IFRS 15 Gap Assessment

PT Telekomunikasi Indonesia
Tbk IFRS 15
Gap impact assessment and
position papers
Contents
Executive summary 3 Comparative studies 37
Testing strategy 5 Comparative studies - global 40
Telkom parent revenue streams 6 Gap impact & position paper 44
Revenue stream identification – Telkom parent 7 1. Identifying the contract 45
Revenue sub-stream identification – Telkom parent 8 2. Identifying performance obligations 103
Revenue stream identification – Subsidiaries 9 3. Determining the transaction price 224
Summary gap impact 12 4. Allocating the transaction price 267
Summary of five steps revenue recognition 13 5. Recognising revenue 289
Main IFRS 15 decision/analysis points 14 6. Other consideration 294
Overview of gap analysis at Telkom parent 15 Presentation and disclosure 327
List of potential IFRS 15 issues 16 Appendix 339
Summary of relevant accounting issues analyzed 24 Appendix A - IAS 18 340
Key accounting gaps/issues identified 30 Appendix B - IFRS 15 359
Solution map – a summary of solutions devised to address the gaps 32 Application guidance – ‘Indihome Assessment’ 368
[client name] IFRS 15 [date]

PT Telekomunikasi
PwC Indonesia Tbk - IFRS 15 2
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Executive
summary
PT Telekomunikasi Indonesia Tbk – IFRS 15

PwC
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Executive summary
The three phases and seven deliverables for implementation of IFRS 15 “Revenue from contract
with customer”
As a foreign private issuer in New York Stock Exchange (“NYSE”), PT Telekomunikasi Indonesia Tbk. (“Telkom” or the “Company”) is subject to Sarbanes-
Oxley Act Section 404 and are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and
procedures for financial reporting, which include an assessment for the effectiveness of such internal controls and procedures.
Key deliverables
This document along with other deliverable we have submitted to you, summarises
the result of our testing strategy under each of the eight elements shown below:
Accounting
1. Revenue streams established to segregate IFRS 15 implementation to a group of
• General accounting revenue source based on its risk and complexity, it will consider all revenue
policies streams include other income and share of profit from JVs/associates. The
What we’ve
• Implementation revenue stream is identified for active products as at 31 December 2017 and
done in Phase 1:
guidance through updated accordingly until 31 December 2018;
• Project set-up position papers
2. Accounting gap, solutions and implementation strategy. For each revenue
• Gap analysis: Business stream, we mapped the solutions and the respective implementation strategy;
o Telkom parent only process
o Key subsidiaries • Add/upgrade 3. Business process are changed following changes in risks. Missing controls are
RCM related added and existing controls are upgraded to make it ready for IFRS 15
to IFRS 15 implementation;
What we’ve done in • Add/upgrade 4. IT tools are designed to help rationalize how myriad transactions are processed
Phase 2: IT System control/SOP
• Develop so they can fully comply with IFRS 15 requirement. Providing balance between
related to compliances and user conveniences;
• Review and comment; workaround IFRS 15
• 3 work streams: solution - data 5. Transition adjustment will be produced as the basis for 31 December 2017
o Acc. policy, tabulator and adjustment to the retained earnings. It will also be considered an adjustment to
o Buspro,; and calculator deferred tax and investments in JVs/associates.
o IT System • Assistance to
6. IFRS reconciliations provide key disclosure between the Company’s filing in
implementation of
Indonesian stock exchanges and NYSE;
ultimate solution
7. Year-end 31 December 2018 adjustments will be produced as the basis for 31
December 2018 adjustments. In addition to adjustment to financial statements,
it will also consider key disclosures requirements;
8. Future development provide a list and future options that can be improved
regarding accounting policies, NCX and SAP RAR.
PT Telekomunikasi Indonesia Tbk - IFRS 15
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Testing strategy

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Telkom parent revenue streams
The accounting for revenue under IFRS 15 is complex, resulting in higher inherent
risks of material misstatement from both intentional and/or unintentional errors
for certain assertions. Furthermore, the assessed level of inherent risk may vary
among different types of revenue streams which reflects the characteristics,
measurement basis and transaction flow attributable to certain revenue
transactions. Accordingly, performing an accounting gap analysis on revenue
stream level is essential to the initial stage of IFRS 15 implementation.
We have segregated Telkom group’s revenue source into six types of revenue
streams (exclude lease and other income as those streams fall outside the scope of
IFRS 15) based on our understanding of the characteristic of the revenue
transaction (e.g. complexity of the arrangement), measurement of the transaction,
and the transaction flow. The revenue stream identification process has been
tailored to support the particular needs of IFRS 15 implementation strategy.
From each identified stream, we also identify the sub-streams, which provide more
granular analysis on Telkom group’s product, customer and/or each product cash
flow/billing schedule as they also provide meaningful information for the
implementation of IFRS 15.
To ensure the completeness of stream identification, we start the analysis from the
revenue line items in audited financial statement. To ensure the completeness of
sub-stream identification, we download the information directly from each
Company order/production information system, include checking of the entity’s
website. We also include other income and share of profit of associates/JVs.
n flow
Chara
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Meas
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Consist of: Consist of: Consist of:

• Contract • Deliverables • Order system
volume • Unit of measurement • Tariff
• Customer type • Timing of revenue • Fulfillment
• Complexity recognition

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Revenue stream identification – Telkom parent
Our analysis started from the audited financial statements line items of each entities in Telkom group. Set out below is our key analysis of the Telkom parent company.
Note:
1) Figures are presented after 2) Deliverables: service or goods 4) Timing: overtime/point-in- 6) Tariff: predefined/negotiable
elimination 3) Unit: unit/speed/link time/percentage-of-completion 7) Fulfilment: time/usage/event
5) Customer type: personal/
PT Telekomunikasi Indonesia Tbk - IFRS 15 corporate/government
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Revenue sub-stream identification – Telkom parent
We download the product information directly from each Company order/production information system. Below are our key analysis for Telkom parent company,
include checking to the entity’s website.
Consumer - Retail Consumer – Retail EBIS – Solutions EBIS - Connectivity

(continued) (continued)
1. POTS Usage - billed monthly 11.Add on internet 8. Corporate DNAPS Milestone 1. Connectivity
payments
2. POTS Monthly 12.Add on pay TV 2. Non-connectivity standard product
9. Corporate Solution + Consumer
3. Internet Monthly 13.Add on POTS 3. Lease
products Monthly
4. POTS + Internet Monthly* 10.Corporate Solution + Consumer
5. Internet + UseeTV Monthly products Usage WIBS - Connectivity
6. POTS + Internet + UseeTV 11.Corporate Solution + Consumer
Monthly products One Time Charge Connectivity
7. POTS + Internet + UseeTV + 12.Corporate Solution + Consumer
Digital content (free product) products Milestone payments WIBS - Interconnection
Monthly
8. "POTS + Internet + UseeTV +
EBIS - Solution Interconnection
Point Indihome *)*) Applicable
only for customers that satisfy
the criteria set out in 1. Corporate Solution (oo) Monthly WIBS - International roaming
https://indihome.co.id/point- 2. Corporate Solution (oo) Usage
rewardMonthly*"
3. Corporate Solution (oo) One Interconnection
9. "POTS + Internet + UseeTV + Time Charge
Digital content (free product) +
poin indihome*)*) Applicable 4. Corporate Solution (oo)
Other income
only for customers that satisfy Milestone Payments
the criteria set out in 5. Corporate DNAPS Monthly
https://indihome.co.id/point- Other income
6. Corporate DNAPS Usage
rewardMonthly*"
7. Corporate DNAPS One Time Share of profit
10.Minipack UseeTV Channel
Monthly Charge
Share of profit of associates/JVs

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Summary gap
impact

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Summary of five steps revenue recognition
Step 1: Identify the contract with the customer

The first step of revenue recogntition s to determine if a contract
exists and whether that contract is with a customer.
Step 2: Identify the performance obligations in the

contract
The second step of revenue recognition is to identify the
performance obligations. A performance obligation is a promise to
transfer a distinct good or service (or a series of distinct goods or
services that are substantially the same and have the same pattern
of transfer) to a customer.
Step 3: Determine the transaction price

The third step of revenue recognition is to determine the transaction
price. The transaction price is the amount of consideration that an
entity expects to be entitled to in exchange for transferring promised
goods or services to a customer, excluding amounts collected on
behalf of a third party (for example, some sales taxes).
Step 4: Allocate the transaction price

The fourth step of revenue recognition is to allocate the transaction
price.
Step 5: Recognise revenue when (or as) a performance

obligation is satisfied
This is the final step of the five step model which is when revenue is
recognized when the performance obligations are satisfied by
transferring the goods or service to the customer. We looked at how
control either transfers over time or at a point in time, which affects
when revenue is recorded.
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Main IFRS 15 decision/analysis points
Our approach for analysis has followed the five-step model set out in IFRS 15. The model applies to all types of contracts with customers, whether these are for
equipment, services or long-term construction contracts. The six areas below are the main decision points within IFRS 15. We have adopted this framework in our high
level impact analysis in this phase.
Main discussion points:

 Identification of required criteria to be met before Telkom account
contract with customer based on guidance in IFRS 15 Main discussion points:
 New requirement – collectability assessment to ensure economic  Method of allocating transaction price using
substance of contract relative stand-alone price (“SSP”)
 Contract management in Telkom  Determine SSP to all Telkom’s product
 Determining contract term Step 4
Step 1
 Contract combination
Identifying the Allocating the
 New concept - Contract modification transaction price
contract
to all POs
Main discussion points: Main discussion points:

Step 2
 Identification of performance  Timing or revenue recognition
Identifying Step 5
obligations from contract  Hierarchy timing of revenue
 Material right – option to purchase
additional goods and services
Performance
Obligation IFRS 15 Recognizing
revenue
recognition
 Renewal options (“PO”)
Step 3 Other
Determining Contract cost

Main discussion points: the transaction Principal vs agent
Presentation and Main discussion points:
 New concept - Determining the transaction price
disclosure  New concept – Incremental costs of
price; potential adjustment to the contract price
 New concept - Variable consideration; potential obtaining a contract
forms of variable consideration in Telkom  Cost to fulfill a contract
 New concept – significant financing component  Principal versus agent
in Telkom contract with customers  Presentation and disclosure requirement

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Overview of gap analysis at Telkom parent
Revenue streams
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IFRS 15
In
issues
Highlighted
22 relevant
issues
17 types of There are 31 gaps/issues identified across

gap six revenue streams
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List of potential IFRS 15 issues
After careful consideration of the concepts governed in the new revenue standard, we have identified potential issues that may or may not applicable to Telkom’s
business practice. We have assessed all these potential issues to Telkom’s six revenue streams to ensure the completeness of our assessment.
No Detail potential issues Page reference

1. Identifying the contract
1.1a Identification of the contract – required criteria
As mentioned in the determination of
revenue streams, we have identified
which contract with customer that fall
outside the scope of IFRS 15.
1 Contract with customer partially in scope in another standard
For the detail refer to Position Paper
(“Posper”) “Identification of
performance obligation in Telkom’s
standard product”.
Mainly relates to arrangement contract
2 Contract between parties are agreed orally or by the customary business practice with Government. For the detail refer to
Posper 1 “Contract with Government”.
Mainly relates to arrangement contract
Telkom enters into an umbrella agreement that governs general term of the arrangement for future with Wholesale customer. For the detail
3
transaction (i.e. contract between Telkom and Wholesale customer) refer to Posper 2 “Fulfilment contract
with wholesale customer”.
Not applicable. Telkom satisfies the
4 Contract between Telkom and customer does not satisfy the criteria of contract under the standard contract criteria to all identified revenue
streams. Refer to Page 44 – 64.
Significant changes in fact and circumstances occurs after the criteria of contract is met (i.e. the subsequent Reassessment criteria, refer to page 65
5
collection is not probable) for detail.
6 Sales or transfer of non-financial assets (barter) Page 66
Contractual arrangement allows shared risk and benefit between the parties involved in the contract (JV Page 66
7
Contract)

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List of potential IFRS 15 issues – cont’d
1. Identifying the contract (continued)
1.1b Collectability of payment
8 Collectability assessment in Telkom contract with customer Page 67
1.1c Contract management – Link between multiple orders with underlying contracts
9 Incomplete information of a contract in iSiska system Page 68 - 69, and 77
10 Incomplete information of a contract in TiCares system Page 70 – 73, and 78
11 Incomplete information of a contract in NCX Page 74 – 76, and 77
1.2 Determining the contract term
12 Contract contains termination clause that allows unilateral termination without significant penalties Related to renewal and termination
clause contained in the contract with
13 Contract contains automatic renewal options on a periodic basis customer. For detail refer to Posper 3
“Accounting treatment for renewal
14 Contracts have no fixed duration / effective period option”.
1.3 Combination of contracts
15 Multiple contract enters near or at the same time with the same customer and negotiated together Related to renewal and termination
clause contained in the contract with
16 Criteria of a distinct performance obligation (Step 2) meets after combining two or more contracts customer. For detail refer to Posper 4
“Contract combination”.
1.4 Contract modification
Accounting treatment for contract
modification applies to all revenue
17 Amendment of contracts happen in Telkom’s revenue stream
stream has been discussed further in
Posper 5 “Contract modification”.

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2. Identifying performance obligations
2.1 Identification of performance obligations from the contract
1 Telkom exclude immaterial promised goods and services Page 104
2 Telkom provides customer with free products Page 106 - 108
3 Telkom has implicit promises in a contract based on its customary business practice Page 109
Further discussion are performed in
In providing the goods and services to the customer, Telkom performs activities that are not performance detail in Posper 6 “Identification of
4
obligation in the context of contract with customer (i.e. installation service) Performance Obligations for Standard
Products”.
Telkom frequently sell bundling
product. Further discussion are
5 Telkom frequently offers customer with bundling products
performed in detail in Posper 11
“Determination of SSP”.
6 Telkom offers warranty to its goods and services Page 109 - 110
7 Arrangement with customer involve shipment of goods or service Page 111
8 Arrangement customer involve bill and hold arrangement Page 111
9 Telkom enters into a contract with customer that allows consignment arrangement Page 111
10 Completeness of identified PO(s) in the contract (include free product). Page 111
11 Telkom has licensing arrangement with customer Page 112 - 114
Further discussion are performed in
detail in Posper 6 “Identification of
12 Telkom offers customer bespoke products
Performance Obligations for Standard
Products”.

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2. Identifying performance obligations (continued)
2.2 Material rights
13 Material right - Telkom consumer product offers option to purchase add-on products at market value Page 223 - 224
14 Material right - Telkom consumer product offers option to purchase add-on products at discounted value Page 223 - 224
15 Material right – Telkom’s offers customer loyalty program (i.e. MyIndiHome Point) Page 223 - 224
16 Customer do not exercise all of their rights or options in the arrangement Page 223 - 224
2.3 Renewal option
Related to renewal and
termination clause contained in
Telkom contract with customer contains
the contract with customer. For
17
detail refer to Posper 3
that impose customer with benefit to have a reduced price in the subsequent period
“Accounting treatment for
renewal option”.

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3. Determining transaction price
3.1 Determining transaction price
1 Telkom has customary business practice to provide discount to customer Page 227
2 Contract with non-cash consideration Page 227
3 Non-refundable upfront fees Page 228
Telkom might pay, or expect to pay, consideration to its customer that reduces amounts owed to Telkom by a Page 228 - 229
4
customer (either by cash or credit)
5 Consideration payable to Telkom customer’s customer Page 228 - 229
Payment to customer relates to anticipated contracts (i.e. Telkom make advance payments to customers to Page 229
6
reimburse them for costs to change vendors and/or to secure exclusivity in anticipation of future purchases)
Incorporated in agent vs principal
7 Contracts contain amount collected on behalf of other parties assessment in Posper 14 “Agent VS
Principal”.
3.2 Variable consideration
8 Method to estimate variable consideration Page 230
9 Variable consideration is constrained Page 230
Telkom offers prompt payment discount (i.e. Telkom might offer a 2 percent discount if an invoice is paid within Page 230
10
ten days of receipt)
11 Pricing to customer varies based on index Page 230
12 Volume discount applicable to series of distinct service / stand ready performance obligations Further assessment is performed
in Posper 9 regarding the
Pricing is based on a formula or a contractual rate per unit of output and there is an undefined quantity of outputs allocation of variable consideration
13
(i.e. usage based) in series of distinct service

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3.2 Variable consideration (continued)
Refer to Possper 9 “Variable
14 Contact contain Service Level Agreement (“SLA”) clause
Consideration”.
Telkom continues to perform under the terms of a contract with a customer that has expired while it negotiates Page 231
15
an extension or renewal of that contract
16 Contract contain price protection clause Page 231
17 Sales-or-usage-based royalties Page 231
3.3 Significant financing component
18 Contracts contain a financing component We have prepared separate Posper
to discuss further on the impact of
significant financing component in
19 Payment received more than one year in advance or one year after transferring goods and services Telkom. Refer to Posper 10
“Accounting treatment for
significant financing component”.
4. Allocating transaction price
4.1 Method of allocating transaction price
Allocation of transaction price (including discount) to all distinct performance obligations in the contract based Page 269
1
on the relative stand-alone selling price
2 Allocating variable consideration to a series of distinct goods or services Page 269
3 Allocating subsequent changes in transaction price Page 269
4.2 Determination of stand-alone selling price (“SSP”)
Refer to Posper 10 “Determination
4 Determination of stand-alone selling price to all of Telkom’s products
of SSP”.

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5. Recognising revenue
5.1 Timing of revenue recognition
1 Customer simultaneously receives and consumes Page 291 - 293
2 Enhance assets Page 291 – 293
3 Right to payment and no alternative use Page 291 – 293
4 Measure of progress over time (e.g. percentage of completion method, output method, and input method) Page 291 – 293
5 Revenue satisfied at a point in time Page 291 – 293
6 Timing of revenue recognition for license Page 291 - 293
5.2 Hierarchy timing of revenue recognition
7 Measuring progress when multiple goods or services are included in a single performance obligation Page 294
6. Other consideration
Ot1 Contract acquisition cost
1 Incremental cost in obtaining contract Detail discussion on all relevant

sales fee to Telkom refer to Posper
2 Determining the contract period to amortise the contract cost 12 “Contract Cost”.
Ot1 Contract fulfilment cost
3 Costs incurred in fulfilling the contract with the customer Detail discussion on all cost incur
to fulfil a contract has been
4 Determining the contract period to amortize the contract cost discussion in Posper 13 “Contract
fulfilment cost”.

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Ot 3 Principal versus agent consideration
Refer to Posper
5 Principal versus agent assessment is performed to all possible arrangements in Telkom
“Agent vs Principal”.
7. Presentation and disclosure
PD1 Presentation and disclosure Page 313-324
Separte working
PD2 Practical expedient paper will be
prepared.
PD3 Hierarchy of revenue classification Page 293
Reference to the standard Main discussion points Potential issues

Identifying the contract 6 17
Identifying performance obligations 3 17
Determining the transaction price 3 19
Allocating transaction price 2 4
Recognizing revenue 2 7
Other consideration 3 5
Presentation and disclosure 3 3
Total 22 72

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Summary of relevant accounting issues analyzed
Not a new concept. No gap between IAS 18 and IFRS New IFRS 15 concept. Changes (gaps) are expected
15. for Telkom.
IFRS 15 introduces some modifications (or new Issues are analysed but no significant gaps between
emphasises) to the existing IAS 18 concept. There Telkom’s existing policy under IAS 18 and IFRS 15.
may be changes (gaps) required for Telkom.
Revenue streams
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Assessment over the criteria required by
IFRS 15 before Telkom accounts for a
Identification of the contract contract with a customer under the
1.1a 60
– required criteria revenue standard.
Before recording revenue, Telkom needs to
ensure that it will be able to collect the
consideration to which the company is
entitled to in exchange for the goods or
services that Telkom will transfer to the
customer.
1.1b Collectability of payment 67
Further assessment is performed for
Telkom contracts with Government and
Wholesale as explained in Position
Paper (“Posper”) 1 and Posper 2.
Specific issues in Telkom contract

Determining the contract management. The absence of link between
term - link between multiple multiple orders with underlying contract
1.1c Gap 1 Gap 1 Gap 1 Gap 1 68
orders with underlying result in significant risk for Telkom to
contracts ensure the completeness of information
during contract review process.

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Summary of relevant accounting issues analyzed – cont’d
Revenue streams
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Determining the contract term is
important as it affects the result of the
remaining five-step model. We performed
1.2 Termination clause 79
further assessment on Telkom termination
clause and renewal option as documented
in Posper 3.
The assessment focuses on the

determination of what is “near or at the
1.3 Combination of contracts Gap2 Gap2 Gap2 Gap2 87
same time” as explained further in Posper
4.
IFRS 15 introduces a new concept on how

to account contract modification. We
1.4 Contract modification Gap3 Gap 3 Gap 3 Gap 3 93 performed further assessment on Telkom
termination clause and renewal option as
documented in Posper 5.
Consumer
Free product meets the criteria of distinct
performance obligations (“PO”) – page
106-108. Further assessment on what
constitutes a PO is elaborated in Posper 6
Identification of performance and Posper 7.
2.1 Gap 4 Gap 5 Gap 5 Gap 5 103
obligations in a contract Non-consumer
Highly related with Point 1.1c
Completeness of identified PO(s) in a
contract (include free product). Further
PT Telekomunikasi Indonesia Tbk - IFRS 15 assessment on what constitutes a PO
PwC 2013 elaborated in Posper 6. 22
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Material right: An option that provides a customer with
• option to purchase free or discounted goods or services in the
2.2 additional goods or Gap 6 221 future might be a material right.
service; Telkom performed further assessment on
• customer loyalty program material rights in Posper 6.
Telkom should assess a renewal or

cancellation option to determine if it
provides a material right similar to other
2.3 Renewal option 81 types of customer options.
Telkom performed further assessment of
renewal option in Posper 3.
Assessment of determining the transaction

Determining the transaction
3.1 245 price in Telkom group to concur whether
price
an adjustment is considered necessary.
The assessment focus on possible variable

consideration from expected usage, Service
Level Guarantee (“SLG”) / restitution
clause in Telkom contract with customer,
3.2 Variable consideration Gap 7 Gap 8 Gap 8 228
and volume discount in Telkom
interconnection service. Further
assessment is performed in Posper 8 and
Posper 9.

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Revenue streams
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Assessment of whether Telkom’s
Co
Significant financing transaction with customer contains
3.3 Gap 9 245
component financing activity. Further assessment is
in Posper 10.
Assessment of the requirement of the

Gap 10 standard to allocate the transaction to
Method of allocating Gap
4.1 Gap 11 Gap 13 258 each separate performance obligation so
transaction price 13
Gap 12 that revenue is recorded at the right time
and in the right amounts.
Assessment to determine the most

suitable and relevant stand-alone selling
Determination of stand- Gap price approach to each Telkom revenue
4.2 Gap 14 Gap 15 259 stream.
alone selling price (“SSP”) 15
We have performed detail assessment on
the approach in Posper 11.
Revenue is recognized when or as

performance obligations are satisfied by
Timing of revenue
5.1 Gap 16 279 transferring control of promised goods or
recognition
services to a customer. Timing does not
affect the transfer of control.
Telkom often provides server (point in

time) and connectivity service (overtime)
Hierarchy timing of revenue to a customer that constitute only one
5.2 281
recognition distinct PO. Telkom should establish a
policy to govern transfer of control of such
PT Telekomunikasi Indonesia Tbk - IFRS 15 products (Policy 1)
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Telkom sometimes incurs costs to obtain
a contract with a customer, such as sales
commission paid to Avenger.
Ot1 Contract acquisition cost Gap 17 287 Further assessment should be performed
to assess whether that cost meets the
contract costs criteria as described in
Posper 12.
Telkom sometimes incurs costs to fulfil

their obligations under a contract once it
is obtained, but before transferring goods
or services to the customer (i.e.
Ot2 Contract fulfillment cost 302 installation fee).
Further assessment should be performed
to assess whether that cost meets the
contract costs criteria as described in
Posper 13.
Telkom should identify whether it is the

principal or an agent in an arrangement
that involves multiple parties.
Ot3 Principal versus agent 309
Further assessment on each possible
business scheme in Telkom is performed
in Posper 14.

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Checklist of all necessary disclosure to
PD1 Presentation and disclosure 313 prepare Telkom’s statutory financial
statement.
Complete list of all the practical expedient

PD2 Practical expedients 316 adopted by Telkom in implementing IFRS
15.
Policy on revenue classification for any

Hierarchy of revenue
PD3 ? combination of provision of services and
classification
products (Policy 2).
Total relevant issues analysed 22 22 22 22 22 22 132
Total gap differences identified 9 9 5 6 1 1 31
Priority 1: Impact to net income, amount above Rp 50 billion, Priority 2: Reclassification – no impact to net income, amount above Rp 50 billion
Priority 3: Amount less than Rp 50 billion

PwC 2013 26
Key accounting gaps/issues identified
Consumer EBIS
Solution
Priority 1:
1 gap Impact to net income
WIBS Priority 2:
EBIS Connectivity Reclassification – no impact to net income
8 gaps Connectivity
Priority 3:
8 gaps Significant financing component &
discussions on variable consideration
WIBS
International WIBS
6 gaps Interconnection
1 gaps 5 gaps Roaming
1 gap 1 gap
We have carried out several procedures to obtain a thorough understanding of From the total of 31 key accounting gaps identified, there are nine gaps
Telkom’s accounting policies on all the revenue streams. We interviewed the (29%) classified as Priority 1 issues, 19 gaps (61%) are included as Priority 2
relevant finance and sales team of the relevant divisions, reviewed a sample of issues, and three gaps (10%) were identified as Priority 3 issues.
the customer contracts, obtained the relevant supporting documents (i.e. Nota Most of the Priority 1 gaps are concentrated in EBIS solution revenue
Dinas “NODIN”, etc), as well as performing a walkthrough to understand the
stream. The IFRS gaps created by these issues is likely to affect Telkom’s net
existing financial reporting process.
income with a total aggregated impact is expected to be more than Rp 50
We identified a total of 31 gaps / issues across the six revenue streams. Each billion. As a result, Telkom needs to immediately address these gaps in
of these issues can be classified into three level of priorities depending on: the order to quantify the opening balance adjustments. Most of the consumer
magnitude of the expected adjustments; whether the issues will result in P&L and connectivity revenue streams, on the other hand, are made up of
adjustments or simply a reclassification between different revenue line items, Priority 2 gaps. These are issues that will not change the bottom line net
etc. Please refer to the graph above where we show the distribution of those 31 income of Telkom, instead they contribute to the reclassifications of
issues across the six revenue streams. different revenue line items.
*From past experiences, management believes that Rp 50 billion is
sufficiently low such that any potential adjustments within this population
PT Telekomunikasi Indonesia Tbk - IFRS 15 can reasonably be expected not to have a material impact upon the Telkom
PwC group. 27
Key accounting gaps/issues identified – cont’d
One issue may need to be resolved using more than one approach. Deciding the right approach will depend on the characteristic of the risks and
customer contracts. For example, a common risk identified across a portfolio of relatively similar, or homogenous, contracts can be effectively
addressed using a custom designed IT solution. On the other hand, a host of issues identified in bespoke contracts can be only be resolved after each
individual contract is manually reviewed and the impacts are quantified on a contract by contract basis. In general, there are three approaches:
• Position papers
We use accounting position paper to thoroughly discuss the identified issue in detail. There are two possible outcomes :1) Telkom concludes that
its existing practice has conformed with the requirements of IFRS 15, or 2) Telkom’s existing practice can no longer continue. Therefore, further
assessment and quantification is necessary.
• Manual quantification
The impact of IFRS 15 implementation is quantified manually by management using a combination of excel spreadsheet, input data from system
applications; and
• IT Solution
The impact of IFRS implementation is address through WP Reviewer or IFRS 15 Calculator or utilizing existing tools in the system.
Responses from
12 25
business process
Total 25 solutions 2
for 31 issues 11
identified across
the revenue
streams Requires further
7 assessment/quantification
Position p... Manual quanti... IT Solu... T

PwC 28
Solution map – a summary of solutions devised to address the gaps
Solution
Issues Revenue Reference control business
No Revenue streams Position Manual IT
identified sub-stream *) process
paper quantification Solution
Consumer All product IB.02.01 M1 – M4
No direct link
between EBIS Solution Solution
multiple Solution + connectivity Yes
Gap 1 orders with Solution + consumer - -
products WP
the Reviewer
underlying EBIS Connectivity Connectivity
contract
WIBS Connectivity Connectivity
Consumer B2B Separate deliverable
Multiple
contracts are EBIS Solution Solution Yes IB.02.02 – M1
entered at the Solution + connectivity Yes &
Solution + consumer Posper 4- Application Control CAL-APP-
Gap 2 same time “Contract - WP
and products 01
combination” Reviewer
negotiated EBIS Connectivity Connectivity
together
WIBS Connectivity Connectivity
Consumer B2B Yes Separate deliverable
Adjustment Posper 5-
EBIS Solution Solution IB.02.02 – M1 & M3
to contract “Accounting
Solution + connectivity Yes &
modification treatment for
Solution + consumer Application Control
follows the contract IFRS 15
Gap 3 products - WP-APP-17 & CAL-APP-01
type of modification” Calculator
modification EBIS Connectivity Connectivity IB.02.02 – M1
set out in &
IFRS 15 WIBS Connectivity Connectivity Application Control
WP-APP-17 & CAL-APP-01
*) all type of billing (e.g. monthly, usage, OTC, and POC), unless otherwise stated
**) Color in column Revenue stream and Revenue sub-streams correspondence to its priority
PwC 29
Solution map – a summary of solutions devised to address the gaps –
cont’d
Solution
Manual Reference
Revenue quantification control
No Issues identified Revenue streams Position
sub-stream *) IT Solution business
paper process
Gap 4 Free products meet Consumer IndiHome 3p Yes - Yes Separate

the criteria of deliverable.
Posper 5 - Update existing
distinct PO (i.e.
“Accounting script
iFlix)
treatment for
contract
modification”
EBIS Solution Solution Yes - Yes IB.02.02 –
Solution + connectivity M3
Posper 6 - WP Reviewer
This issue relates Solution + consumer
“Identification
directly to GAP 1 products
Performance
Completeness of EBIS Connectivity Connectivity Obligation for N/A
Gap 5 identified PO(s) in Standard
WIBS Connectivity Connectivity Products” N/A
the contract
(include free Posper 7 –
product). “Performance
obligations on
CPE”
Consumer IndiHome 3p Yes - Yes Refer to
Customer loyalty position
Posper 6 - Update existing
program meets the paper.
“Identification script
Gap 6 criteria of material Existing
Performance
rights under IFRS Control
Obligation for
15 H.01.01 – C2
Standard
Products”
PwC 30
cont’d
Solution
Issues Revenue Reference control
No Revenue streams Position Manual
identified sub-stream *) IT Solution business process
paper quantification
Gap 7 Consider possible EBIS Solution Solution - - Yes IB.02.02 – M5
adjustment of Solution + connectivity &
IFRS 15
transaction price Solution + consumer Application Control
Calculator
from expected products CAL-APP-01
usage Applicable only for
good or service billed
based on usage
Consider possible WIBS Interconnection Yes - - Refer to position paper.

adjustment of Interconnection Existing Control
Posper 9 –
transaction price H.01.01 – C2
Gap 8 WIBS International International roaming “Volume
with the expected Roaming discount on
usage and tier interconnectio
pricing. n services”
EBIS Solutions Solution Yes Yes - Refer to position paper.
Consider possible Solution + connectivity Existing Control
adjustment of Posper 10 – Posper 10 –
Solution + consumer H.01.01 – C2
transaction price “Accounting “Accounting
products
Gap 9 from financing treatment for treatment for
activity - Applicable only for significant significant
expected not to good or service billed financing financing
be material based on milestone component” component”
payment or OTC

PwC 31
cont’d
Solution
Manual Reference
Revenue Revenue quantification control
No Issues identified Position
streams sub-stream *) IT Solution business
paper process
Gap 10 MEA - Reallocate revenue that - - Yes Separate

is allocated to STB from deliverable
Update existing
DATIN to Pay TV
script
Gap 11 MEA - Allocate transaction - - Yes
price to free products based its
Consumer Indihome 3p Update existing
SSP
script
Gap 12 MEA - Allocate transaction - - Yes
price to material rights (i.e.
Update existing
customer loyalty program)
script
based on its SSP
EBIS Solution Solution - - Yes Application
MEA - Allocate transaction Solution + connectivity Control CAL-
IFRS 15
price to all identified PO(s) APP-01
Calculator
Gap 13 (include free products) in a Solution + consumer
contract based on its relative products
SSP WIBS Connectivity
Connectivity
EBIS Solution Solution Yes - - IB.02.02 –
Determination of SSP for M3
Gap 14 Posper 11 -
solution using cost + margin “Determinatio
n of SSP”
*) all type of billing (e.g. monthly, usage, OTC, and POC), unless otherwise stated,

PwC 32
cont’d
Solution
Reference
Revenue Manual control
No Issues identified Revenue streams Position
sub-stream *) quantification IT Solution business
paper process
Gap 15 Determination of EBIS Connectivity Connectivity Yes - - IB.02.05 –

SSP for M-4
WIBS Connectivity Connectivity Posper 11 -
connectivity or
“Determination
non-connectivity
of SSP”
standard product
using observable
input or tariff -
RDM
Recognition EBIS Solution Solution - - Yes IB.02.02 –
revenue based on Solution + connectivity M-3-7
IFRS 15
transfer of control. Solution + consumer &
Calculator
Gap 16 Timing of billing products Application
does not affect the Control CAL-
recognition of APP-01
revenue
Capitalisation and Consumer Indihome 2p Yes Yes - IB.03.02-M1
amortisation of Indihome 3p &
Posper 12 -
contract Separate Existing
Gap 17 “Contract
acquisition cost working paper control
Acquisition
(i.e. commission to calculate H.01.01.03_
costs”
paid to Avengers) impact. C07b

PwC 33
Comparative
studies

PwC
PwC 34
Another study that focuses on Asian market and other global Telcos
that are similar in size compared to Telkom
We studied comparative peer companies in

Asia and worldwide, with annual revenues
Costs to obtain/ fulfill a contract 82%
that are similar in size compared to
Telkom’s. We focus our assessment using the
following criteria:
Timing of revenue recognition (no longer subject to contigent revenue cap for CPE delivered) 64%
• Asian telecommunication companies
subject to mandatory application of IFRS
Allocation of transaction price based on SSP 64% 15 in 2018; and
• Non-Asian telecommunication companies
that are of similar size with Telkom (i.e.
annual revenue between USD 10 billion –
Identification of distinct performance obligations (e.g. free products) 50%
20 billion).
In line with its peers, major topics like
Multiple component (bundled) contracts 28% capitalization of contract & fulfillment
costs, identification of free products
as distinct performance obligation
Others* 27% and allocation of transaction price to
all of the performance obligations
identified (i.e. multiple element
allocation) are commonly identified as
Variable consideration* 9%
the top IFRS 15 issues.
Other less prevalent issues are contract
Significant financing component* 5% modification, changes to the results of
principal-agent assessment of IAS 18 and
significant financing component.
Number of company affected from 22 Telcos surveyed
A total of 22 Telcos surveyed.

*May not have significant impact to Telkom

PwC 35
Opening balance adjustments reported by the comparative Telcos in
Asia and around the world
Opening balance adjustment as % of
revenue for the year
*Singtel did not separate the effects
of IFRS 15 & 9
> 10%
5.1% - 10%
0.1% - 5%
No
quantitative
impact Source: survey is based on the public
disclosed yet reports filed as of June 2018
Not yet disclosed US$100 mio US$500 mio US$1,0000 mio
Notable observations:
Asian Telcos generally lag behind its European and North American counterparts in completing IFRS 15 quantification process
(i.e. most Telcos that have not disclosed quantitative impacts are Asian.)
Of those Telcos that have quantified the beginning balance impact, more than half reported < 5% adjustment as a percentage of the
revenue for the year.
(Note: we quantified the impact as a percentage of revenue instead of R/E to give a more comparable measure when comparing Telcos of similar sizes. Different Telcos have
different RE historical balances to start with, so RE will not be a useful comparative benchmark).

PwC 36
Comparative
studies - global

PwC
PwC 37
PwC conducted a global IFRS 15 study based on the 60 largest
telcos in the world
Total Revenues Total Assets

• Average $23 Billion • Average $51 Billion
• Median $8 Billion • Median $16 Billion
Geographic location Exchange

• 18 Asian companies • NYSE (8)
• 24 European companies • Frankfurt Stock Exchange (3)
• 18 American companies • NASDAQ (7)
• London Stock Exchange (3)
• Other (39)
Reporting standards Number of segments

• IFRS (37) • 3-5 Segments (88%)
• US GAAP (14) • 6-10 Segments (12%)
• Others (MFRS,KFRS, etc.) (9)

PwC 38
This study is based on the 60 largest telcos in the world across
three continents
Asia (18)
• Revenues of $315bn
• Assets of $582bn
• Employees : 1,255,143
America (18) Europe (24)

• Revenues of $621bn • Revenues of $420bn
• Assets of $1.522bn • Assets of $951bn
• Employees : 1,138,958 • Employees: 955,418

PwC 39
Results of PwC’s IFRS 15 global benchmark study
PwC Global has conducted a research on the impact of IFRS 15 to numerous Telco Companies’ financial information. From this study, it is understood that the
identification of performance obligations, determination of transaction price and stand-alone selling price; although, as well as changes to timing of revenue
recognition due to new distinct performance obligation identified remain the biggest impact for most companies financial information. The following chart
summaries the impact of all IFRS 15: 2016 annual reports.
2017 annual reports.
0% 10% 20% 30% 40% 50% 60% 70% 80%
Identification of performance obligations 72%
Date of revenue recognition 72%
Contract assets and contract liabilities 63%
Cost to obtain a contract / Cost to fulfill a contract 57%
Determination of the stand-alone selling price 50%
Multiple-component contracts 47%
Determination of the transaction price 47%
Notes 47%
Rebates, bonuses and discounts 43%
Financing components 33%
Variable consideration 25%
Construction contracts 10%

PwC 40
Gap impact &
position paper

PwC
PwC 41
1.
Identifying
the contract

PwC
42
Step 1.1a – Identification of the contract – required criteria
Assessment of what constitutes a contract
Requirement from the revenue standard (For further details on the requirements refer to Deliverable 1 “Acc. Policy”)
1.1 Unit of accounting - Portfolio vs contract-by-contract approach 1.2 The contract has been approved and the parties are committed
The unit of account is an individual contract with a customer. A portfolio A contract must be approved by the parties involved in the transaction for it to
approach could be used as a practical expedient so that an entity might apply be accounted for under the revenue standard. Approval might be in writing,
the standard to a portfolio of contracts (or performance obligations). A but it can also be oral or implied based on an entity’s established practice or
portfolio approach might be acceptable if an entity reasonably expects that it the understanding between the parties. Without the approval of both parties,
to a group of contracts or group of performance obligations would not differ it is not clear whether a contract creates rights and obligations that are
materially from considering each contract or performance obligation enforceable against the parties.
separately. An entity should use estimates and assumptions that reflect the
1.3 The entity can identify each party rights
size and composition of the portfolio when using a portfolio approach.
Determining when the use of a portfolio approach is appropriate will require An entity must be able to identify each party’s rights regarding the goods and
judgement and a consideration of all facts. services promised in the contract to assess its obligations under the contract.
Revenue cannot be recognised related to a contract (written or oral) where the
Identification of contract
rights of each party cannot be identified, because the entity would not be able
Telkom shall account for a contract with a customer that is within the scope of to assess when it has transferred control of the goods or services.
IFRS 15 only when all of the following criteria are met:
1.4 The entity can identify the payment terms
a. The parties to the contract have approved the contract (in writing, orally,
The payment terms for goods or services must be known before a contract can
or in accordance with other customary business practices) and are
exist, because without that understanding, an entity cannot determine the
committed to performing their respective obligations.
transaction price. This does not necessarily require that the transaction price
b. The entity can identify each party’s rights regarding the goods or services be fixed or explicitly stated in the contract.
to be transferred.
1.5 The contract has commercial substance
c. The entity can identify the payment terms for the goods or services to be
transferred. A contract has commercial substance if the risk, timing, or amount of the
entity’s future cash flows will change as a result of the contract. If there is no
d. The contract has commercial substance (that is, the risk, timing, or
change, it is unlikely the contract has commercial substance. There should
amount of the entity’s future cash flows is expected to change as a result of
also be a valid business reason for the transaction to occur. Determining
the contract).
whether a contract has commercial substance can require judgment,
e. It is probable that the entity will collect the consideration to which it will particularly in complex arrangements where vendors and customers have
be entitled in exchange for the goods or services that will be transferred to several arrangements in place between them.
the customer. Further discussed in Step 1.1b.

PwC 43
Assessment of what constitutes a contract – cont’d
Consumer product
Retail consumer In the first step to subscribe to IndiHome products, customers submit their ID
(Kartu Tanda Penduduk (“KTP”)/Identity Card and Kartu Keluarga
Costumers that wish to subscribe to Telkom’s IndiHome products are required (“KK”)/Family Registers) for further verification. Once the administrative
to enter into a legally binding contract (“Kontrak Berlangganan”/”KB”) with procedure is completed (e.g. ID Verification, Package verification, contact
Telkom by utilising the existing platform as follows: number verification, and installment order), Telkom enters the details
• MyIndihome (includes the detailed package) into the SCBE Application. The service
 Application – MyIndihome is available the in Play Store to be installed contracted by the customer will be provisioned in NOSS – F as well as creating
by customers; a Customer ID.
 Web – customer details are entered through IndiHome Web and
Identifying the contract is an important step in applying the revenue standard.
accessible only in Plasa Telkom; A contract exists when an agreement between two or more parties creates
 MyIndihome Partner – platform for Mitra (i.e. Avengers)
enforceable rights and obligations between those parties. A contract can be
• Starclick – similar to Indihome Web this platform is a web based system to written, oral, or implied by an entity’s customary business practices. Whether
enter customer details. However, compared to Indihome Web, Starclick the agreed-upon terms are written, oral or evidenced otherwise (for example,
provides more detailed information to Telkom such as the availability of by electronic assent), a contract exists if the agreement creates rights and
Optical Distribution Purpose (“ODP”) in certain regions. obligations that are enforceable against the parties. The standard decided to
complement the definition of a contract by specifying criteria that must be met
In general the process of entering customer details in Telkom’s system is before an entity can apply the revenue recognition model to that contract (see
depicted in the following graph: previous page). Those criteria are derived mainly from previous revenue
recognition requirements and other existing standards. The board decided that
when some or all of those criteria are not met, it is questionable whether the
My Indihome Privy ID/ ID contract establishes enforceable rights and obligations.
HD IA
Starclick Verification
By verifying all the necessary requirements in the platform, Telkom has
entered into a binding contract with customers that is enforceable at law. Both
parties (Telkom and retail customers) must abide the terms of payment in the
NOSS F Starclick Followed up contract once they have accepted the term and condition in the arrangement.
(Put into backend process by Despite the variety of platforms to enter customer details in the system,
Service) (SCBE) WITEL Telkom has general terms and conditions to govern the contract with customer,
as shown on page 46 to 53 (obtained directly from
https://indihome.co.id/syarat-ketentuan-indihome):

PwC 44
Terms and conditions – Parties involved in the contract

PwC 45

PwC 46

PwC 47

PwC 48
Term of payment (clause K-N)

PwC 49

PwC 50

PwC 51

PwC 52
Consumer WIBS Interconnection and International Roaming
“Kawasan/Apartment” customers Telkom enters into a legally binding contract with Other Licensed Operator
Under the consumer revenue stream two types of customer frequently subscribe (“OLO”) to govern detail arrangement in providing the interconnection and
to Telkom’s products. The first are retail customers, which have been fully international roaming. The contract satisfies the criteria of a contract under
discussed on page 45, and second are Kawasan customers. Kawasan customers IFRS 15 considers the following:
• Contract is approved in written and both parties are committed to perform
mainly represent arrangement between Telkom and Apartment Management to
have an exclusive right to distribute internet and TV channels (or other services – their right and obligations;
• Contract clearly states the right and obligation of each parties;
depending on the arrangement) within apartment premises.
• Telkom and OLO can identify term of payment of the arrangement; and
The process to enter into an arrangement with Kawasan customers start by • Contract as genuine as Telkom has commercial reason in entering the
negotiating the type of services and prices between Telkom and Management. The arrangement with OLO.
process is monitored and tracked in a system called IPCA. The end result of this
process is the creation of a Perjanjian Kerja Sama (“PKS”) / Cooperation EBIS & WIBS – DEB and Division of Business Service (“DBS”)
Agreement between Telkom and Management that is generally governed the type
of service available for all room owners in the premises and the price of services. It is understood that Telkom requires an agreed written contract prior to
The package and price could be the same as other packages sold to retail providing goods or services to customers. Contracts are prepared separately by
customers. PKS are negotiated separately by the person in charge for Kawasan each division, though Telkom has a standard template that governs basic terms
customers in each region (Wilayah Usaha Telekomunikasi / “WITEL”) and (i.e. termination clause. We have obtained several examples of Telkom’s
subject to further acknowledgement/approval by Consumer Directorate. contract with customers and notice that the following clauses exist in all of
Telkom’s contracts with customers:
PKS does not meet the criteria for a contract under IFRS 15 as they only govern • Parties involved in the contract
general requirements. Contract criteria are met once the room owner agrees to Generally contain legal information for Telkom and customer(s); for
subscribe to Telkom products using terms of payment similar to retail customer. example: Articles of Association (“AOA”), full address, or Customer’s Tax
Telkom utilises the Starclick system to input customer data. The remaining Registration Number.
procedures are similar to those used in Starclick for retail customer. Each room • The rights and obligations of each party are identified in the contract;
owner has a different Customer ID. The billing arrangement depends on the Under these clauses, Telkom provides details on the service that will be
agreement, Telkom could charge directly to the customer or to the Apartment provided; whilst customers provide details on their rights and obligations
Management. (i.e. payment) for the service provided
• Terms of payment;
Enterprise and Business Service (“EBIS”) & Wholesale and The contract provides detailed terms of payment for the service provided
International Business Service (“WIBS’) – Division and Government including, but not limited, to the following: 1) total payment to be made; and
Services (“DGS”) and Division of Enterprise Services (“DES”) 2) timing for payment.
Refer to sheet “Rationale” in the page 59. • Approval of all the parties in the contract
Sign/approval from all the parties involved in the arrangement.

PwC 53
Example - parties involved in the contract

PwC 54
Example – rights and obligations of each party

PwC 55
Example – terms of payment

PwC 56
Example – approval of contract

PwC 57
Rationale for contract with government and wholesale customers
Consumer, DES, DBS, WIBS Interconnection and WIBS EBIS Solution and EBIS Connectivity
International Roaming
Revenue streams from EBIS Solution and EBIS Connectivity cover the
As explained in the previous pages, the identification of a contract in these contract under the DGS. This differs from the contracts with other divisions.
divisions is quite straight-forward as Telkom requires a written contract prior It involves greater privilege, insofar as in the absence of a written contract
to the provision of services. A Telkom contract, standardised or not, contains prior to providing the service, the parties involved still create enforceable
the following points: rights and obligations. Further assessment on page 60 to 62 is performed to
o Parties involved in the contract; support the conclusion that Telkom’s customary business practice is as good
o Rights and obligations of each party identified in the contract; as a contract under IFRS 15.
o Terms of payment; and
o Approval from all parties in the contracts. WIBS
The arrangement between Telkom and WIBS Customers is governed in an
In addition to the above points, we believe that the contract entered into with
general agreement that may not satisfy the criteria of a contract under IFRS
consumers and WIBS customers are genuine, as all, parties are committed to
15. Telkom needs to continue to assess the contract to determine at which
fulfilling their rights and obligations, and have commercial substance. Having
point the criteria of contract are subsequently met. A further assessment on
considered the points that are included in the contract, as well as the
page 63 to 64 is performed to support the conclusion that for WIBS, the
substance of the contract, we believe that the agreement between Telkom and
contract criteria are satisfied at Berita Acara Kesepakatan (“BAK” ) / Minutes
its customers satisfies the criteria of a contract under IFRS 15 as it creates
of Agreement level.
enforceable rights and obligations between those parties.
Is further analysis through a position paper required?
EBIS EBIS WIBS WIBS WIBS

Consumer
Solution Connectivity Connectivity Interconnection International Roaming
No Yes – for DGS Yes – for DGS Yes No No
IFRS 15 Guidance
Contracts may be written, verbal or in accordance with other customary business practices.
The contract must (a) be approved (b) identify the rights and obligations of either party regarding goods and services (c) identify the payment terms (d) have commercial substance (e) be legally enforceable.

PwC 58
Position paper 1
Application guidance – ‘Contract with government’
Step 1.1a – Identification of the contract
What stream is affected? Purpose of this application guidance Issues
EBIS Solution – sub stream DGS To assess the fulfilment point of a contract in How should revenue be recognised in an
EBIS Connectivity – sub stream DGS arrangement with Government in accordance with arrangement with Government given a formal
the requirements of IFRS 15. contract has not been finalised?
Background:
Telkom has a huge number of revenue transaction with the Government of In practice, particularly for the extension service period beyond the original
the Republic of Indonesia (“Government”) that is usually handled by the term, there may be a timing difference between the finalisation of the contract
DGS. Similarly to other contracts with customers, Telkom is also required to and provisioning of the services. Contracts between Telkom and Government
provide goods and services in return for certain considerations. Ideally, are usually finalised upon approval by State Budget Revenue (“APBN”), while
Telkom and the Indonesian Government prepare and finalise a written formal Telkom should perform its services continuously to Government to support
work contract prior to the provisioning of such goods and services and, if the daily governmental operations without a finalisation of the formal work
contract period elapses, Telkom and the Government need to prepare a new contract. Telkom currently recognises this revenue once Berita Acara Serah
contract if both parties wish to continue the provision of goods or services Operasi (“BASO”) / Minutes of Operation Deliveries is approved even though
beyond the terms covered in the original contract. no formal written contract has been made. An analysis is performed to
determine whether the arrangement with government without formal work
Contracts with the Government do not differ significantly from any other
contract meets the definition of a contract and whether revenue should be
contract. In general, contracts with the Government are governed by the
recognised under the scope of IFRS 15.
following clauses:
1. Parties involved in the contract, as well as each party’s right regarding the
goods or services to be transferred;
2. Payment method and payment terms for the goods or services to be
transferred; and
3. Approval contract from both parties.

PwC 59
Position paper 1
Step 1.1a – Identification of the contract – cont’d
Reference to the relevant accounting standard: [IFRS 15.10] A contract is an agreement between two or more parties that
creates enforceable rights and obligations. Enforceability of the rights and
IFRS 15 provides the specific definition of a contract. An agreement between
two or more parties that creates enforceable rights and obligations meets the obligations in a contract is a matter of law. Contracts can be written, oral or
definition of a contract in the revenue standard. implied by an entity’s customary business practices. The practices and
processes for establishing contracts with customers vary across legal
[IFRS 15.9] explains that an entity shall account for a contract with a jurisdiction, industries and entities. In addition, they may vary within an entity
customer that is within the scope of this Standard only when all the following (for example, they may depend on the class of customer or the nature of the
criteria are met: promised goods or services). An entity shall consider those practices and
a) The parties to the contract have approved the contract (in writing, orally processes in determining whether and when an agreement with a customer
or in accordance with other customary business practices) and are creates enforceable rights and obligations.
committed to performing their respective obligations; [IFRS 15.15] When a contract with customers does not meet the criteria in
b) The entity can identify each party’s rights regarding the goods or services paragraph 9 and an entity receives consideration from the customer, the entity
to be transferred; shall recognise the consideration received as revenue only when either of the
c) The entity can identify the payment terms for the goods or services to be following events has occurred:
transferred;
d) The contract has commercial substance (i.e. the risk, timing or amount a. The entity has no remaining obligations to transfer goods or services to the
of the entity’s future cash flows is expected to change as a result of the customer and all, or substantially all, of the consideration promised by the
contract); and customer has been received by the entity and is non-refundable; or
e) It is probable that the entity will collect the consideration to which it will b. The contract has been terminated and the consideration received from the
be entitled in exchange for the goods or services that will be transferred customer is non-refundable.
to the customer.
[IFRS 15.10] A contract is an agreement between two or more parties that
creates enforceable rights and obligations. Enforceability of the rights and
obligations in a contract is a matter of law. Contracts can be written, oral or
implied by an entity’s customary business practices. The practices and
processes for establishing contracts with customers vary across legal
jurisdiction, industries and entities. In addition, they may vary within an
entity (for example, they may depend on the class of customer or the nature
of the promised goods or services). An entity shall consider those practices
and processes in determining whether and when an agreement with a
customer creates enforceable rights and obligations.

PwC 60
Position paper 1
Analysis:
An analysis was performed to determine whether an arrangement with [d] The entity can identify the payment terms for the goods or services to be
government without a formal work contract meets definition of a contract and transferred.
revenue should be recognised under the scope of IFRS 15. Telkom is able to identify the payment terms based on historical business
[a] The contract has been approved and the parties are committed to practice, where transaction price, either fixed or variable, can be
performing their respective obligations determined in exchange of goods and services provided to Government.
The standard clearly mentions that a contract does not have to be in writing to [e] It is probable that the entity will collect the consideration to which it will
create enforceable rights and obligations. Telkom’s customary business be entitled in exchange for the goods or services that will be transferred
practice shall also be considered in determining whether, and when, an to the customer
agreement with a customer creates enforceable rights and obligations. In Based on historical expedient for transaction with Government, it is
Telkom’s case, this practice is only permissible for Government, where probable (more likely than not) that Telkom will collect the consideration
contract formalisation is mainly delayed because it has not yet received it is entitled to in exchange for goods or services it transfers to the
APBN approval; therefore, it is fair to conclude that the practice implies Government, proving there is a valid substantive transaction between
both parties have agreed to fulfil their respective obligations under the Telkom and Government that reflects Government’s ability and intent to
contract. pay the amount due to Telkom.
[b] The entity can identify each party’s rights regarding the goods or
services to be transferred
Telkom as the service provider is able to identify each party’s rights regarding Conclusion
the goods and services promised in the contract to assess its obligations
under the contract given Telkom agrees to provide goods and services in The arrangement with Government meets the definition of
exchange for cash consideration with agreed and specified terms and contract since all five criteria above are met. Therefore,
conditions. revenue should be recognised in accordance with IFRS 15
[c] The contract has commercial substance (i.e. the risk, timing or amount of “Revenue from contracts with customers” despite the formal
the entity’s future cash flows is expected to change as a result of the contract not having been finalised.
contract)
The contract between Telkom and Government has commercial substance Can the existing practice continue?
where the risk, timing or amount of Telkom’s future cash flows will change
as a result of entering into it (consideration received by Telkom is based Yes – although the formalisation of the written contract is performed
on the goods and services provided to Government) after the provision of the service, Telkom’s existing practice of
recognising revenue once transfer of control has taken place is in
accordance with the requirements in IFRS 15.
PwC 61
Position paper 2
Application guidance – ‘Fulfilment contract with wholesale customer’
Step 1.1a – Identification of the contract
WIBS - Connectivity To assess the fulfilment point of contract in an Whether BAK constitutes a contract in accordance
WIBS – Interconnection arrangement with wholesale customers in with IFRS 15?
accordance with the requirements of IFRS 15.
WIBS – International Roaming
Background: c) The entity can identify the payment terms for the goods or services to be
transferred;
An umbrella arrangement with wholesale customers/WIBS (“customers”) is
d) The contract has commercial substance (i.e. the risk, timing or amount of
governed through PKS with general terms, applicable for a five year period.
the entity’s future cash flows is expected to change as a result of the
For each agreed project, Telkom and customers will sign a BAK for provided
contract); and
services.
e) It is probable that the entity will collect the consideration to which it will
be entitled in exchange for the goods or services that will be transferred to
Reference to the relevant accounting standards:
the customer.
IFRS 15 provides the specific definition of a contract. An agreement between
two or more parties that creates enforceable rights and obligations meets the Analysis:
definition of a contract in the revenue standard. An analysis was performed to determine whether BAK meets the definition of a
[IFRS 15.9] explains that an entity shall account for a contract with a contract and revenue should be recognised under the scope of IFRS 15.
customer what is within the scope of this Standard only when all the
following criteria are met: [a] The contract has been approved and the parties are committed to
performing their respective obligations
a) The parties to the contract have approved the contract (in writing, orally
or in accordance with other customary business practices) and are BAK has been approved by both parties (Telkom and customer) and includes
committed to performing their respective obligations; rights and obligations enforceable against the parties. Respective
b) The entity can identify each party’s rights regarding the goods or services obligations have been detailed in the BAK (Telkom’s obligation to deliver
to be transferred; the services and customers’ obligation to pay for the provided goods or
services).

PwC 62
Position paper 2
Application guidance – ‘Fulfilment contract with wholesale customer’
[b] The entity can identify each party’s rights regarding the goods or services [e] It is probable that the entity will collect the consideration to which it will
to be transferred be entitled in exchange for the goods or services that will be transferred
to the customer
Telkom as the service provider is able to identify each party’s rights regarding
the goods and services promised in the contract to assess its obligations It is probable (more likely than not) that Telkom will collect the consideration
under BAK, where it agrees to provide services in exchange for cash it is entitled to in exchange for goods or services it transfers to the
consideration with the agreed and specified terms and conditions. customers, proving there is valid substantive transaction between Telkom
and customers that reflects customers’ ability and intent to pay as amount
[c] The entity can identify the payment terms for the goods or services to be become due to Telkom as indicated in the BAK terms and conditions.
transferred.
Telkom is able to identify the payment terms as detailed in the BAK where the
transaction price can be determined in exchange for goods or services
provided to the customers. Conclusion
[d] The contract has commercial substance (i.e. the risk, timing or amount of BAK constitutes a contract in accordance with IFRS 15
the entity’s future cash flows is expected to change as a result of the “Revenue from contracts with customers” since all five
contract) criteria above are met
The BAK entered into between Telkom and customers has commercial
substance where the risk, timing or amount of Telkom’s future cash flows
will change as a result of the agreement (consideration received by Telkom
Can the existing practice continue?
is based on the goods and services provided to customers).
Yes – Telkom satisfies the criteria of a contract under IFRS 15

through the use of BAK in every project. Existing practice conforms
with the requirement in IFRS 15.

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Reassessment of contract criteria
Excerpt from IFRS 15.13
If a contract with a customer meets the criteria in paragraph 9 at contract
inception, an entity shall not reassess those criteria unless there is an
indication of a significant change in facts and circumstances. For example, if a
customer’s ability to pay the consideration deteriorates significantly, an entity
would reassess whether it is probable that the entity will collect the
consideration to which the entity will be entitled in exchange for the remaining
goods or services that will be transferred to the customer.
From above explanation, it is clear that Telkom does not need to reassess the
criteria again unless there are indications of significant changes in facts and
circumstances. The determination of whether there is a significant change in
facts or circumstances depends on the specific situation and requires
judgment. Notable situation that may result in reassessment of contract in
Telkom such as the customer has lost access to credit and its major customers
and thus the customer’s ability to pay significantly deteriorates. The
importance of reassessment the criteria of a contract in those cases is to ensure
that the contract remain enforceable for the remaining goods and services.
That is, Telkom would not include the reassessment (and therefore would not
reverse) any receivable, revenue, or contract assets already recognised. Such
assets are assessed for impairment under the relevant financial instruments
standard.
Telkom has established a procedure to ensure that both Telkom and customer
committed to their rights and obligations throughout the period. Taking
example on the consumer product, Telkom has a policy to isolate and stop the
subsequent service to a customer that unable to pay billing for the last 2
months. If, on an certain circumstances, Telkom concludes that particular
customer is unable to perform its obligation to pay for the remaining goods and
service and thus questioning the contract criteria for the remaining period,
such procedure (i.e. isolating the service to customer) ensuring Telkom that
there will be no financial impact arises on this matter as Telkom will not also
perform its responsibilities and no revenue shall be recognized.

PwC 64
Concept introduced in IAS 18 carried to IFRS 15
Potential issues IAS 18 IFRS 15 Remarks
Sales or transfer of non-financial assets Some principles of the revenue Largely remains the same with Mainly the accounting
standard apply to the recognition of a requirements in the legacy standards. treatment under IAS 18
gain or loss on the transfer of certain The gain or loss on this type of sale remains relevant for Telkom.
nonfinancial assets that are not an generally does not meet the definition However, variable
output of an entity’s ordinary activities of revenue, but Telkom should apply considerations shall be
(such as the sale or transfer of property, the guidance in the IFRS 15 considered in the
plants, and equipment). Although a particularly for the transfer of control implementation of IFRS 15 to
gain or loss on this type of sale and measurement of the transaction determine the amount of
generally does not meet the definition price, including the constraint on gain/loss be recognised.
of revenue, an entity should apply the variable considerations, to evaluate
guidance in the revenue standard the timing and amount of the gain or
related to the concept of substantial loss recognised.
risks and rewards to evaluate the
timing and amount of the gain or loss
recognised.
Contractual arrangement allows shared A contractual arrangement that allows Not within the scope of IFRS 15. a The accounting treatment
risks and benefits between the parties a counterparty to participate in an contract with a counterparty to under IAS 18 remains relevant
involved in the contract (JV Contract) activity where both parties share in the participate in an activity where both for Telkom.
risks and benefits of the activity (such parties share the risks and benefits of
as developing an asset) is unlikely to be the activity (such as developing an
in the scope of the revenue guidance. asset) is unlikely to be in the scope of
This type of arrangement is more likely the revenue guidance because the
to be accounted for under the counterparty is unlikely to meet the
requirement in IFRS 11 – Joint definition of a customer
Arrangement.

