ITEM 4. INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY Profile of Telkom Indonesia
Telkom is the largest telecommunications company in Indonesia, in terms of revenue and number of subscribers, providing fixed and mobile telecommunications services and solutions and ancillary services. We are innovative and continue to strengthen and optimize our portfolio businesses, services and solutions by creating strategic programs that maximize synergies and active portfolio management. Our long-term vision, which reflects our existential purpose in building Indonesia as a more prosperous and competitive nation as well as delivering the best value to our stakeholders, is to be the most preferred digital telecommunications company that provides the society with the virtuous communication and information services for their empowerment. In achieving this vision, we define 3 (three) missions that cover many aspects in empowering the society, which are to rapidly build sustainable digital infrastructure and smart platforms that are affordable and accessible to all, to nurture best-in-class digital talents to help develop Indonesia's digital capabilities and increase the adoption of digital technology and services, as well as to orchestrate a comprehensive digital ecosystem to deliver superior customer experience.
In order to achieve our vision and missions, we continue to work to transform key aspects of our business: technology, organization, operation, people, and culture.
Company Name : Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk.
Abbreviated Name : PT Telkom Indonesia (Persero) Tbk.
Commercial Name : Telkom
Line of Business : Telecommunications and informatics networks and services Tax Identification Number : 01.000.013.1-093.000
Business Identification Number : 9120304490415
Business License : 0029/IUP-UB/X/2017/DPMPTSP
Domicile : Bandung, West Java
Address : Jl. Japati No. 1, Bandung 40133, Indonesia
Telephone : +62-22-4521404
Facsimile : +62-22-7206757
Call Center : +62-21-147
Website : www.telkom.co.id
The information found on our website does not form part of this Form 20-F and is not incorporated by reference herein
E-mail : [email protected]; [email protected]
Ratings : International Ratings: "Baa1 (Stable)" by Moody's, "BBB (Stable)" by Fitch, and "A" by MSCI ESG rating for 2021
Domestic Rating: "idAAA" by Pefindo for 2021 Date of Legal Establishment : November 19, 1991
Legal Basis of Establishment : Based on Government Regulation No. 25 of 1991, the status of our Company was converted into a state-owned limited liability corporation ("Persero"), based on the Notarial Deed of Imas Fatimah, S.H. No.128 dated September 24, 1991, as approved by the Ministry of Justice of the Republic of Indonesia by virtue of Decision Letter No. C2-6870.HT.01.01.Th.1991 dated November 19, 1991 and as announced in the State Gazette of the Republic of Indonesia No. 5 dated January 17, 1992, Supplement to the State Gazette No.210
Ownership : – Government of the Republic of Indonesia – 52.09%
– Public – 47.91%
Listing on Stock Exchanges : Our shares of common stock were listed on the IDX and the New York Stock Exchange ("NYSE") on November 14, 1995
Stock Codes : – "TLKM" on the "IDX"
– "TLK" on the "NYSE"
Authorized Capital : 1 Dwiwarna Share and 399,999,999,999 shares of common stock Issued and Fully Paid Capital : 1 Dwiwarna Share and 99,062,216,599 shares of common stock
Offices : – 1 Head Office
– 7 Telkom Regional Offices and 61 Telecommunications Areas Service Centers : – 387 Plasa Telkom outlets
– 10 Global Offices in Australia, Hong Kong, Malaysia, Myanmar, New Zealand, Singapore, Taiwan, Timor Leste, Dubai, and the United States
– 18 International GraPARI centers across Hong Kong, Taiwan, and Timor Leste
– 396 GraPARI centers in Indonesia (including 9 GraPARI Telkom Group in Medan, Pematang Siantar, Pangkal Pinang, Palembang, Tangerang, Jakarta, Bandung, Surabaya, and Sorong) – 174 GraPARI mobile units
– 750 IndiHome sales car units
Other Information : – Public Accountant
