Creating Sustainable
Global Talents and
Opportunities
2013 Sustainability Report
DISCLAIMER
Several parts of this Sustainability Report include forward-looking statements, including our expectations and projections related to future sustainability performance. These statements generally make use of words such as “commitment”, “believe”, “expect”, “anticipate”, “estimate”, “project” or other similar words. In addition, all statements other than historical facts included in this sustainability report can be categorized as forward-looking statements. Although we believe that the expectations relected in the forward-looking statements are reasonable, we can give no assurances that such expectations will prove to be correct. Statements that are forward looking are subject to risks and uncertainties, including changes in the economic, political and social environments in Indonesia.
PERSONAL CONTACT (3.4)
For further information regarding this Report, please contact
Investor Relations, Grha Merah Putih 5th Floor, Jl. Jend. Gatot Subroto Kav. 52, Jakarta 12710, Indonesia. Tel: (62-21) 521 5109,
Fax: (62-21) 522 0500 or email: investor@telkom.co.id. You can also download this document from our website http://www.telkom.co.id.
Creating Sustainable Global
Talents and Opportunities
International expansion has resulted in
Telkom now standing alongside
world-class companies and ensures sustainable
future growth.
As a company strongly committed
to maintaining balanced high-quality
C
ont
ents
2013 Sustainability Performance Overview
Report from the President Director
About Telkom
Products and Services 24
Company Scale 27
Relationship with Suppliers (Supply Chain)
27
Signiicant Changes 28
Mitigation Principle Approaches
28
Commitment to External Initiatives
29
Industry Association and Other Organization Memberships
29
Operational Structure and Share Ownership
29
About This Report
Report Content Determination Process 33 Report Content Determination Process Flow Chart 33 Community Economic Empowerment 44 Development Partner Success Stories 46 Telkom Shares Corporate Social Responsibility Development Strategy 50 Community Empowerment Program 51 Community Development Program 51
Telkom Preserves the Environment
Environmental Impact of Telkom’s Activities
62
Implications, Risks and Business Opportunities Related to Climate Change
62
Participation in Environmental Conservation
63
Fostering a Healthy and Environmentally Friendly Culture
66
Supporting Environmentally Friendly Economic Activities
66 Determining Materiality Level 34
Report Boundary 35
Supply Chain 35
Determining Material and Boundary Aspects
36
Materiality and Boundary Aspects
36
Relations with Stakeholders 37
Signiicant Changes from the Previous Year’s Report
37
Personal Contact 37
Economic Growth
Supporting Indonesia’s Economic Growth
40
Development Strategy 40
Supporting Improved Economic Conditions for Stakeholders
41
Contribution to State Revenue 42 Supporting Regional Economic Growth 43 Fostering Good Relationships with Partners
Participation in Greening Activities
67
Environmental Costs and Awards
67
Telkom’s People
Developing Employee Competencies and Careers
70
Beneits 74
Occupational Health, Safety and Environment (HSE)
76
Industrial Relations 78
IT-based HR Service System 80
Culture Transformation 81
Employee Proile 82
Awards 83
Telkom Governance
GCG Framework and Performance
86
Governance Strengthening Roadmap and Initiatives
86
Company Governance Structure
88
Code of Ethics and Corporate Culture
91
Whistleblowing System 94
Prioritizing Customers
The Future of Indonesia’s Telecommunication Industry
102
Universal Service Obligations and Competition
103
Fulilling Customer Needs and Improving Customer Satisfaction
104
Marketing Strategy and Customer Privacy
107
Marketing Communication 108
Improving Service Quality 109
Handling Customer Complaints
110
Customer Satisfaction Surveys
111
Consumer Protection 111
GRI G4 Core Index
Sustainability Performance
Overview
Economic Performance Overview
Economic Value Generated
(Rp billions)Retained Economic Value
(Rp billions)Economic Value Distributed
(Rp billions)Contribution to State Revenue
(Rp billions)2011 2012 2013 71,900 77,882
84,322
2011 2012 2013 49,796
60,298 57,640
2011 2012 2013 22,104
17,584
26,682
2011 2012 2013 14,780 15,874
Rp
Rp
Rp
billion
billion
billion
partners
55.8
118.2
2.9
3,975
(including administrative costs)
Total
Community
Development
Disbursement
Total Soft Loan
Disbursement
Training
Costs for
Development
Partners
Total
Development
Partners
Environmental Performance
Highlights
Programs
Conserved energy at
3,996
outdoor BTS and utilized
renewable energy sources for BTS in remote areas.
Energy efficiencies in office buildings by:
•
Use of capacitor banks to improve power factors.
•
Use of relective glass.
•
Replacing conventional light bulbs with LED bulbs.
•
Applying building automation for cooling systems.
•
Applying lighting zoning schemes.
•
Installing timers for outdoor lighting.
Implementation of a paperless oice for online oice
applications, resulting in reduced paper use of at least
7,966
reams per year.
Promotion of a healthy and environmentally friendly culture
through the
Bike to Work and Earth Hour
programs.
Results and Program Realization
Reduced CO
2
emissions of at least
961.39
tons carbon equivalent.
Beach cleaning at Pulau Pramuka
in Kepulauan Seribu, to reduce the
environmental impact of 100 tons of trash
per day from Jakarta.
Creation of a Green Belt to minimize
coastal abrasion in Indramayu.
Planting
15,000
mangrove seedlings
in Kampung Garapan, Tangerang.
Planting trees / regreening in Bandar
Social Performance Highlights
Building Social Welfare
Fund disbursement for Community Development Program
Education and Training
(Rp billion)Public Facilities
(Rp billion)Community Health
(Rp billion)Religious Facilities
(Rp billion)Victims of Natural Disaster
(Rp billion)Environmental Conservation
(Rp billion)2011 2012 2013
20
2011 2012 2013
.21
13.28
2011 2012 2013
5.28
6.19
5.54
2011 2012 2013
0.49
1.41 1.47
2011 2012 2013
4.65
7.80
5.37
2011 2012 2013
2.44
0.96
New Program:
Poverty Alleviation with Funding of
Rp6.63
billion
Programs
Education and Training
Dedicated to My Teacher program conducted in six cities; participants were
Junior and Senior High School teachers.
Internet Education in disadvantaged villages in Banten and West Java.
Bandung Knowledge Cloud in cooperation with the Institute for Innovation
and Entrepreneurship Development (“LPIK”) ITB.
Integrated Digital School – Applying DNA (device-network-application)
technology for school communities, reaching
25
schools in Central Java,
Yogyakarta, East Java and Bali.
Edu Campus Development Center (“ECDC”) program – A program to equip
undergraduate students with knowledge of Microsoft application software.
Indonesia Digital School (“IndiSchool”) – A program to install Wi-Fi
equipment in
100,000
schools across Indonesia to “Develop a Smart
Indonesia”.
Assistance to Increase Public Religious Activities and Facilities
Building Islamic boarding schools and mosques in various areas, as well as
assistance to construct church buildings in Toraja, Papua, Simalungun and Toba
Samosir.
Assistance Developing Public Facilities and Infrastructure
Broadband Learning Center (BLC) – assisting with internet access in remote
areas.