PwC 65
Step 1.1b – Collectability of payment
Collection of the consideration is probable
Understanding that the importance of identifying the
Requirement from the revenue standard (IAS 18 vs IFRS 15) contract is escalated in the implementation of IFRS 15,
with the extreme consequences of Telkom delaying
IFRS 15.9(e)
revenue recognition if unable to satisfy the contract
It is probable that the entity will collect the consideration to which it will be entitled in exchange for criteria under IFRS 15. Collection of payment becomes
the goods or services that will be transferred to the customer. In evaluating whether the collectability one of the criteria that should be met for a contract in
of an amount of consideration is probable, an entity shall consider only the customer’s ability and IFRS 15. However, this is not a new concept; the context of
intention to pay that amount of consideration when it is due. The amount of consideration to which the payment was probably introduced in IAS 18 as part of
the entity will be entitled may be less than the price stated in the contract if the consideration is recognising revenue, for sales of both goods and services.
variable because the entity may offer the customer a price concession (see paragraph 52).
The opposite standard reference (the maroon words),
IAS 18.14 clearly state that the entity shall ensure that it is
probable that economic benefits associated with
Revenue from the sale of goods shall be recognised when all the following conditions have been
the transaction will flow to the entity for the
satisfied:
Company to recognise the revenue. The economic benefit
a) The entity has transferred to the buyer the significant risks and rewards of ownership of the
fairly represents the consideration that is expected by
goods;
Telkom in exchange of the goods and services. This
b) The entity retains neither continuing managerial involvement to the degree usually associated
requirement is carried to the requirement in IFRS 15 in
with ownership nor effective control over the goods sold;
different terms, but is similar in substance - It is
c) The amount of revenue can be measured reliably;
probable that the entity will collect the
d) It is probable that the economic benefits associated with the transaction will flow to the entity;
consideration to which it will be entitled in
and
exchange for the goods or services that will be
e) The cost incurred or to be incurred in respect of the transaction can be measured reliably
transferred to the customer. Once Telkom issues
When the outcome of a transaction involving the rendering of services can be estimated reliably, BAST for the customers, Telkom has assessed and
revenue associated with the transaction shall be recognised by reference to the stage of completion of concluded that the collection for these customers are
the transaction at the end of the reporting period. The outcome of a transaction can be estimated probable and the customer has the intention to pay the
reliably when all the following conditions are satisfied: consideration for the goods and service transferred. .
f) The amount can be measured reliably;
Having considered the above facts, we believe that the
g) It is probable that the economic benefits associated with the transaction will flow to the entity;
current accounting treatment regarding the collection of
h) The stage of completion of the transaction at the end of the reporting period can be measured
payment remains relevant to the accounting treatment in
reliably; and
IFRS 15. No additional risk/gap impact is expected to
i) The costs incurred for the transaction and the costs to complete the transaction can be measured
arise from this requirement.
reliably

PwC 66
Step 1.1c – Contract management - Link between multiple orders with
underlying contracts
Completeness of information in the system with contracts
General understanding – obtained from our Phase 1 Deliverable
General overview – consumer product Product flow
Telkom is currently focusing on offering Indihome, which is the

Triple Play products consisting of fixed telephone, internet and
interactive TV as part of its retail products, while still selling the
conservative single products (Fixed telephone, Internet, etc.).
The product information is initially accommodated by Starclick
as customer relationship management (“CRM”) for retail
products. The product flow from initial input in Starclick to the
recording in SAP is as follows:
1. Depending on the product chosen by the customers,
Avengers, Plasa Telkom or 147 sales persons will choose the
desired packages in Starclick, along with the customer's Operational Level – Packages Packages
personal information. The chosen package contains Starclick
individual identification of products in the package, which
is represented by IDREVs in iSISKA. Operational Level – ID ID ID ID ID ID
iSISKA Revenue Revenue Revenue Revenue Revenue Revenue
2. iSISKA as the main revenue system extracts the
information input in Starclick and triggers NOSS-F for
service activation.
3. IDREVs recorded in iSISKA are recognised by TREMS and

TREMS and SAP GL GL GL GL GL GL
translated to the SAP GL accounts. Account Account Account Account Account Account
4. Revenue is recorded in SAP based on the mapping and pool
of information maintained by TREMS.
5. Manually, the revenue GL accounts in SAP are grouped

based on the following revenue streams for the presentation Financial Fixed line Data, internet, and information Other telecommunication
of financial statement: statement service technology services service
disclosure level
a) Fixed line service; • Local • Internet, data communication • CPE and Terminal
b)Data, internet and technology service; and • Direct- and information technology
dialling services
c) Other telecommunication service. • Pay TV
PT Telekomunikasi Indonesia Tbk - IFRS 15 • Others
PwC 67
Completeness of information in the system with contracts – cont’d
Product flow from iSISKA to TREMS Illustration of product flow
1. Upon receiving orders from customers, the avengers, Plasa 1 Starclick 2 iSISKA 3 TREMS
Telkom or 147 sales persons enter the location information Input
information IDREVs
of the customers to check for the availability of network.
IDREV
Personal
GL SAP
information
2. If available, further information is then input into Starclick, IDREV
which includes customers’ personal information and the Request by
Packages IDREV GL SAP
packages that the customer desires. customer
IDREV GL SAP
3. iSISKA then extracts the information from Starclick. iSISKA Add-ons IDREV GL SAP
has set a parameter to identify types of available packages
and the price of the individual product offered for each
package. An individual product is represented in IDREV in
iSISKA with unique product identification. Based on the Illustration:
information in iSISKA, NOSS-F is triggered to activate the
service.
1 Starclick 2 iSISKA
Input 3 TREMS
4. NOSS-F notifies iSISKA when the service is activated, thus information IDREVs
800011940511 -
allowing iSISKA to continue with the billing process. Personal 1000 menit TLP
information 41111101
800011940513 -
5. The billing information recorded in iSISKA is then Add-on TM
transferred to TREMS for recording in SAP. TREMS reads Request 3P 800111021177 -
3P Package 41412658
Indihome Internet
the IDREVs of iSISKA and translates it to the respective 800111021713 -
SAP GL accounts. 41311309
Add-on UseeTV
800111021625 -
wifi.id 41412694
wifi.id

PwC 68
General overview – non consumer product Product flow
In addition to retail products, Telkom also offers non-retail

products which are accommodated by TiCares as the CRM
system. The product flow from the initial input in TiCares to
the recognition of product revenue in SAP is as follows:
Operational Level Product Product Product Product Product Product
1. Products requested by the customers are entered by the – TiCares ID
ID ID ID ID ID
inputter (i.e part the marketing team) as Product IDs
(“PIDs”) in TiCares. PID represents the type of product Operational Level ID ID ID ID ID ID
offering or accumulated product offerings to be provided to – TIBS Revenue Revenue Revenue Revenue Revenue Revenue
the customer.
2. TIBS extracts the information from TiCares and translates
PIDs into Revenue IDs.
3. The information of Revenue IDs recognised by TIBS is

extracted by TREMS. TREMS pools the revenue recognised GL GL GL GL GL GL
for each Revenue ID and translates it to SAP GL accounts. TREMS and SAP Account Account Account Account Account Account
TREMS also identifies revenues from installation activities
that are deferred and calculates the amortisation of the
deferred revenue based on the contract information
extracted from TiCares.
4. Revenue and deferred revenues are recorded in SAP based
on the mapping and pool of information maintained by
TREMS.
5. Manually, the revenue GL accounts in SAP are grouped Interconnection

Data, internet, and
Network
Other
information telecommunication
based on the following revenue streams for financial service
technology services
service
service
statement presentation: Financial
• Domestic • Internet, data • Leased lines • Sales of headset
a) Interconnection service statement
• International communication • Satellite • Tower leases
b)Data, internet and technology service disclosure level and information • Call centre service
transponder
c) Network service technology lease • CPE and
services Terminal
d)Other telecommunication service • Pay TV
PT Telekomunikasi Indonesia Tbk - IFRS 15 • Others
PwC 69
Product flow in TiCares Illustration of product flow
The understanding of the practice to record product flow in TiCares is as follows: Prior 2015:
a) Prior to 2015
1. Account Manager records the initial description of customer requests in AO #1 5
Visit Report (Laporan Visit). 1 2 4 PID
3
2. An ID Bundling number is generated from TiCares. The function of the ID Visit ID
TQuotation Contract
Bundling is to record all products promised in the contract with the Report Bundling SID
customer.
3. Using the generated ID Bundling number, the inputter enters more AO
detailed information of the product request in TQuotation.
4. The TQuotation number triggers the creation of a pre-numbered contract
in TiCares. It is noted that the generated contract number is not related to AO #2 5
the reference of the legal contract. 4 PID
3
5. The final step is to create an Axxxx Order (“AO”) number by selecting the TQuotation Contract
PID based on the type of product requested by the customer and Service SID
ID (“SID”) to facilitate provisioning in TeNOSS. The AO number is
automatically generated by TiCares. While PID represents the type of AO
product to be provided to the customer, AO represents the quantity
requested for a certain PID. Other mandatory inputs for the creation of AO
include the amount of revenue expected to be collected for the AO, the
billing method to the customer (“OKU”), the description of the reference of
the legal contract and a soft copy of the legal contract.
6. The input of additional AO under the same contract follows steps 3 to 5
above, starting from the generation of new TQuotation from the same ID
Bundling number.
7. Upon the completion of the input process, the status of the input of each
AO changes when certain conditions are met.
8. When the status of all AOs under one ID Bundling number has reached
Billing Complete, the ID Bundling runs the automatic allocation of
contract value to all AOs identified based on the tariff proportion of the
PID.
PwC 70
b) After 2015 After 2015:

Starting in 2015, the function of the ID Bundling that enables the automatic 1) One ID Bundling for one contract
allocation of contract value to all AOs identified in a contract with customers Follows the same flow in point (a).
is deactivated for the following reasons: 2) One ID Bundling for more than one contract
- The use of tariff as the basis to allocate the contract value to all AO may be
questioned by external parties because it may not represent the fair value
AO #1 5
of the product. 1 2 3 4 Contract #1
- The allocation of contract value to all AOs can only be performed when all Visit ID
TQuotation Contract
PID
Report Bundling
AOs identified in an ID Bundling have reached Billing Complete status in SID
TiCares. If an AO has a different timing of delivery to the customer
compared to the other AO(s) in the same ID Bundling, the allocation AO
cannot be performed until delivery of all AOs is complete. As a result, the
AO #2 5
revenue of the completed AO(s) cannot be recognised until the remaining 3 4 Contract #2
AO is completed thus requiring manual adjustment. PID
TQuotation Contract
Although the function of the ID Bundling to allocate contract value has been SID
deactivated, the inputter is still required to generate an ID Bundling number AO

in TiCares. The process of AO creation still follows the same order with the
exception only of the absence of automatic allocation of contract value. 2) Several ID Bundling for one contract
However, because the ID Bundling no longer has a significant role, there is no
control over the use of the ID Bundling. As a result, the following scenario can
AO #1 5 Contract #1
exist: 11 2 3 4
Visit ID PID
1) One ID Bundling is used to accommodate products in one contract, TQuotation Contract
Report Bundling
2) One ID Bundling is used to accommodate products in more than one SID
contract, or
AO
3) Several ID Bundlings are used to accommodate products in one contract
AO #2 5
5
2
2 4
4 Contract #1
3
ID PID
TQuotation Contract
Bundling
SID
AO
PwC 71
1. As noted from the TiCares product flow, the inputter creates

AO in TiCares by entering the required details, including the 1 TiCares 2 TIBS 3 TREMS
OKU. There are three types of OKU: OKU Revenue ID
a. OTC (i.e One Time Charge), where the customer is billed Installation
OTC INIT
at one predetermined date; service GL
b. Recurring – Monthly, where the customer is billed on a account
monthly basis; and Recurring -
PID AO
Monthly Non-installation
c. Recurring – Yearly, where the customer is billed on a RECURR
yearly basis. service GL
Recurring - account
Yearly
2. TIBS translates OKU information in TiCares into the
following two groups of Revenue ID:
a. Revenue ID_INIT for OKU OTC, and
b. Revenue ID_RECURR for OKU Recurring – Monthly and Illustration:
OKU Recurring – Yearly
3. TREMS translates TIBS’ Revenue IDs into SAP GL Accounts TiCares TIBS TIBS
with the following configuration:
OKU Revenue ID GL Account
a. Certain Revenue ID_INITs are translated as Revenue for
Installation Service GL accounts. OTC 200 41412102
b. Other Revenue ID_INITs and Revenue ID_RECURRs are MM_ASTINET 8001234622
translated as revenue GL accounts depending on the type Recurring -
of product. 199 41412101
Monthly

PwC 72
General overview – NCX – Non POTS Product flow
NCX is the system utilized by Telkom to record and monitor contracts between Customer Lead &
NCX Quote Agreement
Telkom and Customer. The product flow from the initial input in NCX to the Management Opportunity
recognition of product revenue in SAP is as follows:
1. Telkom will input general information of customer in NCX. For instances,
Customer Account, Service Account, and Billing Account. This flow is
trigerred by Account Manager (AM) that offered products to customer by Order
conducting several visits/meetings or requested by customer.
2. Once agreed with customer, Sales engineer will then input the order in
NCX system and obtain further approval from Account manager and Sales
manager Provisioning Complete in Provisioning Complete in
3. Once quote approved and agreed with customer, AM will then need to TeNOSS / NOSS-F TeNOSS NOSS-F
obtain and upload signed contract with customer in NCX system
4. Account Manager will then submit products inputted in NCX system to
TeNOSS / NOSS-F for activation process.
5. Once the products has been activated in TENOSS / NOSS-F, Account NCX Process Billing Complete
Manager will then obtain and upload signed BASO to further continue
with billing process
1. Product that requested by customer is inputted by Sales Engineer
and generate Product ID in NCX ID ID ID ID ID
2. TIBS extracted the information from NCX and translated the Product ID TIBS Revenue Revenue Revenue Revenue Revenue
into Revenue IDs
2. The information of Revenue ID recognized by NCX are extracted by

TREMS. TREMS pools the revenues recognized for each Revenue ID and GL GL GL GL GL
translates the Revenue IDs to SAP GL accounts. Account Account Account Account Account
TERMS & SAP
3. Revenues are recorded in SAP based on the mapping and pool of
information maintained by TREMS.
1. Manually, the revenue GL accounts in SAP are grouped based on the Data, internet, and Other
Interconnection Network
following revenue streams for financial statement presentation: information telecommunication
service service
a) Interconnection service technology services service
b) Data, internet and technology service Financial • Domestic • Internet, data • Leased lines • Sales of headset
c) Network service statement • International communication • Satellite • Tower leases
d) Other telecommunication service and information transponder • Call centre service
disclosure level
technology lease • CPE and
services Terminal 73
PT Telekomunikasi Indonesia Tbk - IFRS 15 • Pay TV
PwC • Others
Product flow in NCX Illustration of product flow
1. Upon receiving request by customer or by AM that offered the product
to customers , each responsible department will input the following 1 Customer Input 3 Quote
2 Lead and
information in NCX system, for instances: Input of Customer Account Management information Opportunity
will be done by Data Management, Service Account will be done by Input Product
Account Manager, and Billing Account by finance team Customer and Pricing
Request by
Account Customer
customer /
visit
2. If after several visits, customers are interested with the product offered offered Obtain Quote
by Account Manager, AM will then need to convert the lead status from product to Service Account Approval
“Un-qualified” to “Qualified”. Once qualified, customer will converts the
“Qualified” Lead into “Opportunity” customer Qualified
Billing Account customer Quote Approved
3. Opportunity will be then converted into Quote. In this process, Sales
Engineer will input the product and price agreed with the customer in
NCX system. Quote will be then verified and approved by the Account
Manager & Sales Manager
4. Once quote has been approved, Account Manager will further obtain the
signed contract between Telkom and Customer and upload it in NCX 4 Agreement 5 Order
system and input the information of the contract. Subsequently,
Account Manager will select “Activate” in the agreement tab for the Upload
contract to be activated. contract
Contract Active Convert Quote Verify and

5. Once Quote and Agreement has been approved, Account Manager will contract to Order Submit Order
Signed
then select the products which are going to be executed to order phase Input
by selecting “Order Now” flag. Those following product will then be Contract
converted to order by selecting “Auto Order” button and click “Submit”. date
6. The order will be then automatically processed for activation into
TeNOSS (connectivity) and NOSS-F (non-connectivity).
7. TeNOSS / NOSS-F notifies NCX when the service is activated, thus 7 Billing Complete 6 Activation
allowing NCX to continue with the billing process. AM will further need
Obtain and Provisioning
to obtain and upload signed BASO with customer in NCX system. Once Obtain Billing
Fulfill Billing Upload BASO Complete in TeNOSS
collected and upload in NCX, Finance will then conduct the final check Approval from
Complete signed with
to verify all information's/documents in NCX until the status “fulfill Finance Team Provisioning
customer
billing complete” Complete in NOSS-F
PwC
Product flow in NCX Illustration of product flow
1. As noted from the NCX product flow, the inputter creates
1 NCX 2 TIBS 3 TREMS
AO in NCX by inputting the required details, including the
billing method to the customer (“OKU”). There are five types OKU Revenue ID
of OKU: OTC INIT Installation
a. OTC (i.e One Time Charge), where the customer is billed
service GL
in one predetermined date; account
Recurring -
b. Recurring – Monthly, where the customer is billed in PID AO
Monthly
monthly basis; and RECURR
c. Recurring – Yearly, where the customer is billed in yearly Recurring -
basis. Yearly
d. Termin based, where the customer is billed when the
term is met. Termin Termin Non-installation
e. Usage based, where the customer is billed based on usage
service GL
reconciled between customer and Telkom account
Usage Usage
2. TIBS translates OKU information in NCX into the following
four groups of Revenue ID:
a. Revenue ID_INIT for OKU OTC, and
b. Revenue ID_RECURR for OKU Recurring – Monthly and Illustration: NCX TIBS TIREMS
OKU Recurring – Yearly OKU Revenue ID GL Account
c. Revenue ID_TERMIN for OKU OTC Termin
OTC 200 41412101
d. Revenue ID_USAGE for OKU Usage
Recurring -
201 41412102
3. TREMS translates TIBS’ Revenue IDs into SAP GL Accounts Monthly
MM_ASTINET 8001234622
with the following configuration: Recurring -
202 41412103
a. Certain Revenue ID_INITs are translated as Revenue for Yearly
Installation Service GL accounts. Termin 203 41412104
b. Other Revenue ID_INIT, Revenue ID_RECURRs,
Revenue ID_INIT(TERMIN), Revenue ID_USAGE are Usage 204 41412105
translated as revenue GL accounts depending on the type
of product.
PwC 75
Identifying issues in Telkom contract management (iSISKA, NCX & TiCares)
iSiska (Consumer product) EBIS Solution, EBIS Connectivity, and WIBS Connectivity (NCX)
The Consumer Division handles requests from the retail customers that NCX is an improvement to the existing contract management in Telkom. As
would like to subscribe to Telkom’s product; legacy product (“POTS”), explained in the page 75, NCX requires contract information to be inputted prior
internet or Indihome package (2p and 3p). Having considered the detailed to order activation. Once Quote and Agreement has been approved, Account
product flow explained in the previous page, consumer and as depicted in the Manager will then select the products which are going to be executed to order
opposite picture, Telkom enters each service subscribed to the customer by phase by selecting “Order Now” flag. Those following product will then be
choosing the relevant idRev from the predetermined (based on relevant converted to order by selecting “Auto Order” button and click “Submit . Having
NODIN) drop down menu in the system. It is relatively easier for Telkom to considered this process, we could concur that there is a direct link between
link the information in packages subscribed to the customer with the information in the system and underlying contracts.
inputted information in the system by calling the Customer’s unique number
(i.e. Customer Telp Number / Internet Number). Having said that, for the
Consumer Division, there is a direct link between information in the system
and underlying contracts.
WIBS Interconnection and WIBS International Roaming

WIBS Interconnection and WIBS International Roaming has only one type of service that provides interconnection services to other providers, either local or
international. No issue of missed link between orders in the system and the underlying contracts is expected to arise from these streams.

PwC 76
!
Identifying issues in Telkom contract management (Isiska, NCX & TiCares)
EBIS Solutions, EBIS Connectivity and WIBS Connectivity Gap 1 identified

Product flow in TiCares
The opposite graph depicts the flow for Telkom’s non-retail products in the TiCares
system. First, the Account Manager (“AM”) records the initial description of customer AO #1 5 Contract #1
1 2 3
3 4
requests in the Visit Report (Laporan Visit) and generates ID Bundling. Then, AM Visit ID
TQuotation Contract
PID
creates an AO by selecting the PID based on the type of product requested by the Report Bundling
SID
customer and Service ID (“SID”) to facilitate provisioning in TeNOSS. An AO number
is automatically generated by TiCares. While PID represents the type of product to be AO
provided to the customer, AO represents quantity requested for a certain PID. Other
AO #2 5
mandatory inputs for the creation of an AO include the amount of revenue expected to 3
3 4 Contract #2
be collected for the AO, the OKU, the description of the reference of the legal contract TQuotation Contract
PID
and a soft copy of the legal contract. SID
The input of additional AO under the same contract follows the steps above, starting AO
from the generation of a new TQuotation from the same ID Bundling number.
AO does not constitute a contract under IFRS 15 as it is only represents one PID
AO #1 5
(further assessment related to the PID is discussed on page 125); therefore, we needs 1 2 3 4 Contract #1
to link each AO to its underlying contract to ensure a proper 5-step model assessment. Visit ID
TQuotation Contract PID
Report Bundling
This process is very crucial as an improper assessment may result in improper SID
measurement, recognition, presentation and disclosure in the financial statement.
Currently, the system does not provide a reference number, or any link in other means, AO
that enables us to link to which contract the order is actually related.
AO #2 5
2
2 4 Contract #1
3
ID PID
TQuotation Contract
Bundling
SID
AO
Applicable for EBIS Solution,

EBIS Connectivity, and WIBS
Connectivity
PwC 77
Step 1.2 – Determining the contract term
Renewal and termination clauses
IFRS 15.11 Entities should consider termination clauses when assessing contract duration.
If a contract can be terminated at any time for no compensation, the parties do
Some contracts with customers may have no fixed duration and can be not have enforceable rights and obligations, regardless of the stated term. In
terminated or modified by either party at any time. Other contracts may contrast, a contract that can be terminated early, but requires payment of a
automatically be renewed on a periodic basis that is specified in the contract. An substantive termination penalty and is likely to have a contract term equal to
entity shall apply the guidance in the revenue standard to the duration of the the stated term. This is because enforceable rights and obligations exist
contract (that is, the contractual period) in which the parties to the contract throughout the stated contract period.
have present enforceable rights and obligations.
Telkom should apply its judgment in determining whether a termination
IFRS 15.12 penalty is substantive. There are no “bright lines” for making this assessment.
For the purpose of applying this Standard, a contract does not exist if each party The objective is to determine the period over which the parties have enforceable
to the contract has the unilateral enforceable right to terminate a wholly rights and obligations. Factors to consider, among others, include the business
unperformed contract without compensating the other party (or parties). A purposes for contract terms that include termination rights and related
contract is wholly unperformed if both of the following criteria are met: penalties and the entity’s past business practices. Additionally, a payment need
a) the entity has not yet transferred any promised goods or services to the not be labelled a “termination penalty” to create enforceable rights and
customer; and obligations. For example, a substantive penalty might exist if a customer must
b) the entity has not yet received, and is not yet entitled to receive, any repay a portion of an upfront discount if the customer terminates the contract
consideration in exchange for promised goods or services
Understand that it is common for Telkom to have renewal and termination clause in the contract with customers. Further assessment shall be performed to
consider whether these clauses/options are substantive enough to be considered in determining the contract term. Refer to Position Paper 3 in the following
page for the detailed assessment.

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Position paper 3
Application guidance – ‘Accounting treatment for renewal option’
Step 1.2 – Determining the contract terms
Consumer WIBS International To assess the accounting treatment of contract How should the renewal option and cancellation
EBIS Solution roaming renewal and cancellation terms in Telkom’s clause be accounted for in accordance with IFRS
contracts with customers, in accordance with the 15?
EBIS Connectivity WIBS
requirements of IFRS 15.
Interconnection
WIBS Connectivity
Background: The renewal period begins after the original term has elapsed. When a customer
exercises the renewal option, Telkom will continue to provide the same service
Renewal option:
using an updated tariff. The current practice is to have inputters only entering
Telkom’s business practice is to ensure continuous service provision to its the original contract terms (i.e. original service period) into CRM system without
customers with minimal interruption. To satisfy this objective, it is a considering the renewal option. For example, a contract that started on 1
standard practice for Telkom to have a clause in its service contract allowing January 2017 with an initial contract term of 24 months, has an end date
a customer to renew the service period when the term of the original contract inputted into CRM ending 1 January 2019. When the contract reaches its
elapses. Depending on the arrangement, the contract could be automatically maturity in 2019, the inputter will have to create a new order with new terms
renewed without consent from Telkom and the customer, or may require a that will take the service period beyond 24 months.
specific request from the customer subject to Telkom’s approval. An example
Cancellation term:
of a renewal option with consent from both parties is shown here:
In addition to the renewal option, Telkom’s contract with customers may include
Contract Number: K.TEL.1866/HK.820/WTL-4G100000/2016 a cancellation clause that provides Telkom and the customers with the right to
early termination of contracts if certain conditions occur. An example of a
Article 6 - Term:
cancellation clause is obtained from Contract No. K.TEL.102/HK.810/DR3-
Term of subscription 24 months and effective after the Minutes of 10000000/2016
Commencement Operation have been signed by Parties (Telkom and the
Customer).
That period may be extended or terminated by agreement between Telkom
and the Customer, and the Customer may deliver a notice in writing to
Telkom of an extension or termination of this subscription Contract at least
30 (thirty) days prior to expiration.

PwC 79
Position paper 3
Step 1.2 – Determining the contract terms – cont’d
Article 16 – Termination of the subscription contract: Reference to relevance accounting standard:
This subscription contract may be unilaterally terminated by either party, If the option provides a material right to the customer, the customer in effect
without any further charges and other liabilities to the other party, in the pays the entity in advance for future goods or services, and the entity recognises
event of occurrence of one or more of the following conditions (in addition to revenue when those future goods or services are transferred or when the option
any other matters which have been arranged in other articles in this expires. Several examples of customer options are mentioned in the standard:
contract):
• Customer loyalty programme;
• The Government ratified anew regulation that results in the subscription • Loyalty points;
contract no longer being proceeded; and
• Contract renewal options;
• Veritra (All-Payment Locket) is not able to fulfil its responsibilities as
stated in the article 7 (1) of this contract. • Other discount
A renewal option could be viewed similarly to other options to provide
As shown by this example, Telkom’s ability to cancel the contract depends additional goods or services. In other words, the renewal option could be a
upon the occurrence of certain limited events (i.e. the customer’s failure to performance obligation in the contract if it provides the customer with a
fulfil their responsibilities). Similarly, the customer also cannot cancel the material right that it otherwise could not obtain without entering the contract.
contract unless there is a ratification of government regulations or an event Basis of conclusion of IFRS 15 paragraph 391 states that a renewal option gives
beyond the control of Telkom and the customer. a customer the right to acquire additional goods or services of the same type as
As with the renewal option, Telkom currently neither accounts for the those supplied under existing contract. The type of option could be described as
cancellation option in determining contract terms nor does it consider the a “renewal option within a relatively short contract” (for example, a one-year
option as a distinct performance obligation. Telkom’s inputter enters the end- contract with an option to renew that contract for a further year at the end of
date of service provisioning based on the approved term of the original the first and second year) or a “cancellation option with a longer contract” (for
contract. It is only when the circumstances that trigger the cancellation occur, example, a three year contract that allows the customer to discontinue the
that orders under the contract are immediately deactivated, thus discontinuing contract at the end of each year).
any process of recognising further revenue from the contract. The standard did not specifically explain the definition of a material right.
Paragraph B41 states that an entity should also consider whether a customer
has the option to acquire additional goods or services at a price that would
reflect the stand-alone selling price. In this case, the option does not provide a
material right and, instead, the entity has made a marketing offer that should be
accounted for in accordance with IFRS 15 only when the customer exercises the
option to purchase the additional goods or services.

PwC 80
Position paper 3
If the entity has concluded that the renewal option provides a material right, it IFRS15.IE258 The entity concludes that the renewal option provides a material
is a distinct performance obligation that is promised in the contract and right to the customer that it would not receive without entering into the
therefore the entity should estimate the stand-alone selling price for the contract, because the price for maintenance services is significantly higher if the
renewal option. As a result, the entity shall recognise deferred revenue from customer elects to purchase the services only in Year 2 or 3. Part of each
this option at the date of the commencement of the initial contract. customer’s payment of CU1,000 in the first year is, in effect, a non-refundable
prepayment of the services to be provided in a subsequent year. Consequently,
Paragraph B43 of the standard provides practical alternative in estimating the
the entity concludes that the promise to provide the option is a performance
stand-alone selling price of the option that allows the entity to allocate the
obligation.
transaction price to the optional goods or services by reference to the goods or
services expected to be provided and the corresponding expected consideration
Determination of contract term
upon the expected execution of the option (generally for contract renewal
options) if all of the following criteria apply: IFRS15.10 A contract is an agreement between two or more parties that creates
enforceable rights and obligations. As explained in paragraph 11 of IFRS 15,
a) if a customer has a material right to acquire future goods or services;
some contracts with customers may have no fixed duration and can be
b) those goods or services are similar to the original goods or services in the terminated or modified by either party at any time. Other contracts may be
contract; and automatically renewed on a periodic basis as specified in the contract. An entity
c) those goods or services are provided in accordance with the terms of the shall apply IFRS 15 to the duration of the contract (i.e. the contractual period)
original contract. in which the parties to the contract have present enforceable rights and
obligations. The contract term affects the period during which revenue should
The following examples illustrate how to assess whether a renewal be recognised.
option provides a material rights to customers:
Analysis:
IFR515.IE257 An entity enters into 100 separate contracts with customers to
provide one year of maintenance services for CU1,000 per contract. The terms Assessment of whether the renewal option in a contract with customers
of the contracts specify that at the end of the year, each customer has the provides a material right
option to renew the maintenance contract for a second year by paying an [1] Renewal option to obtain goods or services using
additional CU1,000. Customers who renew for a second year are also granted renegotiated/updated tariff
the option to renew for a third year for CU1,000. The entity charges
Following the logic of IFRS 15, a renewal option represents a material right only
significantly higher prices for maintenance services to customers that do not
when it provides a customer with a benefit that the customer would not
sign up for the maintenance services initially (i.e. when the products are new).
have otherwise obtained had he/she not entered into the original contract
That is, the entity charges CU3,000 in Year 2 and CU5,000 in Year 3 for
with Telkom. For example, a special discount or a continuation of paying
annual maintenance services if a customer does not initially purchase the
the same old price for future services while prices for similar services are
service or allows the service to lapse.
expected to increase in the future.


PwC 81
Position paper 3
Analysis: • Contractual arrangements regarding the renewal option do not
Assessment of whether the renewal option in a contract with specifically address the tariff that will be used after the original term
customers provides a material right expires. The customer has no enforceable right to demand Telkom offer
the same price after the original period.
[1] The renewal option to obtain goods or services using renegotiated/updated
tariffs Furthermore, there is no guarantee that Telkom will continue to offer the
same services after the original contract term expires. The business model
Following the logic of IFRS 15, a renewal option represents a material right only may have changed in conjunction with the ever evolving market dynamics
when it provides a customer with a benefit that the customer would not and Telkom may decide to stop offering the same services. In such a
have otherwise obtained had he/she not entered into the original contract situation, Telkom is not obliged to guarantee that the customer will receive
with Telkom. For example, this might be a special discount or a the same services, with the same terms, as the ones in the original period.
continuation of paying the same old price for future services while prices
for similar services are expected to increase in the future. Therefore, Telkom’s practice of not accounting the renewal option as a
distinct performance obligation is in line with the guidance found in
In this case, however, Telkom’s renewal option does not grant any additional paragraph B41 of the standard. The standard re-affirms that any
benefits to the customer because, as explained in the “Background” section arrangement that provides the customer with the option to purchase goods,
above, Telkom will charge the updated tariffs (i.e. prices) for the future or services, that reflect the standalone selling price (“SSP”) of those goods,
goods and services when the customer exercises the renewal option. The or services, at the date of contract renewal is not a material right. Instead,
use of updated tariffs is required by Telkom’s internal Board’s policy and the option only represents a marketing offer to which IFRS 15 should be
procedures. There are two official documents that specifically prescribe this applied only when the customer exercises the option. The company’s
requirement, they are: renewal option is not considered a distinct performance obligation and thus
• Telkom’s internal policy, which requires the use of updated tariffs as the it is not subject to further revenue allocation. Also, Telkom only considers
basis for determining the price for customers. For example, as shown in the original term stated in the contract as the basis for recognising revenue.
Nota Dinas (“Nodin”) No: C.Tel.148/YN 000/COP-D5000000/2017 – [2] Cancellation term
“Update Kebijakan Penyesuaian Tarif Layanan Sirkit Langganan
berbasis WDM dengan Varian BW s.d 100 Gbps”, along with the The cancellation term included in Telkom’s contract with customers does
stipulation of this Nodin the previous tariff is effectively replaced by the not represent a cancellation option because both parties can only cancel the
new tariff. This Nodin also requires each Customer Facing Unit (“CFU”) contracts in very limited circumstances (i.e. government issues a new
to monitor communication regarding the tariff adjustment with the regulation or the customer is unable to fulfil his/her responsibilities).
Customer. (For details on Nodin please refer to Appendix A to this Essentially, the clause is more protective than substantive in nature. It does
application guidance) not provide Telkom and the customers with any real economic benefits and
incentives to terminate their contracts early. As the termination term is not
an option, an assessment about material right is considered unnecessary.

PwC 82
Position paper 3
Determination of the contract terms
The determination of contract terms should consistently follow the results of the
analysis that concludes that the renewal option and cancellation terms do not
provide customers with a material right. Because it is not economically
beneficial for the customer to execute the renewal option, the probability of the
customer executing this option cannot be reliably measured and estimated.
Conclusion
Neither renewal options nor and cancellation terms provide a

material right to customers. Therefore, Telkom’s current practice
of not considering this option/term as a distinct performance
obligation and thus excluding the option/term when determining
the contract period are in line with the requirements of IFRS 15.
Yes – Telkom existing practice does not consider the period covered in the
renewal option nor treat the option as a separate revenue transaction.
Telkom’s practice conforms with the requirements in IFRS 15.

PwC 83
Position paper 3
Step 2.2 – Identification of Material Right in the contract
Appendix
The opposite NODIN serves as evidence that the renewal option that is
provided by Telkom does not raise a material right for the customer. The
NODIN explains that the customer shall follow the new tariff in the
period covered in the renewal option.

PwC 84
Step 1.3 – Combining contracts
Identifying contracts to be potentially combined
Multiple contracts will need to be combined and accounted for as a single Only contracts entered into at or near the same time are assessed under the
arrangement in some situations. This is the case when the economics of the contract combination guidance. Therefore, the determination of what is
individual contracts cannot be understood without reference to the considered as near or near the same time is crucial for Telkom to determine
arrangement as a whole. The determination of whether to combine two or more whether multiple contracts should be combined and accounted for as a single
contracts is made at contract inception. Contracts must be entered into with the contract.
same customer (or related parties of the customer) at or near the same time in
order to account for them as a single contract. Judgment will be needed to A further assessment on page 88 to 92 is performed to support the conclusion
determine what is “at or near the same time,” but the longer the period between that Telkom only consider contracts concluded within the same day to satisfy
the contracts, the more likely circumstances have changed that affect the the criteria for contract combination.
contract negotiations.
Contracts might have a single commercial objective if a contract would be loss-

making without taking into account the consideration received under another
contract. Contracts should also be combined if the performance provided under
one contract affects the consideration to be paid under another contract. This
would be the case when failure to perform under one contract affects the
amount paid under another contract.

Consumer
Yes Yes Yes Yes Yes Yes
IFRS 15 Guidance
Two or more contracts entered into at or near the same time will need to be combined and accounted for as a single contract if any of the following criteria are met: (a) the contracts are negotiated together with a single
commercial objective (b) the amount to be paid for one contract depends on the price or performance of another contract (c) the goods and/or services promised in the contracts are a single performance obligation.

PwC 85
Position paper 4
Application guidance – ‘Contract combination’
Step 1.3 – Combining contracts
Consumer WIBS International This paper is written to assess the appropriateness Is the judgment taken by management for a
EBIS Solution roaming of the judgment developed by management to contract combination in Telkom supported by the
consider combining multiple contracts that are principles laid out in IFRS 15?
entered at, or near, the same time.
Interconnection
WIBS Connectivity
Background: Reference to the relevant accounting standard:

As Telkom provides various telecommunication products, it is common for IFRS 15.BC68; IFRS 15 applies to a single contract with a customer. In many
Telkom to enter into multiple contracts with the same customer. Generally, cases, the contract that is accounted for separately will be the individual contract
IFRS 15 requires combining multiple contracts as a single arrangement when negotiated with the customer. However, the structure and scope of a contract can
the contracts are entered into at, or near, the same time and the economics vary depending on how the parties to the contract decide to record their
of the individual contracts cannot be understood without reference to the agreement. For instance, there may be legal or commercial reasons for the
arrangement as a whole. parties using more than one contract to document the sale of related goods or
After carefully considering the nature of Telkom’s ever evolving technological services or to use a single contract to document the sale of unrelated goods or
service offerings and the criteria of IFRS 15 paragraph 17 on contract services. One of the boards’ objectives in developing IFRS 15 is that the
combination in particular, Telkom concludes that multiple contracts that are accounting for a contract should depend on an entity’s present rights and
entered by a customer in the same day are likely to have been negotiated as obligations rather than on how the entity structures the contract.
part of a single commercial objective. Hence these contracts need to be Further, IASB (“the Board”) provides indicator on when contracts with
combined for revenue recognition purposes. Management is evaluating the customers should be combined instead of being accounted for separately. As
rationale supporting this conclusion below. explained in IFRS 15.17 - An entity shall combine two or more contracts entered
into at or near the same time with the same customer (or related parties of the
customer) and account for the contracts as a single contract if one or more of the
following criteria are met:
a) The contracts are negotiated as a package with a single commercial
objectives;
b) The amount of consideration to be paid in one contract depends on the price
or performance of the other contract; or
c) The goods or service promised in the contract (or some goods or services in
each of the contract) are a single performance obligation in accordance with
PT Telekomunikasi Indonesia Tbk - IFRS 15 IFRS 15 paragraphs 22 – 30.
PwC 86
Position paper 4
Step 1.3 – Combining contracts – cont’d
IFRS 15.BC71 The Boards decided to include requirement in IFRS15.17 of IFRS However, the Board noted that the longer the period between the commitments
15 for when an entity should combine two or more contracts and account for of the parties to the contracts, the more likely it is that the economic
them as a single contract. This is because, in some cases, the amount and circumstances affecting the negotiations have changed.
timing of revenue might differ depending on whether an entity accounts for
two or more contracts separately or as one contract. Analysis:
IFRS 15.BC72 further explains that entering into contracts at or near the same As explained in the section background, Telkom has concluded that contracts
time is a necessary condition for the contracts to be combined. That decision is that are entered into within the same day are likely to have been negotiated as a
consistent with the objectives of identifying the contract that is to be accounted single package and therefore they should be accounted for together. The
for as the unit of account because that assessment is also performed at contract analysis is performed based on the principles of IFRS 15 paragraph 17, as
inception. follows:
IFRS 15.BC73 the Board decided that in addition to entering into contracts at [1] Determine the average interval for Telkom to enter into the new
or near the same time, the contracts should satisfy one or more of the criteria arrangements with the same customers:
in paragraph 17 of IFRS 15 for the contracts to be combined. The Board As explained in IFRS15.17, which is reaffirmed by the statement in IFRS15.BC72
observed that when either criterion (a) or (b) in IFRS15.17 is met, the and IFRS15.BC75, the first and crucial criterion for Telkom to combine
relationship between the consideration in the contacts (i.e. the price multiple contracts with the same customer is whether the contracts are
interdependence) is such that if those contracts were not combined, the entered at, or near, the same time. Judgment is required to determine the
amount of consideration allocated to the performance obligation in each maximum length of time for Telkom to consider whether two contracts are
contract might not faithfully depict the value of the goods or services entered ‘at, or near, the same time’.
transferred to the customer. The Board decided to include the criterion in
paragraph 17(c) of IFRS 15 to avoid the possibility that an entity could Based on Telkom’s historical experience, the average interval of Telkom
effectively bypass the requirements for identifying performance obligation entering into an arrangement with the same customer is 274 days (i.e. 9
depending on how the entity structures the contracts. months) for standard products and 219 days (i.e. 7 months) for non-
standard products. In other words, it takes on average 7 - 9 months for the
IFRS 15.BC75 the Board also considered whether to specify that all contracts same customer to enter into a new contract with Telkom. This is an average
should be combined if they were negotiated as a package to achieve a single measure for all Telkom’s customers in general; in practice, of course, a
commercial objective, regardless of whether those contracts were entered into customer may enter into a new contract within a shorter period of time. A
at or near the same time with the same customer. However, the Board decided customer may also modify its existing contract (i.e. creating an MO-type
not to do this, primarily because it was concerned that doing so could have had order in CRM) without necessarily creating a new contract. Contract
the unintended consequence of an entity combining too many contracts and modification is accounted for separately under IFRS 15, and there is a
not faithfully depicting the entity’s performance. Furthermore, the board solution designed to address modification.
decided that an entity should apply judgment to determine whether a contract
is entered into ‘at or near the same time’.

PwC 87

Position paper 4
Step 1.3 – Combining contracts - cont’d
IFRS 15 specifically does not prescribe a bright line threshold for this criterion, because judgment is always needed to determine what is “at, or near, the
same time”; but the longer the period between the contracts, the more likely it is that circumstances have changed that affect the contract negotiations. This
is particularly true considering the rapid changes in technology and market conditions in Indonesia, a longer time length will not faithfully depict the initial
conditions that were present at the time the first contract was signed by a customer. The longer the duration in between two contracts, the more likely it is
that the promises that are made subsequently in the second contract had not been anticipated at the inception of the first contract; and therefore the two
contracts should not be accounted together (i.e. combined).
[2] Determine criteria for contracts that are negotiated as a single package:
The standard requires Telkom to account for the contracts that are entered at, or near, the same time to be accounted as a single contract if one or more of the
No Criteria Management’s assessment
1 The contracts are As mentioned in the “Background” section, Telkom offers various digital technology products that range from legacy
negotiated as a package telecommunication products (i.e. telephone services) to the development of smart offices. The digital world is
with a single rapidly evolving; therefore, the technology that is built into a product offering today is likely to have changed, or
commercial objective; might have become obsolete, in a matter of years, if not months.

In the age of digital revolution, product innovation and development are essential to maintain Telkom’s competitive
advantage in the market. This is evident if we take into account some of the recent trends in the telecommunication
industry that are worth considering for our analysis:
• The decrease in Telkom’s legacy products: Over-the-Top (OTT) players, who offer apps and streaming contents
directly to consumers through the Internet, have increased their dominance, even in core communication
services such as messaging and voice. Whatsapp, Viber, iMessage, and Skype have dominated the total
telecommunication traffic worldwide. As a result, many telecommunications players are facing a significant
decrease in their legacy products;
• Telkom's Speedy service, which at one point only offered the customer with internet services, now has evolved
significantly into the IndiHome Triple Play service that provides customers with wireline voice, broadband and
pay-TV *);
• Rapid changes in the broadband network from 2G, 3G, to 4G/LTE, and soon to be 5G, which happen within a
short term period.
*) Obtained from BMI Research – Indonesia Telecommunication Report Q4 2017.

PwC 88
Position paper 4

1 The contracts are A customer who paid for internet only (Speedy service) in the past will receive the benefits of triple pay IndiHome
negotiated as a package services today for a relatively similar price. Likewise, a customer that paid for 2G internet data in the past will
with a single receive 3G/4G connectivity for a relatively similar price today. Therefore, unless two contracts are entered within a
commercial objective short period of time of each other, it’s difficult to be certain that the same customer has essentially committed to
(continued); sign a new contract a few months later using the same technology that is available today at contract inception
(creating a genuine expectation for future contract and a direct link between contract one and two).
2 The amount of The analysis for the second criterion largely follows the result from criterion number 1.
consideration to be
Telkom has a policy of offer customers standardised prices that have been pre-established by management subject to
paid in one contract
seasonal marketing initiatives. This is particularly true for consumer business practices (e.g. IndiHome) where the
depends on the price or
prices for 2P or 3P products, for example, have all been pre-established in the CRM. The consumer marketing staff
performance of the
will have to use these standardised prices after incorporating seasonal discounts / promotions that have also been
other contract; or
pre-established by Telkom. In other words, there is little room for price discrimination/ favoritism given to certain
customers.
Similarly for enterprise customers, Telkom has established tariffs with a range of discounts (rentang diskon
maksimal). The marketing team will have to offer prices within the pre-established ranges in accordance with
Telkom’s policy.
So unless there is a specific price reference made in one contract that will be used for the other (future) contracts;
it’s difficult to argue that the prices of two contracts are linked.
Management has also considered the fact that in a rapidly advancing technological environment, the price of a
product offering that uses the same technology is likely to decrease over time (e.g. consider the high prices for fixed
telephone services that have become nominal these days, or the decreasing prices of broadband internet as network
technology continues to evolve). It is not likely that a customer will be willing to “lock-in” future prices of the same
technology using today’s relatively higher prices.
As the product is rapidly changing, the negotiation in the original contract does not necessarily consider the
products of future contracts. The economic circumstances affecting the negotiation of the two contracts have
changed. In short, the pricing strategy of one contract is distinct from the one used in another contract considering
the ever changing market dynamics of the telecommunication industry in Indonesia.

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Position paper 4
!

3 The goods or services This conditions may be more applicable if Telkom provides customers with highly-specialised products in one
promised in the contract, and the related maintenance or installation service in another contract. However, this is not the case for
contracts (or some Telkom, as explained in the position paper “Identification of Performance Obligations”, the identification of
goods or services performance obligation is performed at the service order level not at the contract level. One service order already
promised in each of the considers the related goods or services that are necessary to provide the customer with the combined output, for
contracts) are a single example: general infrastructure and installation services.
performance obligation
Conclusion
Considering all of the facts above, management concludes that unless two, or more, legally binding documents are signed on the same
day, it is difficult for Telkom to combine these multiple contracts as a single arrangement negotiated with a single commercial
objective (i.e. combined). This judgment is developed considering the fact patterns that are prevalent in Telkom and the principles of
contract combination of IFRS 15.
In practice, customers often modify contracts to accommodate some changes made to the original contracts. These modifications are
to be accounted for separately using the contract modification guidance of IFRS 15. Please see our separate accounting position paper
on contract modifications.
No – Understand the combination of contracts has been introduced in the legacy standard (i.e. IAS 18), however, IFRS 15 provides a clearer guidance that
Telkom should take it into account as part of the contract review process. WP Reviewer has accommodated such changes as explained further in deliverable
[page 95]
Gap 2 identified
May be relevant to Consumer, EBIS Solution,
EBIS Connectivity, WIBS Connectivity.
PwC 90
Step 1.4 – Contract modification
Determining the accounting treatment for modifications
Requirement of the standard Telkom needs to have a proper assessment for every contract modification, as
A change to an existing contract is a modification. A contract modification could the new standard introduced a general framework for accounting for contract
change the scope of the contract, the price of the contract, or both. A contract modifications to improve consistency in the accounting for contract
modification exists when the parties to the contract approve the modification modifications. As the revenue recognition model developed, the standard has
either in writing, orally, or based on the parties’ customary business practices. required different approaches to account for contract modifications. This has
Judgment will often be needed to determine whether changes to existing rights developed with the overall objective of faithfully depicting an entity’s rights
and obligations should have been accounted for as part of the original and obligations in the modified contract.
arrangement (that is, should have been anticipated due to the entity’s business
Further assessment in page 94 to 101 is performed for the impact of
practices) or accounted for as a contract modification.
contract modification in each of Telkom’s revenue streams, i.e. whether
A new agreement with an existing customer could be a modification of an Telkom should account for some modifications prospectively and for other
existing contract even if the agreement is not structured as a modification to the modifications on a cumulative catch-up basis.
terms and conditions of the existing contract. Telkom should assess whether the
new contract is a modification to the existing contract. Factors to consider could
include whether the terms and conditions of the new contract were negotiated
separately from the original contract and whether the pricing of the new
contract depends on the pricing of the existing contract.

Consumer
IFRS 15 Guidance
A contract modification is a change in the scope and/or price of a contract that both parties have approved, having the effect of either creating new or changing existing rights and obligations. Modifications are
accounted for in the following ways: (a) retrospective (b) prospective (c) cumulative catch-up.

PwC 91
Position paper 5
Application guidance – ‘Accounting treatment for contract
modification’
Step 1.4 – Contract modification
Consumer WIBS International This paper is written to assess the accounting A question arises as to whether the treatment of
EBIS Solution roaming impact on contract modifications applicable in contract modification in Telkom is in conformity
Telkom. with the requirement in IFRS 15.
Interconnection
WIBS Connectivity
Background: There are several types of modification applicable in Telkom:

In general, Telkom has established a policy of issuing a binding contract with [a] Upgrade/downgrade of product capacity and/or renewal of service period
customers prior to the provision of products and all contracts should be
distinctively identifiable from one to another by applying specific reference Changes in product capacity normally lead to changes in product prices. Telkom
numbers to each contract. From time to time, a customer may request accounts for such changes by creating an MO order to modify the previous
Telkom amend or modify the existing contract arrangement. Each service order(s) for the product. For example, MO No. 8001172007 is
modification is differentiated in the system using a unique contract code of created to modify the capacity of AO No. 8000877150 for the same product
HK 820 (modified contract) to indicate a modification has been made to the (i.e. SIAP_ONLINE).
original contract code of HK 810 (prior to any modification). All contract Similar practices may also be applied for the renewal of a service period. When a
modifications are subject to legal review to ensure Telkom’s internal policies service period of a product is renewed, the inputter can either create a new
and business terms are adhered to. AO order after cancelling the previous AO order or create an MO order to
modify the period of the previous AO order.
[b] Addition of product
When a customer requests the addition of product(s), the inputter creates a
new AO order to trigger the provision of the new product.
[c] Change in customer’s information (e.g. address, bank reference, etc.)
Changes in customer information do not affect modification in the
information of the service orders related to the details of the service
provided as well as the price for such services.

PwC 92
Position paper 5
modification’
Step 1.4 – Contract modification – cont’d
Contract modification in Telkom’s WP Reviewer:
Telkom has developed a tool, called “WP Reviewer”, to capture all the
Original contract necessary information that will be used for IFRS 15 calculation. In this
tool, Telkom classifies each possible modification scenario into 3
classifications based on the nature of the product being modified. The
Yes table below summarises the contract modification logic used by Telkom
in the WP Reviewer tool.
Is the contract legally No
Original contract
modified?
Yes
Changes in the promised No Modification type 3 –

good or service Applied retrospectively
Yes
Price for the new goods or

service the modified Yes Modification type 2 –
contract is lowered Applied prospectively
compared to the respective
SSP
No
Modification type 1 –
Separate contract

PwC 93
Position paper 5
modification’
Reference to the relevant accounting standard: An entity shall account for a contract modification as a separate contract if both
IFRS 15.18 A contract modification is a change in the scope or price (or both) of the following conditions are present:
of a contract that is approved by the parties to the contract. In some industries a) The scope of the contract increases because of the addition of promised
and jurisdiction, a contract modification may be described as a change order, a goods or services that are distinct; and
variation or an amendment. A contract modification exist when the parties to
a contract approve a modification that either creates new or changes existing b) The price of the contract increases by an amount of consideration that
enforceable rights and obligation of the parties to the contract. A contract reflects the entity’s SSP of the additional promised goods or services and
modification could be approved in writing, by oral arrangement or implied by any appropriate adjustment to that price to reflect the circumstances of the
customary business practice. If the parties to the contract have not approved a particular contract
contract modification, an entity shall continue to apply IFRS 15 to the existing If a contract modification is not accounted for as a separate contract, an entity
contract until the contract modification is approved. shall account for the promised goods or services not yet transferred at the date
The standard further states in the paragraph 19, a contract modification may of the contract modification (i.e. the remaining promised goods or services) in
exist even though the parties to the contract have a dispute about the scope or whichever of the following ways is applicable:
price (or both) of the modification or the parties have approved a change in the c) An entity shall account for the contract modification as if it were a
scope of the contract but have not yet determined the corresponding change in termination of the existing contract and the creation of a new contract, if the
price. In determining whether the right and obligations that are created or remaining goods or services are distinct from the goods or services
changed by a modification are enforceable, an entity shall consider all relevant transferred on or before the date of the contract modification. The amount
facts and circumstances including the terms of the contract and other evidence. of consideration to be allocated to the remaining performance obligation (or
If the parties to a contract have approved a change in the scope of the contract to the remaining distinct goods or services in a single performance
but have not yet determined the corresponding change in price, an entity shall obligation identified) is the sum of:
estimate the change to the transaction price arising from the modification in
accordance with the requirements for estimating and constraining estimates of i. The consideration promised by the customer (including amounts
variable consideration. already received from the customer) that was included in the estimate of
the transaction price and that had not been recognised as revenue; and
Contract modifications are accounted for either as a separate contact or as
part of the existing contract, depending on the nature of the modification. If a ii. The consideration promised as part of the contract modification
modification is not approved, management should continue to account for the
existing terms of the contract until the modification is approved.

PwC 94
Position paper 5
modification’
b) An entity shall account for the contract modification as if it were a part of Assessing whether the additional product provided in the contract
the existing contract if the remaining goods or services are not distinct and, modification is a distinct performance obligation
therefore, form a part of a single performance obligation that is partially
The accounting treatment for contract modification will really depend on:
satisfied at the date of the contract modification. The effect that the
contract modification has on the transaction price, and on the entity’s 1. Whether additional distinct goods/ services have been offered; and
measure of progress towards complete satisfaction of the performance
2. Whether the price charged on the additional distinct goods/ services
obligation, is recognised as an adjustment to revenue (either as an increase
represents the SSP of the goods/services at the time of modification.
in or a reduction of revenue) at the date of the contract modification (i.e.
the adjustment to revenue is made on a cumulative catch-up basis). Management has carefully evaluated Telkom’s customary business practices
and concluded its result on the following page.
c) If the remaining goods or services are combination of items (a) and (b),
then the entity shall account for the effects of the modification on the
unsatisfied (including partially unsatisfied) performance obligations in the
modified contract in a manner that is consistent with the objectives of this
paragraph.
Analysis:

Assessing whether a contract modification is approved
A change to an existing contract is a modification. A contract modification
could change the scope of the contract, the price of the contract, or both. A
contract modification is effective after all parties to the contract approve the
modification to make it legally binding. In the IFRS 15 context, a modification
exists once a customer requests a contract modification and such request is
approved by Telkom, creating a new K820-type contract

PwC 95

Position paper 5
modification’
Type of Revenue streams Type of POs Transfer of Detail assessment
modification control
Type 1 Consumer Series of Overtime Accounting for a modification as a separate contract reflects the fact that
distinct there is no economic difference between the customers entering into a
Modification
services separate contract or agreeing to the modification. Telkom accounts for a
accounted for
contract modification as a separate contract if the scope of the modified
as separate
contract increases because of the addition of distinct goods or services,
contract
and the price of the modified contract increases by an amount of
consideration that reflects Telkom’s SSP for the additional promised goods
or services.
In practice, this type of modification is prevalent in the CFU like
Indihome. Telkom’s consumer CFU offers IndiHome services that
combine a range of digital and traditional fixed line services, including:
telephones, internet, home-entertainment (PayTV), digital contents, etc, to
its retail customers. Customer contracts for the consumer CFU are
relatively standard in nature. These retail contracts consist of a series of
distinct goods or services that are substantially the same and that have the
same pattern of economic transfer to the customers. See the application
guidance titled “Determination of Performance Obligation” for
more details.
Furthermore, Telkom has a policy of offering customers standardised
prices that have been pre-established by management subject to seasonal
marketing initiatives. The prices for 2P or 3P products, for example, have
all been pre-established in the CRM. The consumer marketing agents (i.e.
avengers) will use have to use these standardised prices after
incorporating seasonal discounts / promotions that have also been pre-
established by Telkom. As a result, the modification requested by retail
customers will add/reduce the existing distinct goods / services at a price
that represents the SSP of the goods/ service.

PwC 96
Position paper 5
modification’
Type of Revenue streams Original contract Detail assessment
modification
Type of POs Transfer of
control
Type 1 Consumer Series of Overtime Telkom will account for this type of modification as a separate contract (i.e.
distinct type 1). The accounting for the original contract is not affected by the
Modification
services modification and the revenue recognised to date on the original contract is
accounted for
not adjusted. Furthermore, any performance obligations remaining under
as separate
the original contract continue to be accounted for under the original contract.
contract
(continued) Particularly for modifications in the IndiHome contract, the existing business
practice requires such changes or modifications remain valid in the following
months after customer’s request. This subsequent changes are treated as a
separate contracts considering the arrangement in the IndiHome products
ensures that transfer of control for the package is completed on a monthly
basis, and therefore the previous revenue will be fully recognised prior the
activation of the Customer’s new request. Therefore, in IndiHome’ cases, the
modification always leads to a new distinct performance obligation at their
SSP, the modification always leads to Type 1 Modification.
Type 2 • EBIS • Series of • Overtime, Telkom accounts for modifications prospectively if the remaining goods or
Connectivity distinct or services are distinct from the goods or services transferred before the
Modification
• EBIS Solution services; • Point in modification, but the consideration for those goods or services does not
that needs a
• WIBS or time reflect their SSP. For example, where the price of the additional goods or
recalculation
Connectivity • Distinct services in the modified contract is lower compared to the respective SSP –
of multiple
• WIBS goods and the modified contract should be accounted for as type 2 modification.
element
Interconnection services
allocation This type of contract modification is treated as the termination of the original
• WIBS
(“MEA”) on a contract and the creation of a new contract. For this type, Telkom needs to
International
prospective recalculate the MEA of all remaining performance obligations in the original
roaming
basis and modified contracts based on the SSP at the date of modification. The
results of the new MEA exercise are to be accounted for prospectively.

PwC 97
Position paper 5
modification’
Type of Revenue streams Original contracts Detail assessment
modification
Type of POs Transfer of
control
Type 3 EBIS Solution Distinct POC A customer may also request for a modification that does not add distinct
goods or goods or services (for example – contract between Telkom and PT Andowa
Modification
service Media Solusi related to construction of Monople tower). There’s a change to
that does not
the total contract price without any additional distinct goods or service being
add distinct
offered. Under this scenario, Telkom shall account for the contract
goods/ services
modification as if it were part of the original contract. Telkom needs to adjust
and hence
revenue previously recognised (either up or down) to reflect the effects that
needs to be
the contract modification has on the transaction price and update the
accounted for
measure of progress.
retrospectively
Type 2 and Type 3 modifications are prevalent in non-consumer CFU (e.g.
Enterprise and Wholesale) because of the latitude given to Telkom’s
marketing agents to establish discounts to customers. Please see the
accounting position paper titled “Stand-alone Selling Prices” for more details
where it is explained how an enterprise marketing agent is given the
flexibility to give additional discounts to customers. In particular, Type 3
modifications are often found in service contracts where Telkom performs
some type of construction activities (e.g. building a smart office) for
customers.

PwC 98
Position paper 5
!
modification’
Conclusion
Considering all the facts and circumstances applicable in Telkom, we could

conclude that Telkom has developed an adequate accounting mechanism for
contract modification in accordance with the requirements in IFRS 15.
Existing practice:
Other than customers, Telkom treats all type of modification as Type 2.
Yes – other than the type of contract mentioned below, Telkom’s existing treatment
conforms with the requirements in IFRS 15.
No – for EBIS Solution where the original contract offers a distinct service (not a
series of distinct services) or goods, in which the transfer of control is performed
over time using the percentage of completion method (i.e. construction of smart office).
As explained in the previous page, this type of modification will naturally fall into type 3
in which Telkom is required to reallocate the new transaction price to all POs in the
contract and adjust the revenue that has been recognised as part of cumulative catch up
adjustment.
Gap 3 identified
May be relevant to Consumer,
EBIS Solution, EBIS Connectivity,
WIBS Connectivity.

PwC 99
2.
Identifying
performance
obligations

PwC
100
Step 2.1 – Identification of performance obligations from the contract
Assessment of what constitutes a performance obligation
Requirement from the revenue standard (For further detail on the requirements refer to Deliverable 1 “Acc. Policy”)
Performance obligations are the unit of account for the purpose of applying Assessing whether a good or service is “distinct”
the revenue standard and therefore determine when and how revenue is
Telkom will need to determine whether goods or services are distinct and
recognised. Identifying the performance obligations requires judgment in
therefore separate performance obligations, when there are multiple promises
some situations to determine whether multiple promised goods or services in
in a contract. A customer can benefit from a good or service if it can be used,
a contract should be accounted for separately or as a group.
consumed, or sold (for an amount greater than scrap value) to generate
Excerpts from IFRS 15.22 economic benefits. A good or service that cannot be used on its own but can be
At contract inception, an entity shall assess the goods or services promised in used with readily available resources, also meets this criterion, as the entity
a contract with a customer and shall identify as a performance obligation each has the ability to benefit from it. Understanding what a customer expects to
promise to transfer to the customer either: receive as a final product is necessary to assess whether goods or services
a) A good or service (or a bundle of goods or services) that is distinct; or should be combined and accounted for as a single performance obligation.
b) A series distinct goods or services that are substantially the same and that Excerpts from IFRS 15.27
have the same pattern of transfer to the customer
A good or service that is promised to a customer is distinct if both of the
a) Promise to transfer a distinct good or service following criteria are met:
Each distinct good or service that an entity promises to transfer is a a) The customer can benefit from the good or services either on their own or
performance obligation. Goods and services that are not distinct are bundled together with other resources that are readily available to them (that is,
with other goods or services in the contract until a bundle of goods or services the good or service is capable of being distinct); and
that is distinct is created. The bundle of goods or services in that case is a b) The entity’s promise to transfer the good or service to the customer is
single performance obligation. separately identifiable from other promises in the contract (that is, the
promise to transfer the good or service is distinct within the context of the
b) Promise to transfer a series of distinct goods or services contract).
Telkom will apply the principles in the revenue standard to the single Other consideration
performance obligation when the series of criteria are met, rather than the
individual goods or services that make up the single performance obligation. Performance obligations can result from other common contract terms or
The exception is where Telkom should consider each distinct good or service promises implied by an entity’s customary business practices. The assessment
in the series, rather than the single performance obligation, when accounting of whether certain contract terms or implicit promises create performance
for contract modifications and allocating variable considerations. The series obligations requires judgment in some situations.
guidance is intended to simplify the application of the revenue model to
arrangements that meet the criteria; however, application of the series
guidance is not optional.
PwC 101
Assessment of what constitutes a performance obligation – cont’d
Accounting treatment for immaterial products Free products
Generally speaking, the conceptual framework of accounting standards does The revenue standard provides indicators rather than criteria to determine
consider materiality in preparing the financial statement as evidenced by non- when a good or service is distinct within the context of the contract. This allows
mandatory application for those immaterial items/transaction. Assessing management to apply its judgement to determine the separate performance
whether promised goods or services are immaterial requires judgment. Telkom obligations that best reflect the economic substance of a transaction. All
should consider the nature of the contract and the relative significance of a promises in an arrangement should be identified. Promises that are
particular promised good or service to the arrangement as a whole. Telkom inconsequential or perfunctory must be identified, even if they are not the
should evaluate both quantitative and qualitative factors, including the ‘main’ deliverable in the arrangement, because all promises in a contract are
customer’s perspective, in this assessment. If multiple goods or services are goods or services that a customer expects to receive.
considered to be individually immaterial in the context of the contract, but
Generally, sales-type incentives such as free products are currently recognised
those items are material in the aggregate, Telkom should not disregard those
as marketing expenses under the legacy standard in some circumstances.
goods or services when identifying performance obligations.
These incentives might be performance obligations under IFRS 15; if so,
The materiality concept between legacy standards (IAS 18) and IFRS 15 is the revenue will be deferred until such obligations are satisfied once the control
same, thus we believe a remote gap impact arises from this potential issue. If passes to the customer.
one promised good or service has satisfied the criteria of a separately
Please note that that it is common for Telkom to offer free products to
identifiable component in IAS 18, this promised good or service would likely
customers. The easiest example of such cases is free subscription to several
satisfy the criteria of a distinct performance obligation under IFRS 15 ‘s
streaming applications provided to Indihome Package subscribers as shown in
concept. IAS 18, similarly to IFRS 15, in assessing the transaction’s substance,
the following picture:
views the transaction from the perspective of the customer and not the seller:
that is, what does the customer believe they are purchasing? If the customer
views the purchase as one product, then it is likely that the recognition criteria
should be applied to the transaction as a whole. Conversely, if the customer
perceives a number of element is the transaction, then the revenue recognition
criteria should be applied to each element separately.
Having considered the above explanation, we believe no additional risk is
expected from immaterial products. Further, in applying the IFRS 15, the IT
Solution is designed to accommodate such requirements that ensure the
completeness of distinct performance obligations under one contract, whether
or not they are it is material for customers and Telkom.