KAP Purwantono, Sungkoro & Surja (a member firm of Ernst & Young Global Limited) (PCAOB ID 1381)
Indonesia Stock Exchange Building, Tower 2, 7th Floor, Jl. Jend. Sudirman Kav. 52–53, Jakarta 12190, Indonesia
– Securities Administration Bureau PT Datindo Entrycom
Jl. Hayam Wuruk No.28, 2th Floor, Jakarta 10120, Indonesia – Trustee
PT Bank Tabungan Negara (Persero) Tbk
Menara BTN, 18th Floor, Jl. Gajah Mada No.1, Jakarta 10130, Indonesia PT Bank Permata Tbk
Gedung WTC II, 28th Floor, Jl. Jend. Sudirman Kav. 29-31, Jakarta 12920, Indonesia – Custodian
PT Kustodian Sentral Efek Indonesia
Indonesia Stock Exchange Building, Tower 1, 5th Floor, Jl. Jend. Sudirman Kav. 52–53, Jakarta 12190, Indonesia
– Rating Agencies
PT Pemeringkat Efek Indonesia
Panin Tower Senayan City, 17th Floor, Jl. Asia Afrika Lot. 19, Jakarta 10270 Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06, Singapore Land Tower, Singapore 048623 Fitch Hong Kong Ltd.
19/F Man Yee Building, 68 Des Voeux Rd, Hong Kong – ADR Depositary
The Bank of New York Mellon Corporation 240 Greenwich Street, NY, USA – 10286
– Authorized Agent for Service of Process in the United States Puglisi and Associates
850 Library Ave # 204, Newark, DE 19711, USA
Employee Union : The Telkom Employees Union (Serikat Karyawan Telkom or "SEKAR")
Information about the legislation under which we operate and a description, including the amount invested, of our principal capital expenditures and divestitures (including interests in other companies), since the beginning of our last three financial years, is contained elsewhere in this Form 20-F.
Telkom Indonesia Milestones 1856-1884
On October 23, 1856, the Dutch Colonial Government deployed the first electromagnetic telegraph service operation in Indonesia, which connected Jakarta (Batavia) and Bogor (Buitenzorg). We consider this event to be part of the beginning of Telkom's history and have thus adopted October 23 as the anniversary of our "founding."
In 1884, the Dutch Colonial Government established a private entity, "Post en Telegraafdienst" to provide postal and telegraph services.
1906-1965
In 1906, the Dutch Colonial Government established an agency named Jawatan Pos, Telegrap dan Telepon (Post, Telegraph en Telephone Dienst) to assume control over postal services and telecommunications in Indonesia. In 1961, its status was changed to newly-established state-owned company, Perusahaan Negara Pos dan Telekomunikasi ("PN Postel"). In 1965, the Government separated postal and telecommunications services by dividing PN Postel into Perusahaan Negara Pos dan Giro and Perusahaan Negara Telekomunikasi ("PN Telekomunikasi").
1974
PN Telekomunikasi became Perusahaan Umum Telekomunikasi Indonesia ("Perumtel"), which provided domestic and international telecommunications services, and subsequently spun-off PT Industri Telekomunikasi Indonesia, which manufactured telecommunications equipment, into an independent company.
1991
Perumtel became a state-owned limited liability company and rebranded to Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia under Government Regulation No.25 of 1991.
1995
On May 26, 1995, we and Indosat established Telkomsel.
We completed our initial public offering and our shares were listed on the Jakarta Stock Exchange and the Surabaya Stock Exchange (which have since merged to become the IDX). Our shares were also listed on the NYSE and the LSE in the form of ADSs, and were publicly offered without listing on the Tokyo Stock Exchange.
1999
We launched the Telkom-1 satellite. This satellite was de-orbited when it reached the end of its operational life.
2001
We and Indosat eliminated joint ownership and cross-ownership in certain companies as part of the restructuring of the telecommunications industry in Indonesia. We acquired Indosat's 35.0% shareholding in Telkomsel, increasing our shareholding to 77.7%. We divested our 22.5%
shareholding in PT Satelit Palapa Indonesia, or Satelindo, and 37.7% shareholding in PT Lintasarta Aplikanusa. At the same time, we lost our exclusive rights as the sole operator of fixed line services in Indonesia.