Independent Community Electricity
(Listrik Mandiri Rakyat)
Program –
installing pico-powered village-based electricity generation installations in
two villages in East Java.
Establishment of Taman Bungkul – a public park with Free Wi-Fi facilities.
Assistance to Victims of Natural Disaster
Kaleidoscope
1856-1882
On 23 October 1856, the Dutch-East Indies colonial government operated the irst electromagnetic telegraph service in Indonesia, connecting Batavia (Jakarta) and Buitenzorg (Bogor).
1906-1965
The colonial government formed a state agency to control postal and telecommunication services in Indonesia. In 1965 the Postal and Telecommunication Services were separated into two state-owned enterprises, PN Pos and Giro and PN Telekomunikasi, which managed these services.
1974
PN Telekomunikasi was divided into two divisions, PT Industri Telekomunikasi Indonesia (”PT INTI”), which produced telecommunication equipment, and Perusahaan Umum Telekomunikasi (“PERUMTEL”), which provided domestic and international telecommunication services.
1980
The international telecommunication service was taken over by
PT Indonesian Satellite Corporation (“Indosat”).
1991
Perumtel became PT Telekomunikasi Indonesia, or Telkom, with its business operations split into twelve telecommunication areas (“Witel”). These twelve Witel were then reorganized into seven regional divisions (“DIVRE”), namely
Division I Sumatera, Division II Jakarta and its surrounding area, Division III West Java, Division IV Central Java and DI Yogyakarta, Division V East Java, Division VI Kalimantan and Division VII Eastern Indonesia.
1995
Telkom implemented its Initial Public Ofering on 14 November 1995 on the Jakarta and Surabaya Stock exchanges. On 26 May 1995, Telkom established a subsidiary, Telkomsel, to handle the cellular telecommunications business.
1999
2001
Telkom acquired 35% of Indosat’s shares in Telkomsel, thus becoming a majority shareholder in the cellular company with 77.7% shares. Indosat, meanwhile, took over 22.5% of Telkom’s shares in Satelindo and 37.7% of Telkom’s shares in PT Aplikanusa Lintasarta. At the same time, Telkom lost its right to be sole provider of ixed line telephony services in Indonesia.
2002
Telkom re e e 7 es in Telkomsel to Singapore Telecom Mobile Pte Ltd (“SingTel Mobile”).
2004
Telkom launched international direct dialing for ixed line telephones.
2005
The Telkom-2 satellite was launched to take over all satellite transmission services previously handled by Palapa B-4 satellite. This launch made it the eighth satellite launched by Telkom, including Palapa A-1.
2009
Telkom transformed from an infocomm company to a provider of Telecommunication, Information, Media & Edutainment (“TIME”). Telkom’s new look was introduced to the public with a new logo and a new tagline: “the world in your hand’’.
2010
The JaKaLaDeMa submarine iber-optic cable project connecting Java, Kalimantan, Sulawesi, Denpasar and Mataram was successfully completed in April 2010.
2011
Telecommunication infrastructure reformation commenced with the Telkom Nusantara Super Highway project, to connect the archipelago from Sumatra to Papua, and the True Broadband Access project, which provides internet access with a capacity of 20-100 Mbps to all customers across Indonesia.
2013
Telkom now operates
in seven countries:
Hong Kong-Macau,
Timor Leste,
Australia, Myanmar,
Malaysia, Taiwan and
the United States of
America.
2012
Telkom increased broadband penetration with the construction of Indonesia Wi-Fi to realize the Indonesia Digital Network (“IDN”). The business portfolio changed from TIME to TIMES (Telecommunication, Information, Media, Edutainment & Services) to improve business value creation.
To become a leading
Telecommunication, Information, Media,
Edutainment and Services (“TIMES”)
player in the region.
• Provide more for less TIMES services.
• Be the role model for best managed
Indonesian corporation.
Our Vision and Mission are recorded in the company’s long-term plan and were approved by the Board of Commissioners on 30 May 2013 in the Board of Commissioners’ Decree No. 06/KEP/DK/2013/RHS.
The New Telkom Way
Always The Best
Imagine, Focus, Action
Solid, Speed, Smart
with our
Vision, Mission
and
Values
...
Corporate Culture
VISION
MISSION
Philosophy to be
the best
Principle to be the
star
..as well as our
Strategic
Initiatives
...
Centre of Excellence.
Accelerated international expansion.
Transformation costs.
IDN development (id-Access, id-Ring, id-Con).
Focus on portfolios with high growth or value.
1
2
3
4
5
6
7
8
9
10
Portfolio management through BoE and CRO.
Indonesia Digital Solution (“IDS”) – convergence service
for digital ecosystem solutions.
Improving synergy within Telkom Group.
Best subsidiary management system execution.
Indonesia Digital Platform (“IDP”) – platform enabler for
ecosystem development.
Signiicant Events
FEBRUARY
Launch of Contact Center 110
Telkom launched Contact Center 110 (free to call) in synergy with the Indonesian National Police to report accidents and criminal acts.
8 JUNE 2013
Telkom demonstrated its care for the environment through a series of Go Green Smile programs, encompassing: Beach cleanup on Pramuka Island, Thousand Islands. Planting 15,000 mangrove seedlings in Kampung Garapan, Desa Tanjung Pasir, Tangerang. Creation of a Green Belt to minimize coastal abrasion in Indramayu.
Greening project in Bandar Lampung, Makassar, Bengawan Solo riverbanks, Jember and Madura. Establishment of biopore holes in Bogor and Bandung.
27 JUNE 2013
Telkom Indi School Wi-Fi Launching at SMPN I Sabang
As part of its participation in creating a digital society and ensuring national integrity, Telkom implemented its Launching Wi-Fi at SMP Negeri I Kota Sabang, as part of the “The World in Your Hand with high quality internet access from Telkom” program, part of the Broadband Learning Center (BLC) activities.
11 JULY 2013
SME IndiPreneur Training in Yogyakarta
Telkom Yogyakarta held IndiPreneur training titled “Pelatihan Portal Community Sentra UKM Merah Putih” (Red & White SME Center Portal Community Training) involving business people from SME centers across Yogyakarta. The IndiPreneur series of programs is aimed at encouraging SMEs to go online to boost promotions and increase transaction turnover.
21 AUGUST 2013
Jogya Digital Valley
To stimulate the digital creative industry in Indonesia, speciically in Yogyakarta, Telkom built the Jogja Digital Valley (JDV), an incubator and business accelerator center for Information & Communication Technology (ICT) businesses, following the establishment of a similar facility, namely Bandung Digital Valley (BDV).
23 AUGUST 2013
Signing of CLA V
The management and SEKAR successfully reached agreement for the signing of CLA V, valid from 23 August 2013 to 23 August 2015, based on Law No. 13/2003 regarding Manpower, as well as Ministerial Decree of the Minister of Manpower and Transmigration No. PER.16/MEN/XI/2011 regarding Procedures for the Preparation and Legalization of Company Regulations and Registration of Collective Labor Agreements (“CLA”)
4 SEPTEMBER 2013
National Customer Day
To celebrate National Customer Day (HPN), Telkom held a One Day Service for New Installations, Customer Disturbances, Transfers and Claims at Plasa Jatinegara and Plasa Gatot Subroto.
