie, the matter shall be referred to a
General Meeting of Shareholders for resolution. Meetings of the BoD must be held at least once every
two months or at any other time at the request of
BoC Activities in 2007 any of the Directors. The quorum for all Directors’
The BoC performed its duties in 2007 by overseeing meetings is four members of the Board present or
the policies of the BoD in managing Telkomsel. represented in such meeting, one of whom must be a
Through monthly meetings, the BoC was able to Director nominated by SingTel Mobile.
monitor the performance of Telkomsel and provided
committees currently exist in Telkomsel, all formed are mailed to anyone who has signed up for our
by the BoC: mailing service. Telkomsel’s database for this mailing
service contains major investment houses and fund
Audit Committee managers, financial institutions, analysts, and private
This committee is responsible for reviewing the individuals.
Company’s audited financial statements and
discussing them with the external auditors. The Each year, an annual report is produced, to fulfill
Audit Committee consists of Arief Yahya (Head of the reporting requirement to the shareholders, and
Committee), Lim Chuan Poh and Agus Suryono to provide a growing group of investors, analysts
(Committee Members), and is regulated by an Audit and others with an overview of the previous year’s
Committee Charter. The Audit Committee also performance.
regularly interacts with the head of Internal Audits to
discuss internal control issues.
28
Although Telkomsel is a private, non-public company, The program aims to galvanize active employees
we do have an investor relations team. The task participation in the internal control over corporate
of the investor relations team is to define, prepare business deeds such that assets are secured and
and provide material information that the company frauds can be detected as early as possible. The
proactively discloses to interested stakeholders. scope of the whistle blower program is focused on
the financial reporting (at any stage of the accounting
Internal Control and Control Self process) and auditor independence. In April 2007,
Assessment (CSA) a company-wide socialization of the program was
Telkomsel continues to grow rapidly in order to meet undertaken in all of the Company’s offices nationwide.
the growing demands of customers, which indices the
dynamics of changing business processes from time SOA Compliance
to time. Pursuant to requirements of complying with the
Sarbanes Oxley Act (SOA) that is expected of
Internal control as an element of Risk Mitigation that TELKOM as the parent company, the Internal Control
is required in the face of these changing business over Financial Reporting (ICoFR) of Telkomsel is
processes whether in design or operational aspect also audited by external auditors. The SOA ICoFR
continuously evaluates to minimize the possibility of Audit assessed both design and the operational
fraudulent activities. effectiveness of the internal controls developed by the
company.
The enhancement of Internal Control is also
reflected in the establishment of the Enterprise Risk Telkomsel has carried out a top-down risk based
Management Unit that comprises fraud management analysis such that the ICoFR audit can be undertaken
and has been in effect since 2007, enabling more in more efficient and effective manner.
focused efforts on the prevention and detection of
fraud-related risks. Material Litigation
Cross-monopoly Ownership Case
Effective internal control monitored on-line through Pursuant to KPPU’s ruling on the allegation that
CSA (Control Self Assessment) which constitutes Telkomsel had violated certain provisions of Law
another key indicator of the performances of No. 5/1999 ”Prohibition of Monopolistic Practice and
individual business units such that quality assurance Unfair Business Competition” (the Law), the District
and compliance to business processes can be Court in its verdict on May 9, 2008, revoked KPPU’s
improved. ruling that instructing Telkomsel to reduce tariff due
to KPPU did not have authority to determine tariffs.
Telkomsel continuously undertakes Test of Control The verdict also covered among other things:
(TOC) to enhance the quality of ICoFR and CSA. • Telkomsel had violated article 17.1 of the Law
• Telkomsel had not been proven to violate article
Whistleblower 25.1.b of the Law
As part of GCG implementation and compliance to • Temasek Holdings and certain affiliated companies
Sarbanes-Oxley Act, the Company has initiated were instructed to release their ownership in either
the so-called whistleblower program to gather Indosat or TeIkomsel or to decrease its ownership
information on activities that are contrary to GCG by 50% in each of those companies within 12
principles. The Company has appointed a General months from the date of the decision become final
Manager of Special Audit as the whistleblower and legally binding at the following conditions:
liaison officer. The Company started to facilitate a - A maximum of 10% of total shares for each buyer
whistleblower in medium 2006 as part of a TELKOM - The buyer is not associated with Temasek
Group requirement. As of 2007, the Company Holdings
has implemented the whistleblower program • Telkomsel was charged a penalty of Rp 15 billion
independently pursuant to the Resolution of the
BoC dated December 19, 2006 and the President The decision of the court was in many ways more
Director’s Official Memo No. 397/PD-00/XII/2006 dated lenient than those of the KPPU ruling which among
December 21, 2006. other things had charged Temasek with illegal cross-
education that is often neglected by society at large. programs, health, social and the empowerment of
communities through 13 LAZIS (Zakat and Alms
Institution) partners and dakwah institutes in
Indonesia.