2002
We divested a 12.72% shareholding in Telkomsel to Singapore Telecom Mobile Pte Ltd ("SingTel Mobile"), decreasing our shareholding in Telkomsel to 65.0%.
2004
We launched an international direct dialing service for fixed lines with the access code of 007.
2005
We launched the Telkom-2 satellite. This satellite was de-orbited when it reached the end of its operational life.
2009
We underwent a transformation from an information telecommunications company to become a Telecommunication, Information, Media and Edutainment ("TIME") company. Our new image was introduced to the public with a new corporate logo and the slogan of "the world in your hand."
2010
We completed the JaKaLaDeMa submarine fiber optic cable project in April 2010 which connected Java, Kalimantan, Sulawesi, Denpasar, and Mataram.
2011
We commenced the reformation of our telecommunications infrastructure through the completion of the Telkom Nusantara Super Highway project, which unites the Indonesian archipelago from Sumatra to Papua, as well as the True Broadband Access project to provide internet access with a capacity of 20 Mbps to 100 Mbps to customers throughout Indonesia.
2012
We increased broadband penetration through the development of Indonesia Wi-Fi as part of our "Indonesia Digital Network" (IDN) program.
We also reconfigured our business portfolio from TIME to TIMES to increase our ability to create business value.
2014
We became the first operator in Indonesia to commercially launch 4G/LTE services in December 2014.
2015
We launched IndiHome, which bundles all-in-one packages services consisting primarily of broadband internet, fixed wireline phone and interactive TV services.
2016
We completed the construction of our new headquarters in Jakarta which we designed as a "smart office" with open office layout and smart building features in order to provide an inspirational working environment for our employees.
In December 2016, we completed the construction of the submarine cable systems Southeast Asia-Middle East-Western Europe 5 (SEA-ME- WE-5).
2017
The Telkom 3S satellite was launched in February 2017 and fully commenced operations on schedule, starting in April 2017.
In August 2017, we completed the Southeast Asia-United States (SEA-US) submarine fiber cable connecting Manado, Indonesia to California, United States. The SEA-US cable is built, owned, and operated by a consortium of seven companies.
In October 2017, Telkomsel secured an additional 30 MHz spectrum at 2.3 GHz frequency, after winning the auction held by MoCI.
2018
We launched the Telkom Merah Putih satellite, which began providing coverage for all of Indonesia, Southeast Asia and South Asia in August 2018.
We inaugurated The Telkom Hub, a hub for developing digital entrepreneurs, digital infrastructure and solutions, and fostering a culture of digital. This hub also serves as a social and technology education center that provides digital customer care services. It is a center of excellence and it intended to facilitate the Government's digital initiatives such as "Making Indonesia 4.0," "2020 Go Digital Vision," and "One Data Indonesia."
In December 2018, we completed the construction of the Indonesia Global Gateway (IGG) submarine cable, which connects two major submarine cable systems: the Southeast Asia-Middle East-Western Europe 5 (SEA-ME-WE 5) and the Southeast Asia- United States (SEA-US) Submarine Cable Systems.
2019
We sold 654,804 shares, representing 67.0% of PT Jalin Pembayaran Nusantara ("Jalin") to PT Danareksa (Persero), a state-owned enterprise, for the value of Rp394,569,700,000.00. As at the date hereof, we hold 33.0% interest in Jalin.
On February 19, 2019, we acquired (through Mitratel) 95.0% of the share capital in PT Persada Sokka Tama, a company engaged in the telecommunications tower business with 1,017 towers located throughout Indonesia. In December 2019, we completed the acquisition of 2,100 telecommunications towers from PT Indosat Tbk in Indonesia.
We reconfigured our business portfolio from TIMES to a five-segment portfolio (Mobile, Consumer, Enterprise, Wholesale, International Business, and Others) to reflect our customer-centric mindset and enhance and create value to our customers.
