Vision : to become a leading

History in brief:

1882
A private entity was established by the Dutch Colonial
Administration to provide postal and telegraph services
to the public.
1906
The Dutch Administration formed an agency to assume
control of post and telegraph services referred to as Post,
Telegraph en Telephone Dienst (“PTT”).
1945
Indonesia proclaimed her independence as a free and
sovereign state from the Dutch Colonial Administration.
1961
The agency (PTT) status was changed to a state-owned
and fully controlled company (Perusahaan Negara Pos
dan Telekomunikasi (“PN Postel”).
1965
PN Postel was split into two companies: Perusahaan
Negara Pos dan Giro (“PN Pos dan Giro”) to manage postal
services, and Perusahaan Negara Telekomunikasi (“PN
Telekomunikasi”) to manage telecommunications services.
1974
PN Telekomunikasi was changed into a semi profit-making
company called Perusahaan Umum Telekomunikasi
(“Perumtel”) providing domestic and international
telecommunications services.
1980
PT Indonesian Satellite Corporation (“Indosat”) was
established as a new separate company to operate
international telecommunications services.
1991
Perumtel’s status was changed to a profit-making company
called Perusahaan Perseroan (Persero) PT Telekomunikasi
Indonesia (“Telkom”).
1995
Telkom successfully completed its initial public offering
(IPO). Ever since TELKOM shares are listed at the Jakarta
Stock Exchange (JSX), Surabaya Stock Exchange (SSX), New
York Stock Exchange (NYSE) and London Stock Exchange
(LSE). TELKOM also offered its shares through a Public
Offering Without Listing (POWL) at Tokyo Stock Exchange.

TA B L E O F C O N T E N T S
Telkom at a Glance 1
Financial and Operational Highlights 2
Stock Highlights 4
Message from the Chairman of the Board 6
Message from the President Director to Shareholders 8
Business Overview 10
Steps toward Success 18
Human Resource 24
Society Development 26
Corporate Information 28
Management Discussion and Analysis 33
Financial Statements 48
InfoCom company in the region

Telkom at a glance

PT Telekomunikasi Indonesia, Tbk. (“Telkom”) is the most

prominent telecommunications service provider in Indonesia
providing information and communication (InfoCom)
services and network. Telkom directly and through its
associated companies provides a wide range of information
and communications (“InfoCom”) services and network
including fixed wire-lines), mobile (cellular), view (pay TV
and cable TV), internet and multimedia services as well as
other related services. Telkom currently holds majority
interests in PT Telekomunikasi Selular (“Telkomsel”),
PT Dayamitra Telekomunikasi (“Dayamitra”), PT Indonusa
Telemedia (“Indonusa”), PT Infomedia Nusantara
(“Infomedia”), and PT Graha Sarana Duta (“GSD”). Telkom
also holds minority interests in other associated
companies. Its consolidated total assets as of December
31, 2001 was Rp 32.47 trillion.
 F I N A N C I A L A N D O P E R AT I O N A L H I G H L I G H T S

Financial Highlights
These selected financial data for the year ended December 31, 2001 is restated from the company’s consolidated financial
statements, and for the years ended December 31, 2000, 1999, 1998 and 1997 are restated from the company’s consolidated
financial statements.

Consolidated Statements of Income

(In Millions of Rupiah and Thousands of U.S. Dollar, except shares and American Depositary Shares/ADS data)
Under Indonesian GAAP 2001 2000 1999 1998 1997
Rp U.S.$(1) As restated

OPERATING REVENUES
Fixed-lines 6,415,156 631,102 5,177,864 4,528,902 3,805,207 3,205,876
Cellular 5,052,598 497,058 2,914,514 1,755,222 1,091,982 586,800
Revenue under Joint Operation Scheme 2,219,586 218,356 2.267,154 1,677,217 1,591,537 1,646,292
Interconnection Revenues 1,422,170 139,908 1,008,424 732,510 453,212 477,000
Other Telecommunications Services 1,021,279 100,470 744,040 691,863 647,738 484,084
Total Operating Revenues 16,130,789 1,586,894 12,111,996 9,385,720 7,589,676 6,400,052

OPERATING EXPENSES
Depreciation 2,828,603 278,269 2,419,069 2,626,484 2,467,818 1,801,686
Operation and Maintenance 2,149,921 211,502 1,385,735 1,146,419 725,477 551,294
Personnel 2,028,812 199,588 1,610,196 1,224,474 903,898 891,182
General and Administrative 1,287,747 126,684 871,683 570,864 675,328 625,079
Marketing 220,006 21,643 147,160 76,245 51,411 81,414
Total Operating Expenses 8,515,089 837,686 6,433,843 5,644,485 4,823,932 3,950,655

OPERATING INCOME 7,615,700 749,208 5,678,153 3,741,234 2,765,744 2,449,397

OTHER INCOME (CHARGES) - NET (928,411) (91,334) (888,953) (166,527) (1,339,876) (803,629)
INCOME BEFORE TAX 6,687,289 657,874 4,789,200 3,574,707 1,425,868 1,645,768

TAX EXPENSE (2,070,654) (203,704) (1,466,267) (1,008,880) (258,258) (459.074)

INCOME BEFORE MINORITY INTERESTS

IN NET INCOME OF SUBSIDIARY 4,616,635 454,170 3,322,933 2,565,827 1,167,610 1,186,964

PRE ACQUISITION LOSS 108,080 10,633 - - - -

MINORITY INTERESTS IN
NET INCOME OF SUBSIDIARY (474,605) (46,690) (312,930) (162,115) (15,205) (9,134)

NET INCOME 4,250,110 418,113 3,010,003 2,403,712 1,152,405 1,177,560

Weighted Average Outstanding and Fully Paid

Shares (in Millions) (2) 10,079,999 - 10,079,999 9,644.274 9,333.333 9,333.333
Net Income per Share (Rp) 421.64 0.04 298.61 249.23 123.47 126.17
Net Income per ADS (Rp) 8,432.76 0.83 5,972.23 4,984.64 2,469.44 2,523.34
Declared Dividends per Share (3) (Rp) - 88.16 107.75 50.99 48.47 48.47
Declared Dividends per ADS (3) (Rp) - 1,706.20 2,155.00 1,019.80 969.40 969.40

Under US GAAP
Net Income (millions of Rupiah) 4,036,641 397,112 2,952,133 2,621,235 814,928 841,745
Net Income per Share (Rp) 400.46 0.04 292.87 271.79 87.31 90.19
Net Income per ADS (Rp) 8,009.21 0.79 5,857.41 5,435.72 1,746.27 1,803.74

(1) Stated in US Dollar based on Bridge Telerate on February 28, 2002 of Rp 10,165 per US$ 1.00
(2) Prior to IPO on November 14, 1995 TELKOM shares were 8,400,000,000 and post IPO were 9,333,333,000
In August 1999, TELKOM issued bonus shares of 746,666,640 resulted in total shares of 10,079,999,640.
Weighted average for 1999 was 213/365 x total shares pre-distribution of bonus shares plus 152/365 x total
02 shares post-distribution of bonus shares.
(3) Dividends for the financial year concerned, based on the outcome of the General Meeting of Shareholders held in the
•
early following year.
03
 Consolidated Balance Sheets
(In Millions of Rupiah and Thousands of U.S. Dollar)
As of December 31 2001 2000 1999 1998 1997
Under Indonesian GAAP Rp As restated

ASSETS:
CURRENT ASSETS 7,308,519 10,299,704 7,572,719 4,324,548 2,539,234
NONCURRENT ASSETS
Long-term investments - net 191,382 277,135 518,025 452,380 288,647
Property, plant, and equipment - net 22,288,766 20,019,464 19,300,965 20,216,867 17,258,582
Property, plant, and equipment under
revenue-sharing agreements - net 452,733 533,509 630,890 662,814 838,667
Other noncurrent assets 2,228,880 889,128 550,996 383,571 679,762
TOTAL NON CURRENT ASSETS 25,161,761 21,719,236 21,000,876 21,715,632 19,065,658
TOTAL ASSETS 32,470,280 32,018,940 28,573,595 26,040,180 21,604,892

LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES 10,075,323 4,509,355 4,331,222 3,940,196 3,240,577
NONCURRENT LIABILITIES
Deferred tax liabilities 1,767,759 1,787,214 1,546,122 1,357,924 1,193,207
Unearned income on revenue sharing Agreements 225,714 299,409 437,641 586,062 774,095
Unearned initial investor payments
under joint operation scheme 111,834 153,493 168,842 184,191 199,541
Long-term debt 9,730,741 9,546,259 8,540,515 8,537,124 5,658,331
TOTAL NON CURRENT LIABILITIES 11,836,048 11,786,375 10,693,120 10,665,301 7,825,174
TOTAL LIABILITIES 21,911,371 16,295,730 15,024,342 14,605,497 11,065,751
MINORITY INTERESTS IN NET ASSETS
OF SUBSIDIARY 1,235,334 814,034 533,642 359,407 337,632
EQUITY 9,323,575 14,909,176 13,015,611 11,075,276 10,201,509
TOTAL LIABILITIES AND EQUITY 32,470,280 32,018,940 28,573,595 26,040,180 21,604,892

Operating Ratio (%)

Net Income to Equity 45.58 20.19 18.47 10.41 11.54
Net Income to Total Assets 13.09 9.40 8.41 4.43 5.45
Operating Income to Total Assets 23.45 17.73 13.09 10.62 11.34

Financial Ratio (%)

Current Assets to Current Liabilities (Current Ratio) 72.54 228.41 174.63 109.75 78.36
Total Liabilities to Total Stockholders’ Equity 235.01 109.30 115.53 131.87 108.47
Total Liabilities to Total Assets 67.48 50.89 52.60 56.09 51.22

Operational Highlights
Fixed-Lines 2001 2000 1999 1998 1997
Installed lines 8,055,306 7,668,077 7,429,262 7,197,099 6,523,724
Subscriber lines 6,836,274 6,317,298 5,810,951 5,354,993 4,815,742
Public Phones (including Kiosk phones) 382,664 345,307 269,242 216,651 166,724
Lines in Service (LIS) 7,218,938 6,662,605 6,080,193 5,571,644 4,982,466
Pulse production (LIS) (billion) 78.87 71.52 62.43 58.71 50.72
Density (LIS per 100 Inhabitants) 3.25 3.07 2.93 2.73 2,50
Number of Employees 37,422 37,705 37,983 38,117 37,974
Productivity (LIS per employee) 192.91 176.70 160.1 146.2 131.2

Call Completion Ratio (%)

Local 73.92 72.97 70.63 68.1 60.4
Domestic Long Distance Direct Dialing 65.67 65.82 62.98 62.1 56.5
Mobile (Telkomsel):
Base Transceiver Station (BTS) 1,995 1,411 1,169 1,050 982
Transmitt-Receive Exchange 14,981 8,795 5,919 5,284 4,926
Mobile Switching Center 26 23 23 22 22
Base Switching Center 88 80 77 75 73
Home Location Register (HLR) capacity 3,970,000 2,785,000 1,435,000 800,000 725,000
Customer base: 3,252,032 1,687,339 1,025,221 492,624 393,493
Post-paid (KartuHALO) 865,211 657,436 437,197 329,384 364,587
Pre-paid (SimPATI) 2,386,821 1,029,903 588,024 163,240 28,906
Average Revenue per User (ARPU) 171,000 179,000 191,000 236,000 Na
Post-paid (KartuHALO) 287,000 281,000 276,000 236,000 Na
Pre-paid (SimPATI) 111,000 103,000 102,000 Na Na
 STOCK HIGHLIGHTS

TELKOM’s authorized capital: 1 series-A Dwiwarna share and 39,999,999,999 series-B shares
Issued and fully-paid: 1 series-A Dwiwarna share and 10,079, 999,639 series-B shares
(common stock) at par Rp 500.00

Holders (as of December 31, 2001):

The State of the Republic of Indonesia

Represented by the Government: 5,472,235,356 shares 54.29%
Public: Local investors 717,008,877 shares 7.11%
Foreign investors 3,890,755,407 shares 38.60%
Total 10,079,999,640 shares 100.00%

The Government holds the 1 series-A Dwiwarna share, a special and non-transferable share, which entitles the Government
a veto power with respect to nomination, election and removal of Commissioners and Directors and amendments to the
Company’s Article of Association. The Government’s rights with respect to the Dwiwarna Share will not terminate
unless the Article of Association of the Company is amended, which requires the consent of the Government as the
holder of the Dwiwarna Share.

TELKOM share price at the Jakarta Stock Exchange in 2001

Rp 4,000

3,000

2,000

1,000

0
Jan Dec
TELKOM share price at the New York Stock Exchange in 2001
US$ 8.00

6.00

4.00

04
2.00
•

05 0
Jan Dec
The continuous

improvement of the

Company performance

has made over

Telkom share one of

the blue chips in the

stock market.

TELKOM share closing price in each quarter of 2000 and 2001.

JSX (Rp)/share NYSE (US$)/ADS*) LSE (US$)/ADS*)

High Low High Low High Low

2 0 0 0
First quarter 4,350 3,325 12.0000 9.0625 12.150 9.1875
Second quarter 3,775 2,675 9.6875 6.4375 9.625 6.4500
Third quarter 3,325 2,600 8.0000 5.8750 7.875 6.1000
Fourth quarter 2,890 2,025 6.3125 4.1250 6.425 4.2750

2 0 0 1
First quarter 3,125 1,825 6.6500 4.0000 6.5000 3.8500
Second quarter 3,200 2,225 5.6000 3.6500 5.5500 3.8000
Third quarter 3,400 2,650 7.0600 5.5000 7.0500 5.5000
Fourth quarter 3,200 2,425 5.8000 4.6500 6.1250 4.7500
* ADS = American Depositary Share, 1 ADS representing 20 shares of Common Stock.
 M E S S A G E F R O M

T H E C H A I R M A N O F T H E B O A R D

A fundamental change in the telecommunications industry is taking place in Indonesia following the enactment of the Law No.36/
1999 on Telecommunications. The settlement of joint and cross ownership transaction between Telkom and Indosat in 2001 has
sparked off the beginning of a new era of competition. The Board of Commissioners perceive that a true reform in the industry -
that provides users and customers with more choices of wide range of information and communication (“InfoCom”) services as
well as operators - will turn out to be true.

The onus is on us to reach a common understanding and vision as to what we want ‘Telkom to be’ in anticipation
of being a front runner in these changing times. Meanwhile many players in this fast-faced telecommunications
industry seem to be impatient to see the impact of the reforms. The Board of Commissioners, however, believe
that Telkom’s management will be capable of preserving and strengthening Telkom’s credibility as incumbent
operator through utilization of its superb infrastructure, network, and human resource. The Board warmly
support the management policy to adopt a smart approach in designing a new strategy to materialize the
Company vision.

Strategic changes undertaken by the management would not only be a matter of survival but a synergic strategy
as well in efforts to win competition by working hand in hand with all partners. Such changes, indeed, require
extraordinary foresight and audacity amidst the unpredictable environment. The Board would like to encourage
all Telkom’s people to actively and constructively participate in the on-going transformation.

The joint and cross ownership settlement transactions with Indosat and the buy out of Dayamitra have reflected
Telkom’s strong determination to reengineer its business port-folio in order to strengthen its position as a full
service and network provider. The transactions, indeed, would increase Telkom’s consolidated revenues, for
one reason or another, that mobile cellular business provided by Telkomsel shows a very good prospect.

We thank God for the significant progress achieved in the settlement of KSO issues. The Company has started
to settle the KSO issues by acquiring 90.32% shares of PT Dayamitra Telekomunikasi - the KSO partner for
KSO-VI Kalimantan. The Company has also reached an agreement to acquire PT Pramindo Ikat Nusantara - the

06
•

07
 Strategic changes undertaken by

the management would not only be

a matter of survival but a synergic

strategy as well in efforts to win

competition by working hand in

hand with all partners.

KSO partner for KSO-I Sumatera. The Company’s achievement was the long awaited solution for KSO-III West
Java and Banten.

We earnestly hope that the settlement of KSO problems could make up a great momentum for the development
of telecommunications in the country and convey a positive contribution to the Company’s growth.

In terms of regulatory perspective, the release of the Minister of Communications Decree No. KM.20/2001 on
Telecommunications Network Provision and No. KM.21/2001 on Telecommunications Services Provision have
strongly suggested a clear indication of the implementation of the Law No.36/1999 on Telecommunications. We
look forward to having comprehensive regulations that cover licensing, tariff, interconnection scheme as well
as compensation. We also envisage the need of the telecommunications industry for a forum where
telecommunications operators and regulatory authorities can sit together to discuss key issues and obtain
input from those affected by the regulations.

