The risk management system helps Telkom to iden fy significant risks for business sustainability. Telkom has specifically iden fied risks in Indonesia, which cover social and poli cal risks, macroeconomics, disasters, and other risks. Then for business risks, Telkom has iden fied opera onal, financial, legal, and compliance risks, regula ons, inherent risks of the fixed and cellular telecommunica ons business. In addi on to these risks, Telkom also conducts quan ta ve and qualita ve disclosures on market risks.
Type of Risk Risks That Is Faced The Impact to Telkom Mi ga on/Risk Management
a. Risks Related to Indonesia
Poli cal and Social The disrup on of poli cal stability and social instability to specific issues.
Have nega ve impact to the business, opera on, financial condi on, business proceeds and prospect as well as market price for securi es.
1. Monitoring of the influence of social poli cal instability to
the disrup on of
opera onal/service.
2. The maintenance of
awareness through the improvement of safety &
Security func ons.
Macro Economy The change of global, regional, or
Indonesian economic ac vi es. 1. Have the impact on the business, financial condi on, business result or business prospect.
1. Monitoring of the influence of macro economy to the change to increase the expense through Cost Leadership program.
The fluctua on of Rupiah
Exchange rate.
The increase of loan interest rate. 2. Have a material adverse effect to the business, financial, condi on, business proceeds or business prospect.
2. To look for the opportunity to increase the spending of APBN pursuant to the government focus (Mari me,
Tourism, Energy,
Transporta on, etc).
The decrease of Government or Company’s credit ra ng.
Risk of Disaster Flood, thunder, storm, earthquake, tsunami, volcano erup on, epidemic, fire, drought, power shut down and other event beyond Telkom’s control.
Disrup ng its business opera ons and give nega ve impact to the financial performance and profit, business prospect as well as market price of securi es.
1. Transfer of risk by using the insurance of assets to an cipate the natural disaster and fire.
2. Coordina on with ASKALSI (Indonesian Sea Cable Associa on) to secure SKKL.
3. Preven ve & Correc ve Ac on by preparing the Disaster Recovery Plan and Crisis Management Team.
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Type of Risk Risks That Is Faced The Impact to Telkom Mi ga on/Risk Management Other Risks Indonesian corporate informa on
disclosure standard is significantly different than what is implemented in other countries including the United States of America.
Disrup ng its business opera on and giving the nega ve impact to the financial performance and profit, business prospect as well as market price of securi es.
The use of a competent legal consultant that has experience with the issues on corporate law in other countries par cularly the United States of America.
The difference in the regula on of
dividend determina on.
The issue on the legal certainty in Indonesia and United States of America including the implementa on of law.
The possibility on the difference in the interest of controlling shareholders with the interest from other shareholders.
b. Business Related Risks
Opera onal Risk The failure in the sustainability of network opera on, main system, gateway on Telkom’s network or other operator’s network.
Has the nega ve impact to the business, financial condi on, proceeds from the opera on and business prospect.
1. Implementa on of BCM, BCP, and DRP.
2. Cer fica on of Integrated
Management System (IMS) for infrastructure management.
Threat of physical and cyber security, such as the , destruc on, or other ac on.
Has the nega ve impact to the business, financial condi on, result from the opera on materially.
1. The upgrade of Preven ve Ac on in the form of Vulnerability Assessment and Penetra on Test periodically.
2. Monitor and Iden ficate all
types of a ack in the real me as well as to choose and conduct a necessary ac on immediately.
3. Preparing the
recommenda on to handle Cyber A ack based on the historical incident analysis.
4. Intensive coordina on with
relevant par es to handle the Cyber A ack.
Risk regarding internet service. May face a lawsuit and damage the
reputa on. To be more prudent in the
prepara on of contract with content provider partner.
Leak of revenue due to the internal capability weakness or external factor.
Has a nega ve impact to Telkom’s
business result. 1. Accelera on of leak detec on
me and revenue indicated as an external fraud in real me.
2. Monitoring the cri cal point
of the leak of revenue especially on the rejected billing call.
New technology. Has an impact on the compe ve power. 1. The prepara on of
Technology Roadmap by taking into account future technologies and the possible
implementa on of
compe tor’s technologies.
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Type of Risk Risks That Is Faced The Impact to Telkom Mi ga on/Risk Management
2. Accelera on of IDN
(Indonesia Digital Network) program to support future services.
The limit of opera on period, damage or ruin, delay or failure to launch, or the revoca on of Satellite license.
Can create loss to financial condi on, opera on result and capability to give services.
1. The planning to change the Satellite of which opera on period will be immediately expired.
2. The insurance of Satellite
opera on during the ac ve period.
3. Insurance for Manufacturing
and Launching of new Satellite.
4. Developing the understanding
with Regulator in rela on to the Satellite opera on by Telkom.
Financial Risk Interest Rate Risk. Has an adverse effect to the business, financial condi on and result from the opera on.
Interest rate swap contract from the float interest rate to become the fix interest rate upon certain loan term.
Foreign exchange rate risk. Has nega ve impact on the financial
condi on or result from the opera on. Placement of me deposit and hedging to cover the fluctua on risk of foreign exchange.
The limit to fund capital
expenditure. Has a material adverse effect to the business, financial condi on, opera onal performance and business prospect.
Maintaining and improving the Company’s performance to obtain the trust from Na onal or Global fund ins tu on/source.
Legal and
Compliance Risk Penalty/fine by KPPU in rela on to the price fixing and the occurrence of class ac on.
Reducing Telkom’s revenue and has nega ve impact to the business, reputa on and profit.
Strengthening Legal Review towards corporate ac on plan or certain contract.
Regula on Risk The change of Indonesian or
Interna onal Regula on. Has the impact to the business, financial condi on, opera onal performance and business prospect.
1. Analysis on the impact of the regula on plan towards the industry in general and Telkom in par cular.
2. Giving inputs so that the
regula on that will be s pulated will give posi ve impact to the Company and industry.
Risk in rela on to Fix
and Mobile
Telecommunica on Business
Losing the cable phone customers and revenue from the service of cable phone voice call.
Has a material adverse effect on the result from opera on, financial condi on and Telkom’s business prospect.
1. Improving QoS – Quality of Service for cable phone customers.
2. Giving Value Added Service.
Compe on on the internet
service (fixed Broadband). Has a nega ve impact on the business, financial condi on opera onal performance and business prospect.
1. Strengthening the percep on and quality of IndiHome as New Digital Life Style.
2. Accelera on on the launching of the infrastructure for fixed broadband service.
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Type of Risk Risks That Is Faced The Impact to Telkom Mi ga on/Risk Management The compe on on mobile
service. Has a nega ve impact on the business, financial condi on opera onal performance and business prospect.
1. Accelera on of the launch of the infrastructure for 4G service.
2. Improving QoS – Quality of Service.