30
R ISK MANAGEMENT
“OPTIMIZING VALUE
BY BALANCING RETURNS
AGAINST RISKS”
The task for a risk management team is that every • Studied and examined the risks in areas
company is established to generate value for of organization and human resources. The
stakeholders. Every entity faces uncertainty, and the results showed that in the short term, there
challenge for the management is to determine to are six main risks that have to be addressed
what extent such uncertainty remains acceptable. by the management: inefficient cost, a decline
Uncertainty offers risks and opportunities, with in productivity, career enhancement, job
the potential to either erode or increase the value. redundancy, activities that reduce the value of
Risk Management gives the company the ability to future business, and workload imbalance.
effectively manage that uncertainty. • Carried out Telkomsel’s Integrated Risk and
Fraud Risk Assessment 2007 through the
The value can be maximized when management workshops in Bandung and Jakarta. The results
determines strategy and goals to achieve an optimal have been reported in monthly and quarterly
balance between growth and resulting objectives as reports as scheduled. The risk assessment was
well as related risks. In addition, the management conducted based on a business cycle set out
has to be able to effectively and efficiently utilize under the ICoFR. The fraud risk management
available resources to achieve the objectives. report has been published and socialized to the
top level organization.
The performance of ERM in 2007, which covered • Developing Telkomsel organization structure
various activities, including: based on the work load and requirement of
• On President Director’s Instruction, the ERM growing business as input to current organization
carried out the Remedial Deficiency Audit structure after taking consideration issues on
on ICoFR 2006, the result of which has been future and strategic risk.
reported to the Internal Audit and Sub-Directorate
Accounting. It focused mostly on the Entity Level
Control whose implementation was yet to touch
on operational activities, and Transactional Level
Control.
• Risk Identification was performed using
Committee of Sponsoring Organization (COSO)
framework. Risk Identification are on Strategic,
Operational, compliance and reporting risks as a
base for risks assessment.
NSP 1212 - the personal ring tones available to all Telkomsel users
(kartuHALO, simPATI, and Kartu As). With active ring tones of your
personal choice, a call to your cellphone will activate your favorite tune
or song as the ring tones of your cellphone. Delight friends and callers
with your personal choice of musical ring tones. Call or text “1212” to
activate your personal ring tones.
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
32
MANAGEMENT DISCUSSION AND A N A L Y S I S
“SUSTAINING
STRONG CUSTOMER BASE
AND REVENUE GROWTH”
Despite the decline in tariffs, Telkomsel’s operating Telkomsel’s operating revenues increased 26% YoY to
revenues grew strongly in 2007. Strong customer Rp 36.67 trillion. This strong revenue growth was the
base growth combined with strong Minutes of Use results of 35% customer base growth and 38% MoU
(MoU) increase and manageable ARPU decline growth combined with 5% ARPU decline.
resulted in healthy operating revenues growth.
Operating revenues grew 26% to Rp 36.67 trillion. Telkomsel’s prepaid products, which accounted
After experiencing some pressures on operating for 96% of total customer base 2007, were the
expenses in 2006 due to the aggressive network main revenue contributor. It contributed 81% to
deployment to rural areas, operating expenses growth the operating revenues in 2007. The YoY growth
in 2007 was fully under control and manageable. It of operating revenues in 2007 also mostly (92%)
grew 31% to Rp 16.79 trillion in 2007. contributed by the prepaid products.
Non-voice/data revenue
in billion Rupiah
International
Roaming
2% 50,000 30%
Interconnection
4% 25%
40,000
20%
Prepaid
78% 30,000
Postpaid
16% 15%
20,000 10%
10,000 5%
34
Personnel
8% ∙ General & administrative expenses increased 7%
YoY to Rp 0.76 trillion, which was mainly on rental
expenses.
Depreciation
∙ Marketing expenses grew 31% YoY to Rp 0.92
34% trillion, which was mainly attributable to higher
Operation &
Maintenance advertising and sales support costs in supporting
37%
larger customer base.
∙ Other operating expenses consist of cost of cards,
concession fees & USO charges, account receivable
Other collection costs and provision for bad debt, all of
Operating
Expenses which increase in line with sales/customer base
10% Marketing General &
6% Administrative growth. In 2007, it increased 21% to Rp 1.75 trillion,
5%
which was largely the result of higher concession
Operating Expenses 2007 and USO fees (in line with revenue growth).