In the unprecedented telecommunications business environment, a general notion prevails that Telkom’s prospect
in the future will depend on its aptness and capability to add value or enhance the quality of network and
services to the public, inter alia, by improving service focus and system integration, sharpening business portfolio,
as well as maintaining its high potential employees.

A new age of full globalization and free competition in 2003 is on the threshold, so it is high time for the
company to get ready for take off.

Bandung, May 10, 2002

Bacelius Ruru
Chairman of the Board of Commissioners
 MESSAGE FROM THE PRESIDENT DIRECTOR

TO SHAREHOLDERS

Dear shareholders,
I am delighted to deliver to you Telkom’s Annual Report 2001 that was flourished by a number of significant
momentums, which gave birth to several strategic steps by Telkom. There have been the abrogation of joint and
cross ownership in some associated companies with Indosat, the buy-out of Dayamitra (KSO partner for Telkom’s
Regional Division VI - Kalimantan) as well as the provision of Voice over Internet Protocol (VoIP) services.

Through the settlement of joint and cross ownership with PT Indosat, the company has now become the majority
shareholder of PT Telkomsel with 77,72% of shares. Telkomsel is a dominant cellular operator in Indonesia with
almost 50% market share. In addition to Telkomsel, the Company also holds majority interest in other associated
companies such as PT Dayamitra Telekomunikasi (90,32%), PT Indonusa Telemedia (57,5%), PT Infomedia Nusantara
(51%) and PT Graha Sarana Duta (99.99%). It is encouraging and at the same time challenging to see that the
transaction has been awarded as Most Innovative M&A Deal by the Finance Asia Achievement Award as a result
of their survey to investors/analysts, and as Best Telecom Restructuring M&A by The Asset.

On top of that, Telkom is now engaged in consolidating resources including restructuring the organization and
personnel, accelerating the settlement of joint operation scheme (KSO), and mapping out value chain business.
The implementation of competence-based human resource management (CBHRM), retention plan, and voluntary
retirement program, for example, would constitute strategic steps to streamline the chubby company so as to
make it more agile and efficient.

The strategic actions which have

been taken during the last two

years have brought the company

closer to its vision for entering the

InfoCom business with core

services covering fixed-phone,

mobile, view, internet and total

solution services.
The strategic actions which have been taken during the last two years have steadfastly brought the company
closer to its vision for entering into the overall InfoCom business with core services covering fixed-phone,
mobile, view, internet and total solution services. Through strategic business projects established two years
ago, for instance, the company has been reaping benefits from the integration of systems and services. The
improvement of products has generated more revenues as well as providing customers and users with telephony
and internet based services, internet protocol, cellular and value-added services.

These improvements have been reflected to some extent in the company’s financial performance. In 2001 the
company recorded consolidated net income of Rp 4.25 trillions or increased by 41.20 % compared to the previous
year, and EBITDA of Rp 10.44 trillion, an increase of 28.89% compared to the previous year.

Inspite of the improvements achieved, we are well aware that there are problems which have yet to be resolved
such as the low penetration of fixed telephone density, and the deterioriation of service quality in certain areas.
We are convinced, however, these problems could gradually be overcome through mutual understanding and
team-work, which eventually offers greater benefits to customers, users, partners and shareholders.

It is our belief that the excellent performance in the past, especially in 2001, could not have been achieved
without cooperation and support from parties which have been rendering their valuable contribution to the
company. For those reasons, therefore, I have no slightest hesitation to represent the management to thank all
the customers, employees, shareholders, and partners for their immeasurable contribution to the company.

We look forward to enjoying equal or even stronger support for the years to come so as to enable the company
to get better off and excel to the best in all its business ventures in the interest of the stakeholders.

Bandung, May 10, 2002

Muhammad Nazif
President Director and CEO
 B U S I N E S S O V E R V I E W
Several predominant factors that have significantly affected the
company’s business in the year 2001 were the regulatory environ-
ment, technology development, customer needs, and the company
ability to adapt to the ongoing changes of environment.
Regulatory environment
Telecommunications sector regulations (Law No.36/
1999) that came into effect since September 8, 2000
has opened up business opportunities for network and
services provision in Indonesia as well as liberalized
the market. The Law also omits the organizing body,
by which releases private companies from the
obligation to cooperate with Telkom in providing
telecommunication services.
In 2001, the Minister of Communications issued decrees
No. KM.20/2001 on Telecommunications Network
Provision and No. KM21/2001 on Telecommunications
Services Provision as a follow-up of Law No.36/1999 on
Telecommunications which have underlined that
network or services provision could be possessed by
state owned company (BUMN), municipal government
owned company (BUMD), private company or
cooperative.
Regulatory regime in tariff also constitutes a significant
instrument affecting the company business. In addition
to incentives for investors to enter the business, an
adequate tariff regime would encourage Telkom and its
10 KSO investors to develop services and infrastructures
• plan. On January 29, 2002, the Ministry of
Communications (MoC) issued Decree No.KM.12/2002
11
concerning the adjustment of Ministry of Tourism, Post
and Telecommunications Decree No.KM.79/PR.301/
MPPT-95 on the Adjustment Procedures for Domestic
Telecommunications Services Basic Tariff, which was
completed with a letter No.PK.304/1/3 PHB-2002
concerning the increase of domestic fixed-line basic
telephone services for the year 2002. Based on the letter,
the increase in tariff for fixed-line basic telephone
services in the next three years would be 45.49% and
for the year 2002 was 15% on average.
Policy and strategy
The implementation of the Law No.36/1999 has driven
the company to adapt to the changing business
environment. It is in this perspective that infrastructure,
customer based service and human resource are to be
consolidated in order to maintain the company’s market
share as well as acquiring and retaining new customers.
The new era of competition in 2003 is on the threshold.
Telkom, by all means, has to accelerate the
transformation process both in organisational area and
business portfolio.
The company has prudently prepared for the imminent
competition era by the deployment of strategic policies
in 2000 and has adopted strategic actions afterward such
as: (i) continuously upgrades and expands the
network in terms of bandwidth, features, and
penetration; (ii) utilizes benefits from the high growth
netwo
 “Thanks to the excellent diversity of TELKOM services,
I can enjoy the optimal benefit of business opportunities
in the ever increasing competitive environment”

rk improvement
 of mobile and data/internet business, by aggressively
develops mobile and internet infrastructure and
services; (iii) focuses on corporate customers; (iv)
rationalizing assets and restructuring associated
companies; (v) maintains its main revenue sources from
fixed telephone; (vi) global connectivity; and (vii)
strategic partnerships.
The company is currently in the process of
transformation to become a full service and network
provider in InfoCom business which is supported by
five basic business pillars covering Phone, Mobile, View,
Internet and Service. To manage these businesses, the
company runs the business on its own as well as through
its associated companies or under partnership scheme.
By applying the transformation process, Telkom expects
to be able to realize its main goals throughout to 2004
in terms of compound annual growth rate (CAGR) of
operating revenues of 25% and market share of the
business in Phone of 85%, Mobile of 45%, View of 43%,
and Internet of 44%.
Development of information and communication
technology
The dynamic telecommunications technology
development is partly shown by a paradigm shift from
voice-based toward data-based technology platform.
Likewise, the development of telecommunications
technology is moving toward the convergence of voice,
data, and image.
12
•
13
Along with the trend, Telkom is focusing its
development program on three main areas of technology
deployment: transport, access and customer premise
equipment.
In transport technology, Telkom is working out the
backbone network and sets priorities on the
development of Internet Protocol (IP) and optimizes the
nodes of Asynchronous Transfer Mode (ATM). Telkom
collaborates with Cisco-Datacraft to develop IP backbone
nodes in 68 cities throughout the country. In addition,
Telkom also collaborates with Nortel-Astel to optimize
ATM nodes in 10 sites in Java, Sumatra (Medan and
Pekanbaru), and Kalimantan.
Telkom is setting on transmission network
(High Performance Backbone) to support the
development of packet backbone by, among
others, collaborating with Pirelli-Siemens to
deploy fiber optic transmission in Sumatra
using DWDM-8λ laying between Medan and
Bandarlampung. Telkom also plans to
deploy fiber optic cable in Sulawesi and
Kalimantan islands, which is currently in the
evaluation stage of the bidders’ proposal.
Besides, Telkom is in the process to procure
Telkom-2 satellite with 24 transponders C-band
covering from India to Australia to replace Palapa-
B4 satellite, which will expire in 2004.
InfoCom superb services have

significantly enhanced business

partnership efficiency.