2020
We actively took part into several initiatives in response to the COVID-19 outbreak at the level of our company, our communities and nationally. In particular, we further increased our network reliability and availability, and accessibility to our services at affordable prices as more people were asked to work from home or study from home. We also participated in the development of tracking applications, including for purposes of the Indonesian vaccination campaign.
We started building a Telkom HyperScale Data Center in July 2020. This mega-capacity data center of tier 3 and 4 class will complement 26 data centers which are already operational (five international data centers, 18 neuCentrIX and three tier 3 and 4 data centers). Telkom HyperScale Data Center is intended to support Indonesia's digital transformation by enabling global players and corporations from various sectors such as financial institutions, the Government and its agencies, manufacturers, content providers, global cloud providers to further develop access to their services and continue their digitalization efforts.
In October 2020, Telkomsel entered into a conditional sales and purchase agreement for the sale of 6,050 telecommunication towers to Mitratel. The transfer of these telecommunication towers is expected to strengthen Mitratel’s core business and increase its value, as well as help achieve its long-term plans.
In November 2020, Telkomsel entered into a new collaboration with, and made a US$150 million investment in PT Aplikasi Karya Anak Bangsa (Gojek) (now known as PT GoTo Gojek Tokopedia (“GoTo”).
2021
Telkomsel officially launched 5G services on May 27, 2021, cementing its position as the first cellular operator to offer 5G in Indonesia.
Telkomsel also refreshed its brand identity, followed by product simplification. In May 2021, Telkomsel made an additional investment of US$300 million in GoTo. Telkom continued to build synergies and collaborations with digital and technology companies through an MoU with Microsoft in August 2021. In August 2021, Telkomsel entered into a deed of transfer and acquisition agreement with Mitratel for the transfer of its 4,000 telecommunications towers across Indonesia to Mitratel.
Telkom's venture capital arm, MDI, continued its investments into promising technologies and companies. MDI has invested in more than 50 startups in 12 countries, focusing on investment in several strategic sectors.
Telkom continues to build data center and cloud capacity. In addition to the 26 data centers that we already have, we are in the process of developing a new site for a data center namely a Hyperscale Data Center certified as tier 3 and 4 with a total area of 65,000 m2 near Jakarta. Our Hyperscale Data Center will be completed in stages, and the first stage is expected to be completed by the first half of 2022 with a capacity of 22.5 MW.
At the final stage, our Hyperscale Data Center will have total capacity around 75 MW.
IndiHome continues to be our engine of growth during 2021 with 585,000 new subscribers.
Mitratel, our subsidiary, successfully conducted an Initial Public Offering on November 22, 2021. Mitratel received new funds of around Rp18,463 billion to support its organic and inorganic business expansion.
Telkom believes sustainability initiatives are important to ensure that all stakeholders achieve benefits from the economic, social, and environmental ("ESG") goals. Telkom's concern for ESG is also motivated by the belief in the importance of paying attention to every aspect, for example, ecological aspects such as climate change due to economic activities, social impacts of company activities, and corporate governance practices. MSCI ESG researched and upgraded Telkom's rating to 'A' from 'BBB’.
B. BUSINESS OVERVIEW
Strategy
As the largest telecommunications company in Indonesia, we intend to become the preferred digital telecommunications company in Indonesia that contributes to the prosperity and competitiveness of Indonesia while creating and delivering value to our stakeholders. We intend to rapidly build sustainable digital infrastructure and smart platforms that will be competitively priced, affordable, and accessible to a wide range of customers. We also nurture best-in-class digital talents who will contribute to the development of Indonesia's digital capabilities and increase the penetration of digital technologies and services, as well as improve our customers' experience through the development of a comprehensive digital ecosystem.