Growth
in billion Rupiah 2007 2006
(%)
Personnel Concession & USO
9% 612 494 24
Fees
Cost of Cards 528 512 3
36
Telkomsel added Rp 12.37 trillion (USD 1.3 billion) Loan/Debt
to fixed-assets in 2007. There were 4,801 new BTS In December 2002, Telkomsel signed two export
(including 998 3G-BTS) installed and 11.7 million credit facility (ECA) agreements. Both facilities
subscriber capacity added in 2007. were fully drawn down by the end of 2004 and the
remaining installments are due semi-annually until
Net cash used in financing activities increased 2008.
129% to Rp 6.79 trillion, which was mainly due to
higher dividend payment in 2007. In 2007, Telkomsel In 2006, Telkomsel obtained Rp 3.5 trillion loans from
declared dividends amounted to Rp 9.50 trillion local banks, of which Rp 2.0 trillion has been repaid
(85% of 2006’s net income), of which Rp 5.39 trillion by the end of 2007.
was paid in July 2007 and the remaining was paid in
October 2007. In December 2007, Telkomsel paid an During the year 2007, Telkomsel signed Rp 7.2
interim dividend amounted to Rp 1 trillion. trillion new loan facilities from local banks, in short
and medium terms. As of December 31, 2007 Rp 6.2
trillion of these new facilities has been drawn.
The Balances of All the Facilities (as at the end of December 2007)
*) floating rate
Financial Covenants Related to Its Loan/Debt (as at the end of December 2007)
The Management of PT Telekomunikasi Selular is responsible for this Annual Report including the accompanying financial
statements and related financial information which have been approved by member of the Board of Commissioners and the Board
of Directors whose signatures appear belows.
BOA R D O F C O M M I S S I O N E R S
BOA R D O F D I R E C T O R S
38
CORPORATE DATA
Rinaldi Firmansyah Lim Chuan Poh Leong Shin Loong Loso Judijanto Arief Yahya
PRESIDENT COMMISSIONER COMMISSIONER COMMISSIONER COMMISSIONER
COMMISSIONER
Mr. Lim Chuan Poh joined SingTel Mr. Leong Shin Loong is SingTel’s Mr. Loso Judijanto is Special Mr. Arief Yahya is the Director of
Mr. Rinaldi Firmansyah is
in 1998. He was appointed Vice President of Project Adviser to the Minister of State- Enterprise & Wholesale of TELKOM,
the President Director and
CEO International in October Quantz. He is responsible for the Owned Enterprises Republic of since June 2005. He joined TELKOM
Chief Executive Officer of PT
2006. Besides overseeing the implementation of a high digital Indonesia. Previously, he served as in 1986 and has held several senior
Telekomunikasi Indonesia, Tbk.
performances of SingTel’s current access network in Singapore to Special Adviser to the Minister of management positions in the
(TELKOM). Prior to his appointment
overseas assets, which include deliver breakthrough services Information and Communications company: Head of Regional Division
to this top position, he was the
AIS (Thailand), Airtel (India), to homes and offices. Before Technology Republic of Indonesia V - East Java (2004-2005) and Head
Chief Financial Officer of TELKOM
Globe (Philippines), Telkomsel assuming this role, Shin Loong was (2005-2007), Corporate Governance of Regional Division VI – Kalimantan
(2004-2007). He was named as The
(Indonesia), PBTL (Bangladesh) and the Vice President of Consumer Consultant (2000-2005), Staff at (2003-2004) where he was awarded
Best CFO by Asia Money in 2004,
Warid (Pakistan), Mr. Lim is also Products where he oversaw the the Ministry of SOE Republic of The Best Head of Regional Division.