The settlement of cross and joint

ownerships

The settlement of cross and joint

ownership enables Telkom to hold the

majority interest in Telkomsel, the

leading cellular company in the country

with approximately 50% cellular market

share and customer base of 3.25 million

as of December 31, 2001.

Steps for the overcoming of KSO

problems
The buyout of Dayamitra constitutes an

initial step for overcoming the KSO

problems which will strengthen Telkom

in developing telecommunications

services and network including

improvement of fixed-line teledensity in

Indonesia. The step was followed by the

buyout of Pramindo and Ariawest.

 “Through utilization of Telkom sophisticated
services, I can always maintain close relationship
with my loved-ones, even from a distance”.

14
•

15

personalized se
 Access technology is predicted to move quickly along
with the growth of the demand for broader bandwidth
due to the fact that access network remains the basic
platform as well catalyst for the deployment of data
communication in the country. This will lead to the
movement of telecommunications platform toward the
era of data oriented. Meanwhile, wire-line access
technology is designed to provide broadband services
through xDigital Subscriber Line (XDSL) technology or
through Hybrid Fiber Coaxial (HFC) technology, while
wireless technology is directed toward CDMA-1000 1X-
based technology. In supporting the government’s
program for increasing teledensity in the country,
telecommunications network infrastructure that is
compatible with Indonesian geographic condition is
needed. Telkom plans to deploy Fixed Wireless Access
(FWA) - CDMA2000 1X technology which is flexible in
time for infrastructure deployment as well as services.
Telkom expects the government’s support to the plan
by allocating the required frequency-band as well as
numbering plan.
Data-based services are not merely supplements of the
telephone service. In fact, they have become one of the
main vehicles to meet market demand. For such reason,
Telkom has delivered VoIP services with a brand-name
of TelkomSave which is supported by the development
of IP backbone.
rvice
2001 Operating Results
For 2001, Telkom booked a consolidated net income of
Rp 4,250.11 billion and earning per share of Rp 421.64
or increased by 41.20% compared to the result of last
year earning per share of Rp 298.61. The contribution
to the growth of net income was mainly the increase in
cellular of 73.36% and interconnections revenues of
41.03%.
Consolidated operating revenues increased by 33.18%
from Rp 12,111.99 billion in 2000 to Rp 16,130.79 billion
in 2001. While the growth of consolidated operating
expenses was 32.35% from Rp 6,433.84 billion in 2000
to Rp.8,515.09 billion in 2001. The difference resulted
in 34.12% increase in operating income from Rp 5,678.15
billion in 2000 to Rp 7,615.70 billion in 2001. While
consolidated earning before tax, depreciation and
amortization (EBITDA) increased from Rp 8,097.2 billion
in 2000 to Rp 10,499.5 billion bilion in 2001.
Nevertheless, EBITDA margin in 2001 was 64.78% or
lower than 2000 figure of 66.85%.
The number of Telkomsel’s cellular subscribers
increased by 92.73% during the last one year, whereas
for fixed wirelines, there were net additional lines in
service (LIS) of 556,333 lines, 4.48% lower compared to
the additional LIS of 582,412 lines in 2000. The increase
in LIS took place in Telkom regions of 339,542 lines
and in KSO regions of 216,791 lines. As of December
31, 2001, total Telkom’s lines in service were 7,218,938
consisting of 3,949,905 lines in Telkom regions and
3,269,033 lines in KSO regions.
 Total Operatings Revenue (Billion) Services
In line with the change of Telkom’s paradigm in
20,000
providing services to its customers, the Company has
15,000 accomplished some improvement to the quality of
service. Telkom identifies a zone-20 customers, that
10,000
comprise 20% customers contributing approximately
5,000
80% revenue for Telkom. To the zone-20 customers,
0 Telkom applies active management approach, among
1997 1998 1999 2000 2001
others, by encouraging the Company’s account
managers, which are backed-up by virtual account
teams consisting of back-room staff, product owner,
partners and other related functions.
Total Assets (Billion Rupiah)

35,000
For retail customers, the Company sets up a Service
30,000

25,000 Level Guarantee (SLG) policy and differentiation of

20,000 services which are already implemented in Regional
15,000
Division-II (East Java) and Regional Division-V Jakarta.
10,000
The policy will also be gradually implemented in all KSO
5,000

0 Divisions (Division I, III, IV, VI dan VII) starting from the

1997 1998 1999 2000 2001
middle of 2002. The Company also offers incentives to
encourage retail customers to utilize less-physical
contact facilities such as call center/phone in, and web
in as well as to reduce customers involvement in
Net Income (Billion Rupiah)
reaching service centers and service points.
5,000

4,000
Independent assessment on Telkom’s GCG
3,000 As part of universal assessment to measure business
2,000 practice excellence implemented in the Company, Ernst

1,000 & Young has finalized the assessment of Telkom’s Good

0
Corporate Governance. The conclusion of the
1997 1998 1999 2000 2001 assessment by the year 2001 is as follows.

16
•

17
Good Corporate Governance Assessment
Assessment of Governance
Good Needs Improvement Poor
1 2 3 4
1. Roles and Powers - V -
2. Employee Guidelines and Code of Conduct - V -
3. Board Appointments - V -
4. Board Skills and Resources - V -
5. Board Independence - - V
6. Business and Community Consultation - V -
7. Strategy Setting V - -
8. Monitoring Board Performance - V -
9. Management Reporting - V -
10. Risk Management - V -

Telkom realizes that the results of assessment of Telkom’s

good corporate governance practice were mostly “needs
improvement”. The Company takes these initial results
as an impetus for encouraging all staff to reach the best
practice in operating the business.

Operating Revenues
(In millions of Rupiah)
For the Years Ended % to % to % to
December 31, 2001 Total 2000 Total 1999 Total
Fixed wirelines 6,415,156 39.77 5,177,864 42.75 4,528,902 48.25
Mobile cellular 5,052,598 31.32 2,914,514 24.06 1,755,222 18.70
Revenue under
joint operation scheme 2,219,586 13.76 2,267,154 18.72 1,677,217 17.87
Interconnection revenues 1,422,170 8.82 1,008,424 8.33 732,510 7.80
Other telecommunication services 1,021,279 6.33 744,040 6.14 691,869 7.37
Total Operating Revenues 16,130,789 100,00 12,111,996 100,00 9,385,720 100,00
 S T E P S T O W A R D S U C C E S S

Settlement of joint and cross ownership

Pursuing the Sales and Purchase Agreement (SPA) signed on April 3,
2001 the Company has completed a series of transactions with
Perusahaan Perseroan (Persero) PT Indonesian Satellite Corporation
Tbk (“Indosat”), including the acquisition of 35.0% of the issued and
fully paid shares of PT Telekomunikasi Selular (“Telkomsel”) owned
by Indosat.

The parties also agreed that the company sold 22.5% of the issued
and fully paid shares of PT Satelit Palapa Indonesia (“Satelindo”) to
Indosat for US$186 million, and sold 37.66% of the issued and fully
paid shares of PT.Aplikanusa Lintasarta (“Lintasarta”) for US$38
million.

The agreement also stated the acquisition by Indosat of all of the

company’s rights, and transfer or novation of all of Company’s
obligations, under a joint operating agreement with PT Mitra Global
Telekomunikasi Indonesia (“MGTI”) dated October 20, 1995, as
amended (the “KSO IV Agreement”), and all contracts to which the
Company is a party and which relate to the business of the joint
operating scheme established pursuant to the KSO IV Agreement (the
“KSO IV Unit”), together with all other property and assets of the
Company operated and maintained as property and assets of the KSO
IV Unit created by the joint operating agreement (the “KSO IV Assets”),
for a consideration of US$375 million (the “KSO IV Transaction”). By
January 31, 2002 the KSO-IV transaction has been terminated since
the terms and conditions required by the SPA could not be fulfilled.