PwC 102
!
Free products (continued)
If we take Indihome Triple Play as the example, our further analysis is focused on iFlix and HooQ, which are currently being granted for free to Telkom Indihome
Tripleplay customers. The detailed assessment on whether one good or service meets the criteria of a distinct performance obligation follows the requirement in
IFRS 15 paragraph 27.
iFlix HooQ
Assessment for distinct Assessment for distinct

performance obligation Yes. iFlix is an application performance obligation Yes. HooQ is an application
that enables users to enjoy that enables users to enjoy
movie streaming through movie streaming through the
the internet network. From internet network. From the
Yes Yes
Can the customer benefit from the customer perspective Can the customer benefit from customer’s perspective they
the good or service? they can benefited from this the good or service? can benefit from this free
free service. service.
The service contracted for The service contracted for by

by the customer is the free the customer is the free
Is the promise to transfer the subscription to and usage of subscription to and usage of
Yes Is the promise to transfer the Yes
good or service distinct within the Movin application. This the HooQ application. This
good or service distinct within
the context of the contract? service is separately service is separately
the context of the contract?
identifiable from other identifiable from other
promises in the package. promises in the package
Gap 4 identified
Goods and services satisfy Goods and services satisfy

Conclusion: the criteria of distinct PO Conclusion: the criteria of distinct
Applicable for EBIS Solution, EBIS Connectivity, and
WIBS Connectivity
PwC 103
!
Free product (continued) Free product (continued)
As we understand from the analysis performed in the previous page, free • EBIS Solution
subscription given to customers satisfy the criteria of a distinct performance
In EBIS, Telkom may enter into arrangement that contain a free product
obligation. As consequence, Telkom shall allocate the total transaction price to
provided to the customer. Separate assessment shall be made to each
all identified performance obligation, including the free product. Telkom has
product to assess whether such product meet the criteria of a distinct
assessed the impact of this requirement in each of their revenue streams as
performance obligation, therefore; subject for the allocation of transaction
follows:
price. The free product (is satisfy the criteria of a distinct PO) could be in
• Consumer any form, good or service, which means the timing of revenue recognition
From our review over NODIN : C.Tel. 74/YN 000/COP-F2100000/2018 may be differ between IAS 18 and IFRS 15. As the impact may affect Telkom
dated 23 Juli 2018 that governs the marketing initiatives in 2017 and 2018, net income, we classified the gap identified from free product, along with
we understand that the biggest impact of Telkom free product is expected to the completeness of order in a contract, as Priority 1 in Telkom EBIS
be contributed from iFlix. This conclusion is derived from the fact that iFlix Solution.
product in 2017 are provided for free to all Telkom’s customer both for
• EBIS Connectivity & WIBS Connectivity
regular package (i.e. IndiHome Tripleplay) and thematic product (i.e.
Netizen) subscriber. Starting in June 2018, iFlix product are provided only Fairly similar to the consumer stream, product in EBIS connectivity and
to Regular Package subscriber; whereas thematic subscriber have the WIBS Connectivity stream mainly represent series of a distinct service in
option to add iFlix service in exchange for certain consideration. Other than IFRS 15. The pattern of recognizing revenue is similar between IFRS and
iFlix, other free product mostly are provided only in the first month and IAS 18. Hence, we classified as priority 2.
Telkom needs to pay for the service in the subsequent period. • WIBS Interconnection and WIBS International Roaming
As iFlix meet the criteria of a distinct performance obligation, Telkom shall
Generally, Telkom does not provide free products in their interconnection
allocate certain portion from the total transaction price to iFlix (and other
and international roaming services. Separate working paper is prepared for
free product – if any). As iFlix (and other free product: HooQ, CatchPlay,
WIBS Interconnection and WIBS International Roaming.
VIU, and Melon) meet the criteria of a stand-ready performance obligations
(that is, Telkom is required to provide a service of making iFlix available for
the customer to use as and when the customer wishes), the revenue is
recognised overtime. The timing for revenue recognition is similar both in
IFRS 15 and IAS 18 (in IAS 18, the revenue recognition follows the
requirement for rendering of service in which the revenue shall be
recognisied overtime). Considering this, particular to Telkom’s free product
in consumer stream, this gap identified is expected to impact only to
Telkom’s BAU process. Hence, we classified as Priority 2.
Gap 4 identified
PwC Consumer 104
An implicit promise in a contract based on customary business Warranty
practices The nature of a warranty can vary across entities, industries, products, or contracts. A
Under IFRS 15, although there must be enforceable rights and obligations warranty might be written in the contract, or might be implicit as a result of either
between parties for a contract to exist, the performance obligations within the customary business practices or legal requirements. Terms that provide for cash
payments to the customer (for example, liquidated damages for failing to comply with
contract could include promises that result in the customer having a valid
the terms of the contract) should generally be accounted for as variable consideration,
expectation that the entity will transfer goods or services to the customer even
as opposed to a warranty. The following flowchart illustrates the overall framework of
though those promises are not enforceable by law. If the customer has a valid
accounting for warranty obligations.
expectation, the customer would view those promises as part of the negotiated
exchange (i.e. goods or services that the customer expects to receive and for
which it has paid). Assess nature of the
The customer’s perspective should be considered when assessing whether an warranty
implicit promise has given rise to a performance obligation. Customers might
make current purchasing decisions based on expectations implied by an
entity’s customary business practices or marketing activities. Performance
obligations exists if there is a valid expectation that additional goods or
services will be delivered for no additional consideration. Implied promises Does the customer have the Yes
can create a performance obligation under a contractual agreement even when Account for as a separate
option to purchase the
enforcement is not assured because the customer has an expectation of performance obligation
warranty separately?
performance by the entity.
Customary business practices vary between entities, industries, jurisdictions,
No
classes of customers, nature of the product or service, and other factors. In
Telkom’s business practice, all the promised goods and services must be
explicitly stated in the contract, thus; there is no additional performance Yes Promised service is a
Does the warranty provide
obligation arising from implicit promises in a contract. separate performance
a service in addition to
assurance? obligation
No Account for as as a cost

accrual in accordance with
relevant guidance
PwC 105
A warranty can be defined into two categories. First, a warranty that a
customer can purchase separately from the related good or service (priced or
negotiated separately) is a separate performance obligation. The fact that it is
sold separately indicates that a service is being provided beyond ensuring that
the product will function as intended. Revenue allocated to such a warranty is
recognised over the warranty period. Second, a warranty that cannot be
purchased separately must be assessed to determine whether the warranty
provides a service that should be accounted for as a separate performance
obligation. A warranty that provide assurance that a product will function as
expected and in accordance with certain specifications is not a separate
performance obligation. Several factors should be considered when assessing
whether a warranty is calculated as separate performance obligation or not.
From our review of Telkom’s contract with customers, as well as considering

the nature of goods and services provided, Telkom does not offer a warranty
to customers. The commonly found clause relating to quality assurance for
Telkom’s products in the arrangement with customer regards the Service
Level Guarantee (“SLG”) - refer to the picture on this slide for example. SLG
offers a cash payment or reduction to the subsequent invoice to customers:
this type of assurance is a variable consideration as opposed to a performance
obligation. Further assessment to determine whether a warranty offer by
Telkom to the customer is a distinct performance obligation or not is
considered unnecessary.

PwC 106
Potential issues Brief description Analysis
An arrangement that involve shipment of goods to a customer Not applicable.
might include promises related to the shipping service that give
Telkom offices are spread almost to every location in
rise to a performance obligation. Shipping and handling services
Indonesia (i.e. WITEL) to respond to customer demand
may be considered a separate performance obligation if control
across the nation. Shipping arrangements are not
of the goods passes to the customer before shipment, but the
Shipment of goods or relevant to Telkom’s business considering the short
entity has promised to ship the goods (or arranges for the goods
services distance between customers and Telkom and the nature
to be shipped). In contrast, if control of a good does not pass to
of promised goods or services offered to customers.
the customer before shipment, shipping is not a promised
service to the customer but rather a fulfilment activity as the
costs are incurred as part of transferring the goods to the
customer.
Based on IFRS 15, bill and hold arrangements arise when a Not applicable.
customer is billed for goods that are ready for delivery, but the
Considering the nature of Telkom’s goods and services
entity does not ship the goods to the customer until a later date
and also the existing business practice, Telkom does not
at which revenue is recognised when control of the goods passes
offer bill and hold arrangement to customers.
to the customer. In bill and hold arrangements, the goods must
Bill and hold arrangement be identified as belonging to the customer, and they cannot be
used to satisfy orders for other customers. An entity that has
transferred control of the goods and met the bill and hold
criteria to recognise revenue needs to consider whether it is
providing custodial services in addition to providing the goods.
If so, the transaction should be allocated as a separate
performance obligation.
Consignment arrangements are known as retaining control of Not applicable.
the goods until a predetermined event occurs although the
Not relevant to Telkom’s business.
Consignment arrangement entities already shipped the goods to a distributor. Revenue is
not recognised upon delivery of a product if the product is held
on consignment but instead when the entity has transferred
control of the goods to the distributor.

PwC 107
Licence Distinct licence

IFRS 15 states that a licence establishes a customer’s right to the intellectual For a distinct licence, an entity shall consider whether the entity’s promise in
property of an entity (i.e. software and technology; motion pictures, music and granting the licence to a customer is to provide the customer with either:
other forms of media and entertainment; franchises; and patents, trademark a. A right to access the entity’s intellectual property as it exist throughout the
and copyright). To assess accounting treatment for licences, the entity should licence period;
identify whether the licence is a distinct performance obligations from other b. A right to use the entity’s intellectual property as it exist at the point in time
goods/services in the contract. If it is not a distinct performance obligation, the at which the licence is granted.
licence is accounted for as an inseparable part of the goods/services in the
IFRS 15 provides application guidance clarifying that an entity’s promise is to
contract. If the licence is a distinct performance obligation, the nature of the
provide a right to access the entity’s intellectual property if all the following
arrangement must be decided to determine the appropriate timing of revenue
criteria are met:
recognition from the provision of the licence.
c. The contract requires, or the customer reasonably expects, that the entity will
The assessment of whether the licence is distinct performance obligation undertake activities that significantly affect the intellectual property to which
follows the requirement in IFRS 15 paragraph 26 – 30; a good or service that is the customer has a right;
promised to a customer is distinct if both of the following criteria are met: b. The rights granted by the licence directly expose the customer to any positive
1. The customer can benefit from the good or service either on its own or or negative effects of the entity’s activities identified in the point 1 above; and
together with other resources that are readily available to the customer c. Those activities do not result in the transfer of a good or a service to the
(i.e. the good or service is capable of being distinct); and customer as those activities occur.
2. The entity’s promise to transfer the good or service to the customer is
If the above criteria are met, an entity shall account for the promise to grant a
separately identifiable from other promises in the contract (ie the good or
licence as a performance obligation satisfied over time because the customer will
service is distinct within the context of the contract).
simultaneously receive and consume the benefit from the entity’s performance of
providing access to its intellectual property as the performance occurs.
Non-distinct licence
If the above criteria are not met, the nature of an entity’s promise is to provide a
If the promise to grant a licence is not distinct from other promised goods or
services in the contract, an entity shall account for the promise to grant a licence right to use the entity’s intellectual property as it exists (in terms of form and
and those other promised goods or services together as a single performance functionality) at the point in time at which the licence is granted to the customer.
obligation. An example of a non-distinct licence is a licence that forms a This means that the customer can direct the use of, and obtain substantially all of
component of tangible goods and that is integral to the functionality. For this the remaining benefits from, the licence at the point in time at which the licence
condition, an entity shall apply the requirement of IFRS 15 to determine passes. An entity shall account for the promise to provide a right to use the
whether the performance obligation is satisfied overtime or at point time. entity’s intellectual property as a performance obligation satisfied at a point in
time.

PwC 108
The following graphs summarise all necessary steps to account for a licence One of the products offered by Telkom is a licence to use certain
under IFRS 15 guidance properly: software/applications (e.g. SAP and Office 365 Licence). Telkom purchases the
licence from a subsidiary or other entities, and sells it to end customers. The
licence can be sold either separately, as it has standalone functionality to be sold
on its own, or combined with platform management services. The most
commonly found licence sales in Telkom’s business have the following
Is the licence distinct? characteristics:
• Customer purchases licence from Telkom for a certain period of use (i.e. one
year period);
• Invoices are billed monthly;
• Telkom has no further involvement in the licence once it is transferred to the
customer;
• Once the licence period elapses, Telkom enters into a new tendering process
Determine the nature of Account for the bundle of to provide the licence to the customer; and
the licence licence and other • The licence can be used on its standalone basis without dependency on
goods/services Telkom’s other products.
The analysis below may be relevant for licence products with similar
Right to characteristics as above:
Right to use access
Characteristics Analysis
As commonly found licence product in Telkom is
Point in time Over time software (i.e. SAP); other than Telkom, various vendors
recognition recognition Customers also sell this type of product. Therefore, the customer has
purchases a the ability to purchase the software from another vendor
licence to Telkom once a certain period has elapsed.
for a certain The fact that the customer could decide to not purchase
From the above framework, it is understood that the first step in analysing the
period licences from Telkom provides evidence that this product
accounting treatment for a licence is to first identify whether it is a distinct
performance obligation from other goods/services in the contract. If it is not a could be sold separately, which indicates that a customer
can benefit from the licence on its own.
distinct performance obligation, the licence is accounted for as an inseparable
part of the other goods/services in the contract to which the normal five step Invoices are billed The invoices for the licence are billed monthly. This
revenue recognition model is applied. If the licence is a distinct performance monthly might indicate that Telkom regularly sells licences
obligation, the analysis of the nature of the arrangement needs to be performed separately. Similarly with the analysis above, this
to determine the appropriate timing of revenue recognition from the provision condition provides evidence that customers can benefit
of the licence. from the licence on its own.
PwC 109
Because the licence in Telkom is a distinct performance obligation, the next step is to
Characteristics Analysis
determine the accounting treatment for distinct licences.
Once the licence
Tendering is a process for customers to select a Required criteria for a
period elapses,
vendor that will provide them with the licence licence that provides a Analysis
Telkom enters into
product. This practice strengthens the fact that the right to access
a new tendering
customer has the ability to not purchase from
process to provide Not applicable.
Telkom and the customer can benefit from the The contract requires, or
the licence to the
licence on its own. the customer reasonably Telkom has no further involvement in its licence
customer
expects, that the entity will product once it is delivered to the customer. The
The licence can be The second criterion for a service to be considered undertake activities that licence has significant standalone functionality and
used on a standalone as a distinct performance obligation is to be significantly affect the Telkom is not expected to perform any activities that
basis without separately identifiable from another promise in the intellectual property to affect that functionality. Therefore, Telkom does not
dependency on contract. One of the factors that indicates whether which the customer has perform activities that significantly affect the licence
Telkom’s other the licence is separately identifiable is dependency right to which the customer has rights.
products to other goods and services included in the
contract with the customer. The rights granted by the Not applicable.
licence directly expose the
The fact that the customer could decide to not Refer to explanation above.
customer to any positive or
purchase the licence, or purchases the licence from negative effects of the
another vendor, without significantly affecting the entity’s activities identified
other promised goods or services in the contract in the point above
(i.e. platform management service) might indicate
Those activities do not Not applicable.
that the licence is not highly dependent on, or
result in the transfer of a
highly interrelated with, those other promised A platform management service is not considered an
goods or services. Therefore, it is concluded that good or a service to the
activity that affects the licence because it is a separate
the licence is separately identifiable from other customer as those activities
performance obligation. Other than platform
promises in the contract. occur
management services, other activities that may occur
while Telkom delivers the performance obligation are
for administrative purposes only and cannot be
considered as a distinct performance obligation.
Having considered the above analysis, applicable to those licence that have the
characteristic above, the licence is distinct because customers can benefit from it
on its own, and the licence is separable from other promises in the contract (e.g. Having considered the above analysis, the three criteria required for a right to access
platform management service). The requirement for distinct performance the licence over time are not met. The licence is a right to use for customers and its
obligations in the standard, therefore, is already met. revenue should be recognised at a point in time once the customer purchases it. Other
licence arrangement may produce a different conclusion.
PwC 110
WIBS Interconnection and WIBS International Roaming Consumer product

As mentioned previously, transactions in WIBS Interconnection and WIBS Telkom’s retail product offers, in addition to its regular products (e.g.
International Roaming only have one service in which Telkom provides telephone, internet, and pay TV), additional services to customers for free (i.e.
interconnection services to other telecommunication providers. Interconnection iFlix) and customer loyalty programmes were introduced recently. Free
is the physical linking of Telkom's network with equipment or facilities products and loyalty programmes meet the criteria of material rights as further
belonging to other providers. Interconnection and International Roaming explained on page 114 to 121. On the other hand, devices to provide output
satisfy the criteria of a series of distinct services as follows: that the customers have constructed (i.e. ONT) do not meet the criteria of
distinct performance obligations as explain further in page 212-218.
1. Interconnection and international roaming meet criteria to be a
performance obligation satisfied over time; and EBIS Connectivity and WIBS Connectivity
2. The same method is used measure the entity’s progress towards complete
As applicable to Telkom’s standard products, PIDs in the system meet the
satisfaction of the performance obligation.
criteria of a distinct performance obligation in IFRS 15. Application guidance
The arrangement is highly regulated and involves a limited number of on the next pages provide a detailed explanation to support such a conclusion.
contracts. It is unlikely that Telkom provides additional services on top of the
EBIS Solutions
interconnection (i.e. free products). Considering that, it is fair if we conclude
that we expect no gap between Telkom’s existing practice under IAS 18 and The nature of solution products could be very diverse and may be bespoke
IFRS 15. under specific customer circumstances. Determination should be performed on
a contract by contract basis to ensure a proper treatment in IFRS 15.

Consumer
Yes No Yes Yes Yes Yes
IFRS 15 Guidance
Performance obligations are distinct goods and/or services that are:
• Capable of being used separately by the customer (on their own or with other resources); and
• Distinct in the context of the contract (a) Not significantly integrated with other goods/services (b) That do not significantly modify or customise other goods/services (c) Not highly dependent on other goods/services
PwC 111
Position paper 6
Application guidance – ‘Identification of performance obligations for
standard products’
Consumer To assess the number of distinct performance Does Telkom’s current practice of identifying the
EBIS Connectivity obligations for Telkom’s standard products. performance obligation of retail, non-retail
standard products and non-standard products
WIBS Connectivity satisfy IFRS requirements?
Background: Even though there are variations in the service level within each product (e.g.
Telkom has myriads of contracts with customers offering a range of there are variations in the speed level of internet connectivity that a customer
standard retail, standard non-retail and bespoke products, which are can purchase, or the number of TV channels that a customer can subscribe to),
generally referred to as solution products (“DNAPSOO”). Telkom always each product represents a distinct service to be provided to customers.
aims to accommodate customers’ needs by providing individual products or Therefore, Telkom currently treats each standard retail product as a separate
a combination of products according to customers’ requirements. performance obligation. A retail contract may have multiple products, hence
multiple distinct performance obligations, that come with a variation of service
Consumer - Standard retail products levels that can be selected by customers.
Represent Telkom’s regular retail products that have a standardised pricing EBIS Connectivity & WIBS Connectivity - Standard non-retail
mechanism established by the NITS department. Telkom has four standard products:
retail products that are currently offered to customers. These retail products
are maintained in iSiska (referred to as “IdRev”): There represent Telkom’s regular standard non-retail products that have a
standardised pricing mechanism established by the NITS Department.
1. UseeTV Currently, Telkom has hundreds of non-retail products in TiCares (referred to as
2. Fixed Telephone is also known as Plain Old Telephone Service (“POTS”) PID) that are active for provisioning in the system. For example, the following
services are Telkom’s active standard non-retail products that require
3. Internet provisioning:
4. Add-ons (e.g. Melon, HooQ, CatchPlay) 1. MM_Astinet (“Astinet”)
2. MM_SAFIRO (“Safiro”)
5. Customer loyalty programme (i.e. Poin myIndiHome) 3. MM_IP_TRANSIT and MM_IPTRANSIT (“IP Transit”)
4. MM_VPN_IP, MM_VPN_LITE and MM_VPNIP_RL1 (“VPN”)
5. MM_TRANS_ACESS (“Transactional Access”)

PwC 112
Position paper 6
Step 2.1 – Identification of performance obligations from the contract – cont’d
EBIS Solution - Non- standard products for solution services
(DNAPSOO):
This represents Telkom’s bespoke products that are tailored to address
customers’ specific requirements. These solution contracts are bespoke in
nature, and therefore that it is difficult to standardise the types of services
being offered. In general, however, Telkom is offering a combination of:
1. The provision of customers premise equipment (“CPE”);
2. Connectivity services;
3. Installation services;
4. Construction of network infrastructure;
5. Management as well as other services.
The services provided are not limited to the five products mentioned above,
so each solution contract needs to be carefully analysed to determine the
number of distinct performance obligations. Therefore, the identification of
the performance obligation of Telkom’s non-standard products must be
performed on a contract by contract basis.
In practice, Telkom is using the following generic PIDs in TiCares to record
solution service products:
• MM_MANAGE_NETWORK
• MM_MANAGE_SERVICE
• MM_MANAGE_PLATFORM
• MM_MANAGE_APP
• MM_MANAGE_DEVICE
• MM_MGE_DEV_OTHER
• MM_MGE_NON_DEV_OTH

PwC 113
Position paper 6
Reference to relevant accounting standard: Standard further explained in paragraph 23: a series of distinct goods or services
IFRS 15.22: At contract inception, an entity shall assess the goods or services has the same pattern of transfer to the customer if both of the following criteria
promised in a contract with a customer and shall identify as a performance are met:
obligation each promise to transfer to the customer either: a. Each distinct good or service in the series that entity promise to transfer to
a. A good or service (or a bundle of goods or services) that is distinct; or the customer would meet criteria of performance obligation satisfied
overtime; and
b. A series of distinct goods or services that are substantially the same and
b. The same method will be used to measure the entity’s progress towards
that have the same pattern of transfer to the customer (see paragraph
complete satisfaction of the performance obligation to transfer each distinct
23).
goods or service in the series to the customer.
Generally, to apply the IFRS 15, an entity must identify the promised goods
IFRS 15.24 A contract with a customer generally explicitly states the goods or
and services within the contract and determine which of those goods and
services that an entity promises to transfer to a customer. However, the
services are separate performance obligations. Because the standard requires
performance obligations identified in a contract with a customer may not be
entities to allocate the transaction price to a performance obligation, proper
limited to the goods or services that are explicitly stated in that contract. This is
identification of the performance obligation is fundamental to recognising
because a contract with a customer may also include promises that are implied
revenue on a basis that faithfully depicts the entity’s performance in
by an entity’s customary business practices, published policies or specific
transferring the promised good or services to the customer.
statements if, at the time of entering into the contract, those promises create a
Promises in a contract can be explicit, or implicit if the promises create a valid expectation of the customer that the entity will transfer a good or service to
valid expectation that the entity will provide a good or service based on the the customer.
entity’s customary business practices, published policies, or specific
IFRS 15.27 A good or service that is promised to a customer is distinct if all
statements. At the contract inception, IFRS 15 requires an entity to assess
the goods or services promised in a contract with a customer and shall
identify as a performance obligation each promise transfer to the customer 1. The customer can benefit from the good or service on its own or together
either: with other resources that are readily available to the customer; and
IFRS 15.28 - A customer can benefit from a good or service if the good or
c. A good or service (or bundle of goods or services) that is distinct; or
service could be used, consumed, sold for an amount that is greater than
d. A series of distinct goods or services that are substantially the same and scarp value or otherwise held in a way that generates greater economic
that have same pattern of transfer to the customer. benefits
2. The entity’s promise to transfer the good or service to the customer is
separately identifiable from other promises in the contract.

PwC 114
Position paper 6
IFRS 15.29 provides the following indicators whether the promise to transfer B41 If a customer has the option to acquire an additional good or service at a
the good or service is separately identifiable: price that would reflect the SSP for that good or service, that option does not
provide the customer with a material right even if the option can be exercised
1. The entity does not provide significant service of integrating the goods or only by entering into a previous contract. In those cases, the entity has made a
service with other goods or services promised in the contract into a bundle marketing offer that it shall account for in accordance with this Standard only
of goods or services that represent the combined output for which the when the customer exercises the option to purchase the additional goods or
customer has contracted; services.
2. The good or service does not significantly modify or customise another
Analysis:
good or service promised in the contract; and
3. The good or service is not highly dependent on, or highly interrelated with, [1] Identifying the performance obligations offered in Telkom’s
other goods or services promised in the contract standard products (retail and non-retail)
IFRS 15.30 explains that if a promised good or service is not distinct, an entity Relationship between a customer contract, a PID and a performance
shall combine that good or service with other promised goods or services until obligation
it identifies a bundle of goods or services that is distinct. In some cases, that IFRS 15 requires Telkom to identify all distinct performance obligations in a
would result in the entity accounting for all goods or services promised in a customer contract. To do so, we need to first understand the relationship
contract as a single performance obligation. between a customer contract, a service order, a PID and finally a
Material right performance obligation.
IFRS15. B40 If, in a contract, an entity grants a customer the option to acquire At the moment, Telkom’s CRM systems (both TiCares and iSiska) are not
additional goods or services, that option gives rise to a performance obligation designed to operate as a contract management tool (refer to explanation in
in the contract only if the option provides a material right to the customer that Step 1.1c Contract Management). Instead, the main focus of these CRMs is
it would not receive without entering into that contract (for example, a to enable management to deliver services demanded by customers in the
discount that is incremental to the range of discounts typically given for those contracts. CRMs will feed in customers’ orders information to the
goods or services to that class of customer in that geographical area or provisioning and billing systems. In this sense, service order information
market). If the option provides a material right to the customer, the customer is the main focus of the CRMs.
in effect pays the entity in advance for future goods or services and the entity One customer contract may have multiple service orders; with each service
recognises revenue when those future goods or services are transferred or order being ascribed with a PID. For example:
when the option expires.

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Position paper 6
Standard PIDs come with standard services for all customers. Although there
Examples of contract can be some variation in the service level (e.g. the speed of internet
connectivity) demanded by customers, the types (nature) of services that will
Contract number 0097HK000TR6W220ERS2015 be delivered by Telkom have essentially been standardised (i.e. pre-defined).
Therefore, a standard PID is the smallest unit of account from which Telkom
can start identifying its performance obligations. To do so, Telkom will review
Service order - PID • 800829296 – MM_ASTINET
• 8000876422 – MM_METRO_LINK the promised services / goods that the company will deliver to customers in
• 8000878600 – MM_ASTINET each standard PID.
No Relationship Relation
1 Customer contract A customer contract may have multiple service
with service order orders, as illustrated below:
relationship
One customer contract service order #1
 service order #2
 service order #3,
etc.
2 Service order and While one service order  has one PID (a
PID relationship one-to-one relationship).
3 PID and Each PID may have one, or more, distinct
performance performance obligation(s) depending on the
obligation promised goods / services that will be
relationship delivered by Telkom. A standard PID has a
pre-defined set of services / goods that will be
delivered by Telkom.

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Position paper 6
Identification of goods and services delivered in standard PIDs A promise to provide certain services (e.g. fixed telephone, PayTV, Astinet)
Please refer to the page 122-124 where we identify the number of distinct for a specified contract term satisfies the series criteria. This is because
performance obligations for each of Telkom’s standard non-retail PIDs, as well Telkom is providing the same service every month. The underlying activities
as standard retail products. (for example, providing general network infrastructure or additional
installation services) are undertaken to fulfil the service rather than separate
As a result of this review, we come to the conclusion that each standard PID
promises. The distinct service within the series is defined by each time
essentially constitutes a series of distinct goods or services that have the same
increment involved in performing the service (for example, each day or
pattern of transfer to customers. IFRS 15 para 23 prescribes that a series of
month of service).
distinct goods or services have the same pattern of transfer to the customer if
both of the following criteria are met: Customer loyalty programmes
Telkom customer loyalty programmes can be offered only to subscribers to
Criteria in
No Analysis IndiHome Triple Play (with internet speed above 10 Mbps) that has installed
IFRS 15.23
myIndiHome Application as set out in https://indihome.co.id/point-
1 Each distinct good or Yes. Most of the standard products
reward. This is a new programme in Telkom introduced in early 2018. The
service in the series that involve the delivery of standard services
(e.g. connectivity, TV, telephone). For implication is straight forward, Telkom myIndihome points meet the criterion
the entity (Telkom)
these standard services, a customer of material right as supported by the fact that those eligible customers have
promises to transfer to the
simultaneously receives and consumes the right to redeem the point given with several goods or services (i.e.
customer would meet the Prambanan Jazz ticket). A detailed explanation is provided on page 222.
criteria of performance the benefits provided by Telkom’s
performance as the company performs
obligation satisfied
its services.
overtime
2 The same method will be Yes. Most of the services are delivered to,
used to measure the and the benefits are also enjoyed by,
entity’s (Telkom’s) customers over the same period of time.
progress towards complete Time is the unit of measurement that is
satisfaction of the often used to measure progress. (For
performance obligation to example, where a customer purchases
transfer each distinct good access for internet connectivity on a
or service in the series to monthly basis, the benefits are consumed
the customer in the same period in which the services
are delivered).

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Position paper 6
Determination of whether installation activities are distinct performance Therefore, we believe installation activities are not separate performance
obligations obligations that need to be accounted for separately. Please refer to Appendix 2
For a new customer, Telkom often charges installation fees to cover Company for the assessment of retail and non-retail standard products.
costs to set-up connectivity (e.g. laying the cable connecting Telkom’s main Determination of whether CPEs are distinct performance obligations
network infrastructure to a customer’s premises) at the inception of the
contract. A question arises whether these installation activities should be In addition to carrying out installation activities, Telkom may also charge and
considered as a separate performance obligation in a contract. There are two provide CPEs to customers. For retail customers, CPEs are generally made up
criteria in the standard that need to be satisfied for this to be viewed as a of a modem and a set-up box. Please refer to a separate accounting position
distinct performance obligation; they are: paper titled “Identification whether customer premise equipment is distinct for
1. Criterion one states that for goods or service to be distinct, the customer the purpose of IFRS 15” discussing whether CPEs provided as part of Telkom’s
should be able to benefit from the goods or service, either on its own or standard products should be considered as a separate performance obligation.
together with other resources that are readily available. We do not believe
that installation services are distinct because a customer does not benefit [2] Identifying performance obligations in Telkom’s non-standard
from just having the cable connected to his/her premise without the products
contents (e.g. internet connectivity, telephone, TV, etc.) being provided.
Telkom does not sell these installation activities on their own; and more Unlike Telkom’s standard products, the identification of performance
importantly, the activities undertaken are so specific and customised to fit obligations in Telkom’s non-standard products should be performed on a
Telkom’s technical requirements that a customer cannot simply have contract by contract basis. This is considered the best approach to identify
other providers to come in and take over the infrastructure that has been the unit of account that faithfully depicts Telkom’s performance in
installed by Telkom. transferring the promised goods or services to customers.
2. Criterion two requires installation services to be separately identifiable.
Although installation fees may be separately charged to customers, we do
not believe that installation activities are necessarily separable from all
other activities that need to be performed by Telkom in the context of the
contract. For example, a customer cannot receive internet connectivity
without the construction of the basic network infrastructure, the
installation of all necessary equipment to connect a customer’s premise
with Telkom’s network infrastructure and the continuous support of
Telkom’s team to operate the integrated infrastructure. In essence,
installation is just one of the activities that are integrated with all other
inputs to produce a combined output to be delivered to customers. In the
context of the contract, installation activities are not distinct on their own.
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Position paper 6
!
Conclusion
Having considered all of the relevant information and

requirements in the standard, we conclude that the
following approach should be taken to identify the
performance obligations in Telkom’s contracts with
customers:
a. Retail and non-retail standard products – one product
(e.g. PID) represents one performance obligation,
though it may consist of several underlying activities
(goods or services), as this represent a series of goods or
services that are integrated with one another and have
the same pattern of transfer to customers.
b. Non-standard products – identification of performance
obligations shall be performed on a contract by contract
basis.
Can the existing practice continue? Connecting the story
Applicable to Consumers: On page 23 we have highlighted significant issues arise in a from the
No - Customer loyalty programmes are a material right for the system’s inability to link PID, which represent the performance obligation,
Customer; therefore, they are distinct performance obligations. with the underlying contracts.
Telkom needs to allocate the total transaction price to its customer This creates a problem in the overall process of assessing the impact of
loyalty programmes. IFRS 15 in Telkom, as ensuring the completeness of performance
obligations within the contract affects heavily the remaining step in the
Applicable to Consumer, EBIS Solution, EBIS Connectivity,
standards. Inability to ensure complete performance obligation in the
and WIBS Connectivity
contract will impact the allocation of transaction prices (presentation and
Yes – Free products meet the criteria of a distinct performance disclosure) as well as the timing of revenue recognition.
obligation under IFRS 15.
Gap 5 identified
PwC EBIS Solution, EBIS Connectivity, WIBS Connectivity 119
Position paper 6
Appendix 1
Summary assessment of significant PID for standard products:
Number of revenue Number of revenue
elements/Performance elements/Performance
No PID No PID
Obligations Obligations
IAS 18 IFRS 15 IAS 18 IFRS 15
1 MM_ASTINET 1 1 24 MM_METRO_LINK 1 1
2 MM_SAFIRO 1 1 25 MM_DINAACCESS 1 1
3 MM_IP_TRANSIT 1 1 26 MM_IDR 1 1
4 MM_IPTRANSIT 1 1 27 MM_LAY_AKS_CC 1 1
5 MM_VPN_IP 1 1 28 MM_TRANSPONDER 1 1
6 MM_VPN_LITE 1 1 29 MM_ISDN_PRA 1 1
7 MM_VPNIP_RL1 1 1 30 MM_UMEETME 1 1
8 MM_TRANS_ACESS 1 1 31 MM_UCALL 1 1
9 MM_SAR_KOLOKASI 1 N/A**) 32 MM_ADSL 1 1
10 MM_SAR_RUANGAN 1 N/A**) 33 MM_METRO_INTER 1 1
11 MM_SAR_POWER 1 1 34 MM_VPN_FR 1 1
12 MM_DATACENTER 1 1 35 MM_VPN_BACKHAUL 1 1
13 MM_SL_DIGITAL 1 1 36 MM_VPN_DIAL 1 1
14 MM_SL_DIGITAL_H 1 1 37 MM_VPN_INSTANT 1 1
15 MM_WIFI_ID 1 1 38 MM_BACKHAUL_SSK 1 1
16 MM_WDM 1 1 39 MM_E_AKADEMIK 1 1
17 MM_IPLC 1 1 40 MM_E_HEALTH 1 1
18 MM_IEPL 1 1 41 MM_E_KELURAHAN 1 1
19 MM_SARTL_INNERCITY 1 N/A**) 42 MM_E_OFFICE 1 1
20 MM_WIFI_BISNIS 1 1 43 MM_E_PUSKESMAS 1 1
21 MM_SATU 1 1 44 MM_IP_PBX 1 1
22 MM_SIAP_ONLINE 1 1 45 MM_ISDN 1 1
23 MM_METRO_ETHERNET 1 1 46 MM_KI_MAIL_HOSTING 1 1

PwC 120
Position paper 6
Number of revenue Number of revenue
elements/Performance elements/Performance
No PID No9
Obligations PID Obligations
2
IAS 18 IFRS 15
IAS 18 IFRS 15
47 MM_KI_WEB_HOSTING 1 1
48 MM_WIFI_VAS 1 1 73 MM_SAR_GROUNDING 1 1
49 MM_PLASATRON 1 1 74 MM_SAR_LAHAN 1 1
50 MM_T_CLOUD 1 1 75 MM_SAR_TOWER 1 1
51 MM_TFLEET 1 1 76 MM_SAR_TOWER_H 1 1
52 MM_TREND_MICRO 1 1 77 MM_SARPEN_CDAYA_H 1 1
53 MM_VDATACENTER 1 1 78 MM_SARPEN_PGRND_H 1 1
54 MM_VMACHINE 1 1 79 MM_SARPEN_RUNGAN_H 1 1
55 MM_VNETSERVICE 1 1
80 MM_SDL 1 1
56 MM_METRON_INET 1 1
81 MM_SL_ANALOG 1 1
57 MM_LOCATION 1 1
82 MM_SL_ANALOG_H 1 1
58 MM_SMARTADS 1 1
59 MM_VSOFTSERVICE 1 1 83 MM_SL_ANALOG_O 1 1
60 MM_CNDC 1 1 84 MM_TIE_LINE 1 1
61 MM_DDOS 1 1 85 MM_VPN_BACKHAUL_O 1 1
MM_DID 86 MM_ INTERKONEKSI 1 1
62 1 1
DOMESTIK
63 MM_DOV 1 1
87 MM_IN JAPATI (CALL CENTER, 1 1
64 MM_DOV_H 1 1 PREMIUM CALL)
65 MM_HOST 1 1 88 MM_A2P 1 1
66 MM_HOST_O 1 1 89 MM_INTERKONEKSI 1 1
67 MM_LAY_AKSES_CC_O 1 1 INTERNAS 007
68 MM_PORT_INTERKON 1 1 MM_INTERKONEKSI 1 1
MM_PORTE1_SENTRAL 90
69 1 1 INTERNAS 017
70 MM_PREMIUM_CALL 1 1 91 MM_OG PTSN TO 001/008 1 1
71 MM_PWS1 1 1 92 MM_OG TG 017 1 1
72 MM_SAR_AR 1 1

PwC 121
Position paper 6
Number of revenue
elements/Performance
No PID
Obligations
IAS 18 IFRS 15
93 MM_MANAGE_NETWORK*) 1
94 MM_MANAGE_SERVICE*) 1
95 MM_MANAGE_PLATFORM*) 1
96 MM_MANAGE_APP*) 1 To be assessed
97 MM_MANAGE_DEVICE*) 1 further on a
98 MM_MGE_DEV_OTHER*) 1 contract by
99 MM_CPE_HARDWARE*) 1 contract basis
100 MM_CPE_SOFTWARE*) 1
101 MM_MGE_NON_DEV_OTH*) 1
102 MM_CPE_SERVICE*) 1
*) The number of PO in the PID needs to be assessed on a contract by contract basis.

**) Activities performed in these PIDs are not in the scope of IFRS 15 because they
meet definition of lease under IFRIC 4 and IFRS 16.

PwC 122
Position paper 6
Appendix 2
Detail assessment of each product ID within the scope of IFRS 15
No Consumer product Underlying activities Identification of PO under IFRS 15

1 Fixed telephone, Global 1. Operation of general network infrastructure; The installation service, fixed telephone and global called represent
Call 2. For fixed telephone only - additional installation a series of distinct services that are substantially the same and that
services, depending on the availability of the have the same pattern of transfer to the customer because:
network to the customer’s premise i) The customer cannot benefit from the telephone service
separately from the installation service; and
ii) The telephone service is not separately identifiable as the
service must be combined with the installation service to
deliver the service that customers actually contracted.
2 Internet and speed on 1. Operation of general network infrastructure; The installation service, ONT, Internet (retail) and speed on
demand 2. Additional installation service, depending on the demand represent a series of distinct services that are substantially
availability of the network to the customer’s the same and that have the same pattern of transfer to the customer
premise; and because:
3. ONT i) The customer cannot benefit from the internet (retail) and
speed on demand service separately from the installation
service and the provision of ONT; and
ii) Internet or speed on demand is not separately identifiable
from the installation service and the provision of ONT.
3 USeeTV, Minipack 1. Operation of general network infrastructure; The installation service, STB and USeeTV represent a series of
UseeTV 2. Additional installation service, depending on the distinct services that are substantially the same and that have the
availability of the network to the customer’s same pattern of transfer to the customer because:
premise; and i) The customer cannot benefit from the USeeTV service
3. Set Top Box (“STB”) separately from the installation service and the provision of
STB; and
ii) USeeTV is not separately identifiable from the installation
service and the provision of STB.

PwC 123
Position paper 6
No Consumer product Underlying activities Identification of PO under IFRS 15

4 iFlix, HooQ Access to an online library of films and television. This iFlix and HooQ represent a distinct service as this satisfies the
service allows subscribers to stream television series criteria of a distinct performance obligation:
and films via the iFlix and HooQ website on personal
i) Customers benefit from the service which allows them to
computers, or the relevant software on a variety of
stream various movie content through this application; and
supported platforms, including smartphones and
tablets, digital media players, video game consoles and ii) iFlix and HooQ are separately identifiable from the other
smart TVs. No additional underlying activities (i.e. services in the package.
installation) is necessary. For detail refer to page 106.
5 Movin Service that enables the subscriber to receive fixed Movin represents a distinct service as this satisfies the criteria of a
telephone calls by through mobile phone by installing distinct performance obligation:
the application from the App Store (e.g. Google Play
i) Customers benefit from the service which allows them to
Store and Apple Play Store).
receive fixed telephone through mobile phone; and
ii) Movin is separately identifiable from the other services in the
package.
6 Trend Micro Antivirus Service that enables users to protect their devices from Trend Micro Antivirus represents a distinct service as this satisfies
various computer threats (e.g. virus, malware, spyware, the criteria of a distinct performance obligation:
spam, phishing, and other inappropriate content). No
i) Customers have the option to purchase the service separately
additional underlying activities (i.e. installation) is
and benefit from the service that allows them to protect their
necessary.
devices; and
ii) Trend Micro Antivirus is separately identifiable from the
other service in the package.

PwC 124
Position paper 6
No Consumer products Underlying activities Identification of PO under IFRS 15
Digital content meets the criteria of distinct goods below:

RuangGuru, EduKids, Various digital content that allows customers to
7 30 Menit Bisa Membaca subscribe to educational programmes. No additional i) Digital content could be sold separately; and
Al-Quran service is considered necessary. ii) Digital content is separately identifiable from the other goods
and services in the package.
Additional hybrid box meet the criteria of distinct goods as it meet

the following criteria:
1. Operation of general network infrastructure;
i) The customer has the option to purchase an additional hybrid
8 Additional hybrid box 2. Additional installation service, depending on the box separately and can benefit from them combined with of
availability of the network on the customer’s USeeTv Services; and
premise; and
ii) Additional hybrid box is separately identifiable from the other
goods and services in the package.

PwC 125
Position paper 6
Standard non- retail
No Underlying activities Identification of PO under IFRS 15
products
1 MM_Astinet (“Astinet”) 1. Operation of general network infrastructure; Astinet connectivity service
2. Modem; The installation service and Astinet’s connectivity service represent
3. Additional installation service, depending on the a series of distinct services that are substantially the same and that
availability of the network on the customer’s have the same pattern of transfer to the customer because:
premise. i) The customer cannot benefit from the Astinet service
ii) The Astinet service is not separately identifiable from the
installation service identified in the contract
Provision of modem
The provision of modems is not distinct for the purpose of IFRS 15
as this equipment is merely an input that is being used to produce
the output for which the customer actually contracted. When the
equipment and the service are required to continually interact in
order to fulfil the promise to the customer, the two goods/services
are highly interdependent/interrelated. Further analysis for this is
performed in a separate position paper regarding “Determination of
performance obligation for CPE”.
2 MM_SAFIRO (“Safiro”) 1. Operation of general network infrastructure; and The installation service and Safiro’s connectivity service represents a
2. Additional installation service, depending on the series of distinct services that are substantially the same and that
availability of the network on the customer’s have the same pattern of transfer to the customer, because:
premise. i) The customer cannot benefit from the Safiro service separately
from the installation service; and
ii) The Safiro service is not separately identifiable from the
installation service identified in the contract.

PwC 126
Position paper 6
Ref Underlying activities Identification of PO under IFRS 15
products
3,4 MM_IP_TRANSIT and 1. Operation of general network infrastructure; and The installation service and IP Transit’s connectivity service
MM_IPTRANSIT (“IP represent a series of distinct services that are substantially the same
2. Additional installation service, depending on the
Transit”) and that have the same pattern of transfer to the customer, because:
availability of the network on the customer’s
premise. i) The customer cannot benefit from the IP Transit service
ii) The IP Transit service is not separately identifiable from the
5,6, MM_VPN_IP, 1. Operation of general network infrastructure; and The installation service and the VPN connectivity service represent
7,34 MM_VPN_LITE and a series of distinct services that are substantially the same and that
,35, MM_VPNIP_RL1 , have the same pattern of transfer to the customer, because:
36, MM_VPN_FR,
premise. i) The customer cannot benefit from the VPN service separately
37, MM_VPN_BACKHAU,
85 MM_VPN_DIAL,
MM_VPN_INSTANT, ii) The VPN service is not separately identifiable from the
MM_VPN_BACKHAUL installation service identified in the contract.
_O
(“VPN”)
8 MM_TRANS_ACESS 1. Operation of general network infrastructure; and The installation service and the Transactional Access connectivity
(“Transactional service represent a series of distinct services that are substantially
Access”) the same and that have the same pattern of transfer to the
customer, because:
premise.
i) The customer cannot benefit from the Transactional Access
service separately from the installation service; and
ii) The Transactional Access service is not separately identifiable
from the installation service identified in the contract.

PwC 127
Position paper 6
Ref Standard non- retail Underlying activities Identification of PO under IFRS 15
products
11, MM_SAR_POWER, Power connection SAR_POWER and SAR_AR represent a series of distinct
72, MM_SAR_AR, performance obligations that are substantially the same and that
73, MM_SAR_GROUNDIN have the same pattern of transfer to the customer.
74, G, MM_SAR_LAHAN,
75, MM_SAR_TOWER,
76 MM_SAR_TOWER_H
(“Specific Absorption
Rate”)
12 MM_DATACENTER With Data Center service, in addition to providing As described, although the provision of Data Centre includes
(“Data centre”) customers with basic colocation services on the colocation services and data management from which customers
infrastructure and supporting facilities, Telkom also can benefit separately, the services are not considered distinct in the
manages customer’s data on Telkom’s premises using context of the contract. This is because, the customer perceives
Telkom’s own supporting IT equipment. these services as an input or activities that must be performed by
the supplier to fulfil its promise to them. For the customer to enjoy
The following components are required in providing the
the benefit, colocation serves as part of the input that needs to be
data center service:
integrated with Telkom’s IT equipment and data management
1. General network infrastructure, including data service. This makes the colocation, provision of Telkom’s IT
center infrastructure; equipment and data management service as inputs to the provision
2. IT equipment which is shared amongst the of Data Centre service. In this case, the Data Centre service
customers; and represents a series of distinct services that are substantially the
same and that have the same pattern of transfer to the customer.
3. Basic installation service to integrate data center to
customers’ networks’
13, MM_SL_DIGITAL and 1. Operation of general network infrastructure; and The installation service and Leased line connectivity service
14 MM_SL_DIGITAL_H 2. Additional installation service, depending on the represent a series of distinct services that are substantially the same
(“Leased line digital”) availability of the network on the customer’s and that have the same pattern of transfer to the customer, because:
premise. i) The customer cannot benefit from the Leased line service
ii) The Leased line digital service is not separately identifiable

PwC 128
Position paper 6
products
16 MM_WDM (“WDM”) 1. Operation of general network infrastructure; and The installation service and WDM connectivity service represent a
2. Additional installation service, depending on the series of distinct services that are substantially the same and that
premise. i) The customer cannot benefit from the WDM service
ii) The WDM service is not separately identifiable from the
17 MM_IPLC (“IPLC”) 1. Operation of general network infrastructure; and The installation service and IPLC connectivity service represent a
series of distinct services that are substantially the same and that
have the same pattern of transfer to the customer, because:
premise. i) The customer cannot benefit from the IPLC service separately
ii) The IPLC service is not separately identifiable from the
18 MM_IEPL (“IEPL”) 1. Operation of general network infrastructure; and The installation service, IEPL connectivity service represent a series
of distinct services that are substantially the same and that have the
same pattern of transfer to the customer, because:
premise. i) The customer cannot benefit from the IEPL service separately

ii) The IEPL service is not separately identifiable from the

PwC 129
Position paper 6
products
15, MM_WIFI_ID, 1. Operation of general network infrastructure; and The installation service and WIFI connectivity service represent a
MM_WIFI_BISNIS, series of distinct services that are substantially the same and that
20, 2. Additional installation service which also includes
MM_WIFI_VAS have the same pattern of transfer to the customer, because:
48 the installation of access points in customer’s
(“WIFI”)
premise, depending on the availability of the i) The customer cannot benefit from the WIFI service separately
network on the customer’s premise. from the installation service; and
ii) The WIFI service is not separately identifiable from the
21 MM_SATU 1. Operation of general network infrastructure; and The installation service and the service provided under SATU
represent a series of distinct services that are substantially the same
2. Additional installation service which also includes
and that have the same pattern of transfer to the customer,
installation of access points in customer’s premise,
because:
depending on the availability of the network on the
customer’s premise. i) The customer cannot benefit from the SATU service
ii) The SATU service is not separately identifiable from the
22 MM_SIAP_ONLINE 1. Operation of general network infrastructure; and The introduction training to the customer and the service provided
under SIAP_ONLINE represent a series of distinct services that are
2. Introduction training to the customers.
substantially the same and that have the same pattern of transfer to
the customer. The introduction training to the customer is not a
separate PO from the SIAP_ONLINE because the customer cannot
benefit from the training itself without the application and the
content of the training is customised to the Customer condition and
only Telkom could deliver this to the customer.

PwC 130
Position paper 6
products
23, MM_METRO_ETHER 1. Operation of general network infrastructure; and The installation service, Ethernet connectivity service represent a
24, NET, series of distinct services that are substantially the same and that
33, MM_METRO_LINK, have the same pattern of transfer to the customer, because:
56 MM_METRO_INTER,
premise i) The customer cannot benefit from the Ethernet service
MM_METRON_INET
(“Ethernet”)
ii) The Ethernet service is not separately identifiable from the
25 MM_DINAACCESS 1. Operation of general network infrastructure; and The installation service, DINAACESS connectivity service represent
a series of distinct services that are substantially the same and that
premise. i) The customer cannot benefit from the DINAACCESS service
ii) The DINAACCESS service is not separately identifiable from
the installation service identified in the contract.
26 MM_IDR (“IDR”) 1. Operation of intermediate data rate network The installation service and IDR connectivity service represent a
infrastructure; and series of distinct services that are substantially the same and that
availability of the network on the customer’s i) The customer cannot benefit from the IDR service separately
network. from the installation service; and
ii) The IDR service is not separately identifiable from the

PwC 131
Position paper 6

products
27, MM_LAY_AKS_CC, 1. Operation of general network infrastructure; The installation service and the basic call centre service represent a
67 MM_LAY_AKSES_CC_ series of distinct services that are substantially the same and that
O have the same pattern of transfer to the customer. Additional goods
and/or services are separate performance obligation from the basic
(“Call centre”) premise; and
call centre service because the customer can benefit separately from
3. Other goods and/or services specifically required them and they are distinct in the context of the contract.
4. By the customer that constitute inputs to the
provision of call center service as a whole (e.g. call
center operators, switch, etc.).
28 MM_TRANSPONDER 1. General network infrastructure; and Represents a series of distinct services that are substantially the
(“Transponder”) same and that have the same pattern of transfer to the customer
2. Activation service providing the basic set up on the
ground segment.
29, MM_ISDN_PRA, 1. Operation of general network infrastructure The installation service and ISDN service represent a series of
45 MM_ISDN (“ISDN”) distinct services that are substantially the same and that have the
same pattern of transfer to the customer, because:
premise i) The customer cannot benefit from the ISDN service
ii) The ISDN service is not separately identifiable from the

PwC 132
Position paper 6
products
30 MM_UMEETME Substantially, the U Meet Me service is similar to digital U Meet Me meets the following criteria of distinct goods:
content that enables customers to operate a video
i) U Meet Me could be sold separately, in fact customer could
conference around the world.
subscribe directly to this service with the respective
developer; and
ii) U Meet Me is separately identifiable from the other goods and
services in the package.
31 MM_UCALL The operation of customer services and other UCall meets the following criteria of distinct goods:
administrative matters (e.g. order taking and
i) UCall could be sold separately, in fact customers could
processing, customer retention programme).
developer; and
ii) UCall is separately identifiable from the other goods and
32 MM_ADSL 1.Operation of general network infrastructure; and The installation service and ADSL connectivity service represent a
premise i) The customer cannot benefit from the ADSL service separately
ii) The ADSL service is not separately identifiable from the

PwC 133
Position paper 6
products
38 MM_BACKHAUL_SSK 1. Operation of general network infrastructure; and The installation service and Backhaul connectivity service represent
(“Backhaul”) a series of distinct services that are substantially the same and that
premise. i) The customer cannot benefit from the Backhaul service
ii) The Backhaul service is not separately identifiable from the
39 MM_E_AKADEMIK 1. Operation of general network infrastructure; and The installation service and e-Akademik connectivity service
(“e-Akademik”) represent a series of distinct services that are substantially the same
availability of the network to the customer’s
because:
premise.
i) The customer cannot benefit from the e-Akademik service
ii) The e-Akademik service is not separately identifiable from the
40 MM_E_HEALTH (“e- 1. Operation of general network infrastructure; and The installation service and e-Health connectivity service
Health”) represents a series of distinct services that are substantially the
same and that have the same pattern of transfer to the customer,
because:
premise.
i) The customer cannot benefit from the e-Health service
ii) The e-Health service is not separately identifiable from the

PwC 134
Position paper 6
products
41 MM_E_KELURAHAN Telkom provides an end-to-end connection service The installation service, e-Kelurahan connectivity service represent
(“e-Kelurahan”) a series of distinct services that are substantially the same and that
1.Operation of general network infrastructure; and
availability on the network to the customer’s i) The customer cannot benefit from the e-Kelurahan service
premise. separately from the installation service; and
ii) The e-Kelurahan service is not separately identifiable from
42 MM_E_OFFICE 1.Operation of general network infrastructure; and The installation service and e-Office connectivity service represent
2. Additional installation service, depending on the a series of distinct services that are substantially the same and that
(“e-Office”)
premise.
i) The customer cannot benefit from the e-Office service
ii) The e-Office service is not separately identifiable from the
43 MM_E_PUSKESMAS 1. Operation of general network infrastructure; and The installation service and e-Puskesmas connectivity service
(“e-Puskesmas”) represent a series of distinct services that are substantially the same
because:
premise.
i) The customer cannot benefit from the e-Puskesmas service
ii) The e-Puskesmas service is not separately identifiable from

PwC 135
Position paper 6
No Underlying activities Identification of PO under IFRS 15
products
44 MM_IP_PBX (“IP 1. Operation of general network infrastructure; and The installation service and IP PBX connectivity service represent a
PBX”) series of distinct services that are substantially the same and that have
the same pattern of transfer to the customer, because:
premise. i) The customer cannot benefit from the IP PBX service separately
ii) The IP PBX service is not separately identifiable from the
46 MM_KI_MAIL_HOSTI 1. Operation of general network infrastructure; Mail Hosting connectivity service

NG (“Mail Hosting”)
2. Mail Hosting Engine; and The installation service and Mail Hosting’s connectivity service
and that have the same pattern of transfer to the customer because:
premise. i) The customer cannot benefit from the Mail Hosting service
ii) The Mail Hosting service is not separately identifiable from the
Provision of engine
The provision of engines is not distinct for the purpose of IFRS 15 as
this equipment is merely an input used to produce the output for which
the customer actually contracted. When the equipment and the service
are required to continually interact in order to fulfil the promise to the
customer, the two goods/services are highly
interdependent/interrelated. Further analysis for this is performed on a
separate position paper regarding “Determination of performance
obligation for CPE”.

PwC 136
Position paper 6
products
47 MM_KI_WEB_HOSTI 1. Operation of general network infrastructure; and The installation service and Web Hosting of distinct services are
NG (“Web Hosting”) substantially the same and have the same pattern of transfer to the
customer, because:
premise. i) The customer cannot benefit from the Web Hosting service
ii) The Web Hosting service is not separately identifiable from
49 MM_PLASATRON 1. Operation of general network infrastructure; and The installation service and Plasatron connectivity service
(“Plasatron”) represent a series of distinct services that are substantially the same
because:
premise.
i) The customer cannot benefit from the Plasatron service
ii) The Plasatron service is not separately identifiable from the
50 MM_T_CLOUD 1. Operation of general network infrastructure; and The installation service and T-Cloud connectivity service represent
a series of distinct services that are substantially the same and that
(“T-Cloud”) 2. Additional installation service, depending on the
premise. i) The customer cannot benefit from the T-Cloud service
ii) The T-Cloud service is not separately identifiable from the

PwC 137
Position paper 6
products
51 MM_TFLEET Operation of trace tracking system to monitor freight Represents a series of distinct services that are substantially the
and logistic activity. same and that have the same pattern of transfer to the customer.
(“T-Fleet”)
52 MM_TREND_MICRO 1.Operation of general network infrastructure; and The installation service and Trend Micro connectivity service
(“Trend Micro”) represent a series of distinct services that are substantially the same
2.Additional installation service, depending on the because:
availability of the network on the customer’s premise
i) The customer cannot benefit from the Trend Micro service
ii) The Trend Micro service is not separately identifiable from
53 MM_VDATACENTER 1.Operation of general network infrastructure; and The installation service and Virtual Data Center connectivity service
(“Virtual Data Center”) represent a series of distinct services that are substantially the same
2.Additional installation service, depending on the because:
availability of the network on the customer’s premise
i) The customer cannot benefit from the Virtual Data Center
ii) The Virtual Data Center service is not separately identifiable

PwC 138
Position paper 6
products
54 MM_VMACHINE 1. Operation of general network infrastructure; and The installation service and Virtual Machine connectivity service
(“Virtual Machine”) represent a series of distinct services that are substantially the same
because:
premise.
i) The customer cannot benefit from the Virtual Machine
ii) The Virtual Machine service is not separately identifiable
55 MM_VNETSERVICE 1. Operation of general network infrastructure; and The installation service and Virtual Network Service connectivity
(“Virtual Network service represent a series of distinct services that are substantially
Service”) the same and that have the same pattern of transfer to the
customer, because:
premise.
i) The customer cannot benefit from the Virtual Network
Service separately from the installation service; and
ii) The Virtual Network Service is not separately identifiable
57 MM_LOCATION 1. Operation of general network infrastructure; and The installation service and Location of distinct services are
substantially the same and have the same pattern of transfer to the
customer, because:
premise. i) The customer cannot benefit from the Location service
ii) The Location service is not separately identifiable from the

PwC 139
Position paper 6
products
58 MM_SMARTADS 1. Operation of general network infrastructure; and The installation service and Smartads connectivity service
because:
premise.
i) The customer cannot benefit from the Smartads service
ii) The Smartads service is not separately identifiable from the
59 MM_VSOFTSERVICE 1. Operation of general network infrastructure; and The installation service and Softservice connectivity service
because:
premise.
i) The customer cannot benefit from the Softservice service
ii) The Softservice service is not separately identifiable from the
60 MM_CNDC 1. Operation of general network infrastructure; and The installation service and CNDC of distinct services are
customer, because:
premise. i) The customer cannot benefit from the CNDC service
ii) The CNDC service is not separately identifiable from the

PwC 140
Position paper 6
products
61 MM_DDOS 1. Operation of general network infrastructure; and The installation service and DDOS connectivity service represent a
premise. i) The customer cannot benefit from the DDOS service
ii) The DDOS service is not separately identifiable from the
62 MM_DID 1. Operation of general network infrastructure; and The installation service and DID connectivity service represent a
premise. i) The customer cannot benefit from the DID service separately
ii) The DID service is not separately identifiable from the
63, MM_DOV, 1. Operation of general network infrastructure; and The installation service and DOV of distinct services are
64 MM_DOV_H substantially the same and have the same pattern of transfer to the
customer, because:
premise. i) The customer cannot benefit from the DOV service separately
ii) The DOV service is not separately identifiable from the

PwC 141
Position paper 6
products
65, MM_HOST, 1. Operation of general network infrastructure; and The installation service and HOST connectivity service represent a
66 MM_HOST_O series of distinct services that are substantially the same and that
premise. i) The customer cannot benefit from the HOST service
ii) The HOST service is not separately identifiable from the
68 MM_PORT_INTERKO 1. Operation of general network infrastructure; and The installation service and Port Interkoneksi of distinct services
N (“Port Interkoneksi”) are substantially the same and have the same pattern of transfer to
the customer, because:
premise. i) The customer cannot benefit from the Port Interkoneksi
ii) The Port Interkoneksi service is not separately identifiable
69 MM_PORTE1_SENTR 1. Operation of general network infrastructure; and The installation service and Port E1 Sentral connectivity service
AL (“Port E1 Sentral”) represent a series of distinct services that are substantially the same
because:
premise.
i) The customer cannot benefit from the Port E1 Sentral service
ii) The Port E1 Sentral service is not separately identifiable from

PwC 142
Position paper 6
products
70 MM_PREMIUM_CALL Premium call can be used by the customer through Premium call meets the following criteria of distinct goods:
register to Telkom in which the customer will be
i) Premium call could be sold separately, in fact customers
charged higher price when using telephone call.
could subscribe directly to this service with the respective
developer; and
ii) Premium call is separately identifiable from the other goods
and services in the package.
71 MM_PWS1 1. Operation of general network infrastructure; and The installation service and PWS of distinct services are
customer, because:
premise. i) The customer cannot benefit from the PWS service separately
ii) The PWS service is not separately identifiable from the
77, MM_SARPEN_CDAYA 1. Operation of general network infrastructure; and The installation service and Sarana Penunjang of distinct services
78, _H, are substantially the same and have the same pattern of transfer to
79 MM_SARPEN_PGRND the customer, because:
_H,
premise. i) The customer cannot benefit from the Sarana Penunjang
MM_SARPEN_RUNGA
N_H
(“Sarana Penunjang”) ii) The Sarana Penunjang service is not separately identifiable

PwC 143
Position paper 6
products
80 MM_SDL SDL is a program which focuses on seeking out the SDL meets the following criteria of distinct goods:
future digital leaders. The customer interested in this
i) SDL could be sold separately, in fact customers could
program can register SDL through Telkom website.
developer; and
ii) SDL is separately identifiable from the other goods and
81, MM_SL_ANALOG, 1. Operation of general network infrastructure; and The installation service and Analog connectivity service represent a
82, MM_SL_ANALOG_H, series of distinct services that are substantially the same and that
83 MM_SL_ANALOG_O have the same pattern of transfer to the customer, because:
(“Leased line analog”)
premise. i) The customer cannot benefit from the Analog service
ii) The Leased line analog service is not separately identifiable
84 MM_TIE_LINE 1. Operation of general network infrastructure; and The installation service and Tie Line of distinct services are
customer, because:
premise. i) The customer cannot benefit from the Tie Line service
ii) The Tie Line service is not separately identifiable from the

PwC 144
Position paper 6
products
85 MM_INTERKONEKSI 1. Operation of general network infrastructure; and The installation service and Interkoneksi Domestik of distinct
DOMESTIK services are substantially the same and have the same pattern of
transfer to the customer, because:
premise. i) The customer cannot benefit from the Interkoneksi Domestik
ii) The Interkoneksi Domestik service is not separately
identifiable from the installation service identified in the
contract.
86 MM_SL_IN JAPATI 1. Operation of general network infrastructure; and The installation service and IN Japati service represent a series of
(CALL CENTER, distinct services that are substantially the same and that have the
PREMIUM CALL) same pattern of transfer to the customer, because:
premise. i) The customer cannot benefit from the IN Japati service
ii) The IN Japati service is not separately identifiable from the
87 MM_A2P 1. Operation of general network infrastructure; and The installation service and A2P of distinct services are
customer, because:
premise. i) The customer cannot benefit from the A2P service separately
ii) The A2P service is not separately identifiable from the

PwC 145
Position paper 6
products
88 MM_INTERKONEKSI 1. Operation of general network infrastructure; and The installation service and Interkoneksi Internas 007 of distinct
INTERNAS 007 services are substantially the same and have the same pattern of
premise. i) The customer cannot benefit from the Interkoneksi Internas
007 service separately from the installation service; and
ii) The Interkoneksi Internas 007 service is not separately
contract.
89 MM_INTERKONEKSI 1. Operation of general network infrastructure; and The installation service and Interkoneksi Internas 017 service
INTERNAS 017 represent a series of distinct services that are substantially the same
because:
premise.
i) The customer cannot benefit from the Interkoneksi Internas
017 service separately from the installation service; and
ii) The Interkoneksi Internas 017 service is not separately
contract.
90 MM_OG PSTN TO 1. Operation of general network infrastructure; and The installation service and OG PSTN TO 001/008 of distinct
001/008 services are substantially the same and have the same pattern of
premise. i) The customer cannot benefit from the OG PSTN TO 001/008
ii) The OG PSTN TO 001/008 service is not separately
contract.

PwC 146
Position paper 6

products
91 MM_OG TG 017 1. Operation of general network infrastructure; and The installation service and OG TG 017 of distinct services are
customer, because:
premise. i) The customer cannot benefit from the OG TG 017 service
ii) The OG TG 017 service is not separately identifiable from the

PwC 147
Position paper 6
PID’s outside the scope of IFRS 15

Ref Underlying activities Descriptions
products
19 MM_SARTL_INNERCITY 1. Fiber optic; and The provision of a dark fibre is within the scope of IFRS 16 given the
customer has the right to control the use of the fibre throughout the
2. Additional installation service, depending on
contract period.
the availability of the network on the
customer’s premise
9 MM_KOLOKASI 1. General network infrastructure; and Rental of a physical infrastructure is within the scope of IFRS 16. A
(“Colocation”) customer has the right to use the dedicated assets over the contract
2. Basic installation service to set the customer’s
period.
IT hardware.
10, MM_SAR_RUANGAN, 1. General network infrastructure; and Rental of a physical space is within the scope of IFRS 16. A customer
has the right to use the dedicated asset over the contract period
2. Basic installation service to set the customer’s
IT hardware.