NOVEMBER 2013
Assessment Center Indonesia
Telkom’s Assessment Center Indonesia (“ACI”) was inaugurated by State SOE Minister Dahlan Iskan. The center is Telkom’s contribution to developing Indonesia’s human resources.
27 JUNE 2013 11 JULY 2013 21 AUGUST 2013
Awards
Speedy was awarded best Internet Service Provider (“ISP”) in Indonesia 2012 by Chip Magazine in the 2013 Chip Award.
Awarded “Best Sustainability
Reporting Award 2012” in the industry category of the Sustainability
Reporting Award (“SRA”) from the National Center for Sustainability Reporting (“NCSR”).
Awarded “Asian Town Scapes Sector Award 2013” for Bungkul Park, an annual award made by Asian Townscape Award (ATA). Bungkul Park was renovated with funding from the Community Development Program, and is also known by the name Taman Telkom.
Awarded “The Best Product Innovation of Infrastructure Sector” for IndiFinance, “The Best Technology” for Indigo and “The Best Corporate Innovation Culture & Management” in the 2013 SOE Innovation Award by the SOE Ministry.
Awarded “Diamond” in Cellular Telecommunication CDMA category for Plasa Telkom in the Service Quality Award 2013 by Service Excellence Magazine.
National Social Solidarity Award (KSN) Expo & Awards 2013 from the Coordinating Minister for Social Welfare for Telkom’s Active Role in activities directly related to poverty alleviation.
Awarded “Best of Asia” in Asia’s icon on Corporate Governance in the Corporate Governance Asia Annual Recognition Award 2013 by Corporate Governance Asia Magazine.
ISO 9001:2008 Certiication
Awarded to PT Finnet by DQS GmbH in 2012. Valid until 2015.
ISO 9001:2008 Certiication
Awarded to PT Dayamitra Telekomunikasi (“Mitratel”), a Telkom subsidiary, by United Register for System (“URS”) in 2013. Valid until 2016.
Customer Center of Expertise Certiication
Awarded by SAP in 2012. Valid until 2013.
ISO/IEC 27001:2005 Certiication
Awarded to PT Finnet, one of Telkom’s indirect subsidiaries, by DQS Gmbh in 2012. Valid until 2015.
AS/NZS ISO 9001:2008 Certiication
Awarded to PT Administrasi Medika (“AdMedika”), one of Telkom’s indirect subsidiaries, by Veriication New Zealand Limited in 2012. Valid until 2015.
ISO 9001:2008 Certiication
Awarded to Consumer Service West Division by TUV Rheinland Cert GmbH in 2011. Valid until 2013.
ISO 9001:2008 Certiication
Awarded to Business Service Division by TUV Rheinland Cert GmbH in 2013. Valid until 2016.
ISO/IEC 27001:2005 Certiication
Awarded to Infratel Division M Floor and Access Division 7th Floor of
Gedung Grha Citra Caraka, by TUV Rheinland Japan Ltd. in 2012. Valid until 2015.
ISO 9001:2008 Certiication
Awarded to Telkom Flexi Division by TUV Rheinland Cert GmbH in 2011. Valid until 2014.
ISO 9001:2008 Certiication
Awarded to Enterprise Service Division by TUV Rheinland Cert GmbH in 2011. Valid until 2014.
ISO 9001:2008 Certiication
Message from the
President Director
“Telkom continues to actively participate in the mitigation
of carbon dioxide impact through the Telkom Go Green
Action program and to stimulate environmentally friendly
business activities through the provision of
world-class telecommunication service content and IT-based
transmission content.”
Arief Yahya
The widespread extent of the environmental crisis facing the Earth is demonstrated by the increasingly intense extreme weather that has hit various parts of the globe, not excluding Indonesia.The joint eforts
promoted by leaders of the world’s major industrial nations to mitigate the efects of CO2 (carbon dioxide)
emissions are still facing a variety of challenges.The main obstacle is difering economic interests, which has resulted in no agreement yet being reached on the joint global initiatives within the Kyoto Protocol framework.
Despite this reality, Indonesia, as a country with vast tropical rain forests, is one of the main components in the process of mitigating CO2 gas emissions naturally and has demonstrated strong consistency in eforts to mitigate carbon gas emissions through the application of the REDD+ (Reduce Emissions from Deforestation and Land Degradation) program.This program involves all layers of society, the government and industry players in its realization. Through this joint efort, the Indonesian Government believes the Earth’s sustainability and that of all its contents will be achieved. At the same time, communities around the forests are seeing improving welfare, such that future generations will have a healthier planet.
As an industry with coverage across Indonesia, Telkom is strongly committed to managing this environmental crisis through various strategic policies aimed at mitigating carbon gas emissions that occur due to the company’s
natural gas), in accordance with international standards for new room coolers (air conditioners).We are also making eforts to reduce indirect emissions of CO2 gas by the eicient use of mains electricity for AC and lighting, including more energy eicient STOs, using buildings designed especially to save electricity, and taking other steps to reduce the use of electricity generated by power stations.
In addition, we continue to apply the paperless oice concept and are providing various applications for businesspeople in Indonesia.
By improving the quality of
such service applications, we fully support the growth and development of more eicient business activities that are environmentally friendly through the substantial reduction of physical mobility.We are also striving our utmost to safeguard natural resources through the application of the 3R principle (recycle, reuse, reduce).This principle is an important consideration in the preparation of pro-environment policies.The implementation of the 3R principle includes the installation of waste water management at the Head
Oices in Jakarta and Bandung.
We continue to support the growth of an environmentally friendly
culture through the national Bike
to Work movement, which is becoming increasingly entrenched among employees, and Earth Hour, which is promoted by the World Wildlife Fund (WWF).In addition, we also actively preserve the environment through direct action involving local community participation for various projects, operational activities.Telkom
also demonstrates real eforts to stimulate an environmentally friendly economy, growth and business development through improved performance in TIMES services that facilitate more reliable communication, data transfer and teleconference activities. Nowadays, business management activities can be more eicient with substantially reduced physical movement, thus reducing CO2 emissions from transportation.
INCREASING THE INTENSITY
OF ENVIRONMENTALLY
FRIENDLY OPERATIONS
We continue to maintain a high level of consistency in applying environmentally friendly operations as part of our Telkom Go Green Action program, which covers eforts to mitigate carbon gas emissions, eiciencies in energy usage, the use of renewable energy sources, the implementation of paperless oices, an improved environmentally friendly culture, and so forth.
As part of our participation in mitigating the efects of CO2 gas
emissions, we apply a carbon free concept through the use of solar powered cells, micro hydro energy and low power
consumption equipment to operate our 3,996 outdoor BTS, subsequently successfully reducing
CO2 emissions by the equivalent
of 961.39 tons per year.Meanwhile,
indoor BTS are operated with new
energy saving technology.
regreening critical land and the creation of city parks incorporating up-to-date communication facilities in various areas of Indonesia.