With the completion of the transaction, Telkom holds 77.72% share

of Telkomsel - the leading cellular company in Indonesia.
18

19
Long-term solutions for KSO Lines in Service (Thousand)
On October 20, 1995, Telkom entered into long-term
8,000
agreements on joint operation scheme (Kerjasama Operasi 7,000
“KSO”) with five KSO investors providing for the transfer 6,000

of network development and operational responsibility 5,000

4,000
in Telkom’s Regional Division I, III, IV, VI and VII to the
3,000
KSO investors for15 year period commencing the year 2,000
1996 to 2010. 1,000
0
1997 1998 1999 2000 2001
Due to the monetary crisis engulfed the country in 1997
and thereafter, the Government, Telkom, and the KSO
partners came to long-term alternative solutions: (i) KSO
arrangement based on the original agreements and the
Memorandum of Understanding signed on June 5, 1998,
Pulse Production (Billion)
plus new arrangement for additional installed lines; (ii)
80
establish a joint venture company with TELKOM; (iii)
70
establish a joint venture company with Indosat; (iv) grant
60
licence to the KSO investors to be new operators; and (v) 50

early termination of the KSO agreement. 40

30
20
KSO-I
10
On February 20, 2002 Telkom and the shareholders of 0

PT Pramindo Ikat Nusantara (“Pramindo”) - KSO partners 1997 1998 1999 2000 2001

in Regional Division-I Sumatra - signed a Memorandum

of Understanding (MoU) with regard to the acquisition of
100% shares of Pramindo at enterprise value of US$ 425
million. The amount includes outstanding debt of
Call Completion Rate (%)
Pramindo of US$339 million and Pramindo’s equity of
80
US$86 million. The Company will make an initial payment
70
of US$ 54 million while the remaining amount will be paid 60
in installments in ten quarters. On initial closing, 30% 50

ownership will be taken and at the end of September 40

30
2003 additional shares amounting to 15% and another
20
55% will be owned until end of 2004. The buy out 10
agreement had been signed on April 22, 2002. 0
1997 1998 1999 2000 2001

The settlement with respect to the transaction is subject LDC Local

to the satisfaction of certain conditions set forth in the
Purchase Agreement, including shareholders’ approval.
 KSO-III
The long-term solution for the problem with PT Ariawest
International (“Ariawest”) – KSO partner for KSO – III West
Java and Banten – is being undertaken in two ways, first
through the International Chamber of Commerce in
Geneva, and second, through negotiation with Ariawest’s
shareholders. On May 8, 2002, the discussion with
Ariawest shareholders has closed by the signing of
Conditional Sales and Purchase Agreement to acquire
Ariawest by PT Telkom.

With the settlement of the KSO-III problems, the

outstanding obstacle in relation to the joint operation
scheme has been eventually overcome.

KSO-IV
As part of the cross and joint ownership settlement with
Indosat, on April 3, 2001 the Company has signed a sales
and purchase agreement (“SPA”) with Indosat for the
transfer of Telkom’s rights, assets and business in KSI-IV
(Central Java and Yogyakarta) to Indosat, for an amount
of US$ 375 million. The closing of the transaction was
subject to 8 (eight) condition precendents: (i) the
completion of the Telkomsel Transaction and Satelindo
Transaction; (ii) the receipt of all necessary approvals from
MGTI; (iii) the resolution to Indosat’s satisfaction of all
disputes relating to the liabilities of the Company under
Telkom has increased the KSO IV Agreement and KSO IV Construction
Agreement; (iv) Indosat or its nominee having been
granted a license or authorized by the Government to
ownership to become
own and operate a public switched voice
telecommunications network (fixed line and fixed
majority shareholder at wireless) in the Territory; (v) the parties having executed
and delivered to each other a final assets report or having
Telkomsel – the largest received a final arbitration award with respect to such
assets; (vi) the novation of certain contracts; (vii) the

cellular phone company execution by the parties of an agreement with regard to

the transfer of employees of the Company assigned to
20
the KSO IV Unit to Indosat; and (viii) the execution of
•
in Indonesia certain deeds, assignments, licenses, lease agreements,
interconnection agreements and other agreements.
21
The sale of assets and business operations of KSO-IV has
terminated due to the unfulfillment of the terms and
conditions agreed in the SPA. As a consequence, KSO-IV
remains under the control of Telkom and KSO partner
PT Mitra Global Telekomunikasi Indonesia (“MGTI”).
KSO-VI
On May 2001 Telkom and PT Dayamitra Telekomunikasi
(“Dayamitra”) closed the transaction of acquiring 90.32%
of Dayamitra for US$.121.93 million plus Dayamitra’s
existing debt obligations of approximately US$88.5
million. In connection with this transaction, the company
would have assumed liability for a portion of debt. The
company has made an initial payment of US$18.29 million
upon completion of the transaction, and will pay the
remaning amount in equal quarterly installments over a
two-year period. Following the closing of the transaction,
Telkom owns 90.32% shares of Dayamitra, and TM
Communications (HK) Ltd. owns the remaining 9.68%
interest.
KSO-VII
Telkom and PT Bukaka SingTel (KSO partner in Region-VII
Eastern Indonesia) tend to continue the KSO schemes in
accordance with the original agreements with certain
modifications which benefit both parties. The Company
has also reached an agreement to construct a series of
lines in service in service in several cities in the region.
Restructuring ownership in associated
companies
PT Telekomindo Primabhakti (“Telekomindo”)
On December 5, 2001 the Company concluded an equity
swap agreement with PT Rajawali Corporation (“Rajawali”),
PT Telekomindo Primabhakti (“Telekomindo”) and
PT Telekomindo Media Informatika (“TMI”) in conjunction
with the sale of the company shares in Telekomindo, TMI,
and PT Graha Insani Primabhakti (“GIP”) to Rajawali for
Rp.146 billion. Meanwhile, the company has acquired
shares of PT Telekomindo Selular Raya (“Telesera”), an
AMPS-based cellular technology which is currently
operating telephone cellular services in East Java region,
and PT Multisaka Mitra (“MSM”), card issuer for TMI, both
for Rp 151 billion. With the completion of the transaction,
the Company holds no more shares in Telekomindo.
PT Telekomindo Selular Raya (“Telesera”)
Following the completion of the share swap transaction,
the Company holds 69.77% shares of Telesera, an AMPS-
based cellular company with 10,012 subscribers as of
December 31, 2001. Telesera will be a vehicle for Telkom
to develop and expand fixed wireless service.
PT Graha Sarana Duta (“GSD”) buy out
Based on Sales and Purchase Agreement dated April 6,
2001, the Company bought 100% of GSD shares from
Koperasi Mitra Duta and Dana Pensiun Bank Duta at Rp
119 billion. The Rp 106.35 billion balance between the
purchase price and the book value was recorded as
goodwill as a purchase method of accounting and to be
amortized in five years. (Refer to Page F-15 on the Notes
on Consolidated Financial Report).
Increased ownership in PT Indonusa Telemedia
(“Indonusa”)
In 2001, the Company had increased its ownership in
Indonusa from the previous 35% into 57.5%, which
amounts Rp 28 billion recorded as goodwill amounting
to Rp 654 million (Refer to page F-14 on the Notes on
Consolidated Financial Report).
PT Tangara Mitrakom (“Tangarakom”) shares selling
In 2001, the Company sold out all of its ownership in
Tangarakom for Rp 232 million. This has been acknowledged
by purchase method of accounting (Refer to page F-14 on
the Notes on Consolidated Financial).
Business projects
The establishment of business projects in 2000 has driven
the company closer toward a complete set of phone,
mobile, view, internet, and service (PMVIS) as well as
generating additional revenues.The progress of each
business project is as follows:
 Enterprise business
The project function is to integrate units and product
owners of Telkom’s network and services in order to
deliver integrated solution to corporate customers. The
project was established in light of the increasing demand
for interregional as well as packaged products.
Services delivered by Enterprise Business Project include
Solution for Enterprise Network (SEN) and satellite
transponders. By the date, the customers of the project
include PT Ekacita Dian Persada, PT Pembangkit Tenaga
Listrik Jawa-Bali, PT Bank Mandiri, PT Bank International
Indonesia (BII), BAPEDAL, Dit.Jend. Pajak, PT KAI, PT Heinz
ABC, Mabes POLRI, Otorita Batam, Jamsostek, PT BPD Jabar,
TNI, PT Semen Gresik , PT Federal International Finance
and BAPPENAS.
Pay TV/Cable TV Business Project
In 2001 the Company signed a partnership agreement with
Alcatel to deploy Hybrid Fiber Coaxial (HFC) infrastructure
for concentrated customers of 52.610 homepasseds for
US$ 15 million. While Direct to Home (DTH) infrastructure
is developed for spread customers by using three
transponders of Telkom-1 satellite.
In addition to the infrastructure being developed with
Alcatel, HFC is also being developed by PT Indonusa
Telemedia (“Indonusa”) - Telkom’s subsidiary for 25.876
homepasseds and has been used to deliver services to
5,384 customers in Jakarta and Surabaya.
Telkom and its subsidiary provide pay TV services with
the brand-name of TelkomVision.
Caling Card and Payphone (CCP) Business Project
CCP businees project was established to improve fixed
wireline network utilization, among others, by developing
22
23
Calling Card and Payphone services. Caling Card service
is developed using Iintelligent Network (IN) and VoIP-based
technology, while Payphone service is developed through
smart card and Debit/Credit Card Phone. Currently the
business project is in the progress of developing credit
card caling card as a follow-up of Memorandum of
Understanding (MOU) signed by the company and VISA.
Intelligent Network (IN) Business Project
To improve its POTS network utilization in line with the
increase in customer needs for value added services based
on Intelligent Network, IN business project developed
services such as Vote Call and Vote Free with the brand-
name of TelkomVote, in addition to Premiun Call and Free
Call managed by Telkom’s Network Division. Other
services will be launched including Uni Call
(TelkomUnicall), Caling Card (TelkomCard), Virtual Net
(TelkomVirtual), and Split Charging.
Voice over Internet Protocol (VoIP) Business Project
On October 17, 2001 the Government has granted Telkom
a license to operate VoIP service. In 2001 Telkom launched
TelkomSave, through which customers are able to make
international calls.
For the year 2001 the service recorded a revenue of
Rp 17.30 billion from three basic sources of (i) outgoing -
TelkomSave-post-paid of Rp 3.21 billion; (ii) outgoing -
TelkomSave-pre-paid of Rp.5.86 billion; and (iii) incoming
- wholesale trafffic of Rp.8.60 billion.
The service is supported by 22 places of point of presence
(PoP) located in 22 big cities in Indonesia. Investment for
VoIP network for 2001 was Rp. 51,03 billion.
 Awards
Best Managed Company
Finance Asia magazine awarded Telkom as one of the
B2B Business Project
Indonesian Best Managed Companies.
In the year 2000 B2B business project has developed e-
community, e-solution, and e-service service. In 2001 the
Best Investor Relations from an Indonesian
project came into the second phase of the progress after
Company
completing the installation phase in 2000. The second phase
Investor Relations magazine in their program of Investor
includes development of main infrastructure and the
Relations Asia Award, awarded Telkom for Best Investor
development of virtual community through virtual network.
Relations by an Indonesian Company.