by Finance Asia in the category
responsible for driving the Group’s development of new services for Indonesia (1998-2000), and Public Mr. Yahya was awarded “Satya
of Best Managed Companies in
regional mobile initiatives and mobile, internet, broadband and Policy Researcher at the Center for Lencana Pembangunan” medal
2006, was ranked third as Best
supporting the growth objectives telephone businesses. He had Policy and Implementation Studies from the President of Republic of
CEO by Warta Ekonomi in 2007 and
of SingTel’s business groups also spent five years overseas (1995-1996). Mr. Judijanto holds a Indonesia in 2006 and Business
was awarded the Satya Lencana
through strategic investments. – two years with Advanced Info Master degree in Statistics from Future Leader from “SWA Magazine”
Pembangunan medal from the
Previously, Mr. Lim held the Service in Thailand and three the University of New South Wales, in 2006. Mr. Yahya graduated with
President of the Republic of
positions of Executive Vice President years with Telkomsel in Indonesia Sydney, Australia and a Master a Bachelor degree in Electrical
Indonesia in 2007. Before joining
for various key business groups (2001-2004) as Director of Planning degree in Management Accountancy Engineering from Bandung Institute
TELKOM, Mr. Firmansyah had
in SingTel. He currently sits on & Development (2001-2002) and from University of Indonesia. of Technology (ITB) and a Master
served as Director of Investment
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
96
Kiskenda Triwahyusari David Ng Yuen Kuan Moon Syarif Syarial Ahmad
Suriahardja DIRECTOR OF FINANCE DIRECTOR OF DIRECTOR OF DIRECTOR OF PLANNING
PRESIDENT DIRECTOR OPERATIONS COMMERCE AND DEVELOPMENT
As President Director and Ms. Triwahyusari is Director of Mr. David Ng is Director of As Director of Commerce, Mr. Yuen Mr. Syarif joined Telkomsel in
Chief Executive Officer of PT Finance and Chief Financial Officer Operations of Telkomsel and in is responsible for all Marketing, October 2007. Previously, he was the
Telekomunikasi Selular (Telkomsel), of Telkomsel. She is responsible for charge for Network Design and Sales, Products and Customer Executive General Manager of Fixed
Mr. Suriahardja is responsible for the overall financial management Operational Management. Before Service activities of Telkomsel. He Wireless Network of PT Telkom and
Telkomsel’s overall management. of Telkomsel. Ms. Triwahyusari was joining Telkomsel in 2007, he was has more than 15 years experience has held various positions in that
Prior to his appointment as previously a member of Telkomsel’s a Director in Consumer Products in Telecommunications. Graduated company. Mr. Syarif graduated and
Telkomsel’s CEO in 2005, he Board of Commissioners Group of SingTel. He joined SingTel with first class honors degree in obtained his Magister of Technic
had served as TELKOM’s Head (2003-2007) and Vice President in 1984 and has been exposed to engineering from The University degree from Institute of Technology
of Regional Division II - Greater of Accounting of TELKOM. She a variety of functions during his of Western Australia, he also Bandung.
Jakarta, Head of Regional Division graduated from the University assignment with this company in holds a Master of Science degree
V – East Java and Head of Regional of Airlangga with an Accounting mobile, fixed-line and broadband in Management from Stanford
Division VI - Kalimantan. He has degree. businesses. He graduated University in California, USA (Sloan
over 20 years of experience in the with Second Class Honours in program).
telecommunications industry. Engineering from the National
Mr. Suriahardja has a degree in University of Singapore. Note: As of 1st Jan 2008, Mr
telecommunications engineering Richard Tan has replaced Mr. Yuen
from Bandung Institute of as the Director of Commerce
Technology and obtained his
MBA from the Prasetya Mulia
Management Institute.
President
Director
Network Operation
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
Regional
98
KOREA
B RIDGE ALLIANCE
HONGKONG
TAIWAN
MACAU
PHILLIPPINES
THAILAND
INDIA
M ALAYSIA
S I NGAPORE
INDONESIA
AUSTRALIA
Established in November 2004, Bridge Mobile Alliance development projects to deliver innovative cellular
represents the largest grouping of cellular operators technologies and services in the Asia Pacific market.
in Asia Pacific, in which Telkomsel is the only
member from Indonesia and one of the proponents BA has invested more than US$40 million to develop
of the alliance, together with Bharti India, Globe common regional cellular infrastructures that
Telecom Philippines, Maxis Malaysia, Optus Australia, would allow for consistent and seamless end-to-
Singapore Telecom and Taiwan Mobile. end cellular services across the region. Through
this initiative, BA has benefitted customers of
In November 2007, the alliance changed its name member operators when roaming in any of the 11
to Bridge Alliance (BA), having expanded its BA-represented Asia Pacific countries. Multinational
membership to 11 telco operators with the addition corporate customers with offices throughout the
of AIS Thailand, CSL Hong Kong, CTM Macau and region also benefit from the service integration
South Korea Telecom, serving more than 175 million among BA members. Furthermore, the alliance
subscribers region-wide. In addition to operators, shares knowledge, technology and development
the alliance includes also systems provider Ericsson, strategy among and between its members.
Nokia, Nokia Siemens and Qualcomm as Associate
Members. In Indonesia, BA facilitates Telkomsel customers
with, among other things, access to various mobile
BA offers a host of commercial and economic content services including football and other sports
benefits to its members. Through collaboration with features from ESPN STAR Sports; Bridge Data Roam
one another, BA members enhance their capabilities for international data services at affordable rates; and
as well as competitiveness, and undertake joint seamless roaming in four continents (Asia, Australia,
Europe and America).
SingTel Mobile
PT TELEKOMUNIKASI SELULAR ANNUAL REPORT 2007
100
PT Telekomunikasi Selular
Wisma Mulia, Jl. Jend. Gatot Subroto No. 42, Jakarta 12710, Indonesia
Phone +62-21 5240 811, Fax +62-21 5290 6112, www.telkomsel.com
DEPLOYMENT
TO SETTING UP
FROM MASSIVE