PwC 148
Position paper 6
Application guidance – ‘Identification of performance obligations’
UseeTV
General infrastructure Additional installation service Set Top Box (“STB”)
Assessment for distinct Assessment for distinct Assessment for distinct

performance obligation performance obligation performance obligation
Customer can benefit from Customer can benefit from The customer can benefit
general infrastructure when the installation service when from the transactional
it is combined with the it is combined with the access service once it is
other readily available other readily available Yes combined with the general
Yes
Can the customer benefit Yes resources (e.g. Installation Can the customer benefit resources (e.g. Installation Can the customer benefit infrastructure and
and STB). from the good or service? and STB). from the good or service? installation services.
from the good or service?
General infrastructure is
The installation service is
not separately identifiable STB is not separately
Is the promise to transfer Is the promise to transfer not separately identifiable Is the promise to transfer
No in the context of the No identifiable in the context of
the good or service the good or service No in the context of the the good or service
contract as it is one of the the contract as it is one of
distinct within the distinct within the contract as it is one of the distinct within the
necessary parts to be the necessary part to be
context of the contract? context of the contract? necessary parts to be context of the contract?
integrated with other goods integrated with other goods
integrated with other goods
and services to represent and services to represent
and services to represent
the combined output for the combined output for
the combined output for
which the customer has which the customer has
which the customer has
contracted (USEETV contracted (USEETV
contracted (USEETV
service) service)
service)
General infrastructure does Installation service does not Set Top Box does not satisfy
Conclusion: not satisfy the criteria of
Conclusion: satisfy the criteria of distinct Conclusion: the criteria of distinct
distinct performance performance obligation performance obligation
obligation

PwC 149
Position paper 6
UseeTV
Assessment for distinct

The customer can benefit from

USeeTV with the combination
Yes of general infrastructure,
Can the customer benefit
installation, and STB .
IFRS 15.30 explains that if a promised good or service is not distinct, an entity shall combine those goods or service with other
promised goods or services until it identifies a bundle of goods or services that is distinct. In some cases, that would result in the
entity accounting for all goods or services promised in a contract as a single performance obligation
The service contracted for by

Is the promise to transfer the the customer is pay television.
good or service distinct Yes This service is separately
within the context of the identifiable from other
contract? promises in the contract.
Goods and services satisfy the

criteria of distinct performance
obligation
Conclusion:

PwC 150
Position paper 6
Fixed Telephone
General infrastructure Additional installation service Fixed Telephone

performance obligation performance obligation The customer can benefit
performance obligation Customers can benefit from Customer can benefit from
from the fixed telephone
general infrastructure when installation service when it
services with the
it is combined with the is combined with the other
combination of general
other readily available Yes readily available resources Yes
Yes Can the customer benefit Can the customer benefit infrastructure and
Can the customer benefit resources (i.e. installation (i.e. general infrastructure).
from the good or service? from the good or service? installation services.
from the good or service? services)
General infrastructure is Installation service is not

No not separately identifiable Is the promise to transfer separately identifiable in Is the promise to transfer Yes
Is the promise to transfer the good or service No the good or service The service contracted for
the good or service in the context of the the context of the contract
distinct within the distinct within the by the customer is fixed
distinct within the contract as it is one of the as it is one of the necessary
context of the contract? context of the contract? telephone. This service is
context of the contract? necessary parts to be parts to be integrated with
separately identifiable from
integrated with other goods other goods and services to
other promises in the
and services to represent represent the combined
contract.
the combined output for output for which the
which the customer has customer has contracted
contracted (Fixed (Fixed Telephone service)
telephone)
Installation service does not Goods and services satisfy

General infrastructure does
satisfy the criteria of
Conclusion: distinct performance
Conclusion: the criteria of distinct
distinct performance performance obligation
obligation
obligation

PwC 151
Position paper 6
Step 2.1 – Identification of performance obligations from the contract– cont’d
Internet (Retail)
General infrastructure Additional installation service Optical Network Terminal (ONT)

performance obligation Customer can benefit from performance obligation
performance obligation Customer can benefit from Customer can benefit from
installation service when it
general infrastructure when ONT once it is combined
is combined with the other
it is combined with the with Telkom’s general
readily available resources
other readily available Yes Yes infrastructure and
Yes Can the customer benefit (e.g. general infrastructure Can the customer benefit
Can the customer benefit resources (i.e. installation installation service.
from the good or service? and ONT). from the good or service?
from the good or service? services)
ONT is not separately

General infrastructure is Installation service is not identifiable in the context of
not separately identifiable separately identifiable in the contract as it is one of
in the context of the Is the promise to transfer No the context of the contract Is the promise to transfer the necessary parts to be
Is the promise to transfer No No
contract as it is one of the the good or service as it is one of the necessary the good or service integrated with other goods
the good or service
necessary parts to be distinct within the parts to be integrated with distinct within the and services to represent
distinct within the
integrated with other goods context of the contract? other goods and services to context of the contract? the combined output for
context of the contract?
and services to represent represent the combined which the customer has
the combined output for output for which the contracted (i.e. internet
which the customer has customer has contracted services)
contracted (i.e. internet (i.e. internet service)
services)
Set Top Box does not satisfy

General infrastructure does Installation service does not
the criteria of distinct
Conclusion: satisfy the criteria of distinct Conclusion:
distinct performance performance obligation
obligation

PwC 152
Position paper 6
Step 2.1 – Identification of performance obligations from the contract– cont’d
Internet (Retail)


internet services once they are
Yes combined with general
Can the customer benefit from infrastructure, installation,
the good or service? and ONT .

Yes the customer is internet. This
Is the promise to transfer the
service is separately
good or service distinct within the
identifiable from other
promises in the contract.
Good and service satisfy the

Conclusion: criteria of distinct

PwC 153
Position paper 6
MM_ASTINET
General infrastructure Modem Additional installation service
Assessment for distinct Customer can benefit from Assessment for distinct
performance obligation modem when it is combined performance obligation Customer can benefit from
performance obligation Customer can benefit from
with the other readily general infrastructure when
general infrastructure when
available resources (e.g. it is combined with the
it is combined with the
Yes installation services and other readily available
other readily available Yes
Yes Can the customer benefit general infrastructure) Can the customer benefit resources (e.g. general
Can the customer benefit resources (e.g. installation
from the good or service? from the good or service? infrastructure and modem).
from the good or service? services and modem)
Provision of modem is not

distinct for the purpose of
General infrastructure is IFRS 15 as this equipment is
not separately identifiable merely an input that is
being used to produce the Installation service is not
in the context of the Is the promise to transfer output for which the separately identifiable in
contract as it is one of the the good or service No Is the promise to transfer
Is the promise to transfer customer actually the context of the contract
necessary parts to be distinct within the the good or service No
the good or service No contracted. When the as it is one of the necessary
integrated with other goods context of the contract? distinct within the
distinct within the equipment and the service parts to be integrated with
and services to represent context of the contract?
context of the contract? are required to continually other goods and services to
interact in order to fulfil the represent the combined
promise to the customer, output for which the
contracted (i.e. Astinet
the two goods/services are customer has contracted
service)
highly interdependent/ (i.e. Astinet service)
interrelated

not satisfy the criteria of
Conclusion: distinct performance Conclusion: Modem does not satisfy the
Installation Service does
obligation criteria of distinct Conclusion: distinct performance
obligation

PwC 154
Position paper 6
MM_ASTINET


Astiner service once it is
Yes combined with the general
Can the customer benefit from infrastructure, installation,
the good or service? and modem .

Is the promise to transfer the the customer is Astinet. This
Yes
good or service distinct within the service is separately
context of the contract? identifiable from other

criteria of distinct
Conclusion: performance obligation

PwC 155
Position paper 6
MM_SAFIRO
General infrastructure Additional installation service MM_SAFIRO
General infrastructure is
not separately identifiable
Assessment for distinct in the context of the Customer can benefit from
performance obligation performance obligation
performance obligation contract as it is one of the installation service when it The customer can benefit
necessary parts to be is combined with the other from the Safiro service once
integrated with other goods readily available resources it is combined with the
and services to represent Yes (i.e. general infrastructure). Yes general infrastructure and
Yes the combined output for Can the customer benefit Can the customer benefit
Can the customer benefit installation services.
which the customer has from the good or service? from the good or service?
contracted (i.e. Astinet
service)
Installation service is not

separately identifiable in
General infrastructure is the context of the contract The service contracted for
Is the promise to transfer No
not separately identifiable the good or service as it is one of the necessary Is the promise to transfer by the customer is the
in the context of the parts to be integrated with the good or service No Safiro. This service is
distinct within the
Is the promise to transfer contract as it is one of the other goods and services to distinct within the separately identifiable from
the good or service No necessary parts to be represent the combined context of the contract? other promises in the
distinct within the integrated with other goods output for which the contract.
context of the contract? and services to represent customer has contracted
the combined output for (i.e. Safiro service)
contracted (i.e. Safiro
service)

General infrastructure does satisfy the criteria of Conclusion: the criteria of distinct
Conclusion: not satisfy the criteria of Conclusion: distinct performance performance obligation
distinct performance obligation
obligation

PwC 156
Position paper 6
IP TRANSIT
General infrastructure Additional installation service IP_TRANSIT

Customer can benefit from The customer can benefit
general infrastructure when Customer can benefit from
installation service when it from the IP Transit service
it is combined with the Yes Yes
Yes Can the customer benefit is combined with the other Can the customer benefit once it is combined with the
Can the customer benefit other readily available general infrastructure and
resources (e.g. installation from the good or service? readily available resources from the good or service?
from the good or service? installation services.
services and modem) (i.e. general infrastructure).

General infrastructure is separately identifiable in
not separately identifiable the context of the contract Is the promise to transfer
Is the promise to transfer Is the promise to transfer Yes The service contracted for
No in the context of the No as it is one of the necessary the good or service
the good or service the good or service by the customer is IP
contract as it is one of the parts to be integrated with distinct within the
distinct within the distinct within the Transit. This service is
necessary parts to be other goods and services to context of the contract?
context of the contract? context of the contract? separately identifiable from
integrated with other goods represent the combined
other promises in the
and services to represent output for which the
contract.
the combined output for customer has contracted
which the customer has (i.e. IP Transit service)
contracted (i.e. IP Transit
service)

Conclusion:
Conclusion: satisfy the criteria of Conclusion: performance obligation
not satisfy the criteria of distinct performance
distinct performance obligation
obligation

PwC 157
Position paper 6
VPN
General infrastructure Additional installation service VPN

Customer can benefit from Customer can benefit from The customer can benefit
general infrastructure when Yes installation service when it Yes from the VPN service once
Yes it is combined with the Can the customer benefit Can the customer benefit it is combined with the
Can the customer benefit is combined with the other
other readily available from the good or service? readily available resources from the good or service? general infrastructure and
resources (e.g. installation (i.e. general infrastructure). installation services.
services and modem)

General infrastructure is Is the promise to transfer The service contracted for
Is the promise to transfer separately identifiable in Yes
Is the promise to transfer not separately identifiable the good or service
the good or service No the context of the contract by the customer is VPN.
the good or service No in the context of the distinct within the
distinct within the as it is one of the necessary This service is separately
distinct within the contract as it is one of the context of the contract?
context of the contract? parts to be integrated with identifiable from other
context of the contract? necessary parts to be
other goods and services to promises in the contract.
integrated with other goods
represent the combined
output for which the
customer has contracted
(i.e. VPN service)
contracted (i.e. VPN
service)
Goods and services satisfy

General infrastructure does Installation service does not
Conclusion: not satisfy the criteria of Conclusion: satisfy the criteria of
distinct performance distinct performance
obligation obligation

PwC 158
Position paper 6
Transactional Access
General infrastructure Additional installation service Transactional Access

The customer can benefit
Customer can benefit from Customer can benefit from
from the Transactional
general infrastructure when Yes installation service when it Yes
Yes Can the customer benefit Can the customer benefit Access service once it is
it is combined with the is combined with the other
Can the customer benefit combined with the general
other readily available from the good or service? readily available resources from the good or service?
from the good or service? infrastructure and
resources (e.g. installation (i.e. general infrastructure).
installation services.
services and modem)

General infrastructure is separately identifiable in
not separately identifiable the context of the contract
in the context of the Is the promise to transfer as it is one of the necessary Is the promise to transfer
Is the promise to transfer contract as it is one of the No parts to be integrated with Yes The service contracted for
No the good or service the good or service
the good or service necessary parts to be other goods and services to by the customer is
distinct within the distinct within the distinct within the Transactional Access. This
integrated with other goods context of the contract? represent the combined context of the contract?
context of the contract? and services to represent output for which the service is separately
the combined output for customer has contracted identifiable from other
which the customer has (i.e. Transactional Access promises in the contract.
contracted (i.e. service)
Transactional Access
service)
Installation service does not Good and service satisfy the

Conclusion:
General infrastructure does Conclusion: satisfy the criteria of Conclusion: criteria of distinct
distinct performance distinct performance performance obligation
obligation obligation

PwC 159
Position paper 6
SAR

Yes The customer can benefit from

Can the customer benefit from SAR on its own. Telkom
the good or service? regularly sells this product on
a stand-alone basis.

Is the promise to transfer the Yes the customer is SAR. This

Conclusion: criteria of distinct performance
obligation.

PwC 160
Position paper 6
Data Centre
General infrastructure IT Equipment Basic installation service

Customer can benefit from
Customer can benefit from installation service when it
Customer can benefit from IT equipment when it is
Yes Yes is combined with the other
Yes general infrastructure when Can the customer benefit combined with the other Can the customer benefit
Can the customer benefit readily available resources
it is combined with the from the good or service? readily available resources from the good or service?
from the good or service? (e.g. general infrastructure
other readily available (e.g. installation services and IT Equipment).
resources (e.g. installation and general infrastructure).
services and IT Equipment). No
IT Equipment is not distinct

for the purpose of IFRS 15 Installation service is not
General infrastructure is as this equipment is merely separately identifiable in
not separately identifiable an input that is being used Is the promise to transfer the context of the contract
in the context of the Is the promise to transfer to produce the output for the good or service No
as it is one of the necessary
Is the promise to transfer contract as it is one of the the good or service No which the customer actually distinct within the parts to be integrated with
the good or service No necessary parts to be distinct within the context of the contract?
contracted. When the other goods and services to
distinct within the integrated with other goods context of the contract? equipment and the service represent the combined
context of the contract? and services to represent are required to continually output for which the
the combined output for interact in order to fulfil the customer has contracted
which the customer has promise to the customer, (i.e. Data Centre service).
contracted (i.e. Data Centre the two goods/services are
service). highly interdependent or
interrelated.
Installation service does not

Conclusion:
General infrastructure does Conclusion: satisfy the criteria of
not satisfy the criteria of Modem does not satisfy the distinct performance
distinct performance Conclusion: criteria of distinct obligation.
obligation. performance obligation.

PwC 161
Position paper 6
Data Centre


the Data Centre service once it
Yes is combined with general
Can the customer benefit from infrastructure, IT Equipment,
the good or service? and basic installation service.
Provision of Data Centre includes colocation

Yes services and data management from which the
Is the promise to transfer the
customer can benefit separately; the services
good or service distinct within the
are not considered distinct in the context of
the contract. This is because, the customer
perceives these services as an input or
activities that required to be performed by the
supplier to fulfil its promise to the Customer.
For the customer to enjoy the benefit,
colocation serves as part of the input that
needs to be integrated with Telkom’s IT
equipment and data management service. This
makes the colocation, provision of Telkom’s IT
equipment and data management service input
into the provision of the Data Centre service.
In this case, the Data Centre service represents
a series of distinct services that are
substantially the same and that have the same
pattern of transfer to the customer.
Conclusion: Goods and services satisfy the criteria of

distinct performance obligation.

PwC 162
Position paper 6
Leased Line Digital

General infrastructure Additional installation service Leased Line

Assessment for distinct Customer can benefit from
performance obligation installation service when it The customer can benefit
Customer can benefit from is combined with the other from Leased Line service on
general infrastructure when readily available resources its own. Telkom regularly
it is combined with the Yes (i.e. general infrastructure). Can the customer can Yes sells this product on a
Yes Can the customer benefit
Can the customer benefit other readily available benefit from the good or stand-alone basis.
resources (i.e. installation from the good or service?
from the good or service? service?
services).

Is the promise to transfer separately identifiable in
the good or service No the context of the contract Is the promise to transfer
distinct within the as it is one of the necessary the good or service Yes
Is the promise to transfer General infrastructure is parts to be integrated with The service contracted for
No context of the contract? distinct within the
the good or service not separately identifiable other goods and services to by the customer is Leased
distinct within the in the context of the represent the combined Line. This service is
context of the contract? contract as it is one of the output for which the separately identifiable from
necessary parts to be customer has contracted other promises in the
integrated with other goods (i.e. Leased Line service). contract.
contracted (i.e. Leased Line
service).
Conclusion: satisfy the criteria of distinct Conclusion: Goods and services satisfy
performance obligation. the criteria of distinct
General infrastructure does performance obligation.
distinct performance
obligation.

PwC 163
Position paper 6
WDM
General infrastructure Additional installation service MM_WDM

performance obligation installation service when it
from the transactional
Customer can benefit from is combined with the other
access service once it is
general infrastructure when readily available resources
Yes combined with the general
it is combined with the (i.e. general infrastructure). Yes
Yes Can the customer benefit Can the customer benefit infrastructure and
Can the customer benefit other readily available
from the good or service? from the good or service? installation services.
from the good or service? resources (i.e. installation
services).

Is the promise to transfer General infrastructure is parts to be integrated with The service contracted for
No context of the contract? distinct within the
the good or service not separately identifiable other goods and services to context of the contract? by the customer is WDM.
distinct within the in the context of the represent the combined This service is separately
context of the contract? contract as it is one of the output for which the identifiable from other
necessary parts to be customer has contracted promises in the contract.
integrated with other goods (i.e. WDM service).
contracted (i.e. WDM
service).
Conclusion: satisfy the criteria of distinct Goods and services satisfy
performance obligation. Conclusion: the criteria of distinct
obligation.

PwC 164
Position paper 6
MM_IPLC
General infrastructure Additional installation service MM_IPLC

Customer can benefit from is combined with the other from the IPLC service once
general infrastructure when readily available resources it is combined with the
it is combined with the Yes (i.e. general infrastructure). Yes general infrastructure and
Yes Can the customer benefit Can the customer benefit
Can the customer benefit other readily available installation services.
resources (i.e. installation from the good or service? from the good or service?
services).

Is the promise to transfer General infrastructure is parts to be integrated with
No context of the contract? distinct within the The service contracted for
the good or service not separately identifiable other goods and services to context of the contract? by the customer is IPLC.
distinct within the in the context of the represent the combined
contract as it is one of the This service is separately
context of the contract? output for which the identifiable from other
necessary parts to be customer has contracted
integrated with other goods promises in the contract.
(i.e. IPLC service).
contracted (i.e. IPLC
service).
Conclusion: satisfy the criteria of distinct
obligation.

PwC 165
Position paper 6
MM_IEPL
General infrastructure Additional installation service MM_IEPL

Customer can benefit from is combined with the other from the IEPL service once
general infrastructure when Yes readily available resources it is combined with the
it is combined with the (i.e. general infrastructure). Yes general infrastructure and
services).

Is the promise to transfer No General infrastructure is parts to be integrated with
context of the contract? distinct within the The service contracted for
the good or service not separately identifiable other goods and services to context of the contract? by the customer is IEPL.
integrated with other goods (i.e. IEPL service).
contracted (i.e. IEPL
service). Installation service does not
Conclusion: satisfy the criteria of Goods and services satisfy
distinct performance the criteria of distinct
obligation. Conclusion: performance obligation.
obligation.

PwC 166
Position paper 6
WIFI
General infrastructure Additional installation service MM_WIFI

Customer can benefit from is combined with the other from the Wifi service once it
general infrastructure when readily available resources is combined with the
services).

the good or service not separately identifiable other goods and services to context of the contract? by the customer is Wifi.
integrated with other goods (i.e. Wifi service).
contracted (i.e. Wifi
service). Installation service does
distinct performance Conclusion: Goods and services satisfy
obligation. the criteria of distinct
obligation.

PwC 167
Position paper 6
SATU
General infrastructure Additional installation service MM_SATU

Customer can benefit from is combined with the other from the SATU service once
general infrastructure when readily available resources it is combined with the
services).

the good or service not separately identifiable other goods and services to context of the contract? by the customer is SATU.
integrated with other goods (i.e. SATU service).
contracted (i.e. SATU
service). Installation service does
distinct performance Conclusion: Goods and services satisfy
obligation. the criteria of distinct
obligation.

PwC 168
Position paper 6
MM_SIAP_ONLINE
General infrastructure Introduction Training to Customer MM_SIAP_ONLINE
Assessment for distinct The introduction training to Assessment for distinct

Assessment for distinct the customers is not a
performance obligation separate performance The customer can benefit
Customer can benefit from obligation from the SIAP from SIAP Online once it is
general infrastructure when Online service because combined with the general
it is combined with the No customers cannot benefit Yes infrastructure and training
Yes Can the customer benefit from the training itself Can the customer benefit
Can the customer benefit other readily available to customers.
resources (i.e. installation from the good or service? without the application, the from the good or service?
services). content of the training is
customised to the Customer
condition and only Telkom
could deliver this to the
customers.
Is the promise to transfer

the good or service Yes
Is the promise to transfer General infrastructure is The service contracted for
No distinct within the
the good or service not separately identifiable by the customer SIAP
distinct within the in the context of the Online. This service is
contract as it is one of the Is the promise to transfer separately identifiable from
necessary parts to be the good or service other promises in the
integrated with other goods distinct within the No contract.
context of the contract? No further assessment is
necessary as the answer for
the question is “No”.
contracted (i.e. SIAP Online
service).
Installation service does not Conclusion: Goods and services satisfy
Conclusion: satisfy the criteria of
General infrastructure does .performance obligation
obligation.
obligation.

PwC 169
Position paper 6
Ethernet
General infrastructure Additional installation service Ethernet

performance obligation The customer can benefit
Customer can benefit from from the Ethernet service
general infrastructure when Customer can benefit from once it is combined with the
it is combined with the Yes installation service when it Yes general infrastructure and
Yes Can the customer benefit is combined with the other Can the customer benefit
resources (i.e. installation from the good or service? readily available resources from the good or service?
services). (i.e. general infrastructure).

General infrastructure is the good or service Yes
Is the promise to transfer No Is the promise to transfer The service contracted for
not separately identifiable No distinct within the
the good or service the good or service Installation service is not by the customer is Ethernet.
in the context of the context of the contract?
distinct within the distinct within the separately identifiable in This service is separately
context of the contract? contract as it is one of the the context of the contract
necessary parts to be context of the contract? identifiable from other
as it is one of the necessary promises in the contract.
integrated with other goods parts to be integrated with
and services to represent other goods and services to
the combined output for represent the combined
which the customer has output for which the
contracted (i.e. Ethernet customer has contracted
service). (i.e. Ethernet service).
Conclusion: not satisfy the criteria of Installation service does
distinct performance Conclusion: not satisfy the criteria of
obligation. distinct performance
obligation.

PwC 170
Position paper 6
MM_DINAACCESS
General infrastructure Additional installation service MM_DINAACCESS

from the Dina Access
Customer can benefit from service once it is combined
Yes installation service when it with the general
it is combined with the Yes
Yes Can the customer benefit is combined with the other Can the customer benefit infrastructure and
from the good or service? readily available resources from the good or service? installation services.

Is the promise to transfer Is the promise to transfer No The service contracted for
No distinct within the
the good or service not separately identifiable Installation service is not by the customer is Dina
the good or service context of the contract?
distinct within the in the context of the separately identifiable in Access. This service is
distinct within the
context of the contract? contract as it is one of the the context of the contract separately identifiable from
necessary parts to be as it is one of the necessary other promises in the
integrated with other goods parts to be integrated with contract.
contracted (i.e. Dina Access customer has contracted
service). (i.e. Dina Access service).

Conclusion: satisfy the criteria of
obligation.
obligation.

PwC 171
Position paper 6
MM_IDR
General infrastructure Additional installation service MM_IDR

Customer can benefit from from the IDR service once it
general infrastructure when Customer can benefit from is combined with the

Is the promise to transfer Is the promise to transfer No
No not separately identifiable Installation service is not distinct within the The service contracted for
the good or service the good or service
in the context of the separately identifiable in context of the contract? by the customer is IDR.
distinct within the distinct within the
contract as it is one of the the context of the contract This service is separately
context of the contract? context of the contract?
necessary parts to be as it is one of the necessary identifiable from other
integrated with other goods parts to be integrated with promises in the contract.
contracted (i.e. IDR customer has contracted
service). (i.e. IDR service).

Installation service does Conclusion: performance obligation.
Conclusion: distinct performance
obligation.
obligation.

PwC 172
Position paper 6
Call Centre
General infrastructure Additional installation service Other Goods and/or services

Customer can benefit from The customer can benefit
general infrastructure when Customer can benefit from from other goods and /or
it is combined with the Yes installation service when it Yes the service on its own.

Is the promise to transfer General infrastructure is Is the promise to transfer
No No distinct within the
the good or service not separately identifiable the good or service Installation service is not Other goods or services are
distinct within the in the context of the distinct within the separately identifiable in separately identifiable from
context of the contract? contract as it is one of the context of the contract? the context of the contract other promises in the
necessary parts to be as it is one of the necessary contract.
integrated with other goods parts to be integrated with
contracted (i.e. Call Centre customer has contracted
service). (i.e. Call Centre service).

Conclusion:
distinct performance satisfy the criteria of distinct
obligation. performance obligation.

PwC 173
Position paper 6
Call Centre


the Call Centre service once it
Yes is combined with the general
Can the customer benefit from infrastructure and installation
the good or service? services.
Yes The service contracted for by

Is the promise to transfer the the customer is Call Centre.
good or service distinct within the This service is separately
Conclusion: Goods and services satisfy the

obligation.

PwC 174
Position paper 6
Transponder
General infrastructure Activation service Transponder

from the Transponder
No activation service when it is with the general
Yes Can the customer benefit combined with the other Can the customer benefit infrastructure and
from the good or service? readily available resources from the good or service? activation services.
from the good or service? resources (i.e. activation

Is the promise to transfer General infrastructure is The service contracted for
Is the promise to transfer distinct within the
the good or service No not separately identifiable the good or service No Activation service is not by the customer is
distinct within the in the context of the separately identifiable in Transponder. This service is
distinct within the
context of the contract? contract as it is one of the context of the contract? the context of the contract separately identifiable from
contracted (i.e. customer has contracted
Transponder service). (i.e. Transponder service).
Conclusion: not satisfy the criteria of Conclusion: Activation service does not
distinct performance satisfy the criteria of
obligation.

PwC 175
Position paper 6
MM_ISDN
General infrastructure Additional installation service MM_ISDN

Customer can benefit from from the ISDN service once
general infrastructure when Customer can benefit from it is combined with the

Is the promise to transfer Is the promise to transfer
in the context of the separately identifiable in context of the contract? the customer is ISDN. This
distinct within the distinct within the No
contract as it is one of the the context of the contract service is separately
contracted (i.e. ISDN customer has contracted
service). (i.e. ISDN service).

Conclusion: not satisfy the criteria of Conclusion: Installation service does
distinct performance not satisfy the criteria of
obligation.

PwC 176
Position paper 6
MM_UMEETME


UMeetMe on its own. Telkom
Yes regularly sells this product on
Can the customer benefit from a stand-alone basis.
the good or service?

Is the promise to transfer the the customer is UMeetMe. This

obligation.

PwC 177
Position paper 6
MM_UCALL


UCall on its own. Telkom

Is the promise to transfer the the customer is UCall. This

obligation.

PwC 178
Position paper 6
MM_ADSL
General infrastructure Additional installation service MM_ADSL

Customer can benefit from from the ADSL service once

in the context of the separately identifiable in context of the contract? by the customer is ADSL.
integrated with other goods part to be integrated with promise in the contract.
and services to represent other good and service to
contracted (i.e. ADSL customer has contracted
service). (i.e. ADSL service).

obligation.

PwC 179
Position paper 6
MM_BACKHAUL_SSK
General infrastructure Additional installation service MM_BACKHAUL_SSK

Customer can benefit from from the Backhaul service

Is the promise to transfer Is the promise to transfer The service contracted for
No not separately identifiable Installation service is not distinct within the
the good or service the good or service by the customer is
in the context of the separately identifiable in context of the contract?
distinct within the distinct within the No Backhaul. This service is
contracted (i.e. Backhaul customer has contracted
service). (i.e. Backhaul service).

obligation.

PwC 180
Position paper 6
MM_E_AKADEMIK
General infrastructure Additional installation service MM_E_AKADEMIK

from the e-Akademik

the good or service the good or service by the customer is e-
distinct within the distinct within the No Akademik. This service is
contracted (i.e. e-Akademik customer has contracted
service). (i.e. e-Akademik service).

Conclusion: not satisfy the criteria of Conclusion: Installation service does Conclusion: performance obligation.

obligation.

PwC 181
Position paper 6
MM_E_HEALTH
General infrastructure Additional installation service MM_E_HEALTH

Customer can benefit from from the e-Health service
Can the customer benefit other readily available installation service.

in the context of the separately identifiable in context of the contract? by the customer is e-Health.
contracted (i.e. e-Health customer has contracted
service). (i.e. e-Health service).


obligation.

PwC 182
Position paper 6
MM_E_KELURAHAN
General infrastructure Additional installation service MM_E_KELURAHAN

from the e-Kelurahan

distinct within the distinct within the No Kelurahan. This service is
integrated with other goods part to be integrated with contract.
and services to represent other good and service to
contracted (i.e. e- customer has contracted
Kelurahan service). (i.e. e-Kelurahan service).
Good and service satisfy the

criteria of distinct

obligation.

PwC 183
Position paper 6
MM_E_OFFICE
General infrastructure Additional installation service MM_E_OFFICE

Customer can benefit from from the e-Office service

in the context of the separately identifiable in context of the contract? by the customer is e-Office.
contracted (i.e. e-Office customer has contracted
service). (i.e. e-Office service).


obligation.

PwC 184
Position paper 6
MM_E_PUSKESMAS
General infrastructure Additional installation service MM_E_PUSKESMAS

from the e-Puskesmas

distinct within the distinct within the No Puskesmas. This service is
contracted (i.e. e- customer has contracted
Puskesmas service). (i.e. e-Puskesmas service).


obligation.

PwC 185
Position paper 6
MM_LOCATION
General infrastructure Additional installation service MM_LOCATION

Customer can benefit from from the Location service

distinct within the distinct within the No Location. This service is
contracted (i.e. Location customer has contracted
service). (i.e. Location service).


obligation.

PwC 186
Position paper 6
MM_SMARTADS
General infrastructure Additional installation service MM_SMARTADS

Customer can benefit from from the SmartAds service

distinct within the distinct within the No SmartAds. This service is
contracted (i.e. SmartAds customer has contracted
service). (i.e. SmartAds service).


obligation.

PwC 187
Position paper 6
MM_VSOFTSERVICE
General infrastructure Additional installation service MM_VSOFTSERVICE

from the vSoftservice

distinct within the distinct within the No vSoftservice. This service is
contracted (i.e. Softservice customer has contracted
service). (i.e. Softservice service).


obligation.

PwC 188
Position paper 6
MM_CNDC
General infrastructure Additional installation service MM_CNDC

Customer can benefit from from the CNDC service once

in the context of the separately identifiable in context of the contract? by the customer is CNDC.
contracted (i.e. CNDC customer has contracted
service). (i.e. CNDC service).


obligation.

PwC 189
Position paper 6
MM_DDOS
General infrastructure Additional installation service MM_DDOS

Customer can benefit from from the DDOS service once

in the context of the separately identifiable in context of the contract? by the customer is DDOS.
contracted (i.e. DDOS customer has contracted
service). (i.e. DDOS service).


obligation.

PwC 190
Position paper 6
MM_DID
General infrastructure Additional installation service MM_DID

Customer can benefit from from the DID service once it

in the context of the separately identifiable in context of the contract? by the customer is DID.
contracted (i.e. DID customer has contracted
service). (i.e. DID service).


obligation.

PwC 191
Position paper 6
MM_DOV
General infrastructure Additional installation service MM_DOV

Customer can benefit from from the DOV service once

in the context of the separately identifiable in context of the contract? by the customer is DOV.
contracted (i.e. DOV customer has contracted
service). (i.e. DOV service).


obligation.

PwC 192
Position paper 6
MM_HOST
General infrastructure Additional installation service MM_HOST

Customer can benefit from from the HOST service once

in the context of the separately identifiable in context of the contract? by the customer is HOST.
contracted (i.e. HOST customer has contracted
service). (i.e. HOST service).


obligation.

PwC 193
Position paper 6
MM_PORT_INTERKON
General infrastructure Additional installation service MM_PORT_INTERKON

from the Port Interkoneksi

Is the promise to transfer Is the promise to transfer Installation service is not The service contracted for
No not separately identifiable distinct within the
the good or service the good or service separately identifiable in by the customer is Port
distinct within the distinct within the No the context of the contract Interkoneksi. This service is
context of the contract? contract as it is one of the context of the contract? as it is one of the necessary separately identifiable from
necessary parts to be parts to be integrated with other promises in the
integrated with other goods other goods and services to contract.
contracted (i.e. Port (i.e. Port Interkoneksi
Interkoneksi service). service).

obligation.

PwC 194
Position paper 6
MM_PORTE1_SENTRAL
General infrastructure Additional installation service MM_PORTE1_SENTRAL

from the Port E1 Sentral

the good or service the good or service separately identifiable in by the customer is Port E1
distinct within the distinct within the No the context of the contract Sentral. This service is
contracted (i.e. Port E1 (i.e. Port E1 Sentral
Sentral service). service).

obligation.

PwC 195
Position paper 6
MM_PREMIUM_CALL


Premium call on its own.
Yes Telkom regularly sells this
Can the customer benefit from product on a stand-alone
the good or service? basis.

Is the promise to transfer the the customer is Premium call.
good or service distinct within the This service is separately

obligation.

PwC 196
Position paper 6
MM_PWS1
General infrastructure Additional installation service MM_PWS1

Customer can benefit from from the PWS service once

in the context of the separately identifiable in context of the contract? by the customer is PWS.
contracted (i.e. PWS customer has contracted
service). (i.e. PWS service).


obligation.

PwC 197
Position paper 6
Sarana Penunjang
General infrastructure Additional installation service Sarana Penunjang

from the Sarana Penunjang
services) (i.e. general infrastructure).

the good or service the good or service separately identifiable in by the customer is Sarana
distinct within the distinct within the No the context of the contract Penunjang. This service is
contracted (i.e. Sarana (i.e. Sarana Penunjang
Penunjang service). service).

obligation.

PwC 198
Position paper 6
MM_SDL


SDLl on its own. Telkom

Is the promise to transfer the the customer is SDL. This

obligation.

PwC 199
Position paper 6
Leased Line Analog

General infrastructure Additional installation service Leased Line Analog

from the Leased Line
Customer can benefit from Analog service once it is
Yes installation service when it combined with the general

the good or service the good or service by the customer is Leased
distinct within the distinct within the No Line Analog. This service is
contracted (i.e. Analog customer has contracted
service). (i.e. Analog service).


obligation.

PwC 200
MM_TIE_LINE
General infrastructure Additional installation service MM_TIE_LINE

Customer can benefit from from the Tie Line service

in the context of the separately identifiable in context of the contract? by the customer is Tie LIne.
contracted (i.e. Tie Line customer has contracted
service). (i.e. Tie Line service)..


obligation

PwC 201
Position paper 6
MM_INTERKONEKSI DOMESTIK
General infrastructure Additional installation service MM_INTERKONEKSI DOMESTIK

from the Interkoneksi
Customer can benefit from Domestik service once it is

the good or service the good or service separately identifiable in by the customer is
distinct within the distinct within the No the context of the contract Interkoneksi Domestik.
context of the contract? contract as it is one of the context of the contract? as it is one of the necessary This service is separately
necessary parts to be parts to be integrated with identifiable from other
integrated with other goods other goods and services to promises in the contract.
contracted (i.e. Interkoneksi (i.e. Interkoneksi Domestik
Domestik service). service).

obligation.

PwC 202
Position paper 6
MM_IN JAPATI (CALL CENTER, PREMIUM CALL)

General infrastructure Additional installation service MM_IN JAPATI (CALL CENTER, PREMIUM CALL)

Customer can benefit from from the IN Japati service

the good or service the good or service by the customer is IN
distinct within the distinct within the No Japati. This service is
contracted (i.e. IN Japati customer has contracted
service). (i.e. IN Japati service).


obligation.

PwC 203
Position paper 6
MM_A2P
General infrastructure Additional installation service MM_A2P

Customer can benefit from from the A2P service once it

in the context of the separately identifiable in context of the contract? by the customer is A2P.
contracted (i.e. A2P customer has contracted
service). (i.e. A2P service).


obligation.

PwC 204
Position paper 6
MM_INTERKONEKSI INTERNAS 007

General infrastructure Additional installation service MM_INTERKONEKSI INTERNAS 007

Customer can benefit from Internas 007 service once it
Yes installation service when it is combined with the
Yes Can the customer benefit is combined with the other Can the customer benefit general infrastructure and

distinct within the distinct within the No the context of the contract Interkoneksi Internas 007.
contracted (i.e. Interkoneksi (i.e. Interkoneksi Internas
Internas 007 service). 007 service).

obligation.

PwC 205
Position paper 6
MM_INTERKONEKSI INTERNAS 017

General infrastructure Additional installation service MM_INTERKONEKSI INTERNAS 017

Customer can benefit from Internas 017 service once it
Yes installation service when it is combined with the
Yes Can the customer benefit is combined with the other Can the customer benefit general infrastructure and

distinct within the distinct within the No the context of the contract Interkoneksi Internas 017.
contracted (i.e. Interkoneksi (i.e. Interkoneksi Internas
Internas 017 service). 017 service).

obligation.

PwC 206
Position paper 6
MM_OG PSTN TP 001/008

General infrastructure Additional installation service MM_OG PSTN TP 001/008

from the OG PSTN TP
Customer can benefit from 001/008 service once it is

the good or service the good or service separately identifiable in by the customer is OG PSTN
distinct within the distinct within the No the context of the contract TP 001/008. This service is
contracted (i.e. OG PSTN (i.e. OG PSTN TP 001/008
TP 001/008 service). service).

obligation.

PwC 207
Position paper 6
MM_OG TG 017
General infrastructure Additional installation service MM_OG TG 017

Customer can benefit from from the OG TG 017 service

the good or service the good or service by the customer is OG TG
distinct within the distinct within the No 017. This service is
contracted (i.e. OG TG 017 customer has contracted
service). (i.e. OG TG 017 service).


obligation.

PwC 208
Position paper 6
Appendix 2
Example of a contract with combination of several retail and non-retail standard products:
Contract Number : K.TEL. 1866/HK.820/WTL-4G100000/2016
Parties : Telkom and Yayasan Majlis Tafsir Al-Quran (MTA) Surakarta
Detail of services :

Charges
Band width
No Services Location
Install Total Monthly
1 Transponder MTATV 4 MHz Free 2,880,000,000 120,000,000
2 Astinet Studio 2 2 MBps Free
3 Telephone (inc only) Studio 2 1 sst Free
4 Wifi.id (manager service) 3 lokasi @20 Mbps Free
Total performance obligations identified: 4

PwC 209
Position paper 7
Application guidance – ‘Performance obligations in CPE’
Consumer To identify the number of performance Does CPE in Telkom’s retail product satisfy the
obligations on CPE provided to retail customers. criteria of a distinct performance obligation?
Background:
Telkom’s retail products that are generally offered on a stand-alone basis or in
combination with other products, are as follows:
• Indihome:
o Fixed telephone;
o Internet;
o Free subscription to several streaming application (e.g. iFlix and
CatchPlay);
o Interactive TV; and
o Customer loyalty programmes.
• Add-on products (e.g. additional hybrid box, an additional channel
available for separate subscription, HOOQ)
The opposite picture is directly obtained from Telkom’s website:
https://indihome.co.id/package . Telkom continuously modifies the
combination of services under one package, however the services included in
each package represent the combination of services mentioned above.

PwC 210
Position paper 7
It is natural for the delivery of the above service arrangement to be dependent Assessing whether a good or service is “distinct”
on the use of equipment, known as CPE. Contractually, Telkom is obliged to
provide the following CPE for all their retail customer:
1. ONT – modem to provide the internet connection service to customer; and Assessment for distinct
2. Hybrid Box - set up box to provide USeeTV services to customers.
Telkom charges one-time instalment fee for modem or set up box and a
monthly subscription fee for internet or UseeTV service.
Reference to the relevant accounting standard:

Identifying performance obligations No Goods and services are not a
Can the customer benefit from
the good or service? distinct performance obligation
IFRS 15 provides guidance in identifying performance obligations. IFRS 15.22
states that at contract inception, an entity shall assess the goods or services
promised in a contract with a customer and shall identify as a performance
obligation each promise to transfer to the customer either: Yes
• a good or service (or a bundle of goods or services) that is distinct; or
• a series of distinct goods or services that are substantially the same and that No
Is the promise to transfer the Goods and services are not a
have the same pattern of transfer to the customer.
good or service distinct within distinct performance obligation
IFRS 15.23 also explains that a series of distinct goods or services has the same the context of the contract?
pattern of transfer to the customer if both of the following criteria are met:
• each distinct good or service in the series that the entity promises to
transfer to the customer would meet the criteria in paragraph 35 of IFRS 15 Yes
to be a performance obligation satisfied over time; and
• in accordance with paragraphs 39-40 of IFRS 15, the same method would be
used to measure the entity’s progress towards complete satisfaction of the criteria of distinct performance
performance obligation to transfer each distinct good or service in the series obligation
to the customer.


PwC 211
Position paper 7
A fundamental principle of IFRS 15 is that revenue recognition is considered at Analysis:
the level of the specific deliverable, or ‘performance obligation’, within an A fundamental principle of IFRS 15 is that revenue recognition is considered at
arrangement. Where arrangements involve multiple deliverables, the standard the level of the specific deliverable, or ‘performance obligation’, within an
provides guidance on identifying those that are ‘distinct’ and therefore to be arrangement. Where arrangements involve multiple deliverables, the standard
accounted for separately. It is understood from the above paragraph a good or provides guidance on identifying those that are ‘distinct’ and therefore to be
service is distinct if both of the following criteria are met: accounted for separately. It states that a good or service is distinct if both of the
• he customer can benefit from the good or service either on its own or following criteria are met:
together with other resources that are readily available to the customer (i.e. • The customer can benefit from the good or service either on its own or
the good or service is capable of being distinct); and together with other readily available resources (that is, the good or service is
• The entity’s promise to transfer the good or service to the customer is capable of being distinct). For example, the fact that Telkom does not sell
separately identifiable from other promises in the contract (that is, the equipment separately would indicate that those items are capable of being
promise to transfer the good or service is distinct within the context of the distinct.
contract). • The supplier’s promise to transfer the good or service to the customer is
Factors that indicate that an entity’s promise to transfer a good or service to a separately identifiable from other promises in the contract (that is, the
customer is separately identifiable (in accordance with paragraph 27(b)) promise to transfer the good or service is distinct within the context of the
include, but are not limited to, the following: contract). The objective here is to determine whether the nature of the
promise is to deliver a number of goods or services individually or, instead,
• The entity does not provide a significant service of integrating the good or
to transfer a combined item to which the promised goods or services are
service with other goods or services promised in the contract into a bundle
inputs.
of goods or services that represent the combined output for which the
customer has contracted. In other words, the entity is not using the good or Telkom needs to apply the above criteria in considering whether equipment is
service as an input to produce or deliver the combined output specified by distinct and is therefore accounted for as a separate performance obligation. If
the customer. so, Telkom would allocate part of the transaction price to the equipment and
recognise revenue when it is transferred to the customer. If the equipment is
• The good or service does not significantly modify or customise another good
not distinct (not a separate performance obligation), any amounts received in
or service promised in the contract.
its respect would be allocated amongst the other performance obligations in
• The good or service is not highly dependent on, or highly interrelated with, the arrangement.
other goods or services promised in the contract. For example, the fact that
a customer could decide to not purchase the good or service without
significantly affecting the other promised goods or services in the contract
might indicate that the good or service is not highly dependent on, or highly
interrelated with, those other promised goods or services.

PwC 212

Position paper 7
Analysis is performed to identify how many performance obligations exist in the CPE products provided to customers (i.e. modem instalment and internet
subscription or set up box installation and UseeTV subscription), taking into consideration whether there are distinct performance obligations in accordance with
IFRS 15. Telkom has considered a number of factors to assess whether both criteria are satisfied in the following table:
No Criteria ONT STB Distinct

1 Whether there is a secondary market No No No
which allows the customer to benefit
Telkom delivers its internet services using Telkom delivers USeeTV services using its
from the equipment independently
ONT Alcatel Lucent. However, Telkom expects STB. Using the same analysis as ONT,
from the service
secondary markets from its ONT products to Telkom also expects that the secondary
Equipment can sometimes be sold in a not be substantive, after considering the market is not substantive or determinative
secondary market. For example, a following factors: enough to be considered as a distinct
handset or set-top box might be sold on performance obligation.
 Customers are obliged to pay monthly
an online auction site. The frequency
for ONT, therefore Telkom controls
and price of transactions that are
access to the devices and prevents
undertaken on the secondary market
customers from selling the devices on the
should be considered. The closer the
secondary market; and
price on the secondary market is to
scrap value, the more likely that the  Considering the rapid development in
secondary market is not substantive or the communication industry, after two
determinative for the purposes of years Telkom (or other players in the
deciding whether the equipment is industry) may introduce new ONT
distinct. devices. Customers may sell the current
devices on the secondary market,
however, considering technological
obsolescence, the price for such devices
is expected to be very small or close to its
scrap value.

PwC 213
Position paper 7
2 Whether the equipment is sold No No No
separately
Telkom requires the customer to sign up for Telkom requires the customer to sign up
Equipment is often sold separately by the service at the same time as purchasing the for the service at the same time as
the operator providing the service. This equipment from the retailer. This might purchasing the equipment from the
might be because the customer might indicate that the equipment is not, in retailer. This might indicate that the
want an ‘extra’, for example, an STB to substance, sold separately. equipment is not, in substance, sold
access the service on a different separately.
television or an additional router to
boost the signal within the home.
3 Whether the customer can benefit from No Yes Mixed

the equipment through ‘use’ without
Telkom’s ONT does not offer additional Understand that Telkom allows customer
the service
functionality available to the customer. to choose an STB that offers ‘extra’ features
Equipment is often designed to deliver to its customer (i.e. YouTube streaming
a particular service. However, there is from TV). The more substantive the
often additional functionality available additional features (in addition to
to the customer. For example, a set top providing the service), the more this
box might allow the customer to access indicates that the equipment is capable of
the content of other service providers being distinct. Therefore, the additional
or the internet and a satellite dish feature in STB may indicate that the
might also serve as an antenna to pick devices is actually a distinct performance
up freely available channels. The more obligations.
substantive the additional features (in
addition to providing the service), the
more this indicates that the equipment
is capable of being distinct

PwC 214
Position paper 7
4 Whether the customer perceives the Yes No
equipment as an input that is being
In Telkom’s case, although the CPE might be capable of being distinct, when viewed from the
used to provide the service
perspective of the customer it is not distinct within the context of the contract. ONT is
The equipment and the service are required to deliver the promised output for which the customer actually contracted. The CPE
significantly affected by each other and the service are required to continually interact in order to fulfil the promise to the
because the supplier would not be able customer (i.e. internet connection has no function without modem and UseeTV has no
to fulfil its promise by transferring each function without set up box in the perspective of customers’ expectation toward purchasing
of these goods independently. decision in order to have internet connection services or UseeTV service in exchange of
consideration), the two goods/services are highly interdependent/interrelated.
Further, Telkom use the CPE products as an input to produce or deliver the combined output
specified by the customers (internet connection service or UseeTV service) and the services
are highly interrelated with one and the other (without modem or set up box, internet
connection or UseeTV cannot function). This implies that customer is purchasing the final
services (the combined item or items) that those individual items (the inputs) create when
they are combined. Therefore, Telkom is required to account for a series of distinct services
as one performance obligation. In other words, the equipment and the service are
significantly affected by each other because the supplier would not be able to fulfil its
promise by transferring each of these goods independently.
Conclusion
Having considered the above analysis, although there are mixed indicators as whether or not CPE in Telkom’s retail products is distinct
from other services in the contract, we concluded that the provision of CPE to customers does not satisfy the criteria of distinct
performance obligation. The customers cannot have benefit from the CPE alone and the CPE is not separately identifiable from the other
promises in the contract, where Telkom’s overall promise in the contract is to provide internet connection services or UseeTV services to
its customers in exchange for consideration.

PwC 215
Position paper 7
!
Can the existing practice continue? Getting familiar with the impact
No – The existing accounting treatment treats ONT and STB as a distinct To give a better understanding of the actual impact on Telkom’s financial
performance obligation as Telkom sets separate idRev to recognise the information, the following page summarises the impact on Indihome’s
monthly rental fee from these devices. Revenue from ONT and STB are Triple Play Product. The analysis relies heavily on the results of our
recognised as part of DATIN and PayTV, respectively. assessment in determining distinct performance obligations in Telkom’s
product.
In Telkom's Indihome package, after the careful consideration of the
functionality of each device, it is fair to conclude that ONT meets the Telkom’s Triple Play Product consists of the following goods
criteria of distinct performance obligation once it is combined with and services:
Internet, whereas STB meets the criteria of distinct performance • Internet - 10 Mbps;
obligation once it is combined with UseeTV Services. Considering that, • Telephone – 1,000 minutes;
amounts received in its respect would be allocated to internet and PayTV, • USeeTV – Interactive TV Channels Essential + IndiKidslite;
respectively. • Movin;
Gap 4 identified • Iflix, HooQ, and Cactchplay; and
• STB and ONT
Consumer
Total price charged to customer is Rp 460,000 / months

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Calculation of expected impact to Telkom consumer product
Assessment impact - reallocating the transaction price Refer to the following illustrative example on the impact of IFRS 15 on one of
As we understand from the impact assessment of IFRS 15 on Telkom's retail Telkom's Indihome products:
product, the biggest gap between legacy standard (IAS 18) and IFRS 15 is the
treatment of Telkom's free products. IFRS 15 provides a clearer guidance on
identifying whether one promised good or service is a distinct performance
obligation, which results in several "free products" actually satisfying the
relevant criteria. However, on the opposite site, there are also several products
(i.e. CPE) currently treated as distinct performance obligations that actually do
not satisfy the relevant criteria. It is quite clear that Telkom needs to reallocate
the total transaction price to all identified performance obligations in the
contract.
Determination of SSP (refer to Step 4 for detail)
1. SSP for retail product
As explained in the position paper "Determination of SSP", the tariff under
idREV that is incorporated in the Isiska system reflects the SSP.
2. SSP for ONT and STB
As explained in the position paper "Determination of performance
obligations on CPE products to retail customers", STB and ONT do not
satisfy the criteria of distinct performance obligations. Thus, as required in
IFRS 15 par 30, If a promised ONT and STB are not distinct, Telkom shall
combine that ONT and STB with other promised goods or services until it
identifies a bundle of services that is distinct. In Telkom's Indihome package,
after careful consideration of the functionality of each device, it is fair to
conclude that ONT meets the criteria of distinct performance obligation once
it is combined with Internet, whereas STB meets the criteria of distinct
performance obligation once it is combined with UseeTV. Therefore,
determination of the SSP for Internet and UseeTV is conducted by combining
the sales price for internet with ONT and UseeTV with STB, respectively.

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Position paper 7
Getting familiar with the impact.
Is the service distinct?
Tariff Presentation
Services idRev Existing IFRS 15 Gap?
(in Rp) FS 2017
Internet 10 Mbps INETF10M 190,000 Yes Yes DATIN No

Telephone 100 minutes IN1000 50,000 Yes Yes POTS No
USeeTV – Interactive TV USEEINDIHD 100,000 Yes Yes Pay Tv No
Usee Tv – IndiKits Lite USEEINDYHD 20,000 Yes Yes Pay Tv No
MoVin Basic MOVIN1 20,000 Yes Yes DATIN No
iFlix - No Yes - Yes
ONT SWONT 40,000 Yes No DATIN Yes
STB SWSTBHYBRD 40,000 Yes No DATIN No
Total transaction price 460,000
Existing IFRS 15 The shaded area on the graph above represents the possible adjustment to the
geography of revenue disclosed in the financial statement which contributes to the
following reclassification:
1. Allocation amount to free goods; as free goods are presented as part of DATIN,
the total revenue allocated to Pay TV and POTS will be decreased; and
2. Reclassification of the amount allocated to STB that was recognised as DATIN to
PayTV – STB is an integral part of USeeTV Services; therefore, the revenue
should also be allocated within the same line as USeeTV.
DATIN
It is understood from above table and the graph above that no gap is expected from
Pay TV STB despite the fact that in IFRS 15 this device does not meet the criteria of a distinct
performance obligation. This conclusion was derived from the fact that, both under
POTS the existing treatment and IFRS 15, the revenue allocated to STB had already been
disclosed as DATIN.
PT Telekomunikasi Indonesia Tbk - IFRS 15 Passing of control for all services above is completed within a month.
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Step 2.2 – Material rights
Option to purchase additional goods and services
Contracts frequently include options for customers to purchase additional Because a customer option to purchase additional goods or services is either a
goods or services in the future. Customer options that provide a material right material right that is paid for by the customer as part of the existing contract
to the customer (such as a free or discounted good or service) give rise to a or a marketing offer that is not part of the contract, the additional
separate performance obligation. In this case, the performance obligation is consideration that would result from the customer exercising its option would
the option itself, rather than the underlying goods or services. Telkom will not be included in the transaction price. This is the case even if Telkom
allocate a portion of the transaction price to such options, and recognise concludes it is probable, or even virtually certain, that the customer will
revenue allocated to the option when the additional goods or services are purchase additional goods or services. For example, customers could be
transferred to the customer, or when the option expires. economically compelled to make additional purchases due to exclusivity
Material right clauses or other facts and circumstances. Telkom should not include an
estimate of future purchases as a promise in the current contract unless those
IFRS 15 par B 40 - If, in a contract, an entity grants a customer the option to purchases are enforceable by law regardless of the probability that the
acquire additional goods or services, that option gives rise to a performance customer will make additional purchases. Judgment may be required to
obligation in the contract only if the option provides a material right to the identify the enforceable rights and obligations in a contract, as well as the
customer that it would not receive without entering into that contract (for existence of implied or explicit contracts that should be combined with the
example, a discount that is incremental to the range of discounts typically present contract.
given for those goods or services to that class of customer in that geographical
area or market). If the option provides a material right to the customer, the
customer in effect pays the entity in advance for future goods or services, and
the entity recognises revenue when those future goods or services are
transferred or when the option expires.
IFRS 15 par B 41 - If a customer has the option to acquire an additional good
or service at a price that would reflect the stand-alone selling price for that
good or service, that option does not provide the customer with a material
right even if the option can be exercised only by entering into a previous
contract. In those cases, the entity has made a marketing offer that it shall
account for in accordance with this Standard only when the customer
exercises the option to purchase the additional goods or services

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All options relevant to Telkom
!
Step 2.2 – Material rights
Option to purchase additional goods Renewal option
Telkom offers few options to customers that enable them to incur subsequent Refer to position paper 3.
expenditure at a discounted value. Taking Indihome products as an example,
the package allows customers to purchase add-on products in addition to the Unexercised right (breakage)
package they have subscribed to; however, the customer shall pay the add-on Customers sometimes do not exercise all of their rights or options in an
product at market value (i.e. established tariff on the website). From the arrangement. These unexercised rights are often referred to as “breakage” or
customer’s perspective, this option does not provide them with additional forfeiture. Breakage applies to not only sales incentive programmes, but also to
benefits by entering into the contract; therefore, this is not a material right. If, any situation where an entity receives prepayments for future goods or
in the future, Telkom intends to create an option that is more appealing to the services.
customer and thus provides them with discounts in subsequent expenditure, a
different analysis should be conducted to determine whether this may result in An entity should recognise estimated breakage as revenue in proportion to the
different conclusions with the existing package. pattern of exercised rights. For example, an entity would recognise 50 percent
of the total estimated breakage upon redemption of 50 percent customer
Customer loyalty programmes rights. If Telkom cannot conclude whether there will be any breakage, or the
Customer loyalty programmes are used to build brand loyalty and increase extent of such breakage, it should consider the constraint on variable
sales volume. The incentives may go by different names (for example, points, considerations, including the need to record any minimum amounts of
or rewards), but they all represent discounts that the customer can choose to breakage. Breakage that is not expected should be recognised as revenue when
use in the future to acquire additional goods or services. Obligations related to the likelihood of the customer exercising their remaining rights becomes
customer loyalty programmes can be significant even where the value of each remote.
individual incentive is insignificant. As of recently Telkom has been offering On the other hand, the analogy introduced in IFRS15 paragraph B42 regarding
MyIndiHome points to certain customers that meet the eligibility criteria for determining the stand-alone selling price of a customer option can be applied.
customers under the loyalty programme. Telkom lists all the necessary The estimated stand-alone selling price is reduced for expected breakage.
activities to accumulate MyIndihome points and eligible customers can redeem Breakage is the extent to which future performance obligation is not expected
the points to obtain additional goods from Telkom or other entities. to be required because customer does not redeem the option. The transaction
Telkom shall allocate points according to the transaction price. The amount price is therefore only allocated to obligations that are expected to be satisfied.
allocated is based on the estimated standalone selling price of the points
calculated, not the cost of fulfilling awards earned. Revenue is recognised when
the entity has satisfied its performance obligation relating to the points or
when the points expire.
.
Gap 4 identified
Consumer

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3.
Determining
the transaction
price

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221
Step 3.1 – Determining transaction price
All possible adjustments to contract price
Requirement from the revenue standard (Further detail on the requirement refer to Deliverable 1 “Acc. Policy”)
Variable consideration Non-cash consideration

Variable consideration is common and takes various forms, including (but not Any noncash consideration received from a customer needs to be included
limited to) price concessions, volume discounts, rebates, refunds, credits, when determining the transaction price. Noncash consideration is measured
incentives, performance bonuses and royalties. An entity’s past business at fair value. This is consistent with the measurement of other consideration
practices can cause consideration to be variable if there is a history of that considers the value of what the selling entity receives, rather than the
providing discounts or concessions after goods are sold. value of what it gives up.
Consideration is also variable if the amount an entity will receive is contingent Telkom might not be able to reliably determine the fair value of noncash
on a future event occurring or not occurring, even though the amount itself is consideration in some situations. The value of the noncash consideration
fixed. The amount of consideration the entity is entitled to receive depends on received should be measured indirectly in that situation by reference to the
whether the customer retains the product or not. Similarly, consideration standalone selling price of the goods or services provided by the entity.
might be contingent upon meeting certain performance goals or deadlines.
Consideration payable to a customer
The amount of variable consideration included in the transaction price may be
constrained in certain situations. An entity might pay, or expect to pay, consideration to its customer. The
consideration payable can be cash, either in the form of rebates or upfront
Significant financing component
payments, or could alternatively be a credit or some other form of incentive
Some contracts contain a financing component (either explicitly or implicitly) that reduces amounts owed to the entity by a customer.
because payment by a customer occurs either significantly before or
Telkom should consider whether payments to customers are related to a
significantly after performance. This timing difference can benefit either the
revenue contract even if the timing of the payment is not concurrent with a
customer, if the entity is financing the customer’s purchase, or the entity, if
revenue transaction. Such payments could nonetheless be economically
the customer finances the entity’s activities by making payments in advance of
linked to a revenue contract; for example, the payment could represent a
performance.
modification to the transaction price in a contract with a customer. Telkom
The amount of revenue recognised differs from the amount of cash received will therefore need to apply judgment to identify payments to customers that
from the customer when an entity determines a significant financing are economically linked to a revenue contract.
component exists. Revenue recognised will be less than cash received for
Telkom will also need to assess whether payments that relate to anticipated
payments that are received in arrears of performance, as a portion of the
contracts should be recorded as an asset in the period the payment is made.
consideration received will be recorded as interest income. Revenue
Payments capitalized would be amortized as a reduction to future revenues
recognised will exceed the cash received for payments that are received in
from that customer. Assets should be assessed for recoverability, which would
advance of performance, as interest expense will be recorded and increase the
generally be based on expected future revenues from the customer.
amount of revenue recognied.

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Adjustment to transaction price
Step 3.1 - Assessment of transaction price
Telkom has customary business practice to provide discount to As explained in the previous paragraph, Telkom should include non-cash
customer consideration received from customer needs. IFRS 15 states that when a
customer contributes goods or services (for example, materials, equipment, or
The standard requires Telkom to adjust the transaction price stated in the
labor) to facilitate an entity’s fulfillment of the contract, the entity shall assess
contract with all the possible adjustment (i.e. discount). Such adjustment could
whether it obtains control of those contributed goods or services. If so, Telkom
be implicitly stated in the contract or implied by Telkom’s customary business
shall account for the contributed goods or services as noncash consideration. The
practice. Specific to Telkom, all discount given to customer already embedded
standard further explains that once asset from non-cash consideration is
in the contract term considering as follows:
recognised, Telkom shall measure and present such asset in accordance with the
• Consumer, most of the time tariff given to Telkom consumer product is relevant standard (i.e. investment under IFRS 9).
applied to all customer and formalised in Nodin;
Considering the typical contracts in all Telkom revenue streams, the common
• EBIS Connectivity, EBIS Solution, WIBS Connectivity; tariff has considered type of adjustment to Telkom’s transaction price only relates to discount and
allowable discount and any payment arrangement that may make a variable penalty. As Telkom involves in technology and communication industry that
consideration shall be stated in the contract between Telkom and consumer requires certain expertise or license in delivering the services, the customer
(i.e. payment based on the costumer usage). Separate position paper is barely contributes in the fulfilment of a contract. Telkom, and sometime its
prepared to assess the accounting treatment for variable consideration in subsidiaries, is responsible to provide all the necessary input to provide the
usage-based performance obligation; and and goods and service that customer actually contracted. Having considered above
• WIBS Interconnection and WIBS International Roaming; separate analysis, we believe adjustment of transaction price from non-cash consideration
position paper is prepared to assess the accounting treatment for the does not impose Telkom to additional risk or gap in the IFRS 15 implementation
possible variable consideration in these revenue streams. in Telkom.
We conclude that Telkom does not customary business practice that may
impose Telkom to an additional variable consideration that should be consider
in determining the transaction price. Any form of variable consideration is
stated in the contract and has been accommodated properly in the proposed
solution of IFRS 15 implementation.
Contract with non-cash consideration
The new revenue standard includes five steps that are applied to achieve its core
principle. The third step requires Telkom to determine the transaction price of
a contract. The transaction price is the amount of consideration to which
Telkom expects to be entitled in exchange for transferring promised goods or
services to a customer. The transaction price can be a fixed amount of customer
consideration, but it may sometimes include variable consideration or
consideration in a form other than cash.
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Step 3.1 - Assessment of transaction price – cont’d
Non-refundable upfront fees (“PSB”) Consideration payable to customer
It is common for Telkom to have arrangement with customer that requires a An entity might pay, or expect to pay, consideration to its customer. The
nonrefundable upfront fees such as activation fees, or other initial/set-up fees. consideration payable can be cash, either in the form of rebates or upfront
As the building block of the standard implementation, initially Telkom should payments, or could alternatively be a credit or some other form of incentive that
assess whether the activities related to such fees satisfy a performance reduces amounts owed to the entity by a customer. This type of arrangement
obligation. This assessment has been performed in the Position Paper 10 (refer rarely happened in Telkom’s contract with customer.
to page 241), in which we concur that Telkom activation fee does not meet the
criteria of a distinct PO. When those activities do not satisfy a performance The standards introduces the concept of “customer’s customer” as shown in
obligation, because no good or service is transferred to the customer, none of graphs below:
the transaction price should be allocated to those activities. Rather, the upfront
fee is included in the transaction price that is allocated to the performance Example of a payment to a customer’s customer in the distribution chain
obligations in the contract.
Generally, the standard requires the non-refundable upfront fees to be
allocated to all POs in the contract, unless the linkage to a specific number of Manufacturer
PO can be explained. This area requires judgment. Telkom has concurred the
accounting treatment for its upfront fee as follows:
• Consumer, the upfront fee is allocated based on the churn rate. PSB in Product
consumer streams is arguably a necessity to ensure that Telkom able to
provide the services within the enforceable period. The amount charged
as PSB is around Rp 100.000 to Rp 150,000 which approx. 30% of total
subscription fee / month. It is very unlikely that the customer will only Coupon
utilise for one month only. Therefore, it is fair to concur that the linkage of Retailer
the transaction fee extends throughout the customer relationship period.
Telkom existing practice conforms the requirement in the standards.
• EBIS Solution, EBIS Connectivity, and WIBS Connectivity; Telkom Product
concurs that the renewal option is not substantive and no direct linkage
between the upfront fees to particular PO or POs. Therefore, the upfront
fees is allocated evenly using the relative stand-alone selling price to all
identified POs in the contract. Telkom existing practice conforms the End consumer
requirement in the standards.