The development of main infrastructure has resulted in

The achievement of World-class excellence
services such as:i-trust (certification authority), e-
Telkom reached a score of 406 by Malcolm Baldrige National
fulfillment (including i-logistic and i-payment), and data
Quality Assessment compared to the average 1999-2000 USA
center. While the development of virtual community (by
applicants’ score of 415. This was the first year Telkom used
utilizing value added services) resulted in services such
the Baldrige criteria as a basis for achieving world class
as (i) i-deal SME (virtual community of small and medium
excellence and expects to reach higher score in the coming
business and cooperatives); (ii) SCM Otomotif; (iii)
years.
Farmation Center (community of chemist); (iv) BUMN-
Online (state-owned enterprises community); (v) E-
Independent assessment on Telkom’s Good
procurement (Telkom as a pilot project); and (vi) i-Xchange
Corporate Governance
(virtual financial community).
As part of universal assessment to measure business
practice excellence implemented in Telkom, Ernst & Young
International Services Business Project
has made an assessment on Telkom’s good corporate
Telkom established international services project in 2001
governance practice. The initial assessment is a stepping
to accurately prepare international call service and other
stone for Telkom to improve its governance to meet
related services. Currently the project is collaborating with
business practice excellence.
SingTel involving the deployment of radio link between
Singapore and Batam for leased line services. The project
Most Innovative M&A Deal
is also preparing regional link with Telecom Malaysia,
Awarded Most Innovative M&A Deal to the restructuring of
Thailand and the Phillipines.
PT Telkom and Indosat. The transaction allowed Telkom to
gain full control of Indonesia top mobile phone business,
and this is certainly lift up the rating of Telkom stock.

Best Telecom Restructuring M&A

On its December 2001 issue, The Assets asserted the US$
1.9 billion restructuring of PT Telkom and PT Indosat as
Best Telecom Restructuring Merger and Acquisition. The
transaction represents the largest M&A transaction to date
in Indonesia and Telkom has gained control of the leading
cellular company Telkomsel.
 H U M A N R E S O U R C E

HR amount and composition

In line with the changes in business environment, Telkom has set

its new policy on human resource management to prepare more
professional and competent employees to operate and run
InfoCom businesses. The policy encompasses corporate rules and
regulations, competence based human resource management,
retention plan, outsourcing, and voluntary retirement program.
The new corporate rules and regulations were prepared in the
light of competitive atmosphere
where rights and obligations of the
In honing individual employees and the company are
clearly and resolutely stated.
skills, Telkom
As of December 2001, Telkom
conducts a number employed 37,422 staff consisting of
18,926 employees in Telkom regions
of domestic and and 18,496 in KSO regions. A
productivity ratio measured
overseas intensive by numbers of fixed lines in
service per employee was
education and
192.91 as of December 31,

training programs. 2001, while as of December

31, 2000 was 176.70.

As of December 31, 2001 13.96% of employees

were university graduate and 26.92% were
graduated from diploma program.

24
•

25
 As a reputable company, Telkom

provides better employment for

today and tomorrow.