IMPROVING SUSTAINABLE
ECONOMIC DEVELOPMENT
We consistently realize a variety of development programs to take advantage of growth opportunities, support more eicient activities, ensure improved economic performance and the distribution of economic value generated to stakeholders as manifestation of the economic dimension of sustainability.In 2013, Telkom increased its economic value to Rp84.32 trillion, a rise of 8.3% from the Rp77.88 trillion of the previous year.
Telkom distributed 68.4% of this, a total of Rp57.64 trillion, to stakeholders. The economic value distributed to suppliers, employees, national
and regional governments, providers of capital and to communities, demonstrates that Telkom’s business activities have a signiicant economic impact on its stakeholders’ economic progress.Telkom contributed to State revenue in the form of dividends, fees and taxes to the amount of Rp16.74 trillion, an increase of 5.5% on the Rp15.87 trillion the previous year.
In addition, through the payment of regional taxes, the direct and indirect absorption of labor, coaching small and medium business enterprises and cooperatives, the provision of TIMES facilities and the provision of business opportunities for the public to become part of the business chain, Telkom also actively plays its part in improving regional economies.
THE DEVELOPMENT OF SOCIAL LIFE
We distance ourselves from discrimination based on ethnicity, religion, class and gender in the management of human resources, while acknowledging diversity
and providing equal rights for
employees to progress along their career path out of respect for Human Rights.We have established Telkom Corporate University (Telkom CorpU) to develop excellent and digniied people for Telkom and assign employees to participate in training to improve their competencies.In addition, we have established various leadership development programs, in which 897 employees have taken part, to prepare our leaders for the future. Telkom has also implemented entrepreneur training programs to prepare employees approaching retirement age to provide them with skills for retirement.
Telkom also displayed consistent eforts in maintaining and safeguarding its zero accident achievement in various operational areas, an achievement reached through the involvement of all levels of employee in upholding work regulations related to health and the awareness of the risk of workplace accidents.Telkom understands its responsibility toward the health of its customers and continues to develop prime services for its customers, as well
as selecting high quality vendor
products.With this approach, we have successfully maintained our
customer satisfaction index with optimum assessment results from year to year.
Telkom also actively participates in government eforts to improve the conditions of marginal communities, poverty alleviation, improving public health and providing satisfactory public facilities and infrastructure, improving regional operations that encompass remote areas across Indonesia.These community development activities are realized through the implementation of the Partnership and Community Development Program, supported by suicient funding.
In 2013, Telkom disbursed funds for education and training amounting to Rp20.96 billion, Rp18.82 billion for public, including religious facilities, Rp5.37 billion for the provision of health facilities and infrastructure, Rp6.63 billion aid for poverty alleviation and a total of Rp1.47 billion for aid to victims of natural disasters.This funding demonstrates Telkom’s active participation in the achievement of the 2015 Millennium Development Goals (MDGs) initiated by the government long ago.
LOOKING AHEAD
Telkom is committed to continue its support of eforts made by the global community to improve environmental conditions and to mitigate the efects of climate change, which remain the primary issue in the context of sustainability.The chain of extreme weather, climate change and global warming afects all human activities
and has business consequences
faced by all corporate entities, including Telkom.Potential risks faced by Telkom include network and telecommunication infrastructure damage, which in turn has the potential to reduce the company’s economic value in both the short and long term.
For this reason, Telkom is
CLOSING
At this time, we express our thanks to the shareholders, in particular the SOE Ministry, which has provided direction to improve Telkom’s sustainability performance. We appreciate the advice and
direction of Telkom’s Board of
Commissioners, which has enabled the entire workforce to improve the company’s sustainability performance in 2013.
The Telkom Board of Directors,
of course, expresses its highest appreciation to all the employees for their dedication and hard work to ensure an improved sustainability performance compared to the previous year.
TOWARD 2014
We encourage all employees and the management to work even harder in running environmentally friendly operations, improving social care for employees and society, and to improve the welfare of all stakeholders.
A bright future for Indonesia is a bright future for Telkom Indonesia!
Arief Yahya
About Telkom
PT Telekomunikasi Indonesia (Persero), Tbk is a State Owned Enterprise (SOE), with its head oice at Gedung Grha Merah Putih,
Jalan Japati No. 1 Bandung and
with branches spread across the whole of Indonesia.
Per 31 December 2013, we owned a total of 572 customer service oices (Plasa Telkom) spread across 34 provinces and 511 towns/regencies across Indonesia supported by 25,011 employees.
PRODUCTS AND SERVICES
As a company providing TIMES services, we continue to innovate in sectors other than telecommunications, as well as to develop synergies between all products, services and solutions, moving from a legacy business to a New
Economy Business (NEB).
Our business portfolio is grouped into several lines of business, as follows: See Pages 47-53 of the Telkom 2013 Annual Report.
1. Telecommunication Business
a. Fixed Wireline Services
Products under the ixed wireline services are Plain Old Telephone Services (POTS), value added services (VAS), Intelligent Network (IN) services and Session Initiation Protocol (SIP) service. IN
services are internet protocol (IP) based network services connected to the Telkom telecommunication network and exchange system. SIP services are based on IP Multimedia Subsystem (IMS) that integrates wireless and wired voice and data communication.
b. Fixed Wireless Services
Services under the brand Telkom Flexi or Flexi make use of limited mobility CDMA technology
and are managed under the Wireless Broadband
Division. c. Cellular Services
Cellular communication services are implemented through the subsidiary, Telkomsel, and make
use of GSM technology on the 3.5G frequency.
Cellular products and services are divided into two models, post-paid services through the kartuHalo product, and pre-paid services through the simPATI and Kartu As products.
d. Network Services
The Telkom network services encompass satellite transponder leasing, satellite broadcasting, VSAT, audio distribution and satellite-based and terrestrial-based leased lines.
e. Broadband and Internet Services
- Broadband internet is ofered under the
commercial name “Speedy” and provides broadband internet and non cellular services. - Cellular data communication. Telkomsel
provides internet and data communication through its cellular network under the commercial name Flash.
- SMS services for cellular and ixed wireless telephone subscribers.
- Dial up internet connection is provided under the name “TelkomNet instan”.
- Wi-Fi/hotspot is a wireless access solution for mobile internet data services in certain areas utilizing Telkom’s and other ISP’s payment facilities, or in bulk using Customer Premises
Equipment (CPE)-based Wi-Fi technology. In
2012, we launched the Indonesia Wi-Fi service to meet public need for Wi-Fi-based internet services in public places, such as airports, shopping malls, hospitals, universities/schools, cafes and other public places, with a target of 1 million access points in 2013. Indonesia Wi-Fi has been rolled out with a minimum speed of 10 Mbps to accommodate roaming, oloading, retail and other needs.
- FlexiNet, is our internet access service that uses the Telkom Flexi network. In 2011, we launched our “Flexi Hotspot” service for customers wishing to enjoy high speed internet
access through a wireless internet connection supported by our hotspot infrastructure. Services can be easily accessed through all
Wi-Fi enabled equipment merely through the
use of a FlexiNet Unlimited or Flexi Mobile
Broadband username and password, which are
available at every hotspot.
- Virtual Private Network (VPN), is a private network using media such as internet to safely connect to a remote site.