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Step 3.1 - Assessment of transaction price – cont’d
Example of a payment to a customer’s customer in the distribution chain Payment made to anticipated contracts
The entity needs to assess whether payments that relates to anticipated

contracts should be recorded as an asset in the period the payment is made.
Merchant For example, entities sometimes need to make advance payments to customers
to reimburse them for costs to change vendors and/or to secure exclusivity in
anticipation of future purchases even though the entity may not have an
Service enforceable right to them. Payments to a customer that related to anticipated
contracts could meet the definition of an asset. The payment capitalised would
be amortised as a reduction to future revenues from that customer. Assets
should be assessed for recoverability which would generally be based on
Intermediary/ expected future revenues from the customer.
Product Agent
Based on assessment, Telkom does not perform payment to customer relates
to anticipated contracts therefore the accounting treatment for payment
related to anticipated contracts as stated in IFRS 15 does not applicable to
Cash Telkom.
incentive
End consumer
Telkom must first identify whether the end consumer is the entity’s customer under
the revenue standard. However, similar to plain consideration payable, Telkom also
rarely enter into transaction with customer that provide the customer’s customer
any type of incentives that reduce amount owed to Telkom.

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Step 3.2 – Variable consideration
Estimating variable consideration
Excerpt from IFRS 15,52 Expected value method

An entity shall estimate an amount of variable consideration by using either of The expected value method estimates variable consideration based on the
the following methods, depending on which method the entity expects to range of possible outcomes and the probabilities of each outcome. The
better predict the amount of consideration to which it will be entitled: estimate is the probability-weighted amount based on those ranges. The
a) The expected value—The expected value is the sum of probability- expected value method might be most appropriate where an entity has a large
weighted amounts in a range of possible consideration amounts. An number of contracts that have similar characteristics. This is because an entity
expected value may be an appropriate estimate of the amount of variable will likely have better information about the probabilities of various outcomes
consideration if an entity has a large number of contracts with similar where there are a large number of similar transactions.
characteristics. Most likely amount method
b) The most likely amount—The most likely amount is the single most likely The most likely amount method estimates variable consideration based on the
amount in a range of possible consideration amounts (that is, the single single most likely amount in a range of possible consideration amounts. This
most likely outcome of the contract). The most likely amount may be an method might be the most predictive if the entity will receive one of only two
appropriate estimate of the amount of variable consideration if the (or a small number of) possible amounts. This is because the expected value
contract has only two possible outcomes (for example, an entity either method could result in an amount of consideration that is not one of the
achieves a performance bonus or does not). possible outcomes.
The method used is not a policy choice. Telkom should use the method that it Constraint on variable consideration
expects best predicts the amount of consideration to which the entity will be Determining the amount of variable consideration to record, including any
entitled based on the terms of the contract. The method used should be minimum amounts, requires judgment. The assessment of whether variable
applied consistently throughout the contract. However, a single contract can consideration should be constrained is largely a qualitative one that has two
include more than one form of variable consideration. For example, a contract elements: the magnitude and the likelihood of a change in estimate.
might include both a bonus for achieving a specified milestone and a bonus
Variable consideration is not constrained if the potential reversal of
calculated based on the number of transactions processed. Telkom may need
cumulative revenue recognized is not significant. Significance should be
to use the most likely amount to estimate one bonus and the expected value
assessed at the contract level (rather than the performance obligation level or
method to estimate the other if the underlying characteristics of the variable
in relation to the financial position of the entity). Telkom should therefore
consideration are different.
consider revenue recognized to date from the entire contract when evaluating
the significance of any potential reversal of revenue.

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Step 3.2 – Variable consideration
Prompt payment discount Contract contain price protection clause
IFRS 15 defined prompt payment discount as discount include in early Price protection clauses allow a customer to obtain a refund if the seller lowers
payment from customer purchase arrangements. For example, an entity might the product’s price to any other customers during a specified period. Price
offer a two percent discount if an invoice is paid within ten days of receipt. A protection clauses ensure that the customer is not charged more by the seller
portion of the consideration is variable in this situation as there is uncertainty than any other customer during this period. Price matching provisions require
as to whether the customer will pay the invoice within the discount period. an entity to refund a portion of the transaction price if a competitor lowers its
Telkom needs to make an estimate of the consideration it expects to be entitled price on a similar product. Both of these provisions introduce variable
to as a result of offering this incentive. Experience with similar customers and consideration into an arrangement as there is a possibility of subsequent
similar transactions should be considered in determining the number of adjustments to the stated transaction price. Based on our review contract,
customers that are expected to receive the discount. Telkom never provides such protection clause to the customer.
Having considered the explanation as stated above, Telkom does not provide Sales-or-usage-based royalties
any kind of prompt payment discount. No additional gap difference arises
The revenue standard includes an exception for the recognition of revenue
from this issue.
relating to licenses of IP with sales- or usage-based royalties. Revenue is
Pricing based on index recognized at the later of when (or as) the subsequent sale or usage occurs, or
when the performance obligation to which some or all of the royalty has been
A transaction price includes variable consideration at contract inception if the
allocated has been satisfied (or partially satisfied).
amount of consideration is calculated based on an index at a specified date (i.e.
customer price index). Telkom needs to consider the extent to which a Periods after contract expiration, but prior to contract renewal
significant reversal of cumulative revenue recognized could occur if such terms
In Step 1 discussion, we have elaborated further each contract arrangement
are included in arrangements with customers. This assessment requires
applies to Telkom per revenue streams. It is understood from the discussion,
judgment, and Telkom needs to consider whether a minimum amount needs to
applicable to transaction with the Government, Telkom continues to perform
be included in the transaction price.
the service while it negotiates new contract. We have concluded that the parties’
Telkom should also consider whether the arrangement contains a derivative obligation are enforceable prior to signing the new contract, therefore; revenue
that should be separated under the financial instruments guidance if the shall be recorded during this period. Telkom uses BASO as temporary
transaction price is linked to changes in an index. For example, a contract with replacement until the written contract finalized. Telkom uses the historical tariff
a transaction price that varies based on the stock price of a public company in recogning the revenue. This is a prudent approach to recognize the minimum
may contain a derivative that should be accounted for separately. The revenue as Telkom does not consider the anticipated increase in tariff in
variability in the transaction price will not affect revenue if it is accounted for recognizing the revenue.
based on the relevant financial instruments guidance. Telkom should also
consider the financial instruments guidance when the transaction price is
linked to changes in an index after the entity has satisfied its performance
obligations.

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Step 3.2 – Identifying variable consideration
Determining the transaction price
Telkom shall consider the terms of the contract and its customary business EBIS Solution, EBIS Connectivity and WIBS Connectivity
practices to determine the transaction price. The transaction price is the
Variable consideration applicable to Telkom’s EBIS Solution, EBIS
amount of consideration to which an entity expects to be entitled in exchange
Connectivity, and WIBS Connectivity streams are the Service Level Guarantee
for transferring promised goods or services to a customer, excluding amounts
(“SLG”) and predetermined cap arrangement. These arrangements are
collected on behalf of third parties. Determining the transaction price can be
structured in a way that it will affect the total consideration received from the
straightforward, such as where a contract is for a fixed amount of consideration
customer in exchange of the service performed; and thus, meet the criteria of
in return for a fixed number of goods or services in a reasonably short
variable consideration. Further assessment is performed on page 231 to 234
timeframe. Complexities can arise where a contract includes any of the
to support the conclusion that Telkom’s variable consideration does not have
following: 1) Variable consideration, 2) Significant financing component, 3) Non
material effect to Telkom’s existing practice.
cash consideration and 4) Consideration payable
WIBS Interconnection and WIBS International Roaming
Consumer
Understand that these streams contribute not more than significant amount to
As stated in the website https://indihome.co.id/package, the arrangement
Telkom total revenue during 2017 (less than Rp 50 billion per streams).
in Telkom’s retail product is pretty straightforward as the amount charged to
However, the arrangement in this streams impose Telkom with a variable
customer is fixed per month depending on the packaged subscribed by the
consideration in which the amount charge to customer is based on the total
customer. We do not notice any arrangement that may rise to variable
usage and price tier. Further assessment on page 235 to 244 is performed to
consideration to Telkom’s retail product (e.g. service level guarantee and
provide a general framework on how Telkom should account such transaction
volume discount).
in IFRS 15.
Is further analysis through position paper required?

Consumer
No Yes Yes Yes Yes Yes
IFRS 15 Guidance
• Consideration may vary due to discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties or similar items, which may depend on the occurrence or non-occurrence of a future event.
• Variable consideration shall be estimated using one of the following methods; (a) the expected value – The sum of the probability weighted amounts (b) the most likely amount – The single most likely amount.
• Variable consideration will be recognised only to the extent that it is highly probable that a subsequent significant reversal will not occur.
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Position paper 8
Application guidance – ‘Variable consideration’
What stream is impacted? Purpose of this application guidance Issues
EBIS Solution This paper is written to assess the impact of Does the current treatment in Telkom SLG Clause
EBIS Connectivity requirement in variable consideration in Telkom and predetermined cap arrangement satisfy the
requirement in IFRS 15?
WIBS Connectivity
Background:
Service level guarantee (“SLG”) A = number of disruption hours in disruption month
To compete with the growing competition in the telecommunication Av = [(100% - availability level) x number of hours in disruption month]
industry, it is inevitable for Telkom to guarantee a high quality deliverable to
the customer. This commitment has become a common business practice B = Monthly charge
and generally includes in the contract with customer as a service level C = Total hours in disruption month
guarantee (“SLG”). Under this arrangement Telkom promise to provide a
certain restitution to the customer if Telkom unable to satisfy the agreed It is understood from above clause, the SLG acts as penalty if Telkom unable to
certain level of services. provide the service on the agreed level in the contract. Further, the arrangement
Example of SLG arrangement included in the Telkom’s contract with in the contract governs the term and method of repayment. Generally, for any
customer is as follow: discrepancies subject for the SLG penalty, Telkom calculates the total penalty
and deduct those amount in the subsequent billing. Telkom’s past experience
Contract No : K.TEL.1866/HK.820/WTL-4G100000/2016 shows an immaterial restitution or penalty paid to the Customer; thus, Telkom
Article 5 (1) : does not include this variable consideration in the transaction price. Telkom
believes that this current treatment is already in conformity with the
Restitution requirement in IFRS 15.
In the event that TelkomSolution services pursuant to this Subscription Predetermined cap
Contract has disruptioned resulting in the failure to function normally as
Availability Level for location having disruptioned, Customer reserves the In addition the SLG clause, there is also another circumstance that may impose a
right to obtain a restitution in the amount to: variable consideration requirement in Telkom in relation to the Telkom’s
promise to provide a certain cap of goods and services. Under this arrangement,
Restitution = [(A-Av)/C] x B Telkom and the Customer determine the cap for the services, however, the
provisioning of these services in the system are based on the subsequent
expenditure from the Customer.

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Position paper 8
Step 3.1 – Identifying variable consideration – cont’d
Currently, Telkom considers that each expenditure as a separate contract a) The expected value – the expected value is the sum of probability-weighted
considers the transaction price for each purchase are negotiated separately and amounts in a range of possible consideration amounts. An expected value
thus, Telkom only applies the 5-step revenue recognition model once the may be an appropriate estimate of the amount of variable consideration if
Customer actually purchases the products. an entity has a large number of contracts with similar characteristics.
b) The most likely amount – the most likely amount is the single most likely
Reference to the relevant accounting standards: amount in a range of possible consideration amounts (i.e. the single most
IFRS 15.47 An entity shall consider the terms of the contract and its customary likely outcome of the contract). The most likely amount may be an
business practice to determine the transaction price. The transaction price is appropriate estimate of the amount of variable consideration if the contract
the amount of consideration to which an entity expects to be entitled in has only two possible outcomes (for example, an entity either achieves a
exchange for transferring promised goods or services to a customer, excluding performance bonus or does not).
amounts collected on behalf of third parties (for example, some sales taxes). IFRS 15.55 An entity shall recognise a refund liability if the entity receives
The consideration promised in a contract with a customer may include fixed consideration from a customer and expects to refund some or all of that
amounts, variable amounts, or both. consideration to the customer. A refund liability is measured at the amount of
Particular for variable consideration, in the paragraph 50 of IFRS 15 explains consideration received (or receivable) for which the entity does not expect to be
that if the consideration promised in a contract includes a variable amount, an entitled (i.e. amounts not included in the transaction price). The refund liability
entity shall estimate the amount of consideration to which the entity will be (and corresponding change in the transaction price and, therefore, the contract
entitled in exchange for transferring the promised goods or services to a liability) shall be updated at the end of each reporting period for changes in
customer. The common type of variable consideration then further discuss in circumstances.
paragraph 51 in which the standard explains that an amount of consideration IFRS BC203 IASB boards (the “boards”) decided that to provide useful
can vary because of discount, rebates, refunds, credits, price concessions, information to users of financial statements, some estimates of variable
incentives, performance bonus, penalties or other similar items. The promised consideration should not be included in transaction price. This would be the
consideration can also vary if an entity’s entitlement to the consideration is case if the estimate of variable consideration (and consequently the amount of
contingent on the occurrence or non-occurrence of a future event. revenue recognised) is too uncertain and, therefore, may not faithfully depict
IFRS 15.53 An entity shall estimate an amount of variable consideration by the consideration to which the entity will be entitled in exchange for the goods
using either of the following methods, depending on which method the entity or service transferred to the Customer. In that case, the Board decided that an
expects to better predict the amount of consideration to which it will be entity should constrain the estimate of variable consideration to be included in
entitled: the transaction price.

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IFRS 15.56 An entity shall include in the transaction price some or all of an Analysis:
amount of variable consideration estimated only to the extent that it is highly The analysis of the variable consideration in this position paper is conducted
probable that a significant reversal in the amount of cumulative revenue using one plus two-step process. First, Telkom shall identify the variable
recognised will not occur when the uncertainty associated with the variable consideration applicable to them by considering the arrangement with the
consideration is subsequently resolved. IFRS 15.57 explained that in assessing Customer, Telkom’s customary business practices, and published policies or
whether it is highly probable that a significant reversal in the amount of specific statements.
cumulative revenue recognised will not occur once the uncertainty related to
the variable consideration is subsequently resolved, an entity shall consider Then, the two-step process, Telkom estimates the consideration to which the
both the likelihood and the magnitude of revenue reversal included, but are not entity will be entitled and assess whether the objective of the requirement for
limited to, any of the following: constraining estimates of variable consideration can be met.
a) The amount of consideration is highly susceptible to factors outside the Further analysis on each variable consideration in Telkom are as follow:
entity’s influence. Those factors may include volatility in a market, the [1] Service level guarantee (“SLG”)
judgment or action of third parties, weather conditions and a high risk of
obsolescence of the promised good or service. Step 1 – Identify the variable consideration
b) The uncertainty about the amount of consideration is not expected to be SLG is a variable consideration as this is one of the common type variable
resolved for a long period of time. consideration as explained in the IFRS 15.51 – penalty. Although Telkom
offers a fixed-price service contract with the Customer, the SLG term in the
c) The entity’s experience (or other evidence) with similar types of contract is
contract provides the Customer with certain amount of restitution/penalty if
limited, or that experience (or other evidence) has limited predictive value.
Telkom is unable to satisfy the agreed availability level. In this case,
d) The entity has a practice of either offering a broad range of price consideration received by Telkom is variable because Telkom may be entitled
concession or changing the payment terms and conditions of similar to all of the considerations or lower if the Customer exercise its right to a
contracts in similar circumstances. restitution.
e) The Contract has a large number and broad range of possible consideration Step 2 – Estimates the variable consideration
amounts.
Although SLG is a variable consideration, it is expected to have an
immaterial impact to Telkom by considering the fact that the historical
experience in Telkom records an immaterial amount of restitution/penalty
expense compares to the total revenue to the Customer.


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!
As the variable consideration is expected to be immaterial, it is acceptable for
Telkom not to include the estimation in the transaction price. Telkom Conclusion
believes this approach does not breach the requirement of the standard that
the revenue from contract with customer can only be recorded to the extent Both Telkom’s SLG and Predetermined cap do not give
that it is highly probable that a significant reversal in the amount of material impact to Telkom IFRS 15 implementation. Although
cumulative revenue recognised will not occur when the uncertainty SLG does meet the criteria, Telkom’s historical pattern shows
associated with the variable consideration is subsequently resolved. As the not more than significant penalty amount being recorded in
estimated amount of variable consideration is considered not material, their books. The existing treatment conforms the requirement
further analysis for constraining estimates of variable consideration is in IFRS 15.
considered not necessary.
[2] Predetermined cap
Step 1 – Identify the variable consideration
Predetermined cap is not a variable consideration. This arrangement is not a No – Telkom’s existing treatment for SLG and predetermined cap
variable consideration as the arrangement does not affect the amount of conforms the requirement in IFRS 15.
consideration expected to be received from the Customer. The arrangement
is only for agreeing the maximum cap and do not contain other arrangement
that involves any of the following features:
• Price concession – neither the arrangement in the contract or Telkom’s
customary business practice anticipates Telkom to grant a price
concession to the Customer.
• Volume discount – the arrangement does not offer lower tariff if the
total purchase meets a certain level as agreed by both parties.
Also, another argument could be built for the view that each expenditure is
actually a separate transaction. This argument is built based on the facts that
each expenditure from the Customer is subject to a separate negotiation,
particularly for the price of the promised goods/services and the transaction
price. In this case, the consideration is not variable because Telkom entitles
to all consideration from the Customer. Each expenditure is a separate
transaction and Telkom has the right to all consideration agreed by both
parties. As this arrangement is not a variable consideration, further
assessment is considered not necessary.
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Application guidance – ‘Accounting treatment for volume discount on
interconnection and international roaming revenue stream
(“interconnection services”)’
WIBS - Interconnection To assess the application of the series provision The issue we described above may create an
WIBS - International Roaming and allocation of variable consideration (i.e. accounting gap between Telkom’s current
volume discount) to Telkom’s interconnection practice and IFRS 15 requirements on variable
and international roaming revenue stream. consideration that affects the transaction price of
a contract with customer. This is because the
actual transaction price of an interconnection
arrangement between Telkom and an OLO may
vary depending on the actual volume of traffic
used in a given period. This paper is written to
address the proper accounting treatment for
Telkom’s interconnection revenues with variable
consideration.
Background: consideration equal to the actual usage for incoming and transit services
multiplied by a certain tariff.
One of Telkom’s revenue transactions is derived from the interconnection
services between Telkom and other telecommunication providers (both local
The Ministry of Communication and Technology has issued regulation Number:
and overseas providers), which are commonly referred to as other licensed
1153/M.KOMINFO/PI.0204/082016 that governs the base tariffs charged on
operator (“OLO”). Interconnection revenues include tariffs charged for using
domestic interconnection services among OLOs in Indonesia. For international
Telkom’s network on incoming calls made by OLO’s to Telkom’s customers
services, Telkom enters into B2B agreements with international OLOs to agree
(“incoming”) and calls made between OLOs using Telkom’s network (“transit”).
on the tariffs; including the extent of tariff reduction (discount) once a certain

usage level is achieved. This is what we normally called tier-discounts feature.
In the interconnection services arrangement, Telkom is responsible for making
The higher the volume of traffic used by an OLO over a given period (for
the interconnection services available continuously to the OLOs over the
example, over a three months period), the higher the discount provided by
performance period. The OLO controls the extent to which it uses, or does not
Telkom per minute/ second of interconnection services.
use, the interconnection facilities. In return, Telkom is entitled to a

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Telkom currently recognises interconnection revenue based on the actual • A good or service (or a bundle of goods or services) that is distinct
volume of traffic used by an OLO in that month multiplied by the agreed tariff
• A series of distinct goods or services that are substantially the same and that
for that level of traffic. So for example, where Telkom agrees to provide a tariff
have the same pattern of transfer to the customer.
reduction once an OLO’s usage exceeds a specified volume over a three months
period; Telkom does not estimate upfront the potential discount that will be [IFRS 15.23] A series of distinct goods or services has the same pattern of
provided once the specified threshold is eventually met. Tariff discount will be transfer to the customer if both of the following criteria are met:
recorded as incurred once the OLO’s usage has actually exceeded the specified • each distinct good or service in the series that the entity promises to transfer
threshold (for example, in the third month). In the first two months, the actual
to the customer would meet the criteria in paragraph 35 to be a performance
usage has not reached the specified level and hence the OLO has not earned its
obligation satisfied over time; and
right to the discounted tariff.
• in accordance with paragraphs 39–40, the same method would be used to
The current practice is generally not an issue if the agreed discount periods measure the entity’s progress towards complete satisfaction of the
stay within Telkom’s annual fiscal period from January – December. In most performance obligation to transfer each distinct good or service in the series
cases, Telkom and OLOs will have completed volume reconciliations, including to the customer.
the magnitude of tariff discounts, incurred during a fiscal year before the Allocating variable consideration:
issuance of Telkom’s audited financial statements (i.e. there will be no cut off
issue). However, if a discount period stretches over the 31 December annual IFRS 15 provides guidance in determining the variable consideration of
cut-off, the issue under IFRS 15 is should Telkom start estimating the potential transaction price. IFRS 15.50 requires an entity to estimate the amount of
tariff discounts that may eventually be provided in the future given the consideration to which the entity will be entitled in exchange for transferring
interconnection agreement starts before the end of the current fiscal year? the promised goods or services to a customer if the consideration promised in a
contract includes a variable amount.
Reference to the relevant accounting standards: An amount of consideration can vary because of discounts, rebates, refunds,
credits, price concessions, incentives, performance bonuses, penalties or other
Series of distinct performance obligations: similar items. The promised consideration can also vary if an entity’s
The new revenue standard defines a performance obligation and a series as entitlement to the consideration is contingent on the occurrence or non-
follows: occurrence of a future event. For example, an amount of consideration would be
variable if either a product was sold with a right of return or a fixed amount is
[IFRS 15.22] At contract inception, an entity shall assess the goods or services promised as a performance bonus on achievement of a specified milestone.
obligation each promise to transfer to the customer either:
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Position paper 9
[IFRS 15.52] explains that the variability relating to the consideration related to the variable consideration is subsequently resolved, an entity shall
promised by a customer may be explicitly stated in the contract. In addition to consider both the likelihood and the magnitude of the revenue reversal. Factors
the terms of the contract, the promised consideration is variable if either of the that could increase the likelihood or the magnitude of a revenue reversal
following circumstances exists: include, but are not limited to, any of the following:
• the customer has a valid expectation arising from an entity’s customary • The amount of consideration is highly susceptible to factors outside the
business practices, published policies or specific statements that the entity entity’s influence. Those factors may include volatility in a market, the
will accept an amount of consideration that is less than the price stated in judgement or actions of third parties, weather conditions and a high risk of
the contract. That is, it is expected that the entity will offer a price obsolescence of the promised good or service.
concession. Depending on the jurisdiction, industry or customer this offer
• The uncertainty about the amount of consideration is not expected to be
may be referred to as a discount, rebate, refund or credit.
resolved for a long period of time.
• other facts and circumstances indicate that the entity’s intention, when
• The entity’s experience (or other evidence) with similar types of contracts is
entering into the contract with the customer, is to offer a price concession to
limited, or that experience (or other evidence) has limited predictive value.
the customer.
• The entity has a practice of either offering a broad range of price concessions
IFRS 15.56 includes a constraint on the amount of variable consideration
or changing the payment terms and conditions of similar contracts in similar
included in the transaction price. An entity shall include in the transaction
circumstances.
price some or all of an amount of variable consideration estimated in
accordance with paragraph 53 only to the extent that it is highly probable that • The contract has a large number and broad range of possible consideration
a significant reversal in the amount of cumulative revenue recognised will not amounts.
occur when the uncertainty associated with the variable consideration is
[IFRS15.BC115] The boards noted that if an entity determines it has a
subsequently resolved.
performance obligation that meets the criterion in paragraph 22(b) of IFRS 15,
Variable consideration is not constrained if the potential reversal of cumulative an entity should consider the distinct goods or services in the contract, rather
revenue recognised is not significant. Significance should be assessed at the than the performance obligation, for the purposes of contract modifications and
contract level (rather than the performance obligation level or in relation to the the allocation of variable consideration.
financial position of the entity). Management should therefore consider
[IFRS15.84] 84 Variable consideration that is promised in a contract may be
revenue recognised to date from the entire contract when evaluating the
attributable to the entire contract or to a specific part of the contract, such as
significance of any potential reversal of revenue.
either of the following:
In assessing whether it is highly probable that a significant reversal in the • one or more, but not all, performance obligations in the contract (for
amount of cumulative revenue recognised will not occur once the uncertainty
example, a bonus may be contingent on an entity transferring a promised
PT Telekomunikasi Indonesia Tbk - IFRS 15 good or service within a specified period of time); or
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Position paper 9
• one or more, but not all, distinct goods or services promised in a series of [IFRS 15.BC280] However, the boards also noted that allocating the
distinct goods or services that forms part of a single performance obligation transaction price on a relative stand-alone selling price basis brings rigour and
in accordance with paragraph 22(b) (for example, the consideration discipline to the process of allocating the transaction price and, therefore,
promised for the second year of a two-year cleaning service contract will enhances comparability both within an entity and across entities. Consequently,
increase on the basis of movements in a specified inflation index). the boards decided that it should be the default method for allocating the
transaction price. However, they agreed with respondents that it might not
[IFRS15.85] 85 An entity shall allocate a variable amount (and subsequent
always result in a faithful depiction of the amount of consideration to which the
changes to that amount) entirely to a performance obligation or to a distinct
entity expects to be entitled from the customer. Accordingly, in paragraphs 81–
good or service that forms part of a single performance obligation in
86 of IFRS 15, the boards specified the circumstances in which other methods
accordance with paragraph 22(b) if both of the following criteria are met:
should be used.
• the terms of a variable payment relate specifically to the entity’s efforts to
[IFRS15.BC285] The boards clarified in paragraph 84(b) of IFRS 15 that
satisfy the performance obligation or transfer the distinct good or service
variable consideration can be allocated to distinct goods or services even if those
(or to a specific outcome from satisfying the performance obligation or
goods or services form a single performance obligation. The boards made this
transferring the distinct good or service); and
clarification to ensure that an entity can, in some cases, attribute the
• allocating the variable amount of consideration entirely to the performance reassessment of variable consideration to only the satisfied portion of a
obligation or the distinct good or service is consistent with the allocation performance obligation when that performance obligation meets the criterion in
objective in paragraph 73 when considering all of the performance paragraph 22(b) of IFRS 15. Consider the example of a contract to provide hotel
obligations and payment terms in the contract. management services for one year (ie a single performance obligation in
accordance with paragraph 22(b) of IFRS 15) in which the consideration is
[IFRS15.73] The objective when allocating the transaction price is for an entity
variable and determined based on two per cent of occupancy rates. The entity
to allocate the transaction price to each performance obligation (or distinct
provides a daily service of management that is distinct and the uncertainty
good or service) in an amount that depicts the amount of consideration to
related to the consideration is also resolved on a daily basis when the occupancy
which the entity expects to be entitled in exchange for transferring the
occurs. In those circumstances, the boards did not intend for an entity to
promised goods or services to the customer.
allocate the variable consideration determined on a daily basis to the entire
[IFRS15.74] To meet the allocation objective, an entity shall allocate the performance obligation (ie the promise to provide management services over a
transaction price to each performance obligation identified in the contract on a one-year period). Instead, the variable consideration should be allocated to the
relative stand-alone selling price basis in accordance with paragraphs 76–80, distinct service to which the variable consideration relates, which is the daily
except as specified in paragraphs 81–83 (for allocating discounts) and management service.
paragraphs 84–86 (for allocating consideration that includes variable
amounts).
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Position paper 9
Analysis: applicability of the series provision in IFRS 15 para 23. A series of distinct goods
or services has the same pattern of transfer to the customer if both of the
There are three questions that have to be addressed to determine the
appropriate accounting treatment of Telkom’s revenue from interconnection
services; they are: • Each distinct good or service in the series is a performance obligation
satisfied over time; and
1. Does the series provision apply for interconnection revenues? In other
words, does Telkom need to account for interconnection services as a • Telkom would use the same method to measure its progress toward complete
performance obligation that consists of a series of distinct goods or satisfaction of the performance obligation to transfer each distinct service in
services that are essentially the same? (IFRS 15 para 22.b). the series to the OLOs.
2. If there is an undefined quantity of outputs but the contractual rate per
unit of output is fixed, is the consideration still considered to be variable?
3. How would Telkom allocate the transaction price to a performance
obligation with variable consideration, especially for those contracts with
tier-discounts feature? (IFRS 15 paras 84 – 86).
[1] In order to apply the series provision – we have to assess whether
interconnection services meet the criteria of a series of distinct services (IFRS
15 para 22.b)
The series provision is a concept that was introduced by IFRS 15 and does not
exist in IAS 18. As described in paragraph BC113 of IFRS 15, the purpose of the
series guidance is to simplify the application of the revenue model and to
promote consistency in identifying performance obligations. For example, the
series provision prevents an entity from having to allocate the transaction price
on a relative standalone selling price basis to each increment of a distinct
service in repetitive service contracts. In some cases, variable consideration
should be allocated directly to the distinct good or service within the series.
In order to address whether interconnection services represent a series of
distinct services, we have to look at the criteria for determining the

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Position paper 9
Our assessment below focuses on the criteria set out in IFRS 15 para 23:
No Criteria Analysis
(a) Each distinct good or service in the series that the As mentioned in the section “Background”, Telkom is responsible for making the interconnection
entity promises to transfer to the customer would meet services available continuously to an OLO over the performance period. Because Telkom has
the criteria in IFRS 15 paragraph 35 to be a promised to provide an unspecified quantity of outputs depending the volume of traffic actually used
performance obligation satisfied over time by the OLO, the nature of Telkom’s promise is an obligation to stand ready to provide
interconnection services each day to the OLO.
The nature of Telkom’s promise is the overall interconnection and international roaming
services/facilities. Each day of service could be considered distinct because the customer can
benefit from each day of service on its own and each day of service is separately identifiable. Put
another way, each day could be separately identifiable because Telkom does not provide an
integration service between the days, each day does not modify or customise another day, and the
days of service are generally not highly interdependent or interrelated because the entity can fulfil its
obligations each day independent of fulfilling its obligations for the other days.
In addition to the above, the OLO simultaneously receives and consumes the benefits of
performance as Telkom performs by making the network facilities available for the OLO. This is
similar to example 18 in IFRS 15 par IE93.
Therefore, we can conclude that Telkom’s performance obligation is satisfied over time as Telkom
performs the interconnection services.
(b) In accordance with IFRS 15 paragraphs 39 -40, the Telkom believes that the best measure of progress towards complete satisfaction of the
same method would be used to measure the entity’s performance obligation over time is using output methods – Telkom recognises revenue based on
progress toward complete satisfaction of the direct measurements of the volume of traffic used (completed) by the OLOs.
performance obligation to transfer each distinct good or
service in the series to the customer.
Therefore, following the principles of IFRS 15 paras 22.b and 23, Telkom concludes that interconnection is a performance obligation that is made up of
a series of distinct interconnection services provided to OLOs every day.
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Position paper 9
[2] Assessment of whether variable consideration exists in interconnection Therefore, consistent with the conclusion of TRG no. 39 & 44, Telkom
service arrangements concludes that the total transaction price for its interconnection
performance obligation is variable. This applies to arrangements with,
At the beginning of an interconnection contract period, Telkom does not know
and without, tier-discounts feature.
the actual volume of traffic that will be used by its customer. As such,
interconnection service represents a promise for Telkom to stand ready to [3] Allocation of transaction price to interconnection performance obligation
perform, rather than to provide a defined number of outputs. with variable consideration
We know that not all interconnection agreements contain tier-discounts We have established that interconnection is a performance obligation that is
feature. Some interconnection services are generally priced at fixed rate per made up of a series of distinct interconnection services provided by Telkom to
minute / second. The question is if there is an undefined quantity of outputs OLOs every day (see #1). We have also concluded that the total transaction price
but the contractual rate per unit of output is fixed, is the consideration still of an interconnection performance obligation is variable. This applies to
considered to be variable? arrangements with, and without, tier-discounts feature (see #2). The next issue
is on the allocation of transaction price to the interconnection performance
We find useful guidance in TRG discussions no. 39 & 44 on this matter. The
obligation.
TRG discussions conclude that if the nature of the promise is to perform an
unknown quantity of tasks throughout a contract period and the consideration The objective when allocating a transaction price is for Telkom to allocate the
received is contingent upon the quantity completed, the total transaction price transaction price to each performance obligation in an amount that depicts the
is still considered to be variable. amount of consideration to which Telkom expects to be entitled in exchange for
transferring the promised services to its customer. [IFRS 15 para 73]. To meet
The application of TRG’s conclusion is consistent with the fact that the total
this allocation objective, Telkom shall allocate the transaction price to each
transaction price of an interconnection contract is based upon the occurrence,
performance obligation identified in the contract on a relative stand-alone
or non-occurrence, of events that are outside of Telkom’s control (i.e. the
selling price except where a variable consideration exists and it can be
customer’s usage); and therefore the contract has a range of possible
associated with a distinct performance obligation identified in that contract.
transaction prices. The total transaction price for the interconnection
[IFRS 15 para 74]. In such a case, Telkom should apply the principles of IFRS 15
performance obligation is variable. Telkom would have the right to bill based
paras 84 – 86 to allocate the transaction price to interconnection performance
upon the total number of calls and minutes incurred by the OLO during the
obligation.
service period. Given the total number of units are not defined each day, the
total consideration is variable based upon the volume of traffic actually IFRS 15 para 85 requires Telkom to allocate a variable amount (and subsequent
delivered by Telkom to the OLO. changes to that amount) entirely to a distinct good or service that forms part of
a single performance obligation (i.e. a series) in accordance with paragraph
22(b) if both of the following criteria are met:

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• The terms of a variable payment relate specifically to Telkom’s efforts to satisfy the performance obligation or transfer the distinct good or service (or to a
specific outcome from satisfying the performance obligation or transferring the distinct good or service); and
• Allocating the variable amount of consideration entirely to the distinct good or service is consistent with the allocation objective when considering all of the
performance obligations and payment terms in the contract.
We will discuss the application of IFRS 15.85 as follows:
(a) The terms of a variable payment relate Yes
specifically to the entity’s efforts to
The variable payment relates to Telkom’s effort to transfer the distinct goods or service.
satisfy the performance obligation or
transfer the distinct good or service (or Telkom has the right to bill based upon the total number of calls and minutes incurred by the OLO during the
to a specific outcome from satisfying service period. Given the total number of units are not defined at the outset of the contract, the variability to the
the performance obligation or total consideration is solely attributable to the volume of traffic that will eventually be delivered by Telkom to the
transferring the distinct good or OLO.
service)

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Position paper 9
(b) The same method would be used to Yes
measure the entity’s progress towards
complete satisfaction of the For interconnection services, the outputs delivered by Telkom are the same throughout the contract period. Prices
performance obligation to transfer vary depending on the actual volume of traffic used by an OLO and, in some arrangements, prices are also affected
each distinct good or service in the by the tier-discounts feature.
series to the customer TRG No. 39 provides a number of analysis on how the allocation objective of IFRS 15 para 73 is met in
arrangements with variable considerations.
In an arrangement with an unspecified quantity of outputs but fixed rate per unit delivered, TRG concludes that the
pricing the transaction based on the quantity processed meets the allocation objective for each month of service so
long as the fixed rate per unit of output is priced consistently throughout the contract period. In Telkom’s case, this
is applicable to domestic interconnection services where rates are regulated and are consistent with the Telkom’s
standard pricing practices with similar customers.
As for the arrangements with declining prices, TRG also concludes that the allocation objective of IFRS 15 para 73 is
still met if the pricing is based on market terms or the changes in price are substantive and linked to changes in the
entity’s cost to fulfil the obligation. This TRG’s analysis can be applied to those arrangements with tier-discounts
feature. Telkom has spent a considerable amount of capital expenditures (“Capex”) upfront to build up its network
facilities. The amount of annual Capex spent by Telkom is not directly incremental to each minute (or second) of
traffic used by an OLO. Therefore, as an OLO increases its volume of traffic on Telkom’s network, the per unit cost
incurred by Telkom to satisfy that incremental minute (or second) of interconnection service reduces. The reduction
to tariffs from tier-discounts are arguably linked to the cost efficiencies from the economies of scale of delivering
higher volume of traffics.
Note that TRG No 39 and 44 do not require Telkom to specifically prove the one to one relationship between the
extent of tariff reduction and the magnitude of cost efficiencies achieved. It’s sufficient for Telkom to point out the
general relationship for it to conclude that allocating the variable consideration (i.e. the tariff reduction) to a distinct
interconnection service in a series is still consistent with the allocation objective of IFRS 15 paragraph 73.

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!
The standard permits in IFRS15.84(b) that variable consideration can be
allocated to distinct goods or services even if those goods or services form a Conclusion
single performance obligation. This clarification is made to ensure that an
entity can, in some cases, attribute the reassessment of variable consideration Having considered the above analysis, Telkom’s
to only the satisfied portion of a performance obligation when that interconnection service meets the series provision and criteria
performance obligation meets the criterion in paragraph 22(b) of IFRS 15. to allocate variable consideration, as Telkom would allocate
variable consideration to each month based upon the
Therefore:
contractual right to bill in that period.
1. Telkom can continue to allocate variable consideration (i.e. tariff
reduction) to the distinct interconnection service to which the variable
consideration relates. That is to say, Telkom can continue its existing Can the existing practice continue?
practice of recognising interconnection revenue based on the actual
volume of traffic used by an OLO in that month multiplied by the agreed
Yes – Telkom currently recognises the revenue based on the amount
tariff for that level of traffic.
billed during the period that represents the actual traffic in that month
2. Telkom does not need to estimate the potential variation to transaction multiplied by the agreed tariff. This practice results in Telkom allocating
price that relates to the satisfaction of interconnection performance the volume discount only to the month that is in excess of the certain
obligation upfront. Telkom can continue to use the “pay as you use” traffic threshold and therefore is multiplied by a lower tariff compared to
concept for interconnection services. other periods. The series provision and allocation of variable
consideration is applicable for Telkom and permits Telkom to account for
the variable consideration based upon the contractual right to bill in that
period, which is similar to Telkom’s existing practice.

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Position paper 9
the usage-based performance obligations’
EBIS - Solution To assess the application of the series provision The issue we described above may create an
EBIS - Connectivity and allocation of variable consideration (i.e. accounting gap between Telkom’s current
WIBS – Connectivity volume discount) to Telkom’s usage-based practice and IFRS 15 requirements on variable
performance obligations. consideration that affects the transaction price of
a contract with customer. This is because the
actual transaction price of usage-based service
between Telkom and a customer may vary
depending on the actual usage in a given period.
This paper is written to address the proper
accounting treatment for Telkom’s usage-based
Background: Above usage-based services are Telkom’s standard products in which the tariff
are established and standardised by the Network and IT Solution (“NITS”)
Telkom often enters into arrangements that provide services with variable
Department. The recommended tariff is formalised in Nota Dinas (“NODIN”).
considerations as total payments for such services are based on the actual usage
For such services, Telkom is responsible for making the facilities to deliver such
of the customers. Examples of commonly found services with usage-based
services available continuously to the customers over the enforceable
arrangements in Telkom are as follows:
performance period. The customer controls the extent to which it uses, or does
• POTS: fixed telephone services that are charged based on usage and SMS
not use, the facilities provided by Telkom. In return, Telkom is entitled to a
broadcast;
consideration equal to the actual usage for the services multiplied by a certain
• E-ticketing: management of online ticketing systems by Telkom that is
tariff.
priced based on the actual volume of transactions (e.g. E-Money usage); and
• Wifi. ID: instant wi-fi services provided by Telkom in a customer’s premise
that are priced based on actual number of customer login; and
• HISYS: hospital management services provided by Telkom that are priced
based on actual number of transactions processed by the hospitals.

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Position paper 9
Reference to the relevant accounting standards: Allocating variable consideration:

Series of distinct performance obligations: IFRS 15 provides guidance in determining the variable consideration of
transaction price. IFRS 15.50 requires an entity to estimate the amount of
The new revenue standard defines a performance obligation and a series as
consideration to which the entity will be entitled in exchange for transferring
follows:
the promised goods or services to a customer if the consideration promised in a
[IFRS 15.22] At contract inception, an entity shall assess the goods or services contract includes a variable amount.
An amount of consideration can vary because of discounts, rebates, refunds,
obligation each promise to transfer to the customer either:
credits, price concessions, incentives, performance bonuses, penalties or other
a) A good or service (or a bundle of goods or services) that is distinct similar items. The promised consideration can also vary if an entity’s
entitlement to the consideration is contingent on the occurrence or non-
b) A series of distinct goods or services that are substantially the same and
occurrence of a future event. For example, an amount of consideration would be
that have the same pattern of transfer to the customer.
variable if either a product was sold with a right of return or a fixed amount is
promised as a performance bonus on achievement of a specified milestone.
[IFRS 15.23] A series of distinct goods or services has the same pattern of
[IFRS 15.52] explains that the variability relating to the consideration promised
transfer to the customer if both of the following criteria are met:
by a customer may be explicitly stated in the contract. In addition to the terms
a. Each distinct good or service in the series that the entity promises to of the contract, the promised consideration is variable if either of the following
transfer to the customer would meet the criteria in paragraph 35 to be a circumstances exists:
performance obligation satisfied over time; and
• The customer has a valid expectation arising from an entity’s customary
b. in accordance with paragraphs 39–40, the same method would be used to business practices, published policies or specific statements that the entity
measure the entity’s progress towards complete satisfaction of the will accept an amount of consideration that is less than the price stated in the
performance obligation to transfer each distinct good or service in the contract. That is, it is expected that the entity will offer a price concession.
series to the customer. Depending on the jurisdiction, industry or customer this offer may be
referred to as a discount, rebate, refund or credit.
• Other facts and circumstances indicate that the entity’s intention, when
entering into the contract with the customer, is to offer a price concession to
the customer.

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IFRS 15.56 includes a constraint on the amount of variable consideration • The entity’s experience (or other evidence) with similar types of contracts is
included in the transaction price. An entity shall include in the transaction limited, or that experience (or other evidence) has limited predictive value.
price some or all of an amount of variable consideration estimated in • The entity has a practice of either offering a broad range of price concessions
accordance with paragraph 53 only to the extent that it is highly probable that or changing the payment terms and conditions of similar contracts in similar
a significant reversal in the amount of cumulative revenue recognised will not circumstances.
occur when the uncertainty associated with the variable consideration is • The contract has a large number and broad range of possible consideration
subsequently resolved. amounts.
Variable consideration is not constrained if the potential reversal of cumulative [IFRS15.BC115] The boards noted that if an entity determines it has a
revenue recognised is not significant. Significance should be assessed at the performance obligation that meets the criterion in paragraph 22(b) of IFRS 15,
contract level (rather than the performance obligation level or in relation to the an entity should consider the distinct goods or services in the contract, rather
financial position of the entity). Management should therefore consider than the performance obligation, for the purposes of contract modifications and
revenue recognised to date from the entire contract when evaluating the the allocation of variable consideration.
significance of any potential reversal of revenue.
[IFRS15.84] 84 Variable consideration that is promised in a contract may be
In assessing whether it is highly probable that a significant reversal in the attributable to the entire contract or to a specific part of the contract, such as
amount of cumulative revenue recognised will not occur once the uncertainty either of the following:
related to the variable consideration is subsequently resolved, an entity shall
a) One or more, but not all, performance obligations in the contract (for
consider both the likelihood and the magnitude of the revenue reversal.
example, a bonus may be contingent on an entity transferring a promised
Factors that could increase the likelihood or the magnitude of a revenue
good or service within a specified period of time); or
reversal include, but are not limited to, any of the following:
b) One or more, but not all, distinct goods or services promised in a series of
• The amount of consideration is highly susceptible to factors outside the distinct goods or services that forms part of a single performance obligation
entity’s influence. Those factors may include volatility in a market, the in accordance with paragraph 22(b) (for example, the consideration
judgement or actions of third parties, weather conditions and a high risk of promised for the second year of a two-year cleaning service contract will
obsolescence of the promised good or service. increase on the basis of movements in a specified inflation index).
• The uncertainty about the amount of consideration is not expected to be
resolved for a long period of time. [IFRS15.85] 85 An entity shall allocate a variable amount (and subsequent
changes to that amount) entirely to a performance obligation or to a distinct
good or service that forms part of a single performance obligation in accordance
with paragraph 22(b) if both of the following criteria are met:

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a) The terms of a variable payment relate specifically to the entity’s efforts to Consequently, the boards decided that it should be the default method for
satisfy the performance obligation or transfer the distinct good or service allocating the transaction price. However, they agreed with respondents that it
(or to a specific outcome from satisfying the performance obligation or might not always result in a faithful depiction of the amount of consideration to
transferring the distinct good or service); and which the entity expects to be entitled from the customer. Accordingly, in
b) Allocating the variable amount of consideration entirely to the paragraphs 81–86 of IFRS 15, the boards specified the circumstances in which
performance obligation or the distinct good or service is consistent with other methods should be used.
the allocation objective in paragraph 73 when considering all of the
[IFRS15.BC285] The boards clarified in paragraph 84(b) of IFRS 15 that
variable consideration can be allocated to distinct goods or services even if those
goods or services form a single performance obligation. The boards made this
[IFRS15.73] The objective when allocating the transaction price is for an entity
clarification to ensure that an entity can, in some cases, attribute the
to allocate the transaction price to each performance obligation (or distinct
reassessment of variable consideration to only the satisfied portion of a
good or service) in an amount that depicts the amount of consideration to
performance obligation when that performance obligation meets the criterion in
which the entity expects to be entitled in exchange for transferring the
paragraph 22(b) of IFRS 15. Consider the example of a contract to provide hotel
promised goods or services to the customer.
management services for one year (ie a single performance obligation in
[IFRS15.74] To meet the allocation objective, an entity shall allocate the accordance with paragraph 22(b) of IFRS 15) in which the consideration is
transaction price to each performance obligation identified in the contract on a variable and determined based on two per cent of occupancy rates. The entity
relative stand-alone selling price basis in accordance with paragraphs 76–80, provides a daily service of management that is distinct and the uncertainty
except as specified in paragraphs 81–83 (for allocating discounts) and related to the consideration is also resolved on a daily basis when the occupancy
paragraphs 84–86 (for allocating consideration that includes variable occurs. In those circumstances, the boards did not intend for an entity to
amounts). allocate the variable consideration determined on a daily basis to the entire
performance obligation (ie the promise to provide management services over a
[IFRS 15.BC280] However, the boards also noted that allocating the
one-year period). Instead, the variable consideration should be allocated to the
transaction price on a relative stand-alone selling price basis brings rigour and
distinct service to which the variable consideration relates, which is the daily
discipline to the process of allocating the transaction price and, therefore,
management service.
enhances comparability both within an entity and across entities.

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Analysis: the same pattern of transfer to the customer if both of the following criteria are
met:
There are three questions that have to be addressed to determine the
appropriate accounting treatment of Telkom’s revenue from usage-based a) Each distinct good or service in the series is a performance obligation
services; they are: satisfied over time; and
b) Telkom would use the same method to measure its progress toward
1. Does the series provision apply for usage-based revenues? In other words,
complete satisfaction of the performance obligation to transfer each distinct
does Telkom need to account for usage based services as a performance
service in the series to the customers.
obligation that consists of a series of distinct goods or services that are

essentially the same? (IFRS 15 para 22.b).
2. If there is an undefined quantity of outputs but the contractual rate per
unit of output is fixed, is the consideration still considered to be variable?
3. How would Telkom allocate the transaction price to a performance
obligation with variable consideration, especially for those contracts with
tier-discounts feature? (IFRS 15 paras 84 – 86).
[1] In order to apply the series provision – we have to assess whether usage-
based services meet the criteria of a series of distinct services (IFRS 15 para
22.b)
The series provision is a concept that was introduced by IFRS 15 and does not
exist in IAS 18. As described in paragraph BC113 of IFRS 15, the purpose of the
series guidance is to simplify the application of the revenue model and to
promote consistency in identifying performance obligations. For example, the
series provision prevents an entity from having to allocate the transaction price
on a relative standalone selling price basis to each increment of a distinct
service in repetitive service contracts. In some cases, variable consideration
should be allocated directly to the distinct good or service within the series.
In order to address whether usage-based services represent a series of distinct
services, we have to look at the criteria for determining the applicability of the
series provision in IFRS 15 para 23. A series of distinct goods or services has

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Our assessment below focuses on the criteria set out in IFRS 15 para 23:
(a) Each distinct good or service in the series that the As mentioned in the section “Background”, Telkom is responsible for making the usage-based
entity promises to transfer to the customer would services available continuously to a customer over the performance period. Because Telkom has
meet the criteria in IFRS 15 paragraph 35 to be a promised to provide an unspecified quantity of outputs depending the total usage by the customer
performance obligation satisfied over time. on those network/facilities provided by Telkom, the nature of Telkom’s promise is an obligation to
stand ready to provide usage-based services each day to the customer.
The nature of Telkom’s promise is the overall services/facilities (e.g. providing network that
enables customers to make phone calls whenever they want). Each unit of service could be
considered distinct because a customer can benefit from each unit of service on its own and each
unit of service (e.g. measured in seconds/ minutes) is separately identifiable. Put another way,
each unit could be separately identifiable.
In addition to the above, the customer simultaneously receives and consumes the benefits of
performance as Telkom performs by making the network facilities available for the customers. This
is similar to example 18 in IFRS 15 par IE93.
Therefore, we can conclude that for the usage-based product, Telkom’s performance obligation is
satisfied over time as Telkom performs the services.
(b) In accordance with IFRS 15 paragraphs 39 -40, the Telkom believes that the best measure of progress towards complete satisfaction of the
same method would be used to measure the entity’s performance obligation over time is using output methods – Telkom recognises revenue based on
progress toward complete satisfaction of the direct measurements of the actual usage (for example total SMS sent in a given period) by the
performance obligation to transfer each distinct good customers.
or service in the series to the customer.
Therefore, following the principles of IFRS 15 paras 22.b and 23, Telkom concludes that usage-based service (i.e. POTS) is a performance obligation
that is made up of a series of distinct services provided to customers every day.

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[2] Assessment of whether variable consideration exists in usage-based Therefore, consistent with the conclusion of TRG no. 39 & 44, Telkom
service arrangements concludes that the total transaction price for its usage-based
performance obligation is variable. This applies to arrangements with,
At the contract inception, Telkom does not know the actual usage of its stand-
and without, tier-discounts feature.
ready networks/facilities by its customer. As such, usage-based service
represents a promise for Telkom to stand ready to perform, rather than to [3] Allocation of transaction price to usage-based performance obligation with
provide a defined number of outputs. variable consideration
We know that not some usage-based service is not plain vanilla and may have We have established that usage-based service is a performance obligation that is
contained tier-discounts feature in the arrangement. Some usage-based made up of a series of distinct services provided by Telkom to customers every
services are generally priced at fixed rate per minute / second. The question is day (see #1). We have also concluded that the total transaction price of a usage-
if there is an undefined quantity of outputs but the contractual rate per unit of based service performance obligation is variable. This applies to arrangements
output is fixed, is the consideration still considered to be variable? with, and without, tier-discounts feature (see #2). The next issue is on the
allocation of transaction price to the usage-based service performance
We find useful guidance in TRG discussions no. 39 & 44 on this matter. The
obligation.
TRG discussions conclude that if the nature of the promise is to perform an
unknown quantity of tasks throughout a contract period and the consideration The objective when allocating a transaction price is for Telkom to allocate the
received is contingent upon the quantity completed, the total transaction price transaction price to each performance obligation in an amount that depicts the
is still considered to be variable. amount of consideration to which Telkom expects to be entitled in exchange for
transferring the promised services to its customer. [IFRS 15 para 73]. To meet
The application of TRG’s conclusion is consistent with the fact that the total
this allocation objective, Telkom shall allocate the transaction price to each
transaction price of an usage-based service contract is based upon the
performance obligation identified in the contract on a relative stand-alone
occurrence, or non-occurrence, of events that are outside of Telkom’s control
selling price except where a variable consideration exists and it can be
(i.e. the customer’s usage); and therefore the contract has a range of possible
associated with a distinct performance obligation identified in that contract.
transaction prices. The total transaction price for the usage-based performance
[IFRS 15 para 74]. In such a case, Telkom should apply the principles of IFRS 15
obligation is variable. Telkom would have the right to bill based upon the total
paras 84 – 86 to allocate the transaction price to usage-based performance
usage (e.g. number of SMS send by the customer during the service period or
obligation.
number of occurrence in e-ticketing transaction). Given the total number of
units are not defined each day, the total consideration is variable based upon IFRS 15 para 85 requires Telkom to allocate a variable amount (and subsequent
the volume of transaction or traffic actually delivered by Telkom to the changes to that amount) entirely to a distinct good or service that forms part of
customers. a single performance obligation (i.e. a series) in accordance with paragraph
22(b) if both of the following criteria are met:

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Position paper 9
a) The terms of a variable payment relate specifically to Telkom’s efforts to satisfy the performance obligation or transfer the distinct good or service (or to a
specific outcome from satisfying the performance obligation or transferring the distinct good or service); and
b) Allocating the variable amount of consideration entirely to the distinct good or service is consistent with the allocation objective when considering all of the
We will discuss the application of IFRS 15.85 as follows:
(a) The terms of a variable payment Yes
relate specifically to the entity’s
The variable payment relates to Telkom’s effort to transfer the distinct goods or service.
efforts to satisfy the performance
obligation or transfer the distinct
good or service (or to a specific
Telkom has the right to bill based upon the total usage by the customer during the service period. Given the total
outcome from satisfying the
number of units are not defined at the outset of the contract, the variability to the total consideration is solely
performance obligation or
attributable to the actual usage of the customer to those network/facilities provided by Telkom.
transferring the distinct good or
service)
(b) The same method would be used to Yes
measure the entity’s progress towards
complete satisfaction of the For usage-based services, the outputs delivered by Telkom are the same throughout the contract period. Prices
performance obligation to transfer vary depending on the actual usage of the facilities by a customer and, in some arrangements, prices are also
each distinct good or service in the affected by the tier-discounts feature.
series to the customer TRG No. 39 provides a number of analysis on how the allocation objective of IFRS 15 para 73 is met in
arrangements with variable considerations.
In an arrangement with an unspecified quantity of outputs but fixed rate per unit delivered, TRG concludes that
the pricing the transaction based on the quantity processed meets the allocation objective for each month of
service so long as the fixed rate per unit of output is priced consistently throughout the contract period. In
Telkom’s case, this is applicable to plain vanilla usage-based services where the fees are priced consistently
throughout the contract and the rates charged are consistent with the Telkom’s standard pricing practices with
similar customers (as evidenced by the using of Nodin to regulate the tariff for Telkom’s standard product).
PT
PTTelekomunikasi
TelekomunikasiIndonesia
IndonesiaTbk
Tbk--IFRS
IFRS15
15
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Position paper 9
(b) The same method would be used to Allocating the transaction price to the respective unit of delivery in which it has right to invoice could be consistent
measure the entity’s progress towards with the allocation objective. In this sense, the amount allocated to each day reasonably reflects the value/benefit
complete satisfaction of the to the customer of its access to the Telkom’s network/facilities.
performance obligation to transfer
each distinct good or service in the
series to the customer

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The standard permits in IFRS15.84(b) that variable consideration can be

allocated to distinct goods or services even if those goods or services form a Conclusion
single performance obligation. This clarification is made to ensure that an
entity can, in some cases, attribute the reassessment of variable consideration Having considered the above analysis, Telkom’s usage-based
to only the satisfied portion of a performance obligation when that service meets the series provision and criteria to allocate
performance obligation meets the criterion in paragraph 22(b) of IFRS 15. variable consideration, as Telkom would allocate variable
consideration to each month based upon the contractual right
Therefore:
to bill in that period.
1. Telkom can continue to allocate variable consideration (i.e. tariff
reduction) to the particular distinct service to which the variable
consideration relates. That is to say, Telkom can continue its existing Can the existing practice continue?
practice of recognising revenue from usage-based performance obligation
based on the actual usage of the stand-ready facilities by a customer in that
Yes – Telkom currently recognises the revenue based on the amount
month multiplied by the agreed tariff per usage.
billed during the period that represents the actual usage in that month
2. Telkom does not need to estimate the potential variation to transaction multiplied by the agreed tariff. This practice results in Telkom does not
price that relates to the satisfaction of usage-based revenue performance need to estimate the total transaction price in the commencement date of
obligation upfront. Telkom can continue to use the “pay as you use” contract and may only allocate the volume discount to the month that is
concept for usage-based services. in excess of the certain threshold and therefore is multiplied by a lower
tariff compared to other periods. The series provision and allocation of
variable consideration is applicable for Telkom and permits Telkom to
account for the variable consideration based upon the contractual right to
bill in that period, which is similar to Telkom’s existing practice.

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Step 3.3 – Significant financing component
Determining the transaction price
In determining the transaction price, Telkom shall adjust the promised amount EBIS Connectivity, WIBS Connectivity, WIBS Interconnection and
of consideration for the effects of the time value of money if the timing of WIBS International Roaming
payments agreed to by the parties to the contract (either explicitly or implicitly) All the revenue under these revenue streams meet the criteria of series of
provides the customer or Telkom with a significant benefit of financing the distinct service; thus, are recognised over the time. Based on our review,
transfer of goods or services to the customer. In those circumstances, the Telkom applies recurring type of payment with varies term depending on the
contract contains a significant financing component. A significant financing arrangement agreed in the contract. (e.g. monthly or quarterly). Similar with
component may exist regardless of whether the promise of financing is the analysis for consumer product, we expect short time length between
explicitly stated in the contract or implied by the payment terms agreed to by transfer of the services and customer pays for those services.
the parties to the contract.
EBIS Solution, EBIS Connectivity and WIBS Connectivity
Consumer
The arrangement is more complicated compare to other streams. Telkom has
Telkom’s retail products are all recognised over the time and charge to the four type of payment with three probabilities of revenue recognition. Some
customer on a monthly basis. The expected length of time between Telkom combination between type of payment and transfer of control may result in
transfer the promised services to the customer and the customer pays for those expected time length between transfer of control and the payment receives is
services is performed within a month. For this arrangement, we believe there is more than one year. Further assessment on page 242 to 249 provides detail
no significant financing activity include in the transaction. assessment on the impact of such arrangement to Telkom’s accounting
treatment.
Is further analysis through position paper required?

Consumer
No Yes No No No No
IFRS 15 Guidance
In determining the transaction price, an entity shall adjust the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or
implicitly) provides the customer or the entity with a significant benefit of financing the transfer of goods or services to the customer. In those circumstances, the contract contains a significant financing component. A
significant financing component may exist regardless of whether the promise of financing is explicitly stated in the contract or implied by thepayment terms agreed to by the parties to the contract.

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Position paper 10
Application guidance – ‘Accounting treatment for significant financing
component’
Step 3.2 – Estimating the significant financing component
EBIS Solution To propose an accounting treatment for a What is the accounting treatment for significant
significant financing component in the financing component in the transaction price?
transaction price.
Background:
In each revenue arrangement with a customer, Telkom offers three types of Having considered the above conditions, a question arises as to whether
payment to the customer, that either through a recurring payment (i.e. a Telkom should adjust the promised amount of the consideration/transaction
monthly charge), through a One-Time Charge/OTC, or the combination of price to take into account the effects of the time value of money, if the timing
recurring and OTC payment. These type of payments do not affect the of the payment that has been agreed by both parties provides either the
transfer of control of the services that have been provisioned, thus, there is a customer or Telkom with a significant benefit of financing the transfer of
possibility that the expected length of time between the timing of the revenue goods or services to the customer.
recognition and the customer paying for the service is more than one year.
Reference to the Relevant Accounting Standard:
The following table provides two real examples of the different contract
arrangements that are applicable for Telkom: IFRS 15 provides guidance of identifying performance obligations. IFRS 15.16
states that, in determining the transaction price, an entity shall adjust the
promised amount of consideration for the effects of the time value of money, if
Order Contract Term of the timing of the payments that has been agreed to by the parties to the
No Value contract (either explicitly or implicitly) provide the customer or the entity
Number Number Payment
with a significant benefit of financing the transfer of goods or services to the
1 8001424719 K.TEL.02- Recurring Rp 550,000,000
customer. In such circumstances, the contract contains a significant financing
0052/HK.810/DES
-00/2017 component. A significant financing component may exist regardless of
whether the promise of financing is explicitly stated in the contract or whether
it is implied by the payment terms that has been agreed to by the parties to the
2 8001331850 KTEL OTC Rp 2,250,000 contract.
6146/HK.810/DES
-TDS/2016

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component’
Step 3.2 – Estimating the significant financing component – cont’d
[IFRS 15.61] The objective when adjusting the promised amount of [IFRS 15.62] A contract with a customer would not have a significant financing
consideration for a significant financing component is for an entity to recognise component if any of the following factors exist:
revenue at an amount that reflects the price that a customer would have paid • The customer paid for the goods or services in advance, and the timing of the
for the promised goods or services if the customer had paid cash for those transfer of those goods or services is at the discretion of the customer.
goods or services when (or as) they transfer to the customer (that is, the cash
selling price). • The difference between the promised consideration and the cash selling price
of the good or service arises for reasons other than the provision of finance to
The amount of revenue recognised differs from the amount of cash received either the customer or the entity, and the difference between those amounts
from the customer when an entity determines a significant financing is proportional to the reason for the difference. For example, the payment
component exists. Revenue recognised will be less than cash received for terms might provide the entity or the customer with protection from the
payments that are received in arrears of performance, as a portion of the other party failing to adequately complete some or all of its obligations under
consideration received will be recorded as interest income. Revenue recognised the contract.
will exceed the cash received for payments that are received in advance of
performance, as interest expense will be recorded and increase the amount of [IFRS 15.63] as a practical expedient, an entity need not adjust the promised
revenue recognised. amount of consideration for the effects of a significant financing component if
the entity expects, at contract inception, that the period between when the entity
[IFRS 15.61] An entity shall consider all relevant facts and circumstances in transfers a promised good or service to the customer and when the customer
assessing whether a contract contains a financing component and whether that pays for that good or service will be one year or less.
financing component is significant to the contract, including both of the
following: [IFRS 15.64] when adjusting the promised amount of consideration for a
significant financing component, an entity shall use the discount rate that would
• The difference, if any, between the amount of promised consideration and be reflected in a separate financing transaction between the entity and its
the cash selling price of the promised goods or services; customer at contract inception. That rate would reflect the credit characteristics
• The combined effect of both of the following: of the party receiving financing in the contract, as well as any collateral or
o The expected length of time between when the entity transfers the security provided by the customer or the entity, including assets transferred in
promised goods or services to the customer and when the customer pays the contract.
for those goods or services;
o The prevailing interest rates in the relevant market.

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component’
Analysis:
[1] Scoping assessment:
Referring to all of the possible term of payment applicable to Telkom, we have mapped each possible scheme in order to assess whether further assessment
of the significant financing component is considered necessary.
Term of Period of
No Type of Service Analysis
Payment Service
DNAPSOO Monthly No further assessment is considered necessary.

Usage < 1 year The fact that the period of service provisioning is less than 12 months means
1 Retail Telkom could utilise the practical expedient that the entity does not need to adjust its
One Time Charge
transaction price if the period between transfer of control and customer payment is
Standard product *) Monthly payment less than one year.
No further assessment is considered necessary.
DNAPSOO
Monthly and usage payment indicates short time length expected between customer
Monthly > 1 year pays for the service and the services is being delivered. As such, the practical
2 Retail expedient that the entity does not need to adjust its transaction price, if the period
Usage between transfer of control and customer payment is less than one year, could be
Standard product *) applied.
DNAPSOO Yes – performs further assessment.

One Time Charge OTC and milestone payment enables the customer either to pay for the goods and
Retail
3 > 1 year services upfront or to pay after the delivery of the services. This type of arrangement
Milestone payment may contain significant component, if the lapsed time provides a financing benefit to
Standard product *) the customer or to Telkom.
*) For the complete list of Telkom’s standard product, refer to the application guidance “Identification Performance Obligation for Standard Products”
Having considered the above scoping results, a further assessment will be performed only on revenue contracts with customers where the period of service is
more than one year and the payment is conducted at one point in time.