Training and development by the Board of Directors, including

In 2001, a number of 1,352 24 employees for outstanding
employees were studying at local inventions.
educations consisting of 71
programs, while 10 employees were Pension Fund
studying at overseas institutions of Telkom established an institution
10 programs. Meanwhile, a number referred to as Telkom Pension
of 61,947 employees were Foundation (Yayasan Dana Pensiun
undergoing 986 local training Telkom) on December 22, 1982. The
programs and 228 students were objective of the institution is to
undergoing 64 overseas training maintain continuity of employees’
programs. post retirement income by providing
program for pension benefit. In line
For the year 2001, Telkom’s with the Law No.11/1992 on Pension
employees reached an average of Fund, the institution has adjusted its
20.69 mandays a year for training and formal status to Pension Fund (“Dana
education. Meanwhile, a number of Pensiun”) that manages and operates
117 employees were awarded by the a defined pension benefit plan.
Government for their high Sources of the fund are derived from
achievements and 290 were awarded the company’s contribution as well as
employees’ contribution.
By the end of 2001, participants of the
plan consisted of 37,438 active
members, 13,049 pensioners, 6,810
beneficieries (widows/widowers/
children), and 158 former employees
(term vested).
Medication and health care
services
Telkom also established a Medication
and Healthcare Foundation (Yayasan
Kesehatan Pegawai). The Foundation
engages in providing medication and
healthcare service for all Telkom’s
employees and their eligible
dependants. In addition, the
foundation provides similar service to
Telkom’s pensioners. The company
provides a post retirement health care
plan to all of its pensioners who have
worked for over 20 years and their
eligible dependants, except for
employees who retired prior to June
3, 1995. However, the employees
hired by the Company starting from
November 1, 1995 and their
dependants will no longer be entitled
to this benefit.
Early Retirement Program
In the year 2001, Telkom offered
voluntary early retirement program to
employees based on certain
requirements. In March 2002, the
company approved 1.899 applications
with total benefit and severance of Rp
284.9 billion of which Rp108.6 billion
was paid by the KSO Units.
 S O C I E T Y D E V E L O P M E N T
T Telkom involves in several social activities such as education, health, and
other social welfare, through foundation and partnerships.
Yayasan Sandhykara Putra Telkom (“YSPT”)
The establishment of YSPT on Januari 17, 1980 was initiated
by women’s association of Telkom (Dharma Wanita Telkom)
with an objective to participate in developing social welfare
through education and social activities. By end of 2001,
YSPT has several educational institutions such as one
secondary school (Sekolah Lanjutan Tingkat Pertama/
”SLTP”), one senior high school (Sekolah Menengah Umum/
”SMU”), 3 tourism vocational school (Sekolah Menengah
Kejuruan Pariwisata/”(SMK Par”), 6 telecommunications
vocational schools (Sekolah Menengah Kejuruan
Telekomunikasi/”SMK Tel”), One Academy of Tourism
(Akademi Pariwisata/”Akpar”), and 31 Kindergarten (Taman
Kanak-Kanak). These institutions are operated by involving
816 teachers and staff. As of Desember 31, 2001 the total
registered students were 7,738.
For social developments, YSPT performs various activities
such as scholarship for low-level income community,
development of multi purpose building in under-
developing areas, and other incidental social
contributions. Telkom provides some of the poverty
alleviation fund available in the budget particularly for
education.
Yayasan Pendidikan Telkom (“YPT”)
Telkom Education Foundation (YPT) engages in both
under-graduate and graduate education institution namely
School of Telecommunications Technology (Sekolah Tinggi
Teknologi Telkom/STT TELKOM) and Bandung Institute
of Management (Sekolah Tinggi Management Bandung/
26 STMB). YPT also has a radio broadcasting station, which
is operated by PT Lintas Kontinental (Radio K-Lite 107,2
•
FM). These institutions are located in the city of Bandung,
27 West Java.
STT Telkom
STT TELKOM provides study programs for Strata-1/S-1
(bachelor degree) as well as diploma degree. S-1 degree
provides program of Industrial Engineering, Electrical
Engineering, and Informatics Engineering; while diploma
degree provides programs of Electrical Engineering and
Informatics Engineering. During the last two years, an
average of approximately 6,500 students deliver their
admission yearly. By December 2001, 4,095 students
consisting of 3,016 S-1 students and 1,079 diploma degree
students were studying at STT TELKOM. An approximate
of 3,513 alumni of STT TELKOM are currently working in
the telecommunication industry.
STMB
STMB holds programs of S-1 degree in
Telecommunications and Informatics Management, and
Master in Business Administration. By December 2001, a
number of 422 registered students were studying at Strata-
1 degree and 315 registered students were at master
degree. As of December 31, 2001, STMB has graduated
346 masters of business/magister management.
Partnership With Small and Medium Scale
Business Community
Warung Telekomunikasi/WARTEL (Phone-kiosk)
Individuals and small businesses are eligible to provide
telecommunication services by running phone-kiosk. The
kiosks are considered as the arm-length of TELKOM
services. Such cooperation mutually benefit both parties,
Telkom as well as customers. As of December 31, 2001,
lines in service used for phone kiosks were 282,067 lines
or increased by 23.25% from 228,862 lines as of
December 31, 2000. The increase in the number of phone
 Telkom believes in the value of education for
shaping a brighter generation
kiosks have rendered benefit to individuals and small
businesses in creating revenue and unemployment
reduction.
Small and Medium Business Enterprise Center Project
As an implementation of the Summit Conference XI of 15
Governments’ Declaration in Jakarta on May 25, 2001
which has appointed Indonesia to be coordinator for the
development of Small and Medium Enterprises (SME), the
company together with Bank Rakyat Indonesia and Center
of Development of Small Medium Enterprises (CD-SMEs)
has developed information system and e-commerce
network throughout nine cities. One of the objectives is
to provide integrated services for the SMEs to access the
information, market, standardization, banking,
tecknology and management through SME Center. Telkom
has developed infrastructure and access to information
and communication as well as application of e-commerce
that enables the community to access the web-site:
www.sme-center.com
Museum (Galery) Telekomunikasi (“Mustel”)
Mustel is located in the tourism resort of Taman Mini
Indonesia Indah (TMII) Jakarta and was officially opened
on April 20, 1991. The establishment of Mustel was funded
by PT Telkom (47,14%), PT Indosat (47,14%), and PT Inti
(5,72%). As of December 31, 2001, all 21 staff of Mustel
were Telkom’s employees and remunerated by Telkom.
Other operating expenses are collectively provided by
PT Telkom (45%), PT Indosat (40%) and PT Inti (15%).
Mustel provides facilities for documentation and media
for information exchange on telecommunication
technology. The main mission is to absorb, gather, review,
and distribute information, communication, publicity and
education in relation to the story of telecommunication
in Indonesia, its development and prospects.
Through Mustel, Telkom provides the community with
education and recreation facility by presenting visual aid
as well as information on the history, the development,
and trends of telecommunication technology to visitors.
 MANAGEMENT PROFILE

<< Bacelius Ruru, Chairman of the Board of Commissioners

Chairman of TELKOM since April 2000. Secretary to the Minister of state-owned enterprise
(2001 to date). Chairman of the Jakarta Stock Exchange (2001 to date). Chairman of the
Jakarta Initiative Task Force since 2000. Chairman of PT Perkebunan IV (1999-2001).
Chairman of PT Sucofindo (1998 to date). Deputy Minister of Investment and State-
Owned Enterprises in charge for Supervising and Control of the Ministry and formerly
as Deputy for Mining and Agro-Industry Business in the same Ministry (1998-2000).
Director General of the State-Owned Enterprise in Ministry of Finance. (1995-1998).
Chairman of Capital Market Supervisory Agency in Ministry of Finance (1993-1995).
Head of Legal Bureau and Public Relations of the Ministry of Finance (1987 -1993). In
charge of director/head of some directorates/institutions in Ministry of Finance (1975-
1993). Graduate of Faculty of Law, University of Indonesia, Jakarta (1975). Harvard Law
School (1981).

<< Noor Fuad,

Commissioner
<< Rahardjo Tjakraningrat,
Commissioner Commissioner of TELKOM since April
2000. Head of Training and Education
Commissioner of TELKOM since April 2000. Board, Ministry of Finance (2001 to
Commissioner of PT Multi Eka Karma (2000 to date). Secretary General, Ministry of
date). President Director of PT. Multi Eka Karma Finance (2000-2001).Commissioner of
(1996 to 2000). President Director of PT Inhutani III, Ministry of Forestry
PT Telesarana Adi Prima (1995 to 1997). (1987-1994). Commissioner of
Director of Finance of PT.BELTDC (1992 to PT Pelabuhan Indonesia I Medan (1995
1995). Director of Commercial of PT Rajasa to1998). Senior Executive Advisor in
Hasanah Perkasa/Era Mobitel (1986 to 1991). Human Resources to the President
Graduate of Faculty of Law, University of Director of PT Rajawali Nusindo (1997
Indonesia (1966). to date). Commissioner of PT Pelabuhan
Indonesia III Surabaya (1998 to date).
Commissioner of PT Perkebunan
Nasional VIII Jawa Barat (1999 to date).
Commissioner of PT BRI Sanwa - Finance
(1999 to date). Graduate of Faculty of
Economics, Gajah Mada University,
Yogyakarta (1972). M.Sc. in Political
Economics, University of Illinois (1986).

>> Purnomo Sidhi, >> Andi Siswaka Faisal,

Commissioner Commissioner
Commissioner of TELKOM since
April 2000. Head of Training and Commissioner of TELKOM since April
Education Board, Ministry of 2000. Director of Planning and
Communication and Technology of PT TELKOM (1996-2000),
Transportation (2000 to date). Vice President of Corporate and
Senior Executive Advisor to the Technological Planning of PT TELKOM
Minister of Communication (1997 (1995-1996), General Manager of
to date). Indonesian Air Force Corporate Planning of PT TELKOM (1993-
Operation Commander II (1996 to 1995).Head of the North Jakarta Regional
1997). Vice Commander I of Telecommunication Office (1991-1993).
Indonesian Air Force Operation Head of the Kebayoran Baru Service
(1994 to 1996). Senior Executive Office (1990-1991). Graduate of Electrical
Advisor to the Chief of Engineering, Trisakti University, Jakarta
Indonesian Air Force (1992 to (1983). Master of Science, American
28 1993). Graduate of Indonesian Air World University (1998).
Force Academy (1968). Air-Flight
• Instructor School (1977). School
of Staff and Commander of
Indonesian Air Force (1985).
29 S.I.D.M.C., USA (1995).
 << Muhammad Nazif, President Director and CEO

President Director of TELKOM since April 2000, Vice Rector, University of Indonesia
(1994-2000). Executive Director Islamic Development Bank (1990-1991). Member of
Deregulation Team, Ministry of Finance (1990-1993). Member of Efficiency Improvement
Team of State-Owned Enterprises, Ministry of Finance (1989-1991). President Director
Bank Umum Koperasi Indonesia (1985-1989). Executive Director Bank Duta Ekonomi
(1972-1979). Citibank (1968). Graduate of Economics Faculty, University of Indonesia
(1973). MBA, Katholieke University, Leuven, Belgium (1981).