We seek to understand and anticipate customers' needs to deliver the best customer experience and exceed our customers' expectations by facilitating customers' interactions with us, including through digital interfaces (for the purchase of products and service, making payments, submitting change requests or complaints for instance). Such digital interactions are supported by digitized processes to expedite internal collaborations and focus on maximizing customer’s digital experience. We also maximize our engagement with each segment of customers through our specific customer relationship management called Customer Facing Units (CFUs) that consist of CFU Mobile, CFU Consumer, CFU Enterprise, CFU Wholesale &
International Business, and CFU Digital Service. We aim to become more agile as an organization and foster a digital culture, for instance by eliminating manual processes, encouraging a start-up model and work methods, optimizing business processes to facilitate faster development of products and services in accordance with customers' needs and expectations, shorten time-to-market, allocate resources more efficiently, and encourage and nurture digital talents sourced internally or externally. This enables us to maintain or improve our cost competitiveness while focusing on operational excellence to deliver quality products and services to our customers.
We have been strengthening our digital capabilities and intend to further expand our leadership in connectivity-driven business and provide end-to-end digital experience to our customers. We have been enhancing our digital connectivity offering to businesses, invested in our digital platform, and diversified our digital service offering as we pursue maximizing value to our customers and stakeholders through cash flow optimization, value creation and the enhancement of synergies. To that end, we have been expanding the backbone network infrastructure and broadband network access throughout Indonesia and expanded and improved our offering of digital services. For instance, in the mobile segment, we have developed digital advertising, mobile banking and financial services and the IoT and analytics businesses, in addition to digital lifestyle services that focus on providing cellular technology-based entertainment experiences such as music, video streaming, games, and other value-added mobile service platforms. In the Enterprise segment, we provide end-to-end digital solutions for corporate customers, small and medium business, and government institutions that require digital connectivity, IT services, data center and cloud, business process outsourcing, and other support solutions. In the Consumer segment, we offer more high-speed internet package options, TV/Video channels, games, and improved the monetization of digital inventory for digital advertising.
In the Wholesale and International Business segment, we provide wholesale telecommunication hub, internet exchange for OTT players, and digital connectivity including data centers for service providers and digital players, both domestically and globally.
We also engage in inorganic growth to enhance our digital capabilities and strengthen our digital services ecosystem, through acquisitions and collaborations or partnerships with other parties who have superior digital capabilities. For instance, between 2019 to 2021, our subsidiary Mitratel acquired equity interests in PT Persada Sokka Tama (resulting in PT Persada Sokka Tama becoming a wholly-owned subsidiary of Mitratel in the first quarter of 2021) and acquired 2,100 telecommunications towers from PT Indosat Tbk in Indonesia in 2019, Mitratel entered into a conditional sale and purchase agreement with Telkomsel for the acquisition of 6,050 telecommunications towers, 1,911 of which were transferred to Mitratel on October 20, 2020 with the remaining balance (4,139 of towers) transferred on February 26, 2021. Moreover, Mitratel acquired 4,000 telecommunications towers from Telkomsel pursuant to a deed of transfer and acquisition agreement with Telkomsel dated August 31, 2021. With those acquisitions, we seek to continue to consolidate and strengthen our telecommunications tower network throughout Indonesia. Furthermore, we continue to strengthen our digital ecosystem. In 2020, we entered into a strategic partnership with PT GoTo Gojek Tokopedia (“GoTo”), previously known as PT Aplikasi Karya Anak Bangsa (Gojek). On May 18, 2021, Telkomsel entered the Shares Subscription Agreement to subscribe to the converted 29,708 GoTo shares amounted to US$150 million (equivalent to Rp2,110 billion) and exercised the call option to acquire an additional 59,417 GoTo shares amounted to US$300 million (equivalent to Rp4,290 billion). We expect this strategic partnership will allow us to provide users and the community with better services and innovative solutions through the development of an inclusive and sustainable digital ecosystem. In addition, we also expect this collaboration could help to accelerate the digital transformation in Indonesia. While we expand and diversify our businesses, we intend to maintain our high corporate governance standards and enhance our risk management and compliance functions.