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component’
[2] Significant financing component assessment [2.1] Customer provides the financing activity
Some contracts contain a financing component (either explicitly or [2.1.1] Billing vs Cash Selling Price Assessment
implicitly) because payment by a customer occurs either significantly
As mentioned in the previous section, a significant component may be
before or significantly after performance. This timing difference can
incurred when there is a difference between the amount of the promised
benefit either the customer, if the entity is financing the customer’s
consideration (i.e. amount billed) and the cash selling price of the
purchase, or the entity, if the customer finances the entity’s activities by
promised goods or services. The cash selling price reflects the price that
making payments in advance of performance. An entity should reflect the
a customer would have paid for the promised goods or services if the
effects of any significant financing benefit on the transaction price.
customer had paid cash for those goods or services (or as) they transfer
The amount of revenue recognised differs from the amount of cash to the customer. As the determination of the cash selling price is critical
received from the customer when an entity determines a significant to this assessment, our first analysis focuses on how the promised
financing component exists. Revenue recognized will be less than cash consideration is determined in the contract with customer, as explained
received for payments that are received in arrears of performance, as a below:
portion of the consideration received will be recorded as interest income.
a. Retail product
Revenue recognized will exceed the cash received for payments that are
received in advance of performance, as interest expense will be recorded The business practice for Telkom’s retail products is arranged in such
and increase the amount of revenue recognized. a way (by using a centralised tariff arrangement) that Telkom will
offers the same price to similar costumer in the similar
As in IFRS 15 enables the possibility that a customer provides a benefit in
circumstances.
the financing transaction and vice versa, our analysis is performed
separately in relation to who provides the financing activity in the The price of certain goods or services is determined centrally, then
arrangement. inputted into the system, for further action from the Sales
Department. The terms of payment (although it is very unlikely to
use the OTC type of payment for retail products) will not change the
price in the system, thus the amount billed is always the same with as
cash selling price. No significant financing component is identified in
Telkom’s retail products. This practice is supported through the
issuance of Nota Dinas (“NODIN”), which require the AM to select
the services that are to be provided as well as the tariff offers to the
customer from the drop down menu inputted into the system. Please
refer to Appendix A for the NODIN example.

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component’
[2.1] Customer provides the financing activity c. DNAPSOO product
[2.1.1] Billing vs Cash Selling Price Assessment Price charge for the DNAPSOO products are based on the cost +
a. Retail product (continued) margin approach. According to our understanding, the determination
of the margin of Telkom’s DNAPSOO Products only considers the
Above assessment also supported by the discussion in TRG 30. The expenses that are required to deliver the service (i.e. the sales
discussion states that although the list price, the cash selling price, commission). However, Telkom does not have any written policy to
and the promised consideration are all equal, the respective entities support this practice.
should not automatically assume that there is no significant
financing component. The entity should consider all relevant facts Having considered above analysis, the risk of the amount billed differing
and circumstances. Accordingly, this one fact, that the cash selling from the cash selling price is only applicable for Telkom standard and
price is equal to the selling price in the contract, would not be the DNAPSOO Products, although it is remote. Revenue recognised will
totality of the assessment. However, if the list price, the cash selling exceed the cash received for payments that are received in advance of the
price, and the promised consideration are all, in fact, equal performance, as interest expense will be recorded and, as result, will
(including after careful consideration of whether the list price is the increase the amount of revenue recognised.
cash selling price), that might indicate that the contract does not [2.1.2] Maximum Exposure Assessment
include a significant financing component.
The following assessment relies heavily on the assessment result in
b. Standard product Section 2.1.1. Further assessments, to determine the maximum exposure
The price of Telkom’s standard product is determined by using the of significant financing components, have only been performed for
Tariff – RDM approach. The tariff and the RDM are established by Telkom’s Standard and DNAPSOO Products. Our approach is by using
NITS Department. Although AM has the flexibility to set a discount, the deferred revenue balance per 31 December 2017 as the basis to assess
the minimum price that could be offered is limited by the use of the the adjustment impact from financing component.
RDM. This approach is considered to be the most appropriate method in the
One price charge for one customer may differ with from another, but Telkom’s case, as deferred revenue represents the transaction in which
most of the time the difference is only related to the RDM, and does the customer has made the payment prior to the transfer of control the
not considers the financing activity. No significant financing goods and service.
component is expected in Telkom’s standard products. However,
Telkom does not have any written policy to support this practice.

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Position paper 10
component’
As at 31 December 2017, the total deferred revenue balance is consist of the following accounts:
Balance
No GL Expense Detail Is the cost related to the financing activity?
31 Dec 2017
1 11806001 Potongan Pendapatan Ditangguhkan 62,597,995 Yes.
2 20704002 PDD Jasa Telekomunikasi (82,489,838,506) Yes.
3 20704003 PDD Voucher Isi Ulang FW (30,730,204,869) Yes.
4 20704004 PDD i-VAS (50,006) Yes.
5 20704006 Pendapatan Diterima Dimuka Billing (313,014,496,819) Yes.
6 20704017 Potongan Pendapatan Ditangguhkan 135,780,850 Yes.
7 20704020 PDD Wifi (265,696,137) Yes.
8 20704502 PDD Jasa Telekomunikasi (103,537,494) Yes.
9 20707001 PDD Penunjang (5,307,899,075) Yes.
10 20701001 PDD Sewa Tanah (15,842,177,862) No - deferred revenue from land rental is not within the scope of
IFRS 15.
11 20704001 PDD Pasang Baru (195,415,200) No - deferred revenue from Pasang Baru (“PSB”) represent
installation fee charged to customer.
12 20704010 PDD PSB Jastel - Ditangguhkan (52,119,289,742) No - deferred revenue from Pasang Baru (“PSB”) represent
installation fee charged to customer.
13 20704021 PDD Speedy Instant (845,143,247) No - as explained in the section 2.1.1, it is very unlikely for
Telkom’s retail product to have a significant financing
component; thus, it is excluded from the maximum exposure
assessment.
Total deferred expenses balance 500,715,370,112

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Position paper 10
component’
Of the total Rp 501 billion, amounting to Rp 432 billion may have significant [2.2] Telkom provides the financing activity
financing component that should be adjusted from the transaction price. The This condition exists once Telkom allows the customer to pay for the
standard requires when the entity adjusting the promised amount of service after the delivery of such services. Such a concept, of the vendor
consideration for a significant financing component, an entity shall use the providing financing activity to the customer, is not a new concept, since
discount rate that would be reflected in a separate financing transaction this concept was introduced and required in IAS 18/PSAK 23. The
between the entity and its customer at contract inception. That rate would following statement is extracted directly from IAS 18/PSAK23 par 11;
reflect the credit characteristics of the party receiving financing in the contract,
as well as any collateral or security provided by the customer or the entity, “In most cases, the consideration is in the form of cash or cash
including assets transferred in the contract. equivalents and the amount of revenue is the amount of cash or cash
equivalent received or receivable. However, when the inflow of cash or
In this case, Telkom is the party who receives the financing from customer; cash equivalents is deferred, the fair value of the consideration may be
therefore, to assess the impact of financing component, Telkom uses the most less than the nominal amount of cash received or receivable. For
conservative approach on determining the discount rate by using the highest example, an entity may provide interest-free credit to the buyer or
interest rate from all loan/bonds facilities outstanding as at 31 December 2017. accept a note receivable bearing a below market interest rate from the
Obtained from the audited financial statement 2017 information, the highest buyer as consideration for the sales of goods.
rate is contributed from Telkom’s bond offering in 2015 with interest rate of
11%. The estimated maximum exposure is as follows: When the arrangement effectively constitutes a financing transaction,
the fair value of the consideration is determined by discounting all
Total deferred revenue [A] : Rp 431,713,344,061 future receipts using an imputed rate of interest. The imputed rate of
Discount rate [B] : 11% interest is the more clearly determinable of either:
a) The prevailing rate for a similar instrument of an issuer with a
Probable financing component [A]*[B] : Rp 47,488,467,847
similar credit rating; or
Based on the above analysis, the maximum exposure of Telkom’s financing b) A rate of interest that discounts the nominal amount of the
component is considered immaterial. instrument to the current cash sales price of the goods or services.
The difference between the fair value and the nominal amount of the
consideration is recognised as interest revenue in accordance with
paragraphs 29 and 20 and in accordance with IAS 39.”
As there are no significant changes to the concept of adjusting the
transaction price with interest income between the requirements in IAS
18 and IFRS 15, we believe that the existing practice already conform
with the requirement in IFRS 15. Further assessments are not
considered necessary.
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Position paper 10
!
component’
Conclusion
Telkom does not need to adjust its transaction price in relation to

the possible financing activity. Although Telkom has the
possibility of obtaining financing from the customer, the total
exposure is considered insignificant.
No - it is understood from the above assessment Telkom arrangement

provides consumer with financing activity, however, the impact is not
material. Telkom believes the existing treatment still provides a reliable
financial information to all stakeholders.
We would like to highlight that Telkom may need to revisit this assessment in
case the impact from financing activity become material.
Gap 9 identified
Applicable for EBIS Solution

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component’
Appendix A – Nodin for retail product
C.Tel. 56/YN 000/COP-F7010000/2017

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component’
Appendix A – Nodin for retail product
C.Tel. 16/YN 000/COP-F7010000/2017

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4.
Allocating the
transaction
price

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264
Step 4 – Allocating transaction price
Excerpt from IFRS15.72 The standalone selling price of an item that is not directly observable must be
estimated. The revenue standard does not prescribe or prohibit any particular
The objective when allocating the transaction price is for an entity to allocate method for estimating the standalone selling price, as long as the method
the transaction price to each performance obligation (or distinct good or results in an estimate that faithfully represents the price an entity would
service) in an amount that depicts the amount of consideration to which the charge for the goods or services if they were sold separately. There is also no
entity expects to be entitled in exchange for transferring the promised goods hierarchy for how to estimate or otherwise determine the standalone selling
or services to the customer. price for goods or services that are not sold separately. Telkom should
Many contracts involve the sale of more than one good or service. Such consider all information that is reasonably available and should maximize the
contracts might involve the sale of multiple goods, goods followed by related use of observable inputs. For example, if an entity does not sell a particular
services, or multiple services. The transaction price in an arrangement must good on a standalone basis, but its competitors do, that might provide data
be allocated to each separate performance obligation so that revenue is useful in estimating the standalone selling price.
recorded at the right time and in the right amounts. The allocation could be Standalone selling prices can be estimated in a number of ways. Telkom
affected by variable consideration or discounts. should consider the entity’s pricing policies and practices, and the data used in
IFRS 15.76 making pricing decisions, when determining the most appropriate estimation
method. The method used should be applied consistently to similar
To allocate the transaction price to each performance obligation on a relative arrangements. Suitable methods include, but are not limited to:
standalone selling price basis, an entity shall determine the standalone selling • Adjusted market assessment approach
price at contract inception of the distinct good or service underlying each • Expected cost plus a margin approach
performance obligation in the contract and allocate the transaction price in • Residual approach, in limited circumstances
proportion to those standalone selling prices.
Customers often receive a discount for purchasing multiple goods and/or
Telkom should determine the standalone selling price for each item and services as a bundle, charge additional upfront fees, or contains an element of
allocate the transaction price based on each item’s relative value to the total consideration that is variable. Generally, such adjustment to transaction price
value of the goods and services in the arrangement. are typically allocated to all of the performance obligations in an arrangement
The best evidence of standalone selling price is the price an entity charges for based on their relative standalone selling prices, so that it will be allocated
that good or service when the entity sells it separately in similar circumstances proportionately to all performance obligations. Unless, Telkom could shown a
to similar customers. However, goods or services are not always sold linkage for those item to a particular PO or POs and thus the allocation is
separately. The standalone selling price needs to be estimated or derived by performed only to those POs.
other means if the good or service is not sold separately. This estimate often
requires judgment, such as when specialized goods or services are sold only as
part of a bundled arrangement.

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Step 4.1 – Method of allocating transaction price
Determining stand alone selling prices (“SSP”)
Scoping assessment

Consumer
Rationale
The objective when allocating the transaction price is for an entity to allocate Stand-alone selling price requirement is one of the main changes between IFRS
the transaction price to each performance obligation (or distinct good or 15 and IAS 18. This clarification heavily impacts Telkom’s procedure to
service) in an amount that depicts the amount of consideration to which the determine stand-alone selling price in each revenue stream.
entity expects to be entitled in exchange for transferring the promised goods or The next page summarises the approach taken by Telkom to determine SSP per
services to the customer. product and revenue streams impacted.
To allocate the transaction price to each performance obligation on a relative
standalone selling price basis, an entity shall determine the standalone selling
price at contract inception of the distinct good or service underlying each
performance obligation in the contract and allocate the transaction price in
proportion to those standalone selling prices.
IFRS 15 Guidance
The transaction price must be allocated to each performance obligation on a relative stand-alone selling price basis (for contracts with more than one performance obligation). The stand-alone selling price is the
price which a good or service could be sold separately to a customer.

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Application guidance – ‘Determination of SSP’
Step 4.1 – Method of allocating transaction price
General approach for determining SSP in Telkom’s products
Revenue Type of Observable input Adjusted market approach Cost plus margin
streams product
Yes. N/A Yes
The SSP for Telkom’s retail product is Fixed telephone generally offers home Telkom could establishes the
Fixed directly observable by using the sales price telephone services to the customer. stand-alone selling price by
telephone for each product. The sales price Telkom does not have any other analysis the cost structure and
information is widely available for the competitor that offers this services as assessing the profitability of
customers through various channels. other provider competes in cellular Telkom’s standard products.
network instead of home telephone.
Consumer
Yes. Yes Yes.
The SSP for Telkom’s retail product is For Non-fixed telephone (e.g. internet The cost + margin approach will
Non –fixed directly observable by using the sales price and USeeTV Product), Telkom be used to estimate the value of
telephone for each product. The sales price considers pricing charged by the some free add-ons (e.g. the costs
information is widely available for the competitor that offers similar service of premier league channels).
customers through various channels. (e.g. First Media and Play Media) and
adjusted with Telkom specific factors.
Yes Yes Yes
In practice Telkom often provides a Prior to negotiating the price with the Telkom could establishes the
range of discounts to customers for single- customer, management has determined standalone selling price by
EBIS service contracts, depending on the established tariffs for all of its analysis the cost structure and
Connectivity specific pricing strategies that are connectivity services and the maximum assessing the profitability of
Connectivity deployed to win the customers. This, allowable discounts, which reflects the Telkom’s standard products.
WIBS product despite the range of prices, are evidences adjusted market approach.
Connectivity
that connectivity services are sold in
stand-alone basis, thus providing a set of
data used as the basis to determine Stand-
alone Selling Prices.
Lesser observable input in determining SSP

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Position paper 11
Step 4.1 – Method of allocating transaction price – cont’d
Revenue streams Type of Observable input Adjusted market approach Cost plus margin
product
No Yes
The solution products are highly customised, as they depend The use of the cost plus margin approach is
upon what the Customer requires; therefore, there is no deep the most appropriate estimation method in
EBIS Solution Solution product enough market to define the observable prices for one particular this circumstance. Telkom establishes the
(DNAPSOO) solution product. price by considering all the costs incur to
deliver such good or service adjusted with
expected margin set by Telkom.
We believe the urgency to determine the stand-alone selling price is less relevant to these revenue streams consider
WIBS the following factor:
Interconnection • Interconnection and international roaming never sold under bundling arrangement; thus, Telkom does not need
WIBS Interconnection to perform allocation of transaction price; and
International service • The tariff stated in the agreement is already represent the SPP as it already represents tariff charged to similar
roaming customer in the similar circumstances (tariff for interconnection service is highly regulated by the Government,
although Telkom may enter into separate arrangement with other provider).
Lesser observable input in determining SSP
Rationale
The standalone selling price of an item that is not directly observable must be estimated. The revenue standard does not prescribe or prohibit any particular
method for estimating the standalone selling price, as long as the method results in an estimate that faithfully represents the price an entity would charge for the
goods or services if they were sold separately. There is also no hierarchy for how to estimate or otherwise determine the standalone selling price for goods or
services that are not sold separately. Telkom should consider all information that is reasonably available and should maximize the use of observable inputs.
Taking into account the requirement of the standard, we have highlighted the best approach to determine SSP for each Telkom’s product and further assess the
detail in the next practical guidance.

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Position paper 11
Consumer WIBS International To assess the determination of SSP for each Does the determination of SSP for Telkom’s
EBIS Solution roaming distinct standard product underlying each products satisfy the requirement in International
performance obligation (“PO”) at contract Financial Reporting Standard (“IFRS”) 15?
inception.
Interconnection
WIBS Connectivity
Background: Retail products – Consumer

Telkom’s overall delivery channels and product structure Telkom’s retail products that are generally offered on a stand-alone basis or
In general, Telkom segregates its revenue delivery channels into the combination with other products, are as follows:
following three major business units based on the grouping of Telkom’s • Indihome:
target markets: o fixed telephone;
o internet; and
1. Consumer (Division of Consumer Service – “DCS”)
o Interactive TV
DCS accommodates personal markets and focuses on the delivery of retail
products, which are standardised in terms of service and product price. • Add-on products (e.g. an additional channel available for separate
2. Wholesale and International Business Service (“WIBS/DWS”) subscription, HOOQ)
DWS focuses on the delivery of retail products to wholesale customers. All of Telkom’s retail products are offered at standardised prices that are
3. Enterprise and Business (“EBIS”), which is further segregated into: publicly available to customers through various channels, such as the
Enterprise (Division of Enterprise Service – “DES”), Business (Division company’s website: www.indihome.com.
of Business Service – “DBS”), and Government (Division of Government
Service – “DGS”)
EBIS accommodates corporates and government institutions with various
product offerings that consist of standard products and a range of
solution services. Products offered are tailored to satisfy the specific
customer’s needs and prices are negotiated on a contract by contract
basis.

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Position paper 11
The tariffs for the retail products are established and standardised by the Non-retail standard products
Network and IT Solution (“NITS”) Department. The procedures to determine Example of Telkom standard products are as follows:
the pricing for the standard products are as follows:
1. Upon receiving the request for product standardisation, NITS obtains the 1. Astinet 4. Metro Ethernet
cost structure and assesses the profitability of the product; 2; WIFI ID 5. IP Transit
2. Based on the available information, NITS determines the tariff of the 3. VPN 6. DINAccess
product by applying certain margins to the product costs;
3. NITS performs market research to understand the market’s ability to
Similar to the retail products, Telkom’s non-retail standard products have a
absorb the product; and
standardised pricing structure that is set by the NITS Department. The
4. NITS then establishes the allowable maximum discount (Rentang Diskon
difference is that upon receiving the tariff and RDM information, the
Maksimal – “RDM”) to be provided to the customer.
EBIS/WIBS Department will perform the following procedures:
The tariff and the RDM for standardised products are sent to the respective • RDM assessment is performed on a contract by contract basis; and
delivery channel, as their basis from which to determine the final price of the • The discount provided may vary from one customer to another, depending on
products for the customers. Upon receiving the tariff and RDM information,
the negotiation with the customer.
the procedure of establishing the prices of the product to the customer by the
Consumer business unit is as follows: By policy, through Nota Dinas No.
• The marketing department of the Consumer business unit assesses the C.Tel.107/YN000/COPG0000000/2015/RHS, Telkom allows the practice of
market’s capability of absorbing the product price; negotiating discounts for a product on an aggregate basis. This means that the
• The marketing department applies a certain discount within the allowable account manager, when determining the discount on a product, can consider
range to determine the price of the product which is uniformly offered to all the level of discounting on other products. This practice has resulted in some
customers instead; and products being sold at a greater discount than their acceptable levels on a stand-
• There is no provision for discounts to certain customers in the Consumer alone basis.
business unit. In determining the stand-alone selling price for its standard product, Telkom
applies the maximum use of prices of services which are sold in single-service
Telkom often has a marketing strategy that includes “gimmick” products in
contracts.
their package in order to attract customers. Gimmick products are promised
goods or services designed primarily to attract attention or increase the appeal selling price for its standard product, Telkom applies the maximum use of prices
of one package – however, they have little intrinsic value. of services which are sold in single-service contracts.
Considering the above facts, Telkom decides to determine the SSP for its retail
products using the offering prices.

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Position paper 11
Non-standard (“DNAPSOO”) / solutions products After considering all of the costs, the Solution Service Department then
determines the expected margin from the arrangement. Each arrangement may
In addition to the standard products that are regularly offered to customers,
have a different margin to accommodate the following considerations:
Telkom also provides other non-standard products such as solution services
1. Telkom’s business strategy - Telkom may accept a lower margin if the
(i.e. Manage Network) and the sale of customer premise equipment (“CPE”).
strategy is to invest in a new client and Telkom expects to have another
These products are bespoke, tailored according to the customer’s request, and
project with the customer.
their pricing is not standardised. A customer may request pure non-standard
2. Market condition – Telkom may have a lower or higher margin depending
products, or a combination of Telkom’s original products (retail and standard
on the market condition.
products) and non-standard products. As Telkom does not sell the non-
3. The margins achieved on the stand-alone sales of similar products.
standard products separately, the SSPs need to be estimated.
In contrast with the standard products, the prices of solution services are
To estimate the SSP for non-standard products, Telkom should consider its
determined each time a contract is negotiated with the customer.
pricing policies and strategies in practice. For example, the pricing process of
non-standard products starts when a customer requests for a customised
Reference to Relevant Accounting Standard:
service and the account manager (i.e. the sales department) informs the
Solution Service department about the customer’s requirements. The Solution Determination of SSP
Service department then calculates the costs of providing the product and
As a general rule, under IFRS 15.73, the objective when allocating the
establishes a certain range of price to be offered to the customer.
transaction price is for an entity to allocate the transaction price to each
Often times, Telkom needs to purchase the necessary goods or services from performance obligation (or distinct good or service) in an amount that depicts
other parties (subsidiaries or third parties) to fulfill the specific customer’s the amount of consideration to which the entity expects to be entitled in
request. For these purchase transactions, generally Telkom has a master exchange for transferring the promised goods or services to the customer.
agreement (“PKS Induk”) with its preferred vendors. In addition to the PKS Further, in IFRS15.76, to allocate the transaction price to each performance
Induk, Telkom will issue a Kontrak Layanan (“KL”) for each purchase obligation on a relative standalone selling price basis, an entity shall determine
transaction that will provide more detailed information, particularly the total the standalone selling price at contract inception of the distinct good or service
consideration paid/acquisition cost. underlying each performance obligation in the contract and allocate the
transaction price in proportion to those standalone selling prices.
IFRS 77 The stand-alone selling price is the price at which an entity would sell a
promised good or service separately to a customer. The best evidence of a stand-
alone selling price is the observable price of a good or service when the entity
sells that good or service separately in similar circumstances and to similar
customers. A contractually stated price or a list price for a good or service may
be (but shall not be presumed to be) the stand-alone selling price of that good or
service.

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IFRS 78 If a stand-alone selling price is not directly observable, an entity shall IFRS 15.79 Suitable methods for estimating the stand-alone selling price of a
estimate the stand-alone selling price at an amount that would result in the good or service include, but are not limited to, the following:
allocation of the transaction price meeting the allocation objective in a. Adjusted market assessment approach—an entity could evaluate the market
IFRS15.73. When estimating a stand-alone selling price, an entity shall in which it sells goods or services and estimate the price that a customer in
consider all information (including market conditions, entity-specific factors that market would be willing to pay for those goods or services. That
and information about the customer or class of customer) that is reasonably approach might also include referring to prices from the entity’s
available to the entity. In doing so, an entity shall maximise the use of competitors for similar goods or services and adjusting those prices as
observable inputs and apply estimation methods consistently in similar necessary to reflect the entity’s costs and margins.
circumstances.
b. Expected cost plus a margin approach—an entity could forecast its expected
IFRS 15.BC 269 The boards observed that many entities may already have costs of satisfying a performance obligation and then add an appropriate
robust processes for determining stand-alone selling prices on the basis of margin for that good or service.
reasonably available data points and the effects of market considerations and
entity-specific factors. However, other entities may need to develop processes c. Residual approach—an entity may estimate the stand-alone selling price by
for estimating selling prices of goods or services that are typically not sold reference to the total transaction price less the sum of the observable stand-
separately. The boards decided that when developing those processes, an entity alone selling prices of other goods or services promised in the contract.
should consider all reasonably available information on the basis of the specific However, an entity may use a residual approach to estimate, in accordance
facts and circumstances. That information might include the following: with IFRS15.78, the stand-alone selling price of a good or service only if one
a. Reasonably available data points (for example, a stand-alone selling price of the following criteria is met:
of the good or service, the costs incurred to manufacture or provide the i. The entity sells the same good or service to different customers (at or
good or service, related profit margins, published price listings, third-party near the same time) for a broad range of amounts (i.e. the selling price is
or industry pricing and the pricing of other goods or services in the same highly variable because a representative stand-alone selling price is not
contract); discernible from past transactions or other observable evidence); or
b. Market conditions (for example, supply and demand for the good or ii. The entity has not yet established a price for that good or service and the
service in the market, competition, restrictions and trends); good or service has not previously been sold on a stand-alone basis (i.e.
c. Entity-specific factors (for example, business pricing strategies and the selling price is uncertain).
practices); and
d. Information about the customer or class of customer (for example, type of
customer, geographical region and distribution channel).

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Specifying a hierarchy of evidence
IFRS 15.BC274 IAS (the “Boards”) decided not to specify a hierarchy of
evidence to determine the stand-alone selling price of a good or service.
Instead, they decided to emphasise that an entity should maximise the use of
observable inputs when developing estimates of stand-alone selling prices.
IFRS 15.BC276 The Boards observed that IFRS 15 requires an entity to use
observable prices when a good or service is sold separately by the entity (which
is similar to a vendor-specific objective evidence notion). It is only when a good
or service is not sold separately that entity is required to estimate the stand-
alone selling price. In that estimation process, an entity is still required to
maximise the use of observable inputs. The boards noted that in the hierarchy
there is little distinction between third-party evidence and a best estimate of a
selling price. For instance, third-party evidence of a selling price might be
require adjustments to reflect differences in either (a) the good or service
(because the third-party could be for a similar, rather than an identical, good
or service) or (b) pricing strategies between the third party and the entity.
Therefore, the boards affirmed their decision not to specify a hierarchy in IFRS
15. Instead, the boards decided that it was important to emphasise that an
entity should maximise the use of observable inputs when developing
estimates of stand-alone selling prices.
Breakage
IFRS15.B42 Paragraph 74 requires an entity to allocate the transaction price to
performance obligations on a relative stand-alone selling price basis. If the
stand-alone selling price for a customer’s option to acquire additional goods or
services is not directly observable, an entity shall estimate it. That estimate
shall reflect the discount that the customer would obtain when exercising the
option, adjusted for both of the following:
a) Any discount that the customer could receive without exercising the
option; and
b) The likelihood that the option will be exercised

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Position paper 11
Analysis:
This paper is written to assess the SSP determination of each type of product in Telkom.
Consumer - Determination of SSP for the retail products
Step 1: Identify all possible approaches in determining the SSP
There are only two possible approaches in determining the SSP for Telkom’s retail products: observable price and the cost plus margin approach. The adjustment
market approach is not considered feasible, as currently there is no market that offers similar goods or services to Telkom. Significant adjustments shall be made
if Telkom pursues to use the adjustment market approach, and it may not depict the amount of consideration to which the entity expects to be entitled in
exchange for transferring the services to Customer.
[1] Observable price:
Considering on how Telkom develops the price for its retail products, it is known that the final price of the products sold in the IndiHome package is the value
that is expected to be recovered from the service provided to the customers. Based on these considerations, the Company uses a relative fair value approach
(that is the final price) for the purpose of contract value allocation to each component that can be identified separately from IndiHome's contract. This final
price represents tariff embeds in each idRev in the system. This is also supported by Telkom's belief that all data and information needed to calculate the
relative fair value is readily available and reliable. In practice, the company takes the policy that IndiHome products can be sold separately by the Company
on a regular basis and the price offered to customers is the same even if the customer only purchases one of the services. For example illustration, below are
three subscribers who subscribe to different service packages with the offered internet price is the same:
No Customer ID Customer package Internet Services Final Price
1 131177127896 1P (Internet) New Internet – Reguler 1M Zone 2 Rp105.000
2 131164108127 2P (Internet and USeeTV) New Internet – Reguler 1M Zone 2 Rp105.000
3 131165116916 3P (POTS, Internet and USeeTV) New Internet – Reguler 1M Zone 2 Rp105.000
As explained in the above table, above argument valid only if Telkom could provide an evidence that they offer similar tariff (i.e. tariff for Internet service)
between the customer subscribe for Indihome package and single service. Appendix A in this application guidance further discusses regarding this
argumentation by providing evidence from Telkom’s historical transaction.

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Position paper 11
Understand from Telkom’s historical tariff charge to the customers, we [3] Cost plus margin approach:
!
noticed that several tariff falls within a far-reaching range however the
The use of the cost plus margin approach is doable as Telkom has a
number of occurrence is significantly smaller compare to total transaction
separate department (NITS) that is responsible for analysing the cost
during 2017. Considering this, it is fair to conclude that, despite there are
structure and assessing the profitability of Telkom’s standard products.
small number of transaction with unusual tariff attached into the system,
tariff in Telkom iSiska already represent the stand-alone selling price of the Step 2: Specifying a hierarchy
relevance service.
After reviewing the pricing process of the services offered by the Company, it
The following table provide example of the unusual range applies in can be concluded that the use of tariff in each idRev in determining the
Telkom’s internet service: contract value allocation to each service that can be identified separately from
the IndiHome contract is the right approach. Although there are two possible
idRev Normal Tariff Number of % approaches for the retail products, the standard approach emphasises the use
range (in Rp) occurrence
of observable inputs in determining the SSP for allocating the transaction
(in Rp)
price. Therefore, it is more appropriate for Telkom to use the tariffs embedded
INETF10M 190,000 – 590,000 149 0.04% in the iSiska system as the basis for determining SSP, rather than estimating
New 300,000 the amount using the other approach.
Internet Fair 150,000 10 0.003%
Usage Speed 95,000 81 0.02%
10 Mbps Conclusion
25,000 6 0.002%
For consumer (retail products), the determination of SSP as the
INETF100M 1,200,000 1,000,000 1 0.04%
Usage Speed – 1,550,000 basis for allocating the transaction revenue is done by using the
100 Mbps 2,250,000 1 0.04% established tariff for the Customer.
[2] Adjusted market approach: Can the existing practice continue?

Applicable to Non-fixed telephone products only, as Telkom can benchmarks its
Yes – the determination of stand-alone selling price is one of the
service to other provider (e.g. MNC and Biznet). It is not applicable for fixed
clarification provided in IFRS 15. Generally, Telkom existing practice of
telephone (i.e. home telephone) as most of other Telecommunication
recognising revenue to each service based on the tariff attach to respective
providers compete in mobile telephone industry. Considering that, we
idRev conforms the requirement in standards.
believe the adjusted market approach is not feasible to determine SSP for
Telkom’s fixed telephone product.

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Position paper 11
EBIS connectivity and WIBS connectivity Standard – Java (in a) NITS determines the standardised tariff of the service and the
Determination of SSP for Telkom’s standard (i.e. Speed thousands Rp) maximum allowable discount (Rentang Diskon Maksimal -
connectivity) product (Mbps) Original Satellite “RDM”) based on the information of cost, market assessment,
customer’s purchase power, etc. It is understood that there is
Step 1: Identify all possible approaches in determining the SSP 1 no single value of tariff for a service. The tariff of a service
:
In determining the Stand-alone Selling Price, the Standard requires varies, depending on the specification of the service itself. For
20
the Company to maximise the use of observable inputs. The example, the tariff for Astinet ranges depending on the
standardised selling price charged to the customers when a service bandwidth, the type of Astinet (e.g standard, premium, beda
is sold separately, when available, is the best evidence of stand- bandwidth, etc.), location and the type of the infrastructure
alone selling price. However, services are not always sold (e.g fiber optic or satellite backbone).
Nota Dinas Penetapan Tarif
separately. The standalone selling price needs to be estimated or No: ______ b) NITS details the formula of tariff calculation based on the
derived by other means if the service is not sold separately. This Produk: Astinet specification of the service in a formalised documentation of
estimate often requires judgment as the price is not directly
Nota Dinas.
observable. The revenue standard does not prescribe or prohibit any
particular method for estimating the standalone selling price, as c) Based on the Nota Dinas from NITS, IT Department developed
long as the method results in an estimate that faithfully represents the formula to calculate tariff in TICARES.
the price an entity would charge for the services if they were sold
d) As part of the sales team, the Account Manager inputs the
separately.
Astinet – Order 01 service into TICARES based on the specification requested by
Prior to exploring the approaches to determine the Stand-alone Tariff: Rp 1,500,000 the customer. When doing this, TICARES automatically
Selling Prices, the following understanding of Management’s Disc: Rp - calculates the tariff of the service and displays it as the
process to determine the final price to the customer is essential to reference to determine the price.
assess the customary business practice and data availability:
e) Based on the tariff and the calculation of RDM, Account
Manager negotiates the final price with the customer. The
agreed discount or premium is entered into TICARES either by
Astinet – Order 01 presenting it in a separate “Discount” field or by modifying the
Tariff: Rp 1,000,000 amount displayed in “Tariff” field. When the latter approach is
Disc: Rp - selected, the original tariff information becomes no longer
available for that particular order.

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Position paper 11
Step 2: Specifying a hierarchy
With the understanding of the process to determine prices, management provides the following assessment on the possible approaches to determine the
Stand-alone Selling Price by also considering the challenges and data availability:
Agreed price to the customer as the Tariff as the basis to determine Stand-alone Selling Price (i.e Adjusted Market Approach) Cost plus Margin
basis to determine Stand-alone Selling Approach
Price (i.e Observable Input Approach) Use of tariff catalogue in Reconstruction of Tariff from Nota Use of documented value in
TICARES Dinas TICARES
This approach is based on the actual This approach aims to obtain This approach sets off to gather the Arriving from the practice that the This approach requires
final prices that have been agreed with the tariff from the TICARES’ updated Nota Dinas for all types of standardised tariff of connectivity collection of cost
the customers. The information of final tariff catalogue, based on the connectivity services and develop a services from NITS are developed information of all
price is available in TICARES by specification of the service. mechanism to calculate tariff based on in TICARES and automatically connectivity services.
combining the values in column the pre-set specifications calculated based on the
“HRG_” and “DISC_”. Challenges: specification requested by the Challenges:
This approach requires Challenges: customers, this approach aims to Given the nature of the
Challenges: management to download the Reconstruction of tariff formula based on obtain the tariff of services from connectivity product, the
TICARES provides values per order specification of all active Nota Dinas in a separate warehouse is the values documented in column calculation of costs is
basis, in which one customer order in a connectivity orders and not feasible, given the following factors: “HRG_” in TICARES. based on the estimation
bundled service may absorb the full manually input the - Separate exercise needs to be and judgment. Collection
amount of discount in the contract specification per order basis performed to ensure the completeness Challenges: of actual costs, therefore,
while the other customer order hold into TICARES because and relevancy of Nota Dinas; and The values available in column requires exhaustive
the premium. The use of this approach reconstruction of tariff using - Tariff varies for every customer’s “HRG_” in TICARES may have procedures.
is feasible by adjusting the population batch processing is not feasible orders, depending the requested been modified to reflect the final
of contracts to exclude the contracts to be performed. specification (for example, variability of price to the customer, which have Final conclusion of
providing bundled services. the tariff may depend on the absorbed the discount/premium the approach:
Final conclusion of the bandwidth, location, distance, type of of the contract and there is no way Not recommended.
Final conclusion of the approach: approach: backbone, and the attached features of to distinguish the orders that still
Recommended with additional Not recommended. the service). have original tariff values from
approach to exclude the contracts with those whose values have been
bundled services. See next page. Final conclusion of the approach: modified
Not recommended.
Final conclusion of the
approach:
Not recommended.

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Position paper 11
Step 3: Establishing a method to determine Stand-alone Selling Price
As explored in the list of approaches in the previous page, management considers the Stand-alone Selling Prices of connectivity products are based on the agreed prices
agreed price to the customer as the method that is both practical and provides evidence of connectivity services from single-service contracts (i.e population “a” and “b”).
to the observable input. However, it is understood that this approach holds the 2. Selecting one specification that most affects the price determination
following challenges:
From the review of Nota Dinas, it is understood that there are variation of service
a) The customer’s service orders listed in TICARES may be part of a bundled specifications that may affect the calculation of tariff which is then used as the
arrangement. The use of actual price of the service orders in a bundled arrangement basis to negotiate the price with the customer. To reduce the variation and for
may not be an appropriate reference to the stand-alone selling price because it may practicality purpose, Management performs review of the Nota Dinas and
have absorbed the discount or premium of the contract. determine one variability that most affect the determination of price of each
b) The prices of the active customer’s service orders are negotiated and set based on the connectivity service.
specification requested by the customers. The variation of service specification may From the review of Nota Dinas of __ active PIDs in TICARES that becomes
affect the determination of basic price of the service. subject to the assessment of IFRS 15, management concludes that the variability
Understanding the above challenges, management develops the following approach: that most affect the determination of price of individual connectivity service is
the Bandwidth of the service.
1. Obtaining the agreed price of connectivity services from single-service contracts
Telkom may have the following combination of connectivity products in its contracts 3. Using boxplot data distribution method to obtain the acceptable range of
with the customers: Stand-alone Selling Price
a) Contracts containing single Actual selling price of services, as the standard prescribes, is an acceptable
connectivity service with similar reference of Stand-alone Selling Price when the services are sold separately.
specification; However, although obtaining the information of actual service price in single-
b) Contracts containing single service contracts has been performed, additional activity to remove the outliers
connectivity service with different a should be performed to obtain the acceptable range of prices.
specification; Boxplot in a descriptive statistic, is an acceptable method for graphically
c) Contracts containing multiple d distributing data through the quartiles and remove the unusual inputs (i.e
types of connectivity services; and Outliers). Using this method, the actual prices of connectivity service per
d) Contracts containing a combination b bandwidth are collected and distributed to obtain the range of Stand-alone
of connectivity and solution services. selling Price.

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Position paper 11
4. Determining Stand-alone Selling Price for service orders which is not sold separately
Step 1 to 3 results in a catalogue of acceptable range of Stand-alone Selling Price of all
connectivity services which are sold separately in single-service contracts, which will
also be applied for connectivity services sold in bundled arrangements. However, given
the range of services that Telkom provides, there are connectivity services which
bandwidth specifications are not sold in single-service contracts. Management
estimates that the range of Stand-alone Selling Prices of such services are similar to
the range of the previous level of identified bandwidth. For example, when the 2 Mbps
Astinet is never sold separately, the range of Stand-alone Selling Price uses the range
of 1 Mbps Astinet which are sold in single-service contracts.
5. Determining one point of Stand-alone Selling Price reference for the purpose of
allocating transaction price
The acceptable range of Stand-alone Selling Price is used to assess whether the services
in a single-service contracts and contracts with multiple connectivity services are
priced at their fair values. When the prices of all connectivity services in a contract are
within the range of acceptable Stand-alone Selling Price, allocation of transaction price
is not required. However, when the connectivity service is sold in combination with
solution services or when the price of connectivity services are not within the
acceptable range, allocation is required to be performed. In this case, a single rate of
Stand-alone Selling Price, obtained from the average of the price data within the
acceptable range.

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Position paper 11
!
EBIS Solution
Conclusion Determination of SSP for Solution Product (“OO”)
Step 1: Identify all possible approaches in determining the SSP
Management believes that tariffs deducted with RDM is the best
approach to determine the SSP for standard non-retail products. The use of observable prices and the adjusted market approach cannot be
This approach has already considered all of the available done for Telkom’s solution products, because of the followings:
information and represents the actual market’s ability to purchase • There are no established tariffs or other observable inputs that could be
such products.
used to determine the SSP. The products are bespoke, thus they are not
regularly offered to customers nor do they have a standardised tariff.
• The bespoke products are tailored to satisfy specific customer’s
Can the existing practice continue? requirements. Therefore, it is not feasible for Telkom to use the adjusted
market approach, as there will be various markets that need to be
Yes – the determination of stand-alone selling price is one of the considered in the assessment, and the pricing for each customer will
clarification provided in IFRS 15. require specific adjustment to reflect the condition of that customer.
Telkom has come to the conclusion of using the cost plus margin approach in
determining the SSP for its solution products.
Cost plus margin approach:
The costs included in the estimate should be consistent with those an entity
would normally consider in setting stand-alone prices. A cost plus approach
that considered the acquisition cost that are incurred and that are necessary
for providing the services to the customer would be an appropriate method
for Telkom. The actual margins charged by Telkom may vary depending on
the various factors that are being negotiated with the customer. Occasionally,
the actual margins may > 5%, for example, table on the nex page provides an
example of the few instances where Telkom’s DNAPSOO products are
earning > 5% margin:

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Position paper 11
EBIS Solution
Determination of SSP for Solution Product (“OO”)
Table1 : Profitability assessment of Telkom’s products (in million Rupiah)

Price in KB Price in Margin
PO Remarks
[a] KL [b] ([a]-[b])/[a]
Contract between Telkom and PT. Piranti Citra Mustika
 KB number: K.TEL.40/HK.810/DR2-10000000/2017
Smart Office and Gadget 22.8 19.9 13%
 KL number: PKS.TEL.56/HK.810/DBS-00000000/2017
Contract between Telkom and PT. Kawa Kibi Sejahtera
 Astinet is standard products, therefore SSP is determine using
Astinet 21 N/A N/A
Tariff – RDM approach;
Fibre Optic and  KB number: K.TEL.134/HK.810/DR2-10000000/2016; and
16,281 13,184 19%
Accessories  KL number: PKS.TEL.357/HK.810/DBS-00000000/2016.
However, the average margin that is currently applicable for Telkom’s solution products across the board is approximately 5%. This number is supported by
Telkom’s profitability assessment results for all of their products as at 31 December 2016, as shown in the following tables:
Table 2: Profitability assessment of Telkom’s products (in billion Rupiah)
Managed
Financial information Manage platform Managed Application Managed Service Managed Device
Non- device/others
Revenue 271.1 262.3 619.3 937.8 203.8
Gross profit 14 13.8 32 48.7 10.5
Gross margin 5% 5% 5% 5% 5%
The 5% margin is considered appropriate, given the following:

• The historical data reveals that the average estimated margin on most of Telkom’s solution products is 5%;
• The use of 5% signifies Telkom’s profit objectives. The fact that each arrangement may have a lower or a higher estimated margin supports the view that
Telkom could subsidise the profits of one arrangement with those of another, as long as the overall profit is still within Telkom’s target.

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Position paper 11
Step 4.1 – Method of allocating transaction price – cont’d !
Conclusion
A cost-plus approach that considers the extent of costs that are

necessary for performing the intended service would be an
appropriate method for estimating the standalone selling price of
Telkom DNAPSOO products. This could represent the acquisition
cost of the promised goods or services that are necessary to
deliver the service to the customer. The selection of a 5% margin is
considered reasonable as it reflects the average profit margin
charged by Telkom on managed solution services throughout the
year.
Yes – the determination of stand-alone selling price is one of the

clarification provided in IFRS 15.

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Position paper 11
Appendix A – Historical tariff
Detail idRev Number of subsription
%
245,000 164,406 46% Data is obtained from iSiska. The total number of subscription represent number of new
195,000 106,677 30% subscriber during 2017. From the opposite table, we could conclude that Telkom has the
248,000 31,991 9% history of offering several tariff for similar service.
288,000 17,658 5% For example:
210,000 14,531 4% Internet service 10 Mbps under idRev INETF10M - Telkom has various tariff tariff with
298,000 9,140 3%
average of Rp 232,502. Having said that, Telkom could argue that price include in the iSiska
300,000 4,769 1%
system has already represent the price that Telkom will charge if the sales is sold separately to
190,000 4,343 1%
206,500 779 0% the similar customer in similar circumstances.
INETF10M - New Internet Fair Usage Speed 10 Mbps
275,000 686 0%
255,000 436 0%
258,000 254 0%
215,000 238 0%
590,000 149 0%
95,000 81 0%
150,000 10 0%
25,000 6 0%
235,000 2 0%
INETFL20M 270,000 1 1%
Usage Speed 20 Mbps 280,000 183 99%
INETFL30M 390,000 1 3%
INETFL40M 490,000 1 3%
1,018,000 239 13%
1,250,000 940 50%
1,258,000 74 4%
1,260,000 31 2%
1,275,000 5 0%
1,300,000 31 2%
INETF50M
1,318,000 50 3%
Usage Speed 50 Mbps
1,800,000 1 0%
250,000 1 0%
500,000 8 0%
670,000 242 13%
700,000 266 14%
705,000 7 0%

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Position paper 11
Appendix A – Historical tariff (Continued)
Detail idRev Number of subsription
%
1,000,000 1 0%
1,200,000 388 16%
1,205,000 11 0%
1,220,000 242 10%
1,268,000 416 17%
1,445,000 1 0%
INETF100M
1,500,000 1,063 43%
Usage Speed 100 Mbps
1,508,000 114 5%
1,510,000 61 2%
1,518,000 103 4%
1,525,000 11 0%
1,550,000 62 3%
2,250,000 1 0%
0 13 0%
100,000 32,244 16%
300,000 49 0%
60,000 672 0%
USEEINDIHD - UseeTV INDIHOME HD 70,000 581 0%
78,125 213 0%
80,000 27,284 14%
90,000 139,522 70%
91,379 28 0%
USEEENTRYH – UseeTV - New UseeTV Entry HD 40,000 84,218 100%
USEEINBASH - Usee TV 15,000 258 100%
UseeTV Add On A la Carte IndiBasketball HD
USEEINTLTH - UseeTV 20,000 98 100%
UseeTV Add On Inditainment Lite HD
USEE_HD - 464,419 100%
USEEINT2HD - UseeTV Add On Inditainment 2 HD 40,000 4,130 100%
USEEINT1HD - UseeTV Add On Inditainment 1 HD 40,000 4,448 100%

IN1000 - Free Lokal dan SLJJ 100 Menit


PwC 284
Position paper 11
Appendix B – Example of discount calculation in Astinet, VPN-IP MPLS, and Metro E

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5.
Recognising
revenue

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286
Step 5 – Recognising revenue
Control
Based on IFRS 15, an entity shall recognise revenue when (or as) the entity Diagram below explained when the entity should recognised the revenue, over
satisfies a performance obligation by transferring a promised good or service time or at a point in time:
(that is, an asset) to a customer. An asset is transferred when (or as) the
customer obtains control of that asset. A performance obligation is satisfied
Customer receives benefits
when control of the promised good or services is transferred to the customer.
as performed/ another
An entity needs to determine whether control of a good or service transfers to Yes
would not need to re-
a customer categorised as over time or at a point in time. The assessment of perform
whether control transfers over time or at a point in time is critical to the timing e.g. cleaning service,
of revenue recognition which also affect an entity’s determination of whether a shipping
contract is a series of distinct goods or services that should be accounted as
single performance obligation.
No
Performance obligations satisfied over time
An entity transfers control of a good or service over time and, therefore,
Point in time
satisfies a performance obligation and recognizes revenue over time, if one of Create/enhance an asset
Over time
the following criteria is met: Yes customer controls
a. the customer simultaneously receives and consumes the benefits provided e.g. house on customer’s
by the entity’s performance as the entity performs; land
b. the entity’s performance creates or enhances an asset (for example, work
in progress that the customer controls as the asset is created or enhanced;
c. the entity’s performance does not create an asset with an alternative use to No
the entity and the entity has an enforceable right to payment for
performance completed to date.
Does not create asset
Performance obligations satisfied at a point in time
w/alternative use
A performance obligation is satisfied at a point in time if none of the criteria Yes AND No
for satisfying a performance obligation over time are met. Control should be Right to payment for
considered to determine. work to date
e.g. an ‘audit’ report

PwC 287
Passing of control
Step 5 – Recognising revenue
Revenue is recognised when the customer obtains control of a good or services. A performance obligation is satisfied when “control” of the promised good or
service is passed to the customers. This concept of transferring control of a good or service aligns with authoritative guidance on the definition of an asset. The
concept of control might appear to apply only to the transfer of a good, but a service is also transfer an asset to the customer, even if that asset is consumed
immediately. A customer obtains control of a good or service if it has the ability to direct the use of and obtain substantially all of the remaining benefits from that
good or service. A customer could have the future right to direct the use of the asset and obtain substantially all of the benefits from it (for example, upon making
a prepayment for a specified product), but the customer must have actually obtained those rights for control to have transferred.
Revenue Type of product Analysis Revenue

streams recognition
POTS Usage All of Telkom’s consumer product meet the criteria of a series of distinct Over time
service. . Each day of service could be considered distinct because the
POTS customer can benefit from each day of service on its own and each day of
Internet service is separately identifiable. Put another way, each day could be Overtime
separately identifiable because Telkom does not provide an integration
POTS + Internet service between the days, each day does not modify or customise another Overtime
Internet + USeeTV day, and the days of service are generally not highly interdependent or Overtime
interrelated because the entity can fulfil its obligations each day
POTS + Internet + Usee TV independent of fulfilling its obligations for the other days. Overtime
POTS + Internet + USeeTV + Digital content Overtime
(free product)
Consumer
POTS + Internet + Usee TV + Point Indihome Overtime
POTS + Internet + USeeTV + Digital content Overtime
(free product) + poin indihome
Minipack UseeTV Channel Overtime
Movin'Usage - billed Overtime
Wifi id Seamless Overtime
Global call Overtime
Trend Micro Antivirus Overtime

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Application guidance – ‘Policy - Hierarchy of revenue recognition’
!
Step 5 - Recognise revenue when (or as) a performance obligation is satisfied
Analysis:
Revenue streams Type of product Analysis Revenue

recognition
As explained before, performance obligation for these revenue streams satisfy Over time
WIBS Interconnection the criteria of series of distinct service and therefore meet the criteria to
Interconnection
WIBS International
service recognise revenue over time as the performance obligation will also be
Roaming
satisfied over time.
EBIS Connectivity Connectivity
WIBS Connectivity product
Additional consideration on multiple arrangement:

Individually, revenue from sale of server is recognised at a point in time, while sale of connectivity service is recognised over time. However, in the case that
Telkom provides server and connectivity service to a customer (in the perspective of customer’s expectation toward purchasing decision of server and
connectivity service is not separately identifiable and not “distinct” in order to produce combined output specified by customer, where the server itself has no
function without connectivity service), it is considered that the provision of server and connectivity service has only single performance obligation.
Step 5 of the revenue standard, recognise revenue when (or as) the entity satisfies a performance obligation, requires an entity to apply a single method of
measuring progress for each performance obligation. Therefore, revenue from sales of server and connectivity will be recognised over time as this depicts the
economics of the arrangement.
Conclusion Can the existing practice continue?
Telkom does not need to adjust most of it’s revenue recognition Yes – for most of the revenue stream.
policies. However, careful assessment needs to be performed by
performance obligation basis for revenue from EBIS solution to For EBIS solution, additional assessment is need to be performed for each
determine the appropriate revenue recognition. performance obligation as the performance obligation are unique and needs
to be assessment individually.

PwC 289
Application guidance – ‘Policy - Hierarchy of revenue classification’
Step 5 - Recognise revenue when (or as) a performance obligation is satisfied
Policy - Hierarchy of revenue classification Policy - Hierarchy of revenue recognition
Each main service provided to customer that requires provisioning Individually, revenue from sale of server is recognised at a point in time, while
(representing by each product ID/PID) will be classified as: (i) internet, data sale of connectivity service is recognised over time. However, in the case that
communication and information technology services (DATIN), (ii) pay TV, (iii) Telkom provides server and connectivity service to a customer (in the
leased line/IPLC (Internet Private Line Circuit) and (iv) satellite transponder. perspective of customer’s expectation toward purchasing decision of server
Other services or products provided to customer that does not require and connectivity service is not separately identifiable and not “distinct” in
provisioning will be classified as either E-business/App or (i) CPE (Customer order to produce combined output specified by customer, where the server
Premise Equipment) and terminal, and (ii) others. itself has no function without connectivity service), it is considered that the
provision of server and connectivity service has only single performance
Revenue classification for any combination of provision of services and obligation.
products will be following its main services and/or mid-main service, according
to provided hierarchy: Step 5 of the revenue standard, recognise revenue when (or as) the entity
satisfies a performance obligation, requires an entity to apply a single method
• Hierarchy 1 (main services) of measuring progress for each performance obligation. Therefore, revenue
o Internet, data communication and information technology services from sales of server and connectivity will be recognised over time as this
(DATIN) depicts the economics of the arrangement.
o Pay TV
o Leased line/IPLC (Internet Private Line Circuit)
o Satellite transponder
• Hierarchy 2 (mid-main service)
o E-business/App
• Hierarchy 3
o CPE (Customer Premise Equipment) and terminal
o Others

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6.
Other
consideration

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291
Other consideration – Contract costs
Completeness check
IFRS 15 also includes guidance related to contract costs. Costs relating to satisfied performance obligations and costs related to inefficiencies should be expensed
as incurred. Incremental costs of obtaining a contract (for example, a sales commission) should be recognised as an asset if they are expected to be recovered. An
entity can expense the cost of obtaining a contract if the amortisation period would be less than one year. Telkom should evaluate whether direct costs incurred in
fulfilling a contract are in the scope of other standards (for example, inventory, intangibles, or property, plant and equipment). If so, Telkom should account for
such costs in accordance with those standards. If not, Telkom should capitalise those costs only if the costs relate directly to a contract, relate to future
performance, and are expected to be recovered under a contract.
To ensure the completeness of impact IFRS 15 to contract cost in Telkom, we have summarised all expenses incurred during 2017 to be further analysis. Only
expenses that meet the criteria mention above that will have further discussion. Refer to the following table for details:
Nature of account Amount Detail description IFRS 15 Analysis

(in billion Rp)
Operation, maintenance, and 36,602,989,959,183 The expenses relates primarily to provide service Based on our scanning detail assessment, we
telecomunication services to customer, that mainly contribute from but not noticed that several expense may fall into
limited to the following expenses: contract to fulfill a contract, such as:
• Expense for license for Telkom frequency; 1) Installation cost; and
• Expenses relates to power supply, tower, and 2) CPE expense.
antenna; and
Further analysis is performed to ensure the
• Outsourcing expenses
conformity of Telkom’s accounting treatment
with the requirement in IFRS 15.
Depreciation and amortisation 20,445,745,044,137 Mainly contributes from depreciation expenses Within the scope of IAS 16 “Property, Plant and
for transmission, cable network, power supply, Equipment” and IAS 38 “Intangible assets”. No
and software. further work performed is necessary for these
expenses.
Employee expenses 13,529,565,246,997 Mostly contribute from base salary and pension These costs may meet the criteria of cost to fulfil
cost to the employees. a contract. Further analysis is performed.
Interconnection 2,986,971,806,608 Represent payment to Other License Operator These costs may meet the criteria of cost to
(“OLO”) for the interconnection service. fulfill a contract. Further analysis is performed.

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Completeness check – cont’d
Nature of account Amount Detail description IFRS 15 Analysis
(in billion Rp)
General and administrative 5,259,989,906,311 Mostly contributed from allowance for impairment Impairment are within the scope of IFRS
of Jastel receivables, professional fess, and 9; while the other expenses does not
director remuneration. relates to contract with customer.
Selling and marketing 5267,978,985,266 Mainly relates to commission fees paid to The commission expenses need further
Telkom’s sales agent (e.g. Avengers and assessment to assess whether these costs
Canvasser) satisfy the criteria of cost to obtain a
contract under the new requirement.
Foreign exchange gain/loss – net (51,185,782,685) Gain or loss from translation of BSPL These expenses are within the scope of
denominated in foreign currency to Telkom’s IAS 10. No further assessment is
functional currency. considered necessary.
Other incomes (1,039,076,736,268) Mostly contributed from Telkom Akses – Refer to impact assessment of IFRS 15 in
represents income from sale of scrap goods (i.e. Telkom Akses.
coopers)
Other expenses 1,319,885,471,442 Mainly from the penalty expenses, final taxes, and No further assessment.
other non-operating expenses.
Total 84,322,863,900,991

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Position paper 12
Commission fees that satisfy the criteria cost to obtain a contract
Rationale
Telkom often incurs costs to obtain a contract with a customer, such as selling Sales commission
and marketing costs, sales commissions, and legal fees. IFRS 15 introduces new For the past years Telkom incurs significant amount of sales commission paid
requirement that Telkom shall recognise as an assets the incremental costs of to the agents. Telkom has several scheme on calculating total commission paid
obtaining a contract with a customer if Telkom expects to recover those costs. to the agent depending on the discretionary of each department. The biggest
Table in the previous page has summarised all probable expenses that may fall commission fee mainly contributes from the consumer streams (i.e. Indihome)
within the scope IFRS 15; thus, requires further analysis in this section. to increase its customer’s base in Indonesia. Starting in 2016, Telkom permits a
Selling and marketing cost partnership arrangement with third party agents to do the selling activity in
Based on our understanding of Telkom selling and marketing strategy, we return of certain consideration. The partnership arrangement could be in form
understand that Telkom always establishes advertising and promotional budget of door-to-door activity to canvassing arrangement.
to boost its revenue performance. The marketing scheme itself does not Further assessment is performed to assess whether such costs satisfy the
incremental to the new contract acquires which means that Telkom is still criteria of costs to obtain a contract and initially shall be recognize as an assets.
required to incur the costs despite the contract has not been acquired (i.e. The next practical guidance discuss further on each type of sales commission
placement products advertisement in billboard and television). applicable to each revenue streams and the impact of each scheme to the new
Legal fees requirement introduces by the standard.
Telkom has separate legal division that paid on a monthly basis. This cost does
not incremental to new contract acquired.
Need further assessment

Consumer
IFRS 15 Guidance
An entity shall recognize as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. The incremental costs of obtaining a contract are those costs that an
entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission). Costs to obtain a contract that would have been incurred
regardless of whether the contract was obtained shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.
PwC 294
Position paper 12
Other consideration – ‘Contract acquisition cost’
Contract costs
Summary of all possible commission arrangements with Telkom
Revenue Partnership Are the expenses incremental
Product Scheme
streams Programme to obtain new contract?
Represent commission paid to the canvasser that Yes – partially
is responsible to socialize and promoting
Some of the commission fee
Indihome product in certain region.
triggered by the number of new
Canvasser commission/incentives consist of the contracts acquired by the canvasser
Canvasser following components:
• UMR – payable once a certain KPI is achieved
by the canvasser;
• Additional bonus; and
• Management fee to dealer
Represent commission paid to Avenger based on Yes
the actual subscription from the customer.
Indihome The total commission paid to
Incentives consist of the following components: MITRA (the third party agent) is
• Sales fee – calculated based on subscribed driven fully by the number of new
Avenger package and total Put to Service (“PS”) during a contracts acquired by the Avenger
Consumer
certain period;
• Transportation allowance;
• Additional bonus; and
• IPA
No
Incentives consist of the following component:
CPA Fixed salary – payable once a certain KPI is Commission does not incremental
achieved by sales agent. to the contract with customer
acquired.
None. No
Non-Indihome Although additional Telkom does not issue any specific Nota Dinas Commission does not incremental
product: rewards / bonus could be (“NODIN”) or scheme to regulate the additional to the contract with customer
• Fixed telephone given based on rewards provided by TREG. This programme is at acquired.
• Internet discretionary of each the discretion of each TREG.
Region (TREG)

PwC 295
Position paper 12
Contract costs – cont’d
Partnership Are the expenses incremental

Revenue streams Product Scheme
Programme to obtain new contract?
EBIS Solution
EBIS Connectivity Incentives calculates are based on a No
certain KPI that consists of:
WIBS Connectivity Commission does not incremental
Standard Product and Insentif Sales & • Total revenue (80%),
to the contract with customer
WIBS DNAPSOO Product Marketing (“ISM”) • Total new sales during the period
acquired.
Interconnection (10%); and
• Collection rate (10%)
WIBS International
Roaming
Rationale
Only incremental costs should be recognised as assets. Incremental costs of obtaining a contract are those costs that the entity would not have incurred if the
contract had not been obtained (for example, sales commissions). Bid, proposal, and selling and marketing costs (including advertising costs), as well as legal
costs incurred in connection with the pursuit of the contract, are not incremental, as the entity would have incurred those costs even if it did not obtain the
contract. Fixed salaries of employees are also not incremental because those salaries are paid regardless of whether a sale is made. Telkom should consider all fact
and circumstances before drawing a conclusion. Taking into account the requirement of the standard, we have highlighted which costs that should be recognised
as asset and further assess the detail in the next practical guidance.

PwC 296
Position paper 12
Consumer WIBS International To assess the accounting treatment for contract Does the accounting treatment in Telkom related
EBIS Solution roaming acquisition in Telkom to incremental costs of obtaining a contract
WIBS conform to the requirements in IFRS 15?
EBIS Connectivity
Interconnection
WIBS Connectivity
Background:
Consumer products – Indihome
Starting in 2016, Telkom
introduced partnership
programmes that enable the public
(referred to as “MITRA” in this
paper) to enter into an agency
arrangement with Telkom. MITRA
is responsible for promoting
Telkom’s Indihome products to
expand Telkom’s customer base. In
return, Telkom pays MITRA a
certain amount of commission fees.
Currently Telkom has three types of
partnership programme with
MITRA to increase the Indihome
sales as governed in Nota Dinas:
C.Tel.51/YN 000/COP –
F3000000/2017. This is illustrated
in the opposite graph:

PwC 297
Position paper 12
Consumer products – Indihome (continue)
Each arrangement has a different purpose and/or market segment; however, MITRA would be the responsible party to provide the sales force to obtain new
contracts with customers. In each arrangement, the responsibility of the sales force is as follows:
1. Canvasser Agency
Partnership programme that requires the sales force (“Canvasser”) to educate and inform about Telkom IndiHome products to the Customer, spread and
brand Indihome product, and offering IndiHome and MyIndihome products to the customer; and
2. Kemitraan Dealership Indihome
If the Canvasser is responsible for informing customer about Indihome products and therefore acts as a door-opener, then the Avenger acts as the door-to-
door salesman. The Avenger is required to market and sell IndiHome product.
3. CAP
Partnership programme to boost, instead of estimating the amount using the cost plus margin approach.
The following table summarises all the commission arrangements with MITRA:
Type of
No Type of fee Detail scheme
contract
1 Canvasser Canvasser fee: Total canvasser fee calculation:
Agency 1. Upah Minimum Regional (“UMR”); and
Represents the total commission
fee paid directly to the canvasser. 2. Additional bonus based on Telkom’s discretion.
Additional Management Fee: Total additional Management Fee :
Represent the fee paid to the Total revenue collected x Management fee percentage *)
agencies based on their Key
Performance Indicators (“KPI”) No Indicator % Unit Period Target
achievements
1 Total download 15% user Monthly 100k
2 Total verified registration 70& user Monthly 20

3 Total PS (Put into Service) 15% SSL Monthly 20
*) Percentage of the management fee is determined based on certain KPI achievements set
out the contract. The KPI mainly bases from the total new verified registration in the
MyIndiHome application.

PwC 298
Position paper 12
No Type of contract Type of fee Detail scheme
2 Kemitraan Dealership Sales fee - Avenger: Total sales fee Avenger calculation:
Indihome
Represents fee paid to the sales force/ 1. Transportation fee amounting to Rp 200,000 or Rp 400,000 – depending on
Avenger that consists of the following the number of IndiHome packages sold during the period;
expenses: 2. Sales fee: Package index* x (UMR/18 **; and
1. Transportation expenses; 3. IPA: maximum of 2.5% x total revenue recognised x 70%
2. Sales fee; and
3. Additional incentives – known as * Different package has different index.
Insentif Progresif Avenger (“IPA”) ** Illustrative example:
Customer subscribe Paket Value 10 Mbps – package index 0.8
Sales fee: 0.8 * (Rp 2.8 million/18) = Rp 124,444
Sales fee - Supervisor:
Represents the fee paid directly to the Total commission fee calculation:
supervisor that comprises of the
following: 1. Transportation fee 0f Rp 500,000*;
1. Transportation fee; 2. Professional allowances of Rp 1,000,000 *;
2. Professional allowances ; and 3. Sales fee: Total sales fee from Avengers x 10%; and
3. Sales fee; 4. IPA: maximum of 2.5% x total revenue recognised x 20%
4. Additional incentives – IPA * Eligible once the Avengers achieve certain sales during the period
Additional Management fee: Total additional management fee calculation:

Represents the fee paid to the agencies Total commission fee from Avenger & Supervisor x Management Fee percentage *
based on their KPI achievement.
* Percentage of the management fee is determined based on the certain KPI
Achievement set in the contract. The KPI mainly bases from the total sales
acquired in the certain period.
3 CPA Sales fee:
Represents the total commission fee Fixed salary
paid directly to the canvasser.

PwC 299
Position paper 12
Consumer products – Other than Indihome (i.e. POTS)
Unlike Indihome, Telkom does not have any particular partnership Unlike Indihome, Telkom does not have any particular partnership programme
programme or sales commission for its new non-Indihome customer. As or sales commission for its new non-Indihome customer. As announced on
announced on Telkom’s website (refer to graph below for the example), Telkom’s website (refer to graph below for the example), customers who are
customers who are interested in subscribing to Telkom’s POTS and Internet interested in subscribing to Telkom’s POTS and Internet Product should go
Product should go directly to their nearest Plasa Telkom. directly to their nearest Plasa Telkom as shown in below picture:
Currently, Telkom’s existing practice (IAS 18) is to directly expenses all expenses relates to commission paid to the agent under GL Account 51601011
Business Area T003.