>> Mursyid Amal, >> Komarudin

Director of Finance Sastrakoesoemah,
Director of Operations &
Director of Finance of TELKOM Marketing
since April 2000. Chairman of
Logistic Assistance Group,
Director of Operations and Marketing of
TELKOM Corporate Office (1997 -
TELKOM since April 2000. Head of
2000). Logistic General Manager
TELKOM’s Development Division (1997-
TELKOM (1995-1997). Logistic
2000). Member of Blue Print Development
General Manager TELKOM, Jakarta
Team, Directorate General Post and
Regional Division (1992-1995).
Telecommunications (1999). Member of
Magister Management (MM).,
KSO Development Team (1994-1995). Chief
Bandung School of Management
of Regional Division IX Kalimantan (1992-
(1997). Graduate of Economics
1993). Graduate of Electrical Engineering,
Faculty, Islamic University of
Bandung Institute of Technology, Bandung
Nusantara, Bandung (1986).
(1976).

<< Kristiono, Director of << Taufik Akbar, Director

Planning & Technology of Human Resources
Development
Director of Planning and Technology of
TELKOM since April 2000. Head of TELKOM’s Director of Human Resources
Regional Division V, East Java (1995-2000). Development of TELKOM since
Head of TELKOM’s Project IV (1992-1995). April 2000. President Director of
General Manager of TELKOM’s Logistic PT Aplikanusa Lintasarta (1994-2000).
Department (1990-1992). Deputy of Executive General Manager for Palapa
Telkom’s Chief Regional Division VIII Satellites Operation of TELKOM
Denpasar (1989- 1990). Technical Manager, (1992-1993). General Manager
PT Telkom (1978- 1989). Graduate of Telecommunication Planning of TELKOM
Electrical Engineering, Surabaya Institute of (1990-1992). Manager Satellite
Technology, Surabaya (1978). Transmission Planning of TELKOM (1983-
1989). Astronaut Training for Indonesian
Candidate (Payload Specialist) NASA,
Houston, Texas (1986). Graduate of
Electrical Engineering, Bandung Institute
of Technology, Bandung (1975).
Telecommunications Management
Course, Vancouver, Canada (1991).
 TELKOM’S BUSINESS PORTFOLIO

TELKOM
Corporate

Core Division Support Division Business Projects Affiliated & Subsidiary

Division I Sumatra Information System Division Enterprise Dayamitra
Division II Jakarta Training Division Cable TV Graha Sarana Duta
Division III West Java Property Division Calling Card & Payphone Indonusa
Infomedia
Division IV Central Development Division Intelligent Network
Telkomsel
Division V East Java Repair Division VoIP
Telesera
Division VI Kalimantan Research & Development Business to Business
Division VII Eastern Part of Division International Business Citra Sari Makmur
Indonesia Komselindo
Network Division Menara Jakarta
Multimedia Division Metrosel
Mobisel
Multimedia Nusantara
Napsindo
Pasifik Satelit Nusantara
Patrakom

Babintel
Bangtelindo
Ratelindo

30

31
A S S O C I AT E D C O M PA N I E S

The following table depicts Telkom’s ownership in associated companies as of December 31, 2001:

Telkom s
Company Name Ownership Business Operations
(%)

Percentage of ownership more than 50%:

PT Dayamitra Telekomunikasi (“Dayamitra”) 90.32 Telecommunications (KSO-VI Kalimantan)
PT Graha Sarana Duta (“GSD”) 99.99 Property
PT Indonusa Telemedia (“Indonusa”) 57.50 Multimedia (Pay TV, internet)
PT Infomedia Nusantara (“Infomedia”) 51.00 Telecommunications information services
PT Telekomunikasi Selular (“Telkomsel”) 77.72 Telecommunications (GSM cellular)
PT Telekomunikasi Selular Raya (“Telesera”) 69.77 Telecommunications (AMPS cellular)

Percentage of ownership between 20% to 50%

PT Citra Sari Makmur (“CSM”) 25.00 VSAT and consulting services
PT Komunikasi Selular Indonesia (“Komselindo”) 35.00 Telecommunications (AMPS cellular)
PT Menara Jakarta 20.00 Infrastructure for multimedia services
PT Metro Selular Indonesia (“Metrosel”) 20.17 Telecommunications (AMPS cellular)
PT Mobile Selular Indonesia (“Mobisel”) 25.00 Telecommunications (NMT-450 cellular)
PT Multimedia Nusantara 31.00 Multimedia
PT Napsindo Primatel Internasional (”Napsindo”) 32.00 Network Access Point
PT Pasifik Satelit Nusantara (“PSN”) 22.57 Satellite transponder and communications
PT Patra Telekomunikasi Indonesia (“Patrakom”) 30.00 Telecommunications (VSAT)

Percentage of ownership less than 20%

PT Batam Bintan Telekomunikasi (“Babintel”)
PT Pembangunan Telekomunikasi Indonesia
(“Bangtelindo”)
PT Radio Telepon Indonesia (“Ratelindo”)
5.00 Telecommunications
(in Batam and Bintan islands)
3.18 Construction and consulting
12.86 Telecommunications (fixed wireless)
 C O N TA C T I N F O R M AT I O N

PT Telekomunikasi Indonesia, Tbk

CORPORATE OFFICE
Jl. Japati No. 1, Bandung 40133
Tel: (022) 4521108, Fax: (022) 4521408

CORE DIVISION SUPPORT DIVISION

Regional Division I Sumatera Training Division
Jl. Prof. H.M. Yamin, SH. No. 2, Medan 20111 Jl. Gegerkalong Hilir No. 47
Tel: (061) 4151747 Bandung 40152
Fax: (061) 4150747 Tel: (022) 2013930, 2013238
Fax: (022) 2014429
Regional Division II Jakarta
Jl. Jend. Gatot Subroto Kav. 52, Jakarta 12710 Research and Development Division
Tel: (021) 5215100 Jl. Gegerkalong Hilir No. 47
Fax: (021) 5202733 Bandung 40152
Tel: (022) 2014403
Regional Division III West Java Fax: (022) 2014669
Jl. W.R. Supratman No. 66
Bandung 40261 Property Division
Tel: (022) 4523801 Jl. Cisanggarung No. 2
Fax: (022) 7206541 Bandung 40133
Tel: (022) 4521630
Regional Division IV Central Java Fax: (022) 4521631
Jl. Pahlawan No.10, Semarang 50241
Tel: (024) 8302312 Repair Division
Fax: (024) 8302313, 449980 Jl. Japati No. 1, 4th Floor
Bandung 40133
Regional Division V East Java Tel: (022) 7206520
Jl. Ketintang No. 156, Surabaya 60231 Fax: (022) 4524125
Tel: (031) 8286000
Fax: (031) 8286080 Information System Division
Jl. Japati No. 1, 4th Floor
Regional Division VI Kalimantan Bandung 40133
Jl. M.T. Haryono No. 169, Balikpapan 76114 Tel: (022) 4524227
Tel: (0542) 873500 Fax: (022) 7201890
Fax: (0542) 873040
Development Division
Regional Division VII Eastern part of Indonesia Jl. Japati No. 1, 6th Floor
Jl. A.P. Pettarani No.2, Makassar 90221 Bandung 40133
Tel: (0411) 330777 Tel: (022) 4525441
Fax: (0411) 869889, 330977
Multimedia Division
Network Division Jl. Kebon Sirih No.37, Jakarta 10340
Jl. Japati No. 1, 2nd Floor Tel: (021) 3160500
Bandung 40133 Fax: (021) 3160300
Tel: (022) 4522315
Fax: (022) 4522321

32
Investor Relations Unit
• Jl. Japati No. 1, 7th Floor, Bandung 40133
Tel: (62-22) 4527337 Fax: (62-22) 7104743
33
 F I N A N C I A L S TAT E M E N T S

INDEPENDENT AUDITOS’ REPORT 40

CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2000 and 2001
and for each of the three years
in the period ended December 31, 2001

Consolidated Balance Sheets 51

Consolidated Statements of Income 53

Consolidated Statements of Changes in Equity 54

Consolidated Statements of Cash Flows 57

Notes to Consolidated Financial Statements 59

48
•

49
 Annual Report for the year 2001
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia, Tbk
is signed by the Board of Commissioners and Board of Directors
on May 10, 2002

Bacelius Ruru
Chairman

Rahardjo Tjakraningrat H. Noor Fuad

Commissioner Commissioner

Purnomo Sidhi Andi Siswaka Faisal

Commissioner Commissioner

Muhammad Nazif
President Director

Komarudin Sastrakoesoemah Mursyid Amal

Director Director

Taufik Akbar Kristiono

Director Director