- Astinet, provides high quality internet access
using a default internet gateway and public IP address for a dedicated, ixed communication line 24 hours a day.
- VoIP, Telkom provides afordable international call services through our premium VoIP service package “Telkom Global-01017”, while “Telkom Save” provides regular international calls. - ISDN PRA is a digital network to facilitate
multimedia telecommunication services making use of wider bandwidth and inter terminal digital systems to provide voice, data and video communication through a single channel with
high speed, quality and capacity. Telkom also
provides ISDN-based internet access. - DINAccess is a communication service
with dedicated access to provide LAN interconnection services and multimedia services at a speed adjustable to customer needs.
- Global Datacom is a data communication service that lets corporate customers connect
their headquarters with branch oices or clients
across the globe. Telkom works with global partners through Telin, a subsidiary, to provide this service.
- Metro Link is a Metro-network-based
connectivity service that accommodates point-to-point, point-to-multipoint and multipoint-to-multipoint communications.
- Metro I-net is a high capacity data network solution based on IP (Internet Protocol) or ethernet that provides lexibility, ease of use
and efectiveness, as well as quality assurance
for corporate and SME customers. - Port Wholesale provides wholesale rental
- Value-added service. Datacom provides additional facilities ofering added value for data communication customers.
f. Interconnection Services
Telkom also earns revenue from other telecommunication operators that utilize our extensive infrastructure network in Indonesia, both for calls that end at or transit through our network.
g. Ancillary Services
We have exclusive agreements with several investors under revenue sharing arrangements to expand ixed line phone services, public card phones (including their maintenance), data and internet networks, and ancillary facilities related to telecommunications.
In addition, we also have several supporting and ancillary businesses, which include the lease and/
or supply of BTS to other cellular operators and the
provision of various support facilities. We manage our telecommunications tower business through our subsidiary, Mitratel.
2. NEB Portfolio and Strategic Business Opportunities
Portofolio NEB dan Strategic Business Opportunities
mencakup:
a. IT Outsourcing or Managed Application, which consists of cloud-based and server-based management services, as well as IT consultation services.
b. e-Payment/Payment Services, covering:
- Billing Payment is a service that facilitates
customers making payment transactions for service providers or goods, such as PT PLN, Telkom, PDAM, PT KAI and other services, through collecting agents such as banks,
cooperatives, BPR, convenience stores and
other agents;
- Remittance is a money transfer service where neither the sender nor the receiver needs a bank account to complete the transaction as transfers can be accomplished using only
- e-Money provides services to customers who wish to manage money electronically through certain media (cell phone, prepaid card, or a virtual account that can be accessed via the Internet) for use in electronic transactions; and
- e-Voucher or Telkom Voucher is a single voucher issued by Telkom that can be used to purchase or reill services provided by Telkom Group, such as Kartu As, simPATI, Flexi Trendy, post-paid TelkomVision services and Speedy Hotspot.
c. IT enabler services include business process outsourcing and knowledge process outsourcing, which consists of:
- Network-centric value added services, comprising IT-based value added services for data and phone, security services, and server and storage for connectivity customers; and
- Integration services, comprising integration services for network and hardware
associated with Customer Premises
Equipment (CPE), applications and software,
as well as computer hardware.
Media and Edutainment business portfolio, comprising:
a. Pay TV ofering packets or a la carte provided through satellite or cable or IPTV (Internet protocol-based television) with premium content including news, sport, entertainment and others. This service is managed by our subsidiary, Indonusa Telemedia, under the brand TelkomVision. Meanwhile, commercial IPTV services were launched in August 2011 under the brand Groovia TV and are currently available in all regions included in the service provision
license, namely Jabodetabek, Bali, Bandung,
Semarang and Surabaya. Per 31 December 2012, the Company had 1.2 million Pay TV subscribers. b. UseeTV - Over the Top TV (OTT TV) is a TV
service accessible for subscribers over the internet.
c. Advertising is a commercial service for the promotion of products or services owned by a third party that is presented through digital or print media, such as radio, television, internet, newspapers, brochures/lealets and billboards.
d. Portal services facilitate content aggregation and distribution. In addition to sales and payments related to the company’s products and services conducted through our
e-commerce portal, our e-store portal and on-device portal services also facilitate the sale and distribution of content and applications, such as games, applications, news, sport information, education content, music, ring back tones, SMS content and others that can be downloaded directly on the customer’s mobile device or web. This content and application can be obtained either for payment or free of charge.
COMPANY SCALE
2013 2012
Number of Employees (People) 25,011 25,683
Net Revenue (Rp billion) 82,967 77,143
Total Capitalization:
- Total Liability (Rp billion) 50,527 44,391
- Total Equity (Rp billion) 60,542 51,541 - Total Assets (Rp billion) 127,951 111,369
RELATIONSHIP WITH SUPPLIERS (SUPPLY
CHAIN)
G4 has introduced a number of new approaches, one of which is a concept related to the organization’s value chain. The deinition of the GRI G4 supply chain is a
sequence of activities or parties that provide products
or services to the company. This concept, as deined in GRI G4, is an important aspect both inside and outside the company.
We recognize the importance of parties who act as suppliers in the sustainability of our operations. Positive reciprocal interaction and mutual support between us and the suppliers has a positive impact on our performance, thus ensuring the sustainability of the company. Therefore, our partners / suppliers are part of the business operations’ chain.
In order to fulill the need for goods / services
implemented by our partners, we apply the integrated supply chain concept. In addition, the procurement and partnership process is computer-based to minimize physical contact between suppliers / partners with us to facilitate fairness and transparency.
SIGNIFICANT CHANGES
There have been no signiicant changes during the reporting period to the ownership structure or to the ield of business. We remain committed to continuing fundamental and comprehensive transformation at all levels of business.
MITIGATION PRINCIPLE APPROACH
Since 2006, we have been committed to applying risk management based on the Enterprise Risk
Management framework. In practice, risk management is an inseparable part of a company’s GCG application and internal control. Moving ahead, we have compiled
a road map to develop Entity Risk Management as follows:
- 2013 : increased ERM Maturity Level to initial Stage Quantiied Level.
- 2014 : increased ERM Maturity Level to intermediate Stage Quantiied Level.
- 2015 : increased ERM Maturity Level to advanced stage Quantiied Level.
- 2016 : increased ERM Maturity Level entering Optimized Level.
The company’s vision related to risk management implementation is, “Making risk management an INHERENT CULTURE in the implementation of business processes and operations”. Therefore, since 2008, we have built and developed the following:
- Structural aspects, encompassing the development of a risk management vision, mission, commitment, tone at the top, conducive internal environment, policies, competency development, IT tools and systems.
- Operational aspects, encompassing determination of Risk Acceptance Criteria, Risk Assessment implementation and the development of risk management for speciic functions.
- Aspects of care, encompassing monitoring risk management implementation, periodic risk reporting, ensuring sustainable competency
development, as well as conducting reviews through a Risk Management Index, Risk Culture Survey and evaluation of Implementation Maturity Levels. At this time, risk management implementation has reached a level whereby risk management is integrated across all subsidiaries.