PwC 300
Position paper 12
Non-consumer products The formulae to calculate the NKI AM are as follow:
[(80% x ach. Revenue) x faktor kompleksitas resiko *] + [10% x ach. Sales] +
Telkom has a written regulation regarding the sales incentives given to the
[10% x ach Collection rate].
Account Management (“AM”) - the person in charge of dealing with the
contract with the customers. This programme is called Insentif Sale & * Faktor kompleksitas / complexity factor can be implemented as multiplier to the revenue
Marketing (“ISM”) and is regulated under Peraturan Direktur Human Capital performance in accordance with each department’s internal policy. Incentives allocation
Management No: PR 207.20/r.00/PS560/COP – J2000000/2016 (the in the current year
“Regulation”). Threshold NKI AM Index NKI AM
All the relevant departments in Telkom use this Regulation as guidance to NKI < 100% 0%
calculate the incentives to AM. Details of the arrangements for the ISM are
summarised below: 100% ≤ NKI < 120% (13.55 x NKI) – 13.26
1. ISM is an incentive programme for the AM as a reward for their
120 % ≤ NKI < 145% (2.0 x NKI) + 0.60
performance (“NKI”);
2. NKI is the established criteria that should be met by the AM to receive the NKI ≥145% 3.50
incentives. This criteria should be agreed upon by each AM and approved
by the relevant supervisor in each department. The ISM calculation should Nominal value of the incentives is calculated as follow:
use the formula set out in the Regulation; NKI AM x Take home pay (excludes bantuan kemahalan) x Budget Factors **
3. The measurement parameters are as follows: ** Adjustment factor to ensure that the incentives do not exceed the total of Sales &
• Revenue : 80 % Marketing Incentives allocation in the current year
• Sales : 10% 4. The incentive is calculated based on the three months performance and
• Collection rate : 10% distributed three times a year.
Although the total incentives depend on the AM’s achievement of sales during a
certain period, which may indicate that the incentives are increment to the
number of contracts acquired, the incentive expenses are included as part of the
marketing budget and excluded from the profitability assessment.
Similarly to incentives, the costs incurred are not incremental to obtaining a
contract with the customer; therefore, Telkom continues to expense these costs
as incurred.

PwC 301
The following costs are the example of costs incurred but not incremental to Reference to relevant accounting standard:
obtaining a contract with a customer: IFRS 15.91 An entity shall recognise as an asset the incremental costs of
• Legal expense, as Telkom has a separate legal division that will incur cost obtaining a contract with a customer if the entity expects to recover those costs.
whether Telkom acquires the contract or not. Currently, Telkom does not IFRS 15.92 The incremental costs of obtaining a contract are those costs that an
have a legal fee on a contingency basis. If the payment is dependent on the entity incurs to obtain a contract with a customer that it would not have
contract being signed, then it is clearly directly related to the contract; incurred if the contract had not been obtained (for example, a sales
• Other costs (i.e. bidding cost, sales and marketing costs) - these costs are commission).
unlikely to be incremental. Telkom will have to incur such costs irrespective IFRS 15.93 Costs to obtain a contract that would have been incurred regardless
of whether the contract is won. of whether the contract was obtained shall be recognised as an expense when
Currently, Telkom directly expenses all the commissions paid to MITRA as incurred, unless those costs are explicitly chargeable to the customer regardless
incurred. of whether the contract is obtained.
IFRS 15.BC300 During the redeliberations, the IASB Boards (the “boards”)
decided that, in some cases, it might be misleading for an entity to recognise all
the costs of obtaining a contract as expenses when incurred. For example, the
boards observed that recognising the full amount of a sales commission as an
expense at inception of a long-term service contract (when the sales commission
is reflected in the pricing of that contract and is expected to be recovered) would
fail to acknowledge the existence of an asset.
IFRS 15.BC301 Consequently, the boards decided that an entity would recognise
an asset from the costs of obtaining a contract and would present the asset
separately from the contract asset or the contract liability. To limit the
acquisition costs to those that can be clearly identified as relating specifically to
a contract, the board decided that only the incremental costs of obtaining a
contract should be included in the measurement of the asset, if the entity
expects to recover those costs. The board decided that determining whether
other costs relate to a contract is too subjective.

PwC 302
Position paper 12
IFRS 15.BC 302 The boards noted that it might be difficult for some entities to IFRS 15.94 As a practical expedient, an entity may recognise the incremental
determine whether a commission payment is incremental to obtaining a new costs of obtaining a contract as an expense when incurred if the amortisation
contract (for example, payment of a commission might depend on the entity period of the asset that the entity otherwise would have recognised is one year
successfully acquiring several contracts). TRG Discussion No 23 further or less.
discusses the accounting treatment for commission subject to a
Determination of amortisation period
threshold/cumulative targets. Generally, from the TRG discussion, there are
two acceptable views for this matter based on the guidance in the new revenue IFRS15.99 An asset recognised in accordance with paragraph 91 or 95 shall be
standard as follows: amortised on a systematic basis that is consistent with the transfer to the
customer of the goods or services to which the asset relates. The asset may
• First view: the entity might capitalise the commission upon achieving the
relate to goods or services to be transferred under a specific anticipated contract
certain threshold/ targets as it is incremental to obtaining that contract and
(as described in paragraph IFRS15.95(a)).
was not payable until that contract was obtained;
Furthermore, the boards clarified in IFRS15.BC309, an entity should amortise
• Second view: the entity should estimate the total amount of commission to
the asset recognised from the costs of obtaining and fulfilling a contract in
be earned for the period, and a ratable amount of commission costs should
accordance with the pattern of transfer of goods or services to which the asset
be capitalised upon the signing of each contract.
relates. Respondents broadly agreed; however, some asked the boards to clarify
Furthermore, the standard provides an example in IFRS 15.IE190, In whether those goods or services could relate to future contracts. Consequently,
accordance with IFRS15.91, the entity should recognise an asset for the the boards clarified that in amortising the asset in accordance with the transfer
CU10,000 incremental costs of obtaining the contract arising from the of goods or services to which the asset relates, those goods or services could be
commission to sales employees because the entity expects to recover those provided under a specifically anticipated (i.e. future) contract. That conclusion
costs through future fees for the consulting services. The entity also pays is consistent with the notion of amortising an asset over its useful life and with
discretionary annual bonuses to sales supervisors based on annual sales other Standards. However, amortising the asset over a longer period than the
targets, overall profitability of the entity and individual performance initial contract would not be appropriate in situations in which an entity pays a
evaluations. In accordance with paragraph 91 of IFRS 15, the entity does not commission on a contract renewal that is commensurate with the commission
recognise an asset for the bonuses paid to sales supervisors because the paid on the initial contract. In that case, the acquisition costs from the initial
bonuses are not incremental to obtaining a contract. The amounts are contract do not relate to the subsequent contract. TRG Discussion No. 23
discretionary and are based on other factors, including the profitability of the provides further discussion of all acceptable alternatives with the underlying
entity and the individuals’ performance. The bonuses are not directly reasons in determining the period to amortise the contract assets.
attributable to identifiable contracts.
IFRS15.IE191 The entity observes that the external legal fees and travel costs
would have been incurred regardless of whether the contract was obtained.
Therefore, in accordance with paragraph 93 of IFRS 15, those costs are
recognised as expenses when incurred, unless they are within the scope of
another Standard, in which case, the relevant provisions of that Standard
apply.
PwC 303
Position paper 12
TRG Discussion No 23 is also addressed issues regarding pattern of IFRS15.102 For the purposes of applying paragraph 101 to determine the
amortisation for contract assets related to multiple performance obligations. amount of consideration that an entity expects to receive, an entity shall use the
There are two acceptable views that satisfy the requirement to “mirror” the principles for determining the transaction price (except for the requirements on
pattern of transfer of the goods and services to the customer for the contract as constraining estimates of variable consideration) and adjust that amount to
a whole as follows: reflect the effects of the customer’s credit risk.
• View A – Allocate the assets to the individual performance obligations on a IFRS15.103 Before an entity recognises an impairment loss for an asset
relative basis and amortise the respective portion of the asset based on the recognised in accordance with paragraph 91 or 95, the entity shall recognise any
pattern of performance for the underlying performance obligations; or impairment loss for assets related to the contract that are recognised in
accordance with another Standard (for example, IAS 2, IAS 16 and IAS 38).
• View B – Amortise the single assets using one measure of performance After applying the impairment test in paragraph 101, an entity shall include the
considering all of the performance obligations in the contract. Use a resulting carrying amount of the asset recognised in accordance with paragraph
measure that best reflects the “use” of the asset as the goods and services 91 or 95 in the carrying amount of the cash-generating unit to which it belongs
are transferred. Note that this approach may result in a similar pattern of for the purpose of applying IAS 36 Impairment of Assets to that cash-generating
amortisation as View A, bit without any specific allocation of the contract unit.
cost asset to individual performance obligations.
IFRS15.104 An entity shall recognise in profit or loss a reversal of some or all of
IFRS 15.100 An entity shall update the amortisation to reflect a significant an impairment loss previously recognised in accordance with paragraph 101
change in the entity’s expected timing of transfer to the customer of the goods when the impairment conditions no longer exist or have improved. The
or services to which the asset relates. Such a change shall be accounted for as a increased carrying amount of the asset shall not exceed the amount that would
change in accounting estimate in accordance with IAS 8. have been determined (net of amortisation) if no impairment loss had been
Impairment recognised previously.
IFRS15.101 An entity shall recognise an impairment loss in profit or loss to the Analysis:
extent that the carrying amount of an asset recognised in accordance with
[1] Consumer products
paragraph IFRS15.91 or IFRS15.95 exceeds:
Determine whether the costs are incremental and recoverable
a. the remaining amount of consideration that the entity expects to receive in
exchange for the goods or services to which the asset relates; less [1.1] Canvasser Agency
b. the costs that relate directly to providing those goods or services and that There are two types of fees: (1) management fee paid to the agency, and
have not been recognised as expenses (see paragraph 97). (2) sales fee paid to the sales person/Canvasser. The standard requires
incremental costs of obtaining a contract to be capitalised as contract assets
as long as these costs are recoverable. Our analysis focuses on whether fees
paid by Telkom are incremental and recoverable and thus satisfy the
criteria for the recognition of contract assets. Our analysis is performed
separately for each type of fees:
PwC 304
Position paper 12
No Fee Analysis
1 Canvasser fee Incremental to obtain contract with customers:

No – Canvasser fee is not incremental to obtaining a new contract with a customer
The total commission fee paid directly to the canvasser is calculated based on the UMR in the specific region plus the
additional bonus from Telkom. Telkom will incur the commission expense whether they have acquired the new contract with
customer or not.
The commission fee is recoverable:
Yes – the cost is recoverable
Commercially speaking, the partnership arrangement is being developed to align with the target revenue to achieve a
profitable level; therefore, it is fair if we concur that this costs is recoverable.
Conclusion:
The commission fee paid directly to the Canvasser is not incremental to obtaining a new contract with a customer. Thus, the
sales fee does not satisfies the criteria to be recognised as a contract asset. Therefore, Telkom’s existing practice of expenses
directly as incurred conforms the requirement in the IFRS 15.
2 Additional Incremental to obtaining contract with customers:

Management fee
No – Additional management fee is incremental to obtaining a new contract with a customer
The amount of management fee paid to agents depends on the achievement of a certain KPI, as follows:
1. 15% Total download – represents the total number of people who have downloaded MyIndihome applications;
2. 70% Total Verified Registrant – represents the total number of people who have downloaded the applications and
created MyIndiHome accounts using verified IDCards; and
3. 15% Total PS – represents the total number of people who have downloaded and created accounts in MyIndiHome and
subscribed to the IndiHome packages.
Arguably, Total download is the only component that actually represents the cost to acquire a new contract (i.e. incremental),
which generates around 15% of the total commission. Telkom will incur the commission expense whether they have acquired
new contract with customer or not.

PwC 305
Position paper 12
No Fee Analysis
2 Additional The commission fee is recoverable:
Management fee
(continue)
Commercially speaking, the partnership arrangement is being developed align with the target revenue to achieve a profitable
level, therefore it is fair if we concur that this costs is recoverable.
Conclusion:
The management fee paid directly to the Agent does not incremental to obtain a new contract with a customer. Thus, the
management fee does not satisfies the criteria to be recognised as a contract asset. Therefore, Telkom’s existing practice of
expenses directly as incurred conforms the requirement in the IFRS 15.
[1.2] Kemitraan Dealership Indihome

Similar to the analysis performed in the canvasser program, our analysis is performed separately on each type of fees paid to Avengers:
No Commission Fee Analysis
1 Sales fee Incremental to obtain contract with customers
(Supervisor +
Yes – The cost is incremental to obtaining new contract with customer
Avenger)
This fee is paid based on the total contract acquired by the avenger. For supervisor, the total sales fee depends on the total
contract acquired by the avenger under their supervision.
Commercially speaking, Telkom has taken into account the cost that it has to pay Avengers in developing the pricing for its
consumer products; therefore, it is fair to conclude that that this cost is recoverable.
Conclusion:
The commission fee paid directly to Avengers and Supervisors satisfy the criteria to be recognised as part of a contract asset
under IFRS 15. This differs from the current practice where Telkom expenses all the costs as incurred; therefore, Telkom
needs to capitalise these costs. (See further discussion on amortization below).

PwC 306
Position paper 12
No Fee Analysis
2 Additional Incremental to obtain contract with customers:

management fee
Yes – The cost is incremental to obtain new contract with customer
The total commitment for the Avengers is calculated based on a certain KPI that is solely based on the total contract acquired
during the period. In consideration of this, the management fee under the Avenger partnership is incremental of obtaining a
contract with a customer.
Commercially speaking, the partnership arrangement is being developed to align with the target revenue to achieve a
profitable level; therefore, it is fair to concur that this costs is recoverable.
Conclusion:
The Avenger’s management fee is an incremental cost of obtaining a contract with a customer and Telkom expects to recover
this cost. Thus, the management fee satisfies the criteria to be recognised as a contract asset.
[1.3] CAP
The total commission fee paid under the CAP arrangement uses a fixed salary per month; thus, Telkom will incur the commission expense whether they have
acquired new contract with customer or not.
In conclusion, of the three commission arrangement for Indihome products, only Avenger satisfies the criteria of contract assets; thus, Telkom shall capitalise
the commission paid to Avenger to be amortised on a systematic basic. Currently Telkom still directly expenses all the commission fee paid to MITRA
under GL Account 51601011 Business Area T003 (for example, during 2017 the total expense booked for this commission fee amounted to Rp 216 billion).


PwC 307
Position paper 12
!
[II] Non-consumer product
Determine the amortisation method
The standard requires the incremental costs of obtaining a contract to be
The standard requires that contract assets shall be amortised on a systematic capitalised as contract assets as long as these costs are recoverable;
basis that is consistent with the transfer of the goods or services to the customer therefore, assessing the conformity of Telkom’s accounting treatment
to which the asset relates (IFRS 15.99). The amotisation period shall consider related to the contract cost is divided into the following steps:
both the period covered in the contract and the period expected from the
renewal option. To address the requirement from the standards, Telkom uses 1. Step 1 – Determine whether the costs are incremental
the respective customer’s churn rate to amortise the contract asset from the cost 2. Step 2 – Determine whether the costs are recoverable
of obtaining a new contract from a customer. The historical experience shows
3. Step 3 – Determine the amortisation method
that the customer churn rate for Telkom internet product was around 4 to 5
years. The amortisation period for the contract asset that arises from the 4. Step 4 – Determine the impairment
commission fee paid under these partnership programmes is also around 4 – 5 Step 1 – Determine whether the costs are incremental
years.
Incentives - ISM
Determination of impairment indicator
It is understood from the explanation in the “Background” section that
Telkom shall recognise impairment loss once the condition mentioned in the Telkom’s ISM incentive programme is calculated based on the following
IFRS15.101 occurs. parameters:
• Revenue;
Conclusion [(80% x ach. Revenue) x faktor kompleksitas
• Sales; and resiko *] + [10% x ach. Sales] + [10% x ach
Collection rate).
Telkom shall recognise the commission fees paid under the • Collection rate
Avenger Partnership as contract assets. Contract assets will be

As the calculation of incentives is significantly based on the revenue
amortised in accordance with the churn rate of the respective
booked during the year, we could conclude that the sales incentives are
customer.
mostly based on the satisified performance obligations; therefore, the
related expense should be recognised in the profit and loss. In addition to
Can the existing practice continue? this, the above calculation was only used to determine the rate of sales
commission. The total incentives will then be determined based on the
availability of the budget. As the relationship between the new contracts
No – the concept of capitalising cost to obtain a contract is one of the new
with the total incentives is remote, we could concur that these costs are
concept introduces in IFRS 15. Avengers meets the criteria to be capitalised;
not incremental to obtaining a contract.
therefore, the existing practice to directly expense this commission fees
paid to Avenger can no longer continue in IFRS 15. Understand that Telkom
currently struggling to calculate the churn rate that really represent nature
of Indihome consumer.
Gap 7 identified
PwC 308
Consumer
Position paper 12
Other costs (i.e. selling and marketing expenses)
Conclusion
These costs are not incremental of obtaining a contract. The analysis for these
costs is quite straightforward as all costs (such as payroll expense for the legal
Telkom decision to not capitalise the cost to obtain a contract
division or marketing and selling expenses) would have been incurred
and amortise such costs over the initial term, and the term in
regardless of whether the contract was obtained.
the anticipated contract, conforms the requirement in IFRS 15.
Step 2 – Determine whether the costs are recoverable
Incentives - ISM
The second criteria that should be met for the incentives to be capitalised as Can the existing practice continue?
contract assets is the costs are expected to be recovered. Considering the
explanation in IFRS 15.BC300 and IFRS15.IE190, the cost is expected to be Yes – ISM scheme does not meet the criteria of a cost to obtain a
recovered if it is reflected in the pricing of the contract. In Telkom, these contract. Telkom existing practice of directly expense the costs conforms
incentives are included in the marketing budget as reflected in the way Telkom the requirement in IFRS 15.
calculates the total incentives; that is, multiplying the NKI with the budget
factor (as explained in the “Background” section, budget factor is the adjustment
that reflects the total sales and marketing budgets). Commercially speaking, the
marketing budget is being developed to align with the target revenue to become
profitable level; therefore, it is fair if we concur that this costs is recoverable.
Other costs (i.e. selling and marketing expenses)
Other costs are not incremental and there is no proof that these costs are
explicitly chargeable to the customer regardless of whether the contract is
obtained or not.
Step 3 - Determine the amortisation method and impairment
No further analysis is required as none of the costs to obtain a contracts results
in the contract asset recognised in Telkom’s balance sheet.

PwC 309
Position paper 13
Other consideration – ‘Contract fulfilment cost’
Scoping assessment

Consumer
Yes Yes Yes Yes No No
Rationale
WIBS interconnection, WIBS international roaming. Consumer, WIBS connectivity, EBIS Solution and EBIS
Connectivity
Not applicable.
As mentioned before, transactions in WIBS Interconnection and WIBS Telkom provides various services to customer under the Consumer, WIBS
International Roaming only have one service in which Telkom provides an connectivity, EBIS connectivity and EBIS solution. In delivering the services
interconnection service to another telecommunication provider. to the customer, Telkom incurs various costs that may or may not relate
Interconnection is the physical linking of Telkom's network with equipment or directly to fulfilling a contract with a customer. IFRS 15 require management
facilities belonging to another provider. The costs are incurred in the same to assess whether this fulfilment cost needs to be capitalised as assets or
time as the PO fulfilment (transfer of control to customer). Considering that, it directly expensed as incurred. Considering the wide range of products and
is fair to conclude that we expect no gap difference between Telkom’s existing service provided under these revenue stream, further assessment on cost to
practice under IAS 18 and IFRS 15. fulfil are needed to assess whether the existing practice conform with the
requirement in IFRS 15.
IFRS 15 Guidance
Contracts may be written, verbal or in accordance with other customary business practices.
The contract must (a) be approved (b) identify the rights and obligations of either party regarding goods and services (c) identify the payment terms (d) have commercial substance (e) be legally enforceable.

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Position paper 13
Other consideration – ‘Contract fulfilment cost’ – cont’d
Consumer To assess the accounting treatment for contract Does the accounting treatment in Telkom related
EBIS connectivity fulfilment cost in Telkom. to costs to fulfil a contract conform with the
requirements of IFRS 15?
WIBS connectivity
Background:
A detailed explanation is given below based on the nature of service provided by Telkom to the customers.
1. Contract fulfilment costs for consumer, EBIS and WIBS connectivity (retail and other standard service products, e.g internet connection)
In delivering the services to the customer, Telkom incurs various costs that may or may not relate directly to fulfilling a contract with a customer. A
simplified explanation for all relevant costs incurred to deliver the promised goods and services to the customer is illustrated in the picture below:
Provision Provision type

type (“PT”) 4 (“PT”) 3
Feeder Distribusi
Sentral Telepon
Optical
Otomat (“STO”)
distribution
center (“ODC”)
Optical distribution
point (“ODP”)
Provision type Provision type

(“PT”) 2 (“PT”) 1
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Position paper 13
Type of Accounting The second set of costs (“Cost 2”) represent direct costs, which are typically
Nature of costs
Cost treatment incurred at a contract’s inception, to enable Telkom to fulfil its obligations
PT 4 Construction of STO to support Telkom Not within the scope under the contract. For example, cost incurred to perform installation and set-
in providing connection services to of IFRS 15, under the up at customer premises, or in the above simplified explanation, cost of PT1
customers. STO are used as central scope of IAS 16 (last mile connection). These installation and set up costs for retail customers
connection device. are performed by Telkom Akses (Telkom’s subsidiary). Telkom Akses can
PT 3 Construction of ODC to support Not within the scope directly perform the last mile connection or engage with third parties (Mitra) to
Telkom in providing connection of IFRS 15, under the perform the installation. Each month Telkom Akses will charge Telkom for
services to customers. ODC will scope of IAS 16 these installation costs, with the calculation formula: number of installations *
distribute data/connection from STO standard charge rate.
to ODP.
PT 2 Installation of Telkom’s ODP to Not within the scope The installation and set-up costs are blended together with other costs and
support Telkom in providing of IFRS 15, under the charged to the customer as new installation charges /“biaya pasang baru
connection services to customers, scope of IAS 16 (PSB)”, amounting to Rp 125,000 each. These costs need to be assessed in
triggered by requests from customers. accordance with requirements of IFRS 15.
One ODP can connect up to eight
customers, and each connection can be All the costs that are chargeable to customers are stated in the contracts.
used for another customer when the Example from connectivity contracts are:
existing customer ceases the service. No Contract : K.TEL.1866/HK.820/WTL-4G100000/2016
PT 1 Last mile connection. Represents cost Directly expensed
incurred to connect Telkom’s network Parties : Telkom & Yayasan Majlis Tafsir ALQuran (MTA)
from the nearest ODP to the end Surabaya
customers’ premises. Telkom has
capitalized this cost as part of Jaringan Article 4 – Charges :
Kabel in Property Plant, and • Installation charges, one-time charges, other yearly charges
Equipement and depreciated for 5 – 25
years. • The charges above do not include 10% VAT
No Contract : K.TEL.1360/HK.810/R5W-5F460000/2016
Parties : Telkom & PT Sunrise International Persada
It is understood from the above explanation that there are two main costs Article 4 – Charges :
incurred in delivering services to customers. The first set of costs (“Cost 1”) are
• Installation charges, monthly charges, other charges (if any: IKG,
related to all the necessary development costs to build the infrastructure for
integration costs)
the related services. For example costs incurred to plant a fiber optic cable in a
designated area, or in the above simplified explanation, cost of PT2,3,4. This • The charges above do not include 10% VAT
cost is not within the scope of IFRS 15 as it is in the scope of other standard
(IAS 16), thus no further assessment is needed.
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Position paper 13
Telkom does not capitalise the fulfilment costs incurred as they believe Similar to connectivity products, the costs incurred can be classified into
there is no direct relationship between the costs incurred (cost 2) and the several categories:
amount that Telkom charged on one particular customer’s contract. This
1. Costs that are incurred at the same time as the fulfilment of the
accounting position is further evaluated below.
performance obligation, with the nature of the cost similar to the cost
Telkom does not incur additional costs or commissions for the renewal incurred for WIBS interconnection and international roaming.
option. Therefore it is fair to conclude that there will be no gap difference for
these costs.
Last mile cost for connectivity products are mostly incurred for Indihome
(internet) product. Historically, Telkom’s connectivity product (Telkom 2. Costs incurred related to all the necessary development costs to build
speedy) has a churn rate of 5 years. the infrastructure for the related services, similar to Cost 1 for
connectivity products. Since these are under the scope of IAS 16, no
2. Contract fulfilment costs for EBIS solution (construction services/non- further assessment is needed.
connectivity standard products).
3. Costs incurred for revenue which are recognised using the percentage of
Telkom also provides a range of customised products that include, for completion method, e.g. construction services.
example, construction services to build towers or smart offices that are
equipped with state of the art technologies to its customers. These services The contract fulfilment costs represent the cost that is related to the
are performed on an ad hoc basis based on requests from customers. construction service in which the transfer of control is performed over time
and the revenue is recognised as the service progresses, the contract is also
Several costs that are generally incurred when Telkom provides such services amortised over the time.
are as follows:
An example of a construction services contract is:
• Acquisition costs which represent costs to purchase the related
equipment; No Contract : K.TEL.79/HK810/DR2-10000000/2016
• Salaries and wages which represent costs incurred in relation to man Parties : Telkom & PT Titanium Property
power utilised in the transaction; Article 4 – Charges :
• Installation costs which represent costs to integrate infrastructure or
• Biaya penyediaan CPE Smart Building Mechanical ELECTRICAL
equipment to deliver the intended output;
• Other costs

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Position paper 13
Reference to relevant accounting standard: IFRS 15.95 If the costs incurred in fulfilling a contract with a customer are not
within the scope of another Standard (for example, IAS 2 Inventories, IAS 16
The overall framework in recognising cost to fulfil a contract is summarised in
Property, Plant and Equipment or IAS 38 Intangible Assets), an entity shall
below picture:
recognise an asset from the cost incurred to fulfil a contract only if the costs
meet all of the following criteria:
Yes
Account for costs in accordance
In the scope of another standard? a. The costs relate directly to a contract or to an anticipated contract that the
with the other guidance
entity can specifically identify (for example, costs relating to services to be
provided under renewal of an existing contract or costs of designing an asset
No to be transferred under a specific contract that has not yet been approved);
b. The costs generate or enhance resources of the entity that will be used in
Direct relationship between costs satisfying (or continuing to satisfy) performance obligations in the future;
and contract? and
c. The costs are expected to be recovered.
Yes No IFRS 15.96 For costs incurred in fulfilling contract with a customer that are
within the scope of another Standard, an entity shall account for those costs in
Relates to unsatisfied accordance with those other Standard.
Expense as incurred
performance obligations? IFRS 15.97 Costs that directly relate to a contract (or a specific anticipated
No contract) include any of the following:
Yes d. Direct labour (for example, salaries and wages of employee who provide the
No promised services directly to the customer);
Recoverable? e. Direct materials (for examples, supplies used in providing the promised
services to a customer);
f. Allocation of costs that relate directly to the contract or to contract activities
Yes (for example, costs of contract management and supervision, insurance and
depreciation of tools and equipment used in fulfilling the contract);
Recognise an asset for the g. Costs that are explicitly chargeable to the customer under the contract; and
incremental costs h. Other costs that are incurred only because an entity entered into the
contract (for example, payment to subcontractors).

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Position paper 13
IFRS 15.98 An entity shall recognise the following expenses when incurred: The Boards further clarified in IFRS15.BC309 that an entity should amortise the
asset recognised from the costs of obtaining and fulfilling a contract in
a. A general administrative costs (unless those costs are explicitly chargeable
accordance with the pattern of transfer of goods or services to which the asset
to the customer under the contract, in which case an entity shall evaluate
relates. Respondents broadly agreed; however, some asked the Boards to clarify
those costs in accordance with IFRS15.97);
whether those goods or services could relate to future contracts. Consequently,
b. Cost of wasted materials, labour or other resources to fulfil the contract the Boards clarified that in amortising the asset in accordance with the transfer
that were not reflected in the price of the contract; of goods or services to which the asset relates, those goods or services could be
c. Cost that relate to satisfied performance obligation (or partially satisfied provided under a specifically anticipated (i.e. future) contract. That conclusion
performance obligations) in the contract (i.e. costs that relate to past is consistent with the notion of amortising an asset over its useful life and with
performance); and other Standards. However, amortising the asset over a longer period than the
initial contract would not be appropriate in situations in which an entity pays a
d. Costs which an entity cannot distinguish whether the costs relate to
commission on a contract renewal that is commensurate with the commission
unsatisfied performance obligations or to satisfied performance obligations
paid on the initial contract. In that case, the acquisition costs from the initial
(or partially satisfied performance obligations).
contract do not relate to the subsequent contract.
IFRS 15.BC308 IFRS 15 clarifies that only costs that give rise to resources that
IFRS 15.100 An entity shall update the amortisation to reflect a significant
will be used in satisfying performance obligations in the future and that are
change in the entity’s expected timing of transfer to the customer of the goods
expected to be recovered are eligible for recognition as assets. Those
or services to which the asset relates. Such a change shall be accounted for as a
requirements ensure that only costs that meet the definition of an asset are
change in accounting estimate in accordance with IAS 8.
recognised as such and that an entity is precluded from deferring costs merely
to normalise a profit margins throughout a contract by allocation revenue and IFRS 15.101 An entity shall recognise an impairment loss in profit or loss to the
costs evenly over the life of the contract. To provide a clear objective for extent that the carrying amount of an asset recognised in accordance with
recognising and measuring an asset arising from the costs to fulfil a contract, paragraph 91 or 95 exceeds:
the IASB boards (the “boards”) decided that only costs that relate directly to a
a. the remaining amount of consideration that the entity expects to receive in
contract should be included in the cost of the asset.
exchange for the goods or services to which the asset relates; less
IFRS15.99 An asset recognised in accordance with paragraph 91 or 95 shall be b. the costs that relate directly to providing those goods or services and that
amortised on a systematic basis that is consistent with the transfer to the have not been recognised as expenses (see paragraph 97).
customer of the goods or services to which the asset relates. The asset may
relate to goods or services to be transferred under a specific anticipated
contract (as described in paragraph IFRS15.95(a)).

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Position paper 13
Analysis:
Telkom incurs a number of costs in fulfilling the contracts to customers. However, not all of the costs incurred are within the scope of IFRS 15. A careful analysis
should be undertaken to determine which standard is relevant to account for the costs to ensure conformity with the prevailing financial reporting framework.
Considering this, the position paper of the contract fulfilment cost should begin with the analysis as to whether or not the costs are within the scope of another
standard.
1. Contract fulfilment costs for consumer, EBIS and WIBS connectivity (retail and other standard service products, e.g internet connection)
Step 1: Perform assessment of fulfilment costs in accordance with IFRS 15.
As mentioned in the “Background” section, there are various costs incurred in delivering the promised services or goods to customers, as follows:
• Cost 1 represents all costs incurred to develop Telkom’s basic infrastructure and mainframe in a designated common area. These costs are within the scope of
IAS 16, as the mainframe is held for use in the production or supply of goods and services for a wide range of customers. As stated in IFRS 15 para 95, if the
costs are in the scope of another standard, the accounting treatment should follow the related standards, thus no further assessment is performed.
• Cost 2 represents all other direct incremental costs to fulfil the contract. Please see the analysis for the purposes of IFRS 15 below.
Cost 2 for retail and connectivity products:
Criteria to capitalise fulfillment

No costs in accordance with IFRS Analysis
15 para 95
1 Are the costs in the scope of another No - Cost 2 is not within the scope of IAS 16, IAS 38 or IAS 2. Hence, Cost 2 will be evaluated using the guidance
standard? of IFRS 15 for potential capitalisation.
Cost 2 is generally made up of the costs incurred for the last mile access to connect Telkom’s mainframe and a
customer’s premises.
2 Is there a direct relationship between Yes – The costs incurred have direct relationship to a contract. The last mile connection costs are derived from
contract and costs? customer contracts, as last mile connections are only performed when there is a new customer or upon network
migration for an existing customer. There is a plausible relationship between last mile connections with number
of customers (contract), as Telkom Akses will charge their service to Telkom using the number of installations
(customers) multiplied with the standard charge rate.
3 Are the costs related to unsatisfied Yes – The costs generate resources to satisfy the performance obligations in the future.
performance obligations?
4 Recoverable? Yes - Installation costs are usually blended with other charges and charged to the customer, as can be seen in
the contract example in section “Background’ above.

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Position paper 13
Having considered the above analysis, Management concludes that Cost 2 (the costs for last mile connection) satisfy all of the IFRS 15 criteria to capitalise
fulfilment costs. Therefore, Cost 2 for standard retail services should be capitalised and amortised on a systematic basis. As Telkom currently recognises the
PT 1 cost as part of PPE (non-current asset) no journal adjustment is considered necessary. Separate working paper has been prepared to address the
current accounting treatment and IFRS 15.
Step 2: Determination of amortisation period
In determining the amortisation period, Telkom will use 5 years for the amortisation period, which is derived from the churn rate of Telkom speedy
considering the nature of revenue is similar. Churn rate is appropriate to be used for the amortisation period as it represents the expected timing of transfer
to the customer of the goods or services to which the asset relates, including period for anticipated contracts.
Step 3: Determination of impairment indicator
Assets recognised from the costs to obtain or fulfil a contract are subject to impairment testing.
An entity shall recognise an impairment loss in profit or loss to the extent that the carrying amount of an asset recognised in accordance with IFRS 15
exceeds:
a. the remaining amount of consideration that the entity expects to receive in exchange for the goods or services to which the asset relates; less
b. the costs that relate directly to providing those goods or services and that have not been recognised as expenses.
2. Contract fulfilment costs for EBIS solution (construction services)
Step 1: Perform assessment of fulfilment costs in accordance with IFRS 15.
Significant costs incurred to satisfy customised service offerings (e.g. costs incurred to install specific infrastructure that’s designed to fit a particular
customer’s needs) are assessed below.

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Position paper 13
Cost for customised service offerings:
Criteria to capitalise fulfillment

No costs in accordance with IFRS 15 Analysis
para 95
1 Are the costs in the scope of another Most of the costs incurred to fulfil the contract are not within the scope of another standards, e.g IAS 16, IAS 38
standard? or IAS 2. Only few costs, e.g direct material cost, inventory, etc., are within the scope of another standard.
Hence, the costs incurred will be evaluated using the guidance of IFRS 15 for potential capitalisation.

2 Is there a direct relationship between Yes. The costs incurred have a direct relationship to a contract that Telkom can specifically identify. As the
contract and costs? contract offers the customer with a customised service offering, Telkom has close monitoring of costs incurred
to deliver the performance (e.g. costs incurred to purchase client premises equipment in a smart office project).
Having considered the nature of these contracts, it is feasible for Telkom to establish a one-on-one relationship
between costs and a contract.
3 Are the costs are related to unsatisfied Yes - Technically, the costs generate resources to satisfy the performance obligations in the future.
performance obligation?
4 Recoverable? Yes – as explained in the position paper of determining the Standalone Selling Price (SSP), the determination
of the tariff charged to customer for the customized service using the cost plus margin approach. Telkom will
identify what are the necessary cost to deliver the intended output with a certain margin.
Taking into account the business practice, it is safe to assume that all the cost incur in providing customized
service to customer is recoverable.
Step 2: Determination of amortisation period

As the contract fulfilment costs represent the cost that is related to the construction service in which the transfer of control is performed over time and the
revenue is recognised as the service progresses, the contract is also amortised over the time. Having considered that, the costs to fulfil a contract will be expensed
directly, as the costs mark the time when the control of the assets is transferred to the customer. As a result, the accounting treatment required by IFRS 15
eventually has the same accounting consequences as Telkom’s current treatment.
Step 3: Determination of impairment indicator
No further analysis is required as none of the costs to fulfil a contract result in the contract asset being recognised in Telkom’s balance sheet.

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Position paper 13
Conclusion
Telkom’s treatment not to capitalise the cost to fulfil the contract to the customer is different to requirements set out in IFRS 15. It is fair
to conclude that several fulfilment costs in Telkom meet the requirement in IFRS 15 to be capitalised as assets. Telkom needs to capitalise
the costs as assets, calculate the amortisation impact and adjust the cost that has been recognised as part of the cumulative catch up
adjustment.
Yes – other than Consumer, EBIS connectivity and WIBS connectivity, Telkom existing treatment conforms with the requirement in IFRS 15.
No – for Consumer, EBIS connectivity and WIBS connectivity, several fulfilment cost needs to be capitalised as assets and amortised on systematic basis.
Telkom needs to identify the fulfilment cost that meet the criteria and capitalise the costs as assets, calculate the amortisation impact and adjust the cost that
has been recognised as part of the cumulative catch up adjustment.

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Position paper 14
Other consideration – ‘Agent VS Principal’
Assessment of agent versus principal
Consumer WIBS International To assess the impact of IFRS 15 in Telkom’s agent Does the agent versus principal assessment remain
EBIS Solution roaming versus Principal assessment applicable under the requirement in IFRS 15?
Interconnection
WIBS Connectivity
Background:
Telkom has prepared agent versus principal assessment under the requirement in IAS 18. The determination of whether Telkom is acting as principal or agent
based on the Telkom’s exposures to the significant risk and rewards associated with the promised goods and services. The assessment has covered all three
possible schemes prevalent to all division in Telkom as explained in the next page.

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Position paper 14
Assessment of agent versus principal – cont’d
Scheme 1 Scheme 2 Scheme 3
Customer Customer
Customer
KB Rp KB Rp
KB Rp
Telkom Mitra
Telkom
KL Rp KL Rp
Mitra Telkom
Scheme 1 Scheme 2 Scheme 3

This first scheme is prevalent for Telkom’s legacy The second scheme is prevalent for Telkom’s The third scheme is prevalent to the following
product, for example fixed telephone and solution products which required addition Customer conditions:
interconnection). Premised Equipment (CPE) to deliver the intended
• Mitra is Telkom’s subsidiary
output, for example internet and PayTV.
• Mitra provides a very specific products.
Under this scheme, Telkom acts as an agent. Telkom
currently recognises the revenue based on amount
billed which also represent the commission fee for
these transactions.
Principal Principal Agent

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Position paper 14
The assessment performed to each possible scheme has considered all features introduced by the standard as follows:
Business scheme
Criteria
Type 1 Type 2 Type 3
Primary obligor
• Type, coverage, and value of the promised
No – Telkom only provides the
goods and services are determined by Yes - Principal
connection
Telkom;
No – Contract is between Telkom
• Contract is between Telkom and Customer Yes - Principal
and Mitra
Inventory risk
No – Mitra is responsible to find
• Telkom is responsible to determine which N/A Yes – Principal the most suitable CPE to provide
CPE should be provided to Customer;
Telkom is the sole provider the services
• Telkom is responsible for the after-sales under the first scheme No – Telkom only provides the
Yes – Principal
service connection
Pricing determination
No – Telkom gets a certain
• Telkom has the discretionary to set the
Yes – Principal percentage or fixed fee from Mitra’s
price and discount given to Customer
revenue
Credit Risk
No – Telkom only gets the portion
• Full payment is made to Telkom Yes – Principal
from Mitra
• Telkom bears the customers’ credit risk Yes – Principal No – Mitra bears the credit risk
Conclusion Principal Agent

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Position paper 14
Technical reference: Analysis:
IFRS15.B35 An entity is a principal if the entity controls a promised good or service Having considered the features introduces by IFRS 15 for agent versus
before the entity transfers the good or service to a customer. However, an entity is principal consideration, it fair for us to say that there is no substantial different
not necessarily acting as a principal if the entity obtains legal title of a product only in the requirement for agent vs principal assessment between IAS 18 and IFRS
momentarily before legal title is transferred to a customer. An entity that is a 15. The determination of agent and principal in IFRS 15 lies on the assessment
principal in a contract may satisfy a performance obligation by itself or it may of whether Telkom obtains control of the specified goods or services based on
engage another party (for example, a subcontractor) to satisfy some or all of a the facts and circumstances of each arrangement.
performance obligation on its behalf. When an entity that is a principal satisfies a
performance obligation, the entity recognises revenue in the gross amount of The revenue standard includes indicators that an entity controls a specified
consideration to which it expects to be entitled in exchange for those goods or good or service, in which the standards removes the credit risk requirement as
services transferred. one of the consideration, and leaving the following consideration:
• Primary responsibility for fulfilling the contract;
IFRS15.B36 An entity is an agent if the entity’s performance obligation is to arrange • Inventory risk; and
for the provision of goods or services by another party. When an entity that is an • Discretion in establishing pricing.
agent satisfies a performance obligation, the entity recognises revenue in the
amount of any fee or commission to which it expects to be entitled in exchange for Taking into account the requirement in IFRS 15, Telkom concludes that the
arranging for the other party to provide its goods or services. An entity’s fee or assessment performed for IAS 18’s purposes is remain applicable upon
commission might be the net amount of consideration that the entity retains after implementation of IFRS 15.
paying the other party the consideration received in exchange for the goods or
services to be provided by that party.
IFRS15.B37 Indicators that an entity is an agent (and therefore does not control the
good or service before it is provided to a customer) include the following:
a) another party is primarily responsible for fulfilling the contract;
b) the entity does not have inventory risk before or after the goods have been
ordered by a customer, during shipping or on return;
c) the entity does not have discretion in establishing prices for the other party’s
goods or services and, therefore, the benefit that the entity can receive from
those goods or services is limited;
d) the entity’s consideration is in the form of a commission; and
e) the entity is not exposed to credit risk for the amount receivable from a
customer in exchange for the other party’s goods or services

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Presentation and disclosure
PD 1 – IFRS 15 – Presentation and disclosure checklist
IFRS 15 – Presentation and disclosure checklist provides comparation of presentation and disclosure as required by IFRS 15 into revenue disclosure stated in Telkom
financial statement 31 December 2017 . The annual disclosure requirement in IFRS 15 is summarised in the table as below.
Disclosure type Required information

Disaggregated revenue Disaggregation of revenue into categories that show how economic factors affect the nature, amount,
IFRS 15 para 114 - 115 timing and uncertainty of revenue and cash flows
Reconciliation of contract balances  Opening and closing balances and revenue recognised during the period from changes in contract
IFRS 15 para 116 - 118 balances.
 Qualitative and quantitative information about the significant changes in contract balances
Performance obligations  Descriptive information about an entity’s performance obligations.
IFRS 15 para 119 - 122  Information about the transaction price allocated to remaining performance obligations and when
revenue will be recognised
Significant judgements  Method used to recognise revenue for performance obligations satisfied over time and why the
IFRS 15 para 123 - 126 method is appropriate.
 Significant judgements related to transfer of control for performance obligations satisfied at a
point in time.
 Information about the methods, inputs and assumptions used to determine and allocate
transaction price.
Costs to obtain or fulfil a contract  Judgements made to determine costs to obtain or fulfil a contract, and method of amortisation.
IFRS 15 para 127 - 128  Closing balances of assets and amount of amortisation/impairment
For presentation and disclosure checklist, please refer to the following table.

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PD 1 – IFRS 15 – Presentation and disclosure checklist – cont’d
No Requirement Source
The following disclosures may be part of Note 2.ab (Critical accounting
estimates and judgment)
1 Judgements in the application of IFRS 15 Revenue from Contracts with Customers IFRS 15 par 123

Disclose the judgements (*) made in applying IFRS 15 Revenue from Contracts with Customers
that significantly affect the determination of the amount and timing of revenue from contracts
with customers.
Notes:
1. Changes in judgements should also be disclosed (*)

2. In particular, explain the judgements, and changes in the judgements, used in determining
both of the following:(a) the timing of satisfaction of performance obligations; and(b) the
transaction price and the amounts allocated to performance obligations
2 Assets recognised from the costs to obtain a contract with a customer IFRS 15 – 127 (a)

Disclose the judgements made in determining the amount of the costs incurred to obtain a
contract with a customer
3 Assets recognised from the costs to fulfil a contract with a customer IFRS 15 – 127 (a)

Disclose the judgements made in determining the amount of the costs incurred to obtain or
fulfil a contract with a customer

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The following disclosures may be part of Note 2r (Revenue and expense

recognition)
4 A. As part of the accounting policies for revenue recognition disclose:

i. the methods used to recognise revenue,
(Note: for example a description of the output methods or input methods used and IFRS 15 – 124(a)
how those methods are applied)
ii. an explanation of why the methods used provide a faithful depiction of the transfer of
goods or services, and FRS 15 – 124(b)
iii. for performance obligations satisfied at a point in time, disclose the significant
judgements made in evaluating when a customer obtains control of promised goods or IFRS 15 – 125
services.
B. Further, disclose information about the methods used for all of the following:
i. determining the transaction price,
(Note: This includes, but is not limited to, estimating variable consideration,
adjusting the consideration for the effects of the time value of money and measuring IFRS 15 – 126(a)
non-cash consideration)
ii. assessing whether an estimate of variable consideration is constrained; and
iii. allocating the transaction price,
IFRS 15 – 126(b)
(Note: This includes estimating stand-alone selling prices of promised goods or

services and allocating discounts and variable consideration to a specific part of the
contract)
IFRS 15 – 126(c )
iv. measuring obligations for returns, refunds and other similar obligations

IFRS 15 – 125(d)

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C. or costs incurred in obtaining a contract disclose the method it uses to determine the IFRS 15 – 127(b)
amortisation for each reporting period.
D. for the costs incurred to fulfil a contract disclose the method it uses to determine the IFRS 15 – 127(b)
amortisation for each reporting period.
5 Revenue - practical expedient – discounting IFRS 15 - 129
Disclose that the following practical expedient has been applied.

IFRS 15 practical expedient:
An entity need not adjust the promised amount of consideration for the effects of a
significant financing component if the entity expects, at contract inception, that the period
between when the entity transfers a promised good or service to a customer and when the
customer pays for that good or service will be one year or less.
6 Revenue - practical expedient – cost to obtain contract IFRS 15 - 129
Disclose that the following practical expedient has been applied.

IFRS 15 Practical expedient
An entity may recognise the incremental costs of obtaining a contract as an expense when
incurred if the amortisation period of the asset that the entity otherwise would have recognised
is one year or less.
7 Early Application of IFRS 15: Revenue from Contracts with Customers (issued May 2014) IFRS 15 – C1
Disclose that IFRS 15 Revenue from contracts with customers (issued in May 2014) has been
adopted early.

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8 Revenue -performance obligations - general information

Disclose information about its performance obligations in contracts with customers,
including a description of all of the following:
a. when the entity typically satisfies its performance obligations; and IFRS 15 – 119(a)
Note: for example, upon shipment, upon delivery, as services are rendered or upon
completion of service, including when performance obligations are satisfied in a bill-
and-hold arrangement;
b. the significant payment terms.
Note: for example, when payment is typically due, whether the contract has a
significant financing component, due, whether the contract has a significant financing
component, whether the consideration amount is variable and whether the estimate of IFRS 15 – 119(b)
variable consideration istypically constrained in accordance with paragraphs 56–58 of
IFRS 15);
c. the nature of the goods or services that the entity has promised to transfer,
d. any performance obligations to arrange for another party to transfer goods or services (ie
if the entity is acting as an agent);
e. obligations for returns, refunds and other similar obligations; and, IFRS 15 – 119 (c )
f. types of warranties and related obligations IFRS 15 – 119 (c )

IFRS 15 – 119 (d)

IFRS 15 – 119(e )
9 Transaction price and amounts allocated to performance obligations

Disclose information about the inputs and assumptions used for all of the following:

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9 a. determining the transaction price IFRS 15 – 126(a)
Note: This includes, but is not limited to, estimating variable consideration, adjusting the
consideration for the effects of the time value of money and measuring non-cash
consideration
b. assessing whether an estimate of variable consideration is constrained, IFRS 15 – 126(b)
c. allocating the transaction price
Note: This includes estimating stand-alone selling prices of promised goods or services
and allocating discounts and variable consideration to a specific part of the contract IFRS 15 – 126(c )
d. measuring obligations for returns, refunds and other similar obligations

IFRS 15 – 126(d)
The following disclosures may be part of Note 22 (Revenues)
1 Revenue - contracts with customers
Disclose (unless amounts are disclosed separately in the statement of comprehensive):
a. revenue recognised from contracts with customers, which the entity shall disclose
separately from its other sources of revenue, IFRS 15 – 113(a)
b. revenue recognised from its other sources of revenue,
c. any impairment losses recognised (in accordance with IFRS 9 or IAS 39) on any IFRS 15 – 113(a)
receivables arising from an entity’s contracts with customers.
Note: Such impairment losses shall be disclosed separately from impairment losses from IFRS 15 – 113(b)
other contracts,


PwC 329
1 d. any impairment losses recognised (in accordance with IFRS 9 or IAS 39) on any contract IFRS 15 – 113(b)
assets (i.e unbilled revenue) arising from an entity’s contracts with customers, which the
entity shall disclose separately from impairment losses from other contracts.
Note: Such impairment losses shall be disclosed separately from impairment losses
from other contracts
2 Disaggregation of revenue into categories

Disclose a disaggregation of revenue recognised from contracts with customers into categories IFRS 15 – 114, B87, B88, B89
that depict how the nature, amount, timing and uncertainty of revenue and cash flows are
affected by economic factors
3 Disaggregation of revenue - additional information

In addition, the entity shall disclose sufficient information to enable users of financial statements
to understand the relationship between the disclosure of disaggregated revenue and revenue IFRS 15 - 115
information that is disclosed for each reportable segment in accordance with IFRS 8 if the entity
Operating Segments.
4 Revenue - contract balances IFRS 15 – 116(a)
Disclose (if not otherwise separately presented or disclosed):
a. the opening and closing balances of the following which have arisen from contracts with
customers:
i. receivable,
ii. contract assets,
iii. contract liabilities

PwC 330
4 b. revenue recognised in the reporting period that was included in the contract liability IFRS 15 – 116(b)
balance at the beginning of the period,
c. revenue recognised in the reporting period from performance obligations satisfied (or IFRS 15 – 116(c )
partially satisfied) in previous periods
5 Revenue - relationship between performance and payment

Has the entity provided disclosures which explain how:
a. the timing of satisfaction of its performance obligations relates to the typical timing of IFRS 15 – 117
payment; and
b. the effect that those factors have on the contract asset and the contract liability balances? IFRS 15 - 117
Note: This explanation may use qualitative information
6 Revenue - explanation of changes in contract balances

Has the entity provided disclosures which explain the significant changes in the contract asset
and the contract liability balances during the reporting period including for example:
a. changes due to business combinations;
b. cumulative catch-up adjustments to revenue that affect the corresponding contract asset or
contract liability, including,
i. adjustments arising from a change in the measure of progress;
ii. a change in an estimate of the transaction price (including any changes in the assessment of IFRS 15 – 118(a)
whether an estimate of variable consideration is constrained) or a contract modification; IFRS 15 – 118(b)
iii. a contract modification
c. impairment of a contract asset;
d. a change in the time frame for a right to consideration to become unconditional (ie for a
contract asset to be reclassified to a receivable); and
IFRS 15 – 118(c )
IFRS 15 – 118(d)

PwC 331
6 e. a change in the time frame for a performance obligation to be satisfied (ie for the recognition IFRS 15 – 118(e )
of revenue arising from a contract liability).
7 Revenue - transaction price allocated to remaining performance obligations

For remaining performance obligations disclose the following:
a. the aggregate amount of the transaction price allocated to the performance obligations
that are unsatisfied (or partially unsatisfied) as of the end of the reporting period, IFRS 15 – 121
Note: The entity shall disclose in either of the following ways:(i) on a quantitative IFRS 15 – 120(a)
basis using the time bands that would be most appropriate for the duration of the
remaining performance obligations; or(ii) by using qualitative information.

Note: As a practical expedient the entity is not required to make this disclosure if the
entity has a right to consideration from a customer in an amount that corresponds
directly with the value to the customer of the entity’s performance completed to date
(for example, a service contract in which an entity bills a fixed amount for each hour of
service provided), the entity may recognise revenue in the amount to which the entity
has a right to invoice.

Note: As a practical expedient the entity is not required to make this disclosure in
respect of performance obligations which are part of a contract(s) having an original
expected duration of one year or less.

PwC 332
7 b. an explanation of when the entity expects to recognise as revenue the amounts disclosed IFRS 15 – 121
in part (a) of this question IFRS 15 – 121 (b)
Note: The entity shall disclose in either of the following ways:(i) on a quantitative basis
using the time bands that would be most appropriate for the duration of the remaining
performance obligations; or(ii) by using qualitative information.

Note: As a practical expedient the entity is not required to make this disclosure if the
entity has a right to consideration from a customer in an amount that corresponds
directly with the value to the customer of the entity’s performance completed to date (for
example, a service contract in which an entity bills a fixed amount for each hour of
service provided), the entity may recognise revenue in the amount to which the entity
has a right to invoice.
Note: As a practical expedient the entity is not required to make this disclosure in
respect of performance obligations which are part of a contract(s) having an original
expected duration of one year or less.
8 When the above practical expedient(s) is/are applied disclose: IFRS 15 - 122
a. the fact that the entity is applying the practical expedient,
b. whether any consideration from contracts with customers is not included in the
transaction price and, therefore, not included in the information disclosed as required by
part (a) and (b) of this question.

PwC 333
9 Assets recognised from the costs to obtain a contract with a customer

Disclose:
a. the closing balances of assets recognised from the costs incurred to obtain a contract with a IFRS 15 - 128(a)
customer by main category of asset,
b. the amount of amortisation recognised in the reporting period, IFRS 15 - 128(b)
c. the amount of any impairment losses recognised in the reporting period. IFRS 15 - 128(b)
10 Assets recognised from the costs to fulfil a contract with a customer

Disclose:
a. the closing balances of assets recognised from the costs incurred to fulfil a contract with a IFRS 15 - 128(a)
customer by main category of asset,
b. the amount of amortisation recognised in the reporting period, and IFRS 15 - 128(b)
c. the amount of any impairment losses recognised in the reporting period IFRS 15 - 128(b)

11. IFRS 15 for first time - retrospective to each prior reporting period

Disclose:
a. the expedients that have been used ; and IFRS 15 - C6(a)
b. to the extent reasonably possible, a qualitative assessment of the estimated effect of IFRS 15 - C6(b)
applying each of those expedients .
12 IFRS 15 first time - recognising cumulative effect at the date of initial application Disclose : IFRS 15 - C8(a)
a. the amount by which each financial statement line item is affected in the current
reporting period by the application of this Standard as compared to IAS 11, IAS 18 and
related Interpretations that were in effect before the change; and
b. an explanation of the reasons for significant changes identified in the above question.

PwC 334
The following disclosures is for general information only
13 Balances arising from revenue from contract with customers Present the contract in the IFRS 15 - 105
statement of financial position as follows: IFRS 15 – 108
a. any unconditional rights to consideration separately as a receivable .
b. contract asset. IFRS 15 - 107
IFRS 15 – 105
14 Balances arising from revenue from contract with customers IFRS 15 - 106
IFRS 15 - 105
Present contract liabilities in the statement of financial position. Note IFRS 15 uses the term
‘contract liability’ but does not prohibit an entity from using alternative descriptions in the
statement of financial position for those items. If an entity uses an alternative description for a
contract liability the entity shall provide sufficient information for a user of the financial
statements to distinguish between other liabilities and contract liabilities.