In addition, in our eforts to manage risk, we are doing the following:
1. building and developing structural, operational and care aspects for risk management implementation in all subsidiaries;
2. improving the quality of risk-based decision making
(six eyes principle);
3. developing Business Continuity Management and
Crisis Management;
4. developing Revenue Assurance to protect from leakage and an anti-fraud program;
5. development of Enterprise Security Governance to protect physical and non-physical assets (e.g. Information System Security with the development of ISO 27000);
6. developing an Internal Control Program; and 7. developing Regulatory Management.
COMMITMENT TO EXTERNAL INITIATIVES
We always comply with government regulations and strive to apply the standards in force in the telecommunications industry for governance and business practices to monitor and measure performance in accordance with applicable regulations and legislation for publicly listed companies.
MEMBERSHIP IN INDUSTRY ASSOCIATIONS
AND OTHER ORGANIZATIONS
Telkom actively participates in several national and international associations. In the national arena, we are members of:
1. The Indonesian Infocomm Society (MASTEL); 2. The Indonesian Satellite Association (ASSI); 3. The Telecommunications Interconnection Clearing
Association (ASKITEL); and
4. Corporate Forum for Community Development (CFCD).
In the international arena, Telkom is a member of associations including:
1. Asia Paciic Network Information Centre (APNIC), a non-proit organization aimed at ensuring the stability and reliability of internet resources in the Asia Paciic region;
2. ITU Telecommunication Development Sector (ITU-D), an organization responsible for creating policy and supplying training programs, as well as funding strategies related to telecommunications for developing countries; and
3. ITU Telecommunication Standardization Sector (ITU-T), an organization responsible for the creation of telecommunication standards.
OPERATIONAL STRUCTURE AND SHARE
OWNERSHIP
To the end of the reporting period, Telkom owned 23 subsidiaries, consisting of 9 subsidiaries with direct ownership and 14 subsidiaries with indirect ownership. These subsidiaries form part of our business development strategy and contribute to increased revenue. Telkom’s majority shareholder (53.14%) is the Government of the Republic of Indonesia, with the remainder of the company (46.86%) owned by the public.
Our shares are recorded and traded on the Indonesia Stock Exchange (IDX) and New York Stock Exchange (NYSE) under the share codes TLKM and TLK.
Telkom Group Structure
Ir. Rinaldi
Buchari Prana IndahPT Mekar
Bambang
Lusmiadi 1. PT SWADAYANUSA
KENCANA RAHARJA 9,5%
2. Sofian Susantio 9,5%
3. Ravi Varma Kanason 4,75%
4. Shia Kok Rat 1,25% Celluler
35%
65% 100%
60%
99.83% 60% 51% 75% 99,99%
40% 0,17% 0,01%
99,83% 99,99%
100% 100%
53,14%
eBay
International age Ir. Harry John
Dedy Mardhianto
PT Jiraf Imaji Solusi Ir. Rinaldi
Buchari Ir. Rinaldi Buchari
99,99% 99,99% 51%
0,01% 0,01% 49%
0.17% 40%
49%
0,01% 25%
Multimedia Tower Business Telco Equipment
22
- Trans Corpora 80%
- Telkom 19,54%
- TelkomMetra 0,46%
PT TIGATRA MEDIA
Media Trio (L) Ine
1. Magic Alliance Labuan Limited 24,10%
2. The Bank of New York 10%
3. Telesat Canada 3,70%
4. Hughes
Telecommunication & Space 3,70%
5. Others 22,80%
100% 99,99% 100% 100%
46,86%
Erry Anwardiredja 0,01%
100% 100%
100%
55%
45%
80% 38.29%
25% 20%
36.71%
49% 51% 100%
100% 49%
51%
Netco & Opco VSAT
International
About This Report
This 2013 PT Telekomunikasi Indonesia Tbk (Telkom)
Sustainability Report (the Report) is the eighth Report since the irst one was published in 2006. This Report has been compiled to comply with stipulations in Article 66 paragraph 2c of Law No. 40/2007 on Limited Liability Companies,
which requires the submission of a
Corporate Social and Environmental Responsibility (CSR) activities report and an Annual Report.
CSR, according to Article 1 of Law No. 40/2007 is “a company’s commitment to play a role in sustainable economic development
to improve the quality of life and
the environment in a manner that is beneicial to the Company itself, the local community and the public in general.” Through this Report, we are submitting to the stakeholders Telkom’s sustainability performance for economic, environmental and social aspects during 2013.
This report covers the period 1 January – 31 December 2013. The previous Report, the 2012 Sustainability Report, was published in June 2013. Telkom has published a Sustainability Report annually to provide a clear illustration, as well as to assess management performance, of the economic, environmental and social aspects as additional information to the inancial performance presented in the Annual Financial Report.
In preparing this Report we used the sustainability reporting guidelines issued by Global Reporting Initiative (GRI), version 4 (G4), which is internationally recognized and widely accepted. These Guidelines provide two GRI-4 compliant options, namely core and comprehensive. This Report is compiled based on GRI G4-Core.
We have provided special G4 indicators on each relevant page to enable readers to easily ind information related to each indicator, meanwhile, the overall G4-Core index list can be seen on page 110.
The GRI G4 indicators disclosed in this Report relate to the matters considered material and relevant to Telkom’s business. Those GRI G4 indicators that are not material, or that are irrelevant, to Telkom’s business are not disclosed in this Report.
REPOR
T CONTENT DETERMINATION PROCESS
To determine the topics and content of this report, we used the 4 (four)
steps required by GRI G4, namely:
1. identify material aspects and boundary (identiication);
2. prioritize the identiied aspects from the previous step (prioritization); 3. validate these material aspects (validation); and
4. review Reports that had previously been published to improve the
quality of the following year’s Report (review).
The content determination for this Report is based on 4 (four) principles, in accordance with GRI G4, namely:
1. stakeholder inclusiveness, involving stakeholders in the determination of material to be disclosed in this Report;
2. materiality, the content of this Report has been selected based on
material aspects required by the stakeholders;
3. sustainability context, aspects related to the sustainability context that are relevant for inclusion in this Report needed for decision making; and 4. completeness, this Report has
been compiled with a clear scope for the 2013 reporting period and is supported by complete data.
These four steps to determine the content of this Report are illustrated in the Report Content Determination Process Flow Chart, following.
Step 1
IDENTIFICATION
Sustainability
Context
Sustainability
Context
Materiality
Stakeholder Inclusiveness
Completeness
Stakeholder
Inclusiveness
Step 2
PRIORITIZATION
Step 4
REVIEW
Step 3
VALIDATION
REPORT CONTENT DETERMINATION FLOW PROCESS
2013 Sustainability
Report
2013 Sustainability Report
PT Telekomunikasi Indonesia, Tbk1 Telkom Preserves
the EnvironmentTelkom’s PeopleGovernanceTelkom Prioritizing CustomersCore IndexGRI G4
Creating Sustainable Global Talents and Opportunities
DETERMINING MATERIALITY LEVEL
Materiality in this case means matters considered to be relevant to Telkom’s business and having a signiicant impact on stakeholders in the decision making process. To determine materiality for this Report, we have involved the stakeholders by issuing them a materiality survey. Several groups of stakeholders were involved in the survey, including the government, customers, labor unions, suppliers, communities and social welfare organizations. In addition, we have also paid attention to the opinions and advice of stakeholders regarding the previous years’ Sustainability Reports.
1 Economic Empowerment 2 Community Development 3 Contribution to State Revenue
4 Business Ethics
5 Quality of Services 6 Respect for Human Rights
LOW MEDIUM HIGH
LO
W
MEDIUM
HIGH
IMPORT
ANT T
O S
T
AKEhOLDERS
IMPORTANT FOR TELKOM
7 Employee Beneits
8 Training and Education
9 Occupational Health and Safety 10 Energy Conservation and Eiciency 11 Carbon CO2 Emissions Mitigation 12 Sustainable Supplier
5 2
1 3
9 7
8
6 4
10
12
REPORT BOUNDARY
This Report covers the activities of Telkom and its subsidiaries, as noted in the consolidated inancial report. The Financial and Human Resources data, as well as some of the environmental data, in this Report has been consolidated with that of our subsidiaries, while the Community Development and Partnership data only covers Telkom as the parent company and does not include data managed by each subsidiary.
We have used inancial data measurements based on Indonesian Financial Accounting Standards (Pernyataan Standar Akuntansi Keuangan - PSAK). Meanwhile, for the sustainability data we have made use of data
measurement techniques that
are internationally valid, such as gigajoules to calculate energy use. Quantitative data in this Report is presented using the comparability principle for a minimum of two consecutive years, such that this Report may be used to analyze trends. There is no restriction in determining the scope and boundary of this Report. In addition, in accordance with GRI-G4 Guidelines, to determine
the Report’s quality the principles
used are balance, accuracy, timeliness, clarity and reliability.
SUPPLY CHAIN
We have identiied the group of suppliers that has a dominant impact on the sustainability of Telkom’s business. The suppliers referred to in this Report are those that supply special goods and services, such as those supplying labor for security, transportation, cleaning services, marketing and maintenance/repairs. The businesses of these suppliers potentially could impact directly on Telkom’s image and reputation, especially related to compliance with manpower legislation and occupational health and safety. Therefore, to reduce any negative impact, we have tight selection procedures for suppliers and consider their compliance with labor legislation. Every contract entered into with a supplier is regulated
through clauses that require the supplier to abide by regulations and
legislation related to manpower. In the reporting period, there have been no signiicant violations made by our suppliers.
Telkom Subsidiary
Outside the Company
MIN IN
G
CO N
TR A
C T O
R
TR
AN
SPO
RTAT
IONS CLEANIN
G S
ERV
ICE
S
SE
C U
RIT
Y
Subsidiary
OUTSIDE THE COMPANYMATERIALITY ASPECTS AND BOUNDARY
Materiality Aspects Boundary
ECONOMY CATEGORY
Economic Performance Market Presence
Indirect Economic Impact
ENVIRONMENT CATEGORY Energy
Emissions
SOCIAL CATEGORY
Sub Category: Labor
Employment
Occupational Health & Safety Training and Education Diversity and Equal Opportunity Equal Remuneration for male and female employees
Supplier Labor Practices Assessment
Sub Category: Human Rights
Freedom to Associate and Collective Labor Agreement (CLA)
Security Practices
Suppliers’ Human Rights Assessment
Sub Category: Community
Local Communities Anti-corruption Public Policy
Anti-competition or anti-monopoly
Sub Category: Product Responsibility
Providing Product and Service Labeling Marketing Communication
DETERMINING MATERIAL ASPECTS AND BOUNDARY
The process to determine material aspects and boundary was conducted through Focus Group Discussion (FGD) attended by the team responsible for preparing the 2013 Sustainability Report and Telkom employees from various work units. Material aspects were determined through consideration of impacts on Telkom’s business and the efect on stakeholders. In addition, consideration was made of the efect on Telkom’s reputation and branding. The indings of the FGD are summarized in the table below.
RELATIONSHIP WITH STAKEHOLDERS
One important element in good corporate governance is the
implementation of a harmonious relationship with stakeholders. To achieve this, we always strive to understand the needs and expectations of our stakeholders to facilitate fairness for them. Through the corporate culture, “The Telkom Way”, the management works to instill the corporate culture and values such that employees at every level understand and values that must always be used with all stakeholders.
We are committed to establishing two-way interaction that is mutually supportive with our stakeholders. This will result in optimum beneit for the stakeholders, as well as the company, and thus ensure the company’s sustainability.
SIGNIFICANT CHANGES FROM THE PREVIOUS YEAR
This year is the irst time that this Report has been prepared using GRI G4, thus there are minor diferences in the presentation format from previous years, which made use of GRI G3.1. However, despite the change in the guidelines for the preparation of this Report, overall there is no substantial efect or restatement of information contained in reports from previous years. Likewise, during the reporting period there has been no fundamental change in Telkom’s business structure. Fundamental changes,
as intended for this Report, would be acquisitions, mergers, company
restructuring and downsizing.
PERSONAL CONTACT
For further information regarding this Report, please contact:
Investor Relations Graha Merah Putih 5th Floor
Jl. Jend. Gatot Subroto Kav. 52, Jakarta 12710, Indonesia. Tel: (62-21) 521 5109 Fax: (62-21) 522 0500 Email: investor@telkom.co.id.
Economic
Growth
Supporting Indonesia’s Economic Growth
40
Development Strategy 40
Supporting Improved Economic Conditions for Stakeholders
41
Contribution to State Revenue
42
Supporting Regional Economic Growth
43
Fostering Good
Relationships with Partners 43
Community Economic Empowerment
44
Development Partner Success Stories
“Telkom continues to support efforts to
SUPPORTING INDONESIAN
ECONOMIC GROWTH
Telkom understands that the support and availability of a reliable telecommunication infrastructure is an urgent need that must be met considering the geography of Indonesia, which consists of a
cluster of islands with inadequate
physical infrastructure. Telkom also realizes market growth opportunities are promising given the large Indonesian population, accompanied by stable economic growth over recent years.
The Indonesian government has long since deregulated to a free market that allows private businesses to join the telecommunications industry. This was implemented based on consideration of the important role of telecommunications in development, while the state budget has constraints for telecommunication development.
Recent developments indicate that the Indonesian economy continues to grow in line with increasing domestic consumption resulting from an increased level of social welfare. Society
requires the support of a reliable
telecommunication technology infrastructure to communicate, as well as for data transmissions. On the other hand, empirical studies show that the penetration of internet access and ixed line telephones in Indonesia remains low compared to other countries in the region. These facts illustrate that growth opportunities in the telecommunication industry in Indonesia are very promising.
achievement of Telkom’s vision, to become a leading TIMES company in the region.
Telkom continues to increase synergies among the various telecommunication services available and to take advantage of non-organic growth opportunities by expanding into overseas markets. Telkom’s preferred
method of acquisition is to
establish business alliances and strengthen its presence in the domestic market through network expansion and deepening of the TIMES business structure through careful planning. Telkom’s strategic objective is improving market capitalization. To achieve this strategic objective, Telkom implements three main strategies, namely:
1. directional strategy: sustainable competitive growth;
2. portfolio strategy: converged TIMES portfolio; and
3. parenting strategy: strategic guidance.