PwC 335
Appendix

PwC
PwC 336
Appendix A – IAS 18
Stand-alone Single Price
Package POTS/Voic
No. of Total USeeTV Minipack Platform
Price (inc e Movin iflix
No. Program Name Sub- Bundle (tidak UseeTV DTH Game
sewa STB (merujuk (tidak (tidak
scriber Packet Internet dijual (tidak Transvisio HOOQ (tidak ONT STB
ONT) ke harga 1P dijual dijual
terpisah dijual n dijual
POTS kuota terpisah) terpisah)
) terpisah) terpisah)
300 menit)
Quarter 1 - 2017
1 Paket Dynamic Price
2P - INET 3 Mbps + POTS 50
N/A N/A N/A 40,000 N/A
menit 298,000 298,000 30,000 208,000 20,000
N/A N/A N/A 40,000 N/A
menit + Movin 318,000 318,000 50,000 208,000 20,000
N/A N/A N/A 40,000 N/A
menit + Movin 348,000 348,000 30,000 258,000 20,000

650,00 N/A N/A N/A 40,000 N/A
menit + Movin 368,000 368,000 50,000 258,000 20,000
0
N/A N/A N/A 40,000 N/A
menit + Movin 618,000 618,000 50,000 508,000 20,000
N/A N/A N/A 40,000 N/A
menit + Movin 888,000 888,000 50,000 778,000 20,000
N/A N/A N/A 40,000 N/A
menit + Movin 1,168,000 1,168,000 50,000 1,058,000 20,000
N/A N/A N/A 40,000 N/A
menit + Movin 1,368,000 1,368,000 50,000 1,258,000 20,000
2P - INET 100 Mbps + POTS
N/A N/A N/A 40,000 N/A
1000 menit + Movin 1,618,000 1,618,000 50,000 1,508,000 20,000
3P Deluxe - INET 10 Mbps +
POTS 50 menit + UseeTV Entry N/A N/A 40,000
418,000 418,000 30,000 248,000 40,000 20,000 40,000
+ Movin
POTS 50 menit + UseeTV N/A N/A 40,000
458,000 458,000 30,000 248,000 80,000 20,000 40,000
Essential + Movin
478,000 478,000 50,000 248,000 80,000 20,000 40,000
Essential + Movin
748,000 748,000 50,000 508,000 90,000 20,000 40,000
Essential + Movin
POTS 1000 menit + UseeTV
N/A N/A 40,000
Essential + IndiMovie Lite + 1,018,000 1,018,000 50,000 778,000 90,000 20,000 40,000
Movin

PwC 337
Appendix A – IAS 18 – cont’d
Package POTS/Voic
300 menit)
Quarter 1 – 2017
Essential + IndiMovie Lite +
Movin 1,298,000 1,298,000 50,000 1,058,000 90,000 N/A 20,000 N/A 40,000 40,000
Essential + all minipack ex
Dynasty + Movin 1,498,000 1,498,000 50,000 1,258,000 90,000 N/A 20,000 N/A 40,000 40,000
Essential + all minipack ex
dynasty + Movin 1,748,000 1,748,000 50,000 1,508,000 90,000 N/A 20,000 N/A 40,000 40,000
2 IndiHome Paket Karyawan
1 Mbps + POTS 1000 menit +
UseeTV Essential + IndiMovie 1
523,000
+ Movin 275,000 50,000 198,000 100,000 75,000 20,000 N/A 40,000 40,000
+ Movin 325,000 523,000 50,000 198,000 100,000 75,000 20,000 N/A 40,000 40,000
+ Movin 375,000 523,000 50,000 198,000 100,000 75,000 20,000 N/A 40,000 40,000
+ Movin 445,000 623,000 50,000 298,000 100,000 75,000 20,000 N/A 40,000 40,000
+ Movin 700,000 873,000 50,000 548,000 100,000 75,000 20,000 N/A 40,000 40,000
+ Movin 975,000 1,153,000 50,000 828,000 100,000 75,000 20,000 N/A 40,000 40,000
+ Movin 1,250,000 1,443,000 50,000 1,118,000 100,000 75,000 20,000 N/A 40,000 40,000
+ Movin 1,450,000 1,643,000 50,000 1,318,000 100,000 75,000 20,000 N/A 40,000 40,000

PwC 338
Package POTS/Voic
300 menit)
Quarter 1 – 2017
UseeTV Essential + IndiMovie 1 N/A 40,000
1,700,000 1,843,000 50,000 1,518,000 100,000 75,000 20,000 40,000
+ Movin
10 Mbps (20 GB) + POTS 1000
menit + UseeTV Essential + N/A 40,000
275,000 400,000 50,000 75,000 100,000 75,000 20,000 40,000
IndiMovie 1 + Movin
10 Mbps (100 GB) + POTS 1000
menit + UseeTV Essential + N/A 40,000
375,000 500,000 50,000 175,000 100,000 75,000 20,000 40,000
IndiMovie 1 + Movin
IndiHome Paket Pensiunan
N/A N/A N/A 40,000
UseeTV Essential 215,000 215,000 - 75,000 60,000 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000
915,000 N/A N/A N/A 40,000
UseeTV Essential 915,000 - 775,000 60,000 40,000
N/A N/A N/A 40,000
UseeTV Essential 1,180,000 1,190,000 - 1,050,000 60,000 40,000
N/A N/A N/A 40,000

1,640,00 N/A N/A N/A 40,000
UseeTV Essential 1,640,000 - 1,500,000 60,000 40,000
0
10 Mbps (20 GB) + POTS 1000
N/A N/A N/A 40,000
menit + UseeTV Essential 215,000 215,000 - 75,000 60,000 40,000
10 Mbps (100 GB) + POTS 1000
N/A N/A N/A 40,000

PwC 339
Package POTS/Voic
300 menit)
Quarter 1 – 2017
IndiHome Paket Outsource
N/A N/A 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000
N/A N/A N/A 40,000

1,640,00 N/A N/A N/A 40,000
UseeTV Essential 1,640,000 - 1,500,000 60,000 40,000
0
10 Mbps (20 GB) + POTS 1000
N/A N/A N/A 40,000
10 Mbps (100 GB) + POTS 1000
N/A N/A N/A 40,000
Paket Netizen Karyawan,

Outsource dan Pensiunan
N/A N/A N/A 40,000 N/A
Movin 288,000 288,000 30,000 208,000 10,000
N/A N/A N/A 40,000 N/A
Movin 338,000 338,000 30,000 258,000 10,000
N/A N/A N/A 40,000 N/A
Movin 588,000 588,000 30,000 508,000 10,000
N/A N/A N/A 40,000 N/A
Movin 858,000 858,000 30,000 778,000 10,000
N/A N/A N/A 40,000 N/A
Movin 1,138,000 1,138,000 30,000 1,058,000 10,000

PwC 340
Package POTS/Voic
300 menit)
Quarter 1 – 2017
N/A N/A N/A 40,000 N/A
Movin 1,338,000 1,338,000 30,000 1,258,000 10,000
N/A N/A N/A 40,000 N/A
Movin 1,588,000 1,588,000 30,000 1,508,000 10,000
N/A N/A N/A N/A 40,000 N/A
Movin 248,000 248,000 - 208,000
N/A N/A N/A N/A 40,000 N/A
Movin 298,000 298,000 - 258,000
N/A N/A N/A N/A 40,000 N/A
Movin 548,000 548,000 - 508,000
N/A N/A N/A N/A 40,000 N/A
Movin 818,000 818,000 - 778,000

1,098,00 N/A N/A N/A N/A 40,000 N/A
Movin 1,098,000 - 1,058,000
0
N/A N/A N/A N/A 40,000 N/A
Movin 1,298,000 1,298,000 - 1,258,000
N/A N/A N/A N/A 40,000 N/A
Movin 1,548,000 1,548,000 - 1,508,000
Paket Reguler IndiHome -

DTH Transvision
N/A N/A N/A 150,000 20,000 N/A
DTH Transvision 295,000 295,000 50,000 75,000
N/A N/A N/A 150,000 20,000 N/A
DTH Transvision 345,000 345,000 50,000 125,000
N/A N/A N/A 150,000 20,000 N/A
DTH Transvision 395,000 395,000 50,000 175,000
IndiHome Warnet
N/A N/A N/A 40,000
UseeTV Essential 1,470,000 1,470,000 50,000 1,250,000 90,000 40,000
N/A N/A N/A 40,000
UseeTV Essential 1,720,000 1,720,000 50,000 1,500,000 90,000 40,000
IndiHome Upgrade
UseeTV Essential + Free 2 bln 0 N/A 40,000
610,000 610,000 50,000 370,000 90,000 20,000 40,000
Disney & HBO

PwC 341
Package POTS/Voic
300 menit)
Quarter 1 – 2017
UseeTV Essential + Free 2 bln 0 N/A 40,000
875,000 875,000 50,000 635,000 90,000 20,000 40,000
Disney & HBO
UseeTV Essential + HBO + Free 20000 N/A 40,000
1,160,000 1,160,000 50,000 900,000 90,000 20,000 40,000
2 bln Disney
UseeTV Essential + HBO + Free 75000 N/A 40,000
1,465,000 1,465,000 50,000 1,150,000 90,000 20,000 40,000
2 bln Disney
UseeTV Essential + HBO + 1,690,00 75000 N/A 40,000
1,690,000 50,000 1,375,000 90,000 20,000 40,000
Disney 0
IndiHome Komunitas
Blogger dan Wartawan

(idem IndiHome Paket
Karyawan)

Quarter 2 – 2017
Paket Dynamic Price (idem

Quarter 1)
IndiHome Paket Karyawan

(idem Quarter 1)
IndiHome Paket Pensiunan

(idem Quarter 1)
IndiHome Paket Outsource

(idem Quarter 1)
(idem Quarter 1)
DTH Transvision (idem
Quarter 1)
IndiHome Warnet (idem

Quarter 1)
IndiHome Upgrade (idem

Quarter 1)

PwC 342
Package POTS/Voic
300 menit)
Quarter 2 – 2017
Paket IndiHome Khusus

Retensi Pelanggan 3P
10 Mbps (50 GB)+ POTS 100
N/A N/A N/A -
menit + UseeTV Entry 265,000 265,000 20,000 175,000 30,000 40,000
10 Mbps (100 GB)+ POTS 100
N/A N/A N/A -
menit + UseeTV Entry 285,000 285,000 - 215,000 30,000 40,000
N/A N/A N/A -
N/A N/A N/A -
N/A N/A N/A -
UseeTV Essential 915,000 915,000 10,000 775,000 90,000 40,000

1,040,00 N/A N/A N/A -
UseeTV Essential 1,040,000 - 940,000 60,000 40,000
0

Quarter 3 - 2017
IndiHome Paket Netizen 1
10 Mbps + POTS 100 menit N/A N/A N/A N/A 40,000 N/A
275,000 275,000 40,000 195,000
375,000 375,000 40,000 295,000
535,000 535,000 40,000 455,000
635,000 635,000 40,000 555,000
10 Mbps + UseeTV Entry N/A N/A N/A N/A 40,000

315,000 315,000 195,000 40,000 40,000

415,000 415,000 295,000 40,000 40,000

575,000 575,000 455,000 40,000 40,000

675,000 675,000 555,000 40,000 40,000

PwC 343
Package POTS/Voic
300 menit)
Quarter 3 - 2017
N/A N/A N/A 40,000
UseeTV Entry 590,000 590,000 20,000 450,000 40,000 40,000
N/A N/A N/A 40,000
UseeTV Entry 690,000 690,000 20,000 550,000 40,000 40,000

Quarter 1)
IndiHome Khusus Retensi
Pelanggan Pra CT-0 dan
CAPS
IndiHome Passive 3P : 10
Mbps(5 GB) + Phone incoming 65000 0 N/A N/A N/A 40,000
105,000 160,000 15,000 40,000
only + UseeTV Passive
Mbps(5 GB) + Phone incoming 65000 N/A N/A N/A N/A 40,000 N/A
65,000 120,000 15,000
only

Quarter 4 - 2017
N/A N/A N/A 40,000 N/A
Movin 285,000 285,000 40,000 195,000 10,000
N/A N/A N/A 40,000 N/A
Movin 385,000 385,000 40,000 295,000 10,000
N/A N/A N/A 40,000 N/A
Movin 545,000 545,000 40,000 455,000 10,000
N/A N/A N/A 40,000 N/A
Movin 645,000 645,000 40,000 555,000 10,000

(idem Quarter 3)
IndiHome Paket Value

(idem Quarter 3)
IndiHome Deluxe Premium

(idem Quarter 3)
IndiHome Paket Karyawan,

Pensiunan & Outsource
3p 10 Mbps + POTS 100 menit +
N/A N/A N/A 20,000
UseeTV Entry 290,000 290,000 20,000 190,000 40,000 20,000

PwC 344
Package POTS/Voic
300 menit)
Quarter 4 - 2017
N/A N/A N/A 20,000
UseeTV Entry 390,000 390,000 20,000 290,000 40,000 20,000
N/A N/A N/A 20,000
UseeTV Entry 550,000 550,000 20,000 450,000 40,000 20,000
N/A N/A N/A 20,000
UseeTV Entry 650,000 650,000 20,000 550,000 40,000 20,000
2P 10 Mbps + POTS 100 menit N/A N/A N/A N/A 20,000 N/A
255,000 255,000 40,000 195,000
355,000 355,000 40,000 295,000
515,000 515,000 40,000 455,000
615,000 615,000 40,000 555,000
2P 10 Mbps + UseeTV Entry N/A N/A N/A N/A 20,000

275,000 275,000 195,000 40,000 20,000

375,000 375,000 295,000 40,000 20,000

535,000 535,000 455,000 40,000 20,000

635,000 635,000 555,000 40,000 20,000

Quarter 1)
CAPS (idem Quarter 3)
IndiHome Paket Merdeka
3P 10 Mbps +POTS 100 menit +
N/A N/A N/A 20,000
UseeTV Entry 290,000 290,000 20,000 190,000 40,000 20,000
N/A N/A N/A 20,000
UseeTV Entry 390,000 390,000 20,000 290,000 40,000 20,000
N/A N/A N/A 20,000
UseeTV Entry 550,000 550,000 20,000 450,000 40,000 20,000

PwC 345
Package POTS/Voic
300 menit)
Quarter 4 - 2017
N/A N/A N/A 20,000
UseeTV Entry 650,000 650,000 20,000 550,000 40,000 20,000
3P 10 Mbps + POTS (100 menit
Lokal JJ + 100 menit call to N/A N/A N/A 20,000
330,000 330,000 40,000 210,000 40,000 20,000
TSEL) + UseeTV Entry
430,000 430,000 40,000 310,000 40,000 20,000
590,000 590,000 40,000 470,000 40,000 20,000
690,000 690,000 40,000 570,000 40,000 20,000
IndiHome Paket Natal &

Tahun Baru
3p 10 Mbps Low FUP + POTS
300 menit + UseeTV New Entry 20000 N/A N/A 20,000
310,000 310,000 30,000 180,000 40,000 20,000
+ IndiKids Lite
410,000 410,000 30,000 280,000 40,000 20,000
+ IndiKids Lite
540,000 540,000 30,000 410,000 40,000 20,000
+ IndiKids Lite
640,000 640,000 30,000 510,000 40,000 20,000
+ IndiKids Lite
2P 10 Mbps (20 GB) + POTS 300
N/A N/A N/A N/A 20,000 N/A
menit 170,000 170,000 30,000 120,000
2P 10 Mbps (50 GB) + POTS 300
N/A N/A N/A N/A 20,000 N/A
menit 200,000 200,000 30,000 150,000
2P 10 Mbps (20 GB) + UseeTV
N/A N/A N/A N/A 20,000
New Entry 200,000 200,000 120,000 40,000 20,000
N/A N/A N/A N/A 20,000
New Entry 230,000 230,000 150,000 40,000 20,000

PwC 346
Package POTS/Voic
300 menit)
Quarter 1 - 2018

(idem Quarter 4)

(idem Quarter 3)

(idem Quarter 3)

(idem Quarter 3)
(idem Quarter 4)

Quarter 1)
IndiHome Paket Natal &
Tahun Baru (idem Quarter
4)
IndiHome Pricing IndiHome

per ODP
3P 10 Mbps Low FUP + POTS
*) N/A N/A N/A 40,000
1000 menit + UseeTV Essential 420,000 420,000 50,000 190,000 100,000 40,000
*) N/A N/A N/A 40,000
3P 10 Mbps Low FUP + POTS 50
*) N/A N/A N/A 40,000
menit + UseeTV Essential 385,000 385,000 15,000 190,000 100,000 40,000
*) N/A N/A N/A 40,000
1000 menit + UseeTV Entry 360,000 360,000 50,000 190,000 40,000 40,000
*) N/A N/A N/A 40,000
*) N/A N/A N/A 40,000
3P 10 Mbps (100 GB) + POTS
*) N/A N/A N/A 40,000
*) POH AVP PACKAGE AND PRICING, C.Tel. 34/YN 000/COP-F2100000/2017, Penyampaian Breakdown Revenue Paket Pricing IndiHome per ODP, 20 September 2017

PwC 347
Package POTS/Voic
300 menit)
Quarter 1 - 2018
*) N/A N/A N/A 40,000
3P 10 Mbps (100 GB) + POTS 50
*) N/A N/A N/A 40,000
*) N/A N/A N/A 40,000
*) N/A N/A N/A 40,000
3P 10 Mbps (100 GB) + POTS 50
*) N/A N/A N/A 40,000
*) N/A N/A N/A 40,000
3P 10 Mbps (50 GB) + POTS 100
*) N/A N/A N/A 40,000
3P 10 Mbps (50 GB) + POTS 50
*) N/A N/A N/A 40,000
*) N/A N/A N/A 40,000
3P 10 Mbps (50 GB) + POTS 100
*) N/A N/A N/A 40,000
3P 10 Mbps (50 GB) + POTS 50
*) N/A N/A N/A 40,000
*) N/A N/A N/A 40,000
3P 10 Mbps (20 GB) + POTS 100
*) N/A N/A N/A 40,000
3P 10 Mbps (20 GB) + POTS 50
*) N/A N/A N/A 40,000
*) N/A N/A N/A 40,000
3P 10 Mbps (20 GB) + POTS 100
*) N/A N/A N/A 40,000
3P 10 Mbps (20 GB) + POTS 50
*) N/A N/A N/A 40,000

PwC 348
Package POTS/Voic
300 menit)
Quarter 1 - 2018
2P 10 Mbps Low FUP + Phone
*) N/A N/A N/A N/A 40,000 N/A
1000 menit 280,000 280,000 50,000 190,000
2P 10 Mbps Low FUP + Phone
*) N/A N/A N/A N/A 40,000 N/A
100 menit 250,000 250,000 20,000 190,000
2P 10 Mbps Low FUP + Phone 50
*) N/A N/A N/A N/A 40,000 N/A
menit 245,000 245,000 15,000 190,000
2P 10 Mbps (100 GB) + Phone
*) N/A N/A N/A N/A 40,000 N/A
1000 menit 270,000 270,000 50,000 180,000
*) N/A N/A N/A N/A 40,000 N/A
100 menit 240,000 240,000 20,000 180,000
2P 10 Mbps (100 GB) + Phone 50
*) N/A N/A N/A N/A 40,000 N/A
menit 235,000 235,000 15,000 180,000
*) N/A N/A N/A N/A 40,000 N/A
1000 menit 240,000 240,000 50,000 150,000
*) N/A N/A N/A N/A 40,000 N/A
menit 210,000 210,000 20,000 150,000
*) N/A N/A N/A N/A 40,000 N/A
menit 205,000 205,000 15,000 150,000
*) N/A N/A N/A N/A 40,000 N/A
1000 menit 210,000 210,000 50,000 120,000
*) N/A N/A N/A N/A 40,000 N/A
menit 180,000 180,000 20,000 120,000
*) N/A N/A N/A N/A 40,000 N/A
menit 175,000 175,000 15,000 120,000
2P 10 Mbps Low FUP + UseeTV
*) N/A N/A N/A N/A 40,000
Essential 370,000 370,000 190,000 100,000 40,000
*) N/A N/A N/A N/A 40,000
Entry 310,000 310,000 190,000 40,000 40,000
*) N/A N/A N/A N/A 40,000
Essential 360,000 360,000 180,000 100,000 40,000
*) N/A N/A N/A N/A 40,000
Entry 300,000 300,000 180,000 40,000 40,000
*) N/A N/A N/A N/A 40,000
Essential 345,000 330,000 150,000 100,000 40,000

PwC 349
Package POTS/Voic
300 menit)
Quarter 1 - 2018
*) N/A N/A N/A N/A 40,000
Entry 285,000 270,000 150,000 40,000 40,000
*) N/A N/A N/A N/A 40,000
Entry 240,000 240,000 120,000 40,000 40,000
1P 10 Mbps (20 GB) *) N/A N/A N/A N/A N/A 40,000

205,000 200,000 120,000 40,000
IndiHome Paket ODP Hitam

Hijau
**) N/A N/A N/A 40,000
**) N/A N/A N/A 40,000
3P 10 Mbps (20GB) + POTS 50
**) N/A N/A N/A 40,000
**) N/A N/A N/A 40,000
**) N/A N/A N/A 40,000
**) N/A N/A N/A 40,000
**) N/A N/A N/A N/A 40,000 N/A
menit 215,000 235,000 15,000 180,000
**) N/A N/A N/A N/A 40,000 N/A
menit 155,000 175,000 15,000 120,000
**) N/A N/A N/A N/A 40,000 N/A
menit 125,000 145,000 15,000 90,000
**) N/A N/A N/A N/A 40,000
Essential 320,000 360,000 180,000 100,000 40,000
**) N/A N/A N/A N/A 40,000
Entry 260,000 300,000 180,000 40,000 40,000
2P 10 Mbps (20GB) + UseeTV
**) N/A N/A N/A N/A 40,000
Essential 260,000 300,000 120,000 100,000 40,000
**) AVP PACKAGE AND PRICING, C.Tel. 49/YN 000/COP-F2100000/2017, Penyampaian Breakdown Revenue Paket IndiHome untuk ODP Hitam & Hijau, 16 Oktober 2017
OVP CONSUMER FULFILMENT, C.Tel. 212/YN 000/COP-F3000000/2017, Komersalisasi Paket IndiHome untuk ODP Hitam & Hijau, 19 Oktober 2018

PwC 350
Package POTS/Voic
300 menit)
Quarter 1 - 2018
**) N/A N/A N/A N/A 40,000
Entry 200,000 240,000 120,000 40,000 40,000
**) N/A N/A N/A N/A 40,000
Essential 230,000 270,000 90,000 100,000 40,000
**) N/A N/A N/A N/A 40,000
Entry 170,000 210,000 90,000 40,000 40,000
IndiHome Paket Imlek
***)
bundling Inditainment Lite
100 menit + UseeTV Entry +
***) 20000 5,000 40,000
Movin Phone + iflix + Minipack 330,000 425,000 20,000 250,000 40,000 10,000 40,000
Inditainment Lite
***) 20000 5,000 40,000
Inditainment Lite
***) 20000 5,000 40,000
Inditainment Lite
***) 20000 5,000 40,000
Inditainment Lite
***)
bundling IndiBasketball
***) 20000 5,000 40,000
IndiBasketball
**) AVP PACKAGE AND PRICING, C.Tel. 49/YN 000/COP-F2100000/2017, Penyampaian Breakdown Revenue Paket IndiHome untuk ODP Hitam & Hijau, 16 Oktober 2017
OVP CONSUMER FULFILMENT, C.Tel. 212/YN 000/COP-F3000000/2017, Komersalisasi Paket IndiHome untuk ODP Hitam & Hijau, 19 Oktober 2018
***) AVP PACKAGE AND PRICING, C.Tel. 28/YN 000/COP-F2100000/2018, Penyesuaian Breakdown Revenue dan Wording Paket dan Promo IndiHome Imlek, 5 Maret 2018

PwC 351
Package POTS/Voic
300 menit)
Quarter 1 - 2018
100 menit + UseeTV Entry + ***) N/A 5,000 40,000
360,000 480,000 20,000 280,000 40,000 10,000 45,000 40,000
Movin Phone + iflix + HOOQ
450,000 570,000 20,000 370,000 40,000 10,000 45,000 40,000
550,000 670,000 20,000 470,000 40,000 10,000 45,000 40,000
***)
bundling iflix & Movin Net
***) N/A 5,000 40,000
Movin Phone + iflix + iflix & 330,000 415,000 20,000 250,000 40,000 20,000 40,000
Movin Net
***) N/A 5,000 40,000
Movin Net
***) N/A 5,000 40,000
Movin Net
***) N/A 5,000 40,000
Movin Net

Quarter 2 - 2018

(idem Quarter 4)

(idem Quarter 3)

(idem Quarter 3)
***) AVP PACKAGE AND PRICING, C.Tel. 28/YN 000/COP-F2100000/2018, Penyesuaian Breakdown Revenue dan Wording Paket dan Promo IndiHome Imlek, 5 Maret 2018

PwC 352
Package POTS/Voic
300 menit)
Quarter 2 - 2018

(idem Quarter 3)
(idem Quarter 4)

Quarter 1)

(idem Quarter 1 2018)
IndiHome Pricing IndiHome

per ODP
IndiHome Paket ODP Hitam

Hijau
IndiHome Paket Penuh

Berkah
IndiHome Penuh Berkah
****)
bundling Inditainment Lite
****) 5,000 40,000
Movin Phone + iflix + Minipack 330,000 385,000 20,000 210,000 40,000 20,000 10,000 40,000
Inditainment Lite
****) 5,000 40,000
Inditainment Lite
****) 5,000 40,000
Inditainment Lite
****) 5,000 40,000
Inditainment Lite
****) AVP PACKAGE AND PRICING, C.Tel. 48/YN 000/COP-F2100000/2018, Revisi Perubahan Nama Paket Ramadhan dan Penyampaian Breakdown Revenue dan Wording Paket dan Promo IndiHome, 24 April 2018

PwC 353
Package POTS/Voic
300 menit)
Quarter 2 - 2018
****)
bundling IndiSport 2
****) 5,000 40,000
IndiSport 2
****) 5,000 40,000
IndiSport 2
****) 5,000 40,000
IndiSport 2
****) 5,000 40,000
IndiSport 2
****)
bundling HOOQ
100 menit + UseeTV Entry + ****) N/A 5,000 40,000
330,000 410,000 20,000 210,000 40,000 10,000 45,000 40,000
400,000 480,000 20,000 280,000 40,000 10,000 45,000 40,000
490,000 570,000 20,000 370,000 40,000 10,000 45,000 40,000
590,000 670,000 20,000 470,000 40,000 10,000 45,000 40,000

PwC 354
Package POTS/Voic
300 menit)
Quarter 2 - 2018
****)
bundling Catchplay
****) N/A 5,000 40,000
Movin Phone + iflix + Catchplay 330,000 410,000 20,000 210,000 40,000 10,000 45,000 40,000
Movie Lovers Basic
****) N/A 5,000 40,000
Movie Lovers Basic
****) N/A 5,000 40,000
Movie Lovers Basic
****) N/A 5,000 40,000
Movie Lovers Basic
IndiHome Gamer ****)
3P 10 Mbps HSI Gamer + POTS
100 menit + UseeTV Entry + ****) N/A N/A N/A N/A N/A 50,000 40,000
380,000 380,000 20,000 190,000 40,000 40,000
Platform Gamer
480,000 480,000 20,000 290,000 40,000 40,000
Platform Gamer
680,000 680,000 20,000 490,000 40,000 40,000
Platform Gamer
780,000 780,000 20,000 590,000 40,000 40,000
Platform Gamer
****) N/A N/A N/A N/A N/A N/A 50,000 40,000 N/A
incoming only + Platform Gamer 780,000 780,000 15,000 675,000

****) 1,380,00 N/A N/A N/A N/A N/A N/A 50,000 40,000 N/A
incoming only + Platform Gamer 1,380,000 15,000 1,275,000
0

PwC 355
Appendix B – IFRS 15
Platfor
POTS/Voice Minipack
USeeTV Movin iflix m Game
No. Program Name Transactio (merujuk ke UseeTV DTH
(tidak (tidak (tidak Catch- (tidak
n price harga 1P Internet (tidak Trans- HOOQ ONT STB Melon
dijual dijual dijual play dijual
POTS kuota dijual vision
terpisah) terpisah) terpisah) terpisah
300 menit) terpisah)
)
Quarter 1 – 2017
1 Paket Dynamic Price

- - -
menit 298,000 29,504.95 243,907.59 - - 19,669.97 - - - - 4,917.49

- - -
1000 menit + Movin 318,000 49,226.01 244,160.99 - - - - - - 4,922.60
19,690.40

- - -
menit + Movin 348,000 29,575.07 293,779.04 - - - - - - 4,929.18
19,716.71

- - -
1000 menit + Movin 368,000 49,329.76 294,005.36 - - - - - - 4,932.98
19,731.90

- - -
1000 menit + Movin 618,000 49,598.72 543,601.93 - - - - - - 4,959.87
19,839.49

- - -
1000 menit + Movin 888,000 49,720.04 813,419.93 - - - - - - 4,972.00
19,888.02

- - -
1000 menit + Movin 1,168,000 49,786.87 1,093,319.69 - - - - - - 4,978.69
19,914.75

- - -
1000 menit + Movin 1,368,000 49,817.92 1,293,273.12 - - 19,927.17 - - - - 4,981.79

- - -
1000 menit + Movin 1,618,000 49,845.96 1,543,231.05 - - - - - - 4,984.60
19,938.39

POTS 50 menit + UseeTV - - -
418,000 27,084.23 260,008.64 72,224.62 - - - - 36,112.31 4,514.04
Entry + Movin 18,056.16

PwC
POTS 50 menit + UseeTV - - - 356
458,000 27,316.10 262,234.59 109,264.41 - - - - 36,421.47 4,552.68
Essential + Movin 18,210.74

Appendix B – IFRS 15 – cont’d
Platfor
POTS/Voice Minipack
)
Quarter 1 – 2017
- - -
Essential + IndiMovie Lite + 1,298,000 48,324.65 1,061,209.23 125,644.08 - - - - 38,659.72 4,832.46
19,329.86
Movin
- - -
Essential + all minipack ex 1,498,000 48,541.80 1,260,145.17 126,208.68 - - - - 38,833.44 4,854.18
19,416.72
Dynasty + Movin
- - -
Essential + all minipack ex 1,748,000 48,745.12 1,509,148.91 126,737.31 - - - - 38,996.10 4,874.51
19,498.05
dynasty + Movin
IndiHome Paket
2
Karyawan

UseeTV Essential + IndiMovie - - -
275,000 24,207.75 115,228.87 67,781.69 36,311.62 - - - 19,366.20 2,420.77
1 + Movin 9,683.10

325,000 28,609.15 136,179.58 80,105.63 42,913.73 - - - 22,887.32 2,860.92
1 + Movin 11,443.66

375,000 33,010.56 157,130.28 92,429.58 49,515.85 - - - 26,408.45 3,301.06
1 + Movin 13,204.23
10 Mbps + POTS 1000 menit

+ UseeTV Essential + - - -
445,000 33,308.38 225,164.67 93,263.47 49,962.57 - - - 26,646.71 3,330.84
IndiMovie 1 + Movin 13,323.35

700,000 38,126.36 448,366.01 106,753.81 57,189.54 - - - 30,501.09 3,812.64

975,000 40,692.82 706,427.38 113,939.90 61,039.23 16,277.13 - - - 32,554.26 4,069.28
IndiMovie 1 + Movin

1,250,000 42,002.69 972,782.26 117,607.53 63,004.03 - - - 33,602.15 4,200.27
PwC 50 Mbps + POTS 1000 menit 357
1,450,000 42,950.24 1,166,528.44 120,260.66 64,425.36 - - - 34,360.19 4,295.02
Platfor
POTS/Voice Minipack
)
Quarter 1 – 2017

1,700,000 45,021.19 1,402,860.17 126,059.32 67,531.78 - - - 36,016.95 4,502.12
10 Mbps (20 GB) + POTS

1000 menit + UseeTV
- - -
Essential + IndiMovie 1 + 275,000 30,898.88 71,067.42 86,516.85 46,348.31 - - - 24,719.10 3,089.89
12,359.55
Movin
1000 menit + UseeTV
- - -
Essential + IndiMovie 1 + 375,000 34,403.67 147,935.78 96,330.28 51,605.50 13,761.47 - - - 27,522.94 3,440.37
Movin
IndiHome Paket

Pensiunan
1 Mbps + POTS 1000 menit + -

- - - -
UseeTV Essential 215,000 95,096.15 82,692.31 - - - - 33,076.92 4,134.62

- - - -

- - - -
10 Mbps + POTS 1000 menit -

- - - -
+ UseeTV Essential 385,000 255,174.42 89,534.88 - - - - 35,813.95 4,476.74

- - - -

- - - -

- - - -
+ UseeTV Essential 1,180,000 1,041,457.49 95,546.56 - - - - 38,218.62 4,777.33
PwC 358
- - - -
Platfor
POTS/Voice Minipack
)
Quarter 1 – 2017
IndiHome Paket

Outsource

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

-
1000 menit + UseeTV - - - -
215,000 95,096.15 82,692.31 - - - - 33,076.92 4,134.62
Essential
PwC 10 Mbps (100 GB) + POTS 359
-
1000 menit + UseeTV - - - -
315,000 188,125.00 87,500.00 - - - - 35,000.00 4,375.00
Essential
Platfor
POTS/Voice Minipack
)
Quarter 1 – 2017

- - -
+ Movin 1,138,000 29,868.77 1,093,196.85 - - - - - - 4,978.13
9,956.26

- - -
+ Movin 1,338,000 29,888.31 1,293,167.54 - - 9,962.77 - - - - 4,981.38

- - -
+ Movin 1,588,000 29,905.84 1,543,141.24 - - 9,968.61 - - - - 4,984.31

- - - -
Movin 248,000 243,098.81 - - - - - - 4,901.19

- - - -
Movin 298,000 293,082.51 - - - - - - 4,917.49

- - - -
Movin 548,000 543,045.21 - - - - - - 4,954.79

- - - -
Movin 818,000 813,030.38 - - - - - - 4,969.62

- - - -
Movin 1,098,000 1,093,022.67 - - - - - - 4,977.33

- - - -
Movin 1,298,000 1,293,019.19 - - - - - - 4,980.81

- - - -
Movin 1,548,000 1,543,016.10 - - - - - - 4,983.90

DTH Transvision
PwC 360
- 147,500.0 - -
DTH Transvision 295,000 49,166.67 93,416.67 - - - - - - 4,916.67
0
Platfor
POTS/Voice Minipack
)
Quarter 1 – 2017
IndiHome Upgrade

+ UseeTV Essential + Free 2 - - -
610,000 46,564.89 381,832.06 121,068.70 - 18,625.95 - - - 37,251.91 4,656.49
bln Disney & HBO

+ UseeTV Essential + Free 2 - - -
875,000 47,554.35 641,983.70 123,641.30 - - - - 38,043.48 4,755.43
bln Disney & HBO 19,021.74

+ UseeTV Essential + HBO + - - -
1,160,000 48,132.78 904,896.27 125,145.23 19,253.11 - - - 38,506.22 4,813.28
Free 2 bln Disney 19,253.11

1,465,000 48,509.93 1,154,536.42 126,125.83 72,764.90 19,403.97 - - - 38,807.95 4,850.99
Free 2 bln Disney

1,690,000 48,703.17 1,378,299.71 126,628.24 73,054.76 - - - 38,962.54 4,870.32
Disney 19,481.27
IndiHome Komunitas
Blogger dan Wartawan

(idem IndiHome Paket
Karyawan)
Quarter 2 - 2017
Paket Dynamic Price

(idem Quarter 1)
IndiHome Paket
Karyawan (idem Quarter
1)
IndiHome Paket
Pensiunan (idem Quarter
1)
IndiHome Paket
Outsource (idem Quarter
1)
(idem Quarter 1)
Paket Reguler IndiHome
PT Telekomunikasi Indonesia-Tbk - IFRS 15
DTH Transvision (idem
PwC Quarter 1) 361
Platfor
POTS/Voice Minipack
)
Quarter 2 – 2017

Quarter 1)
IndiHome Upgrade (idem

Quarter 1)
Paket IndiHome Khusus

Retensi Pelanggan 3P
10 Mbps (50 GB)+ POTS 100

- - - -
menit + UseeTV Entry 265,000 17,096.77 149,596.77 59,838.71 - - - - 34,193.55 4,274.19
10 Mbps (100 GB)+ POTS 100 -

- - - -
menit + UseeTV Entry 285,000 185,681.82 60,454.55 - - - - 34,545.45 4,318.18

- - - -

- - - -

- - - -
+ UseeTV Essential 915,000 9,531.25 738,671.88 123,906.25 - - - - 38,125.00 4,765.63

- - - -
+ UseeTV Essential 1,040,000 901,013.82 95,852.53 - - - - 38,341.01 4,792.63
Quarter 3 – 2017
10 Mbps + POTS 100 menit - - - -

275,000 39,285.71 230,803.57 - - - - - - 4,910.71

375,000 39,473.68 330,592.11 - - - - - - 4,934.21
PT Telekomunikasi Indonesia
30 Mbps + POTS 100 menit Tbk - IFRS 15 - - - -
535,000 39,629.63 490,416.67 - - - - - - 4,953.70
PwC 362

635,000 39,687.50 590,351.56 - - - - - - 4,960.94
Platfor
POTS/Voice Minipack
)
Quarter 3 – 2017

(Paket Ramadhan)

- - - -
UseeTV Entry 330,000 17,600.00 202,400.00 70,400.00 - - - - 35,200.00 4,400.00

- - - -
UseeTV Entry 430,000 18,105.26 298,736.84 72,421.05 - - - - 36,210.53 4,526.32

- - - -
UseeTV Entry 590,000 18,582.68 455,275.59 74,330.71 - - - - 37,165.35 4,645.67

- - - -
UseeTV Entry 690,000 18,775.51 553,877.55 75,102.04 - - - - 37,551.02 4,693.88
IndiHome Deluxe

Premium
+ UseeTV Essential + IndiKids - - -
460,000 45,544.55 209,504.95 127,524.75 18,217.82 - - - 36,435.64 4,554.46
Lite + Movin 18,217.82

630,000 46,666.67 308,000.00 130,666.67 84,000.00 18,666.67 - - - 37,333.33 4,666.67
Lite + IndiMovie 2 + Movin

820,000 46,857.14 459,200.00 131,200.00 121,828.57 - - - 37,485.71 4,685.71
+ IndiMovie 2 + Movin 18,742.86
+ UseeTV Essential + IndiKids
- - -
+ IndiMovie 2 + IndiMovie 1 + 995,000 47,380.95 559,095.24 132,666.67 194,261.90 - - - 37,904.76 4,738.10
18,952.38
Movin
+ UseeTV Essential + all
- - -
channel ex Dynasty & 1,250,000 48,262.55 714,285.71 135,135.14 289,575.29 - - - 38,610.04 4,826.25
19,305.02
IndiJapan + Movin
+ UseeTV Essential + all
- - -
channel ex Dynasty & 1,750,000 48,746.52 1,208,913.65 136,490.25 292,479.11 - - - 38,997.21 4,874.65
PT Telekomunikasi Indonesia Tbk - IFRS 15 19,498.61
IndiJapan + Movin
PwC IndiHome Paket 363
Karyawan, Pensiunan &
Outsource
Platfor
POTS/Voice Minipack
)
Quarter 3 – 2017

- - - -
UseeTV Entry 590,000 18,582.68 455,275.59 74,330.71 - - - - 37,165.35 4,645.67

- - - -
UseeTV Entry 690,000 18,775.51 553,877.55 75,102.04 - - - - 37,551.02 4,693.88

Quarter 1)
CAPS
Mbps(5 GB) + Phone
- - - -
incoming only + UseeTV 105,000 7,875.00 55,125.00 21,000.00 - - - - 21,000.00 -
Passive
Mbps(5 GB) + Phone - - - -
65,000 8,125.00 56,875.00 - - - - - - -
incoming only
Quarter 4 - 2017

- - -
Movin 285,000 39,310.34 230,948.28 - - 9,827.59 - - - - 4,913.79

- - -
Movin 385,000 39,487.18 330,705.13 - - - - - - 4,935.90
9,871.79

- - -
Movin 545,000 39,636.36 490,500.00 - - - - - - 4,954.55
9,909.09

- - -
Movin 645,000 39,692.31 590,423.08 - - - - - - 4,961.54
9,923.08

(idem Quarter 3)

PwC 364
(idem Quarter 3)
IndiHome Deluxe
Premium (idem Quarter
3)
Application guidance – ‘Indihome Assessment’
Step 4.2 – Determination of stand-alone selling price (“SSP”)
Gap Differences
No Product detail Detail assessment of IFRS 15
Managed Device
1 Indihome Paket Deluxe - Step 1 Current accounting treatment:

Triple Play
Contract criteria are met when the customer agrees to purchase a) For this package, Telkom has identified several
Content: IndiHome Paket Deluxe Triple Play. identifiable services as follows:
• Internet indihome Fiber Other consideration – contract modification: 1. Internet Fiber 10 Mbps (DATIN)
10 Mbps 2. Fixed Telephone (POTS)
It is common for Telkom’s customer to upgrade or change their
• Fixed telephone 1,000 3. USeeTV (DATIN – UseeTV)
IndiHome services subsequently. Existing business practice requires
minutes 4. UseeTV – IndiKids Lite (DATIN – UseeTV)
such changes or modification is valid in the following months after
5. Movin (DATIN)
• Interactive TV Channels customer’s request. This subsequent changes are treated as a
6. Set top Box (DATIN)
Essential + IndiKids Lite separate contracts considering the arrangement in the IndiHome
7. Optical Network Terminal (“ONT”)
(“UseeTV Basic Package”) products ensures that transfer of control for the package is
(DATIN)
completed on a monthly basis, and therefore the revenue from
• Movin' - Basic
previous will be fully recognised prior the activation of the b) Telkom recognises the revenue to each
• iFlix – 1+2 month free Customer’s new request. identifiable services based on the tariff
subscription embedded in their idRev.
• HOOQ - 2 months free Step 2 Gap differences:
subscription
Performance obligations (“PO”) identified from IndiHome Paket Gap differences identified between Telkom’s
Price: Deluxe: existing practice and requirement in IFRS 15 as
Rp 460,000/month a) Internet Fiber 10 Mbps; follows:
b) Fixed telephone – free 1,000 minutes inbound and outbound iFlix and HooQ – performance obligations
call
c) USee Tv - Interactive TV Channels Essential iFlix and HooQ satisfy the criteria of distinct
d) USeeTV - IndiKids Lite performance obligation under IFRS 15 and Telkom
e) Movin' - Basic should allocate the transaction price to iFlix and
f) iFlix HooQ using the relative stand-alone selling price.
g) HOOQ

PwC 365
Step 4.2 – Determination of stand-alone selling price (“SSP”) – cont’d
Gap Differences
Managed Device
1 Step 3 iFlix and HooQ – allocation of revenue

Determination of SSP: a) Transaction price allocated to iFlix is only 8%
from the total transaction price and considered
PO SSP in Rp Remarks as immaterial to Telkom.
Internet 10 Mbps 190,000 Tariff for idRev INETF10M b) SSP for HooQ should be adjusted with the
likelihood of the customer usage/expected
Telephone 50,000 Tariff for idRev IN1000
‘breakage’, so that the transaction price is only
USee Tv - 100,000 Tariff for idRev USEEINDIHD allocated to the obligations that are expected to
Interactive TV be satisfied. The use of the expected breakage
concept of determining the stand-alone selling
USeeTV - 20,000 Tariff for idRev USEEINDYHD
price is using the analogy of a customer option
IndiKids Lite
mentioned in IFRS15.B42.
Movin' - Basic 20,000 Tariff for idRev MOVIN1 Upon further analysis, the value of total free iFlix
iFlix 39,000 Subscription fee for iFlix as and HooQ sold by Telkom as of end of 2017 is in the
obtained in www.iflix.com range of xxx to xxx. This balance will not have any
effect to the 1 January 2018 (opening balance)
HOOQ 49,500 Subscription fee/month for iFlix adjustment since it’s only a reclassification in
as obtained in www.hooq.tv.com between “telephone” and “data, internet” revenues
Notes: for around 2% going forward.
• Tariff in each idRev represents the SSP for the service as the tariff
is the amount charges when Telkom sells the service separately in
similar circumstances to similar customer as reflected in the
offering price established in Telkom’s website; and
• Subscription fee for unlimited access to HooQ/VIU is readily
obtainable from the market.

PwC 366
Gap Differences
Managed Device
1 Step 4 Set-up box and ONT

IFRS 15 requires Telkom to allocate the transaction price to each Set-up box and ONT should not be treated as
distinct performance obligations based on the stand-alone selling separate performance obligations under IFRS 15.
price. [Please see accounting position paper on why set-up
box and ONT are not distinct performance
The following tables summaries the detail allocation for IndiHome
obligations].
Tripe Play – Deluxe:
However, there’s no adjustment needed to the (1)
Relative fair Allocated timing of revenue recognition and (2) multiple-
PO SSP element allocation of the IndiHome package is
value revenue
necessary because Telkom is separately charging
Internet 190,000 41% 188,600 the monthly fees for set-up box and ONT to
Telephone 50,000 11% 50,600 customers. In other words, the monthly fees
charged on set-up box and ONT have been
USee Tv - Interactive TV 100,000 21% 96,600 separately accounted for by Telkom.
USeeTV - IndiKids Lite 20,000 4% 18,400
Movin' - Basic 20,000 4% 18,400
iFlix 39,000 8% 36,800
HOOQ 49,500 11% 50,600
Total 468,500 100% 460,000
Step 5
Transfer of control for all identified performance obligation in Step 2
is performed over time as the Customer simultaneously receives and
consumes the benefit provided as Telkom performs.

PwC 367
Gap Differences
Managed Device
2 Indihome Paket Step 1 Current accounting treatment:

Premium- Triple Play
Contract criteria are met when the customer agrees to purchase a) For this package, Telkom has identified 5
Content: IndiHome Paket Premium Triple Play. separately identifiable services as follows:
• Internet IndiHome Fiber Other consideration – contract modification: 1. Internet Fiber (DATIN)
20 Mbps/ 30 Mbps/ 40 2. Fixed Telephone (POTS)
Mbps/ 50 Mbps/ 100 3. USeeTV (DATIN – UseeTV)
Mbps 4. Movin (DATIN)
such changes or modification is valid in the following months after
• Fixed telephone 1,000 5. Set top Box (DATIN)
customer’s request. This subsequent changes are treated as a
minutes 6. Optical Network Terminal (“ONT”)
separate contracts considering the arrangement in the IndiHome
(DATIN)
• USeeTV Basic Package + products ensures that transfer of control for the package is
Indimovie 2, or + completed on a monthly basis, and therefore the revenue from b) Telkom recognises the revenue to each
IndiMovie 2 + IndiMovie previous will be fully recognised prior the activation of the identifiable services based on the tariff
1, or UseeTV Basic Extra Customer’s new request embedded in their idRev.
• Movin' - Basic Gap differences:
Step 2
• iFlix – 1+2 month free There are two significant gap differences identified
subscription Our assessment for IndiHome Paket Premium Triple Play between Telkom’s existing practice and requirement
• HOOQ - 2 months free accommodates all the available offers under the premium packages. in IFRS 15 as follows:
subscription There are 5 available package for IndiHome Paket Premium, the
more performance obligation embedded in the package the higher iFlix and HooQ – performance obligations
Price: the package price. iFlix and HooQ satisfy the criteria of distinct
Rp 630,000/month to Rp Having considered all the service provided from each packages, we performance obligation under IFRS 15 and Telkom
1,750,000/month depends have identified all the performance obligations offered by Telkom should allocate the transaction price to iFlix and
on the variance of internet the customers as follows: HooQ using the relative stand-alone selling price.
and USeeTV service.
a) Internet IndiHome Fiber 20 Mbps/ 30 Mbps/ 40 Mbps/ 50
Mbps/ 100 Mbps;
b) Fixed telephone – free 1,000 minutes inbound and outbound
call
c) USee Tv - Interactive TV Channels Essential

PwC 368
Gap Differences
Managed Device

d) USeeTV - IndiKids Lite a) Transaction price allocated to iFlix is only 2%
e) USeeTV Indimovie 2
as immaterial to Telkom.
f) USeeTV IndiMovie 1
b) SSP for HooQ should be adjusted with the
g) USee TV Add-On IndiKids HD likelihood of the customer usage/expected
h) USee TV Add-On IndiNews
allocated to the obligations that are expected to
i) UseeTV Add On Inditainment 2 HD be satisfied. The use of the expected breakage
j) UseeTV Add On Inditainment 1 HD
k) Movin' – Basic mentioned in IFRS15.B42.
l) iFlix Upon further analysis, the value of total free iFlix
and HooQ sold by Telkom as of end of 2017 is in the
m) HOOQ
range of xxx to xxx. This balance will not have any
effect to the 1 January 2018 (opening balance)
adjustment since it’s only a reclassification in
between “telephone” and “data, internet” revenues
for less than 2% going forward.

PwC 369
Gap Differences
Managed Device

Determination of SSP: Set-up box and ONT should not be treated as
separate performance obligations under IFRS 15.
Performance SSP [Please see accounting position paper on why set-up
Remarks
obligations in Rp box and ONT are not distinct performance
Internet 20 Mbps 290,000 Tariff for idRev INETF20M obligations].
Internet 30 Mbps 450,000 Tariff for idRev INETF30M However, there’s no adjustment needed to the (1)
timing of revenue recognition and (2) multiple-
Internet 40 Mbps 550,000 Tariff for idRev INETF40M
element allocation of the IndiHome package is
Internet 50 Mbps 700,000 Tariff for idRev INETF50M necessary because Telkom is separately charging
the monthly fees for set-up box and ONT to
Internet 100 Mbps 1,200,000 Tariff for idRev INETF100M
customers. In other words, the monthly fees
Telephone 50,000 Tariff for idRev IN1000 charged on set-up box and ONT have been
USee Tv - Interactive 100,000 Tariff for idRev separately accounted for by Telkom.
TV USEEINDIHD
USeeTV - IndiKids Lite 20,000 Tariff for idRev
USEEINDYHD
UseeTV – IndiMovie 2 70,000 Tariff for idRev
USEEINMV2H
USEEINMV2H - discount
USEEINMV1H
UseeTV Add On 60,000 Tariff for idRev
IndiKids HD USEEKIDDYH

PwC 370
Gap Differences
Managed Device
2 Step 3
Performance
SSP in Rp Remarks
obligations
UseeTV Add On 15,000 Tariff for idRev USEEINNWHD
IndiNews HD
UseeTV Add On 40,000 Tariff for idRev USEEINT2HD
Inditainment 2 HD
UseeTV Add On 40,000 Tariff for idRev USEEINT1HD
Inditainment 1 HD
Movin' - Basic 20,000 Tariff for idRev MOVIN1
iFlix 39,000 Subscription fee for iFlix as
obtained in www.iflix.com
HOOQ 49,500 Subscription fee/month for
HOOQ as obtained in
www.hooq.tv.com
Notes:
similar circumstances to similar customer; and
• Subscription fee for unlimited access to iFlix/HooQ is readily
obtainable from the market

PwC 371
Gap Differences
Managed Device
2 Step 4
IFRS 15 requires Telkom to allocate the transaction price to each
distinct performance obligations based on the stand-alone selling
price. The following tables provides an illustrative example on the
allocation for IndiHome Triple Play 100Mbps:
Relative Allocated
PO SSP
fair value revenue
Internet 100 Mbps 1,200,000 68% 1,194,200
Telephone 50,000 3% 49,800
USee Tv - Interactive TV 100,000 6% 99,500
USeeTV AddOn IndiKids HD 60,000 4% 59,700
USeeTV AddOn Movie 1 HD 75,000 4% 74,600
USeeTV AddOn Movie 2 HD 70,000 4% 69,700
UseeTV Add On IndiNews HD 15,000 1% 14,900
UseeTV Add On Inditainment 40,000 2% 39,800
2 HD
UseeTV Add On Inditainment 40,000 2% 39,800
1 HD
Movin' – Basic 20,000 1% 19,900
iFlix 39,000 2% 38,800
HOOQ 49,500 3% 49,300
Total 1,758,500 100% 1,750,000
Step 5

PwC 372
Gap Differences
Managed Device
3 Indihome Paket Imlek Step 1 Current accounting treatment:

Content: Contract criteria are met when the customer agrees to purchase a) For this package, Telkom has identified 5
IndiHome Paket Imlek separately identifiable services as follows:
• Internet IndiHome Fiber
20 Mbps/ 30 Mbps/ 40 Other consideration – contract modification: 1. Internet Fiber (DATIN)
Mbps 2. Fixed Telephone (POTS)
• Fixed telephone 100 3. USeeTV (DATIN – UseeTV)
minutes 4. Movin (DATIN)
such changes or modification will only be valid in the following
• USeeTV Entry 5. IFLIX (DATIN)
months after customer’s request. This subsequent changes are
• Movin' - Phone
treated as a separate contracts considering the arrangement in the b) Telkom recognises the revenue to each
• OTT - iFlix
IndiHome products ensures that transfer of control for the package identifiable services based on the tariff
• Minipack – Inditainment
is completed on a monthly basis, and therefore the revenue from embedded in their idRev.
Lite or IndiBasketball
previous will be fully recognised prior the activation of the
Price: Customer’s new request. Gap differences:
Rp 360,000/month to Rp Step 2 No gap differences identified between existing
550,000/month depends on practice and requirement in IFRS 15.
the internet service. Our assessment for IndiHome Paket Imlek accommodates all the
available offers under this packages. There are 3 available package
for IndiHome Paket Imlek, the more performance obligation
embedded in the package the higher the package price.
Having considered all the service provided from each packages, we
have identified all the performance obligations offered by Telkom
the customers as follows:
a) Internet IndiHome Fiber 20 Mbps/ 30 Mbps/ 40 Mbps;
b) Fixed telephone – free 100 minutes inbound and outbound call
c) USeeTV Entry
d) Minipack – Inditainment Lite

PwC 373
Gap Differences
Managed Device
3 Step 2
e) Minipack – IndiBasketball
f) Movin' - Phone
g) OTT – iFlix
Step 3
Determination of SSP:
SSP
PO Remarks
in Rp
Internet 20 Mbps 280,000 Tariff for idRev INETFL20M
USee Tv Entry 40,000 Tariff for idRev USEEENTRYH
Movin' - Phone 5,000 Tariff for idRev MVNPHONE1
Minipack - 10,000 Tariff for idRev USEEINTLTH
Inditainment Lite HD
OTT - iFlix 5,000 Tariff for idRev OTTIFLIX01

PwC 374
Gap Differences
Managed Device
3 Step 3
Notes:
• Subscription fee for unlimited access to iFlix is readily obtainable
from the market.
Step 4
IFRS 15 requires Telkom to allocate the transaction price to each
distinct performance obligations based on the stand-alone selling
price. The following tables provides an illustrative example on the
allocation for IndiHome Paket Imlek 40Mbps:
Relative fair Allocated
PO SSP
value revenue
Internet 40 Mbps 470,000 85% 470,000
Telephone 20,000 4% 20,000
USee Tv Entry 40,000 7% 40,000
Movin' – Phone 5,000 1% 5,000
Minipack - Inditainment Lite 10,000 2% 10,000
HD
OTT - iFlix 5,000 1% 5,000
Total 550,000 100% 550,000
Step 5
PwC 375
Gap Differences
Managed Device
4 Indihome Paket Netizen Step 1 Current accounting treatment:

I - Dual Play
Content: IndiHome Paket Netizem I – Dual Play. separately identifiable services as follows:
Mbps/ 40 Mbps 3. USeeTV (DATIN – UseeTV)
• Fixed telephone 100 4. Movin (DATIN)
such changes or modification will only be valid in the following
minutes 5. Optical Network Terminal (“ONT”)
months after customer’s request. This subsequent changes are
(DATIN)
• Movin' - Basic treated as a separate contracts considering the arrangement in the
IndiHome products ensures that transfer of control for the package b) Telkom recognises the revenue to each
• iFlix – 1+2 month free
is completed on a monthly basis, and therefore the revenue from identifiable services based on the tariff
subscription
previous will be fully recognised prior the activation of the embedded in their idRev.
• HOOQ - 2 months free Customer’s new request.
subscription Gap differences:
Price: Step 2 There are two significant gap differences identified

Our assessment for IndiHome Paket Netizen I accommodates all the between Telkom’s existing practice and requirement
Rp 285,000/month to Rp in IFRS 15 as follows:
645,000/month depends on available offers under this packages. There are 4 available package
the internet service. for IndiHome Paket Netizen I, the more performance obligation iFlix and HooQ – performance obligations
embedded in the package the higher the package price.
iFlix and HooQ satisfy the criteria of distinct
Having considered all the service provided from each packages, we performance obligation under IFRS 15 and Telkom
have identified all the performance obligations offered by Telkom should allocate the transaction price to iFlix and
the customers as follows: HooQ using the relative stand-alone selling price.
a) Internet IndiHome Fiber 10 Mbps/ 20 Mbps/ 30 Mbps/ 40
Mbps;
b) Fixed telephone – free 100 minutes inbound and outbound call
c) Movin' - Basic
d) iFlix
e) HOOQ

PwC 376
Gap Differences
Managed Device
Step 3 a) Transaction price allocated to iFlix is only 6%

Determination of SSP : as immaterial to Telkom.
be satisfied. The use of the expected breakage
mentioned in IFRS15.B42.
PO SSP in Rp Remarks Upon further analysis, the value of total free iFlix
Internet 10 Mbps 195,000 Tariff for idRev INETF10M and HooQ sold by Telkom as of end of 2017 is in the
Internet 20 Mbps 295,000 Tariff for idRev INETF20M effect to the 1 January 2018 (opening balance)
Internet 30 Mbps 455,000 Tariff for idRev INETF30M adjustment since it’s only a reclassification in
Internet 40 Mbps 555,000 Tariff for idRev INETF40M for around 1% going forward.
Movin' - Basic 10,000 Tariff for idRev MOVIN1
IFlix 39,000 Subscription fee for iFlix as
HOOQ as obtained in
www.hooq.tv.com

PwC 377
Gap Differences
Managed Device

Notes: Set-up box and ONT should not be treated as
[Please see accounting position paper on why set-up
obligations].
from the market. However, there’s no adjustment needed to the (1)
Step 4 element allocation of the IndiHome package is
IFRS 15 requires Telkom to allocate the transaction price to each the monthly fees for set-up box and ONT to
distinct performance obligations based on the stand-alone selling customers. In other words, the monthly fees
price. The following tables provides an illustrative example on the charged on set-up box and ONT have been
allocation for IndiHome Netizen 1 – Dual Play: separately accounted for by Telkom.
PO SSP
value revenue
Internet 40 Mbps 555,000 80% 516,200
Telephone 40,000 6% 37,200
Movin' - Basic 10,000 1% 9,300
iFlix 39,000 6% 36,300
HOOQ 49,500 7% 46,000
Total 693,500 100% 645,000
Step 5
PwC 378
Gap Differences
Managed Device
5 Indihome Paket Netizen Step 1 Current accounting treatment:

II - Dual Play
Content: IndiHome Paket Premium Triple Play. separately identifiable services as follows:
Mbps/ 40 Mbps
IndiHome services subsequently. Existing business practice requires 3. USeeTV (DATIN – UseeTV)
• Interactive TV Channels such changes or modification will only be valid in the following
4. Movin (DATIN)
entry months after customer’s request. This subsequent changes are
treated as a separate contracts considering the arrangement in the 5. Optical Network Terminal (“ONT”)
• iFlix – 1+2 month free (DATIN)
IndiHome products ensures that transfer of control for the package
subscription
is completed on a monthly basis, and therefore the revenue from b) Telkom recognises the revenue to each
• HOOQ - 2 months free previous will be fully recognised prior the activation of the identifiable services based on the tariff
subscription Customer’s new request. embedded in their idRev.
Price: Step 2 Gap differences:
Rp 315,000/month to Rp Our assessment for IndiHome Paket Netizen II accommodates all There are two significant gap differences identified
675,000/month depends on the available offers under this packages. There are 3 available between Telkom’s existing practice and requirement
the internet service. package for IndiHome Paket Netizen II, the more performance in IFRS 15 as follows:
obligation embedded in the package the higher the package price. iFlix and HooQ – performance obligations
Having considered all the service provided from each packages, we iFlix and HooQ satisfy the criteria of distinct
have identified all the performance obligations offered by Telkom performance obligation under IFRS 15 and Telkom
the customers as follows: should allocate the transaction price to iFlix and
a) Internet IndiHome Fiber 10 Mbps/ 20 Mbps/ 30 Mbps/ 40 HooQ using the relative stand-alone selling price.
Mbps;
b) Interactive TV Channels entry
c) iFlix
d) HOOQ

PwC 379
Gap Differences
Managed Device

a) Transaction price allocated to iFlix is only 6%
as immaterial to Telkom.
be satisfied. The use of the expected breakage
Step 3 price is using the analogy of a customer option
Determination of SSP : mentioned in IFRS15.B42.
Upon further analysis, the value of total free iFlix
PO SSP in Rp Remarks and HooQ sold by Telkom as of end of 2017 is in the
Internet 10 Mbps 195,000 Tariff for idRev INETF10M effect to the 1 January 2018 (opening balance)
adjustment since it’s only a reclassification in
Internet 30 Mbps 455,000 Tariff for idRev INETF30M for around 1% going forward.
UseeTV Starter 40,000 Tariff for idRev USEESTARTH
iFlix 39,000 Subscription fee for iFlix as
HOOQ as obtained in
www.hooq.tv.com

PwC 380
Gap Differences
Managed Device

Notes: Set-up box and ONT should not be treated as
obligations].
from the market. However, there’s no adjustment needed to the (1)
Step 4 element allocation of the IndiHome package is
IFRS 15 requires Telkom to allocate the transaction price to each the monthly fees for set-up box and ONT to
distinct performance obligations based on the stand-alone selling customers. In other words, the monthly fees
price. charged on set-up box and ONT have been
The following tables summaries the detail allocation for IndiHome separately accounted for by Telkom.
Dual Play – Netizen II:

PO SSP
value revenue
Internet 40 Mbps 555,000 81% 548,100
USee Tv Starter 40,000 6% 39,500
iFlix 39,000 6% 38,500
HOOQ 49,500 7% 48,900
Total 683,500 100% 675,000
Step 5
PwC 381
Gap Differences
Managed Device
6 Indihome Internet Fiber Step 1 Current accounting treatment:

Content: Contract criteria are met when the customer agrees to purchase a) For this package, Telkom has identified 2
IndiHome Internet Fiber separately identifiable services as follows:
Internet IndiHome Fiber 10
Mbps/ 20 Mbps/ 30 Mbps/ Step 2 1. Internet Fiber (DATIN)
40 Mbps 2. Optical Network Terminal (“ONT”)
POs identified from IndiHome Internet Fiber: (DATIN)
Price:
• Internet IndiHome Fiber 10 Mbps; or b) Telkom recognises the revenue to each
Rp 250,000/month to Rp • Internet IndiHome Fiber 20 Mbps; or identifiable services based on the tariff
610,000/month depends on • Internet IndiHome Fiber 30 Mbps; or embedded in their idRev which is also similar to
the internet service. • Internet IndiHome Fiber 40 Mbps their offering price.
Set-up box and ONT
Step 3
Set-up box and ONT should not be treated as
Determination of SSP: separate performance obligations under IFRS 15.
PO SSP in Rp Remarks obligations].
Internet 10 Mbps 210,000 Tariff for idRev INETF10M However, there’s no adjustment needed to the (1)
Internet 20 Mbps 310,000 Tariff for idRev INETF20M element allocation of the IndiHome package is
Internet 30 Mbps 470,000 Tariff for idRev INETF30M the monthly fees for set-up box and ONT to
customers. In other words, the monthly fees
Internet 40 Mbps 570,000 Tariff for idRev INETF40M charged on set-up box and ONT have been
Notes: separately accounted for by Telkom.
Tariff in each idRev represents the SSP for the service as the tariff is
the amount charges when Telkom sells the service separately in

PwC 382
Gap Differences
Managed Device
6 Step 4
This is not a multiple element arrangement. No allocation of
transaction price is considered necessary.
Step 5
7 Indihome Fixed Step 1 Current accounting treatment:
Telephone Contract criteria are met when the customer agrees to purchase a) Telkom recognises revenue from fixed telephone
Content: IndiHome Fixed Telephone based on the tariff embedded in their idRev
which is also represent the offering price to the
Fixed telephone 300 minutes Step 2
Identified PO: Fixed telephone customer;
Price:
Step 3 b) Revenue is recognised over time
Rp 235,000/month
Determination of SSP: Gap differences:
No gap differences identified between existing
PO SSP in Rp Remarks practice and requirement in IFRS 15.
Telephone
Notes: 235,000 Tariff for idRev IN300
Tariff in each idRev represents the SSP for the service as the tariff is
the amount charges when Telkom sells the service separately in
Step 4
This is not a multiple element arrangement. No allocation of
transaction price is considered necessary.
Step 5

PwC 383
Gap Differences
Managed Device
8 Add On USeeTV Step 1 Current accounting treatment:

product: Contract criteria are met when the customer agrees to purchase the a) Revenue is recognised in the following month
In addition to the Essential
add-on products. The add-on products will be embedded to the once the Add-on products activated in
Channel USeeTV, which is
previous package subscribed previously. Provisioning for the add-on customer’s premise;
the most basic channel
performs in the following and considering that the revenue from b) Revenue allocated to the add-on Product based
provides for Telkom pay TV,
previous contract has been fully recognise, the addition is treated as on the idRev embedded in the system, which is
Telkom also provides
separate contract. also the same with sales price in the website.
customer with several add-
c) Revenue is recognised over time
on Product that could be
easily upgraded based on the Step 2 Conclusion:
customer request as shown Considering the requirement of distinct performance obligation No gap differences identified between existing
in table below: introduced by the Standards, each type of Add-on products satisfies practice and requirement in IFRS 15.
the criteria of distinct performance obligation.
Product Price
Product per month (in Step 3
Rp)
The established price in Telkom’s IndiHome website already
IndiMovie 1 75,000
represents the total transaction prices for these Add-On products.
IndiMovie 2 70,000 During a certain period or season, Telkom may provide customer
IndiTainment 40,000 with discounted price for these products. Telkom needs to adjust the
1 transaction price in the month that Telkom promises to discount the
IndiTainment 40,000 consideration.
2
ndiKids 60,000 Step 4
IndiNews 15,000 The purchase price of these add-on products already represent the
stand-alone selling price. Understand that the Add-on Product will
Dynasti 169,000 be embedded to the package previously subscribed by the customer,
IndiMovie 55,000 and in that caset, Telkom shall reallocate the total transaction price
Lite to all identified PO (includes PO from the add-on) using the relative
IndiKids Lite 20,000 stand-alone selling price.
Please refer to Triple Play Assessment for the detail example.

PwC 384
Gap Differences
Managed Device
8 Product Price Step 5

Product per month (in
Rp) Transfer of control for all identified performance obligation in Step 2
IndiKids Lite 20,000
IndiJapan 45,000
Extra HD 20,000
IndiSport 50,000
IndiBasketbal 15,000
l
IndiGolf 150,000
IndiTainment 20,000
Lite
Example of add-on product

is as follow:

PwC 385
Gap Differences
Managed Device
9 Add-on Hybrid Box Step 1 Minimum impact to Telkom’s financial information

is expected from this gap difference. This
Telkom offers add-on set-up Contract criteria are met when the customer agrees to purchase the
conclusion is derived from the fact that revenue
box to enable customer add-on products. The add-on products will be embedded to the
from set-up box currently have been disclosed as
enjoy the UseeTV program previous package subscribed previously. Provisioning for the add-on
DATIN, and if Telkom applies the requirement in
in different TV. performs in the following and considering that the revenue from
IFRS 15, the transaction prices allocated to these
previous contract has been fully recognise, the addition is treated as
product should be reallocated to internet which is
separate contract.
also disclosed as part of DATIN.
Price:
Step 2 We also expect a minimum impact from the timing
Hybrid Box HD : Rp 80,000
of revenue recognition considering that revenue is
In line with the assessment for IndiHome Triple Play package, set-
Hybrid Box 4K : Rp 40,000 recognised on a monthly basis. The gap difference
up box does not satisfy the criteria of a distinct performance from the timing of revenue recognition will be
obligations as the customer cannot benefit from USeeTV separately automatically resolved in each reporting period.
from Set Top Box. As consequences, Telkom should not allocate its
transaction price to the additional hybrid box.
Step 3
Further assessment in Step 3 is considered not necessary.
Step 4
Step 5

PwC 386
Gap Differences
Managed Device
10 Other add-on products Step 1 Current accounting treatment:
Other than Add-On product Contract criteria are met when the customer agrees to purchase the a) Revenue is recognised in the following month
for USeeTV, Telkom also add-on products. The add-on products will be embedded to the once the Add-on products activated in
offers various add-on or previous package subscribed previously. Provisioning for the add-on customer’s premise;
enhancement services that performs in the following and considering that the revenue from b) Revenue allocated to the add-on Product based
ranging from upgrades the previous contract has been fully recognise, the addition is treated as on the idRev embedded in the system, which is
internet speed to anti-virus separate contract. also the same with sales price in the website.
installation. Similar to add- Step 2 c) Revenue is recognised over time
on USeeTV, Telkom has an Considering the requirement of distinct performance obligation
established tariff for each Conclusion:
introduced by the Standards, each type of Add-on products satisfies
products which easily the criteria of distinct performance obligation. No gap differences identified between existing
accessible through their practice and requirement in IFRS 15.
Step 3
website.
The established price in Telkom’s IndiHome website already
Below are the examples of
represents the total transaction prices for these Add-On products.
Telkom’s other add-on
During a certain period or season, Telkom may provide customer
product obtained from
with discounted price for these products. Telkom needs to adjust the
IndiHome website:
transaction price in the month that Telkom promises to discount the
1. Speed on demand - consideration.
upgrade internet speed
Step 4
The purchase price of these add-on products already represent the
stand-alone selling price. Understand that the Add-on Product will
be embedded to the package previously subscribed by the customer,
and in that case, Telkom shall reallocate the total transaction price
2. Trend micro antivirus to all identified PO (includes PO from the add-on) using the relative
stand-alone selling price.
Please refer to Triple Play Assessment for the detail example.
Step 5

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IFRS 15 Gap Assessment

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PT Telekomunikasi Indonesia

Executive summary 3 Comparative studies 37

Testing strategy 5 Comparative studies - global 40

Telkom parent revenue streams 6 Gap impact & position paper 44

Revenue stream identification – Telkom parent 7 1. Identifying the contract 45

Revenue sub-stream identification – Telkom parent 8 2. Identifying performance obligations 103

Revenue stream identification – Subsidiaries 9 3. Determining the transaction price 224

Summary gap impact 12 4. Allocating the transaction price 267

Summary of five steps revenue recognition 13 5. Recognising revenue 289

Main IFRS 15 decision/analysis points 14 6. Other consideration 294

Overview of gap analysis at Telkom parent 15 Presentation and disclosure 327

List of potential IFRS 15 issues 16 Appendix 339

Summary of relevant accounting issues analyzed 24 Appendix A - IAS 18 340

Key accounting gaps/issues identified 30 Appendix B - IFRS 15 359

[client name] IFRS 15 [date]

PT Telekomunikasi Indonesia Tbk – IFRS 15

PT Telekomunikasi Indonesia Tbk – IFRS 15

Consist of: Consist of: Consist of:

PT Telekomunikasi Indonesia Tbk - IFRS 15

Consumer - Retail Consumer – Retail EBIS – Solutions EBIS - Connectivity

Share of profit of associates/JVs

PT Telekomunikasi Indonesia Tbk - IFRS 15

PT Telekomunikasi Indonesia Tbk – IFRS 15

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the

Step 3: Determine the transaction price

Step 4: Allocate the transaction price

Step 5: Recognise revenue when (or as) a performance

Main discussion points:

Main discussion points: Main discussion points:

 Renewal options (“PO”)

Determining Contract cost

PT Telekomunikasi Indonesia Tbk - IFRS 15

17 types of There are 31 gaps/issues identified across

No Detail potential issues Page reference

PT Telekomunikasi Indonesia Tbk - IFRS 15

PT Telekomunikasi Indonesia Tbk - IFRS 15

PT Telekomunikasi Indonesia Tbk - IFRS 15

PT Telekomunikasi Indonesia Tbk - IFRS 15

11 Pricing to customer varies based on index Page 230

PT Telekomunikasi Indonesia Tbk - IFRS 15

PT Telekomunikasi Indonesia Tbk - IFRS 15

5.1 Timing of revenue recognition

1 Customer simultaneously receives and consumes Page 291 - 293

2 Enhance assets Page 291 – 293

3 Right to payment and no alternative use Page 291 – 293

5 Revenue satisfied at a point in time Page 291 – 293

6 Timing of revenue recognition for license Page 291 - 293

5.2 Hierarchy timing of revenue recognition

Ot1 Contract acquisition cost

1 Incremental cost in obtaining contract Detail discussion on all relevant

Ot1 Contract fulfilment cost

PT Telekomunikasi Indonesia Tbk - IFRS 15

Reference to the standard Main discussion points Potential issues

PT Telekomunikasi Indonesia Tbk - IFRS 15

Specific issues in Telkom contract

PT Telekomunikasi Indonesia Tbk - IFRS 15

The assessment focuses on the

IFRS 15 introduces a new concept on how