These three key main strategies are further elaborated in 10 strategic initiatives, as follows:
1. center of excellence;
2. focus on portfolios with high growth or value;
3. accelerated international expansion;
4. cost transformation;
5. IDN development (Access, id-Ring, id-Con);
6. Indonesia Digital Solution (IDS) – Convergence services for digital ecosystem solutions; 7. Indonesia Digital Platform (IDP)
– Platform enabler to develop ecosystems;
Indonesian economic growth has tended to be moderate, in the range of 4.5% - 6.5%. In 2013, the national economy grew “only” by 5.78%. This moderate growth implies the existence of obstacles hindering the pace of economic growth, namely infrastructure limitations. To overcome these limitations and ensure higher growth in the future, the government has rolled out the Acceleration and Expansion for Indonesian Economic Development Master Plan (MP3EI), a development program that aims to accelerate the provision of basic infrastructure such as roads, ports, airports, electricity and telecommunications. It is believed that this overall infrastructure will play an important role in stimulating growth in the Indonesian economy.
With all this development, Telkom believes that the current projections and trends in general show strong growth for data services and a shift from traditional telecommunication toward HSPA+ and LTE technologies. Taking into account market opportunities and TIMES service capabilities, Telkom is committed to developing business, expanding and enhancing network capabilities to support Indonesian economic growth.
DEVELOPMENT STRATEGY
Telkom continues to perfect its strategic initiatives with focus on the implementation of the TIMES business framework and strengthening internal consolidation. This reinement is being implemented to ensure the
8 execution of best subsidiary
management system;
9. portfolio management through
Board of Executive (BoE) and
Chief Regional Oicer (CRO); and
10. increased synergy within Telkom Group.
Further explanation regarding
Telkom’s Business Development
Strategy can be found in the “2013 Telkom Annual Report.”
DISTRIBUTING ECONOMIC
PERFORMANCE TO
STAKEHOLDERS
Telkom considers sustainability from an economic perspective is eforts undertaken with the aim of supporting the economic capacity of stakeholders. Thus, sustainability from an economic perspective considers the economic impact on stakeholders resulting from Telkom’s operations. In line with increased economic performance, Telkom’s support of its stakeholders’ economic growth during 2013, with the exception of suppliers, also increased compared to the previous year.
Economic value received in 2013 totaled Rp84.32 trillion, an increase of 7.5% compared to the previous year’s Rp77.88 trillion. With this igure, the positive impact on stakeholders’ economic condition overall resulting from total
economic value distributed totaled Rp57.64 trillion.
Total economic value distributed for one group of stakeholders, namely providers of capital, rose 22.6% from Rp11.85 trillion in 2012 to Rp14.52 trillion in 2013. In line with Telkom’s improved inancial performance, dividends distributed and total interest paid also rose.
The distribution of economic value to other stakeholders, consisting of
payments to suppliers of goods and services, (BTS providers, content
providers, satellite transponder leasing, costs and so on) totaled Rp25.91 trillion, a fall of 23% from payments in 2012, which reached Rp33.65 trillion. Distribution to other stakeholders, such as payments to the State in the form of taxes and fees, totaled Rp7.39 trillion and payments to employees totaled Rp9.73 trillion.
Details of the economic values received and distributed can be seen in the Economic Value Summary table below.
Economic Value Summary (Rp billion)
2013 2012 2011
Direct economic value generated
Revenues:
a) Net Sales 82,967 77,143 71,253
b) Revenues from inancial investments
- Interest income 843 596 546
- Dividend income - -
- Royalties - -
- Income generated from assets 99 65 39
c) Revenues from sale of assets 413 78 62
Total direct economic value generated 84,322 77,882 71,900
Economic value distributed:
Operating costs 25,913 33,651 25,416
Employee wages and beneits:
a) Payroll 2,356 2,084 1,973
b) Beneits 7,376 7,003 6,065 Total employee wages and beneits 9,732 9,087 8,038
Payment to providers of capital:
a) Dividend payment 13,044 10,734 9,102
b) Interest payment 1,476 1,111 1,591
Total payment to providers of capital: 14,520 11,845 10,693
Payment to government 7,390 5,586 5,359
Community investments 85 129 290
Economic value distributed 57,640 60,298 49,796
Economic value retained before dividend 39,726 28,318 31,206
Economic value retained after dividend 26,682 17,584 22,104
The increase in distribution of economic value to employees totaled 7.1%, primarily resulting from a 13.1% increase in salary and 5.3% in beneits. These increases were primarily derived from a policy adjusting Telkom’s remuneration package to support improved welfare for employees. Telkom saw a fall in total employees during the reporting period of 2.6%.
In addition to the salary
component, Telkom is also paying greater attention to improving
the quality of beneits provided to employees. Beneits are
designed to motivate employees to always work to their full ability, efectively and eiciently, to satisfy the KPI targets that have been set. In addition, beneits are provided to provide peace of mind to employees, including through the through the design of a pension program that can ensure
a satisfactory quality of life for
employees when they retire.
Telkom provides adequate
pension programs in two choices of package, namely the Deined
Beneit Pension Plan (“DBPP”)
tailored for permanent employees who were hired prior to 1 July 2002 and the Deined Contribution Pension Plan (“DCPP”) that applies to other permanent employees.
In the DBPP, employees are
enrolled with participation of 18% of basic salary (prior to March 2003, employee contribution was 8.4%) with the company making up the remainder of the contribution. The minimum monthly pension for employees who have retired is approximately Rp425,000. The Company’s contribution to the
Telkom Pension Fund reached Rp187 billion, Rp186 billion and Rp182 billion respectively for 2011,
2012 and 2013. The DBPP fund is
managed by the Telkom Pension Fund for Telkom and PT Asuransi Jiwasraya (Persero) for Telkomsel.
Meanwhile, for the DCPP, the funds are managed by several Financial Institution Pension Funds (DPLK). Employees may select one of several DPLK that provide this program. Telkom’s annual contribution to these DCPP is determined by the percentage taken from participating employees basic salaries and totaled Rp5 billion, Rp5 billion and Rp6 billion respectively for the years 2011, 2012 and 2013.
Telkom also provides its employees with the option to take early retirement from the age of 56 through its Early Retirement program. This program is run periodically, depending on the Company’s inancial ability and employee needs, to ensure the achievement of both short-term and long-term goals. In 2013, Telkom did not implement its Early Retirement program.
In addition to the pension program and performance bonus initiatives, Telkom also provides a variety of other beneits to its employees, including health beneits and various other things discussed in “Telkom’s People”.
To ensure performance and increase the signal transmission power capability of the entire
network of managed BTS
transmitters, Telkom must always provide a budget for the
development, maintenance and purchase of the latest technology applications, as well as the creation of information technology-based service innovations. The economic value percentage distributed for operational costs demonstrates the amount of funds allocated to
develop and improve the quality of
network transmission. At the same
time, Telkom is also required to
improve operational management eiciency to maintain the
performance of the entire managed network.
The economic distribution table above shows that Telkom’s increased perform
